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MIL-OSI: Parker Reports Fiscal 2025 Second Quarter Results

Source: GlobeNewswire (MIL-OSI)

CLEVELAND, Jan. 30, 2025 (GLOBE NEWSWIRE) — Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the quarter ended December 31, 2024, that included the following highlights (compared with the prior year quarter):

Fiscal 2025 Second Quarter Highlights:

Sales were $4.7 billion; organic sales growth was 1%
Net income was $949 million, an increase of 39%, or $853 million adjusted, an increase of 6%
EPS were $7.25, an increase of 39%, or $6.53 adjusted, an increase of 6%
Segment operating margin was 22.1%, an increase of 100 bps, or 25.6% adjusted, an increase of 110 bps
YTD cash flow from operations increased 24% to $1.7 billion, or 17.4% of sales

“Our performance this quarter reflects our focus on operational excellence and the strength of our balanced portfolio,” said Jenny Parmentier, Chairman and Chief Executive Officer. “We delivered record segment operating margin across all businesses, record earnings per share and year-to-date cash flow from operations. Strong cash flow from operations coupled with proceeds from previously announced divestitures allowed us to substantially reduce debt by $1.1 billion this quarter. We are encouraged to see industrial orders turn positive mainly in our longer-cycle businesses. Looking ahead, we have updated our outlook for fiscal year 2025 to reflect stronger Aerospace growth, currency headwinds and a continued delay in the expected industrial recovery. Our strong cash generation creates capital deployment optionality, and we remain committed to our strategy of actively deploying capital to drive shareholder value.”

This news release contains non-GAAP financial measures. Reconciliations of adjusted numbers and certain non-GAAP financial measures are included in the financial tables of this press release.

Outlook

Guidance for the fiscal year ending June 30, 2025 has been updated. The company expects:

Sales growth in fiscal 2025 of (2%) to 1%, with organic sales growth of approximately 2%; divestitures of (1.5%) and unfavorable currency of (1.0%)
Total segment operating margin of approximately 22.7%, or approximately 25.8% on an adjusted basis
EPS of $24.46 to $25.06, or $26.40 to $27.00 on an adjusted basis

Segment Results

Diversified Industrial Segment

North America Businesses
$ in mm	FY25 Q2			FY24 Q2			Change			Organic Growth
Sales	$	1,928		$	2,110			-8.6	%		-5.0	%
Segment Operating Income	$	427		$	462			-7.6	%
Segment Operating Margin		22.1	%		21.9	%	20 bps
Adjusted Segment Operating Income	$	473		$	510			-7.2	%
Adjusted Segment Operating Margin		24.6	%		24.2	%	40 bps

Achieved record adjusted segment operating margin
Continued softness in transportation and off-highway markets
Delayed industrial recovery

International Businesses
$ in mm	FY25 Q2			FY24 Q2			Change			Organic Growth
Sales	$	1,325		$	1,404			-5.7	%		-3.0	%
Segment Operating Income	$	284		$	290			-2.2	%
Segment Operating Margin		21.4	%		20.7	%	70 bps
Adjusted Segment Operating Income	$	320		$	323			-1.2	%
Adjusted Segment Operating Margin		24.1	%		23.0	%	110 bps

Achieved record adjusted segment operating margin
Broad-based softness continued in Europe
Gradual recovery continued in Asia

Aerospace Systems Segment

$ in mm	FY25 Q2			FY24 Q2			Change			Organic Growth
Sales	$	1,490		$	1,306			14.0	%		14.0	%
Segment Operating Income	$	338		$	263			28.5	%
Segment Operating Margin		22.7	%		20.1	%	260 bps
Adjusted Segment Operating Income	$	420		$	347			21.2	%
Adjusted Segment Operating Margin		28.2	%		26.5	%	170 bps

Achieved record sales and adjusted segment operating margin
Achieved 14% organic sales growth
20%+ aftermarket and mid-single digit OEM sales growth

Order Rates

	FY25 Q2
Parker	+5	%
Diversified Industrial Segment – North America Businesses	+3	%
Diversified Industrial Segment – International Businesses	+4	%
Aerospace Systems Segment	+9	%

Company order rates increased across all reported businesses
North America orders turned positive on long-cycle strength
International order growth continued, led by Asia
Aerospace orders accelerated against a tough prior year comparison

About Parker Hannifin
Parker Hannifin is a Fortune 250 global leader in motion and control technologies. For more than a century the company has been enabling engineering breakthroughs that lead to a better tomorrow. Learn more at www.parker.com or @parkerhannifin.

Contacts:
Media:	Financial Analysts:
Aidan Gormley	Jeff Miller
216-896-3258	216-896-2708
aidan.gormley@parker.com	jeffrey.miller@parker.com

Notice of Webcast
Parker Hannifin’s conference call and slide presentation to discuss its fiscal 2025 second quarter results are available to all interested parties via live webcast today at 11:00 a.m. ET, at investors.parker.com. A replay of the webcast will be available on the site approximately one hour after the completion of the call and will remain available for one year. To register for e-mail notification of future events please visit investors.parker.com.

Note on Orders The company reported orders for the quarter ending December 31, 2024, compared with the same quarter a year ago. All comparisons are at constant currency exchange rates, with the prior year quarter restated to the current-year rates, and exclude divestitures. Diversified Industrial comparisons are on 3-month average computations and Aerospace Systems comparisons are on rolling 12-month average computations.

Note on Non-GAAP Financial Measures
This press release contains references to non-GAAP financial information including (a) adjusted net income; (b) adjusted earnings per share; (c) adjusted operating margin and segment operating margins; (d) adjusted operating income and segment operating income and (e) organic sales growth. The adjusted net income, adjusted earnings per share, adjusted operating margin, adjusted segment operating margin, adjusted operating income, adjusted segment operating income and organic sales measures are presented to allow investors and the company to meaningfully evaluate changes in net income, earnings per share and segment operating margins on a comparable basis from period to period. Although adjusted net income, adjusted earnings per share, adjusted operating margin and segment operating margins, adjusted operating income and segment operating income, and organic sales growth are not measures of performance calculated in accordance with GAAP, we believe that they are useful to an investor in evaluating the results of this quarter versus the prior period. Comparable descriptions of record adjusted results in this release refer only to the period from the first quarter of FY2011 to the periods presented in this release. This period coincides with recast historical financial results provided in association with our FY2014 change in segment reporting. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

Forward-Looking Statements
Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. Often but not always, these statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and may also include statements regarding future performance, orders, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from expectations, including those based on past performance.

Among other factors that may affect future performance are: changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments; disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs; changes in product mix; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof; ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives; availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs; supply chain and labor disruptions, including as a result of tariffs and labor shortages; threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies; manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics. Readers should also consider forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 and other periodic filings made with the SEC.

CONSOLIDATED STATEMENT OF INCOME
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands, except per share amounts)		2024			2023			2024			2023
Net sales	$	4,742,593		$	4,820,947		$	9,646,577		$	9,668,435
Cost of sales		3,022,229			3,101,962			6,119,948			6,199,311
Selling, general and administrative expenses		782,421			806,802			1,631,210			1,680,493
Interest expense		100,802			129,029			213,893			263,497
Other income, net		(328,716	)		(85,011	)		(359,517	)		(163,466	)
Income before income taxes		1,165,857			868,165			2,041,043			1,688,600
Income taxes		217,208			186,108			393,866			355,471
Net income		948,649			682,057			1,647,177			1,333,129
Less: Noncontrolling interests		107			206			215			451
Net income attributable to common shareholders	$	948,542		$	681,851		$	1,646,962		$	1,332,678

Earnings per share attributable to common shareholders:
Basic earnings per share	$	7.37		$	5.31		$	12.80		$	10.38
Diluted earnings per share	$	7.25		$	5.23		$	12.60		$	10.23

Average shares outstanding during period – Basic		128,752,836			128,426,247			128,707,962			128,449,398
Average shares outstanding during period – Diluted		130,758,808			130,367,351			130,716,482			130,314,326


CASH DIVIDENDS PER COMMON SHARE
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Amounts in dollars)		2024			2023			2024			2023
Cash dividends per common share	$	1.63		$	1.48		$	3.26		$	2.96

RECONCILIATION OF ORGANIC GROWTH

(Unaudited)

Three Months Ended

As Reported

Adjusted

December 31, 2024

Currency

Divestitures

December 31, 2024

Diversified Industrial Segment

(7.4

)%

(1.3

)%

(1.9

)%

(4.2

)%

Aerospace Systems Segment

14.0

%

—

%

—

%

14.0

%

Total

(1.6

)%

(0.9

)%

(1.4

)%

0.7

%

(Unaudited)

Six Months Ended

As Reported

Adjusted

December 31, 2024

Currency

Divestitures

December 31, 2024

Diversified Industrial Segment

(5.9

)%

(0.8

)%

(1.0

)%

(4.1

)%

Aerospace Systems Segment

15.9

%

0.3

%

—

%

15.6

%

Total

(0.2

)%

(0.5

)%

(0.8

)%

1.1

%

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Net income attributable to common shareholders	$	948,542		$	681,851		$	1,646,962		$	1,332,678
Adjustments:
Acquired intangible asset amortization expense		138,126			142,027			278,247			297,547
Business realignment charges		20,855			14,354			30,361			27,446
Integration costs to achieve		6,893			10,014			13,304			16,420
Gain on sale of building		—			—			(10,461	)		—
Gain on divestitures		(249,748	)		(12,391	)		(249,748	)		(25,651	)
Tax effect of adjustments¹		(11,437	)		(33,476	)		(45,648	)		(69,624	)
Adjusted net income attributable to common shareholders	$	853,231		$	802,379		$	1,663,017		$	1,578,816

RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Amounts in dollars)		2024			2023			2024			2023
Earnings per diluted share	$	7.25		$	5.23		$	12.60		$	10.23
Adjustments:
Acquired intangible asset amortization expense		1.06			1.09			2.13			2.28
Business realignment charges		0.16			0.11			0.23			0.21
Integration costs to achieve		0.05			0.08			0.10			0.13
Gain on sale of building		—			—			(0.08	)		—
Gain on divestitures		(1.91	)		(0.10	)		(1.91	)		(0.20	)
Tax effect of adjustments¹		(0.08	)		(0.26	)		(0.33	)		(0.53	)
Adjusted earnings per diluted share	$	6.53		$	6.15		$	12.74		$	12.12

¹This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

BUSINESS SEGMENT INFORMATION
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Net sales
Diversified Industrial	$	3,252,806		$	3,514,473		$	6,708,964		$	7,133,001
Aerospace Systems		1,489,787			1,306,474			2,937,613			2,535,434
Total net sales	$	4,742,593		$	4,820,947		$	9,646,577		$	9,668,435
Segment operating income
Diversified Industrial	$	710,562		$	752,334		$	1,494,108		$	1,559,088
Aerospace Systems		338,184			263,112			661,170			489,372
Total segment operating income		1,048,746			1,015,446			2,155,278			2,048,460
Corporate general and administrative expenses		56,264			49,902			105,058			105,558
Income before interest expense and other income, net		992,482			965,544			2,050,220			1,942,902
Interest expense		100,802			129,029			213,893			263,497
Other income, net		(274,177	)		(31,650	)		(204,716	)		(9,195	)
Income before income taxes	$	1,165,857		$	868,165		$	2,041,043		$	1,688,600

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Diversified Industrial Segment sales	$	3,252,806		$	3,514,473		$	6,708,964		$	7,133,001

Diversified Industrial Segment operating income	$	710,562		$	752,334		$	1,494,108		$	1,559,088
Adjustments:
Acquired intangible asset amortization		62,570			67,309			127,834			135,260
Business realignment charges		19,343			13,285			28,243			25,924
Integration costs to achieve		627			871			1,405			2,010
Adjusted Diversified Industrial Segment operating income	$	793,102		$	833,799		$	1,651,590		$	1,722,282

Diversified Industrial Segment operating margin		21.8	%		21.4	%		22.3	%		21.9	%
Adjusted Diversified Industrial Segment operating margin		24.4	%		23.7	%		24.6	%		24.1	%

	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Aerospace Systems Segment sales	$	1,489,787		$	1,306,474		$	2,937,613		$	2,535,434

Aerospace Systems Segment operating income	$	338,184		$	263,112		$	661,170		$	489,372
Adjustments:
Acquired intangible asset amortization		75,556			74,718			150,413			162,287
Business realignment charges		386			(123	)		394			330
Integration costs to achieve		6,266			9,143			11,899			14,410
Adjusted Aerospace Systems Segment operating income	$	420,392		$	346,850		$	823,876		$	666,399

Aerospace Systems Segment operating margin		22.7	%		20.1	%		22.5	%		19.3	%
Adjusted Aerospace Systems Segment operating margin		28.2	%		26.5	%		28.0	%		26.3	%

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Total net sales	$	4,742,593		$	4,820,947		$	9,646,577		$	9,668,435

Total segment operating income	$	1,048,746		$	1,015,446		$	2,155,278		$	2,048,460
Adjustments:
Acquired intangible asset amortization		138,126			142,027			278,247			297,547
Business realignment charges		19,729			13,162			28,637			26,254
Integration costs to achieve		6,893			10,014			13,304			16,420
Adjusted total segment operating income	$	1,213,494		$	1,180,649		$	2,475,466		$	2,388,681

Total segment operating margin		22.1	%		21.1	%		22.3	%		21.2	%
Adjusted total segment operating margin		25.6	%		24.5	%		25.7	%		24.7	%

CONSOLIDATED BALANCE SHEET
(Unaudited)	December 31,		June 30,
(Dollars in thousands)		2024		2024
Assets
Current assets:
Cash and cash equivalents	$	395,507	$	422,027
Trade accounts receivable, net		2,445,845		2,865,546
Non-trade and notes receivable		304,829		331,429
Inventories		2,806,983		2,786,800
Prepaid expenses		246,467		252,618
Other current assets		148,831		140,204
Total current assets		6,348,462		6,798,624
Property, plant and equipment, net		2,800,992		2,875,668
Deferred income taxes		87,400		92,704
Investments and other assets		1,232,636		1,207,232
Intangible assets, net		7,444,670		7,816,181
Goodwill		10,357,303		10,507,433
Total assets	$	28,271,463	$	29,297,842

Liabilities and equity
Current liabilities:
Notes payable and long-term debt payable within one year	$	2,373,286	$	3,403,065
Accounts payable, trade		1,794,884		1,991,639
Accrued payrolls and other compensation		420,477		581,251
Accrued domestic and foreign taxes		364,143		354,659
Other accrued liabilities		1,034,501		982,695
Total current liabilities		5,987,291		7,313,309
Long-term debt		6,667,955		7,157,034
Pensions and other postretirement benefits		409,873		437,490
Deferred income taxes		1,394,882		1,583,923
Other liabilities		684,401		725,193
Shareholders’ equity		13,118,553		12,071,972
Noncontrolling interests		8,508		8,921
Total liabilities and equity	$	28,271,463	$	29,297,842

CONSOLIDATED STATEMENT OF CASH FLOWS
	Six Months Ended
(Unaudited)	December 31,
(Dollars in thousands)		2024			2023
Cash flows from operating activities:
Net income	$	1,647,177		$	1,333,129
Depreciation and amortization		454,869			468,165
Stock incentive plan compensation		106,472			108,061
Gain on sale of businesses		(250,373	)		(25,964	)
(Gain) loss on property, plant and equipment and intangible assets		(6,975	)		5,097
Net change in receivables, inventories and trade payables		70,981			(42,804	)
Net change in other assets and liabilities		(405,002	)		(407,366	)
Other, net		61,584			(86,331	)
Net cash provided by operating activities		1,678,733			1,351,987
Cash flows from investing activities:
Capital expenditures		(216,493	)		(204,117	)
Proceeds from sale of property, plant and equipment		13,259			1,360
Proceeds from sale of businesses		622,182			74,595
Other, net		(6,941	)		(2,954	)
Net cash provided by (used in) investing activities		412,007			(131,116	)
Cash flows from financing activities:
Net payments for common stock activity		(189,681	)		(136,394	)
Acquisition of noncontrolling interests		—			(2,883	)
Net payments for debt		(1,494,484	)		(784,847	)
Dividends paid		(420,061	)		(381,115	)
Net cash used in financing activities		(2,104,226	)		(1,305,239	)
Effect of exchange rate changes on cash		(13,034	)		(7,999	)
Net decrease in cash and cash equivalents		(26,520	)		(92,367	)
Cash and cash equivalents at beginning of year		422,027			475,182
Cash and cash equivalents at end of period	$	395,507		$	382,815

RECONCILIATION OF FORECASTED ORGANIC GROWTH
(Unaudited)
(Amounts in percentages)	Fiscal Year 2025
Forecasted net sales	(2%) to 1%
Adjustments:
Currency	1.0%
Divestitures	1.5%
Adjusted forecasted net sales	0.5% to 3.5%

RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN

(Unaudited)
(Amounts in percentages)	Fiscal Year 2025
Forecasted segment operating margin	~ 22.7%
Adjustments:
Business realignment charges	0.2%
Costs to achieve	0.1%
Acquisition-related intangible asset amortization expense	2.8%
Adjusted forecasted segment operating margin	~ 25.8%

RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE

(Unaudited)
(Amounts in dollars)	Fiscal Year 2025
Forecasted earnings per diluted share	$24.46 to $25.06
Adjustments:
Business realignment charges	0.39
Costs to achieve	0.15
Acquisition-related intangible asset amortization expense	4.22
Net gain on divestitures	(1.91)
Gain on sale of building	(0.08)
Tax effect of adjustments¹	(0.83)
Adjusted forecasted earnings per diluted share	$26.40 to $27.00


¹This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

Note: Totals may not foot due to rounding

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENT INFORMATION
	Three Months Ended				Six Months Ended
(Unaudited)	December 31,				December 31,
(Dollars in thousands)		2024		2023		2024		2023
Net sales
Diversified Industrial:
North America businesses	$	1,928,008	$	2,110,203	$	4,028,332	$	4,340,109
International businesses		1,324,798		1,404,270		2,680,632		2,792,892

Segment operating income
Diversified Industrial:
North America businesses	$	426,567	$	461,850	$	911,130	$	967,903
International businesses		283,995		290,484		582,978		591,185

RECONCILIATION OF ORGANIC GROWTH

(Unaudited)

Three Months Ended

As Reported

Adjusted

December 31, 2024

Currency

Divestitures

December 31, 2024

Diversified Industrial Segment:

North America businesses

(8.6

)%

(0.4

)%

(3.2

)%

(5.0

)%

International businesses

(5.7

)%

(2.7

)%

—

%

(3.0

)%

(Unaudited)

Six Months Ended

As Reported

Adjusted

December 31, 2024

Currency

Divestitures

December 31, 2024

Diversified Industrial Segment:

North America businesses

(7.2

)%

(0.5

)%

(1.7

)%

(5.0

)%

International businesses

(4.0

)%

(1.3

)%

—

%

(2.7

)%

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Diversified Industrial Segment:
North America businesses sales	$	1,928,008		$	2,110,203		$	4,028,332		$	4,340,109

North America businesses operating income	$	426,567		$	461,850		$	911,130		$	967,903
Adjustments:
Acquired intangible asset amortization		40,985			44,699			83,960			89,382
Business realignment charges		5,444			3,250			8,888			5,834
Integration costs to achieve		445			562			1,050			1,507
Adjusted North America businesses operating income	$	473,441		$	510,361		$	1,005,028		$	1,064,626

North America businesses operating margin		22.1	%		21.9	%		22.6	%		22.3	%
Adjusted North America businesses operating margin		24.6	%		24.2	%		24.9	%		24.5	%

	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Dollars in thousands)		2024			2023			2024			2023
Diversified Industrial Segment:
International businesses sales	$	1,324,798		$	1,404,270		$	2,680,632		$	2,792,892

International businesses operating income	$	283,995		$	290,484		$	582,978		$	591,185
Adjustments:
Acquired intangible asset amortization		21,585			22,610			43,874			45,878
Business realignment charges		13,899			10,035			19,355			20,090
Integration costs to achieve		182			309			355			503
Adjusted International businesses operating income	$	319,661		$	323,438		$	646,562		$	657,656

International businesses operating margin		21.4	%		20.7	%		21.7	%		21.2	%
Adjusted International businesses operating margin		24.1	%		23.0	%		24.1	%		23.5	%

The MIL Network –

January 31, 2025

MIL-OSI: Bread Financial Provides Performance Update for December 2024

Source: GlobeNewswire (MIL-OSI)

COLUMBUS, Ohio, Jan. 30, 2025 (GLOBE NEWSWIRE) — Bread Financial^®Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, provided a performance update. The following tables present the Company’s net loss rate and delinquency rate for the periods indicated.

	For the month ended December 31, 2024			For the three months ended December 31, 2024
	(dollars in millions)
End-of-period credit card and other loans	$	18,896		$	18,896
Average credit card and other loans ⁽¹⁾	$	18,647		$	18,156
Year-over-year change in average credit card and other loans ⁽¹⁾		—	%		(1	%)
Net principal losses ⁽²⁾	$	129		$	367
Net loss rate ⁽¹⁾⁽²⁾		8.1	%		8.0	%

	As of December 31, 2024			As of December 31, 2023
	(dollars in millions)
30 days + delinquencies – principal	$	1,034		$	1,163
Period ended credit card and other loans – principal	$	17,418		$	17,906
Delinquency rate		5.9	%		6.5	%

______________________________

⁽¹⁾	Beginning in January 2024, we revised the calculation of Average credit card and other loans to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, Average credit card and other loans represent the average balance of the loans at the beginning and end of each month, averaged over the periods indicated. Consequentially, the calculations for Year-over-year change in average credit card and other loans and Net loss rate differ for the periods presented.
⁽²⁾	As a result of hurricanes Helene and Milton we froze delinquency progression for cardholders in Federal Emergency Management Agency identified impact zones for one billing cycle, which will result in modestly lower Net principal losses and Net loss rate in the fourth quarter of 2024, and consequently these actions will negatively impact Net principal losses and Net loss rate in the second quarter of 2025.

About Bread Financial^®
Bread Financial^® (NYSE: BFH) is a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions to millions of U.S. consumers. Our payment solutions, including Bread Financial general purpose credit cards and savings products, empower our customers and their passions for a better life. Additionally, we deliver growth for some of the most recognized brands in travel & entertainment, health & beauty, jewelry and specialty apparel through our private label and co-brand credit cards and pay-over-time products providing choice and value to our shared customers.

To learn more about Bread Financial, our global associates and our sustainability commitments, visit breadfinancial.com or follow us on Instagram and LinkedIn.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, future dividend declarations, and future economic conditions.

We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Accordingly, our actual results could differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. Factors that could cause the outcomes to differ materially include, but are not limited to, the following: macroeconomic conditions, including market conditions, inflation, interest rates, labor market conditions, recessionary pressures or concerns over a prolonged economic slowdown, and the related impact on consumer spending behavior, payments, debt levels, savings rates and other behaviors; global political and public health events and conditions, including ongoing wars and military conflicts and natural disasters; future credit performance, including the level of future delinquency and write-off rates; the loss of, or reduction in demand from, significant brand partners or customers in the highly competitive markets in which we compete; the concentration of our business in U.S. consumer credit; inaccuracies in the models and estimates on which we rely, including the amount of our Allowance for credit losses and our credit risk management models; the inability to realize the intended benefits of acquisitions, dispositions and other strategic initiatives; our level of indebtedness and ability to access financial or capital markets; pending and future federal and state legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform and consumer financial services practices, as well as any such actions with respect to late fees, interchange fees or other charges; impacts arising from or relating to the transition of our credit card processing services to third party service providers that we completed in 2022; failures or breaches in our operational or security systems, including as a result of cyberattacks, unanticipated impacts from technology modernization projects or otherwise; and any tax or other liability or adverse impacts arising out of or related to the spinoff of our former LoyaltyOne segment or the bankruptcy filings of Loyalty Ventures Inc. (LVI) and certain of its subsidiaries and subsequent litigation or other disputes. In addition, the Consumer Financial Protection Bureau (CFPB) has issued a final rule that, absent a successful legal challenge, will place significant limits on credit card late fees, which would have a significant impact on our business and results of operations for at least the short term and, depending on the effectiveness of the mitigating actions that we have taken or may in the future take in anticipation of, or in response to, the final rule, may potentially adversely impact us over the long term; we cannot provide any assurance as to the effective date of the rule, the result of any pending or future challenges or other litigation relating to the rule, or our ability to mitigate or offset the impact of the rule on our business and results of operations. The foregoing factors, along with other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements, are described in greater detail under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Contacts
Brian Vereb — Investor Relations
Brian.Vereb@breadfinancial.com

Susan Haugen — Investor Relations
Susan.Haugen@breadfinancial.com

Rachel Stultz — Media
Rachel.Stultz@breadfinancial.com

The MIL Network –

January 31, 2025

MIL-OSI: Connectone Bancorp, Inc. Reports Fourth Quarter and Full-Year 2024 Results; Declares Common and Preferred Dividends

Source: GlobeNewswire (MIL-OSI)

ENGLEWOOD CLIFFS, N.J., Jan. 30, 2025 (GLOBE NEWSWIRE) — ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income available to common stockholders of $18.9 million for the fourth quarter of 2024 compared with $15.7 million for the third quarter of 2024 and $17.8 million for the fourth quarter of 2023. Diluted earnings per share were $0.49 for the fourth quarter of 2024 compared with $0.41 for the third quarter of 2024 and $0.46 for the fourth quarter of 2023. Full-year 2024 net income available to common stockholders was $67.8 million, compared to $81.0 million for the full-year 2023. Diluted earnings per share for the full-year 2024 were $1.76, compared with $2.07 for the full-year 2023. Return on average assets was 0.84%, 0.70% and 0.79% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively. Return on average tangible common equity was 8.27%, 6.93% and 8.18% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively.

Operating net income available to common stockholders, which excludes non-operating items, as set forth in the reconciliation of GAAP earnings to operating earnings included in the supplemental table attached hereto, was $20.2 million for the fourth quarter of 2024, $16.1 million for the third quarter of 2024 and $19.1 million for the fourth quarter of 2023. Operating diluted earnings per share were $0.52 for the fourth quarter of 2024, $0.42 for the third quarter of 2024 and $0.49 for the fourth quarter of 2023. Operating return on average assets was 0.90%, 0.72% and 0.84% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively. Operating return on average tangible common equity was 8.77%, 7.03% and 8.67% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively.

“I’m extremely pleased with ConnectOne’s fourth quarter 2024 financial results highlighted by a 20.5% quarter-over-quarter and an 6.2% year-over-year increase in quarterly net income available to common stockholders, significant margin expansion and growth in both loans and core deposits,” stated Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer. “On a quarter-over-quarter basis, our loan portfolio grew by 2.0% while core deposits grew by 3.2%. The bank’s net interest margin improved by nearly 20 basis-points, benefiting from a more than 25 basis-point improvement in our cost of deposits. This improvement reflects an approximately 40% cycle-to-date beta on interest-bearing deposits and a 3.6% sequential quarterly increase in average noninterest-bearing demand deposits. Moreover, credit quality trends remain stable and, once again, tangible book value advanced despite higher longer-term interest rates.”

“As we move into 2025, we are experiencing strong operating momentum bolstered by improving industry fundamentals, favorable economic conditions, and a potentially more supportive regulatory environment. Importantly, the proposed merger with The First of Long Island Corporation is moving forward as planned. We’re well along in the merger process and anticipate the transaction to close in the second quarter of 2025.” Mr. Sorrentino added, “The strategic rationale behind this financially attractive transaction remains highly compelling, which will meaningfully enhance ConnectOne’s presence on Long Island and further our position as a premier New York Metro community bank. We are equally excited about the opportunity to serve The First of Long Island’s clients and to leverage the expertise of its team, creating a significantly enhanced platform for sustained growth at ConnectOne.”

Mr. Sorrentino concluded “Looking ahead, we remain focused and committed to our client-first culture and relationship banking model and are well-positioned to grow and strengthen our valuable franchise.”

Dividend Declarations

The Company announced that its Board of Directors declared a cash dividend on both its common stock and its outstanding preferred stock. A cash dividend on common stock of $0.18 per share will be paid on March 3, 2025, to common stockholders of record on February 18, 2025. A dividend of $0.328125 per depositary share, representing a 1/40^th interest in a share of the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on March 3, 2025 to holders of record on February 18, 2025.

Operating Results

Fully taxable equivalent net interest income for the fourth quarter of 2024 was $64.7 million, an increase of $3.8 million, or 6.3%, from the third quarter of 2024, due to a 19 basis-point widening of the net interest margin to 2.86% from 2.67%. Average loans for the fourth quarter of 2024 remained essentially flat from the sequential third quarter, decreasing by $19.8 million, or 0.2%. The widening of the net interest margin was primarily due to a 27 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by a 3 basis-point decline in the rate earned on interest-earning assets. The interest-earning asset rate for the fourth quarter of 2024 was strengthened by an increase in loan prepayment fees and recapture of nonaccrual loan interest. Excluding these aforementioned items, management estimates the net interest margin for the quarter would have been approximately 2.82%. The net interest margin, excluding any non-operating items, is expected to increase to more than 2.90% in the first quarter of 2025 as a result of further improvement in the cost of funds and the deployment of excess cash-on-hand.

Fully taxable equivalent net interest income for the fourth quarter of 2024 increased by $3.0 million, or 4.7%, from the fourth quarter of 2023. The increase from the fourth quarter of 2023 resulted primarily from a 15 basis-point widening in the net interest margin to 2.86% from 2.71%, partially offset by a $164.7 million, or 2.0%, decrease in average loans. The widening of the net interest margin for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was primarily due to a 102 basis-point decrease in the average cost of borrowings, a 9 basis-point decrease in average cost of deposits, including noninterest-bearing deposits, and a 3 basis-point increase in the loan portfolio yield, partially offset by an increase in average cash balances during the fourth quarter of 2024.

Noninterest income was $3.7 million in the fourth quarter of 2024, $4.7 million in the third quarter of 2024 and $4.2 million in the fourth quarter of 2023. The $1.0 million decrease in noninterest income for the fourth quarter of 2024 when compared to the third quarter of 2024 was due to a $0.7 million decrease in net gains on equity securities, a $0.5 million decrease in BOLI income, primarily due to reduced death benefits, partially offset by a $0.2 million increase in net gains on sale of loans held-for-sale. The $0.5 million decrease in noninterest income for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was due to a $0.9 million decrease in net gains on equity securities, partially offset a $0.3 million increase in other deposit, loan and other income and an increase in net gains on sale of loans held-for-sale of $0.1 million.

Noninterest expenses were $38.5 million for the fourth quarter of 2024, $38.6 million for the third quarter of 2024 and $37.8 million for the fourth quarter of 2023. The $0.1 million decrease in noninterest expenses for the fourth quarter of 2024 when compared to the third quarter of 2024 was primarily due to a $0.7 million decrease in salaries and employee benefits, a $0.2 million decrease in other expenses, a $0.1 million decrease in marketing and advertising expenses and a $0.1 million decrease in occupancy and equipment expense, partially offset by a $0.5 million charge related to a branch closing, a $0.3 million increase in professional and consulting expenses, a $0.1 million increase in merger expenses and a $0.1 million increase in information and technology communications.

The $0.7 million increase in noninterest expenses for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was primarily due to a $0.9 million increase merger expenses, a $0.9 million increase in professional and consulting expenses, a $0.5 million increase in branch closing expenses, a $0.4 million increase in information technology and communications, a $0.2 million increase in salaries and employee benefits, a $0.1 million increase in marketing and advertising expenses and a $0.1 million increase in occupancy and equipment expenses, partially offset by decreases in FDIC insurance of $2.1 million and $0.3 million decrease in other expenses. The $0.9 million increase in merger expenses compared to the fourth quarter of 2023 was due to the planned merger with The First of Long Island Corporation. The $0.9 million increase in professional and consulting expenses was primarily due to increases in legal and audit accruals, as well as an increase in loan work-out expenses. The $0.5 million increase in branch closing expenses is due to the aforementioned branch closing. The $2.1 million decrease in FDIC insurance expense is due to the FDIC special assessment charge that was accrued during the fourth quarter of 2023.

Income tax expense was $6.1 million for the fourth quarter of 2024, $6.0 million for the third quarter of 2024 and $6.2 million for the fourth quarter of 2023. The effective tax rates for the fourth quarter of 2024, third quarter of 2024 and fourth quarter of 2023 were 23%, 26% and 24%, respectively. The effective tax rate for the fourth quarter reflects a year-end adjustment for the effective tax rate for the full-year 2024. Our projected tax rate for 2025 is in the range of 26%-27%.

Asset Quality

The provision for credit losses was $3.5 million for the fourth quarter of 2024, $3.8 million for the third quarter of 2024 and $2.7 million for the fourth quarter of 2023, reflecting loan growth, economic outlook and specific reserves. The provision for credit losses was $13.8 million for the full-year 2024 compared to $8.2 million for the full-year 2023. The increase in the full-year 2024 provision for credit losses when compared to the full-year 2023 was primarily due to increases in specific reserves, partially offset by a decrease in the level of general reserves.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), was $57.3 million as of December 31, 2024, $51.3 million as of September 30, 2024 and $52.5 million as of December 31, 2023. Nonperforming assets as a percentage of total assets was 0.58% as of December 31, 2024, 0.53% as of September 31, 2024 and 0.53% as of December 31, 2023. The ratio of nonaccrual loans to loans receivable was 0.69%, 0.63% and 0.63%, as of December 31, 2024, September 30, 2024 and December 31, 2023, respectively. The annualized net loan charge-offs ratio was 0.16% for the fourth quarter of 2024, 0.17% for the third quarter of 2024 and 0.43% for the fourth quarter of 2023. The allowance for credit losses represented 1.00%, 1.02%, and 0.98% of loans receivable as of December 31, 2024, September 31, 2024, and December 31, 2023, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 144.3% as of December 31, 2024, 160.8% as of September 30, 2024 and 156.1% as of December 31, 2023. Criticized and classified loans as a percentage of loans receivable was 2.66% as of December 31, 2024, up from 2.23% as of September 30, 2024 and 1.35% as of December 31, 2023. Loans delinquent 30 to 89 days was 0.04% of loans receivable as of December 31, 2024, down from 0.16% as of September 30, 2024 and 0.30% as of December 31, 2023. The overall credit quality metrics of the Bank’s loan portfolio remain sound, with expected levels of charge-offs, nonaccruals, delinquencies, and classified loans expected to remain within historical ranges.

Selected Balance Sheet Items

The Company’s total assets were $9.880 billion as of December 31, 2024, compared to $9.856 billion as of December 31, 2023. Loans receivable were $8.275 billion as of December 31, 2024 and $8.345 billion as of December 31, 2023. Total deposits were $7.820 billion as of December 31, 2024 and $7.536 billion as of December 31, 2023.

The Company’s total stockholders’ equity was $1.242 billion as of December 31, 2024 and $1.217 billion as of December 31, 2023. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $40.5 million, partially offset by an increase in accumulated other comprehensive losses of approximately $12.7 million and an increase in treasury stock of approximately $5.8 million. As of December 31, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.49% and $23.92, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.0 million as of December 31, 2024, and $214.2 million as of December 31, 2023.

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with Generally Accepted Accounting Principles (“GAAP”), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP measures. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Fourth Quarter 2024 Results Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on January 30, 2025 to review the Company’s financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 1691400. Please dial in at least five minutes before the start of the call to register. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the “Investor Relations” link on the Company’s website https://www.ConnectOneBank.com or at http://ir.connectonebank.com.

A replay of the conference call will be available beginning at approximately 1:00 p.m. ET on Thursday, January 30, 2025 and ending on Thursday, February 6, 2025 by dialing 1 (609) 800-9909, access code 1691400. An online archive of the webcast will be available following the completion of the conference call at https://www.ConnectOneBank.com or at http://ir.connectonebank.com.

About ConnectOne Bancorp, Inc.

ConnectOne Bancorp, Inc., is a modern financial services company that operates, through its subsidiary, ConnectOne Bank, and the Bank’s fintech subsidiary, BoeFly, Inc. ConnectOne Bank is a high-performing commercial bank offering a full suite of banking & lending products and services that focus on small to middle-market businesses. BoeFly, Inc. is a fintech marketplace that connects borrowers in the franchise space with funding solutions through a network of partner banks. ConnectOne Bancorp, Inc. is traded on the Nasdaq Global Market under the trading symbol “CNOB,” and information about ConnectOne may be found at https://www.connectonebank.com.

This news release contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies, and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, those factors set forth in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission, as supplemented by the Company’s subsequent filings with the U.S. Securities and Exchange Commission, and changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, changes in accounting principles and guidelines and the impact of the health emergencies and natural disasters on the Company, its employees and operations, and its customers. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Investor Contact:
William S. Burns
Senior Executive Vice President & CFO
201.816.4474: bburns@cnob.com

Media Contact:
Shannan Weeks
MikeWorldWide
732.299.7890: sweeks@mww.com


CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(in thousands)

	December 31,			December 31,
		2024			2023
	(unaudited)
ASSETS
Cash and due from banks	$	57,816		$	61,421
Interest-bearing deposits with banks		298,672			181,293
Cash and cash equivalents		356,488			242,714

Investment securities		612,847			617,162
Equity securities		20,092			18,564

Loans held-for-sale		743			–

Loans receivable		8,274,810			8,345,145
Less: Allowance for credit losses – loans		82,685			81,974
Net loans receivable		8,192,125			8,263,171

Investment in restricted stock, at cost		40,449			51,457
Bank premises and equipment, net		28,447			30,779
Accrued interest receivable		45,498			49,108
Bank owned life insurance		243,672			237,644
Right of use operating lease assets		14,489			12,007
Goodwill		208,372			208,372
Core deposit intangibles		4,639			5,874
Other assets		111,739			118,751
Total assets	$	9,879,600		$	9,855,603

LIABILITIES
Deposits:
Noninterest-bearing	$	1,422,044		$	1,259,364
Interest-bearing		6,398,070			6,276,838
Total deposits		7,820,114			7,536,202
Borrowings		688,064			933,579
Subordinated debentures, net		79,944			79,439
Operating lease liabilities		15,498			13,171
Other liabilities		34,276			76,592
Total liabilities		8,637,896			8,638,983

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Preferred stock		110,927			110,927
Common stock		586,946			586,946
Additional paid-in capital		36,347			33,182
Retained earnings		631,446			590,970
Treasury stock		(76,116	)		(70,296	)
Accumulated other comprehensive loss		(47,846	)		(35,109	)
Total stockholders’ equity		1,241,704			1,216,620
Total liabilities and stockholders’ equity	$	9,879,600		$	9,855,603


CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)

	Three Months Ended					Year Ended
	12/31/24			12/31/23		12/31/24		12/31/23
Interest income
Interest and fees on loans	$	118,346		$	120,636	$	477,859	$	453,992
Interest and dividends on investment securities:
Taxable		4,804			4,280		18,561		16,666
Tax-exempt		1,109			1,166		4,503		4,641
Dividends		959			912		4,349		3,662
Interest on federal funds sold and other short-term investments		2,815			1,963		12,617		11,104
Total interest income		128,033			128,957		517,889		490,065
Interest expense
Deposits		58,568			59,332		244,846		206,176
Borrowings		4,754			7,803		25,706		28,783
Total interest expense		63,322			67,135		270,552		234,959

Net interest income		64,711			61,822		247,337		255,106
Provision for credit losses		3,500			2,700		13,800		8,200
Net interest income after provision for credit losses		61,211			59,122		233,537		246,906

Noninterest income
Deposit, loan and other income		1,798			1,545		6,861		6,098
Income on bank owned life insurance		1,656			1,635		7,142		6,316
Net gains on sale of loans held-for-sale		597			472		2,723		1,704
Net losses (gains) on equity securities		(307	)		557		2		(117	)
Total noninterest income		3,744			4,209		16,728		14,001

Noninterest expenses
Salaries and employee benefits		22,244			22,010		90,053		88,223
Occupancy and equipment		2,818			2,708		11,615		10,884
FDIC insurance		1,800			3,900		7,200		8,365
Professional and consulting		2,449			1,587		8,447		7,547
Marketing and advertising		495			323		2,420		1,965
Information technology and communications		4,523			4,148		17,574		14,340
Merger expenses		863			–		1,605		–
Branch closing expenses		477			–		477		–
Amortization of core deposit intangibles		296			348		1,235		1,438
Other expenses		2,533			2,821		11,172		11,187
Total noninterest expenses		38,498			37,845		151,798		143,949

Income before income tax expense		26,457			25,486		98,467		116,958
Income tax expense		6,086			6,213		24,674		29,955
Net income		20,371			19,273		73,793		87,003
Preferred dividends		1,509			1,509		6,036		6,036
Net income available to common stockholders	$	18,862		$	17,764	$	67,757	$	80,967

Earnings per common share:
Basic	$	0.49		$	0.46	$	1.77	$	2.08
Diluted		0.49			0.46		1.76		2.07


ConnectOne’s management believes that the supplemental financial information, including non-GAAP measures provided below, is useful to investors. The non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP financial measures presented by other companies.

CONNECTONE BANCORP, INC.
SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES

	As of
	Dec. 31,				Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,
		2024				2024				2024				2024				2023
Selected Financial Data	(dollars in thousands)
Total assets	$	9,879,600			$	9,639,603			$	9,723,731			$	9,853,964			$	9,855,603
Loans receivable:
Commercial	$	1,522,308			$	1,505,743			$	1,491,079			$	1,561,063			$	1,564,768
Commercial real estate		3,384,319				3,261,160				3,274,941				3,333,488				3,342,603
Multifamily		2,506,782				2,482,258				2,499,581				2,507,893				2,566,904
Commercial construction		616,246				616,087				639,168				646,593				620,496
Residential		249,691				250,249				256,786				254,214				256,041
Consumer		1,136				835				945				850				1,029
Gross loans		8,280,482				8,116,332				8,162,500				8,304,101				8,351,841
Net deferred loan fees		(5,672	)			(4,356	)			(4,597	)			(6,144	)			(6,696	)
Loans receivable		8,274,810				8,111,976				8,157,903				8,297,957				8,345,145
Loans held-for-sale		743				–				435				–				–
Total loans	$	8,275,553			$	8,111,976			$	8,158,338			$	8,297,957			$	8,345,145

Investment and equity securities	$	632,939			$	667,112			$	640,322			$	638,854			$	635,726
Goodwill and other intangible assets		213,011				213,307				213,604				213,925				214,246
Deposits:
Noninterest-bearing demand	$	1,422,044			$	1,262,568			$	1,268,882			$	1,290,523			$	1,259,364
Time deposits		2,557,200				2,614,187				2,593,165				2,623,391				2,531,371
Other interest-bearing deposits		3,840,870				3,647,350				3,713,967				3,674,740				3,745,467
Total deposits	$	7,820,114			$	7,524,105			$	7,576,014			$	7,588,654			$	7,536,202

Borrowings	$	688,064			$	742,133			$	756,144			$	877,568			$	933,579
Subordinated debentures (net of debt issuance costs)		79,944				79,818				79,692				79,566				79,439
Total stockholders’ equity		1,241,704				1,239,496				1,224,227				1,216,609				1,216,620

Quarterly Average Balances
Total assets	$	9,653,446			$	9,742,853			$	9,745,853			$	9,860,753			$	9,690,746
Loans receivable:
Commercial	$	1,487,850			$	1,485,777			$	1,517,446			$	1,552,360			$	1,510,634
Commercial real estate (including multifamily)		5,733,188				5,752,467				5,789,498				5,890,853				5,874,854
Commercial construction		631,022				628,740				652,227				637,993				630,468
Residential		250,589				252,975				254,284				252,965				253,200
Consumer		5,204				7,887				5,155				5,091				6,006
Gross loans		8,107,853				8,127,846				8,218,610				8,339,262				8,275,162
Net deferred loan fees		(4,727	)			(4,513	)			(5,954	)			(6,533	)			(6,894	)
Loans receivable		8,103,126				8,123,333				8,212,656				8,332,729				8,268,268
Loans held-for-sale		498				83				169				99				31
Total loans	$	8,103,624			$	8,123,416			$	8,212,825			$	8,332,828			$	8,268,299

Investment and equity securities	$	653,988			$	650,897			$	637,551			$	633,270			$	602,287
Goodwill and other intangible assets		213,205				213,502				213,813				214,133				214,472
Deposits:
Noninterest-bearing demand	$	1,304,699			$	1,259,912			$	1,256,251			$	1,254,201			$	1,248,132
Time deposits		2,478,163				2,625,329				2,587,706				2,567,767				2,495,091
Other interest-bearing deposits		3,838,575				3,747,427				3,721,167				3,696,374				3,747,093
Total deposits	$	7,621,437			$	7,632,668			$	7,565,124			$	7,518,342			$	7,490,316

Borrowings	$	648,300			$	717,586			$	787,256			$	947,003			$	823,123
Subordinated debentures (net of debt issuance costs)		79,862				79,735				79,609				79,483				79,356
Total stockholders’ equity		1,241,738				1,234,724				1,220,621				1,220,818				1,198,389

	Three Months Ended
	Dec. 31,				Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,
		2024				2024				2024				2024				2023
	(dollars in thousands, except for per share data)
Net interest income	$	64,711			$	60,887			$	61,439			$	60,300			$	61,822
Provision for credit losses		3,500				3,800				2,500				4,000				2,700
Net interest income after provision for credit losses		61,211				57,087				58,939				56,300				59,122
Noninterest income
Deposit, loan and other income		1,798				1,817				1,654				1,592				1,545
Income on bank owned life insurance		1,656				2,145				1,677				1,664				1,635
Net gains on sale of loans held-for-sale		597				343				1,277				506				472
Net (losses) gains on equity securities		(307	)			432				(209	)			86				557
Total noninterest income		3,744				4,737				4,399				3,848				4,209
Noninterest expenses
Salaries and employee benefits		22,244				22,957				22,721				22,131				22,010
Occupancy and equipment		2,818				2,889				2,899				3,009				2,708
FDIC insurance		1,800				1,800				1,800				1,800				3,900
Professional and consulting		2,449				2,147				1,923				1,928				1,587
Marketing and advertising		495				635				613				677				323
Information technology and communications		4,523				4,464				4,198				4,389				4,148
Merger expenses		863				742				–				–				–
Branch closing expenses		477				–				–				–				–
Amortization of core deposit intangible		296				297				321				321				348
Other expenses		2,533				2,710				3,119				2,810				2,821
Total noninterest expenses		38,498				38,641				37,594				37,065				37,845

Income before income tax expense		26,457				23,183				25,744				23,083				25,486
Income tax expense		6,086				6,022				6,688				5,878				6,213
Net income		20,371				17,161				19,056				17,205				19,273
Preferred dividends		1,509				1,509				1,509				1,509				1,509
Net income available to common stockholders	$	18,862			$	15,652			$	17,547			$	15,696			$	17,764

Weighted average diluted common shares outstanding		38,519,581				38,525,484				38,448,594				38,511,747				38,651,391
Diluted EPS	$	0.49			$	0.41			$	0.46			$	0.41			$	0.46

Reconciliation of GAAP Net Income to Operating Net Income:
Net income	$	20,371			$	17,161			$	19,056			$	17,205			$	19,273
FDIC special assessment		–				–				–				–				2,100
Merger expenses		863				742				–				–				–
Branch closing expenses		477				–				–				–				–
Amortization of core deposit intangibles		296				297				321				321				348
Net losses (gains) on equity securities		307				(432	)			209				(86	)			(557	)
Tax impact of adjustments		(585	)			(171	)			(149	)			(66	)			(569	)
Operating net income	$	21,729			$	17,597			$	19,437			$	17,374			$	20,595
Preferred dividends		1,509				1,509				1,509				1,509				1,509
Operating net income available to common stockholders	$	20,220			$	16,088			$	17,928			$	15,865			$	19,086

Operating diluted EPS (non-GAAP) ⁽¹⁾	$	0.52			$	0.42			$	0.47			$	0.41			$	0.49

Return on Assets Measures
Average assets	$	9,653,446			$	9,742,853			$	9,745,853			$	9,860,753			$	9,690,746
Return on avg. assets		0.84		%		0.70		%		0.79		%		0.70		%		0.79		%
Operating return on avg. assets (non-GAAP) ⁽²⁾		0.90				0.72				0.80				0.71				0.84

⁽¹⁾ Operating net income available to common stockholders divided by weighted average diluted shares outstanding.
⁽²⁾ Operating net income divided by average assets.

	Three Months Ended
	Dec. 31,				Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,
		2024				2024				2024				2024				2023
Return on Equity Measures	(dollars in thousands)
Average stockholders’ equity	$	1,241,738			$	1,234,724			$	1,220,621			$	1,220,818			$	1,198,389
Less: average preferred stock		(110,927	)			(110,927	)			(110,927	)			(110,927	)			(110,927	)
Average common equity	$	1,130,811			$	1,123,797			$	1,109,694			$	1,109,891			$	1,087,462
Less: average intangible assets		(213,205	)			(213,502	)			(213,813	)			(214,133	)			(214,472	)
Average tangible common equity	$	917,606			$	910,295			$	895,881			$	895,758			$	872,990
Return on avg. common equity (GAAP)		6.64		%		5.54		%		6.36		%		5.69		%		6.48		%
Operating return on avg. common equity (non-GAAP) ⁽³⁾		7.11				5.70				6.50				5.75				6.96
Return on avg. tangible common equity (non-GAAP) ⁽⁴⁾		8.27				6.93				7.98				7.15				8.18
Operating return on avg. tangible common equity (non-GAAP) ⁽⁵⁾		8.77				7.03				8.05				7.12				8.67

Efficiency Measures
Total noninterest expenses	$	38,498			$	38,641			$	37,594			$	37,065			$	37,845
FDIC special assessment		–				–				–				–				(2,100	)
Merger expenses		(863	)			(742	)			–				–				–
Branch closing expenses		(477	)			–				–				–				–
Amortization of core deposit intangibles		(296	)			(297	)			(321	)			(321	)			(348	)
Operating noninterest expense	$	36,862			$	37,602			$	37,273			$	36,744			$	35,397

Net interest income (tax equivalent basis)	$	65,593			$	61,710			$	62,255			$	61,111			$	62,627
Noninterest income		3,744				4,737				4,399				3,848				4,209
Net losses (gains) on equity securities		307				(432	)			209				(86	)			(557	)
Operating revenue	$	69,644			$	66,015			$	66,863			$	64,873			$	66,279

Operating efficiency ratio (non-GAAP) ⁽⁶⁾		52.9		%		57.0		%		55.7		%		56.6		%		53.4		%

Net Interest Margin
Average interest-earning assets	$	9,117,201			$	9,206,038			$	9,210,050			$	9,323,291			$	9,172,165
Net interest income (tax equivalent basis)		65,593				61,710				62,255				61,111				62,627
Net interest margin (GAAP)		2.86		%		2.67		%		2.72		%		2.64		%		2.71		%

⁽³⁾ Operating net income available to common stockholders divided by average common equity.
⁽⁴⁾ Net income available to common stockholders, excluding amortization of intangible assets, divided by average tangible common equity.
⁽⁵⁾ Operating net income available to common stockholders, divided by average tangible common equity.
⁽⁶⁾ Operating noninterest expense divided by operating revenue.

	As of
	Dec. 31,				Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,
		2024				2024				2024				2024				2023
Capital Ratios and Book Value per Share	(dollars in thousands, except for per share data)
Stockholders equity	$	1,241,704			$	1,239,496			$	1,224,227			$	1,216,609			$	1,216,620
Less: preferred stock		(110,927	)			(110,927	)			(110,927	)			(110,927	)			(110,927	)
Common equity	$	1,130,777			$	1,128,569			$	1,113,300			$	1,105,682			$	1,105,693
Less: intangible assets		(213,011	)			(213,307	)			(213,604	)			(213,925	)			(214,246	)
Tangible common equity	$	917,766			$	915,262			$	899,696			$	891,757			$	891,447

Total assets	$	9,879,600			$	9,639,603			$	9,723,731			$	9,853,964			$	9,855,603
Less: intangible assets		(213,011	)			(213,307	)			(213,604	)			(213,925	)			(214,246	)
Tangible assets	$	9,666,589			$	9,426,296			$	9,510,127			$	9,640,039			$	9,641,357

Common shares outstanding		38,370,317				38,368,217				38,365,069				38,333,053				38,519,770

Common equity ratio (GAAP)		11.45		%		11.71		%		11.45		%		11.22		%		11.22		%
Tangible common equity ratio (non-GAAP) ⁽⁷⁾		9.49				9.71				9.46				9.25				9.25

Regulatory capital ratios (Bancorp):
Leverage ratio		11.33		%		11.10		%		10.97		%		10.73		%		10.86		%
Common equity Tier 1 risk-based ratio		10.97				11.07				10.90				10.70				10.62
Risk-based Tier 1 capital ratio		12.29				12.42				12.25				12.03				11.95
Risk-based total capital ratio		14.11				14.29				14.10				13.88				13.77

Regulatory capital ratios (Bank):
Leverage ratio		11.66		%		11.43		%		11.29		%		11.10		%		11.20		%
Common equity Tier 1 risk-based ratio		12.63				12.79				12.60				12.43				12.31
Risk-based Tier 1 capital ratio		12.63				12.79				12.60				12.43				12.31
Risk-based total capital ratio		13.60				13.77				13.58				13.41				13.28

Book value per share (GAAP)	$	29.47			$	29.41			$	29.02			$	28.84			$	28.70
Tangible book value per share (non-GAAP) ⁽⁸⁾		23.92				23.85				23.45				23.26				23.14

Net Loan Charge-offs (Recoveries):
Net loan charge-offs (recoveries):
Charge-offs	$	3,363			$	3,559			$	3,595			$	3,185			$	8,960
Recoveries		(29	)			(53	)			(324	)			(23	)			–
Net loan charge-offs	$	3,334			$	3,506			$	3,271			$	3,162			$	8,960
Net loan charge-offs as a % of average loans receivable (annualized)		0.16		%		0.17		%		0.16		%		0.15		%		0.43		%

Asset Quality
Nonaccrual loans	$	57,310			$	51,300			$	46,026			$	47,438			$	52,524
Other real estate owned		–				–				–				–				–
Nonperforming assets	$	57,310			$	51,300			$	46,026			$	47,438			$	52,524

Allowance for credit losses – loans (“ACL”)	$	82,685			$	82,494			$	82,077			$	82,869			$	81,974
Loans receivable		8,274,810				8,111,976				8,157,903				8,297,957				8,345,145

Nonaccrual loans as a % of loans receivable		0.69		%		0.63		%		0.56		%		0.57		%		0.63		%
Nonperforming assets as a % of total assets		0.58				0.53				0.47				0.48				0.53
ACL as a % of loans receivable		1.00				1.02				1.01				1.00				0.98
ACL as a % of nonaccrual loans		144.3				160.8				178.3				174.7				156.1

⁽⁷⁾ Tangible common equity divided by tangible assets
⁽⁸⁾ Tangible common equity divided by common shares outstanding at period-end


CONNECTONE BANCORP, INC.
NET INTEREST MARGIN ANALYSIS
(dollars in thousands)

	For the Quarter Ended
	December 31, 2024								September 30, 2024									December 31, 2023
	Average									Average									Average
Interest-earning assets:	Balance			Interest			Rate ⁽⁷⁾			Balance			Interest			Rate ⁽⁷⁾			Balance			Interest			Rate ⁽⁷⁾
Investment securities ^{(1) (2)}	$	736,131		$	6,207		3.35	%		$	736,946		$	6,157		3.32	%		$	723,433		$	5,757		3.16	%
Loans receivable and loans held-for-sale ^{(2) (3) (4)}		8,103,624			118,934		5.84				8,123,416			119,805		5.87				8,268,299			121,130		5.81
Federal funds sold and interest-
bearing deposits with banks		238,957			2,815		4.69				304,009			4,056		5.31				134,168			1,963		5.80
Restricted investment in bank stock		38,489			959		9.91				41,667			1,048		10.01				46,265			912		7.82
Total interest-earning assets		9,117,201			128,915		5.63				9,206,038			131,066		5.66				9,172,165			129,762		5.61
Allowance for credit losses		(83,938	)								(83,355	)								(88,861	)
Noninterest-earning assets		620,183									620,170									607,442
Total assets	$	9,653,446								$	9,742,853								$	9,690,746

Interest-bearing liabilities:
Time deposits	$	2,478,163			27,374		4.39			$	2,625,329			30,245		4.58			$	2,495,091			26,486		4.21
Other interest-bearing deposits		3,838,575			31,194		3.23				3,747,427			33,540		3.56				3,747,093			32,846		3.48
Total interest-bearing deposits		6,316,738			58,568		3.69				6,372,756			63,785		3.98				6,242,184			59,332		3.77

Borrowings		648,300			3,430		2.10				717,586			4,239		2.35				823,123			6,467		3.12
Subordinated debentures, net		79,862			1,305		6.50				79,735			1,312		6.55				79,356			1,313		6.56
Finance lease		1,280			19		5.91				1,349			20		5.90				1,546			23		5.90
Total interest-bearing liabilities		7,046,180			63,322		3.58				7,171,426			69,356		3.85				7,146,209			67,135		3.73

Noninterest-bearing demand deposits		1,304,699									1,259,912									1,248,132
Other liabilities		60,829									76,791									98,016
Total noninterest-bearing liabilities		1,365,528									1,336,703									1,346,148
Stockholders’ equity		1,241,738									1,234,724									1,198,389
Total liabilities and stockholders’ equity	$	9,653,446								$	9,742,853								$	9,690,746

Net interest income (tax equivalent basis)					65,593									61,710									62,627
Net interest spread ⁽⁵⁾							2.05	%								1.82	%								1.89	%

Net interest margin ⁽⁶⁾							2.86	%								2.67	%								2.71	%

Tax equivalent adjustment					(882	)								(823	)								(805	)
Net interest income				$	64,711								$	60,887								$	61,822

⁽¹⁾ Average balances are calculated on amortized cost.
⁽²⁾ Interest income is presented on a tax equivalent basis using 21% federal tax rate.
⁽³⁾ Includes loan fee income.
⁽⁴⁾ Loans include nonaccrual loans.
⁽⁵⁾ Represents difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities and is presented on a tax equivalent basis.
⁽⁶⁾ Represents net interest income on a tax equivalent basis divided by average total interest-earning assets.
⁽⁷⁾ Rates are annualized.

The MIL Network –

January 31, 2025

MIL-OSI: Allegro MicroSystems Reports Third Quarter 2025 Results

Source: GlobeNewswire (MIL-OSI)

MANCHESTER, N.H., Jan. 30, 2025 (GLOBE NEWSWIRE) — Allegro MicroSystems, Inc. (“Allegro” or the “Company”) (Nasdaq: ALGM), a global leader in power and sensing semiconductor solutions for motion control and energy efficient systems, today announced financial results for its third quarter ended December 27, 2024.

“We delivered on our commitments with third quarter sales of $178 million and non-GAAP EPS of $0.07, both above the midpoint of our guidance,” said Vineet Nargolwala, President and CEO of Allegro. “During the quarter, we introduced a record number of new magnetic sensing and power products to the market, further expanding our differentiated portfolios. This increasing velocity further solidifies our market leadership and positions us well for above market growth.”

Third Quarter Financial Highlights:

In thousands, except per share data	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net Sales
Automotive	$	130,066		$	141,893		$	194,764		$	403,143		$	577,515
Industrial and other		47,806			45,498			60,220			129,039			231,271
Total net sales	$	177,872		$	187,391		$	254,984		$	532,182		$	808,786
GAAP Financial Measures
Gross margin %		45.7	%		45.7	%		52.5	%		45.4	%		55.8	%
Operating margin %		—	%		2.2	%		14.4	%		(1.2	)%		22.3	%
Diluted EPS	$	(0.04	)	$	(0.18	)	$	0.17		$	(0.31	)	$	0.82
Non-GAAP Financial Measures
Gross margin %		49.1	%		48.8	%		54.6	%		48.9	%		57.0	%
Operating margin %		10.8	%		11.7	%		27.2	%		9.6	%		29.8	%
Diluted EPS	$	0.07		$	0.08		$	0.32		$	0.18		$	1.11

Business Outlook

For the fourth quarter of fiscal year 2025 ending March 28, 2025, the Company expects total net sales to be in the range of $180 million to $190 million.

The Company also estimates the following results on a non-GAAP basis:

Gross Margin is expected to be between 46% and 48%, which contemplates the impact of annual pricing agreements ahead of cost reductions, as well as higher capacity charges resulting from adjusted production levels in the quarter,
Operating expenses are expected to increase by approximately 5% sequentially to $72 million, primarily due to annual payroll tax resets,
As a result of the expected repricing of the term loan and anticipated $30 million Q4 debt repayment, the Company now expects Interest Expense to be approximately $6 million, and
Diluted Earnings per Share are expected to be between $0.03 and $0.07.

Allegro has not provided a reconciliation of its fourth fiscal quarter outlook for non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Interest Expense, and non-GAAP Diluted Earnings per Share because estimates of all of the reconciling items cannot be provided without unreasonable efforts. It is difficult to reasonably provide a forward-looking estimate between such forward-looking non-GAAP measures and the comparable forward-looking U.S. generally accepted accounting principles (“GAAP”) measures. Certain factors that are materially significant to Allegro’s ability to estimate these items are out of its control and/or cannot be reasonably predicted.

Earnings Webcast

A webcast will be held on Thursday, January 30, 2025 at 8:30 a.m., Eastern Time. Vineet Nargolwala, President and Chief Executive Officer, and Derek P. D’Antilio, Executive Vice President and Chief Financial Officer, will discuss Allegro’s business and financial results.

The webcast will be available on the Investor Relations section of the Company’s website at investors.allegromicro.com. A recording of the webcast will be posted in the same location shortly after the call concludes and will be available for at least 90 days.

About Allegro MicroSystems

Allegro MicroSystems is a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling emerging technologies in the automotive and industrial markets. Allegro’s diverse product portfolio provides efficient and reliable solutions for the electrification of vehicles, automotive ADAS safety features, automation for Industry 4.0 and power saving technologies for data centers and clean energy applications.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in 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 facts, contained in this press release including statements regarding our future results of operations and financial position, business strategy, prospective products and the plans and objectives of management for future operations, including, among others, statements regarding the liquidity, growth and profitability strategies and factors affecting our business are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “would,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance or achievements, and one should avoid placing undue reliance on such statements.

Forward-looking statements are based on our management’s current expectations, beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended March 29, 2024, as any such factors may be updated from time to time in our Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission (the “SEC”). These risks and uncertainties include, but are not limited to: downturns or volatility in general economic conditions; our ability to compete effectively, expand our market share and increase our net sales and profitability; our reliance on a limited number of third-party semiconductor wafer fabrication facilities and suppliers of other materials; any failure to adjust purchase commitments and inventory management based on changing market conditions or customer demand; shifts in our product mix, customer mix or channel mix, which could negatively impact our gross margin; the cyclical nature of the semiconductor industry, including the analog segment in which we compete; any downturn or disruption in the automotive market or industry; our ability to successfully integrate the acquisition of other companies or technologies and products into our business; our ability to compensate for decreases in average selling prices of our products and increases in input costs; our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products; our ability to accurately predict our quarterly net sales and operating results and meet the expectations of investors; our dependence on manufacturing operations in the Philippines; our reliance on distributors to generate sales; events beyond our control impacting us, our key suppliers or our manufacturing partners; our ability to develop new product features or new products in a timely and cost-effective manner; our ability to manage growth; any slowdown in the growth of our end markets; the loss of one or more significant customers; our ability to meet customers’ quality requirements; uncertainties related to the design win process and our ability to recover design and development expenses and to generate timely or sufficient net sales or margins; changes in government trade policies, including the imposition of export restrictions and tariffs; our exposures to warranty claims, product liability claims and product recalls; our dependence on international customers and operations; the availability of rebates, tax credits and other financial incentives on end-user demands for certain products; risks, liabilities, costs and obligations related to governmental regulations and other legal obligations, including export/trade control, privacy, data protection, information security, cybersecurity, consumer protection, environmental and occupational health and safety, antitrust, anti-corruption and anti-bribery, product safety, environmental protection, employment matters and tax; the volatility of currency exchange rates; our ability to raise capital to support our growth strategy; our indebtedness may limit our flexibility to operate our business; our ability to effectively manage our growth and to retain key and highly skilled personnel; our ability to protect our proprietary technology and inventions through patents or trade secrets; our ability to commercialize our products without infringing third-party intellectual property rights; disruptions or breaches of our information technology systems or confidential information or those of our third-party service providers; our principal stockholder continues to have influence over us; anti-takeover provisions in our organizational documents and under the General Corporation Law of the State of Delaware; any failure to design, implement or maintain effective internal control over financial reporting; changes in tax rates or the adoption of new tax legislation; the negative impacts of sustained inflation on our business; the physical, transition and litigation risks presented by climate change; and other events beyond our control. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this press release and the documents that we reference completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. All forward-looking statements speak only as of the date of this press release, and except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, changed circumstances or otherwise.

This press release includes certain non-GAAP financial measures as defined by the SEC rules. These non-GAAP financial measures are provided in addition to, and not as a substitute for or superior to measures of, financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their most directly comparable GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of the presented non-GAAP financial measures as tools for comparison.

This press release may not be reproduced, forwarded to any person or published, in whole or in part.

ALLEGRO MICROSYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (Unaudited)

	Three-Month Period Ended						Nine-Month Period Ended
	December 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
Net sales	$	177,872		$	254,984		$	532,182		$	808,786
Cost of goods sold		96,657			121,156			290,534			357,505
Gross profit		81,215			133,828			241,648			451,281
Operating expenses:
Research and development		43,317			44,396			132,031			130,799
Selling, general and administrative		37,939			52,746			116,221			140,135
Total operating expenses		81,256			97,142			248,252			270,934
Operating (loss) income		(41	)		36,686			(6,604	)		180,347
Interest and other (expense) income		(7,561	)		(315	)		(25,902	)		(2,801	)
Loss on change in fair value of forward repurchase contract		—			—			(34,752	)		—
(Loss) income before income taxes		(7,602	)		36,371			(67,258	)		177,546
Income tax (benefit) provision		(803	)		2,969			(9,233	)		17,584
Net (loss) income		(6,799	)		33,402			(58,025	)		159,962
Net income attributable to non-controlling interests		61			57			185			150
Net (loss) income attributable to Allegro MicroSystems, Inc.	$	(6,860	)	$	33,345		$	(58,210	)	$	159,812
Net (loss) income per common share attributable to Allegro MicroSystems, Inc.:
Basic	$	(0.04	)	$	0.17		$	(0.31	)	$	0.83
Diluted	$	(0.04	)	$	0.17		$	(0.31	)	$	0.82
Weighted average shares outstanding:
Basic		184,011,189			192,724,541			188,886,583			192,384,315
Diluted		184,011,189			194,570,380			188,886,583			194,925,040

Supplemental Schedule of Total Net Sales

The following table summarizes total net sales by market within the Company’s unaudited condensed consolidated statements of operations:

	Three-Month Period Ended				Change						Nine-Month Period Ended				Change
	December 27, 2024		December 29, 2023		Amount			%			December 27, 2024		December 29, 2023		Amount			%
	(Dollars in thousands)										(Dollars in thousands)
Automotive	$	130,066	$	194,764	$	(64,698	)		(33	)%	$	403,143	$	577,515	$	(174,372	)		(30	)%
Industrial and other		47,806		60,220		(12,414	)		(21	)%		129,039		231,271		(102,232	)		(44	)%
Total net sales	$	177,872	$	254,984	$	(77,112	)		(30	)%	$	532,182	$	808,786	$	(276,604	)		(34	)%

ALLEGRO MICROSYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

	December 27,			March 29,
	2024 (Unaudited)			2024
Assets
Current assets:
Cash and cash equivalents	$	138,452		$	212,143
Restricted cash		10,510			10,018
Trade accounts receivable, net		83,805			118,508
Inventories		193,140			162,302
Prepaid income taxes		36,037			31,908
Prepaid expenses and other current assets		33,683			33,584
Current portion of related party notes receivable		—			3,750
Total current assets		495,627			572,213
Property, plant and equipment, net		320,975			321,175
Deferred income tax assets		65,398			54,496
Goodwill		202,101			202,425
Intangible assets, net		261,553			276,854
Related party notes receivable, less current portion		—			4,688
Equity investment in related party		30,914			26,727
Other assets		65,172			72,025
Total assets	$	1,441,740		$	1,530,603
Liabilities, Non-Controlling Interests and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	39,685		$	35,964
Amounts due to related party		2,102			1,626
Accrued expenses and other current liabilities		57,751			76,389
Current portion of long-term debt		1,374			3,929
Total current liabilities		100,912			117,908
Long-term debt		374,729			249,611
Other long-term liabilities		31,673			31,368
Total liabilities		507,314			398,887
Commitments and contingencies
Stockholders’ Equity:
Preferred stock		—			—
Common stock		1,840			1,932
Additional paid-in capital		1,004,080			694,332
(Accumulated deficit) retained earnings		(38,791	)		463,012
Accumulated other comprehensive loss		(34,084	)		(28,841	)
Equity attributable to Allegro MicroSystems, Inc.		933,045			1,130,435
Non-controlling interests		1,381			1,281
Total stockholders’ equity		934,426			1,131,716
Total liabilities, non-controlling interests and stockholders’ equity	$	1,441,740		$	1,530,603

ALLEGRO MICROSYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

	Three-Month Period Ended						Nine-Month Period Ended
	December 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
Cash flows from operating activities:
Net (loss) income	$	(6,799	)	$	33,402		$	(58,025	)	$	159,962
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		16,123			20,195			48,578			49,548
Amortization of deferred financing costs		694			185			1,781			292
Deferred income taxes		(3,751	)		(10,119	)		(11,546	)		(28,253	)
Stock-based compensation		10,588			10,920			32,251			32,839
Loss on change in fair value of forward repurchase contract		—			—			34,752			—
Provisions for inventory and expected credit losses		3,031			429			7,519			9,851
Change in fair value of marketable securities		—			—			—			3,579
Other non-cash reconciling items		68			(25	)		6,645			18
Changes in operating assets and liabilities:
Trade accounts receivable		(7,061	)		5,081			34,356			(2,564	)
Inventories		(19,243	)		11,312			(38,074	)		(19,909	)
Prepaid expenses and other assets		14,407			7,368			(1,401	)		(13,085	)
Trade accounts payable		(8,203	)		(12,299	)		5,467			(9,604	)
Due to and from related parties		(3,568	)		705			564			6,817
Accrued expenses and other current and long-term liabilities		(4,469	)		9,404			(21,307	)		(20,540	)
Net cash (used in) provided by operating activities		(8,183	)		76,558			41,560			168,951
Cash flows from investing activities:
Purchases of property, plant and equipment		(13,615	)		(34,399	)		(34,564	)		(110,500	)
Acquisition of business, net of cash acquired		319			(408,119	)		319			(408,119	)
Sales of marketable securities		—			—			—			16,175
Net cash used in investing activities		(13,296	)		(442,518	)		(34,245	)		(502,444	)
Cash flows from financing activities:
Net proceeds from Refinanced 2023 Term Loan Facility		—			—			193,483			—
Repayment of 2023 Term Loan Facility		(25,000	)		—			(75,000	)		—
Borrowings of senior secured debt, net of deferred financing costs		—			245,452			—			245,452
Repayment of 2020 Term Loan Facility		—			(25,000	)		—			(25,000	)
Repayments of other debt		—			(743	)		—			(743	)
Finance lease payments		(318	)		—			(703	)		—
Receipts on related party notes receivable		—			938			1,875			2,813
Payments for taxes related to net share settlement of equity awards		(483	)		(10,732	)		(12,780	)		(24,823	)
Proceeds from issuance of common stock under employee stock purchase plan		—			—			1,987			1,899
Repurchases of common stock		(116	)		—			(853,921	)		—
Net proceeds from issuance of common stock		—			—			665,850			—
Payment of debt issuance costs		—			—			—			(1,450	)
Net cash (used in) provided by financing activities		(25,917	)		209,915			(79,209	)		198,148
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(2,680	)		1,349			(1,305	)		375
Net (decrease) increase in cash and cash equivalents and restricted cash		(50,076	)		(154,696	)		(73,199	)		(134,970	)
Cash and cash equivalents and restricted cash at beginning of period		199,038			378,431			222,161			358,705
Cash and cash equivalents and restricted cash at end of period:	$	148,962		$	223,735		$	148,962		$	223,735

Non-GAAP Financial Measures

In addition to the measures presented in our condensed consolidated financial statements, we regularly review other measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP Profit before Tax, non-GAAP Income Tax Provision, non-GAAP Effective Tax Rate, non-GAAP Net Income Attributable to Allegro MicroSystems, Inc, non-GAAP Basic and Diluted Earnings per Share, non-GAAP Free Cash Flow, and non-GAAP Free Cash Flow as percentage of net sales (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Income Tax Provision, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Income Tax Provision across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities.

The Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures, such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges, such as those being adjusted in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. These Non-GAAP Financial Measures exclude costs related to acquisition and related integration expenses, amortization of acquired intangible assets, stock-based compensation, restructuring actions, related-party activities and other non-operational costs.

Non-GAAP Income Tax Provision

In calculating non-GAAP Income Tax Provision, we have added back the following to GAAP Income Tax Provision:

Tax effect of adjustments to GAAP results—Represents the estimated income tax effect of the adjustments to non-GAAP Profit before Tax described below and elimination of discrete tax adjustments.

*Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP Gross Profit	$	81,215		$	85,662		$	133,828		$	241,648		$	451,281
GAAP Gross Margin (% of net sales)		45.7	%		45.7	%		52.5	%		45.4	%		55.8	%

Non-GAAP adjustments
Transaction-related costs		5			10			523			14			523
Purchased intangible amortization		4,875			4,875			3,648			14,625			4,323
Restructuring costs		522			16			166			1,738			166
Stock-based compensation		802			817			1,073			2,180			4,625
Total Non-GAAP Adjustments	$	6,204		$	5,718		$	5,410		$	18,557		$	9,637

Non-GAAP Gross Profit	$	87,419		$	91,380		$	139,238		$	260,205		$	460,918
Non-GAAP Gross Margin (% of net sales)		49.1	%		48.8	%		54.6	%		48.9	%		57.0	%

*Reconciliation of Non-GAAP Operating Expenses*

	Three-Month Period Ended							Nine-Month Period Ended
	December 27, 2024		September 27, 2024			December 29, 2023		December 27, 2024			December 29, 2023
	(Dollars in thousands)							(Dollars in thousands)
GAAP Operating Expenses	$	81,256	$	81,595		$	97,142	$	248,252		$	270,934

Research and Development Expenses
GAAP Research and Development Expenses		43,317		43,510			44,396		132,031			130,799
Non-GAAP adjustments
Transaction-related costs		333		206			343		1,568			352
Restructuring costs		568		260			908		997			908
Stock-based compensation		3,960		3,523			3,870		11,218			10,340
Other costs⁽¹⁾		—		3			—		3			—
Non-GAAP Research and Development Expenses		38,456		39,518			39,275		118,245			119,199

Selling, General and Administrative Expenses
GAAP Selling, General and Administrative Expenses		37,939		38,085			52,746		116,221			140,135
Non-GAAP adjustments
Transaction-related costs		148		275			9,543		1,237			14,419
Purchased intangible amortization		535		535			495		1,605			1,210
Restructuring costs		1,264		2,046			5,795		4,355			5,795
Stock-based compensation		5,826		7,205			5,977		18,853			17,874
Other costs⁽¹⁾		391		(1,820	)		283		(618	)		383
Non-GAAP Selling, General and Administrative Expenses		29,775		29,844			30,653		90,789			100,454

Total Non-GAAP Adjustments		13,025		12,233			27,214		39,218			51,281

Non-GAAP Operating Expenses	$	68,231	$	69,362		$	69,928	$	209,034		$	219,653

(1) Included in non-GAAP other costs are non-recurring charges that are individually immaterial for separate disclosure, such as project evaluation costs, which consist of costs and estimated costs incurred in connection with debt and equity financings or other non-recurring transactions.

*Reconciliation of Non-GAAP Operating Income and Non-GAAP Operating Margin*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP Operating (Loss) Income	$	(41	)	$	4,067		$	36,686		$	(6,604	)	$	180,347
GAAP Operating Margin (% of net sales)		—	%		2.2	%		14.4	%		(1.2	)%		22.3	%

Transaction-related costs		486			491			10,409			2,819			15,294
Purchased intangible amortization		5,410			5,410			4,143			16,230			5,533
Restructuring costs		2,354			2,322			6,869			7,090			6,869
Stock-based compensation		10,588			11,545			10,920			32,251			32,839
Other costs⁽¹⁾		391			(1,817	)		283			(615	)		383
Total Non-GAAP Adjustments	$	19,229		$	17,951		$	32,624		$	57,775		$	60,918

Non-GAAP Operating Income	$	19,188		$	22,018		$	69,310		$	51,171		$	241,265
Non-GAAP Operating Margin (% of net sales)		10.8	%		11.7	%		27.2	%		9.6	%		29.8	%

(1) Included in non-GAAP other costs are non-recurring charges that are individually immaterial for separate disclosure, such as project evaluation costs, which consist of costs and estimated costs incurred in connection with debt and equity financings or other non-recurring transactions.

*Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP Net (Loss) Income	$	(6,799	)	$	(33,613	)	$	33,402		$	(58,025	)	$	159,962
GAAP Net (Loss) Income Margin (% of net sales)		(3.8	)%		(17.9	)%		13.1	%		(10.9	)%		19.8	%

Interest expense		7,762			10,353			3,854			23,492			5,381
Interest income		(388	)		(420	)		(857	)		(1,302	)		(2,550	)
Income tax (benefit) provision		(803	)		(9,470	)		2,969			(9,233	)		17,584
Depreciation & amortization		16,123			15,997			20,227			48,578			49,645
EBITDA	$	15,895		$	(17,153	)	$	59,595		$	3,510		$	230,022

Transaction-related costs		486			3,295			10,409			5,623			15,294
Restructuring costs		2,354			2,067			6,869			6,835			6,869
Stock-based compensation		10,588			11,545			10,920			32,251			32,839
Loss on change in fair value of forward repurchase contract		—			34,752			—			34,752			—
Other costs⁽¹⁾		998			(2,195	)		(551	)		1,610			5,339
Adjusted EBITDA	$	30,321		$	32,311		$	87,242		$	84,581		$	290,363
Adjusted EBITDA Margin (% of net sales)		17.0	%		17.2	%		34.2	%		15.9	%		35.9	%

(1) Included in non-GAAP other costs are non-recurring charges that are individually immaterial for separate disclosure, such as project evaluation costs, which consist of costs and estimated costs incurred in connection with debt and equity financings or other non-recurring transactions, and income (loss) in earnings of equity investments.

*Reconciliation of Non-GAAP Profit before Tax*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP (Loss) Income before Income Taxes	$	(7,602	)	$	(43,083	)	$	36,371		$	(67,258	)	$	177,546

Transaction-related costs		486			3,295			10,409			5,623			15,294
Transaction-related interest		192			141			162			1,042			162
Purchased intangible amortization		5,410			5,410			4,143			16,230			5,533
Restructuring costs		2,354			2,067			6,869			6,835			6,869
Stock-based compensation		10,588			11,545			10,920			32,251			32,839
Loss on change in fair value of forward repurchase contract		—			34,752			—			34,752			—
Other costs⁽¹⁾		1,427			1,428			(551	)		5,662			5,339
Total Non-GAAP Adjustments	$	20,457		$	58,638		$	31,952		$	102,395		$	66,036

Non-GAAP Profit before Tax	$	12,855		$	15,555		$	68,323		$	35,137		$	243,582

(1) Included in non-GAAP other costs are non-recurring charges that are individually immaterial for separate disclosure, such as project evaluation costs, which consist of costs and estimated costs incurred in connection with debt and equity financings or other non-recurring transactions, and income (loss) in earnings of equity investments.

*Reconciliation of Non-GAAP Income Tax Provision and Non-GAAP Effective Tax Rate*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP Income Tax (Benefit) Provision	$	(803	)	$	(9,470	)	$	2,969		$	(9,233	)	$	17,584
GAAP effective tax rate		10.6	%		22.0	%		8.2	%		13.7	%		9.9	%

Tax effect of adjustments to GAAP results		398			10,071			3,748			10,074			10,128

Non-GAAP Income Tax (Benefit) Provision	$	(405	)	$	601		$	6,717		$	841		$	27,712
Non-GAAP effective tax rate		(3.2	)%		3.9	%		9.8	%		2.4	%		11.4	%

*Reconciliation of Non-GAAP Net Income Attributable to Allegro MicroSystems, Inc. and Non-GAAP Earnings per Share*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP Net (Loss) Income Attributable to Allegro MicroSystems, Inc.⁽¹⁾	$	(6,860	)	$	(33,675	)	$	33,345		$	(58,210	)	$	159,812
GAAP Basic weighted average common shares		184,011,189			189,182,850			192,724,541			188,886,583			192,384,315
GAAP Diluted weighted average common shares		184,011,189			189,182,850			194,570,380			188,886,583			194,925,040
GAAP Basic (Loss) Earnings per Share	$	(0.04	)	$	(0.18	)	$	0.17		$	(0.31	)	$	0.83
GAAP Diluted (Loss) Earnings per Share	$	(0.04	)	$	(0.18	)	$	0.17		$	(0.31	)	$	0.82

Transaction-related costs		486			3,295			10,409			5,623			15,294
Transaction-related interest		192			141			162			1,042			162
Purchased intangible amortization		5,410			5,410			4,143			16,230			5,533
Restructuring costs		2,354			2,067			6,869			6,835			6,869
Stock-based compensation		10,588			11,545			10,920			32,251			32,839
Loss on change in fair value of forward repurchase contract		—			34,752			—			34,752			—
Other costs⁽²⁾		1,427			1,428			(551	)		5,662			5,339
Total Non-GAAP Adjustments		20,457			58,638			31,952			102,395			66,036
Tax effect of adjustments to GAAP results⁽³⁾		(398	)		(10,071	)		(3,748	)		(10,074	)		(10,128	)
Non-GAAP Net Income Attributable to Allegro MicroSystems, Inc.	$	13,199		$	14,892		$	61,549		$	34,111		$	215,720
Basic weighted average common shares		184,011,189			189,182,850			192,724,541			188,886,583			192,384,315
Diluted weighted average common shares		184,485,792			189,710,595			194,570,380			189,577,693			194,925,040
Non-GAAP Basic Earnings per Share	$	0.07		$	0.08		$	0.32		$	0.18		$	1.12
Non-GAAP Diluted Earnings per Share	$	0.07		$	0.08		$	0.32		$	0.18		$	1.11

(1) GAAP Net (Loss) Income Attributable to Allegro MicroSystems, Inc. represents GAAP Net (Loss) Income adjusted for Net Income Attributable to non-controlling interests.
(2) Included in non-GAAP other costs are non-recurring charges that are individually immaterial for separate disclosure, such as project evaluation costs, which consists of costs and estimated costs incurred in connection with debt and equity financings or other non-recurring transactions, income (loss) in earnings of equity investments, and unrealized losses (gains) on investments.
(3) To calculate the tax effect of adjustments to GAAP results, the Company considers each non-GAAP adjustment by tax jurisdiction and reverses all discrete items to calculate an annual non-GAAP effective tax rate (“NG ETR”). This NG ETR is then applied to Non-GAAP Profit Before Tax to arrive at the tax effect of adjustments to GAAP results.

*Reconciliation of Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow as Percentage of Net Sales*

	Three-Month Period Ended									Nine-Month Period Ended
	December 27, 2024			September 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
	(Dollars in thousands)									(Dollars in thousands)
GAAP Operating Cash Flow	$	(8,183	)	$	15,547		$	76,558		$	41,560		$	168,951
GAAP Operating Cash Flow (% of net sales)		-4.6	%		8.3	%		30.0	%		7.8	%		20.9	%
Non-GAAP adjustments
Purchases of property, plant and equipment		(13,615	)		(9,972	)		(34,399	)		(34,564	)		(110,500	)

Non-GAAP Free Cash Flow	$	(21,798	)	$	5,575		$	42,159		$	6,996		$	58,451
Non-GAAP Free Cash Flow (% of net sales)		(12.3	)%		3.0	%		16.5	%		1.3	%		7.2	%

Investor Contact:
Jalene Hoover
VP of Investor Relations & Corporate Communications
+1 (512) 751-6526
jhoover@allegromicro.com

The MIL Network –

January 31, 2025

MIL-OSI United Kingdom: Highland growth opportunities showcased to international audience

Source: Scotland – Highland Council

Whilst in attendance at the Scottish Cities Week the Council Leader had the opportunity to meet with the Secretary of State for Scotland and the Parliamentary Under-Secretary of State for Scotland making representation on a number of matters that are important to the whole of the Highland Council area . Pictured is The Highland Council Leader, Councillor Raymond Bremner with the Secretary of State for Scotland, The Rt Hon Ian Murray MP and Allan Maguire, the Council’s Head of Development and Regeneration.

The Highland Council’s Leader Councillor Raymond Bremner attended Scottish Cities Week in London (20-22 January) to promote investment opportunities in Inverness, the Highlands and the Highland Council area. Scottish Cities Week aims to provide a focused opportunity to create and develop long-term strategic partnerships, with a wide array of investors and developers.

Its success is rooted in the cities working in collaboration with the Scottish and UK Government, via the Scottish Cities Alliance, to boost investor confidence and deliver a programme of activity promoting the benefits of investing in Scotland’s smart and sustainable cities. It also provides opportunities for Highland Council representatives to meet with government Ministers and Cabinet Secretaries and discuss matters of importance to the Highlands.

The multi-day event is attended by national and international investors together with representatives from the Scottish Government, Scottish Development International and the Department of Business and Trade. This year’s event programme focused on seizing the unique opportunities related to our contribution towards the transition to net zero and other high growth businesses and sectors, driving place-based investment and innovation and enabling infrastructure.

The event coincides with the council’s recent launch of the new Invest Highland brand which is aimed at promoting the Highlands’ wealth of investment opportunities.

Council Leader Cllr Raymond Bremner said: “The Highland region is really coming into its own and is attracting interest from all over the world. We have so much to offer inward investors and Scottish Cities Week is a great platform for showcasing the world class opportunities which exist throughout our area. Attracting investors to the region is essential to address societal challenges and unlock transformational change.

“With representatives also attending from Highlands and Islands Enterprise and the Inverness and Cromarty Firth Green Freeport, it helps demonstrate the successful partnerships we have in Highland and shows our ambition for the future.”

30 Jan 2025

MIL OSI United Kingdom –

January 31, 2025

MIL-OSI Europe: Answer to a written question – Paediatric transplants – E-002682/2024(ASW)

Source: European Parliament

In accordance with Article 168 of the Treaty on the Functioning of the EU, the EU’s competence regarding organ donation and transplantation is limited to setting high standards for safety and quality. This is done through a dedicated directive[1].

The recently adopted Council conclusions on enhancing organ donation and transplantation[2], also call on the Commission to support national organisations of transplant services.

The Commission will continue supporting Member States for knowledge sharing, training and collaboration, building on the achievements and insights gained from the 2009-2015 action plan[3].

To that end, the Commission has initiated discussions on the Council conclusions between the 27 national competent authorities on organ transplantation, to identify the way forward and possible actions and deliverables.

While this could possibly include actions focusing specifically on paediatric transplants, many horizontal actions are also expected to benefit these.

For example, the FOEDUS Joint Action[4], which among others delivered an exchange platform for ‘difficult-to-match’ organs, regularly allows for the exchange of organs for paediatric transplants.

In addition, a specific European Reference Network (ERN)[5] was established in 2017 for paediatric transplants, namely ERN TRANSPLANT-CHILD[6].

It thus benefits from funding dedicated to the 24 ERNs and their registries under the EU4Health Programme. It is also involved in EU-funded research projects such as PROTECT-CHILD[7] and benefits there from funding from the EU research and innovation framework programme Horizon Europe.

[1] Directive 2010/45/EU of the European Parliament and of the Council of 7 July 2010 on standards of quality and safety of human organs intended for transplantation (OJ L 207, 6.8.2010, p. 14-29).
[2] Council conclusions on enhancing organ donation and transplantation approved by the Employment, Social Policy, Health and Consumer Affairs Council (Health) at its meeting on 3 December 2024: https://data.consilium.europa.eu/doc/document/ST-16568-2024-INIT/en/pdf
[3] Action plan on Organ Donation and Transplantation (2009-2015): Strengthened Cooperation between Member States. COM(2008) 819 final https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0819:FIN:EN:PDF
[4] https://www.foedus-eoeo.eu/#/public
[5] https://health.ec.europa.eu/rare-diseases-and-european-reference-networks/european-reference-networks_en
[6] https://transplantchild.eu/
[7] A PRivacy-prOTecting Environment for Child Transplants health-related and genomic data integration in the European Reference Network: https://cordis.europa.eu/project/id/101137423

Last updated: 30 January 2025

MIL OSI Europe News –

January 31, 2025

MIL-OSI United Kingdom: UK Trade Minister visited South Africa and Botswana to strengthen trade ties

Source: United Kingdom – Executive Government & Departments

This was the first visit to Africa by UK Minister for Trade Policy Douglas Alexander, which forms part of the UK Government’s wider resetting of partnerships with Africa, which the Foreign Secretary set out in November during his visits to Nigeria and South Africa.

UK Minister for Trade Policy and Economic Security, Douglas Alexander, travelled to South Africa and Botswana to strengthen trade links and create opportunities for both African and UK businesses.

He is the first Minister from the UK’s Department for Business and Trade to travel to the continent since the UK election, which took place last summer.

The UK is seeking to deepen trade and investment across the continent and drive mutually beneficial growth in both the UK and Africa, including by making progress on removing barriers to trade to help businesses export more easily and providing UK support to trade for development programmes across the continent.

During his trip, the Trade Policy Minister co-chaired the first Southern African Custom Union and Mozambique (SACUM) – UK Economic Partnership Agreement (EPA) Joint Council. The Economic Partnership Agreement underpins all goods trade with the UK and SACUM members. The Joint Council discussed where there is potential to strengthen our trade and investment partnerships and support economic growth across all member countries.

He met with South Africa’s Minister for Trade Industry and Competition, Parks Tau, South Africa’s Agriculture Minister, John Steenhuisen, as well as Botswana’s Vice-President and Trade Minister, Ndaba Gaolathe, to discuss areas for future growth in key sectors including infrastructure, energy, transport and logistics, agriculture, minerals, and the digital economy. He also met with UK and South African companies and took part in a CEO roundtable, where he was seeking views from the private sector to help inform the Government’s cross-continent reset and wider trade strategy.

Trade Policy Minister, Douglas Alexander said:

The Government is taking a fresh approach to Africa, one which prioritises genuine partnerships, mutual benefit, and sustainable development. My visit is an important step in building new, long-lasting relationships in South Africa and Botswana.

South Africa is our largest trading partner in Africa, with an exciting period ahead as the country assumes the G20 Presidency. Both of our Governments are laser focused on economic growth – this shared ambition is a powerful motivator for greater bilateral trade.

Mutual economic growth is also at the forefront of the UK’s relationship with Botswana. There is a huge opportunity for us to collaborate on sectors important to our economies including renewable energy and I look forward to continuing to strengthen our ties.

Minister Alexander emphasised the UK’s support for South Africa’s Presidency of the G20 this year and reaffirmed the UK Government’s commitment to building mutually beneficial partnerships with African countries. This follows on from the UK Foreign Secretary’s recent visit to the continent in November 2024, during which he agreed to develop a UK-South Africa Growth Plan.

Further information

this visit forms part of the UK Government’s wider resetting of partnerships with Africa, which the Foreign Secretary set out in November during his visits to Nigeria and South Africa based on three priorities: economic growth and transformation, climate and nature, and governance and security
background for the UK’s Minister for Trade Policy Douglas Alexander MP can be found here
information on the SACUM-UK Economic Partnership Agreement can be found here
information on the UK Foreign Secretary’s visit to Nigeria and South Africa, including agreement on developing a new UK-South Africa Growth Plan, can be found here

Published 30 January 2025

MIL OSI United Kingdom –

January 31, 2025

MIL-OSI: FirstCash Reports Record Fourth Quarter and Full-Year Operating Results; Accelerating Pawn Demand Drives Record Revenue & Earnings; Declares Quarterly Cash Dividend

Source: GlobeNewswire (MIL-OSI)

FORT WORTH, Texas, Jan. 30, 2025 (GLOBE NEWSWIRE) — FirstCash Holdings, Inc. (“FirstCash” or the “Company”) (Nasdaq: FCFS), the leading international operator of more than 3,000 retail pawn stores and a leading provider of retail point-of-sale (“POS”) payment solutions, today announced operating results for the fourth quarter and full-year ended December 31, 2024. The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.38 per share, which will be paid on February 28, 2025.

Mr. Rick Wessel, chief executive officer, stated, “FirstCash posted record fourth quarter and full year revenues and earnings primarily fueled by exceptionally strong pawn operating results. Same-store pawn receivables increased 12% in both the U.S. and Latin America (local currency basis) compared to last year. This marked the sixth consecutive quarter of double digit same-store pawn receivable growth in the U.S. The POS payment solutions segment (“AFF”) had solid profitability as well, and posted growth in transaction volumes and door counts for the quarter and year-to-date periods.

“A total of 16 pawn stores were added in the fourth quarter, including an acquisition of 10 stores coupled with six new store openings. For the full year, 99 pawn stores were opened or acquired, boosting the total store base to 3,026 locations. FirstCash’s cash flows and balance sheet remain strong and we believe that we are well positioned to fund further anticipated store growth in 2025 along with dividends and potential share buybacks.”

This release contains adjusted financial measures, which exclude certain non-operating and/or non-cash income and expenses, that are non-GAAP financial measures. Please refer to the descriptions and reconciliations to GAAP of these and other non-GAAP financial measures at the end of this release.

	Three Months Ended December 31,
	As Reported (GAAP)				Adjusted (Non-GAAP)
In thousands, except per share amounts	2024		2023		2024		2023
Revenue	$	883,811	$	852,134	$	883,811	$	852,134
Net income	$	83,547	$	69,589	$	95,415	$	92,846
Diluted earnings per share	$	1.86	$	1.53	$	2.12	$	2.04
EBITDA (non-GAAP measure)	$	162,636	$	145,493	$	165,685	$	161,704
Weighted-average diluted shares		45,038		45,425		45,038		45,425

	Twelve Months Ended December 31,
	As Reported (GAAP)				Adjusted (Non-GAAP)
In thousands, except per share amounts	2024		2023		2024		2023
Revenue	$	3,388,514	$	3,151,796	$	3,388,514	$	3,151,796
Net income	$	258,815	$	219,301	$	302,680	$	276,874
Diluted earnings per share	$	5.73	$	4.80	$	6.70	$	6.06
EBITDA (non-GAAP measure)	$	551,008	$	493,784	$	558,437	$	511,732
Weighted-average diluted shares		45,168		45,693		45,168		45,693

Consolidated Operating Highlights

Gross revenues totaled a record $3.4 billion in 2024, an increase of 8% on both a GAAP and constant currency basis compared to last year. Revenues totaled $884 million in the fourth quarter, an increase of 4% on a GAAP basis and 7% on a constant currency basis compared to the prior-year quarter.
Diluted earnings per share for 2024 increased 19% over last year on a GAAP basis while adjusted diluted earnings per share increased 11% compared to the prior year. For the fourth quarter, diluted earnings per share increased 22% over the prior-year quarter on a GAAP basis while adjusted diluted earnings per share increased 4% compared to the prior-year quarter. These results were even more impressive in light of lower foreign currency exchange rates, which reduced 2024 earnings per share by approximately $0.06 for the fourth quarter and $0.04 for the full year compared to the prior-year periods.
Record net income for 2024 totaled $259 million on a GAAP basis while adjusted net income was a record $303 million, which represented increases of 18% and 9%, respectively, over the prior year.
Adjusted EBITDA for the full year was $558 million, an increase of $47 million, or 9%, compared to the prior year.

Store Base and Platform Growth

Pawn Stores – 16 pawn locations were added in Mexico during the fourth quarter, consisting of ten acquired stores and six de novo stores. For the full year, a total of 99 pawn locations were added, including 29 stores in the U.S. and 70 stores in Latin America.
As of December 31, 2024, the Company had 3,026 locations, comprised of 1,200 U.S. locations and 1,826 locations in Latin America.

Retail POS Payment Solutions (AFF) Merchant Partnerships – As of December 31, 2024, there were approximately 13,600 active retail and e-commerce merchant partner locations, representing a 17% increase in the number of active merchant locations compared to a year ago. Excluding certain furniture locations closed due to bankruptcies, the number of active doors increased over 25%.

U.S. Pawn Segment Operating Results

Fourth quarter 2024 segment pre-tax operating income was $112 million, an increase of $13 million, or 14%, compared to the prior-year quarter. The resulting segment pre-tax operating margin remained strong at 26% for the quarter.
Full year 2024 segment pre-tax operating income was $397 million, an increase of $61 million, or 18%, compared to the prior year. The resulting segment pre-tax operating margin was 25% for the full year, which equaled the prior year.
Pawn receivables grew significantly over the course of the fourth quarter, totaling almost $400 million by year end and increasing 15% compared to the prior year. The increase in total pawn receivables was driven by a 5% increase in the year-to-date weighted-average store count coupled with an impressive 12% same-store increase. On a two-year stacked basis, same-store pawn receivables were up 26%.
Pawn loan fees increased 11% for the fourth quarter and 16% for the full year, while on a same-store basis, pawn loan fee revenue increased 9% and 11% compared to both of the respective prior-year periods.
Retail merchandise sales increased 10% in the fourth quarter and 13% for the full year compared to the respective prior-year periods. Same-store retail sales increased 6% for both the quarter and full year compared to the respective prior-year periods, as the Company saw continued retail demand from value-conscious consumers.
Retail sales margins improved to a robust 43% in the fourth quarter compared to 42% in the prior-year quarter. Full year retail margins were 42% in 2024 compared to 43% in 2023.
Annualized inventory turnover was consistent at 2.8 times for both 2024 and 2023. Inventories aged greater than one year at December 31, 2024 remained extremely low at 1% of total inventories.
Operating expenses for the fourth quarter and full year increased 10% and 12%, respectively, as compared to the prior-year periods, primarily due to store additions and increased labor and variable compensation expenses. On a same-store basis, expenses increased 7% for the quarter and 5% for the full year compared to the respective prior-year periods.

Latin America Pawn Segment Operating Results

Note: Certain growth rates below are calculated on a constant currency basis, a non-GAAP financial measure defined at the end of this release. The average Mexican peso to U.S. dollar exchange rate for the fourth quarter of 2024 was 20.1 pesos / dollar, an unfavorable change of 14% versus the comparable prior-year period, and for the twelve-month period ended December 31, 2024 was 18.3 pesos / dollar, an unfavorable change of 3% versus the prior-year period.

While fourth quarter segment pre-tax operating income decreased 4% on a U.S. dollar basis compared to last year, it increased 7% on a constant currency basis. The resulting segment pre-tax operating margin was 20% for both the fourth quarter of 2024 and 2023.
For the full year of 2024, segment pre-tax operating income decreased 4% on a U.S. dollar basis compared to the prior year and decreased 2% on a constant currency basis. The resulting segment pre-tax operating margin was 19%, equaling the prior year.
While pawn receivables at December 31, 2024 decreased 5% on a U.S. dollar basis, they increased 13% on a constant currency basis compared to the prior year. On a same-store basis, pawn receivables decreased 6% on a U.S. dollar basis but increased 12% on a constant currency basis compared to the prior year.
While total and same-store pawn loan fees in the fourth quarter decreased 3% in U.S. dollars, they increased 10% on a constant currency basis compared to the prior-year quarter. For the full year, both total and same-store pawn loan fees increased 4%, or 7% on a constant currency basis, compared to the prior year.
Although retail merchandise sales in the fourth quarter of 2024 decreased 5% compared to the prior-year quarter, they increased 7% on a constant currency basis. Same-store retail merchandise sales in the fourth quarter of 2024 decreased 6% on a U.S. dollar basis while increasing 7% on a constant currency basis compared to the prior-year quarter. For the full year, retail merchandise sales increased 2%, or 4% on a constant currency basis, compared to the prior year, while same-store retail merchandise sales increased 1%, or 4% on a constant currency basis, compared to the prior year.
Retail margins were 34% for the fourth quarter of 2024 and 35% for the full year, both similar to prior-period results. Annualized inventory turnover was 4.2 times in 2024 versus 4.4 times in 2023, while inventories aged greater than one year at December 31, 2024 remained extremely low at 1%.
Operating expenses for the fourth quarter of 2024 decreased 5% in total but increased 7% on a constant currency basis compared to the prior-year quarter while full year operating expenses increased 7%, or 9% on a constant currency basis compared to last year. The increase in constant currency expenses from all stores reflected increased store counts and higher labor costs (due primarily to further increases in the federal minimum wage and other mandated benefit programs), along with other inflationary impacts.

American First Finance (AFF) – Retail POS Payment Solutions Segment Operating Results

Fourth quarter segment pre-tax operating income totaled $39 million, a decrease of 10% compared to the prior-year quarter. The anticipated decline in earnings was reflective of lower net revenue from its furniture vertical, partially offset by strong growth in non-furniture net revenues.
For the full year, segment pre-tax operating income remained strong at $129 million, a nominal decrease of 3% over the prior year.
Segment revenues for the quarter, comprised of lease-to-own (“LTO”) fees and interest and fees on finance receivables, decreased 1% compared to the prior-year quarter. Revenues for the full year increased 3% compared to the prior year.
Gross transaction volume of lease and loan originations during the fourth quarter increased $12 million, or 4%, compared to last year, driven primarily by the 17% increase in active merchant door counts and continued growth in non-furniture verticals. Excluding furniture, fourth quarter origination volume increased approximately 36%. For the full year, overall gross transaction volume increased 5% over the prior year and was up 27%, excluding furniture.
Combined gross leased merchandise and finance receivables outstanding at December 31, 2024 decreased 1% compared to the December 31, 2023 balances.
The combined lease and loan loss provision as a percentage of the total gross transaction volume originated was 29% for both 2024 and 2023. The resulting allowance on combined leased merchandise and finance receivables at December 31, 2024 was 42% compared to 40% in the prior year.
The average monthly net charge-off (“NCO”) rate for combined leased merchandise and finance receivable products for the full year 2024 was 5.3% compared to the prior-year rate of 5.0%, and was in line with the Company’s targeted range for NCO’s.

Cash Flow and Liquidity

Each of the Company’s three business segments generated significant operating cash flows in 2024. Consolidated operating cash flows for the full year grew 30% and totaled $540 million compared to $416 million in 2023.
Adjusted free cash flows (a non-GAAP measure) increased 24% to $262 million in 2024, compared to $212 million in the prior year.
The operating cash flows helped fund significant growth in earning assets and continued investments in the pawn store platform with a nominal increase in net debt. Key investments made in 2024 included:
- Pawn earning assets (pawn receivables and inventories) increased $69 million.
- A total of 38 pawn stores were acquired for a combined cash purchase price of $76 million.
- 61 new, or de novo, pawn stores were added for a total investment of $19 million in fixed assets and working capital.
- Real estate purchases totaling $86 million as the Company purchased the underlying real estate at 58 of its existing pawn stores, bringing the number of Company-owned properties to 400 locations.
Net debt at December 31, 2024 was $1.6 billion, a modest 5% increase over the prior year. Over $1.5 billion of the Company’s long-term financing remains fixed rate debt with favorable interest rates ranging from 4.625% to 6.875% and maturity dates that do not begin until 2028 and continue into 2032.
The Company’s net debt to adjusted EBITDA ratio was 2.8x at December 31, 2024.

Shareholder Returns

The Board of Directors declared a $0.38 per share first quarter cash dividend, which will be paid on February 28, 2025 to stockholders of record as of February 14, 2025. This represents an annualized dividend of $1.52 per share. Any future dividends are subject to approval by the Company’s Board of Directors.
During 2024, FirstCash repurchased $85 million of its common stock. The Company has $115 million available under the $200 million share repurchase program authorized in July 2023. Future share repurchases are subject to expected liquidity, acquisitions and other investment opportunities, debt covenant restrictions, market conditions and other relevant factors.
Combined shareholder payouts in the form of cash dividends and stock repurchases were over $150 million in 2024 and have totaled almost $800 million over the last five years.
The Company generated a 13% return on equity and a 6% return on assets in 2024. Using adjusted net income for 2024, the adjusted return on equity was 15% while the adjusted return on assets was 7%.

2025 Outlook

The Company’s outlook for 2025 is highly positive given the continued growth in pawn receivables and expectations for further pawn store additions and AFF merchant partner growth. Anticipated conditions and trends for 2025 include the following:

Pawn Operations:

Pawn operations will continue to be the primary earnings driver, as the Company expects the contribution from the combined U.S. and Latin America pawn segments to be approximately 85% of total segment level pre-tax income for 2025.
The Company expects further growth in the pawn store base in 2025 through a combination of new store openings and potential acquisitions. Over the last five years, the Company has added an average of 115 new and acquired stores per year. The guidance presented below does not assume any material acquisition activity.

U.S. Pawn

U.S. Pawn is anticipated to contribute approximately 65% of total segment level pre-tax income for 2025.
Same-store pawn loans began 2025 up 12% compared to a year ago, with January balances to date up similarly. Given the strength of the 2024 same-store results, growth rates are expected to moderate slightly over the course of the year, but still result in strong pawn fee growth that is expected to be in a range of 8% to 11% for the full year.
Similar retail sales growth is projected for 2025, with retail margins expected to be in a normalized range targeted at approximately 42%.
Given the strong revenue momentum coupled with modest expense growth, the Company anticipates solid double-digit segment earnings growth in 2025 from this, its largest segment.

Latin America Pawn

LatAm Pawn is anticipated to contribute approximately 20% of total segment level pre-tax income for 2025.
U.S. dollar-reported results for Latin America in 2025 are expected to be impacted by the lower exchange rate for the Mexican peso, which has most recently been in a range 20 to 21 pesos per U.S. dollar compared to the average exchange rate of 18.3 to 1 in 2024.
Same-store pawn receivables began 2025 down 6% on a U.S. dollar basis but up 12% on a constant currency basis. Full year pawn fee growth is expected to remain in a range of 8% to 11% on a local currency basis while it is projected to be down in a range of 2% to 5% on a U.S. dollar basis, given the current exchange rate.
Retail sales in Latin America are also expected to track similarly to pawn fees in 2025 with consistent retail margins.
While operating expenses are expected to increase by 6% to 9% in Latin America on a local currency basis (given the enacted 10% increase in the Mexico minimum wage for 2025), expenses are anticipated to decline in a range of 3% to 6% on a U.S. dollar basis, which should dampen the overall currency impact on dollar-denominated segment earnings.

Retail POS Payment Solutions (AFF) Operations:

AFF is anticipated to contribute approximately 15% of total segment level pre-tax income for 2025.
As a result of recent merchant partner bankruptcies in the furniture sector (Conn’s HomePlus and American Freight), the Company anticipates first half 2025 origination volume being down to the prior year, given lower expected furniture originations, which are more seasonally weighted to the income tax refund season. Despite this headwind, full year origination volume for 2025 is expected to increase in a low single digit range compared to 2024, given continued growth in door counts and originations from new and other existing merchants. Excluding originations from Conn’s HomePlus and American Freight, origination volumes are expected to increase in a range of 20% to 25% over 2024.
While full year 2025 net revenues are forecast to decline in a range of 10% to 15% compared to the prior year due to lower LTO balances and first half originations, reduced operating expenses related to the changes in product mix and other expense reduction initiatives are expected to offset much of the decrease in net revenue. Resulting full year segment pre-tax income is expected to be flat to down only slightly compared to the prior year.

Tax Rates and Currency:

The full year 2025 effective income tax rate under current tax codes in the U.S. and Latin America is expected to range from 24% to 25%.
Each full point change in the exchange rate of the Mexican peso is projected to have an annual earnings impact of approximately $0.10 per share.

Additional Commentary and Analysis

Mr. Wessel further commented on FirstCash’s 2024 operating results and the outlook for 2025, “Our core pawn segments continue to see exceptional growth in pawn receivables, pawn fees and retail sales. Strong sequential acceleration in same-store pawn receivable growth rates during the fourth quarter resulted in end of year increases in pawn receivables of 15% in the U.S. and 13% (constant currency basis) in Latin America compared to last year. We believe this growth continues to be driven by inflationary impacts and credit tightening for consumers with small, immediate cash needs. Furthermore, we saw excellent retail sales results in the fourth quarter, with same-store sales up 6% in the U.S. and 7% in LatAm (constant currency) compared to the prior-year quarter while maintaining strong gross margins, which we attribute to our deep value retail pricing, attractive interest-free layaway programs and excellent customer service.

“Our industry-leading pawn operations were further expanded in 2024 as we added almost 100 locations through new store openings across all markets, coupled with strategic acquisitions in the U.S. and Mexico. Over the last five years, we have opened or acquired more than 550 pawn locations and we began 2025 with a strong pipeline of new store openings already in process. While most of our new store openings will continue to be in Latin America, we currently have three store openings slated for growth markets in the U.S. Additionally, we continue to see accretive acquisition opportunities in multiple markets which can be funded from available cash and credit facilities.

“While a smaller component of FirstCash’s consolidated operations, AFF posted solid results in 2024 by contributing almost $130 million in segment earnings and generating meaningful cash flow. Although this was a difficult year in the retail furniture industry, given weak sales volumes and store closings at several retailers of size, AFF posted overall origination growth in 2024, driven by successful expansion in other vertical categories and its strong field sales channel.

“We began 2025 in a strong position to again deliver meaningful earnings growth with the current momentum in our core pawn business in both the U.S. and Latin America and opportunities for additional growth through pawnshop acquisitions and de novo store openings. AFF’s prospects remain positive as well, as it continues to grow and diversify its merchant base. On a consolidated basis, our strong cash flows and balance sheet position us well to support this growth, and combined with ongoing cash dividends and potential share repurchases, are expected to drive further shareholder returns,” concluded Mr. Wessel.

About FirstCash

FirstCash is the leading international operator of pawn stores focused on serving cash and credit-constrained consumers. FirstCash’s more than 3,000 pawn stores in the U.S. and Latin America buy and sell a wide variety of jewelry, electronics, tools, appliances, sporting goods, musical instruments and other merchandise, and make small non-recourse pawn loans secured by pledged personal property. FirstCash’s pawn segments in the U.S. and Latin America currently account for approximately 80% of segment earnings, with the remainder provided by its wholly owned subsidiary, AFF, which provides lease-to-own and retail finance payment solutions for consumer goods and services.

FirstCash is a component company in both the Standard & Poor’s MidCap 400 Index® and the Russell 2000 Index®. FirstCash’s common stock (ticker symbol “FCFS”) is traded on the Nasdaq, the creator of the world’s first electronic stock market. For additional information regarding FirstCash and the services it provides, visit FirstCash’s websites located at http://www.firstcash.com and http://www.americanfirstfinance.com.

Forward-Looking Information

This release contains forward-looking statements about the business, financial condition, outlook and prospects of FirstCash Holdings, Inc. and its wholly owned subsidiaries (together, the “Company”), including the Company’s outlook for 2025. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “outlook,” “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations, outlook and future plans. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this release. Such factors and risks may include, without limitation, risks related to the extensive regulatory environment in which the Company operates; risks associated with the legal and regulatory proceedings that the Company is a party to or may become a party to in the future, including the Consumer Financial Protection Bureau (the “CFPB”) lawsuit filed against the Company; risks related to the Company’s acquisitions, including the failure of the Company’s acquisitions to deliver the estimated value and benefits expected by the Company and the ability of the Company to continue to identify and consummate acquisitions on favorable terms, if at all; potential changes in consumer behavior and shopping patterns which could impact demand for the Company’s pawn loan, retail, lease-to-own (“LTO”) and retail finance products, labor shortages and increased labor costs; a deterioration in the economic conditions in the United States and Latin America, including as a result of inflation, elevated interest rates and higher gas prices, which potentially could have an impact on discretionary consumer spending and demand for the Company’s products; currency fluctuations, primarily involving the Mexican peso; competition the Company faces from other retailers and providers of retail payment solutions; the ability of the Company to successfully execute on its business strategies; contraction in sales activity at merchant partners of the Company’s retail POS payment solutions business; impact of store closures, financial difficulties or even bankruptcies at the merchant partners of the Company’s retail POS payment solutions business; the ability of the Company’s retail POS payment solutions business to continue to grow its base of merchant partners, including those outside of the furniture vertical; and other risks discussed and described in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), including the risks described in Part 1, Item 1A, “Risk Factors” thereof, and other reports filed with the SEC. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this release speak only as of the date of this release, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2024			2023			2024			2023
Revenue:
Retail merchandise sales	$	413,671		$	397,412		$	1,507,096		$	1,381,272
Pawn loan fees		189,984			178,238			737,126			658,536
Leased merchandise income		177,440			190,057			766,241			752,682
Interest and fees on finance receivables		70,507			59,571			245,891			233,818
Wholesale scrap jewelry sales		32,209			26,856			132,160			125,488
Total revenue		883,811			852,134			3,388,514			3,151,796

Cost of revenue:
Cost of retail merchandise sold		249,831			241,402			909,685			832,393
Depreciation of leased merchandise		97,937			103,631			433,306			411,455
Provision for lease losses		33,561			34,184			163,395			175,858
Provision for loan losses		41,736			32,459			143,827			123,030
Cost of wholesale scrap jewelry sold		27,058			22,809			108,769			101,821
Total cost of revenue		450,123			434,485			1,758,982			1,644,557

Net revenue		433,688			417,649			1,629,532			1,507,239

Expenses and other income:
Operating expenses		226,547			216,783			900,978			832,149
Administrative expenses		43,636			51,887			173,199			176,315
Depreciation and amortization		26,434			27,635			104,941			109,161
Interest expense		27,197			26,586			105,226			93,243
Interest income		(528	)		(216	)		(1,935	)		(1,469	)
Loss (gain) on foreign exchange		508			376			2,641			(1,529	)
Merger and acquisition expenses		42			4,252			2,228			7,922
Other expenses (income), net		319			(1,142	)		(522	)		(1,402	)
Total expenses and other income		324,155			326,161			1,286,756			1,214,390

Income before income taxes		109,533			91,488			342,776			292,849

Provision for income taxes		25,986			21,899			83,961			73,548

Net income	$	83,547		$	69,589		$	258,815		$	219,301

FIRSTCASH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	December 31,
	2024			2023
ASSETS
Cash and cash equivalents	$	175,095		$	127,018
Accounts receivable, net		73,325			71,922
Pawn loans		517,867			471,846
Finance receivables, net		147,501			113,901
Inventories		334,580			312,089
Leased merchandise, net		128,437			171,191
Prepaid expenses and other current assets		26,943			38,634
Total current assets		1,403,748			1,306,601

Property and equipment, net		717,916			632,724
Operating lease right of use asset		324,646			328,458
Goodwill		1,787,172			1,727,652
Intangible assets, net		228,858			277,724
Other assets		9,934			10,242
Deferred tax assets, net		4,712			6,514
Total assets	$	4,476,986		$	4,289,915

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities	$	171,540		$	163,050
Customer deposits and prepayments		72,703			70,580
Lease liability, current		95,161			101,962
Total current liabilities		339,404			335,592

Revolving unsecured credit facilities		198,000			568,000
Senior unsecured notes		1,531,346			1,037,647
Deferred tax liabilities, net		128,574			136,773
Lease liability, non-current		225,498			215,485
Total liabilities		2,422,822			2,293,497

Stockholders’ equity:
Common stock		575			573
Additional paid-in capital		1,767,569			1,741,046
Retained earnings		1,411,083			1,218,029
Accumulated other comprehensive loss		(129,596	)		(43,037	)
Common stock held in treasury, at cost		(995,467	)		(920,193	)
Total stockholders’ equity		2,054,164			1,996,418
Total liabilities and stockholders’ equity	$	4,476,986		$	4,289,915

FIRSTCASH HOLDINGS, INC.
U.S. PAWN SEGMENT RESULTS
(UNAUDITED)

U.S. Pawn Operating Results and Margins (dollars in thousands)

	Three Months Ended
	December 31,
	2024			2023			Increase
Revenue:
Retail merchandise sales	$	267,251		$	243,697			10	%
Pawn loan fees		133,563			120,083			11	%
Wholesale scrap jewelry sales		23,201			17,463			33	%
Total revenue		424,015			381,243			11	%

Cost of revenue:
Cost of retail merchandise sold		153,641			141,406			9	%
Cost of wholesale scrap jewelry sold		19,755			14,941			32	%
Total cost of revenue		173,396			156,347			11	%

Net revenue		250,619			224,896			11	%

Segment expenses:
Operating expenses		131,439			119,627			10	%
Depreciation and amortization		7,371			6,799			8	%
Total segment expenses		138,810			126,426			10	%

Segment pre-tax operating income	$	111,809		$	98,470			14	%

Operating metrics:
Retail merchandise sales margin	43		%	42		%
Net revenue margin	59		%	59		%
Segment pre-tax operating margin	26		%	26		%

FIRSTCASH HOLDINGS, INC.
U.S. PAWN SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

	Twelve Months Ended
	December 31,
	2024			2023			Increase
Revenue:
Retail merchandise sales	$	969,371		$	854,190			13	%
Pawn loan fees		505,262			435,762			16	%
Wholesale scrap jewelry sales		93,923			78,571			20	%
Total revenue		1,568,556			1,368,523			15	%

Cost of revenue:
Cost of retail merchandise sold		560,970			490,544			14	%
Cost of wholesale scrap jewelry sold		77,683			64,545			20	%
Total cost of revenue		638,653			555,089			15	%

Net revenue		929,903			813,434			14	%

Segment expenses:
Operating expenses		503,630			451,543			12	%
Depreciation and amortization		28,980			25,585			13	%
Total segment expenses		532,610			477,128			12	%

Segment pre-tax operating income	$	397,293		$	336,306			18	%

Operating metrics:
Retail merchandise sales margin	42		%	43		%
Net revenue margin	59		%	59		%
Segment pre-tax operating margin	25		%	25		%

FIRSTCASH HOLDINGS, INC.
U.S. PAWN SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

U.S. Pawn Earning Assets and Portfolio Metrics (dollars in thousands, except as otherwise noted)

	As of December 31,
	2024			2023			Increase
Earning assets:
Pawn loans	$	396,667		$	344,152			15	%
Inventories		245,492			221,843			11	%
	$	642,159		$	565,995			13	%

Average outstanding pawn loan amount (in ones)	$	283		$	258			10	%

Composition of pawn collateral:
General merchandise	28		%	30		%
Jewelry	72		%	70		%
	100		%	100		%

Composition of inventories:
General merchandise	41		%	43		%
Jewelry	59		%	57		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	1		%

Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories)	2.8 times			2.8 times

FIRSTCASH HOLDINGS, INC.
LATIN AMERICA PAWN SEGMENT RESULTS
(UNAUDITED)

Latin America Pawn Segment Results

Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. See the “Constant Currency Results” section below for additional discussion of constant currency operating results.

Latin America Pawn Operating Results and Margins (dollars in thousands)

											Constant Currency Basis
											Three Months
											Ended
	Three Months Ended										December 31,			Increase /
	December 31,										2024			(Decrease)
	2024			2023			(Decrease)				(Non-GAAP)			(Non-GAAP)
Revenue:
Retail merchandise sales	$	147,412		$	155,310			(5)	%		$	166,927			7	%
Pawn loan fees		56,421			58,155			(3)	%			63,893			10	%
Wholesale scrap jewelry sales		9,008			9,393			(4)	%			9,008			(4)	%
Total revenue		212,841			222,858			(4)	%			239,828			8	%

Cost of revenue:
Cost of retail merchandise sold		96,718			100,870			(4)	%			109,445			9	%
Cost of wholesale scrap jewelry sold		7,303			7,868			(7)	%			8,278			5	%
Total cost of revenue		104,021			108,738			(4)	%			117,723			8	%

Net revenue		108,820			114,120			(5)	%			122,105			7	%

Segment expenses:
Operating expenses		60,918			63,976			(5)	%			68,628			7	%
Depreciation and amortization		5,170			5,466			(5)	%			5,754			5	%
Total segment expenses		66,088			69,442			(5)	%			74,382			7	%

Segment pre-tax operating income	$	42,732		$	44,678			(4)	%		$	47,723			7	%

Operating metrics:
Retail merchandise sales margin	34		%	35		%				34			%
Net revenue margin	51		%	51		%				51			%
Segment pre-tax operating margin	20		%	20		%				20			%

FIRSTCASH HOLDINGS, INC.
LATIN AMERICA PAWN SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

										Constant Currency Basis
										Twelve Months
										Ended
	Twelve Months Ended									December 31,			Increase /
	December 31,						Increase /			2024			(Decrease)
	2024			2023			(Decrease)			(Non-GAAP)			(Non-GAAP)
Revenue:
Retail merchandise sales	$	541,787		$	533,612			2	%	$	556,686			4	%
Pawn loan fees		231,864			222,774			4	%		238,305			7	%
Wholesale scrap jewelry sales		38,237			46,917			(19)	%		38,237			(19)	%
Total revenue		811,888			803,303			1	%		833,228			4	%

Cost of revenue:
Cost of retail merchandise sold		350,906			345,309			2	%		360,452			4	%
Cost of wholesale scrap jewelry sold		31,086			37,276			(17)	%		31,977			(14)	%
Total cost of revenue		381,992			382,585			—	%		392,429			3	%

Net revenue		429,896			420,718			2	%		440,799			5	%

Segment expenses:
Operating expenses		259,307			243,146			7	%		266,102			9	%
Depreciation and amortization		20,369			21,350			(5)	%		20,855			(2)	%
Total segment expenses		279,676			264,496			6	%		286,957			8	%

Segment pre-tax operating income	$	150,220		$	156,222			(4)	%	$	153,842			(2)	%

Operating metrics:
Retail merchandise sales margin	35		%	35		%				35		%
Net revenue margin	53		%	52		%				53		%
Segment pre-tax operating margin	19		%	19		%				18		%

FIRSTCASH HOLDINGS, INC.
LATIN AMERICA PAWN SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

Latin America Pawn Earning Assets and Portfolio Metrics (dollars in thousands, except as otherwise noted)

										Constant Currency Basis
										As of
										December 31,
	As of December 31,									2024		Increase
	2024			2023			(Decrease)			(Non-GAAP)		(Non-GAAP)
Earning assets:
Pawn loans	$	121,200		$	127,694			(5)	%	$	143,805		13	%
Inventories		89,088			90,246			(1)	%		105,686		17	%
	$	210,288		$	217,940			(4)	%	$	249,491		14	%

Average outstanding pawn loan amount (in ones)	$	87		$	95			(8)	%	$	103		8	%

Composition of pawn collateral:
General merchandise	58		%	63		%
Jewelry	42		%	37		%
	100		%	100		%

Composition of inventories:
General merchandise	65		%	67		%
Jewelry	35		%	33		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	1		%

Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories)	4.2 times			4.4 times

FIRSTCASH HOLDINGS, INC.
RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS
(UNAUDITED)

Retail POS Payment Solutions Operating Results (dollars in thousands)

	Three Months Ended
	December 31,				Increase /
	2024		2023		(Decrease)
Revenue:
Leased merchandise income	$	177,440	$	190,057		(7)	%
Interest and fees on finance receivables		70,507		59,571		18	%
Total revenue		247,947		249,628		(1)	%

Cost of revenue:
Depreciation of leased merchandise		98,266		104,114		(6)	%
Provision for lease losses		33,665		35,564		(5)	%
Provision for loan losses		41,736		32,459		29	%
Total cost of revenue		173,667		172,137		1	%

Net revenue		74,280		77,491		(4)	%

Segment expenses:
Operating expenses		34,190		33,180		3	%
Depreciation and amortization		705		772		(9)	%
Total segment expenses		34,895		33,952		3	%

Segment pre-tax operating income	$	39,385	$	43,539		(10)	%

FIRSTCASH HOLDINGS, INC.
RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

	Twelve Months Ended
	December 31,				Increase /
	2024		2023		(Decrease)
Revenue:
Leased merchandise income	$	766,241	$	752,682		2	%
Interest and fees on finance receivables		245,891		233,818		5	%
Total revenue		1,012,132		986,500		3	%

Cost of revenue:
Depreciation of leased merchandise		434,915		413,546		5	%
Provision for lease losses		163,937		177,418		(8)	%
Provision for loan losses		143,827		123,030		17	%
Total cost of revenue		742,679		713,994		4	%

Net revenue		269,453		272,506		(1)	%

Segment expenses:
Operating expenses		138,041		137,460		—	%
Depreciation and amortization		2,783		3,030		(8)	%
Total segment expenses		140,824		140,490		—	%

Segment pre-tax operating income	$	128,629	$	132,016		(3)	%

FIRSTCASH HOLDINGS, INC.
RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

Retail POS Payment Solutions Gross Transaction Volumes (dollars in thousands)

	Three Months Ended
	December 31,				Increase /
	2024		2023		(Decrease)
Leased merchandise	$	124,590	$	170,278		(27)	%
Finance receivables		159,898		102,279		56	%
Total gross transaction volume	$	284,488	$	272,557		4	%

	Twelve Months Ended
	December 31,				Increase /
	2024		2023		(Decrease)
Leased merchandise	$	568,635	$	623,069		(9)	%
Finance receivables		510,231		405,765		26	%
Total gross transaction volume	$	1,078,866	$	1,028,834		5	%

Retail POS Payment Solutions Earning Assets (dollars in thousands)

	As of December 31,						Increase /
	2024			2023			(Decrease)
Leased merchandise, net:
Leased merchandise, before allowance for lease losses	$	209,333		$	267,458			(22)	%
Less allowance for lease losses		(80,661	)		(95,752	)		(16)	%
Leased merchandise, net	$	128,672		$	171,706			(25)	%

Finance receivables, net:
Finance receivables, before allowance for loan losses	$	264,506		$	210,355			26	%
Less allowance for loan losses		(117,005	)		(96,454	)		21	%
Finance receivables, net	$	147,501		$	113,901			29	%

FIRSTCASH HOLDINGS, INC.
RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

Allowance for Lease and Loan Losses and Other Portfolio Metrics (dollars in thousands)

	Three Months Ended
	December 31,						Increase /
	2024			2023			(Decrease)
Allowance for lease losses:
Balance at beginning of period	$	93,823		$	105,472		(11)	%
Provision for lease losses		33,665			35,564		(5)	%
Charge-offs		(48,607	)		(46,986	)	3	%
Recoveries		1,780			1,702		5	%
Balance at end of period	$	80,661		$	95,752		(16)	%

Leased merchandise portfolio metrics:
Provision rate ⁽¹⁾	27		%	21		%
Average monthly net charge-off rate ⁽²⁾	7.1		%	5.8		%
Delinquency rate ⁽³⁾	24.4		%	21.7		%

Allowance for loan losses:
Balance at beginning of period	$	109,197		$	96,684		13	%
Provision for loan losses		41,736			32,459		29	%
Charge-offs		(35,751	)		(34,680	)	3	%
Recoveries		1,823			1,991		(8)	%
Balance at end of period	$	117,005		$	96,454		21	%

Finance receivables portfolio metrics:
Provision rate ⁽¹⁾	26		%	32		%
Average monthly net charge-off rate ⁽²⁾	4.5		%	5.2		%
Delinquency rate ⁽³⁾	20.0		%	21.8		%

⁽¹⁾ Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.

⁽²⁾ Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.

⁽³⁾ Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due).

FIRSTCASH HOLDINGS, INC.
RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
(UNAUDITED)

	Twelve Months Ended
		December 31,						Increase /
		2024			2023			(Decrease)
Allowance for lease losses:
Balance at beginning of period		$	95,752		$	79,576			20	%
Provision for lease losses			163,937			177,418			(8)	%
Charge-offs			(186,123	)		(167,952	)		11	%
Recoveries			7,095			6,710			6	%
Balance at end of period		$	80,661		$	95,752			(16)	%

Leased merchandise portfolio metrics:
Provision rate ⁽¹⁾	29			%	28		%
Average monthly net charge-off rate ⁽²⁾	6.3			%	5.4		%
Delinquency rate ⁽³⁾	24.4			%	21.7		%

Allowance for loan losses:
Balance at beginning of period		$	96,454		$	84,833			14	%
Provision for loan losses			143,827			123,030			17	%
Charge-offs			(130,812	)		(117,961	)		11	%
Recoveries			7,536			6,552			15	%
Balance at end of period		$	117,005		$	96,454			21	%

Finance receivables portfolio metrics:
Provision rate ⁽¹⁾	28			%	30		%
Average monthly net charge-off rate ⁽²⁾	4.3			%	4.7		%
Delinquency rate ⁽³⁾	20.0			%	21.8		%

⁽¹⁾ Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.

⁽²⁾ Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.

⁽³⁾ Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due).

FIRSTCASH HOLDINGS, INC.
PAWN STORE LOCATIONS AND MERCHANT PARTNER LOCATIONS

Pawn Operations

As of December 31, 2024, the Company operated 3,026 pawn store locations comprised of 1,200 stores in 29 U.S. states and the District of Columbia, 1,725 stores in 32 states in Mexico, 72 stores in Guatemala, 17 stores in El Salvador and 12 stores in Colombia.

The following tables detail pawn store count activity for the three and twelve months ended December 31, 2024:

	Three Months Ended December 31, 2024
	U.S.		Latin America		Total
Total locations, beginning of period	1,201		1,824		3,025
New locations opened	—		6		6
Locations acquired	—		10		10
Consolidation of existing pawn locations ⁽¹⁾	(1	)	(14	)	(15	)
Total locations, end of period	1,200		1,826		3,026


	Twelve Months Ended December 31, 2024
	U.S.		Latin America		Total
Total locations, beginning of period	1,183		1,814		2,997
New locations opened	1		60		61
Locations acquired	28		10		38
Consolidation of existing pawn locations ^{(1) (2)}	(12	)	(58	)	(70	)
Total locations, end of period	1,200		1,826		3,026

⁽¹⁾ Store consolidations were primarily acquired locations which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.

⁽²⁾ Includes 10 pawnshops located in Acapulco, Mexico that were severely damaged by a hurricane in the fall of 2023, which the Company elected to consolidate with other stores in this market. The Company expects to replace certain of these locations in this market over time as the city’s infrastructure recovers.

Retail POS Payment Solutions

As of December 31, 2024, AFF provided LTO and retail POS payment solutions for consumer goods and services through a network of approximately 13,600 active retail merchant partner locations, which is net of the closing of approximately 1,000 Conn’s HomePlus and American Freight locations due to bankruptcy during the fourth quarter of 2024. This compares to the active door count of approximately 11,600 locations at December 31, 2023.

FIRSTCASH HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
(UNAUDITED)

The Company uses certain financial calculations such as adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow, adjusted return on equity, adjusted return on assets and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than generally accepted accounting principles (“GAAP”), primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.

While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses and amortization of acquired AFF intangible assets. The Company does not consider these items to be related to the organic operations of the acquired businesses or its continuing operations and are generally not relevant to assessing or estimating the long-term performance of the acquired businesses. In addition, excluding these items allows for more accurate comparisons of the financial results to prior periods. Merger and acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of technology systems and corporate facilities, among others.

The Company has certain leases in Mexico which are denominated in U.S. dollars. The lease liability of these U.S. dollar-denominated leases, which is considered a monetary liability, is remeasured into Mexican pesos using current period exchange rates, resulting in the recognition of foreign currency exchange gains or losses. The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses (1) because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and (2) to improve comparability of current periods presented with prior periods.

FIRSTCASH HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and are not representative of the Company’s core operating performance. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.

The following table provides a reconciliation between net income and diluted earnings per share calculated in accordance with GAAP to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (in thousands, except per share amounts):

	Three Months Ended December 31,										Twelve Months Ended December 31,
	2024		2023			2024		2023			2024		2023			2024		2023
	In Thousands		In Thousands			Per Share		Per Share			In Thousands		In Thousands			Per Share		Per Share
Net income and diluted earnings per share, as reported	$	83,547	$	69,589		$	1.86	$	1.53		$	258,815	$	219,301		$	5.73	$	4.80
Adjustments, net of tax:
Merger and acquisition expenses		31		3,271			—		0.07			1,706		6,089			0.04		0.13
Non-cash foreign currency loss (gain) related to lease liability		504		(607	)		0.01		(0.01	)		2,627		(1,778	)		0.06		(0.04	)
AFF purchase accounting and other adjustments		9,572		21,472			0.21		0.47			38,289		54,341			0.85		1.19
Other expenses (income), net		1,761		(879	)		0.04		(0.02	)		1,243		(1,079	)		0.02		(0.02	)
Adjusted net income and diluted earnings per share	$	95,415	$	92,846		$	2.12	$	2.04		$	302,680	$	276,874		$	6.70	$	6.06

FIRSTCASH HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items, as listed below, that management considers to be non-operating in nature and not representative of its actual operating performance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance, and adjusted EBITDA is used as a starting point in the calculation of the consolidated total debt ratio as defined in the Company’s senior unsecured notes. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (in thousands):

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2024			2023			2024			2023
Net income	$	83,547		$	69,589		$	258,815		$	219,301
Income taxes		25,986			21,899			83,961			73,548
Depreciation and amortization		26,434			27,635			104,941			109,161
Interest expense		27,197			26,586			105,226			93,243
Interest income		(528	)		(216	)		(1,935	)		(1,469	)
EBITDA		162,636			145,493			551,008			493,784
Adjustments:
Merger and acquisition expenses		42			4,252			2,228			7,922
Non-cash foreign currency loss (gain) related to lease liability		720			(867	)		3,755			(2,540	)
AFF purchase accounting and other adjustments ⁽¹⁾		—			13,968			—			13,968
Other expenses (income), net		2,287			(1,142	)		1,446			(1,402	)
Adjusted EBITDA	$	165,685		$	161,704		$	558,437		$	511,732

⁽¹⁾ For the three and twelve months ended December 31, 2023, amount represents other non-recurring costs included in administrative expenses related to a discontinued finance product.

FIRSTCASH HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)

Free Cash Flow and Adjusted Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of furniture, fixtures, equipment and improvements and net fundings/repayments of pawn loan and finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for merger and acquisition expenses paid that management considers to be non-operating in nature.

Free cash flow and adjusted free cash flow are commonly used by investors as additional measures of cash, generated by business operations, that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, that may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (in thousands):

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2024			2023			2024			2023
Cash flow from operating activities	$	198,149		$	99,105		$	539,958		$	416,142
Cash flow from investing activities:
Pawn loans, net ⁽¹⁾		(2,276	)		24,448			(71,999	)		(34,978	)
Finance receivables, net		(53,128	)		(27,448	)		(139,314	)		(115,442	)
Purchases of furniture, fixtures, equipment and improvements		(12,213	)		(13,425	)		(68,245	)		(60,148	)
Free cash flow		130,532			82,680			260,400			205,574
Merger and acquisition expenses paid, net of tax benefit		31			3,271			1,706			6,089
Adjusted free cash flow	$	130,563		$	85,951		$	262,106		$	211,663

⁽¹⁾ Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

FIRSTCASH HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)

Adjusted Return on Equity and Adjusted Return on Assets

Management believes the presentation of adjusted return on equity and adjusted return on assets provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating performance.

Annualized adjusted return on equity and adjusted return on assets is calculated as follows (dollars in thousands):

	Twelve Months Ended
	December 31, 2024
Adjusted net income ⁽¹⁾	$	302,680

Average stockholders’ equity (average of five most recent quarter-end balances)	$	2,014,721
Adjusted return on equity (trailing twelve months adjusted net income divided by average equity)	15		%

Average total assets (average of five most recent quarter-end balances)	$	4,345,922
Adjusted return on assets (trailing twelve months adjusted net income divided by average total assets)	7		%

⁽¹⁾ See detail of adjustments to net income in the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.

Constant Currency Results

The Company’s reporting currency is the U.S. dollar, however, certain performance metrics discussed in this release are presented on a “constant currency” basis, which is considered a non-GAAP financial measure. The Company’s management uses constant currency results to evaluate operating results of business operations in Latin America, which are transacted in local currencies in Mexico, Guatemala and Colombia. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar.

The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. See the Latin America pawn segment tables elsewhere in this release for additional reconciliation of certain constant currency amounts to as reported GAAP amounts.

FIRSTCASH HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)

Exchange Rates for the Mexican Peso, Guatemalan Quetzal and Colombian Peso

	December 31,		Favorable /
	2024	2023	(Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period	20.3	16.9		(20)	%
Three months ended	20.1	17.6		(14)	%
Twelve months ended	18.3	17.8		(3)	%

Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period	7.7	7.8		1	%
Three months ended	7.7	7.8		1	%
Twelve months ended	7.8	7.8		—	%

Colombian peso / U.S. dollar exchange rate:
End-of-period	4,409	3,822		(15)	%
Three months ended	4,348	4,070		(7)	%
Twelve months ended	4,071	4,328		6	%

FIRSTCASH HOLDINGS, INC.
INTERSEGMENT TRANSACTIONS
(UNAUDITED)

Intersegment transactions relate to the Company offering AFF’s LTO payment solution in its U.S. pawn stores and are eliminated to arrive at consolidated totals. For the three months ended December 31, 2024 and 2023, these intersegment amounts are as follows:

U.S. pawn retail merchandise sales includes $1.0 million and $1.6 million, respectively. Excluding these intersegment sales, consolidated U.S. retail merchandise sales totaled $266.3 million and $242.1 million, respectively.
U.S. pawn cost of retail merchandise sold includes $0.5 million and $0.9 million, respectively. Excluding these intersegment sales, consolidated U.S. cost of retail merchandise sold totaled $153.1 million and $140.5 million, respectively.
Retail POS payment solutions depreciation of leased merchandise includes $0.3 million and $0.5 million, respectively. Excluding these intersegment transactions, consolidated depreciation of leased merchandise totaled $97.9 million and $103.6 million, respectively.
Retail POS payment solutions provision for lease losses includes $0.1 million and $1.4 million, respectively. Excluding these intersegment transactions, consolidated provision for lease losses totaled $33.6 million and $34.2 million, respectively.

For the twelve months ended December 31, 2024 and 2023, these intersegment amounts are as follows:

U.S. pawn retail merchandise sales includes $4.1 million and $6.5 million, respectively. Excluding these intersegment sales, consolidated U.S. retail merchandise sales totaled $965.3 million and $847.7 million, respectively.
U.S. pawn cost of retail merchandise sold includes $2.2 million and $3.5 million, respectively. Excluding these intersegment sales, consolidated U.S. cost of retail merchandise sold totaled $558.8 million and $487.1 million, respectively.
Retail POS payment solutions depreciation of leased merchandise includes $1.6 million and $2.1 million, respectively. Excluding these intersegment transactions, consolidated depreciation of leased merchandise totaled $433.3 million and $411.5 million, respectively.
Retail POS payment solutions provision for lease losses includes $0.5 million and $1.6 million, respectively. Excluding these intersegment transactions, consolidated provision for lease losses totaled $163.4 million and $175.9 million, respectively.

As of December 31, 2024 and 2023, these intersegment amounts are as follows:

Retail POS payment solutions leased merchandise, net includes $0.2 million and $0.5 million, respectively. Excluding these intersegment transactions, consolidated net leased merchandise totaled $128.4 million and $171.2 million, respectively.

For further information, please contact:
Gar Jackson
Global IR Group
Phone: (817) 886-6998
Email: gar@globalirgroup.com

Doug Orr, Executive Vice President and Chief Financial Officer
Phone:    (817) 258-2650
Email:     investorrelations@firstcash.com
Website:  investors.firstcash.com

The MIL Network –

January 31, 2025

MIL-OSI Economics: No need to RSVP: a closer look at the Tria stealer campaign

Source: Securelist – Kaspersky

Headline: No need to RSVP: a closer look at the Tria stealer campaign

Introduction

Since mid-2024, we’ve observed a malicious Android campaign leveraging wedding invitations as a lure to social-engineer victims into installing a malicious Android app (APK), which we have named “Tria Stealer” after unique strings found in campaign samples. The primary targets of the campaign are users in Malaysia and Brunei, with Malaysia being the most affected country.

Our investigation suggests that this campaign is likely operated by an Indonesian-speaking threat actor, as we found artifacts written in the Indonesian language, namely several unique strings embedded in the malware and the naming pattern of the Telegram bots that are used for hosting C2 servers.

Our findings, in a nutshell, are as follows:

Tria Stealer collects victims’ SMS data, tracks call logs, messages (for example, from WhatsApp and WhatsApp Business), and email data (for example, Gmail and Outlook mailboxes).
Tria Stealer exfiltrates the data by sending it to various Telegram bots using the Telegram API for communication.
The threat actor then exploits this data to hijack personal messaging accounts, impersonate account owners to request money transfers from the victims’ contacts, and compromise accounts with other services.

Kaspersky products detect this threat as HEUR:Trojan–Spy.AndroidOS.Agent.*.

Technical details

Background

We detected several APK samples tagged as Trojan–Spy.AndroidOS.Agent and originating from Malaysia and Brunei in our Kaspersky Security Network (KSN) telemetry and on third-party multi-antivirus platforms.

Further investigation revealed multiple posts by Malaysian Android users on social media platforms like X and Facebook discussing a scam campaign involving malicious APKs and WhatsApp hijacking. Our analysis indicates that this campaign has been ongoing since March 2024, with the threat actor consistently using a wedding invitation theme to lure victims into installing the malicious app. We discovered two versions of malicious APKs, with the first one initially detected in March 2024, and the second one in August of the same year. The newer sample was slightly upgraded with additional functionality and adjusted wording in messages that were sent to Telegram bots.

We named this malware “Tria Stealer” after the username found in all APK samples in the message that is sent to the C2 server during the initial execution of the malware, which states, “Having any issues? Contact me at ‘https://t[.]me/Mr_tria’”. This suggests that “Mr Tria” may be the support contact or the individual in charge of the campaign.

Overview of the Tria Stealer campaign

According to our observations, the threat actor uses stolen messages and emails to obtain security codes for hijacking their victims’ WhatsApp and Telegram accounts which will be used for distributing the malicious APK to the victims’ contacts. Not only that, but our researchers also have observed that the threat actor takes advantage of the hijacked WhatsApp and Telegram accounts to impersonate their owners, asking the targets’ contacts to transfer money to the actor’s bank accounts.

Besides WhatsApp and Telegram accounts, the threat actor was also able to take over and sign in to the victims’ accounts with other services by requesting transaction authorization codes (TACs) and one-time passwords (OTPs) for the relevant platforms, and then accessing the security codes in the text messages which they intercepted.

Delivery method

The threat actor distributes the APK via personal and group chats in Telegram and WhatsApp, using messages that invite recipients to a wedding and require them to install the APK to view an invitation card.

Delivery through a compromised WhatsApp account (on the left) and through a compromised Telegram account (on the right)

First-time execution

When the malicious Android app is installed, it checks whether it is being opened for the first time via the IntroActivity function, which is triggered only during the initial app launch. The app also retrieves the Boolean value associated with the key firstStart in the SharedPreferences object. If this key does not exist, the default value true is returned, meaning it’s the first time the app has been opened.

In that case, the malware requests the android.permission.RECEIVE_SMS permission to gain access to read newly received SMS messages. The app mimics a system settings app with a gear icon to trick the victim into thinking that the request and the app itself are legitimate.

Once the user grants the required permission, they are presented with a custom dialog prompting them to enter their phone number.

Custom dialog box prompts for a phone number (new version on the left, earlier version on the right)

After the victim enters their phone number and clicks “Next”, this number along with the device’s brand and model is collected and assembled into a string to be later sent to a C2. A message with Mr. Tria’s contact is also added to this string.

Building the required strings before sending them to the bot

The malware then communicates with the SendMessage Telegram API to send the collected information to one of the threat actor’s Telegram bots, as shown below.

Sending messages to the bot

In most cases we’ve seen in this campaign, the attackers used a different Telegram bot for each sample, although we managed to find a few that shared the same Telegram bot.

Meanwhile, the app updates its SharedPreferences object to record the fact that it has been opened before, preventing it from starting with the IntroActivity function again on subsequent launches.

Main activity

After completing the initial execution flow, or whenever the app is opened again, the main activity of Tria Stealer is invoked using an intent.

During this process, the app requests all permissions declared in its manifest:

android.permission.READ_SMS;
android.permission.RECEIVE_SMS;
android.permission.INTERNET;
android.permission.ACCESS_NETWORK_STATE;
android.permission.READ_PHONE_STATE;
android.permission.READ_CALL_LOG;
android.permission.SYSTEM_ALERT_WINDOW;
android.permission.WAKE_LOCK;
android.permission.RECEIVE_BOOT_COMPLETED;
android.permission.FOREGROUND_SERVICE.

These permissions allow the malware to access messaging and calls data and collect other information, such as the network state.

In newer variants, an additional permission, android.permission.BIND_NOTIFICATION_LISTENER_SERVICE, is declared in the manifest. This permission is utilized to intercept messages and emails via notifications.

The app then sends a message to the Telegram bot, indicating that the malicious app has been opened by the victim, thus notifying the attackers.

Building strings indicating the malicious app is opened

Moreover, in this main activity, the app runs a background service designed to open the built-in system settings app using an intent. This occurs when the victim opens the app, convincing the victim that they are accessing the legitimate system settings.

SMS and call monitor

In all samples and variants of Tria Stealer, the malicious APK utilizes the BroadcastReceiver function to monitor new incoming messages and call activities through two components named SMSMonitor and CallMonitor. SMSMonitor captures SMS information, including the message content, sender’s phone number, and SIM slot details. CallMonitor tracks incoming call activities and, like SMSMonitor, extracts such details as the caller’s phone number and SIM slot (for dual SIM devices). The malware also collects additional details, including the current battery level of the victim’s phone, which is possible to do via either of these components.

Then the sample processes all collected data and combines it into a single message to send to the Telegram bot.

Building strings for retrieving SMS content

The threat actor uses this activity mostly to take over WhatsApp, Telegram or other accounts by reading SMS messages containing OTP/TAC codes.

App messages and mail stealer

In the newer variant of Tria Stealer, we discovered that the threat actor had developed an additional feature to steal personal messages and emails from the packages related to a number of apps, including the following:

Package Name	App Name
com.whatsapp	WhatsApp
com.whatsapp.w4b	WhatsApp Business
com.google.android.apps.messaging	Google Messages
com.samsung.android.messaging	Samsung Messages
com.android.mms	Default MMS
com.google.android.gm	Gmail
com.microsoft.office.outlook	Outlook
com.yahoo.mobile.client.android.mail	Yahoo Mail

The threat actor steals messages by intercepting notifications from these apps. The onNotificationPosted function in a custom class named AppNotificationListener is triggered whenever a new notification is posted by one of the targeted apps.

onNotificationPosted function

Once a notification is received, the malware retrieves the app name that matches the packageName property of the notification. If the app is not recognized, it is labeled as “Unknown App”. Then the malware proceeds to extract the notification content and combines it with the app and contact names, device information (brand and model), and the target phone number into a formatted string. Once generated, this string is sent as a message to the Telegram bot.

Building a message to be sent to the bot

As suggested by our observations, the threat actor creates and uses separate Telegram bots for handling different types of stolen data. One bot is used for collecting texts from messaging apps and emails, while another handles SMS data. As a result, newer variants of the malware include two Telegram bot token IDs.

Account takeover

The threat actor’s main goal is to get full access to victims’ WhatsApp and Telegram accounts. Once compromised, these accounts are used for two main purposes:

Distributing the malicious APK to the targets’ contacts through group chats and direct messages, thereby expanding the pool of victims.
Impersonating the account owners to request money transfers from their contacts to the threat actor’s bank account.

Furthermore, we assume that by intercepting SMS messages, the threat actor was also able to sign in to various platforms using the victims’ accounts to inflict further damage.

The stolen information also could be exploited for other malicious activities, such as accessing online banking accounts, resetting passwords for specific platforms, or compromising services that rely on instant message or email authentication.

Attribution

We assume with high confidence that the threat actor is Indonesian-speaking, because some strings included in the messages sent to the Telegram bot are written in Indonesian, for example: “APLIKASI DI BUKA LAGI” (translated as “APPLICATION REOPENED”).

Victimology

In this campaign, we did not observe any specific targeting of individual users. However, the threat actor focuses on individuals in Malaysia and Brunei. We saw a spike in the number of detects in mid-2024, but Tria Stealer continues to be detected in January 2025.

Different campaign from UdangaSteal

In 2023 and early 2024, our researchers observed a very similar campaign under the detection name HEUR:Trojan–Banker.AndroidOS.UdangaSteal, primarily targeting victims in Indonesia, Malaysia and India to steal SMS data and exfiltrate it to Telegram bots hosted as a C2. In this campaign, the threat actor heavily targeted Indonesian and Indian victims and utilized various lure themes, including the following:

wedding invitations;
parcel delivery;
credit card transactions;
government job offers;
religious events;
annual tax charges;
customer support;
electricity bills;
government initiatives for farmers;
vehicle registration system for Indian users.

However, we are not attributing the current Tria Stealer campaign to the same threat actor associated with UdangaSteal, as the APK code between the two malware campaigns looks different, the Telegram bot naming patterns are also different, and the victimology varies compared to this UdangaSteal malware campaign. Moreover, in the Tria Stealer campaign, the threat actor upgraded their malware to not only steal SMS messages but also to target personal communications, including data from WhatsApp and email apps. This contrasts with the UdangaSteal malware, where the threat actor consistently used the same tactics from its rise in 2023 till late 2024 without any changes.

Conclusion

The Tria Stealer campaign remains active, targeting more victims in Malaysia and Brunei. The attackers employ phishing techniques to spread the APK, allowing them to spy on victims’ personal messages and emails. According to our observations, the threat actor uses the stolen data to obtain security codes for hijacking victims’ WhatsApp and Telegram accounts which will be used for distributing the malicious APK to the targets’ contacts. Accessing security codes also could enable the attackers to take over and log in to victims’ other online accounts to extend the scope of their malicious activities.

We assess with medium confidence that the threat actor will likely continue targeting users in Malaysia and Brunei in the near future, aiming to hijack new WhatsApp and Telegram accounts and take over accounts with other services to pursue malicious activities. To protect against such threats, we strongly advise against installing apps from untrusted sources and recommend using reliable security solutions for mobile devices.

Indicator of Compromises

Tria Stealer

File hashes

Telegram bots

7112694573:AAFHHrDEy-iwmlyYB7JZDXS6iwCFq6NMkEc	adffg_404bot
7081364304:AAG6FcxeZtkc98RlhjLXnP2LDMG4DEy9C6s	Beinfooo_bot
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7462160646:AAELOVCtGCZP6bN3j-2n13BFj1-m2X0csCg	bukanspamhuy_bot
6638550564:AAGalDVGRDkstOZ03vpl3nTUn6g0qYnHSJk	Dalllez77_bot
7048703894:AAFA64ghS6hE3H96SyMLz_7nplj7beTn6kM	demo_hey_bot
6460021704:AAEqy8oTs2aFCBf6Z1_4oeSVSeRuHkf8BJc	dmspmbot
7182267203:AAFnGr0m9lAgsrvxrKyMNwykdwBx3GES3g4	EmpatLima454545_Bot
7183780742:AAFyUu_yFQ7WzspK_tPe_oTEtqeBbuzeVQs	Erorrrrr_bot
7004348743:AAFjC2fdmkdlobDOS_CDs-4zlLdcM4ZLIU4	geeeeyl_bot
7155428051:AAGo5mBcUNlv5GXesDomY0kmICv57QK5Gdc	Ma7ko_bot
6997362162:AAGq-yxpaI7ciRwMovIEfq_vKRiERtL9h_c	Mr_Boy999_bot
7427152480:AAGdMhWSn6lkLur6qlG0N6q92i0PFvcaiN8	newsinfohuy_bot
7428836801:AAEhvj2eEKUjH5Rg76sr02tm6ubgqmpVXNA	okeetessuc_bot
6663431103:AAEJYxnkOaaSD0yuLjll49B3UUlHsr0T35A	tcausmytc_bot
7245598298:AAHcn9EndJ-peGQD6a4wBNXhx9HaYmXDGoA	tcththsatu_bot
6971388615:AAHEFDoHF3E6CdbAWgC6dg6wYg741RRWXAw	venitcuc_bot
7123651826:AAGYmP8pUZUzqshR-oOQndFM-u25A7F5ams	Wa86_bot
7052659548:AAEAiHIDq_Wtr0sy9DSUlx2Zi4Rp2PaEGhA	weachatt_bot
6373705951:AAHgGVw_OXvXbuZHFAQNlWiARRETgRuRYU4	Weheebot
7081353385:AAFxw7UkQUiJPhJ-h4Nk2ZV02_JVcsiy-8U	workinghus_bot
6931159844:AAF2DDIwXvWyvLbOKtuptPfE__AW_QbAAgc	Xin69999_bot
7127627140:AAHu-WX7jnhIIDI7Qv21omXALAV4DJ-sa2Y	heyt077_bot
7231091758:AAHEo7QNythFlHOa6s_gpSDzvb1oVYEMM5M	Heyt378_bot
7545156259:AAGILcWHcP6MiYgEmRCZbm3-Sh2UwP2CPJw	Bijiontameledak_bot
7362820488:AAEaoqD6ZObICBdNU9Ih_RoAggFWXPnAwnc	Heysatu_bot
7339265971:AAFp_alNY0L6BXrNo_BX6W15SSloZ5XgBaU	heyt721_bot
7452580223:AAHLvKsBrhbzyjvF2mK6Ac4X67n1rhBFYt8	heyapp721_bot
7270774627:AAEe7BnL1hGMr83Dn-wy1lwMX-x1d_d_ZXo	Heywhatssatu_bot
7387092110:AAHBMveHZERcyzu9tw4Bh8__f0PmRjRmph4	Heyapp378_bot
6457485799:AAF_5mQnxoeIRqzK3B3PPv_gFcM5-g8T2cY	Fash66kkkkkkk_bot
6765461490:AAEJR-V_QAPlAMvGy3ELM9V0hVs1IcDjIk0	Hehahaahahbotfash_bot

UdangaSteal

File hashes

daa30cd6699c187bb891448b89be1340
162ed054914a8c71ad02126693c40997
9698fa3e7e64272ff79c057e3b8be5d8
9a0147d4c9d6ed3be82825ce35fdb4ee
e4da1332303b93f11d40787f7a79b917
4ff2572a40300c0cce4327ec34259902

MIL OSI Economics –

January 30, 2025

MIL-OSI Global: Corporate transparency is a step toward a greener economy, but further change is needed

Source: The Conversation – France – By Madlen Sobkowiak, Associate Professor in Social and Environmental Accounting, EDHEC Business School

Could corporate transparency be one of the solutions to climate change? Or, at the very least, could it be a way to hold businesses accountable for their environmental impacts? Not by itself, according to our paper, “Shaping nature outcomes in corporate settings”, recently published by The Royal Society.

Ninety-four percent of investors are doubtful of the validity of corporate sustainability reporting, citing unsupported claims, according to PwC’s Global Investor Survey 2023. And their skepticism is not unfounded.

Indeed, our paper shows that while corporate transparency is a crucial first step toward a more sustainable economy, it alone will not be enough to drive positive corporate nature outcomes. For change to actually happen, three critical steps are needed: linking corporate actions to their environmental impact, embedding nature outcomes into daily operations and aligning financial incentives with ecological goals.

The risk of greenwashing

Even if there is a growing push for nature-related regulation, and especially nature-related disclosures, companies have only started to provide information about their nature-related performance, impacts and risks. This is the essence of the European Union’s Sustainable Finance Disclosures Regulation (SFDR) that came into effect in 2021 and the Corporate Sustainability Reporting Directive (CSRD) that came into effect in 2023. Both initiatives aim to strengthen transparency obligations on environmental, sustainable and governance (ESG) issues within the bloc. This is characteristic of a certain kind of governance, which uses mandated information disclosure as a way of regulating behaviour.

Does it work? Not on its own, as companies still struggle to fully understand their impacts on nature or the impacts of their supply chain. And they often lack the knowledge and expertise to navigate the evolving and complex landscape of national and international sustainability reporting requirements, let alone take meaningful action. This could result in the dilution of the concept of transparency and a rise in greenwashing, the process of making false or misleading environmental claims.

Greenwashing might distort relevant information that investors require to make decisions and, in the end, erode their trust in sustainability-related products and/or practices. A study commissioned by the European Union in 2023 found that 53% of green claims on products and services make vague, misleading or even unfounded claims, and 40% have no supporting evidence. In the United States, 68% of executives admitted to being guilty of greenwashing. In this context, the standardisation of sustainability reporting in the EU is necessary and overdue.

Three key factors for corporate accountability

My co-authors and I identify three conditions for information disclosures to positively impact nature outcomes: linking companies and ecosystems, translating aspiration into operations and shaping financial-system responsiveness.

Our current approach, which uses disclosure requirements to drive company behaviour, may be limited, because providing information does not in itself encourage companies to fully achieve nature-positive impacts.

Linking companies and ecosystems

This first condition means putting in place radical traceability that links company actions to outcomes in particular settings. This would create the potential for companies to be held accountable regardless of whether they publish data, as well as incentives for them to produce their own data rather than having to respond to requirements created by third parties.

One example is Cargill, a supplier for the food sector. In the company’s “South American Soy Sustainability Report”, it traces the soy it produces and purchases through its supply chain with locations in several South American countries. The sites are geospatially located with data on the degree of deforestation in each polygon obtained from satellite images. In this respect, traceability creates the possibility for nature accounts.

Translating aspirations into operations

This approach is about developing routines and tools that translate strategic intent into on-the-ground behaviour: in other words, linking knowledge and action. Even if companies are well informed about their impacts on nature, translating strategies to reduce impacts and restore nature into operational targets might be difficult. In this regard, it might be useful to translate ambitions into specific metrics that, once embedded in companies, create visibilities and routines that focus on making a change.

For example, Holcim Spain, an aggregates and cement producer, has developed a monitoring system to evaluate restoration processes by studying nature assets. It has also studied resources based on field samples by cataloguing flora, identifying vegetation, establishing the distribution of birds and insects, assessing the status of biodiversity in the quarry and developing strategies and action plans. Monitoring of activities has been undertaken using a biodiversity index developed in collaboration with the World Wide Fund for Nature (WWF) and the International Union for Conservation of Nature (IUCN)‘s Biodiversity Indicator and Reporting System.

Shaping financial-system responsiveness

The final requirement relates to identifying how financial-system actors can enable company actions. To put it another way, it is about aligning financial incentives with environmental goals.

Company owners and those who fund companies are the most powerful financial actors in this context. Financial stability relies on well-functioning ecosystems; indeed, recent studies have shown that climate change threatens it. Information governance could be used to draw investor attention to nature impacts, mirroring more developed interventions. An example of such a mechanism is the EU’s SFDR, which requires banks, insurers and asset managers to provide information about how they address sustainability risks.

Another example comes from ASN Bank, which specialises in sustainability banking products and has developed a biodiversity footprinting tool for financial institutions to estimate the impacts of an investment portfolio and identify hotspots therein.

Better information, less greenwashing

The more solid, standardised and transparent corporate sustainability information is shared, the better we can combat the greenwashing that undermines the credibility of sustainability efforts. But, while disclosure is key, it is time we take its limits into account. For businesses, this implies adopting governance approaches that shape action and ceasing to rely solely on reporting.

Madlen Sobkowiak ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d’une organisation qui pourrait tirer profit de cet article, et n’a déclaré aucune autre affiliation que son organisme de recherche.

– ref. Corporate transparency is a step toward a greener economy, but further change is needed – https://theconversation.com/corporate-transparency-is-a-step-toward-a-greener-economy-but-further-change-is-needed-243215

MIL OSI – Global Reports –

January 30, 2025

MIL-OSI Banking: VC funding in China shrinks 21.7% to $35.2 billion in 2024, finds GlobalData

Source: GlobalData

VC funding in China shrinks 21.7% to $35.2 billion in 2024, finds GlobalData

Posted in Business Fundamentals

A total of 2,537 venture capital (VC) funding deals were announced in China during 2024 while the total disclosed funding value of these deals stood at $35.2 billion. This represents a year-on-year (YoY) decline of 23.2% in VC deal volume, whereas the total disclosed funding value fell by 21.7% compared to the previous year, according to GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Deals Database revealed that a total of 3,305 VC deals were announced in China during 2023 while the total disclosed funding value of these deals was $45 billion.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “There seems to be a severe dent in investor sentiment during 2024, which reflects in the decline in VC deal volume as well as value. Although it continues to be a key global market for VC funding activity, China’s share has been diminishing and it is more prominent in terms of value.”

China, which accounted for 16.6% of the total number of VC deals announced globally during 2023, accounted for 15.4% share of deal volume in 2024. Meanwhile, China saw its share of the total disclosed funding value fall from 18.9% in 2023 to 12.9% in 2024.

Bose adds: “The impact in terms of value can also be understood from that fact that China experienced a decline in the number of big-ticket deals announcement in 2024 compared to the previous year.”

For instance, the number of VC deals valued more than or equal to $100 million announced in China fell from 87 in 2023 to 63 in 2024.

Bose concludes: “The sharp decline in VC activity in China reflects a combination of waning investor confidence and broader economic uncertainties. The reduction in high-value deals further underscores the need for strategic recalibration, as investors increasingly seek opportunities in emerging sectors with higher growth potential.”

Note: Historic data may change in case some deals get added to previous months because of a delay in disclosure of information in the public domain.

MIL OSI Global Banks –

January 30, 2025

MIL-OSI Banking: UK VC funding surges 16.3% to $16.6 billion in 2024 despite fewer deals, reveals GlobalData

Source: GlobalData

UK VC funding surges 16.3% to $16.6 billion in 2024 despite fewer deals, reveals GlobalData

Posted in Business Fundamentals

The UK’s venture capital (VC) market experienced a decline in the number of deals announced in 2024, with 1,209 deals compared to 1,289 in 2023. Despite this, the total funding value rose by 16.3%, reaching $16.6 billion. This shift reflects a growing trend among VC firms to prioritize high-value investments in fewer, more promising startups, according to GlobalData a leading data and analytics company.

An analysis of GlobalData’s Deals Database revealed that the UK witnessed the announcement of a total of 1,289 VC deals during 2023 while the disclosed funding value of these deals stood at $14.2 billion.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The growth in funding value despite a decline in deal volume showcases a trend wherein VC firms seem to be weighing quality over quantity and have put in big money in few promising startups. In fact, 2024 saw a growth in the number of big-ticket deals (≥ $100 million) from 23 in 2023 to 29.”

Bose adds: “The UK, apart from being the top European market for VC funding activity, is also among the top five markets globally in terms of both deal volume and value.”

The UK accounted for 7.3% of the total number of VC deals announced globally during 2024 while its share in terms of the total funding value stood at 6.1%.

Some of the notable VC funding deals announced in the UK during 2024 included $1.05 billion worth of funding raised by Wayve Technologies, $1 billion raised by Abound, $500 million by Core Power, $431 million raised by Monzo, $370 million by Lighthouse, and $267 million worth of funding raised by Zepz.

Bose concludes: “The increase in big-ticket deals underscores strong confidence in the UK’s innovation ecosystem, reinforcing its position as a global VC hotspot. As funding strategies evolve, the market’s resilience and ability to attract large-scale investments will be key in shaping the future of venture capital in the region.”

Note: Historic data may change in case some deals get added to previous months because of a delay in disclosure of information in the public domain.

MIL OSI Global Banks –

January 30, 2025

MIL-OSI: STMicroelectronics Reports Q4 and FY 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

PR No: C3309C

STMicroelectronics Reports Q4 and FY 2024 Financial Results

Q4 net revenues $3.32 billion; gross margin 37.7%; operating margin 11.1%; net income $341 million
FY net revenues $13.27 billion; gross margin 39.3%; operating margin 12.6%; net income $1.56 billion
Business outlook at mid-point: Q1 net revenues of $2.51 billion and gross margin of 33.8%
Start of the company-wide program to resize global cost base*

Geneva, January 30, 2025 – STMicroelectronics N.V. (“ST”) (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the fourth quarter ended December 31, 2024. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).

ST reported fourth quarter net revenues of $3.32 billion, gross margin of 37.7%, operating margin of 11.1%, and net income of $341 million or $0.37 diluted earnings per share.

Jean-Marc Chery, ST President & CEO, commented:

“FY24 revenues decreased 23.2% to $13.27 billion. Operating margin was 12.6% compared to 26.7% in FY23 and net income decreased 63.0% to $1.56 billion. We invested $2.53 billion in Net Capex (non-U.S. GAAP) while delivering free cash flow (non-U.S. GAAP) of $288 million.”
“Q4 net revenues were in line with the mid-point of our business outlook range driven by higher revenues in Personal Electronics offset by lower revenues in Industrial, while Automotive and CECP were as expected. Q4 gross margin of 37.7% was broadly in line with the mid-point of our business outlook range.”
“Our book-to-bill ratio remained below 1 in Q4 as we continued to face a delayed recovery and inventory correction in Industrial and a slowdown in Automotive, both particularly in Europe.”
“Our first quarter business outlook, at the mid-point, is for net revenues of $2.51 billion, decreasing year-over-year by 27.6% and decreasing sequentially by 24.4%; gross margin is expected to be about 33.8%, impacted by about 500 basis points of unused capacity charges.”
“For 2025, we plan to invest between $2.0 to $2.3 billion in Net Capex (non-U.S. GAAP).”

Quarterly Financial Summary (U.S. GAAP)

(US$ m, except per share data)	Q4 2024	Q3 2024	Q4 2023	Q/Q	Y/Y
Net Revenues	$3,321	$3,251	$4,282	2.2%	-22.4%
Gross Profit	$1,253	$1,228	$1,949	2.1%	-35.7%
Gross Margin	37.7%	37.8%	45.5%	-10 bps	-780 bps
Operating Income	$369	$381	$1,023	-3.3%	-64.0%
Operating Margin	11.1%	11.7%	23.9%	-60 bps	-1,280 bps
Net Income	$341	$351	$1,076	-2.6%	-68.3%
Diluted Earnings Per Share	$0.37	$0.37	$1.14	0%	-67.5%

* For each of the concerned countries, the start of the program will take place in accordance with applicable regulations.

Annual Financial Summary (U.S. GAAP)

(US$ m, except earnings per share data)	FY2024	FY2023	Y/Y
Net Revenues	$13,269	$17,286	-23.2%
Gross Profit	$5,220	$8,287	-37.0%
Gross Margin	39.3%	47.9%	-860 bps
Operating Income	$1,676	$4,611	-63.7%
Operating Margin	12.6%	26.7%	-1,410 bps
Net Income	$1,557	$4,211	-63.0%
Diluted Earnings Per Share	$1.66	$4.46	-62.8%

Fourth Quarter 2024 Summary Review

Reminder: On January 10, 2024, ST announced a new organization which implied a change in segment reporting starting Q1 2024. Prior year comparative periods have been adjusted accordingly. See Appendix for more detail.

Net Revenues by Reportable Segment (US$ m)	Q4 2024	Q3 2024	Q4 2023	Q/Q	Y/Y
Analog products, MEMS and Sensors (AM&S) segment	1,198	1,185	1,418	1.1%	-15.5%
Power and discrete products (P&D) segment	752	807	965	-6.8%	-22.1%
Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group	1,950	1,992	2,383	-2.1%	-18.2%
Microcontrollers (MCU) segment	887	829	1,272	7.0%	-30.2%
Digital ICs and RF Products (D&RF) segment	481	426	623	13.0%	-22.8%
Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group	1,368	1,255	1,895	9.0%	-27.8%
Others	3	4	4	–	–
Total Net Revenues	$3,321	$3,251	$4,282	2.2%	-22.4%

Net revenues totaled $3.32 billion, representing a year-over-year decrease of 22.4%. Year-over-year net sales to OEMs and Distribution decreased 19.8% and 28.7%, respectively. On a sequential basis, net revenues increased 2.2%, in line with the mid-point of ST’s guidance.

Gross profit totaled $1.25 billion, representing a year-over-year decrease of 35.7%. Gross margin of 37.7%, 30 basis points below the mid-point of ST’s guidance, decreased 780 basis points year-over-year, mainly due to product mix and, to a lesser extent, to sales price and higher unused capacity charges.

Operating income decreased 64.0% to $369 million, compared to $1.02 billion in the year-ago quarter. ST’s operating margin decreased 1,280 basis points on a year-over-year basis to 11.1% of net revenues, compared to 23.9% in the fourth quarter of 2023.

By reportable segment¹, compared with the year-ago quarter:

In Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group:

Analog products, MEMS and Sensors (AM&S) segment:

Revenue decreased 15.5% mainly due to decreases in Analog and in Imaging.
Operating profit decreased by 41.2% to $176 million. Operating margin was 14.7% compared to 21.1%.

Power and Discrete products (P&D) segment:

Revenue decreased 22.1%.
Operating profit decreased by 63.7% to $89 million. Operating margin was 11.9% compared to 25.4%.

In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:

Microcontrollers (MCU) segment:

Revenue decreased 30.2% mainly due to a decrease in GP MCU.
Operating profit decreased by 66.4% to $127 million. Operating margin was 14.3% compared to 29.8%.

Digital ICs and RF products (D&RF) segment:

Revenue decreased 22.8% mainly due to a decrease in ADAS (automotive ADAS and infotainment).
Operating profit decreased by 33.2% to $149 million. Operating margin was 31.0% compared to 35.7%.

Net income and diluted Earnings Per Share decreased to $341 million and $0.37 respectively compared to $1.08 billion and $1.14 respectively in the year-ago quarter. As a reminder, the fourth quarter 2023 net income included a one-time non-cash income tax benefit of $191 million.

Cash Flow and Balance Sheet Highlights

				Trailing 12 Months
(US$ m)	Q4 2024	Q3 2024	Q4 2023	Q4 2024	Q4 2023	TTM Change
Net cash from operating activities	681	723	1,480	2,965	5,992	-50.5%
Free cash flow (non-U.S. GAAP)²	128	136	652	288	1,774	-83.8%

Net cash from operating activities was $681 million in the fourth quarter compared to $1.48 billion in the year-ago quarter. For the full-year 2024, net cash from operating activities decreased 50.5% to $2.97 billion, which represents 22.3% of total revenues.

Net Capex (non-U.S. GAAP), were $470 million in the fourth quarter and $2.53 billion for the full year 2024. In the respective year-ago periods, net capital expenditures were $798 million and $4.11 billion.

Free cash flow (non-U.S. GAAP) was $128 million and $288 million in the fourth quarter and full year 2024, respectively, compared to $652 million and $1.77 billion in the year-ago respective periods.

Inventory at the end of the fourth quarter was $2.79 billion, compared to $2.88 billion in the previous quarter and $2.70 billion in the year-ago quarter. Days sales of inventory at quarter-end was 122 days, compared to 130 days in the previous quarter, and 104 days in the year-ago quarter.

In the fourth quarter, ST paid cash dividends to its stockholders totaling $88 million and executed a $92 million share buy-back, as part of its current share repurchase program.

ST’s net financial position (non-U.S. GAAP) was $3.23 billion as of December 31, 2024, compared to $3.18 billion as of September 28, 2024 and reflected total liquidity of $6.18 billion and total financial debt of $2.95 billion. Adjusted net financial position (non-U.S. GAAP), taking into consideration the effect on total liquidity of advances from capital grants for which capital expenditures have not been incurred yet, stood at $2.85 billion as of December 31, 2024.

Corporate developments

In Q4, we announced the launch of a new company-wide program to reshape our manufacturing footprint accelerating our wafer fab capacity to 300mm Silicon (Agrate and Crolles) and 200mm Silicon Carbide (Catania) and resizing our global cost base.

This program should result in strengthening our capability to grow our revenues with an improved operating efficiency resulting in annual cost savings in the high triple-digit million-dollar range exiting 2027. Specifically in terms of operating expenses (SG&A and R&D), ST expects annual cost savings totaling $300 to 360 million, exiting 2027, compared to the cost base of 2024.

Business Outlook

ST’s guidance, at the mid-point, for the 2025 first quarter is:

Net revenues are expected to be $2.51 billion, a decrease of 24.4% sequentially, plus or minus 350 basis points.
Gross margin of 33.8%, plus or minus 200 basis points.
This outlook is based on an assumed effective currency exchange rate of approximately $1.06 = €1.00 for the 2025 first quarter and includes the impact of existing hedging contracts.
The first quarter will close on March 29, 2025.

Conference Call and Webcast Information

ST will conduct a conference call with analysts, investors and reporters to discuss its fourth quarter and full year 2024 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST’s website, https://investors.st.com, and will be available for replay until February 14, 2025.

Use of Supplemental Non-U.S. GAAP Financial Information

This press release contains supplemental non-U.S. GAAP financial information.

Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with ST’s consolidated financial statements prepared in accordance with U.S. GAAP.

See the Appendix of this press release for a reconciliation of ST’s non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures.

Forward-looking Information

Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management’s current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated by such statements due to, among other factors:

changes in global trade policies, including the adoption and expansion of tariffs and trade barriers, that could affect the macro-economic environment and adversely impact the demand for our products;
uncertain macro-economic and industry trends (such as inflation and fluctuations in supply chains), which may impact production capacity and end-market demand for our products;
customer demand that differs from projections which may require us to undertake transformation measures that may not be successful in realizing the expected benefits in full or at all;
the ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
changes in economic, social, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macroeconomic or regional events, geopolitical and military conflicts, social unrest, labor actions, or terrorist activities;
unanticipated events or circumstances, which may impact our ability to execute our plans and/or meet the objectives of our R&D and manufacturing programs, which benefit from public funding;
financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
the loading, product mix, and manufacturing performance of our production facilities and/or our required volume to fulfill capacity reserved with suppliers or third-party manufacturing providers;
availability and costs of equipment, raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations (including increasing costs resulting from inflation);
the functionalities and performance of our IT systems, which are subject to cybersecurity threats and which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology;
theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of data privacy legislation;
the impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, the effects of climate change, health risks and epidemics or pandemics in locations where we, our customers or our suppliers operate;
increased regulation and initiatives in our industry, including those concerning climate change and sustainability matters and our goal to become carbon neutral by 2027 on scope 1 and 2 and partially scope 3;
epidemics or pandemics, which may negatively impact the global economy in a significant manner for an extended period of time, and could also materially adversely affect our business and operating results;
industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers; and
the ability to successfully ramp up new programs that could be impacted by factors beyond our control, including the availability of critical third-party components and performance of subcontractors in line with our expectations.

Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as “believes”, “expects”, “may”, “are expected to”, “should”, “would be”, “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.

Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2024. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this press release as anticipated, believed or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.

Unfavorable changes in the above or other factors listed under “Item 3. Key Information — Risk Factors” from time to time in our Securities and Exchange Commission (“SEC”) filings, could have a material adverse effect on our business and/or financial condition.

About STMicroelectronics

At ST, we are over 50,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain with state-of-the-art manufacturing facilities. An integrated device manufacturer, we work with more than 200,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. Our technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of cloud-connected autonomous things. We are committed to achieving our goal to become carbon neutral on scope 1 and 2 and partially scope 3 by 2027. Further information can be found at www.st.com.

For further information, please contact:

INVESTOR RELATIONS:
Jérôme Ramel
EVP Corporate Development & Integrated External Communication
Tel: +41 22 929 59 20
jerome.ramel@st.com

MEDIA RELATIONS:
Alexis Breton
Corporate External Communications
Tel: + 33 6 59 16 79 08
alexis.breton@st.com

STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of U.S. dollars, except per share data ($))

	Three months ended
	December 31,	December 31,
	2024	2023
	(Unaudited)	(Unaudited)

Net sales	3,301	4,262
Other revenues	20	20
NET REVENUES	3,321	4,282
Cost of sales	(2,068)	(2,333)
GROSS PROFIT	1,253	1,949
Selling, general and administrative expenses	(420)	(416)
Research and development expenses	(523)	(521)
Other income and expenses, net	59	11
Total operating expenses	(884)	(926)
OPERATING INCOME	369	1,023
Interest income, net	52	57
Other components of pension benefit costs	(3)	(5)
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST	418	1,075
Income tax (expense) benefit	(82)	6
NET INCOME	336	1,081
Net loss (income) attributable to noncontrolling interest	5	(5)
NET INCOME ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS	341	1,076

EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS	0.38	1.19
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS	0.37	1.14

NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS	935.7	942.9

STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of U.S. dollars, except per share data ($))

	Twelve months ended
	December 31,	December 31,
	2024	2023
	(Unaudited)	(Audited)

Net sales	13,217	17,239
Other revenues	52	47
NET REVENUES	13,269	17,286
Cost of sales	(8,049)	(8,999)
GROSS PROFIT	5,220	8,287
Selling, general and administrative expenses	(1,649)	(1,631)
Research and development expenses	(2,077)	(2,100)
Other income and expenses, net	182	55
Total operating expenses	(3,544)	(3,676)
OPERATING INCOME	1,676	4,611
Interest income, net	218	171
Other components of pension benefit costs	(15)	(19)
Loss on financial instruments, net	(1)	–
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST	1,878	4,763
Income tax expense	(313)	(541)
NET INCOME	1,565	4,222
Net income attributable to noncontrolling interest	(8)	(11)
NET INCOME ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS	1,557	4,211

EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS	1.73	4.66
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS	1.66	4.46

NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS	939.3	944.2


STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
As at	December 31,	September 28,	December 31,
In millions of U.S. dollars	2024	2024	2023
	(Unaudited)	(Unaudited)	(Audited)
ASSETS
Current assets:
Cash and cash equivalents	2,282	3,077	3,222
Short-term deposits	1,450	977	1,226
Marketable securities	2,452	2,242	1,635
Trade accounts receivable, net	1,749	1,730	1,731
Inventories	2,794	2,875	2,698
Other current assets	1,007	1,062	1,295
Total current assets	11,734	11,963	11,807
Goodwill	290	303	303
Other intangible assets, net	346	354	367
Property, plant and equipment, net	10,877	11,258	10,554
Non-current deferred tax assets	464	547	592
Long-term investments	71	20	22
Other non-current assets	961	1,071	808
	13,009	13,553	12,646
Total assets	24,743	25,516	24,453

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	990	1,003	217
Trade accounts payable	1,323	1,585	1,856
Other payables and accrued liabilities	1,306	1,327	1,525
Dividends payable to stockholders	88	177	54
Accrued income tax	66	116	78
Total current liabilities	3,773	4,208	3,730
Long-term debt	1,963	2,112	2,710
Post-employment benefit obligations	377	397	372
Long-term deferred tax liabilities	47	60	54
Other long-term liabilities	904	935	735
	3,291	3,504	3,871
Total liabilities	7,064	7,712	7,601
Commitment and contingencies
Equity
Parent company stockholders’ equity
Common stock (preferred stock: 540,000,000 shares authorized, not issued; common stock: Euro 1.04 par value, 1,200,000,000 shares authorized, 911,281,920 shares issued, 898,175,408 shares outstanding as of December 31, 2024)	1,157	1,157	1,157
Additional Paid-in Capital	3,088	3,032	2,866
Retained earnings	13,459	13,118	12,470
Accumulated other comprehensive income	236	657	613
Treasury stock	(491)	(400)	(377)
Total parent company stockholders’ equity	17,449	17,564	16,729
Noncontrolling interest	230	240	123
Total equity	17,679	17,804	16,852
Total liabilities and equity	24,743	25,516	24,453


STMicroelectronics N.V.

SELECTED CASH FLOW DATA

Cash Flow Data (in US$ millions)	Q4 2024	Q3 2024	Q4 2023

Net Cash from operating activities	681	723	1,480
Net Cash used in investing activities	(1,259)	(601)	(1,610)
Net Cash from (used in) financing activities	(209)	(142)	336
Net Cash increase (decrease)	(795)	(15)	211

Selected Cash Flow Data (in US$ millions)	Q4 2024	Q3 2024	Q4 2023

Depreciation & amortization	451	440	414
Net payment for Capital expenditures	(501)	(601)	(798)
Dividends paid to stockholders	(88)	(80)	(60)
Change in inventories, net	(2)	(17)	219

Appendix
ST
New organization

On January 10, 2024, ST announced a new organization to deliver enhanced product development innovation and efficiency, time-to-market as well as customer focus by end market. This new organization implies a change in segment reporting which is applied from January 1, 2024.

ST moved from three reportable segments (ADG, AMS and MDG) to four reportable segments as follows:

In Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group:
- Analog products, MEMS and Sensors (AM&S) segment, comprised of ST analog products, MEMS sensors and actuators, and optical sensing solutions.
- Power and Discrete products (P&D) segment comprised of discrete and power transistor products.

In this Press Release, “Analog” refers to ST analog products, “MEMS” to MEMS sensors and actuators and “Imaging” to optical sensing solutions.

In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:
- Microcontrollers (MCU) segment, comprised of general-purpose and automotive microcontrollers, microprocessors and connected security products (including EEPROM).
- Digital ICs and RF Products (D&RF) segment, comprised of automotive ADAS, infotainment, RF and communications products.

In this Press release, “Auto MCU” refers to Automotive microcontrollers and microprocessors, “GP MCU” to general purpose microcontrollers and microprocessors, “Connected Security” to connected security products (including EEPROM), “ADAS” to automotive ADAS and infotainment, “RF Communications” to RF and communications products.

Prior year quarters comparative information has been adjusted accordingly.

(Appendix – continued)
ST – Supplemental Financial Information

	Q4 2024	Q3 2024	Q2 2024	Q1 2024	Q4 2023	FY 2024	FY 2023
Net Revenues By Market Channel (%)
Total OEM	73%	76%	73%	70%	70%	73%	66%
Distribution	27%	24%	27%	30%	30%	27%	34%

€/$ Effective Rate	1.09	1.08	1.08	1.09	1.08	1.08	1.08

Reportable Segment Data (US$ m)
Analog products, MEMS and Sensors (AM&S) segment
– Net Revenues	1,198	1,185	1,165	1,217	1,418	4,764	5,478
– Operating Income	176	175	144	185	300	680	1,191
Power and Discrete products (P&D) segment
– Net Revenues	752	807	747	820	965	3,126	3,852
– Operating Income	89	121	110	138	245	458	1,006
Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group
– Net Revenues	1,950	1,992	1,912	2,037	2,383	7,890	9,330
– Operating Income	265	296	254	323	545	1,138	2,197
Microcontrollers (MCU) segment
– Net Revenues	887	829	800	950	1,272	3,466	5,668
– Operating Income	127	116	72	185	378	499	2,018
Digital ICs and RF Products (D&RF) segment
– Net Revenues	481	426	516	475	623	1,898	2,272
– Operating Income	149	114	150	150	223	564	810
Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group
– Net Revenues	1,368	1,255	1,316	1,425	1,895	5,364	7,940
– Operating Income	276	230	222	335	601	1,063	2,828
Others ^(a)
– Net Revenues	3	4	4	3	4	15	16
– Operating Income (Loss)	(172)	(145)	(101)	(107)	(123)	(525)	(414)
Total
– Net Revenues	3,321	3,251	3,232	3,465	4,282	13,269	17,286
– Operating Income	369	381	375	551	1,023	1,676	4,611

^(a)Net revenues of Others include revenues from sales assembly services and other revenues. Operating income (loss) of Others include items such as unused capacity charges, including incidents leading to power outage, impairment and restructuring charges, management reorganization costs, start-up and phase out costs, and other unallocated income (expenses) such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to reportable segments, as well as operating earnings of other products. Others includes:

(US$ m)	*Q4 2024*	*Q3 2024*	*Q2 2024*	*Q1 2024*	*Q4 2023*	*FY 2024*	*FY 2023*
*Unused capacity charges*	*118*	*104*	84	63	57	*370*	*120*

(Appendix – continued)
ST
Supplemental Non-U.S. GAAP Financial Information
U.S. GAAP – Non-U.S. GAAP Reconciliation

The supplemental non-U.S. GAAP information presented in this press release is unaudited and subject to inherent limitations. Such non-U.S. GAAP information is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for U.S. GAAP measurements. Also, our supplemental non-U.S. GAAP financial information may not be comparable to similarly titled non-U.S. GAAP measures used by other companies. Further, specific limitations for individual non-U.S. GAAP measures, and the reasons for presenting non-U.S. GAAP financial information, are set forth in the paragraphs below. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

ST believes that these non-U.S. GAAP financial measures provide useful information for investors and management because they offer, when read in conjunction with ST’s U.S. GAAP financials, (i) the ability to make more meaningful period-to-period comparisons of ST’s on-going operating results, (ii) the ability to better identify trends in ST’s business and perform related trend analysis, and (iii) to facilitate a comparison of ST’s results of operations against investor and analyst financial models and valuations, which may exclude these items.

Net Financial Position and Adjusted Net Financial Position (non-U.S. GAAP measures)

Net Financial Position, a non-U.S. GAAP measure, represents the difference between our total liquidity and our total financial debt. Our total liquidity includes cash and cash equivalents, restricted cash, if any, short-term deposits, and marketable securities, and our total financial debt includes short-term debt and long-term debt, as reported in our Consolidated Balance Sheets. Starting Q4 2023, ST also presents adjusted net financial position as a non-U.S. GAAP measure, to take into consideration the effect on total liquidity of advances received on capital grants for which capital expenditures have not been incurred yet. Reporting periods prior to Q4 2023 are not impacted.

ST believes its Net Financial Position and Adjusted Net Financial Position provide useful information for investors and management because they give evidence of our global position either in terms of net indebtedness or net cash by measuring our capital resources based on cash and cash equivalents, restricted cash, if any, short-term deposits and marketable securities and the total level of our financial debt. Our definitions of Net Financial Position and Adjusted Net Financial Position may differ from definitions used by other companies, and therefore, comparability may be limited.

(US$ m)	Dec 31 2024	Sep 28 2024	June 29 2024	Mar 30 2024	Dec 31 2023
Cash and cash equivalents	2,282	3,077	3,092	3,133	3,222
Short term deposits	1,450	977	975	1,226	1,226
Marketable securities	2,452	2,242	2,218	1,880	1,635
Total liquidity	6,184	6,296	6,285	6,239	6,083
Short-term debt	(990)	(1,003)	(236)	(238)	(217)
Long-term debt ^(a)	(1,963)	(2,112)	(2,850)	(2,875)	(2,710)
Total financial debt	(2,953)	(3,115)	(3,086)	(3,113)	(2,927)
Net Financial Position	3,231	3,181	3,199	3,126	3,156
Advances received on capital grants	(385)	(366)	(402)	(351)	(152)
Adjusted Net Financial Position	2,846	2,815	2,797	2,775	3,004

^(a)Long-term debt contains standard conditions but does not impose minimum financial ratios. Committed credit facilities for $634 million equivalent, are currently undrawn.

(Appendix – continued)

Net Capex and Free Cash Flow (non-U.S. GAAP measures)

ST presents Net Capex as a non-U.S. GAAP measure, which is reported as part of our Free Cash Flow (non-U.S. GAAP measure), to take into consideration the effect of advances from capital grants received on prior periods allocated to property, plant and equipment in the reporting period.

Net Capex, a non-U.S. GAAP measure, is defined as (i) Payment for purchase of tangible assets, as reported plus (ii) Proceeds from sale of tangible assets, as reported plus (iii) Proceeds from capital grants and other contributions, as reported plus (iv) Advances from capital grants allocated to property, plant and equipment in the reporting period.

ST believes Net Capex provides useful information for investors and management because annual capital expenditures budget includes the effect of capital grants. Our definition of Net Capex may differ from definitions used by other companies.

(US$ m)	Q4 2024	Q3 2024	Q2 2024	Q1 2024	Q4 2023	FY 2024	FY 2023
Payment for purchase of tangible assets, as reported	(584)	(669)	(690)	(1,145)	(1,076)	(3,088)	(4,439)
Proceeds from sale of tangible assets, as reported	–	2	1	2	–	5	8
Proceeds from capital grants and other contributions, as reported	83	66	143	149	278	441	320
Advances from capital grants allocated to property, plant and equipment	31	36	18	27	–	111	–
Net Capex	(470)	(565)	(528)	(967)	(798)	(2,531)	(4,111)

Free Cash Flow, which is a non-U.S. GAAP measure, is defined as (i) net cash from operating activities plus (ii) Net Capex plus (iii) payment for purchase (and proceeds from sale) of intangible and financial assets and (iv) net cash paid for business acquisitions, if any.

ST believes Free Cash Flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operations.

Free Cash Flow reconciles with the total cash flow and the net cash increase (decrease) by including the payment for purchases of (and proceeds from matured) marketable securities and net investment in (and proceeds from) short-term deposits, the net cash from (used in) financing activities and the effect of changes in exchange rates, and by excluding the advances from capital grants received on prior periods allocated to property, plant and equipment in the reporting period. Our definition of Free Cash Flow may differ from definitions used by other companies.

(US$ m)	Q4 2024	Q3 2024	Q2 2024	Q1 2024	Q4 2023	FY 2024	FY 2023
Net cash from operating activities	681	723	702	859	1,480	2,965	5,992
Net Capex	(470)	(565)	(528)	(967)	(798)	(2,531)	(4,111)
Payment for purchase of intangible assets, net of proceeds from sale	(32)	(20)	(15)	(26)	(28)	(93)	(97)
Payment for purchase of financial assets, net of proceeds from sale	(51)	(2)	–	–	(2)	(53)	(10)
Free Cash Flow	128	136	159	(134)	652	288	1,774

¹See Appendix for the definition of reportable segments.

²Non-U.S. GAAP. See Appendix for reconciliation to U.S. GAAP and information explaining why ST believes these measures are important.

Attachment

C3309C – Q424 Earnings PR – FINAL FOR PUBLICATION

The MIL Network –

January 30, 2025

MIL-OSI: Nokia Corporation Financial Report for Q4 and full year 2024

Source: GlobeNewswire (MIL-OSI)

Nokia Corporation
Financial Statement Release
30 January 2025 at 08:00 EET

Nokia Corporation Financial Report for Q4 and full year 2024

Strong Q4 growth and profitability as market trends improve

Q4 net sales increased 9% y-o-y in constant currency (10% reported). Network Infrastructure net sales grew strongly with all units contributing, Nokia Technologies grew significantly and Cloud and Network Services also grew in Q4.
Comparable gross margin in Q4 increased by 250bps y-o-y to 47.2% (reported increased 280bps to 46.1%), with a strong contribution from Nokia Technologies along with smaller contributions from other businesses.
Q4 comparable operating margin increased 380bps y-o-y to 19.1% (reported up 540bps to 15.3%), mainly due to higher gross margin, continued cost control and higher contribution from Nokia Technologies.
Q4 comparable diluted EPS for the period of EUR 0.18; reported diluted EPS for the period of EUR 0.15.
Q4 free cash flow of EUR 0.05 billion, net cash balance of EUR 4.9 billion.
Full year 2024 net sales declined 9% in both reported and constant currency, of which 7 percentage points was related to India. Comparable operating profit was EUR 2.6 billion (reported EUR 2.0 billion).
Full year comparable diluted EPS of EUR 0.39; reported diluted EPS of 0.23.
Board proposes dividend authorization of EUR 0.14 per share.
Nokia issues full year 2025 outlook on an organic basis. Nokia expects comparable operating profit of between EUR 1.9 billion and 2.4 billion and free cash flow conversion from comparable operating profit of between 50% and 80%.

This is a summary of the Nokia Corporation Financial report for Q4 and full year 2024 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group’s financial information as well as on Nokia’s outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. A video interview summarizing the key points of our Q4 results will also be published on the website. Investors should not solely rely on summaries of Nokia’s financial reports and should also review the complete reports with tables.

PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q4 AND FULL YEAR 2024 RESULTS

In the following quote, net sales growth rates are on a constant currency basis
We saw a strong finish to 2024 with 9% net sales growth year-on-year in Q4. I am optimistic that the improving market trends we are now seeing will persist into 2025. Alongside the net sales growth, we saw excellent profitability in Q4 with a comparable operating margin of 19.1%. This meant our full year comparable operating profit was EUR 2.6 billion, at the mid-point of our guidance of EUR 2.3 to 2.9 billion.

All business groups delivered a strong operational performance in the quarter. Net sales growth in Network Infrastructure accelerated to 17%, with IP Networks growing 24%, Fixed Networks 16% and Optical Networks 7%. This reflected a strong recovery in demand from communication service providers, notably in North America.

Mobile Networks net sales stabilized with continued resilience in gross margin. We also secured many important deals, winning 18 000 additional base station sites, since the start of 2024 on a net basis. This was achieved while maintaining our commercial and pricing discipline to protect our gross margins.

Cloud and Network Services returned to 7% net sales growth in the quarter, despite a headwind of 4 percentage points from a prior business disposal, and its operating margin improved over the full year. Both Core Networks and Enterprise Campus Edge grew strongly. The fourth quarter saw the acquisition of Rapid’s technology assets. This will bolster our R&D capacity in Network as Code and increase our developer access. Taken together with our autonomous networks application suite, we are accelerating our efforts to help operators fully automate and monetize their networks.

Nokia Technologies had an extremely active quarter. We signed a deal with Transsion, a previously unlicensed mobile devices vendor, along with multimedia deals with HP and Samsung, as well as many other smaller deals. Our annual net sales run-rate increased to approximately between EUR 1.3 and 1.4 billion in Q4, progressing towards our mid-term EUR 1.4 to 1.5 billion target.

We delivered a strong cash performance throughout 2024, ending with full year free cash flow of EUR 2.0 billion. This means we continue to have a strong balance sheet supporting our business with net cash of EUR 4.9 billion at the end of the year, even after returning EUR 1.4 billion to shareholders through dividend and share buybacks. The Board is proposing an increase in the dividend to EUR 0.14 per share in respect of the financial year 2024. We also continue to execute against our outstanding share buyback program to offset any dilution from the equity component of our pending Infinera acquisition. Going forward, our target remains to maintain a net cash position of between 10-15% of annual net sales.

Q4 also saw further progress in efforts to expand our presence in the data center market. We signed important deals with Microsoft and Nscale for our data center switching products, along with announcing partnerships with both Kyndryl and Lenovo. We are now stepping up our investments to broaden our addressable market in data center IP networking. We will invest up to an additional EUR 100 million in annual operating expenses with a view to driving incremental net sales of EUR 1 billion by 2028. In the short-term this will moderate the pace of operating margin expansion in Network Infrastructure, but we anticipate a strong return on investment considering the momentum we already have today in the market.

Looking further ahead into 2025, we expect the improved trends we have seen in Network Infrastructure in the second half of this year, to sustain and drive strong growth. Cloud and Network Services is also expected to grow with strong 5G Core momentum and growth in our Enterprise Campus Edge business. End markets in Mobile Networks are improving and we currently assume largely stable net sales. Nokia Technologies is expected to deliver approximately EUR 1.1 billion of operating profit.

At the Nokia level, we currently estimate we will deliver comparable operating profit of between EUR 1.9 and 2.4 billion in 2025. We also target free cash flow conversion from comparable operating profit of between 50% and 80%. Excluding the one-time items that benefited 2024 by over EUR 700 million which were mostly in the first half of the year, this guidance would imply a strong improvement in our comparable operating profit in 2025 despite select increased investments.

Given the market volatility in 2024, our results demonstrate the responsiveness and capacity of the Nokia team to execute in all market conditions. I thank the whole Nokia team for their commitment, hard work and drive which made these results possible.

FINANCIAL RESULTS

EUR million (except for EPS in EUR)	Q4’24	Q4’23	YoY change	Constant currency YoY change	Q1-Q4’24	Q1-Q4’23	YoY change	Constant currency YoY change
Reported results
Net sales	5 983	5 416	10%	9%	19 220	21 138	(9)%	(9)%
Gross margin %	46.1%	43.3%	280bps		46.1%	40.4%	570bps
Research and development expenses	(1 136)	(1 080)	5%		(4 512)	(4 277)	5%
Selling, general and administrative expenses	(789)	(774)	2%		(2 890)	(2 878)	0%
Operating profit	917	534	72%		1 999	1 661	20%
Operating margin %	15.3%	9.9%	540bps		10.4%	7.9%	250bps
Profit/(loss) from continuing operations	746	(51)			1 711	649	164%
Profit/(loss) from discontinued operations	67	18	272%		(427)	30
Profit/(loss) for the period	813	(33)			1 284	679	89%
EPS for the period, diluted	0.15	(0.01)			0.23	0.12	92%
Net cash and interest-bearing financial investments	4 854	4 323	12%		4 854	4 323	12%
Comparable results
Net sales	5 983	5 416	10%	9%	19 220	21 138	(9)%	(9)%
Gross margin %	47.2%	44.7%	250bps		47.1%	41.1%	600bps
Research and development expenses	(1 129)	(1 023)	10%		(4 298)	(4 143)	4%
Selling, general and administrative expenses	(638)	(615)	4%		(2 423)	(2 448)	(1)%
Operating profit	1 142	830	38%		2 619	2 337	12%
Operating margin %	19.1%	15.3%	380bps		13.6%	11.1%	250bps
Profit for the period	977	555	76%		2 175	1 590	37%
EPS for the period, diluted	0.18	0.10	80%		0.39	0.28	39%
ROIC⁽¹⁾	13.0%	9.9%	310bps		13.0%	9.9%	310bps

¹ Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to the Alternative performance measures section in Nokia Corporation Financial Report for Q4 and full year 2024 for details.

Business group results	Network Infrastructure		Mobile Networks		Cloud and Network Services		Nokia Technologies		Group Common and Other
EUR million	Q4’24	Q4’23	Q4’24	Q4’23	Q4’24	Q4’23	Q4’24	Q4’23	Q4’24	Q4’23
Net sales	2 031	1 712	2 431	2 450	1 054	977	463	251	6	25
YoY change	19%		(1)%		8%		84%		(76)%
Constant currency YoY change	17%		(2)%		7%		85%		(76)%
Gross margin %	45.4%	44.7%	38.1%	38.3%	48.1%	47.6%	99.8%	100.0%
Operating profit/(loss)	398	264	187	281	236	223	356	169	(35)	(106)
Operating margin %	19.6%	15.4%	7.7%	11.5%	22.4%	22.8%	76.9%	67.3%

SHAREHOLDER DISTRIBUTION

Dividend

The Board of Directors proposes that the Annual General Meeting 2025 authorizes the Board to resolve on the distribution of an aggregate maximum of EUR 0.14 per share to be paid in respect of the financial year 2024. The authorization would be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.

Under the current authorization by the Annual General Meeting held on 3 April 2024, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.13 per share to be paid in respect of financial year 2023. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.

On 30 January 2025, the Board resolved to distribute a dividend of EUR 0.03 per share. The dividend record date is 4 February 2025 and the dividend will be paid on 13 February 2025. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.

Following this announced distribution of the fourth installment and executed payments of the previous installments, the Board has no remaining distribution authorization.

Share buyback programs

In January 2024, Nokia’s Board of Directors initiated a share buyback program to repurchase shares to return up to EUR 600 million of cash to shareholders in tranches over a period of two years. The share buyback execution started on 20 March 2024. On 19 July 2024, Nokia’s Board of Directors decided to accelerate the timeframe for the share buyback program with the aim of completing the full EUR 600 million program by the end of the year instead of the initial two year timeframe. The program was completed on 21 November 2024 and the repurchased 157 646 220 shares were canceled on 4 December 2024.

On 27 June 2024, Nokia announced its intention to acquire Infinera in a transaction that valued Infinera at US$1.7 billion equity value with up to 30% of the consideration to be paid in Nokia American depositary shares (“ADSs”), depending on the elections of Infinera shareholders. To offset the dilution from the transaction to Nokia shareholders, on 22 November 2024 Nokia announced a new share buyback program targeting to repurchase 150 million shares for an aggregate purchase price not exceeding EUR 900 million. Under this share buyback program, by 31 December 2024, Nokia had repurchased 19 186 046 of its own shares at an average price per share of approximately EUR 4.14.

OUTLOOK

	Full Year 2025
Comparable operating profit⁽¹⁾	EUR 1.9 billion to EUR 2.4 billion (excluding any impact from pending Infinera acquisition)
Free cash flow⁽¹⁾	50% to 80% conversion from comparable operating profit (excluding any impact from pending Infinera acquisition)

¹Please refer to Alternative performance measures section in Nokia Corporation Financial Report for Q4 and full year 2024 for a full explanation of how these terms are defined.

The outlook, long-term targets and all of the underlying outlook assumptions described below are forward-looking statements subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this report. release.

Along with Nokia’s official outlook targets provided above, Nokia provides the below additional assumptions that support the group level financial outlook. Considering the pending Infinera acquisition along with the transfer of Managed Services from Cloud and Network Services to Mobile Networks (further details of this transfer are included in the Additional Topics section), Nokia is not currently providing assumptions by business group as it did previously.

	Full year 2025
Group Common and Other operating expenses	approximately EUR 400 million
Comparable financial income and expenses	Positive EUR 50 to 150 million
Comparable income tax rate	~25%
Cash outflows related to income taxes	EUR 450 million
Capital Expenditures	EUR 550 million

2026 TARGETS

Nokia’s current targets for its existing perimeter of the business for 2026 are outlined below. This does not consider pending acquisitions. Nokia sees further opportunities to increase margins beyond 2026 and believes an operating margin of 14% remains achievable over the longer term.

Net sales	Grow faster than the market
Comparable operating margin⁽¹⁾	≥ 13%
Free cash flow⁽¹⁾	55% to 85% conversion from comparable operating profit

¹ Please refer to Alternative Performance measures section in Nokia Corporation Financial Report for Q4 and full year 2024 for a full explanation of how these terms are defined.

The comparable operating margin target for Nokia group is built on the following assumptions by business group for 2026:

Network Infrastructure	13 – 16% operating margin
Mobile Networks	6 – 9% operating margin
Cloud and Network Services	7 – 10% operating margin
Nokia Technologies	Operating profit more than EUR 1.1 billion
Group common and other	Approximately EUR 300 million of operating expenses

ADDITIONAL TOPICS

Progress on Infinera acquisition
On 27 June 2024, Nokia announced a definitive agreement under which Nokia will acquire Infinera, a global supplier of innovative open optical networking solutions and advanced optical semiconductors. The acquisition process continues to proceed as expected. On 13 September 2024, the applicable waiting period under the US pre-merger review expired and the Department of Justice decided not to investigate the planned transaction. On 1 October 2024, Infinera shareholders approved the planned acquisition. On 7 October 2024, Nokia and Infinera received approval from the Committee on Foreign Investment in the United States (CFIUS). During the fourth quarter Nokia received many of the outstanding required approvals for the deal. At this point approval from the European Union and Taiwan, along with contractual closing conditions, are the major items outstanding to proceed to closing. Assuming the current target timelines, Nokia and Infinera now expect the deal to close during the first quarter of 2025.

Nokia exercised NSB call option to simplify ownership structure in China

Nokia and its joint venture partner China Huaxin have been together reviewing the future ownership structure of Nokia Shanghai Bell (NSB). Following those discussions, Nokia exercised its call option, outlined in NSB’s shareholders’ agreement, to initiate the process to become the sole shareholder by purchasing China Huaxin’s approximately 50% share in NSB. This will allow Nokia to simplify its ownership structure in China while Nokia remains committed to continue serving the local market.
Since the creation of the joint venture Nokia has recorded a liability on its balance sheet based on the estimated future cash settlement to acquire China Huaxin’s ownership interest. The execution of the call option is subject to completing required steps under the shareholders’ agreement.

Managed Services business transferred from Cloud and Network Services into Mobile Networks in 2025
Nokia has moved its Managed Services business into Mobile Networks (MN), effective 1 January 2025. The Managed Services business provides outsourced network management of multi-vendor RAN networks for operators and since 2021 has been part of our Cloud and Network Services (CNS) business group. Considering CNS is increasingly transitioning towards cloud-native software sales, ‘as-a-service’ product offerings and helping customers to monetize networks through API’s, Nokia believes that this business is more aligned and fits better with its MN business. Based on 2024 results, this change is expected to lead to a transfer of approximately EUR 430 million of net sales and approximately EUR 40 million of comparable operating profit from CNS to MN. Nokia will provide recast financial information for 2024 for MN and CNS reflecting this change prior to Nokia’s Q1 financial results.

RISK FACTORS

Nokia and its businesses are exposed to a number of risks and uncertainties which include but are not limited to:

Competitive intensity, which is expected to continue at a high level as some competitors seek to take share;
Changes in customer network investments related to their ability to monetize the network;
Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments;
Our ability to procure certain standard components and the costs thereof, such as semiconductors;
Disturbance in the global supply chain;
Impact of inflation, increased global macro-uncertainty, major currency fluctuations, changes in tariffs and higher interest rates;
Potential economic impact and disruption of global pandemics;
War or other geopolitical conflicts, disruptions and potential costs thereof;
Other macroeconomic, industry and competitive developments;
Timing and value of new, renewed and existing patent licensing agreements with licensees;
Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; on-going litigation with respect to licensing and regulatory landscape for patent licensing;
The outcomes of on-going and potential disputes and litigation;
Our ability to execute, complete, successfully integrate and realize the expected benefits from our ongoing transactions;
Timing of completions and acceptances of certain projects;
Our product and regional mix;
Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various countries and OECD initiatives;
Our ability to utilize our Finnish deferred tax assets and their recognition on our balance sheet;
Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions;

as well the risk factors specified under Forward-looking statements of this release, and our 2023 annual report on Form 20-F published on 29 February 2024 under Operating and financial review and prospects-Risk factors.

FORWARD-LOOKING STATEMENTS

Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia’s current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, projects, programs, product launches, growth management, licenses, sustainability and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of potential global pandemics, geopolitical conflicts and the general or regional macroeconomic conditions on our businesses, our supply chain, the timing of market changes or turning points in demand and our customers’ businesses) and any future dividends and other distributions of profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales, income, margins, cash flows, cost savings, the timing of receivables, operating expenses, provisions, impairments, taxes, currency exchange rates, hedging, investment funds, inflation, product cost reductions, competitiveness, revenue generation in any specific region, and licensing income and payments; D) ability to execute, expectations, plans or benefits related to our ongoing transactions, investments and changes in organizational structure and operating model; E) impact on revenue with respect to litigation/renewal discussions; and F) any statements preceded by or including “anticipate”, “continue”, “believe”, “envisage”, “expect”, “aim”, “will”, “target”, “may”, “would”, “see”, “plan” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.

ANALYST WEBCAST

Nokia’s webcast will begin on 30 January 2025 at 11.30 a.m. Finnish time (EET). The webcast will last approximately 60 minutes.
The webcast will be a presentation followed by a Q&A session. Presentation slides will be available for download at www.nokia.com/financials.
A link to the webcast will be available at www.nokia.com/financials.
Media representatives can listen in via the link, or alternatively call +1-412-317-5619.

FINANCIAL CALENDAR

Nokia plans to publish its “Nokia in 2024” annual report, which includes the review by the Board of Directors and the audited annual accounts, during the week starting on 10 March 2025.
Nokia plans to publish its first quarter 2025 results on 24 April 2025.
Nokia’s Annual General Meeting 2025 is planned to be held on 29 April 2025.
Nokia plans to publish its second quarter and half year 2025 results on 24 July 2025.
Nokia plans to publish its third quarter and January-September 2025 results on 23 October 2025.

About Nokia

At Nokia, we create technology that helps the world act together.

As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs.

With truly open architectures that seamlessly integrate into any ecosystem, our high-performance networks create new opportunities for monetization and scale. Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.

Inquiries:

Nokia
Communications
Phone: +358 10 448 4900
Email: press.services@nokia.com
Maria Vaismaa, Global Head of External Communications

Nokia
Investor Relations
Phone: +358 931 580 507
Email: investor.relations@nokia.com

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2024_Q4_Nokia_Earnings_release_English

The MIL Network –

January 30, 2025

MIL-Evening Report: Even as the tide turned for fur, crocodile leather kept selling in high-end fashion. But for how much longer?

Source: The Conversation (Au and NZ) – By Rachel Lamarche-Beauchesne, Senior Lecturer in Fashion Enterprise, Torrens University Australia

apple2499/Shutterstock

Dotted across northern Australia are 21 saltwater crocodile farms, home to around 130,000 crocodiles. Their skins are turned into crocodile leather, long sought for use in luxury handbags, belts and other items.

While fur lost favour due to welfare concerns about animals such as mink, chinchillas and arctic foxes raised for their skins, crocodile leather has kept selling. Australia dominates the global market of saltwater crocodile skins, producing almost 60% of all such skins traded internationally.

But the industry now faces real headwinds. Major retailers and fashion events in Australia and internationally are phasing out or banning crocodile and other exotic skins due to growing concerns over animal welfare.

The Northern Territory government’s crocodile farming plan acknowledges shifting consumer demand and increasing scrutiny as the industry’s largest threat.

Most of the world’s crocodile leather comes from Australian farms.
Venus Angel/Shutterstock

Feathers, fur and now skins

Early animal rights activists in the 19th century focused on feathers due to concern about the enormous environmental damage done by plume hunters killing ostriches and egrets. Only later did activists turn their focus to fur.

In the early 20th century, countries such as the United States and Britain enacted bans or restrictions on feathers. In this century, sentiment has largely turned against wearing real fur, though faux fur and vintage fur are still popular.

But even as feathers went out of fashion, new animal products were arriving. By 1928, exotic skins such as crocodile, alligator and snake began commercialisation in Europe and the US. By the 1970s, they were widely used in fashion.

That looks to be changing.

By 2026, department store David Jones will phase out all exotic skins, including ostrich, crocodile, alligator, lizard and snake. The move builds on the company’s existing animal welfare policies, which already prohibit the sale of fur, angora rabbit wool and foie gras (duck or goose liver).

The 2025 Melbourne Fashion Festival will also ban exotic leathers, while London Fashion Week will be the first of the “Big Four” fashion weeks to follow suit.

In recent years, the kangaroo leather industry has also come under pressure due to concerns over animal welfare. California banned it altogether, and a full US ban is under consideration.

Feathers are also under increasing scrutiny, with fashion weeks in Copenhagen, Helsinki and Melbourne announcing feather bans starting this year.

These decisions reflect a growing shift toward ethical fashion, driven by consumer demand and rising awareness of animal welfare.

Fur has lost its appeal for many consumers.
ChiccoDodiFC/Shutterstock

Exotic leather, native species

Crocodile leather is described as an “exotic” skin, even though saltwater crocodiles are native to Australia.

Two-thirds of Australia’s skins come from the Northern Territory, while Queensland and Western Australia have smaller industries.

Crocodile farms operate by harvesting eggs from the wild and raising the animals in captivity. In the wild, they are protected from hunting. But in farms, they are legally considered stock or production animals, which means they lose these protections.

When we farm animals, it’s common to think of them as resources waiting to be used for our purposes.

But the fashion backlash suggests another way of thinking is emerging. My research points to a more animal-centric perspective on how animal-derived materials are produced for fashion.

Crocodile farms emerged as a way to protect these reptiles from being hunted to extinction. But the industry is now under increasing scrutiny.
RWK007/Shutterstock

From unregulated hunting to farmed crocodiles

Skin hunters nearly drove the saltwater crocodile to extinction in Australia. An estimated 300,000 animals were killed for their skins between 1945 and 1970. Saltie populations fell as low as 3,000 animals before authorities acted.

Freshwater crocodiles, too, were hunted for their skins from 1959. After both species were protected in the 1970s, their populations rebounded.

Crocodile farming started in Queensland in 1972, and in the Northern Territory in 1979.

In 1975, the international Convention on International Trade in Endangered Species of Wild Fauna and Flora on trading endangered animals came into effect, in part to regulate the trade of exotic animals in luxury products.

But this agreement doesn’t rule out uses for fashion. As crocodile experts at the International Union for Conservation of Nature write:

[…] crocodile farming was seen not only as a way to reduce pressure on the wild populations, but also as a means through which commercial incentives for the conservation of crocodilians could be generated.

As the website of one Australian crocodile farm states, crocodiles are a “natural renewable resource with considerable potential for sustainable commercial use”.

By 2018, the crocodile farming industry was worth A$26.7 million to the Northern Territory’s economy. Around 100,000 juvenile crocodiles are raised annually on farms. The NT industry plans to expand in coming years, with a target of 50,000 skins annually.

Trends in fashion heavily influence how crocodiles are farmed. While saltwater crocodiles can live up to 70 years in the wild, it takes three to four years for a crocodile to reach 1.5 metres, at which point their skins can make larger fashion items.

But in recent years, crocodiles have been slaughtered at around two years. Their smaller skins are used for smaller accessories.

Welfare concerns

The crocodile farming industry promotes its sustainability and positive economic impacts on First Nations communities. But this has come under question in recent years, with the release of documentaries featuring ex-crocodile farm workers, while activists from the Farm Transparency Project flew drones over crocodile farms and released footage of slaughtering practices in an effort to increase scrutiny and draw media coverage.

This image of a crocodile in a Northern Territory farm was taken by activists using a drone.
Farm Transparency Project, CC BY

Animal welfare organisations such as the RSPCA have long opposed the practice.

In 2023, the federal government announced an update of the code of humane treatment of wild and farmed crocodiles to incorporate new science and techniques, according to Environment Minister Tanya Plibersek. The updated code was expected late last year but has not been released.

In response, NT Crocodile Farmers Association chief Jodi Truman said the industry “supports independent audits to ensure humane treatment”. She added:

[…] animal rights activists have made clear that they are against all farms and the farming of all animals.

This drone image taken by animal activists shows the slaughter of crocodiles at a NT farm.
Farm Transparency Project, CC BY

What’s likely to happen?

While commercial operators and governments plan to expand, there are now real barriers to the industry’s growth.

For decades, animal derived products such as fur, feathers and leather have been prized in fashion. But consumers are increasingly less comfortable with how these products are made. That’s the thing about fashion – it changes.

The author has previously been a member and lower-house candidate for the Animal Justice Party in Victoria.

– ref. Even as the tide turned for fur, crocodile leather kept selling in high-end fashion. But for how much longer? – https://theconversation.com/even-as-the-tide-turned-for-fur-crocodile-leather-kept-selling-in-high-end-fashion-but-for-how-much-longer-245471

MIL OSI Analysis – EveningReport.nz –

January 30, 2025

MIL-OSI USA: Sen. Scott Introduces Kelly Loeffler at Confirmation Hearing

US Senate News:

Source: United States Senator for South Carolina Tim Scott
WASHINGTON — Today, U.S. Senator Tim Scott (R-S.C.), member of the Senate Small Business and Entrepreneurship Committee, introduced former Senator Kelly Loeffler (R-Ga.), President Trumps’ nominee to lead the U.S. Small Business Administration, at her confirmation hearing.
“As a small business owner for 15 years, I have great confidence in your ability to do the job. To my fellow members of this Committee, I hope that you’ll hear her out. But I’m also asking for you to vote for her, because it is time for us to right the ship to focus on the underserved communities around this country, and to make sure that every single zip code in this nation has strong, powerful small businesses,” said Senator Scott. “Because without small businesses, we will have high unemployment [and] low enthusiasm.”

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: Fischer Questions Howard Lutnick at Confirmation Hearing

US Senate News:

Source: United States Senator for Nebraska Deb Fischer
Today, U.S. Senator Deb Fischer (R-Neb.), a member of the Senate Commerce Committee, questioned Howard Lutnick at the confirmation hearing on his nomination to be Secretary of Commerce.
During the hearing, Senator Fischer’s exchange with Lutnick focused on federal spectrum management and its critical role in national security, the impact of retaliatory tariffs on agriculture and manufacturing, the need to expand export markets, preserving critical broadband funding, and strategies to counter threats from China in technology markets.

Click the image above to watch a video of Senator Fischer’s questioning
Click here to download audio
Click here to download video
On the Role Spectrum Plays in Protecting National Security:
Senator Fischer: If confirmed, you will lead a massive federal agency across 13 bureaus. And to start with, I want to highlight one that you’ve already heard of—the NTIA. It has critical influence over the U.S. economy and over our security, as well. Among its roles . . . NTIA coordinates spectrum management, ensuring that federal airwaves are being used most effectively. But, as spectrum becomes more scarce, critical federal operations, especially those essential for our national security, have been seen as obstacles. At the onset, I want to make it clear to you that DOD airwaves are not lying dormant and that proposals to clear them would jeopardize our national security.
We have constellations of DOD satellites that rely on spectrum. Our nuclear command and control relies on spectrum. Advanced fighter aircraft like F-35s rely on spectrum. And we are investing tens of billions of dollars in developing sixth-generation aircraft that will rely on spectrum. We have radar systems on our Navy ships tracking incoming missiles around the world. These allowed us to help defend Israel from over 300 missile and drone attacks last year. They rely on spectrum. I can go on and on, as my colleagues know, but this is all to say that I hope we can work together so that we can come up with a really strong strategy for federal spectrum management in the future.
On Protecting Nebraska’s Industries From Retaliatory Tariffs:
Senator Fischer: I’m from Nebraska, and Nebraska’s agricultural and manufacturing industries rely on our strong export markets for our products. You and I talked about trade and about the need under this administration for trade to be front and center. We know that we didn’t see much of that happen in the previous administration. We also know, though sir, that other countries may try to retaliate against our agricultural and our manufacturing industries. So, if confirmed, will you work with your colleagues at other agencies to understand the impact of retaliatory tariffs on agriculture and manufacturing?
Howard Lutnick: I will.
On Opportunities To Expand Export Markets:Senator Fischer: Thank you. Can you also talk a little bit about what opportunities you view that are out there so that we can expand certain export markets over the next four years under this administration?
Howard Lutnick: I think our farmers, ranchers, and fishermen are treated with disrespect.Senator Fischer: Always, the fish.Howard Lutnick: Always, you have to include them. You know, how often do we eat seafood? Come on. So they are treated with disrespect around the world. They are our farmers, our ranchers, and our fishermen are treated with disrespect. The countries take advantage of American kindness, American gratitude, that we used to rebuild the world after the World Wars, and after the Korean War, and after the Vietnam War.
We need that disrespect to end. And I think tariffs are a way to create reciprocity, to be treated fairly, to be treated appropriately. And I think it will help our farmers, our ranchers, and our fishermen to flourish. And that’s what I expect this administration is going to drive. And that’s why I am honored to serve President Trump in his pursuit of that reciprocity and that fairness, and the end of the disrespect.
These countries have reliance on the American economy, and they need to start respecting us and respect us now.
On Understanding the Importance of the BEAD Broadband Program:Senator Fischer: Thank you. You heard about the BEAD funding from Senator Thune and other members of this committee as well. And I hope you will take that to heart and help our states get through some of those regulations that are out there. It has been an impediment to us.
On Bolstering American Competitiveness Against China: Senator Fischer: I’d like to talk a little bit here in the last few seconds about technology and competitiveness. I think I have Senator Wicker’s time.
In previous hearings, this committee has discussed the United States’ AI capabilities and that we are in a dead heat with China. This week, we heard about DeepSeek, and I think it’s having us to examine kind of where we are right now with that.
If confirmed, given the Commerce Department’s breadth of influence on that issue, how will you address different threats that we see coming from the CCP within these information and technology markets?Howard Lutnick: I take a very jaundiced view of China. I think they only care about themselves and seek to harm us. We need to protect ourselves, we need to drive our innovation forward, and we need to stop helping them.
Open platforms—Meta’s open platform, let DeepSeek rely on it. Nvidia’s chips, which they bought tons of and they found their ways around it, drive their DeepSeek model. It’s got to end.
If they are going to compete with us, let them compete, but stop using our tools to compete with us. So I’m going to be very strong on that. I am thrilled to oversee BIS and I’m thrilled to coordinate and empower BIS with tariffs that will improve the strength. When we say no, that answer’s got to be no.Senator Fischer: I look forward to working with you, sir. Thank you.Howard Lutnick: Thank you.

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: Ernst Discusses Fixing Broken SBA With Loeffler

US Senate News:

Source: United States Senator Joni Ernst (R-IA)

WASHINGTON – Today, at the Senate Committee on Small Business and Entrepreneurship hearing on the nomination of the Honorable Kelly Loeffler to serve as the Small Business Administration (SBA) administrator, Chair Joni Ernst (R-Iowa) highlighted the need to reform the agency.
Ernst asked Loeffler about her plans to refocus the SBA on its mission to empower entrepreneurs and unleash the small business economy by increasing transparency, slashing red tape, and eliminating waste, fraud, and abuse.

Click here to watch Chair Ernst’s remarks.
During Ernst’s questioning, Loeffler committed to a “collaborative and responsive” relationship with Ernst to improve transparency at the SBA.
After the agency had a 66-day disaster funding shortfall last year and failed victims in desperate need, Ernst asked Loeffler how she would work with Congress to improve critical relief programs at the agency.
As part of her plan, Loeffler noted that she will make sure that the agency is accountable to taxpayers, that she will get it back to work, and be committed to the success of small businesses and responsible to taxpayers.

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: Reed Announces Committee Leadership Assignments for 119th Congress

US Senate News:

Source: United States Senator for Rhode Island Jack Reed
WASHINGTON, DC – Today, after the Senate Appropriations Committee fully organized, U.S. Senator Jack Reed (D-RI) announced his full slate of committee and subcommittee assignments for the 119th Congress.
Senator Reed will continue serving on four ‘A’ committees: Armed Services; Appropriations; Banking, Housing, and Urban Affairs; and the Select Committee on Intelligence. These assignments include two of the three ‘Super A’ Committees: Armed Services and Appropriations.
Senator Reed will serve as Ranking Member of the Senate Armed Services Committee (SASC) and as the Ranking Member of the Appropriations Subcommittee on Financial Services and General Government (FSGG), which has jurisdiction over a diverse group of agencies responsible for regulating the financial and telecommunications industries; collecting taxes and providing taxpayer assistance; providing small business assistance; overseeing the White House and judicial branch operations, and the District of Columbia; construction and management of federal buildings; and overseeing the Federal workforce.
With these assignments, Reed is well-positioned to deliver for Rhode Island while overseeing the U.S. Department of Defense and federal spending decisions through the appropriations process.
“These key committee posts help me fix our roads and bridges, strengthen our economy, deliver for Rhode Island, and chart a responsible fiscal path. My new assignment on the Financial Services and General Government Subcommittee provides another tool to support small business growth, expand economic opportunity, boost Rhode Island’s broadband connections, and ensure the health and safety of our financial markets,” said Reed. “As Congress grapples with a range of complex challenges, I will do everything in my power to help lower prices for working families and ensure Rhode Islanders’ needs are met. I will continue to be a relentless advocate for our state and focus on the issues that Rhode Islanders care about. And I will promote and uphold the constitutional role of Congress, including Congress’s power of the purse. ”
ARMED SERVICES COMMITTEE
Senator Reed is the Ranking Member of the powerful Senate Armed Services Committee, which is responsible for overseeing the U.S. Department of Defense (DOD), military services operating across the domains of land, sea, air, cyberspace, and space, and all DOD agencies, including their budgets and policies, and national security aspects of nuclear energy. Each year, SASC is tasked with producing and passing the National Defense Authorization Act (NDAA).
In 2024, under Reed’s leadership as SASC Chairman, Congress passed the fiscal year 2025 National Defense Authorization Act (NDAA), which authorized $883.7 billion for the U.S. Department of Defense (DOD) and the national security programs of the U.S. Department of Energy. The NDAA offers a blueprint to equip, supply, and train U.S. forces; provide for military families; and strengthen oversight of the Defense Department and military programs. The defense industry is a high-tech sector that contributes to Rhode Island’s economic growth, generates good-paying jobs, and has been a resilient segment of the state’s economy. According to the latest Rhode Island data, the defense industry generated over $4.3 billion in annual economic impact for Rhode Island and a total employment share of 6.2 percent of the state’s workforce.
In addition to his leadership on the Armed Services Committee, Reed is also a member of the Appropriations Subcommittee on Defense, which provides him with additional oversight responsibilities in determining how defense dollars are spent.
APPROPRIATIONS COMMITTEE
Senator Reed will continue to serve as Rhode Island’s only member of the powerful Appropriations Committee, which controls the funding of the federal government.
Senator Reed is the third most senior Democrat on the Appropriations Committee. He works tirelessly to direct federal funding to the Ocean State to create jobs, strengthen infrastructure, and support economic and community development initiatives.
Senator Reed will give up his leadership post on the Subcommittee on the Legislative Branch in order to help lead the Financial Services and General Government Subcommittee.
The FSGG subcommittee drafts the spending plan and oversees annual funding for financial-related agencies including the U.S. Department of Treasury; the Securities and Exchange Commission (SEC); and the Internal Revenue Service (IRS). It is responsible for funding the Executive Office of the President and federal election security initiatives. The panel also has jurisdiction over two dozen key agencies and programs that have a direct impact on Rhode Island, including:
– The U.S. Small Business Administration (SBA), which supports local entrepreneurs and small businesses with outreach and loans and also provides loans following federally-declared disasters.
– The Federal Trade Commission (FTC), which helps ensure competition in broad sectors of the economy and helps protect consumers from false advertising and business practices.
– The Federal Communications Commission (FCC), which has jurisdiction over telecommunications and broadband matters.
– The Office of National Drug Control Policy (ONDCP), which provides funding for High Intensity Drug Trafficking Areas nationwide and to Rhode Island.
– The Federal Election Commission (FEC), with has jurisdiction over federal campaign finance laws.
– The General Services Administration (GSA), which manages federal properties in Rhode Island and nationwide.
– The Community Development Financial Institutions (CDFI) Fund which provides hundreds of millions annually to generate economic growth in local communities and provide access to credit and technical assistance to underserved areas.
Additionally, Senator Reed will serve on five other Appropriations Subcommittees: Commerce, Justice, Science, and Related Agencies (CJS); Defense; Labor, Health and Human Services, Education, and Related Agencies (Labor-H); Military Construction, Veterans Affairs, and Related Agencies (MilCon-VA); and Transportation, Housing, and Urban Development (THUD).
BANKING, HOUSING & URBAN AFFAIRS
A champion of affordable housing, consumer protection, and mass-transit, Senator Reed will continue serving as a key member of the Banking, Housing & Urban Affairs Committee, which has broad oversight over our nation’s financial institutions, capital markets, consumer finance, monetary policy, and housing and mass-transit programs.
Senator Reed is the most senior Democratic member of the panel, but Senate rules dictate that members may only serve atop one full committee at a time.
Senator Reed has used his Banking Committee post to author Wall Street reform and consumer protection laws, including his ‘warrants law,’ which forced the return of over $10 billion dollars to taxpayers. He also successfully urged the U.S. Securities and Exchange Commission (SEC) to focus greater attention on climate risk disclosures for public companies. The committee also oversees federal housing policy and authorizes mass-transit investments, and Senator Reed used his role on the committee led to create two affordable housing funds: the Housing Trust Fund and the Capital Magnet Fund.
It was Senator Reed’s leadership on the Banking, Housing, and Urban Affairs Committee, coupled with his work on the Appropriations Committee, that earned him a spot as one of twenty members of the bipartisan working group that was tasked with developing the CARES Act (Public Law No. 116-136). Senator Reed was the driving force behind the successful effort to create the $150 billion Coronavirus Relief Fund (CRF) in the CARES Act and successfully secured a small state minimum of $1.25 billion in the law. Senator Reed continues to play an active role in pushing legislation to direct additional federal funds to states and local governments to help save lives and address the economic impact caused by the pandemic.
As America faces an affordable housing crisis, which worsened during the pandemic, Senator Reed will play a key role in providing relief for renters and homeowners, and helping to revitalize communities by expanding the supply of affordable housing. Reed will also use his seat on this committee to boost mass-transit infrastructure in order to help connect communities and more Americans to jobs and economic opportunity.
Senator Reed will serve on three key Banking subcommittees: Economic Policy; Financial Institutions and Consumer Protection; and Securities, Insurance, and Investment.
INTELLIGENCE COMMITTEE
By virtue of his leadership of the Senate Armed Services Committee, Reed is also an ex officio member of the high-profile Senate Select Committee on Intelligence, which oversees the U.S. Intelligence Community. As an ex officio member of the panel, Senator Reed regularly participates in open and closed-door briefings and hearings with top intelligence officials from the Office of the Director of National Intelligence (ODNI), the Central Intelligence Agency (CIA), the Defense Intelligence Agency (DIA), and the National Security Agency (NSA), but he does not vote in committee.
The Intelligence Committee was established in 1976 to oversee the range of civilian and military agencies and departments that make up the U.S. Intelligence Community, and has wide influence over U.S. national security and foreign policy.
The President of the United States is required by law to ensure that the Intelligence Committee is kept “fully and currently informed” of intelligence activities. As a result, U.S. intelligence agencies must notify the Committee of its activities, including covert actions.

MIL OSI USA News –

January 30, 2025

MIL-OSI United Kingdom: Impact of Brexit on Scottish Trade

Source: Scottish Government

New figures show possible cost of increased trade barriers.

Analysis published today by the Office of the Chief Economic Advisor has estimated Brexit trade barriers could impact Scotland’s economy by £4 billion.

This estimated economic cost is from the reduction in trade alone – not counting changes to productivity, investment or migration.

Business Minister Richard Lochhead said the report demonstrated the urgent need to reverse the damage of Brexit to boost living standards and revenue for the NHS.

According to the Trade Modelling Report, Scottish exports could be lower by 7.2% or £3 billion compared to continued EU membership.

The chemical and pharmaceutical sector is estimated to be one of the hardest hit by post-Brexit trade barriers, with an estimated 9.1% reduction in output, followed by the computer and electronics sector with an estimated 7.7% fall. The 4.9% output drop estimated for the agrifood sector represents a loss of £827 million.

Business Minister Richard Lochhead said:

“On the eve of the fifth anniversary of Brexit, these new figures highlight the urgent need to change course to boost the economy and increase public revenue for the NHS.

“This is the latest in a long line of studies highlighting how badly Brexit continues to impact Scotland and should cause the UK Government to consider its approach to economic growth.

“The Scottish Government has been clear that Scotland’s place is in the EU and the huge European single market. But we are also a voice for greater co-operation with the EU right now and we urge the new UK Government to forge a much closer relationship with our fellow Europeans.”

Background

Scottish Government’s Brexit Trade Modelling Report

The report is the first to specifically analyse the impact of the UK’s post-Brexit trade agreements on Scotland’s economy. It examines the expected effect of actual or potential free trade agreements between the UK and Australia, India, Switzerland and Turkey, as well as the Trade and Cooperation Agreement between the UK and EU. It then compares that with the trade benefits Scotland would have received from continued EU membership.

This report makes estimates based on the impact of trade barriers and does not account for changes in productivity and investment due to Brexit. This means that some of the headline figures differ from those in other reports – such as in modelling by the National Institute of Economic and Social Research, which showed that UK GDP could be 5.7% lower – as they look at the overall impact of Brexit on the economy.

MIL OSI United Kingdom –

January 30, 2025

MIL-OSI USA: Lutnick Commits to Championing Alaska Fishermen & “Freedom Fish” as Commerce Secretary

US Senate News:

Source: United States Senator for Alaska Dan Sullivan
01.29.25
WASHINGTON—U.S. Senator Dan Sullivan (R-Alaska), a member of the Senate Commerce, Science and Transportation Committee, today received commitments from Howard Lutnick, President Trump’s nominee to be Secretary of Commerce, to visit Alaska, champion the interests of Alaska’s fishermen and seafood industry, help implement President Trump’s “Unleashing Alaska’s Extraordinary Resource Potential” executive order, and work to advance the Alaska Liquefied Natural Gas (LNG) Project. Sen. Sullivan highlighted the serious challenges facing Alaska and America’s fishermen, including the decade-long unfair, non-reciprocal seafood trade relationship between the U.S. and Russia, which was fixed by executive orders Sen. Sullivan secured in 2022 and 2023. Sullivan noted the Commerce Department’s important role in enforcing the comprehensive ban on the import of Russian seafood and advocating for America’s fishing communities.
Sen. Sullivan posed his questions to Mr. Lutnick during his confirmation hearing before the committee.
[embedded content]
Below is a full transcript of Sen. Sullivan’s exchange with Mr. Lutnick.
Sen. Dan Sullivan: Thank you, Mr. Chairman. Mr. Lutnick, congratulations to you and your family. Thank you for that very powerful opening statement. I appreciated our meeting. I’m really enjoying this hearing, all the focus on fish. It’s great. In all seriousness, certain secretaries, most secretaries, in my view, have not embraced their role that they are really important to our fishing community. As you and I talked about, this is really important to my state. Alaska is the superpower of seafood. Over two-thirds of all seafood harvested in America—commercial, subsistence, sport—is harvested in Alaska’s waters. Over two-thirds. So we’re it. We’re the 800-pound gorilla. Tens of thousands of Alaskans are connected to this industry. We are a huge powerhouse in terms of American exports. Mr. Lutnick, the vice president, in his opening statement, called you a “product guy,” a “sales guy,” a “good dude.” That’s a quote from the vice president. Good dude. I want to also maybe give you the title of “Godfather of American Fishermen” or the patron saint of American fishermen…
Howard Lutnick: This is working for me.
DS: …to keep a focus on these communities, on these great Americans—just look at Deadliest Catch and things like that—and to be a leader on focusing on them. That does not always happen. As a matter of fact, it usually hasn’t happened with the Secretaries of Commerce. Can you commit to me on doing that?
HL: Well, I love to fish, and I’m happy to commit to you. The fishermen of the United States of America are one of our great assets. It’s easy for me to promise to take care of them.
DS: Great. Since you love to fish, this next question might be the easiest one you get all day. I need a commitment from you to come to Alaska. You can bring the family.
HL: As long as I can bring my family, we’re coming.
DS: You can go fishing—but to meet these great American fishermen who are my constituents. It’d be great for you to get up there soon to meet them. Can I get your commitment to do that as well?
HL: It’s my pleasure.
DS: Great. Let me mention—we already talked about it: The last four years have been tough on my state. This is a chart I’ve shown all over the place—the Last Frontier Lock Up, we called it. 70 executive orders and actions from the Biden administration singularly focused on shutting down Alaska. 70. Fortunately, this is now a thing of the past. We want to get rid of that. On day one, the President issued this executive order, President Trump. It’s called “Unleashing Alaska’s Extraordinary Resource Potential.” It’s long, right? It’s very detailed. The Secretary of Commerce is mentioned in it. One of the lines in there: “It’s the policy of the United States”—this is from President Trump on day one—”to fully avail itself of Alaska’s vast lands and resources for the benefit of the nation and the American citizens who call Alaska home.” You’re mentioned in this, the Secretary of Commerce. Can I get your commitment to work with me on implementing every aspect of this really great Trump day one executive order?
HL: Yes.
DS: Great. Thank you. You mentioned disrespect for our fishermen. You and I talked about what we’ve been enduring for the last ten years. Russia instituted a ban on any exports of American seafood in 2014, and yet we had open borders essentially for them, for the last ten years, taking market share. Literally the most disrespectful, unfair trading situation I could see anywhere in the world. They were coming after our market share. Our fishermen in America could not export one fish to Russia. I worked really hard to get that changed. We got a ban, and then the Russians start sending their fish to China to essentially create a loophole, then to come into the U.S. We shut that down finally. Can you work with me to make sure we don’t have that incredibly unfair—Russia bans everything and they can import everything here. Ridiculous. Same with China. You’re a sales guy, a products guy. I want you to commit to me to promote American “freedom fish,” Alaska “freedom fish,” and don’t allow “communist fish” from Russia and China coming into our markets. Can you commit…
HL: We’ve got to get rid of those communist fish.
DS: So can I get a commitment on that?
HL: I do.
DS: Excellent. No “communist fish.” Freedom fish is what we want. Finally, Mr. Lutnick, the chairman is going to focus this committee a lot on energy, which I think is great. I know you care about unleashing our extraordinary energy potential. One of the big areas of focus of the Trump day-one EO on unleashing Alaska’s extraordinary resource potential is moving forward and finally getting done this massive Alaska LNG project that we’ve been working on for a number of years. We got all of the permits during the Trump administration. Of course, Biden blocked those. This would create thousands of jobs, would revitalize the American steel industry, would—estimates are—would reduce our trade deficit by about $10 billion a year. Can you commit to work with me, the President—who’s very focused on that in his EO, the secretaries of Interior and Energy, and other cabinet officials, including our Asian allies, to make this project a reality, which will be great for the country, great for our workers, great for our trade deficit, and really boost America’s national security?
HL: I can.
DS: Thank you.

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: Additional Measures to Combat Anti-Semitism

US Senate News:

Source: The White House
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
Section 1. Purpose. My Administration has fought and will continue to fight anti-Semitism in the United States and around the world. On December 11, 2019, I issued Executive Order 13899, my first Executive Order on Combating Anti-Semitism, finding that students, in particular, faced anti-Semitic harassment in schools and on university and college campuses. Executive Order 13899 provided interpretive assistance on the enforcement of the Nation’s civil rights laws to ensure that they would protect American Jews to the same extent to which all other American citizens are protected. The prior administration effectively nullified Executive Order 13899 by failing to give the terms of the order full force and effect throughout the Government. This order reaffirms Executive Order 13899 and directs additional measures to advance the policy thereof in the wake of the Hamas terrorist attacks of October 7, 2023, against the people of Israel. These attacks unleashed an unprecedented wave of vile anti-Semitic discrimination, vandalism, and violence against our citizens, especially in our schools and on our campuses. Jewish students have faced an unrelenting barrage of discrimination; denial of access to campus common areas and facilities, including libraries and classrooms; and intimidation, harassment, and physical threats and assault. A joint report by the House Committees on Education and the Workforce, Energy and Commerce, Judiciary, Oversight and Accountability, Veterans’ Affairs, and Ways and Means calls the Federal Government’s failure to fight anti-Semitism and protect Jewish students “astounding.” This failure is unacceptable and ends today. Sec. 2. Policy. It shall be the policy of the United States to combat anti-Semitism vigorously, using all available and appropriate legal tools, to prosecute, remove, or otherwise hold to account the perpetrators of unlawful anti-Semitic harassment and violence.
Sec. 3. Additional Measures to Combat Campus Anti-Semitism. (a) Within 60 days of the date of this order, the head of each executive department or agency (agency) shall submit a report to the President, through the Assistant to the President for Domestic Policy, identifying all civil and criminal authorities or actions within the jurisdiction of that agency, beyond those already implemented under Executive Order 13899, that might be used to curb or combat anti-Semitism, and containing an inventory and analysis of all pending administrative complaints, as of the date of the report, against or involving institutions of higher education alleging civil-rights violations related to or arising from post-October 7, 2023, campus anti-Semitism.(b) The report submitted by the Attorney General under this section shall additionally include an inventory and an analysis of all court cases, as of the date of the report, against or involving institutions of higher education alleging civil-rights violations related to or arising from post-October 7, 2023, campus anti-Semitism and indicate whether the Attorney General intends to or has taken any action with respect to such matters, including filing statements of interest or intervention.(c) The Attorney General is encouraged to employ appropriate civil-rights enforcement authorities, such as 18 U.S.C. 241, to combat anti-Semitism. (d) The report submitted by the Secretary of Education under this section shall additionally include an inventory and an analysis of all Title VI complaints and administrative actions, including in K-12 education, related to anti-Semitism — pending or resolved after October 7, 2023 — within the Department’s Office for Civil Rights.(e) In addition to identifying relevant authorities to curb or combat anti-Semitism generally required by this section, the Secretary of State, the Secretary of Education, and the Secretary of Homeland Security, in consultation with each other, shall include in their reports recommendations for familiarizing institutions of higher education with the grounds for inadmissibility under 8 U.S.C. 1182(a)(3) so that such institutions may monitor for and report activities by alien students and staff relevant to those grounds and for ensuring that such reports about aliens lead, as appropriate and consistent with applicable law, to investigations and, if warranted, actions to remove such aliens.
Sec. 4. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect(i) the authority granted by law to an executive department or agency, or the head thereof; or(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: KEY MOMENTS: In Back-to-Back Nomination Hearings, Luján Presses RFK Jr. and Howard Lutnick on their Commitment to Working for the American People

US Senate News:

Source: United States Senator Ben Ray Luján (D-New Mexico)

Washington, D.C. – Today, U.S. Senator Ben Ray Luján (D-N.M.), a member of the Senate Committee on Finance and the Senate Committee on Committee on Commerce, Science, and Transportation, pressed Robert F. Kennedy Jr. and Howard Lutnick in their respective nomination hearings on their commitment to preserving programs that provide critical services for New Mexicans. Senator Luján pressed both nominees on their commitment to upholding the law and serving the American people – not being a rubber stamp for the President.

In the nomination hearing for Robert F. Kennedy Jr. to become Secretary of Health and Human Services, Senator Luján questioned Mr. Kennedy on his understanding of the importance of Medicaid and pressed Mr. Kennedy for his commitment to protect Medicaid from cuts. Mr. Kennedy did not commit to not cutting Medicaid if asked to by the President.

In the nomination hearing for Howard Lutnick to become Secretary of Commerce, Senator Luján questioned Mr. Lutnick on whether he would commit to not cutting funding that has been awarded to connect thousands of New Mexicans to the internet. Despite Mr. Lutnick’s acknowledgement of the importance of broadband buildout, he would not commit to maintaining crucial support for broadband.

Key Moments from the Nomination Hearing for Robert F. Kennedy Jr. to become Secretary of Health and Human Services:

Watch the exchange with Robert F. Kennedy, Jr. here.

On Medicare:

Sen. Luján: Do you know how many babies born in this country are covered through Medicaid?

Mr. Kennedy: I would guess, I don’t know the answer, I would guess about 30 million.

Sen. Luján: I have it Mr. Kennedy, about 41% or 1.4 million babies, births are financed by Medicaid according to the National Center for Health Statistics.

Sen. Luján: If President Trump asks you to cut Medicaid will you do it?

Mr. Kennedy: It’s not up to me to cut Medicaid, it’d be up to Congress.

Sen. Luján: Mr. Kennedy, if you don’t want to answer, I’ll move on.

On Native American Health:

Sen. Luján: What are you going to do when programs are eliminated to require the inclusion of Native Americans in clinical trials when it comes to life-saving medicine?

Mr. Kennedy: I’m going to do everything I can to make sure there are Native American trials.

Sen. Luján: Will you commit to finalizing the Congressionally mandated FDA guidance to increase clinical trial diversity?

Mr. Kennedy: Yes.

Sen. Luján: Will you commit to reinstating all of the pages that were eliminated and people that were fired from this administration that have this responsibility?

Mr. Kennedy, in part: I cannot commit to that.

On Autism Services:

Sen. Luján: I ask unanimous consent to enter into the record and article from Autism Speaks titled “Do Vaccines Cause Autism” and I’ll note that the first sentence states “Vaccines do not cause autism.”

Key Moments from the Nomination Hearing for Howard Lutnick to become Secretary of Commerce:

Watch the exchange with Howard Lutnick here.

Sen. Luján: If you’re asked to cut that program (broadband access) by the President of the United States, will you?

Mr. Lutnick: I work for him.

Sen. Luján: Is your response that if the president asks you to cut broadband infrastructure funding, you will do that? Is that what I just heard?

Mr. Lutnick, in part: I work for the President of the United States, and I am here to executive his policies.

Sen. Luján: We have a responsibility to communicate to each other for the people we work for. It’s not that you just work for Donald Trump sir, you work for the American people if you get this position.

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: WATCH: Baldwin Questions Commerce Secretary Nominee if He Will Cut Funding for Wisconsin Tech Hubs

US Senate News:

Source: United States Senator for Wisconsin Tammy Baldwin
WASHINGTON, D.C. – Today, U.S. Senator Tammy Baldwin (D-WI) questioned Howard Lutnick, nominee for Secretary of the Department of Commerce (DOC), in the U.S. Senate Committee on Commerce, Science, and Transportation on if he will cut funding for the Wisconsin Biohealth Tech Hub. The questioning comes as the Trump Administration holds up federal funding approved by Congress and already awarded to states, local governments, and nonprofits. The Wisconsin Biohealth Tech Hub was awarded a $49 million investment to grow the state’s personalized medicine and biohealth sector – advancing research and innovation, growing our economy and creating jobs, and boosting American competitiveness in a cutting-edge industry.
“Wisconsin has a rich history of innovation and making things, and our Tech Hub is going to carry that into the future, creating good paying jobs, growing our Made in Wisconsin economy, and revolutionizing health care as we know it. But, cutting funding for it puts it all at risk,” said Senator Baldwin. “Cutting this investment would put Wisconsin jobs on the line, hurt our economy, and put breakthroughs that could keep families healthy out of reach. I will keep fighting to get what Wisconsin is owed so we can continue to grow our economy and keep families healthy.”
On Monday night, the Trump Administration ordered a freeze on federal grants and loans. While the Administration continues to send mixed signals about the future of this order, which now faces challenges in court, Senator Baldwin asked Mr. Lutnick to confirm whether funding for Wisconsin’s Tech Hub would be impacted. Mr. Lutnick was not able to provide an answer.
If the Committee approves his nomination to be DOC Secretary, Howard Lutnick will advance to a confirmation vote by the whole Senate.
A full video of Senator Baldwin’s questions is available here.

MIL OSI USA News –

January 30, 2025

MIL-OSI: Sound Financial Bancorp, Inc. Q4 2024 Results

Source: GlobeNewswire (MIL-OSI)

SEATTLE, Jan. 29, 2025 (GLOBE NEWSWIRE) — Sound Financial Bancorp, Inc. (the “Company”) (Nasdaq: SFBC), the holding company for Sound Community Bank (the “Bank”), today reported net income of $1.9 million for the quarter ended December 31, 2024, or $0.74 diluted earnings per share, as compared to net income of $1.2 million, or $0.45 diluted earnings per share, for the quarter ended September 30, 2024, and $1.2 million, or $0.47 diluted earnings per share, for the quarter ended December 31, 2023. The Company also announced today that its Board of Directors declared a cash dividend on the Company’s common stock of $0.19 per share, payable on February 26, 2025 to stockholders of record as of the close of business on February 12, 2025.

Comments from the President and Chief Executive Officer

“The Bank ended the year with many positives, including a 15-basis-point increase in net interest margin compared to the third quarter of 2024. This was largely due to our significant progress in reducing deposit costs, which fell by 16 basis points,” remarked Laurie Stewart, President and Chief Executive Officer. “Additionally, nonperforming loans decreased by 11.8% from the third quarter, and for the first time in more than a decade, we have no OREO,” concluded Ms. Stewart. “Notable progress was made in reducing funding costs during the quarter and in controlling expenses throughout the entire year. We hope to continue this momentum in 2025. Our staff across the company played an important role in these accomplishments by focusing on client relationships and increasing efficiencies through technological improvements,” explained Wes Ochs, Executive Vice President and Chief Financial Officer. Mr. Ochs continued, “We ended the year with the same balance sheet strategy that we used to close out 2023, which helped reduce the Bank’s asset size below $1 billion. This strategy is intended to provide the Bank with additional operational flexibility and continued cost savings in 2025.”
Q4 2024 Financial Performance
Total assets decreased $107.3 million or 9.7% to $993.6 million at December 31, 2024, from $1.10 billion at September 30, 2024, and decreased $1.6 million or 0.2% from $995.2 million at December 31, 2023.				Net interest income increased $347 thousand or 4.4% to $8.2 million for the quarter ended December 31, 2024, from $7.9 million for the quarter ended September 30, 2024, and increased $653 thousand or 8.6% from $7.6 million for the quarter ended December 31, 2023.

				Net interest margin (“NIM”), annualized, was 3.13% for the quarter ended December 31, 2024, compared to 2.98% for the quarter ended September 30, 2024 and 3.04% for the quarter ended December 31, 2023.
Loans held-for-portfolio decreased $1.6 million or 0.2% to $900.2 million at December 31, 2024, compared to $901.7 million at September 30, 2024, and increased $5.7 million or 0.6% from $894.5 million at December 31, 2023.
				A $14 thousand provision for credit losses was recorded for the quarter ended December 31, 2024, compared to an $8 thousand provision and a $27 thousand release of provision for credit losses for the quarters ended September 30, 2024 and December 31, 2023, respectively. At December 31, 2024, the allowance for credit losses on loans to total loans outstanding was 0.94%, compared to 0.95% at September 30, 2024 and 0.98% December 31, 2023.
Total deposits decreased $92.4 million or 9.9% to $837.8 million at December 31, 2024, from $930.2 million at September 30, 2024, and increased $11.3 million or 1.4% from $826.5 million at December 31, 2023. Noninterest-bearing deposits increased $2.8 million or 2.2% to $132.5 million at December 31, 2024 compared to $129.7 million at September 30, 2024, and increased $5.8 million or 4.6% compared to $126.7 million at December 31, 2023.
				Total noninterest income decreased $75 thousand or 6.1% to $1.2 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and increased $94 thousand or 8.8% compared to the quarter ended December 31, 2023.
The loans-to-deposits ratio was 108% at December 31, 2024, compared to 97% at September 30, 2024 and 108% at December 31, 2023.
				Total noninterest expense decreased $621 thousand or 8.1% to $7.1 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and decreased $248 thousand or 3.4% compared to the quarter ended December 31, 2023.
Total nonperforming loans decreased $998 thousand or 11.8% to $7.5 million at December 31, 2024, from $8.5 million at September 30, 2024, and increased $3.9 million or 110.7% from $3.6 million at December 31, 2023. Nonperforming loans to total loans was 0.83% and the allowance for credit losses on loans to total nonperforming loans was 113.46% at December 31, 2024.
				The Bank continued to maintain capital levels in excess of regulatory requirements and was categorized as “well-capitalized” at December 31, 2024.

Operating Results

Net interest income increased $347 thousand, or 4.4%, to $8.2 million for the quarter ended December 31, 2024, compared to $7.9 million for the quarter ended September 30, 2024, and increased $653 thousand, or 8.6%, from $7.6 million for the quarter ended December 31, 2023.The increase from the prior quarter was primarily the result of lower funding costs and an increase in average yield on loans receivable and investments, partially offset by a decrease in the average balance and yield on interest-bearing cash. The increase in net interest income compared to the same quarter one year ago was primarily due to a higher average yield on interest-earning assets, particularly loans receivable and investments, and an increase in the average balances of both loans receivable and interest-bearing cash, partially offset by a lower average yield on interest-bearing cash and higher funding costs.

Interest income decreased $102 thousand, or 0.7%, to $14.7 million for the quarter ended December 31, 2024, compared to $14.8 million for the quarter ended September 30, 2024, and increased $1.4 million, or 10.5%, from $13.3 million for the quarter ended December 31, 2023. The decrease from the prior quarter was primarily due to a lower average balance of interest-bearing cash, and a 59 basis point decline in the average yield on interest-bearing cash, offset by a seven basis point increase in the average loan yield and a 16 basis point increase in the average yield on investments. The increase in interest income compared to the same quarter last year was due primarily to higher average balances of loans and interest-bearing cash, a 37 basis point increase in the average yield on loans, and a 43 basis point increase in the average yield on investments, partially offset by a decline in the average balance of investments and a 59 basis point decline in the average yield on interest-bearing cash.

Interest income on loans increased $194 thousand, or 1.5%, to $13.1 million for the quarter ended December 31, 2024, compared to $12.9 million for the quarter ended September 30, 2024, and increased $1.0 million, or 8.6%, from $12.0 million for the quarter ended December 31, 2023. The average balance of total loans was $900.8 million for the quarter ended December 31, 2024, up from $898.6 million for the quarter ended September 30, 2024 and $884.7 million for the quarter ended December 31, 2023. The average yield on total loans was 5.77% for the quarter ended December 31, 2024, up from 5.70% for the quarter ended September 30, 2024 and 5.40% for the quarter ended December 31, 2023. The increase in the average loan yield during the current quarter, compared to both the prior quarter and the fourth quarter of 2023, was primarily due to the origination of new loans at higher interest rates. Additionally, variable-rate loans resetting to higher rates contributed to the increase in average yield compared to the prior quarters. The increase in the average balance during the current quarter compared to the prior quarter was primarily due to growth in commercial and multifamily loans, manufactured housing loans and floating home loans. This was partially offset by a decline in construction and land loans and commercial business loans. The average balances for one-to-four family loans, home equity loans, and other consumer loans remained relatively flat from the third quarter of 2024. The increase in the average balance of loans during the current quarter compared to the fourth quarter of 2023 was primarily due to loan growth across all categories, except for one-to-four family loans, construction and land loans, commercial business loans, and other consumer loans, with the largest decrease being in construction and land loans.

Interest income on investments was $132 thousand for both the quarters ended December 31, 2024 and September 30, 2024, and $129 thousand for the quarter ended December 31, 2023. Interest income on interest-bearing cash decreased $296 thousand to $1.5 million for the quarter ended December 31, 2024, compared to $1.8 million for the quarter ended September 30, 2024, and increased $359 thousand from $1.2 million for the quarter ended December 31, 2023. The decrease from the prior quarter was due to decreases in the average yield and average balance of interest-bearing cash. The increase from the same quarter in the prior year was a result of a higher average balance, partially offset by a lower average yield.

Interest expense decreased $449 thousand, or 6.4%, to $6.5 million for the quarter ended December 31, 2024, from $7.0 million for the quarter ended September 30, 2024, and increased $746 thousand, or 12.9%, from $5.8 million for the quarter ended December 31, 2023. The decrease in interest expense during the current quarter from the prior quarter was primarily the result of average balance decreases of $3.8 million in demand and NOW accounts, $2.3 million in certificate accounts and $9.5 million in FHLB advances, as well as lower average rates paid on all categories of interest-bearing deposits, partially offset by a $10.2 million increase in the average balance of savings and money market accounts. The increase in interest expense during the current quarter from the same quarter a year ago was primarily the result of a $91.9 million increase in the average balance of savings and money market accounts and a $1.3 million increase in the average balance of certificate accounts, as well as higher average rates paid on savings and money market accounts. This was partially offset by a $25.3 million decrease in the average balance of demand and NOW accounts and a $9.6 million decrease in the average balance of FHLB advances. The average cost of deposits was 2.58% for the quarter ended December 31, 2024, down from 2.74% for the quarter ended September 30, 2024 and up from 2.38% for the quarter ended December 31, 2023. The average cost of FHLB advances was 4.31% for the quarter ended December 31, 2024, down from 4.32% for the quarter ended September 30, 2024, and up from 4.26% for the quarter ended December 31, 2023.

NIM (annualized) was 3.13% for the quarter ended December 31, 2024, up from 2.98% for the quarter ended September 30, 2024 and 3.04% for the quarter ended December 31, 2023. The increase in NIM from the prior quarter was the result of lower cost of funding, partially offset by a decrease in interest income on interest-earning assets. The increase in NIM from the quarter one year ago was primarily due to an increase in interest income on interest-earning assets, driven by the higher average balance in loans and interest-bearing cash and a higher yield earned on loans and investments, partially offset by a higher average balance of and cost of savings and money market accounts.

A provision for credit losses of $14 thousand was recorded for the quarter ended December 31, 2024, consisting of a release of provision for credit losses on loans of $73 thousand and a provision for credit losses on unfunded loan commitments of $87 thousand. This compared to a provision for credit losses of $8 thousand for the quarter ended September 30, 2024, consisting of a provision for credit losses on loans of $106 thousand and a release of provision for credit losses on unfunded loan commitments of $98 thousand, and a release of provision for credit losses of $27 thousand for the quarter ended December 31, 2023, consisting of a provision for credit losses on loans of $337 thousand and a release of the provision for credit losses on unfunded loan commitments of $364 thousand. The increase in the provision for credit losses for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 resulted primarily from an additional qualitative adjustment related to our loan review, additional enhancements to the loss model related to how we adjust for the qualitative component, including the utilization of a scorecard to drive managements analysis, and growth in our unfunded construction loan portfolio, which has a higher loss rate than our other loan portfolios. These increases were offset by lower reserves in both our floating home sub-segment of other consumer loans within our quantitative analysis and in our qualitative analysis related to market conditions and value of underlying collateral, as economic conditions have improved. Expected loss estimates consider various factors, such as market conditions, borrower-specific information, projected delinquencies, and the impact of economic conditions on borrowers’ ability to repay.

Noninterest income decreased $75 thousand, or 6.1%, to $1.2 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and increased $94 thousand, or 8.8%, compared to the quarter ended December 31, 2023. The decrease from the prior quarter was primarily related to a $24 thousand downward adjustment in fair value of mortgage servicing rights and a $59 thousand decrease in earnings from bank-owned life insurance (“BOLI”), both influenced by fluctuating market interest rates. These decreases were partially offset by an increase of $13 thousand in net gain on sale of loans due to higher sales volume in the fourth quarter of 2024, and a $7 thousand increase in gain on disposal of assets due to insurance claims exceeding the book value on the replacement of stolen laptops in the second quarter of 2024. The increase in noninterest income from the same quarter of 2023 was primarily due an $43 thousand increase in service charges and fee income primarily due to increases in late fees on loans, higher interchange income and income related to a new, multi-year agreement with our credit card provider that was effective in 2024, a late fee on one commercial loan and higher specialty deposit fees due to fewer reversals of fees in 2024, a $173 thousand increase in the fair value adjustment on mortgage servicing rights due to changes in prepayment speeds, servicing costs, and discount rate, and a $7 thousand increase in gain on disposal of assets as noted above. These increases were partially offset by a $95 thousand decrease in earnings on BOLI due to market rate fluctuations, and a $23 thousand decrease in net gain on sale of loans due to fewer loans sold, and an $11 thousand decrease in mortgage servicing income as a result of the portfolio paying down at a faster rate than we are replacing the loans. Loans sold during the quarter ended December 31, 2024, totaled $3.5 million, compared to $2.4 million and $4.5 million of loans sold during the quarters ended September 30, 2024 and December 31, 2023, respectively.

Noninterest expense decreased $621 thousand, or 8.1%, to $7.1 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and decreased $248 thousand, or 3.4%, from the quarter ended December 31, 2023. The decrease from the quarter ended September 30, 2024 was primarily a result of lower salaries and benefits and operations expenses, partially offset by higher data processing expense. Salaries and benefits decreased $549 thousand primarily due to lower incentive compensation, lower retirement plan expense due to fluctuating market rates, lower medical expense due to higher medical costs during the third quarter of 2024, and lower salaries expense, as well as higher deferred salaries due to higher loan production. Operations expense decreased $211 thousand primarily due to a reversal of state and local tax expense related to higher estimated tax payments made than actual tax due, and lower operational losses in the current quarter as the prior quarter included the charge-off of a fraudulently obtained loan. This was partially offset by an $165 thousand increase in data processing expenses, reflecting new technology implementation costs. Compared to same quarter in 2023, the decrease in noninterest expense was primarily due to lower operations expenses, occupancy expenses and data processing expenses, which were partially offset by a $118 thousand increase in salaries and benefits costs. Operations expenses decreased due to reduction in loan originations costs, office expenses, operational losses, charitable contributions and state and local taxes, partially offset by higher professional fees primarily related to costs for future FDIC Improvement Act implementation. Data processing expenses decreased due to lower costs related to our core processor, while occupancy expenses decreased primarily due to fully amortized leasehold improvements. The increase in salaries and benefits compared to the same quarter last year reflected higher incentive compensation, lower deferred salaries, higher medical expenses due primarily to a change in insurance providers, and a higher contribution to our employee stock ownership plan due to the increase in value of our stock in 2024. This was partially offset by lower retirement plan expenses due to fluctuating market rates and lower salaries from a restructuring of positions at the end of 2023.

Balance Sheet Review, Capital Management and Credit Quality

Assets at December 31, 2024 totaled $993.6 million, down from $1.10 billion at September 30, 2024 and $995.22 million at December 31, 2023. The decrease in total assets from September 30, 2024 was primarily due to decreases in cash and cash equivalents and loans held-for-portfolio. The decrease from one year ago was primarily a result of lower balances of cash and cash equivalents and investment securities, offset by an increase in loans held-for-portfolio.

Cash and cash equivalents decreased $105.3 million, or 70.7%, to $43.6 million at December 31, 2024, compared to $148.9 million at September 30, 2024, and decreased $6.0 million, or 12.2%, from $49.7 million at December 31, 2023. The decrease from the prior quarter was primarily due to higher deposit withdrawals, as well as the strategic decision to sell reciprocal deposits at the end of the year. Cash and cash equivalents decreased from one year ago primarily due to the increase in loans held-for-portfolio and the payoff of one FHLB borrowing, partially offset by an increase in deposits.

Investment securities decreased $251 thousand, or 2.5%, to $9.9 million at December 31, 2024, compared to $10.2 million at September 30, 2024, and decreased $533 thousand, or 5.1%, from $10.5 million at December 31, 2023. Held-to-maturity securities totaled $2.1 million at both December 31, 2024 and September 30, 2024, and totaled $2.2 million at December 31, 2023. Available-for-sale securities totaled $7.8 million at December 31, 2024, compared to $8.0 million at September 30, 2024 and $8.3 million at December 31, 2023.

Loans held-for-portfolio were $900.2 million at December 31, 2024, compared to $901.7 million at September 30, 2024 and $894.5 million at December 31, 2023.

Nonperforming assets (“NPAs”), which are comprised of nonaccrual loans (including nonperforming modified loans), other real estate owned (“OREO”) and other repossessed assets, decreased $1.1 million, or 12.9%, to $7.5 million at December 31, 2024, from $8.6 million at September 30, 2024 and increased $3.4 million, or 81.3%, from $4.1 million at December 31, 2023. The decrease in NPAs from September 30, 2024 was primarily due to the payoff of seven loans totaling $1.2 million, one loan totaling $76 thousand returning to accrual status, and sale of one other real estate owned property for $115 thousand for a small net gain on sale, partially offset by the addition of seven loans totaling $326 thousand to nonaccrual. The increase in NPAs from one year ago was primarily due to the placement of an additional $9.3 million of loans on nonaccrual status, which included a $3.7 million matured commercial real estate loan where the borrower is in the process of securing financing from another lender, and a $2.4 million floating home loan, all of which are well secured. These additions were partially offset by payoffs totaling $4.2 million, the return of $784 thousand of loans to accrual status, charge-offs of $142 thousand, the sale of two other real estate owned properties for $685 thousand, and normal loan payments.

NPAs to total assets were 0.75%, 0.78% and 0.42% at December 31, 2024, September 30, 2024 and December 31, 2023, respectively. The allowance for credit losses on loans to total loans outstanding was 0.94% at December 31, 2024, compared to 0.95% at September 30, 2024 and 0.98% at December 31, 2023. Net loan charge-offs for the fourth quarter of 2024 totaled $13 thousand, compared to $14 thousand for the third quarter of 2024, and $15 thousand for the fourth quarter of 2023.

The following table summarizes our NPAs at the dates indicated (dollars in thousands):

	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Nonperforming Loans:
One-to-four family	$	537		$	745		$	822		$	835		$	1,108
Home equity loans		298			338			342			83			84
Commercial and multifamily		3,734			4,719			5,161			4,747			—
Construction and land		24			25			28			29			—
Manufactured homes		521			230			136			166			228
Floating homes		2,363			2,377			2,417			3,192			—
Commercial business		11			23			—			—			2,135
Other consumer		3			32			3			1			1
Total nonperforming loans		7,491			8,489			8,909			9,053			3,556
OREO and Other Repossessed Assets:
Commercial and multifamily		—			—			—			575			575
Manufactured homes		—			115			115			115			—
Total OREO and repossessed assets		—			115			115			690			575
Total NPAs	$	7,491		$	8,604		$	9,024		$	9,743		$	4,131

Percentage of Nonperforming Loans:
One-to-four family		7.3	%		8.7	%		9.1	%		8.5	%		26.9	%
Home equity loans		4.0			3.9			3.8			0.9			2.0
Commercial and multifamily		49.8			54.8			57.2			48.7			—
Construction and land		0.3			0.3			0.3			0.3			—
Manufactured homes		7.0			2.7			1.5			1.7			5.5
Floating homes		31.5			27.6			26.8			32.8			—
Commercial business		0.1			0.3			—			—			51.7
Other consumer		—			0.4			—			—			—
Total nonperforming loans		100.0			98.7			98.7			92.9			86.1
Percentage of OREO and Other Repossessed Assets:
Commercial and multifamily		—			—			—			5.9			13.9
Manufactured homes		—			1.3			1.3			1.2			—
Total OREO and repossessed assets		—			1.3			1.3			7.1			13.9
Total NPAs		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The following table summarizes the allowance for credit losses at the dates and for the periods indicated (dollars in thousands, unaudited):

	At or For the Quarter Ended:
	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Allowance for Credit Losses on Loans
Balance at beginning of period	$	8,585		$	8,493		$	8,598		$	8,760		$	8,438
(Release of) provision for credit losses during the period		(73	)		106			(88	)		(106	)		337
Net charge-offs during the period		(13	)		(14	)		(17	)		(56	)		(15	)
Balance at end of period	$	8,499		$	8,585		$	8,493		$	8,598		$	8,760
Allowance for Credit Losses on Unfunded Loan Commitments
Balance at beginning of period	$	147		$	245		$	266		$	193		$	557
Provision for (release of) provision for credit losses during the period		87			(98	)		(21	)		73			(364	)
Balance at end of period		234			147			245			266			193
Allowance for Credit Losses	$	8,733		$	8,732		$	8,738		$	8,864		$	8,953
Allowance for credit losses on loans to total loans		0.94	%		0.95	%		0.96	%		0.96	%		0.98	%
Allowance for credit losses to total loans		0.97	%		0.97	%		0.98	%		0.99	%		1.00	%
Allowance for credit losses on loans to total nonperforming loans		113.46	%		101.13	%		95.33	%		94.97	%		246.34	%
Allowance for credit losses to total nonperforming loans		116.58	%		102.86	%		98.08	%		97.91	%		251.77	%

Total deposits decreased $92.4 million, or 9.9%, to $837.8 million at December 31, 2024, from $930.2 million at September 30, 2024 and increased $11.3 million, or 1.4%, from $826.5 million at December 31, 2023. The decrease in total deposits compared to the prior quarter-end was primarily a result of the movement of reciprocal deposits off balance sheet for strategic objectives at year-end, followed by the return of those deposits to our balance sheet in the first quarter of 2025, and a decrease in one high cost money market depositor relationship as part of our strategic decision to decrease our overall cost of funds. Noninterest-bearing deposits increased $2.8 million, or 2.2%, to $132.5 million at December 31, 2024, compared to $129.7 million at September 30, 2024 and increased $5.8 million, or 4.6%, from $126.7 million at December 31, 2023. Noninterest-bearing deposits represented 15.8%, 14.0% and 15.3% of total deposits at December 31, 2024, September 30, 2024 and December 31, 2023, respectively.

FHLB advances totaled $25.0 million at December 31, 2024, compared to $40.0 million at both September 30, 2024, and December 31, 2023. The decrease from both prior dated was due to the repayment of a $15.0 million FHLB advance that matured in November 2024. FHLB advances are primarily used to support organic loan growth and to maintain liquidity ratios in line with our asset/liability objectives. FHLB advances outstanding at December 31, 2024 had maturities ranging from early 2026 through early 2028. Subordinated notes, net totaled $11.8 million at each of December 31, 2024, September 30, 2024 and December 31, 2023.

Stockholders’ equity totaled $103.7 million at December 31, 2024, an increase of $1.4 million, or 1.4%, from $102.2 million at September 30, 2024, and an increase of $3.0 million, or 3.0%, from $100.7 million at December 31, 2023. The increase in stockholders’ equity from September 30, 2024 was primarily the result of $1.9 million of net income earned during the current quarter, $98 thousand in share-based compensation, and $19 thousand in common stock options exercised, partially offset by a $122 thousand increase in accumulated other comprehensive loss, net of tax and the payment of $486 thousand in cash dividends to the Company’s stockholders.

Sound Financial Bancorp, Inc., a bank holding company, is the parent company of Sound Community Bank, which is headquartered in Seattle, Washington and has full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles, Port Ludlow and University Place. Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer with one loan production office located in the Madison Park neighborhood of Seattle. For more information, please visit www.soundcb.com.

Forward-Looking Statements Disclaimer

When used in this press release and in documents filed or furnished by Sound Financial Bancorp, Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”), in the Company’s other press releases or other public or stockholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors listed below or because of other factors that we cannot foresee that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made.

Factors which could cause actual results to differ materially, include, but are not limited to:adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation or deflation, a recession or slowed economic growth, as well as supply chain disruptions; changes in the interest rate environment, including increases and decreases in the Board of Governors of the Federal Reserve System (the Federal Reserve) benchmark rate and the duration at which such interest rate levels are maintained, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; changes in consumer spending, borrowing and savings habits; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; the Company’s ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company’s market area; secondary market conditions for loans;expectations regarding key growth initiatives and strategic priorities; environmental, social and governance goals and targets; results of examinations of the Company or the Bank by their regulators; increased competition; changes in management’s business strategies; legislative changes; changes in the regulatory and tax environments in which the Company operates; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on our third-party vendors; the potential imposition of new tariffs or changes to existing trade policies that could affect economic activity or specific industry sector; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other documents filed with or furnished to the SEC, which are available at www.soundcb.com and on the SEC’s website at www.sec.gov. The risks inherent in these factors could cause the Company’s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company and could negatively affect the Company’s operating and stock performance.

The Company does not undertake—and specifically disclaims any obligation—to revise any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statement.

CONSOLIDATED INCOME STATEMENTS (Dollars in thousands, unaudited)
	For the Quarter Ended
	December 31, 2024			September 30, 2024		June 30, 2024			March 31, 2024			December 31, 2023
Interest income	$	14,736		$	14,838	$	14,039		$	13,760		$	13,337
Interest expense		6,516			6,965		6,591			6,300			5,770
Net interest income		8,220			7,873		7,448			7,460			7,567
Provision for (release of) credit losses		14			8		(109	)		(33	)		(27	)
Net interest income after provision for (release of) credit losses		8,206			7,865		7,557			7,493			7,594
Noninterest income:
Service charges and fee income		619			628		761			612			576
Earnings on bank-owned life insurance		127			186		134			177			222
Mortgage servicing income		277			280		279			282			288
Fair value adjustment on mortgage servicing rights		77			101		(116	)		(65	)		(96	)
Net gain on sale of loans		53			40		74			90			76
Other income		7			—		30			—			—
Total noninterest income		1,160			1,235		1,162			1,096			1,066
Noninterest expense:
Salaries and benefits		3,920			4,469		4,658			4,543			3,802
Operations		1,329			1,540		1,569			1,457			1,537
Regulatory assessments		189			189		220			189			198
Occupancy		409			414		397			444			458
Data processing		1,232			1,067		910			1,017			1,311
Net (gain) loss on OREO and repossessed assets		(21	)		—		(17	)		6			—
Total noninterest expense		7,058			7,679		7,737			7,656			7,306
Income before provision for income taxes		2,308			1,421		982			933			1,354
Provision for income taxes		389			267		187			163			143
Net income	$	1,919		$	1,154	$	795		$	770		$	1,211

CONSOLIDATED INCOME STATEMENTS (Dollars in thousands, unaudited)

	For theYear Ended December 31
		2024			2023
Interest income	$	57,374		$	50,609
Interest expense		26,372			16,759
Net interest income		31,002			33,850
(Release of) provision for credit losses		(120	)		(273	)
Net interest income after (release of) provision for credit losses		31,122			34,123
Noninterest income:
Service charges and fee income		2,620			2,527
Earnings on bank-owned life insurance		625			1,179
Mortgage servicing income		1,118			1,179
Fair value adjustment on mortgage servicing rights		(4	)		(219	)
Net gain on sale of loans		258			340
Other income		38			—
Total noninterest income		4,655			5,006
Noninterest expense:
Salaries and benefits		17,590			17,135
Operations		5,894			6,095
Regulatory assessments		787			688
Occupancy		1,665			1,810
Data processing		4,226			4,388
Net (gain) loss on OREO and repossessed assets		(31	)		13
Total noninterest expense		30,131			30,129
Income before provision for income taxes		5,646			9,000
Provision for income taxes		1,006			1,561
Net income	$	4,640		$	7,439

CONSOLIDATED BALANCE SHEETS (Dollars in thousands, unaudited)
	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
ASSETS
Cash and cash equivalents	$	43,641		$	148,930		$	135,111		$	137,977		$	49,690
Available-for-sale securities, at fair value		7,790			8,032			7,996			8,115			8,287
Held-to-maturity securities, at amortized cost		2,130			2,139			2,147			2,157			2,166
Loans held-for-sale		487			65			257			351			603
Loans held-for-portfolio		900,171			901,733			889,274			897,877			894,478
Allowance for credit losses – loans		(8,499	)		(8,585	)		(8,493	)		(8,598	)		(8,760	)
Total loans held-for-portfolio, net		891,672			893,148			880,781			889,279			885,718
Accrued interest receivable		3,471			3,705			3,413			3,617			3,452
Bank-owned life insurance, net		22,490			22,363			22,172			22,037			21,860
Other real estate owned (“OREO”) and other repossessed assets, net		—			115			115			690			575
Mortgage servicing rights, at fair value		4,769			4,665			4,540			4,612			4,632
Federal Home Loan Bank (“FHLB”) stock, at cost		1,730			2,405			2,406			2,406			2,396
Premises and equipment, net		4,697			4,807			4,906			6,685			5,240
Right-of-use assets		3,725			3,779			4,020			4,259			4,496
Other assets		7,031			6,777			6,995			4,500			6,106
TOTAL ASSETS	$	993,633		$	1,100,930		$	1,074,859		$	1,086,685		$	995,221
LIABILITIES
Interest-bearing deposits	$	705,267		$	800,480		$	781,854		$	788,217		$	699,813
Noninterest-bearing deposits		132,532			129,717			124,915			128,666			126,726
Total deposits		837,799			930,197			906,769			916,883			826,539
Borrowings		25,000			40,000			40,000			40,000			40,000
Accrued interest payable		765			908			760			719			817
Lease liabilities		4,013			4,079			4,328			4,576			4,821
Other liabilities		9,371			9,711			9,105			9,578			9,563
Advance payments from borrowers for taxes and insurance		1,260			2,047			812			2,209			1,110
Subordinated notes, net		11,759			11,749			11,738			11,728			11,717
TOTAL LIABILITIES		889,967			998,691			973,512			985,693			894,567
STOCKHOLDERS’ EQUITY:
Common stock		25			25			25			25			25
Additional paid-in capital		28,413			28,296			28,198			28,110			27,990
Retained earnings		76,272			74,840			74,173			73,907			73,627
Accumulated other comprehensive loss, net of tax		(1,044	)		(922	)		(1,049	)		(1,050	)		(988	)
TOTAL STOCKHOLDERS’ EQUITY		103,666			102,239			101,347			100,992			100,654
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	993,633		$	1,100,930		$	1,074,859		$	1,086,685		$	995,221

KEY FINANCIAL RATIOS (unaudited)
	For the Quarter Ended
	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Annualized return on average assets	0.70	%	0.42	%	0.30	%	0.29	%	0.46	%
Annualized return on average equity	7.40	%	4.50	%	3.17	%	3.06	%	4.78	%
Annualized net interest margin⁽¹⁾	3.13	%	2.98	%	2.92	%	2.95	%	3.04	%
Annualized efficiency ratio⁽²⁾	75.25	%	84.31	%	89.86	%	89.48	%	84.63	%

(1) Net interest income divided by average interest earning assets.
(2) Noninterest expense divided by total revenue (net interest income and noninterest income).

PER COMMON SHARE DATA (unaudited)
	At or For the Quarter Ended
	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Basic earnings per share	$	0.75	$	0.45	$	0.31	$	0.30	$	0.47
Diluted earnings per share	$	0.74	$	0.45	$	0.31	$	0.30	$	0.47
Weighted-average basic shares outstanding		2,547,210		2,544,233		2,540,538		2,539,213		2,542,175
Weighted-average diluted shares outstanding		2,578,771		2,569,368		2,559,015		2,556,958		2,560,656
Common shares outstanding at period-end		2,564,907		2,564,095		2,557,284		2,558,546		2,549,427
Book value per share	$	40.42	$	39.87	$	39.63	$	39.47	$	39.48

AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE RATE PAID
(Dollars in thousands, unaudited)

The following tables present, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. Income and yields on tax-exempt obligations have not been computed on a tax equivalent basis. All average balances are daily average balances. Nonaccrual loans have been included in the table as loans carrying a zero yield for the period they have been on nonaccrual (dollars in thousands).

	Three Months Ended
	December 31, 2024							September 30, 2024							December 31, 2023
	Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate		Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate		Average Outstanding Balance			Interest Earned/ Paid		Yield/ Rate
Interest-Earning Assets:
Loans receivable	$	900,832		$	13,070	5.77	%	$	898,570		$	12,876	5.70	%	$	884,677		$	12,033	5.40	%
Interest-earning cash		130,412			1,534	4.68	%		138,240			1,830	5.27	%		88,401			1,175	5.27	%
Investments		13,263			132	3.96	%		13,806			132	3.80	%		14,479			129	3.53	%
Total interest-earning assets	$	1,044,507			14,736	5.61	%		1,050,616		$	14,838	5.62	%	$	987,557			13,337	5.36	%
Interest-Bearing Liabilities:
Savings and money market accounts	$	350,495			2,476	2.81	%	$	340,281			2,688	3.14	%	$	258,583			1,586	2.43	%
Demand and NOW accounts		144,470			128	0.35	%		148,252			151	0.41	%		169,816			149	0.35	%
Certificate accounts		301,293			3,413	4.51	%		303,632			3,524	4.62	%		300,042			3,436	4.54	%
Subordinated notes		11,756			168	5.69	%		11,745			168	5.69	%		11,714			168	5.69	%
Borrowings		30,546			331	4.31	%		40,000			434	4.32	%		40,109			431	4.26	%
Total interest-bearing liabilities	$	838,560			6,516	3.09	%	$	843,910			6,965	3.28	%	$	780,264			5,770	2.93	%
Net interest income/spread				$	8,220	2.52	%				$	7,873	2.34	%				$	7,567	2.42	%
Net interest margin						3.13	%						2.98	%						3.04	%

Ratio of interest-earning assets to interest-bearing liabilities		125	%						124	%						127	%
Noninterest-bearing deposits	$	130,476						$	132,762						$	134,857
Total deposits		926,734		$	6,017	2.58	%		924,927		$	6,363	2.74	%		863,298		$	5,171	2.38	%
Total funding⁽¹⁾		969,036			6,516	2.68	%		976,672			6,965	2.84	%		915,121			5,770	2.50	%

(1) Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

	Year Ended
	December 31, 2024							December 31, 2023
	Average Outstanding Balance			Interest Earned/Paid		Yield/Rate		Average Outstanding Balance			Interest Earned/Paid		Yield/Rate
Interest-Earning Assets:
Loans receivable	$	896,690		$	50,499	5.63	%	$	870,227		$	46,470	5.34	%
Interest-earning cash		124,259			6,367	5.12	%		74,708			3,621	4.85	%
Investments		12,468			508	4.07	%		13,661			518	3.79	%
Total interest-earning assets	$	1,033,417			57,374	5.55	%	$	958,596			50,609	5.28	%
Interest-Bearing Liabilities:
Savings and money market accounts	$	319,314			9,145	2.86	%	$	194,810			2,783	1.43	%
Demand and NOW accounts		151,528			568	0.37	%		204,922			736	0.36	%
Certificate accounts		309,441			14,363	4.64	%		280,238			10,617	3.79	%
Subordinated notes		11,740			672	5.72	%		11,698			672	5.74	%
Borrowings		37,623			1,624	4.32	%		43,977			1,951	4.44	%
Total interest-bearing liabilities	$	829,646			26,372	3.18	%	$	735,645			16,759	2.28	%
Net interest income/spread				$	31,002	2.37	%				$	33,850	3.00	%
Net interest margin						3.00	%						3.53	%

Ratio of interest-earning assets to interest-bearing liabilities		125	%						130	%
Noninterest-bearing deposits	$	131,141						$	154,448
Total deposits		911,424		$	24,076	2.64	%		834,418		$	14,136	1.69	%
Total funding⁽¹⁾		960,787			26,372	2.74	%		890,093			16,759	1.88	%

(1) Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

LOANS (Dollars in thousands, unaudited)
	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Real estate loans:
One-to-four family	$	269,684		$	271,702		$	268,488		$	279,213		$	279,448
Home equity		26,686			25,199			26,185			24,380			23,073
Commercial and multifamily		371,516			358,587			342,632			324,483			315,280
Construction and land		73,077			85,724			96,962			111,726			126,758
Total real estate loans		740,963			741,212			734,267			739,802			744,559
Consumer Loans:
Manufactured homes		41,128			40,371			38,953			37,583			36,193
Floating homes		86,411			86,155			81,622			84,237			75,108
Other consumer		17,720			18,266			18,422			18,847			19,612
Total consumer loans		145,259			144,792			138,997			140,667			130,913
Commercial business loans		15,605			17,481			17,860			19,075			20,688
Total loans		901,827			903,485			891,124			899,544			896,160
Less:
Premiums		718			736			754			808			829
Deferred fees, net		(2,374	)		(2,488	)		(2,604	)		(2,475	)		(2,511	)
Allowance for credit losses – loans		(8,499	)		(8,585	)		(8,493	)		(8,598	)		(8,760	)
Total loans held-for-portfolio, net	$	891,672		$	893,148		$	880,781		$	889,279		$	885,718

DEPOSITS (Dollars in thousands, unaudited)
	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Noninterest-bearing demand	$	132,532	$	129,717	$	124,915	$	128,666	$	126,726
Interest-bearing demand		142,126		148,740		152,829		159,178		168,346
Savings		61,252		61,455		63,368		65,723		69,461
Money market⁽¹⁾		206,067		285,655		253,873		241,976		154,044
Certificates		295,822		304,630		311,784		321,340		307,962
Total deposits	$	837,799	$	930,197	$	906,769	$	916,883	$	826,539

(1) Includes $5.0 million of brokered deposits at December 31, 2023.

CREDIT QUALITY DATA (Dollars in thousands, unaudited)
	At or For the Quarter Ended
	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Total nonperforming loans	$	7,491		$	8,489		$	8,909		$	9,053		$	3,556
OREO and other repossessed assets		—			115			115			690			575
Total nonperforming assets	$	7,491		$	8,604		$	9,024		$	9,743		$	4,131
Net charge-offs during the quarter	$	(13	)	$	(14	)	$	(17	)	$	(56	)	$	(15	)
Provision for (release of) credit losses during the quarter		14			8			(109	)		(33	)		(27	)
Allowance for credit losses – loans		8,499			8,585			8,493			8,598			8,760
Allowance for credit losses – loans to total loans		0.94	%		0.95	%		0.96	%		0.96	%		0.98	%
Allowance for credit losses – loans to total nonperforming loans		113.46	%		101.13	%		95.33	%		94.97	%		246.34	%
Nonperforming loans to total loans		0.83	%		0.94	%		1.00	%		1.01	%		0.40	%
Nonperforming assets to total assets		0.75	%		0.78	%		0.84	%		0.90	%		0.42	%

OTHER STATISTICS (Dollars in thousands, unaudited)
	At or For the Quarter Ended
	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023

Total loans to total deposits		107.64	%		97.13	%		98.27	%		98.11	%		108.42	%
Noninterest-bearing deposits to total deposits		15.82	%		13.95	%		13.78	%		14.03	%		15.33	%

Average total assets for the quarter	$	1,089,067		$	1,095,404		$	1,070,579		$	1,062,036		$	1,033,985
Average total equity for the quarter	$	103,181		$	102,059		$	100,961		$	101,292		$	100,612

Contact

Financial:
Wes Ochs
Executive Vice President/CFO
(206) 436-8587

Media:
Laurie Stewart
President/CEO
(206) 436-1495

The MIL Network –

January 30, 2025

MIL-OSI USA: Senators Markey and Cruz Reintroduce Bill to Keep AM Radio in New Vehicles

US Senate News:

Source: United States Senator for Massachusetts Ed Markey
Bill Text (PDF)
Washington (January 29, 2025) – Senator Edward J. Markey (D-Mass.), member of the Senate Commerce, Science, and Transportation Committee, and Ted Cruz (R-Texas), Chairman of the Senate Commerce, Science, and Transportation Committee, today reintroduced the AM Radio for Every Vehicle Act. This legislation would direct the National Highway Traffic Safety Administration (NHTSA) to require automakers to maintain AM broadcast radio in their new vehicles at no additional charge.
“As we witness more tragic climate change-induced disasters like the wildfires in Los Angeles, broadcast AM radio continues to be a critical tool for communication. AM radio is a lifeline for people across the country for news, sports, and especially emergency information,” said Senator Markey. “Tens of millions of listeners across the country have made clear that they want AM radio to remain in their vehicles. Our AM Radio for Every Vehicle Act heeds their words and ensures that this essential tool doesn’t get lost on the dial.”
“During weather disasters or power outages, AM radio is consistently the most reliable form of communication and is critical to keep millions of Texans safe. AM radio has long been a haven for people to express differing viewpoints, allowing free speech and our robust democratic process to flourish for decades. I am honored to once again partner with Sen. Markey on this bipartisan legislation on behalf of our constituents who depend on AM radio and public airwaves for access to news, music, talk, and emergency alerts,” said Senator Cruz.
Cosponsors in the Senate include Senators Tammy Baldwin (D-Wisc.), John Barrasso (R-Wyo.), Marsha Blackburn (R-Tenn.), Richard Blumenthal (D-Conn.), Katie Britt (R-Ala.), Ted Budd (R-N.C.), Maria Cantwell (D-Wash.), Shelley Moore Capito (R-W.V.), Tom Cotton (R-Ark.), Kevin Cramer (R-N.D.), Steve Daines (R-Mont.), Joni Ernst (R-Iowa), Deb Fischer (R-Neb.), Chuck Grassley (R-Iowa), Josh Hawley (R-Mo.), Maggie Hassan (D-N.H.), Mazie Hirono (D-Hawaii), Jim Justice (R-W.V.), Angus King (I-Maine), Amy Klobuchar (D-Minn.), James Lankford (R-Okla.), Ben Ray Luján (D-N.M.), Cynthia Lummis (R-Wyo.), Roger Marshall (R-Kan.), Jeff Merkley (D-Ore.), Jerry Moran (R-Kan.), Chris Murphy (D-Conn.), Jack Reed (D-R.I.), Pete Ricketts (R-Neb.), Bernie Sanders (I-Vt.), Rick Scott (R-Fla.), Jeanne Shaheen (D-N.H.), Tim Sheehy (R-Mont.), Tina Smith (D-Minn.), Dan Sullivan (R-Alaska), Ron Wyden (D-Ore.), Todd Young (R-Ind.), John Barrasso (R-Wy.), Jim Banks (R-Ind.), and John Hoeven (R-N.D.).
In May 2023, Senators Markey and Cruz led their colleagues in introducing the AM Radio for Every Vehicle Act. The AM Radio for Every Vehicle Act passed through the Senate Commerce Committee in July 2023 and passed through the House Energy and Commerce Committee in September 2024.

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: Chair Ernst Delivers Opening Remarks at Kelly Loeffler Nomination Hearing

US Senate News:

Source: United States Senator Joni Ernst (R-IA)
WASHINGTON – Today, at the Senate Committee on Small Business and Entrepreneurship hearing on the nomination of former Senator Kelly Loeffler to serve as the Small Business Administration (SBA) administrator, Chair Joni Ernst (R-Iowa) highlighted how Loeffler’s track record as a successful business leader provides the exact experience needed to reform the bloated agency and restore its mission.
Among the biggest areas in need of reform, Ernst cited widespread fraud in COVD-era relief designated for small businesses, the SBA’s mismanaged loan and disaster aid programs, and rampant telework abuse.
Click here watch Chair Ernst’s opening remarks.
Ernst’s full remarks:
“Senator Loeffler, as I already said, welcome to the Committee, and thank you for your willingness to serve in this role.
“I greatly appreciate the time you’ve spent meeting with me and my colleagues prior to this hearing. I want to take a minute to recognize some of your family here supporting you today. First, your husband, Jeff. Thank you, Jeff for being here. Next, your brother Brian, and his family, who I understand traveled to Washington D.C. from their farm in Illinois. And also, your parents, Don and Lynda, who are watching the hearing from their home in Florida today. We appreciate you all making the trip here and tuning into this important hearing.
“As a former member of this body, you understand the importance of the Senate’s advice and consent process, and I appreciate that you have fully embraced the committee’s standard, yet extensive, vetting of your experience and background in advance of today’s hearing and our upcoming vote on your confirmation.
“As a successful businesswoman, it is abundantly clear that you truly understand what it takes to be an entrepreneur.
“Throughout your distinguished career, you’ve risen through the ranks at multiple companies due to your determination and grit, and you have started many successful businesses yourself.
“Most importantly, you understand what it means to be overrun by Washington’s bureaucratic overreach—and that government must instead get out of businesses’ way so they can thrive.
“Small businesses and their advocates are excited for your leadership. The Committee has received several letters of support for Senator Loeffler’s nomination.
“The mission of the SBA is to aid small businesses to ensure economic prosperity and free competition.
“Traditionally, SBA administers programs and services falling into three main buckets: there’s counseling, contracting, and access to capital.
“While SBA once may have been characterized as a smaller agency, COVID small business programs made SBA a household name, as the agency received a whopping $1.1 trillion in taxpayer funding to assist small businesses during the pandemic.
“With that funding came big responsibilities, and I remain concerned the SBA under the prior Administration failed to live up to its mission.
“I believe substantial reforms must be made to get the SBA back in shape, and that is going to require strong leadership.
“The Biden administration decided to turn a blind eye to COVID fraud and delinquencies, refusing to properly collect outstanding debt and fraudulent funds, which has huge implications to the taxpayer.
“Reports have indicated SBA charged off about $18.6 billion worth of EIDL loans in Fiscal Year 2024.
“Not once during the Biden administration was the SBA able to provide an accounting of their loans receivable and loan guarantees, which meant that the Government Accountability Office hasn’t been able to even issue a financial audit of the Agency since Fiscal Year 2020.
“SBA also completely mismanaged and misinformed Congress last year regarding its disaster loan account, resulting in a shortfall lasting 66 days – an unacceptable failure for the disaster victims in North Carolina, South Carolina, Georgia, Virginia, and Florida.
“I do appreciate that once the account was funded, SBA staff worked around the clock, including over the holidays, to get the money out to disaster victims, but I never want to see that situation unfold again.
“While SBA is failing, it also appears that its workforce continues to stay home, while its more than 246,000 square foot Washington, D.C. headquarters sits empty.
“The GAO found that even if everyone did show up to work in person, the SBA’s building space would still only be 67 percent utilized, which is a complete waste of taxpayer money.
“That is why I introduced a bill to relocate 30 percent of the headquarters workforce to the SBA district offices across the country and cut 30 percent of office space.
“The SBA has been completely out of touch with the real-world challenges of entrepreneurs, and while the Biden administration simultaneously let SBA employees stay home, they also added positions in Washington, D.C. while stripping offices in Iowa, New Hampshire, Utah, and other states.
“I would like to work with you, Senator Loeffler, on ways to ensure SBA is effectively utilizing its personnel and ensuring that small businesses in all parts of America are able to access SBA programs if they need them.
“I’ve detailed these concerns and others regarding the mess you have to clean up from the Biden administration, and potential landmines you will encounter, in a letter to President Trump on day one of his new Administration. I ask unanimous consent to enter that letter into the record.
“Without objection, so ordered.
“In Iowa, Main Street is in trouble, and I hear from my colleagues that this is true in their states across America.
“Small businesses are the lifeblood of our rural communities, and for too long under the Biden administration, they’ve been crushed with red tape and woke program requirements, with no one caring about how that affects the day-to-day operations.
“I see a great opportunity for the Trump administration, and you, to revitalize small businesses in America.
“Thank you again for being here, and I look forward to your testimony.”

MIL OSI USA News –

January 30, 2025

MIL-OSI USA: FEMA hosting media opportunity at Mercer County, W.Va., disaster recovery center

Source: US Federal Emergency Management Agency

Headline: FEMA hosting media opportunity at Mercer County, W.Va., disaster recovery center

FEMA hosting media opportunity at Mercer County, W.Va., disaster recovery center

The Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) will be available to media at 10:30 a.m., Friday, Jan. 31, 2025, at the Princeton, W.Va., Disaster Recovery Center (DRC). West Virginia FEMA Federal Coordinating Officer Georgeta Dragoiu and a representative of the SBA will be present to provide an update on the recovery mission following the Sept. 25-28, 2024, remnants of Tropical Storm Helene. Dragoiu will speak on the approval of more than $2 million in disaster aid; the upcoming deadline to apply on Friday, Feb. 7; the extra week of DRC operation; and a reminder to residents to be careful with their information. Members of the media are invited to participate.Information for the Princeton Disaster Recovery Center is as follows:Princeton Disaster Recovery CenterLifeline Princeton Church of God250 Oakvale Rd. Princeton, WV 24740Hours of operation:Monday to Friday: 9 a.m. to 5 p.m.Saturdays: 10 a.m. to 2 p.m. Closed SundayFor more information on West Virginia’s disaster recovery, visit emd.wv.gov, West Virginia Emergency Management Division Facebook page, www.fema.gov/disaster/4851 and www.facebook.com/FEMA.
tiana.suber
Wed, 01/29/2025 – 21:46

MIL OSI USA News –

January 30, 2025

MIL-OSI: National Fuel Reports First Quarter Earnings

Source: GlobeNewswire (MIL-OSI)

WILLIAMSVILLE, N.Y., Jan. 29, 2025 (GLOBE NEWSWIRE) — National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the first quarter of its 2025 fiscal year.

FISCAL 2025 FIRST QUARTER SUMMARY

GAAP net income of $45.0 million (or $0.49 per share), which includes $104.6 million in non-cash, after-tax impairment charges in the Exploration & Production segment, compared to GAAP net income of $133.0 million (or $1.44 per share) in the prior year.
Adjusted operating results of $151.9 million (or $1.66 per share), an increase of 14%, or $16.7 million ($0.20 per share), compared to the prior year. See non-GAAP reconciliation on page 2.
Pipeline & Storage segment net income increased $8.4 million, or 35%, compared to the prior year, primarily due to the settlement of the Supply Corporation rate case, which led to increased rates effective February 1, 2024.
Utility segment net income increased $5.9 million, or 22%, compared to the prior year driven by a three-year settlement of a rate proceeding in the Company’s New York jurisdiction, which led to increased rates starting October 1, 2024.
E&P segment adjusted operating results increased $2.6 million, or 5%, compared to the prior year, supported by hedging-related gains, which more than offset the $0.08 per MMBtu decrease in the weighted average natural gas price compared to the prior year.
The Company repurchased $34 million of common stock during the quarter, which brings the total amount repurchased to $99 million, or 1.7 million shares, under the $200 million share buyback program, authorized in March 2024.
The Company is increasing its guidance for fiscal 2025 adjusted earnings per share to a range of $6.50 to $7.00 as a result of higher forecasted natural gas prices and ongoing improvements in the outlook for each segment.

MANAGEMENT COMMENTS

David P. Bauer, President and CEO of National Fuel Gas Company, stated: “Fiscal 2025 is off to a great start for National Fuel, with each business contributing to our strong consolidated adjusted operating results.

“In our regulated segments, we are delivering on our long-term growth outlook, with adjusted earnings per share in the quarter increasing approximately 30% compared to the prior year. The recent approval of our rate case settlement in our New York utility jurisdiction, which extends through 2027, combined with the ongoing benefits from ratemaking activity in our Pennsylvania utility territory and at Supply Corporation, gives us further confidence in our 7% to 10% earnings growth projections over the next three years. Furthermore, our integrated upstream and gathering operations in the Eastern Development Area (“EDA”) continue to exceed expectations, with the combination of strong operational execution and our highly-prolific assets. This differentiated ability to drive capital efficiency improvements alongside a rising price outlook for natural gas positions these businesses to deliver strong results in the coming years. We expect that these tailwinds will contribute to rising free cash flow across the system and deliver significant value to National Fuel shareholders.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS


	Three Months Ended
	December 31,
(in thousands except per share amounts)	2024			2023
Reported GAAP Earnings	$	44,986		$	133,020
Items impacting comparability:
Impairment of assets (E&P)		141,802			—
Tax impact of impairment of assets		(37,169	)		—
Unrealized (gain) loss on derivative asset (E&P)		349			4,198
Tax impact of unrealized (gain) loss on derivative asset		(94	)		(1,151	)
Unrealized (gain) loss on other investments (Corporate / All Other)		2,617			(1,049	)
Tax impact of unrealized (gain) loss on other investments		(550	)		220
Adjusted Operating Results	$	151,941		$	135,238

Reported GAAP Earnings Per Share	$	0.49		$	1.44
Items impacting comparability:
Impairment of assets, net of tax (E&P)		1.14			—
Unrealized (gain) loss on derivative asset, net of tax (E&P)		—			0.03
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)		0.02			(0.01	)
Rounding		0.01			—
Adjusted Operating Results Per Share	$	1.66		$	1.46

FISCAL 2025 GUIDANCE UPDATE

National Fuel is increasing its guidance for fiscal 2025 adjusted earnings per share, which are now expected to be within a range of $6.50 to $7.00. This updated range incorporates better than expected results in the first quarter along with the anticipated impact of higher natural gas prices and higher production in the Exploration and Production segment for the remainder of the fiscal year. The Company is now assuming NYMEX natural gas prices will average $3.50 per MMBtu for the remaining nine months of fiscal 2025, an increase of $0.70 from the $2.80 per MMBtu assumed in previous guidance. This updated natural gas price projection approximates the current NYMEX forward curve at this time, however; given the continued volatility in NYMEX natural gas prices, the Company is providing the following sensitivities to its adjusted operating results guidance range:

NYMEX Assumption *Remaining 9 months* ($/MMBtu)		Fiscal 2025 Adjusted Earnings Per Share Sensitivities
$3.00		$6.15 – $6.65
$3.50		$6.50 – $7.00
$4.00		$6.90 – $7.40

The Company’s production guidance for fiscal 2025 is now expected to be in the range of 410 to 425 Bcfe, an increase of 7.5 Bcfe, or 2%, at the midpoint compared to previous guidance. The revised production guidance is principally a result of ongoing improvements in Seneca’s well results and additional operational efficiencies in the highly prolific EDA. This is also expected to result in increased Gathering segment revenue, relative to the Company’s prior projections, and as a result the Company has increased the midpoint of its guidance range by $5 million. While the Company’s guidance does not incorporate any future price-related curtailments, with 87% of its projected fiscal 2025 production linked to firm sales contracts, Seneca has limited exposure to in-basin markets. Further, 71% of expected production for the balance of the fiscal year is either matched by a financial hedge, including a combination of swaps and no-cost collars, or was entered into at a fixed price, both of which provide price certainty for that production.

Additionally, as a result of operational improvements, the Company is revising Seneca’s capital expenditure guidance range downward to $495 million to $515 million, or $505 million at the midpoint, which is a $5 million decrease from the midpoint of the Company’s previous guidance.

The Company’s other fiscal 2025 guidance assumptions remain largely unchanged and are detailed in the table on page 7.

DISCUSSION OF FIRST QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended December 31, 2024 is summarized in a tabular form on pages 8 and 9 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Note that management defines adjusted operating results as reported GAAP earnings adjusted for items impacting comparability, and adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.

Upstream Business

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC (“Seneca”). Seneca explores for, develops and produces primarily natural gas reserves in Pennsylvania.

	Three Months Ended
	December 31,
(in thousands)	2024			2023		Variance
GAAP Earnings	$	(46,777	)	$	52,483	$	(99,260	)
Impairment of assets, net of tax		104,633			—		104,633
Unrealized (gain) loss on derivative asset, net of tax		255			3,047		(2,792	)
Adjusted Operating Results	$	58,111		$	55,530	$	2,581

Adjusted EBITDA	$	156,645		$	159,970	$	(3,325	)

Seneca’s first quarter GAAP earnings decreased $99.3 million versus the prior year. This was driven by non-cash, pre-tax impairment charges of $141.8 million ($104.6 million after-tax), the majority of which is related to a “ceiling test” impairment which required Seneca to write-down the book value of its reserves under the full cost method of accounting. For purposes of the ceiling test, the 12-month average of first day of the month pricing for NYMEX natural gas for the period ended December 31, 2024 was $2.13 per MMBtu.

Excluding impairments, as well as the net impact of unrealized losses related to reductions in the fair value of contingent consideration received in connection with the June 2022 divestiture of Seneca’s California assets (see table above), Seneca’s adjusted operating results increased $2.6 million primarily due to higher realized natural gas prices after the impact of hedging and lower per unit operating expenses, partially offset by lower natural gas production.

During the first quarter, Seneca produced 97.7 Bcf of natural gas, a decrease of 3.0 Bcf, or 3%, from the prior year. Compared to the preceding fourth quarter of fiscal 2024, production in the first quarter is higher by 5.8 Bcf, or 6%. Early in the quarter, Seneca curtailed approximately 1 Bcf of production due to low in-basin pricing. Production in the quarter was lower than the prior year largely due to the timing of turn in line dates for new wells between fiscal years.

Seneca’s average realized natural gas price, after the impact of hedging and transportation costs, was $2.53 per Mcf, an increase of $0.02 per Mcf from the prior year. Seneca recorded hedging gains of $29.7 million, or an uplift of $0.30 per Mcf, during the quarter, which more than offset a $0.08 per Mcf decrease in pre-hedge natural gas price realizations versus the prior year.

On a per unit basis, first quarter Lease Operating Expense (“LOE”) was $0.67 per Mcf, consistent with the prior year. LOE included $55.0 million ($0.56 per Mcf) for gathering and compression services from the Company’s Gathering segment to connect Seneca’s production to sales points along interstate pipelines. General and Administrative Expense (“G&A”) was $0.20 per Mcf, an increase of $0.02 per Mcf compared to the prior year driven by the combination of higher personnel costs and modestly lower production. Depreciation, Depletion and Amortization Expense (“DD&A”) was $0.65 per Mcf, a decrease of $0.06 per Mcf from the prior year largely due to ceiling test impairments recorded in the third and fourth quarters of fiscal 2024 that lowered Seneca’s full cost pool depletable base.

Midstream Businesses

Pipeline and Storage Segment

The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.

	Three Months Ended
	December 31,
(in thousands)	2024		2023		Variance
GAAP Earnings	$	32,454	$	24,055	$	8,399

Adjusted EBITDA	$	70,953	$	59,142	$	11,811

The Pipeline and Storage segment’s first quarter GAAP earnings increased $8.4 million versus the prior year primarily due to higher operating revenues, partly offset by higher operation and maintenance (“O&M”) expense.

The increase in operating revenues of $12.2 million, or 13%, was primarily attributable to an increase in Supply Corporation’s transportation and storage rates effective February 1, 2024, in accordance with its rate settlement, which was approved in fiscal 2024. O&M expense increased $1.1 million primarily due to higher pipeline integrity and labor-related costs.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which delivers Seneca and other non-affiliated Appalachian production to the interstate pipeline system.

	Three Months Ended
	December 31,
(in thousands)	2024		2023		Variance
GAAP Earnings	$	27,145	$	28,825	$	(1,680	)

Adjusted EBITDA	$	51,936	$	53,061	$	(1,125	)

The Gathering segment’s first quarter GAAP earnings decreased $1.7 million versus the prior year due to lower operating revenues and higher DD&A expense.

Operating revenues decreased $1.5 million, or 2%, primarily due to a decrease in throughput from Seneca. DD&A expense increased $1.1 million primarily due to higher average depreciable plant in service compared to the prior year.

Downstream Business

Utility Segment

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution Corporation”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.

	Three Months Ended
	December 31,
(in thousands)	2024		2023		Variance
GAAP Earnings	$	32,499	$	26,551	$	5,948

Adjusted EBITDA	$	60,665	$	53,366	$	7,299

The Utility segment’s first quarter GAAP earnings increased $5.9 million, or 22%, primarily as a result of the implementation of the recent rate case order in the Utility’s New York jurisdiction.

For the quarter, customer margin (operating revenues less purchased gas sold) increased $9.1 million, primarily due to the aforementioned rate case in Distribution Corporation’s New York jurisdiction, for which a settlement became effective October 1, 2024. Other income, which was also impacted by the rate settlement, increased $4.0 million. This was in large part due to the recognition of non-service pension and post-retirement benefit income that is offset with a corresponding reduction in new base rates and as a result, has no effect on net income.

O&M expense increased by $1.6 million, primarily driven by higher personnel costs, partially offset by a reduction related to amortizations of certain regulatory assets as a result of the New York rate settlement. DD&A expense increased $0.8 million primarily due to higher average depreciable plant in service compared to the prior year. Interest expense increased $2.3 million primarily due to a higher average amount of net borrowings.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other generated a combined net loss of $0.3 million in the current-year first quarter, which was $1.4 million lower than combined earnings of $1.1 million in the prior-year first quarter. The reduction in earnings during the quarter was primarily driven by unrealized losses recorded on investment securities that fund non-qualified retirement benefit plans.

EARNINGS TELECONFERENCE

A conference call to discuss the results will be held on Thursday, January 30, 2025, at 9 a.m. ET. All participants must pre-register to join this conference using the Participant Registration link. A webcast link to the conference call will be provided under the Events Calendar on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay will be available following the call through the end of the day, Thursday, February 6, 2025. To access the replay, dial 1-866-813-9403 and provide Access Code 245940.

National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuel.com.

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: impairments under the SEC’s full cost ceiling test for natural gas reserves; changes in the price of natural gas; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design, retained natural gas and system modernization), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; the Company’s ability to estimate accurately the time and resources necessary to meet emissions targets; governmental/regulatory actions and/or market pressures to reduce or eliminate reliance on natural gas; changes in economic conditions, including inflationary pressures, supply chain issues, liquidity challenges, and global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; changes in price differentials between similar quantities of natural gas sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas reserves, including among others geology, lease availability and costs, title disputes, weather conditions, water availability and disposal or recycling opportunities of used water, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; the Company’s ability to complete strategic transactions; increased costs or delays or changes in plans with respect to Company projects or related projects of other companies, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; negotiations with the collective bargaining units representing the Company’s workforce, including potential work stoppages during negotiations; uncertainty of natural gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas; changes in demographic patterns and weather conditions (including those related to climate change); changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war, as well as economic and operational disruptions due to third-party outages; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its adjusted earnings per share guidance for fiscal 2025. Additional details on the Company’s forecast assumptions and business segment guidance are outlined in the table below.

The revised adjusted earnings per share guidance range excludes certain items that impacted the comparability of adjusted operating results during the three months ended December 31, 2024, including: (1) the after tax impairment of assets, which reduced earnings by $1.14 per share; (2) after-tax unrealized losses on a derivative asset, which reduced earnings by less than $0.01 per share; and (3) after-tax unrealized losses on other investments, which reduced earnings by $0.02 per share. While the Company expects to record certain adjustments to unrealized gain or loss on a derivative asset and unrealized gain or loss on investments during the nine months ending September 30, 2025, the amounts of these and other potential adjustments and charges, including ceiling test impairments, are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.

	Previous FY 2025 Guidance	Updated FY 2025 Guidance

Consolidated Adjusted Earnings per Share	$5.50 to $6.00	$6.50 to $7.00
Consolidated Effective Tax Rate	~ 24.5 – 25%	~ 25%

Capital Expenditures(Millions)
Exploration and Production	$495 – $525	$495 – $515
Pipeline and Storage	$130 – $150	$130 – $150
Gathering	$95 – $110	$95 – $110
Utility	$165 – $185	$165 – $185
Consolidated Capital Expenditures	$885 – $970	$885 – $960

Exploration and Production Segment Guidance

Commodity Price Assumptions*
NYMEX natural gas price	$2.80 /MMBtu	$3.50 /MMBtu
Appalachian basin spot price	$2.00 /MMBtu	$2.90 /MMBtu

Realized natural gas prices, after hedging ($/Mcf)	$2.47 – $2.51	$2.77 – $2.81

Production (Bcf)	400 to 420	410 to 425

E&P Operating Costs($/Mcf)
LOE	$0.68 – $0.70	$0.68 – $0.70
G&A	$0.18 – $0.19	$0.18 – $0.19
DD&A	$0.65 – $0.69	$0.63 – $0.67

Other Business Segment Guidance(Millions)
Gathering Segment Revenues	$245 – $255	$250 – $260
Pipeline and Storage Segment Revenues	$415 – $435	$415 – $435

* Commodity price assumptions are for the remaining nine months of the fiscal year.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED DECEMBER 31, 2024
(Unaudited)

	Upstream			Midstream						Downstream

	Exploration &			Pipeline &									Corporate /
(Thousands of Dollars)	Production			Storage			Gathering			Utility			All Other			Consolidated*

First quarter 2024 GAAP earnings	$	52,483		$	24,055		$	28,825		$	26,551		$	1,106		$	133,020
Items impacting comparability:
Unrealized (gain) loss on derivative asset		4,198															4,198
Tax impact of unrealized (gain) loss on derivative asset		(1,151	)														(1,151	)
Unrealized (gain) loss on other investments														(1,049	)		(1,049	)
Tax impact of unrealized (gain) loss on other investments														220			220
First quarter 2024 adjusted operating results		55,530			24,055			28,825			26,551			277			135,238
Drivers of adjusted operating results**
Upstream Revenues
Higher (lower) natural gas production		(6,016	)														(6,016	)
Higher (lower) realized natural gas prices, after hedging		1,885															1,885
Midstream Revenues
Higher (lower) operating revenues					9,637			(1,151	)								8,486
Downstream Margins***
Impact of usage and weather											(325	)					(325	)
Impact of new rates in New York											7,865						7,865
Operating Expenses
Lower (higher) lease operating and transportation expenses		1,133															1,133
Lower (higher) operating expenses					(856	)					(1,244	)					(2,100	)
Lower (higher) depreciation / depletion		6,842						(835	)		(624	)					5,383
Other Income (Expense)
Higher (lower) other income		(1,680	)								3,176			1,686			3,182
(Higher) lower interest expense											(1,785	)					(1,785	)
Income Taxes
Lower (higher) income tax expense / effective tax rate		(8	)		(488	)		443			(584	)		205			(432	)
All other / rounding		425			106			(137	)		(531	)		(436	)		(573	)
First quarter 2025 adjusted operating results		58,111			32,454			27,145			32,499			1,732			151,941
Items impacting comparability:
Impairment of assets		(141,802	)														(141,802	)
Tax impact of impairment of assets		37,169															37,169
Unrealized gain (loss) on derivative asset		(349	)														(349	)
Tax impact of unrealized gain (loss) on derivative asset		94															94
Unrealized gain (loss) on other investments														(2,617	)		(2,617	)
Tax impact of unrealized gain (loss) on other investments														550			550
First quarter 2025 GAAP earnings	$	(46,777	)	$	32,454		$	27,145		$	32,499		$	(335	)	$	44,986

* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED DECEMBER 31, 2024
(Unaudited)

	Upstream			Midstream						Downstream

	Exploration &			Pipeline &									Corporate /
	Production			Storage			Gathering			Utility			All Other			Consolidated*

First quarter 2024 GAAP earnings per share	$	0.57		$	0.26		$	0.31		$	0.29		$	0.01		$	1.44
Items impacting comparability:
Unrealized (gain) loss on derivative asset, net of tax		0.03															0.03
Unrealized (gain) loss on other investments, net of tax														(0.01	)		(0.01	)
First quarter 2024 adjusted operating results per share		0.60			0.26			0.31			0.29			—			1.46
Drivers of adjusted operating results**
Upstream Revenues
Higher (lower) natural gas production		(0.07	)														(0.07	)
Higher (lower) realized natural gas prices, after hedging		0.02															0.02
Midstream Revenues
Higher (lower) operating revenues					0.11			(0.01	)								0.10
Downstream Margins***
Impact of usage and weather											—						—
Impact of new rates in New York											0.09						0.09
Operating Expenses
Lower (higher) lease operating and transportation expenses		0.01															0.01
Lower (higher) operating expenses					(0.01	)					(0.01	)					(0.02	)
Lower (higher) depreciation / depletion		0.08						(0.01	)		(0.01	)					0.06
Other Income (Expense)
Higher (lower) other income		(0.02	)								0.03			0.02			0.03
(Higher) lower interest expense											(0.02	)					(0.02	)
Income Taxes
Lower (higher) income tax expense / effective tax rate		—			(0.01	)		—			(0.01	)		—			(0.02	)
All other / rounding		0.02			—			0.01			—			(0.01	)		0.02
First quarter 2025 adjusted operating results per share		0.64			0.35			0.30			0.36			0.01			1.66
Items impacting comparability:
Impairment of assets, net of tax		(1.14	)														(1.14	)
Unrealized gain (loss) on derivative asset, net of tax		—															—
Unrealized gain (loss) on other investments, net of tax														(0.02	)		(0.02	)
Rounding		(0.01	)														(0.01	)
First quarter 2025 GAAP earnings per share	$	(0.51	)	$	0.35		$	0.30		$	0.36		$	(0.01	)	$	0.49

* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

(Thousands of Dollars, except per share amounts)
	Three Months Ended
	December 31,
	(Unaudited)
SUMMARY OF OPERATIONS	2024			2023
Operating Revenues:
Utility Revenues	$	228,424		$	201,920
Exploration and Production and Other Revenues		248,860			254,019
Pipeline and Storage and Gathering Revenues		72,198			69,422
		549,482			525,361
Operating Expenses:
Purchased Gas		65,337			56,552
Operation and Maintenance:
Utility		55,244			53,705
Exploration and Production and Other		33,541			34,826
Pipeline and Storage and Gathering		35,941			34,962
Property, Franchise and Other Taxes		22,056			22,416
Depreciation, Depletion and Amortization		109,370			115,790
Impairment of Assets		141,802			—
		463,291			318,251

Operating Income		86,191			207,110

Other Income (Expense):
Other Income (Deductions)		7,720			3,732
Interest Expense on Long-Term Debt		(33,362	)		(28,462	)
Other Interest Expense		(4,381	)		(6,273	)

Income Before Income Taxes		56,168			176,107

Income Tax Expense		11,182			43,087

Net Income Available for Common Stock	$	44,986		$	133,020

Earnings Per Common Share
Basic	$	0.50		$	1.45
Diluted	$	0.49		$	1.44

Weighted Average Common Shares:
Used in Basic Calculation		90,777,446			91,910,244
Used in Diluted Calculation		91,434,741			92,442,145

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

	December 31,			September 30,
(Thousands of Dollars)	2024			2024
ASSETS
Property, Plant and Equipment	$	14,675,281		$	14,524,798
Less – Accumulated Depreciation, Depletion and Amortization		7,393,477			7,185,593
Net Property, Plant and Equipment		7,281,804			7,339,205
Current Assets:
Cash and Temporary Cash Investments		48,694			38,222
Receivables – Net		202,821			127,222
Unbilled Revenue		57,117			15,521
Gas Stored Underground		24,725			35,055
Materials and Supplies – at average cost		47,820			47,670
Other Current Assets		83,435			92,229
Total Current Assets		464,612			355,919
Other Assets:
Recoverable Future Taxes		83,740			80,084
Unamortized Debt Expense		5,206			5,604
Other Regulatory Assets		106,386			108,022
Deferred Charges		68,952			69,662
Other Investments		71,493			81,705
Goodwill		5,476			5,476
Prepaid Pension and Post-Retirement Benefit Costs		185,224			180,230
Fair Value of Derivative Financial Instruments		20,695			87,905
Other		7,860			5,958
Total Other Assets		555,032			624,646
Total Assets	$	8,301,448		$	8,319,770
CAPITALIZATION AND LIABILITIES
Capitalization:
Comprehensive Shareholders’ Equity
Common Stock, $1 Par Value Authorized – 200,000,000 Shares; Issued and
Outstanding – 90,612,955 Shares and 91,005,993 Shares, Respectively	$	90,613		$	91,006
Paid in Capital		1,039,705			1,045,487
Earnings Reinvested in the Business		1,698,648			1,727,326
Accumulated Other Comprehensive Loss		(76,153	)		(15,476	)
Total Comprehensive Shareholders’ Equity		2,752,813			2,848,343
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs		2,189,421			2,188,243
Total Capitalization		4,942,234			5,036,586
Current and Accrued Liabilities:
Notes Payable to Banks and Commercial Paper		200,000			90,700
Current Portion of Long-Term Debt		500,000			500,000
Accounts Payable		120,991			165,068
Amounts Payable to Customers		42,587			42,720
Dividends Payable		46,671			46,872
Interest Payable on Long-Term Debt		44,376			27,247
Customer Advances		15,295			19,373
Customer Security Deposits		36,091			36,265
Other Accruals and Current Liabilities		172,409			162,903
Fair Value of Derivative Financial Instruments		20,893			4,744
Total Current and Accrued Liabilities		1,199,313			1,095,892
Other Liabilities:
Deferred Income Taxes		1,089,394			1,111,165
Taxes Refundable to Customers		303,344			305,645
Cost of Removal Regulatory Liability		296,660			292,477
Other Regulatory Liabilities		147,561			151,452
Other Post-Retirement Liabilities		3,476			3,511
Asset Retirement Obligations		199,310			203,006
Other Liabilities		120,156			120,036
Total Other Liabilities		2,159,901			2,187,292
Commitments and Contingencies		—			—
Total Capitalization and Liabilities	$	8,301,448		$	8,319,770

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Three Months Ended
	December 31,
(Thousands of Dollars)	2024			2023

Operating Activities:
Net Income Available for Common Stock	$	44,986		$	133,020
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Impairment of Assets		141,802			—
Depreciation, Depletion and Amortization		109,370			115,790
Deferred Income Taxes		(5,385	)		38,362
Stock-Based Compensation		4,705			4,660
Other		7,146			8,041
Change in:
Receivables and Unbilled Revenue		(115,165	)		(58,459	)
Gas Stored Underground and Materials and Supplies		10,180			6,915
Other Current Assets		8,814			892
Accounts Payable		9,703			(3,355	)
Amounts Payable to Customers		(133	)		1,013
Customer Advances		(4,078	)		2,083
Customer Security Deposits		(174	)		2,079
Other Accruals and Current Liabilities		21,266			28,612
Other Assets		(3,892	)		(6,306	)
Other Liabilities		(9,057	)		(2,403	)
Net Cash Provided by Operating Activities	$	220,088		$	270,944

Investing Activities:
Capital Expenditures	$	(240,427	)	$	(246,938	)
Other		5,878			(920	)
Net Cash Used in Investing Activities	$	(234,549	)	$	(247,858	)

Financing Activities:
Changes in Notes Payable to Banks and Commercial Paper		109,300			12,500
Shares Repurchased Under Repurchase Plan		(33,524	)		—
Dividends Paid on Common Stock		(46,872	)		(45,451	)
Net Repurchases of Common Stock Under Stock and Benefit Plans		(3,971	)		(3,897	)
Net Cash Provided by (Used in) Financing Activities	$	24,933		$	(36,848	)

Net Increase (Decrease) in Cash and Cash Equivalents		10,472			(13,762	)
Cash and Cash Equivalents at Beginning of Period		38,222			55,447
Cash and Cash Equivalents at December 31	$	48,694		$	41,685

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)

UPSTREAM BUSINESS


	Three Months Ended
(Thousands of Dollars, except per share amounts)	December 31,
EXPLORATION AND PRODUCTION SEGMENT	2024			2023			Variance
Total Operating Revenues	$	248,860		$	254,019		$	(5,159	)
Operating Expenses:
Operation and Maintenance:
General and Administrative Expense		19,326			17,793			1,533
Lease Operating and Transportation Expense		65,640			67,074			(1,434	)
All Other Operation and Maintenance Expense		3,867			5,544			(1,677	)
Property, Franchise and Other Taxes		3,382			3,638			(256	)
Depreciation, Depletion and Amortization		63,304			71,965			(8,661	)
Impairment of Assets		141,802			—			141,802
		297,321			166,014			131,307

Operating Income (Loss)		(48,461	)		88,005			(136,466	)

Other Income (Expense):
Non-Service Pension and Post-Retirement Benefit Credit		37			100			(63	)
Interest and Other Income (Deductions)		272			(1,513	)		1,785
Interest Expense		(15,200	)		(15,268	)		68
Income (Loss) Before Income Taxes		(63,352	)		71,324			(134,676	)
Income Tax Expense (Benefit)		(16,575	)		18,841			(35,416	)
Net Income (Loss)	$	(46,777	)	$	52,483		$	(99,260	)
Net Income (Loss) Per Share (Diluted)	$	(0.51	)	$	0.57		$	(1.08	)

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)

MIDSTREAM BUSINESSES

	Three Months Ended
(Thousands of Dollars, except per share amounts)	December 31,
PIPELINE AND STORAGE SEGMENT	2024			2023			Variance
Revenues from External Customers	$	68,750		$	64,826		$	3,924
Intersegment Revenues		37,862			29,587			8,275
Total Operating Revenues		106,612			94,413			12,199
Operating Expenses:
Purchased Gas		(42	)		601			(643	)
Operation and Maintenance		27,034			25,950			1,084
Property, Franchise and Other Taxes		8,667			8,720			(53	)
Depreciation, Depletion and Amortization		18,585			18,213			372
		54,244			53,484			760

Operating Income		52,368			40,929			11,439

Other Income (Expense):
Non-Service Pension and Post-Retirement Benefit Credit		952			1,257			(305	)
Interest and Other Income		2,040			1,931			109
Interest Expense		(11,729	)		(11,725	)		(4	)
Income Before Income Taxes		43,631			32,392			11,239
Income Tax Expense		11,177			8,337			2,840
Net Income	$	32,454		$	24,055		$	8,399
Net Income Per Share (Diluted)	$	0.35		$	0.26		$	0.09


	Three Months Ended
	December 31,
GATHERING SEGMENT	2024			2023			Variance
Revenues from External Customers	$	3,448		$	4,596		$	(1,148	)
Intersegment Revenues		57,683			57,992			(309	)
Total Operating Revenues		61,131			62,588			(1,457	)
Operating Expenses:
Operation and Maintenance		9,429			9,504			(75	)
Property, Franchise and Other Taxes		(234	)		23			(257	)
Depreciation, Depletion and Amortization		10,515			9,458			1,057
		19,710			18,985			725

Operating Income		41,421			43,603			(2,182	)

Other Income (Expense):
Non-Service Pension and Post-Retirement Benefit Credit		—			9			(9	)
Interest and Other Income		58			73			(15	)
Interest Expense		(4,210	)		(3,729	)		(481	)
Income Before Income Taxes		37,269			39,956			(2,687	)
Income Tax Expense		10,124			11,131			(1,007	)
Net Income	$	27,145		$	28,825		$	(1,680	)
Net Income Per Share (Diluted)	$	0.30		$	0.31		$	(0.01	)

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)

DOWNSTREAM BUSINESS


	Three Months Ended
(Thousands of Dollars, except per share amounts)	December 31,
UTILITY SEGMENT	2024			2023			Variance
Revenues from External Customers	$	228,424		$	201,920		$	26,504
Intersegment Revenues		85			87			(2	)
Total Operating Revenues		228,509			202,007			26,502
Operating Expenses:
Purchased Gas		101,473			84,051			17,422
Operation and Maintenance		56,260			54,684			1,576
Property, Franchise and Other Taxes		10,111			9,906			205
Depreciation, Depletion and Amortization		16,827			16,037			790
		184,671			164,678			19,993

Operating Income		43,838			37,329			6,509

Other Income (Expense):
Non-Service Pension and Post-Retirement Benefit Credit		5,871			470			5,401
Interest and Other Income		528			1,911			(1,383	)
Interest Expense		(10,716	)		(8,457	)		(2,259	)
Income Before Income Taxes		39,521			31,253			8,268
Income Tax Expense		7,022			4,702			2,320
Net Income	$	32,499		$	26,551		$	5,948
Net Income Per Share (Diluted)	$	0.36		$	0.29		$	0.07

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)

	Three Months Ended
(Thousands of Dollars, except per share amounts)	December 31,
ALL OTHER	2024			2023			Variance
Total Operating Revenues	$	—		$	—		$	—
Operating Expenses:
Operation and Maintenance		—			—			—
		—			—			—

Operating Income		—			—			—
Other Income (Expense):
Interest and Other Income (Deductions)		(136	)		(77	)		(59	)
Interest Expense		(116	)		(81	)		(35	)
Loss before Income Taxes		(252	)		(158	)		(94	)
Income Tax Benefit		(59	)		(37	)		(22	)
Net Loss	$	(193	)	$	(121	)	$	(72	)
Net Loss Per Share (Diluted)	$	—		$	—		$	—

	Three Months Ended
	December 31,
CORPORATE	2024			2023			Variance
Revenues from External Customers	$	—		$	—		$	—
Intersegment Revenues		1,341			1,285			56
Total Operating Revenues		1,341			1,285			56
Operating Expenses:
Operation and Maintenance		4,047			3,795			252
Property, Franchise and Other Taxes		130			129			1
Depreciation, Depletion and Amortization		139			117			22
		4,316			4,041			275

Operating Loss		(2,975	)		(2,756	)		(219	)
Other Income (Expense):
Non-Service Pension and Post-Retirement Benefit Costs		(212	)		(387	)		175
Interest and Other Income		41,061			41,030			31
Interest Expense on Long-Term Debt		(33,362	)		(28,462	)		(4,900	)
Other Interest Expense		(5,161	)		(8,085	)		2,924
Income (Loss) before Income Taxes		(649	)		1,340			(1,989	)
Income Tax Expense (Benefit)		(507	)		113			(620	)
Net Income (Loss)	$	(142	)	$	1,227		$	(1,369	)
Net Income (Loss) Per Share (Diluted)	$	(0.01	)	$	0.01		$	(0.02	)


	Three Months Ended
	December 31,
INTERSEGMENT ELIMINATIONS	2024			2023			Variance
Intersegment Revenues	$	(96,971	)	$	(88,951	)	$	(8,020	)
Operating Expenses:
Purchased Gas		(36,094	)		(28,100	)		(7,994	)
Operation and Maintenance		(60,877	)		(60,851	)		(26	)
		(96,971	)		(88,951	)		(8,020	)
Operating Income		—			—			—
Other Income (Expense):
Interest and Other Deductions		(42,751	)		(41,072	)		(1,679	)
Interest Expense		42,751			41,072			1,679
Net Income	$	—		$	—		$	—
Net Income Per Share (Diluted)	$	—		$	—		$	—

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

SEGMENT INFORMATION (Continued)
(Thousands of Dollars)

	Three Months Ended
	December 31,
	(Unaudited)
							Increase
	2024			2023			(Decrease)

Capital Expenditures:
Exploration and Production	$	122,602	⁽¹⁾⁽²⁾	$	160,957	⁽³⁾⁽⁴⁾	$	(38,355	)
Pipeline and Storage		19,792	⁽¹⁾⁽²⁾		24,554	⁽³⁾⁽⁴⁾		(4,762	)
Gathering		13,027	⁽¹⁾⁽²⁾		19,569	⁽³⁾⁽⁴⁾		(6,542	)
Utility		36,430	⁽¹⁾⁽²⁾		30,510	⁽³⁾⁽⁴⁾		5,920
Total Reportable Segments		191,851			235,590			(43,739	)
All Other		—			—			—
Corporate		204			61			143
Total Capital Expenditures	$	192,055		$	235,651		$	(43,596	)

(1)	Capital expenditures for the quarter ended December 31, 2024, include accounts payable and accrued liabilities related to capital expenditures of $56.3 million, $4.4 million, $6.0 million, and $4.9 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2024, since they represent non-cash investing activities at that date.

(2)	Capital expenditures for the quarter ended December 31, 2024, exclude capital expenditures of $63.3 million, $14.4 million, $21.7 million and $20.6 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2024 and paid during the quarter ended December 31, 2024. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2024, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2024.

(3)	Capital expenditures for the quarter ended December 31, 2023, include accounts payable and accrued liabilities related to capital expenditures of $74.9 million, $5.5 million, $11.1 million, and $6.4 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were excluded from the Consolidated Statement of Cash Flows at December 31, 2023, since they represented non-cash investing activities at that date.

(4)	Capital expenditures for the quarter ended December 31, 2023, exclude capital expenditures of $43.2 million, $31.8 million, $20.6 million and $13.6 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2023 and paid during the quarter ended December 31, 2023. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2023, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2023.

DEGREE DAYS
				Percent Colder
				(Warmer) Than:
Three Months Ended December 31,	Normal	2024	2023	Normal ⁽¹⁾	Last Year ⁽¹⁾
Buffalo, NY	2,253	1,884	1,858	(16.4)	1.4
Erie, PA	1,894	1,697	1,664	(10.4)	2.0

⁽¹⁾Percents compare actual 2024 degree days to normal degree days and actual 2024 degree days to actual 2023 degree days.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

EXPLORATION AND PRODUCTION INFORMATION


	Three Months Ended
	December 31,
					Increase
	2024		2023		(Decrease)

Gas Production/Prices:
Production (MMcf)
Appalachia		97,717		100,757		(3,040	)

Average Prices (Per Mcf)
Weighted Average	$	2.23	$	2.31	$	(0.08	)
Weighted Average after Hedging		2.53		2.51		0.02

Selected Operating Performance Statistics:
General and Administrative Expense per Mcf ⁽¹⁾	$	0.20	$	0.18	$	0.02
Lease Operating and Transportation Expense per Mcf ⁽¹⁾⁽²⁾	$	0.67	$	0.67	$	—
Depreciation, Depletion and Amortization per Mcf ⁽¹⁾	$	0.65	$	0.71	$	(0.06	)

⁽¹⁾Refer to page 13 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.

⁽²⁾Amounts include transportation expense of $0.57 and $0.56 per Mcf for the three months ended December 31, 2024 and December 31, 2023, respectively.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES



Pipeline and Storage Throughput – (millions of cubic feet – MMcf)

	Three Months Ended
	December 31,
			Increase
	2024	2023	(Decrease)
Firm Transportation – Affiliated	31,870	31,495	375
Firm Transportation – Non-Affiliated	171,012	168,606	2,406
Interruptible Transportation	62	118	(56	)
	202,944	200,219	2,725

Gathering Volume – (MMcf)
	Three Months Ended
	December 31,
			Increase
	2024	2023	(Decrease)
Gathered Volume	120,961	124,261	(3,300	)


Utility Throughput – (MMcf)
	Three Months Ended
	December 31,
			Increase
	2024	2023	(Decrease)
Retail Sales:
Residential Sales	18,476	17,982	494
Commercial Sales	2,919	2,800	119
Industrial Sales	199	138	61
	21,594	20,920	674
Transportation	16,942	17,528	(586	)
	38,536	38,448	88

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES

In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding adjusted operating results, adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company’s ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company’s management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines adjusted operating results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel’s reported GAAP earnings to adjusted operating results for the three months ended December 31, 2024 and 2023:

	Three Months Ended
	December 31,
(in thousands except per share amounts)	2024			2023
Reported GAAP Earnings	$	44,986		$	133,020
Items impacting comparability:
Impairment of assets (E&P)		141,802			—
Tax impact of impairment of assets		(37,169	)		—
Unrealized (gain) loss on derivative asset (E&P)		349			4,198
Tax impact of unrealized (gain) loss on derivative asset		(94	)		(1,151	)
Unrealized (gain) loss on other investments (Corporate / All Other)		2,617			(1,049	)
Tax impact of unrealized (gain) loss on other investments		(550	)		220
Adjusted Operating Results	$	151,941		$	135,238

Reported GAAP Earnings Per Share	$	0.49		$	1.44
Items impacting comparability:
Impairment of assets, net of tax (E&P)		1.14			—
Unrealized (gain) loss on derivative asset, net of tax (E&P)		—			0.03
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)		0.02			(0.01	)
Rounding		0.01			—
Adjusted Operating Results Per Share	$	1.66		$	1.46

Management defines adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel’s reported GAAP earnings to adjusted EBITDA for the three months ended December 31, 2024 and 2023:

	Three Months Ended
	December 31,
(in thousands)	2024			2023
Reported GAAP Earnings	$	44,986		$	133,020
Depreciation, Depletion and Amortization		109,370			115,790
Other (Income) Deductions		(7,720	)		(3,732	)
Interest Expense		37,743			34,735
Income Taxes		11,182			43,087
Impairment of Assets		141,802			—
Adjusted EBITDA	$	337,363		$	322,900

Adjusted EBITDA by Segment
Pipeline and Storage Adjusted EBITDA	$	70,953		$	59,142
Gathering Adjusted EBITDA		51,936			53,061
Total Midstream Businesses Adjusted EBITDA		122,889			112,203
Exploration and Production Adjusted EBITDA		156,645			159,970
Utility Adjusted EBITDA		60,665			53,366
Corporate and All Other Adjusted EBITDA		(2,836	)		(2,639	)
Total Adjusted EBITDA	$	337,363		$	322,900

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA

	Three Months Ended
	December 31,
(in thousands)	2024			2023
Exploration and Production Segment
Reported GAAP Earnings	$	(46,777	)	$	52,483
Depreciation, Depletion and Amortization		63,304			71,965
Other (Income) Deductions		(309	)		1,413
Interest Expense		15,200			15,268
Income Taxes		(16,575	)		18,841
Impairment of Assets		141,802			—
Adjusted EBITDA	$	156,645		$	159,970

Pipeline and Storage Segment
Reported GAAP Earnings	$	32,454		$	24,055
Depreciation, Depletion and Amortization		18,585			18,213
Other (Income) Deductions		(2,992	)		(3,188	)
Interest Expense		11,729			11,725
Income Taxes		11,177			8,337
Adjusted EBITDA	$	70,953		$	59,142

Gathering Segment
Reported GAAP Earnings	$	27,145		$	28,825
Depreciation, Depletion and Amortization		10,515			9,458
Other (Income) Deductions		(58	)		(82	)
Interest Expense		4,210			3,729
Income Taxes		10,124			11,131
Adjusted EBITDA	$	51,936		$	53,061

Utility Segment
Reported GAAP Earnings	$	32,499		$	26,551
Depreciation, Depletion and Amortization		16,827			16,037
Other (Income) Deductions		(6,399	)		(2,381	)
Interest Expense		10,716			8,457
Income Taxes		7,022			4,702
Adjusted EBITDA	$	60,665		$	53,366

Corporate and All Other
Reported GAAP Earnings	$	(335	)	$	1,106
Depreciation, Depletion and Amortization		139			117
Other (Income) Deductions		2,038			506
Interest Expense		(4,112	)		(4,444	)
Income Taxes		(566	)		76
Adjusted EBITDA	$	(2,836	)	$	(2,639	)

Management defines free cash flow as net cash provided by operating activities, less net cash used in investing activities, adjusted for acquisitions and divestitures. The Company is unable to provide a reconciliation of any projected free cash flow measure to its comparable GAAP financial measure without unreasonable efforts. This is due to an inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.

The MIL Network –

January 30, 2025

MIL-OSI USA: 01.29.2025 Sen. Cruz Introduces Legislation to Defund the CFPB and Restore Congressional Oversight

US Senate News:

Source: United States Senator for Texas Ted Cruz
WASHINGTON, D.C. – U.S. Sen. Ted Cruz (R-Texas) introduced the Defund the CFPB Act, which would zero out transfer payments from the Federal Reserve to the Consumer Financial Protection Bureau (CFPB).
Upon introduction, Sen. Cruz said, “The CFPB is an unelected, unaccountable bureaucratic agency that has imposed burdensome and harmful regulations on American businesses, banks, and credit unions. It is an unchecked Obama-era executive arm and the Federal Reserve should not be transferring funds to it. Enacting this legislation would save American taxpayers billions of dollars and I call on the Senate to expeditiously take it up and pass it.”
The bill is co-sponsored by Sens. John Barrasso (R-Wyo.), Rick Scott (R-Fla.), Steve Daines (R-Mont.), Marsha Blackburn (R-Tenn.), Mike Rounds (R-S.D.), and Mike Lee (R-Utah).
Rep. Keith Self (R-Texas-03) introduced the companion legislation in the House of Representatives.
Read the Defund the CFPB Act here.
BACKGROUND
This bill is supported by the Texas Credit Union Association (TXCUA), Texas Bankers Association (TBA), and Heritage Action.

MIL OSI USA News –

January 30, 2025

Category: Commerce

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Introduction

Technical details

Background

Delivery method

First-time execution

Main activity

SMS and call monitor

App messages and mail stealer

Account takeover

Attribution

Victimology

Different campaign from UdangaSteal

Conclusion

Indicator of Compromises

Tria Stealer

File hashes

Telegram bots

UdangaSteal

File hashes

The risk of greenwashing

Three key factors for corporate accountability

Linking companies and ecosystems

Translating aspirations into operations

Shaping financial-system responsiveness

Better information, less greenwashing

Feathers, fur and now skins

Exotic leather, native species

From unregulated hunting to farmed crocodiles

Welfare concerns

What’s likely to happen?