Emissions Trading – Page 38

MIL-OSI: Credit Acceptance Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Southfield, Michigan, Oct. 30, 2024 (GLOBE NEWSWIRE) — Credit Acceptance Corporation (Nasdaq: CACC) (referred to as the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) today announced consolidated net income of $78.8 million, or $6.35 per diluted share, for the three months ended September 30, 2024 compared to consolidated net income of $70.8 million, or $5.43 per diluted share, for the same period in 2023. Adjusted net income, a non-GAAP financial measure, for the three months ended September 30, 2024 was $109.1 million, or $8.79 per diluted share, compared to $139.5 million, or $10.70 per diluted share, for the same period in 2023. The following table summarizes our financial results:

(In millions, except per share data)	For the Three Months Ended						For the Nine Months Ended
	September 30, 2024		June 30, 2024		September 30, 2023			September 30, 2024		September 30, 2023
GAAP net income (loss)	$	78.8	$	(47.1)	$	70.8	$	96.0	$	192.5
GAAP net income (loss) per diluted share	$	6.35	$	(3.83)	$	5.43	$	7.68	$	14.73

Adjusted net income (1)	$	109.1	$	126.4	$	139.5	$	352.9	$	406.5
Adjusted net income per diluted share (1)	$	8.79	$	10.29	$	10.70	$	28.25	$	31.10

^{(1) Represents a non-GAAP financial measure.}

Our results for the third quarter of 2024 in comparison to the third quarter of 2023 included:

A similar decline in forecasted collection rates
A decline in forecasted collection rates decreased forecasted net cash flows from our loan portfolio by $62.8 million, or 0.6%, compared to a decrease in forecasted collection rates during the third quarter of 2023 that decreased forecasted net cash flows from our loan portfolio by $69.4 million, or 0.7%.

A decrease in forecasted profitability for Consumer Loans assigned in 2021 through 2024
Forecasted profitability was lower than our estimates at September 30, 2023, due to both a decline in forecasted collection rates and slower forecasted net cash flow timing since the third quarter of 2023. The slower forecasted net cash flow timing was primarily a result of a decrease in Consumer Loan prepayments, which remain at below-average levels.

Growth in Consumer Loan assignment volume and the average balance of our loan portfolio
Unit and dollar volumes grew 17.7% and 12.2%, respectively, as compared to the third quarter of 2023. The average balance of our loan portfolio, which is our largest-ever, increased 14.9% and 18.6% on a GAAP and adjusted basis, respectively, as compared to the third quarter of 2023.

An increase in the initial spread on Consumer Loan assignments
The initial spread increased to 21.9% compared to 21.4% on Consumer Loans assigned in the third quarter of 2023.

An increase in our average cost of debt
Our average cost of debt increased from 5.8% to 7.3%, primarily a result of higher interest rates on recently completed or extended secured financings and recently issued senior notes and the repayment of older secured financings and senior notes with lower interest rates.

A decrease in common shares outstanding due to stock repurchases
Since the third quarter of 2023, we have repurchased approximately 566,000 shares, or 4.5% of the shares outstanding as of September 30, 2023. There were no stock repurchases during the third quarter of 2024.

Our results for the third quarter of 2024 in comparison to the second quarter of 2024 included:

A smaller decline in forecasted collection rates
A decline in forecasted collection rates decreased forecasted net cash flows from our loan portfolio by $62.8 million, or 0.6%, compared to a decrease in forecasted collection rates during the second quarter of 2024 that decreased forecasted net cash flows from our loan portfolio by $189.3 million, or 1.7%. The $189.3 million decrease in forecasted net cash flows for the second quarter of 2024 was composed of an ordinary decrease in forecasted net cash flows of $42.1 million, or 0.3%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%.

A decrease in forecasted profitability for Consumer Loans assigned in 2021 through 2024
Forecasted profitability was lower than our estimates at June 30, 2024, due to both the decline in forecasted collection rates and the slower forecasted net cash flow timing during the third quarter of 2024 discussed above.

Growth in the average balance of our loan portfolio
The average balance of our loan portfolio, which is our largest-ever, increased 2.6% and 4.3% on a GAAP and adjusted basis, respectively, as compared to the second quarter of 2024.

Loss on sale of building
We recognized a $23.7 million loss during the second quarter of 2024 related to the sale of one of our two office buildings, which we have excluded from our adjusted results. The building was sold to reduce excess office space and eliminate the associated annual operating costs of approximately $2.1 million.

Consumer Loan Metrics

Dealers assign retail installment contracts (referred to as “Consumer Loans”) to Credit Acceptance. At the time a Consumer Loan is submitted to us for assignment, we forecast future expected cash flows from the Consumer Loan. Based on the amount and timing of these forecasts and expected expense levels, an advance or one-time purchase payment is made to the related dealer at a price designed to maximize economic profit, a non-GAAP financial measure that considers our return on capital, our cost of capital, and the amount of capital invested.

We use a statistical model to estimate the expected collection rate for each Consumer Loan at the time of assignment. We continue to evaluate the expected collection rate for each Consumer Loan subsequent to assignment. Our evaluation becomes more accurate as the Consumer Loans age, as we use actual performance data in our forecast. By comparing our current expected collection rate for each Consumer Loan with the rate we projected at the time of assignment, we are able to assess the accuracy of our initial forecast. The following table compares our aggregated forecast of Consumer Loan collection rates as of September 30, 2024, with the aggregated forecasts as of June 30, 2024, as of December 31, 2023, and at the time of assignment, segmented by year of assignment:

	Forecasted Collection Percentage as of (1)								Current Forecast Variance from
Consumer Loan Assignment Year	September 30, 2024		June 30, 2024		December 31, 2023		Initial Forecast		June 30, 2024		December 31, 2023		Initial Forecast
2015	65.3	%	65.3	%	65.2	%	67.7	%	0.0	%	0.1	%	-2.4	%
2016	63.9	%	63.9	%	63.8	%	65.4	%	0.0	%	0.1	%	-1.5	%
2017	64.7	%	64.7	%	64.7	%	64.0	%	0.0	%	0.0	%	0.7	%
2018	65.5	%	65.5	%	65.5	%	63.6	%	0.0	%	0.0	%	1.9	%
2019	67.2	%	67.1	%	66.9	%	64.0	%	0.1	%	0.3	%	3.2	%
2020	67.6	%	67.7	%	67.6	%	63.4	%	-0.1	%	0.0	%	4.2	%
2021	63.8	%	64.1	%	64.5	%	66.3	%	-0.3	%	-0.7	%	-2.5	%
2022	60.6	%	61.1	%	62.7	%	67.5	%	-0.5	%	-2.1	%	-6.9	%
2023	64.3	%	64.5	%	67.4	%	67.5	%	-0.2	%	-3.1	%	-3.2	%
2024 (2)	66.6	%	66.6	%	—		67.3	%	0.0	%	—		-0.7	%

^{(1) Represents the total forecasted collections we expect to collect on the Consumer Loans as a percentage of the repayments that we were contractually owed on the Consumer Loans at the time of assignment. Contractual repayments include both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates.}
^{(2) The forecasted collection rate for 2024 Consumer Loans as of September 30, 2024 includes both Consumer Loans that were in our portfolio as of June 30, 2024 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates for each of these segments:}

	Forecasted Collection Percentage as of						Current Forecast Variance from
2024 Consumer Loan Assignment Period	September 30, 2024		June 30, 2024		Initial Forecast		June 30, 2024		Initial Forecast
January 1, 2024 through June 30, 2024	66.4	%	66.6	%	67.2	%	-0.2	%	-0.8	%
July 1, 2024 through September 30, 2024	67.0	%	—		67.3	%	—		-0.3	%

Consumer Loans assigned in 2018 through 2020 have yielded forecasted collection results significantly better than our initial estimates, while Consumer Loans assigned in 2015, 2016, and 2021 through 2023 have yielded forecasted collection results significantly worse than our initial estimates. For all other assignment years presented, actual results have been close to our initial estimates. For the three months ended September 30, 2024, forecasted collection rates declined for Consumer Loans assigned in 2021 through 2024 and were generally consistent with expectations at the start of the period for all other assignment years presented. For the nine months ended September 30, 2024, forecasted collection rates improved for Consumer Loans assigned in 2019, declined for Consumer Loans assigned in 2021 through 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented.

The changes in forecasted collection rates for the three and nine months ended September 30, 2024 and 2023 impacted forecasted net cash flows (forecasted collections less forecasted dealer holdback payments) as follows:

(Dollars in millions)	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Decrease in Forecasted Net Cash Flows		2024			2023			2024			2023
Dealer loans	$	(43.6)		$	(40.3)		$	(173.0)		$	(89.3)
Purchased loans		(19.2)			(29.1)			(109.9)			(60.0)
Total	$	(62.8)		$	(69.4)		$	(282.9)		$	(149.3)
% change from forecast at beginning of period		-0.6	%		-0.7	%		-2.8	%		-1.7	%

During the second quarter of 2024, we applied an adjustment to our methodology for forecasting the amount of future net cash flows from our loan portfolio, which reduced the forecasted collection rates for Consumer Loans assigned in 2022 through 2024. Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters. More recently, Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022. During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics. Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends. Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses. The implementation of this forecast adjustment during the second quarter of 2024 reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased provision for credit losses by $127.5 million.

During the second quarter of 2023, we adjusted our methodology for forecasting the amount and timing of future net cash flows from our loan portfolio through the utilization of more recent Consumer Loan performance and Consumer Loan prepayment data. We had experienced a decrease in Consumer Loan prepayments to below-average levels and as a result, slowed our forecasted net cash flow timing. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit. Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses. The implementation of the adjustment to our forecasting methodology during the second quarter of 2023 reduced forecasted net cash flows by $44.5 million, or 0.5%, and increased provision for credit losses by $71.3 million.

We have experienced increased levels of uncertainty associated with our estimate of the amount and timing of future net cash flows from our loan portfolio since the beginning of 2020, with realized collections underperforming our expectations during the early stages of the COVID-19 pandemic, outperforming our expectations following the distribution of federal stimulus payments and enhanced unemployment benefits, and underperforming our expectations during the current economic environment. For the period from January 1, 2020 through September 30, 2024, the cumulative change to our forecast of future net cash flows from our loan portfolio has been a decrease of $269.1 million, or 3.0%, as shown in the following table:

(Dollars in millions)	Increase (Decrease) in Forecasted Net Cash Flows
Three Months Ended	Total Loans		% Change from Forecast at Beginning of Period
March 31, 2020	$	(206.5)	-2.3	%
June 30, 2020		24.4	0.3	%
September 30, 2020		138.5	1.5	%
December 31, 2020		(2.7)	0.0	%
March 31, 2021		107.4	1.1	%
June 30, 2021		104.5	1.1	%
September 30, 2021		82.3	0.9	%
December 31, 2021		31.9	0.3	%
March 31, 2022		110.2	1.2	%
June 30, 2022		(43.4)	-0.5	%
September 30, 2022		(85.4)	-0.9	%
December 31, 2022		(41.1)	-0.5	%
March 31, 2023		9.4	0.1	%
June 30, 2023		(89.3)	-0.9	%
September 30, 2023		(69.4)	-0.7	%
December 31, 2023		(57.0)	-0.6	%
March 31, 2024		(30.8)	-0.3	%
June 30, 2024		(189.3)	-1.7	%
September 30, 2024		(62.8)	-0.6	%
Total	$	(269.1)	-3.0	%

The following table presents information on Consumer Loan assignments for each of the last 10 years:

	Average					Total Assignment Volume
Consumer Loan Assignment Year	Consumer Loan (1)		Advance (2)		Initial Loan Term (in months)	Unit Volume	Dollar Volume (2) (in millions)
2015	$	16,354	$	7,272	50	298,288	$	2,167.0
2016		18,218		7,976	53	330,710		2,635.5
2017		20,230		8,746	55	328,507		2,873.1
2018		22,158		9,635	57	373,329		3,595.8
2019		23,139		10,174	57	369,805		3,772.2
2020		24,262		10,656	59	341,967		3,641.2
2021		25,632		11,790	59	268,730		3,167.8
2022		27,242		12,924	60	280,467		3,625.3
2023		27,025		12,475	61	332,499		4,147.8
2024 (3)(4)		26,564		12,018	61	307,215		3,692.1

^{(1)   Represents the repayments that we were contractually owed on Consumer Loans at the time of assignment, which include both principal and interest.}
^{(2)   Represents advances paid to dealers on Consumer Loans assigned under our portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under our purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.}
^{(3)   Represents activity for the nine months ended September 30, 2024. Information in this table for each of the years prior to 2024 represents activity for all 12 months of that year.}
^{(4)   The averages for 2024 Consumer Loans include both Consumer Loans that were in our portfolio as of June 30, 2024 and Consumer Loans assigned during the most recent quarter. The following table provides averages for each of these segments:}

	Average
2024 Consumer Loan Assignment Period	Consumer Loan		Advance		Initial Loan Term (in months)
January 1, 2024 through June 30, 2024	$	26,554	$	12,033	61
July 1, 2024 through September 30, 2024		26,586		11,985	61

The profitability of our loans is primarily driven by the amount and timing of the net cash flows we receive from the spread between the forecasted collection rate and the advance rate, less operating expenses and the cost of capital. Forecasting collection rates accurately at loan inception is difficult. With this in mind, we establish advance rates that are intended to allow us to achieve acceptable levels of profitability across our portfolio, even if collection rates are less than we initially forecast.

The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of September 30, 2024, as well as forecasted collection rates and spreads at the time of assignment. All amounts, unless otherwise noted, are presented as a percentage of the initial balance of the Consumer Loan (principal + interest). The table includes both dealer loans and purchased loans.

	Forecasted Collection % as of						Spread % as of
Consumer Loan Assignment Year	September 30, 2024		Initial Forecast		Advance % (1)		September 30, 2024		Initial Forecast		% of Forecast Realized (2)
2015	65.3	%	67.7	%	44.5	%	20.8	%	23.2	%	99.7	%
2016	63.9	%	65.4	%	43.8	%	20.1	%	21.6	%	99.4	%
2017	64.7	%	64.0	%	43.2	%	21.5	%	20.8	%	99.1	%
2018	65.5	%	63.6	%	43.5	%	22.0	%	20.1	%	98.4	%
2019	67.2	%	64.0	%	44.0	%	23.2	%	20.0	%	96.1	%
2020	67.6	%	63.4	%	43.9	%	23.7	%	19.5	%	90.8	%
2021	63.8	%	66.3	%	46.0	%	17.8	%	20.3	%	80.8	%
2022	60.6	%	67.5	%	47.4	%	13.2	%	20.1	%	61.3	%
2023	64.3	%	67.5	%	46.2	%	18.1	%	21.3	%	36.8	%
2024 (3)	66.6	%	67.3	%	45.3	%	21.3	%	22.0	%	10.7	%

^{(1)   Represents advances paid to dealers on Consumer Loans assigned under our portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under our purchase program as a percentage of the initial balance of the Consumer Loans.  Payments of dealer holdback and accelerated dealer holdback are not included.}
^{(2)   Presented as a percentage of total forecasted collections.}
^{(3)   The forecasted collection rate, advance rate and spread for 2024 Consumer Loans as of September 30, 2024 include both Consumer Loans that were in our portfolio as of June 30, 2024 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates, advance rates, and spreads for each of these segments:}

	Forecasted Collection % as of						Spread % as of
2024 Consumer Loan Assignment Period	September 30, 2024		Initial Forecast		Advance %		September 30, 2024		Initial Forecast
January 1, 2024 through June 30, 2024	66.4	%	67.2	%	45.2	%	21.2	%	22.0	%
July 1, 2024 through September 30, 2024	67.0	%	67.3	%	45.4	%	21.6	%	21.9	%

The risk of a material change in our forecasted collection rate declines as the Consumer Loans age. For 2020 and prior Consumer Loan assignments, the risk of a material forecast variance is modest, as we have currently realized in excess of 90% of the expected collections. Conversely, the forecasted collection rates for more recent Consumer Loan assignments are less certain as a significant portion of our forecast has not been realized.

The spread between the forecasted collection rate as of September 30, 2024 and the advance rate ranges from 13.2% to 23.7%, on an annual basis, for Consumer Loans assigned over the last 10 years. The spreads with respect to 2019 and 2020 Consumer Loans have been positively impacted by Consumer Loan performance, which has exceeded our initial estimates by a greater margin than the other years presented. The spread with respect to 2022 Consumer Loans has been negatively impacted by Consumer Loan performance, which has been lower than our initial estimates by a greater margin than the other years presented. The higher spread for 2024 Consumer Loans relative to 2023 Consumer Loans as of September 30, 2024 was primarily a result of Consumer Loan performance, as the performance of 2023 Consumer Loans has been lower than our initial estimates by a greater margin than 2024 Consumer Loans. Additionally, 2024 Consumer Loans had a higher initial spread, which was primarily due to a decrease in the advance rate.

The following table compares our forecast of aggregate Consumer Loan collection rates as of September 30, 2024 with the forecasts at the time of assignment, for dealer loans and purchased loans separately:

	Dealer Loans						Purchased Loans
	Forecasted Collection Percentage as of (1)						Forecasted Collection Percentage as of (1)
Consumer Loan Assignment Year	September 30, 2024		Initial Forecast		Variance		September 30, 2024		Initial Forecast		Variance
2015	64.6	%	67.5	%	-2.9	%	69.0	%	68.5	%	0.5	%
2016	63.1	%	65.1	%	-2.0	%	66.1	%	66.5	%	-0.4	%
2017	64.0	%	63.8	%	0.2	%	66.3	%	64.6	%	1.7	%
2018	64.9	%	63.6	%	1.3	%	66.8	%	63.5	%	3.3	%
2019	66.8	%	63.9	%	2.9	%	67.9	%	64.2	%	3.7	%
2020	67.5	%	63.3	%	4.2	%	67.9	%	63.6	%	4.3	%
2021	63.5	%	66.3	%	-2.8	%	64.3	%	66.3	%	-2.0	%
2022	59.8	%	67.3	%	-7.5	%	62.4	%	68.0	%	-5.6	%
2023	63.1	%	66.8	%	-3.7	%	67.6	%	69.4	%	-1.8	%
2024	65.5	%	66.3	%	-0.8	%	70.5	%	70.7	%	-0.2	%

^{(1) The forecasted collection rates presented for dealer loans and purchased loans reflect the Consumer Loan classification at the time of assignment. The forecasted collection rates represent the total forecasted collections we expect to collect on the Consumer Loans as a percentage of the repayments that we were contractually owed on the Consumer Loans at the time of assignment. Contractual repayments include both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates.}

The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate) as of September 30, 2024 for dealer loans and purchased loans separately. All amounts are presented as a percentage of the initial balance of the Consumer Loan (principal + interest).

	Dealer Loans						Purchased Loans
Consumer Loan Assignment Year	Forecasted Collection % (1)		Advance % (1)(2)		Spread %		Forecasted Collection % (1)		Advance % (1)(2)		Spread %
2015	64.6	%	43.4	%	21.2	%	69.0	%	50.2	%	18.8	%
2016	63.1	%	42.1	%	21.0	%	66.1	%	48.6	%	17.5	%
2017	64.0	%	42.1	%	21.9	%	66.3	%	45.8	%	20.5	%
2018	64.9	%	42.7	%	22.2	%	66.8	%	45.2	%	21.6	%
2019	66.8	%	43.1	%	23.7	%	67.9	%	45.6	%	22.3	%
2020	67.5	%	43.0	%	24.5	%	67.9	%	45.5	%	22.4	%
2021	63.5	%	45.1	%	18.4	%	64.3	%	47.7	%	16.6	%
2022	59.8	%	46.4	%	13.4	%	62.4	%	50.1	%	12.3	%
2023	63.1	%	44.8	%	18.3	%	67.6	%	49.8	%	17.8	%
2024	65.5	%	44.3	%	21.2	%	70.5	%	49.0	%	21.5	%

^{(1) The forecasted collection rates and advance rates presented for dealer loans and purchased loans reflect the Consumer Loan classification at the time of assignment.}
^{(2) Represents advances paid to dealers on Consumer Loans assigned under our portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under our purchase program as a percentage of the initial balance of the Consumer Loans. Payments of dealer holdback and accelerated dealer holdback are not included.}

Although the advance rate on purchased loans is higher as compared to the advance rate on dealer loans, purchased loans do not require us to pay dealer holdback.

The spread as of September 30, 2024 on 2024 dealer loans was 21.2%, as compared to a spread of 18.3% on 2023 dealer loans. The increase was due to Consumer Loan performance, as the performance of 2023 dealer loans has been lower than our initial estimates by a greater margin than 2024 dealer loans.

The spread as of September 30, 2024 on 2024 purchased loans was 21.5%, as compared to a spread of 17.8% on 2023 purchased loans. The increase was primarily a result of a higher initial spread on 2024 purchased loans, due to a higher initial forecast and lower advance rate. Additionally, the performance of 2023 purchased loans has been lower than our initial estimates by a greater margin than 2024 purchased loans.

Consumer Loan Volume

The following table summarizes changes in Consumer Loan assignment volume in each of the last seven quarters as compared to the same period in the previous year:

	Year over Year Percent Change
Three Months Ended	Unit Volume		Dollar Volume (1)
March 31, 2023	22.8	%	18.6	%
June 30, 2023	12.8	%	8.3	%
September 30, 2023	13.0	%	10.5	%
December 31, 2023	26.7	%	21.3	%
March 31, 2024	24.1	%	20.2	%
June 30, 2024	20.9	%	16.3	%
September 30, 2024	17.7	%	12.2	%

^{(1) Represents advances paid to dealers on Consumer Loans assigned under our portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under our purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.}

Consumer Loan assignment volumes depend on a number of factors including (1) the overall demand for our financing programs, (2) the amount of capital available to fund new loans, and (3) our assessment of the volume that our infrastructure can support. Our pricing strategy is intended to maximize the amount of economic profit we generate, within the confines of capital and infrastructure constraints.

Unit and dollar volumes grew 17.7% and 12.2%, respectively, during the third quarter of 2024 as the number of active dealers grew 8.8% and the average unit volume per active dealer increased 8.4%. Dollar volume increased less than unit volume during the third quarter of 2024 due to a decrease in the average advance paid, due to decreases in the average size of Consumer Loans assigned and the average advance rate. Unit volume for the 28-day period ended October 28, 2024 grew 4.6% compared to the same period in 2023.

The following table summarizes the changes in Consumer Loan unit volume and active dealers:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024	2023	% Change		2024	2023	% Change
Consumer Loan unit volume	95,670	81,299	17.7	%	307,215	253,847	21.0	%
Active dealers (1)	10,678	9,818	8.8	%	14,326	13,008	10.1	%
Average volume per active dealer	9.0	8.3	8.4	%	21.4	19.5	9.7	%

Consumer Loan unit volume from dealers active both periods	74,108	67,930	9.1	%	262,564	228,157	15.1	%
Dealers active both periods	6,595	6,595	—		9,604	9,604	—
Average volume per dealer active both periods	11.2	10.3	9.1	%	27.3	23.8	15.1	%

Consumer loan unit volume from dealers not active both periods	21,562	13,369	61.3	%	44,651	25,690	73.8	%
Dealers not active both periods	4,083	3,223	26.7	%	4,722	3,404	38.7	%
Average volume per dealer not active both periods	5.3	4.1	29.3	%	9.5	7.5	26.7	%

^{(1) Active dealers are dealers who have received funding for at least one Consumer Loan during the period.}

The following table provides additional information on the changes in Consumer Loan unit volume and active dealers:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2024		2023		% Change		2024		2023		% Change
Consumer Loan unit volume from new active dealers	3,447		3,926		-12.2	%	29,441		29,005		1.5	%
New active dealers (1)	1,038		983		5.6	%	3,428		3,095		10.8	%
Average volume per new active dealer	3.3		4.0		-17.5	%	8.6		9.4		-8.5	%

Attrition (2)	-16.4	%	-17.2	%			-10.1	%	-8.9	%

^{(1) New active dealers are dealers who enrolled in our program and have received funding for their first dealer loan or purchased loan from us during the period.}
^{(2) Attrition is measured according to the following formula: decrease in Consumer Loan unit volume from dealers who have received funding for at least one dealer loan or purchased loan during the comparable period of the prior year but did not receive funding for any dealer loans or purchased loans during the current period divided by prior year comparable period Consumer Loan unit volume.}

The following table shows the percentage of Consumer Loans assigned to us as dealer loans and purchased loans for each of the last seven quarters:

	Unit Volume				Dollar Volume (1)
Three Months Ended	Dealer Loans		Purchased Loans		Dealer Loans		Purchased Loans
March 31, 2023	72.1	%	27.9	%	68.1	%	31.9	%
June 30, 2023	72.4	%	27.6	%	68.6	%	31.4	%
September 30, 2023	74.8	%	25.2	%	71.7	%	28.3	%
December 31, 2023	77.2	%	22.8	%	75.0	%	25.0	%
March 31, 2024	78.2	%	21.8	%	76.6	%	23.4	%
June 30, 2024	78.5	%	21.5	%	77.3	%	22.7	%
September 30, 2024	79.5	%	20.5	%	78.4	%	21.6	%

^{(1) Represents advances paid to dealers on Consumer Loans assigned under our portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under our purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.}

As of September 30, 2024 and December 31, 2023, the net dealer loans receivable balance was 71.6% and 67.7%, respectively, of the total net loans receivable balance.

Financial Results

(Dollars in millions, except per share data)	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2024		2023	% Change			2024		2023	% Change
GAAP average debt	$	6,071.1	$	4,831.4	25.7	%	$	5,732.1	$	4,718.7	21.5	%
GAAP average shareholders’ equity		1,594.2		1,731.3	-7.9	%		1,632.1		1,719.1	-5.1	%
Average capital	$	7,665.3	$	6,562.7	16.8	%	$	7,364.2	$	6,437.8	14.4	%
GAAP net income	$	78.8	$	70.8	11.3	%	$	96.0	$	192.5	-50.1	%
Diluted weighted average shares outstanding		12,415,143		13,039,638	-4.8	%		12,494,011		13,068,998	-4.4	%
GAAP net income per diluted share	$	6.35	$	5.43	16.9	%	$	7.68	$	14.73	-47.9	%

The increase in GAAP net income for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily a result of the following:

An increase in finance charges of 14.9% ($65.9 million), primarily due to an increase in the average balance of our loan portfolio.
An increase in premiums earned of 20.7% ($4.3 million), primarily due to growth in the size of our reinsurance portfolio, which resulted from growth in new Consumer Loan assignments and an increase in the average premium written per reinsured vehicle service contract in recent periods.
An increase in operating expenses of 17.1% ($18.9 million), primarily due to:
- An increase in salaries and wages expense of 15.9% ($10.6 million), primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for dealers and consumers and (ii) fringe benefits, primarily due to higher medical claims.
- An increase in general and administrative expenses of 36.2% ($7.7 million), primarily due to an increase in legal expenses.
An increase in interest expense of 57.7% ($40.7 million), due to:
- An increase in our average cost of debt, which increased interest expense by $22.6 million, primarily as a result of higher interest rates on recently completed or extended secured financings and recently issued senior notes and the repayment of older secured financings and senior notes with lower interest rates.
- An increase in our average outstanding debt balance, which increased interest expense by $18.1 million, primarily due to borrowings used to fund the growth of our loan portfolio and stock repurchases.

The decrease in GAAP net income for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily a result of the following:

An increase in interest expense of 64.2% ($120.5 million), due to:
- An increase in our average cost of debt, which increased interest expense by $80.2 million, primarily as a result of higher interest rates on recently completed or extended secured financings and recently issued senior notes and the repayment of older secured financings and senior notes with lower interest rates.
- An increase in our average outstanding debt balance, which increased interest expense by $40.3 million, primarily due to borrowings used to fund the growth of our loan portfolio and stock repurchases.
An increase in provision for credit losses of 20.8% ($118.8 million), primarily due to an increase in provision for credit losses on forecast changes of $111.5 million, due to a greater decline in Consumer Loan performance and slower net cash flow timing during the first nine months of 2024 compared to the first nine months of 2023.

During the first nine months of 2024, we decreased our estimate of future net cash flows by $282.9 million, or 2.8%, to reflect a decline in forecasted collection rates during the period, and slowed our forecasted net cash flow timing to reflect a decrease in Consumer Loan prepayments, which remain at below-average levels. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit. The $282.9 million decrease in forecasted net cash flows for the first nine months of 2024 was composed of an ordinary decrease in forecasted net cash flows of $135.7 million, or 1.4%, and an adjustment applied to our forecasting methodology during the second quarter of 2024, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased our provision for credit losses by $127.5 million.

During the first nine months of 2023, we decreased our estimate of future net cash flows by $149.3 million, or 1.7%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect a decrease in Consumer Loan prepayments. The $149.3 million decrease in forecasted net cash flows for the first nine months of 2023 was composed of an ordinary decrease in forecasted net cash flows of $104.8 million, or 1.2%, and an adjustment to our forecasting methodology during the second quarter of 2023, which upon implementation, decreased our estimate of future net cash flows by $44.5 million, or 0.5%, and increased our provision for credit losses by $71.3 million.

The following table summarizes each component of provision for credit losses:

(In millions)	For the Nine Months Ended September 30,
Provision for Credit Losses		2024		2023	Change
Forecast changes	$	430.9	$	319.4	$	111.5
New Consumer Loan assignments		260.4		253.1		7.3
Total	$	691.3	$	572.5	$	118.8

An increase in operating expenses of 10.2% ($35.1 million), primarily due to:
- An increase in salaries and wages expense of 8.2% ($17.5 million), primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for dealers and consumers and (ii) fringe benefits, primarily due to higher medical claims.
- An increase in general and administrative expense of 26.9% ($16.1 million), primarily due to increases in legal and technology systems expenses.
A loss on sale of building of $23.7 million related to the sale of one of our two office buildings. The building was sold to reduce excess office space and eliminate the associated annual operating costs of approximately $2.1 million.
An increase in premiums earned of 22.9% ($13.3 million), primarily due to growth in the size of our reinsurance portfolio, which resulted from growth in new Consumer Loan assignments and an increase in the average premium written per reinsured vehicle service contract in recent periods.
A decrease in provision for income taxes of 29.1% ($17.1 million), primarily due to a decrease in pre-tax income.
An increase in finance charges of 13.1% ($170.7 million), primarily due to an increase in the average balance of our loan portfolio.

Adjusted financial results are provided to help shareholders understand our financial performance. The financial data below is non-GAAP, unless labeled otherwise. We use adjusted financial information internally to measure financial performance and to determine certain incentive compensation. We also use economic profit as a framework to evaluate business decisions and strategies, with the objective to maximize economic profit over the long term. In addition, certain debt facilities utilize adjusted financial information for the determination of loan collateral values and to measure financial covenants. The table below shows our results following adjustments to reflect non-GAAP accounting methods. Material adjustments are explained in the table footnotes and the subsequent “Floating Yield Adjustment” and “Senior Notes Adjustment” sections. Measures such as adjusted average capital, adjusted net income, adjusted net income per diluted share, adjusted interest expense (after-tax), adjusted net income plus adjusted interest expense (after-tax), adjusted return on capital, adjusted revenue, operating expenses, adjusted loans receivable, economic profit, and economic profit per diluted share are non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.

Adjusted financial results for the three and nine months ended September 30, 2024, compared to the same periods in 2023, include the following:

(Dollars in millions, except per share data)	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2024			2023		% Change			2024			2023		% Change
Adjusted average capital	$	8,387.6		$	7,023.9		19.4	%	$	7,976.2		$	6,801.6		17.3	%
Adjusted net income	$	109.1		$	139.5		-21.8	%	$	352.9		$	406.5		-13.2	%
Adjusted interest expense (after-tax)	$	85.6		$	54.8		56.2	%	$	237.3		$	146.1		62.4	%
Adjusted net income plus adjusted interest expense (after-tax)	$	194.7		$	194.3		0.2	%	$	590.2		$	552.6		6.8	%
Adjusted return on capital		9.3	%		11.1	%	-16.2	%		9.9	%		10.8	%	-8.3	%
Cost of capital		7.3	%		7.1	%	2.8	%		7.4	%		6.8	%	8.8	%
Economic profit	$	41.4		$	69.1		-40.1	%	$	149.0		$	204.6		-27.2	%
Diluted weighted average shares outstanding		12,415,143			13,039,638		-4.8	%		12,494,011			13,068,998		-4.4	%
Adjusted net income per diluted share	$	8.79		$	10.70		-17.9	%	$	28.25		$	31.10		-9.2	%
Economic profit per diluted share	$	3.33		$	5.30		-37.2	%	$	11.93		$	15.66		-23.8	%

Economic profit decreased 40.1% and 27.2% for the three and nine months ended September 30, 2024, as compared to the same periods in 2023. Economic profit is a function of the return on capital in excess of the cost of capital and the amount of capital invested in the business. The following table summarizes the impact each of these components had on the changes in economic profit for the three and nine months ended September 30, 2024, as compared to the same periods in 2023:

(In millions)	Year over Year Change in Economic Profit
	For the Three Months Ended September 30, 2024		For the Nine Months Ended September 30, 2024
Decrease in adjusted return on capital	$	(37.3)	$	(58.1)
Increase in cost of capital		(3.8)		(33.0)
Increase in adjusted average capital		13.4		35.5
Decrease in economic profit	$	(27.7)	$	(55.6)

The decrease in economic profit for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily a result of the following:

A decrease in our adjusted return on capital of 180 basis points, primarily due to a decrease in the yield used to recognize adjusted finance charges on our loan portfolio, primarily due to both a decline in forecasted collection rates and slower forecasted net cash flow timing since the second quarter of 2023. The slower forecasted net cash flow timing was primarily a result of a decrease in Consumer Loan prepayments, which remain at below-average levels.
An increase in adjusted average capital of 19.4%, primarily due to an increase in the average balance of our loan portfolio.

The decrease in economic profit for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily a result of the following:

A decrease in our adjusted return on capital of 90 basis points, primarily due to:
- A decrease in the yield used to recognize adjusted finance charges on our loan portfolio decreased our adjusted return on capital by 130 basis points, primarily due to both a decline in forecasted collection rates and slower forecasted net cash flow timing since the first quarter of 2023. The slower forecasted net cash flow timing was primarily a result of a decrease in Consumer Loan prepayments, which remain at below-average levels.
- Slower growth in operating expenses increased our adjusted return on capital by 30 basis points as operating expenses grew by 10.2% while adjusted average capital grew by 17.3%.
An increase in our cost of capital, primarily due to an increase in our cost of debt, primarily as a result of higher interest rates on recently completed or extended secured financings and recently issued senior notes and the repayment of older secured financings and senior notes with lower interest rates.
An increase in adjusted average capital of 17.3%, primarily due to an increase in the average balance of our loan portfolio.

The following table shows adjusted revenue and operating expenses as a percentage of adjusted average capital, the adjusted return on capital, and the percentage change in adjusted average capital for each of the last eight quarters, compared to the same period in the prior year:

	For the Three Months Ended
	Sept. 30, 2024		Jun. 30, 2024		Mar. 31, 2024		Dec. 31, 2023		Sept. 30, 2023		Jun. 30, 2023		Mar. 31, 2023		Dec. 31, 2022
Adjusted revenue as a percentage of adjusted average capital (1)	18.2	%	19.6	%	19.8	%	20.2	%	20.7	%	21.2	%	20.6	%	22.0	%
Operating expenses as a percentage of adjusted average capital (1)	6.2	%	6.2	%	6.7	%	6.3	%	6.3	%	6.9	%	7.2	%	6.4	%
Adjusted return on capital (1)	9.3	%	10.3	%	10.1	%	10.6	%	11.1	%	11.1	%	10.3	%	12.0	%
Percentage change in adjusted average capital compared to the same period in the prior year	19.4	%	17.6	%	14.6	%	11.5	%	8.8	%	6.2	%	1.0	%	-2.4	%

^{(1) Annualized.}

The decrease in adjusted return on capital for the three months ended September 30, 2024, as compared to the three months ended June 30, 2024, was primarily due to a decrease in the yield used to recognize adjusted finance charges on our loan portfolio, primarily due to both a decline in Consumer Loan performance and slower forecasted net cash flow timing in the second and third quarters of 2024, which is being recorded over time as an adjustment to the yield used to recognize adjusted finance charges.

The following tables provide a reconciliation of non-GAAP measures to GAAP measures. Certain amounts do not recalculate due to rounding.

(Dollars in millions, except per share data)	For the Three Months Ended
	Sept. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sept. 30, 2023			Jun. 30, 2023			Mar. 31, 2023			Dec. 31, 2022
Adjusted net income
GAAP net income (loss)	$	78.8		$	(47.1)		$	64.3		$	93.6		$	70.8		$	22.2		$	99.5		$	127.3
Floating yield adjustment (after-tax)		(115.1)			(96.1)			(92.4)			(83.9)			(76.4)			(73.9)			(75.9)			(69.3)
GAAP provision for credit losses (after-tax)		142.2			246.9			143.2			126.1			142.1			192.9			105.8			100.4
Loss on sale of building (1)		—			18.3			—			—			—			—			—			—
Senior notes adjustment (after-tax)		—			—			—			(2.6)			(0.5)			(0.6)			(0.5)			(0.5)
Income tax adjustment (2)		3.2			4.4			2.3			(4.1)			3.5			(0.6)			(1.9)			(1.8)
Adjusted net income	$	109.1		$	126.4		$	117.4		$	129.1		$	139.5		$	140.0		$	127.0		$	156.1

Adjusted net income per diluted share (3)	$	8.79		$	10.29		$	9.28		$	10.06		$	10.70		$	10.69		$	9.71		$	11.74
Diluted weighted average shares outstanding		12,415,143			12,282,174			12,646,529			12,837,181			13,039,638			13,099,961			13,073,316			13,294,506

Adjusted revenue
GAAP total revenue	$	550.3		$	538.2		$	508.0		$	491.6		$	478.6		$	477.9		$	453.8		$	459.0
Floating yield adjustment		(149.4)			(124.8)			(120.0)			(108.9)			(99.3)			(96.1)			(98.4)			(90.0)
GAAP provision for claims		(18.5)			(20.3)			(17.0)			(16.6)			(16.5)			(19.7)			(17.9)			(12.4)
Adjusted revenue	$	382.4		$	393.1		$	371.0		$	366.1		$	362.8		$	362.1		$	337.5		$	356.6

Adjusted average capital
GAAP average debt	$	6,071.1		$	5,818.2		$	5,306.8		$	4,986.3		$	4,831.4		$	4,730.3		$	4,594.7		$	4,591.1
Deferred debt issuance adjustment		—			—			—			20.9			24.5			24.0			21.2			21.3
Senior notes debt adjustment		—			—			—			2.8			3.4			3.4			3.4			3.4
Adjusted average debt		6,071.1			5,818.2			5,306.8			5,010.0			4,859.3			4,757.7			4,619.3			4,615.8
GAAP average shareholders’ equity		1,594.2			1,623.5			1,678.5			1,734.3			1,731.3			1,752.6			1,673.3			1,635.2
Senior notes equity adjustment		—			—			—			2.0			2.9			3.4			4.0			4.5
Income tax adjustment (4)		(118.5)			(118.5)			(118.5)			(118.5)			(118.5)			(118.5)			(118.5)			(118.5)
Floating yield adjustment		840.8			710.1			641.0			606.5			548.9			433.9			373.7			353.2
Adjusted average equity		2,316.5			2,215.1			2,201.0			2,224.3			2,164.6			2,071.4			1,932.5			1,874.4
Adjusted average capital	$	8,387.6		$	8,033.3		$	7,507.8		$	7,234.3		$	7,023.9		$	6,829.1		$	6,551.8		$	6,490.2

Adjusted revenue as a percentage of adjusted average capital (5)		18.2	%		19.6	%		19.8	%		20.2	%		20.7	%		21.2	%		20.6	%		22.0	%

Adjusted loans receivable
GAAP loans receivable, net	$	7,781.5		$	7,547.7		$	7,345.6		$	6,955.3		$	6,780.5		$	6,610.3		$	6,500.3		$	6,297.7
Floating yield adjustment		1,100.8			1,065.6			869.7			803.8			748.9			663.7			509.2			470.2
Adjusted loans receivable	$	8,882.3		$	8,613.3		$	8,215.3		$	7,759.1		$	7,529.4		$	7,274.0		$	7,009.5		$	6,767.9

Adjusted interest expense (after-tax)
GAAP interest expense	$	111.2		$	104.5		$	92.5		$	78.8		$	70.5		$	62.8		$	54.4		$	49.4
Senior notes adjustment		—			—			—			3.5			0.7			0.7			0.7			0.7
Adjusted interest expense (pre-tax)		111.2			104.5			92.5			82.3			71.2			63.5			55.1			50.1
Adjustment to record tax effect (2)		(25.6)			(24.0)			(21.3)			(18.9)			(16.4)			(14.6)			(12.7)			(11.5)
Adjusted interest expense (after-tax)	$	85.6		$	80.5		$	71.2		$	63.4		$	54.8		$	48.9		$	42.4		$	38.6

^{(1)   The sale of one of our two office buildings in June 2024 resulted in a loss on the sale of the asset. As this transaction is both unusual and infrequent in nature, we applied this adjustment to remove the impact of the loss on sale of building from our adjusted net income.}
^{(2)   Adjustment to record taxes at our estimated long-term effective income tax rate of 23%.}
^{(3)   Net income per diluted share is computed independently for each of the quarters presented. Therefore, the sum of quarterly net income per diluted share information may not equal year-to-date net income per diluted share.}
^{(4)   The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in the reversal of $118.5 million of provision for income taxes to reflect the new federal statutory income tax rate. This adjustment removes the impact of this reversal from adjusted average capital. We believe the income tax adjustment provides a more accurate reflection of the performance of our business as we are recognizing provision for income taxes at the applicable long-term effective tax rate for the period.}
^{(5)   Annualized.}

(Dollars in millions)	For the Three Months Ended
	Sept. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sept. 30, 2023			Jun. 30, 2023			Mar. 31, 2023			Dec. 31, 2022
Adjusted return on capital (1)
Adjusted net income	$	109.1		$	126.4		$	117.4		$	129.1		$	139.5		$	140.0		$	127.0		$	156.1
Adjusted interest expense (after-tax)		85.6			80.5			71.2			63.4			54.8			48.9			42.4			38.6
Adjusted net income plus adjusted interest expense (after-tax)	$	194.7		$	206.9		$	188.6		$	192.5		$	194.3		$	188.9		$	169.4		$	194.7

Reconciliation of GAAP return on equity to adjusted return on capital (4)
GAAP return on equity (2)		19.8	%		-11.6	%		15.3	%		21.6	%		16.4	%		5.1	%		23.8	%		31.1	%
Non-GAAP adjustments		-10.5	%		21.9	%		-5.2	%		-11.0	%		-5.3	%		6.0	%		-13.5	%		-19.1	%
Adjusted return on capital (1)		9.3	%		10.3	%		10.1	%		10.6	%		11.1	%		11.1	%		10.3	%		12.0	%

Economic profit
Adjusted return on capital		9.3	%		10.3	%		10.1	%		10.6	%		11.1	%		11.1	%		10.3	%		12.0	%
Cost of capital (3) (4)		7.3	%		7.5	%		7.3	%		7.6	%		7.1	%		6.7	%		6.6	%		6.6	%
Adjusted return on capital in excess of cost of capital		2.0	%		2.8	%		2.8	%		3.0	%		4.0	%		4.4	%		3.7	%		5.4	%
Adjusted average capital	$	8,387.6		$	8,033.3		$	7,507.8		$	7,234.3		$	7,023.9		$	6,829.1		$	6,551.8		$	6,490.2
Economic profit	$	41.4		$	56.2		$	51.4		$	55.9		$	69.1		$	74.1		$	61.4		$	88.1

Reconciliation of GAAP net income (loss) to economic profit
GAAP net income (loss)	$	78.8		$	(47.1)		$	64.3		$	93.6		$	70.8		$	22.2		$	99.5		$	127.3
Non-GAAP adjustments		30.3			173.5			53.1			35.5			68.7			117.8			27.5			28.8
Adjusted net income		109.1			126.4			117.4			129.1			139.5			140.0			127.0			156.1
Adjusted interest expense (after-tax)		85.6			80.5			71.2			63.4			54.8			48.9			42.4			38.6
Adjusted net income plus adjusted interest expense (after-tax)		194.7			206.9			188.6			192.5			194.3			188.9			169.4			194.7
Less: cost of capital		153.3			150.7			137.2			136.6			125.2			114.8			108.0			106.6
Economic profit	$	41.4		$	56.2		$	51.4		$	55.9		$	69.1		$	74.1		$	61.4		$	88.1

Economic profit per diluted share (5)	$	3.33		$	4.58		$	4.06		$	4.35		$	5.30		$	5.66		$	4.70		$	6.63

Operating expenses as a percentage of adjusted average capital (4)		6.2	%		6.2	%		6.7	%		6.3	%		6.3	%		6.9	%		7.2	%		6.4	%

Percentage change in adjusted average capital compared to the same period in the prior year		19.4	%		17.6	%		14.6	%		11.5	%		8.8	%		6.2	%		1.0	%		-2.4	%

^{(1) Adjusted return on capital is defined as adjusted net income plus adjusted interest expense (after-tax) divided by adjusted average capital.}
^{(2) Calculated by dividing GAAP net income (loss) by GAAP average shareholders’ equity.}

^{(3) The cost of capital includes both a cost of equity and a cost of debt. The cost of equity capital is determined based on a formula that considers the risk of the business and the risk associated with our use of debt. The formula utilized for determining the cost of equity capital is as follows: (the average 30-year Treasury rate + 5%) + [(1 – tax rate) x (the average 30-year Treasury rate + 5% – pre-tax average cost of debt rate) x average debt/(average equity + average debt x tax rate)]. For the periods presented, the average 30-year Treasury rate and the adjusted pre-tax average cost of debt were as follows:}

	For the Three Months Ended
	Sept. 30, 2024		Jun. 30, 2024		Mar. 31, 2024		Dec. 31, 2023		Sept. 30, 2023		Jun. 30, 2023		Mar. 31, 2023		Dec. 31, 2022
Average 30-year Treasury rate	4.3	%	4.6	%	4.3	%	4.7	%	4.2	%	3.8	%	3.8	%	4.0	%
Adjusted pre-tax average cost of debt (4)	7.3	%	7.2	%	7.0	%	6.3	%	5.9	%	5.3	%	4.8	%	4.3	%

^{(4) Annualized.}
^{(5) Economic profit per diluted share is computed independently for each of the quarters presented. Therefore, the sum of quarterly economic profit per diluted share information may not equal year-to-date economic profit per diluted share.}

(In millions, except share and per share data)	For the Nine Months Ended September 30,
		2024			2023
Adjusted net income
GAAP net income	$	96.0		$	192.5
Floating yield adjustment (after-tax)		(303.6)			(226.2)
GAAP provision for credit losses (after-tax)		532.3			440.8
Loss on sale of building (1)		18.3			—
Senior notes adjustment (after-tax)		—			(1.6)
Income tax adjustment (2)		9.9			1.0
Adjusted net income	$	352.9		$	406.5

Adjusted net income per diluted share	$	28.25		$	31.10
Diluted weighted average shares outstanding		12,494,011			13,068,998

Adjusted average capital
GAAP average debt	$	5,732.1		$	4,718.7
Deferred debt issuance adjustment		—			23.3
Senior notes debt adjustment		—			3.4
Adjusted average debt		5,732.1			4,745.4
GAAP average shareholders’ equity		1,632.1			1,719.1
Senior notes equity adjustment		—			3.4
Income tax adjustment (3)		(118.5)			(118.5)
Floating yield adjustment		730.5			452.2
Adjusted average equity		2,244.1			2,056.2
Adjusted average capital	$	7,976.2		$	6,801.6

Adjusted interest expense (after-tax)
GAAP interest expense	$	308.2		$	187.7
Senior notes adjustment		—			2.1
Adjusted interest expense (pre-tax)		308.2			189.8
Adjustment to record tax effect (2)		(70.9)			(43.7)
Adjusted interest expense (after-tax)	$	237.3		$	146.1

Adjusted return on capital (5)
Adjusted net income	$	352.9		$	406.5
Adjusted interest expense (after-tax)		237.3			146.1
Adjusted net income plus adjusted interest expense (after-tax)	$	590.2		$	552.6

Reconciliation of GAAP return on equity to adjusted return on capital (7)
GAAP return on equity (4)		7.8	%		14.9	%
Non-GAAP adjustments		2.1	%		-4.1	%
Adjusted return on capital (5)		9.9	%		10.8	%

Economic profit
Adjusted return on capital		9.9	%		10.8	%
Cost of capital (6) (7)		7.4	%		6.8	%
Adjusted return on capital in excess of cost of capital		2.5	%		4.0	%
Adjusted average capital	$	7,976.2		$	6,801.6
Economic profit	$	149.0		$	204.6

Reconciliation of GAAP net income to economic profit
GAAP net income	$	96.0		$	192.5
Non-GAAP adjustments		256.9			214.0
Adjusted net income		352.9			406.5
Adjusted interest expense (after-tax)		237.3			146.1
Adjusted net income plus adjusted interest expense (after-tax)		590.2			552.6
Less: cost of capital		441.2			348.0
Economic profit	$	149.0		$	204.6

Economic profit per diluted share (8)	$	11.93		$	15.66

^{(1)   The sale of one of our two office buildings in June 2024 resulted in a loss on the sale of the asset. As this transaction is both unusual and infrequent in nature, we applied this adjustment to remove the impact of the loss on sale of building from our adjusted net income.}
^{(2)        Adjustment to record taxes at our estimated long-term effective income tax rate of 23%.}
^{(3)   The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in the reversal of $118.5 million of provision for income taxes to reflect the new federal statutory income tax rate. This adjustment removes the impact of this reversal from adjusted average capital. We believe the income tax adjustment provides a more accurate reflection of the performance of our business as we are recognizing provision for income taxes at the applicable long-term effective tax rate for the period.}
^{(4)   Calculated by dividing GAAP net income by GAAP average shareholders’ equity.}
^{(5)   Adjusted return on capital is defined as adjusted net income plus adjusted interest expense after-tax divided by adjusted average capital.}
^{(6)   The cost of capital includes both a cost of equity and a cost of debt.  The cost of equity capital is determined based on a formula that considers the risk of the business and the risk associated with our use of debt.  The formula utilized for determining the cost of equity capital is as follows: (the average 30-year Treasury rate + 5%) + [(1 – tax rate) x (the average 30-year Treasury rate + 5% – pre-tax average cost of debt rate) x average debt/(average equity + average debt x tax rate)].  For the periods presented, the average 30-year Treasury rate and the adjusted pre-tax average cost of debt were as follows:}

	For the Nine Months Ended September 30,
	2024		2023
Average 30-year Treasury rate	4.4	%	3.9	%
Adjusted pre-tax average cost of debt (7)	7.2	%	5.3	%

^{(7) Annualized}
^{(8) Economic profit per diluted share is computed independently for each of the quarters presented. Therefore, the sum of quarterly economic profit per diluted share information may not equal year-to-date economic profit per diluted share.}

Floating Yield Adjustment

The net loan income (finance charge revenue less provision for credit losses expense) that we recognize over the life of a loan equals the cash we collect from the underlying Consumer Loan less the cash we pay to the dealer. We believe the economics of our business are best exhibited by recognizing loan revenue on a level-yield basis over the life of the loan based on expected future net cash flows. The purpose of this non-GAAP adjustment is to provide insight into our business by showing this level yield measure of income. Under GAAP, contractual amounts due in excess of the loan receivable balance at the time of assignment will be reflected as interest income, while contractual amounts due that are not expected to be collected are reflected in the provision for credit losses. Our non-GAAP floating yield adjustment recognizes the net effects of contractual interest income and expected credit losses in a single measure of finance charge revenue, consistent with how we manage our business. The floating yield adjustment recognizes revenue on a level-yield basis based upon expected future net cash flows, with any changes in expected future net cash flows, which are recognized immediately under GAAP as provision for credit losses, recognized over the remaining forecast period (up to 120 months after the origination date of the underlying Consumer Loans) for each individual dealer loan and purchased loan. The floating yield adjustment does not accelerate revenue recognition. Rather, it reduces revenue by taking amounts that are reported under GAAP as provision for credit losses and instead treating them as reductions of revenue over time.

Under the GAAP methodology we employ, which is known as the current expected credit loss model, or CECL, we are required to recognize:

a significant provision for credit losses expense at the time of the loan’s assignment to us for contractual net cash flows we do not expect to realize; and
finance charge revenue in subsequent periods that is significantly in excess of our expected yield.

Due to the GAAP treatment of contractual net cash flows we do not expect to realize at the time of loan assignment (i.e. significant expense at the time of loan assignment, which is offset by higher revenue in subsequent periods), we do not believe the GAAP methodology we employ provides sufficient transparency into the economics of our business, including our results of operations, financial condition, and financial leverage. Our floating yield adjustment enables us to provide measures of income that are not impacted by GAAP’s treatment of contractual net cash flows we do not expect to realize at the time of loan assignment. We believe the floating yield adjustment is presented in a manner which reflects both the economic reality of our business and how the business is managed and provides valuable supplemental information to help investors better understand our business, executive compensation, liquidity, and capital resources.

Senior Notes Adjustment (applied in periods prior to December 31, 2023)

This non-GAAP adjustment modifies our GAAP financial results to treat the issuance of certain senior notes as a refinancing of certain previously issued senior notes. Our historical adjusted financial information reflects application of the senior notes adjustment as described below in connection with (i) the issuance by us in 2014 of $300.0 million principal amount of 6.125% senior notes due 2021 (the “2021 senior notes”) and the related retirement of our 9.125% senior notes due 2017 (the “2017 senior notes”) and (ii) the issuance by us in 2019 of $400.0 million principal amount of 5.125% senior notes due 2024 (the “2024 senior notes”) and the related retirement of the 2021 senior notes and our 7.375% senior notes due 2023 (the “2023 senior notes”).

We issued the 2024 senior notes on December 18, 2019. We used a portion of the net proceeds from the 2024 senior notes to repurchase or redeem all of the $300.0 million outstanding principal amount of the 2021 senior notes, of which $148.2 million was repurchased on December 18, 2019 and the remaining $151.8 million was redeemed on January 17, 2020. We used the remaining net proceeds from the 2024 senior notes, together with borrowings under our revolving credit facility, to redeem in full the $250.0 million outstanding principal amount of the 2023 senior notes on March 15, 2020. Under GAAP, the fourth quarter of 2019 included (i) a pre-tax loss on extinguishment of debt of $1.8 million related to the repurchase of 2021 senior notes in the fourth quarter of 2019 and the redemption of the remaining 2021 senior notes in the first quarter of 2020 and (ii) additional interest expense of $0.3 million on $160.0 million of additional outstanding debt caused by the one month lag from the issuance of the 2024 senior notes and repurchase of 2021 senior notes in the fourth quarter of 2019 to the redemption of the remaining 2021 senior notes in the first quarter of 2020. Under GAAP, the first quarter of 2020 included (i) a pre-tax loss on extinguishment of debt of $7.4 million related to the redemption of 2023 senior notes in the first quarter of 2020 and (ii) additional interest expense of $0.4 million on $160.0 million of additional outstanding debt caused by the one month lag from the issuance of the 2024 senior notes and repurchase of 2021 senior notes in the fourth quarter of 2019 to the redemption of the remaining 2021 senior notes in the first quarter of 2020.

We issued the 2021 senior notes on January 22, 2014. On February 21, 2014, we used the net proceeds from the 2021 senior notes, together with borrowings under our revolving credit facilities, to redeem in full the $350.0 million outstanding principal amount of the 2017 senior notes. Under GAAP, the first quarter of 2014 included (i) a pre-tax loss on extinguishment of debt of $21.8 million related to the redemption of the 2017 senior notes in the first quarter of 2014 and (ii) additional interest expense of $1.4 million on $276.0 million of additional outstanding debt caused by the one month lag from the issuance of the 2021 senior notes to the redemption of the 2017 senior notes.

Under our non-GAAP approach, the loss on extinguishment of debt and additional interest expense that were recognized for GAAP purposes were in each case deferred as debt issuance costs to be recognized ratably as interest expense over the term of the newly issued notes. In addition, for adjusted average capital purposes, the impact of additional outstanding debt related to the lag from the issuance of the new notes to the redemption of the previously issued notes was in each case deferred to be recognized ratably over the term of the newly issued notes. Upon the issuance of the 2024 senior notes in the fourth quarter of 2019, the outstanding unamortized balances of the non-GAAP adjustments related to the 2021 senior notes were deferred and were being recognized ratably over the term of the 2024 senior notes, until the repurchase and redemption of the 2024 senior notes in December 2023.

We believe the application of the senior notes adjustment as described above provided a more accurate reflection of the performance of our business, since we were recognizing the costs incurred with these transactions in a manner consistent with how we recognize the costs incurred when we periodically refinance our other debt facilities. We have determined not to apply the senior notes adjustment in connection with the issuance by us in December 2023 of our 9.250% senior notes due 2028 and the related retirement of the 2024 senior notes, because the adjustment would not be material.

Cautionary Statement Regarding Forward-Looking Information

We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. Statements in this release that are not historical facts, such as those using terms like “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “assume,” “forecast,” “estimate,” “intend,” “plan,” “target,” or similar expressions, and those regarding our future results, plans, and objectives, are “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. Actual results could differ materially from these forward-looking statements since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 12, 2024, and other risk factors discussed herein or listed from time to time in our reports filed with the SEC and the following:

Industry, Operational, and Macroeconomic Risks

Our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on results of operations.
Due to competition from traditional financing sources and non-traditional lenders, we may not be able to compete successfully.
Adverse changes in economic conditions, the automobile or finance industries, or the non-prime consumer market could adversely affect our financial position, liquidity, and results of operations, the ability of key vendors that we depend on to supply us with services, and our ability to enter into future financing transactions.
Reliance on third parties to administer our ancillary product offerings could adversely affect our business and financial results.
We are dependent on our senior management and the loss of any of these individuals or an inability to hire additional team members could adversely affect our ability to operate profitably.
Our reputation is a key asset to our business, and our business may be affected by how we are perceived in the marketplace.
An outbreak of contagious disease or other public health emergency could materially and adversely affect our business, financial condition, liquidity, and results of operations.
The concentration in several states of automobile dealers who participate in our programs could adversely affect us.
Reliance on our outsourced business functions could adversely affect our business.
Our ability to hire and retain foreign engineering personnel could be hindered by immigration restrictions.
We may be unable to execute our business strategy due to current economic conditions.
Natural disasters, climate change, military conflicts, acts of war, terrorist attacks and threats, or the escalation of military activity in response to terrorist attacks or otherwise may negatively affect our business, financial condition, and results of operations.
Governmental or market responses to climate change and related environmental issues could have a material adverse effect on our business.
A small number of our shareholders have the ability to significantly influence matters requiring shareholder approval and such shareholders have interests which may conflict with the interests of our other security holders.

Capital and Liquidity Risks

We may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow our business.
The terms of our debt limit how we conduct our business.
A violation of the terms of our asset-backed secured financings or revolving secured warehouse facilities could have a material adverse impact on our operations.
Our substantial debt could negatively impact our business, prevent us from satisfying our debt obligations, and adversely affect our financial condition.
We may not be able to generate sufficient cash flows to service our outstanding debt and fund operations and may be forced to take other actions to satisfy our obligations under such debt.
Interest rate fluctuations may adversely affect our borrowing costs, profitability, and liquidity.
Reduction in our credit rating could increase the cost of our funding from, and restrict our access to, the capital markets and adversely affect our liquidity, financial condition, and results of operations.
We may incur substantially more debt and other liabilities. This could exacerbate further the risks associated with our current debt levels.
The conditions of the U.S. and international capital markets may adversely affect lenders with which we have relationships, causing us to incur additional costs and reducing our sources of liquidity, which may adversely affect our financial position, liquidity, and results of operations.

Technology and Cybersecurity Risks

Our dependence on technology could have a material adverse effect on our business.
We depend on secure information technology, and a breach of our systems or those of our third-party service providers could result in our experiencing significant financial, legal, and reputational exposure and could materially adversely affect our business, financial condition, and results of operations.
Our use of electronic contracts could impact our ability to perfect our ownership or security interest in Consumer Loans.
Failure to properly safeguard confidential consumer and team member information could subject us to liability, decrease our profitability, and damage our reputation.

Legal and Regulatory Risks

Litigation we are involved in from time to time may adversely affect our financial condition, results of operations, and cash flows.
Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on our results of operations and cash flows from operations.
The regulations to which we are or may become subject could result in a material adverse effect on our business.

Other factors not currently anticipated by management may also materially and adversely affect our business, financial condition, and results of operations. We do not undertake, and expressly disclaim any obligation, to update or alter our statements whether as a result of new information, future events, or otherwise, except as required by applicable law.

Webcast Details

We will host a webcast on October 31, 2024 at 8:30 a.m. Eastern Time to discuss our third quarter results. The webcast can be accessed live by visiting the “Investor Relations” section of our website at ir.creditacceptance.com or by telephone as described below. Only persons accessing the webcast by telephone will be able to pose questions to the presenters during the webcast. A replay and transcript of the webcast will be archived in the “Investor Relations” section of our website.

To participate in the webcast by telephone, you must pre-register at https://register.vevent.com/register/BIc3f0d088751f49af853a2c2511fe2362, or through the link posted on the “Investor Relations” section of our website at ir.creditacceptance.com. Upon registration you will be provided with the dial-in number and a unique PIN to access the webcast by telephone.

Description of Credit Acceptance Corporation

We make vehicle ownership possible by providing innovative financing solutions that enable automobile dealers to sell vehicles to consumers regardless of their credit history. Our financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our financing programs, but who actually end up qualifying for traditional financing.

Without our financing programs, consumers are often unable to purchase vehicles or they purchase unreliable ones. Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing. Credit Acceptance is publicly traded on the Nasdaq Stock Market under the symbol CACC. For more information, visit creditacceptance.com.

CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(Dollars in millions, except per share data)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2024		2023		2024		2023
Revenue:
Finance charges	$	507.6	$	441.7	$	1,474.5	$	1,303.8
Premiums earned		25.1		20.8		71.3		58.0
Other income		17.6		16.1		50.7		48.5
Total revenue		550.3		478.6		1,596.5		1,410.3
Costs and expenses:
Salaries and wages		77.3		66.7		231.6		214.1
General and administrative		29.0		21.3		75.9		59.8
Sales and marketing		23.1		22.5		72.4		70.9
Total operating expenses		129.4		110.5		379.9		344.8

Provision for credit losses on forecast changes		105.9		106.3		430.9		319.4
Provision for credit losses on new Consumer Loan assignments		78.8		78.3		260.4		253.1
Total provision for credit losses		184.7		184.6		691.3		572.5

Interest		111.2		70.5		308.2		187.7
Provision for claims		18.5		16.5		55.8		54.1
Loss on sale of building		—		—		23.7		—
Total costs and expenses		443.8		382.1		1,458.9		1,159.1
Income before provision for income taxes		106.5		96.5		137.6		251.2
Provision for income taxes		27.7		25.7		41.6		58.7
Net income	$	78.8	$	70.8	$	96.0	$	192.5

Net income per share:
Basic	$	6.42	$	5.47	$	7.78	$	14.79
Diluted	$	6.35	$	5.43	$	7.68	$	14.73

Weighted average shares outstanding:
Basic		12,274,685		12,933,377		12,345,739		13,013,344
Diluted		12,415,143		13,039,638		12,494,011		13,068,998

CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Dollars in millions, except per share data)	As of
	September 30, 2024		December 31, 2023
ASSETS:
Cash and cash equivalents	$	159.7	$	13.2
Restricted cash and cash equivalents		556.6		457.7
Restricted securities available for sale		113.9		93.2

Loans receivable		11,197.6		10,020.1
Allowance for credit losses		(3,416.1)		(3,064.8)
Loans receivable, net		7,781.5		6,955.3

Property and equipment, net		15.2		46.5
Income taxes receivable		26.4		4.3
Other assets		29.9		40.0
Total assets	$	8,683.2	$	7,610.2

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Liabilities:
Accounts payable and accrued liabilities	$	364.4	$	318.8
Revolving secured lines of credit		1.0		79.2
Secured financing		5,257.1		3,990.9
Senior notes		990.8		989.0
Mortgage note		—		8.4
Deferred income taxes, net		423.2		389.2
Income taxes payable		0.2		81.0
Total liabilities		7,036.7		5,856.5

Shareholders’ Equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued		—		—
Common stock, $.01 par value, 80,000,000 shares authorized, 12,111,600 and 12,522,397 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		0.1		0.1
Paid-in capital		324.5		279.0
Retained earnings		1,321.0		1,475.6
Accumulated other comprehensive income (loss)		0.9		(1.0)
Total shareholders’ equity		1,646.5		1,753.7
Total liabilities and shareholders’ equity	$	8,683.2	$	7,610.2

The MIL Network –

January 25, 2025

MIL-OSI: Climb Global Solutions Reports Record Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Net Income and Adjusted Net Income up more than 2x to $5.5 Million or $1.19 per Share and $7.1 million or $1.55 per share, respectively; Adjusted EBITDA up 96% to $9.9 Million

Net Sales up 52% to $119.3 Million, with Adjusted Gross Billings Up 65% to $465.2 Million

EATONTOWN, N.J., Oct. 30, 2024 (GLOBE NEWSWIRE) — Climb Global Solutions, Inc. (NASDAQ:CLMB) (“Climb”, the “Company”, “we”, or “our”), a value-added global IT channel company providing unique sales and distribution solutions for innovative technology vendors, is reporting results for the third quarter ended September 30, 2024.

Third Quarter 2024 Summary vs. Same Year-Ago Quarter

Net sales increased 52% to $119.3 million.
Adjusted gross billings (a non-GAAP financial measure defined below) increased 65% to $465.2 million.
Net income increased more than 2x to $5.5 million or $1.19 per diluted share.
Adjusted net income (a non-GAAP financial measure defined below) also increased more than 2x to $7.1 million or $1.55 per diluted share.
Adjusted EBITDA (a non-GAAP financial measure defined below) increased 96% to $9.9 million.

Management Commentary

“Q3 was another period of exceptional growth for Climb as we generated record levels across all key financial metrics, while delivering on our acquisition objectives,” said CEO Dale Foster. “Our strong performance was driven by the execution of our core initiatives and the integration of DSS and DataSolutions into our operating platform. We also generated double-digit organic growth in both the U.S. and Europe as we deepened relationships with existing customers while signing new, innovative vendors to our line card.

“Looking ahead, we will continue to leverage our global infrastructure to foster organic growth while actively evaluating M&A targets that complement our geographic footprint, expand our service and solution offerings and, most importantly, align with our high-performance culture. We expect to unlock additional synergies from our acquisitions and further improve operating leverage as we execute across our global platform. We believe that these initiatives, coupled with our proven track record of accretive M&A, will enable us to close out 2024 on a strong note and achieve another year of record results.”

Dividend

Subsequent to quarter end, on October 28, 2024, Climb’s Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable on November 15, 2024, to shareholders of record on November 11, 2024.

Third Quarter 2024 Financial Results

Net sales in the third quarter of 2024 increased 52% to $119.3 million compared to $78.5 million for the same period in 2023. This reflects organic growth from new and existing vendors, as well as contributions from the Company’s acquisitions of Douglas Stewart Software & Services, LLC (“DSS”) on July 31, 2024 and DataSolutions Holdings Limited (“DataSolutions”) on October 6, 2023. In addition, adjusted gross billings (“AGB”) in the third quarter of 2024 increased 65% to $465.2 million compared to $281.9 million in the year-ago period.

Gross profit in the third quarter of 2024 increased 70% to $24.3 million compared to $14.3 million for the same period in 2023. The increase was driven by organic growth from new and existing vendors in both North America and Europe, as well as contributions from DSS and DataSolutions.

Selling, general, and administrative (“SG&A”) expenses in the third quarter of 2024 were $13.9 million compared to $10.1 million in the year-ago period. SG&A from DSS and DataSolutions drove the majority of the increase as well as variable sales compensation attributed to the growth in AGB. SG&A as a percentage of adjusted gross billings decreased to 3.0% for the third quarter of 2024 compared to 3.6% in the year-ago period.

Net income in the third quarter of 2024 increased more than 2x to $5.5 million or $1.19 per diluted share, compared to $2.4 million or $0.52 per diluted share for the same period in 2023. Net income was impacted by a $1.2 million charge related to a change in fair value of acquisition contingent consideration associated with DataSolutions. Adjusted net income also increased more than 2x to $7.1 million or $1.55 per diluted share, compared to $2.6 million or $0.56 per diluted share for the year-ago period. The Company’s earnings per diluted share in the third quarter of 2024 was negatively impacted by $0.05 in FX compared to the year-ago period.

Adjusted EBITDA in the third quarter of 2024 increased 96% to $9.9 million compared to $5.1 million for the same period in 2023. The increase was primarily driven by organic growth from both new and existing vendors, as well as contribution from the Company’s acquisitions of DSS and DataSolutions. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, increased 500 basis points to 41% compared to 36% for the same period in 2023.

On September 30, 2024, cash and cash equivalents were $22.1 million compared to $36.3 million on December 31, 2023, while working capital decreased by $12.3 million during this period. The decrease in cash was primarily attributed to the cash paid at closing for the acquisition of DSS, $20.9 million, as well as the timing of receivable collections and payables. Climb had $0.9 million of outstanding debt on September 30, 2024, with no borrowings outstanding under its $50 million revolving credit facility.

For more information on the non-GAAP financial measures discussed in this press release, please see the section titled, “Non-GAAP Financial Measures,” and the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release.

Conference Call

The Company will conduct a conference call tomorrow, October 31, 2024, at 8:30 a.m. Eastern time to discuss its results for the third quarter ended September 30, 2024.

Climb management will host the conference call, followed by a question-and-answer period.

Date: Thursday, October 31, 2024
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (800) 274-8461
International dial-in number: (203) 518-9814
Conference ID: CLIMB
Webcast: Climb’s Q3 2024 Conference Call

If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.

The conference call will also be available for replay on the investor relations section of the Company’s website at www.climbglobalsolutions.com.

About Climb Global Solutions

Climb Global Solutions, Inc. (NASDAQ:CLMB) is a value-added global IT distribution and solutions company specializing in emerging and innovative technologies. Climb operates across the US, Canada and Europe through multiple business units, including Climb Channel Solutions, Grey Matter and Climb Global Services. The Company provides IT distribution and solutions for companies in the Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries.

Additional information can be found by visiting www.climbglobalsolutions.com.

Non-GAAP Financial Measures

Climb Global Solutions uses non-GAAP financial measures, including adjusted gross billings, adjusted net income and adjusted EBITDA, as supplemental measures of the performance of the Company’s business. Use of these financial measures has limitations, and you should not consider them in isolation or use them as substitutes for analysis of Climb’s financial results under generally accepted accounting principles in the United States of America (“U.S. GAAP”). The attached tables provide definitions of these measures and a reconciliation of each non-GAAP financial measure to the most nearly comparable measure under U.S. GAAP.

Forward-Looking Statements

The statements in this release, other than statements of historical fact, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. These forward-looking statements are subject to certain risks and uncertainties. Many of the forward-looking statements may be identified by words such as ”look forward,” “believes,” “expects,” “intends,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “in process,” “under construction,” “in development,” “opportunity,” “target,” “outlook,” “maintain,” “continue,” “goal,” “aim,” “commit,” or similar expressions, or when we discuss our priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations. In this press release, the forward-looking statements relate to, among other things, declaring and reaffirming our strategic goals, future operating results, and the effects and potential benefits of the strategic acquisition on our business. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include, without limitation, our ability to recognize the anticipated benefits of the acquisitions of Data Solutions Holdings Limited and Douglas Stewart Software & Services, LLC, the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, competitive pricing pressures, the successful integration of acquisitions, contribution of key vendor relationships and support programs, inflation, as well as factors that affect the software industry in general. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described in the section entitled “Risk Factors” contained in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and from time to time in the Company’s filings with the Securities and Exchange Commission.

Company Contact

Drew Clark
Chief Financial Officer
(732) 389-0932
Drew@ClimbGS.com

Investor Relations Contact

Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
CLMB@elevate-ir.com


CLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	(Unaudited)
(Amounts in thousands, except share and per share amounts)

		September 30, 2024			December 31, 2023

ASSETS

Current assets
	Cash and cash equivalents	$	22,139		$	36,295
	Accounts receivable, net of allowance for doubtful accounts of $640 and $709, respectively		247,907			222,269
	Inventory, net		4,445			3,741
	Prepaid expenses and other current assets		6,629			6,755
Total current assets			281,120			269,060

Equipment and leasehold improvements, net			12,151			8,850
Goodwill			29,628			27,182
Other intangibles, net			46,041			26,930
Right-of-use assets, net			937			878
Accounts receivable long-term, net			752			797
Other assets			863			1,077
Deferred income tax assets			448			324

Total assets		$	371,940		$	335,098

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
	Accounts payable and accrued expenses	$	273,893		$	249,648
	Lease liability, current portion		533			450
	Term loan, current portion		555			540
Total current liabilities			274,981			250,638

	Lease liability, net of current portion		796			879
	Deferred income tax liabilities		5,671			5,554
	Term loan, net of current portion		334			752
	Non-current liabilities		2,490			2,505

Total liabilities			284,272			260,328


Stockholders’ equity
	Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares
	issued, and 4,606,790 and 4,573,448 shares outstanding , respectively		53			53
	Additional paid-in capital		36,676			34,647
	Treasury stock, at cost, 677,710 and 711,052 shares, respectively		(12,777	)		(12,623	)
	Retained earnings		62,560			53,215
	Accumulated other comprehensive income (loss)		1,156			(522	)
Total stockholders’ equity			87,668			74,770
Total liabilities and stockholders’ equity		$	371,940		$	335,098

CLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in thousands, except per share data)

	Nine months ended						Three months ended
	September 30,						September 30,
		2024			2023			2024			2023

Net Sales	$	303,847		$	245,229		$	119,349		$	78,457

Cost of sales, excluding depreciation and amortization expense		244,014			202,053			95,092			64,183

Gross profit		59,833			43,176			24,257			14,274


Selling, general and administrative expenses		39,433			31,930			13,937			10,122
Depreciation & amortization expense		2,933			1,934			1,197			617
Acquisition related costs		1,201			277			609			246
Total selling, general and administrative expenses		43,567			34,141			15,743			10,985

Income from operations		16,266			9,035			8,514			3,289

Interest, net		755			760			198			318
Foreign currency transaction loss		(688	)		(100	)		(442	)		(140	)
Change in fair value of acquisition contingent consideration		(1,152	)		–			(1,152	)		–
Income before provision for income taxes		15,181			9,695			7,118			3,467
Provision for income taxes		3,561			2,618			1,659			1,095

Net income	$	11,620		$	7,077		$	5,459		$	2,372

Income per common share – Basic	$	2.54		$	1.57		$	1.19		$	0.52
Income per common share – Diluted	$	2.54		$	1.57		$	1.19		$	0.52

Weighted average common shares outstanding – Basic		4,458			4,392			4,476			4,414
Weighted average common shares outstanding – Diluted		4,458			4,392			4,476			4,414

Dividends paid per common share	$	0.51		$	0.51		$	0.17		$	0.17


Reconciliation of GAAP and Non-GAAP Financial Measures (unaudited)
(Amounts in thousands, except per share data)

The table below presents net sales reconciled to Adjusted Gross Billings (Non-GAAP) (1):

	Nine months ended						Three months ended
	September 30,			September 30,			September 30,			September 30,
		2024			2023			2024			2023
Net sales	$	303,847		$	245,229		$	119,349		$	78,457
Costs of sales related to sales where the Company is an agent		876,447			618,110			345,835			203,458
Adjusted gross billings (Non-GAAP)	$	1,180,294		$	863,339		$	465,184		$	281,915

(1) We define adjusted gross billings as net sales in accordance with US GAAP, adjusted for the cost of sales related to sales where the Company is an agent. We provided a reconciliation of adjusted gross billings to net sales, which is the most directly comparable US GAAP measure. We use adjusted gross billings of product and services as a supplemental measure of our performance to gain insight into the volume of business generated by our business, and to analyze the changes to our accounts receivable and accounts payable. Our use of adjusted gross billings of product and services as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures.

	The table below presents net income reconciled to adjusted EBITDA (Non-GAAP) (2):

		Nine months ended						Three months ended
		September 30,			September 30,			September 30,			September 30,
			2024			2023			2024			2023

Net income		$	11,620		$	7,077		$	5,459		$	2,372
	Provision for income taxes		3,561			2,618			1,659			1,095
	Depreciation and amortization		2,933			1,934			1,197			617
	Interest expense		266			94			105			45
EBITDA			18,380			11,723			8,420			4,129
	Share-based compensation		2,810			3,422			904			687
	Acquisition related costs		1,201			277			609			246
Adjusted EBITDA		$	22,391		$	15,422		$	9,933		$	5,062


		Nine months ended						Three months ended
		September 30,			September 30,			September 30,			September 30,
Components of interest, net			2024			2023			2024			2023

	Amortization of discount on accounts receivable with extended payment terms	$	(23	)	$	(41	)	$	(6	)	$	(12	)
	Interest income		(998	)		(813	)		(297	)		(351	)
	Interest expense		266			94			105			45
Interest, net		$	(755	)	$	(760	)	$	(198	)	$	(318	)

(2) We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest and acquisition related costs. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable US GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability when compared to the prior year and our competitors. Adjusted EBITDA is also a component to our financial covenants in our credit facility. Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

The table below presents net income reconciled to adjusted net income (Non-GAAP) (3):

	Nine months ended				Three months ended
	September 30,		September 30,		September 30,		September 30,
		2024		2023		2024		2023

Net income	$	11,620	$	7,077	$	5,459	$	2,372
Acquisition related costs, net of income taxes		901		208		457		185
One-time CEO stock grant		–		1,796		–		–
Change in fair value of acquisition contingent consideration		1,152		–		1,152		–
Adjusted net income	$	13,673	$	9,081	$	7,068	$	2,557

Adjusted net income per common share – diluted	$	3.00	$	2.03	$	1.55	$	0.56

(3) We define adjusted net income as net income excluding acquisition related costs, net of income taxes, the stock compensation expense recognized for the one-time CEO stock grant, and the change in fair value of acquisition contingent consideration. We provided a reconciliation of adjusted net income to net income, which is the most directly comparable U.S. GAAP measure. We use adjusted net income as a supplemental measure of our performance to gain insight into comparison of our businesses profitability when compared to the prior year. Our use of adjusted net income has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate adjusted net income, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

The MIL Network –

January 25, 2025

MIL-OSI: AMSC Reports Second Quarter Fiscal Year 2024 Financial Results and Provides Business Outlook

Source: GlobeNewswire (MIL-OSI)

Financial Highlights:

Reported Second Quarter Net Income of Nearly $5 Million
Generated Nearly $13 Million of Operating Cash Flow During the Quarter
Increased Revenue by 60% Year Over Year to Above $54 Million

Company to host conference call tomorrow, October 31, at 10:00 am ET

AYER, Mass., Oct. 30, 2024 (GLOBE NEWSWIRE) — AMSC (Nasdaq: AMSC), a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™ and protect and expand the capability and resiliency of our Navy’s fleet, today reported financial results for its second quarter of fiscal year 2024 ended September 30, 2024. The second quarter results include results from NWL, Inc. beginning as of the acquisition date, August 1, 2024.

Revenues for the second quarter of fiscal 2024 were $54.5 million compared with $34.0 million for the same period of fiscal 2023. The year-over-year increase was primarily driven by the acquisition of NWL, Inc., increased shipments of new energy power systems and electrical control system shipments, versus the year ago period.

AMSC’s net income for the second quarter of fiscal 2024 was $4.9 million, or $0.13 per share, compared to a net loss of $2.5 million, or $0.09 per share, for the same period of fiscal 2023. The Company’s non-GAAP net income for the second quarter of fiscal 2024 was $10.0 million, or $0.27 per share, compared with a non-GAAP net income of less than $0.1 million, or $0.00 per share, in the same period of fiscal 2023. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results.

Cash, cash equivalents, and restricted cash on September 30, 2024, totaled $74.8 million, compared with $95.5 million at June 30, 2024.

“AMSC delivered fiscal second quarter net income of nearly $5 million and grew revenue by 60% when compared to the same period last year,” said Daniel P. McGahn, Chairman, President and CEO, AMSC. “During the second quarter of fiscal 2024 we booked nearly $60 million of new orders, with new energy power systems orders coming in stronger than previously demonstrated. We ended the quarter with over $200 million in 12-month backlog and over $300 million in total backlog. We are very excited for the second half of the fiscal year and remain focused on our execution as well as improving the resiliency of the power grid.”

Business Outlook
For the third quarter ending December 31, 2024, AMSC expects that its revenues will be in the range of $55.0 million to $60.0 million. The Company’s net loss for the third quarter of fiscal 2024 is expected not to exceed $1.0 million, or $0.03 per share. The Company’s non-GAAP net income (as defined below) is expected to exceed $2 million, or $0.05 per share.

Conference Call Reminder
In conjunction with this announcement, AMSC management will participate in a conference call with investors beginning at 10:00 a.m. Eastern Time on Thursday, October 31, 2024, to discuss the Company’s financial results and business outlook. Those who wish to listen to the live or archived conference call webcast should visit the “Investors” section of the Company’s website at https://ir.amsc.com. The live call can be accessed by dialing 1-844-481-2802 or 1-412-317-0675 and asking to join the AMSC call. A replay of the call may be accessed 2 hours following the call by dialing 1-877-344-7529 and using conference passcode 5836897.

About AMSC (Nasdaq: AMSC)
AMSC generates the ideas, technologies and solutions that meet the world’s demand for smarter, cleaner … better energy™. Through its Gridtec™ Solutions, AMSC provides the engineering planning services and advanced grid systems that optimize network reliability, efficiency and performance. Through its Marinetec™ Solutions, AMSC provides ship protection systems and is developing propulsion and power management solutions designed to help fleets increase system efficiencies, enhance power quality and boost operational safety. Through its Windtec® Solutions, AMSC provides wind turbine electronic controls and systems, designs and engineering services that reduce the cost of wind energy. The Company’s solutions are enhancing the performance and reliability of power networks, increasing the operational safety of navy fleets, and powering gigawatts of renewable energy globally. Founded in 1987, AMSC is headquartered near Boston, Massachusetts with operations in Asia, Australia, Europe and North America. For more information, please visit www.amsc.com.

AMSC, American Superconductor, D-VAR, D-VAR VVO, Gridtec, Marinetec, Windtec, Neeltran, NEPSI, Smarter, Cleaner … Better Energy, and Orchestrate the Rhythm and Harmony of Power on the Grid are trademarks or registered trademarks of American Superconductor Corporation. All other brand names, product names, trademarks or service marks belong to their respective holders.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this release regarding execution of our goals and strategies; backlog; expectations regarding the second half of fiscal 2024; our expected GAAP and non-GAAP financial results for the quarter ending December 31, 2024; and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements represent management’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to: We have a history of operating losses, which may continue in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; We have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; Changes in exchange rates could adversely affect our results of operations; We may be required to issue performance bonds or provide letters of credit, which restricts our ability to access any cash used as collateral for the bonds or letters of credit; If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; We may not realize all of the sales expected from our backlog of orders and contracts; Our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the government. The continued funding of such contracts remains subject to annual congressional appropriation, which, if not approved, could reduce our revenue and lower or eliminate our profit; Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business; Pandemics, epidemics or other public health crises may adversely impact our business, financial condition and results of operations; We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; Uncertainty surrounding our prospects and financial condition may have an adverse effect on our customer and supplier relationship; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; A significant portion of our Wind segment revenues are derived from a single customer. If this customer’s business is negatively affected, it could adversely impact our business; Our success in addressing the wind energy market is dependent on the manufacturers that license our designs; Our business and operations would be adversely impacted in the event of a failure or security breach of our or any critical third parties’ information technology infrastructure and networks; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results; Many of our revenue opportunities are dependent upon subcontractors and other business collaborators; If we fail to implement our business strategy successfully, our financial performance could be harmed; Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share; Many of our customers outside of the United States may be either directly or indirectly related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; We have had limited success marketing and selling our superconductor products and system-level solutions, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow; We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and our business continuity and disaster recovery plans may not adequately protect us or our value chain from such events; Adverse changes in domestic and global economic conditions could adversely affect our operating results; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Our products face competition, which could limit our ability to acquire or retain customers; We have operations in, and depend on sales in, emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets. Changes in India’s political, social, regulatory and economic environment may affect our financial performance; Our success depends upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our products may not develop; Industry consolidation could result in more powerful competitors and fewer customers; Increasing focus and scrutiny on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy: Lower prices for other energy sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business; We may be unable to adequately prevent disclosure of trade secrets and other proprietary information; Our patents may not provide meaningful or long-term protection for our technology, which could result in us losing some or all of our market position; There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; Third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; Our common stock has experienced, and may continue to experience, market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management’s attention; Unfavorable results of legal proceedings could have a material adverse effect on our business, operating results and financial condition; and the other important factors discussed under the caption “Risk Factors” in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2024, and our other reports filed with the SEC. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Revenues
Grid	$	46,936		$	28,515		$	79,272		$	54,251
Wind		7,535			5,489			15,489			10,007
Total revenues		54,471			34,004			94,761			64,258

Cost of revenues		38,858			25,418			66,923			49,390

Gross margin		15,613			8,586			27,838			14,868

Operating expenses:
Research and development		2,646			1,641			4,931			3,493
Selling, general and administrative		10,525			7,946			19,423			15,815
Amortization of acquisition-related intangibles		433			538			845			1,076
Change in fair value of contingent consideration		2,762			850			6,682			2,200
Restructuring		—			(20	)		—			(14	)
Total operating expenses		16,366			10,955			31,881			22,570

Operating loss		(753	)		(2,369	)		(4,043	)		(7,702	)

Interest income, net		979			194			2,099			368
Other expense, net		(329	)		(204	)		(489	)		(321	)
Loss before income tax expense (benefit)		(103	)		(2,379	)		(2,433	)		(7,655	)

Income tax (benefit) expense		(4,990	)		106			(4,796	)		228

Net income (loss)	$	4,887		$	(2,485	)	$	2,363		$	(7,883	)

Net income (loss) per common share
Basic	$	0.13		$	(0.09	)	$	0.07		$	(0.28	)
Diluted	$	0.13		$	(0.09	)	$	0.06		$	(0.28	)

Weighted average number of common shares outstanding
Basic		36,952			28,828			36,317			28,545
Diluted		37,499			28,828			36,951			28,545

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
	September 30, 2024			March 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	72,131		$	90,522
Accounts receivable, net		40,059			26,325
Inventory, net		70,880			41,857
Prepaid expenses and other current assets		10,806			7,295
Restricted cash		1,201			468
Total current assets		195,077			166,467

Property, plant and equipment, net		38,765			10,861
Intangibles, net		7,329			6,369
Right-of-use assets		3,744			2,557
Goodwill		48,950			43,471
Restricted cash		1,454			1,290
Deferred tax assets		1,201			1,119
Equity-method investments		1,245			—
Other assets		683			637
Total assets	$	298,448		$	232,771

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	25,158		$	24,235
Lease liability, current portion		555			716
Debt, current portion		—			25
Contingent consideration		—			3,100
Deferred tax liabilities, current portion		16			—
Deferred revenue, current portion		69,356			50,732
Total current liabilities		95,085			78,808

Deferred revenue, long term portion		11,915			7,097
Lease liability, long term portion		2,814			1,968
Deferred tax liabilities		1,591			300
Other liabilities		28			27
Total liabilities		111,433			88,200

Stockholders’ equity:
Common stock		398			373
Additional paid-in capital		1,253,168			1,212,913
Treasury stock		(3,765	)		(3,639	)
Accumulated other comprehensive income		1,509			1,582
Accumulated deficit		(1,064,295	)		(1,066,658	)
Total stockholders’ equity		187,015			144,571
Total liabilities and stockholders’ equity	$	298,448		$	232,771

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
	Six Months Ended September 30,
	2024			2023
Cash flows from operating activities:

Net income (loss)	$	2,363		$	(7,883	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization		2,395			2,234
Stock-based compensation expense		2,072			2,468
Provision for excess and obsolete inventory		780			1,070
Amortization of operating lease right-of-use assets		546			122
Deferred income taxes		(5,165	)		—
Change in fair value of contingent consideration		6,682			2,200
Other non-cash items		(15	)		273
Changes in operating asset and liability accounts:
Accounts receivable		2,538			3,152
Inventory		(6,672	)		(11,935	)
Prepaid expenses and other assets		(2,082	)		8,015
Operating leases		(1,048	)		(123	)
Accounts payable and accrued expenses		(4,455	)		(9,399	)
Deferred revenue		18,182			8,458
Net cash provided by (used in) operating activities		16,121			(1,348	)

Cash flows from investing activities:
Purchases of property, plant and equipment		(852	)		(430	)
Cash paid to settle contingent consideration liabilities		(3,278	)		—
Cash paid for acquisition, net of cash acquired		(29,577	)		—
Change in other assets		218			(10	)
Net cash used in investing activities		(33,489	)		(440	)

Cash flows from financing activities:
Repurchase of treasury stock		(126	)		—
Repayment of debt		(25	)		(33	)
Cash paid related to registration of common stock shares		(148	)		—
Proceeds from exercise of employee stock options and ESPP		157			136
Net cash (used in) provided by financing activities		(142	)		103

Effect of exchange rate changes on cash		16			(10	)

Net decrease in cash, cash equivalents and restricted cash		(17,494	)		(1,695	)
Cash, cash equivalents and restricted cash at beginning of period		92,280			25,675
Cash, cash equivalents and restricted cash at end of period	$	74,786		$	23,980

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) (In thousands, except per share data)
	Three Months Ended September 30,					Six Months Ended September 30,
	2024		2023			2024		2023
Net income (loss)	$	4,887	$	(2,485	)	$	2,363	$	(7,883	)
Stock-based compensation		843		1,111			2,072		2,468
Acquisition costs		850		—			1,080		—
Amortization of acquisition-related intangibles		608		538			1,020		1,082
Change in fair value of contingent consideration		2,762		850			6,682		2,200
Non-GAAP net income (loss)	$	9,950	$	14		$	13,217	$	(2,133	)

Non-GAAP net income (loss) per share – basic	$	0.27	$	–		$	0.36	$	(0.07	)
Non-GAAP net income (loss) per share – diluted	$	0.27	$	–		$	0.36	$	(0.07	)
Weighted average shares outstanding – basic		36,952		28,828			36,317		28,545
Weighted average shares outstanding – diluted		37,499		28,828			36,951		28,545

Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Income (In millions, except per share data)
	Three Months Ending
	December 31, 2024
Net loss	$	(1.0	)
Stock-based compensation		2.3
Amortization of acquisition-related intangibles		0.7
Non-GAAP net income	$	2.0
Non-GAAP net income per share	$	0.05
Shares outstanding		38.5

Note: Non-GAAP net income (loss) is defined by the Company as net loss before; stock-based compensation; amortization of acquisition-related intangibles; acquisition costs; change in fair value of contingent consideration, other non-cash or unusual charges, and the tax effect of adjustments calculated at the relevant rate for our non-GAAP metric. The Company believes non-GAAP net income (loss) and non-GAAP net income (loss) per share assist management and investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding these non-cash, non-recurring or other charges that it does not believe are indicative of its core operating performance. Actual GAAP and non-GAAP net loss for the fiscal quarter ending December 31, 2024, including the above adjustments, may differ materially from those forecasted in the table above. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measure included in this release, however, should be considered in addition to, and not as a substitute for or superior to, operating income or other measures of financial performance prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP net loss is set forth in the table above.

AMSC Contacts
Investor Relations Contact:
LHA Investor Relations
Carolyn Capaccio
(212) 838-3777
amscIR@lhai.com

Public Relations Contact:
RooneyPartners
Joe Luongo
(914) 906-5903

AMSC Director, Communications:
Nicol Golez
978-399-8344
Nicol.Golez@amsc.com

The MIL Network –

January 25, 2025

MIL-OSI: Pathfinder Bancorp, Inc. Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Results reflect branch-acquisition-related expenses, as well as provision expense resulting from a comprehensive loan portfolio review that significantly reduced nonperformers, as Pathfinder positions the Bank for organic growth in its Central New York markets

OSWEGO, N.Y., Oct. 30, 2024 (GLOBE NEWSWIRE) — Pathfinder Bancorp, Inc. (“Pathfinder” or the “Company”) (NASDAQ: PBHC) announced its financial results for the third quarter ended September 30, 2024.

The holding company for Pathfinder Bank (“the Bank”) reported a third quarter 2024 net loss attributable to common shareholders of $4.6 million or $0.75 per share, compared to net income available to common shareholders of $2.0 million or $0.32 per share in the second quarter of 2024 and $2.2 million or $0.35 per share in the third quarter of 2023.

Third Quarter 2024 Highlights and Key Developments

The net loss reflected $9.0 million in provision expense that primarily resulted from a comprehensive loan portfolio review that the Bank elected to undertake as part of its commitment to continuously improve its credit risk management approach. Following its conclusion, the Company recorded net charge offs of $8.7 million in the quarter and reduced nonperforming loans by 34.0% to $16.2 million at period end, or 1.8% of total loans. The allowance for credit losses on September 30, 2024 represented 1.87% and 106.8% of total and nonperforming loans, respectively.
Net interest income increased for the third consecutive quarter to $11.7 million, including the benefit of a catch-up interest payment of $887,000. Net interest income increased $2.3 million from $9.5 million in the linked quarter ended June 30, 2024 and $1.7 million from $10.1 million in the third quarter of 2023. Net interest margin (“NIM”) expanded for the third consecutive quarter to 3.34%, including the benefit of 25 basis points from the catch-up interest payment. NIM increased 56 basis points from the linked quarter and 27 basis points from the year-ago period.
Non-interest income was $1.7 million, including a net death benefit of $175,000 on bank owned life insurance (“BOLI”), compared to $1.2 million in each of the linked and year-ago quarters.
Non-interest expense was $10.3 million, including $1.6 million in transaction-related expenses for the previously announced July 2024 closing of the East Syracuse branch acquisition, in addition to third quarter 2024 operating costs of approximately $462,000 associated with Pathfinder’s newest location. Non-interest expense was $7.9 million in the linked quarter and $7.7 million in the year-ago period.
Pre-tax, pre-provision net income was $3.4 million, including the effect of transaction-related expenses, compared to $2.8 million in the linked quarter and $3.6 million in the year-ago period. Pre-tax, pre-provision net income, which is not a financial metric under generally accepted accounting principles (“GAAP”), is a measure that the Company believes is helpful to understanding profitability without giving effect to income taxes and provision for credit losses.
Total deposits were $1.20 billion at period end, compared to $1.10 billion on June 30, 2024 and $1.13 billion on September 30, 2023. The Bank’s loan-to-deposit ratio was 77.1% on September 30, 2024.
Total loans were $921.7 million at period end, compared to $888.3 million on June 30, 2024 and $896.1 million on September 30, 2023.

“Pathfinder is well positioned for organic growth opportunities in our attractive Central New York markets, having closed the third quarter with significantly reduced levels of nonperformers, healthy reserves, strong capital ratios, and abundant liquidity,” said President and Chief Executive Officer James A. Dowd. “Having completed a thorough, top-to-bottom review of the loan portfolio at the end of September, we believe it is sufficiently collateralized and reserved. Going forward, we intend to take a more exacting loss-mitigation approach, and Pathfinder’s ongoing underwriting and credit risk management processes can be expected to reflect the combined expertise of our entire management team and professional staff, including our recently appointed Chief Credit Officer Joseph Serbun and Chief Financial Officer Justin Bigham.”

Dowd added, “Our financial performance also reflects the positive impact of Pathfinder Bank’s in-market core deposit franchise and immediate contributions from our recent East Syracuse branch acquisition, including higher loan and deposit balances, lower funding costs, revenue growth, and NIM expansion. Looking ahead, as we end 2024 and begin the new year, we intend to tightly manage operating expenses and expect continued benefits from our core deposit franchise as a source of low-cost, relationship-based funding for commercial and retail loan growth in our local markets.”

East Syracuse Branch Acquisition
As previously announced, Pathfinder Bank completed the purchase of its East Syracuse branch on July 19, 2024, assuming $186.0 million in associated deposits and acquiring $30.6 million in assets including $29.9 million in loans. Acquired assets include a core deposit intangible (“CDI”) valued at $6.3 million, and the valuation of acquired loans resulted in an estimated discount of $1.8 million.

The addition of the East Syracuse branch significantly increased the Bank’s customer base, which expanded the number of Pathfinder’s relationships by approximately 25% and grew non-brokered deposits by 21.5%.

At acquisition, the average cost of deposits assumed with the branch acquisition was 1.99% (excluding the CDI) and as of September 30, 2024, the Bank retained approximately 97% of deposit balances. The Company utilized a portion of the low-cost liquidity provided by the transaction to pay down $74.4 million in borrowings and $106.0 million in high-cost brokered deposits during the third quarter of 2024.

Insurance Business Divestiture
On October 15, 2024, Pathfinder announced that it sold its interest in the FitzGibbons Agency, LLC, which contributed $28,000 to the Company’s net income and 24 basis points to its consolidated efficiency ratio in the third quarter of 2024, to Marshall & Sterling Enterprises, Inc. Reflecting an active insurance brokerage market and the FitzGibbons Agency’s success since initiating its partnership with the Bank 13 years ago, Pathfinder will receive approximately $2.0 million from the sale, which closed on October 1, 2024, and the Company expects to recognize a portion of that amount as a net gain in the fourth quarter of 2024.

Net Interest Income and Net Interest Margin
Third quarter 2024 net interest income was $11.7 million, an increase of 23.8% from the second quarter of 2024. An increase in interest and dividend income of $2.2 million was primarily attributed to average yield increases of 67 basis points on loans including 39 basis points from an $887,000 catch-up interest payment associated with purchased loan pool positions, 97 basis points on fed funds sold and interest-earning deposits, and 45 basis points on all earning assets. The corresponding increase in loan interest income and federal funds sold and interest-earning deposits was $1.9 million and $371,000, respectively. A decrease in interest expense of $75,000 was attributed to reductions in brokered deposits and short-term borrowings expense associated with paydowns of brokered deposits and borrowings utilizing a portion of the low-cost liquidity provided by the Bank’s East Syracuse branch acquisition.

Net interest margin was 3.34% in the third quarter of 2024 compared to 2.78% in the second quarter of 2024. The increase of 56 basis points was driven by improvements in earning asset yields and funding costs, as well as 25 basis points attributed to the catch-up interest payment received in the third quarter of 2024.

Third quarter 2024 net interest income was $11.7 million, an increase of 16.6% from the third quarter of 2023. An increase in interest and dividend income of $3.5 million was primarily attributed to average yield increases of 74 basis points on loans including 39 basis points from the catch-up interest payment, 67 basis points on taxable investment securities, 227 basis points on fed funds sold and interest-earning deposits, and 65 basis points on all earning assets. The corresponding increase in loan interest income, taxable investment securities, and federal funds sold and interest-earning deposits was $2.0 million, $1.2 million, and $426,000, respectively. Increased interest and dividend income was partially offset by an increase in interest expense of $1.9 million. This increase in interest expense was predominantly the result of higher interest rates and balances associated with borrowing and higher average rates paid on interest-bearing deposits, compared to the third quarter of 2023.

Net interest margin was 3.34% in the third quarter of 2024 compared to 3.07% in the third quarter of 2023. The increase of 27 basis points was driven by improvements in earning asset yields and lower average borrowings, partially offset by higher funding costs, as well as 25 basis points attributed to the catch-up interest payment received in the third quarter of 2024.

Noninterest Income
Noninterest income totaled $1.7 million in the third quarter of 2024, an increase of $496,000 or 41.0% from the second quarter of 2024 and an increase of $514,000 or 43.1% from the third quarter of 2023.

Compared to the linked quarter, noninterest income growth included increases of $194,000 in earnings and gain on BOLI including the net death benefit of $175,000, $109,000 in debit card interchange fees, and $62,000 in service charges on deposit accounts, as well as a $33,000 decrease in loan servicing fees. Noninterest income growth from the linked quarter also reflected an increase of $204,000 in net realized losses on sales and redemptions of investment securities, as well as increases of $201,000 in net realized gains on sales of marketable equity securities and $50,000 in gains on sales of loans and foreclosed real estate.

Compared to the year-ago quarter, noninterest income growth for the third quarter of 2024 included increases of $278,000 in interchange fees, $196,000 in earnings and gain on BOLI including the net death benefit of $175,000 on BOLI, and $49,000 in service charges on deposit accounts, as well as a $20,000 decrease in loan servicing fees. Noninterest income growth from the year-ago quarter also reflected a $178,000 increase in net realized losses on sales and redemptions of investment securities, as well as increases of $101,000 in net realized gains on sales of marketable equity securities and $49,000 in gains on sales of loans and foreclosed real estate.

Prior to the October 1, 2024 sale of the Company’s insurance agency asset, it contributed $367,000 to noninterest income in the third quarter of 2024, compared to $260,000 and $310,000 in the linked and year-ago quarters, respectively.

Noninterest Expense
Noninterest expense totaled $10.3 million in the third quarter of 2024, increasing $2.4 million and $2.6 million from the linked and year-ago quarters, respectively. The increase was primarily due to $1.6 million in transaction-related expenses for the East Syracuse branch acquisition, in addition to third quarter 2024 operating costs of approximately $462,000 associated with operating Pathfinder Bank’s newest location.

Professional and other services expense was $1.8 million in the third quarter, increasing $1.1 million and $1.3 million from the linked and year-ago quarters, respectively. The increase was primarily attributed to branch acquisition-related expenses.

Salaries and benefits were $5.0 million in the third quarter of 2024, increasing $560,000 and $805,000 from the linked and year-ago quarters, respectively. The increase was primarily due to $141,000 transaction-related bonuses to employees, $115,000 reduced salary cost deferrals (“ASC 310-20”) associated with reduced lending volumes, and $80,000 of ongoing personnel-related costs associated with operating the branch acquired early in the third quarter of 2024. The remaining increase was primarily driven by higher salaries and benefits costs associated with merit increases and wage inflation.

Building and occupancy was $1.1 million in the third quarter of 2024, increasing $220,000 and $266,000 from the linked and year-ago quarters, respectively. These increases were due to ongoing facilities-related costs of approximately $322,000 associated with operating the branch acquired early in the third quarter of 2024, partially offset by seasonal reductions in building and occupancy expense categories when compared to the second quarter of 2024.

Prior to the October 1, 2024 sale of the Company’s insurance agency asset, it incurred $308,000 of noninterest expense in the third quarter of 2024, compared to $232,000 and $273,000 in the linked and year-ago quarters, respectively.

For the third quarter of 2024, annualized noninterest expense represented 2.75% of average assets, including 8 basis points from insurance agency expense and 43 basis points from acquisition-related expenses. The efficiency ratio was 75.28%, including 24 basis points and 1,186 basis points attributed to the insurance business and acquisition-related expenses, respectively. The efficiency ratio, which is not a financial metric under GAAP, is a measure that the Company believes is helpful to understanding its level of non-interest expense as a percentage of total revenue. For the linked and year-ago quarters, annualized noninterest expense represented 2.19% and 2.20% of average assets, respectively. The efficiency ratio was 74.08% and 67.93% in the linked and year-ago periods.

Statement of Financial Condition
As of September 30, 2024, the Company’s statement of financial condition reflects total assets of $1.48 billion, compared to $1.45 billion and $1.40 billion recorded on June 30, 2024 and September 30, 2023, respectively.

The increase in assets during the third quarter of 2024 was primarily due to higher total loan balances, including $29.9 million in primarily consumer, residential, and home equity loans acquired with the East Syracuse branch transaction in the third quarter of 2024.

Loans totaled $921.7 million on September 30, 2024, increasing 3.8% during the third quarter and 2.9% from one year prior. Consumer and residential loans totaled $388.7 million, increasing 7.6% during the third quarter and 4.8% from one year prior. Commercial loans totaled $534.5 million, increasing 1.4% during the third quarter and 1.7% from one year prior.

With respect to liabilities, deposits totaled $1.20 billion on September 30, 2024, increasing 8.6% during the third quarter and 6.1% from one year prior. The increase in deposits during the third quarter of 2024 reflects $186.0 million assumed with the East Syracuse branch acquisition, offset by a reduction of $106.0 million in brokered deposits utilizing lower-cost liquidity provided by the transaction, as well as seasonal fluctuations in municipal deposits. The Company also utilized liquidity provided by the transaction to reduce short-term borrowings, which totaled $60.3 million on September 30, 2024 as compared to $127.6 million on June 30, 2024 and $56.7 million on September 30, 2023.

Shareholders equity totaled $120.3 million on September 30, 2024, down $3.1 million or 2.5% in the third quarter and $6.5 million or 5.7% from one year prior. The decrease reflects lower retained earnings attributed primarily to the elevated third quarter 2024 provision expense’s impact on net income in the period, which more than offset a significant reduction in accumulated other comprehensive loss (“AOCL”). AOCL improved to $6.7 million on September 30, 2024, declining $2.1 million or 23.6% during the third quarter and $6.6 million or 49.7% from one year prior, reflecting a favorable change in the interest rate environment.

Asset Quality
The Company’s asset quality metrics reflect the comprehensive loan portfolio review completed at the end of the third quarter of 2024.

Nonperforming loans were reduced by 34.0% in the third quarter of 2024 to $16.2 million or 1.75% of total loans on September 30, 2024. Nonperforming loans were $24.5 million or 2.76% of total loans on June 30, 2024 and $16.2 million or 1.80% of total loans on September 30, 2023.

Gross loan charge offs totaled $8.8 million in the third quarter of 2024, following completion of the portfolio review. Gross loan charge offs included $4.9 million for 13 nonperforming commercial loans, as well as $2.5 million for nonperforming positions primarily associated with secured solar purchased loan pools acquired in 2021.

Net charge offs (“NCOs”) after recoveries were $8.7 million or an annualized 1.29% of average loans in the third quarter of 2024, compared to $66,000 or 0.02% in the linked quarter and $3.8 million or 0.61% in the prior year period.

The $9.0 million provision for credit losses expense in the third quarter of 2024 primarily resulted from a replenishment of the allowance for credit losses (“ACL”) for commercial loan reserves and an adjustment to the lifetime loss estimate for solar purchased loan pool positions, which followed completion of the Company’s loan portfolio review. The Company believes it is sufficiently collateralized and reserved, with its ACL of $17.3 million on September 30, 2024 increasing by $382,000 from June 30, 2024 and $1.5 million from September 30, 2023. As a percentage of total loans, ACL represented 1.87% on September 30, 2024, 1.90% on June 30, 2024, and 1.76% on September 30, 2023.

Liquidity
The Company has diligently ensured a strong liquidity profile as of September 30, 2024 to meet its ongoing financial obligations. The Bank’s liquidity management, as evaluated by its cash reserves and operational cash flows from loan repayments and investment securities, remains robust and is effectively managed by the institution’s leadership.

The Bank’s analysis indicates that expected cash inflows from loans and investment securities are more than sufficient to meet all projected financial obligations. Total deposits increased to $1.20 billion on September 30, 2024 from $1.10 billion on June 30, 2024 and $1.13 billion on September 30, 2023. Core deposits increased to 77.45% of total deposits on September 30, 2024, from 67.98% on June 30, 2024 and 69.83% on September 30, 2023. This further underscores the success of the Bank’s strategic initiatives to enhance its core deposit franchise, including targeted marketing campaigns and customer engagement programs aimed at deepening banking relationships and enhancing deposit stability.

At the end of the current quarter, Pathfinder Bancorp had an available additional funding capacity of $105.2 million with the Federal Home Loan Bank of New York, which complements its liquidity reserves. Moreover, the Bank maintains additional unused credit lines totaling $27.3 million, which provide a buffer for additional funding needs. These facilities, including access to the Federal Reserve’s Discount Window, are part of a comprehensive liquidity strategy that ensures flexibility and readiness to respond to any funding requirements.

Cash Dividend Declared
On September 30, 2024, Pathfinder’s Board of Directors declared a cash dividend of $0.10 per share for holders of both voting common and non-voting common stock.

In addition, this dividend also extends to the notional shares of the Company’s warrants. Shareholders registered by October 18, 2024 will be eligible for the dividend, which is scheduled for disbursement on November 8, 2024. This distribution aligns with Pathfinder Bancorp’s philosophy of consistent and reliable delivery of shareholder value.

Evaluating the Company’s market performance, the closing stock price as of September 30, 2024 stood at $15.83 per share. This positions the dividend yield at an attractive 2.53%.

About Pathfinder Bancorp, Inc.
Pathfinder Bancorp, Inc. (NASDAQ: PBHC) is the commercial bank holding company for Pathfinder Bank, which serves Central New York customers throughout Oswego, Syracuse and their neighboring communities. Strategically located branches averaging approximately $100 million in deposits per location, as well as diversified consumer, mortgage and commercial loan portfolios, reflect the state-chartered Bank’s commitment to in-market relationships and local customer service. The Company also offers investment services to individuals and businesses. At September 30, 2024, the Oswego-headquartered Company had assets of $1.48 billion, loans of $921.7 million, and deposits of $1.20 billion. More information is available at pathfinderbank.com and ir.pathfinderbank.com.

Forward-Looking Statements
Certain statements contained herein are “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. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may.” These forward-looking statements are based on current beliefs and expectations of the Company’s and the Bank’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s and the Bank’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to: risks related to the real estate and economic environment, particularly in the market areas in which the Company and the Bank operate; fiscal and monetary policies of the U.S. Government; inflation; changes in government regulations affecting financial institutions, including regulatory compliance costs and capital requirements; fluctuations in the adequacy of the allowance for credit losses; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; the risk that the Company may not be successful in the implementation of its business strategy; changes in prevailing interest rates; credit risk management; asset-liability management; and other risks described in the Company’s filings with the Securities and Exchange Commission, which are available at the SEC’s website, www.sec.gov.

This release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant’s historical or future financial performance, financial position, or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet, or statement of cash flows (or equivalent statements) of the registrant; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the release of the non-GAAP financial measures to the most directly comparable GAAP financial.

PATHFINDER BANCORP, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)

	2024									2023
SELECTED BALANCE SHEET DATA:	September 30,			June 30,			March 31,			December 31,			September 30,
ASSETS:
Cash and due from banks	$	18,923		$	12,022		$	13,565		$	12,338		$	12,822
Interest-earning deposits		16,401			19,797			15,658			36,394			11,652
Total cash and cash equivalents		35,324			31,819			29,223			48,732			24,474
Available-for-sale securities, at fair value		271,977			274,977			279,012			258,716			206,848
Held-to-maturity securities, at amortized cost		161,385			166,271			172,648			179,286			185,589
Marketable equity securities, at fair value		3,872			3,793			3,342			3,206			3,013
Federal Home Loan Bank stock, at cost		5,401			8,702			7,031			8,748			5,824
Loans		921,660			888,263			891,531			897,207			896,123
Less: Allowance for credit losses		17,274			16,892			16,655			15,975			15,767
Loans receivable, net		904,386			871,371			874,876			881,232			880,356
Premises and equipment, net		18,989			18,878			18,332			18,441			18,491
Assets held-for-sale		–			3,042			3,042			3,042			3,042
Operating lease right-of-use assets		1,425			1,459			1,493			1,526			1,559
Finance lease right-of-use assets		16,873			4,004			4,038			4,073			4,108
Accrued interest receivable		6,806			7,076			7,170			7,286			6,594
Foreclosed real estate		–			60			82			151			189
Intangible assets, net		6,217			76			80			85			88
Goodwill		5,752			4,536			4,536			4,536			4,536
Bank owned life insurance		24,560			24,967			24,799			24,641			24,479
Other assets		20,159			25,180			23,968			22,097			31,459
Total assets	$	1,483,126		$	1,446,211		$	1,453,672		$	1,465,798		$	1,400,649

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Deposits:
Interest-bearing deposits	$	986,103		$	932,132		$	969,692		$	949,898		$	953,143
Noninterest-bearing deposits		210,110			169,145			176,421			170,169			174,710
Total deposits		1,196,213			1,101,277			1,146,113			1,120,067			1,127,853
Short-term borrowings		60,315			127,577			91,577			125,680			56,698
Long-term borrowings		39,769			45,869			45,869			49,919			53,915
Subordinated debt		30,057			30,008			29,961			29,914			29,867
Accrued interest payable		236			2,092			1,963			2,245			1,731
Operating lease liabilities		1,621			1,652			1,682			1,711			1,739
Finance lease liabilities		16,829			4,359			4,370			4,381			4,391
Other liabilities		16,986			9,203			9,505			11,625			10,013
Total liabilities		1,362,026			1,322,037			1,331,040			1,345,542			1,286,207
Shareholders’ equity:
Voting common stock shares issued and outstanding		4,719,788			4,719,788			4,719,788			4,719,288			4,713,353
Voting common stock		47			47			47			47			47
Non-Voting common stock		14			14			14			14			14
Additional paid in capital		53,231			53,182			53,151			53,114			52,963
Retained earnings		73,670			78,936			77,558			76,060			74,282
Accumulated other comprehensive loss		(6,716	)		(8,786	)		(8,862	)		(9,605	)		(13,356	)
Unearned ESOP shares		–			(45	)		(90	)		(135	)		(180	)
Total Pathfinder Bancorp, Inc. shareholders’ equity		120,246			123,348			121,818			119,495			113,770
Noncontrolling interest		854			826			814			761			672
Total equity		121,100			124,174			122,632			120,256			114,442
Total liabilities and shareholders’ equity	$	1,483,126		$	1,446,211		$	1,453,672		$	1,465,798		$	1,400,649

The above information is preliminary and based on the Company’s data available at the time of presentation.

	Nine Months Ended September 30,						2024									2023
SELECTED INCOME STATEMENT DATA:	2024			2023			Q3			Q2			Q1			Q4			Q3
Interest and dividend income:
Loans, including fees	$	39,182		$	34,919		$	14,425		$	12,489		$	12,268		$	12,429		$	12,470
Debt securities:
Taxable		17,007			12,408			5,664			5,736			5,607			5,092			4,488
Tax-exempt		1,475			1,441			469			498			508			506			507
Dividends		456			341			149			178			129			232			140
Federal funds sold and interest-earning deposits		711			226			492			121			98			69			66
Total interest and dividend income		58,831			49,335			21,199			19,022			18,610			18,328			17,671
Interest expense:
Interest on deposits		22,670			15,885			7,633			7,626			7,411			7,380			6,223
Interest on short-term borrowings		3,476			1,624			1,136			1,226			1,114			1,064			674
Interest on long-term borrowings		597			619			202			201			194			231			222
Interest on subordinated debt		1,476			1,447			496			489			491			494			492
Total interest expense		28,219			19,575			9,467			9,542			9,210			9,169			7,611
Net interest income		30,612			29,760			11,732			9,480			9,400			9,159			10,060
Provision for (benefit from) credit losses:
Loans		10,118			2,675			9,104			304			710			316			798
Held-to-maturity securities		(90	)		(24	)		(31	)		(74	)		15			(74	)		5
Unfunded commitments		(43	)		14			(104	)		60			1			23			30
Total provision for credit losses		9,985			2,665			8,969			290			726			265			833
Net interest income after provision for credit losses		20,627			27,095			2,763			9,190			8,674			8,894			9,227
Noninterest income:
Service charges on deposit accounts		1,031			913			392			330			309			336			343
Earnings and gain on bank owned life insurance		685			466			361			167			157			164			165
Loan servicing fees		279			238			79			112			88			69			99
Net realized (losses) gains on sales and redemptions of investment securities		(320	)		60			(188	)		16			(148	)		2			(13	)
Net realized gains (losses) on sales of marketable equity securities		31			(208	)		62			(139	)		108			(47	)		(39	)
Gains on sales of loans and foreclosed real estate		148			183			90			40			18			(2	)		41
Loss on sale of premises and equipment		(36	)		–			(36	)		–			–			–			–
Debit card interchange fees		610			455			300			191			119			161			22
Insurance agency revenue		1,024			1,001			367			260			397			303			310
Other charges, commissions & fees		1,203			764			280			234			689			332			265
Total noninterest income		4,655			3,872			1,707			1,211			1,737			1,318			1,193
Noninterest expense:
Salaries and employee benefits		13,687			12,243			4,959			4,399			4,329			3,677			4,154
Building and occupancy		2,864			2,699			1,134			914			816			864			868
Data processing		1,750			1,519			672			550			528			499			483
Professional and other services		3,078			1,531			1,820			696			562			488			492
Advertising		386			516			165			116			105			155			144
FDIC assessments		685			663			228			228			229			222			222
Audits and exams		416			476			123			123			170			259			159
Insurance agency expense		825			817			308			232			285			216			273
Community service activities		111			151			20			39			52			49			55
Foreclosed real estate expenses		82			76			27			30			25			35			44
Other expenses		1,989			1,660			803			581			605			580			759
Total noninterest expense		25,873			22,351			10,259			7,908			7,706			7,044			7,653
(Loss) income before provision for income taxes		(591	)		8,616			(5,789	)		2,493			2,705			3,168			2,767
(Benefit) provision for income taxes		(160	)		1,772			(1,173	)		481			532			590			573
Net (loss) income attributable to noncontrolling interest and Pathfinder Bancorp, Inc.		(431	)		6,844			(4,616	)		2,012			2,173			2,578			2,194
Net income attributable to noncontrolling interest		93			87			28			12			53			42			18
Net (loss) income attributable to Pathfinder Bancorp Inc.	$	(524	)	$	6,757		$	(4,644	)	$	2,000		$	2,120		$	2,536		$	2,176
Voting Earnings per common share – basic and diluted	$	(0.09	)	$	1.10		$	(0.75	)	$	0.32		$	0.34		$	0.41		$	0.35
Series A Non-Voting Earnings per common share- basic and diluted	$	(0.09	)	$	1.10		$	(0.75	)	$	0.32		$	0.34		$	0.41		$	0.35
Dividends per common share (Voting and Series A Non-Voting)	$	0.30		$	0.27		$	0.10		$	0.10		$	0.10		$	0.09		$	0.09

The above information is preliminary and based on the Company’s data available at the time of presentation.

	Nine Months Ended September 30,						2024									2023
FINANCIAL HIGHLIGHTS:	2024			2023			Q3			Q2			Q1			Q4			Q3
Selected Ratios:
Return on average assets		-0.05	%		0.65	%		-1.25	%		0.56	%		0.59	%		0.72	%		0.63	%
Return on average common equity		-0.57	%		7.88	%		-14.79	%		6.49	%		7.01	%		8.72	%		7.50	%
Return on average equity		-0.57	%		7.88	%		-14.79	%		6.49	%		7.01	%		8.72	%		7.50	%
Return on average tangible common equity (1)		-0.59	%		8.23	%		-15.28	%		6.78	%		7.32	%		9.01	%		7.75	%
Net interest margin		2.97	%		3.02	%		3.34	%		2.78	%		2.75	%		2.74	%		3.07	%
Loans/deposits		77.05	%		79.45	%		77.05	%		80.66	%		77.79	%		80.10	%		79.45	%
Core deposits/deposits (2)		77.45	%		69.83	%		77.45	%		67.98	%		69.17	%		69.83	%		69.83	%
Annualized non-interest expense/average assets		2.39	%		2.16	%		2.75	%		2.19	%		2.16	%		2.01	%		2.20	%
Efficiency ratio (1)		72.70	%		66.58	%		75.28	%		74.08	%		68.29	%		67.25	%		67.93	%

Other Selected Data:
Average yield on loans		5.82	%		5.17	%		6.31	%		5.64	%		5.48	%		5.55	%		5.57	%
Average cost of interest bearing deposits		3.12	%		2.23	%		3.11	%		3.21	%		3.07	%		3.10	%		2.65	%
Average cost of total deposits, including non-interest bearing		2.64	%		1.88	%		2.59	%		2.72	%		2.61	%		2.63	%		2.24	%
Deposits/branch (4)	$	99,684		$	102,532		$	99,684		$	100,116		$	104,192		$	101,824		$	102,532
Pre-tax, pre-provision net income (1)	$	9,714		$	11,221		$	3,368		$	2,767		$	3,579		$	3,431		$	3,613
Total revenue (1)	$	35,587		$	33,572		$	13,627		$	10,675		$	11,285		$	10,475		$	11,266

Share and Per Share Data:
Cash dividends per share	$	0.30		$	0.27		$	0.10		$	0.10		$	0.10		$	0.09		$	0.09
Book value per common share	$	19.71		$	18.67		$	19.71		$	20.22		$	19.97		$	19.59		$	18.67
Tangible book value per common share (1)	$	17.75		$	17.91		$	17.75		$	19.46		$	19.21		$	18.83		$	17.91
Basic and diluted weighted average shares outstanding – Voting		4,708			4,640			4,714			4,708			4,701			4,693			4,671
Basic and diluted earnings per share – Voting (3)	$	(0.09	)	$	1.10		$	(0.75	)	$	0.32		$	0.34		$	0.41		$	0.35
Basic and diluted weighted average shares outstanding – Series A Non-Voting		1,380			1,380			1,380			1,380			1,380			1,380			1,380
Basic and diluted earnings per share – Series A Non-Voting (3)	$	(0.09	)	$	1.10		$	(0.75	)	$	0.32		$	0.34		$	0.41		$	0.35
Common shares outstanding at period end		6,100			6,094			6,100			6,100			6,100			6,100			6,094

Pathfinder Bancorp, Inc. Capital Ratios:
Company tangible common equity to tangible assets (1)		7.36	%		7.82	%		7.36	%		8.24	%		8.09	%		7.86	%		7.82	%
Company Total Core Capital (to Risk-Weighted Assets)		15.55	%		17.00	%		15.55	%		16.19	%		16.23	%		16.17	%		17.00	%
Company Tier 1 Capital (to Risk-Weighted Assets)		11.84	%		12.39	%		11.84	%		12.31	%		12.33	%		12.30	%		12.39	%
Company Tier 1 Common Equity (to Risk-Weighted Assets)		11.33	%		12.91	%		11.33	%		11.83	%		11.85	%		11.81	%		12.91	%
Company Tier 1 Capital (to Assets)		8.29	%		9.21	%		8.29	%		9.16	%		9.16	%		9.35	%		9.21	%

Pathfinder Bank Capital Ratios:
Bank Total Core Capital (to Risk-Weighted Assets)		14.52	%		14.76	%		14.52	%		16.04	%		15.65	%		15.05	%		14.76	%
Bank Tier 1 Capital (to Risk-Weighted Assets)		13.26	%		13.51	%		13.26	%		14.79	%		14.39	%		13.80	%		13.51	%
Bank Tier 1 Common Equity (to Risk-Weighted Assets)		13.26	%		13.51	%		13.26	%		14.79	%		14.39	%		13.80	%		13.51	%
Bank Tier 1 Capital (to Assets)		9.13	%		10.11	%		9.13	%		10.30	%		10.13	%		10.11	%		10.11	%

(1) Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures.
(2) Non-brokered deposits excluding certificates of deposit of $250,000 or more.
(3) Basic and diluted earnings per share are calculated based upon the two-class method. Weighted average shares outstanding do not include unallocated ESOP shares.
(4) Includes 11 full-service branches and one motor bank for September 30, 2024. Includes 10 full-service branches and one motor bank for all periods prior.

The above information is preliminary and based on the Company’s data available at the time of presentation.

	Nine Months Ended September 30,						2024									2023
ASSET QUALITY:	2024			2023			Q3			Q2			Q1			Q4			Q3
Total loan charge-offs	$	8,992		$	4,365		$	8,812		$	112		$	68		$	211		$	3,874
Total recoveries		174			252			90			46			38			103			45
Net loan charge-offs		8,818			4,113			8,722			66			30			108			3,829
Allowance for credit losses at period end		17,274			15,767			17,274			16,892			16,655			15,975			15,767
Nonperforming loans at period end		16,170			16,173			16,170			24,490			19,652			17,227			16,173
Nonperforming assets at period end	$	16,170		$	16,362		$	16,170		$	24,550		$	19,734		$	17,378		$	16,362
Annualized net loan charge-offs to average loans		1.29	%		0.61	%		1.29	%		0.02	%		0.01	%		0.47	%		0.61	%
Allowance for credit losses to period end loans		1.87	%		1.76	%		1.87	%		1.90	%		1.87	%		1.78	%		1.76	%
Allowance for credit losses to nonperforming loans		106.83	%		97.49	%		106.83	%		68.98	%		84.75	%		92.73	%		97.49	%
Nonperforming loans to period end loans		1.75	%		1.80	%		1.75	%		2.76	%		2.20	%		1.92	%		1.80	%
Nonperforming assets to period end assets		1.09	%		1.17	%		1.09	%		1.70	%		1.36	%		1.19	%		1.17	%

	2024									2023
LOAN COMPOSITION:	September 30,			June 30,			March 31,			December 31,			September 30,
1-4 family first-lien residential mortgages	$	255,235		$	250,106		$	252,026		$	257,604		$	252,956
Residential construction		4,077			309			1,689			1,355			2,090
Commercial real estate		378,805			370,361			363,467			358,707			362,822
Commercial lines of credit		64,672			62,711			67,416			72,069			73,497
Other commercial and industrial		88,247			90,813			91,178			89,803			85,506
Paycheck protection program loans		125			136			147			158			169
Tax exempt commercial loans		2,658			3,228			3,374			3,430			3,451
Home equity and junior liens		52,709			35,821			35,723			34,858			34,666
Other consumer		76,703			75,195			77,106			79,797			81,319
Subtotal loans		923,231			888,680			892,126			897,781			896,476
Deferred loan fees		(1,571	)		(417	)		(595	)		(574	)		(353	)
Total loans	$	921,660		$	888,263		$	891,531		$	897,207		$	896,123

	2024						2023
DEPOSIT COMPOSITION:	September 30,		June 30,		March 31,		December 31,		September 30,
Savings accounts	$	129,053	$	106,048	$	111,465	$	113,543	$	118,406
Time accounts		352,729		368,262		378,103		377,570		359,011
Time accounts in excess of $250,000		140,181		117,021		114,514		95,272		96,686
Money management accounts		11,520		12,154		11,676		12,364		13,052
MMDA accounts		250,007		193,915		215,101		224,707		235,165
Demand deposit interest-bearing		97,344		128,168		134,196		119,321		125,585
Demand deposit noninterest-bearing		210,110		169,145		176,434		170,169		174,712
Mortgage escrow funds		5,269		6,564		4,624		7,121		5,236
Total deposits	$	1,196,213	$	1,101,277	$	1,146,113	$	1,120,067	$	1,127,853

The above information is preliminary and based on the Company’s data available at the time of presentation.

	Nine Months Ended September 30,						2024						2023
SELECTED AVERAGE BALANCES:	2024			2023			Q3			Q2			Q3
Interest-earning assets:
Loans	$	898,361		$	900,917		$	914,467		$	885,384		$	895,900
Taxable investment securities		427,311			371,615			415,751			434,572			376,455
Tax-exempt investment securities		29,499			31,077			30,382			28,944			27,831
Fed funds sold and interest-earning deposits		20,161			11,750			42,897			13,387			11,395
Total interest-earning assets		1,375,332			1,315,359			1,403,497			1,362,287			1,311,581
Noninterest-earning assets:
Other assets		99,200			99,431			103,856			98,746			102,738
Allowance for credit losses		(16,511	)		(18,043	)		(16,537	)		(16,905	)		(19,028	)
Net unrealized losses on available-for-sale securities		(10,184	)		(12,919	)		(9,161	)		(10,248	)		(13,275	)
Total assets	$	1,447,837		$	1,383,828		$	1,481,655		$	1,433,880		$	1,382,016
Interest-bearing liabilities:
NOW accounts	$	100,922		$	94,116		$	102,868		$	92,918		$	90,992
Money management accounts		11,782			14,651			11,828			12,076			14,503
MMDA accounts		217,580			241,550			227,247			214,364			218,601
Savings and club accounts		115,875			127,490			127,262			107,558			121,710
Time deposits		521,832			472,614			514,050			524,276			493,907
Subordinated loans		29,978			29,793			30,025			29,977			29,837
Borrowings		129,943			99,029			122,129			141,067			110,780
Total interest-bearing liabilities		1,127,912			1,079,243			1,135,409			1,122,236			1,080,330
Noninterest-bearing liabilities:
Demand deposits		177,202			174,143			195,765			171,135			169,825
Other liabilities		19,382			16,100			24,855			17,298			15,768
Total liabilities		1,324,496			1,269,486			1,356,029			1,310,669			1,265,923
Shareholders’ equity		123,341			114,342			125,626			123,211			116,093
Total liabilities & shareholders’ equity	$	1,447,837		$	1,383,828		$	1,481,655		$	1,433,880		$	1,382,016

	Nine Months Ended September 30,						2024						2023
SELECTED AVERAGE YIELDS:	2024			2023			Q3			Q2			Q3
Interest-earning assets:
Loans		5.82	%		5.17	%		6.31	%		5.64	%		5.57	%
Taxable investment securities		5.45	%		4.57	%		5.59	%		5.44	%		4.92	%
Tax-exempt investment securities		6.67	%		6.18	%		6.17	%		6.88	%		7.29	%
Fed funds sold and interest-earning deposits		4.70	%		2.56	%		4.59	%		3.62	%		2.32	%
Total interest-earning assets		5.70	%		5.00	%		6.04	%		5.59	%		5.39	%
Interest-bearing liabilities:
NOW accounts		1.06	%		0.45	%		1.09	%		1.14	%		0.55	%
Money management accounts		0.11	%		0.11	%		0.10	%		0.10	%		0.11	%
MMDA accounts		3.64	%		2.51	%		3.54	%		3.74	%		3.00	%
Savings and club accounts		0.26	%		0.21	%		0.25	%		0.26	%		0.22	%
Time deposits		4.01	%		3.05	%		4.09	%		4.03	%		3.55	%
Subordinated loans		6.56	%		6.48	%		6.61	%		6.53	%		6.60	%
Borrowings		4.18	%		3.02	%		4.38	%		4.05	%		3.24	%
Total interest-bearing liabilities		3.34	%		2.42	%		3.34	%		3.40	%		2.82	%
Net interest rate spread		2.36	%		2.58	%		2.70	%		2.19	%		2.57	%
Net interest margin		2.97	%		3.02	%		3.34	%		2.78	%		3.07	%
Ratio of average interest-earning assets to average interest-bearing liabilities		121.94	%		121.88	%		123.61	%		121.39	%		121.41	%

The above information is preliminary and based on the Company’s data available at the time of presentation.

	Nine Months Ended September 30,						2024									2023
NON-GAAP RECONCILIATIONS:	2024			2023			Q3			Q2			Q1			Q4			Q3
Tangible book value per common share:
Total equity							$	120,246		$	123,348		$	121,818		$	119,495		$	113,770
Intangible assets								(11,969	)		(4,612	)		(4,616	)		(4,621	)		(4,624	)
Tangible common equity (non-GAAP)								108,277			118,736			117,202			114,874			109,146
Common shares outstanding								6,100			6,100			6,100			6,100			6,094
Tangible book value per common share (non-GAAP)							$	17.75		$	19.46		$	19.21		$	18.83		$	17.91
Tangible common equity to tangible assets:
Tangible common equity (non-GAAP)							$	108,277		$	118,736		$	117,202		$	114,874		$	109,146
Tangible assets								1,471,157			1,441,599			1,449,056			1,461,177			1,396,025
Tangible common equity to tangible assets ratio (non-GAAP)								7.36	%		8.24	%		8.09	%		7.86	%		7.82	%
Return on average tangible common equity:
Average shareholders’ equity	$	123,341		$	114,342		$	125,626		$	123,211		$	121,031		$	116,265		$	116,093
Average intangible assets		4,642			4,631			4,691			4,614			4,619			4,623			4,627
Average tangible equity (non-GAAP)		118,699			109,711			120,935			118,597			116,412			111,642			111,466
Net income (loss)		(524	)		6,757			(4,644	)		2,000			2,120			2,536			2,176
Net income (loss), annualized	$	(700	)	$	9,034		$	(18,475	)	$	8,044		$	8,527		$	10,061		$	8,633
Return on average tangible common equity (non-GAAP) (1)		-0.59	%		8.23	%		-15.28	%		6.78	%		7.32	%		9.01	%		7.75	%
Revenue, pre-tax, pre-provision net income, and efficiency ratio:
Net interest income	$	30,612		$	29,760		$	11,732		$	9,480		$	9,400		$	9,159		$	10,060
Total noninterest income		4,655			3,872			1,707			1,211			1,737			1,318			1,193
Net realized (gains) losses on sales and redemptions of investment securities		(320	)		60			(188	)		16			(148	)		2			(13	)
Revenue (non-GAAP) (2)		35,587			33,572			13,627			10,675			11,285			10,475			11,266
Total non-interest expense		25,873			22,351			10,259			7,908			7,706			7,044			7,653
Pre-tax, pre-provision net income (non-GAAP) (3)	$	9,714		$	11,221		$	3,368		$	2,767		$	3,579		$	3,431		$	3,613
Efficiency ratio (non-GAAP) (4)		72.70	%		66.58	%		75.28	%		74.08	%		68.29	%		67.25	%		67.93	%

(1) Return on average tangible common equity equals annualized net income (loss) divided by average tangible equity
(2) Revenue equals net interest income plus total noninterest income less net realized gains or losses on sales and redemptions of investment securities
(3) Pre-tax, pre-provision net income equals revenue less total non-interest expense
(4) Efficiency ratio equals noninterest expense divided by revenue

The above information is preliminary and based on the Company’s data available at the time of presentation.

Investor/Media Contacts
James A. Dowd, President, CEO
Justin K. Bigham, Senior Vice President, CFO
Telephone: (315) 343-0057

The MIL Network –

January 25, 2025

MIL-OSI: LPL Financial Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Key Financial Results

Net Income was $255 million, translating to diluted earnings per share (“EPS”) of $3.39, up 16% from a year ago
Adjusted EPS* increased 11% year-over-year to $4.16
- Gross profit* increased 12% year-over-year to $1,128 million
- Core G&A* increased 5% year-over-year to $359 million
- Adjusted EBITDA* increased 12% year-over-year to $566 million

Key Business Results

Total advisory and brokerage assets increased 29% year-over-year to $1.6 trillion
- Advisory assets increased 35% year-over-year to $892 billion
- Advisory assets as a percentage of total assets increased to 56.0%, up from 53.5% a year ago
Total organic net new assets were $27 billion, representing 7% annualized growth
- Excluding a $6 billion outflow related to a planned separation from misaligned large OSJs, total organic net new assets were $33 billion, translating to a 9% annualized growth rate
- Organic net new advisory assets were $23 billion, representing 11% annualized growth. Excluding the impact of the planned separations, total organic net new advisory assets were $28 billion, translating to a 14% annualized growth rate.
Recruited assets⁽¹⁾were $26 billion
- Recruited assets over the trailing twelve months were $87 billion, up approximately 12% from a year ago
Advisor count⁽²⁾was 23,686, up 224 sequentially and 1,282 year-over-year
Total client cash balances were $46 billion, an increase of $2 billion sequentially and a decrease of $1 billion year-over-year
- Client cash balances as a percentage of total assets were 2.9%, in-line with the prior quarter and down from 3.8% a year ago

Key Capital and Liquidity Results

Corporate cash⁽³⁾was $708 million
Leverage ratio⁽⁴⁾was 1.61x
Dividends paid were $22.4 million

Key Updates

M&A:
- Atria Wealth Solutions, Inc. (“Atria”): In October 2024, closed the acquisition of Atria, a wealth management solutions holding company. Atria supports ~2,200 advisors and ~160 banks and credit unions, managing ~$110 billion of brokerage and advisory assets. Conversion is expected to be completed in mid-2025.
  - Estimated run-rate EBITDA has increased from $140 million at announcement to $150 million
- The Investment Center, Inc. (“The Investment Center”): Announced a definitive agreement to acquire The Investment Center, a firm with ~240 advisors serving ~$9 billion of brokerage and advisory assets. We expect to close and convert the acquisition in the first half of 2025.
- Liquidity & Succession: Deployed approximately $34 million of capital to close six deals, including our first three external practices
Prudential Advisors (“Prudential”): On track to onboard the retail wealth management business of Prudential during Q4
- Estimated run-rate EBITDA has increased from $60 million at announcement to $70 million
Core G&A*:
- While there are variable costs associated with supporting our strong levels of organic growth, given our ongoing focus on efficiency, we are tightening our 2024 Core G&A* outlook to a range of $1,475 million to $1,485 million
- Additionally, we are increasing the range by $35 million to $40 million to include costs related to the acquisition of Atria and onboarding of Prudential, resulting in an updated range of $1,510 million to $1,525 million
Share Repurchases: We plan to resume our share repurchase program in Q4 2024, with an estimated $100 million of repurchases planned during the fourth quarter

*See the Non-GAAP Financial Measures section and the endnotes to this release for further details about these non-GAAP financial measures

SAN DIEGO, Oct. 30, 2024 (GLOBE NEWSWIRE) — LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”) today announced results for its third quarter ended September 30, 2024, reporting net income of $255 million or $3.39 per share. This compares with $224 million, or $2.91 per share, in the third quarter of 2023 and $244 million, or $3.23 per share, in the prior quarter.

“I joined LPL with the mandate to accelerate our growth, and for the past six years, have worked closely with Matt Audette and the rest of our leadership team, to set our strategic vision, and to build and execute on the plan to achieve that vision,” said Rich Steinmeier, CEO. “Looking forward, our opportunity is clear – to assert our leadership and shape both the advisor and institutional markets. Our focus is on creating the culture, workplace environment, and capabilities, to achieve sustainable outperformance through becoming an indispensable partner to our advisors and institutions, while delivering long-term value to shareholders.”

“We’re operating from a position of strength with a leadership team that is focused on supporting our advisors’ success through innovative solutions,” said Matt Audette, President and CFO. “In my expanded role, I look forward to the opportunity to help extend our leadership position in the advisor-mediated markets and to enhance value for our shareholders. Specific to the third quarter, we delivered strong organic growth in both our traditional and new markets. As a complement, we announced our acquisition of The Investment Center, and early in the fourth quarter we closed our acquisition of Atria. As we look ahead, we remain excited by the opportunities we have to serve and support our advisors, while continuing to deliver an industry leading value proposition.”

Dividend Declaration

The Company’s Board of Directors declared a $0.30 per share dividend to be paid on December 2, 2024 to all stockholders of record as of November 14, 2024.

Conference Call and Additional Information

The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Wednesday, October 30, 2024. The conference call will be accessible and available for replay at investor.lpl.com/events.

Contacts

Investor Relations
investor.relations@lplfinancial.com

Media Relations
media.relations@lplfinancial.com

About LPL Financial

LPL Financial Holdings Inc. (Nasdaq: LPLA) was founded on the principle that the firm should work for advisors and institutions, and not the other way around. Today, LPL is a leader in the markets we serve⁽⁵⁾, serving more than 23,000 financial advisors, including advisors at approximately 1,000 institutions and at approximately 580 registered investment advisor (“RIA”) firms nationwide. We are steadfast in our commitment to the advisor-mediated model and the belief that Americans deserve access to personalized guidance from a financial professional. At LPL, independence means that advisors and institution leaders have the freedom they deserve to choose the business model, services, and technology resources that allow them to run a thriving business. They have the flexibility to do business their way. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors and institutions, so they can take care of their clients.

Securities and Advisory services offered through LPL Financial LLC (“LPL Financial”), a registered investment advisor. Member FINRA/SIPC. LPL Financial and its affiliated companies provide financial services only from the United States.

Throughout this communication, the terms “financial advisors” and “advisors” are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial.

We routinely disclose information that may be important to shareholders in the “Investor Relations” or “Press Releases” section of our website.

Forward-Looking Statements

This press release contains statements regarding:

the amount and timing of the onboarding of acquired, recruited or transitioned brokerage and advisory assets, including Atria, Prudential and The Investment Center;
the Company’s future financial and operating results, growth, plans, priorities and business strategies, including forecasts and statements related to the Company’s core G&A expenses; and
future capabilities, future advisor service experience, future investments and capital deployment, including share repurchase activity and dividends, if any, and long-term shareholder value.

These and any other statements that are not related to present facts or current conditions, or that are not purely historical, constitute forward-looking statements. They reflect the Company’s expectations and objectives as of October 30, 2024 and are not guarantees that expectations or objectives expressed or implied will be achieved. The achievement of such expectations and objectives involves risks and uncertainties that may cause actual results, levels of activity or the timing of events to differ materially from those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include:

the failure to satisfy the closing conditions applicable to the Company’s strategic relationship agreement with Prudential, or the Company’s purchase agreement with The Investment Center, including regulatory approvals;
difficulties and delays in onboarding the assets of acquired, recruited or transitioned advisors, including the receipt and timing of regulatory approvals that may be required;
disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients;
the choice by clients of acquired or recruited advisors not to open brokerage and/or advisory accounts at the Company;
changes in general economic and financial market conditions, including retail investor sentiment;
changes in interest rates and fees payable by banks participating in the Company’s client cash programs, including the Company’s success in negotiating agreements with current or additional counterparties;
the Company’s strategy and success in managing client cash program fees;
fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenue;
effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions, and their ability to provide financial products and services effectively;
whether the retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company;
changes in the growth and profitability of the Company’s fee-based offerings and asset-based revenues;
the effect of current, pending and future legislation, regulation and regulatory actions, including disciplinary actions imposed by federal and state regulators and self-regulatory organizations;
the cost of defending, settling and remediating issues related to regulatory matters or legal proceedings, including civil monetary penalties or actual costs of reimbursing customers for losses in excess of our reserves or insurance;
changes made to the Company’s services and pricing, including in response to competitive developments and current, pending and future legislation, regulation and regulatory actions, and the effect that such changes may have on the Company’s gross profit streams and costs;
execution of the Company’s capital management plans, including its compliance with the terms of the Company’s amended and restated credit agreement, the committed revolving credit facilities of the Company and LPL Financial, and the indentures governing the Company’s senior unsecured notes;
strategic acquisitions and investments, including pursuant to the Company’s Liquidity & Succession solution, and the effect that such acquisitions and investments may have on the Company’s capital management plans and liquidity;
the price, availability and trading volumes of shares of the Company’s common stock, which will affect the timing and size of future share repurchases by the Company, if any;
the execution of the Company’s plans and its success in realizing the synergies, expense savings, service improvements or efficiencies expected to result from its investments, initiatives and acquisitions, expense plans and technology initiatives;
whether advisors affiliated with Atria, Prudential, and The Investment Center will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company;
the performance of third-party service providers to which business processes have been transitioned;
the Company’s ability to control operating risks, information technology systems risks, cybersecurity risks and sourcing risks; and
the other factors set forth in the Company’s most recent Annual Report on Form 10-K, as may be amended or updated in the Company’s Quarterly Reports on Form 10-Q or other filings with the Securities and Exchange Commission.

Except as required by law, the Company specifically disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this earnings release, and you should not rely on statements contained herein as representing the Company’s view as of any date subsequent to the date of this press release.


LPL Financial Holdings Inc. Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited)

	Three Months Ended						Three Months Ended
	September 30,		June 30,				September 30,
	2024		2024		Change		2023			Change
REVENUE
Advisory	$	1,378,050	$	1,288,163	7	%	$	1,081,562		27	%
Commission:
Sales-based		429,132		423,070	1	%		311,792		38	%
Trailing		377,400		363,976	4	%		331,808		14	%
Total commission		806,532		787,046	2	%		643,600		25	%
Asset-based:
Client cash		353,855		341,475	4	%		360,518		(2	%)
Other asset-based		272,336		259,533	5	%		224,614		21	%
Total asset-based		626,191		601,008	4	%		585,132		7	%
Service and fee		145,729		135,000	8	%		135,648		7	%
Transaction		58,546		58,935	(1	%)		50,210		17	%
Interest income, net		49,923		47,478	5	%		40,773		22	%
Other		43,423		14,139	n/m			(14,542	)	n/m
Total revenue		3,108,394		2,931,769	6	%		2,522,383		23	%
EXPENSE
Advisory and commission		1,948,065		1,819,027	7	%		1,488,432		31	%
Compensation and benefits		266,415		274,000	(3	%)		243,759		9	%
Promotional		164,538		136,125	21	%		131,645		25	%
Depreciation and amortization		78,338		70,999	10	%		64,627		21	%
Occupancy and equipment		69,879		69,529	1	%		61,339		14	%
Interest expense on borrowings		67,779		64,341	5	%		48,363		40	%
Amortization of other intangibles		32,461		30,607	6	%		27,760		17	%
Brokerage, clearing and exchange		29,636		32,984	(10	%)		24,793		20	%
Professional services		26,295		22,100	19	%		18,699		41	%
Communications and data processing		17,916		19,406	(8	%)		19,634		(9	%)
Other		59,724		62,580	(5	%)		75,660		(21	%)
Total expense		2,761,046		2,601,698	6	%		2,204,711		25	%
INCOME BEFORE PROVISION FOR INCOME TAXES		347,348		330,071	5	%		317,672		9	%
PROVISION FOR INCOME TAXES		92,045		86,271	7	%		93,381		(1	%)
NET INCOME	$	255,303	$	243,800	5	%	$	224,291		14	%
EARNINGS PER SHARE
Earnings per share, basic	$	3.41	$	3.26	5	%	$	2.95		16	%
Earnings per share, diluted	$	3.39	$	3.23	5	%	$	2.91		16	%
Weighted-average shares outstanding, basic		74,776		74,725	—	%		76,062		(2	%)
Weighted-average shares outstanding, diluted		75,405		75,548	—	%		77,147		(2	%)


LPL Financial Holdings Inc. Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited)

	Nine Months Ended
	September 30,
	2024		2023		Change
REVENUE
Advisory	$	3,866,024	$	3,050,184	27	%
Commission:
Sales-based		1,237,437		896,825	38	%
Trailing		1,102,587		973,386	13	%
Total commission		2,340,024		1,870,211	25	%
Asset-based:
Client cash		1,047,712		1,157,208	(9	%)
Other asset-based		780,208		639,387	22	%
Total asset-based		1,827,920		1,796,595	2	%
Service and fee		412,901		377,757	9	%
Transaction		174,739		146,081	20	%
Interest income, net		140,926		116,103	21	%
Other		110,222		52,088	112	%
Total revenue		8,872,756		7,409,019	20	%
EXPENSE
Advisory and commission		5,500,579		4,307,829	28	%
Compensation and benefits		814,784		708,972	15	%
Promotional		427,282		332,433	29	%
Depreciation and amortization		216,495		179,058	21	%
Occupancy and equipment		205,672		186,517	10	%
Interest expense on borrowings		192,202		132,389	45	%
Brokerage, clearing and exchange		93,152		80,067	16	%
Amortization of other intangibles		92,620		78,593	18	%
Professional services		61,674		51,011	21	%
Communications and data processing		57,066		57,903	(1	%)
Other		159,619		143,259	11	%
Total expense		7,821,145		6,258,031	25	%
INCOME BEFORE PROVISION FOR INCOME TAXES		1,051,611		1,150,988	(9	%)
PROVISION FOR INCOME TAXES		263,744		302,293	(13	%)
NET INCOME	$	787,867	$	848,695	(7	%)
EARNINGS PER SHARE
Earnings per share, basic	$	10.55	$	10.97	(4	%)
Earnings per share, diluted	$	10.45	$	10.82	(3	%)
Weighted-average shares outstanding, basic		74,688		77,339	(3	%)
Weighted-average shares outstanding, diluted		75,424		78,439	(4	%)


LPL Financial Holdings Inc. Condensed Consolidated Statements of Financial Condition (In thousands, except share data) (Unaudited)

	September 30, 2024			June 30, 2024			December 31, 2023
ASSETS
Cash and equivalents	$	1,474,954		$	1,318,894		$	465,671
Cash and equivalents segregated under federal or other regulations		1,382,867			1,530,150			2,007,312
Restricted cash		104,881			109,618			108,180
Receivables from clients, net		622,015			563,923			588,585
Receivables from brokers, dealers and clearing organizations		53,763			74,432			50,069
Advisor loans, net		1,913,363			1,757,727			1,479,690
Other receivables, net		802,186			763,632			743,317
Investment securities ($94,694, $73,463 and $76,088 at fair value at September 30, 2024, June 30, 2024 and December 31, 2023, respectively)		111,096			89,853			91,311
Property and equipment, net		1,144,676			1,066,395			933,091
Goodwill		1,868,193			1,860,062			1,856,648
Other intangibles, net		782,426			783,031			671,585
Other assets		1,681,455			1,586,010			1,390,021
Total assets	$	11,941,875		$	11,503,727		$	10,385,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Client payables	$	2,039,140		$	1,963,988		$	2,266,176
Payables to brokers, dealers and clearing organizations		211,054			212,394			163,337
Accrued advisory and commission expenses payable		252,881			240,370			216,541
Corporate debt and other borrowings, net		4,441,913			4,442,840			3,734,111
Accounts payable and accrued liabilities		485,927			461,277			485,963
Other liabilities		1,739,209			1,667,511			1,440,373
Total liabilities		9,170,124			8,988,380			8,306,501
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value; 600,000,000 shares authorized; 130,779,259, 130,746,590 shares and 130,233,328 shares issued at September 30, 2024, June 30, 2024 and December 31, 2023, respectively		131			131			130
Additional paid-in capital		2,059,207			2,038,216			1,987,684
Treasury stock, at cost — 55,968,552, 55,985,188 shares and 55,576,970 shares at September 30, 2024, June 30, 2024 and December 31, 2023, respectively		(4,102,319	)		(4,101,955	)		(3,993,949	)
Retained earnings		4,814,732			4,578,955			4,085,114
Total stockholders’ equity		2,771,751			2,515,347			2,078,979
Total liabilities and stockholders’ equity	$	11,941,875		$	11,503,727		$	10,385,480

LPL Financial Holdings Inc.
Management’s Statements of Operations
(In thousands, except per share data)
(Unaudited)

Certain information in this release is presented as reviewed by the Company’s management and includes information derived from the Company’s unaudited condensed consolidated statements of income, non-GAAP financial measures and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled “Non-GAAP Financial Measures” in this release.

	Quarterly Results
	Q3 2024			Q2 2024			Change		Q3 2023			Change
Gross Profit₍₆₎
Advisory	$	1,378,050		$	1,288,163		7	%	$	1,081,562		27	%
Trailing commissions		377,400			363,976		4	%		331,808		14	%
Sales-based commissions		429,132			423,070		1	%		311,792		38	%
Advisory fees and commissions		2,184,582			2,075,209		5	%		1,725,162		27	%
Production-based payout₍₇₎		(1,910,634	)		(1,812,050	)	5	%		(1,506,080	)	27	%
Advisory fees and commissions, net of payout		273,948			263,159		4	%		219,082		25	%
Client cash₍₈₎		372,333			361,316		3	%		377,782		(1	%)
Other asset-based₍₉₎		272,336			259,533		5	%		224,614		21	%
Service and fee		145,729			135,000		8	%		135,648		7	%
Transaction		58,546			58,935		(1	%)		50,210		17	%
Interest income, net₍₁₀₎		31,428			27,618		14	%		23,485		34	%
Other revenue₍₁₁₎		3,392			6,621		(49	%)		4,113		(18	%)
Total net advisory fees and commissions and attachment revenue		1,157,712			1,112,182		4	%		1,034,934		12	%
Brokerage, clearing and exchange expense		(29,636	)		(32,984	)	(10	%)		(24,793	)	20	%
Gross Profit₍₆₎		1,128,076			1,079,198		5	%		1,010,141		12	%

G&A Expense
Core G&A₍₁₂₎		359,134			370,912		(3	%)		341,728		5	%
Regulatory charges₍₁₃₎		24,879			7,594		n/m			48,083		(48	%)
Promotional (ongoing)₍₁₄₎₍₁₅₎		175,605			147,830		19	%		140,171		25	%
Acquisition costs₍₁₅₎		22,243			36,876		(40	%)		5,989		n/m
Employee share-based compensation		20,289			19,968		2	%		15,748		29	%
Total G&A		602,150			583,180		3	%		551,719		9	%
EBITDA₍₁₆₎		525,926			496,018		6	%		458,422		15	%
Depreciation and amortization		78,338			70,999		10	%		64,627		21	%
Amortization of other intangibles		32,461			30,607		6	%		27,760		17	%
Interest expense on borrowings		67,779			64,341		5	%		48,363		40	%
INCOME BEFORE PROVISION FOR INCOME TAXES		347,348			330,071		5	%		317,672		9	%
PROVISION FOR INCOME TAXES		92,045			86,271		7	%		93,381		(1	%)
NET INCOME	$	255,303		$	243,800		5	%	$	224,291		14	%
Earnings per share, diluted	$	3.39		$	3.23		5	%	$	2.91		16	%
Weighted-average shares outstanding, diluted		75,405			75,548		—	%		77,147		(2	%)
Adjusted EBITDA₍₁₆₎	$	566,169		$	532,894		6	%	$	504,411		12	%
Adjusted EPS₍₁₇₎	$	4.16		$	3.88		7	%	$	3.74		11	%


LPL Financial Holdings Inc. Operating Metrics (Dollars in billions, except where noted) (Unaudited)

	Q3 2024			Q2 2024			Change		Q3 2023			Change
Market Drivers
S&P 500 Index (end of period)		5,762			5,460		6	%		4,288		34	%
Russell 2000 Index (end of period)		2,230			2,048		9	%		1,785		25	%
Fed Funds daily effective rate (average bps)		527			533		(6bps)			526		1bps

Advisory and Brokerage Assets₍₁₈₎
Advisory assets	$	892.0		$	829.1		8	%	$	662.7		35	%
Brokerage assets		700.1			668.7		5	%		575.7		22	%
Total Advisory and Brokerage Assets	$	1,592.1		$	1,497.8		6	%	$	1,238.4		29	%
Advisory as a % of Total Advisory and Brokerage Assets		56.0	%		55.4	%	60bps			53.5	%	250bps

Assets by Platform
Corporate advisory assets₍₁₉₎	$	618.8		$	567.8		9	%	$	444.4		39	%
Independent RIA advisory assets₍₁₉₎		273.2			261.3		5	%		218.3		25	%
Brokerage assets		700.1			668.7		5	%		575.7		22	%
Total Advisory and Brokerage Assets	$	1,592.1		$	1,497.8		6	%	$	1,238.4		29	%

Centrally Managed Assets
Centrally managed assets₍₂₀₎	$	138.1		$	126.9		9	%	$	100.5		37	%
Centrally Managed as a % of Total Advisory Assets		15.5	%		15.3	%	20bps			15.2	%	30bps


LPL Financial Holdings Inc. Operating Metrics (Dollars in billions, except where noted) (Unaudited)

	Q3 2024			Q2 2024			Change	Q3 2023			Change
Organic Net New Assets (NNA)₍₂₁₎
Organic net new advisory assets	$	23.2		$	26.6		n/m	$	22.7		n/m
Organic net new brokerage assets		3.8			2.5		n/m		10.5		n/m
Total Organic Net New Assets	$	27.0		$	29.0		n/m	$	33.2		n/m

Acquired Net New Assets₍₂₁₎
Acquired net new advisory assets	$	0.5		$	0.3		n/m	$	—		n/m
Acquired net new brokerage assets		0.1			4.8		n/m		—		n/m
Total Acquired Net New Assets	$	0.6		$	5.0		n/m	$	—		n/m

Total Net New Assets₍₂₁₎
Net new advisory assets	$	23.7		$	26.8		n/m	$	22.7		n/m
Net new brokerage assets		3.8			7.2		n/m		10.5		n/m
Total Net New Assets	$	27.5		$	34.0		n/m	$	33.2		n/m

Net brokerage to advisory conversions₍₂₂₎	$	3.5		$	3.7		n/m	$	2.7		n/m
Organic advisory NNA annualized growth₍₂₃₎		11.2	%		13.4	%	n/m		13.7	%	n/m
Total organic NNA annualized growth₍₂₃₎		7.2	%		8.1	%	n/m		10.7	%	n/m

Net New Advisory Assets₍₂₁₎
Corporate RIA net new advisory assets	$	24.0		$	23.4		n/m	$	17.0		n/m
Independent RIA net new advisory assets		(0.3	)		3.4		n/m		5.7		n/m
Total Net New Advisory Assets	$	23.7		$	26.8		n/m	$	22.7		n/m
Centrally managed net new advisory assets₍₂₁₎	$	4.4		$	4.4		n/m	$	4.4		n/m

Net buy (sell) activity₍₂₄₎	$	37.7		$	39.3		n/m	$	35.6		n/m

Note: Totals may not foot due to rounding.


LPL Financial Holdings Inc. Client Cash Data (Dollars in thousands, except where noted) (Unaudited)

	Q3 2024			Q2 2024			Change		Q3 2023			Change
Client Cash Balances (in billions)₍₂₅₎
Insured cash account sweep	$	32.1		$	31.0		4	%	$	33.6		(4	%)
Deposit cash account sweep		9.6			9.2		4	%		9.1		5	%
Total Bank Sweep		41.7			40.2		4	%		42.7		(2	%)
Money market sweep		2.3			2.3		—	%		2.6		(12	%)
Total Client Cash Sweep Held by Third Parties		44.0			42.5		4	%		45.3		(3	%)
Client cash account (CCA)₍₂₆₎		1.8			1.5		20	%		1.5		20	%
Total Client Cash Balances	$	45.8		$	44.0		4	%	$	46.9		(2	%)
Client Cash Balances as a % of Total Assets		2.9	%		2.9	%	—bps			3.8	%	(90bps)

Note: Totals may not foot due to rounding.


	Three Months Ended
	September 30, 2024					June 30, 2024					September 30, 2023
Interest-Earnings Assets	Average Balance (in billions)		Revenue		Net Yield (bps)₍₂₇₎	Average Balance (in billions)		Revenue		Net Yield (bps)₍₂₇₎	Average Balance (in billions)		Revenue		Net Yield (bps)₍₂₇₎
Insured cash account sweep	$	31.1	$	259,503	332	$	31.7	$	250,804	318	$	34.5	$	276,944	318
Deposit cash account sweep		9.2		92,765	400		9.0		89,070	399		9.1		81,826	357
Total Bank Sweep		40.3		352,268	348		40.7		339,874	336		43.6		358,770	326
Money market sweep		2.3		1,587	28		2.3		1,601	28		2.4		1,748	29
Total Client Cash Held By Third Parties		42.6		353,855	330		43.0		341,475	320		46.0		360,518	311
Client cash account (CCA)₍₂₆₎		1.6		18,478	472		1.7		19,841	472		1.5		17,264	454
Total Client Cash		44.2		372,333	335		44.7		361,316	326		47.5		377,782	315
Margin receivables		0.5		11,199	885		0.5		10,521	889		0.5		10,740	883
Other interest revenue		1.5		20,229	533		1.3		17,097	545		0.9		12,745	576
Total Client Cash and Interest Income, Net	$	46.2	$	403,761	348	$	46.5	$	388,934	337	$	48.9	$	401,267	326

Note: Totals may not foot due to rounding.


LPL Financial Holdings Inc. Monthly Metrics (Dollars in billions, except where noted) (Unaudited)

	September 2024		August 2024		Change		July 2024		June 2024
Advisory and Brokerage Assets₍₁₈₎
Advisory assets	$	892.0	$	869.5	3	%	$	850.6	$	829.1
Brokerage assets		700.1		690.6	1	%		678.7		668.7
Total Advisory and Brokerage Assets	$	1,592.1	$	1,560.1	2	%	$	1,529.3	$	1,497.8

Organic Net New Assets (NNA)₍₂₁₎
Organic net new advisory assets	$	11.0	$	5.4	n/m		$	6.8	$	9.2
Organic net new brokerage assets		0.5		1.1	n/m			2.2		1.6
Total Organic Net New Assets	$	11.4	$	6.6	n/m		$	9.0	$	10.8

Acquired Net New Assets₍₂₁₎
Acquired net new advisory assets	$	0.2	$	0.2	n/m		$	—	$	—
Acquired net new brokerage assets		0.1		—	n/m			—		—
Total Acquired Net New Assets	$	0.3	$	0.3	n/m		$	—	$	—

Total Net New Assets₍₂₁₎
Net new advisory assets	$	11.2	$	5.7	n/m		$	6.8	$	9.2
Net new brokerage assets		0.5		1.2	n/m			2.2		1.6
Total Net New Assets	$	11.7	$	6.8	n/m		$	9.0	$	10.8
Net brokerage to advisory conversions₍₂₂₎	$	1.2	$	1.3	n/m		$	1.0	$	1.2

Client Cash Balances₍₂₅₎
Insured cash account sweep	$	32.1	$	30.4	6	%	$	31.1	$	31.0
Deposit cash account sweep		9.6		9.3	3	%		9.1		9.2
Total Bank Sweep		41.7		39.7	5	%		40.2		40.2
Money market sweep		2.3		2.2	5	%		2.3		2.3
Total Client Cash Sweep Held by Third Parties		44.0		41.9	5	%		42.5		42.5
Client cash account (CCA)₍₂₆₎		1.8		1.4	29	%		1.5		1.5
Total Client Cash Balances	$	45.8	$	43.3	6	%	$	44.0	$	44.0

Net buy (sell) activity₍₂₄₎	$	12.2	$	12.6	n/m		$	12.9	$	12.1

Market Drivers
S&P 500 Index (end of period)		5,762		5,648	2	%		5,522		5,460
Russell 2000 Index (end of period)		2,230		2,218	1	%		2,254		2,048
Fed Funds effective rate (average bps)		513		533	(20bps)			533		533

Note: Totals may not foot due to rounding.


LPL Financial Holdings Inc. Financial Measures (Dollars in thousands, except where noted) (Unaudited)

	Q3 2024			Q2 2024			Change		Q3 2023			Change
Commission Revenue by Product
Annuities	$	481,852		$	469,100		3	%	$	371,304		30	%
Mutual funds		193,451			187,432		3	%		169,318		14	%
Fixed income		55,707			53,192		5	%		42,286		32	%
Equities		36,786			34,434		7	%		27,414		34	%
Other		38,736			42,888		(10	%)		33,278		16	%
Total commission revenue	$	806,532		$	787,046		2	%	$	643,600		25	%

Commission Revenue by Sales-based and Trailing
Sales-based commissions
Annuities	$	265,955		$	260,188		2	%	$	183,974		45	%
Mutual funds		42,310			42,981		(2	%)		34,718		22	%
Fixed income		55,707			53,192		5	%		42,286		32	%
Equities		36,786			34,434		7	%		27,414		34	%
Other		28,374			32,275		(12	%)		23,400		21	%
Total sales-based commissions	$	429,132		$	423,070		1	%	$	311,792		38	%
Trailing commissions
Annuities	$	215,897		$	208,912		3	%	$	187,330		15	%
Mutual funds		151,141			144,451		5	%		134,600		12	%
Other		10,362			10,613		(2	%)		9,878		5	%
Total trailing commissions	$	377,400		$	363,976		4	%	$	331,808		14	%
Total commission revenue	$	806,532		$	787,046		2	%	$	643,600		25	%

Payout Rate₍₇₎		87.46	%		87.32	%	14bps			87.30	%	16bps


LPL Financial Holdings Inc. Capital Management Measures (Dollars in thousands, except where noted) (Unaudited)

	Q3 2024			Q2 2024			Q4 2023
Cash and equivalents	$	1,474,954		$	1,318,894		$	465,671
Cash at regulated subsidiaries		(992,450	)		(828,145	)		(410,313	)
Excess cash at regulated subsidiaries per the Credit Agreement		225,886			193,342			128,327
Corporate Cash₍₃₎	$	708,390		$	684,091		$	183,685

Corporate Cash₍₃₎
Cash at the Parent	$	435,109		$	450,505		$	26,587
Excess cash at regulated subsidiaries per the Credit Agreement		225,886			193,342			128,327
Cash at non-regulated subsidiaries		47,395			40,244			28,771
Corporate Cash	$	708,390		$	684,091		$	183,685

Leverage Ratio
Total debt	$	4,469,175		$	4,471,850		$	3,757,200
Total corporate cash		708,390			684,091			183,685
Credit Agreement Net Debt	$	3,760,785		$	3,787,759		$	3,573,515
Credit Agreement EBITDA (trailing twelve months)₍₂₈₎	$	2,340,886		$	2,260,165		$	2,194,807
Leverage Ratio	1.61x			1.68x			1.63x


	September 30, 2024
Total Debt	Balance		Current Applicable Margin	Interest Rate		Maturity
Revolving Credit Facility_(a)	$	—	ABR+37.5 bps / SOFR+147.5 bps	6.321	%	5/20/2029
Broker-Dealer Revolving Credit Facility		—	SOFR+135 bps	6.310	%	5/19/2025
Senior Secured Term Loan B		1,019,175	SOFR+185 bps_(b)	7.051	%	11/12/2026
Senior Unsecured Notes		500,000	5.700% Fixed	5.700	%	5/20/2027
Senior Unsecured Notes		400,000	4.625% Fixed	4.625	%	11/15/2027
Senior Unsecured Notes		750,000	6.750% Fixed	6.750	%	11/17/2028
Senior Unsecured Notes		900,000	4.000% Fixed	4.000	%	3/15/2029
Senior Unsecured Notes		400,000	4.375% Fixed	4.375	%	5/15/2031
Senior Unsecured Notes		500,000	6.000% Fixed	6.000	%	5/20/2034
Total / Weighted Average	$	4,469,175		5.661	%

(a) Secured borrowing capacity of $2.25 billion at LPL Holdings, Inc. (the “Parent”).
(b) The SOFR rate option is a one-month SOFR rate and subject to an interest rate floor of 0 bps.


LPL Financial Holdings Inc. Key Business and Financial Metrics (Dollars in thousands, except where noted) (Unaudited)

	Q3 2024			Q2 2024			Change		Q3 2023			Change
Advisors
Advisors		23,686			23,462		1	%		22,404		6	%
Net new advisors		224			578		(61	%)		462		(52	%)
Annualized advisory fees and commissions per advisor₍₂₉₎	$	371		$	358		4	%	$	311		19	%
Average total assets per advisor ($ in millions)₍₃₀₎	$	67.2		$	63.8		5	%	$	55.3		22	%
Transition assistance loan amortization ($ in millions)₍₃₁₎	$	69.1		$	61.9		12	%	$	53.7		29	%
Total client accounts (in millions)		8.7			8.6		1	%		8.2		6	%

Employees		7,342			7,451		(1	%)		7,124		3	%

Services Group
Services Group subscriptions₍₃₂₎
Professional Services		1,890			1,892		—	%		1,867		1	%
Business Optimizers		3,798			3,606		5	%		3,251		17	%
Planning and Advice		735			665		11	%		456		61	%
Total Services Group subscriptions		6,423			6,163		4	%		5,574		15	%
Services Group advisor count		4,340			4,169		4	%		3,695		17	%

AUM retention rate (quarterly annualized)₍₃₃₎		97.0	%		98.4	%	(140bps)			98.8	%	(180bps)

Capital Management
Capital expenditures ($ in millions)₍₃₄₎	$	147.1		$	128.9		14	%	$	95.0		55	%
Acquisitions, net ($ in millions)₍₃₅₎	$	34.1		$	115.1		(70	%)	$	60.3		(43	%)

Share repurchases ($ in millions)	$	—		$	—		—	%	$	250.0		(100	%)
Dividends ($ in millions)		22.4			22.4		—	%		22.8		(2	%)
Total Capital Returned ($ in millions)	$	22.4		$	22.4		—	%	$	272.8		(92	%)

Non-GAAP Financial Measures

Management believes that presenting certain non-GAAP financial measures by excluding or including certain items can be helpful to investors and analysts who may wish to use this information to analyze the Company’s current performance, prospects and valuation. Management uses this non-GAAP information internally to evaluate operating performance and in formulating the budget for future periods. Management believes that the non-GAAP financial measures and metrics discussed below are appropriate for evaluating the performance of the Company.

Adjusted EPS and Adjusted net income

Adjusted EPS is defined as adjusted net income, a non-GAAP measure defined as net income plus the after-tax impact of amortization of other intangibles, acquisition costs, and certain regulatory charges, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items, acquisition costs, and certain regulatory charges that management does not believe impact the Company’s ongoing operations. Adjusted net income and adjusted EPS are not measures of the Company’s financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP. For a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS, please see the endnote disclosures in this release.

Gross profit

Gross profit is calculated as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation. All other expense categories, including depreciation and amortization of property and equipment and amortization of other intangibles, are considered general and administrative in nature. Because the Company’s gross profit amounts do not include any depreciation and amortization expense, the Company considers gross profit to be a non-GAAP financial measure that may not be comparable to similar measures used by others in its industry. Management believes that gross profit can provide investors with useful insight into the Company’s core operating performance before indirect costs that are general and administrative in nature. For a calculation of gross profit, please see the endnote disclosures in this release.

Core G&A

Core G&A consists of total expense less the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs. Management presents core G&A because it believes core G&A reflects the corporate expense categories over which management can generally exercise a measure of control, compared with expense items over which management either cannot exercise control, such as advisory and commission, or which management views as promotional expense necessary to support advisor growth and retention, including conferences and transition assistance. Core G&A is not a measure of the Company’s total expense as calculated in accordance with GAAP. For a reconciliation of the Company’s total expense to core G&A, please see the endnote disclosures in this release. The Company does not provide an outlook for its total expense because it contains expense components, such as advisory and commission, that are market-driven and over which the Company cannot exercise control. Accordingly, a reconciliation of the Company’s outlook for total expense to an outlook for core G&A cannot be made available without unreasonable effort.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles. Adjusted EBITDA is defined as EBITDA, a non-GAAP measure, plus acquisition costs and certain regulatory charges. The Company presents EBITDA and adjusted EBITDA because management believes that they can be useful financial metrics in understanding the Company’s earnings from operations. EBITDA and adjusted EBITDA are not measures of the Company’s financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of net income to EBITDA and adjusted EBITDA, please see the endnote disclosures in this release.

Credit Agreement EBITDA

Credit Agreement EBITDA is defined in, and calculated by management in accordance with, the Company’s amended and restated credit agreement (“Credit Agreement”) as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions. The Company presents Credit Agreement EBITDA because management believes that it can be a useful financial metric in understanding the Company’s debt capacity and covenant compliance under its Credit Agreement. Credit Agreement EBITDA is not a measure of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of net income to Credit Agreement EBITDA, please see the endnote disclosures in this release.

Endnote Disclosures

(1) Represents the estimated total advisory and brokerage assets expected to transition to the Company’s primary broker-dealer subsidiary, LPL Financial, in connection with advisors who transferred their licenses to LPL Financial during the period. The estimate is based on prior business reported by the advisors, which has not been independently and fully verified by LPL Financial. The actual transition of assets to LPL Financial generally occurs over several quarters and the actual amount transitioned may vary from the estimate.

(2) The terms “Financial Advisors” and “Advisors” refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial, an SEC-registered broker-dealer and investment advisor.

(3) Corporate cash, a component of cash and equivalents, is the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company’s Credit Agreement, which include LPL Financial and The Private Trust Company, N.A., in excess of the capital requirements of the Company’s Credit Agreement (which, in the case of LPL Financial is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with Exchange Act Rule 15c3-1) and (3) cash and equivalents held at non-regulated subsidiaries.

(4) Compliance with the Leverage Ratio is only required under the Company’s revolving credit facility.

(5) The Company was named Top RIA custodian (Cerulli Associates, 2023 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S. (based on total revenues, Financial Planning magazine 1996-2022); and, among third-party providers of brokerage services to banks and credit unions, No. 1 in AUM Growth from Financial Institutions; No. 1 in Market Share of AUM from Financial Institutions; No. 1 in Market Share of Revenue from Financial Institutions; No. 1 on Financial Institution Market Share; No. 1 on Share of Advisors (2021-2022 Kehrer Bielan Research and Consulting Annual TPM Report). Fortune 500 as of June 2021.

(6) Gross profit is a non-GAAP financial measure. Please see a description of gross profit under the “Non-GAAP Financial Measures” section of this release for additional information. Below is a calculation of gross profit for the periods presented (in thousands):

	Q3 2024		Q2 2024		Q3 2023
Total revenue	$	3,108,394	$	2,931,769	$	2,522,383
Advisory and commission expense		1,948,065		1,819,027		1,488,432
Brokerage, clearing and exchange expense		29,636		32,984		24,793
Employee deferred compensation		2,617		560		(983	)
Gross profit	$	1,128,076	$	1,079,198	$	1,010,141

(7) Production-based payout is a financial measure calculated as advisory and commission expense plus (less) advisor deferred compensation. The payout rate is calculated by dividing the production-based payout by total advisory and commission revenue. Below is a reconciliation of the Company’s advisory and commission expense to the production-based payout and a calculation of the payout rate for the periods presented (in thousands, except payout rate):

	Q3 2024			Q2 2024			Q3 2023
Advisory and commission expense	$	1,948,065		$	1,819,027		$	1,488,432
(Less) Plus: Advisor deferred compensation		(37,431	)		(6,977	)		17,648
Production-based payout	$	1,910,634		$	1,812,050		$	1,506,080

Advisory and commission revenue	$	2,184,582		$	2,075,209		$	1,725,162

Payout rate		87.46	%		87.32	%		87.30	%

(8) Below is a reconciliation of client cash revenue per Management’s Statements of Operations to client cash revenue, a component of asset-based revenue, on the Company’s condensed consolidated statements of income for the periods presented (in thousands):

	Q3 2024			Q2 2024			Q3 2023
Client cash on Management’s Statement of Operations		372,333		$	361,316		$	377,782
Interest income on CCA balances segregated under federal or other regulations₍₁₀₎		(18,478	)		(19,841	)		(17,264	)
Client cash on Condensed Consolidated Statements of Income	$	353,855		$	341,475		$	360,518

(9) Consists of revenue from the Company’s sponsorship programs with financial product manufacturers, omnibus processing and networking services but does not include fees from client cash programs.

(10) During the first quarter of 2024, the Company disaggregated the activity previously reported in the interest income and other, net line item into its interest income, net and other revenue components. Prior period amounts have been reclassified to conform to the current presentation. Below is a reconciliation of interest income, net per Management’s Statements of Operations to interest income, net on the Company’s condensed consolidated statements of income for the periods presented (in thousands):

	Q3 2024		Q2 2024		Q3 2023
Interest income, net on Management’s Statement of Operations	$	31,428	$	27,618	$	23,485
Interest income on CCA balances segregated under federal or other regulations₍₈₎		18,478		19,841		17,264
Interest income on deferred compensation		17		19		24
Interest income, net on Condensed Consolidated Statements of Income	$	49,923	$	47,478	$	40,773

(11) During the first quarter of 2024, the Company disaggregated the activity previously reported in the interest income and other, net line item into its interest income, net and other revenue components. Prior period amounts have been reclassified to conform to the current presentation. Below is a reconciliation of other revenue per Management’s Statements of Operations to other revenue on the Company’s condensed consolidated statements of income for the periods presented (in thousands):

	Q3 2024			Q2 2024			Q3 2023
Other revenue on Management’s Statement of Operations	$	3,392		$	6,621		$	4,113
Interest income on deferred compensation		(17	)		(19	)		(24	)
Deferred compensation		40,048			7,537			(18,631	)
Other revenue on Condensed Consolidated Statements of Income	$	43,423		$	14,139		$	(14,542	)

(12) Core G&A is a non-GAAP financial measure. Please see a description of core G&A under the “Non-GAAP Financial Measures” section of this release for additional information. Below is a reconciliation of the Company’s total expense to core G&A for the periods presented (in thousands):

	Q3 2024			Q2 2024			Q3 2023
Core G&A Reconciliation
Total expense	$	2,761,046		$	2,601,698		$	2,204,711
Advisory and commission		(1,948,065	)		(1,819,027	)		(1,488,432	)
Depreciation and amortization		(78,338	)		(70,999	)		(64,627	)
Interest expense on borrowings		(67,779	)		(64,341	)		(48,363	)
Brokerage, clearing and exchange		(29,636	)		(32,984	)		(24,793	)
Amortization of other intangibles		(32,461	)		(30,607	)		(27,760	)
Employee deferred compensation		(2,617	)		(560	)		983
Total G&A		602,150			583,180			551,719
Promotional (ongoing)₍₁₄₎₍₁₅₎		(175,605	)		(147,830	)		(140,171	)
Acquisition costs₍₁₅₎		(22,243	)		(36,876	)		(5,989	)
Employee share-based compensation		(20,289	)		(19,968	)		(15,748	)
Regulatory charges₍₁₃₎		(24,879	)		(7,594	)		(48,083	)
Core G&A	$	359,134		$	370,912		$	341,728

(13) Regulatory charges for the three months ended September 30, 2024 include charges related to a potential settlement with the SEC to resolve the Company’s civil investigation of certain elements of the Company’s Anti-Money Laundering (“AML”) compliance program. Under the SEC’s proposed resolution, the Company would pay an $18.0 million civil monetary penalty, and the Company has recorded an $18.0 million charge for the quarter ended September 30, 2024. Regulatory charges for the three months ended September 30, 2023 include a $40.0 million charge to reflect the amount of the penalty related to the SEC’s civil investigation of the Company’s compliance with records preservation requirements for business-related electronic communications that was not covered by the Company’s captive insurance subsidiary. The Company reached a settlement with the staff of the SEC and paid the civil monetary penalty of $50.0 million in August 2024.

(14) Promotional (ongoing) includes $13.0 million, $12.2 million and $10.8 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively, of support costs related to full-time employees that are classified within Compensation and benefits expense in the condensed consolidated statements of income and excludes costs that have been incurred as part of acquisitions that have been classified within acquisition costs for the same periods.

(15) Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions. The below table summarizes the primary components of acquisition costs for the periods presented (in thousands):

	Q3 2024			Q2 2024		Q3 2023
Acquisition costs
Fair value mark on contingent consideration₍₃₆₎	$	5,849		$	24,624	$	—
Compensation and benefits		8,352			6,827		1,345
Professional services		6,685			3,567		2,199
Promotional₍₁₄₎		1,964			539		2,260
Other		(607	)		1,319		185
Acquisition costs	$	22,243		$	36,876	$	5,989

(16) EBITDA and adjusted EBITDA are non-GAAP financial measures. Please see a description of EBITDA and adjusted EBITDA under the “Non-GAAP Financial Measures” section of this release for additional information. Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented (in thousands):

	Q3 2024		Q2 2024		Q3 2023
EBITDA and adjusted EBITDA Reconciliation
Net income	$	255,303	$	243,800	$	224,291
Interest expense on borrowings		67,779		64,341		48,363
Provision for income taxes		92,045		86,271		93,381
Depreciation and amortization		78,338		70,999		64,627
Amortization of other intangibles		32,461		30,607		27,760
EBITDA	$	525,926	$	496,018	$	458,422
Regulatory charges₍₁₃₎		18,000		—		40,000
Acquisition costs₍₁₅₎		22,243		36,876		5,989
Adjusted EBITDA	$	566,169	$	532,894	$	504,411

(17) Adjusted net income and adjusted EPS are non-GAAP financial measures. Please see a description of adjusted net income and adjusted EPS under the “Non-GAAP Financial Measures” section of this release for additional information. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in thousands, except per share data):

	Q3 2024						Q2 2024						Q3 2023
	Amount			Per Share			Amount			Per Share			Amount			Per Share
Net income / earnings per diluted share	$	255,303		$	3.39		$	243,800		$	3.23		$	224,291		$	2.91
Regulatory charges₍₁₃₎		18,000			0.24			—			—			40,000			0.52
Amortization of other intangibles		32,461			0.43			30,607			0.41			27,760			0.36
Acquisition costs₍₁₅₎		22,243			0.29			36,876			0.49			5,989			0.08
Tax benefit		(14,650	)		(0.19	)		(17,816	)		(0.24	)		(9,143	)		(0.12	)
Adjusted net income / adjusted EPS	$	313,357		$	4.16		$	293,467		$	3.88		$	288,897		$	3.74
Diluted share count		75,405						75,548						77,147
Note: Totals may not foot due to rounding.

(18) Consists of total advisory and brokerage assets under custody at the Company’s primary broker-dealer subsidiary, LPL Financial.

(19) Assets on the Company’s corporate advisory platform are serviced by investment advisor representatives of LPL Financial. Assets on the Company’s independent RIA advisory platform are serviced by investment advisor representatives of separate registered investment advisor firms rather than representatives of LPL Financial.

(20) Consists of advisory assets in LPL Financial’s Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.

(21) Consists of total client deposits into advisory or brokerage accounts less total client withdrawals from advisory or brokerage accounts, plus dividends, plus interest, minus advisory fees. The Company considers conversions from and to brokerage or advisory accounts as deposits and withdrawals, respectively.

(22) Consists of existing custodied assets that converted from brokerage to advisory, less existing custodied assets that converted from advisory to brokerage.

(23) Calculated as annualized current period organic net new assets divided by preceding period assets in their respective categories of advisory assets or total advisory and brokerage assets.

(24) Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.

(25) Client cash balances include CCA and exclude purchased money market funds. CCA balances include cash that clients have deposited with LPL Financial that is included in Client payables in the condensed consolidated balance sheets. The following table presents purchased money market funds for the periods presented (in billions):

	Q3 2024		Q2 2024		Q3 2023
Purchased money market funds	$	38.5	$	35.7	$	25.2

(26) During the first quarter of 2024, the Company updated its definition of client cash account balances to exclude other client payables. Prior period disclosures have been updated to reflect this change as applicable.

(27) Calculated by dividing revenue for the period by the average balance during the period.

(28) EBITDA and Credit Agreement EBITDA are non-GAAP financial measures. Please see a description of EBITDA and Credit Agreement EBITDA under the “Non-GAAP Financial Measures” section of this release for additional information. Under the Credit Agreement, management calculates Credit Agreement EBITDA for a trailing twelve month period at the end of each fiscal quarter and in doing so may make further adjustments to prior quarters. Below are reconciliations of trailing twelve month net income to trailing twelve month EBITDA and Credit Agreement EBITDA for the periods presented (in thousands):

	Q3 2024		Q2 2024		Q4 2023
EBITDA and Credit Agreement EBITDA Reconciliations
Net income	$	1,005,422	$	974,410	$	1,066,250
Interest expense on borrowings		246,618		227,201		186,804
Provision for income taxes		339,977		341,312		378,525
Depreciation and amortization		284,431		270,720		246,994
Amortization of other intangibles		121,238		116,537		107,211
EBITDA	$	1,997,686	$	1,930,180	$	1,985,784
Credit Agreement Adjustments:
Acquisition costs and other₍₁₅₎₍₃₇₎	$	236,007	$	224,687	$	110,170
Employee share-based compensation		78,425		73,884		66,024
M&A accretion₍₃₈₎		26,265		28,843		30,268
Advisor share-based compensation		2,503		2,571		2,561
Credit Agreement EBITDA	$	2,340,886	$	2,260,165	$	2,194,807

(29) Calculated based on the average advisor count from the current period and prior periods.

(30) Calculated based on the end of period total advisory and brokerage assets divided by end of period advisor count.

(31) Represents amortization expense on forgivable loans for transition assistance to advisors and institutions.

(32) Refers to active subscriptions related to professional services offerings (CFO Solutions, Marketing Solutions, Admin Solutions, Advisor Institute, Bookkeeping, Partial Book Sales, CFO Essentials, and Digital Marketing) and business optimizer offerings (M&A Solutions, Digital Office, Resilience Plans and Assurance Plans), as well as planning and advice services (Paraplanning, Tax Planning, and High Net Worth Services) for which subscriptions are the number of advisors using the service.

(33) Reflects retention of total advisory and brokerage assets, calculated by deducting quarterly annualized attrition from total advisory and brokerage assets, divided by the prior quarter total advisory and brokerage assets.

(34) Capital expenditures represent cash payments for property and equipment during the period.

(35) Acquisitions, net represent cash paid for acquisitions, net of cash acquired during the period.

(36) Represents a fair value adjustment to our contingent consideration liabilities that is reflected in other expense in the condensed consolidated statements of income.

(37) Acquisition costs and other primarily include acquisition costs, costs incurred related to the integration of the strategic relationship with Prudential, an $18.0 million regulatory charge recognized during the three months ended September 30, 2024 related to an investigation of the Company’s compliance with certain elements of the Company’s AML compliance program, and a $40.0 million regulatory charge recognized during the three months ended September 30, 2023 to reflect the amount of a penalty proposed by the SEC as part of its civil investigation of the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices that have not been approved by the Company.

(38) M&A accretion is an adjustment to reflect the annualized expected run rate EBITDA of an acquisition as permitted by the Credit Agreement for up to eight fiscal quarters following the close of the transaction.

The MIL Network –

January 25, 2025

MIL-OSI: Robinhood Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Second highest Revenues on record, up 36% year-over-year to $637 million
GAAP Diluted EPS of $0.17, up $0.26 year-over-year
Year-to-date Net Deposits of $34 billion, Revenues of $1.94 billion, and GAAP Diluted EPS of $0.55 have all exceeded prior full year records

MENLO PARK, Calif., Oct. 30, 2024 (GLOBE NEWSWIRE) — Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today announced financial results for the third quarter of 2024, which ended September 30, 2024.

“I’m really proud of our Q3 results and how smoothly our product engine is humming,” said Vlad Tenev, CEO and Co-Founder of Robinhood. “In the past month, we introduced Robinhood Legend, our new desktop offering, and announced index options, futures, and a realized profit and loss tool are coming soon. And just this week, we launched our Presidential Election Market. We have a ton of momentum, and we’re just getting started.”

“Q3 was another strong quarter, as we drove 36% year-over-year revenue growth, and dropped most of that to the bottom line,” said Jason Warnick, Chief Financial Officer of Robinhood. “We entered 2024 with the goal of delivering another year of profitable growth, so we’re excited to have already broken prior full year records for both revenue and EPS.”

Third Quarter Results:

Total net revenues increased 36% year-over-year to $637 million.
- Transaction-based revenues increased 72% year-over-year to $319 million, primarily driven by options revenue of $202 million, up 63%, cryptocurrencies revenue of $61 million, up 165%, and equities revenue of $37 million, up 37%.
- Net interest revenues increased 9% year-over-year to $274 million, primarily driven by growth in interest-earning assets.
- Other revenues increased 42% year-over-year to $44 million, primarily due to increased Gold subscription revenues.
- Total net revenues were reduced by $27 million in Q3 2024 (and $13 million in Q2 2024) due to matches paid to customers on transfers and deposits.
Net income increased year-over-year to $150 million, or diluted earnings per share (EPS) of $0.17, compared to a net loss of $85 million, or diluted EPS of -$0.09, in Q3 2023.
Total operating expenses decreased 10% year-over-year to $486 million. This includes a $10 million regulatory accrual, which compares to a $104 million regulatory accrual in Q3 2023.
- Adjusted Operating Expenses (non-GAAP) increased 12% year-over-year to $397 million primarily due to increased marketing and growth investments.
- Share-Based Compensation (SBC) decreased 5% year-over-year to $79 million.
Adjusted EBITDA (non-GAAP) increased 96% year-over-year to $268 million.
Funded Customers increased by 1.0 million year-over-year to 24.3 million.
- Investment Accounts increased by 1.5 million year-over-year to 25.1 million.
Assets Under Custody (AUC) increased 76% year-over-year to $152.2 billion, driven by continued Net Deposits and higher equity and cryptocurrency valuations.
Net Deposits were $10.0 billion, an annualized growth rate of 29% relative to AUC at the end of Q2 2024. Over the past twelve months, Net Deposits were $39.0 billion, a growth rate of 45% relative to AUC at the end of Q3 2023.
Average Revenue Per User (ARPU) increased by 31% year-over-year to $105.
Gold Subscribers increased by 860 thousand, or 65%, year-over-year to 2.2 million.
Cash and cash equivalents totaled $4.6 billion compared with $4.9 billion at the end of Q3 2023.
Share repurchases were $97 million, representing 5.0 million shares of our Class A common stock at an average price per share of $19.42.
- In July 2024, we began executing on our authorized $1 billion share repurchase program, which we continue to expect to complete over a total of two to three years.

Highlights

Robinhood takes major steps toward delivering on product roadmap and winning the active trader market.

Building for Active Traders – In October 2024, Robinhood began rolling out Robinhood Legend, a powerful, sleek browser-based desktop trading platform built from the ground up for active traders, and announced that it will launch futures and index options in the coming months with some of the lowest contract fees in the industry.
Robinhood Hosts its First Ever Customer-Focused Conference – In October 2024, Robinhood held its inaugural HOOD Summit, bringing together over 400 customers with Robinhood executives and other industry leaders for a three-day event to discuss the latest in trading technology, investing, and culture.
More than 9 percent of Robinhood Funded Customers benefit from Robinhood Gold – Gold Subscribers reached new highs of 2.2 million in Q3 2024. Additionally, Robinhood Gold Cards continue to roll out, now in the hands of nearly 100 thousand customers.
Robinhood Retirement Reaches $11 billion in AUC – In October 2024, Robinhood Retirement reached $11 billion in AUC across nearly one million funded retirement accounts. Offering the first ever IRA with a match, customers have received over $200 million in matches on retirement account transfers and contributions since launching in January 2023.
Expanding Our UK Product Offering – Robinhood introduced stock lending in the UK in September 2024 and launched margin investing for UK customers in October 2024. Robinhood has also received Financial Conduct Authority approval to offer options trading in the UK and plans to launch in 2025.

Additional Q3 2024 Operating Data

Retirement AUC increased 9X year-over-year to $9.9 billion.
Cash Sweep increased 80% year-over-year to $24.5 billion.
Margin Book increased 53% year-over-year to $5.5 billion.
Equity Notional Trading Volumes increased 65% year-over-year to $286.2 billion.
Options Contracts Traded increased 47% year-over-year to 443.4 million.
Crypto Notional Trading Volumes increased 112% year-over-year to $14.4 billion.
Monthly Active Users (MAU) increased 7% year-over-year to 11.0 million.

Webcast and Conference Call Information

Robinhood will host a conference call to discuss its results at 2 p.m. PT / 5 p.m. ET today, October 30, 2024. The live webcast of Robinhood’s earnings conference call can be accessed at investors.robinhood.com, along with the earnings press release and accompanying slide presentation.

Following the call, a replay and transcript will also be available at the same website.

Financial Outlook

Our 2024 expense plan includes growth investments in new products, features, and international expansion while also getting more efficient in our existing businesses. Our outlook for GAAP total operating expenses is $1.86 billion to $1.96 billion, including a $10 million regulatory accrual in Q3 2024.

Our outlook for Non-GAAP combined Adjusted Operating Expenses and SBC for full-year 2024 is unchanged at $1.85 billion to $1.95 billion.

Actual results might differ materially from our outlook due to several factors, including the rate of growth in Funded Customers and our effectiveness to cross-sell products which affects variable marketing costs, the degree to which we are successful in managing credit losses and preventing fraud, and our ability to manage web-hosting expenses efficiently, among other factors. The above expense outlook does not include potential significant regulatory matters or other significant expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that may arise or accruals we may determine in the future are required, as we are unable to accurately predict the size or timing of such matters, expenses or accruals at this time. See “Non-GAAP Financial Measures” for more information on Adjusted Operating Expenses and SBC, including significant items that we believe are not indicative of our ongoing expenses that would be adjusted out of total operating expenses (GAAP) to get to Adjusted Operating Expenses and SBC (non-GAAP) should they occur.

About Robinhood

Robinhood Markets, Inc. (NASDAQ: HOOD) transformed financial services by introducing commission-free stock trading and democratizing access to the markets for millions of investors. Today, Robinhood lets you trade stocks, options, commodity interests, and crypto, invest for retirement, and earn with Robinhood Gold. Headquartered in Menlo Park, California, Robinhood puts customers in the driver’s seat, delivering unprecedented value and products intentionally designed for a new generation of investors. Additional information about Robinhood can be found at www.robinhood.com.

Robinhood uses the “Overview” tab of its Investor Relations website (accessible at investors.robinhood.com/overview) and its Newsroom (accessible at newsroom.aboutrobinhood.com), as means of disclosing information to the public in a broad, non-exclusionary manner for purposes of the U.S. Securities and Exchange Commission’s (“SEC”) Regulation Fair Disclosure (Reg. FD). Investors should routinely monitor those web pages, in addition to Robinhood’s press releases, SEC filings, and public conference calls and webcasts, as information posted on them could be deemed to be material information.

“Robinhood” and the Robinhood feather logo are registered trademarks of Robinhood Markets, Inc. All other names are trademarks and/or registered trademarks of their respective owners.

Contacts

Investors:
ir@robinhood.com

Press:
press@robinhood.com

ROBINHOOD MARKETS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	December 31,			September 30,
(in millions, except share and per share data)		2023			2024
Assets
Current assets:
Cash and cash equivalents	$	4,835		$	4,611
Cash and cash equivalents segregated under federal and other regulations		4,448			5,547
Receivables from brokers, dealers, and clearing organizations		89			139
Receivables from users, net		3,495			5,546
Securities borrowed		1,602			3,704
Deposits with clearing organizations		338			464
Asset related to user cryptocurrencies safeguarding obligation		14,708			19,456
User-held fractional shares		1,592			2,201
Held-to-maturity investments		413			527
Prepaid expenses		63			86
Deferred customer match incentives		11			73
Other current assets		196			251
Total current assets		31,790			42,605
Property, software, and equipment, net		120			133
Goodwill		175			179
Intangible assets, net		48			39
Non-current held-to-maturity investments		73			—
Non-current deferred customer match incentives		19			159
Other non-current assets, including non-current prepaid expenses of $4 as of December 31, 2023 and $22 as of September 30, 2024		107			130
Total assets	$	32,332		$	43,245
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	384		$	443
Payables to users		5,097			6,264
Securities loaned		3,547			7,306
User cryptocurrencies safeguarding obligation		14,708			19,456
Fractional shares repurchase obligation		1,592			2,201
Other current liabilities		217			288
Total current liabilities		25,545			35,958
Other non-current liabilities		91			79
Total liabilities		25,636			36,037
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value 210,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and September 30, 2024.		—			—
Class A common stock, $0.0001 par value. 21,000,000,000 shares authorized, 745,401,862 shares issued and outstanding as of December 31, 2023; 21,000,000,000 shares authorized, 761,992,964 shares issued and outstanding as of September 30, 2024.		—			—
Class B common stock, $0.0001 par value. 700,000,000 shares authorized, 126,760,802 shares issued and outstanding as of December 31, 2023; 700,000,000 shares authorized, 121,616,044 shares issued and outstanding as of September 30, 2024.		—			—
Class C common stock, $0.0001 par value. 7,000,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and September 30, 2024.		—			—
Additional paid-in capital		12,145			12,158
Accumulated other comprehensive income (loss)		(3	)		1
Accumulated deficit		(5,446	)		(4,951	)
Total stockholders’ equity		6,696			7,208
Total liabilities and stockholders’ equity	$	32,332		$	43,245

ROBINHOOD MARKETS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,					YOY%		Three Months Ended June 30,		QOQ%
(in millions, except share, per share, and percentage data)		2023			2024	Change			2024	Change
Revenues:
Transaction-based revenues	$	185		$	319	72	%	$	327	(2	)%
Net interest revenues		251			274	9	%		285	(4	)%
Other revenues		31			44	42	%		70	(37	)%
Total net revenues		467			637	36	%		682	(7	)%

Operating expenses⁽¹⁾⁽²⁾:
Brokerage and transaction		39			39	—	%		40	(3	)%
Technology and development		202			205	1	%		209	(2	)%
Operations		41			50	22	%		46	9	%
Marketing		28			59	111	%		64	(8	)%
General and administrative		230			133	(42	)%		134	(1	)%
Total operating expenses		540			486	(10	)%		493	(1	)%

Other income (expense), net		(2	)		2	NM			2	—	%
Income (loss) before income taxes		(75	)		153	NM			191	(20	)%
Provision for income taxes		10			3	(70	)%		3	—	%
Net income (loss)	$	(85	)	$	150	NM		$	188	(20	)%
Net income (loss) attributable to common stockholders:
Basic	$	(85	)	$	150			$	188
Diluted	$	(85	)	$	150			$	188
Net income (loss) per share attributable to common stockholders:
Basic	$	(0.09	)	$	0.17			$	0.21
Diluted	$	(0.09	)	$	0.17			$	0.21
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		895,108,790			884,108,545				881,076,624
Diluted		895,108,790			905,544,750				904,490,572

	Nine Months Ended September 30,					YOY% Change
(in millions, except share, per share, and percentage data)		2023			2024	YOY% Change
Revenues:
Transaction-based revenues	$	585		$	975		67	%
Net interest revenues		693			813		17	%
Other revenues		116			149		28	%
Total net revenues		1,394			1,937		39	%

Operating expenses⁽¹⁾⁽²⁾:
Brokerage and transaction		114			114		—	%
Technology and development		608			610		—	%
Operations		119			140		18	%
Marketing		79			190		141	%
General and administrative		1,036			385		(63	)%
Total operating expenses		1,956			1,439		(26	)%

Other income, net		—			8		NM
Income (loss) before income taxes		(562	)		506		NM
Provision for income taxes		9			11		22	%
Net income (loss)	$	(571	)	$	495		NM
Net income (loss) attributable to common stockholders:
Basic	$	(571	)	$	495
Diluted	$	(571	)	$	495
Net income (loss) per share attributable to common stockholders:
Basic	$	(0.64	)	$	0.56
Diluted	$	(0.64	)	$	0.55
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		898,999,464			880,182,573
Diluted		898,999,464			903,555,592

________________
⁽¹⁾ The following table presents operating expenses as a percent of total net revenues:

	Three Months Ended September 30,					Three Months Ended June 30,			Nine Months Ended September 30,
		2023		2024			2024			2023		2024
Brokerage and transaction		8	%	6	%		5	%		8	%	6	%
Technology and development		43	%	32	%		31	%		44	%	31	%
Operations		9	%	8	%		7	%		9	%	7	%
Marketing		6	%	9	%		9	%		6	%	10	%
General and administrative		49	%	21	%		20	%		74	%	20	%
Total operating expenses		115	%	76	%		72	%		141	%	74	%

⁽²⁾ The following table presents the SBC on our unaudited condensed consolidated statements of operations for the periods indicated:

	Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,
(in millions)		2023		2024		2024		2023		2024
Brokerage and transaction	$	2	$	2	$	3	$	6	$	7
Technology and development		51		48		52		161		144
Operations		3		1		2		6		5
Marketing		1		3		1		3		6
General and administrative		26		25		28		614		65
Total SBC	$	83	$	79	$	86	$	790	$	227

ROBINHOOD MARKETS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)		2023			2024			2023			2024
Operating activities:
Net income (loss)	$	(85	)	$	150		$	(571	)	$	495
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		19			20			54			55
Provision for credit losses		14			23			29			57
Share-based compensation		83			79			790			227
Other		(27	)		1			(27	)		—
Changes in operating assets and liabilities:
Securities segregated under federal and other regulations		—			547			—			—
Receivables from brokers, dealers, and clearing organizations		54			10			13			(50	)
Receivables from users, net		(391	)		(433	)		(502	)		(1,971	)
Securities borrowed		(244	)		(1,487	)		(687	)		(2,102	)
Deposits with clearing organizations		(52	)		87			(89	)		(126	)
Current and non-current prepaid expenses		17			(21	)		26			(41	)
Current and non-current deferred customer match incentives		(4	)		(6	)		(10	)		(202	)
Other current and non-current assets		62			117			10			(11	)
Accounts payable and accrued expenses		94			54			145			28
Payables to users		(786	)		475			(376	)		1,167
Securities loaned		263			2,215			1,411			3,759
Other current and non-current liabilities		6			(19	)		5			(42	)
Net cash provided by (used in) operating activities		(977	)		1,812			221			1,243
Investing activities:
Purchases of property, software, and equipment		(1	)		(7	)		(1	)		(9	)
Capitalization of internally developed software		(5	)		(12	)		(14	)		(26	)
Purchases of held-to-maturity investments		(76	)		(167	)		(651	)		(469	)
Proceeds from maturities of held-to-maturity investments		75			150			167			439
Purchases of credit card receivables by Credit Card Funding Trust		—			(169	)		—			(239	)
Collections of purchased credit card receivables		—			82			—			130
Business acquisition, net of cash and cash equivalents acquired		(90	)		—			(90	)		(6	)
Asset acquisition, net of cash acquired		—			—			—			(3	)
Other		—			—			10			1
Net cash used in investing activities		(97	)		(123	)		(579	)		(182	)
Financing activities:
Proceeds from issuance of common stock under the Employee Stock Purchase Plan		—			—			9			10
Taxes paid related to net share settlement of equity awards		(4	)		(56	)		(9	)		(155	)
Payments of debt issuance costs		—			—			(10	)		(14	)
Draws on credit facilities		10			1			20			12
Repayments on credit facilities		(10	)		(1	)		(20	)		(12	)
Borrowings on Credit Card Funding Trust		—			78			—			95
Repayments on Credit Card Funding Trust		—			—			—			(1	)
Change in principal collected from customers due to Coastal Bank		(3	)		(22	)		(3	)		(15	)
Repurchase of Class A common stock		(608	)		(97	)		(608	)		(97	)
Proceeds from exercise of stock options, net of repurchases		—			2			2			10
Net cash used in financing activities		(615	)		(95	)		(619	)		(167	)
Effect of foreign exchange rate changes on cash and cash equivalents		—			1			—			1
Net increase (decrease) in cash, cash equivalents, segregated cash, and restricted cash		(1,689	)		1,595			(977	)		895
Cash, cash equivalents, segregated cash, and restricted cash, beginning of the period		10,069			8,646			9,357			9,346
Cash, cash equivalents, segregated cash, and restricted cash, end of the period	$	8,380		$	10,241		$	8,380		$	10,241
Reconciliation of cash, cash equivalents, segregated cash and restricted cash, end of the period:
Cash and cash equivalents, end of the period	$	4,889		$	4,611		$	4,889		$	4,611
Segregated cash and cash equivalents, end of the period		3,448			5,547			3,448			5,547
Restricted cash in other current assets, end of the period		26			67			26			67
Restricted cash in other non-current assets, end of the period		17			16			17			16
Cash, cash equivalents, segregated cash and restricted cash, end of the period	$	8,380		$	10,241		$	8,380		$	10,241
Supplemental disclosures:
Cash paid for interest	$	2		$	4		$	8		$	12
Cash paid for income taxes, net of refund received	$	7		$	8		$	9		$	14

Reconciliation of GAAP to Non-GAAP Results (Unaudited)

	Three Months Ended September 30,						Three Months Ended June 30,			Nine Months Ended September 30,
(in millions)		2023			2024			2024			2023			2024
Net income (loss)	$	(85	)	$	150		$	188		$	(571	)	$	495
Net margin		(18	)%		24	%		28	%		(41	)%		26	%
Add:
Interest expenses related to credit facilities		6			6			6			17			18
Provision for income taxes		10			3			3			9			11
Depreciation and amortization		19			20			18			54			55
EBITDA (non-GAAP)		(50	)		179			215			(491	)		579
Add: SBC
2021 Founders Award Cancellation		—			—			—			485			—
SBC Excluding 2021 Founders Award Cancellation		83			79			86			305			227
Significant legal and tax settlements and reserves		104			10			—			104			10
Adjusted EBITDA (non-GAAP)	$	137		$	268		$	301		$	403		$	816
Adjusted EBITDA margin (non-GAAP)		29	%		42	%		44	%		29	%		42	%

	Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,
(in millions)		2023		2024		2024		2023		2024
Total operating expenses (GAAP)	$	540	$	486	$	493	$	1,956	$	1,439
Add: SBC
2021 Founders Award Cancellation		—		—		—		485		—
SBC Excluding 2021 Founders Award Cancellation		83		79		86		305		227
Significant legal and tax settlements and reserves		104		10		—		104		10
Adjusted Operating Expenses (Non-GAAP)	$	353	$	397	$	407	$	1,062	$	1,202

(in millions)	Prior Financial Outlook¹ for the Year Ending December 31, 2024	Current Financial Outlook for the Year Ending December 31, 2024	Change
Total operating expenses (GAAP)	$1,850 – $1,950	$1,860 – $1,960	*increased by $10*
Significant legal and tax settlements and reserves	—	$10	increased by $10
Adjusted Operating Expenses and SBC (Non-GAAP)²	$1,850 – $1,950	$1,850 – $1,950	*no change*

(1) Prior Outlook provided at Q2 2024 Earnings on August 7th, 2024.
(2) Actual results might differ materially from our outlook, see “Financial Outlook” for more information. The above expense outlook does not include potential significant regulatory matters or other significant expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that may arise or accruals we may determine in the future are required, as we are unable to accurately predict the size or timing of such matters, expenses or accruals at this time. See “Non-GAAP Financial Measures” for more information on Adjusted Operating Expenses and SBC, including significant items that we believe are not indicative of our ongoing expenses that would be adjusted out of total operating expenses (GAAP) to get to Adjusted Operating Expenses and SBC (non-GAAP) should they occur.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding the expected financial performance of Robinhood Markets, Inc. and its consolidated subsidiaries (“we,” “Robinhood,” or the “Company”) and our strategic and operational plans, including (among others) statements regarding that index options, futures, and a realized profit and loss tool are coming soon; that we have a ton of momentum, and we’re just getting started; that in July 2024, we began executing on our authorized $1 billion share repurchase program, which we continue to expect to complete over a total of two to three years; that we will launch futures and index options in the coming months with some of the lowest contract fees in the industry; that we received Financial Conduct Authority approval to offer options trading in the UK and plan to launch in 2025; and all statements and information under the headings “Financial Outlook” and “Reconciliation of GAAP to Non-GAAP Financial Outlook.” Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “believe,” “may,” “will” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Our forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other factors that may cause our actual future results, performance, or achievements to differ materially from any future results expressed or implied in this press release. Reported results should not be considered an indication of future performance. Factors that contribute to the uncertain nature of our forward-looking statements include, among others: our limited operating experience at our current scale; the difficulty of managing our business effectively, including the size of our workforce, and the risk of continued declining or negative growth; the fluctuations in our financial results and key metrics from quarter to quarter; our reliance on transaction-based revenue, including payment for order flow (“PFOF”), and the risk of new regulation or bans on PFOF and similar practices; our exposure to fluctuations in interest rates and rapidly changing interest rate environments; the difficulty of raising additional capital (to provide liquidity needs and support business growth and objectives) on reasonable terms, if at all; the need to maintain capital levels required by regulators and self-regulatory organizations; the risk that we might mishandle the cash, securities, and cryptocurrencies we hold on behalf of customers, and our exposure to liability for processing, operational, or technical errors in clearing functions; the impact of negative publicity on our brand and reputation; the risk that changes in business, economic, or political conditions that impact the global financial markets, or a systemic market event, might harm our business; our dependence on key employees and a skilled workforce; the difficulty of complying with an extensive, complex, and changing regulatory environment and the need to adjust our business model in response to new or modified laws and regulations; the possibility of adverse developments in pending litigation and regulatory investigations; the effects of competition; our need to innovate and invest in new products, services, technologies, and geographies in order to attract and retain customers and deepen their engagement with us in order to maintain growth; our reliance on third parties to perform some key functions and the risk that processing, operational or technological failures could impair the availability or stability of our platforms; the risk of cybersecurity incidents, theft, data breaches, and other online attacks; the difficulty of processing customer data in compliance with privacy laws; our need as a regulated financial services company to develop and maintain effective compliance and risk management infrastructures; the risks associated with incorporating artificial intelligence technologies into some of our products and processes; the volatility of cryptocurrency prices and trading volumes; the risk that our platforms and services could be exploited to facilitate illegal payments; and the risk that substantial future sales of Class A common stock in the public market, or the perception that they may occur, could cause the price of our stock to fall. Because some of these risks and uncertainties cannot be predicted or quantified and some are beyond our control, you should not rely on our forward-looking statements as predictions of future events. More information about potential risks and uncertainties that could affect our business and financial results can be found in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, which we expect to be available on October 31, 2024, as well as in our other filings with the SEC, all of which are available on the SEC’s web site at www.sec.gov. Moreover, we operate in a very competitive and rapidly changing environment; new risks and uncertainties may emerge from time to time, and it is not possible for us to predict all risks nor identify all uncertainties. The events and circumstances reflected in our forward-looking statements might not be achieved and actual results could differ materially from those projected in the forward-looking statements. Except as otherwise noted, all forward-looking statements are made as of the date of this press release, October 30, 2024 and are based on information and estimates available to us at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by law, Robinhood assumes no obligation to update any of the statements in this press release whether as a result of any new information, future events, changed circumstances, or otherwise. You should read this press release with the understanding that our actual future results, performance, events, and circumstances might be materially different from what we expect.

Non-GAAP Financial Measures

We collect and analyze operating and financial data to evaluate the health of our business, allocate our resources and assess our performance. In addition to total net revenues, net income (loss) and other results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted EBITDA margin, Adjusted Operating Expenses, and Adjusted Operating Expenses and SBC. This non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with GAAP and may be different from similarly titled non-GAAP measures used by other companies. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss), excluding (i) interest expenses related to credit facilities, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) SBC, (v) significant legal and tax settlements and reserves, and (vi) other significant gains, losses, and expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that we believe are not indicative of our ongoing results.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations, and render comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

Adjusted EBITDA Margin

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total net revenues. The most directly comparable GAAP measure is net margin (calculated as net income (loss) divided by total net revenues). We believe Adjusted EBITDA Margin provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Adjusted EBITDA Margin is used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

Adjusted Operating Expenses

Adjusted Operating Expenses is defined as GAAP total operating expenses minus (i) SBC, (ii) significant legal and tax settlements and reserves, and (iii) other significant expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that we believe are not indicative of our ongoing expenses. The amount and timing of the excluded items are unpredictable, are not driven by core results, of operations, and render comparisons with prior periods less meaningful. We believe Adjusted Operating Expenses provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our cost structure. Adjusted Operating Expenses is used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

Adjusted Operating Expenses and SBC

Adjusted Operating Expenses and SBC is defined as GAAP total operating expenses minus (i) significant legal and tax settlements and reserves and (ii) other significant expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses), that we believe are not indicative of our ongoing expenses. The amount and timing of the excluded items are unpredictable, are not driven by core results, of operations, and render comparisons with prior periods less meaningful. Unlike Adjusted Operating Expenses, Adjusted Operating Expenses and SBC does not adjust for SBC. We believe Adjusted Operating Expense and SBC provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our cost structure. Adjusted Operating Expenses and SBC is used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

Key Performance Metrics

In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key performance metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

Funded Customers

We define a Funded Customer as a unique person who has at least one account with a Robinhood entity and, within the past 45 calendar days (a) had an account balance that was greater than zero (excluding amounts that are deposited into a Funded Customer account by the Company with no action taken by the unique person) or (b) completed a transaction using any such account. Individuals who share a funded joint investing account (which launched in July 2024) are each considered to be a Funded Customer.

Assets Under Custody (“AUC”)

We define AUC as the sum of the fair value of all equities, options, cryptocurrency and cash held by users in their accounts, net of receivables from users, as of a stated date or period end on a trade date basis. Net Deposits and net market gains (losses) drive the change in AUC in any given period.

Net Deposits

We define Net Deposits as all cash deposits and asset transfers from customers, as well as dividends, interest, and cash and assets earned in connection with Company promotions (such as account transfer and retirement match incentives and free stock bonuses) received by customers, net of reversals, customer cash withdrawals, margin interest, Gold subscription fees, and other assets transferred out of our platforms (assets transferred in or out include debit card transactions, Automated Customer Account Transfer Service transfers, and custodial crypto wallet transfers) for a stated period. Prior to the second quarter of 2024, Net Deposits did not include inflows from cash and assets earned in connection with Company promotions and prior to January 2024, Net Deposits did not include inflows from dividends and interest or outflows from Robinhood Gold subscription fees and margin interest, although we have not restated amounts in prior periods as the impact to those figures was immaterial.

Average Revenue Per User (“ARPU”)

We define ARPU as total revenue for a given period divided by the average number of Funded Customers on the last day of that period and the last day of the immediately preceding period. Figures in this release represent ARPU annualized for each three-month period presented.

Gold Subscribers

We define a Gold Subscriber as a unique person who has at least one account with a Robinhood entity and who, as of the end of the relevant period (a) is subscribed to Robinhood Gold and (b) has made at least one Robinhood Gold subscription fee payment.

Additional Operating Metrics

Retirement AUC

We define Retirement AUC as the total AUC in traditional IRAs and Roth IRAs.

Cash Sweep

We define Cash Sweep as the period-end aggregate balances in our brokerage sweep program (i.e., the period-end total amount of participating users’ uninvested brokerage cash that has been automatically “swept” or moved from their brokerage accounts into deposits for their benefit at a network of program banks). This is an off-balance-sheet amount. Robinhood earns a net interest spread on Cash Sweep balances based on the interest rate offered by the banks less the interest rate given to users as stated in our program terms.

Margin Book

We define Margin Book as our period-end aggregate outstanding margin loan balances receivable (i.e., the period-end total amount we are owed by customers on loans made for the purchase of securities, supported by a pledge of assets in their margin-enabled brokerage accounts).

Notional Trading Volume

We define Notional Trading Volume for any specified asset class as the aggregate dollar value (purchase price or sale price as applicable) of trades executed in that asset class over a specified period of time.

Options Contracts Traded

We define Options Contracts Traded as the total number of options contracts bought or sold over a specified period of time. Each contract generally entitles the holder to trade 100 shares of the underlying stock.

Monthly Active Users (“MAU”)

We define MAUs as the number of unique persons who, using one or more accounts with a Robinhood entity, meet one of the following criteria at any point during a specified calendar month: a) executes a debit card or credit card transaction, b) transitions between two different screens on a mobile device while logged into their account or c) loads a page in a web browser while logged into their account. A person need not satisfy these conditions on a recurring monthly basis or be a Funded Customer to be included in MAU. MAU figures in this release reflect MAU for the last month of the relevant period presented. We utilize MAU to measure how many customers interact with our products and services during a given month. MAU does not measure the frequency or duration of the interaction, but we consider it a useful indicator for engagement. Additionally, MAUs are positively correlated with, but are not indicative of, the performance of revenue and other key performance indicators.

Glossary Terms

Investment Accounts

We define an Investment Account as a funded individual brokerage account, a funded joint investing account, or a funded individual retirement account (“IRA”). As of September 30, 2024, a Funded Customer can have up to four Investment Accounts – individual brokerage account, joint investing account (which launched in July 2024), traditional IRA, and Roth IRA.

Growth Rate and Annualized Growth Rate with respect to Net Deposits

When used with respect to Net Deposits, “growth rate” and “annualized growth rate” provide information about Net Deposits relative to total AUC. “Growth rate” is calculated as aggregate Net Deposits over a specified 12 month period, divided by AUC for the fiscal quarter that immediately precedes such 12 month period. “Annualized growth rate” is calculated as Net Deposits for a specified quarter multiplied by 4 and divided by AUC for the immediately preceding quarter.

The MIL Network –

January 25, 2025

MIL-OSI: Tenable Announces Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

Revenue of $227.1 million, up 13% year-over-year.
Calculated current billings of $248.4 million, up 11% year-over-year.
GAAP operating margin of (1)%; Non-GAAP operating margin of 20%.
Net cash provided by operating activities of $54.6 million; Unlevered free cash flow of $60.8 million.
$200 million expansion of our stock repurchase program.

COLUMBIA, Md., Oct. 30, 2024 (GLOBE NEWSWIRE) — Tenable Holdings, Inc. (“Tenable”) (Nasdaq: TENB), the exposure management company, today announced financial results for the quarter ended September 30, 2024.

“We delivered strong results in Q3, surpassing expectations on both the top and bottom line,” said Amit Yoran, Chairman and CEO of Tenable. “Cloud Security and Tenable One, our exposure management platform, continue to drive demand as customers increasingly focus on securing critical cloud infrastructure and assessing their overall exposures in a hybrid world.”

Third Quarter 2024 Financial Highlights

Revenue was $227.1 million, a 13% increase year-over-year.
Calculated current billings was $248.4 million, an 11% increase year-over-year.
GAAP loss from operations was $2.1 million, compared to $7.9 million in the third quarter of 2023.
Non-GAAP income from operations was $45.0 million, compared to $36.6 million in the third quarter of 2023.
GAAP net loss was $9.2 million, compared to $15.6 million in the third quarter of 2023.
GAAP net loss per share was $0.08, compared to $0.13 in the third quarter of 2023.
Non-GAAP net income was $39.3 million, compared to $27.7 million in the third quarter of 2023.
Non-GAAP diluted earnings per share was $0.32, compared to $0.23 in the third quarter of 2023.
Cash and cash equivalents and short-term investments were $548.4 million at September 30, 2024, compared to $474.0 million at December 31, 2023.
Net cash provided by operating activities was $54.6 million, compared to $42.4 million in the third quarter of 2023.
Unlevered free cash flow was $60.8 million, compared to $48.2 million in the third quarter of 2023.

Recent Business Highlights

Added 386 new enterprise platform customers and 60 net new six-figure customers.
Announced that our Board of Directors recently approved the expansion of our existing stock repurchase program, raising the existing authorization by $200 million.
Released AI Aware, advanced detection capabilities designed to rapidly surface artificial intelligence solutions, vulnerabilities and weaknesses.
Introduced Vulnerability Intelligence and Exposure Response, two powerful context-driven prioritization and response features that are designed to deliver actionable intelligence across IT and cloud environments.
Extended exposure management capabilities to cloud data and AI by adding new data security posture management (DSPM) and artificial intelligence security posture management (AI-SPM) capabilities for Tenable Cloud Security.
Launched Tenable Enclave Security, a solution that supports the needs of customers operating in highly secure environments.
Recognized as the top performer in cloud security in the 2024 CRN Annual Report Card Awards.

Financial Outlook

For the fourth quarter of 2024, we currently expect:

Revenue in the range of $229.0 million to $233.0 million.
Non-GAAP income from operations in the range of $47.0 million to $49.0 million.
Non-GAAP net income in the range of $42.0 million to $44.0 million, assuming interest expense of $7.8 million, interest income of $6.0 million and a provision for income taxes of $3.1 million.
Non-GAAP diluted earnings per share in the range of $0.33 to $0.35.
125.5 million diluted weighted average shares outstanding.

For the year ending December 31, 2024, we currently expect:

Calculated current billings in the range of $957.0 million to $967.0 million.
Revenue in the range of $893.3 million to $897.3 million.
Non-GAAP income from operations in the range of $171.8 million to $173.8 million.
Non-GAAP net income in the range of $149.9 million to $151.9 million, assuming interest expense of $32.1 million, interest income of $23.5 million and a provision for income taxes of $12.3 million.
Non-GAAP diluted earnings per share in the range of $1.21 to $1.23.
123.5 million diluted weighted average shares outstanding.
Unlevered free cash flow in the range of $225.0 million to $235.0 million.

Conference Call Information

Tenable will host a conference call on October 30, 2024 at 4:30 p.m. Eastern Time to discuss its financial results. The conference call can be accessed at 877-407-9716 (U.S.) and 201-493-6779 (international). A live webcast of the event will be available on the Tenable Investor Relations website at https://investors.tenable.com. An archived replay of the live broadcast will be available on the Investor Relations page of the website following the call.

About Tenable

Tenable^® is the exposure management company, exposing and closing the cybersecurity gaps that erode business value, reputation and trust. The company’s AI-powered exposure management platform radically unifies security visibility, insight and action across the attack surface, equipping modern organizations to protect against attacks from IT infrastructure to cloud environments to critical infrastructure and everywhere in between. By protecting enterprises from security exposure, Tenable reduces business risk for approximately 44,000 customers around the globe. Learn more at tenable.com.

Contact Information

Investor Relations
investors@tenable.com

Media Relations
tenablepr@tenable.com

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, our platform’s ability to help protect enterprises from security exposure, business strategy and plans and objectives for future operations, are forward-looking statements and represent our views as of the date of this press release. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond our control that could affect our financial results. These risks and uncertainties are detailed in the sections titled “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 year ended December 31, 2023 as well as other filings that we make from time to time with the SEC, which are available on the SEC’s website at sec.gov. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements subsequent to the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures

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

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. We include these non-GAAP financial measures to present our financial performance using a management view and because we believe that these measures provide an additional comparison of our core financial performance over multiple periods with other companies in our industry.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

Calculated Current Billings: We define calculated current billings, a non-GAAP financial measure, as total revenue recognized in a period plus the change in current deferred revenue in the corresponding period. We believe that calculated current billings is a key metric to measure our periodic performance. Given that most of our customers pay in advance (including multi-year contracts), but we generally recognize the related revenue ratably over time, we use calculated current billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers. We believe that calculated current billings, which excludes deferred revenue for periods beyond twelve months in a customer’s contractual term, more closely correlates with annual contract value and that the variability in total billings, depending on the timing of large multi-year contracts and the preference for annual billing versus multi-year upfront billing, may distort growth in one period over another.

Free Cash Flow and Unlevered Free Cash Flow: We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less purchases of property and equipment and capitalized software development costs. We believe free cash flow is an important liquidity measure of the cash that is available (if any), after purchases of property and equipment and capitalized software development costs, for investment in our business and to make acquisitions. We believe that free cash flow is useful as a liquidity measure because it measures our ability to generate cash. We define unlevered free cash flow as free cash flow plus cash paid for interest and other financing costs. We believe unlevered free cash flow is useful as a liquidity measure as it measures the cash that is available to invest in our business and meet our current debt obligations and future financing needs. However, given our debt obligations, non-cancelable commitments and other contractual obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

Non-GAAP Income from Operations and Non-GAAP Operating Margin: We define these non-GAAP financial measures as their respective GAAP measures, excluding the effect of stock-based compensation, acquisition-related expenses, restructuring expenses, costs related to the intra-entity asset transfers resulting from the internal restructuring of legal entities, and amortization of acquired intangible assets. Acquisition-related expenses include transaction and integration expenses, as well as costs related to the intercompany transfer of acquired intellectual property. Restructuring expenses include non-ordinary course severance, employee related benefits, and other charges. We believe that the exclusion of these expenses provides for a useful comparison of our operating results to prior periods and to our peer companies, which commonly exclude restructuring expenses.

Non-GAAP Net Income and Non-GAAP Earnings Per Share: We define non-GAAP net income as GAAP net loss, excluding the effect of stock-based compensation, acquisition-related expenses, restructuring expenses and amortization of acquired intangible assets, including the applicable tax impacts. In addition, we exclude the tax impact and related costs of intra-entity asset transfers resulting from the internal restructuring of legal entities as well as deferred income tax benefits recognized in connection with acquisitions. We use non-GAAP net income to calculate non-GAAP earnings per share.

Non-GAAP Gross Profit and Non-GAAP Gross Margin: We define non-GAAP gross profit as GAAP gross profit, excluding the effect of stock-based compensation and amortization of acquired intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Sales and Marketing Expense, Non-GAAP Research and Development Expense and Non-GAAP General and Administrative Expense: We define these non-GAAP measures as their respective GAAP measures, excluding stock-based compensation, acquisition-related expenses and costs related to intra-entity asset transfers resulting from the internal restructuring of legal entities.

TENABLE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)		2024			2023			2024			2023
Revenue	$	227,088		$	201,529		$	664,290		$	585,404
Cost of revenue⁽¹⁾		50,499			45,754			148,229			134,774
Gross profit		176,589			155,775			516,061			450,630
Operating expenses:
Sales and marketing⁽¹⁾		99,083			94,759			300,037			289,750
Research and development⁽¹⁾		48,020			37,052			136,896			113,080
General and administrative⁽¹⁾		31,569			31,877			92,889			85,614
Restructuring		—			—			6,070			—
Total operating expenses		178,672			163,688			535,892			488,444
Loss from operations		(2,083	)		(7,913	)		(19,831	)		(37,814	)
Interest income		5,989			7,662			17,587			19,323
Interest expense		(8,148	)		(8,119	)		(24,333	)		(23,208	)
Other income (expense), net		359			(6,502	)		(858	)		(7,993	)
Loss before income taxes		(3,883	)		(14,872	)		(27,435	)		(49,692	)
Provision for income taxes		5,328			693			10,734			6,944
Net loss	$	(9,211	)	$	(15,565	)	$	(38,169	)	$	(56,636	)

Net loss per share, basic and diluted	$	(0.08	)	$	(0.13	)	$	(0.32	)	$	(0.49	)
Weighted-average shares used to compute net loss per share, basic and diluted		119,169			115,954			118,466			114,967

_______________

⁽¹⁾ Includes stock-based compensation as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Cost of revenue	$	3,216	$	3,011	$	9,486	$	8,542
Sales and marketing		15,941		15,805		47,517		46,622
Research and development		12,435		9,242		35,395		27,871
General and administrative		10,092		8,777		30,403		25,777
Total stock-based compensation	$	41,684	$	36,835	$	122,801	$	108,812

TENABLE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS

	September 30, 2024			December 31, 2023
(in thousands, except per share data)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	312,207		$	237,132
Short-term investments		236,242			236,840
Accounts receivable (net of allowance for doubtful accounts of $971 and $470 at September 30, 2024 and December 31, 2023, respectively)		192,648			220,060
Deferred commissions		49,858			49,559
Prepaid expenses and other current assets		52,575			61,882
Total current assets		843,530			805,473
Property and equipment, net		39,780			45,436
Deferred commissions (net of current portion)		64,405			72,394
Operating lease right-of-use assets		32,127			34,835
Acquired intangible assets, net		99,474			107,017
Goodwill		541,292			518,539
Other assets		13,811			23,177
Total assets	$	1,634,419		$	1,606,871

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	17,833		$	16,941
Accrued compensation		43,040			66,492
Deferred revenue		583,940			580,779
Operating lease liabilities		6,099			5,971
Other current liabilities		6,205			5,655
Total current liabilities		657,117			675,838
Deferred revenue (net of current portion)		163,512			169,718
Term loan, net of issuance costs (net of current portion)		357,334			359,281
Operating lease liabilities (net of current portion)		43,706			48,058
Other liabilities		8,195			7,632
Total liabilities		1,229,864			1,260,527

Stockholders’ equity:
Common stock (par value: $0.01; 500,000 shares authorized; 121,344 and 117,504 shares issued at September 30, 2024 and December 31, 2023, respectively)		1,213			1,175
Additional paid-in capital		1,330,517			1,185,100
Treasury stock (at cost: 1,471 and 356 shares at September 30, 2024 and December 31, 2023, respectively)		(64,925	)		(14,934	)
Accumulated other comprehensive income		954			38
Accumulated deficit		(863,204	)		(825,035	)
Total stockholders’ equity		404,555			346,344
Total liabilities and stockholders’ equity	$	1,634,419		$	1,606,871

TENABLE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Nine Months Ended September 30,
(in thousands)		2024			2023
Cash flows from operating activities:
Net loss	$	(38,169	)	$	(56,636	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		24,434			18,900
Stock-based compensation		122,801			108,812
Net accretion of discounts and amortization of premiums on short-term investments		(6,141	)		(5,903	)
Amortization of debt issuance costs		1,003			941
(Gain) loss on other investments		(1,452	)		5,000
Restructuring		4,528			—
Other		4,128			1,800
Changes in operating assets and liabilities:
Accounts receivable		26,911			9,084
Prepaid expenses and other assets		29,868			17,524
Accounts payable, accrued expenses and accrued compensation		(22,921	)		447
Deferred revenue		(3,153	)		16,856
Other current and noncurrent liabilities		(5,480	)		(5,475	)
Net cash provided by operating activities		136,357			111,350

Cash flows from investing activities:
Purchases of property and equipment		(1,924	)		(1,299	)
Capitalized software development costs		(5,930	)		(4,707	)
Purchases of short-term investments		(227,210	)		(217,239	)
Sales and maturities of short-term investments		234,865			242,864
Proceeds from other investments		3,512			—
Purchases of other investments		(1,250	)		—
Business combinations, net of cash acquired		(29,162	)		—
Net cash (used in) provided by investing activities		(27,099	)		19,619

Cash flows from financing activities:
Payments on term loan		(2,813	)		(2,813	)
Proceeds from loan agreement		—			424
Proceeds from stock issued in connection with the employee stock purchase plan		16,262			16,224
Proceeds from the exercise of stock options		4,798			2,421
Purchase of treasury stock		(49,991	)		—
Other financing activities		—			(213	)
Net cash (used in) provided by financing activities		(31,744	)		16,043
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(2,439	)		(2,562	)
Net increase in cash and cash equivalents and restricted cash		75,075			144,450
Cash and cash equivalents and restricted cash at beginning of period		237,132			300,866
Cash and cash equivalents and restricted cash at end of period	$	312,207		$	445,316

TENABLE HOLDINGS, INC. REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (unaudited)

Revenue	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)		2024		2023		2024		2023
Subscription revenue	$	208,554	$	183,268	$	608,727	$	531,133
Perpetual license and maintenance revenue		11,769		12,200		35,941		36,535
Professional services and other revenue		6,765		6,061		19,622		17,736
Revenue⁽¹⁾	$	227,088	$	201,529	$	664,290	$	585,404

_______________

⁽¹⁾ Recurring revenue, which includes revenue from subscription arrangements for software (both recognized ratably over the subscription term and upon delivery) and cloud-based solutions and maintenance associated with perpetual licenses, represented 96% of revenue in the three and nine months ended September 30, 2024 and 95% of revenue in the three and nine months ended September 30, 2023.

Calculated Current Billings	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Revenue	$	227,088		$	201,529		$	664,290		$	585,404
Deferred revenue (current), end of period		583,940			518,372			583,940			518,372
Deferred revenue (current), beginning of period⁽¹⁾		(562,587	)		(495,199	)		(580,887	)		(502,115	)
Calculated current billings	$	248,441		$	224,702		$	667,343		$	601,661

^{________________}
⁽¹⁾ Deferred revenue (current), beginning of period for the nine months ended September 30, 2024 includes $0.1 million related to acquired deferred revenue.

Remaining Performance Obligations	September 30,
(in thousands)		2024		2023
Remaining performance obligations, short-term	$	592,351	$	528,367
Remaining performance obligations, long-term		179,210		168,817
Remaining performance obligations	$	771,561	$	697,184

Free Cash Flow and Unlevered Free Cash Flow	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Net cash provided by operating activities	$	54,607		$	42,411		$	136,357		$	111,350
Purchases of property and equipment		(733	)		(201	)		(1,924	)		(1,299	)
Capitalized software development costs		(1,163	)		(1,894	)		(5,930	)		(4,707	)
Free cash flow⁽¹⁾		52,711			40,316			128,503			105,344
Cash paid for interest and other financing costs		8,055			7,843			23,505			26,786
Unlevered free cash flow⁽¹⁾	$	60,766		$	48,159		$	152,008		$	132,130

________________

⁽¹⁾ Free cash flow and unlevered free cash flow for the periods presented were impacted by:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Employee stock purchase plan activity	$	(3,653	)	$	(2,236	)	$	(6,283	)	$	(2,507	)
Acquisition-related expenses		(663	)		(571	)		(1,326	)		(830	)
Restructuring		(492	)		—			(5,911	)		—

Non-GAAP Income from Operations and Non-GAAP Operating Margin	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)		2024			2023			2024			2023
Loss from operations	$	(2,083	)	$	(7,913	)	$	(19,831	)	$	(37,814	)
Stock-based compensation		41,684			36,835			122,801			108,812
Acquisition-related expenses		360			4,598			1,284			4,728
Restructuring		—			—			6,070			—
Amortization of acquired intangible assets		5,014			3,055			14,443			9,208
Non-GAAP income from operations	$	44,975		$	36,575		$	124,767		$	84,934
Operating margin		(1	)%		`(4	)%		(3	)%		(6	)%
Non-GAAP operating margin		20	%		18	%		19	%		15	%

Non-GAAP Net Income and Non-GAAP Earnings Per Share	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)		2024			2023			2024			2023
Net loss	$	(9,211	)	$	(15,565	)	$	(38,169	)	$	(56,636	)
Stock-based compensation		41,684			36,835			122,801			108,812
Tax impact of stock-based compensation⁽¹⁾		1,528			(1,207	)		1,626			1,046
Acquisition-related expenses⁽²⁾		360			4,598			1,284			4,728
Restructuring⁽²⁾		—			—			6,070			—
Amortization of acquired intangible assets⁽³⁾		5,014			3,055			14,443			9,208
Tax impact of acquisitions		(52	)		(48	)		(130	)		(161	)
Non-GAAP net income	$	39,323		$	27,668		$	107,925		$	66,997

Net loss per share, diluted	$	(0.08	)	$	(0.13	)	$	(0.32	)	$	(0.49	)
Stock-based compensation		0.35			0.32			1.04			0.94
Tax impact of stock-based compensation⁽¹⁾		0.01			(0.01	)		0.01			0.01
Acquisition-related expenses⁽²⁾		0.01			0.04			0.01			0.04
Restructuring⁽²⁾		—			—			0.05			—
Amortization of acquired intangible assets⁽³⁾		0.04			0.02			0.12			0.08
Tax impact of acquisitions		—			—			—			—
Adjustment to diluted earnings per share⁽⁴⁾		(0.01	)		(0.01	)		(0.03	)		(0.02	)
Non-GAAP earnings per share, diluted	$	0.32		$	0.23		$	0.88		$	0.56

Weighted-average shares used to compute GAAP net loss per share, diluted		119,169			115,954			118,466			114,967

Weighted-average shares used to compute non-GAAP earnings per share, diluted		123,288			121,473			123,206			120,273

________________

(1) The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2) The tax impact of acquisition-related expenses and restructuring are not material.
(3) The tax impact of the amortization of acquired intangible assets is included in the tax impact of acquisitions.
(4) An adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

Non-GAAP Gross Profit and Non-GAAP Gross Margin	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)		2024			2023			2024			2023
Gross profit	$	176,589		$	155,775		$	516,061		$	450,630
Stock-based compensation		3,216			3,011			9,486			8,542
Amortization of acquired intangible assets		5,014			3,055			14,443			9,208
Non-GAAP gross profit	$	184,819		$	161,841		$	539,990		$	468,380
Gross margin		78	%		77	%		78	%		77	%
Non-GAAP gross margin		81	%		80	%		81	%		80	%

Non-GAAP Sales and Marketing Expense	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)		2024			2023			2024			2023
Sales and marketing expense	$	99,083		$	94,759		$	300,037		$	289,750
Less: Stock-based compensation		15,941			15,805			47,517			46,622
Less: Acquisition-related expenses		3			—			52			—
Non-GAAP sales and marketing expense	$	83,139		$	78,954		$	252,468		$	243,128
Non-GAAP sales and marketing expense % of revenue		37	%		39	%		38	%		42	%

Non-GAAP Research and Development Expense	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)		2024			2023			2024			2023
Research and development expense	$	48,020		$	37,052		$	136,896		$	113,080
Less: Stock-based compensation		12,435			9,242			35,395			27,871
Less: Acquisition-related expenses		—			—			(20	)		—
Non-GAAP research and development expense	$	35,585		$	27,810		$	101,521		$	85,209
Non-GAAP research and development expense % of revenue		16	%		14	%		15	%		15	%

Non-GAAP General and Administrative Expense	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)		2024			2023			2024			2023
General and administrative expense	$	31,569		$	31,877		$	92,889		$	85,614
Less: Stock-based compensation		10,092			8,777			30,403			25,777
Less: Acquisition-related expenses		357			4,598			1,252			4,728
Non-GAAP general and administrative expense	$	21,120		$	18,502		$	61,234		$	55,109
Non-GAAP general and administrative expense % of revenue		9	%		9	%		9	%		9	%

The following adjustments to reconcile forecasted non-GAAP income from operations, non-GAAP net income, non-GAAP earnings per share, free cash flow and unlevered free cash flow are subject to a number of uncertainties and assumptions, each of which are inherently difficult to forecast. As a result, actual adjustments and GAAP results may differ materially.

Forecasted Non-GAAP Income from Operations	Three Months Ending December 31, 2024				Year Ending December 31, 2024
(in millions)	Low		High		Low			High
Forecasted income (loss) from operations	$	0.6	$	2.6	$	(19.2	)	$	(17.2	)
Forecasted stock-based compensation		41.3		41.3		164.1			164.1
Forecasted acquisition-related expenses		—		—		1.3			1.3
Forecasted restructuring		—		—		6.1			6.1
Forecasted amortization of acquired intangible assets		5.1		5.1		19.5			19.5
Forecasted non-GAAP income from operations	$	47.0	$	49.0	$	171.8		$	173.8

Forecasted Non-GAAP Net Income and Non-GAAP Earnings Per Share	Three Months Ending December 31, 2024						Year Ending December 31, 2024
(in millions, except per share data)	Low			High			Low			High
Forecasted net loss⁽¹⁾	$	(6.2	)	$	(4.2	)	$	(44.4	)	$	(42.4	)
Forecasted stock-based compensation		41.3			41.3			164.1			164.1
Forecasted tax impact of stock-based compensation		1.9			1.9			3.5			3.5
Forecasted acquisition-related expenses		—			—			1.3			1.3
Forecasted restructuring		—			—			6.1			6.1
Forecasted amortization of acquired intangible assets		5.1			5.1			19.5			19.5
Forecasted tax impact of acquisitions		(0.1	)		(0.1	)		(0.2	)		(0.2	)
Forecasted non-GAAP net income	$	42.0		$	44.0		$	149.9		$	151.9

Forecasted net loss per share, diluted⁽¹⁾	$	(0.05	)	$	(0.04	)	$	(0.37	)	$	(0.36	)
Forecasted stock-based compensation		0.34			0.34			1.38			1.38
Forecasted tax impact of stock-based compensation		0.02			0.02			0.03			0.03
Forecasted acquisition-related expenses		—			—			0.01			0.01
Forecasted restructuring		—			—			0.05			0.05
Forecasted amortization of acquired intangible assets		0.04			0.04			0.16			0.16
Forecasted tax impact of acquisitions		—			—			—			—
Adjustment to diluted earnings per share⁽²⁾		(0.02	)		(0.01	)		(0.05	)		(0.04	)
Forecasted non-GAAP earnings per share, diluted	$	0.33		$	0.35		$	1.21		$	1.23

Forecasted weighted-average shares used to compute GAAP net loss per share, diluted		120.0			120.0			119.0			119.0
Forecasted weighted-average shares used to compute non-GAAP earnings per share, diluted		125.5			125.5			123.5			123.5

________________
(1) The forecasted GAAP net loss assumes income tax expense of $4.9 million and $15.6 million in the three months and year ending December 31, 2024, respectively.

(2) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

Forecasted Free Cash Flow and Unlevered Free Cash Flow	Year Ending December 31, 2024
(in millions)	Low			High
Forecasted net cash provided by operating activities	$	206.7		$	216.7
Forecasted purchases of property and equipment		(5.9	)		(5.9	)
Forecasted capitalized software development costs		(6.7	)		(6.7	)
Forecasted free cash flow		194.1			204.1
Forecasted cash paid for interest and other financing costs		30.9			30.9
Forecasted unlevered free cash flow	$	225.0		$	235.0

The MIL Network –

January 25, 2025

MIL-OSI: Orange County Bancorp, Inc. Announces Third Quarter 2024 results:

Source: GlobeNewswire (MIL-OSI)

Net Interest Income increased $467 thousand, or 2.1%, to $23.0 million for the quarter ended September 30, 2024, from $22.5 million for the quarter ended September 30, 2023
Net Interest Margin grew 3 basis points to 3.81% for the quarter ended September 30, 2024, as compared to 3.78% for the quarter ended September 30, 2023
Total Loans grew $49.0 million, or 2.8%, reaching $1.8 billion at September 30, 2024 as compared to $1.7 billion at December 31, 2023.
Total Deposits rose $101.3 million, or 5.0%, to $2.1 billion at September 30, 2024, from $2.0 billion at year-end 2023
Book value per share increased $4.77, or 16.3%, to $34.03 at September 30, 2024, from $29.26 at December 31, 2023
Trust and investment advisory income rose $521 thousand, or 20.1%, to $3.1 million for Q3 2024, as compared to $2.6 million for Q3 2023

MIDDLETOWN, N.Y., Oct. 30, 2024 (GLOBE NEWSWIRE) — Orange County Bancorp, Inc. (the “Company” – Nasdaq: OBT), parent company of Orange Bank & Trust Co. (the “Bank”) and Hudson Valley Investment Advisors, Inc. (“HVIA”), today announced net income of $3.2 million, or $0.57 per basic and diluted share, for the three months ended September 30, 2024. This compares with net income of $9.0 million, or $1.61 per basic and diluted share, for the three months ended September 30, 2023. The decrease in earnings per share, basic and diluted, was due primarily to increases in the provision for credit losses and non-interest expense offset by increases in net interest income and non-interest income during the current period. For the nine months ended September 30, 2024, net income was $20.7 million, or $3.67 per basic and diluted share, as compared to $21.4 million, or $3.79 per basic and diluted share, for the nine months ended September 30, 2023.

Book value per share rose $4.77, or 16.3%, year-to-date, from $29.26 at December 31, 2023 to $34.03 at September 30, 2024. Tangible book value per share increased $4.81, or 17.1%, during the same period, from $28.12 at December 31, 2023 to $32.93 at September 30, 2024 (see “Non-GAAP Financial Measure Reconciliation” below for additional detail). These increases were due primarily to earnings during the nine months ended September 30, 2024, as well as a decrease in accumulated other comprehensive income (loss) associated with a reduction in unrealized losses within the investment securities portfolio.

“This quarter was one in which our core and ancillary businesses continued to perform well,” said Company President and CEO Michael Gilfeather, “but earnings were negatively impacted by a significant commercial office space loan. For the quarter, we increased our provision for loan losses by $7.2 million. This was primarily attributable to a $5.6 million reserve against an office space participation loan identified as problematic in the prior quarter, and against which we’ve already reserved nearly $4 million. Our decision to add to the reserves was the result of further deterioration of the loan and uncertainty regarding the borrower’s commitment to payment performance and we are pursuing all remedies at our disposal. The remainder of the quarterly provision, approximately $1.6 million, was primarily attributable to loan growth during the quarter, as well as the impact associated with periodic review of our loan portfolio. We are fortunate that, despite this reserve, the strength and resilience of our business model enabled us to record $3.2 million of net income for the quarter, bringing our 9-month total to $20.7 million, as compared to $21.4 million for the same period last year.

Loan demand and economic activity in the communities we serve remains strong. This was aided by the Federal Reserve’s long-awaited reduction in interest rates – an outsized 50 basis points – which contributed to quality loan growth experienced in the quarter. For the quarter, total loans increased $62.3 million, or 3.6%, increasing our total loan portfolio to $1.8 billion at quarter end, up from $1.7 billion at year end 2023. Total deposits at quarter end, though below second quarter levels due to seasonal reductions in municipal deposits and IOLA business, have grown $101.3 million, or 5.0%, since year end, eclipsing $2.1 billion. Attorneys, while not the only source of our IOLA deposits, are a significant component which have the added benefit of providing meaningful business referrals to the Bank. Total cost of deposits was 1.25% for Q3, reflecting the Bank’s ongoing commitment to growing commercial checking accounts and other low-cost deposits. Given the challenges our industry has confronted retaining, much less growing deposits in the current interest rate environment, I am very proud of these results.

Net interest margin for the quarter was 3.81%, down 29 basis points, or 7.1%, from the previous quarter, but still well above industry averages.

Our Wealth Management divisions continued their strong performance in Q3. Trust and Advisory income rose approximately $521 thousand, or 20.1% to $3.1 million, as compared to $2.6 million during Q3 2023. While a portion of this is attributable to asset growth from favorable market performance, gathering new AUM has become a bank wide area of focus. Bank clients seeking higher returns on their idle deposits are introduced to our HVIA asset management staff, who have competitive alternatives, financial market insight, and can provide tailored investment solutions for their overall cash strategies. This has enabled us to retain those funds, attract new AUM from outside and keep client assets in-house for easy access as business and personal needs evolve over time.

As frustrating as aspects of this quarter have been, overall performance of the Bank and our employees has been exemplary. We recognize success in our industry isn’t judged by quarters, but by years, with our 132-year history serving as testimony to the commitment of our employees and consistency of our performance over time. This perspective has been critical to our success and is why our staff and clients have remained close and loyal to our vision. So I once again thank our employees for their hard work and dedication, our customers for their trust and business, and our investors for their continued confidence and support.”

Third Quarter 2024 Financial Review

Net Income

Net income for the third quarter of 2024 was $3.2 million, a decrease of $5.8 million, or 64.4%, from net income of $9.0 million for the third quarter of 2023. The decrease was the result of a substantial provision for estimated credit losses as well as increased interest and non-interest expense over the same quarter last year. Net income for the nine months ended September 30, 2024 was $20.7 million, as compared to $21.4 million for the same period in 2023. The decrease similarly reflected the effect of an increase in provision for credit losses coupled with increased non-interest expense during the first nine months of 2024, as compared to the same period in 2023. The provision includes the impact of additional reserves associated with a nonaccrual loan during the current quarter.

Net Interest Income

For the three months ended September 30, 2024, net interest income rose $467 thousand, or 2.1%, to $23.0 million, versus $22.5 million during the same period last year. The increase was driven primarily by a $1.7 million increase in interest and fees on loans during the current period. For the nine months ended September 30, 2024, net interest income reached $68.7 million, representing an increase of $2.4 million, or 3.7%, over the first nine months of 2023.

Total interest income rose $1.3 million, or 4.4%, to $31.4 million for the three months ended September 30, 2024, compared to $30.1 million for the three months ended September 30, 2023. The increase reflected 6.9% growth in interest and fees associated with loans, a 1.6% increase in interest income from tax-exempt investment securities, and an 8.2% increase in interest income related to fed funds interest and balances held at correspondent banks. For the nine months ended September 30, 2024, total interest income rose $8.8 million, or 10.2%, to $95.0 million as compared to $86.2 million for the nine months ended September 30, 2023.

Total interest expense increased $870 thousand during the third quarter of 2024, to $8.5 million, as compared to $7.6 million in the third quarter of 2023. The increase represented the combined effect of rising interest rates on customer deposits and brokered deposits partially offset by a decrease in the cost associated with borrowed funds utilized as alternate sources of funding. Interest expense associated with savings and NOW accounts totaled $5.4 million during the third quarter of 2024, as compared to $3.5 million during the third quarter of 2023. Interest expense associated with FHLB advances drawn and other borrowings during the current quarter totaled $1.6 million, as compared to $1.9 million during the third quarter of 2023. During the nine months ended September 30, 2024, total interest expense rose $6.4 million, to $26.3 million, as compared to $20.0 million for the same period last year.

Provision for Credit Losses

As of January 1, 2023, the Company adopted the current expected credit losses methodology (“CECL”) accounting standard, which includes loans individually evaluated, as well as loans evaluated on a pooled basis to assess the adequacy of the allowance for credit losses. The Bank seeks to estimate lifetime losses in its loan and investment portfolio by using expected discounted cash flows and supplemental qualitative considerations, including relevant economic considerations, portfolio concentrations, and other external factors, as well as evaluating investment securities held by the Bank.

The Company recognized a provision for credit losses of $7.2 million for the three months ended September 30, 2024, as compared to $837 thousand for the three months ended September 30, 2023. This increase was primarily driven by a $5.6 million reserve associated with a specific non-accrual commercial loan as well as the impact of the methodology associated with estimated lifetime losses and the increase in loans closed during the quarter. The allowance for credit losses to total loans was 1.73% as of September 30, 2024 versus 1.44% as of December 31, 2023. For the nine months ended September 30, 2024, the provision for credit losses totaled $7.8 million as compared to $7.4 million for the nine months ended September 30, 2023. No reserves for investment securities were recorded during 2024.

Non-Interest Income

Non-interest income rose $954 thousand, or 29.6%, to $4.2 million for the three months ended September 30, 2024, as compared to $3.2 million for the three months ended September 30, 2023. This growth was related to continued increased fee income within several of the Company’s fee income categories, including investment advisory income, trust income, and service charges on deposit accounts. For the nine months ended September 30, 2024, non-interest income increased approximately $2.0 million, to $11.7 million, as compared to $9.7 million for the nine months ended September 30, 2023.

Non-Interest Expense

Non-interest expense was $16.0 million for the third quarter of 2024, reflecting an increase of $2.4 million, or 17.3%, as compared to $13.6 million for the same period in 2023. The increase in non-interest expense for the current three-month period reflected the Company’s continued commitment to growth. This investment consists primarily of increases in compensation, information technology, and deposit insurance costs, as well as professional fees associated with certain corporate initiatives. Our efficiency ratio increased to 58.8% for the three months ended September 30, 2024, from 52.8% for the same period in 2023. For the nine months ended September 30, 2024, our efficiency ratio increased to 58.2% from 55.4% for the same period in 2023. Non-interest expense for the nine months ended September 30, 2024 reached $46.7 million, reflecting a $4.7 million increase over non-interest expense of $42.1 million for the nine months ended September 30, 2023.

Income Tax Expense

Provision for income taxes for the three months ended September 30, 2024 was $788 thousand, as compared to $2.3 million for the same period in 2023. The decrease was directly related to lower income before income taxes. For the nine months ended September 30, 2024, the provision for income taxes was $5.1 million, approximately the same as for the nine months ended September 30, 2023. Our effective tax rate for the three-month period ended September 30, 2024 was 19.7%, as compared to 20.0% for the same period in 2023. Our effective tax rate for the nine-month period ended September 30, 2024 was 19.9%, as compared to 19.3% for the same period in 2023.

Financial Condition

Total consolidated assets increased $33.6 million, or 1.4%, to remain relatively level at $2.5 billion at September 30, 2024 and December 31, 2023. The stability of the balance sheet included loan growth and continued increases in deposits and cash as well as paydowns of borrowings during the current nine-month period.

Total cash and due from banks increased from $147.4 million at December 31, 2023, to $160.9 million at September 30, 2024, an increase of approximately $13.5 million, or 9.2%. This increase resulted primarily from increases in deposit balances and slower loan growth which increased cash levels while reducing short-term borrowings.

Total investment securities decreased $26.7 million, or 5.3%, from $504.5 million at December 31, 2023 to $477.8 million at September 30, 2024. The decrease continues to be driven primarily by investment maturities during the first nine months of 2024.

Total loans increased $49.0 million, or 2.8%, from $1.7 billion at December 31, 2023 to $1.8 billion at September 30, 2024. The increase was primarily driven by an increase of $75.2 million related to commercial real estate loans as well as a $4.7 million increase in consumer loans offset by decreases in all other loan categories during 2024.

Total deposits increased $101.3 million, to $2.1 billion at September 30, 2024, from $2.0 billion at December 31, 2023. This increase was due primarily to $122.1 million of growth in money market accounts, $37.4 million increase in interest bearing demand accounts, and $30.1 million increase in savings accounts. The increases in deposit accounts were offset by an $8.8 million decrease in noninterest-bearing demand accounts and a $79.6 million decrease in certificates of deposit, mainly associated with brokered deposits utilized by the Bank for short term funding purposes. Deposit composition at September 30, 2024 included 48.3% in demand deposit accounts (including NOW accounts) as a percentage of total deposits. Uninsured deposits, net of fully collateralized municipal relationships, remain stable and represent approximately 39% of total deposits at September 30, 2024, as compared to 37% of total deposits at December 31, 2023.

FHLBNY short-term borrowings decreased by $142.5 million, or 63.5%, to $82 million as of September 30, 2024, as compared to $224.5 million at December 31, 2023. The decrease in borrowings was driven by increased deposits which outpaced loan growth during the first nine months of 2024 and allowed for paydowns of borrowings while maintaining adequate levels of cash at September 30, 2024. The decrease in borrowings reflects a strategic decision to actively manage liquidity sources and take advantage of opportunities to reduce funding costs.

Stockholders’ equity increased approximately $27.7 million during the first nine months of 2024, reaching $193.1 million at September 30, 2024 from $165.4 million at December 31, 2023. The increase was due primarily to $20.7 million of net income during the first nine months of 2024, partially reduced by dividends and favorably impacted by a reduction of unrealized losses of approximately $9.7 million, net of taxes, on the market value of investment securities within the Company’s equity as accumulated other comprehensive income (loss).

At September 30, 2024, the Bank maintained capital ratios in excess of regulatory standards for well capitalized institutions. The Bank’s Tier 1 capital to average assets ratio was 10.06%, both common equity and Tier 1 capital to risk weighted assets were 13.64%, and total capital to risk weighted assets was 14.89%.

Wealth Management

At September 30, 2024, our Wealth Management Division, which includes trust and investment advisory, totaled $1.8 billion in assets under management or advisory, as compared to $1.6 billion at December 31, 2023, a 13.4% increase. Trust and investment advisory income for the quarter ended September 30, 2024 reached $3.1 million and represented an increase of 20.0%, or $521 thousand, as compared to $2.6 million for the quarter ended September 30, 2023.

The breakdown of trust and investment advisory assets as of September 30, 2024 and December 31, 2023, respectively, is as follows:

ORANGE COUNTY BANCORP, INC.
SUMMARY OF AUM/AUA
(UNAUDITED)
(Dollar Amounts in thousands)
	At September 30, 2024				At December 31, 2023
	Amount		Percent		Amount		Percent
Investment Assets Under Management & Advisory	$	1,107,182	61.78	%	$	909,384	57.56	%
Trust Asset Under Administration & Management		684,937	38.22	%		670,515	42.44	%
Total	$	1,792,119	100.00	%	$	1,579,899	100.00	%

Loan Quality

At September 30, 2024, the Bank had total non-performing loans of $11.2 million, or 0.62% of total loans. Total non-accrual loans represented approximately $10.9 million of loans as of September 30, 2024, compared to $4.4 million at December 31, 2023. The increase in non-accrual loans was primarily the result of one $10.7 million commercial real estate participation which remains non-performing and in non-accrual status at quarter end.

On October 25, 2024, the Bank filed a civil complaint in the United States District Court for the District of New Jersey against the lead lender, Valley National Bank, of the non-performing commercial real estate loan participation noted above. This action cites breach of contract and other claims related to the participation agreement with the lead lender. The lawsuit requests damages and demands repurchase by the lead lender of the participated loan amount in accordance with the rights available under the terms of the participation agreement.

Liquidity

Management believes the Bank has the necessary liquidity to meet normal business needs. The Bank uses a variety of resources to manage its liquidity position. These include short term investments, cash from lending and investing activities, core-deposit growth, and non-core funding sources, such as time deposits exceeding $250,000, brokered deposits, FHLBNY advances, and other borrowings. As of September 30, 2024, the Bank’s cash and due from banks totaled $160.9 million. The Bank maintains an investment portfolio of securities available for sale, comprised mainly of US Government agency and treasury securities, Small Business Administration loan pools, mortgage-backed securities, and municipal bonds. Although the portfolio generates interest income for the Bank, it also serves as an available source of liquidity and funding. As of September 30, 2024, the Bank’s investment in securities available for sale was $477.8 million, of which $24.2 million was not pledged as collateral and additional $45.5 million with the Federal Reserve which is not specifically designated to any borrowings. Additionally, as of September 30, 2024, the Bank’s overnight advance line capacity at the Federal Home Loan Bank of New York was $577.6 million, of which $76.0 million was used to collateralize municipal deposits and $10.0 million was utilized for long term advances. As of September 30, 2024, the Bank’s unused borrowing capacity at the FHLBNY was $491.6 million. The Bank also maintains additional borrowing capacity of $20 million with other correspondent banks. Additional funding is available to the Bank through the discount window lending by the Federal Reserve. At September 30, 2024, the Bank was utilizing $50 million of funding through the Bank Term Funding Program from the Federal Reserve under a one-year facility.

The Bank also considers brokered deposits an element of its deposit strategy. As of September 30, 2024, the Bank had brokered deposit arrangements with various terms totaling $107.3 million.

Non-GAAP Financial Measure Reconciliations
The following table reconciles, as of the dates set forth below, stockholders’ equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates our tangible book value per share.

	September 30, 2024			December 31, 2023
	(Dollars in thousands except for share data)
Tangible Common Equity:
Total stockholders’ equity	$	193,094		$	165,376
Adjustments:
Goodwill		(5,359	)		(5,359	)
Other intangible assets		(892	)		(1,107	)
Tangible common equity	$	186,843		$	158,910
Common shares outstanding		5,674,126			5,651,311
Book value per common share	$	34.03		$	29.26
Tangible book value per common share	$	32.93		$	28.12

Tangible Assets
Total assets	$	2,519,099		$	2,485,468
Adjustments:
Goodwill		(5,359	)		(5,359	)
Other intangible assets		(892	)		(1,107	)
Tangible assets	$	2,512,848		$	2,479,002
Tangible common equity to tangible assets		7.44	%		6.41	%

About Orange County Bancorp, Inc

Orange County Bancorp, Inc. is the parent company of Orange Bank & Trust Company and Hudson Valley Investment Advisors, Inc. Orange Bank & Trust Company is an independent bank that began with the vision of 14 founders over 125 years ago. It has grown through innovation and an unwavering commitment to its community and business clientele to approximately $2.5 billion in total assets. Hudson Valley Investment Advisors, Inc. is a Registered Investment Advisor in Goshen, NY. It was founded in 1996 and acquired by the Company in 2012.

Forward Looking Statements

Certain statements contained herein are “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. Such forward looking statements may be identified by reference to a future period or periods, or by the use of forward looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the real estate and economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, inflation, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, increased levels of loan delinquencies, problem assets and foreclosures, credit risk management, asset-liability management, cybersecurity risks, geopolitical conflicts, public health issues, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions that 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.

For further information:
Michael Lesler
EVP & Chief Financial Officer
mlesler@orangebanktrust.com
Phone: (845) 341-5111

ORANGE COUNTY BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
	(Dollar Amounts in thousands except per share data)

			September 30, 2024			December 31, 2023

		ASSETS

Cash and due from banks			$	160,872		$	147,383
Investment securities – available-for-sale				469,532			489,948
(Amortized cost $529,161 at September 30, 2024 and $560,994 at December 31, 2023)
Restricted investment in bank stocks				8,267			14,525
Loans				1,796,094			1,747,062
Allowance for credit losses				(31,023	)		(25,182	)
	Loans, net			1,765,071			1,721,880

Premises and equipment, net				15,624			16,160
Accrued interest receivable				10,007			5,934
Bank owned life insurance				41,993			41,447
Goodwill				5,359			5,359
Intangible assets				892			1,107
Other assets				41,482			41,725

		TOTAL ASSETS	$	2,519,099		$	2,485,468

		LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits:
	Noninterest bearing		$	690,419		$	699,203
	Interest bearing			1,449,604			1,339,546
		Total deposits		2,140,023			2,038,749

FHLB advances, short term				82,000			224,500
FHLB advances, long term				10,000			10,000
BTFP borrowing				50,000			–
Subordinated notes, net of issuance costs				19,573			19,520
Accrued expenses and other liabilities				24,409			27,323

		TOTAL LIABILITIES		2,326,005			2,320,092

		STOCKHOLDERS’ EQUITY

Common stock, $0.50 par value; 15,000,000 shares authorized;
	5,683,304 issued; 5,674,126 and 5,651,311 outstanding,
	at September 30, 2024 and December 31, 2023, respectively			2,842			2,842
Surplus				120,874			120,392
Retained Earnings				124,174			107,361
Accumulated other comprehensive income (loss), net of taxes				(54,386	)		(64,108	)
Treasury stock, at cost; 9,178 and 31,993 shares at September 30,
	2024 and December 31, 2023, respectively			(410	)		(1,111	)
		TOTAL STOCKHOLDERS’ EQUITY		193,094			165,376

		TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,519,099		$	2,485,468

ORANGE COUNTY BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollar Amounts in thousands except per share data)
			For Three Months Ended September 30,				Nine Months Ended September 30,
			2024		2023		2024		2023
INTEREST INCOME
	Interest and fees on loans		$	26,375	$	24,682	$	78,767	$	70,398
	Interest on investment securities:
		Taxable		2,645		3,150		8,976		9,570
		Tax exempt		573		564		1,722		1,721
	Interest on Federal funds sold and other			1,843		1,703		5,556		4,514

		TOTAL INTEREST INCOME		31,436		30,099		95,021		86,203

INTEREST EXPENSE
	Savings and NOW accounts			5,432		3,506		15,167		9,081
	Time deposits			1,213		1,954		5,741		3,893
	FHLB advances and borrowings			1,593		1,907		4,734		6,295
	Note payable			–		–		–		–
	Subordinated notes			230		231		691		692
		TOTAL INTEREST EXPENSE		8,468		7,598		26,333		19,961

		NET INTEREST INCOME		22,968		22,501		68,688		66,242

Provision for credit losses				7,191		837		7,761		7,406
		NET INTEREST INCOME AFTER
		PROVISION FOR CREDIT LOSSES		15,777		21,664		60,927		58,836

NONINTEREST INCOME
	Service charges on deposit accounts			270		210		737		588
	Trust income			1,379		1,266		4,000		3,707
	Investment advisory income			1,741		1,333		4,966		3,819
	Investment securities gains(losses)			–		–		–		107
	Earnings on bank owned life insurance			39		243		551		725
	Other			745		168		1,413		730
		TOTAL NONINTEREST INCOME		4,174		3,220		11,667		9,676

NONINTEREST EXPENSE
	Salaries			6,687		6,135		20,298		18,606
	Employee benefits			2,269		1,752		6,695		5,359
	Occupancy expense			1,222		1,180		3,547		3,614
	Professional fees			1,557		799		4,330		3,512
	Directors’ fees and expenses			584		295		781		682
	Computer software expense			1,526		1,233		4,191		3,714
	FDIC assessment			210		463		978		1,023
	Advertising expenses			364		364		1,166		1,074
	Advisor expenses related to trust income			30		30		95		89
	Telephone expenses			190		184		565		534
	Intangible amortization			71		71		214		214
	Other			1,237		1,084		3,884		3,644
		TOTAL NONINTEREST EXPENSE		15,947		13,590		46,744		42,065

	Income before income taxes			4,004		11,294		25,850		26,447

Provision for income taxes				788		2,256		5,131		5,093
		NET INCOME	$	3,216	$	9,038	$	20,719	$	21,354

Basic and diluted earnings per share			$	0.57	$	1.61	$	3.67	$	3.79

Weighted average shares outstanding				5,653,904		5,629,642		5,643,591		5,628,036

ORANGE COUNTY BANCORP, INC.
NET INTEREST MARGIN ANALYSIS
(UNAUDITED)
(Dollar Amounts in thousands)

	Three Months Ended September 30,
	2024								2023
	Average Balance			Interest			Average Rate		Average Balance			Interest		Average Rate
Assets:
Loans Receivable (net of PPP)	$	1,759,989		$	26,372		5.94	%	$	1,697,745		$	24,677	5.77	%
PPP Loans		186			3		6.40	%		996			5	1.99	%
Investment securities		463,347			3,252		2.78	%		495,803			3,466	2.77	%
Due from banks		160,563			1,843		4.55	%		154,335			1,703	4.38	%
Other		7,601			(34	)	-1.77	%		10,299			248	9.55	%
Total interest earning assets		2,391,686			31,436		5.21	%		2,359,178			30,099	5.06	%
Non-interest earning assets		94,476								96,894
Total assets	$	2,486,162							$	2,456,072

Liabilities and equity:
Interest-bearing demand accounts	$	370,442		$	425		0.46	%	$	334,658		$	332	0.39	%
Money market accounts		695,516			4,083		2.33	%		632,300			2,551	1.60	%
Savings accounts		256,934			924		1.43	%		242,627			623	1.02	%
Certificates of deposit		116,817			1,213		4.12	%		176,369			1,954	4.40	%
Total interest-bearing deposits		1,439,709			6,645		1.83	%		1,385,954			5,460	1.56	%
FHLB Advances and other borrowings		127,197			1,593		4.97	%		140,560			1,907	5.38	%
Subordinated notes		19,561			230		4.66	%		19,490			231	4.70	%
Total interest bearing liabilities		1,586,467			8,468		2.12	%		1,546,004			7,598	1.95	%
Non-interest bearing demand accounts		688,138								736,313
Other non-interest bearing liabilities		25,947								23,279
Total liabilities		2,300,552								2,305,596
Total shareholders’ equity		185,610								150,476
Total liabilities and shareholders’ equity	$	2,486,162							$	2,456,072

Net interest income				$	22,968							$	22,501
Interest rate spread ¹							3.10	%						3.11	%
Net interest margin ²							3.81	%						3.78	%
Average interest earning assets to interest-bearing liabilities		150.8	%							152.6	%

Notes:
¹The Interest rate spread is the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities
²Net interest margin is the annualized net interest income divided by average interest-earning assets

ORANGE COUNTY BANCORP, INC.
NET INTEREST MARGIN ANALYSIS
(UNAUDITED)
(Dollar Amounts in thousands)

	Nine Months Ended September 30,
	2024							2023
	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate
Assets:
Loans Receivable (net of PPP)	$	1,742,193		$	78,761	6.02	%	$	1,668,967		$	70,374	5.64	%
PPP Loans		197			6	4.06	%		1,440			24	2.23	%
Investment securities		470,701			10,048	2.84	%		514,011			10,575	2.75	%
Due from banks		156,899			5,556	4.72	%		139,539			4,514	4.33	%
Other		7,945			650	10.90	%		11,268			716	8.50	%
Total interest earning assets		2,377,935			95,021	5.32	%		2,335,225			86,203	4.94	%
Non-interest earning assets		96,047							95,597
Total assets	$	2,473,982						$	2,430,822

Liabilities and equity:
Interest-bearing demand accounts	$	375,124		$	1,348	0.48	%	$	336,801		$	875	0.35	%
Money market accounts		660,795			11,233	2.26	%		623,039			6,471	1.39	%
Savings accounts		249,013			2,586	1.38	%		251,588			1,735	0.92	%
Certificates of deposit		170,079			5,741	4.50	%		147,750			3,893	3.52	%
Total interest-bearing deposits		1,455,011			20,908	1.91	%		1,359,178			12,974	1.28	%
FHLB Advances and other borrowings		123,880			4,734	5.09	%		164,434			6,295	5.12	%
Subordinated notes		19,544			691	4.71	%		19,472			692	4.75	%
Total interest bearing liabilities		1,598,435			26,333	2.19	%		1,543,084			19,961	1.73	%
Non-interest bearing demand accounts		674,727							717,067
Other non-interest bearing liabilities		26,701							22,988
Total liabilities		2,299,863							2,283,139
Total shareholders’ equity		174,119							147,683
Total liabilities and shareholders’ equity	$	2,473,982						$	2,430,822

Net interest income				$	68,688						$	66,242
Interest rate spread ¹						3.13	%						3.21	%
Net interest margin ²						3.85	%						3.79	%
Average interest earning assets to interest-bearing liabilities		148.8	%						151.3	%

Notes:
¹The Interest rate spread is the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities
² Net interest margin is the annualized net interest income divided by average interest-earning assets

ORANGE COUNTY BANCORP, INC.
SELECTED RATIOS AND OTHER DATA
(UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Performance Ratios:
Return on average assets (1)	0.52	%	1.47	%	1.12	%	1.17	%
Return on average equity (1)	6.93	%	24.03	%	15.87	%	19.28	%
Interest rate spread (2)	3.10	%	3.11	%	3.13	%	3.21	%
Net interest margin (3)	3.81	%	3.78	%	3.85	%	3.79	%
Dividend payout ratio (4)	40.44	%	14.33	%	18.79	%	18.18	%
Non-interest income to average total assets	0.67	%	0.52	%	0.63	%	0.53	%
Non-interest expenses to average total assets	2.57	%	2.21	%	2.52	%	2.31	%
Average interest-earning assets to average interest-bearing liabilities	150.76	%	152.60	%	148.77	%	151.33	%

	At		At
	September 30, 2024		December 31, 2023
Asset Quality Ratios:
Non-performing assets to total assets	0.44	%	0.18	%
Non-performing loans to total loans	0.62	%	0.25	%
Allowance for credit losses to non-performing loans	277.76	%	568.83	%
Allowance for credit losses to total loans	1.73	%	1.44	%

Capital Ratios (5):
Total capital (to risk-weighted assets)	14.89	%	14.16	%
Tier 1 capital (to risk-weighted assets)	13.64	%	12.91	%
Common equity tier 1 capital (to risk-weighted assets)	13.64	%	12.91	%
Tier 1 capital (to average assets)	10.06	%	9.42	%

Notes:
(1) Annualized for the three and nine month periods ended September 30, 2024 and 2023, respectively.
(2) Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the periods.
(3) The net interest margin represents net interest income as a percent of average interest-earning assets for the periods.
(4) The dividend payout ratio represents dividends paid per share divided by net income per share.
(5) Ratios are for the Bank only.

ORANGE COUNTY BANCORP, INC.
SELECTED OPERATING DATA
(UNAUDITED)
(Dollar Amounts in thousands except per share data)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest income	$	31,436	$	30,099	$	95,021	$	86,203
Interest expense		8,468		7,598		26,333		19,961
Net interest income		22,968		22,501		68,688		66,242
Provision for credit losses		7,191		837		7,761		7,406
Net interest income after provision for credit losses		15,777		21,664		60,927		58,836
Noninterest income		4,174		3,220		11,667		9,676
Noninterest expenses		15,947		13,590		46,744		42,065
Income before income taxes		4,004		11,294		25,850		26,447
Provision for income taxes		788		2,256		5,131		5,093
Net income	$	3,216	$	9,038	$	20,719	$	21,354

Basic and diluted earnings per share	$	0.57	$	1.61	$	3.67	$	3.79
Weighted average common shares outstanding		5,653,904		5,629,642		5,643,591		5,628,036

	At		At
	September 30, 2024		December 31, 2023
Book value per share	$	34.03	$	29.26
Net tangible book value per share (1)	$	32.93	$	28.12
Outstanding common shares		5,674,126		5,651,311

Notes:
(1) Net tangible book value represents the amount of total tangible assets reduced by our total liabilities. Tangible assets are calculated by reducing total assets, as defined by GAAP, by $5,359 in goodwill and $892, and $1,107 in other intangible assets for September 30, 2024 and December 31, 2023, respectively.

ORANGE COUNTY BANCORP, INC.
LOAN COMPOSITION
(UNAUDITED)
(Dollar Amounts in thousands)
	At September 30, 2024				At December 31, 2023
	Amount		Percent		Amount		Percent
Commercial and industrial (a)	$	251,484	14.00	%	$	273,562	15.66	%
Commercial real estate		1,334,580	74.30	%		1,259,356	72.08	%
Commercial real estate construction		78,227	4.36	%		85,725	4.91	%
Residential real estate		74,462	4.15	%		78,321	4.48	%
Home equity		16,064	0.89	%		13,546	0.78	%
Consumer		41,277	2.30	%		36,552	2.09	%
Total loans		1,796,094	100.00	%		1,747,062	100.00	%
Allowance for loan losses		31,023				25,182
Total loans, net	$	1,765,071			$	1,721,880

(a) – Includes PPP loans of:	$	181			$	215

ORANGE COUNTY BANCORP, INC.
DEPOSITS BY ACCOUNT TYPE
(UNAUDITED)
(Dollar Amounts in thousands)
	At September 30, 2024						At December 31, 2023
	Amount		Percent		Average Rate		Amount		Percent		Average Rate
Noninterest-bearing demand accounts	$	690,419	32.26	%	0.00	%	$	699,203	34.30	%	0.00	%
Interest bearing demand accounts		342,306	16.00	%	0.49	%		304,892	14.95	%	0.49	%
Money market accounts		707,065	33.04	%	2.27	%		584,976	28.69	%	2.04	%
Savings accounts		258,302	12.07	%	1.39	%		228,161	11.19	%	1.19	%
Certificates of Deposit		141,931	6.63	%	4.06	%		221,517	10.87	%	4.57	%
Total	$	2,140,023	100.00	%	1.27	%	$	2,038,749	100.00	%	1.29	%

ORANGE COUNTY BANCORP, INC.
NON-PERFORMING ASSETS
(UNAUDITED)
	(Dollar Amounts in thousands)

	September 30, 2024			December 31, 2023

Non-accrual loans:
Commercial and industrial	$	199		$	556
Commercial real estate		10,725			2,692
Commercial real estate construction		–			–
Residential real estate		8			1,179
Home equity		–			–
Consumer		–			–
Total non-accrual loans		10,932			4,427
Accruing loans 90 days or more past due:
Commercial and industrial		237			–
Commercial real estate		–			–
Commercial real estate construction		–			–
Residential real estate		–			–
Home equity		–			–
Consumer		–			–
Total loans 90 days or more past due		237			–
Total non-performing loans		11,169			4,427
Other real estate owned		–			–
Other non-performing assets		–			–
Total non-performing assets	$	11,169		$	4,427

Ratios:
Total non-performing loans to total loans		0.62	%		0.25	%
Total non-performing loans to total assets		0.44	%		0.18	%
Total non-performing assets to total assets		0.44	%		0.18	%

Notes:
1 – Includes non-accruing TDRs:	$	–		$	2,391

The MIL Network –

January 25, 2025

MIL-OSI: Employers Holdings, Inc. Reports Third Quarter 2024 Results and Declares Regular Quarterly Dividend of $0.30 per Share

Source: GlobeNewswire (MIL-OSI)

RENO, Nev., Oct. 30, 2024 (GLOBE NEWSWIRE) — Employers Holdings, Inc. (the “Company”) (NYSE:EIG), a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services focused on small and mid-sized businesses engaged in low-to-medium hazard industries, today reported financial results for its third quarter ended September 30, 2024.

Financial Highlights:
(All comparisons vs. the third quarter of 2023).

Net income per diluted share increased by 124%, from $0.54 to $1.21,
Adjusted net income per diluted share increased 19%, from $0.68 to $0.81,
Gross premiums written decreased 8%, from $196.2 million to $181.2 million,
Net premiums earned increased 1%, from $184.6 million to $186.6 million,
Underwriting and general and administrative expense ratio of 23.2%, versus 23.6%,
GAAP combined ratio of 100.4% (101.2% excluding LPT), versus 100.3% (101.3% excluding LPT),
Net investment income increased 3%, from $25.9 million to $26.6 million, and
Record number of ending policies in-force of 129,879.

Management Commentary

Chief Executive Officer Katherine Antonello commented: “Higher earned premiums, strong net investment income and continued net investment gains drove year-over-year increases in revenue of 10% and 6% for the third quarter and the first nine months of 2024. We also ended the period with yet another record number of policies in-force, which were up 3% year-over-year.

During the quarter we grew our new and renewal premiums, but reductions in final audit premiums and endorsements more than offset that growth.

Our current accident year loss and LAE ratio was 63.9%, slightly above the loss and LAE ratio we maintained throughout 2023 and consistent with that of 2022. As was the case in the third quarter of 2023, we did not recognize any prior year loss reserve development on our voluntary business because a full actuarial study was not performed. We will evaluate our prior year reserves in more detail at year-end when we routinely perform a full reserve study.

Our commission expense ratio was 14.1%, versus 14.5% a year ago. The reduction in this ratio was largely attributable to a decrease in anticipated 2024 agency incentives, which are specific to individual contracts and vary with agency targets. Our underwriting and general and administrative expense ratio was 23.2%, down from 23.6% a year ago. The reduction in this ratio was primarily the result of the Cerity integration plan we executed in the fourth quarter of 2023.

Our resulting combined ratio excluding LPT was 101.2% for the third quarter, versus 101.3%, a year ago.

Our net investment income was $26.6 million, up 3% from a year ago. When considering the $1.0 million of interest expense we incurred in the third quarter of 2023 through our Federal Home Loan Bank leveraged investment strategy, which we unwound during the fourth quarter of 2023, our net investment income was actually up 7% year-over-year.

Lastly, our strong operating results, coupled with our proactive and opportunistic management of our investment portfolio and our capital position, contributed to year-over year increases of 27% and 24% in our book value per share and book value per share including the deferred gain, respectively. As a result, our balance sheet is strong, our underwriting capital is abundant and our confidence in the Company’s future operations remains high.”

Summary of Third Quarter 2024 Results

(All comparisons vs. the third quarter of 2023, unless otherwise noted).

Gross premiums written were $181.2 million, a decrease of 8%. The decrease was due to higher new and renewal business writings being more than offset by lower final audit premiums and endorsements. Net premiums earned were $186.6 million, an increase of 1%.

Losses and loss adjustment expenses were $117.7 million, an increase of 2%. The increase was primarily due to higher earned premiums and a slightly higher current accident year loss and loss adjustment expense estimate. The Company’s loss and loss adjustment expense ratio was 63.1% (63.9% excluding LPT), versus 62.2% (63.2% excluding LPT).

Commission expenses were $26.4 million, a decrease of 1%. The Company’s commission expense ratio was 14.1%, versus 14.5% a year ago.

Underwriting and general and administrative expenses were $43.2 million, a decrease of 1%. The Company’s underwriting and general and administrative expense ratio was 23.2%, versus 23.6% a year ago. The decrease primarily related to lower professional fees and information technology expenses, partially offset by higher bad debt expense.

Net investment income was $26.6 million, an increase of 2.7%. The increase was primarily due to higher yields on our fixed maturity securities.

Net realized and unrealized gains (losses) on investments reflected on the income statement were $10.9 million, versus $(7.1) million.

Interest and financing expenses were less than $0.1 million, versus $1.0 million. The decrease resulted from the unwinding of our former FHLB leveraged investment strategy.

Income tax expense was $6.4 million (17.4% effective rate), versus $3.4 million (19.5% effective rate). The effective rates during each of the periods included income tax benefits and exclusions associated with tax-advantaged investment income, LPT adjustments, deferred gain amortization and related adjustments and tax credits utilized.

The Company’s book value per share including the deferred gain of $47.99 increased 24.0% year-over-year and 7.5% during the third quarter of 2024, computed after considering dividends declared. During the third quarter this measure was favorably impacted by $52.2 million of after-tax unrealized gains arising from fixed maturity securities (which are reflected on the balance sheet) and $10.1 million of net after tax unrealized gains arising from equity securities and other investments (which are reflected on the income statement). The Company’s adjusted book value per share of $49.83 increased by 11.5% year-over-year and 2.5% during the third quarter of 2024, computed after considering dividends declared. During the third quarter this measure was favorably impacted by the net after tax unrealized gains arising from equity securities and other investments previously described.

Share Repurchases and Fourth Quarter 2024 Dividend Declaration

During the third quarter of 2024, the Company repurchased 163,221 shares of its common stock at an average price of $45.27 per share. During the period from October 1, 2024 through October 29, 2024, the Company repurchased a further 20,602 shares of its common stock at an average price of $47.45 per share. The Company currently has a remaining share repurchase authorization of $38.6 million.

On October 30, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.30. The dividend is payable on November 27, 2024 to stockholders of record as of November 13, 2024.

Earnings Conference Call and Webcast

The Company will host a conference call on Thursday, October 31, 2024 at 11:00 a.m. Eastern Daylight Time / 8:00 a.m. Pacific Daylight Time.

To participate in the live conference call, you must first register here. Once registered you will receive dial-in numbers and a unique PIN number.

The webcast will be accessible on the Company’s website at www.employers.com through the “Investors” link.

Reconciliation of Non-GAAP Financial Measures to GAAP

The information in this press release should be read in conjunction with the Financial Supplement that is attached to this press release and available on our website.

Within this earnings release we present various financial measures, some of which are “non-GAAP financial measures” as defined in Regulation G pursuant to Section 401 of the Sarbanes – Oxley Act of 2002. A description of these non-GAAP financial measures, as well as a reconciliation of such non-GAAP measures to our most directly comparable GAAP financial measures is included in the attached Financial Supplement. Management believes that these non-GAAP measures are important to the Company’s investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.

Forward-Looking Statements

In this press release, the Company and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations, and projections of, among other things, the Company’s future performance, economic or market conditions, including current or future levels of inflation, changes in interest rates, labor market expectations, catastrophic events or geo-political conditions, legislative or regulatory actions or court decisions, business growth, retention rates, loss costs, claim trends and the impact of key business initiatives, future technologies and planned investments. Certain of these statements may constitute “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often identified by words such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” or “continue,” or other comparable terminology and their negatives. The Company and its management caution investors that such forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in the Company’s future performance. Factors that could cause the Company’s actual results to differ materially from those indicated by such forward-looking statements include, among other things, those discussed or identified from time to time in the Company’s public filings with the Securities and Exchange Commission (SEC), including the risks detailed in the Company’s Quarterly Reports on Form 10-Q and the Company’s Annual Reports on Form 10-K. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Filings with the SEC

The Company’s filings with the SEC and its quarterly investor presentations can be accessed through the “Investors” link on the Company’s website, www.employers.com. The Company’s filings with the SEC can also be accessed through the SEC’s EDGAR Database at www.sec.gov (EDGAR CIK No. 0001379041).

About Employers Holdings, Inc.

Employers Holdings, Inc. (NYSE: EIG), is a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services (collectively “EMPLOYERS®”) focused on small and mid-sized businesses engaged in low-to-medium hazard industries. EMPLOYERS leverages over a century of experience to deliver comprehensive coverage solutions that meet the unique needs of its customers. Drawing from its long history and extensive knowledge, EMPLOYERS empowers businesses by protecting their most valuable asset – their employees – through exceptional claims management, loss control, and risk management services, creating safer work environments.

EMPLOYERS is also proud to offer Cerity®, which is focused on providing digital-first, direct-to-consumer workers’ compensation insurance solutions with fast, and affordable coverage options through a user-friendly online platform.

EMPLOYERS operates throughout the United States, apart from four states that are served exclusively by their state funds. Insurance is offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, Employers Assurance Company and Cerity Insurance Company, all rated A- (Excellent) by A.M. Best. Not all companies do business in all jurisdictions. EIG Services, Inc., and Cerity Services, Inc., are subsidiaries of Employers Holdings, Inc. EMPLOYERS® is a registered trademark of EIG Services, Inc., and Cerity® is a registered trademark of Cerity Services, Inc. For more information, please visit www.employers.com and www.cerity.com.

Contact Information

Mike Paquette (775) 327-2562 or mpaquette@employers.com


EMPLOYERS HOLDINGS, INC. Table of Contents

	Page

	1	Consolidated Financial Highlights

	2	Summary Consolidated Balance Sheets

	3	Summary Consolidated Income Statements

	4	Return on Equity

	5	Combined Ratios

	6	Roll-forward of Unpaid Losses and LAE

	7	Consolidated Investment Portfolio

	8	Book Value Per Share

	9	Earnings Per Share

	10	Non-GAAP Financial Measures


EMPLOYERS HOLDINGS, INC. Consolidated Financial Highlights (unaudited) $ in millions, except per share amounts

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
		2024			2023		% change				2024			2023		% change
*Selected financial highlights:*
Gross premiums written	$	181.2		$	196.2			(8	)%	$	599.9		$	589.5			2	%
Net premiums written		179.6			194.5			(8	)		594.8			584.2			2
Net premiums earned		186.6			184.6			1			559.3			534.4			5
Net investment income		26.6			25.9			3			80.3			80.3			—
Net income excluding LPT⁽¹⁾		28.8			12.1			138			84.5			66.6			27
Adjusted net income⁽¹⁾		20.2			17.7			14			65.1			65.6			(1	)
Net Income before income taxes		36.7			17.4			111			112.1			90.3			24
Net Income		30.3			14.0			116			90.3			72.5			25
Comprehensive income (loss)		84.0			(12.1	)		794			131.0			54.8			139
Total assets											3,617.3			3,527.0			3
Stockholders’ equity											1,093.4			919.0			19
Stockholders’ equity including the Deferred Gain⁽²⁾											1,187.2			1,019.2			16
Adjusted stockholders’ equity⁽²⁾											1,232.5			1,175.8			5
Annualized adjusted return on stockholders’ equity⁽³⁾		6.6	%		6.0	%		10	%		7.1	%		7.4	%		(4)	%
*Amounts per share:*
Cash dividends declared per share	$	0.30		$	0.28			7	%	$	0.88		$	0.82			7	%
Earnings per diluted share⁽⁴⁾		1.21			0.54			124			3.57			2.71			32
Earnings per diluted share excluding LPT⁽⁴⁾		1.15			0.46			150			3.34			2.49			34
Adjusted earnings per diluted share⁽⁴⁾		0.81			0.68			19			2.57			2.45			5
Book value per share⁽²⁾											44.20			35.73			24
Book value per share including the Deferred Gain⁽²⁾											47.99			39.63			21
Adjusted book value per share⁽²⁾											49.83			45.72			9
Combined ratio excluding LPT:⁽⁵⁾:
Loss and loss adjustment expense ratio:
Current Year		63.9	%		63.3	%					64.0	%		63.4	%
Prior Year		—			(0.1	)					(1.7	)		(3.8	)
Loss and loss adjustment expense ratio		63.9	%		63.2	%					62.3	%		59.6	%
Commission expense ratio		14.1	%		14.5	%					14.1	%		13.8	%
Underwriting and general and administrative expense ratio		23.2	%		23.6	%					23.3	%		25.0	%
Combined ratio excluding LPT		101.2	%		101.3	%					99.7	%		98.4	%


(1) See Page 3 for calculations and Page 10 for information regarding our use of Non-GAAP Financial Measures.
(2) See Page 8 for calculations and Page 10 for information regarding our use of Non-GAAP Financial Measures.
(3) See Page 4 for calculations and Page 10 for information regarding our use of Non-GAAP Financial Measures.
(4) See Page 9 for description and calculations and Page 10 for information regarding our use of Non-GAAP Financial Measures.
(5) See Pages 5 for details and Page 10 for information regarding our use of Non-GAAP Financial Measures.


EMPLOYERS HOLDINGS, INC. Summary Consolidated Balance Sheets (unaudited) $ in millions, except per share amounts

	September 30, 2024			December 31, 2023
ASSETS
Investments, cash and cash equivalents	$	2,601.5		$	2,504.7
Accrued investment income		15.8			16.3
Premiums receivable, net		378.8			359.4
Reinsurance recoverable, net of allowance, on paid and unpaid losses and LAE		418.8			433.8
Deferred policy acquisition costs		60.9			55.6
Deferred income tax asset, net		26.2			43.4
Contingent commission receivable—LPT Agreement		—			14.2
Other assets		115.3			123.0
Total assets	$	3,617.3		$	3,550.4

LIABILITIES
Unpaid losses and LAE	$	1,836.5		$	1,884.5
Unearned premiums		412.5			379.7
Commissions and premium taxes payable		65.4			66.0
Deferred Gain		93.8			99.2
Other liabilities		115.7			107.1
Total liabilities	$	2,523.9		$	2,536.5

STOCKHOLDERS’ EQUITY
Common stock and additional paid-in capital	$	423.1		$	420.4
Retained earnings		1,452.1			1,384.3
Accumulated other comprehensive loss		(45.3	)		(86.0	)
Treasury stock, at cost		(736.5	)		(704.8	)
Total stockholders’ equity		1,093.4			1,013.9
Total liabilities and stockholders’ equity	$	3,617.3		$	3,550.4

Stockholders’ equity including the Deferred Gain ⁽¹⁾	$	1,187.2		$	1,113.1
Adjusted stockholders’ equity ⁽¹⁾		1,232.5			1,199.1
Book value per share ⁽¹⁾	$	44.20		$	39.96
Book value per share including the Deferred Gain⁽¹⁾		47.99			43.88
Adjusted book value per share ⁽¹⁾		49.83			47.26

(1) See Page 8 for calculations and Page 10 for information regarding our use of Non-GAAP Financial Measures.


EMPLOYERS HOLDINGS, INC. Summary Consolidated Income Statements (unaudited) $ in millions

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2024			2023			2024			2023
Revenues:
Net premiums earned	$	186.6		$	184.6		$	559.3		$	534.4
Net investment income		26.6			25.9			80.3			80.3
Net realized and unrealized gains (losses) on investments⁽¹⁾		10.9			(7.1	)		24.5			10.7
Other income (loss)		(0.1	)		0.1			—			(0.2	)
Total revenues		224.0			203.5			664.1			625.2
Expenses:
Losses and LAE incurred		(117.7	)		(114.9	)		(343.0	)		(312.8	)
Commission expense		(26.4	)		(26.7	)		(78.7	)		(73.8	)
Underwriting and general and administrative expenses		(43.2	)		(43.5	)		(130.2	)		(133.7	)
Interest and financing expenses		—			(1.0	)		(0.1	)		(5.2	)
Other expenses		—			—			—			(9.4	)
Total expenses		(187.3	)		(186.1	)		(552.0	)		(534.9	)
Net income before income taxes		36.7			17.4			112.1			90.3
Income tax expense		(6.4	)		(3.4	)		(21.8	)		(17.8	)
Net Income		30.3			14.0			90.3			72.5
Unrealized AFS investment gains (losses) arising during the period, net of tax⁽²⁾		52.2			(27.0	)		35.7			(20.0	)
Reclassification adjustment for net realized AFS investment losses in net income, net of tax⁽²⁾		1.5			0.9			5.0			2.3
Total comprehensive income (loss)	$	84.0		$	(12.1	)	$	131.0		$	54.8
Net Income	$	30.3		$	14.0		$	90.3		$	72.5
Amortization of the Deferred Gain – losses		(1.5	)		(1.5	)		(4.6	)		(4.7	)
Amortization of the Deferred Gain – contingent commission		—			(0.4	)		(0.8	)		(1.2	)
LPT contingent commission adjustments		—			—			(0.4	)		—
Net income excluding LPT Agreement ⁽³⁾		28.8			12.1			84.5			66.6
Net realized and unrealized (gains) losses on investments		(10.9	)		7.1			(24.5	)		(10.7	)
Lease termination and asset impairment charges		—			—			—			9.4
Income tax expense (benefit) related to items excluded from Net income		2.3			(1.5	)		5.1			0.3
Adjusted net income	$	20.2		$	17.7		$	65.1		$	65.6

(1) Includes net realized and unrealized gains (losses) on equity securities and other investments of $12.8 million and $(5.9) million for the three months ended September 30, 2024 and 2023, respectively, and $30.8 million and $13.6 million for the nine months ended September 30, 2024 and 2023, respectively.
(2) AFS = Available for Sale securities.
(3) See Page 10 regarding our use of Non-GAAP Financial Measures.


EMPLOYERS HOLDINGS, INC. Return on Equity (unaudited) $ in millions

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
			2024			2023			2024			2023

Net income	A	$	30.3		$	14.0		$	90.3		$	72.5
Impact of the LPT Agreement			(1.5	)		(1.9	)		(5.8	)		(5.9	)
Net realized and unrealized (gains) losses on investments			(10.9	)		7.1			(24.5	)		(10.7	)
Lease termination and asset impairment charges			—			—			—			9.4
Income tax expense (benefit) related to items excluded from Net income			2.3			(1.5	)		5.1			0.3
Adjusted net income ⁽¹⁾	B		20.2			17.7			65.1			65.6

Stockholders’ equity – end of period		$	1,093.4		$	919.0		$	1,093.4		$	919.0
Stockholders’ equity – beginning of period			1,022.9			951.7			1,013.9			944.2
Average stockholders’ equity	C		1,058.2			935.4			1,053.7			931.6

Stockholders’ equity – end of period		$	1,093.4		$	919.0		$	1,093.4		$	919.0
Deferred Gain – end of period			93.8			100.2			93.8			100.2
Accumulated other comprehensive loss – end of period			57.3			198.2			57.3			198.2
Income taxes related to accumulated other comprehensive loss – end of period			(12.0	)		(41.6	)		(12.0	)		(41.6	)
Adjusted stockholders’ equity – end of period			1,232.5			1,175.8			1,232.5			1,175.8
Adjusted stockholders’ equity – beginning of period			1,217.2			1,184.3			1,199.1			1,189.2
Average adjusted stockholders’ equity ⁽¹⁾	D		1,224.9			1,180.1			1,215.8			1,182.5

Return on stockholders’ equity	A / C		2.9	%		1.5	%		8.6	%		7.8	%
Annualized return on stockholders’ equity			11.5			6.0			11.4			10.4

Adjusted return on stockholders’ equity ⁽¹⁾	B / D		1.6	%		1.5	%		5.4	%		5.5	%
Annualized adjusted return on stockholders’ equity ⁽¹⁾			6.6			6.0			7.1			7.4

(1) See Page 10 for information regarding our use of Non-GAAP Financial Measures.


EMPLOYERS HOLDINGS, INC. Combined Ratios (unaudited) $ in millions, except per share amounts

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
			2024			2023			2024			2023

Net premiums earned	A	$	186.6		$	184.6		$	559.3		$	534.4
Losses and LAE incurred	B		117.7			114.9			343.0			312.8
Amortization of deferred reinsurance gain – losses			1.5			1.5			4.6			4.7
Amortization of deferred reinsurance gain – contingent commission			—			0.4			0.8			1.2
LPT contingent commission adjustments			—			—			0.4			—
Losses and LAE excluding LPT⁽¹⁾	C	$	119.2		$	116.8		$	348.8		$	318.7
Prior year loss reserve development			(0.1	)		(0.1	)		(9.3	)		(20.0	)
Losses and LAE excluding LPT – current accident year	D	$	119.3		$	116.9		$	358.1		$	338.7
Commission expense	E	$	26.4		$	26.7		$	78.7		$	73.8
Underwriting and general and administrative expense	F	$	43.2		$	43.5		$	130.2		$	133.7
GAAP combined ratio:
Loss and LAE ratio	B/A		63.1	%		62.2	%		61.3	%		58.5	%
Commission expense ratio	E/A		14.1			14.5			14.1			13.8
Underwriting and general and administrative expense ratio	F/A		23.2			23.6			23.3			25.0
GAAP combined ratio			100.4	%		100.3	%		98.7	%		97.3	%
Combined ratio excluding LPT:⁽¹⁾
Loss and LAE ratio excluding LPT	C/A		63.9	%		63.2	%		62.3	%		59.6	%
Commission expense ratio	E/A		14.1			14.5			14.1			13.8
Underwriting and general and administrative expense ratio	F/A		23.2			23.6			23.3			25.0
Combined ratio excluding LPT			101.2	%		101.3	%		99.7	%		98.4	%
Combined ratio excluding LPT: current accident year:⁽¹⁾
Loss and LAE ratio excluding LPT	D/A		63.9	%		63.3	%		64.0	%		63.4	%
Commission expense ratio	E/A		14.1			14.5			14.1			13.8
Underwriting and general and administrative expenses ratio	F/A		23.2			23.6			23.3			25.0
Combined ratio excluding LPT: current accident year			101.2	%		101.4	%		101.4	%		102.2	%

(1) See Page 10 for information regarding our use of Non-GAAP Financial Measures.


EMPLOYERS HOLDINGS, INC. Roll-forward of Unpaid Losses and LAE (unaudited) $ in millions

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2024			2023			2024			2023

Unpaid losses and LAE at beginning of period	$	1,850.9		$	1,927.2		$	1,884.5		$	1,960.7
Reinsurance recoverable, excluding CECL allowance, on unpaid losses and LAE		418.3			436.2			428.4			445.4
Net unpaid losses and LAE at beginning of period		1,432.6			1,491.0			1,456.1			1,515.3
Losses and LAE incurred:
Current year losses		119.3			116.9			358.0			338.7
Prior year losses on voluntary business		—			—			(9.3	)		(20.0	)
Prior year losses on involuntary business		(0.1	)		(0.1	)		—			—
Total losses incurred		119.2			116.8			348.7			318.7
Losses and LAE paid:
Current year losses		38.3			32.0			69.2			64.1
Prior year losses		90.1			89.0			312.2			283.1
Total paid losses		128.4			121.0			381.4			347.2
Net unpaid losses and LAE at end of period		1,423.4			1,486.8			1,423.4			1,486.8
Reinsurance recoverable, excluding CECL allowance, on unpaid losses and LAE		413.1			426.6			413.1			426.6
Unpaid losses and LAE at end of period	$	1,836.5		$	1,913.4		$	1,836.5		$	1,913.4

Total losses and LAE shown in the above table exclude amortization of the Deferred Gain and LPT contingent commission adjustments, which totaled $1.5 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively, and $5.8 million and $5.9 million for the nine months ended September 30, 2024 and 2023, respectively.


EMPLOYERS HOLDINGS, INC. Consolidated Investment Portfolio (unaudited) $ in millions

	September 30, 2024									December 31, 2023
Investment Positions:	Cost or Amortized Cost ⁽¹⁾		Net Unrealized Gain (Loss)			Fair Value		%		Fair Value		%
Fixed maturity securities	$	2,124.6	$	(57.4	)	$	2,065.8	79	%	$	1,936.3	77	%
Equity securities		150.4		111.5			261.9	10			217.2	9
Short-term investments		30.6		—			30.6	1			33.1	1
Other invested assets		88.8		10.9			99.7	4			91.5	4
Cash and cash equivalents		143.3		—			143.3	6			226.4	9
Restricted cash and cash equivalents		0.2		—			0.2	—			0.2	—
Total investments and cash	$	2,537.9	$	65.0		$	2,601.5	100	%	$	2,504.7	100	%

Breakout of Fixed Maturity Securities:
U.S. Treasuries and agencies	$	62.4	$	(0.3	)	$	62.1	3	%	$	60.5	3	%
States and municipalities		181.2		1.8			183.0	9			210.2	11
Corporate securities		930.9		(24.6	)		905.7	44			895.8	46
Mortgage-backed securities		552.8		(32.4	)		520.1	25			426.0	22
Asset-backed securities		209.5		0.6			210.1	10			128.0	7
Collateralized loan obligations		53.3		(0.2	)		53.1	3			91.5	5
Bank loans and other		134.5		(2.3	)		131.7	6			124.3	6
Total fixed maturity securities	$	2,124.6	$	(57.4	)	$	2,065.8	100	%	$	1,936.3	100	%

Weighted average book yield	4.4%	4.3%
Average credit quality (S&P)	A+	A
Duration	4.2	4.5
(1) Amortized cost excludes allowance for current expected credit losses of $1.4 million.


EMPLOYERS HOLDINGS, INC. Book Value Per Share (unaudited) $ in millions, except per share amounts

		September 30, 2024			June 30, 2024			December 31, 2023			September 30, 2023
Numerators:
Stockholders’ equity	A	$	1,093.4		$	1,022.9		$	1,013.9		$	919.0
Plus: Deferred Gain			93.8			95.3			99.2			100.2
Stockholders’ equity including the Deferred Gain ⁽¹⁾	B		1,187.2			1,118.2			1,113.1			1,019.2
Accumulated other comprehensive loss			57.3			125.3			108.9			198.2
Income taxes related to accumulated other comprehensive loss			(12.0	)		(26.3	)		(22.9	)		(41.6	)
Adjusted stockholders’ equity ⁽¹⁾	C	$	1,232.5		$	1,217.2		$	1,199.1		$	1,175.8

Denominator (shares outstanding)	D		24,736,533			24,896,116			25,369,753			25,719,074

Book value per share ⁽¹⁾	A / D	$	44.20		$	41.09		$	39.96		$	35.73
Book value per share including the Deferred Gain⁽¹⁾	B / D		47.99			44.91			43.88			39.63
Adjusted book value per share ⁽¹⁾	C / D		49.83			48.89			47.26			45.72

Year-over-year change in: ⁽²⁾
Book value per share			27.0	%		15.7	%		18.1	%		12.6	%
Book value per share including the Deferred Gain			24.0			14.0			16.3			11.1
Adjusted book value per share			11.5			10.2			10.5			10.2

(1) See Page 10 for information regarding our use of Non-GAAP Financial Measures.
(2) Reflects the twelve month change in book value per share after taking into account dividends declared of $1.16, $1.14, $1.10 and $2.33 for the twelve month periods ended September 30, 2024, June 30, 2024, December 31, 2023, and September 30, 2023, respectively.


EMPLOYERS HOLDINGS, INC. Earnings Per Share (unaudited) $ in millions, except per share amounts

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
			2024			2023			2024			2023
Numerators:
Net income	A	$	30.3		$	14.0		$	90.3		$	72.5
Impact of the LPT Agreement			(1.5	)		(1.9	)		(5.8	)		(5.9	)
Net income excluding LPT ⁽¹⁾	B		28.8			12.1			84.5			66.6
Net realized and unrealized (gains) losses on investments			(10.9	)		7.1			(24.5	)		(10.7	)
Lease termination and asset impairment charges			—			—			—			9.4
Income tax expense (benefit) related to items excluded from Net income			2.3			(1.5	)		5.1			0.3
Adjusted net income ⁽¹⁾	C	$	20.2		$	17.7		$	65.1		$	65.6

Denominators:
Average common shares outstanding (basic)	D		24,858,159			25,981,984			25,159,753			26,612,443
Average common shares outstanding (diluted)	E		24,982,463			26,118,280			25,293,020			26,767,056

Earnings per share:
Basic	A / D	$	1.22		$	0.54		$	3.59		$	2.72
Diluted	A / E		1.21			0.54			3.57			2.71

Earnings per share excluding LPT: ⁽¹⁾
Basic	B / D	$	1.16		$	0.47		$	3.36		$	2.50
Diluted	B / E		1.15			0.46			3.34			2.49

Adjusted earnings per share: ⁽¹⁾
Basic	C / D	$	0.81		$	0.68		$	2.59		$	2.47
Diluted	C / E		0.81			0.68			2.57			2.45

(1) See Page 10 for information regarding our use of Non-GAAP Financial Measures.

Non-GAAP Financial Measures

Within this earnings release we present the following measures, each of which are “non-GAAP financial measures.” A reconciliation of these measures to the Company’s most directly comparable GAAP financial measures is included herein. Management believes that these non-GAAP measures are important to the Company’s investors, analysts and other interested parties who benefit from having an objective and consistent basis for comparison with other companies within our industry. Management further believes that these measures are more relevant than comparable GAAP measures in evaluating our financial performance.

The LPT Agreement is a non-recurring transaction that no longer provides any ongoing cash benefits to the Company. Management believes that providing non-GAAP measures that exclude the effects of the LPT Agreement (amortization of deferred reinsurance gain, adjustments to LPT Agreement ceded reserves and adjustments to the contingent commission receivable) is useful in providing investors, analysts and other interested parties a meaningful understanding of the Company’s ongoing underwriting performance.

Deferred reinsurance gain (Deferred Gain) reflects the unamortized gain from the LPT Agreement. This gain has been deferred and is being amortized using the recovery method, whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries, except for the contingent profit commission, which was amortized through June 30, 2024, the date of its final settlement. Amortization is reflected in losses and LAE incurred.

Adjusted net income (see Page 3 for calculations) is net income excluding the effects of the LPT Agreement, and net realized and unrealized gains and losses on investments (net of tax), and any miscellaneous non-recurring transactions (net of tax). Management believes that providing this non-GAAP measures is helpful to investors, analysts and other interested parties in identifying trends in the Company’s operating performance because such items have limited significance to its ongoing operations or can be impacted by both discretionary and other economic factors and may not represent operating trends.

Stockholders’ equity including the Deferred Gain (see Page 8 for calculations) is stockholders’ equity including the Deferred Gain. Management believes that providing this non-GAAP measure is useful in providing investors, analysts and other interested parties a meaningful measure of the Company’s total underwriting capital.

Adjusted stockholders’ equity (see Page 8 for calculations) is stockholders’ equity including the Deferred Gain, less accumulated other comprehensive income (net of tax). Management believes that providing this non-GAAP measure is useful to investors, analysts and other interested parties since it serves as the denominator to the Company’s adjusted return on stockholders’ equity metric.

Return on stockholders’ equity and Adjusted return on stockholders’ equity (see Page 4 for calculations). Management believes that these profitability measures are widely used by our investors, analysts and other interested parties.

Book value per share, Book value per share including the Deferred Gain, and Adjusted book value per share (see Page 8 for calculations). Management believes that these valuation measures are widely used by our investors, analysts and other interested parties.

Net income excluding LPT (see Page 3 for calculations). Management believes that these performance and underwriting measures are widely used by our investors, analysts and other interested parties.

The MIL Network –

January 25, 2025

MIL-OSI: COMSTOCK RESOURCES, INC. REPORTS THIRD QUARTER 2024 FINANCIAL AND OPERATING RESULTS

Source: GlobeNewswire (MIL-OSI)

FRISCO, TX, Oct. 30, 2024 (GLOBE NEWSWIRE) — Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today reported financial and operating results for the quarter ended September 30, 2024.

Highlights of 2024‘s Third Quarter

Weak natural gas prices continued to weigh heavily on the third quarter financial results.
Natural gas and oil sales, including realized hedging gains, were $305 million.
Operating cash flow was $152 million or $0.52 per diluted share.
Adjusted EBITDAX for the quarter was $202 million.
Adjusted net loss was $48.5 million or $0.17 per share for the quarter.
Lower completion activity was planned for the quarter, resulting in eight (5.4 net) operated wells being turned to sales since the Company’s last update with an average initial production of 21 MMcf per day.
First horseshoe Haynesville well was successful with a 31 MMcf per day initial production rate.
Western Haynesville exploratory play continues to progress with acreage position up to 453,881 net acres and most recent well costs down to an estimated $2,814 per completed lateral foot. Comstock’s thirteenth Western Haynesville well is on flowback with another five wells in the play expected to be turned to sales in late 2024 through early 2025.

Financial Results for the Three Months Ended September 30, 2024

Comstock’s realized natural gas price for the third quarter of 2024 averaged $1.90 per Mcf before hedging and $2.28 per Mcf after hedging. As a result, Comstock’s natural gas and oil sales in the third quarter of 2024 decreased to $305.0 million (including realized hedging gains of $51.4 million) despite a 2% increase in production in the quarter. Operating cash flow (excluding changes in working capital) generated in the third quarter of 2024 was $152.3 million, and net loss for the third quarter was $25.7 million or $0.09 per share. Net loss in the quarter included a pre-tax $23.8 million unrealized gain on hedging contracts held for risk management and a gain on sale of assets of $0.9 million. Excluding these items, adjusted net loss for the third quarter of 2024 was $48.5 million, or $0.17 per share.

Comstock’s production cost per Mcfe in the third quarter averaged $0.77 per Mcfe, which was comprised of $0.41 for gathering and transportation costs, $0.22 for lease operating costs, $0.09 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock’s unhedged operating margin was 60% in the third quarter of 2024 and 67% after hedging.

Financial Results for the Nine Months Ended September 30, 2024

Natural gas and oil sales for the nine months ended September 30, 2024 totaled $919.1 million (including realized hedging gains of $160.0 million). Operating cash flow (excluding changes in working capital) generated during the first nine months of 2024 was $452.4 million, and net loss was $163.4 million or $0.57 per share. Net loss during the first nine months of 2024 included a pre-tax $70.7 million unrealized loss on hedging contracts held for risk management and a gain on sale of assets of $0.9 million. Excluding these items, adjusted net loss for the nine months ended September 30, 2024 was $121.3 million or $0.42 per share.

Comstock’s production cost per Mcfe during the nine months ended September 30, 2024 averaged $0.78 per Mcfe, which was comprised of $0.37 for gathering and transportation costs, $0.25 for lease operating costs, $0.12 for production and other taxes and $0.04 for cash general and administrative expenses. Comstock’s unhedged operating margin was 58% during the first nine months of 2024 and 65% after hedging.

Drilling Results

Comstock drilled eight (6.2 net) operated horizontal Haynesville/Bossier shale wells in the third quarter of 2024 which had an average lateral length of 12,034 feet. Comstock turned 11 (8.0 net) operated wells to sales in the third quarter of 2024.

Since its last operational update in July, Comstock has turned eight (5.4 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 21 MMcf per day. The completed lateral length of these wells averaged 12,391 feet. Included in the wells turned to sales was the Sebastian 11 #5H, the Company’s first horseshoe Haynesville well, which had a 9,382 foot completed lateral and an initial production rate of 31 MMcf per day.

Other

On October 30, 2024, Comstock also announced that its bank group reaffirmed the $2.0 billion borrowing base and approved the amendment of certain financial covenants under its $1.5 billion revolving credit facility.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on October 31, 2024, to discuss the third quarter 2024 operational and financial results. Investors wishing to listen should visit the Company’s website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BI25940ff3de024e45b06512519e9e6 a64. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/27pqb8gi.

If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. CT on October 31, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/27pqb8gi.

This press release may contain “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. Information concerning the assumptions, uncertainties and risks that may affect the actual results can be found in the Company’s filings with the Securities and Exchange Commission (“SEC”) available on the Company’s website or the SEC’s website at sec.gov.

Comstock Resources, Inc. is a leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas. The Company’s stock is traded on the New York Stock Exchange under the symbol CRK.

COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues:
Natural gas sales	$	252,650		$	304,141		$	756,260		$	911,065
Oil sales		975			1,309			2,925			4,111
Total natural gas and oil sales		253,625			305,450			759,185			915,176
Gas services		50,847			71,287			127,889			239,350
Total revenues		304,472			376,737			887,074			1,154,526
Operating expenses:
Production and ad valorem taxes		12,578			25,386			49,730			59,891
Gathering and transportation		53,996			47,012			150,456			137,981
Lease operating		29,248			31,664			99,125			100,525
Exploration		—			—			—			1,775
Depreciation, depletion and amortization		208,350			148,190			593,281			422,350
Gas services		52,622			67,632			132,796			224,317
General and administrative		9,923			9,586			29,271			31,992
Gain on sale of assets		(910	)		—			(910	)		(125	)
Total operating expenses		365,807			329,470			1,053,749			978,706
Operating income (loss)		(61,335	)		47,267			(166,675	)		175,820
Other income (expenses):
Gain from derivative financial instruments		75,163			14,276			89,218			76,190
Other income		274			409			927			1,467
Interest expense		(54,516	)		(43,624	)		(156,005	)		(121,082	)
Total other income (expenses)		20,921			(28,939	)		(65,860	)		(43,425	)
Income (loss) before income taxes		(40,414	)		18,328			(232,535	)		132,395
(Provision for) benefit from income taxes		14,696			(3,608	)		69,094			(28,878	)
Net income (loss)		(25,718	)		14,720			(163,441	)		103,517
Net income attributable to noncontrolling interest		(3,173	)		—			(8,081	)		—
Net income (loss) available to Comstock	$	(28,891	)	$	14,720		$	(171,522	)	$	103,517

Net income (loss) per share
Basic	$	(0.09	)	$	0.05		$	(0.57	)	$	0.37
Diluted	$	(0.09	)	$	0.05		$	(0.57	)	$	0.37
Weighted average shares outstanding:
Basic		290,170			276,999			285,949			276,741
Diluted		290,170			276,999			285,949			276,741
Dividends per share	$	—		$	0.125		$	—		$	0.375

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Natural gas production (MMcf)		133,116			130,528			403,420			383,902
Oil production (Mbbls)		13			17			40			57
Total production (MMcfe)		133,198			130,629			403,662			384,241

Natural gas sales	$	252,650		$	304,141		$	756,260		$	911,065
Natural gas hedging settlements ⁽¹⁾		51,409			10,344			159,956			76,221
Total natural gas including hedging		304,059			314,485			916,216			987,286
Oil sales		975			1,309			2,925			4,111
Total natural gas and oil sales including hedging	$	305,034		$	315,794		$	919,141		$	991,397

Average natural gas price (per Mcf)	$	1.90		$	2.33		$	1.87		$	2.37
Average natural gas price including hedging (per Mcf)	$	2.28		$	2.41		$	2.27		$	2.57
Average oil price (per barrel)	$	75.00		$	77.00		$	73.13		$	72.12
Average price (per Mcfe)	$	1.90		$	2.34		$	1.88		$	2.38
Average price including hedging (per Mcfe)	$	2.29		$	2.42		$	2.28		$	2.58

Production and ad valorem taxes	$	12,578		$	25,386		$	49,730		$	59,891
Gathering and transportation		53,996			47,012			150,456			137,981
Lease operating		29,248			31,664			99,125			100,525
Cash general and administrative ⁽²⁾		6,042			6,930			17,892			24,984
Total production costs	$	101,864		$	110,992		$	317,203		$	323,381

Production and ad valorem taxes (per Mcfe)	$	0.09		$	0.20		$	0.12		$	0.16
Gathering and transportation (per Mcfe)		0.41			0.36			0.37			0.36
Lease operating (per Mcfe)		0.22			0.24			0.25			0.26
Cash general and administrative (per Mcfe)		0.05			0.05			0.04			0.07
Total production costs (per Mcfe)	$	0.77		$	0.85		$	0.78		$	0.85

Unhedged operating margin		60	%		64	%		58	%		65	%
Hedged operating margin		67	%		65	%		65	%		67	%

Gas services revenue	$	50,847		$	71,287		$	127,889		$	239,350
Gas services expenses		52,622			67,632			132,796			224,317
Gas services margin	$	(1,775	)	$	3,655		$	(4,907	)	$	15,033

Natural Gas and Oil Capital Expenditures:
Unproved property acquisitions	$	8,800		$	19,998		$	87,938		$	76,646
Total natural gas and oil properties acquisitions	$	8,800		$	19,998		$	87,938		$	76,646
Exploration and Development:
Development leasehold	$	5,623		$	5,369		$	12,153		$	19,087
Exploratory drilling and completion		57,144			74,737			215,992			179,049
Development drilling and completion		114,172			229,594			411,315			740,808
Other development costs		7,453			1,418			22,175			18,868
Total exploration and development capital expenditures	$	184,392		$	311,118		$	661,635		$	957,812

(1) Included in gain (loss) from derivative financial instruments in operating results.

(2) Excludes stock-based compensation.

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
ADJUSTED NET INCOME (LOSS):
Net income (loss)	$	(25,718	)	$	14,720		$	(163,441	)	$	103,517
Unrealized (gain) loss from derivative financial instruments		(23,754	)		(3,932	)		70,738			31
Exploration expense		—			—			—			1,775
Gain on sale of assets		(910	)		—			(910	)		(125	)
Adjustment to income taxes		1,873			946			(27,663	)		(418	)
Adjusted net income (loss)	$	(48,509	)	$	11,734		$	(121,276	)	$	104,780

Adjusted net income (loss) per share ⁽²⁾	$	(0.17	)	$	0.04		$	(0.42	)	$	0.38
Diluted shares outstanding		290,170			276,999			285,949			276,741


ADJUSTED EBITDAX:
Net income (loss)	$	(25,718	)	$	14,720		$	(163,441	)	$	103,517
Interest expense		54,516			43,624			156,005			121,082
Income taxes		(14,696	)		3,608			(69,094	)		28,878
Depreciation, depletion, and amortization		208,350			148,190			593,281			422,350
Exploration		—			—			—			1,775
Unrealized (gain) loss from derivative financial instruments		(23,754	)		(3,932	)		70,738			31
Stock-based compensation		3,883			2,655			11,380			7,006
Gain on sale of assets		(910	)		—			(910	)		(125	)
Total Adjusted EBITDAX ⁽³⁾	$	201,671		$	208,865		$	597,959		$	684,514

(1) Adjusted net income (loss) is presented because of its acceptance by investors and by Comstock management as an indicator of the Company’s profitability excluding non-cash unrealized gains and losses on derivative financial instruments, gains and losses on sales of assets and other unusual items.

(2) Adjusted net income (loss) per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units pursuant to the treasury stock method.

(3) Adjusted EBITDAX is presented in the earnings release because management believes that adjusted EBITDAX, which represents Comstock’s results from operations before interest, income taxes, and certain non-cash items, including depreciation, depletion and amortization, unrealized gains and losses on derivative financial instruments and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
OPERATING CASH FLOW ⁽¹⁾:
Net income (loss)	$	(25,718	)	$	14,720		$	(163,441	)	$	103,517
Reconciling items:
Unrealized (gain) loss from derivative financial instruments		(23,754	)		(3,932	)		70,738			31
Deferred income taxes		(12,734	)		3,608			(67,165	)		28,878
Depreciation, depletion and amortization		208,350			148,190			593,281			422,350
Amortization of debt discount and issuance costs		3,136			1,989			8,519			5,980
Stock-based compensation		3,883			2,655			11,380			7,006
Gain on sale of assets		(910	)		—			(910	)		(125	)
Operating cash flow	$	152,253		$	167,230		$	452,402		$	567,637
(Increase) decrease in accounts receivable		(658	)		(20,887	)		75,573			295,323
Increase in other current assets		(5,595	)		(1,825	)		(749	)		(624	)
Decrease in accounts payable and accrued expenses		(47,830	)		(73,753	)		(173,942	)		(73,697	)
Net cash provided by operating activities	$	98,170		$	70,765		$	353,284		$	788,639

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
FREE CASH FLOW (DEFICIT)⁽²⁾:
Operating cash flow	$	152,253		$	167,230		$	452,402		$	567,637
Less:
Exploration and development capital expenditures		(184,392	)		(311,118	)		(661,635	)		(957,812	)
Midstream capital expenditures		(30,251	)		—			(46,739	)		—
Other capital expenditures		(735	)		(10,563	)		(1,706	)		(22,076	)
Contributions from midstream partner		19,000			—			36,000			—
Free cash deficit from operations	$	(44,125	)	$	(154,451	)	$	(221,678	)	$	(412,251	)
Acquisitions		(8,800	)		(19,998	)		(87,938	)		(76,646	)
Proceeds from divestitures		1,214			—			1,214			41,295
Free cash deficit after acquisition and divestiture activity	$	(51,711	)	$	(174,449	)	$	(308,402	)	$	(447,602	)

(1) Operating cash flow is presented in the earnings release because management believes it to be useful to investors as a common alternative measure of cash flows which excludes changes to other working capital accounts.

(2) Free cash flow (deficit) from operations and free cash flow (deficit) after acquisition and divestiture activity are presented in the earnings release because management believes them to be useful indicators of the Company’s ability to internally fund acquisitions and debt maturities after exploration and development capital expenditures, midstream and other capital expenditures, contributions from its midstream partner, proved and unproved property acquisitions, and proceeds from divestiture of natural gas and oil properties.

COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

	September 30, 2024		December 31, 2023
ASSETS
Cash and cash equivalents	$	13,772	$	16,669
Accounts receivable		155,857		231,430
Derivative financial instruments		71,704		126,775
Other current assets		58,379		86,619
Total current assets		299,712		461,493
Property and equipment, net		5,590,448		5,384,771
Goodwill		335,897		335,897
Operating lease right-of-use assets		82,124		71,462
Derivative financial instruments		4,828		—
	$	6,313,009	$	6,253,623

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	358,336	$	523,260
Accrued costs		106,057		134,466
Operating leases		35,372		23,765
Total current liabilities		499,765		681,491
Long-term debt		2,949,181		2,640,391
Deferred income taxes		402,870		470,035
Derivative financial instruments		20,495		—
Long-term operating leases		46,681		47,742
Asset retirement obligation		32,016		30,773
Total liabilities		3,951,008		3,870,432
Stockholders’ Equity:
Common stock		146,130		139,214
Additional paid-in capital		1,362,393		1,260,930
Accumulated earnings		786,748		958,270
Total stockholders’ equity attributable to Comstock		2,295,271		2,358,414
Noncontrolling interest		66,730		24,777
Total stockholders’ equity		2,362,001		2,383,191
	$	6,313,009	$	6,253,623

The MIL Network –

January 25, 2025

MIL-OSI: Magic Empire Global Limited Announces First Half 2024 Unaudited Financial Results

Source: GlobeNewswire (MIL-OSI)

HONG KONG, Oct. 30, 2024 (GLOBE NEWSWIRE) — Magic Empire Global Limited (“MEGL” or the “Company”) (NASDAQ: MEGL), a financial services provider in Hong Kong which principally engages in the provision of corporate finance advisory services, today announced its unaudited financial results for the six months ended June 30, 2024.

Overview:

	●	Revenue increased by approximately 26.9% from approximately HK$6.1 million for the six months ended June 30, 2023 to approximately HK$7.7 million (US$1.0 million) for the six months ended June 30, 2024

	●	Net income decreased by approximately 13.6% from approximately HK$0.7 million for the six months ended June 30, 2023 to approximately HK$0.6 million (US$80,000) for the six months ended June 30, 2024

Six Month Financial Results Ended June 30, 2024

Revenue. Revenue increased by approximately 26.9% from approximately HK$6.1 million for the six months ended June 30, 2023 to approximately HK$7.7 million (US$1.0 million) for the six months ended June 30, 2024. During the six months ended June 30, 2024, the Hong Kong capital markets and the general economic environment in Hong Kong remained difficult. In view of the market conditions of Hong Kong market, we diversified our business to explore projects of listing in other key capital markets such as the United States and we completed two financial advisory projects for clients pursuing listing on Nasdaq and our revenue from financial and independent advisory services significantly increased from approximately HK$0.2 million for the six months ended June 30, 2023 to approximately HK$6.9 million (US$0.9 million) for the six months ended June 30, 2024. Revenue from compliance advisory services decreased from approximately HK$1.4 million for the six months ended June 30, 2023 to approximately HK$0.5 million (US$59,000) for the six months ended June 30, 2024 due to completion of several of our compliance advisory projects during the six months ended June 30, 2024 and the decrease in the number of new IPOs in the Hong Kong market.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by approximately 27.6% from approximately HK$7.2 million for the six months ended June 30, 2023 to approximately HK$9.2 million (US$1.2 million) for the six months ended June 30, 2024, which was mainly due to (i) increase in staff costs resulting from increase in payroll and bonus to our staff; (ii) increase in travelling, accommodation and entertainment expenses due to increase in travelling for business development initiatives; and (iii) increase in depreciation charge.

Other income, net. Other net income increased by approximately 13.7% from approximately HK$1.9 million for the six months ended June 30, 2023 to approximately HK$2.1 million (US$0.3 million) for the six months ended June 30, 2024, which was mainly due to the increase in interest income resulting from the increase in average cash balance.

Income tax expense. Income tax expense was nil for the six months ended June 30, 2024 (six months ended June 30, 2023: nil) as we have available tax losses brought forward.

Net income. Net income decreased by 13.6% from approximately HK$0.7 million for the six months ended June 30, 2023 to approximately HK$0.6 million (US$80,000) for the six months ended June 30, 2024, which was mainly due to the increase in selling, general and administrative expenses, partially offset by increase in revenue.

Basic and diluted EPS. Basic and diluted EPS were approximately HK$0.03 (US$0.004) per ordinary share for the six months ended June 30, 2024, as compared to HK$0.04 per ordinary share for the six months ended June 30, 2023, respectively.

About Magic Empire Global Limited

Magic Empire Global Limited is a financial services provider in Hong Kong which principally engage in the provision of corporate finance advisory services and underwriting services. Its service offerings mainly comprise (i) IPO sponsorship services; (ii) financial advisory and independent financial advisory services; (iii) compliance advisory services; and (iv) underwriting services. For more information, visit the Company’s website at http://www.meglmagic.com.

Exchange Rate Information

This announcement contains translations of certain HK$ amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from HK$ to US$ were made at the rate of HK$7.8083 to US$1.00, the exchange rate on June 28, 2024 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the HK$ or US$ amounts referred could be converted into US$ or HK$, as the case may be, at any particular rate or at all.

Safe Harbor Statement

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

Hong Kong:

Magic Empire Global Limited
Ms. Vivien Tai
Tel: +852 3577 8770
E-mail: meglir@giraffecap.com

MAGIC EMPIRE GLOBAL LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	December 31, 2023			June 30, 2024			June 30, 2024
	HK$			HK$			US$
ASSETS
Current assets:
Cash		92,407,813			92,659,337			11,866,775
Accounts receivable		2,302,436			1,656,000			212,082
Interest receivables		449,550			346,457			44,370
Deposits and prepayments		1,096,249			1,055,783			135,213

Total current assets		96,256,048			95,717,577			12,258,440

Non-current assets:
Property and equipment, net		1,695,006			1,504,509			192,681
Right-of-use assets		1,658,382			710,735			91,023
Long-term investment		38,647,738			38,647,738			4,949,571

Total non-current assets		42,001,126			40,862,982			5,233,275
Total assets		138,257,174			136,580,559			17,491,715

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accruals and other payables		1,079,000			263,003			33,682
Contract liabilities		1,164,000			664,000			85,038
Operating lease liabilities		1,746,317			757,717			97,040

Total current liabilities		3,989,317			1,684,720			215,760

Total liabilities		3,989,317			1,684,720			215,760

COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY
Ordinary shares, US$0.0001 par value, 300,000,000 shares authorized, and 20,256,099 shares outstanding as of December 31, 2023 and June 30, 2024 respectively		15,826			15,826			2,027
Additional paid-in capital		138,662,858			138,662,858			17,758,393
Accumulated deficits		(4,410,827	)		(3,782,845	)		(484,465	)
Total shareholders’ equity		134,267,857			134,895,839			17,275,955
Total liabilities and shareholders’ equity		138,257,174			136,580,559			17,491,715

MAGIC EMPIRE GLOBAL LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	For the six months ended
	June 30, 2023			June 30, 2024			June 30, 2024
	HK$			HK$			US$
REVENUE		6,081,430			7,719,600			988,640

OPERATING EXPENSES:
Selling, general and administrative expenses		(7,230,225	)		(9,224,710	)		(1,181,399	)
Total operating expenses		(7,230,225	)		(9,224,710	)		(1,181,399	)

INCOME FROM OPERATIONS		(1,148,795	)		(1,505,110	)		(192,759	)

OTHER INCOME (EXPENSE)
Interest income		1,957,509			2,166,502			277,461
Other expenses		(81,527	)		(33,410	)		(4,279	)
Total other income, net		1,875,982			2,133,092			273,182

INCOME BEFORE INCOME TAXES		727,187			627,982			80,423
INCOME TAX EXPENSES		–			–			–
NET INCOME		727,187			627,982			80,423

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Basic and diluted		20,256,099			20,256,099			20,256,099

EARNINGS PER SHARE
Basic and diluted		0.04			0.03			0.004

The MIL Network –

January 25, 2025

MIL-OSI: NCS Multistage Holdings, Inc. Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Third Quarter Results

Total revenues of $44.0 million, a 15% year-over-year improvement, driven in part by increased international revenues
Net income of $4.1 million and diluted earnings per share of $1.60, compared to $4.4 million and diluted earnings per share of $1.77 one year ago
Adjusted EBITDA of $7.1 million, a $0.3 million year-over-year improvement
Cash flows from operating activities of $2.1 million for the first nine months of 2024; free cash flow less distributions to non-controlling interest of $0.4 million, a $3.3 million improvement over the first nine months of 2023
$15.3 million in cash and $8.6 million of total debt as of September 30, 2024

HOUSTON, Oct. 30, 2024 (GLOBE NEWSWIRE) — NCS Multistage Holdings, Inc. (Nasdaq: NCSM) (the “Company,” “NCS,” “we” or “us”), a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies, today announced its results for the quarter ended September 30, 2024.

Financial Review

Total revenues were $44.0 million for the quarter ended September 30, 2024 compared to $38.3 million for the third quarter of 2023. Revenue growth was driven by increases in international services revenues, U.S. product sales, and Canada product sales and services. These gains were partially offset by lower U.S. services revenues and international product sales. The significant increase in international revenues was driven by Middle East tracer work and North Sea frac systems, while the increase in the United States reflects higher frac plug and perforating gun sales by our joint venture, Repeat Precision, LLC (“Repeat Precision”). Despite the increase in U.S. revenues, customer activity continues to be negatively impacted by lower natural gas prices. The increase in our Canadian revenue was due in part to higher fracturing systems activity in 2024, as the prior year was impacted more significantly by Canadian wildfires stemming from drought conditions.

Compared to the second quarter of 2024, total revenues increased by 48%, with an increase in Canada of 139%, primarily due to seasonality associated with spring break-up in the second quarter. This increase was partially offset by a decline of 31% in international revenues, primarily associated with the timing of tracer service work in the Middle East, and a 6% decline in the United States.

Gross profit was $17.8 million, with a gross margin of 41%, for the third quarter of 2024, compared to $15.2 million, with a gross margin of 40%, for the third quarter of 2023. Gross margin for 2024 improved due to an increase in higher-margin international work in both the Middle East and North Sea, an increase in frac plug and perforating gun sales in the United States, as well as the benefits realized from operational restructurings enacted in 2023. Adjusted gross profit, which we define as total revenues less total cost of sales, exclusive of depreciation and amortization (“DD&A”), was $18.5 million, or an adjusted gross margin of 42%, for the third quarter of 2024, compared to $15.7 million, or 41%, for the third quarter of 2023.

Selling, general and administrative (“SG&A”) expenses totaled $14.1 million for the third quarter of 2024, an increase of $1.5 million compared to the same period in 2023. This increase in expense reflects a higher annual incentive bonus accrual year-over-year partially offset by the benefit of cost-saving measures implemented through our restructuring efforts in 2023.

Other income was $1.5 million for the third quarter of 2024 compared to $2.0 million for the third quarter of 2023. This change in other income is primarily attributable to the prior year recovery of unpaid invoices through a litigation settlement and the reversal of a legal contingency fee in 2023 that was not repeated in 2024. This was partially offset in 2024 by increases in royalty income from licensees and the benefit associated with our technical services and assistance agreement with our local partner in Oman.

Net income was $4.1 million, or $1.60 per diluted share, for the quarter ended September 30, 2024 compared to net income of $4.4 million, or $1.77 per diluted share for the quarter ended September 30, 2023.

Adjusted EBITDA was $7.1 million for the quarter ended September 30, 2024, an increase of $0.3 million compared to the same period a year ago. This improvement is primarily the result of an increase in higher-margin international projects partially offset by an increase in SG&A expenses due to higher annual incentive bonus accruals. Our resulting Adjusted EBITDA margin of 16% for the quarter ended September 30, 2024 compared to 18% for the same period a year ago.

Cash flow from operating activities for the nine months ended September 30, 2024 was $2.1 million, a $3.5 million improvement compared to the same period in 2023. For the nine months ended September 30, 2024, free cash flow, less distributions to non-controlling interest, provided cash of $0.4 million compared to a use of cash of $(3.0) million for the same period in 2023. The overall increase in free cash flow was largely attributed to our operating results, change in net working capital, and a reduction in net cash used in investing activities, partially offset by a distribution to our non-controlling interest.

Liquidity and Capital Expenditures

As of September 30, 2024, NCS had $15.3 million in cash and $8.6 million in total debt, and a borrowing base under the undrawn asset-based revolving credit facility (“ABL Facility”) of $21.7 million. Our working capital, defined as current assets minus current liabilities, was $77.3 million and $71.2 million as of September 30, 2024 and December 31, 2023, respectively.

Net working capital, calculated as working capital, less cash and excluding the current maturities of long-term debt, was $64.1 million and $56.3 million as of September 30, 2024 and December 31, 2023, respectively. The increase in our net working capital was primarily attributable to an increase in our accounts receivable, partially offset by an increase in accrued expenses.

NCS incurred capital expenditures, net of proceeds from the sale of property and equipment, of $0.7 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Review and Outlook

NCS’s Chief Executive Officer, Ryan Hummer commented, “NCS has continued to outperform expectations in a challenging market environment. This quarter marks the third consecutive quarter in which our total revenue has been at the high end or exceeded our expectations, and in which our Adjusted EBITDA exceeded the high end of our expectations.

Our revenue for the first nine months of 2024 of $117.6 million is over $10 million, or approximately 10%, higher than the same period last year. Importantly, we are also demonstrating the operating leverage in our business, with a modest improvement in gross margin percentage paired with a reduction in SG&A expenses for these periods. Our resulting Adjusted EBITDA of $14.1 million for the first nine months of 2024 is approximately 50% higher than the same period last year, a demonstration of the attractive incremental margins our business can generate as we grow.

This performance reflects the way our team has embraced and executed our core strategies to build upon our leading market positions, capitalize on international and offshore opportunities and to commercialize innovative solutions to complex customer challenges. One example of this is the 124% improvement in revenue derived outside North America for the first nine months of 2024 as compared to 2023, with international revenue comprising 10% of our total revenue in that period, as compared to 5% last year. Our multi-year efforts to grow our customer base in the North Sea and to enter certain markets in the Middle East are being rewarded.

Our team at NCS and Repeat Precision has delivered year-over-year revenue growth of 15% in the U.S. through the first nine months of the year, an impressive performance in light of meaningful reductions in industry activity, whether measured by the rig count or unconventional completion counts.

We are pairing this growth with improved free cash flow generation, with free cash flow after distributions to non-controlling interest for the first nine months of 2024 of $0.4 million, increasing by more than $3 million as compared to the same period in 2023. We maintain a net cash position of $6.7 million, and had total liquidity of over $37 million as of September 30, 2024, which includes our cash on hand and availability under our undrawn revolving credit facility.

We expect that we will continue to deliver improved revenue performance in the fourth quarter of 2024 as compared to 2023 in each of the U.S., Canada and international markets. However, sequentially we expect a 5-15% reduction in revenue in each of these markets, reflecting the potential for a more significant reduction in year-end activity than in prior years for the U.S. and Canadian markets due to industry drilling and completion efficiencies, and more challenging winter operating conditions in selected international markets, including the North Sea.

We believe the value that we bring to our customers across our product and service portfolio, our continued product and service innovation, and our targeted efforts to penetrate international markets positions us to outperform the anticipated changes in industry drilling and completion activity. As demonstrated thus far in 2024, we believe that this revenue growth, paired with previously enacted and continued efforts to control our operating expenses, will enable higher year-over-year Adjusted EBITDA Margins.

These results are reflective of the talent, effort and dedication of the outstanding team at NCS and at Repeat Precision. By delivering on our core strategies, we are providing extraordinary outcomes to our customers, driving innovation in the industry and creating value for our shareholders.”

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net Income (Loss), Adjusted Earnings (Loss) per Diluted Share, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to Non-Controlling Interest and Net Working Capital are non-GAAP financial measures. For an explanation of these measures and a reconciliation, refer to “Non-GAAP Financial Measures” below.

Conference Call

The Company will host a conference call to discuss its third quarter 2024 results and updated guidance on Thursday, October 31, 2024 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). The conference call will be available via a live audio webcast. Participants who wish to ask questions may register for the call here to receive the dial-in numbers and unique PIN. If you wish to join the conference call but do not plan to ask questions, you may join the listen-only webcast here. The live webcast can also be accessed by visiting the Investors section of the Company’s website at ir.ncsmultistage.com. It is recommended that participants join at least 10 minutes prior to the event start.

The replay will be available in the Investors section of the Company’s website shortly after the conclusion of the call and will remain available for approximately seven days.

About NCS Multistage Holdings, Inc.

NCS Multistage Holdings, Inc. is a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies. NCS provides products and services primarily to exploration and production companies for use in onshore and offshore wells, predominantly wells that have been drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations. NCS’s products and services are utilized in oil and natural gas basins throughout North America and in selected international markets, including the North Sea, the Middle East, Argentina and China. NCS’s common stock is traded on the Nasdaq Capital Market under the symbol “NCSM.” Additional information is available on the website, www.ncsmultistage.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause our actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following: declines in the level of oil and natural gas exploration and production activity in Canada, the United States and internationally; oil and natural gas price fluctuations; significant competition for our products and services that results in pricing pressures, reduced sales, or reduced market share; inability to successfully implement our strategy of increasing sales of products and services into the U.S. and international markets; loss of significant customers; losses and liabilities from uninsured or underinsured business activities and litigation; our failure to identify and consummate potential acquisitions; the financial health of our customers including their ability to pay for products or services provided; our inability to integrate or realize the expected benefits from acquisitions; our inability to achieve suitable price increases to offset the impacts of cost inflation; loss of any of our key suppliers or significant disruptions negatively impacting our supply chain; risks in attracting and retaining qualified employees and key personnel; risks resulting from the operations of our joint venture arrangement; currency exchange rate fluctuations; impact of severe weather conditions; our inability to accurately predict customer demand, which may result in us holding excess or obsolete inventory; impairment in the carrying value of long-lived assets including goodwill; failure to comply with or changes to federal, state and local and non-U.S. laws and other regulations, including anti-corruption and environmental regulations, guidelines and regulations for the use of explosives; change in trade policy, including the impact of tariffs; our inability to successfully develop and implement new technologies, products and services that align with the needs of our customers, including addressing the shift to more non-traditional energy markets as part of the energy transition; our inability to protect and maintain critical intellectual property assets or losses and liabilities from adverse decisions in intellectual property disputes; loss of, or interruption to, our information and computer systems; system interruptions or failures, including complications with our enterprise resource planning system, cybersecurity breaches, identity theft or other disruptions that could compromise our information; our failure to establish and maintain effective internal control over financial reporting; restrictions on the availability of our customers to obtain water essential to the drilling and hydraulic fracturing processes; changes in legislation or regulation governing the oil and natural gas industry, including restrictions on emissions of greenhouse gases; our inability to meet regulatory requirements for use of certain chemicals by our tracer diagnostics business; the reduction in our ABL Facility borrowing base or our inability to comply with the covenants in our debt agreements; and our inability to obtain sufficient liquidity on reasonable terms, or at all and other factors discussed or referenced in our filings made from time to time with the Securities and Exchange Commission. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Contact

Mike Morrison
Chief Financial Officer and Treasurer
(281) 453-2222
IR@ncsmultistage.com

NCS MULTISTAGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Revenues
Product sales	$	31,675		$	27,286		$	82,455		$	76,149
Services		12,331			10,993			35,099			31,075
Total revenues		44,006			38,279			117,554			107,224
Cost of sales
Cost of product sales, exclusive of depreciation and amortization expense shown below		19,408			17,118			51,309			47,945
Cost of services, exclusive of depreciation and amortization expense shown below		6,066			5,449			18,171			16,564
Total cost of sales, exclusive of depreciation and amortization expense shown below		25,474			22,567			69,480			64,509
Selling, general and administrative expenses		14,139			12,669			42,789			43,297
Depreciation		1,188			1,001			3,395			2,892
Amortization		168			168			502			502
Income (loss) from operations		3,037			1,874			1,388			(3,976	)
Other income (expense)
Interest expense, net		(108	)		(27	)		(323	)		(447	)
Provision for litigation, net of recoveries		—			(98	)		—			(42,498	)
Other income, net		1,523			1,983			4,863			3,753
Foreign currency exchange gain (loss), net		217			(157	)		(788	)		(79	)
Total other income (expense)		1,632			1,701			3,752			(39,271	)
Income (loss) before income tax		4,669			3,575			5,140			(43,247	)
Income tax (benefit) expense		(35	)		(537	)		722			(287	)
Net income (loss)		4,704			4,112			4,418			(42,960	)
Net income (loss) attributable to non-controlling interest		557			(296	)		1,296			(168	)
Net income (loss) attributable to NCS Multistage Holdings, Inc.	$	4,147		$	4,408		$	3,122		$	(42,792	)
Earnings (loss) per common share
Basic earnings (loss) per common share attributable to NCS Multistage Holdings, Inc.	$	1.63		$	1.78		$	1.23		$	(17.33	)
Diluted earnings (loss) per common share attributable to NCS Multistage Holdings, Inc.	$	1.60		$	1.77		$	1.21		$	(17.33	)
Weighted average common shares outstanding
Basic		2,548			2,479			2,535			2,469
Diluted		2,588			2,489			2,571			2,469

NCS MULTISTAGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS*
(In thousands, except share data)
(Unaudited)

	September 30,			December 31,
	2024			2023
Assets
Current assets
Cash and cash equivalents	$	15,330		$	16,720
Accounts receivable—trade, net		36,652			23,981
Inventories, net		41,199			41,612
Prepaid expenses and other current assets		1,996			1,862
Other current receivables		4,276			4,042
Insurance receivable		—			15,000
Total current assets		99,453			103,217
Noncurrent assets
Property and equipment, net		22,656			23,336
Goodwill		15,222			15,222
Identifiable intangibles, net		3,905			4,407
Operating lease assets		3,644			4,847
Deposits and other assets		777			937
Deferred income taxes, net		186			66
Total noncurrent assets		46,390			48,815
Total assets	$	145,843		$	152,032
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable—trade	$	7,512		$	6,227
Accrued expenses		6,874			3,702
Income taxes payable		713			364
Operating lease liabilities		1,388			1,583
Accrual for legal contingencies		—			15,000
Current maturities of long-term debt		2,111			1,812
Other current liabilities		3,511			3,370
Total current liabilities		22,109			32,058
Noncurrent liabilities
Long-term debt, less current maturities		6,525			6,344
Operating lease liabilities, long-term		2,588			3,775
Other long-term liabilities		200			213
Deferred income taxes, net		311			249
Total noncurrent liabilities		9,624			10,581
Total liabilities		31,733			42,639
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2024 and December 31, 2023		—			—
Common stock, $0.01 par value, 11,250,000 shares authorized, 2,557,648 shares issued and 2,502,680 shares outstanding at September 30, 2024 and 2,482,796 shares issued and 2,443,744 shares outstanding at December 31, 2023		26			25
Additional paid-in capital		446,721			444,638
Accumulated other comprehensive loss		(86,300	)		(85,752	)
Retained deficit		(262,495	)		(265,617	)
Treasury stock, at cost, 54,968 shares at September 30, 2024 and 39,052 shares at December 31, 2023		(1,913	)		(1,676	)
Total stockholders’ equity		96,039			91,618
Non-controlling interest		18,071			17,775
Total equity		114,110			109,393
Total liabilities and stockholders’ equity	$	145,843		$	152,032

_____________________
* Preliminary

NCS MULTISTAGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Nine Months Ended
	September 30,
	2024			2023
Cash flows from operating activities
Net income (loss)	$	4,418		$	(42,960	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		3,897			3,394
Amortization of deferred loan costs		155			153
Share-based compensation		3,403			4,198
Provision for inventory obsolescence		945			256
Deferred income tax expense		3			147
Gain on sale of property and equipment		(363	)		(423	)
Provision for credit losses		44			112
Provision for litigation, net of recoveries		—			42,498
Net foreign currency unrealized loss (gain)		855			(127	)
Proceeds from note receivable		61			338
Changes in operating assets and liabilities:
Accounts receivable—trade		(13,050	)		(2,847	)
Inventories, net		(1,210	)		(6,356	)
Prepaid expenses and other assets		821			544
Accounts payable—trade		1,124			2,894
Accrued expenses		3,224			(1,025	)
Other liabilities		(2,433	)		(2,023	)
Income taxes receivable/payable		188			(219	)
Net cash provided by (used in) operating activities		2,082			(1,446	)
Cash flows from investing activities
Purchases of property and equipment		(1,083	)		(1,704	)
Purchase and development of software and technology		(70	)		(263	)
Proceeds from sales of property and equipment		421			454
Net cash used in investing activities		(732	)		(1,513	)
Cash flows from financing activities
Payments on finance leases		(1,442	)		(1,159	)
Line of credit borrowings		3,062			11,702
Payments of line of credit borrowings		(3,062	)		(11,758	)
Treasury shares withheld		(237	)		(265	)
Distribution to noncontrolling interest		(1,000	)		—
Net cash used in financing activities		(2,679	)		(1,480	)
Effect of exchange rate changes on cash and cash equivalents		(61	)		(397	)
Net change in cash and cash equivalents		(1,390	)		(4,836	)
Cash and cash equivalents beginning of period		16,720			16,234
Cash and cash equivalents end of period	$	15,330		$	11,398
Noncash investing and financing activities
Assets obtained in exchange for new finance lease liabilities	$	2,145		$	1,665
Assets obtained in exchange for new operating lease liabilities	$	—		$	1,791

NCS MULTISTAGE HOLDINGS, INC.
REVENUES BY GEOGRAPHIC AREA
(In thousands)
(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
United States
Product sales	$	9,489	$	5,200	$	25,806	$	20,202
Services		1,645		2,812		7,130		8,511
Total United States		11,134		8,012		32,936		28,713
Canada
Product sales		22,140		21,531		53,078		54,062
Services		6,725		6,613		19,514		19,074
Total Canada		28,865		28,144		72,592		73,136
Other Countries
Product sales		46		555		3,571		1,885
Services		3,961		1,568		8,455		3,490
Total other countries		4,007		2,123		12,026		5,375
Total
Product sales		31,675		27,286		82,455		76,149
Services		12,331		10,993		35,099		31,075
Total revenues	$	44,006	$	38,279	$	117,554	$	107,224

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net Income (Loss), Adjusted Earnings (Loss) per Diluted Share, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to Non-Controlling Interest and Net Working Capital (our “non-GAAP financial measures”) are not defined under generally accepted accounting principles (“GAAP”), are not measures of net income (loss), income (loss) from operations, gross profit and gross margin (inclusive of DD&A), cash provided by (used in) operating activities, working capital or any other performance measure derived in accordance with GAAP, and are subject to important limitations. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies in our industry and are not measures of performance calculated in accordance with GAAP. Our non-GAAP financial measures have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our financial performance as reported under GAAP, and they should not be considered as alternatives to net income (loss), income (loss) from operations, gross profit, gross margin, cash provided by (used in) operating activities, working capital or any other performance measures derived in accordance with GAAP as measures of operating performance or as alternatives to cash flow from operating activities as measures of our liquidity.

However, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net Income (Loss), Adjusted Earnings (Loss) per Diluted Share, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to Non-Controlling Interest and Net Working Capital are key metrics that management uses to assess the period-to-period performance of our core business operations or metrics that enable investors to assess our performance from period to period to evaluate our performance relative to other companies that are not subject to such factors, or who may provide similar non-GAAP measures in their public disclosures.

The tables below set forth reconciliations of our non-GAAP financial measures to the most directly comparable measures of financial performance calculated under GAAP:

NET WORKING CAPITAL*

Net working capital is defined as total current assets, excluding cash and cash equivalents, minus total current liabilities, excluding current maturities of long-term debt. Net working capital excludes cash and cash equivalents and current maturities of long-term debt in order to evaluate the investments in working capital that we believe are required to support our business. We believe that net working capital is useful in analyzing the cash flow and working capital needs of the Company, including determining the efficiencies of our operations and our ability to readily convert assets into cash.

	September 30,			December 31,
	2024			2023
Working capital	$	77,344		$	71,159
Cash and cash equivalents		(15,330	)		(16,720	)
Current maturities of long term debt		2,111			1,812
Net working capital	$	64,125		$	56,251

_____________________
*Preliminary

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)

ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN

Adjusted gross profit is defined as total revenues minus cost of sales, exclusive of depreciation and amortization expense, which we present as a separate line item in our statement of operations. Adjusted gross margin represents adjusted gross profit as a percentage of total revenues.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Total revenues	$	44,006		$	38,279		$	117,554		$	107,224
Total cost of sales, exclusive of depreciation and amortization expense		25,474			22,567			69,480			64,509
Total depreciation and amortization associated with cost of sales		699			558			1,968			1,601
Gross Profit	$	17,833		$	15,154		$	46,106		$	41,114
Gross Margin		41	%		40	%		39	%		38	%
Exclude total depreciation and amortization associated with cost of sales		(699	)		(558	)		(1,968	)		(1,601	)
Adjusted Gross Profit	$	18,532		$	15,712		$	48,074		$	42,715
Adjusted Gross Margin		42	%		41	%		41	%		40	%

ADJUSTED NET INCOME (LOSS) AND ADJUSTED EARNINGS (LOSS) PER DILUTED SHARE

Adjusted net income (loss) is defined as net income (loss) attributable to NCS Multistage Holdings, Inc. adjusted to exclude certain items which we believe are not reflective of ongoing performance. Adjusted income (loss) per diluted share is defined as adjusted net income (loss) divided by our diluted weighted average common shares outstanding during the relevant period.

	Three Months Ended										Nine Months Ended
	September 30, 2024						September 30, 2023				September 30, 2024						September 30, 2023
	Effect on Net Income			Impact on Diluted Earnings Per Share			Effect on Net Income		Impact on Diluted Earnings Per Share		Effect on Net Income			Impact on Diluted Earnings Per Share			Effect on Net (Loss) Income			Impact on Diluted (Loss) Earnings Per Share
Net income (loss) attributable to NCS Multistage Holdings, Inc.	$	4,147		$	1.60		$	4,408	$	1.77	$	3,122		$	1.21		$	(42,792	)	$	(17.33	)
Adjustments
Provision for litigation, net of recoveries (a)		—			—			98		0.04		—			—			42,498			17.21
Foreign currency exchange (gain) loss (b)		(262	)		(0.10	)		237		0.10		679			0.26			132			0.06
Income tax impact from adjustments (c)		2			—			1		—		(90	)		(0.03	)		303			0.12
Adjusted net income attributable to NCS Multistage Holdings, Inc.	$	3,887		$	1.50		$	4,744	$	1.91	$	3,711		$	1.44		$	141		$	0.06

__________________

(a)	Represents litigation provision primarily associated with a legal matter in Texas for the nine months ended September 30, 2023. In December 2023, we settled the matter where the insurance carrier agreed to pay the mutually-agreed settlement amounts to the plaintiff in January 2024, resulting in no cash payments by NCS.
(b)	Represents realized and unrealized foreign currency exchange gains and losses attributable to NCS Multistage Holdings, Inc. primarily due to movement in the foreign currency exchange rates during the applicable periods.
(c)	Represents income tax impacts based on applicable effective tax rates.

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)

EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN, AND ADJUSTED EBITDA LESS SHARE-BASED COMPENSATION

EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain items which we believe are not reflective of ongoing operating performance or which, in the case of share-based compensation, is non-cash in nature. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of total revenues. Adjusted EBITDA Less Share-Based Compensation is defined as Adjusted EBITDA minus share-based compensation expense. We believe that Adjusted EBITDA is an important measure that excludes costs that management believes do not reflect our ongoing operating performance, legal proceedings for intellectual property as further described below, and certain costs associated with our capital structure. We believe that Adjusted EBITDA Less Share-Based Compensation presents our financial performance in a manner that is comparable to the presentation provided by many of our peers.

We periodically incur legal costs associated with the assertion of, or defense of, intellectual property, which we exclude from our definition of Adjusted EBITDA and Adjusted EBITDA Less Share-Based Compensation, unless we believe that settlement will occur prior to any material legal spend (included in the table below as “Professional Fees”). Although these costs may recur between periods, depending on legal matters then outstanding or in process, we believe the timing of when these costs are incurred does not typically match the settlement or recoveries associated with such matters, and therefore, can distort our operating results. Similarly, we exclude from Adjusted EBITDA and Adjusted EBITDA Less Share-Based Compensation the one-time settlement or recovery payment associated with these excluded legal matters when realized but would not exclude any go forward royalties or payments, if applicable. We expect to continue to incur these legal costs for current matters under appeal and for any future cases that may go to trial, provided that the amount will vary by period.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Net income (loss)	$	4,704		$	4,112		$	4,418		$	(42,960	)
Income tax (benefit) expense		(35	)		(537	)		722			(287	)
Interest expense, net		108			27			323			447
Depreciation		1,188			1,001			3,395			2,892
Amortization		168			168			502			502
EBITDA		6,133			4,771			9,360			(39,406	)
Provision for litigation, net of recoveries (a)		—			98			—			42,498
Share-based compensation (b)		651			1,328			2,084			3,285
Professional fees (c)		333			(375	)		1,263			1,286
Foreign currency exchange (gain) loss (d)		(217	)		157			788			79
Severance and other termination benefits (e)		—			671			—			980
Other (f)		175			145			573			698
Adjusted EBITDA	$	7,075		$	6,795		$	14,068		$	9,420
Adjusted EBITDA Margin		16	%		18	%		12	%		9	%
Adjusted EBITDA Less Share-Based Compensation	$	6,424		$	5,467		$	11,984		$	6,135

___________________

(a)	Represents litigation provision primarily associated with a legal matter in Texas. See footnote (a) in the “Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Diluted Share” table above for more information.
(b)	Represents non-cash compensation charges related to share-based compensation granted to our officers, employees and directors.
(c)	Represents non-capitalizable costs of professional services primarily incurred or reversed in connection with our legal proceedings associated with the assertion of, or defense of, intellectual property as further described above as well as the cost incurred for the evaluation of potential strategic transactions.
(d)	Represents realized and unrealized foreign currency exchange gains and losses primarily due to movement in the foreign currency exchange rates during the applicable periods.
(e)	Represents certain expenses associated with consolidations of our tracer diagnostics business operations and Repeat Precision’s manufacturing operations in Mexico.
(f)	Represents the impact of a research and development subsidy that is included in income tax expense in accordance with GAAP along with other charges and credits.

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)

FREE CASH FLOW AND FREE CASH FLOW LESS DISTRIBUTIONS TO NON-CONTROLLING INTEREST

Free cash flow is defined as net cash provided by (used in) operating activities less purchases of property and equipment (inclusive of the purchase and development of software and technology) plus proceeds from sales of property and equipment, as presented in our consolidated statement of cash flows. We define free cash flow less distributions to non-controlling interest as free cash flow less amounts reported in the financing activities section of the statement of cash flows as distributions to non-controlling interest. We believe free cash flow is useful because it provides information to investors regarding the cash that was available in the period that was in excess of our needs to fund our capital expenditures and other investment needs. We believe that free cash flow less distributions to non-controlling interest is useful because it provides information to investors regarding the cash that was available in the period that was in excess of our needs to fund our capital expenditures, other investment needs, and cash distributions to our joint venture partner.

	Nine Months Ended
	September 30,
	2024			2023
Net cash provided by (used in) operating activities	$	2,082		$	(1,446	)
Purchases of property and equipment		(1,083	)		(1,704	)
Purchase and development of software and technology		(70	)		(263	)
Proceeds from sales of property and equipment		421			454
Free cash flow	$	1,350		$	(2,959	)
Distributions to non-controlling interest		(1,000	)		—
Free cash flow less distributions to non-controlling interest	$	350		$	(2,959	)

The MIL Network –

January 25, 2025

MIL-OSI: Transocean Ltd. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

	Three months ended											Three months ended
	September 30,				June 30,				sequential			September 30,				year-over-year
	2024				2024				change			2023				change
(In millions, except per share amounts, percentages and backlog)
Contract drilling revenues	$	948			$	861			$	87		$	713			$	235
Adjusted contract drilling revenues	$	948			$	861			$	87		$	721			$	227
Revenue efficiency ⁽¹⁾		94.5		%		96.9		%					95.4		%
Operating and maintenance expense	$	563			$	534			$	29		$	524			$	39
Net loss attributable to controlling interest	$	(494	)		$	(123	)		$	(371	)	$	(220	)		$	(274	)
Diluted loss per share	$	(0.58	)		$	(0.15	)		$	(0.43	)	$	(0.28	)		$	(0.30	)

Adjusted EBITDA	$	342			$	284			$	58		$	162			$	180
Adjusted EBITDA margin		36.0		%		33.0		%					22.5		%
Adjusted net income (loss)	$	64			$	(123	)		$	187		$	(280	)		$	344
Adjusted diluted earnings (loss) per share	$	—			$	(0.15	)		$	0.15		$	(0.36	)		$	0.36


Backlog as of the October 2024 Fleet Status Report	$	9.3		billion

STEINHAUSEN, Switzerland, Oct. 30, 2024 (GLOBE NEWSWIRE) — Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $494 million, $0.58 per diluted share, for the three months ended September 30, 2024.

Third quarter results included net unfavorable items of $558 million or $0.58 per diluted share as follows:

$617 million, $0.64 per diluted share, loss on impairment of assets, net of tax.

Partially offset by:

$21 million , $0.02 per diluted share, gain on retirement of debt; and
$38 million, $0.04 per diluted share, discrete tax items, net.

After consideration of these net unfavorable items, third quarter 2024 adjusted net income was $64 million.

Contract drilling revenues for the three months ended September 30, 2024, increased sequentially by $87 million to $948 million, primarily due to increased rig utilization, increased dayrates for two rigs, higher reimbursement revenues and a full quarter of revenues from the newbuild ultra-deepwater drillship Deepwater Aquila, partially offset by lower revenue efficiency across the fleet.

Operating and maintenance expense was $563 million, compared with $534 million in the prior quarter. The sequential increase was the result of increased fleet activity, including a full quarter of operations from Deepwater Aquila, partially offset by reduced operating costs related to Transocean Norge following the acquisition of Orion Holdings (Cayman) Limited in June 2024.

General and administrative expense was $47 million, down from $59 million in the second quarter. The decrease was primarily due to reduced costs associated with the early retirement of certain personnel and lower professional fees.

Interest expense net of capitalized amounts was $154 million, compared to $143 million in the prior quarter, excluding the favorable adjustment of $74 million and $69 million in the third and second quarter, respectively, for the fair value of the bifurcated exchange feature related to the 4.625% exchangeable bonds. Interest income was $11 million, compared to $14 million in the prior quarter.

The Effective Tax Rate⁽²⁾ was 6.0%, down from 474.5% in the prior quarter. The decrease was primarily due to rig impairments, rig sales and other ordinary movement in income before tax. The Effective Tax Rate excluding discrete items was 22.5% compared to 416.3% in the previous quarter.

Cash provided by operating activities was $194 million during the third quarter of 2024, representing an increase of $61 million compared to the prior quarter. The sequential increase was primarily due to increased operating activities, improved cash collected from customers and timing of payments to suppliers, partially offset by higher interest payments.

Third quarter 2024 capital expenditures of $58 million were primarily associated with Deepwater Aquila. This compares with $84 million in the prior quarter.

“As illustrated by the nearly $1.3 billion in backlog booked in the third quarter, including the recent award for Deepwater Conqueror, the demand for our fleet of high specification ultra-deepwater and harsh environment rigs remains strong,” said Chief Executive Officer, Jeremy Thigpen. “With these most recent awards, more than 97% of Transocean’s active fleet is contracted in 2025, once again demonstrating that our customers clearly recognize Transocean’s unique capabilities – our rigs, crews and superior operational performance – add value to their programs.”

Thigpen concluded, “With approximately $9.3 billion in backlog, and clear visibility to future demand, we will remain focused on delivering safe, reliable and efficient operations for our customers and continue to maximize cash generation to improve our balance sheet, as we did in the third quarter with $136 million of free cash flow.”

Non-GAAP Financial Measures
We present our operating results in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and operates the highest specification floating offshore drilling fleet in the world.

Transocean owns or has partial ownership interests in and operates a fleet of 34 mobile offshore drilling units, consisting of 26 ultra-deepwater floaters and eight harsh environment floaters.

For more information about Transocean, please visit: www.deepwater.com.

Conference Call Information

Transocean will conduct a teleconference starting at 9 a.m. EDT, 2 p.m. CET, on Thursday, October 31, 2024, to discuss the results. To participate, dial +1 785-424-1226 and refer to conference code 827284 approximately 15 minutes prior to the scheduled start time.

The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.

A replay of the conference call will be available after 12 p.m. EDT, 5 p.m. CET, on Thursday, October 31, 2024. The replay, which will be archived for approximately 30 days, can be accessed at +1 402-220-9184, passcode 827284. The replay will also be available on the company’s website.

Forward-Looking Statements

The statements described herein that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements could contain words such as “possible,” “intend,” “will,” “if,” “expect,” or other similar expressions. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the company’s newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the fluctuation of current and future prices of oil and gas, the global and regional supply and demand for oil and gas, the intention to scrap certain drilling rigs, the success of our business following prior acquisitions, the effects of the spread of and mitigation efforts by governments, businesses and individuals related to contagious illnesses, and other factors, including those and other risks discussed in the company’s most recent Annual Report on Form 10-K for the year ended December 31, 2023, and in the company’s other filings with the SEC, which are available free of charge on the SEC’s website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of the Swiss Financial Services Act (“FinSA”) or advertising within the meaning of the FinSA. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.

Notes

(1)

Revenue efficiency is defined as actual operating revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations. See the accompanying schedule entitled “Revenue Efficiency.”

(2)

Effective Tax Rate is defined as income tax expense or benefit divided by income or loss before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”

Analyst Contact:
Alison Johnson
+1 713-232-7214

Media Contact:
Pam Easton
+1 713-232-7647

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
	Three months ended						Nine months ended
	September 30,						September 30,
	2024			2023			2024			2023

Contract drilling revenues	$	948		$	713		$	2,572		$	2,091

Costs and expenses
Operating and maintenance		563			524			1,620			1,417
Depreciation and amortization		190			192			559			560
General and administrative		47			44			158			137
		800			760			2,337			2,114

Loss on impairment of assets		(629	)		(5	)		(772	)		(58	)
Loss on disposal of assets, net		(4	)		(3	)		(10	)		(173	)
Operating loss		(485	)		(55	)		(547	)		(254	)

Other income (expense), net
Interest income		11			12			40			42
Interest expense, net of amounts capitalized		(80	)		(232	)		(271	)		(649	)
Gain (loss) on retirement of debt		21			—			161			(32	)
Other, net		8			12			32			35
		(40	)		(208	)		(38	)		(604	)
Loss before income tax benefit		(525	)		(263	)		(585	)		(858	)
Income tax benefit		(31	)		(43	)		(66	)		(8	)

Net loss		(494	)		(220	)		(519	)		(850	)
Net income attributable to noncontrolling interest		—			—			—			—
Net loss attributable to controlling interest	$	(494	)	$	(220	)	$	(519	)	$	(850	)

Loss per share
Basic	$	(0.56	)	$	(0.28	)	$	(0.62	)	$	(1.13	)
Diluted	$	(0.58	)	$	(0.28	)	$	(0.65	)	$	(1.13	)

Weighted-average shares outstanding
Basic		879			774			840			755
Diluted		954			774			915			755

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
	September 30,			December 31,
	2024			2023
Assets
Cash and cash equivalents	$	435		$	762
Accounts receivable, net of allowance of $2 at September 30, 2024 and December 31, 2023		594			512
Materials and supplies, net of allowance of $176 and $198 at September 30, 2024 and December 31, 2023, respectively		425			426
Assets held for sale		345			49
Restricted cash and cash equivalents		365			233
Other current assets		179			144
Total current assets		2,343			2,126

Property and equipment		22,412			23,875
Less accumulated depreciation		(6,424	)		(6,934	)
Property and equipment, net		15,988			16,941
Contract intangible assets		—			4
Deferred tax assets, net		165			44
Other assets		1,014			1,139
Total assets	$	19,510		$	20,254

Liabilities and equity
Accounts payable	$	255		$	323
Accrued income taxes		13			23
Debt due within one year		457			370
Other current liabilities		706			681
Total current liabilities		1,431			1,397

Long-term debt		6,503			7,043
Deferred tax liabilities, net		570			540
Other long-term liabilities		778			858
Total long-term liabilities		7,851			8,441

Commitments and contingencies

Shares, $0.10 par value, 1,057,879,029 authorized, 141,262,093 conditionally authorized, 940,828,901 issued
and 875,803,595 outstanding at September 30, 2024, and CHF 0.10 par value, 1,021,294,549 authorized,
142,362,093 conditionally authorized, 843,715,858 issued and 809,030,846 outstanding at December 31, 2023		87			81
Additional paid-in capital		14,871			14,544
Accumulated deficit		(4,552	)		(4,033	)
Accumulated other comprehensive loss		(179	)		(177	)
Total controlling interest shareholders’ equity		10,227			10,415
Noncontrolling interest		1			1
Total equity		10,228			10,416
Total liabilities and equity	$	19,510		$	20,254

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
	Nine months ended
	September 30,
	2024			2023
Cash flows from operating activities
Net loss	$	(519	)	$	(850	)
Adjustments to reconcile to net cash provided by operating activities:
Amortization of contract intangible asset		4			45
Depreciation and amortization		559			560
Share-based compensation expense		38			30
Loss on impairment of assets		772			58
Loss on impairment of investment in unconsolidated affiliate		5			—
Loss on disposal of assets, net		10			173
Fair value adjustment to bifurcated compound exchange feature		(153	)		272
Amortization of debt-related balances, net		39			38
(Gain) loss on retirement of debt		(161	)		32
Deferred income tax expense (benefit)		(91	)		1
Other, net		(6	)		21
Changes in deferred revenues, net		98			40
Changes in deferred costs, net		(26	)		(125	)
Changes in other operating assets and liabilities, net		(328	)		(229	)
Net cash provided by operating activities		241			66

Cash flows from investing activities
Capital expenditures		(225	)		(207	)
Investment in loans to unconsolidated affiliates		(3	)		(3	)
Investment in equity of unconsolidated affiliate		—			(10	)
Proceeds from disposal of assets, net of costs to sell		99			10
Cash acquired in acquisition of unconsolidated affiliates		5			7
Net cash used in investing activities		(124	)		(203	)

Cash flows from financing activities
Repayments of debt		(2,073	)		(1,707	)
Proceeds from issuance of debt, net of issue costs		1,767			1,664
Other, net		(6	)		(3	)
Net cash used in financing activities		(312	)		(46	)

Net decrease in unrestricted and restricted cash and cash equivalents		(195	)		(183	)
Unrestricted and restricted cash and cash equivalents, beginning of period		995			991
Unrestricted and restricted cash and cash equivalents, end of period	$	800		$	808

TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS


	Three months ended
	September 30,		June 30,		September 30,
Contract Drilling Revenues (in millions)	2024		2024		2023
Ultra-deepwater floaters	$	668	$	606	$	516
Harsh environment floaters		280		255		197
Total contract drilling revenues	$	948	$	861	$	713

	Three months ended
	September 30,		June 30,		September 30,
Average Daily Revenue ⁽¹⁾	2024		2024		2023
Ultra-deepwater floaters	$	426,700	$	433,900	$	406,500
Harsh environment floaters		464,900		449,600		357,400
Total fleet average daily revenue	$	436,800	$	438,300	$	391,300

	Three months ended
	September 30,		June 30,		September 30,
Utilization ⁽²⁾	2024		2024		2023
Ultra-deepwater floaters	60.7	%	53.5	%	45.0	%
Harsh environment floaters	75.0	%	73.0	%	63.0	%
Total fleet average rig utilization	63.9	%	57.8	%	49.4	%

	Three months ended
	September 30,		June 30,		September 30,
Revenue Efficiency ⁽³⁾	2024		2024		2023
Ultra-deepwater floaters	92.5	%	96.5	%	94.3	%
Harsh environment floaters	100.1	%	98.1	%	98.1	%
Total fleet average revenue efficiency	94.5	%	96.9	%	95.4	%


⁽¹⁾ Average daily revenue is defined as operating revenues, excluding revenues for contract terminations, reimbursements and contract intangible amortization, earned per operating day. An operating day is defined as a day for which a rig is contracted to earn a dayrate during the firm contract period after operations commence.

⁽²⁾ Rig utilization is defined as the total number of operating days divided by the total number of rig calendar days in the measurement period, expressed as a percentage.

⁽³⁾ Revenue efficiency is defined as actual operating revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations.

TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
(in millions, except per share data)


	YTD			QTD			YTD			QTD			YTD
	09/30/24			09/30/24			06/30/24			06/30/24			03/31/24
Adjusted Net Income (Loss)
Net income (loss) attributable to controlling interest, as reported	$	(519	)	$	(494	)	$	(25	)	$	(123	)	$	98
Loss on impairment of assets, net of tax		755			617			138			138			—
Loss on impairment of investment in unconsolidated affiliates		5			—			5			4			1
Gain on retirement of debt		(161	)		(21	)		(140	)		(140	)		—
Discrete tax items		(161	)		(38	)		(123	)		(2	)		(121	)
Net income (loss), as adjusted	$	(81	)	$	64		$	(145	)	$	(123	)	$	(22	)

Adjusted Diluted Earnings (Loss) Per Share:
Diluted earnings (loss) per share, as reported	$	(0.65	)	$	(0.58	)	$	(0.03	)	$	(0.15	)	$	0.11
Loss on impairment of assets, net of tax		0.82			0.64			0.17			0.17			—
Loss on impairment of investment in unconsolidated affiliates		0.01			—			—			—			—
Gain on retirement of debt		(0.18	)		(0.02	)		(0.17	)		(0.17	)		—
Discrete tax items		(0.18	)		(0.04	)		(0.15	)		—			(0.14	)
Diluted earnings (loss) per share, as adjusted	$	(0.18	)	$	—		$	(0.18	)	$	(0.15	)	$	(0.03	)

	YTD			QTD			YTD			QTD			YTD			QTD			YTD
	12/31/23			12/31/23			09/30/23			09/30/23			06/30/23			06/30/23			03/31/23
Adjusted Net Loss
Net loss attributable to controlling interest, as reported	$	(954	)	$	(104	)	$	(850	)	$	(220	)	$	(630	)	$	(165	)	$	(465	)
Loss on impairment of assets		57			(1	)		58			5			53			53			—
Loss on disposal of assets, net		169			—			169			—			169			—			169
Loss on impairment of investment in unconsolidated affiliate		5			5			—			—			—			—			—
Loss on conversion of debt to equity		27			24			3			—			3			3			—
(Gain) loss on retirement of debt		31			(1	)		32			—			32			—			32
Discrete tax items		(74	)		3			(77	)		(65	)		(12	)		(1	)		(11	)
Net loss, as adjusted	$	(739	)	$	(74	)	$	(665	)	$	(280	)	$	(385	)	$	(110	)	$	(275	)

Adjusted Diluted Loss Per Share:
Diluted loss per share, as reported	$	(1.24	)	$	(0.13	)	$	(1.13	)	$	(0.28	)	$	(0.85	)	$	(0.22	)	$	(0.64	)
Loss on impairment of assets		0.07			—			0.08			0.01			0.07			0.07			—
Loss on disposal of assets, net		0.22			—			0.23			—			0.23			—			0.23
Loss on impairment of investment in unconsolidated affiliate		0.01			0.01			—			—			—			—			—
Loss on conversion of debt to equity		0.04			0.03			—			—			—			—			—
(Gain) loss on retirement of debt		0.04			—			0.04			—			0.04			—			0.04
Discrete tax items		(0.10	)		—			(0.10	)		(0.09	)		(0.01	)		—			(0.01	)
Diluted loss per share, as adjusted	$	(0.96	)	$	(0.09	)	$	(0.88	)	$	(0.36	)	$	(0.52	)	$	(0.15	)	$	(0.38	)

TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED CONTRACT DRILLING REVENUES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND RELATED MARGINS
(in millions, except percentages)


	YTD				QTD				YTD				QTD				YTD
	09/30/24				09/30/24				06/30/24				06/30/24				03/31/24

Contract drilling revenues	$	2,572			$	948			$	1,624			$	861			$	763
Contract intangible asset amortization		4				—				4				—				4
Adjusted Contract Drilling Revenues	$	2,576			$	948			$	1,628			$	861			$	767

Net income (loss)	$	(519	)		$	(494	)		$	(25	)		$	(123	)		$	98
Interest expense, net of interest income		231				69				162				60				102
Income tax expense (benefit)		(66	)			(31	)			(35	)			156				(191	)
Depreciation and amortization		559				190				369				184				185
Contract intangible asset amortization		4				—				4				—				4
EBITDA		209				(266	)			475				277				198

Loss on impairment of assets		772				629				143				143				—
Loss on impairment of investment in unconsolidated affiliates		5				—				5				4				1
Gain on retirement of debt		(161	)			(21	)			(140	)			(140	)			—
Adjusted EBITDA	$	825			$	342			$	483			$	284			$	199


Profit (loss) margin		(20.2	)	%		(52.0	)	%		(1.5	)	%		(14.3	)	%		12.9		%
EBITDA margin		8.1		%		(28.1	)	%		29.2		%		32.2		%		25.8		%
Adjusted EBITDA margin		32.0		%		36.0		%		29.7		%		33.0		%		26.0		%

	YTD				QTD				YTD				QTD				YTD				QTD				YTD
	12/31/23				12/31/23				09/30/23				09/30/23				06/30/23				06/30/23				03/31/23

Contract drilling revenues	$	2,832			$	741			$	2,091			$	713			$	1,378			$	729			$	649
Contract intangible asset amortization		52				7				45				8				37				19				18
Adjusted Contract Drilling Revenues	$	2,884			$	748			$	2,136			$	721			$	1,415			$	748			$	667

Net loss	$	(954	)		$	(104	)		$	(850	)		$	(220	)		$	(630	)		$	(165	)		$	(465	)
Interest expense, net of interest income		594				(13	)			607				220				387				157				230
Income tax expense (benefit)		13				21				(8	)			(43	)			35				(16	)			51
Depreciation and amortization		744				184				560				192				368				186				182
Contract intangible asset amortization		52				7				45				8				37				19				18
EBITDA		449				95				354				157				197				181				16

Loss on impairment of assets		57				(1	)			58				5				53				53				—
Loss on disposal of assets, net		169				—				169				—				169				—				169
Loss on impairment of investment in unconsolidated affiliate		5				5				—				—				—				—				—
Loss on conversion of debt to equity		27				24				3				—				3				3				—
(Gain) loss on retirement of debt		31				(1	)			32				—				32				—				32
Adjusted EBITDA	$	738			$	122			$	616			$	162			$	454			$	237			$	217


Loss margin		(33.7	)	%		(14.0	)	%		(40.7	)	%		(30.9	)	%		(45.7	)	%		(22.6	)	%		(71.6	)	%
EBITDA margin		15.6		%		12.7		%		16.6		%		21.8		%		13.9		%		24.2		%		2.4		%
Adjusted EBITDA margin		25.6		%		16.3		%		28.9		%		22.5		%		32.1		%		31.7		%		32.5		%

TRANSOCEAN LTD. AND SUBSIDIARIES
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS
(in millions, except tax rates)


	Three months ended												Nine months ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2024				2024				2023				2024				2023

Income (loss) before income taxes	$	(525	)		$	33			$	(263	)		$	(585	)		$	(858	)
Loss on impairment of assets		629				143				5				772				58
Loss on disposal of assets, net		—				—				—				—				169
Loss on impairment of investment in unconsolidated affiliates		—				4				—				5				—
Loss on conversion of debt to equity		—				—				—				—				3
(Gain) loss on retirement of debt		(21	)			(140	)			—				(161	)			32
Adjusted income (loss) before income taxes	$	83			$	40			$	(258	)		$	31			$	(596	)


Income tax expense (benefit)	$	(31	)		$	156			$	(43	)		$	(66	)		$	(8	)
Loss on impairment of assets		12				5				—				17				—
Loss on disposal of assets, net		—				—				—				—				—
Loss on impairment of investment in unconsolidated affiliates		—				—				—				—				—
Loss on conversion of debt to equity		—				—				—				—				—
(Gain) loss on retirement of debt		—				—				—				—				—
Changes in estimates (1)		38				2				65				161				77
Adjusted income tax expense (benefit) (2)	$	19			$	163			$	22			$	112			$	69

Effective Tax Rate (3)		6.0		%		474.5		%		16.3		%		11.3		%		0.9		%

Effective Tax Rate, excluding discrete items (4)		22.5		%		416.3		%		(8.7	)	%		364.0		%		(11.7	)	%


(1) Our estimates change as we file tax returns, settle disputes with tax authorities, or become aware of changes in laws and other events that have an effect on our (a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities.

(2) The three months ended September 30, 2024 included $283 million of additional tax benefit, reflecting the cumulative effect of a decrease in the annual effective tax rate from the previous quarter estimate.

(3) Our effective tax rate is calculated as income tax expense or benefit divided by income or loss before income taxes.

(4) Our effective tax rate, excluding discrete items, is calculated as income tax expense or benefit, excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income or loss before income taxes, excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes related to estimating the annual effective tax rate.

Transocean Ltd. and subsidiaries
Non-GAAP Financial Measures and Reconciliations
Free Cash Flow and Levered Free Cash Flow
(in millions)


							YTD			QTD			YTD			QTD			YTD
							09/30/24			09/30/24			06/30/24			06/30/24			03/31/24

Cash provided by (used in) operating activities							$	241		$	194		$	47		$	133		$	(86	)
Capital expenditures								(225	)		(58	)		(167	)		(84	)		(83	)
Free Cash Flow								16			136			(120	)		49			(169	)
Debt repayments								(2,073	)		(258	)		(1,815	)		(1,664	)		(151	)
Debt repayments, paid from debt proceeds								1,748			99			1,649			1,649			–
Levered Free Cash Flow							$	(309	)	$	(23	)	$	(286	)	$	34		$	(320	)



	YTD			QTD			YTD			QTD			YTD			QTD			YTD
	12/31/23			12/31/23			09/30/23			09/30/23			06/30/23			06/30/23			03/31/23

Cash provided by (used in) operating activities	$	164		$	98		$	66		$	(44	)	$	110		$	157		$	(47	)
Capital expenditures		(427	)		(220	)		(207	)		(50	)		(157	)		(76	)		(81	)
Free Cash Flow		(263	)		(122	)		(141	)		(94	)		(47	)		81			(128	)
Debt repayments		(1,717	)		(10	)		(1,707	)		(139	)		(1,568	)		(4	)		(1,564	)
Debt repayments, paid from debt proceeds		1,156			–			1,156			–			1,156			–			1,156
Levered Free Cash Flow	$	(824	)	$	(132	)	$	(692	)	$	(233	)	$	(459	)	$	77		$	(536	)



	YTD			QTD			YTD			QTD			YTD			QTD			YTD
	12/31/22			12/31/22			09/30/22			09/30/22			06/30/22			06/30/22			03/31/22

Cash provided by (used in) operating activities	$	448		$	178		$	270		$	230		$	40		$	41		$	(1	)
Capital expenditures		(717	)		(409	)		(308	)		(87	)		(221	)		(115	)		(106	)
Free Cash Flow		(269	)		(231	)		(38	)		143			(181	)		(74	)		(107	)
Debt repayments		(554	)		(101	)		(453	)		(196	)		(257	)		(92	)		(165	)
Debt repayments, paid from debt proceeds		–			–			–			–			–			–			–
Levered Free Cash Flow	$	(823	)	$	(332	)	$	(491	)	$	(53	)	$	(438	)	$	(166	)	$	(272	)

The MIL Network –

January 25, 2025

MIL-OSI: Ponce Financial Group, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 30, 2024 (GLOBE NEWSWIRE) — Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the third quarter of 2024.

Third Quarter 2024 Highlights (Compared to Prior Periods):

Net income available to common stockholders was $2.2 million, or $0.10 per diluted share for the three months ended September 30, 2024, as compared to net income available to common stockholders of $3.1 million, or $0.14 per diluted share for the three months ended June 30, 2024 and net income available to common stockholders of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023. Total net income for the three months ended September 30, 2024 was $2.4 million. The Company paid dividends of $0.3 million on its preferred stock during the quarter ended September 30, 2024.
Included in the $2.2 million of net income available to common stockholders for the third quarter of 2024 results is $41.3 million in interest and dividend income and $1.2 million in non-interest income, offset by $22.3 million in interest expense, $16.3 million in non-interest expense, $0.8 million in provision for credit losses, $0.6 million in provision for income taxes and $0.3 million in dividends on preferred shares.
Net interest income of $19.0 million for the third quarter of 2024 increased $1.1 million, or 6.25%, from the prior quarter and increased $2.5 million, or 15.00%, from the same quarter last year.
Net interest margin was 2.65% for the third quarter of 2024, versus 2.62% for the prior quarter and versus 2.58% for the same quarter last year.

Nine Months 2024 Highlights (Compared to 2023):

Net income available to common stockholders was $7.7 million, or $0.34 per diluted share for the nine months ended September 30, 2024, as compared to net income available to common stockholders of $2.8 million, or $0.12 per diluted share for the nine months ended September 30, 2023. Total net income for the nine months ended September 30, 2024, prior to the payment of $0.4 million in dividends on preferred shares, was $8.0 million.
Net interest income for the nine months ended September 30, 2024 was $55.8 million, an increase of $7.7 million, or 15.98%, compared to $48.1 million for the nine months ended September 30, 2023.
Non-interest income for the nine months ended September 30, 2024 was $5.1 million, a decrease of $3.8 million, or 42.76%, from $8.9 million for the nine months ended September 30, 2023. The decrease was primarily driven by a $3.7 million in grants that were received in the prior year.
Non-interest expense for the nine months ended September 30, 2024 was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023.
Cash and equivalents were $155.8 million as of September 30, 2024, an increase of $16.6 million, or 11.94%, from $139.2 million as of December 31, 2023.
Securities totaled $514.7 million as of September 30, 2024, a decrease of $66.9 million, or 11.50%, from $581.7 million as of December 31, 2023 primarily due to regular principal payments, maturity of one available-for-sale security in the amount of $4.0 million and call of one held-to-maturity security in the amount of $25.0 million.
Net loans receivable were $2.18 billion as of September 30, 2024, an increase of $284.4 million, or 15.00%, from $1.90 billion as of December 31, 2023.
Deposits were $1.87 billion as of September 30, 2024, an increase of $362.7 million, or 24.06%, from $1.51 billion as of December 31, 2023.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “We continue to make progress quarter over quarter both in terms of our economic performance as well as serving our communities. Book value per share continues to grow and is now $11.74 (up $0.75 vs last year) and total equity per common share stands at $21.18. Our levels of liquidity and capital remain strong. Our net interest income grew quarter over quarter, and we’re well positioned for a decline in interest rates. We reduced our borrowings during the quarter, paying off the entirety of our Bank Term Funding Program Loan, while lowering the overall cost and extending our maturities. We remain committed to the communities we serve and our status as a Minority Depository Institution (“MDI”)/Community Development Financial Institution (“CDFI”), and we continue to invest in our people and in technology to improve our efficiency.”

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added, “During the quarter, the US Treasury Department issued proposed guidelines under which it may sell their ECIP investment back to the issuers or related non-profit affiliates. We believe the adoption of the proposed regulations would be greatly beneficial to Ponce Financial Group, although there can be no assurance that the proposed regulations will be adopted, or that that will be adopted in their current form. Most of our loan growth of $157.6 million this quarter is explained by our desire to ensure qualification under the proposed regulations, if adopted. Deposits also grew significantly during the quarter including $35.0 million from the Banking Development District program of New York.”

Selected performance metrics are as follows (refer to “Key Metrics” for additional information):

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratios (Annualized):	2024			2024			2024			2023			2023
Return on average assets (1)		0.33	%		0.45	%		0.33	%		0.08	%		0.39	%
Return on average equity (1)		1.93	%		2.59	%		1.97	%		0.42	%		2.11	%
Net interest rate spread (1) (2)		1.77	%		1.72	%		1.82	%		1.74	%		1.68	%
Net interest margin (1) (3)		2.65	%		2.62	%		2.71	%		2.66	%		2.58	%
Non-interest expense to average assets (1)		2.19	%		2.28	%		2.35	%		2.66	%		2.58	%
Efficiency ratio (4)		80.87	%		80.09	%		82.56	%		96.83	%		78.11	%
Average interest-earning assets to average interest- bearing liabilities		128.35	%		129.73	%		129.69	%		133.50	%		134.49	%
Average equity to average assets		16.97	%		17.41	%		17.00	%		18.25	%		18.32	%

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Capital Ratios (Annualized):	2024			2024			2024			2023			2023
Total capital to risk-weighted assets (Bank only)		21.61	%		22.47	%		22.79	%		23.30	%		25.10	%
Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Tier 1 capital to average assets (Bank only)		16.19	%		16.70	%		16.26	%		17.49	%		17.51	%

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Asset Quality Ratios (Annualized):	2024			2024			2024			2023			2023
Allowance for loan losses as a percentage of total loans		1.09	%		1.18	%		1.23	%		1.36	%		1.51	%
Allowance for loan losses as a percentage of nonperforming loans		139.52	%		130.28	%		140.90	%		152.99	%		169.49	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.17	%)		(0.10	%)		(0.25	%)		(0.24	%)		(0.34	%)
Non-performing loans as a percentage of total gross loans		0.78	%		0.89	%		0.87	%		0.89	%		0.89	%
Non-performing loans as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.73	%		0.82	%		0.79	%		0.81	%		0.82	%

	(1)	Annualized where appropriate.
	(2)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
	(3)	Net interest margin represents net interest income divided by average total interest-earning assets.
	(4)	Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
	(5)	Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.

Summary of Results of Operations

Net income for the three months ended September 30, 2024 was $2.4 million compared to net income of $3.2 million for the three months ended June 30, 2024 and net income of $2.6 million for the three months ended September 30, 2023.

The decrease of net income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was attributed mainly to an increase of $1.2 million in provision for credit losses, a decrease of $1.1 million in non-interest income, an increase of $0.2 million in non-interest expense, partially offset by an increase of $1.1 million in net interest income and a decrease of $0.6 million in provision for income taxes .

The decrease of net income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely due to a decrease of $4.5 million in non-interest income as a result of a $3.7 million grant reported in the third quarter of 2023 and an increase of $0.3 million in provision for credit losses, partially offset by an increase of $2.5 million in net interest income and decreases of $1.1 million in provision for income taxes and $ 1.0 million in non-interest expense.

Net income for the nine months ended September 30, 2024 was $8.0 million compared to a net income of $2.8 million for the nine months ended September 30, 2023. The increase of $5.2 million in net income was attributable to an increase of $7.7 million in net interest income, a decrease of $1.3 million in non-interest expense and a decrease of $1.1 million in provision for credit losses, partially offset by a decrease of $3.8 million in non-interest income and an increase of $1.1 million in provision for income taxes.

Net Interest Income and Net Margin

Net interest income for the three months ended September 30, 2024, increased $1.1 million, or 6.25%, to $19.0 million compared to $17.9 million for the three months ended June 30, 2024 and increased $2.5 million, or 15.00%, compared to $16.5 million for the three months ended September 30, 2023.

Net interest income for the nine months ended September 30, 2024, increased $7.7 million, or 15.98%, to $55.8 million, compared to $48.1 million for the nine months ended September 30, 2023. The increase of $7.7 million of net interest income was attributable to an increase of $28.8 million in total interest and dividend income, offset by an increase of $21.1 million in total interest expense.

For the nine months ended September 30, 2024, provision for credit losses amounted to $0.2 million consisting of a provision for credit losses on loans in the amount of $0.4 million and a benefit for credit losses on held-to-maturity securities in the amount of $0.2 million. The $0.4 million provision for credit losses on loans for the nine months ended September 30, 2024 resulted from a benefit of $2.1 million related to microloans offset by a provision of $2.5 million related to non-microloans.

Net interest margin was 2.65% for the three months ended September 30, 2024 compared to 2.62% for the prior quarter, an increase of 3bps and 2.58% for the same period last year, an increase of 7bps.

Net interest margin was 2.66% for the nine months ended September 30, 2024 compared to 2.65% for the nine months ended September 30, 2023, an increase of 1bp.

Non-interest Income

Non-interest income for the three months ended September 30, 2024, was $1.2 million, a decrease of $1.1 million, or 49.03%, compared to $2.3 million the three months ended June 30, 2024 and a decrease of $4.5 million, or 79.55%, compared to $5.6 million the three months ended September 30, 2023.

The $1.1 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was largely attributable to decreases of $0.7 million in other non-interest income related to the mark to market adjustments on a private equity fund investment and $0.3 million in late and prepayment charges.

The $4.5 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely attributable to $3.7 million in grants received in the third quarter of 2023 and a decrease of $0.8 million in late and prepayment charges.

Non-interest income for the nine months ended September 30, 2024, was $5.1 million, a decrease of $3.8 million, or 42.76%, compared to $8.9 million for the nine months ended September 30, 2023. The decrease was largely attributable to $3.7 million related to grants received in the third quarter of 2023 and a decrease of $1.1 million in late and prepayment charges, partially, offset by increases of $0.6 million in other non-interest income and $0.4 million in income on sale of mortgage loans.

Non-interest Expense

Non-interest expense for the three months ended September 30, 2024, was $16.3 million, an increase of $0.2 million, or 1.03%, compared to $16.1 million for the three months ended June 30, 2024 and a decrease of $1.0 million, or 5.79%, compared to $17.3 million for the three months ended September 30, 2023.

The $0.2 million increase from the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was mainly attributable to a decrease of $0.2 million in benefit for contingencies and an increase of $0.2 million in occupancy and equipment, partially offset by a decrease of $0.3 million in other operating expense.

The $1.0 million decrease from the three months ended September 30, 2023 compared to the three months ended September 30, 2023 was mainly attributable to decreases of $0.6 million in provision for contingencies, $0.5 million in data processing expenses and $0.3 million in professional fees, partially offset by increases of $0.2 million in direct loan expenses, $0.2 million in occupancy and equipment and $0.1 million in compensation and benefits.

Non-interest expense for the nine months ended September 30, 2024, was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023. The $1.4 million decrease from the nine months ended September 30, 2023 was mainly attributable to decreases of $2.5 million in provision for contingencies, $0.7 million in data processing expenses, $0.6 million in professional fees and $0.5 million in office supplies, telephone and postage, partially offset by a decrease of $1.2 million in microloans recoveries and increases of $0.8 million in compensation and benefits and $0.8 million in direct loan expenses.

Balance Sheet Summary

Total assets increased $265.2 million, or 9.64%, to $3.02 billion as of September 30, 2024 from $2.75 billion as of December 31, 2023. The increase in total assets is largely attributable to increases of $284.4 million in net loans receivable, $26.7 million in other assets, $16.6 million in cash and cash equivalents, $9.1 million in Federal Home Loan Bank of New York stock and $0.8 million in net premises and equipment, partially offset by decreases of $58.0 million in held-to-maturity securities, $8.9 million in available-for-sale securities, $2.5 million in deferred tax assets, $1.5 million in right of use assets, $1.1 million in accrued interest receivable and $0.4 million in mortgage loans held for sale.

Total liabilities increased $252.1 million, or 11.16%, to $2.51 billion as of September 30, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to an increase of $362.7 million in deposits, $3.0 million in advance payments by borrowers for taxes and insurance and $0.8 million in other liabilities, partially offset by decreases of $104.0 million in borrowings, $9.0 million in accrued interest payable and $1.4 million in operating lease liabilities.

Total stockholders’ equity increased $13.2 million, or 2.69%, to $504.6 million as of September 30, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders’ equity was largely attributable to $8.0 million in net income, $3.0 million in other comprehensive income, $1.6 million impact to additional paid in capital as a result of share-based compensation and $1.0 million from release of ESOP shares, offset by $0.4 million in preferred stock dividend for shares issued pursuant to the ECIP.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc. is the holding company for Ponce Bank. Ponce Bank is a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. Ponce Bank’s business primarily consists of taking deposits from the general public and to a lesser extent alternative funding sources and investing those funds, together with funds generated from operations and borrowings, in mortgage loans, consisting of 1-4 family residences (investor-owned and owner-occupied), multifamily residences, nonresidential properties, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank’s market area; Ponce Bank’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in Ponce Financial Group, Inc.’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)


	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
ASSETS
Cash and due from banks:
Cash	$	32,061		$	23,128		$	29,972		$	28,930		$	26,046
Interest-bearing deposits		123,751			80,038			104,752			110,260			90,966
Total cash and cash equivalents		155,812			103,166			134,724			139,190			117,012
Available-for-sale securities, at fair value		111,005			113,125			116,044			119,902			116,753
Held-to-maturity securities, at amortized cost		403,736			442,113			452,955			461,748			471,065
Placement with banks		249			249			249			249			996
Mortgage loans held for sale, at fair value		9,566			37,764			7,860			9,980			14,103
Loans receivable, net		2,180,331			2,022,173			1,981,428			1,895,886			1,787,607
Accrued interest receivable		16,890			17,441			18,063			18,010			16,624
Premises and equipment, net		16,843			16,976			17,396			16,053			16,453
Right of use assets		29,785			30,349			31,021			31,272			32,110
Federal Home Loan Bank of New York stock (FHLBNY), at cost		28,515			23,972			23,892			19,377			18,870
Deferred tax assets		11,845			13,172			13,919			14,332			15,984
Other assets		51,392			21,507			21,151			24,723			16,286
Total assets	$	3,015,969		$	2,842,007		$	2,818,702		$	2,750,722		$	2,623,863
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	1,870,323		$	1,606,097		$	1,585,784		$	1,507,620		$	1,401,132
Operating lease liabilities		31,343			31,861			32,486			32,684			33,459
Accrued interest payable		2,918			6,820			4,218			11,965			8,385
Advance payments by borrowers for taxes and insurance		13,733			10,838			13,245			10,778			13,743
Borrowings		580,421			680,421			680,421			684,421			675,100
Other liabilities		12,642			8,313			8,866			11,859			6,986
Total liabilities		2,511,380			2,344,350			2,325,020			2,259,327			2,138,805
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000			225,000			225,000			225,000			225,000
Common stock, $0.01 par value; 200,000,000 shares authorized		249			249			249			249			249
Treasury stock, at cost		(9,445	)		(9,519	)		(9,702	)		(9,747	)		(10,975	)
Additional paid-in-capital		208,478			207,934			207,584			207,106			207,626
Retained earnings		105,103			102,951			99,834			97,420			96,902
Accumulated other comprehensive loss		(12,686	)		(16,557	)		(16,590	)		(15,649	)		(20,468	)
Unearned compensation ─ ESOP		(12,110	)		(12,401	)		(12,693	)		(12,984	)		(13,276	)
Total stockholders’ equity		504,589			497,657			493,682			491,395			485,058
Total liabilities and stockholders’ equity	$	3,015,969		$	2,842,007		$	2,818,702		$	2,750,722		$	2,623,863

Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Interest and dividend income:
Interest on loans receivable	$	32,945		$	31,281		$	30,664		$	27,814		$	25,276
Interest on deposits due from banks		2,430			1,542			2,911			990			1,969
Interest and dividend on securities and FHLBNY stock		5,918			5,969			6,091			6,146			6,261
Total interest and dividend income		41,293			38,792			39,666			34,950			33,506
Interest expense:
Interest on certificates of deposit		6,926			6,358			6,380			5,103			4,362
Interest on other deposits		8,519			7,389			6,540			5,706			5,639
Interest on borrowings		6,825			7,141			7,923			6,944			6,963
Total interest expense		22,270			20,888			20,843			17,753			16,964
Net interest income		19,023			17,904			18,823			17,197			16,542
Provision (benefit) for credit losses		789			(374	)		(180	)		(375	)		535
Net interest income after provision (benefit) for credit losses		18,234			18,278			19,003			17,572			16,007
Non-interest income:
Service charges and fees		508			492			473			498			516
Brokerage commissions		—			9			8			13			17
Late and prepayment charges		77			426			359			365			899
Income on sale of mortgage loans		218			274			302			244			173
Grant income		—			—			—			438			3,718
Other		348			1,057			565			(273	)		304
Total non-interest income		1,151			2,258			1,707			1,285			5,627
Non-interest expense:
Compensation and benefits		7,674			7,724			7,844			8,262			7,566
Occupancy and equipment		3,786			3,564			3,667			3,686			3,588
Data processing expenses		1,099			1,013			1,127			1,101			1,582
Direct loan expenses		573			633			732			497			369
(Benefit) provision for contingencies		(252	)		(493	)		164			418			391
Insurance and surety bond premiums		292			263			253			250			255
Office supplies, telephone and postage		222			233			249			294			301
Professional fees		1,351			1,369			1,723			2,040			1,693
Microloans recoveries		(54	)		(65	)		(53	)		(152	)		(69	)
Marketing and promotional expenses		180			145			100			146			248
Directors fees and regulatory assessment		178			176			179			173			169
Other operating expenses		1,265			1,585			965			1,182			1,223
Total non-interest expense		16,314			16,147			16,950			17,897			17,316
Income before income taxes		3,071			4,389			3,760			960			4,318
Provision for income taxes		638			1,197			1,346			442			1,728
Net income	$	2,433		$	3,192		$	2,414		$	518		$	2,590
Dividends on preferred shares		281			75			—			—			—
Net income available to common stockholders	$	2,152		$	3,117		$	2,414		$	518		$	2,590
Earnings per common share:
Basic	$	0.10		$	0.14		$	0.11		$	0.02		$	0.12
Diluted	$	0.10		$	0.14		$	0.11		$	0.02		$	0.12
Weighted average common shares outstanding:
Basic		22,446,009			22,409,803			22,353,492			22,224,945			22,272,076
Diluted		22,612,028			22,419,309			22,366,728			22,406,102			22,349,217

Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

	For the Nine Months Ended September 30,
	2024			2023			Variance $			Variance %
Interest and dividend income:
Interest on loans receivable	$	94,890		$	67,991		$	26,899			39.56	%
Interest on deposits due from banks		6,883			3,983			2,900			72.81	%
Interest and dividend on securities and FHLBNY stock		17,978			18,943			(965	)		(5.09	%)
Total interest and dividend income		119,751			90,917			28,834			31.71	%
Interest expense:
Interest on certificates of deposit		19,664			11,468			8,196			71.47	%
Interest on other deposits		22,448			12,864			9,584			74.50	%
Interest on borrowings		21,889			18,516			3,373			18.22	%
Total interest expense		64,001			42,848			21,153			49.37	%
Net interest income		55,750			48,069			7,681			15.98	%
Provision for credit losses		235			1,348			(1,113	)		(82.57	%)
Net interest income after provision for credit losses		55,515			46,721			8,794			18.82	%
Non-interest income:
Service charges and fees		1,473			1,488			(15	)		(1.01	%)
Brokerage commissions		17			67			(50	)		(74.63	%)
Late and prepayment charges		862			2,000			(1,138	)		(56.90	%)
Income on sale of mortgage loans		794			354			440			124.29	%
Grant income		—			3,718			(3,718	)		(100.00	%)
Other		1,970			1,311			659			50.27	%
Total non-interest income		5,116			8,938			(3,822	)		(42.76	%)
Non-interest expense:
Compensation and benefits		23,242			22,437			805			3.59	%
Occupancy and equipment		11,017			10,882			135			1.24	%
Data processing expenses		3,239			3,982			(743	)		(18.66	%)
Direct loan expenses		1,938			1,126			812			72.11	%
(Benefit) provision for contingencies		(581	)		1,893			(2,474	)		(130.69	%)
Insurance and surety bond premiums		808			768			40			5.21	%
Office supplies, telephone and postage		704			1,189			(485	)		(40.79	%)
Professional fees		4,443			5,052			(609	)		(12.05	%)
Microloans recoveries		(172	)		(1,329	)		1,157			(87.06	%)
Marketing and promotional expenses		425			679			(254	)		(37.41	%)
Directors fees and regulatory assessment		533			484			49			10.12	%
Other operating expenses		3,815			3,603			212			5.88	%
Total non-interest expense		49,411			50,766			(1,355	)		(2.67	%)
Income before income taxes		11,220			4,893			6,327			129.31	%
Provision for income taxes		3,181			2,059			1,122			54.49	%
Net income	$	8,039		$	2,834		$	5,205			183.66	%
Dividends on preferred shares		356			—			356			100.00	%
Net income available to common stockholders	$	7,683		$	2,834		$	4,849			171.10	%
Earnings per common share:
Basic	$	0.34		$	0.12		$	0.22			177.36	%
Diluted	$	0.34		$	0.12		$	0.22			177.10	%
Weighted average common shares outstanding:
Basic		22,403,258			22,920,680			(517,422	)		(2.26	%)
Diluted		22,466,178			22,962,956			(496,778	)		(2.16	%)

Ponce Financial Group, Inc. and Subsidiaries
Key Metrics

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Performance Ratios:
Return on average assets (1)		0.33	%		0.45	%		0.33	%		0.08	%		0.39	%
Return on average equity (1)		1.93	%		2.59	%		1.97	%		0.42	%		2.11	%
Net interest rate spread (1) (2)		1.77	%		1.72	%		1.82	%		1.74	%		1.68	%
Net interest margin (1) (3)		2.65	%		2.62	%		2.71	%		2.66	%		2.58	%
Non-interest expense to average assets (1)		2.19	%		2.28	%		2.35	%		2.66	%		2.58	%
Efficiency ratio (4)		80.87	%		80.09	%		82.56	%		96.83	%		78.11	%
Average interest-earning assets to average interest- bearing liabilities		128.35	%		129.73	%		129.69	%		133.50	%		134.49	%
Average equity to average assets		16.97	%		17.41	%		17.00	%		18.25	%		18.32	%
Capital Ratios:
Total capital to risk-weighted assets (Bank only)		21.61	%		22.47	%		22.79	%		23.30	%		25.10	%
Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Tier 1 capital to average assets (Bank only)		16.19	%		16.70	%		16.26	%		17.49	%		17.51	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.09	%		1.18	%		1.23	%		1.36	%		1.51	%
Allowance for credit losses on loans as a percentage of nonperforming loans		139.52	%		130.28	%		140.90	%		152.99	%		169.49	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.17	%)		(0.10	%)		(0.25	%)		(0.24	%)		(0.34	%)
Non-performing loans as a percentage of total gross loans		0.78	%		0.89	%		0.87	%		0.89	%		0.89	%
Non-performing loans as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.73	%		0.82	%		0.79	%		0.81	%		0.82	%
Other:
Number of offices		19			18			18			18			19
Number of full-time equivalent employees		228			227			233			237			243

	(1)	Annualized where appropriate.
	(2)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
	(3)	Net interest margin represents net interest income divided by average total interest-earning assets.
	(4)	Efficiency ratio represents noninterest expense divided by the sum of net interest income and non-interest income.
	(5)	Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.

Ponce Financial Group, Inc. and Subsidiaries
Securities Portfolio

	September 30, 2024										December 31, 2023
				Gross		Gross								Gross		Gross
	Amortized			Unrealized		Unrealized					Amortized			Unrealized		Unrealized
	Cost			Gains		Losses			Fair Value		Cost			Gains		Losses			Fair Value
	(in thousands)										(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,993		$	—	$	(124	)	$	2,869	$	2,990		$	—	$	(206	)	$	2,784
Corporate Bonds		21,766			—		(1,438	)		20,328		25,790			—		(2,122	)		23,668
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		35,620			—		(4,976	)		30,644		39,375			—		(6,227	)		33,148
FHLMC Certificates		9,310			—		(1,119	)		8,191		10,163			—		(1,482	)		8,681
FNMA Certificates		57,345			—		(8,463	)		48,882		61,359			—		(9,842	)		51,517
GNMA Certificates		91			—		—			91		104			—		—			104
Total available-for-sale securities	$	127,125		$	—	$	(16,120	)	$	111,005	$	139,781		$	—	$	(19,879	)	$	119,902

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(49	)	$	24,951	$	25,000		$	—	$	(181	)	$	24,819
Corporate Bonds		57,500			—		(618	)		56,882		82,500			—		(2,691	)		79,809
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		193,440			454		(2,946	)		190,948		212,093			104		(5,170	)		207,027
FHLMC Certificates		3,441			—		(169	)		3,272		3,897			—		(244	)		3,653
FNMA Certificates		108,577			22		(1,967	)		106,632		118,944			—		(4,088	)		114,856
SBA Certificates		15,985			153		—			16,138		19,712			166		—			19,878
Allowance for Credit Losses		(207	)		—		—			—		(398	)		—		—			—
Total held-to-maturity securities	$	403,736		$	629	$	(5,749	)	$	398,823	$	461,748		$	270	$	(12,374	)	$	450,042

	(1)	Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.

The following table presents the activity in the allowance for credit losses for held-to-maturity securities.

	For the Nine			For the
	Months Ended			Year Ended
	September 30, 2024			December 31, 2023
Allowance for credit losses on securities at beginning of the period	$	398		$	—
CECL adoption		—			662
Benefit for credit losses		(191	)		(264	)
Allowance for credit losses on securities at end of the period	$	207		$	398

Ponce Financial Group, Inc. and Subsidiaries
Loan Portfolio

	As of
	September 30,						June 30,						March 31,						December 31,						September 30,
	2024						2024						2024						2023						2023
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	332,380			15.09	%	$	337,292			16.49	%	$	339,331			16.92	%	$	343,689			17.89	%	$	347,082			19.13	%
Owner-Occupied		145,065			6.59	%		147,485			7.21	%		150,842			7.52	%		152,311			7.93	%		151,866			8.37	%
Multifamily residential		678,029			30.78	%		545,323			26.66	%		545,825			27.22	%		550,559			28.65	%		553,694			30.52	%
Nonresidential properties		383,277			17.40	%		337,583			16.51	%		327,350			16.32	%		342,343			17.81	%		321,472			17.71	%
Construction and land		631,461			28.67	%		641,879			31.39	%		608,665			30.35	%		503,925			26.22	%		411,383			22.67	%
Total mortgage loans		2,170,212			98.53	%		2,009,562			98.26	%		1,972,013			98.33	%		1,892,827			98.50	%		1,785,497			98.40	%
Non-mortgage loans:
Business loans		28,499			1.29	%		30,222			1.48	%		26,664			1.33	%		19,779			1.03	%		18,416			1.02	%
Consumer loans (1)		4,021			0.18	%		5,305			0.26	%		6,741			0.34	%		8,966			0.47	%		10,416			0.58	%
Total non-mortgage loans		32,520			1.47	%		35,527			1.74	%		33,405			1.67	%		28,745			1.50	%		28,832			1.60	%
Total loans, gross		2,202,732			100.00	%		2,045,089			100.00	%		2,005,418			100.00	%		1,921,572			100.00	%		1,814,329			100.00	%
Net deferred loan origination costs		1,565						1,145						674						468						692
Allowance for credit losses on loans		(23,966	)					(24,061	)					(24,664	)					(26,154	)					(27,414	)
Loans, net	$	2,180,331					$	2,022,173					$	1,981,428					$	1,895,886					$	1,787,607

	(1)	As of September 30, 2024, June 30,2024, March 31, 2024, December 31, 2023, and September 30, 2023, consumer loans include $3.0 million, $4.3 million, $5.7 million, $8.0 million, and $9.3 million, respectively, of microloans originated by the Bank.

Ponce Financial Group, Inc. and Subsidiaries
Microloans Exposure (previously originated by the Bank under its arrangement with Grain)

Total Microloans Exposure as of September 30, 2024
(in thousands)
Microloans Receivable from Grain
Microloans originated – put back (inception-to-September 30, 2024)	$	23,932
Write-downs, net of recoveries (inception-to-date as of September 30, 2024)		(15,287	)
Cash receipts (inception-to-September 30, 2024)		(6,819	)
Grant/reserve		(1,826	)
Net receivable as of September 30, 2024	$	—
Microloans Receivables from Borrowers
Microloans receivable as of September 30, 2024	$	3,033
Allowance for credit losses on loans as of September 30, 2024 ⁽¹⁾		(2,570	)
Microloans, net of allowance for credit losses on loans as of September 30, 2024	$	463
Investments
Investment in Grain	$	1,000
Investment write-off in Q3 2022		(1,000	)
Net investment as of September 30, 2024		—
Total exposure related to microloans as of September 30, 2024 ⁽²⁾	$	463

	(1)	Excludes $1.5 million of security deposits by microloans originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.
	(2)	Total remaining exposure to microloan borrowers. These loans are now serviced by the Bank.

On November 1, 2023, Ponce Financial Group, Inc. and Grain Technologies, Inc. (“Grain”) signed a Perpetual Software License Agreement in order for the Bank to assume the servicing of the remaining microloans. In order to facilitate the transfer of the servicing responsibilities to the Bank, Grain granted the Bank a perpetual right and license to use the Grain software, including the source code to service the remaining microloans.

Ponce Financial Group, Inc. and Subsidiaries
Allowance for Credit Losses on Loans

	For the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	24,061		$	24,664		$	26,154		$	27,414		$	28,173
Provision (benefit) for credit losses on loans		801			(120	)		(255	)		(126	)		750
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			—
Multifamily residences		—			—			—			—			—
Nonresidential properties		(7	)		—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		(450	)		—			(52	)		(63	)		—
Consumer		(634	)		(747	)		(1,302	)		(1,135	)		(1,592	)
Total charge-offs		(1,091	)		(747	)		(1,354	)		(1,198	)		(1,592	)
Recoveries:
Non-mortgage loans:
Business		1			7			1			—			3
Consumer		194			257			118			64			80
Total recoveries		195			264			119			64			83
Net (charge-offs) recoveries		(896	)		(483	)		(1,235	)		(1,134	)		(1,509	)
Allowance for credit losses on loans at end of the period	$	23,966		$	24,061		$	24,664		$	26,154		$	27,414

Ponce Financial Group, Inc. and Subsidiaries
Deposits

	As of
	September 30,					June 30,					March 31,					December 31,					September 30,
	2024					2024					2024					2023					2023
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Demand ⁽¹⁾	$	182,737		9.78	%	$	178,125		11.09	%	$	191,541		12.07	%	$	185,151		12.28	%	$	214,326		15.30	%
Interest-bearing deposits:
NOW/IOLA accounts ⁽¹⁾		71,445		3.82	%		81,178		5.05	%		73,202		4.62	%		77,909		5.17	%		74,055		5.29	%
Money market accounts		660,168		35.30	%		502,255		31.27	%		482,344		30.42	%		432,735		28.70	%		370,500		26.44	%
Reciprocal deposits		94,145		5.03	%		109,945		6.85	%		97,718		6.16	%		96,860		6.42	%		82,670		5.90	%
Savings accounts		108,941		5.82	%		109,694		6.83	%		112,713		7.11	%		114,139		7.57	%		117,870		8.41	%
Total NOW, money market, reciprocal and savings accounts		934,699		49.97	%		803,072		50.00	%		765,977		48.31	%		721,643		47.86	%		645,095		46.04	%
Certificates of deposit of $250K or more		174,053		9.31	%		156,224		9.73	%		146,296		9.23	%		132,153		8.77	%		122,353		8.73	%
Brokered certificates of deposit ⁽²⁾		94,531		5.05	%		94,614		5.89	%		94,689		5.97	%		98,729		6.55	%		98,729		7.05	%
Listing service deposits ⁽²⁾		7,376		0.39	%		9,361		0.58	%		12,688		0.80	%		14,433		0.96	%		15,180		1.08	%
All other certificates of deposit less than $250K		476,927		25.50	%		364,701		22.71	%		374,593		23.62	%		355,511		23.58	%		305,449		21.80	%
Total certificates of deposit		752,887		40.25	%		624,900		38.91	%		628,266		39.62	%		600,826		39.86	%		541,711		38.66	%
Total interest-bearing deposits		1,687,586		90.22	%		1,427,972		88.91	%		1,394,243		87.93	%		1,322,469		87.72	%		1,186,806		84.70	%
Total deposits	$	1,870,323		100.00	%	$	1,606,097		100.00	%	$	1,585,784		100.00	%	$	1,507,620		100.00	%	$	1,401,132		100.00	%

	(1)	As of December 31, 2023 and September 30, 2023 $58.2 million and $51.5 million, respectively, were reclassified from demand to NOW/IOLA accounts.
	(2)	As of December 31, 2023, and September 30, 2023, there were $0.3 million and $0.3 million, respectively, in individual listing service deposits amounting to $250,000 or more. As of September 30, 2024, there were no individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.

Ponce Financial Group, Inc. and Subsidiaries
Borrowings

	September 30,							December 31,
	2024							2023
	Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate			Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate
	(Dollars in thousands)
Term advances ending:
2024	$	59,321	$	59,321		4.00	%	$	363,321	$	363,321		4.55	%
2025		50,000		50,000		4.41			50,000		50,000		4.41
2026		200,000		200,000		4.25			—		—		—
2027		212,000		212,000		3.44			212,000		212,000		3.44
2028		9,100		9,100		3.84			9,100		9,100		3.84
Thereafter		50,000		50,000		3.35			50,000		50,000		3.35
	$	580,421	$	580,421		3.86	%	$	684,421	$	684,421		4.10	%

Ponce Financial Group, Inc. and Subsidiaries
Nonperforming Assets

	As of Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	436		$	436		$	399		$	793		$	396
Owner occupied		1,423			1,423			1,426			1,682			1,685
Multifamily residential		4,685			5,754			4,098			2,979			1,444
Nonresidential properties		824			828			441			—			—
Construction and land		8,907			8,907			10,277			10,759			11,721
Non-mortgage loans:
Business		180			396			146			165			209
Consumer		—			—			—			—			—
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty) ⁽¹⁾	$	16,455		$	17,744		$	16,787		$	16,378		$	15,455

Non-accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾:
Mortgage loans:
1-4 family residential
Investor owned	$	278		$	277		$	270		$	270		$	270
Owner occupied		444			448			447			447			449
Multifamily residential		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾		722			725			717			717			719
Total non-accrual loans ⁽²⁾	$	17,177		$	18,469		$	17,504		$	17,095		$	16,174

Accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	1,821		$	1,830		$	1,850		$	2,112		$	2,131
Owner occupied		2,116			2,171			2,288			2,313			2,335
Multifamily residential		—			—			—			—			—
Nonresidential properties		672			707			748			757			765
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		222			—			—			—			—
Consumer		—			—			—			—			—
Total accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾	$	4,831		$	4,708		$	4,886		$	5,182		$	5,231
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾	$	22,008		$	23,177		$	22,390		$	22,277		$	21,405
Total non-performing loans to total gross loans		0.78	%		0.89	%		0.87	%		0.89	%		0.89	%
Total non-performing assets to total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets ⁽¹⁾		0.73	%		0.82	%		0.79	%		0.81	%		0.82	%

	(1)	Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.
	(2)	Includes nonperforming mortgage loans held for sale.

Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

	For the Three Months Ended September 30,
	2024						2023
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹⁾		Balance		Interest		Yield/Rate ⁽¹⁾
	(Dollars in thousands)
Interest-earning assets:
Loans ⁽²⁾	$	2,096,592	$	32,945	6.25	%	$	1,777,585	$	25,276	5.64	%
Securities ⁽³⁾		548,708		5,324	3.86	%		599,573		5,821	3.85	%
Other ⁽⁴⁾		210,057		3,024	5.73	%		169,570		2,409	5.64	%
Total interest-earning assets		2,855,357		41,293	5.75	%		2,546,728		33,506	5.22	%
Non-interest-earning assets		107,153						111,771
Total assets	$	2,962,510					$	2,658,499
Interest-bearing liabilities:
NOW/IOLA ^{(5) (6)}	$	74,690	$	174	0.93	%	$	69,935	$	141	0.80	%
Money market ⁽⁶⁾		711,385		8,318	4.65	%		485,042		5,468	4.47	%
Savings		109,571		25	0.09	%		118,095		29	0.10	%
Certificates of deposit		655,562		6,926	4.20	%		527,302		4,362	3.28	%
Total deposits		1,551,208		15,443	3.96	%		1,200,374		10,000	3.31	%
Advance payments by borrowers		13,151		2	0.06	%		14,537		1	0.03	%
Borrowings		660,312		6,825	4.11	%		678,676		6,963	4.07	%
Total interest-bearing liabilities		2,224,671		22,270	3.98	%		1,893,587		16,964	3.55	%
Non-interest-bearing liabilities:
Non-interest-bearing demand ⁽⁵⁾		185,543		—				231,299		—
Other non-interest-bearing liabilities		49,702		—				46,643		—
Total non-interest-bearing liabilities		235,245		—				277,942		—
Total liabilities		2,459,916		22,270				2,171,529		16,964
Total equity		502,594						486,970
Total liabilities and total equity	$	2,962,510			3.98	%	$	2,658,499			3.55	%
Net interest income			$	19,023					$	16,542
Net interest rate spread ⁽⁷⁾					1.77	%					1.67	%
Net interest-earning assets ⁽⁸⁾	$	630,686					$	653,141
Net interest margin ⁽⁹⁾					2.65	%					2.58	%
Average interest-earning assets to interest-bearing liabilities					128.35	%					134.49	%

	(1)	Annualized where appropriate.
	(2)	Loans include loans and mortgage loans held for sale, at fair value.
	(3)	Securities include available-for-sale securities and held-to-maturity securities.
	(4)	Includes FHLBNY demand account, FHLBNY stock dividends and FRBNY demand deposits.
	(5)	Includes reclassification of $47.1 million average outstanding balances from non-interest bearing demand to NOW/IOLA for the three months ended September 30, 2023.
	(6)	Includes $0.1 million of interest expense reclassified from money market to NOW/IOLA for the three months ended September 30, 2023.
	(7)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
	(8)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
	(9)	Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

	For the Nine Months Ended September 30,
	2024							2023
	Average							Average
	Outstanding				Average			Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹⁾			Balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans ⁽²⁾	$	2,038,879	$	94,890		6.22	%	$	1,678,369	$	67,991		5.42	%
Securities ⁽³⁾		562,451		16,429		3.90	%		614,987		17,627		3.83	%
Other ⁽⁴⁾		196,668		8,432		5.73	%		127,961		5,299		5.54	%
Total interest-earning assets		2,797,998		119,751		5.72	%		2,421,317		90,917		5.02	%
Non-interest-earning assets		106,500							118,609
Total assets	$	2,904,498						$	2,539,926
Interest-bearing liabilities:
NOW/IOLA ^{(5) (6)}	$	76,817	$	543		0.94	%	$	69,331	$	1,133		2.18	%
Money market ⁽⁶⁾		618,725		21,819		4.71	%		403,171		11,637		3.86	%
Savings		111,636		80		0.10	%		123,218		88		0.10	%
Certificates of deposit		640,369		19,664		4.10	%		522,740		11,468		2.93	%
Total deposits		1,447,547		42,106		3.89	%		1,118,460		24,326		2.91	%
Advance payments by borrowers		13,660		6		0.06	%		14,814		6		0.05	%
Borrowings		703,775		21,889		4.15	%		617,912		18,516		4.01	%
Total interest-bearing liabilities		2,164,982		64,001		3.95	%		1,751,186		42,848		3.27	%
Non-interest-bearing liabilities:
Non-interest-bearing demand ⁽⁵⁾		191,087		—					251,645		—
Other non-interest-bearing liabilities		51,061		—					43,864		—
Total non-interest-bearing liabilities		242,148		—					295,509		—
Total liabilities		2,407,130		64,001					2,046,695		42,848
Total equity		497,368							493,231
Total liabilities and total equity	$	2,904,498				3.95	%	$	2,539,926				3.27	%
Net interest income			$	55,750						$	48,069
Net interest rate spread ⁽⁷⁾						1.77	%						1.74	%
Net interest-earning assets ⁽⁸⁾	$	633,016						$	670,131
Net interest margin ⁽⁹⁾						2.66	%						2.65	%
Average interest-earning assets to
interest-bearing liabilities						129.24	%						138.27	%

	(1)	Annualized where appropriate.
	(2)	Loans include loans and mortgage loans held for sale, at fair value.
	(3)	Securities include available-for-sale securities and held-to-maturity securities.
	(4)	Includes FHLBNY demand account, FHLBNY stock dividends and FRBNY demand deposits.
	(5)	Includes reclassification of $46.5 million average outstanding balances from non-interest bearing demand to NOW/IOLA for the nine months ended September 30, 2023.
	(6)	Includes $1.1 million of interest expense reclassified from money market to NOW/IOLA for the nine months ended September 30, 2023.
	(7)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
	(8)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
	(9)	Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries
Other Data

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
	2024		2024		2024		2023		2023
Other Data
Common shares issued		24,886,711		24,886,711		24,886,711		24,886,711		24,886,711
Less treasury shares		1,067,248		1,074,979		1,096,214		1,101,191		1,233,111
Common shares outstanding at end of period		23,819,463		23,811,732		23,790,497		23,785,520		23,653,600

Book value per common share	$	11.74	$	11.45	$	11.29	$	11.20	$	10.99
Tangible book value per common share	$	11.74	$	11.45	$	11.29	$	11.20	$	10.99

Contact:
Sergio Vaccaro
sergio.vaccaro@poncebank.net
718-931-9000

The MIL Network –

January 25, 2025

MIL-OSI: SEACOR Marine Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

HOUSTON, Oct. 30, 2024 (GLOBE NEWSWIRE) — SEACOR Marine Holdings Inc. (NYSE: SMHI) (the “Company” or “SEACOR Marine”), a leading provider of marine and support transportation services to offshore energy facilities worldwide, today announced results for its third quarter ended September 30, 2024.

SEACOR Marine’s consolidated operating revenues for the third quarter of 2024 were $68.9 million, operating loss was $6.5 million, and direct vessel profit (“DVP”)⁽¹⁾ was $16.0 million. This compares to consolidated operating revenues of $76.9 million, operating income of $9.8 million, and DVP of $36.8 million in the third quarter of 2023, and consolidated operating revenues of $69.9 million, operating loss of $3.9 million, and DVP of $20.3 million in the second quarter of 2024.

Notable third quarter items include:

10.4% decrease in revenues from the third quarter of 2023 and a 1.4% decrease from the second quarter of 2024.
Average day rates of $18,879, a 4.6% increase from the third quarter of 2023, and a 1.4% decrease from the second quarter of 2024.
67% utilization, a decrease from 73% in the third quarter of 2023 and a decrease from 69% in the second quarter of 2024.
DVP margin of 23.2%, a decrease from 47.8% in the third quarter of 2023 and a decrease from 29.1% in the second quarter of 2024, due in part to $8.3 million of drydocking and major repairs during the quarter compared to $2.0 million in the third quarter of 2023 and $8.5 million in the second quarter of 2024, all of which are expensed as incurred.

For the third quarter of 2024, net loss was $16.3 million ($0.59 loss per basic and diluted share). This compares to a net loss for the third quarter of 2023 of $0.9 million ($0.03 loss per basic and diluted share). Sequentially, the third quarter 2024 results compare to a net loss of $12.5 million ($0.45 earnings per basic and diluted share) in the second quarter of 2024.

Chief Executive Officer John Gellert commented:

“The third quarter results reflect overall lower utilization driven by our heavy 2024 maintenance schedule and softer than expected demand during the quarter, particularly in the U.S. Gulf of Mexico and the North Sea markets. While we made progress in remarketing and repositioning our available tonnage, these efforts reduced the utilization of these vessels during the quarter. Our utilization figures were also affected by continuing work on drydockings and major repairs, some of which experienced additional delays as a result of ongoing shipyard and vendor capacity issues. We continue to see challenges as shipyards and other vendors expand their support teams, expertise and production capacity to respond to demand growth. In addition to lower utilization, these results also reflect higher operating expenses, driven mostly by 9.9% higher crewing costs and 30.0% higher maintenance costs relative to the year to date third quarter of 2023, both of which we attribute primarily to increased industry demand and vendor capacity constraints. Nevertheless, our average day rates held steady and we continued to add charters that will contribute improvements to our utilization, with contracted revenue backlog, including options, in excess of $360.0 million.

In the near term, one of our premium liftboats located in the U.S. Gulf of Mexico will return to work in early November after being in the shipyard for maintenance since April. We are also seeing a stronger volume of inquiries for decommissioning work for our liftboats in the 2025-2026 timeframe, which is coming from both the U.S. Gulf of Mexico as well as international markets. We own one of the youngest and most fuel efficient and versatile fleets of offshore vessels in the world. Although demand for our services remains highly correlated to the underlying commodity prices, which have been very volatile during 2024, we are well positioned to capture attractive opportunities servicing offshore energy.”
___________________

(1)

Direct vessel profit (defined as operating revenues less operating costs and expenses, “DVP”) is the Company’s measure of segment profitability. DVP is a critical financial measure used by the Company to analyze and compare the operating performance of its regions, without regard to financing decisions (depreciation and interest expense for owned vessels vs. lease expense for lease vessels). DVP is also useful when comparing the Company’s global fleet performance against those of our competitors who may have differing fleet financing structures. DVP has material limitations as an analytical tool in that it does not reflect all of the costs associated with the ownership and operation of our fleet, and it should not be considered in isolation or used as a substitute for our results as reported under GAAP. See page 4 for reconciliation of DVP to GAAP Operating Income (Loss), its most comparable GAAP measure.

SEACOR Marine provides global marine and support transportation services to offshore energy facilities worldwide. SEACOR Marine operates and manages a diverse fleet of offshore support vessels that deliver cargo and personnel to offshore installations, including offshore wind farms; assist offshore operations for production and storage facilities; provide construction, well work-over, offshore wind farm installation and decommissioning support; carry and launch equipment used underwater in drilling and well installation, maintenance, inspection and repair; and handle anchors and mooring equipment for offshore rigs and platforms. Additionally, SEACOR Marine’s vessels provide emergency response services and accommodations for technicians and specialists.

Certain statements discussed in this release as well as in other reports, materials and oral statements that the Company releases from time to time to the public constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements concern management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by the management of the Company. These statements are not guarantees of future performance and actual events or results may differ significantly from these statements. Actual events or results are subject to significant known and unknown risks, uncertainties and other important factors, many of which are beyond the Company’s control and are described in the Company’s filings with the SEC. It should be understood that it is not possible to predict or identify all such factors. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based, except as required by law. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its filings with the Securities and Exchange Commission, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (if any). These statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995.

Please visit SEACOR Marine’s website at www.seacormarine.com for additional information.
For all other requests, contact InvestorRelations@seacormarine.com

SEACOR MARINE HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except share data)
	Three Months Ended September 30,						Nine months ended September 30,
	2024			2023			2024			2023
Operating Revenues	$	68,916		$	76,900		$	201,553		$	206,428
Costs and Expenses:
Operating		52,907			40,142			150,526			116,381
Administrative and general		11,019			12,300			33,825			37,636
Lease expense		364			651			1,331			2,069
Depreciation and amortization		12,928			13,462			38,749			40,799
		77,218			66,555			224,431			196,885
Gains (Losses) on Asset Dispositions and Impairments, Net		1,821			(512	)		1,857			3,352
Operating (Loss) Income		(6,481	)		9,833			(21,021	)		12,895
Other Income (Expense):
Interest income		358			340			1,396			1,222
Interest expense		(10,127	)		(9,536	)		(30,626	)		(27,060	)
Loss on debt extinguishment		—			(2,004	)		—			(2,004	)
Derivative gains (losses), net		67			—			(372	)		—
Foreign currency (losses) gains, net		(1,717	)		571			(2,357	)		(857	)
Other, net		29			—			(66	)		—
		(11,390	)		(10,629	)		(32,025	)		(28,699	)
Loss Before Income Tax (Benefit) Expense and Equity in Earnings of 50% or Less Owned Companies		(17,871	)		(796	)		(53,046	)		(15,804	)
Income Tax (Benefit) Expense		(513	)		2,360			(270	)		2,421
Loss Before Equity in Earnings of 50% or Less Owned Companies		(17,358	)		(3,156	)		(52,776	)		(18,225	)
Equity in Earnings of 50% or Less Owned Companies		1,012			2,273			878			3,182
Net Loss	$	(16,346	)	$	(883	)	$	(51,898	)	$	(15,043	)

Net Loss Per Share:
Basic	$	(0.59	)	$	(0.03	)	$	(1.88	)	$	(0.56	)
Diluted	$	(0.59	)	$	(0.03	)	$	(1.88	)	$	(0.56	)
Weighted Average Common Stock and Warrants Outstanding:
Basic		27,772,733			27,181,754			27,615,699			27,048,656
Diluted		27,772,733			27,181,754			27,615,699			27,048,656

SEACOR MARINE HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except statistics and per share data)
				Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
Time Charter Statistics:
Average Rates Per Day	$	18,879		$	19,141		$	19,042		$	18,031		$	18,046
Fleet Utilization		67	%		69	%		62	%		71	%		73	%
Fleet Available Days⁽²⁾		5,026			4,994			5,005			5,170			5,182
Operating Revenues:
Time charter	$	63,313		$	65,649		$	59,263		$	66,498		$	68,668
Bareboat charter		372			364			364			368			368
Other marine services		5,231			3,854			3,143			6,217			7,864
		68,916			69,867			62,770			73,083			76,900
Costs and Expenses:
Operating:
Personnel		21,940			21,566			21,670			22,080			19,943
Repairs and maintenance		9,945			10,244			9,763			7,604			7,418
Drydocking		6,068			6,210			6,706			2,561			1,768
Insurance and loss reserves		2,584			3,099			1,738			2,944			1,833
Fuel, lubes and supplies		6,574			3,966			4,523			3,683			5,047
Other		5,796			4,435			3,699			4,397			4,133
		52,907			49,520			48,099			43,269			40,142
Direct Vessel Profit⁽¹⁾		16,009			20,347			14,671			29,814			36,758
Other Costs and Expenses:
Lease expense		364			486			481			679			651
Administrative and general		11,019			10,889			11,917			11,547			12,300
Depreciation and amortization		12,928			12,939			12,882			13,022			13,462
		24,311			24,314			25,280			25,248			26,413
Gains (Losses) on Asset Dispositions and Impairments, Net		1,821			37			(1	)		18,057			(512	)
Operating (Loss) Income		(6,481	)		(3,930	)		(10,610	)		22,623			9,833
Other Income (Expense):
Interest income		358			445			593			222			340
Interest expense		(10,127	)		(10,190	)		(10,309	)		(10,444	)		(9,536	)
Derivative gains (losses), net		67			104			(543	)		608			—
Loss on debt extinguishment		—			—			—			—			(2,004	)
Foreign currency (losses) gains, net		(1,717	)		(560	)		(80	)		(1,276	)		571
Other, net		29			—			(95	)		—			—
		(11,390	)		(10,201	)		(10,434	)		(10,890	)		(10,629	)
(Loss) Income Before Income Tax (Benefit) Expense and Equity in Earnings (Losses) of 50% or Less Owned Companies		(17,871	)		(14,131	)		(21,044	)		11,733			(796	)
Income Tax (Benefit) Expense		(513	)		(682	)		925			6,378			2,360
(Loss) Income Before Equity in Earnings (Losses) of 50% or Less Owned Companies		(17,358	)		(13,449	)		(21,969	)		5,355			(3,156	)
Equity in Earnings (Losses) of 50% or Less Owned Companies		1,012			966			(1,100	)		374			2,273
Net (Loss) Income	$	(16,346	)	$	(12,483	)	$	(23,069	)	$	5,729		$	(883	)

Net (Loss) Earnings Per Share:
Basic	$	(0.59	)	$	(0.45	)	$	(0.84	)	$	0.21		$	(0.03	)
Diluted	$	(0.59	)	$	(0.45	)	$	(0.84	)	$	0.20		$	(0.03	)
Weighted Average Common Stock and Warrants Outstanding:
Basic		27,773			27,729			27,344			27,182			27,182
Diluted		27,773			27,729			27,344			28,401			27,182
Common Shares and Warrants Outstanding at Period End		28,950			28,941			28,906			28,489			28,481

____________________
(1) See full description of footnote above.
(2) Includes available days for a bareboat charter for one PSV, which has been excluded from days worked and average day rates.

SEACOR MARINE HOLDINGS INC. UNAUDITED DIRECT VESSEL PROFIT (“DVP”) BY SEGMENT (in thousands, except statistics)
	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
*United States, primarily Gulf of Mexico*
Time Charter Statistics:
Average rates per day worked	$	17,188		$	22,356		$	28,156		$	22,584		$	23,663
Fleet utilization		42	%		37	%		27	%		50	%		57	%
Fleet available days		920			921			927			1,152			1,196
Out-of-service days for repairs, maintenance and drydockings		116			179			137			61			151
Out-of-service days for cold-stacked status⁽²⁾		175			127			182			254			206
Operating Revenues:
Time charter	$	6,593		$	7,697		$	6,957		$	12,929		$	16,236
Other marine services		1,188			480			1,026			5,346			5,478
		7,781			8,177			7,983			18,275			21,714
Direct Costs and Expenses:
Operating:
Personnel		6,297			6,284			5,781			6,906			6,712
Repairs and maintenance		1,655			1,879			1,404			819			1,560
Drydocking		2,615			2,570			1,968			303			462
Insurance and loss reserves		799			943			396			1,297			332
Fuel, lubes and supplies		964			866			667			1,032			958
Other		225			226			(171	)		475			375
		12,555			12,768			10,045			10,832			10,399
Direct Vessel (Loss) Profit⁽¹⁾	$	(4,774	)	$	(4,591	)	$	(2,062	)	$	7,443		$	11,315
Other Costs and Expenses:
Lease expense	$	140		$	141		$	138		$	141		$	116
Depreciation and amortization		3,194			3,194			2,750			3,479			3,810

*Africa and Europe*
Time Charter Statistics:
Average rates per day worked	$	18,875		$	18,580		$	15,197		$	15,233		$	15,388
Fleet utilization		77	%		74	%		76	%		82	%		84	%
Fleet available days		1,990			1,969			1,775			1,748			1,748
Out-of-service days for repairs, maintenance and drydockings		203			203			238			124			111
Out-of-service days for cold-stacked status		58			91			91			92			54
Operating Revenues:
Time charter	$	28,809		$	27,047		$	20,555		$	21,791		$	22,528
Other marine services		3,048			1,028			169			189			1,943
		31,857			28,075			20,724			21,980			24,471
Direct Costs and Expenses:
Operating:
Personnel		6,083			4,969			5,181			6,007			5,089
Repairs and maintenance		3,455			3,161			3,209			2,807			2,214
Drydocking		681			1,226			2,032			1,298			320
Insurance and loss reserves		599			819			334			416			573
Fuel, lubes and supplies		2,514			1,170			1,287			623			2,573
Other		3,975			2,801			2,199			2,267			2,448
		17,307			14,146			14,242			13,418			13,217
Direct Vessel Profit⁽¹⁾	$	14,550		$	13,929		$	6,482		$	8,562		$	11,254
Other Costs and Expenses:
Lease expense	$	75		$	172		$	178		$	289		$	372
Depreciation and amortization		4,540			4,565			3,915			3,747			3,821

____________________
(1) See full description of footnote above.
(2) Includes one liftboat and one FSV cold-stacked in this region as of September 30, 2024.

SEACOR MARINE HOLDINGS INC. UNAUDITED DIRECT VESSEL PROFIT (“DVP”) BY SEGMENT (continued) (in thousands, except statistics)
	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
*Middle East and Asia*
Time Charter Statistics:
Average rates per day worked	$	17,825		$	17,083		$	16,934		$	17,590		$	16,313
Fleet utilization		71	%		82	%		71	%		69	%		67	%
Fleet available days		1,288			1,296			1,365			1,461			1,472
Out-of-service days for repairs, maintenance and drydockings		229			168			224			360			297
Operating Revenues:
Time charter	$	16,411		$	18,073		$	16,477		$	17,729		$	16,087
Other marine services		375			619			350			539			267
		16,786			18,692			16,827			18,268			16,354
Direct Costs and Expenses:
Operating:
Personnel		5,769			6,930			5,963			5,522			5,157
Repairs and maintenance		3,318			3,443			2,712			2,590			2,623
Drydocking		832			707			1,483			624			1,056
Insurance and loss reserves		927			798			618			1,022			711
Fuel, lubes and supplies		1,043			1,103			1,198			1,242			743
Other		1,131			989			1,000			1,133			943
		13,020			13,970			12,974			12,133			11,233
Direct Vessel Profit⁽¹⁾	$	3,766		$	4,722		$	3,853		$	6,135		$	5,121
Other Costs and Expenses:
Lease expense	$	73		$	71		$	85		$	158		$	59
Depreciation and amortization		3,261			3,247			3,496			3,643			3,721

*Latin America*
Time Charter Statistics:
Average rates per day worked	$	21,984		$	22,437		$	28,308		$	20,745		$	20,656
Fleet utilization		63	%		71	%		58	%		84	%		87	%
Fleet available days⁽²⁾		828			808			938			809			766
Out-of-service days for repairs, maintenance and drydockings		94			41			1			—			67
Operating Revenues:
Time charter	$	11,500		$	12,832		$	15,274		$	14,049		$	13,817
Bareboat charter		372			364			364			368			368
Other marine services		620			1,727			1,598			143			176
		12,492			14,923			17,236			14,560			14,361
Direct Costs and Expenses:
Operating:
Personnel		3,791			3,383			4,745			3,645			2,985
Repairs and maintenance		1,517			1,761			2,438			1,388			1,021
Drydocking		1,940			1,707			1,223			336			(70	)
Insurance and loss reserves		259			539			390			209			217
Fuel, lubes and supplies		2,053			827			1,371			786			773
Other		465			419			671			522			367
		10,025			8,636			10,838			6,886			5,293
Direct Vessel Profit⁽¹⁾	$	2,467		$	6,287		$	6,398		$	7,674		$	9,068
Other Costs and Expenses:
Lease expense	$	76		$	102		$	80		$	91		$	104
Depreciation and amortization		1,933			1,933			2,721			2,153			2,110

_______________
(1) See full description of footnote above.
(2) Includes available days for a bareboat charter for one PSV, which has been excluded from days worked and average day rates.

SEACOR MARINE HOLDINGS INC. UNAUDITED PERFORMANCE BY VESSEL CLASS (in thousands, except statistics)
	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
*AHTS*
Time Charter Statistics:
Average rates per day worked	$	10,316		$	8,125		$	8,538		$	8,937		$	9,947
Fleet utilization		46	%		49	%		75	%		64	%		50	%
Fleet available days		334			364			364			368			368
Out-of-service days for repairs, maintenance and drydockings		87			29			—			41			111
Out-of-service days for cold-stacked status		58			91			91			92			54
Operating Revenues:
Time charter	$	1,576		$	1,459		$	2,331		$	2,102		$	1,831
Other marine services		13			219			—			6			930
		1,589			1,678			2,331			2,108			2,761
Direct Costs and Expenses:
Operating:
Personnel	$	981		$	1,045		$	1,064		$	944		$	1,019
Repairs and maintenance		239			465			220			612			484
Drydocking		436			280			68			58			747
Insurance and loss reserves		66			97			43			73			88
Fuel, lubes and supplies		90			69			616			375			428
Other		263			230			287			295			378
		2,075			2,186			2,298			2,357			3,144
Other Costs and Expenses:
Lease expense	$	4		$	164		$	171		$	253		$	331
Depreciation and amortization		175			175			175			175			249

*FSV*
Time Charter Statistics:
Average rates per day worked	$	13,102		$	12,978		$	11,834		$	11,841		$	11,441
Fleet utilization		81	%		80	%		72	%		74	%		79	%
Fleet available days		2,024			2,002			2,002			2,105			2,116
Out-of-service days for repairs, maintenance and drydockings		96			128			216			337			227
Out-of-service days for cold-stacked status		83			36			91			92			69
Operating Revenues:
Time charter	$	21,606		$	20,698		$	17,081		$	18,502		$	19,135
Other marine services		1,012			516			126			163			652
		22,618			21,214			17,207			18,665			19,787
Direct Costs and Expenses:
Operating:
Personnel	$	5,637		$	5,829		$	5,649		$	5,320		$	5,144
Repairs and maintenance		4,378			4,572			3,093			2,691			2,787
Drydocking		448			457			1,869			1,710			870
Insurance and loss reserves		532			546			277			507			185
Fuel, lubes and supplies		1,962			993			1,051			1,441			1,501
Other		2,238			1,850			1,649			1,632			1,552
		15,195			14,247			13,588			13,301			12,039
Other Costs and Expenses:
Depreciation and amortization	$	4,744		$	4,746		$	4,744		$	4,879		$	5,002

SEACOR MARINE HOLDINGS INC. UNAUDITED PERFORMANCE BY VESSEL CLASS (continued) (in thousands, except statistics)
	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
*PSV*
Time Charter Statistics:
Average rates per day worked	$	21,819		$	20,952		$	19,133		$	19,778		$	19,528
Fleet utilization		58	%		66	%		53	%		77	%		78	%
Fleet available days⁽¹⁾		1,932			1,900			1,911			1,902			1,870
Out-of-service days for repairs, maintenance and drydockings		349			291			307			109			110
Operating Revenues:
Time charter	$	24,488		$	26,390		$	19,390		$	29,140		$	28,580
Bareboat charter		372			364			364			368			368
Other marine services		2,855			2,266			416			595			696
		27,715			29,020			20,170			30,103			29,644
Direct Costs and Expenses:
Operating:
Personnel	$	9,360		$	8,979		$	8,850		$	9,017		$	8,793
Repairs and maintenance		3,798			3,151			4,393			3,520			2,504
Drydocking		2,629			2,616			3,386			472			232
Insurance and loss reserves		636			1,037			395			690			682
Fuel, lubes and supplies		3,594			1,575			1,889			1,027			2,352
Other		2,821			1,850			1,395			1,922			1,761
		22,838			19,208			20,308			16,648			16,324
Other Costs and Expenses:
Lease expense	$	(3	)	$	3		$	—		$	—		$	—
Depreciation and amortization		4,117			4,128			4,073			4,073			4,073

___________________
(1) Includes available days for a bareboat charter for one PSV, which has been excluded from days worked and average day rates.

SEACOR MARINE HOLDINGS INC. UNAUDITED PERFORMANCE BY VESSEL CLASS (continued) (in thousands, except statistics)
	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
*Liftboats*
Time Charter Statistics:
Average rates per day worked	$	36,423		$	43,204		$	53,506		$	40,181		$	39,419
Fleet utilization		58	%		54	%		53	%		52	%		59	%
Fleet available days		736			728			728			795			828
Out-of-service days for repairs, maintenance and drydockings		109			143			78			60			111
Out-of-service days for cold-stacked status		92			91			91			162			137
Operating Revenues:
Time charter	$	15,643		$	17,102		$	20,461		$	16,754		$	19,122
Other marine services		1,142			666			1,772			4,666			4,710
		16,785			17,768			22,233			21,420			23,832
Direct Costs and Expenses:
Operating:
Personnel	$	5,926		$	6,842		$	6,140		$	5,316		$	4,983
Repairs and maintenance		1,531			2,054			2,035			769			1,643
Drydocking		2,555			2,857			1,383			321			(81	)
Insurance and loss reserves		1,334			1,482			1,282			1,554			1,148
Fuel, lubes and supplies		928			1,329			967			838			766
Other		473			519			343			531			445
		12,747			15,083			12,150			9,329			8,904
Other Costs and Expenses:
Depreciation and amortization		3,866			3,865			3,866			3,867			4,099

*Other Activity*
Operating Revenues:
Other marine services	$	209		$	187		$	829		$	787		$	876
		209			187			829			787			876
Direct Costs and Expenses:
Operating:
Personnel	$	36		$	(1,129	)	$	(33	)	$	1,483		$	4
Repairs and maintenance		(1	)		2			22			12			—
Insurance and loss reserves		16			(63	)		(259	)		120			(270	)
Fuel, lubes and supplies		—			—			—			2			—
Other		1			(14	)		25			17			(3	)
		52			(1,204	)		(245	)		1,634			(269	)
Other Costs and Expenses:
Lease expense	$	363		$	319		$	310		$	426		$	320
Depreciation and amortization		26			25			24			28			39

SEACOR MARINE HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	35,601		$	40,605		$	59,593		$	67,455		$	55,840
Restricted cash		2,263			2,255			2,566			16,676			2,796
Receivables:
Trade, net of allowance for credit loss		76,497			70,770			58,272			63,728			63,246
Other		7,841			6,210			12,210			11,049			8,662
Tax receivable		983			983			983			983			445
Inventories		3,139			3,117			2,516			1,609			1,738
Prepaid expenses and other		4,840			5,659			3,425			2,686			2,957
Assets held for sale		—			500			500			500			6,093
Total current assets		131,164			130,099			140,065			164,686			141,777
Property and Equipment:
Historical cost		921,445			921,443			919,139			918,823			936,520
Accumulated depreciation		(362,604	)		(349,799	)		(337,001	)		(324,141	)		(318,549	)
		558,841			571,644			582,138			594,682			617,971
Construction in progress		11,935			11,518			13,410			10,362			9,413
Net property and equipment		570,776			583,162			595,548			605,044			627,384
Right-of-use asset – operating leases		3,575			3,683			3,988			4,291			4,907
Right-of-use asset – finance leases		19			28			29			37			45
Investments, at equity, and advances to 50% or less owned companies		2,046			2,641			3,122			4,125			3,857
Other assets		1,864			1,953			2,094			2,153			2,095
Total assets	$	709,444		$	721,566		$	744,846		$	780,336		$	780,065
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of operating lease liabilities	$	494		$	861		$	1,285		$	1,591		$	1,856
Current portion of finance lease liabilities		17			26			33			35			35
Current portion of long-term debt		28,605			28,605			28,605			28,365			28,005
Accounts payable		22,744			17,790			23,453			27,562			32,468
Other current liabilities		28,808			23,795			21,067			19,533			21,340
Total current liabilities		80,668			71,077			74,443			77,086			83,704
Long-term operating lease liabilities		3,221			3,276			3,390			3,529			3,571
Long-term finance lease liabilities		4			5			—			6			15
Long-term debt		272,325			277,740			281,989			287,544			291,843
Deferred income taxes		26,802			30,083			33,873			35,718			33,078
Deferred gains and other liabilities		1,416			1,447			2,285			2,229			2,217
Total liabilities		384,436			383,628			395,980			406,112			414,428
Equity:
SEACOR Marine Holdings Inc. stockholders’ equity:
Common stock		287			286			286			280			280
Additional paid-in capital		477,661			476,020			474,433			472,692			471,158
Accumulated deficit		(154,374	)		(138,028	)		(125,609	)		(102,425	)		(108,154	)
Shares held in treasury		(8,110	)		(8,110	)		(8,071	)		(4,221	)		(4,221	)
Accumulated other comprehensive income, net of tax		9,223			7,449			7,506			7,577			6,253
		324,687			337,617			348,545			373,903			365,316
Noncontrolling interests in subsidiaries		321			321			321			321			321
Total equity		325,008			337,938			348,866			374,224			365,637
Total liabilities and equity	$	709,444		$	721,566		$	744,846		$	780,336		$	780,065

SEACOR MARINE HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
				Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023
Cash Flows from Operating Activities:
Net (Loss) Income	$	(16,346	)	$	(12,483	)	$	(23,069	)	$	5,729		$	(883	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		12,928			12,939			12,882			13,022			13,462
Deferred financing costs amortization		298			297			295			279			459
Stock-based compensation expense		1,604			1,587			1,645			1,510			1,540
Debt discount amortization		2,061			1,993			1,926			1,862			1,714
Allowance for credit losses		101			39			3			266			594
(Gain) loss from equipment sales, retirements or impairments		(1,821	)		(37	)		1			(18,057	)		512
Losses on debt extinguishment		—			—			—			—			177
Derivative (gains) losses		(67	)		(104	)		543			(608	)		—
Interest on finance lease		—			1			—			1			59
Settlements on derivative transactions, net		—			—			164			—			197
Currency losses (gains)		1,717			560			80			1,276			(571	)
Deferred income taxes		(3,281	)		(3,790	)		(1,845	)		2,640			(960	)
Equity (earnings) losses		(1,012	)		(966	)		1,100			(374	)		(2,273	)
Dividends received from equity investees		1,498			1,418			—			166			1,031
Changes in Operating Assets and Liabilities:
Accounts receivables		(7,411	)		(6,928	)		4,291			(3,472	)		(747	)
Other assets		1,032			(2,395	)		(1,290	)		733			493
Accounts payable and accrued liabilities		9,325			(4,378	)		(3,895	)		(6,456	)		(7,705	)
Net cash provided by (used in) operating activities		626			(12,247	)		(7,169	)		(1,483	)		7,099
Cash Flows from Investing Activities:
Purchases of property and equipment		(210	)		(658	)		(3,416	)		(3,644	)		(6,455	)
Proceeds from disposition of property and equipment		2,331			86			—			36,692			—
Net investing activities in property and equipment		2,121			(572	)		(3,416	)		33,048			(6,455	)
Principal payments on notes due from others		—			—			—			—			5,000
Net cash provided by (used in) investing activities		2,121			(572	)		(3,416	)		33,048			(1,455	)
Cash Flows from Financing Activities:
Payments on long-term debt		(7,770	)		(6,533	)		(7,530	)		(6,173	)		(4,901	)
Payments on debt extinguishment		—			—			—			—			(104,832	)
Payments on debt extinguishment cost		—			—			—			—			(1,827	)
Proceeds from issuance of long-term debt, net of issue costs		—			—			—			87			121,207
Payments on finance leases		(10	)		(9	)		(9	)		(9	)		(204	)
Proceeds from issuance of common stock, net of issue costs		—			—			—			24			—
Proceeds from exercise of stock options		38			102			—			—			—
Tax withholdings on restricted stock vesting		—			(39	)		(3,850	)		—			—
Net cash (used in) provided by financing activities		(7,742	)		(6,479	)		(11,389	)		(6,071	)		9,443
Effects of Exchange Rate Changes on Cash, Restricted Cash and Cash Equivalents		(1	)		(1	)		2			1			3
Net Change in Cash, Restricted Cash and Cash Equivalents		(4,996	)		(19,299	)		(21,972	)		25,495			15,090
Cash, Restricted Cash and Cash Equivalents, Beginning of Period		42,860			62,159			84,131			58,636			43,546
Cash, Restricted Cash and Cash Equivalents, End of Period	$	37,864		$	42,860		$	62,159		$	84,131		$	58,636

SEACOR MARINE HOLDINGS INC. UNAUDITED FLEET COUNTS
	Owned		Leased-in		Managed		Total
September 30, 2024
AHTS		2		1		—		3
FSV		22		—		1		23
PSV		21		—		—		21
Liftboats		8		—		—		8
		53		1		1		55
December 31, 2023
AHTS		3		1		—		4
FSV		22		—		3		25
PSV		21		—		—		21
Liftboats		8		—		—		8
		54		1		3		58

The MIL Network –

January 25, 2025

MIL-OSI: Altair Announces Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

TROY, Mich., Oct. 30, 2024 (GLOBE NEWSWIRE) — Altair (Nasdaq: ALTR), today released its financial results for the third quarter and nine months ended September 30, 2024.

Immediately prior to the dissemination of this press release, Altair issued a press release announcing that it has entered into a merger agreement with a subsidiary of Siemens pursuant to which Altair will be acquired and stockholders of Altair will receive cash merger consideration as more fully described in that press release.

Third Quarter 2024 Financial Results

Software revenue was $138.7 million compared to $119.1 million for the third quarter of 2023, an increase of 16.5% in reported currency and 16.2% in constant currency
Total revenue was $151.5 million compared to $134.0 million for the third quarter of 2023, an increase of 13.0% in reported currency and 12.8% in constant currency
Net income was $1.8 million compared to a net loss of $(4.4) million for the third quarter of 2023, an improvement in earnings of $6.2 million. Net income per share, diluted was $0.02 based on 88.4 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.05) for the third quarter of 2023, based on 80.4 million diluted weighted average common shares outstanding. Net income margin was 1.2% compared to net loss margin of (3.3)% for the third quarter of 2023
Non-GAAP net income was $21.2 million, compared to non-GAAP net income of $12.7 million for the third quarter of 2023, an increase of $8.5 million. Non-GAAP net income per share, diluted was $0.24 based on 88.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.15 for the third quarter of 2023, based on 85.3 million non-GAAP diluted common shares outstanding
Adjusted EBITDA was $25.7 million compared to $15.5 million for the third quarter of 2023, an increase of 66.3% Adjusted EBITDA margin was 17.0% compared to 11.5% for the third quarter of 2023
Cash provided by operating activities was $14.5 million, compared to $16.4 million for the third quarter of 2023
Free cash flow was $9.8 million, compared to $14.7 million for the third quarter of 2023.

Conference Call Information

In light of the proposed transaction with Siemens, Altair is suspending quarterly financial results conference calls and its quarterly and annual guidance.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

Non-GAAP diluted common shares is calculated using the treasury stock method to calculate the effect of dilutive securities, stock options, restricted stock units and employee stock purchase plan shares and using the if-converted method to calculate the effect of convertible instruments. This is the same methodology that is used when calculating GAAP diluted shares. However, the determination of whether the shares are dilutive or antidilutive is made independently on a GAAP and non-GAAP net income (loss) basis and therefore the number of diluted shares outstanding for GAAP and non-GAAP may be different.

Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.

Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

Free cash flow consists of cash flow from operations less capital expenditures.

Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense and other special items as identified by management and described elsewhere in this press release.

Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair

Altair is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit https://www.altair.com.

Important Information and Where to Find It

This communication relates to a proposed transaction between Altair and Siemens Industry Software Inc. (“Parent”). In connection with this proposed transaction, Altair will file a Current Report on Form 8-K with further information regarding the terms and conditions contained in the definitive transaction agreements and a proxy statement on Schedule 14A or other documents with the United States Securities and Exchange Commission (the “SEC”). This communication is not a substitute for any proxy statement or other document that Altair may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ALTAIR ARE URGED TO READ THE PROXY STATEMENT, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT, AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The definitive proxy statement, when available, will be mailed to stockholders of Altair as applicable. Investors and security holders will be able to obtain free copies of these documents, when available, and other documents filed with the SEC by Altair through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Altair will be available free of charge on Altair’s internet website at https://investor.altair.com or by contacting Altair’s primary investor relations contact by email at ir@altair.com or by phone at (248) 614-2400.

Participants in Solicitation

Altair, Parent, Siemens AG, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Altair, their ownership of Altair common shares, and Altair’s transactions with related persons is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 22, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001701732/000095017024018804/altr-20231231.htm), in its proxy statement on Schedule 14A for its 2024 Annual Meeting of Stockholders in the sections entitled “Corporate Governance Matters,” “Security Ownership of Certain Beneficial Owners and Management” and “Transactions with Related Persons”, which was filed with the SEC on April 5, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001701732/000119312524087903/d722499ddef14a.htm), certain of its Quarterly Reports on Form 10-Q and certain of its Current Reports on Form 8-K.

These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements

This communication contains “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. Any statements contained in this communication that are not statements of historical fact, including statements regarding the proposed transaction, including the expected timing and closing of the proposed transaction; Altair’s ability to consummate the proposed transaction; the expected benefits of the proposed transaction and other considerations taken into account by the Altair Board of Directors in approving the proposed transaction; the amounts to be received by stockholders and expectations for Altair prior to and following the closing of the proposed transaction, may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’s current expectations for the future of Altair based on current expectations and assumptions relating to Altair’s business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs,” and other words of similar meaning in connection with the discussion of future performance, plans, actions or events. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others: (i) the timing to consummate the proposed transaction, (ii) the risk that a condition of closing of the proposed transaction may not be satisfied or that the closing of the proposed transaction might otherwise not occur, (iii) the risk that a regulatory approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated, (iv) the diversion of management time on transaction-related issues, (v) risks related to disruption of management time from ongoing business operations due to the proposed transaction, (vi) the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of Altair, (vii) the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Altair to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers, (viii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, dated October 30, 2024, with Siemens (the “Merger Agreement”), including in circumstances requiring Altair to pay a termination fee, (ix) the risk that competing offers will be made; (x) unexpected costs, charges or expenses resulting from the merger, (xi) potential litigation relating to the merger that could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto, (xii) worldwide economic or political changes that affect the markets that Altair’s businesses serve which could have an effect on demand for Altair’s products and impact Altair’s profitability and (xiii) disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, including tariffs and trade restrictions, cyber-security vulnerabilities, foreign currency volatility, swings in consumer confidence and spending, raw material pricing and supply issues, retention of key employees, increases in fuel prices, and outcomes of legal proceedings, claims and investigations. Accordingly, actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in Altair’s filings with the SEC, including the risks and uncertainties identified in Part I, Item 1A – Risk Factors of Altair’s Annual Report on Form 10-K for the year ended December 31, 2023 and in Altair’s other filings with the SEC. The list of factors is not intended to be exhaustive.

These forward-looking statements speak only as of the date of this communication, and Altair does not assume any obligation to update or revise any forward-looking statement made in this communication or that may from time to time be made by or on behalf of Altair.

Media Relations
Altair
Jennifer Ristic
216-849-3109
jristic@altair.com

Investor Relations
Altair
Stephen Palmtag
669-328-9111
spalmtag@altair.com

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

	September 30, 2024			December 31, 2023
(In thousands)	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	513,371		$	467,459
Accounts receivable, net		121,345			190,461
Income tax receivable		20,794			16,650
Prepaid expenses and other current assets		31,489			26,053
Total current assets		686,999			700,623
Property and equipment, net		40,908			39,803
Operating lease right of use assets		31,856			30,759
Goodwill		476,209			458,125
Other intangible assets, net		84,904			83,550
Deferred tax assets		9,661			9,955
Other long-term assets		47,331			40,678
TOTAL ASSETS	$	1,377,868		$	1,363,493
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,607		$	8,995
Accrued compensation and benefits		43,497			45,081
Current portion of operating lease liabilities		8,212			8,825
Other accrued expenses and current liabilities		40,267			48,398
Deferred revenue		114,525			131,356
Current portion of convertible senior notes, net		—			81,455
Total current liabilities		210,108			324,110
Convertible senior notes, net		226,812			225,929
Operating lease liabilities, net of current portion		24,484			22,625
Deferred revenue, non-current		26,310			32,347
Other long-term liabilities		53,254			47,151
TOTAL LIABILITIES		540,968			652,162
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding		—			—
Common stock ($0.0001 par value)
Class A common stock, authorized 513,797 shares, issued and outstanding 59,518 and 55,240 shares as of September 30, 2024, and December 31, 2023, respectively		5			5
Class B common stock, authorized 41,203 shares, issued and outstanding 25,432 and 26,814 shares as of September 30, 2024, and December 31, 2023, respectively		3			3
Additional paid-in capital		971,835			864,135
Accumulated deficit		(117,324	)		(130,503	)
Accumulated other comprehensive loss		(17,619	)		(22,309	)
TOTAL STOCKHOLDERS’ EQUITY		836,900			711,331
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,377,868		$	1,363,493

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2024			2023			2024			2023
Revenue
License	$	92,939		$	79,825		$	303,345		$	279,972
Maintenance and other services		45,733			39,252			129,179			114,069
Total software		138,672			119,077			432,524			394,041
Engineering services and other		12,778			14,926			40,633			47,157
Total revenue		151,450			134,003			473,157			441,198
Cost of revenue
License		2,795			3,083			10,437			11,888
Maintenance and other services		16,045			13,689			46,410			41,754
Total software *		18,840			16,772			56,847			53,642
Engineering services and other		11,175			12,314			34,577			38,976
Total cost of revenue		30,015			29,086			91,424			92,618
Gross profit		121,435			104,917			381,733			348,580
Operating expenses:
Research and development *		56,111			51,598			164,014			160,126
Sales and marketing *		45,559			44,069			136,468			132,543
General and administrative *		17,500			17,218			54,555			53,791
Amortization of intangible assets		9,246			7,704			24,313			23,143
Other operating (income) expense, net		(2,669	)		(4,408	)		(4,337	)		1,324
Total operating expenses		125,747			116,181			375,013			370,927
Operating (loss) income		(4,312	)		(11,264	)		6,720			(22,347	)
Interest expense		1,317			1,529			4,497			4,583
Other income, net		(10,758	)		(1,890	)		(20,465	)		(9,698	)
Income (loss) before income taxes		5,129			(10,903	)		22,688			(17,232	)
Income tax expense (benefit)		3,350			(6,541	)		9,509			11,369
Net income (loss)	$	1,779		$	(4,362	)	$	13,179		$	(28,601	)
Earnings (loss) per share, basic
Earnings (loss) per share	$	0.02		$	(0.05	)	$	0.16		$	(0.36	)
Weighted average shares		84,835			80,431			83,680			80,204
Earnings (loss) per share, diluted
Earnings (loss) per share	$	0.02		$	(0.05	)	$	0.15		$	(0.36	)
Weighted average shares		88,425			80,431			87,854			80,204

* Amounts include stock-based compensation expense as follows (in thousands):

	(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Cost of revenue – software	$	2,131	$	2,468	$	6,230	$	7,792
Research and development		6,378		7,824		19,356		26,510
Sales and marketing		5,176		6,933		14,675		22,105
General and administrative		3,671		3,301		10,449		10,016
Total stock-based compensation expense	$	17,356	$	20,526	$	50,710	$	66,423

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)

	Nine Months Ended September 30,
(In thousands)	2024			2023
OPERATING ACTIVITIES:
Net income (loss)	$	13,179		$	(28,601	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		31,120			29,271
Stock-based compensation expense		50,710			66,423
Deferred income taxes		(114	)		2,178
Loss on mark-to-market adjustment of contingent consideration		189			4,494
Other, net		1,520			1,385
Changes in assets and liabilities:
Accounts receivable, net		72,916			47,226
Prepaid expenses and other current assets		(7,895	)		959
Other long-term assets		408			(1,491	)
Accounts payable		(5,416	)		(5,494	)
Accrued compensation and benefits		(1,977	)		(2,726	)
Other accrued expenses and current liabilities		(12,261	)		(4,526	)
Deferred revenue		(25,825	)		(3,442	)
Net cash provided by operating activities		116,554			105,656
INVESTING ACTIVITIES:
Payments for acquisition of businesses, net of cash acquired		(25,575	)		(3,235	)
Capital expenditures		(9,739	)		(7,882	)
Other investing activities, net		(5,036	)		(2,452	)
Net cash used in investing activities		(40,350	)		(13,569	)
FINANCING ACTIVITIES:
Settlement of convertible senior notes		(81,729	)		—
Proceeds from the exercise of common stock options		43,721			25,526
Proceeds from employee stock purchase plan contributions		7,112			5,772
Payments for repurchase and retirement of common stock		—			(6,255	)
Other financing activities		—			(73	)
Net cash (used in) provided by financing activities		(30,896	)		24,970
Effect of exchange rate changes on cash, cash equivalents and restricted cash		554			(2,599	)
Net increase in cash, cash equivalents and restricted cash		45,862			114,458
Cash, cash equivalents and restricted cash at beginning of year		467,576			316,958
Cash, cash equivalents and restricted cash at end of period	$	513,438		$	431,416

Change in Presentation of Revenue and Cost of Revenue

Effective in the first quarter of 2024, the Company changed the presentation of revenue and cost of revenue in its Consolidated Statements of Operations to combine the financial statement line items (“FSLIs”) labeled “Software related services”, “Client engineering services” and “Other” into one FSLI labeled “Engineering services and other”. The change in presentation has been applied retrospectively and does not affect the software revenue, total revenue, software cost of revenue or total cost of revenue amounts previously reported or have any effect on segment reporting.

Financial Results

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:

		(Unaudited)
		Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)		2024			2023			2024			2023
Net income (loss)		$	1,779		$	(4,362	)	$	13,179		$	(28,601	)
Stock-based compensation expense			17,356			20,526			50,710			66,423
Amortization of intangible assets			9,246			7,704			24,313			23,143
Non-cash interest expense			310			469			1,204			1,399
Impact of non-GAAP tax rate ⁽¹⁾			(3,721	)		(10,997	)		(14,564	)		(8,897	)
Special adjustments and other ⁽²⁾			(3,756	)		(658	)		(2,622	)		4,212
	Non-GAAP net income	$	21,214		$	12,682		$	72,220		$	57,679

Net income (loss) per share, diluted		$	0.02		$	(0.05	)	$	0.15		$	(0.36	)
Non-GAAP net income per share, diluted		$	0.24		$	0.15		$	0.82		$	0.68

GAAP diluted shares outstanding			88,425			80,431			87,854			80,204
Non-GAAP diluted shares outstanding			88,425			85,347			87,854			84,857

(1)	For the three and nine months ended September 30, 2024, the Company used a non-GAAP effective tax rate of 25%. For the three and nine months ended September 30, 2023, the Company used a non-GAAP effective tax rate of 26%.
(2)	The three months ended September 30, 2024, includes $3.8 million of currency gains on acquisition-related intercompany loans. The three months ended September 30, 2023, includes a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $2.8 million of currency losses on acquisition-related intercompany loans. The nine months ended September 30, 2024, includes $2.8 million of currency gains on acquisition-related intercompany loans, and a $0.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2023, includes a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million of currency gains on acquisition-related intercompany loans.

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Net income (loss)		$	1,779		$	(4,362	)	$	13,179		$	(28,601	)
Income tax (benefit) expense			3,350			(6,541	)		9,509			11,369
Stock-based compensation expense			17,356			20,526			50,710			66,423
Interest expense			1,317			1,529			4,497			4,583
Depreciation and amortization			11,563			9,783			31,120			29,271
Special adjustments, interest income and other ⁽¹⁾			(9,660	)		(5,481	)		(20,144	)		(7,480	)
	Adjusted EBITDA	$	25,705		$	15,454		$	88,871		$	75,565

(1)	The three months ended September 30, 2024, includes $5.9 million of interest income and $3.8 million of currency gains on acquisition-related intercompany loans. The three months ended September 30, 2023, includes $4.8 million of interest income, a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.8 million currency losses on acquisition-related intercompany loans. The nine months ended September 30, 2024, includes $17.5 million of interest income, $2.8 million of currency gains on acquisition-related intercompany loans, and a $0.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2023, includes $11.7 million of interest income, a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.3 million currency gains on acquisition-related intercompany loans.

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Net cash provided by operating activities	$	14,547		$	16,427		$	116,554		$	105,656
Capital expenditures		(4,735	)		(1,698	)		(9,739	)		(7,882	)
Free cash flow	$	9,812		$	14,729		$	106,815		$	97,774

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Gross profit	$	121,435		$	104,917		$	381,733		$	348,580
Stock-based compensation expense		2,131			2,468			6,230			7,792
Non-GAAP gross profit	$	123,566		$	107,385		$	387,963		$	356,372

Gross profit margin		80.2	%		78.3	%		80.7	%		79.0	%
Non-GAAP gross margin		81.6	%		80.1	%		82.0	%		80.8	%

The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Total operating expense	$	125,747		$	116,181		$	375,013		$	370,927
Stock-based compensation expense		(15,225	)		(18,058	)		(44,480	)		(58,631	)
Amortization		(9,246	)		(7,704	)		(24,313	)		(23,143	)
Loss on mark-to-market adjustment of contingent consideration		—			3,493			(189	)		(4,494	)
Non-GAAP operating expense	$	101,276		$	93,912		$	306,031		$	284,659

The following table provides the calculation of non-GAAP diluted common shares and non-GAAP net income per share, diluted:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Numerator:
	Non-GAAP net income	$	21,214	$	12,682	$	72,220	$	57,679
	Interest expense related to convertible notes, net of tax ⁽¹⁾		—		—		—		—
	Numerator for non-GAAP diluted income per share	$	21,214	$	12,682	$	72,220	$	57,679
Denominator:
	Weighted average shares outstanding, basic		84,835		80,431		83,680		80,204
	Effect of dilutive shares		3,590		4,916		4,174		4,653
	Non-GAAP diluted shares outstanding		88,425		85,347		87,854		84,857
Non-GAAP net income per share, diluted		$	0.24	$	0.15	$	0.82	$	0.68

(1)	Interest expense related to the convertible notes has been excluded from the numerator for non-GAAP diluted earnings per share because its effect would have been anti-dilutive.

The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Revenue	$	151,450		$	134,003		$	473,157		$	441,198
Ending deferred revenue		140,835			138,933			140,835			138,933
Beginning deferred revenue		(152,184	)		(148,547	)		(163,703	)		(144,460	)
Deferred revenue acquired		(253	)		—			(1,825	)		—
Billings	$	139,848		$	124,389		$	448,464		$	435,671

The following table provides Software revenue, Total revenue, Billings and Adjusted EBITDA on a constant currency basis:

	(Unaudited)
	Three Months Ended September 30, 2024							Three Months Ended September 30, 2023		Increase/ (Decrease) %
(in thousands)	As reported		Currency changes			As adjusted for constant currency		As reported		As reported			As adjusted for constant currency
Software revenue	$	138.7	$	(0.3	)	$	138.4	$	119.1		16.5	%		16.2	%
Total revenue	$	151.5	$	(0.4	)	$	151.1	$	134.0		13.0	%		12.8	%
Billings	$	139.8	$	(0.1	)	$	139.7	$	124.4		12.4	%		12.3	%
Adjusted EBITDA	$	25.7	$	(0.1	)	$	25.6	$	15.5		66.3	%		65.5	%


	Nine Months Ended September 30, 2024							Nine Months Ended September 30, 2023		Increase/ (Decrease) %
(in thousands)	As reported		Currency changes			As adjusted for constant currency		As reported		As reported			As adjusted for constant currency
Software revenue	$	432.5	$	4.4		$	436.9	$	394.0		9.8	%		10.9	%
Total revenue	$	473.2	$	4.6		$	477.8	$	441.2		7.2	%		8.3	%
Billings	$	448.5	$	4.5		$	453.0	$	435.7		2.9	%		4.0	%
Adjusted EBITDA	$	88.9	$	3.3		$	92.2	$	75.6		17.6	%		22.0	%

The MIL Network –

January 25, 2025

MIL-OSI Economics: Microsoft Cloud strength drives first quarter results

Source: Microsoft

Headline: Microsoft Cloud strength drives first quarter results

Microsoft Cloud Strength Drives First Quarter Results

REDMOND, Wash. — October 30, 2024 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2024, as compared to the corresponding period of last fiscal year:

· Revenue was $65.6 billion and increased 16%

· Operating income was $30.6 billion and increased 14%

· Net income was $24.7 billion and increased 11% (up 10% in constant currency)

· Diluted earnings per share was $3.30 and increased 10%

“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” said Satya Nadella, chairman and chief executive officer of Microsoft. “We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”

“Strong execution by our sales teams and partners delivered a solid start to our fiscal year with Microsoft Cloud revenue of $38.9 billion, up 22% year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

Revenue in Productivity and Business Processes was $28.3 billion and increased 12% (up 13% in constant currency), with the following business highlights:

· Microsoft 365 Commercial products and cloud services revenue increased 13% (up 14% in constant currency) driven by Microsoft 365 Commercial cloud revenue growth of 15% (up 16% in constant currency)

· Microsoft 365 Consumer products and cloud services revenue increased 5% (up 6% in constant currency) driven by Microsoft 365 Consumer cloud revenue growth of 6% (up 7% in constant currency)

· LinkedIn revenue increased 10% (up 9% in constant currency)

· Dynamics products and cloud services revenue increased 14% driven by Dynamics 365 revenue growth of 18% (up 19% in constant currency)

Revenue in Intelligent Cloud was $24.1 billion and increased 20% (up 21% in constant currency), with the following business highlights:

· Server products and cloud services revenue increased 23% driven by Azure and other cloud services revenue growth of 33% (up 34% in constant currency)

Revenue in More Personal Computing was $13.2 billion and increased 17%, with the following business highlights:

· Windows OEM and Devices revenue increased 2%

· Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision acquisition

· Search and news advertising revenue excluding traffic acquisition costs increased 18% (up 19% in constant currency)

Microsoft returned $9.0 billion to shareholders in the form of dividends and share repurchases in the first quarter of fiscal year 2025.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To learn more about Microsoft’s corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency.

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on October 30, 2025.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended September 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2023 As Reported (GAAP)	$56,517	$26,895	$22,291	$2.99
2024 As Reported (GAAP)	$65,585	$30,552	$24,667	$3.30
Percentage Change Y/Y (GAAP)	16%	14%	11%	10%
Constant Currency Impact	$(217)	$(181)	$78	$0.01
Percentage Change Y/Y Constant Currency	16%	14%	10%	10%

Segment Revenue Constant Currency Reconciliation

	Three Months Ended September 30,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2023 As Reported (GAAP)	$25,226	$20,013	$11,278
2024 As Reported (GAAP)	$28,317	$24,092	$13,176
Percentage Change Y/Y (GAAP)	12%	20%	17%
Constant Currency Impact	$(128)	$(72)	$(17)
Percentage Change Y/Y Constant Currency	13%	21%	17%

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

Selected Product and Service Revenue Constant Currency Reconciliation

	Three Months Ended September 30, 2024
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Microsoft Cloud	22%	0%	22%
Microsoft 365 Commercial products and cloud services	13%	1%	14%
Microsoft 365 Commercial cloud	15%	1%	16%
Microsoft 365 Consumer products and cloud services	5%	1%	6%
Microsoft 365 Consumer cloud	6%	1%	7%
LinkedIn	10%	(1)%	9%
Dynamics products and cloud services	14%	0%	14%
Dynamics 365	18%	1%	19%
Server products and cloud services	23%	0%	23%
Azure and other cloud services	33%	1%	34%
Windows OEM and Devices	2%	0%	2%
Xbox content and services	61%	0%	61%
Search and news advertising excluding traffic acquisition costs	18%	1%	19%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

· intense competition in all of our markets that may adversely affect our results of operations;

· focus on cloud-based and AI services presenting execution and competitive risks;

· significant investments in products and services that may not achieve expected returns;

· acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

· impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

· cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

· disclosure and misuse of personal data that could cause liability and harm to our reputation;

· the possibility that we may not be able to protect information stored in our products and services from use by others;

· abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;

· products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;

· issues about the use of AI in our offerings that may result in reputational or competitive harm, or legal liability;

· excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

· supply or quality problems;

· government enforcement under competition laws and new market regulation may limit how we design and market our products;

· potential consequences of trade and anti-corruption laws;

· potential consequences of existing and increasing legal and regulatory requirements;

· laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

· claims against us that may result in adverse outcomes in legal disputes;

· uncertainties relating to our business with government customers;

· additional tax liabilities;

· sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk;

· an inability to protect and utilize our intellectual property may harm our business and operating results;

· claims that Microsoft has infringed the intellectual property rights of others;

· damage to our reputation or our brands that may harm our business and results of operations;

· adverse economic or market conditions that may harm our business;

· catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;

· exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and

· the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of September 30, 2024. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

For more information, financial analysts and investors only:

Brett Iversen, Vice President, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

**MICROSOFT CORPORATION**

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Revenue:
Product	$15,272	$15,535
Service and other	50,313	40,982
Total revenue	65,585	56,517
Cost of revenue:
Product	3,294	3,531
Service and other	16,805	12,771
Total cost of revenue	20,099	16,302
Gross margin	45,486	40,215
Research and development	7,544	6,659
Sales and marketing	5,717	5,187
General and administrative	1,673	1,474
Operating income	30,552	26,895
Other income (expense), net	(283)	389
Income before income taxes	30,269	27,284
Provision for income taxes	5,602	4,993
Net income	$24,667	$22,291
Earnings per share:
Basic	$3.32	$3.00
Diluted	$3.30	$2.99
Weighted average shares outstanding:
Basic	7,433	7,429
Diluted	7,470	7,462

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Net income	$24,667	$22,291
Other comprehensive income (loss), net of tax:
Net change related to derivatives	(10)	21
Net change related to investments	1,114	(260)
Translation adjustments and other	304	(355)
Other comprehensive income (loss)	1,408	(594)
Comprehensive income	$26,075	$21,697

BALANCE SHEETS

(In millions) (Unaudited)
	September 30, 2024	June 30, 2024
Assets
Current assets:
Cash and cash equivalents	$20,840	$18,315
Short-term investments	57,588	57,228
Total cash, cash equivalents, and short-term investments	78,428	75,543
Accounts receivable, net of allowance for doubtful accounts of $647 and $830	44,148	56,924
Inventories	1,626	1,246
Other current assets	25,724	26,021
Total current assets	149,926	159,734
Property and equipment, net of accumulated depreciation of $80,517 and $76,421	152,863	135,591
Operating lease right-of-use assets	20,528	18,961
Equity and other investments	15,778	14,600
Goodwill	119,374	119,220
Intangible assets, net	26,751	27,597
Other long-term assets	37,793	36,460
Total assets	$523,013	$512,163
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$22,768	$21,996
Short-term debt	0	6,693
Current portion of long-term debt	2,249	2,249
Accrued compensation	8,326	12,564
Short-term income taxes	9,717	5,017
Short-term unearned revenue	53,026	57,582
Other current liabilities	19,114	19,185
Total current liabilities	115,200	125,286
Long-term debt	42,868	42,688
Long-term income taxes	24,452	27,931
Long-term unearned revenue	2,663	2,602
Deferred income taxes	2,581	2,618
Operating lease liabilities	16,361	15,497
Other long-term liabilities	31,165	27,064
Total liabilities	235,290	243,686
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,436 and 7,434	102,976	100,923
Retained earnings	188,929	173,144
Accumulated other comprehensive loss	(4,182)	(5,590)
Total stockholders’ equity	287,723	268,477
Total liabilities and stockholders’ equity	$523,013	$512,163

CASH FLOWS STATEMENTS

(In millions) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Operations
Net income	$24,667	$22,291
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other	7,383	3,921
Stock-based compensation expense	2,832	2,507
Net recognized losses (gains) on investments and derivatives	(125)	14
Deferred income taxes	(1,433)	(568)
Changes in operating assets and liabilities:
Accounts receivable	14,037	11,034
Inventories	(373)	(505)
Other current assets	(82)	(796)
Other long-term assets	(1,761)	(2,013)
Accounts payable	(916)	1,214
Unearned revenue	(5,553)	(4,126)
Income taxes	1,016	1,425
Other current liabilities	(5,479)	(4,106)
Other long-term liabilities	(33)	291
Net cash from operations	34,180	30,583
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net	(5,746)	18,692
Proceeds from issuance of debt	0	7,073
Repayments of debt	(966)	(1,500)
Common stock issued	706	685
Common stock repurchased	(4,107)	(4,831)
Common stock cash dividends paid	(5,574)	(5,051)
Other, net	(889)	(307)
Net cash from (used in) financing	(16,576)	14,761
Investing
Additions to property and equipment	(14,923)	(9,917)
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets	(1,849)	(1,186)
Purchases of investments	(1,620)	(8,460)
Maturities of investments	2,136	15,718
Sales of investments	1,968	5,330
Other, net	(913)	(982)
Net cash from (used in) investing	(15,201)	503
Effect of foreign exchange rates on cash and cash equivalents	122	(99)
Net change in cash and cash equivalents	2,525	45,748
Cash and cash equivalents, beginning of period	18,315	34,704
Cash and cash equivalents, end of period	$20,840	$80,452

SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Revenue
Productivity and Business Processes	$28,317	$25,226
Intelligent Cloud	24,092	20,013
More Personal Computing	13,176	11,278
Total	$65,585	$56,517
Operating Income
Productivity and Business Processes	$16,516	$14,297
Intelligent Cloud	10,503	8,908
More Personal Computing	3,533	3,690
Total	$30,552	$26,895

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

MIL OSI Economics –

January 25, 2025

MIL-OSI: Superior Energy Services Announces Third Quarter 2024 Results and Conference Call

Source: GlobeNewswire (MIL-OSI)

HOUSTON, Oct. 30, 2024 (GLOBE NEWSWIRE) — Superior Energy Services, Inc. (the “Company”) filed its Form 10-Q for the period ended September 30, 2024. In accordance with the Company’s Shareholders Agreement, it will host a conference call with shareholders on November 1, 2024.

For the third quarter of 2024, the Company reported net income from continuing operations of $21.9 million, or $1.09 per diluted share, with revenue of $197.3 million. This compares to net income from continuing operations of $29.5 million or $1.46 per diluted share, with revenue of $201.1 million, for the second quarter of 2024.

The Company’s Adjusted EBITDA (a non-GAAP measure defined on page 4) was $57.8 million compared to $60.0 million for the second quarter of 2024. Refer to pages 11 and 12 for a reconciliation of Adjusted EBITDA to GAAP results.

Third Quarter 2024 Geographic Breakdown

U.S. land revenue was $36.0 million for the third quarter of 2024, a decrease of 8% compared to revenue of $39.0 million for the second quarter of 2024. The decline in U.S. land revenue was primarily driven by decreased activity from our premium drill pipe and bottom hole accessories product lines within our Rentals segment, consistent with a reduced U.S. land rig count.

U.S. offshore revenue was $49.7 million in the third quarter of 2024, a decrease of 8% compared to revenue of $53.8 million in the second quarter of 2024. U.S. offshore revenue decreased primarily in our Well Services segments, with the most significant decline coming from our project-based completion services product line. U.S. Offshore revenue in the Rentals segment for the third quarter of 2024 was up $1.6 million versus the second quarter of 2024, despite approximately $1.0 million of revenue slipping to the fourth quarter of 2024 due to hurricane activity in September.

International revenue was $111.6 million in the third quarter of 2024, an increase of 3% compared to revenue of $108.4 million in the second quarter of 2024. International revenue was up across both our Rentals and Well Services segments, with the increase being driven by our hydraulic snubbing and well control services product lines.

Third Quarter 2024 Segment Reporting

The Rentals segment revenue in the third quarter of 2024 was $97.9 million, a 2% decrease compared to revenue of $99.9 million in the second quarter of 2024, primarily driven by reduced activity in U.S. land and hurricane disruptions in the U.S. offshore market. In the third quarter of 2024, Rentals segment income from operations was $43.9 million as compared to $44.1 million in the second quarter of 2024. Adjusted EBITDA was $55.9 million, a decrease from $56.0 million in the second quarter of 2024. Adjusted EBITDA Margin (a non-GAAP measure defined on page 4) was 57%, a 1% increase from the second quarter of 2024.

The Well Services segment revenue in the third quarter of 2024 was $99.5 million, a 2% decrease compared to revenue of $101.2 million in the second quarter of 2024 and income from operations for the third quarter of 2024 was $3.8 million as compared to $10.7 million in the second quarter of 2024. Adjusted EBITDA for the third quarter of 2024 was $15.4 million with an Adjusted EBITDA Margin of 16%, as compared to Adjusted EBITDA of $19.1 million with an Adjusted EBITDA Margin of 19% in the second quarter of 2024. The Well Services segment sequential decline was primarily driven by lower activity in our project-based completion services product line.

Liquidity

As of September 30, 2024, the Company had cash, cash equivalents, and restricted cash of approximately $380.6 million. As of September 30, 2024, our borrowing base, as defined in our credit agreement, was approximately $89.9 million, and we had $39.5 million in letters of credit outstanding which reduced the borrowing availability to $50.4 million. At September 30, 2024, we had no outstanding borrowings under our credit facility.

During the third quarter of 2024, we utilized an indirect foreign exchange mechanism known as a Blue Chip Swap. The transactions were completed at implied exchange rates that were approximately 63.0% higher than the official exchange rate, resulting in a loss of approximately $5.1 million during the third quarter of 2024.

During the third quarter of 2024, net cash from operating activities was $62.5 million. Free Cash Flow (a non-GAAP measure defined on page 4) for the third quarter of 2024 totaled $50.5 million as compared to $39.0 million for the second quarter of 2024. Refer to page 8 for a reconciliation of Free Cash Flow to Net Cash from Operating Activities.

Third quarter 2024 capital expenditures were $12.0 million. The Company expects total capital expenditures for 2024 to be approximately $100 to $110 million. Approximately 91% of total 2024 capital expenditures are targeted for the replacement of existing assets. Of the total estimated 2024 capital expenditures, approximately 68% is expected to be invested in the Rentals segment.

2024 Guidance

Our full year 2024 guidance remains consistent from the second quarter 2024 guidance. We expect 2024 revenue to come in at a range of $780 million to $840 million with 2024 Adjusted EBITDA expected to be in a range of $235 million to $265 million.

Conference Call Information

The Company’s management team will host a conference call on Friday, November 1, 2024, at 10:00 a.m. Eastern Time. The call will be available via live webcast in the “Events” section at ir.superiorenergy.com. To access via phone, participants can register for the call here, where they will be provided a phone number and access code. The call will be available for replay until November 1, 2025 on Superior’s website at ir.superiorenergy.com. If you are a shareholder and would like to submit a question, please email your question beforehand to Jamie Spexarth at ir@superiorenergy.com.

About Superior Energy Services

Superior Energy Services serves the drilling, completion and production-related needs of oil and gas companies worldwide through a diversified portfolio of specialized oilfield services and equipment that are used throughout the economic life cycle of oil and gas wells. For more information, visit: www.superiorenergy.com.

Non-GAAP Financial Measures

To supplement Superior’s consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also uses Adjusted EBITDA and Adjusted EBITDA Margin. Management uses Adjusted EBITDA and Adjusted EBITDA Margin internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company also believes these non-GAAP measures provide investors useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures are not recognized measures for financial statement presentation under U.S. GAAP and do not have standardized meanings and may not be comparable to similar measures presented by other public companies. Adjusted EBITDA and Adjusted EBITDA Margin should be considered as supplements to, and not as substitutes for, or superior to, the corresponding measures calculated in accordance with GAAP. We define Adjusted EBITDA as net income (loss) from continuing activities before net interest expense, income tax expense (benefit) and depreciation, amortization, accretion and depletion, restructuring and transaction expenses, adjusted for other gains and losses and other expenses, net, which management does not consider representative of our ongoing operations. We define Adjusted EBITDA Margin as Adjusted EBITDA by segment as a percentage of segment revenues. For a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, please see the tables under “―Superior Energy Services, Inc. and Subsidiaries Reconciliation of Adjusted EBITDA” and “—Superior Energy Services, Inc. and Subsidiaries Reconciliation of Adjusted EBITDA by Segment” included on pages 11 and 12 of this press release.

Free Cash Flow is defined as net cash from operating activities less payments for capital expenditures. Free Cash Flow is considered a non-GAAP financial measure under the SEC’s rules. Management believes, however, that Free Cash Flow is an important financial measure for use in evaluating the Company’s financial performance, as it measures our ability to generate additional cash from our business operations. Free Cash Flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of Free Cash Flow is limited and does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations or payments made for business acquisitions. Therefore, we believe it is important to view Free Cash Flow as supplemental to our entire Statement of Cash Flows. Please see table under “—Condensed Consolidated Statements of Cash Flows” included on page 8 of this press release.

The Company is unable to provide a reconciliation of the forward-looking non-GAAP financial measure, Adjusted EBITDA, contained in this press release to its most directly comparable GAAP financial measure, net income, as the information necessary for a quantitative reconciliation of the forward-looking non-GAAP financial measure to its respective most directly comparable GAAP financial measure is not (and was not, when prepared) available to the Company without unreasonable efforts due to the inherent difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy. Net income includes the impact of depreciation, income taxes and certain other items that impact comparability between periods, which may be significant and are difficult to project with a reasonable degree of accuracy. In addition, we believe such reconciliation could imply a degree of precision that might be confusing or misleading to investors. The probable significance of providing this forward-looking non-GAAP financial measure without the directly comparable GAAP financial measure is that such GAAP financial measure may be materially different from the corresponding non-GAAP financial measure.

Forward-Looking Statements

This press release contains, and future oral or written statements or press releases by the Company and its management may contain, certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks”, “will,” “could,” “may” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact regarding the Company’s financial position and results, financial performance, liquidity, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company’s management in light of its experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties, including but not limited to conditions in the oil and gas industry, U.S. and global market and economic conditions generally and macroeconomic conditions worldwide (including inflation, interest rates, supply chain disruptions and capital and credit markets conditions) and other uncertainties (such as the war in Ukraine and conflict in Israel and broader geopolitical tensions in the Middle East and eastern Europe) that could cause the Company’s actual results to differ materially from such statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements.

While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in the Company’s Form 10-K for the year ended December 31, 2023 and subsequent reports on Form 10-Qs and those set forth from time to time in the Company’s other periodic filings with the Securities and Exchange Commission, which are available at www.superiorenergy.com. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2024			2024			2023			2024			2023

Rentals	$	97,857		$	99,851		$	113,201		$	305,799		$	334,433
Well Services		99,450			101,230			97,184			301,223			340,562
Total revenues		197,307			201,081			210,385			607,022			674,995

Rentals		35,227			36,596			37,769			109,589			109,258
Well Services		74,172			71,672			72,076			214,717			239,062
Total cost of revenues		109,399			108,268			109,845			324,306			348,320

Depreciation, depletion, amortization and accretion		21,077			20,868			20,490			62,392			61,250
General and administrative expenses		33,458			33,404			30,089			101,837			92,256
Restructuring and transaction expenses		5,891			–			–			5,891			1,983
Other gains, net		(133	)		(614	)		(4,073	)		(1,829	)		(5,424	)
Income from operations		27,615			39,155			54,034			114,425			176,610

Other income (expense):
Interest income, net		5,032			5,760			6,629			17,632			18,581
Loss on Blue Chip Swaps		(5,113	)		–			(12,120	)		(5,113	)		(12,120	)
Other income (expense)		979			(2,082	)		(4,520	)		(2,916	)		(8,508	)
Income from continuing operations before income taxes		28,513			42,833			44,023			124,028			174,563
Income tax expense		(6,597	)		(13,370	)		(11,403	)		(34,754	)		(44,615	)
Net income from continuing operations		21,916			29,463			32,620			89,274			129,948
Income from discontinued operations, net of income tax		–			1,896			128			1,896			408
Net income	$	21,916		$	31,359		$	32,748		$	91,170		$	130,356

Income per share – basic:
Net income from continuing operations	$	1.09		$	1.46		$	1.62		$	4.43		$	6.46
Income from discontinued operations, net of income tax		–			0.09			0.01			0.09			0.02
Net income	$	1.09		$	1.55		$	1.63		$	4.52		$	6.48

Income per share – diluted
Net income from continuing operations	$	1.09		$	1.46		$	1.62		$	4.42		$	6.45
Income from discontinued operations, net of income tax		–			0.09			–			0.10			0.02
Net income	$	1.09		$	1.55		$	1.62		$	4.52		$	6.47

Weighted-average shares outstanding
Basic		20,177			20,172			20,136			20,170			20,123
Diluted		20,186			20,183			20,159			20,182			20,144

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)

	September 30,		December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	325,881	$	391,684
Accounts receivable, net		200,106		276,868
Inventory		70,293		74,995
Income taxes receivable		13,383		10,542
Prepaid expenses		23,363		18,614
Other current assets		7,765		7,922
Total current assets		640,791		780,625
Property, plant and equipment, net		306,285		294,960
Note receivable		72,694		69,005
Restricted cash		54,707		85,444
Deferred tax assets		59,555		67,241
Other assets, net		42,319		43,718
Total assets	$	1,176,351	$	1,340,993

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	38,897	$	38,214
Accrued expenses		106,203		103,782
Income taxes payable		20,100		20,220
Decommissioning liability		30,747		21,631
Total current liabilities		195,947		183,847
Decommissioning liability		140,030		148,652
Other liabilities		38,599		47,583
Total liabilities		374,576		380,082

Total equity		801,775		960,911
Total liabilities and equity	$	1,176,351	$	1,340,993

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2024			2024			2023			2024			2023

Cash flows from operating activities
Net income	$	21,916		$	31,359		$	32,748		$	91,170		$	130,356
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation, depletion, amortization and accretion		21,077			20,868			20,490			62,392			61,250
Loss on Blue Chip Swaps		5,113			–			12,120			5,113			12,120
Washington State Tax Settlement		–			–			–			–			(27,068	)
Decommissioning costs		(5,111	)		(143	)		(3,401	)		(5,684	)		(6,279	)
Other non-cash items		(2,642	)		4,205			566			4,798			23,357
Changes in operating assets and liabilities:		22,162			17,487			(10,112	)		67,396			(38,390	)
Net cash from operating activities		62,515			73,776			52,411			225,185			155,346

Cash flows from investing activities
Payments for capital expenditures		(12,005	)		(34,744	)		(21,592	)		(67,447	)		(67,218	)
Proceeds from sales of assets		292			669			9,563			3,577			24,710
Proceeds from sales of Blue Chip Swap securities		8,121			–			9,656			8,121			9,656
Purchases of Blue Chip Swap securities		(13,234	)		–			(21,776	)		(13,234	)		(21,776	)
Net cash from investing activities		(16,826	)		(34,075	)		(24,149	)		(68,983	)		(54,628	)

Cash flows from financing activities
Distributions to shareholders		–			–			–			(250,417	)		–
Repurchase of shares		–			–			–			(962	)		–
Other		(358	)		–			–			(1,363	)		(1,116	)
Net cash from financing activities		(358	)		–			–			(252,742	)		(1,116	)
Net change in cash, cash equivalents, and restricted cash		45,331			39,701			28,262			(96,540	)		99,602
Cash, cash equivalents and restricted cash at beginning of period		335,257			295,556			410,447			477,128			339,107
Cash, cash equivalents, and restricted cash at end of period	$	380,588		$	335,257		$	438,709		$	380,588		$	438,709

Reconciliation of Free Cash Flow
Net cash from operating activities	$	62,515		$	73,776		$	52,411		$	225,185		$	155,346
Payments for capital expenditures		(12,005	)		(34,744	)		(21,592	)		(67,447	)		(67,218	)
Free Cash Flow	$	50,510		$	39,032		$	30,819		$	157,738		$	88,128

Free Cash Flow is a Non-GAAP measure. See Non-GAAP Financial Measures for our definition of Free Cash Flow.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
REVENUE BY GEOGRAPHIC REGION BY SEGMENT
(in thousands, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
U.S. land
Rentals	$	28,934	$	32,713	$	37,478	$	100,653	$	127,341
Well Services		7,027		6,242		8,223		20,735		20,384
Total U.S. land		35,961		38,955		45,701		121,388		147,725

U.S. offshore
Rentals		32,228		30,644		44,681		100,123		117,867
Well Services		17,489		23,125		14,459		69,486		54,185
Total U.S. offshore		49,717		53,769		59,140		169,609		172,052

International
Rentals		36,695		36,494		31,042		105,023		89,225
Well Services		74,934		71,863		74,502		211,002		265,993
Total International		111,629		108,357		105,544		316,025		355,218
Total Revenues	$	197,307	$	201,081	$	210,385	$	607,022	$	674,995

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
(in thousands, unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Revenues
Rentals	$	97,857		$	99,851		$	113,201		$	305,799		$	334,433
Well Services		99,450			101,230			97,184			301,223			340,562
Total Revenues	$	197,307		$	201,081		$	210,385		$	607,022		$	674,995

Income (loss) from Operations
Rentals	$	43,856		$	44,061		$	56,253		$	139,128		$	167,373
Well Services		3,789			10,686			10,581			27,867			50,860
Corporate and other		(20,030	)		(15,592	)		(12,800	)		(52,570	)		(41,623	)
Income from operations	$	27,615		$	39,155		$	54,034		$	114,425		$	176,610

Adjusted EBITDA
Rentals	$	55,915		$	56,023		$	68,791		$	174,959		$	204,632
Well Services		15,427			19,078			15,137			56,028			69,697
Corporate and other		(13,576	)		(15,078	)		(12,125	)		(45,096	)		(37,207	)
Total Adjusted EBITDA	$	57,766		$	60,023		$	71,803		$	185,891		$	237,122

Adjusted EBITDA Margin
Rentals		57	%		56	%		61	%		57	%		61	%
Well Services		16	%		19	%		16	%		19	%		20	%
Corporate and other	n/a			n/a			n/a			n/a			n/a
Total Adjusted EBITDA Margin		29	%		30	%		34	%		31	%		35	%

Adjusted EBITDA is a Non-GAAP measure. See Non-GAAP Financial Measures for our definition of Adjusted EBITDA and pages 11 and 12 for a reconciliation to income (loss) from operations.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(in thousands, unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2024			2024			2023			2024			2023

Net income from continuing operations	$	21,916		$	29,463		$	32,620		$	89,274		$	129,948
Depreciation, depletion, amortization and accretion		21,077			20,868			20,490			62,392			61,250
Interest income, net		(5,032	)		(5,760	)		(6,629	)		(17,632	)		(18,581	)
Income tax expense		6,597			13,370			11,403			34,754			44,615
Restructuring expenses and other adjustments ⁽¹⁾		9,074			–			(2,721	)		9,074			(738	)
Loss on Blue Chip Swap Securities		5,113			–			12,120			5,113			12,120
Other (income) expense, net		(979	)		2,082			4,520			2,916			8,508
Adjusted EBITDA	$	57,766		$	60,023		$	71,803		$	185,891		$	237,122

Adjusted EBITDA is a Non-GAAP measure. See Non-GAAP Financial Measures for our definition of Adjusted EBITDA.

⁽¹⁾Restructuring expenses and other adjustments for the three and nine months ended September 30, 2024 relate to costs associated with changes in our executive management and other restructuring costs. Adjustments for the three and nine months ended September 30, 2023 relate to exit and disposal activities related to non-core businesses and other restructuring costs.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT
(in thousands, unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Rentals
Income from operations	$	43,856		$	44,061		$	56,253		$	139,128		$	167,373
Depreciation, depletion, amortization and accretion		12,059			11,962			12,538			35,831			37,259
Adjusted EBITDA	$	55,915		$	56,023		$	68,791		$	174,959		$	204,632

Well Services
Income from operations	$	3,789		$	10,686		$	10,581		$	27,867		$	50,860
Depreciation, depletion, amortization and accretion		8,455			8,392			7,277			24,978			21,558
Restructuring expenses and other adjustments⁽¹⁾		3,183			–			(2,721	)		3,183			(2,721	)
Adjusted EBITDA	$	15,427		$	19,078		$	15,137		$	56,028		$	69,697

Corporate
Loss from operations	$	(20,030	)	$	(15,592	)	$	(12,800	)	$	(52,570	)	$	(41,623	)
Depreciation, depletion, amortization and accretion		563			514			675			1,583			2,433
Restructuring expenses and other adjustments ⁽¹⁾		5,891			–			–			5,891			1,983
Adjusted EBITDA	$	(13,576	)	$	(15,078	)	$	(12,125	)	$	(45,096	)	$	(37,207	)

Total
Income from operations	$	27,615		$	39,155		$	54,034		$	114,425		$	176,610
Depreciation, depletion, amortization and accretion		21,077			20,868			20,490			62,392			61,250
Restructuring expenses and other adjustments ⁽¹⁾		9,074			–			(2,721	)		9,074			(738	)
Adjusted EBITDA	$	57,766		$	60,023		$	71,803		$	185,891		$	237,122

Adjusted EBITDA is a Non-GAAP measure. See Non-GAAP Financial Measures for our definition of Adjusted EBITDA.

⁽¹⁾Restructuring expenses and other adjustments for the three and nine months ended September 30, 2024 relate to costs associated with changes in our executive management and other restructuring costs. Adjustments for the three and nine months ended September 30, 2023 relate to exit and disposal activities related to non-core businesses and other restructuring costs.

FOR FURTHER INFORMATION CONTACT:
Jamie Spexarth, Chief Financial Officer
1001 Louisiana St., Suite 2900
Houston, TX 77002
Investor Relations, ir@superiorenergy.com, (713) 654-2200

The MIL Network –

January 25, 2025

MIL-OSI: Farmers & Merchants Bancorp, Inc. Reports 2024 Third-Quarter and Year-to-Date Financial Results

Source: GlobeNewswire (MIL-OSI)

ARCHBOLD, Ohio, Oct. 30, 2024 (GLOBE NEWSWIRE) — Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2024 third quarter and year-to-date ended September 30, 2024.

2024 Third Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

86 consecutive quarters of profitability
Net income increased 36.4% to $6.5 million, or $0.48 per basic and diluted share, from $4.8 million, or $0.35 per basic and diluted share, and net income expanded 14.7% from the 2024 second quarter
Net interest margin increased 12 basis points to 2.71%
Efficiency ratio improved to 67.98%, compared to 73.07% for the same period a year ago, and 69.03% for the 2024 second quarter
Total net loans remain stable at $2.54 billion at September 30, 2024
Total assets increased 4.8% to a record $3.39 billion
Deposits increased 4.3% to a record $2.68 billion
Stockholders’ equity increased 10.6% to a record $335.4 million
Asset quality remains at historically strong levels with nonperforming loans of only $2.9 million at September 30, 2024, compared to $22.4 million at September 30, 2023
Allowance for credit losses was 879.37% of nonperforming loans
F&M ended the quarter with excellent liquidity levels, and over $635 million in contingent funding sources, and a cash-to-assets ratio of 7.2%
According to the FDIC, F&M continued to have the third largest share of deposits out of the 58 financial institutions that are also operating within its local markets

Lars B. Eller, President and Chief Executive Officer, stated, “F&M produced excellent earnings growth on a year-over-year and sequential basis, driven by higher net interest income, historically strong asset quality, and prudent expense management. Most importantly, our third quarter results reflect the talent of our associates, as we continue to work hard to drive operating improvements at F&M, serve our local Ohio, Indiana, and Michigan communities, and position F&M for long-term success. In addition, I am pleased to report that F&M was the third largest bank out of 58 financial institutions within the markets we compete, according to the FDIC, reflecting the leading value we provide to our local communities. In fact, F&M is the number one bank, based on deposits, in almost half of the communities in which we operate.”

Income Statement
Net income for the 2024 third quarter ended September 30, 2024, was $6.5 million, compared to $4.8 million for the same period last year. Net income per basic and diluted share for the 2024 third quarter was $0.48, compared to $0.35 for the same period last year. Net income for the 2024 nine months ended September 30, 2024, was $17.6 million, compared to $17.2 million for the same period last year. Net income per basic and diluted share for the 2024 nine months was $1.28, compared to $1.26 for the same period last year.

Mr. Eller continued, “Our 2024 third quarter and year-to-date performance demonstrate the success of the near-term strategies we are pursuing to navigate a complex operating environment and improve earnings. Most importantly, while the demand for loans is high across our markets, our approach to risk and pricing remains conservative. This near-term strategy has contributed to excellent asset quality. In addition, we continue to focus on strategies aimed at optimizing our deposit base and growing low-cost checking (DDA) deposits. Since the beginning of 2024, we have added over 5,600 new checking accounts, and benefited from new and expanded relationships at offices that were opened in 2023. As a result, we ended the quarter with a loan-to-deposit ratio of 93.6%, compared to 97.2% at September 30, 2023, and 96.0% at June 30, 2024. Our third quarter of 2024 loan-to-deposit ratio was the lowest quarterly value in two years. The final near-term strategy we are pursuing is focused on controlling expenses, and I am encouraged by the continued year-over-year and sequential improvement in our efficiency ratio. This reflects the opportunities we are pursuing to manage operating costs and expand productivity.”

Deposits
At September 30, 2024, total deposits were $2.68 billion, an increase of 4.3% from September 30, 2023. The Company’s cost of interest-bearing liabilities was 3.2% for the quarter ended September 30, 2024, compared to 2.82% for the quarter ended September 30, 2023, and 3.02% for the 2023 fourth quarter ended December 31, 2023.

Loan Portfolio and Asset Quality
“F&M’s teams continue to do an excellent job managing our cost of funds, loan pricing, deposit growth and overall net interest margin. Since the quarter ended December 31, 2023, our yield on earning assets has increased by 34 basis points, compared to a 19 basis point increase in our cost of interest bearing liabilities – representing the third consecutive quarter our yield on earning assets has outpaced our cost of interest bearing liabilities. We expect this trend will continue as more of our loan portfolio reprices in 2024,” continued Mr. Eller.

Total loans, net at September 30, 2024, increased 0.3%, or by $8.7 million to $2.54 billion, compared to $2.53 billion at September 30, 2023. The year-over-year growth was driven by higher consumer real estate, commercial and industrial, and agricultural loans, partially offset by lower commercial real estate, agricultural real estate, and consumer loans.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $2.9 million, or 0.11% of total loans at September 30, 2024, compared to $22.4 million, or 0.89% of total loans at September 30, 2023, and $22.4 million, or 0.87% at December 31, 2023.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.3% of the Company’s total loan portfolio at September 30, 2024. In addition, F&M’s commercial real estate office credit exposure represented 5.3% of the Company’s total loan portfolio at September 30, 2024, with a weighted average loan-to-value of approximately 64% and an average loan of approximately $880,000.

F&M’s CRE portfolio included the following categories at September 30, 2024:

CRE Category	Dollar Balance		Percent of CRE Portfolio⁽^*)		Percent of Total Loan Portfolio⁽^*)

Industrial	$	274,953	21.1	%	10.8	%
Retail	$	237,622	18.2	%	9.4	%
Multi-family	$	223,926	17.2	%	8.8	%
Hotels	$	141,642	10.9	%	5.6	%
Office	$	134,973	10.4	%	5.3	%
Gas Stations	$	62,028	4.8	%	2.5	%
Food Service	$	46,526	3.6	%	1.8	%
Development	$	30,999	2.4	%	1.2	%
Senior Living	$	29,866	2.3	%	1.2	%
Auto Dealers	$	25,068	1.9	%	1.0	%
Other	$	93,557	7.2	%	3.7	%
Total CRE	$	1,301,160	100.0	%	51.3	%

* Numbers have been rounded

At September 30, 2024, the Company’s allowance for credit losses to nonperforming loans was 879.37%, compared to 112.61% at September 30, 2023, and 111.95% at December 31, 2023. The allowance to total loans was 1.01% at September 30, 2024, compared to 1.00% at September 30, 2023. Including accretable yield adjustments, associated with the Company’s recent acquisitions, F&M’s allowance for credit losses to total loans was 1.10% at September 30, 2024, compared to 1.18% at September 30, 2023.

Mr. Eller concluded, “With two months remaining in 2024, I am encouraged by F&M’s strong financial and operating performance to date. F&M ended the quarter with record stockholders’ equity, historically strong asset quality, record deposits, and excellent liquidity levels with over $635 million in contingent funding sources, and a cash-to-assets ratio of 7.2%. We remain focused on continual improvements, managing the items under our control, and providing our customers and communities with outstanding, and local financial services. As a result, F&M’s financial and operating performance continues to strengthen and I believe the Company is well positioned to create lasting value for our communities, customers, team members, and shareholders.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 10.6% to $335.4 million, or $24.48 per share at September 30, 2024, from $303.2 million, or $22.19 per share at September 30, 2023. The Company’s Tier 1 leverage ratio of 8.04%, remained stable compared to September 30, 2023.

Tangible stockholders’ equity increased to $242.8 million at September 30, 2024, compared to $208.8 million at September 30, 2023. On a per share basis, tangible stockholders’ equity at September 30, 2024, was $17.72 per share, compared to $15.28 per share at September 30, 2023.

For the nine months ended September 30, 2024, the Company has declared cash dividends of $0.66125 per share, which is a 5.0% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 30 consecutive years. For the nine months ended September 30, 2024, the dividend payout ratio was 50.99% compared to 49.50% for the same period last year.

About Farmers & Merchants State Bank:
Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) is the holding company of F&M Bank, a local independent community bank that has been serving its communities since 1897. F&M Bank provides commercial banking, retail banking and other financial services. Our locations are in Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties. The Michigan footprint includes Oakland County, and we have Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Perrysburg and Bryan, Ohio.

Safe Harbor Statement
Farmers & Merchants Bancorp, Inc. (“F&M”) wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management’s expectations and comments, may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M’s SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC’s website, www.sec.gov or through F&M’s website www.fm.bank.

Non-GAAP Financial Measures
This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is included within this press release.


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (Unaudited) (in thousands of dollars, except per share data)

	Three Months Ended														Nine Months Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023		September 30, 2023			September 30, 2024			September 30, 2023
Interest Income
Loans, including fees	$	36,873		$	36,593		$	35,200		$	34,493	$	33,783		$	108,666		$	94,851
Debt securities:
U.S. Treasury and government agencies		1,467			1,148			1,045			987		1,005			3,660			3,103
Municipalities		387			389			394			397		392			1,170			1,201
Dividends		334			327			333			365		246			994			517
Federal funds sold		7			7			7			8		6			21			36
Other		2,833			2,702			1,675			2,020		927			7,210			1,830
Total interest income		41,901			41,166			38,654			38,270		36,359			121,721			101,538
Interest Expense
Deposits		16,947			16,488			15,279			15,015		13,323			48,714			31,908
Federal funds purchased and securities sold under agreements to repurchase		277			276			284			293		349			837			1,181
Borrowed funds		2,804			2,742			2,689			2,742		2,741			8,235			6,134
Subordinated notes		284			285			284			285		284			853			853
Total interest expense		20,312			19,791			18,536			18,335		16,697			58,639			40,076
Net Interest Income – Before Provision for Credit Losses		21,589			21,375			20,118			19,935		19,662			63,082			61,462
Provision for Credit Losses – Loans		282			605			(289	)		278		460			598			1,420
Provision for Credit Losses – Off Balance Sheet Credit Exposures		(267	)		(18	)		(266	)		189		(76	)		(551	)		(143	)
Net Interest Income After Provision for Credit Losses		21,574			20,788			20,673			19,468		19,278			63,035			60,185
Noninterest Income
Customer service fees		300			189			598			415		248			1,087			917
Other service charges and fees		1,155			1,085			1,057			1,090		1,133			3,297			3,253
Interchange income		1,315			1,330			1,429			1,310		1,266			4,074			4,008
Loan servicing income		710			513			539			666		502			1,762			3,739
Net gain on sale of loans		215			314			107			230		294			636			469
Increase in cash surrender value of bank owned life insurance		265			236			216			216		221			717			618
Net loss on sale of available-for-sale securities		–			–			–			–		–			–			(891	)
Total noninterest income		3,960			3,667			3,946			3,927		3,664			11,573			12,113
Noninterest Expense
Salaries and wages		7,713			7,589			7,846			6,981		6,777			23,148			19,934
Employee benefits		2,112			2,112			2,171			1,218		2,066			6,395			6,302
Net occupancy expense		1,054			999			1,027			1,187		950			3,080			2,646
Furniture and equipment		1,472			1,407			1,353			1,370		1,189			4,232			3,652
Data processing		339			448			500			785		840			1,287			2,362
Franchise taxes		410			265			555			308		434			1,230			1,179
ATM expense		472			397			473			665		640			1,342			1,946
Advertising		597			519			530			397		865			1,646			2,209
Net (gain) loss on sale of other assets owned		–			(49	)		–			86		49			(49	)		49
FDIC assessment		516			507			580			594		586			1,603			1,388
Servicing rights amortization – net		219			187			168			182		106			574			429
Loan expense		244			251			229			246		241			724			809
Consulting fees		251			198			186			192		179			635			640
Professional fees		453			527			445			331		358			1,425			1,099
Intangible asset amortization		445			444			445			446		445			1,334			1,334
Other general and administrative		1,128			1,495			1,333			1,532		1,319			3,956			4,841
Total noninterest expense		17,425			17,296			17,841			16,520		17,044			52,562			50,819
Income Before Income Taxes		8,109			7,159			6,778			6,875		5,898			22,046			21,479
Income Taxes		1,593			1,477			1,419			1,332		1,121			4,489			4,235
Net Income		6,516			5,682			5,359			5,543		4,777			17,557			17,244
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities		11,664			2,531			(1,995	)		13,261		(4,514	)		12,200			(2,480	)
Reclassification adjustment for realized loss on sale of available-for-sale securities		–			–			–			–		–			–			891
Net unrealized gain (loss) on available-for-sale securities		11,664			2,531			(1,995	)		13,261		(4,514	)		12,200			(1,589	)
Tax expense (benefit)		2,449			531			(418	)		2,784		(947	)		2,562			(333	)
Other comprehensive income (loss)		9,215			2,000			(1,577	)		10,477		(3,567	)		9,638			(1,256	)
Comprehensive Income	$	15,731		$	7,682		$	3,782		$	16,020	$	1,210		$	27,195		$	15,988
Basic Earnings Per Share	$	0.48		$	0.42		$	0.39		$	0.41	$	0.35		$	1.28		$	1.26
Diluted Earnings Per Share	$	0.48		$	0.42		$	0.39		$	0.41	$	0.35		$	1.28		$	1.26
Dividends Declared	$	0.22125		$	0.22		$	0.22		$	0.22	$	0.21		$	0.66125		$	0.63

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars, except per share data)

		September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
		(Unaudited)			(Unaudited)			(Unaudited)						(Unaudited)
Assets
Cash and due from banks		$	244,572		$	191,785		$	186,541		$	140,917		$	151,711
Federal funds sold			932			1,283			1,241			1,284			1,471
	Total cash and cash equivalents		245,504			193,068			187,782			142,201			153,182

Interest-bearing time deposits			2,727			3,221			2,735			2,740			2,989
Securities – available-for-sale			404,881			365,209			347,516			358,478			348,255
Other securities, at cost			15,028			14,721			14,744			17,138			16,995
Loans held for sale			1,706			1,628			2,410			1,576			1,039
Loans, net of allowance for credit losses of $25,484 9/30/24 and $25,024 12/31/23			2,512,852			2,534,468			2,516,687			2,556,167			2,504,329
Premises and equipment			33,779			34,507			35,007			35,790			31,723
Construction in progress			35			38			9			8			3,044
Goodwill			86,358			86,358			86,358			86,358			86,358
Loan servicing rights			5,644			5,504			5,555			5,648			5,687
Bank owned life insurance			34,624			34,359			34,123			33,907			33,691
Other assets			46,047			49,552			54,628			43,218			47,388

Total Assets		$	3,389,185		$	3,322,633		$	3,287,554		$	3,283,229		$	3,234,680

	Liabilities and Stockholders’ Equity
Liabilities
Deposits
	Noninterest-bearing	$	481,444		$	479,069		$	510,731		$	528,465		$	505,358
	Interest-bearing
	NOW accounts		865,617			821,145			829,236			816,790			778,133
	Savings		661,565			673,284			635,430			599,191			591,344
	Time		676,187			667,592			645,985			663,017			700,445
	Total deposits		2,684,813			2,641,090			2,621,382			2,607,463			2,575,280

Federal funds purchased and securities sold under agreements to repurchase			27,292			27,218			28,218			28,218			30,527
Federal Home Loan Bank (FHLB) advances			263,081			266,102			256,628			265,750			266,286
Subordinated notes, net of unamortized issuance costs			34,789			34,759			34,731			34,702			34,673
Dividend payable			2,998			2,975			2,975			2,974			2,838
Accrued expenses and other liabilities			40,832			27,825			25,930			27,579			21,892
	Total liabilities		3,053,805			2,999,969			2,969,864			2,966,686			2,931,496

Commitments and Contingencies

Stockholders’ Equity
Common stock – No par value 20,000,000 shares authorized; issued
14,564,425 shares 9/30/24 and 12/31/23; outstanding 13,702,593			135,193			135,829			135,482			135,515			135,171
shares 9/30/24 and 13,664,641 shares 12/31/23
Treasury stock – 861,832 shares 9/30/24 and 899,784 shares 12/31/23			(10,904	)		(11,006	)		(10,851	)		(11,040	)		(11,008	)
Retained earnings			230,465			226,430			223,648			221,080			218,510
Accumulated other comprehensive loss			(19,374	)		(28,589	)		(30,589	)		(29,012	)		(39,489	)
	Total stockholders’ equity		335,380			322,664			317,690			316,543			303,184

Total Liabilities and Stockholders’ Equity		$	3,389,185		$	3,322,633		$	3,287,554		$	3,283,229		$	3,234,680

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES SELECT FINANCIAL DATA

	For the Three Months Ended															For the Nine Months Ended
Selected financial data	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			September 30, 2024			September 30, 2023
Return on average assets		0.78	%		0.69	%		0.66	%		0.67	%		0.59	%		0.71	%		0.73	%
Return on average equity		7.93	%		7.13	%		6.76	%		7.27	%		6.26	%		7.28	%		7.52	%
Yield on earning assets		5.27	%		5.22	%		5.00	%		4.93	%		4.79	%		5.17	%		4.57	%
Cost of interest bearing liabilities		3.21	%		3.18	%		3.06	%		3.02	%		2.82	%		3.16	%		2.35	%
Net interest spread		2.06	%		2.04	%		1.94	%		1.91	%		1.97	%		2.01	%		2.22	%
Net interest margin		2.71	%		2.71	%		2.60	%		2.57	%		2.59	%		2.68	%		2.77	%
Efficiency		67.98	%		69.03	%		74.08	%		69.23	%		73.07	%		70.36	%		68.24	%
Dividend payout ratio		45.99	%		52.35	%		55.52	%		54.23	%		60.07	%		50.99	%		49.50	%
Tangible book value per share	$	17.72		$	16.79		$	16.39		$	16.29		$	15.28
Tier 1 leverage ratio		8.04	%		8.02	%		8.40	%		8.20	%		8.02	%
Average shares outstanding		13,687,119			13,681,501			13,671,166			13,665,773			13,650,823			13,679,955			13,633,101

Loans	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
(Dollar amounts in thousands)
Commercial real estate	$	1,301,160		$	1,303,598		$	1,304,400		$	1,337,766		$	1,304,118
Agricultural real estate		220,328			222,558			227,455			223,791			225,672
Consumer real estate		524,055			525,902			525,178			521,895			512,973
Commercial and industrial		260,732			268,426			256,051			254,935			250,891
Agricultural		137,252			142,909			127,670			132,560			123,735
Consumer		67,394			70,918			74,819			79,591			83,024
Other		25,916			26,449			26,776			30,136			31,083
Less: Net deferred loan fees, costs and other ⁽¹⁾		1,499			(1,022	)		(982	)		517			(1,890	)
Total loans, net	$	2,538,336		$	2,559,738		$	2,541,367		$	2,581,191		$	2,529,606


Asset quality data	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
(Dollar amounts in thousands)
Nonaccrual loans	$	2,898		$	2,487		$	19,391		$	22,353		$	22,447
90 day past due and accruing	$	–		$	–		$	–		$	–		$	–
Nonperforming loans	$	2,898		$	2,487		$	19,391		$	22,353		$	22,447
Other real estate owned	$	–		$	–		$	–		$	–		$	–
Nonperforming assets	$	2,898		$	2,487		$	19,391		$	22,353		$	22,447


Allowance for credit losses	$	25,484		$	25,270		$	24,680		$	25,024		$	25,277
Allowance for unfunded		1,661			1,928			1,946			2,212			2,023
Total Allowance for Credit Losses	$	27,145		$	27,198		$	26,626		$	27,236		$	27,300
Allowance for credit losses/total loans		1.01	%		0.99	%		0.97	%		0.97	%		1.00	%
Adjusted credit losses with accretable yield/total loans		1.10	%		1.10	%		1.11	%		1.13	%		1.18	%
Net charge-offs:
Quarter-to-date	$	68		$	15		$	55		$	531		$	93
Year-to-date	$	138		$	70		$	55		$	551		$	20
Net charge-offs to average loans
Quarter-to-date		0.00	%		0.00	%		0.00	%		0.02	%		0.00	%
Year-to-date		0.01	%		0.00	%		0.00	%		0.02	%		0.00	%
Nonperforming loans/total loans		0.11	%		0.10	%		0.76	%		0.87	%		0.89	%
Allowance for credit losses/nonperforming loans		879.37	%		1016.08	%		127.28	%		111.95	%		112.61	%
NPA coverage ratio		879.37	%		1016.08	%		127.28	%		111.95	%		112.61	%

⁽¹⁾ Includes carrying value adjustments of $3.0 million as of September 30, 2024, $612 thousand as of June 30, 2024, $969 thousand as of March 31, 2024 and $2.7 million as of December 31, 2023 related to interest rate swaps associated with fixed rate loans


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES (in thousands of dollars, except percentages)

	For the Three Months Ended						For the Three Months Ended
	September 30, 2024						September 30, 2023
Interest Earning Assets:	Average Balance		Interest/Dividends		Annualized Yield/Rate		Average Balance		Interest/Dividends		Annualized Yield/Rate
Loans	$	2,551,899	$	36,873	5.78	%	$	2,536,885	$	33,783	5.33	%
Taxable investment securities		415,943		2,107	2.03	%		393,910		1,559	1.58	%
Tax-exempt investment securities		19,661		81	2.09	%		23,986		84	1.77	%
Fed funds sold & other		197,258		2,840	5.76	%		85,515		933	4.36	%
Total Interest Earning Assets		3,184,761	$	41,901	5.27	%		3,040,296	$	36,359	4.79	%

Nonearning Assets		168,055						180,193

Total Assets	$	3,352,816					$	3,220,489

Interest Bearing Liabilities:
Savings deposits	$	1,538,387	$	10,691	2.78	%	$	1,367,168	$	7,673	2.24	%
Other time deposits		667,224		6,256	3.75	%		667,880		5,650	3.38	%
Other borrowed money		264,539		2,804	4.24	%		266,467		2,741	4.11	%
Fed funds purchased & securities sold under agreement to repurchase		27,481		277	4.03	%		34,128		349	4.09	%
Subordinated notes		34,769		284	3.27	%		34,654		284	3.28	%
Total Interest Bearing Liabilities	$	2,532,400	$	20,312	3.21	%	$	2,370,297	$	16,697	2.82	%

Noninterest Bearing Liabilities		491,851						544,801

Stockholders’ Equity	$	328,565					$	305,391

Net Interest Income and Interest Rate Spread			$	21,589	2.06	%			$	19,662	1.97	%

Net Interest Margin					2.71	%					2.59	%

Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts


	For the Nine Months Ended						For the Nine Months Ended
	September 30, 2024						September 30, 2023
Interest Earning Assets:	Average Balance		Interest/Dividends		Annualized Yield/Rate		Average Balance		Interest/Dividends		Annualized Yield/Rate
Loans	$	2,561,774	$	108,666	5.66	%	$	2,470,770	$	94,851	5.12	%
Taxable investment securities		397,466		5,575	1.87	%		396,917		4,544	1.53	%
Tax-exempt investment securities		20,684		249	2.03	%		24,865		277	1.88	%
Fed funds sold & other		165,227		7,231	5.84	%		67,869		1,866	3.67	%
Total Interest Earning Assets		3,145,151	$	121,721	5.17	%		2,960,421	$	101,538	4.57	%

Nonearning Assets		161,113						176,568

Total Assets	$	3,306,264					$	3,136,989

Interest Bearing Liabilities:
Savings deposits	$	1,487,809	$	30,291	2.71	%	$	1,373,110	$	18,854	1.83	%
Other time deposits		662,129		18,423	3.71	%		620,071		13,054	2.81	%
Other borrowed money		264,310		8,235	4.15	%		204,927		6,134	3.99	%
Fed funds purchased & securities sold under agreement to repurchase		27,887		837	4.00	%		37,649		1,181	4.18	%
Subordinated notes		34,741		853	3.27	%		34,625		853	3.28	%
Total Interest Bearing Liabilities	$	2,476,876	$	58,639	3.16	%	$	2,270,382	$	40,076	2.35	%

Noninterest Bearing Liabilities		507,843						561,001

Stockholders’ Equity	$	321,545					$	305,606

Net Interest Income and Interest Rate Spread			$	63,082	2.01	%			$	61,462	2.22	%

Net Interest Margin					2.68	%					2.77	%

Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES (in thousands of dollars, except percentages)

	For the Three Months Ended September 30, 2024													For the Three Months Ended September 30, 2023
	As Reported				Excluding Acc/Amort				Difference					As Reported				Excluding Acc/Amort				Difference
	$		Yield		$		Yield		$			Yield		$		Yield		$		Yield		$			Yield
Interest Earning Assets:
Loans	$	36,873	5.78	%	$	36,149	5.67	%	$	724		0.11	%	$	33,783	5.33	%	$	32,631	5.15	%	$	1,152		0.18	%
Taxable investment securities		2,107	2.03	%		2,107	2.03	%		–		0.00	%		1,559	1.58	%		1,559	1.58	%		–		0.00	%
Tax-exempt investment securities		81	2.09	%		81	2.09	%		–		0.00	%		84	1.77	%		84	1.77	%		–		0.00	%
Fed funds sold & other		2,840	5.76	%		2,840	5.76	%		–		0.00	%		933	4.36	%		933	4.36	%		–		0.00	%
Total Interest Earning Assets		41,901	5.27	%		41,177	5.17	%		724		0.10	%		36,359	4.79	%		35,207	4.64	%		1,152		0.15	%

Interest Bearing Liabilities:
Savings deposits	$	10,691	2.78	%	$	10,691	2.78	%	$	–		0.00	%	$	7,673	2.24	%	$	7,673	2.24	%	$	–		0.00	%
Other time deposits		6,256	3.75	%		6,256	3.75	%		–		0.00	%		5,650	3.38	%		5,500	3.29	%		150		0.09	%
Other borrowed money		2,804	4.24	%		2,800	4.23	%		4		0.01	%		2,741	4.11	%		2,759	4.14	%		(18	)	-0.03	%
Federal funds purchased and securities sold under agreement to repurchase		277	4.03	%		277	4.03	%		–		0.00	%		349	4.09	%		349	4.09	%		–		0.00	%
Subordinated notes		284	3.27	%		284	3.27	%		–		0.00	%		284	3.28	%		284	3.28	%		–		0.00	%
Total Interest Bearing Liabilities		20,312	3.21	%		20,308	3.21	%		4		0.00	%		16,697	2.82	%		16,565	2.80	%		132		0.02	%

Interest/Dividend income/yield		41,901	5.27	%		41,177	5.17	%		724		0.10	%		36,359	4.79	%		35,207	4.64	%		1,152		0.15	%
Interest Expense / yield		20,312	3.21	%		20,308	3.21	%		4		0.00	%		16,697	2.82	%		16,565	2.80	%		132		0.02	%
Net Interest Spread		21,589	2.06	%		20,869	1.96	%		720		0.10	%		19,662	1.97	%		18,642	1.84	%		1,020		0.13	%
Net Interest Margin			2.71	%			2.62	%				0.09	%			2.59	%			2.46	%				0.13	%


	For the Nine Months Ended September 30, 2024													For the Nine Months Ended September 30, 2023
	As Reported				Excluding Acc/Amort				Difference					As Reported				Excluding Acc/Amort				Difference
	$		Yield		$		Yield		$			Yield		$		Yield		$		Yield		$			Yield
Interest Earning Assets:
Loans	$	108,666	5.66	%	$	106,588	5.55	%	$	2,078		0.11	%	$	94,851	5.12	%	$	92,364	4.99	%	$	2,487		0.13	%
Taxable investment securities		5,575	1.87	%		5,575	1.87	%		–		0.00	%		4,544	1.53	%		4,544	1.53	%		–		0.00	%
Tax-exempt investment securities		249	2.03	%		249	2.03	%		–		0.00	%		277	1.88	%		277	1.88	%		–		0.00	%
Fed funds sold & other		7,231	5.84	%		7,231	5.84	%		–		0.00	%		1,866	3.67	%		1,866	3.67	%		–		0.00	%
Total Interest Earning Assets		121,721	5.17	%		119,643	5.08	%		2,078		0.09	%		101,538	4.57	%		99,051	4.47	%		2,487		0.10	%

Interest Bearing Liabilities:
Savings deposits	$	30,291	2.71	%	$	30,291	2.71	%	$	–		0.00	%	$	18,854	1.83	%	$	18,854	1.83	%	$	–		0.00	%
Other time deposits		18,423	3.71	%		18,423	3.71	%		–		0.00	%		13,054	2.81	%		13,458	2.89	%		(404	)	-0.08	%
Other borrowed money		8,235	4.15	%		8,254	4.16	%		(19	)	-0.01	%		6,134	3.99	%		6,187	4.03	%		(53	)	-0.04	%
Federal funds purchased and securities sold under agreement to repurchase		837	4.00	%		837	4.00	%		–		0.00	%		1,181	4.18	%		1,181	4.18	%		–		0.00	%
Subordinated notes		853	3.27	%		853	3.27	%		–		0.00	%		853	3.28	%		853	3.28	%		–		0.00	%
Total Interest Bearing Liabilities		58,639	3.16	%		58,658	3.16	%		(19	)	0.00	%		40,076	2.35	%		40,533	2.38	%		(457	)	-0.03	%

Interest/Dividend income/yield		121,721	5.17	%		119,643	5.08	%		2,078		0.09	%		101,538	4.57	%		99,051	4.47	%		2,487		0.10	%
Interest Expense / yield		58,639	3.16	%		58,658	3.16	%		(19	)	0.00	%		40,076	2.35	%		40,533	2.38	%		(457	)	-0.03	%
Net Interest Spread		63,082	2.01	%		60,985	1.92	%		2,097		0.09	%		61,462	2.22	%		58,518	2.09	%		2,944		0.13	%
Net Interest Margin			2.68	%			2.59	%				0.09	%			2.77	%			2.64	%				0.13	%

Company Contact:	Investor and Media Contact:
Lars B. Eller President and Chief Executive Officer Farmers & Merchants Bancorp, Inc. (419) 446-2501 leller@fm.bank	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

The MIL Network –

January 25, 2025

MIL-OSI: Amundi: Third quarter and nine-month 2024 results

Source: GlobeNewswire (MIL-OSI)

Amundi: Third quarter and nine-month 2024 results

Net income¹^,²up +16% Q3/Q3 and record assets under management at €2.2 trillion

Strong growth in earnings and revenues		Q3 – adjusted net income¹^,² at €337m, fast-growing: +16.1% Q3/Q3 Thanks to revenue growth (+10.5%) and positive jaws effect Q3/Q3 cost/income ratio improvement at 52.9%³ 9 months – adjusted net income¹^,² at €1,005m, up +10.4% 9M/9M Earnings per share²: €1.65 for Q3, €4.91 for 9M

Record AuM & dynamic MLT inflows⁵		Record assets under management³: €2,192bn at 30 September 2024, up +11% year-on-year Q3 net inflows³ of +€2.9bn, or +€14.5bn excluding the exit from a large, low-income institutional mandate⁴ +€9.1bn in MLT assets⁴^,⁵^,⁶ Solid commercial momentum of Asian JVs: +€5.3bn

Continued strategic progress		ETFs⁶: +€8bn in Q3 net inflows, now more than €250bn in assets under management Third-party distribution: +€7bn Q3 net inflows, with contribution from all regions and asset classes Asia: +€7bn in Q3 net inflows, from JVs and direct distribution in Japan, Singapore, Hong Kong, Taiwan and China Technology: revenues +42% Q3/Q3 Victory Capital: approval⁷ of the partnership with Amundi secured at EGM, transaction expected to close in Q1 2025

Paris, 30 October 2024

Amundi’s Board of Directors met on 29 October 2024 under the chairmanship of Philippe Brassac, and reviewed the financial statements for the third quarter and the first 9 months of 2024.

Valérie Baudson, Chief Executive Officer, said:
« Amundi’s results in the third quarter of 2024 demonstrate our ongoing strategic progress and continued growth potential. Our Q3 net profit¹^,²of €337m, increased by +16% compared to the same period in 2023 and exceeded one billion euros over 9 months. Assets under management reached a record level of €2.2 trillion.

We have been able to support our clients whatever their profile and needs, which has resulted in a high level of net inflows in our strategic development areas, namely Asia, Third-Party Distributors, and ETFs.

By putting clients at the heart of our strategy and by continuing to develop the areas of expertise that primarily seek to meet their needs, we are ideally positioned to seize growth opportunities in the savings industry. »

* * * * *

Further progress in achieving our 2025 Ambitions plan

Q3 2024 saw key areas of focus under the “2025 Strategic Ambitions” plan contribute to activity and earnings growth.

ETFs exceeded €250bn in assets under management at the end of September, up +31% year-on-year, thanks in particular to very dynamic net inflows reaching +€17bn over 9 months, including +€8bn in Q3. This places Amundi in second place in the European market in terms of net inflows this quarter⁸. these inflows are well diversified across equity and fixed income products, with a high share of products classified as responsible investment⁹ in net inflows (+€3bn, or 34% market share in flows in this market segment). Amundi has had many commercial successes this quarter: for example, the Amundi ETF Stoxx Europe 600 is the best-selling (+€0.85bn) European equity ETFs in Q3, the Amundi ETF Euro Government Tilted Green Bond, launched last year, saw its assets under management exceed €3bn after gathering +€1.1bn since the beginning of the year, and the Amundi ETF Prime ACWI exceeded €1bn in assets under management 8 months after its launch.
Third-Party Distribution reached €377bn in assets under management at the end of September, up +24% year-on-year, with net inflows +€19bn for 9 months 2024, and +€7bn in Q3, thanks to contributions from all regions and asset classes, from ETFs, treasury products and active management;
Asia assets under management increased by +17% year-on-year to €458bn; net inflows for 9 months 2024 stood at +€30bn with a significant contribution from Amundi’s Indian JV SBI MF, which now has €278bn in assets, up +19% year-on-year (+€18bn in net inflows); €103bn of total Asian assets under management come from direct distribution excluding JVs (+20% year-on-year), with net inflows for 9 months 2024 standing at +€3bn in Japan, +€2.4bn Singapore, +€1.4bn Hong Kong and also +€1.7bn in China outside the two JVs, mainly with institutional clients;
The Technology & Services offering is also experiencing strong growth, with technology revenues of €54m over 9 months, up +28% compared to the same period in 2023, and even +42% Q3/Q3; the Fund Channel fund distribution platform exceeded €490bn in assets at the end of September 2024; during the quarter it signed a distribution agreement with ING Germany and integrated the fintech AirFund into its ecosystem to digitise access to private markets; Fund Channel was also ranked “Best Distribution Platform” for the third consecutive year by the consulting and research firm Platforum;
In fixed income expertise, Amundi now manages €1,160bn in assets¹⁰ across a wide range of solutions, from treasury products to target maturity funds, offering attractive returns and capital protection; fixed income net inflows stood at +€46bn¹⁰ over 9 months and +€14bn¹⁰ in Q3 thanks to sustained activity in active bond strategies (+€11bn excluding JV) and ETFs (+€2.5bn);
The partnership project with Victory Capital reached an important milestone with shareholder approval of resolutions⁷ necessary to finalise the transactions, expected in Q1 2025. As a reminder, this partnership aims at creating a larger US investment platform, via the contribution of Amundi US to Victory Capital in return for Amundi taking a 26%-stake of the combined entity as well as 15-year distribution agreements, to serve the clients of both companies; Amundi would thus have a greater number of US and global management expertise to offer its clients. The transaction, which involves no disbursement of cash, is expected to bring a low single-digit accretion for Amundi shareholders, with an increase in the contribution of our US operations to the adjusted net income and EPS.

Activity

Market environment

In the third quarter of 2024, equity markets¹¹ increased by +1.1% in average compared to the previous quarter and by +15.6% compared to Q3 2023. The European bond markets¹² also rose, reflecting the shift in monetary policy and the ECB’s decision to cut rates. Year-on-year, our benchmark index¹² increased by +6.3% in Q3 2024 compared to Q3 2023 and by +2.1% compared to Q2 2024. The market effect is therefore positive on the evolution of Amundi’s revenues and net income.

When compared to the 2021 averages used as a reference for the 2025 Ambitions plan, the market effect is only slightly positive.

The European asset management market continues its gradual recovery. Open-ended fund volumes¹³, at +€213bn in the third quarter, continued to be driven by treasury products (+€93bn) and passive management (+€75bn). Nevertheless, the third quarter recorded positive flows in medium- to long-term active management for the second quarter in a row (+€45bn), driven by fixed income strategies (+€69bn).

High level of activity over the quarter in MLT assets⁵, assets under management at a record level of €2.2tn

Activity this quarter continues to be marked, like the rest of the European market, by risk aversion among retail clients. However, Amundi performed well, driven in particular by ETFs, bond solutions, third-party distributors and Asia. Excluding the exceptional exit from a low-income insurance mandate⁴, net inflows were positive in all major medium- to long-term areas of expertise (passive, active, structured products and real assets), in all client segments (Retail, Institutional and JV), and in all major markets (France, Italy, Germany, Asia and the United States).

Amundi’s assets under management at 30 September 2024 increased by +11.1% year-on-year (compared to the end of September 2023) and by +1.6% quarter-on-quarter (compared to the end of June 2024), to €2,192bn, an all-time high.

In the third quarter of 2024, the market and currency effect amounted to +€32.5bn (+€175.9bn over a year) and Amundi generated positive net inflows of +€2.9bn. As announced at the time of the second quarter results publication, this amount includes the exit of a low-income multi-asset mandate⁴ with a European insurer, of €11.6bn.

Adjusted for this exit⁴, net inflows for the quarter were +€14.4bn of which +€9.1bn in MLT Assets⁵. It was positive in active management (+€4.3bn) and ETFs (+€7.8bn), partially offset by outflows from index strategies. Structured products and real and alternative assets also recorded positive net inflows (+€0.8bn), while treasury products were flat (+€0.1bn).

Finally, the JVs¹⁴continued their solid commercial momentum, with net inflows of +€5.3bn, reflecting a positive contribution from India (SBI MF, +€6.0bn) and South Korea (NH-Amundi, +€0.4bn), partially offset this quarter by slight net outflows in China (ABC-CA) despite continued open-ended net inflows.

By Client Segment, Retail recorded net inflows of +€6.3bn, of which +€1.3bn in MLT assets⁵, with contrasting developments according to the sub-segments:

Third-Party Distributors had another very good quarter in terms of total net inflows (+€6.8bn); all regions contributed to these inflows, which were highly diversified across asset classes, with positive contributions from ETFs, treasury products but also active management (+€1.5bn);
Risk aversion has a larger impact on the activity of partner network clients in France (+€1.1bn) and outside France excluding Amundi BOC WM (-€0.9bn), despite the good performance of structured and treasury products as well as bond strategies; Sabadell’s network in Spain continues its sales momentum (+€0.4bn);
In China, Amundi BOC WM posted net outflows this quarter (-€0.7bn), as the maturities of fixed-term funds were not offset by open-ended fund subscriptions.

Excluding the loss of the low-income insurance mandate already mentioned⁴, the Institutional segment recorded very positive inflows in MLT Assets⁵(+€7.8bn), in all sub-segments: Institutional & Sovereigns with +€4.4bn, CA & SG insurance mandates with +€2.4bn thanks to the continued recovery of the traditional life insurance Euro contracts this quarter, Corporates and Employee Savings (+€1.0bn) thanks to net inflows in short-term bond products from corporates. Net outflows in Treasury Products (-€4.9bn) are to a large extent seasonal.

Results

Sustained growth in net income, +16% Q3/Q3 to €337m, and more than €1bn in the 9 months of 2024

Adjusted data²

In the third quarter of 2024, adjusted net income²reached €337m, up +16.1% compared to the third quarter of 2023. Since the second quarter, it includes Alpha Associates, whose acquisition was finalised in early April.

The growth in net income was mainly due to organic revenue growth, amplified by operating efficiency, which led to a positive jaws effect, and by the very strong momentum of Asian JVs. These results were achieved against the backdrop of continued client risk aversion, and inflation.

Adjusted net revenues² reached €862m, up +10.5% compared to the third quarter of 2023.

The sustained growth in net management fees, up +9.2% compared to the third quarter of 2023, to €805m, reflects the good level of activity and the increase in average assets under management excluding JVs (+8.6% over the same period);
Performance fees (€20m) doubled compared to the third quarter of 2023 (€10m), a low basis of comparison; however, they were down compared to the second quarter of 2024 (€50m) due to the lower level of crystallisation¹⁵ in the third quarter than in the second and fourth quarters, as it does every year; however, the performance of Amundi’s management is at a good level, with more than 71% of assets under management ranked in the first or second quartiles according to Morningstar¹⁶ over 1, 3 or 5 years and 257 Amundi funds rated 4 or 5 stars by Morningstar as of 30 September;
Amundi Technology’s revenues, at €20m, continued to grow steadily (+41.8% compared to the third quarter of 2023; +13.0% compared to the second quarter of 2024), confirming the development of this business;
Finally, the Financial and other income² amounted to €17m, down slightly compared to the third quarter of 2023 and previous quarters.

The increase in operating expenses², by +7.4% compared to the third quarter of 2023, to €456m, remains lower than the increase in revenues (+10.5%) over the same period, thus generating a positive jaws effect which reflects the Group’s operational efficiency.

The increase is mainly due to:

the first consolidation of Alpha Associates;
the provision for individual variable remuneration in line with the increase in results;
and finally the acceleration of investments in development initiatives according to the axes of the 2025 Ambitions Plan, particularly in technology.

The Cost income ratio improved to 52.9% in adjusted data² compared to the same quarter last year, and remains in line with the 2025 target and at the best level in the industry.

The Adjusted gross operating income²(EBIT) amounted to €406m, up +14.2% compared to the third quarter of 2023, reflecting double-digit revenue growth amplified by operational efficiency.

Income from equity-accounted companies, which reflects Amundi’s share of the net income of minority JVs in India (SBI MF), China (ABC-CA), South Korea (NH-Amundi) and Morocco (Wafa Gestion), was up +36.5% compared to the third quarter of 2023, to €33m, representing 10% of adjusted net income, reflecting the good level of activity in India and Korea.

Adjusted earnings per share²in the third quarter of 2024 reached €1.65, up +16.0%.

Accounting data in the third quarter of 2024

Accounting Net income Group share amounted to €320m and includes non-cash charges related to acquisitions, in particular the amortisation of intangible assets related to distribution and client contracts (-€24m before tax in the quarter including the corresponding new charges related to Alpha Associates, see details in p. 11), representing a total of -€17m after tax.

Accounting earnings per share in the third quarter of 2024 reached €1.56.

In the first 9 months of 2024, adjusted net income²amounted to €1,005m, up +10.4%, reflecting the same trends as in the third quarter:

Adjusted net revenues² grew by +7.3% compared to the first 9 months of 2023, to €2,573m, reflecting as in the quarter the sustained growth in management fees (+6.6%) and the strong increase in Amundi Technology’s revenues (€54m, +28.2%) and financial and other income² (€67m, +38.2%); performance fees, on the other hand, were down by -2.0% to €88m;
Adjusted operating expenses² are well controlled with an increase of +5.9% compared to the first 9 months of 2023, at €1,356m, resulting in a positive jaws effect;
Adjusted cost income ratio² stands at 52.7%.

Adjusted gross operating income² was €1,217m, up +8,9% compared to the first 9 months of 2023, showing a higher growth rate than revenue growth thanks to operating efficiency.

Income from equity-accounted companies increased by +28.6% compared to the first 9 months of 2023, to €94m.

Adjusted earnings per share²for the first 9 months of 2024 reached €4.91, up +10.1% compared to the first 9 months of 2023.

Accounting data for the first 9 months of 2024

Accounting Net income Group share amounted to €956m and includes non-cash charges related to acquisitions, in particular the amortisation of intangible assets related to distribution and client contracts (-€68m before tax in the 9 months including the corresponding new charges related to Alpha Associates, see details on p. 11), representing a total of -€49m after tax in the first 9 months of 2024.

Accounting earnings per share for the first 9 months of 2024 reached €4.67.

To be noted for the fourth quarter and full-year 2024

Success of the capital increase reserved for employees – The capital increase reserved for employees “We Share Amundi”, announced on 23 September 2024, is expected to be completed tomorrow, 31 October 2024. This operation offered for the seventh consecutive year a subscription of shares at a discount.

It was once again a great success this year: more than 2,000 employees in 15 countries subscribed to this capital increase, for a total amount of €36.3m. This represents nearly two out of three employees in France and more than two out of five worldwide.
This transaction, which is in line with the existing legal authorisations voted by the Shareholders’ Meeting on 12 May 2023, reflects Amundi’s desire to involve its employees not only in the development of the Company but also in the creation of economic value.

The impact of this transaction on earnings per share will be very limited: the number of shares to be created will be 771,628 (i.e. ~0.4% of the share capital before the transaction).
This issue will bring the number of shares making up Amundi’s share capital to 205,419,262 as of 31 October 2024, i.e. a share capital increased to €513,548,155.
Employees will now hold around 1.7% of Amundi’s capital, compared to 1.3% before the transaction. In the fourth quarter of 2024, the Amundi Group will record in its consolidated financial statements a charge relating to the subscription discount of €12.3m before tax.

On the basis of the Finance Bill presented by the French government, an exceptional tax contribution on the profits of large companies would apply to Amundi, whose turnover in France for tax purposes is more than €3bn.

* * * * *

APPENDICES

Adjusted income statement²of the first 9 months of 2024 and 2023

(€m)	9M 2024	9M 2023	% chg. 9M/9M

Net revenue – Adjusted	2,573	2,397	+7.3%
Management fees	2,364	2,217	+6.6%
Performance fees	88	89	-2.0%
Technology	54	42	+28.2%
Net financial & other net income	67	49	+38.2%
Operating expenses – Adjusted	(1,356)	(1,280)	+5.9%
Cost income ratio – Adjusted (%)	52.7%	53.4%	-0.7pp
Gross operating income – Adjusted	1,217,	1,117,	+8.9%
Cost of risk & other	(7)	(5)	+24.5%
Equity-accounted companies	94	73	+28.6%
Income before tax – Adjusted	1,305	1,185	+10.1%
Corporate tax	(302)	(277)	+8.8%
Non-controlling interests	2	3	-25.2%
Net income, Group share – Adjusted	1,005	910	+10.4%
Depreciation of intangible assets after tax	(49)	(44)	+11.6%
Integration costs net of tax	0	0	NS
Net income, Group share	956	866	+10.3%
Earnings per share (€)	4.67	4.25	+10.0%
Earnings per share – Adjusted (€)	4.91	4.46	+10.1%

Adjusted income statement²of the third quarter of 2024

(€m)	Q3 2024	Q3 2023	% chg. Q3/Q3	Q2 2024	% chg. Q3/Q2

Net revenue – Adjusted	862	780	+10.5%	887	-2.9%
Management fees	805	737	+9.2%	794	+1.3%
Performance fees	20	10	+97.3%	50	-58.9%
Technology	20	14	+41.8%	17	+13.0%
Net financial & other net income	17	19	-10.6%	26	-34.0%
Operating expenses – Adjusted	(456)	(424)	+7.4%	(461)	-1.1%
Cost income ratio – Adjusted (%)	52.9%	54.4%	-1.5pp	51.9%	+1.0pp
Gross operating income – Adjusted	406	356	+14.2%	426	-4.8%
Cost of risk & other	(2)	(3)	-36.0%	(5)	-63.4%
Equity-accounted companies	33	24	+36.5%	33	-0.1%
Income before tax – Adjusted	437	377	+15.9%	454	-3.9%
Corporate tax	(101)	(88)	+14.9%	(105)	-3.8%
Non-controlling interests	1	1	-23.5%	0	NS
Net income, Group share – Adjusted	337	290	+16.1%	350	-3.7%
Depreciation of intangible assets after tax	(17)	(15)	+17.9%	(17)	+1.2%
Integration costs net of tax	0	0	NS	0	NS
Net income, Group share	320	276	+16.0%	333	-4.0%
Earnings per share (€)	1.56	1.35	+15.9%	1.63	-4.0%
Earnings per share – Adjusted (€)	1.65	1.42	+16.0%	1.71	-3.7%

Evolution of assets under management from the end of 2020 to the end of September 2024¹⁷

(€bn)	Assets under management	Net inflows	Market & Forex Effect	Scope effect			Change in AuM vs. previous quarter
As of 31/12/2020	1,729				/	+4.0%
Q1 2021		-12.7	+39.3		/
As of 31/03/2021	1,755				/	+1.5%
Q2 2021		+7.2	+31.4		/
As of 30/06/2021	1,794				/	+2.2%
Q3 2021		+0.2	+17.0		/
As of 30/09/2021	1,811				/	+1.0%
Q4 2021		+65.6	+39.1		+148¹⁸
As of 31/12/2021	2,064				/	+14%
Q1 2022		+3.2	-46.4		/
As of 31/03/2022	2,021				/	-2.1%
Q2 2022		+1.8	-97.75		/
As of 30/06/2022	1,925				/	-4.8%
Q3 2022		-12.9	-16.3		/
As of 30/09/2022	1,895				/	-1.6%
Q4 2022		+15.0	-6.2		/
As of 31/12/2022	1,904				/	+0.5%
Q1 2023		-11.1	+40.9		/
As of 31/03/2023	1,934				/	+1.6%
Q2 2023		+3.7	+23.8		/
As of 31/06/2023	1,961				/	+1.4%
Q3 2023		+13.7	-1.7		/
As of 30/09/2023	1,973				/	+0.6%
Q4 2023		+19.5	+63.8		-20
As of 31/12/2023	2,037				/	+3.2%
Q1 2024		+16.6	+63.0		/
As of 31/03/2024	2,116				/	+3.9%
Q2 2024		+15.5	+16.6		+8
30/06/2024	2,156					+1.9%
Q3 2024		+2.9	+32.5		/
30/09/2024	2,192					+1.6%

Total over one year between September 30, 2023 and September 30, 2024: +11.1%

Net inflows +€54.5bn
Market & exchange rate effects +€175.9bn
Scope effects -€12.2bn
(disposal of Lyxor Inc. in Q4 2023, first consolidation of Alpha Associates in Q2 2024)

Details of assets under management and net inflows by client segments¹⁹

(€bn)	AuM 30.09.2024	AuM 30.09.2023	% change /30.09.2023	Net flows Q3 2024	Net flows Q3 2023	Net flows 9M 2024	Net flows 9M 2023
French networks	138	126	+9.1%	+1.1	+0.9	+0.3	+4.6
International networks	167	156	+7.1%	-1.6	-1.0	-4.4	-3.2
o/w Amundi BOC WM	3	4	-26.9%	-0.7	-0.5	-0.5	-3.3
Third-party distributors	377	305	+23.5%	+6.8	+2.1	+19.2	+4.1
Retail	681	587	+16.1%	+6.3	+2.0	+15.1	+5.6
Institutional & Sovereigns (*)	518	489	+6.0%	-9.3	+17.9	+1.4	+14.4
Corporates	113	97	+16.0%	+2.3	-3.8	-5.8	-7.4
Employee savings plans	92	84	+9.8%	-0.5	-0.9	+2.5	+2.6
CA & SG insurers	428	406	+5.3%	-1.2	-3.9	+0.5	-9.6
Institutional	1,151	1,076	+6.9%	-8.7	+9.3	-1.4	+0.0
JVs	360	310	+16.0%	+5.3	+2.4	+21.3	+0.7
Total	2,192	1,973	+11.1%	+2.9	+13.7	+35.0	+6.3

Details of assets under management and net inflows by asset classes¹⁹

(€bn)	AuM 30.09.2024	AuM 30.09.2023	% change /30.09.2023	Net flows Q3 2024	Net flows Q3 2023	Net flows 9M 2024	Net flows 9M 2023
Equity	527	443	+18.9%	-0.7	+7.0	+0.0	+2.0
Multi-assets	274	274	-0.0%	-15.4	-5.9	-22.3	-17.0
Bonds	732	624	+17.3%	+12.8	+7.7	+36.8	+10.1
Real, alternative & structured assets	114	124	-8.3%	+0.8	-1.1	+1.5	+2.4
MLT ASSETS excl. JVs	1,647	1,465	+12.4%	-2.5	+7.8	+16.1	-2.4
Treasury products excl. JVs	185	198	-6.5%	+0.1	+3.5	-2.4	+8.0
Assets excl. JVs	1,832	1,663	+10.1%	-2.4	+11.3	+13.6	+5.6
JVs	360	310	+16.0%	+5.3	+2.4	+21.3	+0.7
TOTAL	2,192	1,973	+11.1%	+2.9	+13.7	+35.0	+6.3
*o/w MLT assets*	*1,973*	*1,745*	*+13.1%*	*+3.4*	*+11.3*	*+34.9*	*-0.7*
*o/w Treasury products*	*219*	*229*	*-4.2%*	*-0.5*	*+2.5*	*+0.1*	*+7.1*

Details of assets under management and net inflows by management type and asset classes¹⁹

(€bn)	AuM 30.09.2024	AuM 30.09.2023	% change /30.09.2023	Net flows Q3 2024	Net flows Q3 2023	Net flows 9M 2024	Net flows 9M 2023
Active management	1,136	1,022	+11.1%	-7.1	-1.9	+2.2	-15.6
Equity	208	187	+11.4%	-2.3	-1.6	-5.4	-2.5
Multi-assets	263	265	-0.9%	-15.7	-6.3	-23.4	-18.2
Bonds	665	570	+16.6%	+10.8	+6.1	+31.0	+5.1
Structured products	43	35	+22.3%	+0.8	-0.2	+2.7	+2.9
Passive management	397	319	+24.5%	+3.8	+10.8	+12.4	+10.8
ETFs & ETC	251	192	+31.1%	+7.8	+3.6	+17.3	+8.0
Index & Smart Beta	146	127	+14.5%	-4.0	+7.2	-5.0	+2.8
Real & alternative assets	71	89	-20.5%	+0.0	-0.9	-1.2	-0.5
Real assets	67	63	+4.8%	+0.2	-0.3	-0.1	+0.2
Alternative assets	4	25	-83.8%	-0.2	-0.6	-1.1	-0.7
MLT ASSETS excl. JVs	1,647	1,465	+12.4%	-2.5	+7.8	+16.1	-2.4
Treasury products excl. JVs	185	198	-6.5%	+0.1	+3.5	-2.4	+8.0
TOTAL ASSETS excl. JVs	1,832	1,663	+10.1%	-2.4	+11.3	+13.6	+5.6
JVs	360	310	+16.0%	+5.3	+2.4	+21.3	+0.7
TOTAL	2,192	1,973	+11.1%	+2.9	+13.7	+35.0	+6.3

Details of assets under management and net inflows by geographical areas¹⁹

(€bn)	AuM 30.09.2024	AuM 30.09.2023	% change /30.09.2023	Net flows Q3 2024	Net flows Q3 2023	Net flows 9M 2024	Net flows 9M 2023
France	987	903	+9.3%	+2.8	+4.1	+12.8	-1.2
Italy	202	197	+2.7%	-10.8	-1.5	-13.8	-2.2
Europe excl. France & Italy	421	353	+19.2%	+1.9	-0.8	+6.0	+6.0
Asia	458	392	+17.0%	+7.4	+3.4	+29.6	-0.3
Rest of the world	124	129	-4.3%	+1.7	+8.4	+0.4	+4.0
TOTAL	2,192	1,973	+11.1%	+2.9	+13.7	+35.0	+6.3
*TOTAL outside France*	1,204	1,070	+12.5%	+0.1	+9.6	+22.2	+7.5

Methodology Appendix

Accounting & adjusted data

Accounting data – These include the amortization of intangible assets, recorded as other income, and since Q2 2024, other non-cash expenses spread according to the schedule of payments of the earn-out until the end of 2029; these expenses are recognized as deductions from net income, in finance costs.

The aggregate amounts of these items are as follows for the different periods under review:

Q1 2023: -€20m before tax and -€15m after tax
Q2 2023: -€20m before tax and -€15m after tax
Q3 2023: -€20m before tax and -€15m after tax
9M 2023: -€61m before tax and -€44m after tax
2023: -€82m before tax and -€59m after tax
Q1 2024: -€20m before tax and -€15m after tax
Q2 2024: -€24m before tax and -€17m after tax
Q3 2024: -€24m pre-tax and -€17m after tax
9M 2024: -€68m before tax and -€49m after tax

There were no significant integration costs recorded in the third quarter as a result of the acquisition of Alpha Associates

Adjusted data – in order to present an income statement closer to economic reality, the following adjustments are made: restatement of the amortization of distribution contracts with Bawag, UniCredit and Banco Sabadell, intangible assets representing the client contracts of Lyxor and, since the second quarter of 2024, Alpha Associates, as well as other non-cash charges related to the acquisition of Alpha Associates; such depreciation and amortization and non-cash expenses are recorded as a deduction from net revenues.

Acquisition of Alpha Associates

In accordance with IFRS 3, recognition of Amundi’s balance sheet as at 01/04/2024:

goodwill of €290m;
an intangible asset of €50m representing client contracts, depreciable on a straight-line basis until the end of 2030;
a liability representing the conditional earn-out not yet paid, for €160m, including an actuarial discount of -€30m, which will be amortized over 6 years.

In the Group’s income statement, the following is recorded:

amortization of intangible assets for a full-year expense of -€7.6m (-€6.1m after tax)
other non-cash expenses spread according to the schedule of payments of the earn-out until the end of 2029; These expenses are recorded as deductions from net income, as finance costs.

In Q3 2024, the amortization of intangible assets was -€1.9m before tax (-€1.5m after tax) and non-cash expenses were -€1.4m before tax (i.e. -€1.1m after tax). Over the first 9 months of 2024, these expenses are respectively -€3.8m and -€2.9m (-€6.6m in total), since they only started in Q2.

Alternative Performance Measures²⁰

In order to present an income statement that is closer to economic reality, Amundi publishes adjusted data that excludes the depreciation of intangible assets and, since the second quarter of 2024, Alpha Associates, as well as other non-cash charges related to the acquisition of Alpha Associates.
Adjusted, normalized data are reconciled with accounting data as follows:

= accounting data

= adjusted data

(m€)	9M 2024	9M 2023	Q3 2024	Q3 2023	Q2 2024

Net operating income	2,452	2,307	825	747	844
Technology	54	42	20	14	17
Net financial income and other income	(1)	(13)	(6)	(1)	3
Adjusted net financial income and other income	67	49	17	19	26

Net revenues (a)	2,505	2,336	838	760,	864,
– Depreciation of intangible assets before tax	(65)	(61)	(22)	(20)	(22)
– other non-cash charges relating to Alpha Associates	(3)	0	(1)	0	(1)
Net revenues – Adjusted (b)	2,573	2,397	862,	780,	887

Operating expenses (c)	(1,356)	(1,280)	(456)	(424)	(461)
– Integration costs before tax	0	0	0	0	0
Operating expenses – Adjusted (d)	(1,356)	(1,280)	(456)	(424)	(461)

Gross operating income (e) = (a) + (c)	1,149	1,056	382	335	403
Gross operating income – Adjusted (f) = (b) + (d)	1,217	1,117	406	356	426
Cost-income ratio (%) -(c)/(a)	54.1%	54.8%	54.4%	55.9%	53.4%
Cost-income ratio – Adjusted (%) -(d)/(b)	52.7%	53.4%	52.9%	54.4%	51.9%
Cost of risk & other (g)	(7)	(5)	(2)	(3)	(5)
Equity-accounted companies (h)	94	73	33	24	33
Income before tax (i) = (e) + (g) + (h)	1,237	1,124	413	356	431
Income before tax – Adjusted (j) = (f) + (g) + (h)	1,305	1,185	437	377	454
Income tax (k)	(283)	(260)	(94)	(82)	(98)
Income tax – Adjusted (l)	(302)	(277)	(101)	(88)	(105)
Non-controlling interests (m)	2	3	1	1	0
Net income, Group share (o) = (i)+(k)+(m)	956	866	320	276	333
Net income, Group share – Adjusted (p) = (j)+(l)+(m)	1,005	910	337	290	350

Earnings per share (€)	4.67	4.25	1.56	1.35	1.63
Adjusted earnings per share (€)	4.91	4.46	1.65	1.42	1.71

Shareholding

	30 September 2023		31 December 2023		30 September 2024
(units)	Number of shares	% of share capital	Number of shares	% of share capital	Number of shares	% of share capital
Crédit Agricole Group	141,057,399	68.93%	141,057,399	68.93%	141,057,399	68.93%
Employees	3,042,292	1.49%	2,918,391	1.43%	2,751,891	1.34%
Treasury shares	1,297,231	0.63%	1,247,998	0.61%	958,031	0.47%
Free float	59,250,712	28.95%	59,423,846	29.04%	59,880,313	29.26%

Number of shares at end of period	204,647,634	100.0%	204,647,634	100.0%	204,647,634	100.0%
Average number of shares year-to-date	204,050,516	–	204,201,023	–	204,647,634	–
Average number of shares quarter-to-date	204,425,079	–	204,647,634	–	204,647,634	–

Average number of shares on a pro rata basis.

The average number of shares is unchanged between Q2 and Q3 2024, it increased by +0.1% between Q3 2023 and Q3 2024 and by +0.3% between the first 9 months of 2023 and the same period of 2024;
A capital increase reserved for employees will be carried out on October 31, 2024. 771,628 shares were created (approximately 0.4% of the share capital before the transaction), bringing the share of employees to about 1.7% of the capital, compared to 1.34% at September 30, 2024, before the transaction.

Financial communication calendar

Q4 and Full Year 2024 Results: February 4, 2025
Q1 2025 earnings release: April 29, 2025
Annual General Meeting: May 27, 2025
Q2 and H1 2025 earnings release: July 29, 2025
Q3 and 9-month 2025 results: October 28, 2025

About Amundi

Amundi, the leading European asset manager, ranking among the top 10 global players²¹, offers its 100 million clients – retail, institutional and corporate – a complete range of savings and investment solutions in active and passive management, in traditional or real assets. This offering is enhanced with IT tools and services to cover the entire savings value chain. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages close to €2.2 trillion of assets²².

With its six international investment hubs²³, financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.

Amundi clients benefit from the expertise and advice of 5,500 employees in 35 countries.

Amundi, a trusted partner, working every day in the interest of its clients and society.

www.amundi.com

Press contacts:
Natacha Andermahr
Tel. +33 1 76 37 86 05
natacha.andermahr@amundi.com

Corentin Henry
Tel. +33 1 76 36 26 96
corentin.henry@amundi.com

Investor contacts:
Cyril Meilland, CFA
Tel. +33 1 76 32 62 67
cyril.meilland@amundi.com

Thomas Lapeyre
Tel. +33 1 76 33 70 54
thomas.lapeyre@amundi.com

Annabelle Wiriath

Tel. + 33 1 76 32 43 92

annabelle.wiriath@amundi.com

WARNING

This document does not constitute an offer or invitation to sell or purchase, or any solicitation of any offer to purchase or subscribe for, any securities of Amundi in the United States of America or in France. Securities may not be offered, subscribed or sold in the United States of America absent registration under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements thereof. The securities of Amundi have not been and will not be registered under the U.S. Securities Act and Amundi does not intend to make a public offer of its securities in the United States of America or in France.

This document may contain forward looking statements concerning Amundi’s financial position and results. The data provided do not constitute a profit “forecast” or “estimate” as defined in Commission Delegated Regulation (EU) 2019/980.

These forward looking statements include projections and financial estimates based on scenarios that employ a number of economic assumptions in a given competitive and regulatory context, assumptions regarding plans, objectives and expectations in connection with future events, transactions, products and services, and assumptions in terms of future performance and synergies. By their very nature, they are therefore subject to known and unknown risks and uncertainties, which could lead to their non-fulfilment. Consequently, no assurance can be given that these forward looking statement will come to fruition, and Amundi’s actual financial position and results may differ materially from those projected or implied in these forward looking statements. [In particular, conditions to completion of the announced transaction between Amundi and Victory Capital, may not be satisfied and such transaction may not be completed on schedule, or at all; risks relating to the expected benefits or impact of the transaction on Victory Capital’s and Amundi’s respective businesses are contained in their respective public filings.]

Amundi undertakes no obligation to publicly revise or update any forward looking statements provided as at the date of this document. Risks that may affect Amundi’s financial position and results are further detailed in the “Risk Factors” section of our Universal Registration Document filed with the French Autorité des Marchés Financiers. The reader should take all these uncertainties and risks into consideration before forming their own opinion.

The figures presented were prepared in accordance with applicable prudential regulations and IFRS guidelines, as adopted by the European Union and applicable at that date. The financial information set out herein do not constitute a set of financial statements for an interim period as defined by IAS 34 “Interim Financial Reporting” and has not been audited.

Unless otherwise specified, sources for rankings and market positions are internal. The information contained in this document, to the extent that it relates to parties other than Amundi or comes from external sources, has not been verified by a supervisory authority or, more generally, subject to independent verification, and no representation or warranty has been expressed as to, nor should any reliance be placed on, the fairness, accuracy, correctness or completeness of the information or opinions contained herein. Neither Amundi nor its representatives can be held liable for any decision made, negligence or loss that may result from the use of this document or its contents, or anything related to them, or any document or information to which this document may refer.

The sum of values set out in the tables and analyses may differ slightly from the total reported due to rounding.

¹        Net income Group share
²        Adjusted data: excluding amortisation of intangible assets relating to distribution and client contracts as well as other non-cash charges relating to the acquisition of Alpha Associates recorded in net financial income (see note p. 11)
³        Assets under management and flows including assets under advisory, marketed assets and funds of funds, and taking into account 100% of Asian JV’s assets and flows; for Wafa Gestion in Morocco, they are reported in proportion to Amundi’s holding in the capital of the JV
⁴        As announced at the time of the publication of the Q2 results, exit in Q3 from a large low-income mandate (€11.6 billion) with a European insurer, in multi-asset; including this exit, net inflows were positive by +€2.9bn in Q3 and +€35bn over 9 months
⁵        Medium-Long Term Assets
⁶        Excluding JVs
⁷        Extraordinary General Meeting of Shareholders of Victory Capital, held on 11 October 2024
⁸        Source: TrackInsight Q3 2024
⁹        Classified as article 8 or 9 of the SFDR regulation of the European Union
¹⁰        Including JV: €234bn in assets, +€12bn net inflows over 9 months and +€1bn in Q3
¹¹        50% MSCI World + 50% Eurostoxx 600 composite index for equity markets, average values over each period considered
¹²        Bloomberg Euro Aggregate for bond markets, average values over each reporting period
¹³        Source: Morningstar FundFile, ETFGI. European & cross-border open-ended funds (excluding mandates and dedicated funds). Data as of the end of June 2024.
¹⁴        Assets under management and flows including assets under advisory, marketed assets and funds of funds, and taking into account 100% of Asian JV’s assets and flows; for Wafa Gestion in Morocco, they are reported in proportion to Amundi’s holding in the capital of the JV
¹⁵        Anniversary dates of the funds triggering the recognition of these fees
¹⁶        Source: Morningstar Direct, Broadridge FundFile – Open-ended funds and ETFs, global fund scope, September 2024; as a percentage of the assets under management of the funds in question; the number of Amundi open-ended funds rated by Morningstar was 1063 at the end of September 2024. © 2024 Morningstar, all rights reserved
¹⁷        Assets under management and flows including assets under advisory, marketed assets and funds of funds, and taking into account 100% of Asian JV’s assets and flows; for Wafa Gestion in Morocco, they are reported in proportion to Amundi’s holding in the capital of the JV
¹⁸        Lyxor, integrated as of 31/12/2021
¹⁹        Assets under management and flows including assets under advisory, marketed assets and funds of funds, and taking into account 100% of Asian JV’s assets and flows; for Wafa Gestion in Morocco, they are reported in proportion to Amundi’s holding in the capital of the JV; as of 01/01/2024, reclassification of short-term bond strategies (€30 billion in outstandings) as Bonds previously classified as Treasury until that date; Outstanding amounts up to that date have not been reclassified in these tables
²⁰        See also the section 4.3 of the 2023 Universal Registration Document filed with the AMF on April 18, 2024
²¹Source: IPE “Top 500 Asset Managers” published in June 2024, based on assets under management as at 31/12/2023
²²Amundi data at 30/09/2024
²³Boston, Dublin, London, Milan, Paris and Tokyo

Attachment

Amundi PR results Q3&9M 2024

The MIL Network –

January 25, 2025

MIL-OSI: CSW Industrials Reports Record Fiscal 2025 Second Quarter Results

Source: GlobeNewswire (MIL-OSI)

DALLAS, Oct. 30, 2024 (GLOBE NEWSWIRE) — CSW Industrials, Inc. (Nasdaq: CSWI or the “Company”) today reported record results for the fiscal 2025 second quarter period ended September 30, 2024.

Fiscal 2025 Second Quarter Highlights (comparisons to fiscal 2024 second quarter)

Total revenue increased 11.9% to an all-time quarterly high of $227.9 million, driven by organic growth of 6.2% and inorganic growth of 5.7% from the recent acquisitions of Dust Free and PSP Products
Net income attributable to CSWI increased 20.0% to $36.1 million, compared to $30.1 million
Earnings per diluted share (“EPS”) increased 17.1% to $2.26, compared to $1.93
EBITDA grew 14.8% to $60.8 million, including margin expansion of 70 bps to 26.7%
Cash flow from operations increased 49.5% to $66.8 million, compared to $44.7 million
Issued and sold 1.265 million shares of stock at $285 per share in a successful follow-on equity offering, resulting in net proceeds of $347.4 million
Paid down $115.0 million, or all outstanding debt on the revolver following the equity offering, further improving the strength of the balance sheet

Fiscal 2025 First Half Highlights (comparisons to fiscal 2024 first half)

Total revenue increased 11.6% to $454.1 million, of which 7.0%, or $28.3 million was organic growth, and $18.8 million, or 4.6%, was inorganic growth from recent acquisitions
Net income attributable to CSWI increased 23.0% to $74.6 million, as compared to $60.7 million
EPS improved 21.5% to $4.73, compared to $3.90
EBITDA increased 17.4% to $126.1 million, including margin expansion of 140 bps to 27.8%
Cash flow from operations increased 36.4% to $129.5 million, compared to $94.9 million
Invested $32.3 million in acquisitions and $8.6 million in organic capital expenditures, while returning total cash of $15.4 million to shareholders through share repurchases of $8.9 million and dividends of $6.5 million

Comments from the Chairman, President, and Chief Executive Officer

Joseph B. Armes, CSW Industrials’ Chairman, President, and Chief Executive Officer, commented, “I am pleased to announce these outstanding results for the fiscal second quarter of 2025. CSWI’s record revenue for the quarter was driven by organic volume growth, pricing actions, and our strategic acquisitions of Dust Free and PSP Products. The team also achieved all-time record operating cash flow and record fiscal second quarter net income, earnings per diluted share, and EBITDA for the quarter.”

Armes continued, “During the second fiscal quarter 2025, CSWI issued equity to the public for the first time in our history. Strong investor demand, after the public announcement of our follow-on equity offering, allowed the Company to issue a total of 1.265 million shares of common stock proving that our track record of building long-term shareholder value is attractive to both pre-existing and new shareholders, while also being accretive to our earnings due to the full repayment of our debt and investment in interest-bearing accounts. In addition, our disciplined capital allocation philosophy led us to acquire PSP Products in the quarter, adding innovative products within the profitable electrical end market for CSWI. Subsequent to quarter end, the Company announced a mid-year, 14% increase in our quarterly cash dividend, reflecting our strong balance sheet, cash flows, and profitability.”

Fiscal 2025 Second Quarter Consolidated Results

Fiscal second quarter revenue was $227.9 million, a $24.3 million or 11.9% increase over the prior year period. Total revenue growth included $12.7 million of organic growth contributed from all operating segments (6.2% of the total 11.9% growth) due to increased volume and pricing actions, with the remainder contributed by the Dust Free and PSP acquisitions, which are both reported in the Contractor Solutions segment.

Gross profit in the fiscal second quarter was $103.9 million, representing 14.2% growth over $91.0 million in the prior year period. Gross profit margin expanded 90 bps to 45.6%, compared to 44.7% in the prior year period. The gross profit margin increase was primarily a result of volume leverage and pricing actions.

Operating expenses as a percentage of revenue were 23.0% in the current period, which was below the prior year period of 24.0%. Operating expenses were $52.4 million in the current year period, compared to $49.0 million in the prior year period and we were able to leverage our revenue growth while absorbing additional expenses related to the recent acquisitions, spending on business development and integration, and investing in team members.

Operating income in the current period was $51.5 million, compared to $42.0 million in the prior year period. Operating income as a percentage of revenue was 22.6% in fiscal 2025 second quarter, compared to 20.6% in the prior year period. The 200 bps improvement in operating income margin was a result of the previously mentioned improvement in the gross profit margin and leverage on operating expenses.

Interest expense was $1.3 million, compared to interest expense of $3.3 million in the prior year period. The decrease of $2.0 million was a result of a lower debt balance throughout the quarter and paying off the outstanding balance borrowed against our revolver and interest income earned from the net proceeds of the equity offering.

Other expense was $0.7 million, compared to other income of $1.9 million in the prior year period. The change in other expense of $2.6 million was primarily related to a gain of $1.4 million reported in the previous period in connection with the sale of a property previously held for investment that did not recur, in addition to losses arising from transactions in currencies other than functional currencies.

Net income attributable to CSWI (net of non-controlling interest in the joint venture) increased 20.0% to $36.1 million, compared to the prior year period of $30.1 million, and EPS increased 17.1% to $2.26, compared to $1.93 in the prior year period.

Fiscal 2025 second quarter EBITDA increased 14.8% to $60.8 million, up from $53.0 million in the prior year period. EBITDA margin expanded 70 bps to 26.7%, compared to 26.0% in the prior year period.

During the fiscal second quarter 2025, the Company issued equity to the public for the first time. On September 4, 2024, CSWI announced the commencement of an underwritten public offering of one million shares of common stock. The following day, the Company announced the upsize of the public offering to 1.1 million shares of common stock at a price of $285 per share, plus an option for the underwriters to purchase up to an additional 165 thousand shares. In the aggregate, CSWI was able to issue and sell 1.265 million shares of common stock at $285 for proceeds of approximately $347.4 million, net of underwriting discount and expenses incurred directly related to the offering. The follow-on equity offering increased the Company’s weighted average shares outstanding, used in determining the diluted EPS, by 336 thousand for the fiscal 2025 second quarter and 169 thousand for the first half of fiscal 2025.

During the fiscal second quarter, the Company paid down $115.0 million of debt, resulting in no borrowings outstanding under the revolving line of credit at quarter end, utilizing the record quarterly cash flows from operations of $66.8 million and the cash received from our follow-on equity offering. Cash flows from operations benefited from a $16.8 million tax payment deferral from fiscal first half 2025 to fiscal third quarter 2025 under a temporary federal tax relief related to the severe storms and flooding in Texas in early 2024.

Following quarter-end, the Company announced its twenty-third consecutive regular quarterly cash dividend. This dividend was increased by $0.03, or 14.3%, from the prior quarter to $0.24 per share due to our strong balance sheet, cash flows and profitability, and will be paid on November 8, 2024, to shareholders of record on October 25, 2024.

The Company’s effective tax rate for the fiscal second quarter was 26.1%. The third quarter GAAP tax rate may be lower than average, due to a potential $3.6M release of uncertain tax position reserves upon statue expiration of several pre-acquisition tax returns for TRUaire and Falcon.

Fiscal 2025 Second Quarter Segment Results

The Contractor Solutions segment revenue was $158.8 million, an $18.9 million or 13.5% increase over the prior year period, comprised of organic growth of $7.3 million (5.2% of the total 13.5% growth) driven by increased organic unit volumes and pricing actions, and inorganic growth of $11.6 million from the recent acquisitions of Dust Free and PSP Products. As compared to the prior year period, net revenue growth was driven by the HVAC/R, electrical, and plumbing end markets. Segment operating income improved to $46.3 million, compared to $39.0 million in the prior year period. The incremental profit resulted from revenue growth, gross profit leverage, and the inclusion of recently acquired businesses and was partially offset by increased spending on business integrations, strategic development activities, and employee compensation. Segment operating income margin in the fiscal second quarter was 29.1%, compared to 27.9% in the prior year period. Segment EBITDA in the fiscal second quarter was $53.7 million, or 33.8% of revenue, compared to $46.6 million, or 33.3% of revenue in the prior year period.

The Specialized Reliability Solutions segment revenue was $38.5 million, a $1.9 million or 5.2% increase from the prior year period. The increased net revenue was driven by growth in the energy, rail transportation, and mining end markets. Segment operating income improved to $5.8 million, as compared to $4.8 million in the prior year period, an increase of 20.5%. Segment operating income margin in the fiscal second quarter improved to 15.1%, compared to the prior year period of 13.2% as a result of manufacturing efficiencies. Segment EBITDA improved by 13.2% to $7.1 million in the fiscal second quarter, with an EBITDA margin of 18.4% as compared to 17.2% in the prior year period.

The Engineered Building Solutions segment revenue was a record $32.7 million, or 11.9% increase compared to $29.2 million in the prior year period, driven by strength in the backlog converting to revenue and market expansion. Segment operating income was $6.1 million, or 18.6% of revenue, compared to the prior year period of $5.2 million, or 17.9% of revenue, due to the management of operating expenses. Segment EBITDA and EBITDA margin also improved to $6.6 million and 20.1% in the fiscal second quarter, compared to $5.7 million and 19.5% in the prior year period.

Fiscal 2025 First Half Consolidated Results

Fiscal first half revenue was $454.1 million, representing 11.6% growth from $407.0 million in the prior year period, with growth in all three reporting segments. Of the $47.1 million total growth, $28.3 million (7.0% of the 11.6% total growth) resulted from organic growth, with the remainder ($18.8 million) contributed by the Dust Free and PSP acquisitions.

Gross profit in the fiscal first half was $211.3 million, representing $28.2 million (15.4%) growth from $183.1 million in the prior year period, with the incremental profit resulting predominantly from revenue growth driven by increased unit volumes, a slight increase from pricing actions, and recent acquisitions. Gross profit as a percentage of sales was 46.5%, compared to 45.0% in the prior year period. Gross margin improvement was a result of leveraging the volume increase, favorable product mix and pricing actions.

Operating expenses as a percentage of revenue were 23.1%, compared to 23.6% in the prior year period, as the increase in revenue growth outpaced operating expenses. Operating expenses in the current year period were $104.7 million, compared to $95.9 million in the prior year period. The additional expenses were related to employee compensation, expenses related to recent acquisitions including amortization of intangible assets, business development expenses, and integration costs.

In the current period, operating income was $106.6 million, compared to $87.2 million in the prior year period. The incremental operating income resulted from the gross profit increase, partially offset by the operating expense increase as discussed above. Operating income margin in the current period improved to 23.5%, compared to the prior year period of 21.4%. During the comparative periods, the enhanced operating income margin was due to the improvement in gross profit margin combined with the management of operating expenses.

Interest expense was $3.9 million, compared to interest expense of $7.3 million in the prior year period. The decrease of $3.4 million was a result of a lower debt balance throughout the first half of the year, then paying off the outstanding balance borrowed against our revolver and interest income earned from the net proceeds of the equity offering.

Other expense was $0.4 million, compared to other income of $2.2 million in the prior year period. The change in other expense of $2.6 million was primarily related to the aforementioned gain of $1.4 million, in addition to losses arising from transactions in currencies other than functional currencies.

In the current period, reported net income attributable to CSWI improved to $74.6 million, or $4.73 per diluted share. In the prior year period, reported net income attributable to CSWI was $60.7 million, or $3.90 per diluted share.

Fiscal 2025 first half EBITDA increased 17.4% to $126.1 million from $107.4 million in the prior year period. EBITDA as a percentage of revenue improved 140 bps to 27.8%, compared to 26.4%, in the prior year period.

Net cash provided by operating activities for the fiscal 2025 first half was a record $129.5 million, compared to $94.9 million in the prior year’s first half, as improved profit, and the tax payment deferrals led to a 36.4% increase compared to the prior year period. The Company paid down all $166.0 million of debt in the first half utilizing our record cash flow from operations and net proceeds from the follow-on equity offering.

The Company’s effective tax rate for the fiscal first half was 26.2% on a GAAP basis.

Fiscal 2025 First Half Segment Results

Contractor Solutions segment revenue was $319.3 million, a $39.4 million or 14.1% increase from the prior year period. Revenue growth was comprised of inorganic growth from Dust Free and PSP acquisitions ($18.8 million, or 6.7%, of growth), and organic growth of $20.6 million (7.4% of the total 14.1% growth) due to increased unit volumes and a slight increase from pricing actions. As compared to the prior year period, net revenue growth was driven primarily by the HVAC/R, plumbing, and electrical end markets. Segment operating income in the current year period was $96.1 million, compared to $78.7 million in the prior year period. The incremental profit resulted from the increased unit volumes, favorable product mix, and the inclusion of recent acquisitions, partially offset by increased expenses related to employee compensation and business integrations as the segment builds the infrastructure to support continued growth, and increased expenses related to the inclusion of Dust Free and PSP in the current period, including amortization of intangible assets. Segment operating income margin was 30.1%, compared to 28.1% in the prior year period, driven primarily by increased operating leverage from the additional volume, favorable product mix and pricing actions, combined with the management of operating expenses. Segment EBITDA in the current period was $112.0 million, or 35.1% of revenue, compared to $93.4 million, or 33.4% of revenue in the prior year period.

Specialized Reliability Solutions segment revenue grew to $75.3 million, a $1.0 million or 1.3% increase from the prior year period of $74.3 million, primarily due to pricing actions and increased unit volumes, with growth in the rail transportation end market and a decrease in mining. In the current year period, Segment operating income improved by 10.0% to $13.0 million, or 17.2% of revenue, compared to the prior year period of $11.8 million, or 15.9% of revenue. Improved segment operating income resulted primarily as a result of a favorable inventory adjustment in the first quarter as well as the increased volume. Segment EBITDA in the current period was $15.6 million, or 20.7% of revenue, compared to $14.7 million, or 19.8% of revenue in the prior year period.

Engineered Building Solutions segment revenue was $63.6 million, a $6.8 million or 11.9% increase over the prior year period, primarily due to the conversion of backlog into revenue and market expansion. Segment operating income increased 24.4% to $11.8 million, or 18.6% of revenue, compared to the prior year period of $9.5 million, or 16.7% of revenue, due to the increased net revenue, improved gross margin as a result of operating leverage, and management of operating expenses. Segment EBITDA in the current period was $12.8 million, or 20.1% of revenue, compared to $10.4 million, or 18.3% of revenue in the prior year period.

All percentages are calculated based upon the attached financial statements. Share count used in determining the diluted EPS is based on a weighted average of outstanding shares throughout the measurement period.

Conference Call Information

The Company will host a conference call today at 10:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. A live webcast of the call can be accessed at https://cswindustrials.gcs-web.com/. To access the call, participants may dial 1-877-407-0784, international callers may use 1-201-689-8560, and request to join the CSW Industrials earnings call.

A telephonic replay will be available shortly after the conclusion of the call and until Wednesday, November 13, 2024. Participants may access the replay at 1-844-512-2921, international callers may use 1-412-317-6671 and enter access code 13749338. The call will also be available for replay via webcast link on the Investors portion of the CSWI website www.cswindustrials.com.

Safe Harbor Statement

This press release includes 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, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as “may,” “should,” “expects,” “could,” “intends,” “plans,” “anticipates,” “estimates,” “believes,” “forecasts,” “predicts” or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, effective tax rate, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations, and financial performance and condition.

The forward-looking statements included in this press release are based on our current expectations, projections, estimates, and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the risk factors described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

All forward-looking statements included in this press release are based on information currently available to us, and we assume no obligation to update any forward-looking statement except as may be required by law.

Non-GAAP Financial Measures

This press release includes an analysis of adjusted diluted earnings per share attributable to CSWI, adjusted net income attributable to CSWI, adjusted operating income and free cash flows, which are non-GAAP financial measures of performance. Attributable to CSWI is defined to exclude the income attributable to the non-controlling interest in the Whitmore JV.

CSWI utilizes adjusted EBITDA (earnings before interest, tax, depreciation and amortization) as an additional consolidated, non-GAAP financial measure, which consists of consolidated net income including income attributable to the non-controlling interest in the Whitmore JV, adjusted to remove the impact of income taxes, interest expense, depreciation, amortization and impairment, and significant nonrecurring items.

For a reconciliation of these measures to the most directly comparable GAAP measures and for a discussion of why we consider these non-GAAP measures useful, see the “Reconciliation of Non-GAAP Measures” section of this release.

About CSW Industrials, Inc.

CSW Industrials is a diversified industrial growth company with industry-leading operations in three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions. CSWI provides niche, value-added products with two essential commonalities: performance and reliability. The primary end markets we serve with our well-known brands include: HVAC/R, plumbing, electrical, general industrial, architecturally-specified building products, energy, mining, and rail transportation. For more information, please visit www.cswindustrials.com.

Investor Relations

Alexa Huerta
Vice President, Investor Relations and Treasurer
214-489-7113
alexa.huerta@cswindustrials.com

CSW INDUSTRIALS, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months Ended September 30,						Six Months Ended September 30,
(Amounts in thousands, except per share amounts)		2024			2023			2024			2023
Revenues, net	$	227,926		$	203,653		$	454,103		$	407,013
Cost of revenues		(124,025	)		(112,694	)		(242,781	)		(223,887	)
Gross profit		103,901			90,959			211,322			183,126
Selling, general and administrative expenses		(52,352	)		(48,966	)		(104,712	)		(95,927	)
Operating income		51,549			41,993			106,610			87,199
Interest expense, net		(1,341	)		(3,306	)		(3,861	)		(7,315	)
Other income (expense), net		(677	)		1,926			(418	)		2,240
Income before income taxes		49,531			40,613			102,331			82,124
Provision for income taxes		(12,910	)		(10,431	)		(26,859	)		(20,885	)
Net income		36,621			30,182			75,472			61,239
Less: Income attributable to redeemable noncontrolling interest		(570	)		(127	)		(828	)		(572	)
Net income attributable to CSW Industrials, Inc.	$	36,051		$	30,055		$	74,644		$	60,667

Net income per share attributable to CSW Industrials, Inc.
Basic	$	2.27		$	1.93		$	4.75		$	3.91
Diluted		2.26			1.93			4.73			3.90

Weighted average number of shares outstanding:
Basic		15,866			15,544			15,701			15,532
Diluted		15,941			15,588			15,770			15,568

CSW INDUSTRIALS, INC. CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts in thousands, except for per share amounts)	September 30, 2024			March 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	273,220		$	22,156
Accounts receivable, net of allowance for expected credit losses of $1,127 and $908, respectively		135,265			142,665
Inventories, net		183,731			150,749
Prepaid expenses and other current assets		17,281			15,840
Total current assets		609,497			331,410
Property, plant and equipment, net of accumulated depreciation of $109,891 and $103,515, respectively		95,128			92,811
Goodwill		255,899			247,191
Intangible assets, net		333,326			318,819
Other assets		65,446			53,095
Total assets	$	1,359,296		$	1,043,326

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	63,191		$	48,387
Accrued and other current liabilities		96,259			67,449
Total current liabilities		159,450			115,836
Long-term debt		—			166,000
Retirement benefits payable		1,093			1,114
Other long-term liabilities		148,404			125,298
Total liabilities		308,947			408,248
Commitments and contingencies (See Note 13)
Redeemable noncontrolling interest		20,183			19,355
Equity:
Common shares, $0.01 par value		177			164
Additional paid-in capital		494,535			137,253
Treasury shares, at cost (982 and 952 shares, respectively)		(106,636	)		(95,643	)
Retained earnings		651,145			583,075
Accumulated other comprehensive loss		(9,055	)		(9,126	)
Total equity		1,030,166			615,723
Total liabilities, redeemable noncontrolling interest and equity	$	1,359,296		$	1,043,326

CSW INDUSTRIALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	Six Months Ended September 30,
(Amounts in thousands)		2024			2023
Cash flows from operating activities:
Net income	$	75,472		$	61,239
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		7,045			6,613
Amortization of intangible and other assets		13,214			11,730
Provision for inventory reserves		840			2,490
Provision for doubtful accounts		723			227
Share-based compensation		6,891			5,556
Net gain on disposals of property, plant and equipment		(39	)		(1,446	)
Net pension benefit		33			33
Impairment of assets		—			91
Net deferred taxes		1,516			411
Changes in operating assets and liabilities:
Accounts receivable		11,301			(3,917	)
Inventories		(25,282	)		7,739
Prepaid expenses and other current assets		(2,085	)		(5,478	)
Other assets		153			(466	)
Accounts payable and other current liabilities		39,626			8,975
Retirement benefits payable and other liabilities		61			1,139
Net cash provided by operating activities		129,469			94,936
Cash flows from investing activities:
Capital expenditures		(8,587	)		(7,785	)
Proceeds from sale of assets held for investment		—			1,665
Proceeds from sale of assets		43			42
Cash paid for investments		(500	)		—
Cash paid for acquisitions		(32,305	)		(2,623	)
Net cash used in investing activities		(41,349	)		(8,701	)
Cash flows from financing activities:
Borrowings on line of credit		32,723			38,681
Repayments of line of credit and term loan		(198,723	)		(118,681	)
Purchase of treasury shares		(12,287	)		(3,928	)
Proceeds from equity issuance		347,407			—
Dividends		(6,523	)		(5,900	)
Net cash provided by (used in) financing activities		162,597			(89,828	)
Effect of exchange rate changes on cash and equivalents		347			(1,016	)
Net change in cash and cash equivalents		251,064			(4,609	)
Cash and cash equivalents, beginning of period		22,156			18,455
Cash and cash equivalents, end of period	$	273,220		$	13,846

Reconciliation of Non-GAAP Measures

We use adjusted earnings per share attributable to CSWI, adjusted net income attributable to CSWI, adjusted operating income, and adjusted EBITDA, together with financial measures prepared in accordance with GAAP, such as revenue, cost of revenue, operating expense, operating income and net income attributable to CSWI, to assess our historical and prospective operating performance and to enhance our understanding of our core operating performance. Free cash flow is a non-GAAP financial measure and is defined as cash flow from operations less capital expenditures. We also believe these measures are useful for investors to assess the operating performance of our business without the effect of non-recurring items. In the following tables, there could be immaterial differences in amounts presented due to rounding.

CSW Industrials, Inc.
Reconciliation of Net Income Attributable to CSWI to EBITDA
(unaudited)

(Amounts in thousands)	Three months ended September 30,						Six Months ended September 30,
		2024			2023			2024			2023
Net Income attributable to CSWI	$	36,051		$	30,055		$	74,644		$	60,667
Plus: Income attributable to redeemable noncontrolling interest		570			127			828			572
Net Income	$	36,621		$	30,182		$	75,472		$	61,239

Adjusting Items:
Interest expense, net		1,341			3,306			3,861			7,315
Income tax expense		12,909			10,431			26,859			20,886
Depreciation & amortization		9,951			9,045			19,883			17,960
EBITDA	$	60,823		$	52,964		$	126,075		$	107,399
EBITDA % Revenue		26.7	%		26.0	%		27.8	%		26.4	%

CSW Industrials, Inc.
Reconciliation of Segment Operating Income to Segment EBITDA
(unaudited)

(Amounts in thousands)	Three months ended September 30, 2024
	Contractor Solutions			Specialized Reliability Solutions			Engineered Building Solutions			Corporate and Other			Consolidated
Revenue, net	$	158,835		$	38,535		$	32,673		$	(2,115	)	$	227,927

Operating Income	$	46,254		$	5,819		$	6,082		$	(6,606	)	$	51,550
% Revenue		29.1	%		15.1	%		18.6	%					22.6	%

Adjusting Items:
Other income (expense), net		(543	)		(121	)		(12	)		(2	)		(678	)
Depreciation & amortization		8,002			1,409			494			45			9,951
EBITDA	$	53,713		$	7,108		$	6,564		$	(6,562	)	$	60,823
% Revenue		33.8	%		18.4	%		20.1	%					26.7	%

(Amounts in thousands)	Three months ended September 30, 2023
	Contractor Solutions			Specialized Reliability Solutions			Engineered Building Solutions			Corporate and Other			Consolidated
Revenue, net	$	139,902		$	36,614		$	29,211		$	(2,075	)	$	203,653

Operating Income	$	39,025		$	4,829		$	5,233		$	(7,095	)	$	41,993
% Revenue		27.9	%		13.2	%		17.9	%					20.6	%

Adjusting Items:
Other income (expense), net		575			(54	)		3			1,402			1,926
Depreciation & amortization		7,045			1,505			453			42			9,045
EBITDA	$	46,645		$	6,280		$	5,690		$	(5,651	)	$	52,964
% Revenue		33.3	%		17.2	%		19.5	%					26.0	%

CSW Industrials, Inc.
Reconciliation of Segment Operating Income to Segment EBITDA
(unaudited)

(Amounts in thousands)	Six Months ended September 30, 2024
	Contractor Solutions			Specialized Reliability Solutions			Engineered Building Solutions			Corporate and Other			Consolidated
Revenue, net	$	319,252		$	75,327		$	63,566		$	(4,041	)	$	454,104

Operating Income	$	96,138		$	12,970		$	11,806		$	(14,304	)	$	106,610
% Revenue		30.1	%		17.2	%		18.6	%					23.5	%

Adjusting Items:
Other income (expense), net		(147	)		(183	)		(19	)		(68	)		(418	)
Depreciation & amortization		15,985			2,832			979			87			19,883
EBITDA	$	111,976		$	15,619		$	12,766		$	(14,285	)	$	126,075
% Revenue		35.1	%		20.7	%		20.1	%					27.8	%

(Amounts in thousands)	Six Months ended September 30, 2023
	Contractor Solutions			Specialized Reliability Solutions			Engineered Building Solutions			Corporate and Other			Consolidated
Revenue, net	$	279,857		$	74,326		$	56,798		$	(3,967	)	$	407,014

Operating Income	$	78,692		$	11,794		$	9,493		$	(12,780	)	$	87,199
% Revenue		28.1	%		15.9	%		16.7	%					21.4	%

Adjusting Items:
Other income (expense), net		747			(91	)		11			1,573			2,240
Depreciation & amortization		13,940			3,035			895			90			17,960
EBITDA	$	93,380		$	14,738		$	10,398		$	(11,117	)	$	107,399
% Revenue		33.4	%		19.8	%		18.3	%					26.4	%

CSW INDUSTRIALS, INC.
Reconciliation of Operating Cash Flow to Free Cash Flow
(Unaudited)

(Amounts in thousands)	Three Months Ended September 30,						Six Months ended September 30,
		2024			2023			2024			2023
Net cash provided by operating activities	$	66,814		$	44,679		$	129,469		$	94,936
Less: Capital expenditures		(5,486	)		(2,814	)		(8,587	)		(7,785	)
Free cash flow	$	61,328		$	41,865		$	120,882		$	87,151
Free cash flow % EBITDA		100.8	%		79.0	%		95.9	%		81.1	%

The MIL Network –

January 25, 2025

MIL-OSI: Red River Bancshares, Inc. Reports Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

ALEXANDRIA, La., Oct. 30, 2024 (GLOBE NEWSWIRE) — Red River Bancshares, Inc. (the “Company”) (Nasdaq: RRBI), the holding company for Red River Bank (the “Bank”), announced today its unaudited financial results for the third quarter of 2024.

Net income for the third quarter of 2024 was $8.8 million, or $1.27 per diluted common share (“EPS”), an increase of $767,000, or 9.6%, compared to $8.0 million, or $1.16 EPS, for the second quarter of 2024, and an increase of $733,000, or 9.1%, compared to $8.0 million, or $1.12 EPS, for the third quarter of 2023. For the third quarter of 2024, the quarterly return on assets was 1.13%, and the quarterly return on equity was 11.11%.

Net income for the nine months ended September 30, 2024, was $24.9 million, or $3.59 EPS, a decrease of $1.7 million, or 6.2%, compared to $26.6 million, or $3.70 EPS, for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the return on assets was 1.08%, and the return on equity was 10.86%.

Third Quarter 2024 Performance and Operational Highlights

In the third quarter of 2024, the Company reported higher earnings, an improved net interest margin, and fairly consistent loans and deposits. We deployed excess funds into the securities portfolio and completed a significant stock repurchase. In mid-September, the target range of the federal funds rate was reduced by 50 basis points (“bps”).

Net income for the third quarter of 2024 was $8.8 million compared to $8.0 million for the prior quarter. Net income for the third quarter benefited from higher net interest income and an improved net interest margin fully tax equivalent (“FTE”), along with higher noninterest income.
Net interest income and net interest margin FTE increased for the third quarter of 2024 compared to the prior quarter. Net interest income for the third quarter of 2024 was $22.5 million compared to $21.8 million for the prior quarter. Net interest margin FTE for the third quarter of 2024 was 2.98% compared to 2.92% for the prior quarter. These increases were due to improved yields on securities and loans outpacing higher deposit rates.
Noninterest income totaled $5.4 million for the third quarter of 2024, an increase of $321,000, or 6.3%, compared to $5.1 million for the previous quarter. Noninterest income benefited from the receipt of a $151,000 nonrecurring loan fee.
As of September 30, 2024, assets were $3.10 billion, which was $53.2 million, or 1.7%, higher than June 30, 2024. The increase was mainly due to a $30.5 million increase in deposits.
Deposits totaled $2.75 billion as of September 30, 2024, an increase of $30.5 million, or 1.1%, compared to $2.72 billion as of June 30, 2024. In the third quarter of 2024, customer deposit balances remained consistent, with normal activity.
As of September 30, 2024, loans held for investment (“HFI”) were $2.06 billion, slightly higher than $2.05 billion as of June 30, 2024. In the third quarter of 2024, we closed on a high level of loan commitments, which should fund over time.
As of September 30, 2024, total securities were $697.7 million, which was $31.1 million, or 4.7%, higher than June 30, 2024. In the third quarter of 2024, we redeployed cash flows from lower yielding securities into higher yielding securities, as well as deployed other liquid assets into the securities portfolio.
As of September 30, 2024, liquid assets, which are cash and cash equivalents, were $232.6 million, and the liquid assets to assets ratio was 7.50%. We do not have any borrowings, brokered deposits, or internet-sourced deposits.
In the third quarter of 2024, the provision for credit losses totaled $300,000. This included $200,000 for loans and $100,000 for unfunded loan commitments.
As of September 30, 2024, nonperforming assets (“NPA(s)”) were $3.1 million, or 0.10% of assets, and the allowance for credit losses (“ACL”) was $21.8 million, or 1.06% of loans HFI.
We paid a quarterly cash dividend of $0.09 per common share in the third quarter of 2024.
The 2024 stock repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024. In the third quarter of 2024, we entered into a privately negotiated stock repurchase agreement for the repurchase of 60,000 shares at an aggregate cost of $3.0 million. In connection with this repurchase, we reduced the availability under the 2024 repurchase program by $3.0 million. We also repurchased 233 shares at an aggregate cost of $11,000 from the open market. As of September 30, 2024, the 2024 stock repurchase program had $1.2 million remaining.
As of September 30, 2024, capital levels were strong with a stockholders’ equity to assets ratio of 10.46%, a leverage ratio of 11.90%, and a total risk-based capital ratio of 18.07%.
The book value per share of common stock was $47.51 as of September 30, 2024, compared to $44.58 as of June 30, 2024. This improvement was primarily due to the decrease in the accumulated other comprehensive loss related to securities and net income added to stockholders’ equity, partially offset by stock repurchases.

Blake Chatelain, President and Chief Executive Officer, stated, “We are pleased with the financial results for the third quarter of 2024. We managed continued improvement to the net interest margin FTE, higher earnings, solid asset quality, steady loan activity, and continued strong liquidity and capital.

“Throughout the majority of the third quarter, until the Federal Reserve reduced the federal funds rate, we continued to reprice assets at a quicker pace than liabilities, which benefited net interest margin FTE and net interest income. Loan demand continued to be steady in the third quarter, despite some companies possibly placing investment decisions on hold due to the pending presidential election. We did, however, close on a significant amount of construction loan commitments, which should fund over the next year.

“On September 18, 2024, the Federal Reserve reduced the federal funds rate by 50 bps. This marks the conclusion of one of the most aggressive interest rate tightening cycles in many years. The rapid increase in interest rates has been challenging for banks and their customers. A lower interest rate environment should spur loan demand and mortgage loan activity, as well as help moderate accumulated other comprehensive loss in stockholders’ equity related to securities. Overall, the Louisiana economy seems to be faring well, and our customers’ balance sheets and earnings appear solid.

“Our company is well-positioned for the future, with robust capital and liquidity levels combined with a great team of community bankers. As we gain more clarity regarding future interest rates and the presidential election concludes, we remain committed to providing steady financial results for the company.”

Net Interest Income and Net Interest Margin FTE

Net interest income and net interest margin FTE increased in the third quarter of 2024 compared to the prior quarter. These increases were due to improved yields on securities and loans outpacing higher deposit rates. After keeping the federal funds rate consistent since the third quarter of 2023, the Federal Open Market Committee (“FOMC”) decreased the federal funds rate by 50 bps in September of 2024.

Net interest income for the third quarter of 2024 was $22.5 million, which was $670,000, or 3.1%, higher than the second quarter of 2024, due to a $1.2 million increase in interest and dividend income, partially offset by a $550,000 increase in interest expense. The increase in interest and dividend income was due to higher interest income on loans and securities. Loan income increased $1.0 million primarily due to higher rates on new and renewed loans compared to the existing portfolio. The average rate on new and renewed loans was 7.89% for the third quarter of 2024 and 7.98% for the prior quarter. Securities income increased $266,000 due to reinvesting lower yielding securities cash flows into higher yielding securities. The increase in interest expense was primarily due to higher rates on interest-bearing transaction deposits and time deposits.

The net interest margin FTE increased six bps to 2.98% for the third quarter of 2024, compared to 2.92% for the prior quarter. This increase was due to improved yields on securities and loans, partially offset by higher deposit costs. The yield on securities increased 15 bps due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 11 bps due to higher rates on new and renewed loans compared to the existing portfolio. The cost of deposits increased six bps to 1.81% for the third quarter of 2024, compared to 1.75% for the previous quarter, primarily due to a nine bp increase in the rate on interest-bearing deposits during the third quarter, partially offset by our adjustment to certain transaction deposit rates late in the third quarter.

Late in the third quarter of 2024, the target range of the federal funds rate was reduced 50 bps to 4.75%-5.00%. At that time, we adjusted rates on transaction and time deposits, and we expect to continue lowering these rates in conjunction with future federal funds rate decreases. The market’s expectation is that the FOMC will continue lowering the target federal funds rate in the fourth quarter of 2024. During the twelve months ending September 30, 2025, we anticipate receiving approximately $134.0 million in securities cash flows with an average yield of 2.86%, and we project approximately $194.2 million of fixed rate loans will mature with an average yield of 5.95%. We expect to redeploy these balances into higher yielding assets. Additionally, during the twelve months ending September 30, 2025, we expect $558.5 million of time deposits to mature with an average rate of 4.47%, which we anticipate repricing into lower cost deposits. As of September 30, 2024, floating rate loans were 14.9% of loans HFI, and floating rate transaction deposits were 7.2% of interest-bearing transaction deposits. Depending on balance sheet activity and the movement in interest rates, we expect the net interest income and net interest margin FTE to improve slightly in the fourth quarter of 2024.

Provision for Credit Losses

The provision for credit losses for the third quarter of 2024 totaled $300,000, which included $200,000 for loans and $100,000 for unfunded loan commitments. The provision for credit losses in the second quarter was $300,000 for loans. The provision in the second and third quarters was due to potential economic challenges resulting from the recent inflationary environment, changing monetary policy, and loan growth. In the third quarter of 2024, we had an increase in unfunded loan commitments. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.

Noninterest Income

Noninterest income totaled $5.4 million for the third quarter of 2024, an increase of $321,000, or 6.3%, compared to $5.1 million for the previous quarter. The increase was mainly due to a gain on equity securities and increases in service charges on deposit accounts, loan and deposit income, and brokerage income, partially offset by a decrease in Small Business Investment Company (“SBIC”) income.

Equity securities are an investment in a Community Reinvestment Act (“CRA”) mutual fund consisting primarily of bonds. The gain or loss on equity securities is a fair value adjustment primarily driven by changes in the interest rate environment. Due to the fluctuations in market rates between quarters, equity securities had a gain of $107,000 in the third quarter of 2024, compared to a loss of $13,000 for the previous quarter.

Service charges on deposit accounts totaled $1.5 million for the third quarter of 2024, an increase of $119,000, or 8.7%, compared to $1.4 million for the previous quarter. This increase was mainly due to a larger number of non-sufficient fund transactions and related fee income in the third quarter of 2024.

Loan and deposit income totaled $588,000 for the third quarter of 2024, an increase of $96,000, or 19.5%, compared to $492,000 for the previous quarter. The third quarter of 2024 benefited from the receipt of a $151,000 nonrecurring loan fee.

Brokerage income was $987,000 for the third quarter of 2024, an increase of $94,000, or 10.5%, compared to $893,000 for the previous quarter. The higher income in the third quarter of 2024 was mainly due to increased investing activity by clients. Assets under management were $1.13 billion as of September 30, 2024.

SBIC income for the third quarter of 2024 was $301,000, a decrease of $153,000, or 33.7%, compared to $454,000 for the previous quarter. This decrease was primarily due to lower normal income received from these partnerships in the third quarter. We expect SBIC income to be slightly higher in the fourth quarter of 2024 when compared to the third quarter.

Operating Expenses

Operating expenses totaled $16.8 million for the third quarter of 2024, an increase of $63,000, or 0.4%, compared to $16.7 million for the previous quarter. This increase was mainly due to higher technology expenses and other tax expenses.

Technology expenses totaled $865,000 for the third quarter of 2024, an increase of $141,000, or 19.5%, compared to $724,000 for the previous quarter. This increase was primarily due to continued upgrades to our core banking systems and other software technology enhancements.

Other taxes totaled $622,000 for the third quarter of 2024, an increase of $122,000, or 24.4%, compared to $500,000 for the previous quarter. The second quarter benefited from the reversal of $145,000 of stock repurchase tax expense due to finalized guidelines.

Asset Overview

As of September 30, 2024, assets were $3.10 billion, compared to assets of $3.05 billion as of June 30, 2024, an increase of $53.2 million, or 1.7%. In the third quarter, assets were mainly impacted by a $30.5 million, or 1.1%, increase in deposits. In the third quarter of 2024, liquid assets increased $19.6 million, or 9.2%, to $232.6 million and averaged $224.0 million for the third quarter. As of September 30, 2024, we had sufficient liquid assets available and $1.69 billion accessible from other liquidity sources. The liquid assets to assets ratio was 7.50% as of September 30, 2024. Total securities increased $31.1 million, or 4.7%, to $697.7 million in the third quarter and were 22.5% of assets as of September 30, 2024. During the third quarter, loans HFI increased $8.2 million, or 0.4%, to $2.06 billion. The loans HFI to deposits ratio was 74.84% as of September 30, 2024, compared to 75.38% as of June 30, 2024.

Securities

Total securities as of September 30, 2024, were $697.7 million, an increase of $31.1 million, or 4.7%, from June 30, 2024. Securities increased primarily due to $52.9 million in purchases combined with a $14.9 million reduction in net unrealized loss on securities AFS. This was partially offset by maturities and principal repayments.

The estimated fair value of securities available for sale (“AFS”) totaled $560.6 million, net of $49.5 million of unrealized loss, as of September 30, 2024, compared to $526.9 million, net of $64.4 million of unrealized loss, as of June 30, 2024. As of September 30, 2024, the amortized cost of securities held-to-maturity (“HTM”) totaled $134.1 million compared to $136.8 million as of June 30, 2024. As of September 30, 2024, securities HTM had an unrealized loss of $17.3 million compared to $22.8 million as of June 30, 2024.

As of September 30, 2024, equity securities, which is an investment in a CRA mutual fund consisting primarily of bonds, totaled $3.0 million compared to $2.9 million as of June 30, 2024.

Loans

Loans HFI as of September 30, 2024, were $2.06 billion, slightly higher than $2.05 billion as of June 30, 2024. In the third quarter of 2024, we closed on a high level of loan commitments, which, depending on customer activity, should fund over time. Unfunded loan commitments that originated in the third quarter of 2024 totaled $76.4 million.

Loans HFI by Category
	September 30, 2024			June 30, 2024			Change from June 30, 2024 to September 30, 2024
(dollars in thousands)	Amount		Percent	Amount		Percent	$ Change		% Change
Real estate:
Commercial real estate	$	875,590	42.6%	$	865,645	42.3%	$	9,945	1.1%
One-to-four family residential		616,467	30.0%		611,904	29.9%		4,563	0.7%
Construction and development		141,525	6.9%		129,197	6.3%		12,328	9.5%
Commercial and industrial		327,069	15.9%		344,071	16.8%		(17,002)	(4.9%)
Tax-exempt		66,436	3.2%		67,941	3.3%		(1,505)	(2.2%)
Consumer		28,961	1.4%		29,132	1.4%		(171)	(0.6%)
Total loans HFI	$	2,056,048	100.0%	$	2,047,890	100.0%	$	8,158	0.4%

Commercial real estate (“CRE”) loans are collateralized by owner occupied and non-owner occupied properties mainly in Louisiana. Non-owner occupied office loans were $57.2 million, or 2.8% of loans HFI, as of September 30, 2024, and are primarily centered in low-rise suburban areas. The average CRE loan size was $947,000 as of September 30, 2024.

Health care loans are our largest industry concentration and are made up of a diversified portfolio of health care providers. As of September 30, 2024, total health care loans were 8.0% of loans HFI. Within the health care sector, loans to nursing and residential care facilities were 4.4% of loans HFI, and loans to physician and dental practices were 3.4% of loans HFI. The average health care loan size was $399,000 as of September 30, 2024.

Asset Quality and Allowance for Credit Losses

NPAs totaled $3.1 million as of September 30, 2024, a decrease of $103,000, or 3.2%, from June 30, 2024, primarily due to changes to nonaccrual loans. The ratio of NPAs to assets was 0.10% as of September 30, 2024, and 0.11% as of June 30, 2024.

As of September 30, 2024, the ACL was $21.8 million. The ratio of ACL to loans HFI was 1.06% as of September 30, 2024 and June 30, 2024. The net charge-offs to average loans ratio was 0.00% for the third quarter of 2024 and 0.01% for the second quarter of 2024.

Deposits

As of September 30, 2024, deposits were $2.75 billion, an increase of $30.5 million, or 1.1%, compared to June 30, 2024. Average deposits for the third quarter of 2024 were $2.73 billion, a decrease of $5.6 million, or 0.2%, from the prior quarter. The following tables provide details on our deposit portfolio:

Deposits by Account Type
	September 30, 2024			June 30, 2024			Change from June 30, 2024 to September 30, 2024
(dollars in thousands)	Balance		% of Total	Balance		% of Total	$ Change		% Change
Noninterest-bearing demand deposits	$	882,394	32.1%	$	892,942	32.9%	$	(10,548)	(1.2%)
Interest-bearing deposits:
Interest-bearing demand deposits		163,787	6.0%		135,543	5.0%		28,244	20.8%
NOW accounts		379,566	13.8%		377,385	13.9%		2,181	0.6%
Money market accounts		551,229	20.0%		547,715	20.1%		3,514	0.6%
Savings accounts		166,723	6.1%		170,050	6.3%		(3,327)	(2.0%)
Time deposits less than or equal to $250,000		411,361	15.0%		399,981	14.7%		11,380	2.8%
Time deposits greater than $250,000		192,065	7.0%		193,030	7.1%		(965)	(0.5%)
Total interest-bearing deposits		1,864,731	67.9%		1,823,704	67.1%		41,027	2.2%
Total deposits	$	2,747,125	100.0%	$	2,716,646	100.0%	$	30,479	1.1%

Deposits by Customer Type
	September 30, 2024			June 30, 2024			Change from June 30, 2024 to September 30, 2024
(dollars in thousands)	Balance		% of Total	Balance		% of Total	$ Change		% Change
Consumer	$	1,348,281	49.1%	$	1,351,709	49.8%	$	(3,428)	(0.3%)
Commercial		1,191,625	43.4%		1,149,023	42.3%		42,602	3.7%
Public		207,219	7.5%		215,914	7.9%		(8,695)	(4.0%)
Total deposits	$	2,747,125	100.0%	$	2,716,646	100.0%	$	30,479	1.1%

In the third quarter of 2024, customer deposit balances remained consistent, with normal activity.

The Bank has a granular, diverse deposit portfolio with customers in a variety of industries throughout Louisiana. As of September 30, 2024, the average deposit account size was approximately $27,000.

As of September 30, 2024, our estimated uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $832.2 million, or 30.3% of total deposits. This amount was estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Also, as of September 30, 2024, our estimated uninsured deposits, excluding collateralized public entity deposits, were approximately $674.8 million, or 24.6% of total deposits. Our cash and cash equivalents of $232.6 million, combined with our available borrowing capacity of $1.69 billion, equaled 231.3% of our estimated uninsured deposits and 285.2% of our estimated uninsured deposits, excluding collateralized public entity deposits.

Stockholders’ Equity

Total stockholders’ equity as of September 30, 2024, was $324.3 million compared to $307.0 million as of June 30, 2024. The $17.3 million, or 5.6%, increase in stockholders’ equity during the third quarter of 2024 was attributable to a $12.1 million, net of tax, market adjustment to accumulated other comprehensive loss related to securities, $8.8 million of net income, and $92,000 of stock compensation, partially offset by the repurchase of 60,233 shares of common stock for $3.0 million and $615,000 in cash dividends. We paid a quarterly cash dividend of $0.09 per share on September 19, 2024.

Non-GAAP Disclosure

Our accounting and reporting policies conform to United States generally accepted accounting principles (“GAAP”) and the prevailing practices in the banking industry. Certain financial measures used by management to evaluate our operating performance are discussed as supplemental non-GAAP performance measures. In accordance with the Securities and Exchange Commission’s (“SEC”) rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the U.S.

Management and the board of directors review tangible book value per share, tangible common equity to tangible assets, and realized book value per share as part of managing operating performance. However, these non-GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that are discussed may differ from that of other companies’ reporting measures with similar names. It is important to understand how such other banking organizations calculate and name their financial measures similar to the non-GAAP financial measures discussed by us when comparing such non-GAAP financial measures.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included within the following financial statement tables.

About Red River Bancshares, Inc.

Red River Bancshares, Inc. is the bank holding company for Red River Bank, a Louisiana state-chartered bank established in 1999 that provides a fully integrated suite of banking products and services tailored to the needs of commercial and retail customers. Red River Bank operates from a network of 28 banking centers throughout Louisiana and one combined loan and deposit production office in New Orleans, Louisiana. Banking centers are located in the following Louisiana markets: Central, which includes the Alexandria metropolitan statistical area (“MSA”); Northwest, which includes the Shreveport-Bossier City MSA; Capital, which includes the Baton Rouge MSA; Southwest, which includes the Lake Charles MSA; the Northshore, which includes Covington; Acadiana, which includes the Lafayette MSA; and New Orleans.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause us to make changes to our future plans. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent quarterly reports on Form 10-Q, and in other documents that we file with the SEC from time to time. In addition, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, express or implied, included in this news release are qualified in their entirety by this cautionary statement.

Contact:
Isabel V. Carriere, CPA, CGMA
Executive Vice President, Chief Financial Officer, and Assistant Corporate Secretary
318-561-4023
icarriere@redriverbank.net

FINANCIAL HIGHLIGHTS (UNAUDITED)

	As of and for the Three Months Ended						As of and for the Nine Months Ended
(dollars in thousands, except per share data)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net Income	$	8,754	$	7,987	$	8,021	$	24,929	$	26,587

Per Common Share Data:
Earnings per share, basic	$	1.28	$	1.16	$	1.12	$	3.60	$	3.70
Earnings per share, diluted	$	1.27	$	1.16	$	1.12	$	3.59	$	3.70
Book value per share	$	47.51	$	44.58	$	39.43	$	47.51	$	39.43
Tangible book value per share ⁽¹⁾	$	47.28	$	44.35	$	39.21	$	47.28	$	39.21
Realized book value per share ⁽¹⁾	$	54.78	$	53.54	$	50.27	$	54.78	$	50.27
Cash dividends per share	$	0.09	$	0.09	$	0.08	$	0.27	$	0.24
Shares outstanding		6,826,120		6,886,928		7,150,685		6,826,120		7,150,685
Weighted average shares outstanding, basic		6,851,223		6,896,030		7,168,413		6,932,137		7,176,219
Weighted average shares outstanding, diluted		6,867,474		6,914,140		7,180,084		6,949,196		7,188,371

Summary Performance Ratios:
Return on average assets		1.13%		1.05%		1.05%		1.08%		1.18%
Return on average equity		11.11%		10.69%		11.15%		10.86%		12.71%
Net interest margin		2.93%		2.87%		2.74%		2.87%		2.91%
Net interest margin FTE		2.98%		2.92%		2.78%		2.92%		2.94%
Efficiency ratio		60.09%		62.07%		61.70%		60.84%		59.02%
Loans HFI to deposits ratio		74.84%		75.38%		70.60%		74.84%		70.60%
Noninterest-bearing deposits to deposits ratio		32.12%		32.87%		35.22%		32.12%		35.22%
Noninterest income to average assets		0.70%		0.67%		0.73%		0.67%		0.71%
Operating expense to average assets		2.17%		2.19%		2.13%		2.14%		2.12%

Summary Credit Quality Ratios:
NPAs to assets		0.10%		0.11%		0.07%		0.10%		0.07%
Nonperforming loans to loans HFI		0.15%		0.16%		0.10%		0.15%		0.10%
ACL to loans HFI		1.06%		1.06%		1.09%		1.06%		1.09%
Net charge-offs to average loans		0.00%		0.01%		0.00%		0.02%		0.01%

Capital Ratios:
Stockholders’ equity to assets		10.46%		10.07%		9.20%		10.46%		9.20%
Tangible common equity to tangible assets⁽¹⁾		10.41%		10.02%		9.15%		10.41%		9.15%
Total risk-based capital to risk-weighted assets		18.07%		18.01%		18.35%		18.07%		18.35%
Tier 1 risk-based capital to risk-weighted assets		17.05%		16.99%		17.31%		17.05%		17.31%
Common equity Tier 1 capital to risk-weighted assets		17.05%		16.99%		17.31%		17.05%		17.31%
Tier 1 risk-based capital to average assets		11.90%		11.74%		11.56%		11.90%		11.56%

^{(1) Non-GAAP financial measure. Calculations of this measure and reconciliations to GAAP are included in the schedules accompanying this release.}

RED RIVER BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
ASSETS
Cash and due from banks	$	39,664	$	35,035	$	19,401	$	53,062	$	42,413
Interest-bearing deposits in other banks		192,983		178,038		210,404		252,364		279,786
Securities available-for-sale, at fair value		560,555		526,890		545,967		570,092		529,046
Securities held-to-maturity, at amortized cost		134,145		136,824		139,328		141,236		143,420
Equity securities, at fair value		3,028		2,921		2,934		2,965		2,833
Nonmarketable equity securities		2,305		2,283		2,261		2,239		2,190
Loans held for sale		1,805		3,878		1,653		1,306		2,348
Loans held for investment		2,056,048		2,047,890		2,038,072		1,992,858		1,948,606
Allowance for credit losses		(21,757)		(21,627)		(21,564)		(21,336)		(21,183)
Premises and equipment, net		57,661		57,910		57,539		57,088		56,466
Accrued interest receivable		9,465		9,570		9,995		9,945		8,778
Bank-owned life insurance		30,164		29,947		29,731		29,529		29,332
Intangible assets		1,546		1,546		1,546		1,546		1,546
Right-of-use assets		2,853		2,973		3,091		3,629		3,757
Other assets		31,285		34,450		32,940		32,287		36,815
Total Assets	$	3,101,750	$	3,048,528	$	3,073,298	$	3,128,810	$	3,066,153

LIABILITIES
Noninterest-bearing deposits	$	882,394	$	892,942	$	895,439	$	916,456	$	972,155
Interest-bearing deposits		1,864,731		1,823,704		1,850,452		1,885,432		1,787,738
Total Deposits		2,747,125		2,716,646		2,745,891		2,801,888		2,759,893
Accrued interest payable		11,751		8,747		8,959		8,000		6,800
Lease liabilities		2,982		3,100		3,215		3,767		3,892
Accrued expenses and other liabilities		15,574		13,045		15,919		11,304		13,617
Total Liabilities		2,777,432		2,741,538		2,773,984		2,824,959		2,784,202
COMMITMENTS AND CONTINGENCIES		—		—		—		—		—
STOCKHOLDERS’ EQUITY
Preferred stock, no par value		—		—		—		—		—
Common stock, no par value		41,402		44,413		45,177		55,136		58,031
Additional paid-in capital		2,682		2,590		2,485		2,407		2,327
Retained earnings		329,858		321,719		314,352		306,802		299,079
Accumulated other comprehensive income (loss)		(49,624)		(61,732)		(62,700)		(60,494)		(77,486)
Total Stockholders’ Equity		324,318		306,990		299,314		303,851		281,951
Total Liabilities and Stockholders’ Equity	$	3,101,750	$	3,048,528	$	3,073,298	$	3,128,810	$	3,066,153

RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
(in thousands)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	27,909	$	26,882	$	23,925	$	80,684	$	68,541
Interest on securities		4,334		4,068		3,404		12,465		10,635
Interest on federal funds sold		—		—		—		—		886
Interest on deposits in other banks		2,630		2,709		2,950		8,378		6,359
Dividends on stock		28		22		45		73		106
Total Interest and Dividend Income		34,901		33,681		30,324		101,600		86,527
INTEREST EXPENSE
Interest on deposits		12,444		11,894		9,562		35,993		21,319
Interest on other borrowed funds		—		—		37		—		64
Total Interest Expense		12,444		11,894		9,599		35,993		21,383
Net Interest Income		22,457		21,787		20,725		65,607		65,144
Provision for credit losses		300		300		185		900		485
Net Interest Income After Provision for Credit Losses		22,157		21,487		20,540		64,707		64,659
NONINTEREST INCOME
Service charges on deposit accounts		1,486		1,367		1,489		4,223		4,317
Debit card income, net		905		949		830		2,875		2,687
Mortgage loan income		732		650		604		1,838		1,524
Brokerage income		987		893		1,029		2,867		2,759
Loan and deposit income		588		492		571		1,572		1,566
Bank-owned life insurance income		217		216		191		635		557
Gain (Loss) on equity securities		107		(13)		(113)		63		(145)
SBIC income		301		454		920		1,107		2,479
Other income (loss)		96		90		60		266		184
Total Noninterest Income		5,419		5,098		5,581		15,446		15,928
OPERATING EXPENSES
Personnel expenses		9,700		9,603		9,461		28,854		28,008
Occupancy and equipment expenses		1,661		1,698		1,663		4,975		4,933
Technology expenses		865		724		675		2,298		2,066
Advertising		317		408		331		1,061		955
Other business development expenses		521		593		522		1,589		1,451
Data processing expense		652		651		651		1,650		1,689
Other taxes		622		500		664		1,859		2,042
Loan and deposit expenses		294		309		238		561		728
Legal and professional expenses		653		729		616		2,000		1,714
Regulatory assessment expenses		421		401		419		1,226		1,223
Other operating expenses		1,046		1,073		990		3,241		3,041
Total Operating Expenses		16,752		16,689		16,230		49,314		47,850
Income Before Income Tax Expense		10,824		9,896		9,891		30,839		32,737
Income tax expense		2,070		1,909		1,870		5,910		6,150
Net Income	$	8,754	$	7,987	$	8,021	$	24,929	$	26,587

RED RIVER BANCSHARES, INC.
NET INTEREST INCOME AND NET INTEREST MARGIN (UNAUDITED)

	For the Three Months Ended
	September 30, 2024					June 30, 2024
(dollars in thousands)	Average Balance Outstanding		Interest Income/ Expense		Average Yield/ Rate	Average Balance Outstanding		Interest Income/ Expense		Average Yield/ Rate
Assets
Interest-earning assets:
Loans^(1,2)	$	2,054,451	$	27,909	5.32%	$	2,042,602	$	26,882	5.21%
Securities – taxable		545,171		3,344	2.45%		546,466		3,069	2.25%
Securities – tax-exempt		191,285		990	2.07%		193,954		999	2.06%
Interest-bearing deposits in other banks		194,229		2,630	5.36%		199,668		2,709	5.43%
Nonmarketable equity securities		2,284		28	4.85%		2,262		22	3.96%
Total interest-earning assets		2,987,420	$	34,901	4.59%		2,984,952	$	33,681	4.48%
Allowance for credit losses		(21,702)					(21,653)
Noninterest-earning assets		104,599					96,631
Total assets	$	3,070,317				$	3,059,930
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing transaction deposits	$	1,230,487	$	6,042	1.95%	$	1,230,474	$	5,701	1.86%
Time deposits		597,286		6,402	4.26%		595,120		6,193	4.19%
Total interest-bearing deposits		1,827,773		12,444	2.71%		1,825,594		11,894	2.62%
Other borrowings		—		—	—%		1		—	5.78%
Total interest-bearing liabilities		1,827,773	$	12,444	2.71%		1,825,595	$	11,894	2.62%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		901,192					908,930
Accrued interest and other liabilities		28,006					24,868
Total noninterest-bearing liabilities		929,198					933,798
Stockholders’ equity		313,346					300,537
Total liabilities and stockholders’ equity	$	3,070,317				$	3,059,930
Net interest income			$	22,457				$	21,787
Net interest spread					1.88%					1.86%
Net interest margin					2.93%					2.87%
Net interest margin FTE⁽³⁾					2.98%					2.92%
Cost of deposits					1.81%					1.75%
Cost of funds					1.66%					1.60%

^{(1)  Includes average outstanding balances of loans held for sale of $3.0 million and $3.2 million for the three months ended September 30, 2024 and June 30, 2024, respectively.}
^{(2)  Nonaccrual loans are included as loans carrying a zero yield.}
^{(3)  Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans.}

RED RIVER BANCSHARES, INC.
NET INTEREST INCOME AND NET INTEREST MARGIN (UNAUDITED)

	For the Nine Months Ended
	September 30, 2024					September 30, 2023
(dollars in thousands)	Average Balance Outstanding		Interest Income/ Expense		Average Yield/ Rate	Average Balance Outstanding		Interest Income/ Expense		Average Yield/ Rate
Assets
Interest-earning assets:
Loans^(1,2)	$	2,037,435	$	80,684	5.21%	$	1,933,226	$	68,541	4.68%
Securities – taxable		553,714		9,461	2.28%		618,345		7,535	1.63%
Securities – tax-exempt		194,341		3,004	2.06%		203,748		3,100	2.03%
Federal funds sold		—		—	—%		24,861		886	4.70%
Interest-bearing deposits in other banks		206,023		8,378	5.40%		167,210		6,359	5.05%
Nonmarketable equity securities		2,262		73	4.27%		3,744		106	3.76%
Total interest-earning assets		2,993,775	$	101,600	4.47%		2,951,134	$	86,527	3.88%
Allowance for credit losses		(21,586)					(20,920)
Noninterest-earning assets		100,586					88,527
Total assets	$	3,072,775				$	3,018,741
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing transaction deposits	$	1,240,737	$	17,424	1.88%	$	1,259,198	$	12,126	1.29%
Time deposits		591,771		18,569	4.19%		441,442		9,193	2.78%
Total interest-bearing deposits		1,832,508		35,993	2.62%		1,700,640		21,319	1.68%
Other borrowings		—		—	—%		1,539		64	5.49%
Total interest-bearing liabilities		1,832,508	$	35,993	2.62%		1,702,179	$	21,383	1.68%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		907,722					1,016,034
Accrued interest and other liabilities		25,983					20,951
Total noninterest-bearing liabilities		933,705					1,036,985
Stockholders’ equity		306,562					279,577
Total liabilities and stockholders’ equity	$	3,072,775				$	3,018,741
Net interest income			$	65,607				$	65,144
Net interest spread					1.85%					2.20%
Net interest margin					2.87%					2.91%
Net interest margin FTE⁽³⁾					2.92%					2.94%
Cost of deposits					1.75%					1.05%
Cost of funds					1.61%					0.97%

^{(1)  Includes average outstanding balances of loans held for sale of $2.7 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively.}
^{(2)  Nonaccrual loans are included as loans carrying a zero yield.}
^{(3)  Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans.}

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(dollars in thousands, except per share data)	September 30, 2024		June 30, 2024		September 30, 2023
Tangible common equity
Total stockholders’ equity	$	324,318	$	306,990	$	281,951
Adjustments:
Intangible assets		(1,546)		(1,546)		(1,546)
Total tangible common equity (non-GAAP)	$	322,772	$	305,444	$	280,405
Realized common equity
Total stockholders’ equity	$	324,318	$	306,990	$	281,951
Adjustments:
Accumulated other comprehensive (income) loss		49,624		61,732		77,486
Total realized common equity (non-GAAP)	$	373,942	$	368,722	$	359,437
Common shares outstanding		6,826,120		6,886,928		7,150,685
Book value per share	$	47.51	$	44.58	$	39.43
Tangible book value per share (non-GAAP)	$	47.28	$	44.35	$	39.21
Realized book value per share (non-GAAP)	$	54.78	$	53.54	$	50.27

Tangible assets
Total assets	$	3,101,750	$	3,048,528	$	3,066,153
Adjustments:
Intangible assets		(1,546)		(1,546)		(1,546)
Total tangible assets (non-GAAP)	$	3,100,204	$	3,046,982	$	3,064,607
Total stockholders’ equity to assets		10.46%		10.07%		9.20%
Tangible common equity to tangible assets (non-GAAP)		10.41%		10.02%		9.15%

The MIL Network –

January 25, 2025

MIL-OSI: Summit State Bank Reports Net Income of $626,000 for Third Quarter 2024

Source: GlobeNewswire (MIL-OSI)

SANTA ROSA, Calif., Oct. 30, 2024 (GLOBE NEWSWIRE) — Summit State Bank (the “Bank”) (Nasdaq: SSBI) today reported net income for the third quarter ended September 30, 2024 of $626,000, or $0.09 per diluted share, compared to net income of $1,821,000, or $0.27 per diluted share for the third quarter ended September 30, 2023. Net operating income before credit loss provision and income tax was $2,122,000 for the third quarter ended September 30, 2024 compared to $2,520,000 for the third quarter ended 2023.

In September 2024 the Bank declared its eighty-third consecutive quarterly cash dividend.

“In this time of economic uncertainty, the Board is focused on balancing its commitment to shareholders while also building capital, increasing liquidity and positioning the Bank to create long-term value,” said Brian Reed, President and CEO. “As such, the Bank is not announcing a dividend for the third quarter of 2024.”

Third Quarter 2024 Financial Highlights (at or for the three months ended September 30, 2024)

Net operating income before credit loss provision and income tax increased quarter-to-date to $2,122,000 for Q3 2024 when compared to $1,955,000 in Q1 2024 to $1,267,000 in Q2 2024.
Operating expenses decreased in the third quarter of 2024 to $6,181,000 compared to $6,926,000 in the third quarter of 2023.
The improvement in net income for the third quarter ended September 30, 2024 was offset by a $1,320,000 provision for credit losses.
Net income for the third quarter ended September 30, 2024 was $626,000, or $0.09 per diluted share, compared to $1,821,000, or $0.27 per diluted share, in the third quarter of 2023 and $928,000, or $0.14 per diluted share, for the second quarter ended June 30, 2024.
The allowance for credit losses to total loans was 1.66% on September 30, 2024 which is based on estimating credit losses for the life of the loans in the portfolio.
The Bank maintained strong total liquidity of $458,554,000, or 41.0% of total assets as of September 30, 2024. This includes on balance sheet liquidity (cash and equivalents and unpledged available-for-sale securities) of $148,499,000 or 13.3% of total assets, plus available borrowing capacity of $310,055,000 or 27.7% of total assets.
The Bank remains well-capitalized and all regulatory capital ratios were well above minimum requirements on September 30, 2024.
Net loans decreased $14,832,000 to $917,367,000 at September 30, 2024, compared to $932,199,000 one year earlier and increased $3,853,000 compared to $913,514,000 three months earlier.
Total deposits decreased 3% to $1,002,770,000 at September 30, 2024, compared to $1,030,836,000 at September 30, 2023, and increased 4% when compared to the prior quarter end of $966,587,000.
Book value was $14.85 per share, compared to $13.77 per share a year ago and $14.44 in the preceding quarter.

Operating Results

For the third quarter of 2024, the annualized return on average assets was 0.23% and the annualized return on average equity was 2.48%. This compared to an annualized return on average assets of 0.63% and an annualized return on average equity of 7.59%, respectively, for the third quarter of 2023.

Summit’s net interest margin was 2.71% in the third quarter of 2024 and 2.80% in the third quarter of 2023. Interest and dividend income increased 0.3% to $14,977,000 in the third quarter of 2024 compared to $14,931,000 in the third quarter of 2023. The slight increase in interest income is attributable to a $763,000 increase in interest on loans offset by a decrease of $671,000 in interest on deposits with banks and a decrease in interest on investment securities of $45,000.

“Our earnings have been substantially impacted by the high interest rate environment that continues to put upward pressure on our funding costs,” said Reed. “The cost of deposits was 3.05% during the third quarter, compared to 2.95% during the preceding quarter, as customers continue to focus on higher yields. The recent rate decrease by the Federal Reserve will help alleviate some of the pricing pressures, but rates remain elevated. We have been actively implementing programs to reduce cost of funds while preserving our local deposit relationships.”

Noninterest income decreased in the third quarter of 2024 to $1,030,000 compared to $1,496,000 in the third quarter of 2023. The decrease is primarily attributed to the Bank recognizing $474,000 in gains on sales of SBA and USDA guaranteed loan balances in the third quarter of 2024 compared to $1,046,000 in gains on sales of SBA and USDA guaranteed loan balances in the third quarter of 2023.

Operating expenses decreased in the third quarter of 2024 to $6,181,000 compared to $6,926,000 in the third quarter of 2023. The decrease is primarily due to a decrease in the accrual employee bonus expenses of $238,000, a reduction in stock appreciation rights expense of $179,000, a decrease in marketing expense of $113,000 and a decrease of $75,000 in legal expense.

Balance Sheet Review

Net loans decreased 2% to $917,367,000 at September 30, 2024, compared to $932,199,000 at September 30, 2023, and decreased 0.4% compared to June 30, 2024. The Bank’s largest loan types are commercial real estate loans which make up 78% of the portfolio, “secured by farmland” totaling 9% of the portfolio, and 8% in commercial and industrial loans. Of the commercial real estate total, approximately 32% or $235,000,000 is owner occupied and the remaining 68% or $491,000,000 is non-owner occupied. The portfolio is well diversified between industries with no significant concentrations, including office space which totals $116,300,000.

Total deposits decreased 3% to $1,002,770,000 at September 30, 2024, compared to $1,030,836,000 at September 30, 2023, and increased 4% when compared to the prior quarter end. At September 30, 2024, noninterest bearing demand deposit accounts decreased 9% compared to a year ago and represented 19% of total deposits; savings, NOW and money market accounts increased 6% compared to a year ago and represented 48% of total deposits, and CDs decreased 10% compared to a year ago and comprised 33% of total deposits. The decrease in deposits is a result of the Bank managing its liquidity levels and asset growth. The average cost of deposits was 3.05% in the third quarter of 2024, compared to 2.63% in the third quarter of 2023.

Shareholders’ equity was $100,662,000 at September 30, 2024, compared to $97,949,000 three months earlier and $93,439,000 a year earlier. The increase in shareholders’ equity compared to a year ago was primarily due to a reduction in accumulated other comprehensive loss on securities of $4,790,000 and an increase of $2,145,000 in retained earnings. At September 30, 2024 book value was $14.85 per share, compared to $14.44 three months earlier, and $13.77 at September 30, 2023.

Summit State Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with average equity to assets of 9.10% at September 30, 2024, compared to 9.04% at June 30, 2024, and 8.24% at September 30, 2023. The increase compared to September 2023 was due to the Bank’s retention of capital which is exceeding asset growth.

Credit Quality

“Our primary focus has been managing asset quality and reducing portfolio risk,” said Reed. “Our nonperforming loans, which are concentrated in the “secured by farmland” category, remain elevated as we work with our customers to cure or payoff these loans. The Bank is committed to acting so it can replace this segment of the portfolio with performing loans. Our commercial real estate portfolios continue to perform well.”

Nonperforming assets were $41,971,000, or 3.75% of total assets, at September 30, 2024. This compared to $40,994,000 in nonperforming assets at June 30, 2024, and $35,267,000 in nonperforming assets at September 30, 2023. There are three specific relationships totaling $32,200,000, and one real estate owned for $5,130,000, that together make up 89% of nonperforming assets portfolio. These three relationships are “secured by farmland” and the Bank has specific reserves set aside based on current appraised values net of any costs.

There were no net charge-offs during the three months ended September 30, 2024, compared to net charge-offs of $1,347,000 during the three months ended June 30, 2024 and net recoveries of $10,000 during the three months ended September 30, 2023. Net charge-offs for the three months ended June 30, 2024 were related to a loan taken into real estate owned.

For the third quarter of 2024, consistent with factors within the allowance for credit losses, the Bank recorded a $1,320,000 provision for credit loss expense for loans, a $8,000 reversal of credit losses for unfunded loan commitments and a $19,000 reversal of credit losses on investments. This compared to a $27,000 reversal of credit loss expense on loans, a $5,000 reversal of credit losses on unfunded loan commitments and a $27,000 provision for credit losses on investments in the third quarter of 2023.

The allowance for credit losses to total loans was 1.66% on September 30, 2024, and 1.61% on September 30, 2023. The increase is due to a provision for credit losses on loans of $1,320,000 recorded during the three months ended September 30, 2024. The provision covers a $1,000,000 specific loan reserve and $300,000 general pool loan reserve.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $1.1 billion and total equity of $101 million at September 30, 2024. Headquartered in Sonoma County, the Bank specializes in providing exceptional customer service and customized financial solutions to aid in the success of local small businesses and nonprofits throughout Sonoma County.

Summit State Bank is committed to embracing the diverse backgrounds, cultures and talents of its employees to create high performance and support the evolving needs of its customers and community it serves. At the center of diversity is inclusion, collaboration, and a shared vision for delivering superior service to customers and results for shareholders. Presently, 60% of management are women and minorities with 60% represented on the Executive Management Team. Through the engagement of its team, Summit State Bank has received many esteemed awards including: Top Performing Community Bank by American Banker, Best Places to Work in the North Bay by North Bay Business Journal, Corporate Philanthropy Award by the San Francisco Business Times, Hall of Fame by North Bay Biz Magazine, and Diversity in Business. Summit State Bank’s stock is traded on the Nasdaq Global Market under the symbol SSBI. Further information can be found at www.summitstatebank.com.

Forward-looking Statements

The financial results in this release are preliminary. Final financial results and other disclosures will be reported in Summit State Bank’s quarterly report on Form 10-Q for the period ended September 30, 2024 and may differ materially from the results and disclosures in this release due to, among other things, the completion of final review procedures, the occurrence of subsequent events or the discovery of additional information.

Except for historical information contained herein, the statements contained in this news release, are forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the Bank will be conducting its operations, including the real estate market in California and other factors beyond the Bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. You should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Contact: Brian Reed, President and CEO, Summit State Bank (707) 568-4908


SUMMIT STATE BANK
STATEMENTS OF INCOME
(In thousands except earnings per share data)


			Three Months Ended
			September 30, 2024			June 30, 2024			September 30, 2023
			(Unaudited)			(Unaudited)			(Unaudited)

Interest and dividend income:
	Interest and fees on loans		$	13,594		$	13,083		$	12,831
	Interest on deposits with banks			592			451			1,263
	Interest on investment securities			663			709			708
	Dividends on FHLB stock			128			128			129
		Total interest and dividend income		14,977			14,371			14,931
Interest expense:
	Deposits			7,563			7,046			6,895
	Federal Home Loan Bank advances			4			137			10
	Junior subordinated debt			138			94			94
		Total interest expense		7,705			7,277			6,999
		Net interest income before provision for credit losses		7,272			7,094			7,932
Provision for (reversal of) credit losses on loans				1,320			6			(27	)
(Reversal of) credit losses on unfunded loan commitments				(8	)		(26	)		(5	)
(Reversal of) provision for credit losses on investments				(19	)		4			27
		Net interest income after provision for (reversal of) credit
		losses on loans, unfunded loan commitments and investments		5,979			7,110			7,937
Non-interest income:
	Service charges on deposit accounts			241			227			231
	Rental income			60			60			61
	Net gain on loan sales			474			270			1,046
	Other income			255			244			158
		Total non-interest income		1,030			801			1,496
Non-interest expense:
	Salaries and employee benefits			3,988			4,039			4,362
	Occupancy and equipment			420			443			432
	Other expenses			1,773			2,145			2,132
		Total non-interest expense		6,181			6,627			6,926
		Income before provision for income taxes		828			1,284			2,507
Provision for income taxes				202			356			686
		Net income	$	626		$	928		$	1,821

Basic earnings per common share			$	0.09		$	0.14		$	0.27
Diluted earnings per common share			$	0.09		$	0.14		$	0.27

Basic weighted average shares of common stock outstanding				6,719			6,719			6,697
Diluted weighted average shares of common stock outstanding				6,719			6,719			6,705


SUMMIT STATE BANK
STATEMENTS OF INCOME
(In thousands except earnings per share data)


			Nine Months Ended
			September 30, 2024			September 30, 2023
			(Unaudited)			(Unaudited)

Interest and dividend income:
	Interest and fees on loans		$	39,952		$	39,152
	Interest on deposits with banks			1,405			3,618
	Interest on investment securities			2,084			2,143
	Dividends on FHLB stock			386			293
		Total interest and dividend income		43,827			45,206
Interest expense:
	Deposits			21,396			17,114
	Federal Home Loan Bank advances			332			177
	Junior Subordinated Debt			325			281
		Total interest expense		22,053			17,572
		Net interest income before provision for credit losses		21,774			27,634
Provision for credit losses on loans				1,311			373
(Reversal of) credit losses on unfunded loan commitments				(99	)		(3	)
(Reversal of) provision for credit losses on investments				(20	)		27
		Net interest income after provision for (reversal of) credit
		losses on loans, unfunded loan commitments and investments		20,582			27,237
Non-interest income:
	Service charges on deposit accounts			701			653
	Rental income			180			139
	Net gain on loan sales			1,257			2,481
	Other income			641			1,630
		Total non-interest income		2,779			4,903
Non-interest expense:
	Salaries and employee benefits			12,210			12,354
	Occupancy and equipment			1,348			1,326
	Other expenses			5,651			5,886
		Total non-interest expense		19,209			19,566
		Income before provision for income taxes		4,152			12,574
Provision for income taxes				1,203			3,652
		Net income	$	2,949		$	8,922

Basic earnings per common share			$	0.44		$	1.33
Diluted earnings per common share			$	0.44		$	1.33

Basic weighted average shares of common stock outstanding				6,712			6,694
Diluted weighted average shares of common stock outstanding				6,712			6,697


SUMMIT STATE BANK
BALANCE SHEETS
(In thousands except share data)


			September 30, 2024			June 30, 2024			September 30, 2023
			(Unaudited)			(Unaudited)			(Unaudited)

ASSETS

Cash and due from banks			$	80,928		$	40,142		$	86,604
		Total cash and cash equivalents		80,928			40,142			86,604

Investment securities:
	Available-for-sale, less allowance for credit losses of $38, $57 and $0
	(at fair value; amortized cost of $86,225, $96,407 and $97,099)			76,205			83,105			80,312

Loans, less allowance for credit losses of $15,466, $14,145 and $15,243				917,367			913,514			932,199
Bank premises and equipment, net				5,251			5,306			5,334
Investment in Federal Home Loan Bank stock (FHLB), at cost				5,889			5,889			5,541
Goodwill				4,119			4,119			4,119
Other Real Estate Owned				5,130			5,130			–
Affordable housing tax credit investments				7,698			7,942			8,360
Accrued interest receivable and other assets				16,204			16,898			19,705

		Total assets	$	1,118,791		$	1,082,045		$	1,142,174

LIABILITIES AND
SHAREHOLDERS’ EQUITY

Deposits:
	Demand – non interest-bearing		$	192,371		$	183,181		$	210,258
	Demand – interest-bearing			212,214			218,124			201,516
	Savings			45,845			42,974			54,317
	Money market			219,593			212,750			193,080
	Time deposits that meet or exceed the FDIC insurance limit			80,801			74,744			72,836
	Other time deposits			251,946			234,814			298,829
		Total deposits		1,002,770			966,587			1,030,836

Federal Home Loan Bank advances				–			3,500			–
Junior subordinated debt				5,931			5,927			5,916
Affordable housing commitment				4,061			4,061			4,435
Accrued interest payable and other liabilities				5,367			4,021			7,548

		Total liabilities		1,018,129			984,096			1,048,735

Shareholders’ equity
	Preferred stock, no par value; 20,000,000 shares authorized;
	no shares issued and outstanding			–			–			–
	Common stock, no par value; shares authorized – 30,000,000 shares;
	issued and outstanding 6,776,563, 6,784,099 and 6,784,099			37,677			37,623			37,389
	Retained earnings			70,012			69,651			67,867
	Accumulated other comprehensive loss, net			(7,027	)		(9,325	)		(11,817	)

		Total shareholders’ equity		100,662			97,949			93,439

		Total liabilities and shareholders’ equity	$	1,118,791		$	1,082,045		$	1,142,174

Financial Summary
(Dollars in thousands except per share data)

	As of and for the
	Three Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023
	(Unaudited)			(Unaudited)			(Unaudited)
Statement of Income Data:
Net interest income	$	7,272		$	7,094		$	7,932
Provision for (reversal of) credit losses on loans		1,320			6			(27	)
(Reversal of) credit losses on unfunded loan commitments		(8	)		(26	)		(5	)
(Reversal of) provision for credit losses on investments		(19	)		4			27
Non-interest income		1,030			801			1,496
Non-interest expense		6,181			6,627			6,926
Provision for income taxes		202			356			686
Net income	$	626		$	928		$	1,821

Selected per Common Share Data:
Basic earnings per common share	$	0.09		$	0.14		$	0.27
Diluted earnings per common share	$	0.09		$	0.14		$	0.27
Dividend per share	$	0.04		$	0.12		$	0.12
Book value per common share (1)	$	14.85		$	14.44		$	13.77

Selected Balance Sheet Data:
Assets	$	1,118,791		$	1,082,045		$	1,142,174
Loans, net		917,367			913,514			932,199
Deposits		1,002,770			966,587			1,030,836
Average assets		1,098,469			1,078,700			1,155,007
Average earning assets		1,063,476			1,049,254			1,123,951
Average shareholders’ equity		99,962			97,548			95,180
Nonperforming loans		36,841			35,864			35,267
Net loans (charged-off) recovered		–			(1,067	)		10
Other real estate owned		5,130			5,130			–
Total nonperforming assets		41,971			40,994			35,267

Selected Ratios:
Return on average assets (2)		0.23	%		0.35	%		0.63	%
Return on average common shareholders’ equity (2)		2.48	%		3.82	%		7.59	%
Efficiency ratio (3)		74.45	%		83.94	%		73.46	%
Net interest margin (2)		2.71	%		2.71	%		2.80	%
Common equity tier 1 capital ratio		9.94	%		10.22	%		9.65	%
Tier 1 capital ratio		9.94	%		10.22	%		9.65	%
Total capital ratio		11.66	%		12.08	%		11.49	%
Tier 1 leverage ratio		9.18	%		9.31	%		8.47	%
Common dividend payout ratio (4)		42.34	%		87.96	%		43.82	%
Average shareholders’ equity to average assets		9.10	%		9.04	%		8.24	%
Nonperforming loans to total loans		3.95	%		3.87	%		3.72	%
Nonperforming assets to total assets		3.75	%		3.79	%		3.09	%
Allowance for credit losses to total loans		1.66	%		1.52	%		1.61	%
Allowance for credit losses to nonperforming loans		41.98	%		39.44	%		43.22	%

(1) Total shareholders’ equity divided by total common shares outstanding.
(2) Annualized.
(3) Non-interest expenses to net interest and non-interest income, net of securities gains.
(4) Common dividends divided by net income available for common shareholders.

Financial Summary
(Dollars in thousands except per share data)

	As of and for the
	Nine Months Ended
	September 30, 2024			September 30, 2023
	(Unaudited)			(Unaudited)
Statement of Income Data:
Net interest income	$	21,774		$	27,634
(Reversal of) provision for credit losses on loans		1,311			373
(Reversal of) provision for credit losses on unfunded loan commitments		(99	)		(3	)
(Reversal of) provision for credit losses on investments		(20	)		27
Non-interest income		2,779			4,903
Non-interest expense		19,209			19,566
Provision for income taxes		1,203			3,652
Net income	$	2,949		$	8,922

Selected per Common Share Data:
Basic earnings per common share	$	0.44		$	1.33
Diluted earnings per common share	$	0.44		$	1.33
Dividend per share	$	0.28		$	0.36
Book value per common share (1)	$	14.85		$	13.77

Selected Balance Sheet Data:
Assets	$	1,118,791		$	1,142,174
Loans, net		917,367			932,199
Deposits		1,002,770			1,030,836
Average assets		1,088,413			1,149,441
Average earning assets		1,056,714			1,117,877
Average shareholders’ equity		98,333			93,461
Nonperforming loans		36,841			35,267
Net loans (charged-off) recovered		(1,066	)		31
Other real estate owned		5,130			–
Total nonperforming assets		41,971			35,267

Selected Ratios:
Return on average assets (2)		0.36	%		1.04	%
Return on average common shareholders’ equity (2)		4.00	%		12.76	%
Efficiency ratio (3)		78.23	%		60.13	%
Net interest margin (2)		2.74	%		3.31	%
Common equity tier 1 capital ratio		9.94	%		9.65	%
Tier 1 capital ratio		9.94	%		9.65	%
Total capital ratio		11.66	%		11.49	%
Tier 1 leverage ratio		9.18	%		8.47	%
Common dividend payout ratio (4)		64.23	%		27.36	%
Average shareholders’ equity to average assets		9.03	%		8.13	%
Nonperforming loans to total loans		3.95	%		3.72	%
Nonperforming assets to total assets		3.75	%		3.09	%
Allowance for credit losses to total loans		1.66	%		1.61	%
Allowance for credit losses to nonperforming loans		41.98	%		43.22	%

(1) Total shareholders’ equity divided by total common shares outstanding.
(2) Annualized.
(3) Non-interest expenses to net interest and non-interest income, net of securities gains.
(4) Common dividends divided by net income available for common shareholders.

The MIL Network –

January 25, 2025

MIL-OSI: Medallion Bank Reports 2024 Third Quarter Results and Declares Series F Preferred Stock Dividend

Source: GlobeNewswire (MIL-OSI)

SALT LAKE CITY, Oct. 29, 2024 (GLOBE NEWSWIRE) — Medallion Bank (Nasdaq: MBNKP, the “Bank”), an FDIC-insured bank specializing in consumer loans for the purchase of recreational vehicles, boats, and home improvements, as well as loan products and services offered through fintech strategic partners, today announced its results for the quarter ended September 30, 2024. The Bank is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

2024 Third Quarter Highlights

Net income of $15.5 million, compared to $17.2 million in the prior year quarter.
Net interest income of $53.2 million, compared to $48.7 million in the prior year quarter.
Net interest margin of 8.44%, compared to 8.70% in the prior year quarter.
Total provision for credit losses was $20.2 million, compared to $14.0 million in the prior year quarter. Total provision for credit losses included $2.2 million of net taxi medallion recoveries, compared to $1.7 million of net taxi medallion recoveries in the prior year quarter.
Annualized net charge-offs were 2.31% of average loans outstanding, compared to 1.97% in the prior year quarter.
Annualized return on assets and return on equity were 2.47% and 16.72%, respectively, compared to 3.06% and 20.46% for the prior year period.
The total loan portfolio grew 13% from September 30, 2023 to $2.4 billion as of September 30, 2024.
Total assets were $2.6 billion and the Tier 1 leverage ratio was 15.66% at September 30, 2024.

Donald Poulton, President and Chief Executive Officer of Medallion Bank, stated, “Earnings grew over the sequential quarter as combined recreation and home improvement loan origination volumes reached their anticipated peak for 2024. Net interest income rose to $53 million on more than $72 million of total interest income. As is typical for the time of year, delinquency rose compared to the second quarter while the net charge-off rate was essentially flat. Aided by the new fintech relationship announced in September, we originated $40 million in loans through our fintech strategic partners during the quarter. The strategic partnership program, which we have approached with caution and patience, is expected to grow steadily in the coming periods as our partners grow. Though overall demand for our products remains strong, we continue to prioritize credit quality and managed growth that maintains our market position.”

Recreation Lending Segment

The Bank’s recreation loan portfolio grew 15% to $1.555 billion as of September 30, 2024, compared to $1.346 billion at September 30, 2023. Loan originations were $139.1 million, compared to $92.6 million in the prior year quarter.
Net interest income was $40.2 million, compared to $36.5 million in the prior year quarter.
Recreation loans were 65% of loans receivable as of September 30, 2024, compared to 64% at September 30, 2023.
Delinquencies 30 days or more past due were $64.6 million, or 4.15%, of recreation loans as of September 30, 2024, compared to $51.4 million, or 3.82%, at September 30, 2023.
Annualized net charge-offs were 3.18% of average recreation loans outstanding, compared to 2.67% in the prior year quarter.
The provision for recreation credit losses was $17.5 million and the allowance for credit losses was 4.53% of the outstanding balance, compared to $11.9 million and 4.24% of the outstanding balance in the prior year quarter.

Home Improvement Lending Segment

The Bank’s home improvement loan portfolio grew 8% to $814.1 million as of September 30, 2024, compared to $750.5 million at September 30, 2023. Loan originations were $96.5 million, compared to $79.3 million in the prior year quarter.
Net interest income was $12.6 million, compared to $11.9 million in the prior year quarter.
Home improvement loans were 34% of loans receivable as of September 30, 2024, compared to 36% at September 30, 2023.
Delinquencies 30 days or more past due were $8.3 million, or 1.02%, of home improvement loans as of September 30, 2024, compared to $6.8 million, or 0.90%, at September 30, 2023.
Annualized net charge-offs were 1.76% of average home improvement loans outstanding, compared to 1.61% in the prior year quarter.
The provision for home improvement credit losses was $4.9 million and the allowance for credit losses was 2.42% of the outstanding balance, compared to $3.9 million and 2.31% of the outstanding balance in the prior year quarter.

Series F Preferred Stock Dividend

On October 24, 2024, the Bank’s Board of Directors declared a quarterly cash dividend of $0.50 per share on the Bank’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, which trades on the Nasdaq Capital Market under the ticker symbol “MBNKP.” The dividend is payable on January 2, 2025, to holders of record at the close of business on December 16, 2024.

About Medallion Bank

Medallion Bank specializes in providing consumer loans for the purchase of recreational vehicles, boats, and home improvements, along with loan origination services to fintech strategic partners. The Bank works directly with thousands of dealers, contractors and financial service providers serving their customers throughout the United States. Medallion Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City and is a wholly owned subsidiary of Medallion Financial Corp. (Nasdaq: MFIN).

For more information, visit www.medallionbank.com

Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, costs, sales, net investment income, earnings, returns and growth. These statements are often, but not always, made through the use of words or phrases such as “remains,” “anticipated,” “expected,” “continue,” “maintain” or the negative versions of these words or other comparable words or phrases of a future or forward-looking nature. These statements may relate to our future earnings, returns, capital levels, sources of funding, growth prospects, asset quality and pursuit and execution of our strategy. Medallion Bank’s actual results may differ significantly from the results discussed in such forward-looking statements. For a description of certain risks to which Medallion Bank is or may be subject, please refer to the factors discussed under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in Medallion Bank’s Form 10-K for the year ended December 31, 2023, and in its Quarterly Reports on Form 10-Q, filed with the FDIC. Medallion Bank’s Form 10-K, Form 10-Qs and other FDIC filings are available in the Investor Relations section of Medallion Bank’s website. Medallion Bank’s financial results for any period are not necessarily indicative of Medallion Financial Corp.’s results for the same period.

Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com

MEDALLION BANK STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Total interest income	$	72,352	$	62,193	$	202,079	$	173,414
Total interest expense		19,193		13,446		50,470		33,384
Net interest income		53,159		48,747		151,609		140,030
Provision for credit losses		20,153		14,024		55,345		26,740
Net interest income after provision for credit losses		33,006		34,723		96,264		113,290
Other non-interest income		645		968		2,116		1,263
Non-interest expense
Salaries and benefits		5,035		5,024		14,971		14,004
Loan servicing		3,158		3,007		9,074		8,723
Collection costs		1,604		1,509		4,578		4,473
Regulatory fees		961		1,021		2,826		2,484
Professional fees		368		450		1,185		1,612
Information technology		317		252		858		750
Occupancy and equipment		193		211		626		625
Other		875		839		2,685		2,705
Total non-interest expense		12,511		12,313		36,803		35,376
Income before income taxes		21,140		23,378		61,577		79,177
Provision for income taxes		5,661		6,222		16,583		21,268
Net income	$	15,479	$	17,156	$	44,994	$	57,909
Less: Preferred stock dividends		1,512		1,512		4,535	$	4,535
Net income attributable to common shareholder	$	13,967	$	15,644	$	40,459	$	53,374

MEDALLION BANK BALANCE SHEETS (UNAUDITED)

(In thousands)	September 30, 2024			December 31, 2023			September 30, 2023
Assets
Cash and federal funds sold	$	148,446		$	110,043		$	100,192
Investment securities, available-for-sale		56,754			54,282			53,175
Loans, inclusive of net deferred loan acquisition cost and fees		2,374,673			2,100,338			2,101,786
Allowance for credit losses		(90,784	)		(79,283	)		(75,094	)
Loans, net		2,283,889			2,021,055			2,026,692
Loan collateral in process of foreclosure		3,424			4,165			7,658
Fixed assets and right-of-use lease assets, net		9,275			8,140			7,705
Deferred tax assets		13,338			12,761			11,634
Accrued interest receivable		14,013			13,439			13,405
Other assets		38,472			38,171			37,595
Total assets	$	2,567,611		$	2,262,056		$	2,258,056
Liabilities and Shareholders’ Equity
Liabilities
Deposits and other funds borrowed	$	2,143,132		$	1,866,657		$	1,865,096
Accrued interest payable		4,880			4,029			3,052
Income tax payable		25,559			21,219			30,472
Other liabilities		17,301			17,509			18,397
Due to affiliates		1,038			849			942
Total liabilities		2,191,910			1,910,263			1,917,959
Shareholder’s Equity
Series E Preferred stock		26,303			26,303			26,303
Series F Preferred stock		42,485			42,485			42,485
Common stock		1,000			1,000			1,000
Additional paid in capital		77,500			77,500			77,500
Accumulated other comprehensive loss, net of tax		(3,080	)		(4,529	)		(5,794	)
Retained earnings		231,493			209,034			198,603
Total shareholders’ equity		375,701			351,793			340,097
Total liabilities and shareholders’ equity	$	2,567,611		$	2,262,056		$	2,258,056

The MIL Network –

January 25, 2025

MIL-OSI: Expand Energy Corporation Reports Third Quarter 2024 Results, Provides Preliminary 2025 Capital and Operating Plan and Announces Enhanced Capital Return Framework

Source: GlobeNewswire (MIL-OSI)

OKLAHOMA CITY, Oct. 29, 2024 (GLOBE NEWSWIRE) — Expand Energy Corporation (NASDAQ: EXE) (“Expand Energy” or the “company”) today reported third quarter 2024 financial and operating results. In addition, the company provided its preliminary 2025 capital and operating plan and announced details regarding its enhanced capital return framework. On October 1, 2024, Expand Energy announced the completion of the previously disclosed merger between Chesapeake Energy Corporation (“Chesapeake”) and Southwestern Energy Company (“Southwestern”).

Legacy Chesapeake Third Quarter Highlights

Net cash provided by operating activities of $422 million
Net loss of $114 million, or $0.85 per fully diluted share; adjusted net income⁽¹⁾of $22 million, or $0.16 per share
Adjusted EBITDAX⁽¹⁾of $365 million
Produced approximately 2.65 bcf/d net (100% natural gas)

Expand Energy Highlights

Raised annual synergy target by $100 million; expected to achieve approximately $225 million in 2025 and approximately $500 million in annual synergies by year end 2027
Upgraded at the start of fourth quarter to Investment Grade credit rating from S&P (BBB-) and Fitch (BBB-)
Quarterly base dividend of $0.575 per common share to be paid in December 2024, 15th straight quarter paying a dividend
2025 capital expenditures expected to be approximately $2.7 billion, yielding net production of approximately 7 bcf/day (~91% natural gas)
Enhanced capital return framework to more effectively return cash to shareholders and reduce net debt; announced new $1 billion share repurchase authorization

^{(1) Definitions of non-GAAP financial measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure are included at the end of this news release.}

“Our strong third quarter results, recent Investment Grade rating and preliminary 2025 outlook demonstrate the power of our advantaged portfolio and resilient financial foundation,” said Nick Dell’Osso, Expand Energy’s President and Chief Executive Officer. “Our integration efforts are already delivering, allowing us to raise our annual synergy expectations by 25% to $500 million, as we drive to lower our breakeven costs and more efficiently reach markets in need. As the largest domestic producer of natural gas, and a top producer globally, we are built to answer the call for affordable, reliable, lower carbon energy and expand opportunity for all stakeholders.”
Operations Update

In the third quarter, legacy Chesapeake operated an average of seven rigs to drill 30 wells and turned seven wells in line, resulting in net production of approximately 2.65 bcfe per day (100% natural gas). Additionally, the company built an inventory of 18 drilled but uncompleted (“DUCs”) wells and 12 deferred turn in lines (“TILs”). A detailed breakdown of third quarter production, capital expenditures and activity can be found in supplemental slides which have been posted at https://investors.expandenergy.com/events-presentations.

Expand Energy continues to execute its previously disclosed plan to defer completions and new TILs. As of October 1, 2024, the combined company had 58 DUCs, excluding working inventory, and 58 deferred TILs. The company intends to prudently activate production as market conditions warrant.

Expand Energy is currently running 12 rigs (8 in Haynesville, 2 in Northeast Appalachia, and 2 in Southwest Appalachia) and 6 completion crews (3 in Haynesville, 2 in Northeast Appalachia, and 1 in Southwest Appalachia). At current market conditions, the company expects to drop two rigs in the first quarter of 2025.

Annual Synergy Outlook and Preliminary 2025 Capital & Operating Program

Expand Energy increased its expected annual synergy outlook by $100 million to $500 million. The company expects to achieve approximately $225 million in synergies in 2025 and to achieve the full $500 million in annual synergies by year end 2027.

In 2025, at current market conditions, the company expects to run 10 to 12 rigs and invest approximately $2.7 billion yielding an estimated daily production of approximately 7 bcfe per day. Expand Energy will provide complete guidance in early 2025.

Shareholder Returns Update

Expand Energy plans to pay its quarterly base dividend of $0.575 per share on December 4, 2024 to shareholders of record at the close of business on November 14, 2024.

The company announced today its enhanced capital return framework which is designed to more effectively return cash to shareholders and reduce net debt. The plan is expected to go into effect January 1, 2025, and prioritizes the base dividend of $2.30 per share and $500 million of annual net debt reduction. Once both have been funded, it is anticipated that 75% of remaining free cash flow be distributed as market conditions warrant, between share repurchases and additional dividend payments. The remaining free cash flow would be maintained on the balance sheet.

In conjunction with the enhanced framework, Expand Energy’s Board of Directors approved a $1 billion repurchase authorization.

Conference Call Information

A conference call to discuss the results and preliminary 2025 plan has been scheduled for 9 a.m. EDT on October 30, 2024. Participants can view the live webcast here. Participants who would like to ask a question, can register here, and will receive the dial-in info and a unique PIN to join the call. Links to the conference call will be provided on Expand Energy’s website. A replay will be available on the website following the call.

Financial Statements, Non-GAAP Financial Measures and 2024 Guidance and Outlook Projections

Reconciliations of each non-GAAP financial measure used in this news release to the most directly comparable GAAP financial measure are provided below. Additional detail on the company’s 2024 third quarter financial and operational results, along with non-GAAP measures that adjust for items typically excluded by certain securities analysts, are available on the company’s website. Non-GAAP measures should not be considered as an alternative to GAAP measures. Management’s updated guidance for 2024 and preliminary plan for 2025 can be found on the company’s website at www.expandenergy.com.

Expand Energy Corporation (NASDAQ: EXE) is the largest independent natural gas producer in the United States, powered by dedicated and innovative employees focused on disrupting the industry’s traditional cost and market delivery model to responsibly develop assets in the nation’s most prolific natural gas basins. Expand Energy’s returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. Expand Energy is committed to expanding America’s energy reach to fuel a more affordable, reliable, lower carbon future.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include our current expectations or forecasts of future events, including matters relating to the combined company after the merger with Southwestern Energy Company (“Southwestern”), armed conflict and instability in Europe and the Middle East, along with the effects of the current global economic environment, and the impact of each on our business, financial condition, results of operations and cash flows, actions by, or disputes among or between, members of OPEC+ and other foreign oil-exporting countries, market factors, market prices, our ability to meet debt service requirements, our ability to continue to pay cash dividends, the amount and timing of any cash dividends and our ESG initiatives. Forward-looking and other statements in this release regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “expect,” “could,” “may,” “anticipate,” “intend,” “plan,” “ability,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “guidance,” “outlook,” “opportunity” or “strategy.” The absence of such words or expressions does not necessarily mean the statements are not forward-looking.

Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

conservation measures and technological advances could reduce demand for natural gas and oil;
negative public perceptions of our industry;
competition in the natural gas and oil exploration and production industry;
the volatility of natural gas, oil and NGL prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles;
risks from regional epidemics or pandemics and related economic turmoil, including supply chain constraints;
write-downs of our natural gas and oil asset carrying values due to low commodity prices;
significant capital expenditures are required to replace our reserves and conduct our business;
our ability to replace reserves and sustain production;
uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;
drilling and operating risks and resulting liabilities;
our ability to generate profits or achieve targeted results in drilling and well operations;
leasehold terms expiring before production can be established;
risks from our commodity price risk management activities;
uncertainties, risks and costs associated with natural gas and oil operations;
our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used;
pipeline and gathering system capacity constraints and transportation interruptions;
our plans to participate in the LNG export industry;
terrorist activities and/or cyber-attacks adversely impacting our operations;
risks from failure to protect personal information and data and compliance with data privacy and security laws and regulations;
disruption of our business by natural or human causes beyond our control;
a deterioration in general economic, business or industry conditions;
the impact of inflation and commodity price volatility, including as a result of armed conflict and instability in Europe and the Middle East, along with the effects of the current global economic environment, on our business, financial condition, employees, contractors, vendors and the global demand for natural gas and oil and on U.S. and global financial markets;
our inability to access the capital markets on favorable terms;
the limitations on our financial flexibility due to our level of indebtedness and restrictive covenants from our indebtedness;
our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information;
risks related to acquisitions or dispositions, or potential acquisitions or dispositions, including risks related to the merger with Southwestern, such as risks related to loss of management personnel, other key employees, customers, suppliers, vendors, landlords, joint venture partners and other business partners following the merger; risks related to disruption of management time from ongoing business operations due to integration; the risk of any litigation relating to the transaction; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; and the risk that the combined company may be unable to achieve synergies or other anticipated benefits of the transaction or it may take longer than expected to achieve those synergies or benefits;
our ability to achieve and maintain ESG certifications, goals and commitments;
legislative, regulatory and ESG initiatives, addressing environmental concerns, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring or water disposal;
federal and state tax proposals affecting our industry;
risks related to an annual limitation on the utilization of our tax attributes, as well as trading in our common stock, additional issuance of common stock, and certain other stock transactions, which could lead to an additional, potentially more restrictive, annual limitation; and
other factors that are described under Risk Factors in Item 1A of Part I of our Annual Report on Form 10-K.

We caution you not to place undue reliance on the forward-looking statements contained in this release, which speak only as of the filing date, and we undertake no obligation to update this information. We urge you to carefully review and consider the disclosures in this release and our filings with the SEC that attempt to advise interested parties of the risks and factors that may affect our business.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

($ in millions, except per share data)	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	1,044		$	1,079
Restricted cash		76			74
Accounts receivable, net		261			593
Derivative assets		199			637
Other current assets		217			226
Total current assets		1,797			2,609
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties		12,373			11,468
Unproved properties		1,806			1,806
Other property and equipment		518			497
Total property and equipment		14,697			13,771
Less: accumulated depreciation, depletion and amortization		(4,743	)		(3,674	)
Total property and equipment, net		9,954			10,097
Long-term derivative assets		15			74
Deferred income tax assets		1,038			933
Other long-term assets		588			663
Total assets	$	13,392		$	14,376

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	264		$	425
Accrued interest		41			39
Derivative liabilities		5			3
Other current liabilities		589			847
Total current liabilities		899			1,314
Long-term debt, net		2,017			2,028
Long-term derivative liabilities		—			9
Asset retirement obligations, net of current portion		271			265
Other long-term liabilities		17			31
Total liabilities		3,204			3,647
Contingencies and commitments
Stockholders’ equity:
Common stock, $0.01 par value, 450,000,000 shares authorized: 135,107,576 and 130,789,936 shares issued		1			1
Additional paid-in capital		5,778			5,754
Retained earnings		4,409			4,974
Total stockholders’ equity		10,188			10,729
Total liabilities and stockholders’ equity	$	13,392		$	14,376

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
($ in millions, except per share data)
Revenues and other:
Natural gas, oil and NGL	$	407		$	682		$	1,374		$	2,784
Marketing		193			724			641			1,987
Natural gas and oil derivatives		46			106			207			1,195
Gains on sales of assets		2			—			12			807
Total revenues and other		648			1,512			2,234			6,773
Operating expenses:
Production		50			73			158			293
Gathering, processing and transportation		152			192			479			663
Severance and ad valorem taxes		11			27			58			136
Exploration		2			4			7			19
Marketing		192			723			656			1,985
General and administrative		39			29			133			95
Separation and other termination costs		—			—			23			3
Depreciation, depletion and amortization		335			382			1,082			1,148
Other operating expense, net		22			3			55			15
Total operating expenses		803			1,433			2,651			4,357
Income (loss) from operations		(155	)		79			(417	)		2,416
Other income (expense):
Interest expense		(20	)		(23	)		(59	)		(82	)
Losses on purchases, exchanges or extinguishments of debt		—			—			(2	)		—
Other income		17			15			58			48
Total other income (expense)		(3	)		(8	)		(3	)		(34	)
Income (loss) before income taxes		(158	)		71			(420	)		2,382
Income tax expense (benefit)		(44	)		1			(105	)		532
Net income (loss)	$	(114	)	$	70		$	(315	)	$	1,850
Earnings (loss) per common share:
Basic	$	(0.85	)	$	0.53		$	(2.39	)	$	13.86
Diluted	$	(0.85	)	$	0.49		$	(2.39	)	$	12.90
Weighted average common shares outstanding (in thousands):
Basic		133,794			132,153			131,958			133,460
Diluted		133,794			142,348			131,958			143,463

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)		2024			2023			2024			2023
Cash flows from operating activities:
Net income (loss)	$	(114	)	$	70		$	(315	)	$	1,850
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		335			382			1,082			1,148
Deferred income tax expense (benefit)		(44	)		(80	)		(105	)		319
Derivative gains, net		(46	)		(106	)		(207	)		(1,195	)
Cash receipts on derivative settlements, net		207			216			695			167
Share-based compensation		10			9			29			25
Gains on sales of assets		(2	)		—			(12	)		(807	)
Losses on purchases, exchanges or extinguishments of debt		—			—			2			—
Other		(9	)		6			(16	)		35
Changes in assets and liabilities		85			9			30			368
Net cash provided by operating activities		422			506			1,183			1,910
Cash flows from investing activities:
Capital expenditures		(298	)		(423	)		(1,021	)		(1,450	)
Receipts of deferred consideration		—			—			116			—
Contributions to investments		(26	)		(61	)		(71	)		(149	)
Proceeds from divestitures of property and equipment		5			4			17			1,967
Net cash provided by (used in) investing activities		(319	)		(480	)		(959	)		368
Cash flows from financing activities:
Proceeds from Credit Facility		—			—			—			1,125
Payments on Credit Facility		—			—			—			(2,175	)
Funds held for transition services		—			(6	)		—			91
Proceeds from warrant exercise		—			—			1			—
Debt issuance and other financing costs		—			—			(4	)		—
Cash paid to repurchase and retire common stock		—			(132	)		—			(313	)
Cash paid for common stock dividends		(78	)		(77	)		(254	)		(412	)
Net cash used in financing activities		(78	)		(215	)		(257	)		(1,684	)
Net increase (decrease) in cash, cash equivalents and restricted cash		25			(189	)		(33	)		594
Cash, cash equivalents and restricted cash, beginning of period		1,095			975			1,153			192
Cash, cash equivalents and restricted cash, end of period	$	1,120		$	786		$	1,120		$	786

Cash and cash equivalents	$	1,044		$	713		$	1,044		$	713
Restricted cash		76			73			76			73
Total cash, cash equivalents and restricted cash	$	1,120		$	786		$	1,120		$	786

NATURAL GAS, OIL AND NGL PRODUCTION AND AVERAGE SALES PRICES (unaudited)

	Three Months Ended September 30, 2024
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,531	1.51	—	—	—	—	1,531	1.51
Haynesville	1,116	1.88	—	—	—	—	1,116	1.88
Total	2,647	1.67	—	—	—	—	2,647	1.67

Average NYMEX Price		2.16		—
Average Realized Price (including realized derivatives)		2.51		—		—		2.51

	Three Months Ended September 30, 2023
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,734	1.63	—	—	—	—	1,734	1.63
Haynesville	1,568	2.15	—	—	—	—	1,568	2.15
Eagle Ford	76	2.52	9	82.33	10	25.76	193	6.36
Total	3,378	1.89	9	82.33	10	25.76	3,495	2.12

Average NYMEX Price		2.55		82.26
Average Realized Price (including realized derivatives)		2.58		82.33		25.76		2.79

	Nine Months Ended September 30, 2024
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,601	1.65	—	—	—	—	1,601	1.65
Haynesville	1,261	1.88	—	—	—	—	1,261	1.88
Total	2,862	1.75	—	—	—	—	2,862	1.75

Average NYMEX Price		2.10		—
Average Realized Price (including realized derivatives)		2.64		—		—		2.64

	Nine Months Ended September 30, 2023
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,845	2.24	—	—	—	—	1,845	2.24
Haynesville	1,569	2.26	—	—	—	—	1,569	2.26
Eagle Ford	96	2.22	26	77.41	12	25.61	323	7.82
Total	3,510	2.25	26	77.41	12	25.61	3,737	2.73

Average NYMEX Price		2.69		77.39
Average Realized Price (including realized derivatives)		2.56		72.10		25.61		2.99

CAPITAL EXPENDITURES ACCRUED (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
($ in millions)
Drilling and completion capital expenditures:
Marcellus	$	82	$	91	$	280	$	324
Haynesville		151		191		477		704
Eagle Ford		—		9		—		222
Total drilling and completion capital expenditures		233		291		757		1,250
Non-drilling and completion – field		32		48		106		100
Non-drilling and completion – corporate		24		18		73		56
Total capital expenditures	$	289	$	357	$	936	$	1,406

NON-GAAP FINANCIAL MEASURES

As a supplement to the financial results prepared in accordance with U.S. GAAP, Expand Energy’s quarterly earnings releases contain certain financial measures that are not prepared or presented in accordance with U.S. GAAP. These non-GAAP financial measures include Adjusted Net Income, Adjusted Diluted Earnings Per Common Share, Adjusted EBITDAX, Free Cash Flow, Adjusted Free Cash Flow and Net Debt. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below. Management believes these adjusted financial measures are a meaningful adjunct to earnings and cash flows calculated in accordance with GAAP because (a) management uses these financial measures to evaluate the company’s trends and performance, (b) these financial measures are comparable to estimates provided by certain securities analysts, and (c) items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

Expand Energy’s definitions of each non-GAAP measure presented herein are provided below. Because not all companies or securities analysts use identical calculations, Expand Energy’s non-GAAP measures may not be comparable to similarly titled measures of other companies or securities analysts.

Adjusted Net Income: Adjusted Net Income is defined as net income (loss) adjusted to exclude unrealized (gains) losses on natural gas and oil derivatives, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Expand Energy believes that Adjusted Net Income facilitates comparisons of the company’s period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Net Income should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

Adjusted Diluted Earnings Per Common Share: Adjusted Diluted Earnings Per Common Share is defined as diluted earnings (loss) per common share adjusted to exclude the per diluted share amounts attributed to unrealized (gains) losses on natural gas and oil derivatives, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Expand Energy believes that Adjusted Diluted Earnings Per Common Share facilitates comparisons of the company’s period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Diluted Earnings Per Common Share should not be considered an alternative to, or more meaningful than, earnings (loss) per common share as presented in accordance with GAAP.

Adjusted EBITDAX: Adjusted EBITDAX is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense, exploration expense, unrealized (gains) losses on natural gas and oil derivatives, separation and other termination costs, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results. Adjusted EBITDAX is presented as it provides investors an indication of the company’s ability to internally fund exploration and development activities and service or incur debt. Adjusted EBITDAX should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

Free Cash Flow: Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures. Free Cash Flow is a liquidity measure that provides investors additional information regarding the company’s ability to service or incur debt and return cash to shareholders. Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

Adjusted Free Cash Flow: Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures and cash contributions to investments, adjusted to exclude certain items management believes affect the comparability of operating results. Adjusted Free Cash Flow is a liquidity measure that provides investors additional information regarding the company’s ability to service or incur debt and return cash to shareholders and is used to determine Expand Energy’s returns framework payout. Adjusted Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

Net Debt: Net Debt is defined as GAAP total debt excluding premiums, discounts, and deferred issuance costs less cash and cash equivalents. Net Debt is useful to investors as a widely understood measure of liquidity and leverage, but this measure should not be considered as an alternative to, or more meaningful than, total debt presented in accordance with GAAP.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)		2024			2023			2024			2023
Net income (loss) (GAAP)	$	(114	)	$	70		$	(315	)	$	1,850

Adjustments:
Unrealized (gains) losses on natural gas and oil derivatives		160			110			489			(931	)
Separation and other termination costs		—			—			23			3
Gains on sales of assets		(2	)		—			(12	)		(807	)
Other operating expense, net		23			3			58			18
Losses on purchases, exchanges or extinguishments of debt		—			—			2			—
Other		(4	)		(4	)		(17	)		(19	)
Tax effect of adjustments^(a)		(41	)		(24	)		(125	)		403
Adjusted net income (Non-GAAP)	$	22		$	155		$	103		$	517

(a)	The three- and nine-month periods ended September 30, 2024 and September 30, 2023 include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%.

RECONCILIATION OF EARNINGS (LOSS) PER COMMON SHARE TO ADJUSTED DILUTED EARNINGS PER COMMON SHARE (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($/share)		2024			2023			2024			2023
Earnings (loss) per common share (GAAP)	$	(0.85	)	$	0.53		$	(2.39	)	$	13.86
Effect of dilutive securities		—			(0.04	)		—			(0.96	)
Diluted earnings (loss) per common share (GAAP)	$	(0.85	)	$	0.49		$	(2.39	)	$	12.90

Adjustments:
Unrealized (gains) losses on natural gas and oil derivatives		1.20			0.78			3.70			(6.49	)
Separation and other termination costs		—			—			0.17			0.02
Gains on sales of assets		(0.02	)		—			(0.09	)		(5.63	)
Other operating expense, net		0.17			0.02			0.44			0.13
Losses on purchases, exchanges or extinguishments of debt		—			—			0.01			—
Other		(0.03	)		(0.03	)		(0.13	)		(0.13	)
Tax effect of adjustments^(a)		(0.31	)		(0.17	)		(0.95	)		2.81
Effect of dilutive securities		—			—			(0.03	)		—
Adjusted diluted earnings per common share (Non-GAAP)	$	0.16		$	1.09		$	0.73		$	3.61

(a)	The three- and nine-month periods ended September 30, 2024 and September 30, 2023 include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDAX (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
($ in millions)
Net income (loss) (GAAP)	$	(114	)	$	70		$	(315	)	$	1,850

Adjustments:
Interest expense		20			23			59			82
Income tax expense (benefit)		(44	)		1			(105	)		532
Depreciation, depletion and amortization		335			382			1,082			1,148
Exploration		2			4			7			19
Unrealized (gains) losses on natural gas and oil derivatives		160			110			489			(931	)
Separation and other termination costs		—			—			23			3
Gains on sales of assets		(2	)		—			(12	)		(807	)
Other operating expense, net		23			3			58			18
Losses on purchases, exchanges or extinguishments of debt		—			—			2			—
Other		(15	)		(13	)		(57	)		(36	)
Adjusted EBITDAX (Non-GAAP)	$	365		$	580		$	1,231		$	1,878

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
($ in millions)
Net cash provided by operating activities (GAAP)	$	422		$	506		$	1,183		$	1,910
Cash capital expenditures		(298	)		(423	)		(1,021	)		(1,450	)
Free cash flow (Non-GAAP)		124			83			162			460
Cash contributions to investments		(26	)		(61	)		(71	)		(149	)
Free cash flow associated with divested assets^(a)		—			(57	)		—			(195	)
Adjusted free cash flow (Non-GAAP)	$	98		$	(35	)	$	91		$	116

(a)

In March and April of 2023, we closed two divestitures of certain Eagle Ford assets. Due to the structure of these transactions, both of which had an effective date of October 1, 2022, the cash generated by these assets was delivered to the respective buyers through a reduction in the proceeds we received at the closing of each transaction. Additionally, in August 2023, we entered into an agreement to sell the final portion of our Eagle Ford assets, with an economic effective date of February 1, 2023. Included within the adjustment above reflects the cash flows from the three months ended September 30, 2023, associated with the final portion of our Eagle Ford assets as the cash generated by those assets were delivered to the buyer through a reduction in the proceeds we received once the transaction closed during the fourth quarter of 2023.

RECONCILIATION OF TOTAL DEBT TO NET DEBT (unaudited)

($ in millions)	September 30, 2024
Total debt (GAAP)	$	2,017
Premiums and issuance costs on debt		(67	)
Principal amount of debt		1,950
Cash and cash equivalents		(1,044	)
Net debt (Non-GAAP)	$	906

INVESTOR CONTACT:	MEDIA CONTACT:	EXPAND ENERGY CORPORATION
Chris Ayres	Brooke Coe	6100 North Western Avenue
(405) 935-8870	(405) 935-8878	P.O. Box 18496
ir@expandenergy.com	media@expandenergy.com	Oklahoma City, OK 73154

The MIL Network –

January 25, 2025

MIL-OSI: EXL Reports 2024 Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

2024 Third Quarter Revenue of $472.1 Million, up 14.9% year-over-year

Q3 Diluted EPS (GAAP) of $0.33, up 24.2% from $0.26 in Q3 of 2023

Q3 Adjusted Diluted EPS (Non-GAAP) ⁽¹⁾of $0.44, up 16.3% from $0.37 in Q3 of 2023

NEW YORK, Oct. 29, 2024 (GLOBE NEWSWIRE) — ExlService Holdings, Inc. (Nasdaq: EXLS), a leading data analytics and digital operations and solutions company, today announced its financial results for the quarter ended September 30, 2024.

Rohit Kapoor, chairman and chief executive officer, said, “We are pleased with our third quarter results. We delivered revenue and adjusted diluted EPS growth of 15% and 16% respectively. The ongoing execution of our data and AI-led strategy enabled us to accelerate our growth, achieving double-digit growth across both our data analytics and digital operations and solutions businesses during the quarter. As we continue to expand our data modernization and AI solution set with innovations such as industry-specific large language models (LLMs), we are well positioned to continue our momentum into the fourth quarter and beyond.”

Maurizio Nicolelli, chief financial officer, said, “Based on our strong year-to-date performance and current visibility for the remainder of the year, we are raising the full-year guidance range for revenue and EPS. We now expect revenue to be in the range of $1.825 billion to $1.835 billion, up from our prior guidance of $1.805 billion to $1.830 billion. This represents 12% to 13% year-over-year growth on a reported currency basis and approximately 12% on a constant currency basis. We now expect our adjusted diluted earnings per share for 2024 to be in the range of $1.61 to $1.63, up from our prior guidance of $1.59 to $1.62, representing growth of 13% to 14% over the prior year.”

__________________________________________________________

(1) Reconciliations of adjusted (non-GAAP) financial measures to the most directly comparable GAAP measures, where applicable, are included at the end of this release under “Reconciliation of Adjusted Financial Measures to GAAP Measures.” These non-GAAP measures, including adjusted diluted EPS and constant currency measures, are not measures of financial performance prepared in accordance with GAAP.

Financial Highlights: Third Quarter 2024

Revenue for the quarter ended September 30, 2024 increased to $472.1 million compared to $411.0 million for the third quarter of 2023, an increase of 14.9% on a reported basis and 14.5% on a constant currency basis. Revenue increased by 5.3% sequentially on a reported basis and 4.9% on a constant currency basis, from the second quarter of 2024.

	Revenue						Gross Margin
	Three months ended						Three months ended
Reportable Segments	September 30, 2024		September 30, 2023		June 30, 2024		September 30, 2024			September 30, 2023			June 30, 2024
	(dollars in millions)
Insurance	$	157.6	$	136.4	$	149.3		36.3	%		36.6	%		36.0	%
Healthcare		30.5		26.2		28.1		33.6	%		36.8	%		33.1	%
Emerging Business		80.0		65.3		77.2		40.2	%		42.4	%		41.6	%
Analytics		204.0		183.1		193.8		38.5	%		37.0	%		36.7	%
Revenues, net	$	472.1	$	411.0	$	448.4		37.8	%		37.7	%		37.1	%

Operating income margin for each of the quarter ended September 30, 2024 and the third quarter of 2023, was 14.7%, and 13.7% for the second quarter of 2024. Adjusted operating income margin for the quarter ended September 30, 2024, was 19.9%, compared to 20.0% for the third quarter of 2023 and 19.8% for the second quarter of 2024.

Diluted earnings per share for the quarter ended September 30, 2024, was $0.33, compared to $0.26 for the third quarter of 2023 and $0.28 for the second quarter of 2024. Adjusted diluted earnings per share for the quarter ended September 30, 2024, was $0.44, compared to $0.37 for the third quarter of 2023 and $0.40 for the second quarter of 2024.

Business Highlights: Third Quarter 2024

Won 13 new clients in the third quarter of 2024, with 8 clients in digital operations and solutions business and 5 clients in analytics.
Launched the EXL Insurance LLM, developed using NVIDIA AI software. This LLM addresses the highly specialized needs of the insurance industry, leveraging EXL’s 25 years of experience in the industry and a proprietary data set with more than a decade of claims-related data.
Expanded partnership with Databricks to deploy new data management and generative AI solutions into the Databricks ecosystem, speeding the development of cutting-edge data management solutions for EXL clients.
Recognized as a Major Player in the IDC MarketScape: Worldwide Data Modernization Services 2024 Vendor Assessment based on our core value propositions, execution and innovation capabilities, go-to-market strategy, and market impact.
Named by Newsweek as one of America’s Most Reliable Companies 2025 based on parameters including: Likelihood of Recommendation, Ease of Doing Business, Value for Money, Consistency of Deliverables, and Reputation for Dependability.

2024 Guidance
Based on current visibility, and a U.S. dollar to Indian rupee exchange rate of 84.0, U.K. pound sterling to U.S. dollar exchange rate of 1.30, U.S. dollar to the Philippine peso exchange rate of 58.0 and all other currencies at current exchange rates, we are providing the following guidance for the full year 2024:

Revenue of $1.825 billion to $1.835 billion, representing an increase of 12% to 13% on a reported currency basis and approximately 12% on a constant currency basis from 2023.

Adjusted diluted earnings per share of $1.61 to $1.63, representing an increase of 13% to 14% from 2023.

Conference Call

ExlService Holdings, Inc. will host a conference call on Wednesday, Oct. 30, 2024, at 10:00 A.M. ET to discuss the company’s quarterly operating and financial results. The conference call will be available live via the internet by accessing the investor relations section of EXL’s website at ir.exlservice.com, where an accompanying investor-friendly spreadsheet of historical operating and financial data can also be accessed. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software.

Please note that there is a new system to access the live call-in order to ask questions. To join the live call, please register here. For those who cannot access the live broadcast, a replay will be available on the EXL website ir.exlservice.com for a period of approximately twelve months.

About ExlService Holdings, Inc.

EXL (Nasdaq: EXLS) is a leading data analytics and digital operations and solutions company. We partner with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. EXL harnesses the power of data, analytics, AI, and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect. We are headquartered in New York and have more than 57,000 employees spanning six continents. For more information, visit www.exlservice.com.

Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to EXL’s operations and business environment, all of which are difficult to predict and many of which are beyond EXL’s control. Forward-looking statements include information concerning EXL’s possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of management’s experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors, which include our ability to maintain and grow client demand, our ability to hire and retain sufficiently trained employees, and our ability to accurately estimate and/or manage costs, rising interest rates, rising inflation, recessionary economic trends, and ability to successfully integrate strategic acquisitions, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K. You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect EXL. EXL has no obligation to update any forward-looking statements after the date hereof, except as required by applicable law.

EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amount and share count)

	Three months ended September 30,						Nine months ended September 30,
		2024			2023			2024			2023
Revenues, net	$	472,073		$	410,971		$	1,356,946		$	1,216,610
Cost of revenues⁽¹⁾		293,806			256,002			849,336			760,691
Gross profit⁽¹⁾		178,267			154,969			507,610			455,919
Operating expenses:
General and administrative expenses		57,495			52,213			167,195			144,564
Selling and marketing expenses		37,568			30,943			108,982			88,674
Depreciation and amortization expense		13,799			11,583			39,055			38,192
Total operating expenses		108,862			94,739			315,232			271,430
Income from operations		69,405			60,230			192,378			184,489
Foreign exchange gain, net		278			409			673			838
Interest expense		(5,526	)		(3,405	)		(14,145	)		(10,030	)
Other income, net		4,374			778			11,876			6,594
Income before income tax expense and earnings from equity affiliates		68,531			58,012			190,782			181,891
Income tax expense		15,460			14,161			43,086			37,773
Income before earnings from equity affiliates		53,071			43,851			147,696			144,118
Gain/(loss) from equity-method investment		(34	)		25			(71	)		157
Net income	$	53,037		$	43,876		$	147,625		$	144,275
Earnings per share:
Basic	$	0.33		$	0.26		$	0.90		$	0.87
Diluted	$	0.33		$	0.26		$	0.90		$	0.86
Weighted average number of shares used in computing earnings per share:
Basic		161,732,872			166,159,619			163,197,767			166,707,599
Diluted		163,187,733			167,688,374			164,620,081			168,591,612

⁽¹⁾ Exclusive of depreciation and amortization expense.

EXLSERVICE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except per share amount and share count)

	As of
	September 30, 2024			December 31, 2023

Assets
Current assets:
Cash and cash equivalents	$	150,102		$	136,953
Short-term investments		175,648			153,881
Restricted cash		7,342			4,062
Accounts receivable, net		340,904			308,108
Other current assets		93,693			76,669
Total current assets		767,689			679,673
Property and equipment, net		107,395			100,373
Operating lease right-of-use assets		71,796			64,856
Restricted cash		5,820			4,386
Deferred tax assets, net		106,881			82,927
Goodwill		427,663			405,639
Other intangible assets, net		51,291			50,164
Long-term investments		14,184			4,430
Other assets		57,113			49,524
Total assets	$	1,609,832		$	1,441,972
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,082		$	5,055
Current portion of long-term borrowings		4,891			65,000
Deferred revenue		12,472			12,318
Accrued employee costs		110,677			117,137
Accrued expenses and other current liabilities		105,159			114,113
Current portion of operating lease liabilities		16,904			12,780
Total current liabilities		254,185			326,403
Long-term borrowings, less current portion		339,828			135,000
Operating lease liabilities, less current portion		62,336			58,175
Deferred tax liabilities, net		3,245			1,495
Other non-current liabilities		42,675			31,462
Total liabilities		702,269			552,535
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued		—			—
Common stock, $0.001 par value; 400,000,000 shares authorized, 205,317,002 shares issued and 160,880,592 shares outstanding as of September 30, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023		205			203
Additional paid-in capital		572,430			508,028
Retained earnings		1,231,288			1,083,663
Accumulated other comprehensive loss		(122,593	)		(127,040	)
Total including shares held in treasury		1,681,330			1,464,854
Less: 44,436,410 shares as of September 30, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost		(773,767	)		(575,417	)
Total stockholders’ equity		907,563			889,437
Total liabilities and stockholders’ equity	$	1,609,832		$	1,441,972

EXLSERVICE HOLDINGS, INC.

Reconciliation of Adjusted Financial Measures to GAAP Measures

In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), EXL has included in this release certain financial measures that are considered non-GAAP financial measures, including the following:

Adjusted operating income and adjusted operating income margin;
Adjusted EBITDA and adjusted EBITDA margin;
Adjusted net income and adjusted diluted earnings per share; and
Revenue growth on constant currency basis.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Accordingly, the financial results calculated in accordance with GAAP and reconciliations from those financial statements should be carefully evaluated. EXL believes that providing these non-GAAP financial measures may help investors better understand EXL’s underlying financial performance. Management also believes that these non-GAAP financial measures, when read in conjunction with EXL’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s results and comparisons of the Company’s results with the results of other companies. Additionally, management considers some of these non-GAAP financial measures to determine variable compensation of its employees. The Company believes that it is unreasonably difficult to provide its earnings per share financial guidance in accordance with GAAP, or a qualitative reconciliation thereof, for a number of reasons, including, without limitation, the Company’s inability to predict its future stock-based compensation expense under ASC Topic 718, the amortization of intangibles associated with future acquisitions and the currency fluctuations and associated tax effects. As such, the Company presents guidance with respect to adjusted diluted earnings per share. The Company also incurs significant non-cash charges for depreciation that may not be indicative of the Company’s ability to generate cash flow.

EXL non-GAAP financial measures exclude, where applicable, stock-based compensation expense, amortization of acquisition-related intangible assets, restructuring costs, litigation settlement costs and associated legal fees, effects of termination of leases, certain defined social security contributions, allowance for certain material expected credit losses, other acquisition-related expenses or benefits and effect of any non-recurring tax adjustments. Acquisition-related expenses or benefits include, changes in the fair value of contingent consideration, external deal costs, integration expenses, direct and incremental travel costs and non-recurring benefits or losses. Our adjusted net income and adjusted diluted EPS also excludes the effects of income tax on the above pre-tax items, as applicable. The effects of income tax of each item is calculated by applying the statutory rate of the local tax regulations in the jurisdiction in which the item was incurred.

A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and exclude costs that are recurring, namely stock-based compensation and amortization of acquisition-related intangible assets. EXL compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures to allow investors to evaluate such non-GAAP financial measures.

EXL’s primary exchange rate exposure is with the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand. The average exchange rate of the U.S. dollar against the Indian rupee increased from 82.69 during the quarter ended September 30, 2023 to 83.79 during the quarter ended September 30, 2024, representing a depreciation of 1.3% against the U.S. dollar. The average exchange rate of the U.S. dollar against the Philippine peso increased from 56.02 during the quarter ended September 30, 2023 to 56.84 during the quarter ended September 30, 2024, representing a depreciation of 1.5% against the U.S. dollar. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.26 during the quarter ended September 30, 2023 to 1.31 during the quarter ended September 30, 2024, representing an appreciation of 4.4% against the U.S. dollar. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.49 during the quarter ended September 30, 2023 to 17.74 during the quarter ended September 30, 2024, representing an appreciation of 4.1% against the U.S. dollar.

The following table shows the reconciliation of these non-GAAP financial measures for the three months ended September 30, 2024 and September 30, 2023, and the three months ended June 30, 2024:

Reconciliation of Adjusted Operating Income and Adjusted EBITDA (Amounts in thousands)

	Three months ended
	September 30,						June 30,
		2024			2023			2024
Net Income (GAAP)	$	53,037		$	43,876		$	45,825
add: Income tax expense		15,460			14,161			13,873
add/(subtract): Foreign exchange gain, net, interest expense, gain/(loss) from equity-method investment and other income/(loss), net		908			2,193			1,751
Income from operations (GAAP)	$	69,405		$	60,230		$	61,449
add: Stock-based compensation expense		21,232			17,067			18,095
add: Amortization of acquisition-related intangibles		3,449			3,157			3,077
add: Restructuring and litigation settlement costs (a)		—			—			6,174
add: Allowance for expected credit losses (b)		—			1,700			—
Adjusted operating income (Non-GAAP)	$	94,086		$	82,154		$	88,795
Adjusted operating income margin as a % of Revenue (Non-GAAP)		19.9	%		20.0	%		19.8	%
add: Depreciation on long-lived assets		10,350			8,426			9,833
Adjusted EBITDA (Non-GAAP)	$	104,436		$	90,580		$	98,628
Adjusted EBITDA margin as a % of revenue (Non-GAAP)		22.1	%		22.0	%		22.0	%

(a) To exclude effects of employee severance costs and outplacement support costs of $4,762 and litigation settlement costs and associated legal fees of $1,412 during the three months ended June 30, 2024.

(b) To exclude the effects of material allowance for expected credit losses on accounts receivables related to a customer bankruptcy event during the three months ended September 30, 2023.

Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share (Amounts in thousands, except per share amount)

	Three months ended
	September 30,						June 30,
		2024			2023			2024
Net income (GAAP)	$	53,037		$	43,876		$	45,825
add: Stock-based compensation expense		21,232			17,067			18,095
add: Amortization of acquisition-related intangibles		3,449			3,157			3,077
add: Restructuring and litigation settlement costs (a)		—			—			6,174
add: Effects of changes in fair value of contingent consideration		—			2,500			—
add: Allowance for expected credit losses (b)		—			1,700			—
subtract: Tax impact on stock-based compensation expense (c)		(5,830	)		(4,340	)		(4,619	)
subtract: Tax impact on amortization of acquisition-related intangibles		(866	)		(771	)		(765	)
subtract: Tax impact on restructuring and litigation settlement costs		—			—			(1,588	)
subtract: Tax impact on allowance for expected credit losses		—			(429	)		—
Adjusted net income (Non-GAAP)	$	71,022		$	62,760		$	66,199
Adjusted diluted earnings per share (Non-GAAP)	$	0.44		$	0.37		$	0.40

(a) To exclude effects of employee severance costs and outplacement support costs of $4,762 and litigation settlement costs and associated legal fees of $1,412 during the three months ended June 30, 2024.

(b) To exclude the effects of material allowance for expected credit losses on accounts receivables related to a customer bankruptcy event during the three months ended September 30, 2023.

(c) Tax impact includes $1,673 and $462 during the three months ended September 30, 2024 and 2023 respectively, and $18 during the three months ended June 30, 2024, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation – Stock Compensation.

Contacts:
Investor Relations
John Kristoff
Vice President, Investor Relations
+1 212 209 4613
ir@exlservice.com

Media – US
Keith Little
Assistant Vice President, Media Relations
+1 703 598 0980
media.relations@exlservice.com

The MIL Network –

January 25, 2025

MIL-OSI: Qorvo® Announces Fiscal 2025 Second Quarter Financial Results

Source: GlobeNewswire (MIL-OSI)

GREENSBORO, N.C., Oct. 29, 2024 (GLOBE NEWSWIRE) — Qorvo® (Nasdaq:QRVO), a leading global provider of connectivity and power solutions, today announced financial results for the Company’s fiscal 2025 second quarter ended September 28, 2024.

On a GAAP basis, revenue for Qorvo’s fiscal 2025 second quarter was $1.047 billion, gross margin was 42.6%, operating income was $9.7 million, and loss per share was $0.18. On a non-GAAP basis, gross margin was 47.0%, operating income was $212.2 million, and diluted earnings per share was $1.88.

Bob Bruggeworth, president and chief executive officer of Qorvo, said, “In the September quarter, ACG successfully supported our largest customer’s seasonal smartphone ramp. In HPA, we expanded our D&A business while building a broad-based business in power management. In CSG, we maintained our leadership in Wi-Fi applications while investing to grow in diverse businesses including automotive solutions and SoCs for ultra-wideband and Matter. HPA and CSG are on pace to achieve mid-teen year-over-year growth in fiscal 2025.”

Financial Commentary and Outlook

Grant Brown, chief financial officer of Qorvo, said, “In the September quarter, we exceeded the midpoint of guidance in revenue, gross margin and EPS. Looking forward, the flagship and premium tiers in the smartphone market are holding up well, however, content and ramp profiles vary by model, and we are experiencing unfavorable mix. We expect this to continue in the second half of fiscal 2025. In addition, in the mid and entry tiers of Android 5G smartphones, mix has shifted toward entry-tier 5G at the expense of mid-tier 5G. In our current view, we don’t expect this mix shift in Android 5G from mid-tier to entry-tier to reverse. As a result, we are taking appropriate actions, including factory consolidation and operating expense reductions as well as focusing on opportunities that align with our long-term profitability objectives. We currently expect full-year fiscal 2025 revenue and gross margin will be slightly down versus fiscal 2024.”

Qorvo’s current outlook for the December 2024 quarter is:

Quarterly revenue of approximately $900 million, plus or minus $25 million
Non-GAAP gross margin of approximately 45%
Non-GAAP diluted earnings per share between $1.10 and $1.30

See “Forward-looking non-GAAP financial measures” below. Qorvo’s actual quarterly results may differ from these expectations and projections, and such differences may be material.

Selected Financial Information

The following tables set forth selected GAAP and non-GAAP financial information for Qorvo for the periods indicated. See the more detailed financial information for Qorvo, including reconciliations of GAAP and non-GAAP financial information, attached.

SELECTED GAAP RESULTS
(In millions, except for percentages and EPS)
(Unaudited)

	Q2 Fiscal 2025			Q1 Fiscal 2025			Q2 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue	$	1,046.5		$	886.7		$	1,103.5		$	159.8		$	(57.0	)
Gross profit	$	445.3		$	332.3		$	489.7		$	113.0		$	(44.4	)
Gross margin		42.6	%		37.5	%		44.4	%	5.1 ppt			(1.8) ppt
Operating expenses	$	435.6		$	327.7		$	338.3		$	107.9		$	97.3
Operating income	$	9.7		$	4.6		$	151.4		$	5.1		$	(141.7	)
Net (loss) income	$	(17.4	)	$	0.4		$	97.5		$	(17.8	)	$	(114.9	)
Weighted-average diluted shares		94.9			96.5			98.6			(1.6	)		(3.7	)
Diluted EPS (loss per share)	$	(0.18	)	$	0.00		$	0.99		$	(0.18	)	$	(1.17	)


SELECTED NON-GAAP RESULTS⁽¹⁾
(In millions, except for percentages and EPS)
(Unaudited)

	Q2 Fiscal 2025			Q1 Fiscal 2025			Q2 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue	$	1,046.5		$	886.7		$	1,103.5		$	159.8		$	(57.0	)
Gross profit	$	492.0		$	362.7		$	525.2		$	129.3		$	(33.2	)
Gross margin		47.0	%		40.9	%		47.6	%		6.1 ppt			(0.6) ppt
Operating expenses	$	279.8		$	264.5		$	245.8		$	15.3		$	34.0
Operating income	$	212.2		$	98.1		$	279.4		$	114.1		$	(67.2	)
Net income	$	179.8		$	83.5		$	235.5		$	96.3		$	(55.7	)
Weighted-average diluted shares		95.8			96.5			98.6			(0.7	)		(2.8	)
Diluted EPS	$	1.88		$	0.87		$	2.39		$	1.01		$	(0.51	)

(1) Adjusted for stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill and other asset impairments, gain or loss on assets, other expense or income, gain or loss on investments, and an adjustment of income taxes.

SELECTED GAAP RESULTS BY OPERATING SEGMENT
(In millions, except percentages)
(Unaudited)
	Q2 Fiscal 2025			Q1 Fiscal 2025			Q2 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue
HPA	$	148.3		$	129.5		$	149.8			14.5	%		(1.0	)%
CSG		146.8			114.9			103.6			27.8	%		41.7	%
ACG		751.4			642.3			850.1			17.0	%		(11.6	)%
Total revenue	$	1,046.5		$	886.7		$	1,103.5			18.0	%		(5.2	)%
Operating income (loss)
HPA	$	13.1		$	4.9		$	25.4			167.3	%		(48.4	)%
CSG		(9.0	)		(19.5	)		(27.7	)		53.8	%		67.5	%
ACG		215.1			116.4			284.8			84.8	%		(24.5	)%
All other⁽¹⁾		(209.5	)		(97.2	)		(131.1	)		(115.5	)%		(59.8	)%
Total operating income	$	9.7		$	4.6		$	151.4			110.9	%		(93.6	)%
Operating income (loss) as a % of revenue
HPA		8.8	%		3.8	%		17.0	%		5.0 ppt			(8.2) ppt
CSG		(6.1	)		(17.0	)		(26.7	)		10.9 ppt			20.6 ppt
ACG		28.6			18.1			33.5			10.5 ppt			(4.9) ppt
Total operating income as a % of revenue		0.9	%		0.5	%		13.7	%		0.4 ppt			(12.8) ppt

(1) Includes stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill and other asset impairments, gain or loss on assets, other expense or income, and other miscellaneous corporate overhead expenses.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains some or all of the following non-GAAP financial measures: (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating expenses, operating income and operating margin, (iii) non-GAAP net income, (iv) non-GAAP net income per diluted share, (v) free cash flow, (vi) EBITDA, (vii) non-GAAP return on invested capital (ROIC), and (viii) net debt or positive net cash. Each of these non-GAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the “Reconciliation of GAAP to Non-GAAP Financial Measures” tables, attached, and the “Additional Selected Non-GAAP Financial Measures and Reconciliations” tables, attached.

In managing Qorvo’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In developing and monitoring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing gross margin and operating margin. In addition, management relies upon these non-GAAP financial measures to assess whether research and development efforts are at an appropriate level, and when making decisions about product spending, administrative budgets, and other operating expenses. Also, we believe that non-GAAP financial measures provide useful supplemental information to investors and enable investors to analyze the results of operations in the same way as management. We have chosen to provide this supplemental information to enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, and stock-based compensation expense, which may obscure trends in Qorvo’s underlying performance.

We believe that these non-GAAP financial measures offer an additional view of Qorvo’s operations that, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of Qorvo’s results of operations and the factors and trends affecting Qorvo’s business. However, these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of Qorvo’s operations, are outlined below:

Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude amortization of intangible assets, stock-based compensation expense, restructuring-related charges, acquisition and integration-related costs, and certain other expense (income). We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin facilitates a useful evaluation of our historical performance and projected costs and the potential for realizing cost efficiencies.

We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, and customer relationships, as items arising from pre-acquisition activities, determined at the time of an acquisition, rather than ongoing costs of operating Qorvo’s business. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangible assets is a static expense, which is not typically affected by operations during any particular period. Although we exclude the amortization of purchased intangible assets from these non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase price accounting and contribute to revenue generation.

We believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of stock-based compensation expense assists management and investors in evaluating the period-over-period performance of Qorvo’s ongoing operations because (i) the expenses are non-cash in nature, and (ii) although the size of the grants is within our control, the amount of expense varies depending on factors such as short-term fluctuations in stock price volatility and prevailing interest rates, which can be unrelated to the operational performance of Qorvo during the period in which the expense is incurred and generally are outside the control of management. Moreover, we believe that the exclusion of stock-based compensation expense in presenting non-GAAP gross profit and gross margin and other non-GAAP financial measures is useful to investors to understand the impact of the expensing of stock-based compensation to Qorvo’s gross profit and gross margins and other financial measures in comparison to prior periods. We also believe that the adjustments to profit and margin related to restructuring-related charges, and acquisition and integration-related costs do not constitute part of Qorvo’s ongoing operations and therefore the exclusion of these items provides management and investors with better visibility into the actual costs required to generate revenues over time and facilitates a useful evaluation of our historical and projected performance. We believe disclosure of non-GAAP gross profit and gross margin has economic substance because the excluded expenses do not represent continuing cash expenditures and, as described above, we have little control over the timing and amount of the expenses in question.

Non-GAAP operating expenses, operating income and operating margin. Non-GAAP operating expenses, operating income and operating margin exclude stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, (gain) loss on assets and certain other expense (income). We believe that presentation of a measure of operating expenses, operating income and operating margin that excludes amortization of intangible assets and stock-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, (gain) loss on assets and certain other expense (income) do not constitute part of Qorvo’s ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and facilitates a useful evaluation of our historical and projected performance. We believe disclosure of non-GAAP operating expenses, operating income and operating margin has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.

Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, (gain) loss on assets, certain other expense (income), gain or loss on investments, and also reflect an adjustment of income taxes. The income tax adjustment primarily represents the use of research and development tax credit carryforwards, deferred tax expense (benefit) items not affecting taxes payable, adjustments related to the deemed and actual repatriation of historical foreign earnings, non-cash expense (benefit) related to uncertain tax positions and other items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating expenses, operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.

Free cash flow. Qorvo defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period, and free cash flow margin is calculated as free cash flow as a percentage of revenue. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.

EBITDA. Qorvo adjusts GAAP net income for interest expense, interest income, income tax expense (benefit), depreciation and intangible amortization expense, stock-based compensation and other charges that are not representative of Qorvo’s ongoing operations (including goodwill and other asset impairments, investment activity, acquisition-related costs and restructuring-related costs) when presenting EBITDA. Management believes that this measure is useful to evaluate our ongoing operations and as a general indicator of our operating cash flow (in conjunction with a cash flow statement which also includes among other items, changes in working capital and the effect of non-cash charges).

Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations’ use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of an adjustment for income taxes (as described above), by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of equity plus net debt, less certain goodwill.

Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus any borrowings under our credit facility and the principal balance of our senior unsecured notes. Management believes that net debt or positive net cash provides useful information regarding the level of Qorvo’s indebtedness by reflecting cash and investments that could be used to repay debt.

Inventory days on hand. Inventory days on hand is defined as (a) average net inventory for the period, divided by (b) the result of non-GAAP cost of goods sold for the period divided by the number of days in the period.

Forward-looking non-GAAP financial measures. Our earnings release contains forward-looking free cash flow, gross margin, income tax rate and diluted earnings per share. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth above) that we provide them to investors on a historical basis. We are unable to provide a reconciliation of the forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures without unreasonable effort due to variability and difficulty in making accurate projections for items that would be required to be included in the GAAP measures, such as stock-based compensation, acquisition and integration-related costs, restructuring-related charges, gain or loss on assets, goodwill and other asset impairments, gain or loss on investments and the provision for income taxes, which could have a potentially significant impact on our future GAAP results.

Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP financial measures as an analytical tool compared to the most directly comparable GAAP financial measures are these non-GAAP financial measures (i) may not be comparable to similarly titled measures used by other companies in our industry, and (ii) exclude financial information that some may consider important in evaluating our performance, thus limiting their usefulness as a comparative tool. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities. We further compensate for the limitations of our use of non-GAAP financial measures by presenting the corresponding GAAP measures more prominently.

Qorvo will conduct a conference call at 5:00 p.m. ET today to discuss today’s press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at the following URL: https://ir.qorvo.com (under “Events & Presentations”). A telephone playback of the conference call will be available approximately two hours after the call’s completion and can be accessed by dialing 1-412-317-0088 and using the passcode 2723791. The playback will be available through the close of business November 5, 2024.

About Qorvo

Qorvo (Nasdaq:QRVO) supplies innovative semiconductor solutions that make a better world possible. We combine product and technology leadership, systems-level expertise and global manufacturing scale to quickly solve our customers’ most complex technical challenges. Qorvo serves diverse high-growth segments of large global markets, including automotive, consumer, defense & aerospace, industrial & enterprise, infrastructure and mobile. Visit www.qorvo.com to learn how our diverse and innovative team is helping connect, protect and power our planet.

Qorvo is a registered trademark of Qorvo, Inc. in the U.S. and in other countries. All other trademarks are the property of their respective owners.

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “forecast”, “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management’s current judgment and expectations as of the date the statement is first made, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We caution you not to place undue reliance upon any such forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under U.S. federal securities laws. Our business is subject to numerous risks and uncertainties, including those relating to fluctuations in our operating results on a quarterly and annual basis; our substantial dependence on developing new products and achieving design wins; our dependence on several large customers for a substantial portion of our revenue; a loss of revenue if defense and aerospace contracts are canceled or delayed; our dependence on third parties; risks related to sales through distributors; risks associated with the operation of our manufacturing facilities; business disruptions; poor manufacturing yields; increased inventory risks and costs, due to timing of customers’ forecasts; our inability to effectively manage or maintain relationships with chipset suppliers; our ability to continue to innovate in a very competitive industry; underutilization of manufacturing facilities; unfavorable changes in interest rates, pricing of certain precious metals, utility rates and foreign currency exchange rates; our acquisitions, divestitures and other strategic investments failing to achieve financial or strategic objectives; our ability to attract, retain and motivate key employees; warranty claims, product recalls and product liability; changes in our effective tax rate; enactment of international or domestic tax legislation, or changes in regulatory guidance; changes in the favorable tax status of certain of our subsidiaries; risks associated with social, environmental, health and safety regulations, and climate change; risks from international sales and operations; economic regulation in China; changes in government trade policies, including imposition of tariffs and export restrictions; we may not be able to generate sufficient cash to service all of our debt; restrictions imposed by the agreements governing our debt; our reliance on our intellectual property portfolio; claims of infringement of third-party intellectual property rights; security breaches, failed system upgrades or regular maintenance and other similar disruptions to our IT systems; theft, loss or misuse of personal data by or about our employees, customers or third parties; provisions in our governing documents and Delaware law may discourage takeovers and business combinations that our stockholders might consider to be in their best interests; and volatility in the price of our common stock. These and other risks and uncertainties, which are described in more detail under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024, and Qorvo’s subsequent reports and statements that we file with the SEC, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

Financial Tables to Follow

QORVO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

	Three Months Ended						Six Months Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Revenue	$	1,046,509		$	1,103,493		$	1,933,180		$	1,754,657

Costs and expenses:
Cost of goods sold		601,203			613,803			1,155,570			1,035,897
Research and development		201,050			174,947			388,652			338,037
Selling, general and administrative		107,760			103,696			222,683			209,119
Other operating expense		126,821			59,619			151,994			68,312
Total costs and expenses		1,036,834			952,065			1,918,899			1,651,365

Operating income		9,675			151,428			14,281			103,292
Interest expense		(22,594	)		(17,121	)		(39,688	)		(34,382	)
Other income, net		15,422			5,211			27,187			18,927

Income before income taxes		2,503			139,518			1,780			87,837
Income tax expense		(19,938	)		(42,057	)		(18,801	)		(33,956	)
Net (loss) income	$	(17,435	)	$	97,461		$	(17,021	)	$	53,881

Net (loss) income per share:
Basic	$	(0.18	)	$	1.00		$	(0.18	)	$	0.55
Diluted	$	(0.18	)	$	0.99		$	(0.18	)	$	0.54

Weighted-average shares of common stock outstanding:
Basic		94,886			97,945			95,116			98,167
Diluted		94,886			98,590			95,116			98,892

QORVO, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (Unaudited)

	Three Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023

GAAP operating income	$	9,675		$	4,606		$	151,428
Stock-based compensation expense		38,181			42,366			39,053
Amortization of intangible assets		29,482			30,474			29,963
Restructuring-related charges		34,396			19,574			8,418
Acquisition and integration-related costs		1,211			2,582			852
Goodwill impairment		96,458			—			48,000
Other expense (income)		2,811			(1,477	)		1,712
Non-GAAP operating income	$	212,214		$	98,125		$	279,426

GAAP net (loss) income	$	(17,435	)	$	414		$	97,461
Stock-based compensation expense		38,181			42,366			39,053
Amortization of intangible assets		29,482			30,474			29,963
Restructuring-related charges		34,396			19,574			8,418
Acquisition and integration-related costs		1,211			2,582			852
Goodwill impairment		96,458			—			48,000
Other expense (income)		379			(3,446	)		2,616
Loss on investments		780			2,499			1,574
Adjustment of income taxes		(3,611	)		(10,939	)		7,576
Non-GAAP net income	$	179,841		$	83,524		$	235,513

GAAP weighted-average outstanding diluted shares		94,886			96,510			98,590
Dilutive stock-based awards		867			—			—
Non-GAAP weighted-average outstanding diluted shares		95,753			96,510			98,590

Non-GAAP net income per share, diluted	$	1.88		$	0.87		$	2.39

QORVO, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)

	Three Months Ended
(in thousands, except percentages)	September 28, 2024					June 29, 2024					September 30, 2023
GAAP gross profit/margin	$	445,306		42.6	%	$	332,304		37.5	%	$	489,690	44.4	%
Stock-based compensation expense		6,047		0.6			5,186		0.6			7,481	0.7
Amortization of intangible assets		25,523		2.4			25,827		2.9			25,591	2.3
Restructuring-related charges		15,414		1.4			—		—			2,482	0.2
Acquisition and integration-related costs		636		0.1			1,925		0.2			1	—
Other income		(885	)	(0.1	)		(2,586	)	(0.3	)		—	—
Non-GAAP gross profit/margin	$	492,041		47.0	%	$	362,656		40.9	%	$	525,245	47.6	%

	Three Months Ended
Non-GAAP Operating Income	September 28, 2024
(as a percentage of revenue)

GAAP operating income		0.9	%
Stock-based compensation expense		3.7
Amortization of intangible assets		2.8
Restructuring-related charges		3.3
Acquisition and integration-related costs		0.1
Goodwill impairment		9.2
Other expense		0.3
Non-GAAP operating income		20.3	%

	Three Months Ended
Free Cash Flow⁽¹⁾	September 28, 2024
(in millions)

Net cash provided by operating activities	$	127.8
Purchases of property and equipment		(33.0	)
Free cash flow	$	94.8

(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.

QORVO, INC. AND SUBSIDIARIES ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (In thousands) (Unaudited)

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP research and development expense	$	201,050	$	187,602	$	174,947
Less:
Stock-based compensation expense		13,468		12,727		11,519
Acquisition and integration-related costs		2		2		2
Non-GAAP research and development expense	$	187,580	$	174,873	$	163,426

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP selling, general and administrative expense	$	107,760	$	114,923	$	103,696
Less:
Stock-based compensation expense		18,488		24,322		20,030
Amortization of intangible assets		3,959		4,647		4,372
Acquisition and integration-related costs		1		—		—
Non-GAAP selling, general and administrative expense	$	85,312	$	85,954	$	79,294

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP other operating expense	$	126,821	$	25,173	$	59,619
Less:
Stock-based compensation expense		178		131		23
Restructuring-related charges		18,982		19,574		5,936
Acquisition and integration-related costs		572		655		849
Goodwill impairment		96,458		—		48,000
Other expense		3,696		1,109		1,712
Non-GAAP other operating expense	$	6,935	$	3,704	$	3,099

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP total operating expense	$	435,631	$	327,698	$	338,262
Less:
Stock-based compensation expense		32,134		37,180		31,572
Amortization of intangible assets		3,959		4,647		4,372
Restructuring-related charges		18,982		19,574		5,936
Acquisition and integration-related costs		575		657		851
Goodwill impairment		96,458		—		48,000
Other expense		3,696		1,109		1,712
Non-GAAP total operating expense	$	279,827	$	264,531	$	245,819

QORVO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	September 28, 2024		March 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	1,096,452	$	1,029,258
Accounts receivable, net		580,963		412,960
Inventories		694,457		710,555
Other current assets		160,587		133,983
Assets of disposal group held for sale		—		159,278
Total current assets		2,532,459		2,446,034

Property and equipment, net		846,540		870,982
Goodwill		2,437,790		2,534,601
Intangible assets, net		445,715		509,383
Long-term investments		24,804		23,252
Other non-current assets		215,767		170,383
Total assets	$	6,503,075	$	6,554,635

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	675,581	$	589,760
Current portion of long-term debt		412,179		438,740
Other current liabilities		245,977		113,215
Liabilities of disposal group held for sale		—		88,372
Total current liabilities		1,333,737		1,230,087

Long-term debt		1,549,244		1,549,272
Other long-term liabilities		209,925		218,904
Total liabilities		3,092,906		2,998,263

Stockholders’ equity		3,410,169		3,556,372
Total liabilities and stockholders’ equity	$	6,503,075	$	6,554,635

At Qorvo^®
Doug DeLieto
VP, Investor Relations
1.336.678.7968

The MIL Network –

January 25, 2025

MIL-OSI: Medallion Financial Corp. Reports 2024 Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 29, 2024 (GLOBE NEWSWIRE) — Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the “Company”), a specialty finance company that originates and services loans in various consumer and commercial industries, as well as offers loan products and services through fintech strategic partners, announced today its results for the quarter ended September 30, 2024.

2024 Third Quarter Highlights

Net income was $8.6 million, or $0.37 per share, compared to $11.2 million, or $0.48 per share, in the prior year quarter.
Net interest income grew 8% to $52.7 million from $48.8 million in the prior year quarter.
Net interest margin on gross loans was 8.11%, compared to 8.35% in the prior year quarter, and on net loans it was 8.42%, compared to 8.64% in the prior year quarter.
Loan originations were $275.6 million, compared to $217.4 million in the prior year quarter.
Loans grew 13% to $2.5 billion as of September 30, 2024, compared to $2.2 billion a year ago.
The credit loss provision increased to $20.2 million from $14.5 million in the prior year quarter.
The Company repurchased 122,344 shares of common stock at an average cost of $7.89 per share.
Subsequent to September 30, 2024, the Board of Directors increased the quarterly cash dividend 10% to $0.11 per share.

Executive Commentary – Andrew Murstein, President of Medallion

“We continue to be pleased with our quarterly performance. The earnings were strong despite lower taxi medallion related recoveries and the absence of equity gains, both of which we experienced in the prior year quarter. At $0.37 per share, our earnings included approximately $0.07 per share of additional allowance tied to the growth of our consumer lending segments, which saw recreation and home improvement loans grow 4% and 5% from the previous quarter to a combined $2.4 billion, with over $235 million in originations this quarter. We continue to be comfortable with the overall credit performance of these two consumer segments, which carry weighted average coupons of 14.92% for recreation loans and 9.76% for home improvement loans. During the quarter we originated recreation loans at an average rate of 16.33% and home improvement loans at an average rate of 10.75%.

Our net interest income reached $52.7 million during the quarter, up 6% from just a quarter ago. We remain cautiously optimistic that the solid performance of our loan portfolio will continue. Our net interest margin during the quarter was 8.11%, decreasing only 1 basis point from the prior quarter, as we continue to increase our yield to offset the rise in our average cost of borrowings.

Our total interest income of $76.4 million, net interest income of $52.7 million, and total assets of $2.9 billion were all record highs. Our fintech strategic partnership program at Medallion Bank had its highest volume quarter ever with $40 million of new loans, up from $24 million in the second quarter of this year. As a result, we are optimistic about the quarters ahead and are hopeful to continue delivering meaningful growth in origination volumes in our newest business line.

Lastly, we are pleased to announce that our board of directors has authorized an increase of our quarterly dividend to $0.11 per share beginning with the upcoming payment next month, reflecting our strong financial performance and ongoing commitment to delivering value to our shareholders. This increase underscores our confidence in the Company’s future growth and stability, as well as our focus on returning capital to investors.”

Business Segment Highlights

Recreation Lending Segment

Originations were $139.1 million during the quarter, compared to $92.6 million a year ago.
Recreation loans grew 15% to $1.6 billion as of September 30, 2024, compared to $1.3 billion a year ago.
Recreation loans were 63% of total loans as of September 30, 2024, compared to 61% a year ago.
Net interest income grew 9% to $38.9 million for the quarter, from $35.6 million in the prior year quarter.
The average interest rate was 14.92% at quarter-end, compared to 14.73% a year ago.
Recreation loans 90 days or more past due were $7.5 million, or 0.50% of gross recreation loans, as of September 30, 2024, compared to $5.9 million, or 0.45%, a year ago.
Allowance for credit loss rate was 4.53% as of September 30, 2024, compared to 4.24% a year ago.

Home Improvement Lending Segment

Originations were $96.5 million during the quarter, compared to $79.3 million a year ago.
Home improvement loans grew 8% to $814.1 million as of September 30, 2024, compared to $750.5 million a year ago.
Home improvement loans were 33% of total loans as of September 30, 2024, compared to 34% a year ago.
Net interest income grew 5% to $12.0 million for the quarter, from $11.4 million in the prior year quarter.
The average interest rate was 9.76% at quarter-end, compared to 9.38% a year ago.
Home improvement loans 90 days or more past due were $1.6 million, or 0.19% of gross home improvement loans, as of September 30, 2024, compared to $1.0 million, or 0.13%, a year ago.
Allowance for credit loss rate was 2.42% as of September 30, 2024, compared to 2.31% a year ago.

Commercial Lending Segment

Commercial loans were $110.1 million at September 30, 2024, compared to $100.3 million a year ago.
The average interest rate on the portfolio was 12.90%, compared to 12.91% a year ago.

Taxi Medallion Lending Segment

The Company collected $4.1 million of cash on taxi medallion-related assets during the quarter.
Total net taxi medallion assets declined to $8.8 million (comprised of $1.9 million of loans net of allowance for credit losses and $6.9 million of loan collateral in process of foreclosure), a 46% reduction from a year ago, and represented less than half a percent of the Company’s total assets as of September 30, 2024.

Capital Allocation

Quarterly Dividend

The Board of Directors declared a quarterly dividend of $0.11 per share, payable on November 27, 2024 to shareholders of record at the close of business on November 15, 2024.

Stock Repurchase Plan

During the third quarter, the Company repurchased 122,344 shares of its common stock at an average cost of $7.89 per share, for a total of $1.0 million.
As of September 30, 2024, the Company had $15.4 million remaining under its $40 million share repurchase program.

Conference Call Information

The Company will host a conference call to discuss its third quarter financial results tomorrow, Wednesday, October 30, 2024 at 9:00 a.m. Eastern time.

In connection with its earnings release, the Company has updated its quarterly supplement presentation, which is now available at www.medallion.com.

How to Participate

Date: Wednesday, October 30, 2024
Time: 9:00 a.m. Eastern time
U.S. dial-in number: (833) 816-1412
International dial-in number: (412) 317-0504
Live webcast: Link to Webcast of 3Q24 Earnings Call

A link to the live audio webcast of the conference call will also be available at the Company’s IR website.

Replay Information

The webcast replay will be available at the Company’s IR website until the next quarter’s results are announced.

The conference call replay will be available following the end of the call through Wednesday, November 6.

U.S. dial-in number: (844) 512-2921
International dial-in number: (412) 317-6671
Access ID: 1019 3247

About Medallion Financial Corp.

Medallion Financial Corp. (NASDAQ:MFIN) and its subsidiaries originate and service a growing portfolio of consumer loans and mezzanine loans in various industries. Key industries served include recreation (towable RVs and marine) and home improvement (replacement roofs, swimming pools, and windows). Medallion Financial Corp. is headquartered in New York City, NY, and its largest subsidiary, Medallion Bank, is headquartered in Salt Lake City, Utah. For more information, please visit www.medallion.com.

Forward-Looking Statements
Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, net interest income and expenses, other expenses, earnings, growth, and our growth strategy. These statements are often, but not always, made using words or phrases such as “will” and “continue” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These statements relate to future public announcements of our earnings, the impact of the pending SEC litigation, expectations regarding our loan portfolio, including collections on our medallion loans, the potential for future asset growth, and market share opportunities. Medallion’s actual results may differ significantly from the results discussed in such forward-looking statements. For example, statements about the effects of the current economy, whether inflation or the risk of recession, operations, financial performance and prospects constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond Medallion’s control. In addition to risks relating to the current economy, a description of certain risks to which Medallion is or may be subject, including risks related to the pending SEC litigation, please refer to the factors discussed under the heading “Risk Factors” in Medallion’s 2023 Annual Report on Form 10-K.

Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com

MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Dollars in thousands, except share and per share data)	September 30, 2024			December 31, 2023			September 30, 2023
Assets
Cash, cash equivalents, and federal funds sold	$	187,929		$	149,845		$	127,642
Investment and equity securities		66,651			65,712			63,717
Loans		2,485,279			2,215,886			2,203,038
Allowance for credit losses		(96,518	)		(84,235	)		(79,133	)
Net loans receivable		2,388,761			2,131,651			2,123,905
Goodwill and intangible assets, net		170,311			171,394			171,755
Property, equipment, and right-of-use lease asset, net		14,172			14,076			13,278
Accrued interest receivable		14,108			13,538			13,593
Loan collateral in process of foreclosure		8,818			11,772			15,923
Other assets		29,302			29,839			28,814
Total assets	$	2,880,052		$	2,587,827		$	2,558,627
Liabilities
Deposits	$	2,108,132		$	1,866,657		$	1,855,096
Long-term debt		232,037			235,544			218,137
Short-term borrowings		49,000			8,000			18,489
Deferred tax liabilities, net		20,598			21,207			23,131
Operating lease liabilities		5,534			7,019			7,075
Accrued interest payable		6,888			6,822			4,624
Accounts payable and accrued expenses		26,687			30,804			34,813
Total liabilities		2,448,876			2,176,053			2,161,365
Total stockholders’ equity		362,388			342,986			328,474
Non-controlling interest in consolidated subsidiaries		68,788			68,788			68,788
Total equity		431,176			411,774			397,262
Total liabilities and equity	$	2,880,052		$	2,587,827		$	2,558,627
Number of shares outstanding		23,084,277			23,449,646			23,363,731
Book value per share	$	15.70		$	14.63		$	14.06

MEDALLION FINANCIAL CORP.‌
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)‌

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2024			2023			2024			2023
Total interest income	$	76,409		$	65,886		$	214,183		$	183,455
Total interest expense		23,672			17,102			63,661			44,379
Net interest income		52,737			48,784			150,522			139,076
Provision for credit losses		20,151			14,532			55,929			27,045
Net interest income after provision for credit losses		32,586			34,252			94,593			112,031
Other income (loss)
(Loss) gain on equity investments		(519	)		2,180			3,136			2,189
Gain on sale of loans and taxi medallions		340			1,417			1,170			4,578
Write-down of loan collateral in process of foreclosure		(19	)		(30	)		(19	)		(303	)
Other income		785			739			2,802			1,868
Total other income, net		587			4,306			7,089			8,332
Other expenses
Salaries and employee benefits		9,456			9,630			28,347			27,805
Loan servicing fees		2,790			2,501			7,951			7,084
Collection costs		1,673			1,583			4,799			4,729
Regulatory fees		961			1,021			2,826			2,484
Professional fees		818			1,148			3,434			4,223
Rent expense		664			629			2,019			1,855
Amortization of intangible assets		361			361			1,084			1,084
Other expenses		2,272			2,216			6,755			7,220
Total other expenses		18,995			19,089			57,215			56,484
Income before income taxes		14,178			19,469			44,467			63,879
Income tax provision		4,055			6,727			14,196			18,582
Net income after taxes		10,123			12,742			30,271			45,297
Less: income attributable to the non-controlling interest		1,512			1,512			4,535			4,536
Total net income attributable to Medallion Financial Corp.	$	8,611		$	11,230		$	25,736		$	40,761
Basic net income per share	$	0.38		$	0.50		$	1.14		$	1.81
Diluted net income per share	$	0.37		$	0.48		$	1.09		$	1.77
Weighted average common shares outstanding
Basic		22,490,792			22,596,982			22,576,446			22,469,968
Diluted		23,447,929			23,392,901			23,555,065			23,067,944
Dividends declared per common share	$	0.10		$	0.08		$	0.30		$	0.24

The MIL Network –

January 25, 2025

MIL-OSI: AMD Reports Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

SANTA CLARA, Calif., Oct. 29, 2024 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announced revenue for the third quarter of 2024 of $6.8 billion, gross margin of 50%, operating income of $724 million, net income of $771 million and diluted earnings per share of $0.47. On a non-GAAP^(*) basis, gross margin was 54%, operating income was $1.7 billion, net income was $1.5 billion and diluted earnings per share was $0.92.

“We delivered strong third quarter financial results with record revenue led by higher sales of EPYC and Instinct data center products and robust demand for our Ryzen PC processors,” said AMD Chair and CEO Dr. Lisa Su. “Looking forward, we see significant growth opportunities across our data center, client and embedded businesses driven by the insatiable demand for more compute.”

“We are pleased with our execution in the third quarter, delivering strong year-over-year expansion in gross margin and earnings per share,” said AMD EVP, CFO and Treasurer Jean Hu. “We are on-track to deliver record annual revenue for 2024 based on significant growth in our Data Center and Client segments.”

GAAP Quarterly Financial Results

	Q3 2024	Q3 2023	Y/Y	Q2 2024	Q/Q
Revenue ($M)	$6,819	$5,800	Up 18%	$5,835	Up 17%
Gross profit ($M)	$3,419	$2,747	Up 24%	$2,864	Up 19%
Gross margin	50%	47%	Up 3 ppts	49%	Up 1 ppt
Operating expenses ($M)	$2,709	$2,533	Up 7%	$2,605	Up 4%
Operating income ($M)	$724	$224	Up 223%	$269	Up 169%
Operating margin	11%	4%	Up 7 ppts	5%	Up 6 ppts
Net income ($M)	$771	$299	Up 158%	$265	Up 191%
Diluted earnings per share	$0.47	$0.18	Up 161%	$0.16	Up 194%

*Non-GAAP() Quarterly Financial Results**

	Q3 2024	Q3 2023	Y/Y	Q2 2024	Q/Q
Revenue ($M)	$6,819	$5,800	Up 18%	$5,835	Up 17%
Gross profit ($M)	$3,657	$2,963	Up 23%	$3,101	Up 18%
Gross margin	54%	51%	Up 3 ppts	53%	Up 1 ppt
Operating expenses ($M)	$1,956	$1,697	Up 15%	$1,847	Up 6%
Operating income ($M)	$1,715	$1,276	Up 34%	$1,264	Up 36%
Operating margin	25%	22%	Up 3 ppts	22%	Up 3 ppts
Net income ($M)	$1,504	$1,135	Up 33%	$1,126	Up 34%
Diluted earnings per share	$0.92	$0.70	Up 31%	$0.69	Up 33%

Segment Summary

Record Data Center segment revenue of $3.5 billion was up 122% year-over-year and 25% sequentially primarily driven by the strong ramp of AMD Instinct™ GPU shipments and growth in AMD EPYC™ CPU sales.
Client segment revenue was $1.9 billion, up 29% year-over-year and 26% sequentially primarily driven by strong demand for “Zen 5” AMD Ryzen™ processors.
Gaming segment revenue was $462 million, down 69% year-over-year and 29% sequentially primarily due to a decrease in semi-custom revenue.
Embedded segment revenue was $927 million, down 25% year-over-year as customers normalized their inventory levels. On a sequential basis, revenue increased 8% as demand improved in several end markets.

Recent PR Highlights

At the Advancing AI 2024 event this month, AMD and strategic partners including Dell, Google Cloud, HPE, Lenovo, Meta, Microsoft, Oracle Cloud Infrastructure, Supermicro and AI leaders Databricks, Essential AI, Fireworks AI, Luma AI and Reka AI unveiled a broad portfolio of solutions delivering enterprise AI at scale based on the latest AMD Instinct accelerators, EPYC CPUs, AMD networking solutions and Ryzen PRO CPUs:
- New AMD EPYC 9005 Series processors, with record-breaking performance and energy efficiency for diverse data center needs, available in a wide range of platforms from leading OEMs and ODMs.
- AMD Instinct MI325X accelerators, delivering leadership performance and memory capabilities for the most demanding AI workloads. AMD also shared new details on next-gen AMD Instinct accelerators planned to launch in 2025 and 2026.
- An expanded high performance networking portfolio to maximize performance, scalability and efficiency for AI systems, with the new AMD Pensando™ Salina DPU and AMD Pensando Pollara 400 NIC.
- New Ryzen AI PRO 300 Series mobile processors, powering next-gen AI PCs for the enterprise with 50+ AI TOPS and leadership performance, battery life, security and manageability features.
AMD continues to extend leadership AI performance, optimizations and customer adoption for AMD Instinct accelerators and AMD ROCm™ open software:
- Oracle Cloud Infrastructure selected AMD Instinct MI300X accelerators with AMD ROCm open software to power its latest OCI Compute Supercluster designed for demanding AI workloads.
- AMD unveiled its first results on leading AI benchmark MLPerf, revealing excellent performance for AMD Instinct MI300X accelerators advanced by the AMD ROCm software platform, on-par with NVIDIA H100.
- AMD highlighted support for the latest Llama 3.2 release from Meta, enabling developers to build new agentic applications and personalized AI experiences on AMD accelerators and processors from cloud to edge and AI PCs.
AMD and ecosystem partners are enabling new AI PC platforms and capabilities:
- In partnership with Microsoft, AMD announced that Copilot+ will be enabled on AMD CPU-powered AI PCs via a free upgrade planned to be available starting in November 2024.
- OEM partners including Acer, HP, Lenovo and Asus announced new systems powered by AMD Ryzen AI 300 Series mobile processors, leveraging the leadership gaming, content creation and everyday performance of the new “Zen 5” architecture.
AMD expanded its embedded portfolio for a range of applications, including:
AMD announced an agreement to acquire ZT Systems, a leading provider of AI and general purpose compute infrastructure for the world’s largest hyperscale providers, to expand the company’s data center AI systems capabilities and accelerate deployment of AMD AI rack scale systems with cloud and enterprise customers. The acquisition is subject to regulatory clearance and other customary closing conditions and is expected to close in the first half of 2025.
AMD completed the acquisition of Silo AI to accelerate development and deployment of AI models on AMD hardware.
AMD and Intel announced the creation of an x86 ecosystem advisory group with Broadcom, Dell, Google, HPE, HP, Lenovo, Meta, Microsoft, Oracle, Red Hat and industry luminaries Linus Torvalds and Tim Sweeney to collaborate on architectural interoperability and simplify software development.

Current Outlook

AMD’s outlook statements are based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

For the fourth quarter of 2024, AMD expects revenue to be approximately $7.5 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 22% and sequential growth of approximately 10%. Non-GAAP gross margin is expected to be approximately 54%.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its third quarter 2024 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.

Media Contact:
Drew Prairie
AMD Communications
512-602-4425
drew.prairie@amd.com

Investor Contact:
Mitch Haws
AMD Investor Relations
408-749-3124
mitch.haws@amd.com

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share data) (Unaudited)

	Three Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023
GAAP gross profit	$	3,419		$	2,864		$	2,747
*GAAP gross margin*		50	%		49	%		47	%
Stock-based compensation		5			5			6
Amortization of acquisition-related intangibles		233			231			210
Acquisition-related and other costs⁽¹⁾		—			1			—
Non-GAAP gross profit	$	3,657		$	3,101		$	2,963
Non-GAAP gross margin		54	%		53	%		51	%

GAAP operating expenses	$	2,709		$	2,605		$	2,533
*GAAP operating expenses/revenue %*		40	%		45	%		44	%
Stock-based compensation		346			341			347
Amortization of acquisition-related intangibles		352			372			450
Acquisition-related and other costs⁽¹⁾		55			45			39
Non-GAAP operating expenses	$	1,956		$	1,847		$	1,697
Non-GAAP operating expenses/revenue %		29	%		32	%		29	%

GAAP operating income	$	724		$	269		$	224
*GAAP operating margin*		11	%		5	%		4	%
Stock-based compensation		351			346			353
Amortization of acquisition-related intangibles		585			603			660
Acquisition-related and other costs⁽¹⁾		55			46			39
Non-GAAP operating income	$	1,715		$	1,264		$	1,276
*Non-GAAP operating margin*		25	%		22	%		22	%

	Three Months Ended
	September 28, 2024						June 29, 2024						September 30, 2023
GAAP net income / earnings per share	$	771		$	0.47		$	265		$	0.16		$	299		$	0.18
(Gains) losses on equity investments, net		(1	)		—			—			—			(4	)		—
Stock-based compensation		351			0.21			346			0.21			353			0.22
Equity income in investee		(7	)		—			(7	)		—			(3	)		—
Amortization of acquisition-related intangibles		585			0.36			603			0.37			660			0.41
Acquisition-related and other costs⁽¹⁾		56			0.03			46			0.03			39			0.02
Income tax provision		(251	)		(0.15	)		(127	)		(0.08	)		(209	)		(0.13	)
Non-GAAP net income / earnings per share	$	1,504		$	0.92		$	1,126		$	0.69		$	1,135		$	0.70

(1)

Acquisition-related and other costs primarily comprised of transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.

About AMD

For more than 50 years AMD has driven innovation in high-performance computing, graphics and visualization technologies. AMD employees are focused on building leadership high-performance and adaptive products that push the boundaries of what is possible. Billions of people, leading Fortune 500 businesses and cutting-edge scientific research institutions around the world rely on AMD technology daily to improve how they live, work and play. For more information about how AMD is enabling today and inspiring tomorrow, visit the AMD (NASDAQ: AMD) website, blog, LinkedIn and X pages.

Cautionary Statement

This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as AMD’s expectations for future growth in data center, client and embedded businesses; AMD being on track to deliver record annual revenue growth for 2024 based on significant growth in AMD’s Data Center and Client segments; AMD’s expectations about the demand for more compute; the features, functionality, performance, availability, timing and expected benefits of future AMD products; AMD’s anticipated acquisition of ZT Systems and the expected timing of the transaction; and AMD’s expected fourth quarter 2024 financial outlook, including revenue and non-GAAP gross margin, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this press release are based on current beliefs, assumptions and expectations, speak only as of the date of this press release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD’s control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation’s dominance of the microprocessor market and its aggressive business practices; Nvidia’s dominance in the graphics processing unit market and its aggressive business practices; the cyclical nature of the semiconductor industry; market conditions of the industries in which AMD products are sold; loss of a significant customer; competitive markets in which AMD’s products are sold; economic and market uncertainty; quarterly and seasonal sales patterns; AMD’s ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD’s products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD’s ability to introduce products on a timely basis with expected features and performance levels; AMD’s ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyberattacks; uncertainties involving the ordering and shipment of AMD’s products; AMD’s reliance on third-party intellectual property to design and introduce new products; AMD’s reliance on third-party companies for design, manufacture and supply of motherboards, software, memory and other computer platform components; AMD’s reliance on Microsoft and other software vendors’ support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board partners; impact of modification or interruption of AMD’s internal business processes and information systems; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; efficiency of AMD’s supply chain; AMD’s ability to rely on third party supply-chain logistics functions; AMD’s ability to effectively control sales of its products on the gray market; long-term impact of climate change on AMD’s business; impact of government actions and regulations such as export regulations, tariffs and trade protection measures; AMD’s ability to realize its deferred tax assets; potential tax liabilities; current and future claims and litigation; impact of environmental laws, conflict minerals related provisions and other laws or regulations; evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters; issues related to the responsible use of AI; restrictions imposed by agreements governing AMD’s notes, the guarantees of Xilinx’s notes and the revolving credit agreement; the ability to obtain applicable regulatory approvals for the acquisition of ZT Systems in a timely manner or otherwise and to satisfy other closing conditions to the transaction; impact of acquisitions, joint ventures and/or investments on AMD’s business and AMD’s ability to integrate acquired businesses;  impact of any impairment of the combined company’s assets; political, legal and economic risks and natural disasters; future impairments of technology license purchases; AMD’s ability to attract and retain qualified personnel; and AMD’s stock price volatility. Investors are urged to review in detail the risks and uncertainties in AMD’s Securities and Exchange Commission filings, including but not limited to AMD’s most recent reports on Forms 10-K and 10-Q.

(*)		In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating expenses/revenue%, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share. AMD uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2024, AMD uses a projected non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments, reflecting currently available information. AMD also provided adjusted EBITDA, free cash flow and free cash flow margin as supplemental non-GAAP measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. The non-GAAP financial measures disclosed in this earnings press release should be viewed in addition to and not as a substitute for or superior to AMD’s reported results prepared in accordance with GAAP and should be read only in conjunction with AMD’s Consolidated Financial Statements prepared in accordance with GAAP. These non-GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in the data tables in this earnings press release. This earnings press release also contains forward-looking non-GAAP gross margin concerning AMD’s financial outlook, which is based on current expectations as of October 29, 2024 and assumptions and beliefs that involve numerous risks and uncertainties. Adjustments to arrive at the GAAP gross margin outlook typically include stock-based compensation, amortization of acquired intangible assets and acquisition-related and other costs. The timing and impact of such adjustments are dependent on future events that are typically uncertain or outside of AMD’s control, therefore, a reconciliation to equivalent GAAP measures is not practicable at this time. AMD undertakes no intent or obligation to publicly update or revise its outlook statements as a result of new information, future events or otherwise, except as may be required by law.

©2024 Advanced Micro Devices, Inc. All rights reserved. AMD, the AMD Arrow logo, 3D V-Cache, Alveo, EPYC, FidelityFX, Instinct, Kria, Radeon, Ryzen, Threadripper, Ultrascale+, Versal, Zynq, and combinations thereof, are trademarks of Advanced Micro Devices, Inc.

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages) (Unaudited)

	Three Months Ended									Nine Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Net revenue	$	6,819		$	5,835		$	5,800		$	18,127		$	16,512
Cost of sales		3,167			2,740			2,843			8,590			8,236
Amortization of acquisition-related intangibles		233			231			210			694			727
Total cost of sales		3,400			2,971			3,053			9,284			8,963
Gross profit		3,419			2,864			2,747			8,843			7,549
Gross margin		50	%		49	%		47	%		49	%		46	%
Research and development		1,636			1,583			1,507			4,744			4,361
Marketing, general and administrative		721			650			576			1,991			1,708
Amortization of acquisition-related intangibles		352			372			450			1,116			1,449
Licensing gain		(14	)		(10	)		(10	)		(37	)		(28	)
Operating income		724			269			224			1,029			59
Interest expense		(23	)		(25	)		(26	)		(73	)		(79	)
Other income (expense), net		36			55			59			144			148
Income before income taxes and equity income		737			299			257			1,100			128
Income tax provision (benefit)		(27	)		41			(39	)		(38	)		(49	)
Equity income in investee		7			7			3			21			10
Net income	$	771		$	265		$	299		$	1,159		$	187
Earnings per share
Basic	$	0.48		$	0.16		$	0.18		$	0.72		$	0.12
Diluted	$	0.47		$	0.16		$	0.18		$	0.71		$	0.11
Shares used in per share calculation
Basic		1,620			1,618			1,616			1,619			1,613
Diluted		1,636			1,637			1,629			1,638			1,625

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)

	September 28, 2024			December 30, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,897		$	3,933
Short-term investments		647			1,840
Accounts receivable, net		7,241			5,376
Inventories		5,374			4,351
Receivables from related parties		29			9
Prepaid expenses and other current assets		1,547			1,259
Total current assets		18,735			16,768
Property and equipment, net		1,669			1,589
Operating lease right-of-use assets		647			633
Goodwill		24,839			24,262
Acquisition-related intangibles, net		19,572			21,363
Investment: equity method		137			99
Deferred tax assets		1,183			366
Other non-current assets		2,854			2,805
Total Assets	$	69,636		$	67,885

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,530		$	2,055
Payables to related parties		461			363
Accrued liabilities		4,120			3,082
Current portion of long-term debt, net		—			751
Other current liabilities		389			438
Total current liabilities		7,500			6,689
Long-term debt, net of current portion		1,720			1,717
Long-term operating lease liabilities		518			535
Deferred tax liabilities		1,162			1,202
Other long-term liabilities		1,751			1,850

Stockholders’ equity:
Capital stock:
Common stock, par value		17			17
Additional paid-in capital		60,896			59,676
Treasury stock, at cost		(5,812	)		(4,514	)
Retained earnings		1,882			723
Accumulated other comprehensive income (loss)		2			(10	)
Total stockholders’ equity	$	56,985		$	55,892
Total Liabilities and Stockholders’ Equity	$	69,636		$	67,885

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions) (Unaudited)

	Three Months Ended						Nine Months Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Cash flows from operating activities:
Net income	$	771		$	299		$	1,159		$	187
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		756			823			2,309			2,654
Stock-based compensation		351			353			1,068			1,010
Amortization of operating lease right-of-use assets		30			25			82			73
Deferred income taxes		(607	)		(218	)		(863	)		(800	)
Inventory loss at contract manufacturer		—			—			65			—
Other		(13	)		(23	)		(50	)		(31	)
Changes in operating assets and liabilities
Accounts receivable, net		(1,489	)		(743	)		(1,862	)		(929	)
Inventories		(386	)		122			(1,096	)		(674	)
Prepaid expenses and other assets		(16	)		(143	)		(250	)		(380	)
Receivables from and payables to related parties, net		36			14			78			(136	)
Accounts payable		832			(547	)		476			(238	)
Accrued and other liabilities		363			459			626			550
Net cash provided by operating activities		628			421			1,742			1,286
Cash flows from investing activities:
Purchases of property and equipment		(132	)		(124	)		(428	)		(407	)
Purchases of short-term investments		(142	)		(496	)		(707	)		(3,312	)
Proceeds from maturity of short-term investments		149			746			1,351			1,917
Proceeds from sale of short-term investments		589			—			591			248
Acquisitions, net of cash acquired		(548	)		(14	)		(548	)		(14	)
Related party equity method investment		(17	)		—			(17	)		—
Other		(37	)		(10	)		(129	)		(5	)
Net cash provided by (used in) investing activities		(138	)		102			113			(1,573	)
Cash flows from financing activities:
Repayment of debt		—			—			(750	)		—
Proceeds from sales of common stock through employee equity plans		4			4			152			148
Repurchases of common stock		(250	)		(511	)		(606	)		(752	)
Common stock repurchases for tax withholding on employee equity plans		(460	)		(295	)		(686	)		(382	)
Other		—			(1	)		(1	)		1
Net cash used in financing activities		(706	)		(803	)		(1,891	)		(987	)
Net decrease in cash and cash equivalents	$	(216	)	$	(280	)	$	(36	)	$	(1,274	)
Cash and cash equivalents at beginning of period		4,113			3,841			3,933			4,835
Cash and cash equivalents at end of period	$	3,897		$	3,561		$	3,897		$	3,561

ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions) (Unaudited)

	Three Months Ended									Nine Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Segment and Category Information⁽¹⁾
Data Center
Net revenue	$	3,549		$	2,834		$	1,598		$	8,720		$	4,214
Operating income	$	1,041		$	743		$	306		$	2,325		$	601
Client
Net revenue	$	1,881		$	1,492		$	1,453		$	4,741		$	3,190
Operating income (loss)	$	276		$	89		$	140		$	451		$	(101	)
Gaming
Net revenue	$	462		$	648		$	1,506		$	2,032		$	4,844
Operating income	$	12		$	77		$	208		$	240		$	747
Embedded
Net revenue	$	927		$	861		$	1,243		$	2,634		$	4,264
Operating income	$	372		$	345		$	612		$	1,059		$	2,167
All Other
Net revenue	$	—		$	—		$	—		$	—		$	—
Operating loss	$	(977	)	$	(985	)	$	(1,042	)	$	(3,046	)	$	(3,355	)
Total
Net revenue	$	6,819		$	5,835		$	5,800		$	18,127		$	16,512
Operating income	$	724		$	269		$	224		$	1,029		$	59

Other Data
Capital expenditures	$	132		$	154		$	124		$	428		$	407
Adjusted EBITDA⁽²⁾	$	1,887		$	1,430		$	1,439		$	4,612		$	3,920
Cash, cash equivalents and short-term investments	$	4,544		$	5,340		$	5,785		$	4,544		$	5,785
Free cash flow⁽³⁾	$	496		$	439		$	297		$	1,314		$	879
Total assets	$	69,636		$	67,886		$	67,626		$	69,636		$	67,626
Total debt	$	1,720		$	1,719		$	2,467		$	1,720		$	2,467

(1)		The Data Center segment primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers.
		The Client segment primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers.
		The Gaming segment primarily includes discrete GPUs, and semi-custom SoC products and development services.
		The Embedded segment primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
		From time to time, the Company may also sell or license portions of its IP portfolio.
		All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments, such as amortization of acquisition-related intangible asset, employee stock-based compensation expense, acquisition-related and other costs, inventory loss at contract manufacturer, and licensing gain.

(2)

Reconciliation of GAAP Net Income to Adjusted EBITDA

	Three Months Ended									Nine Months Ended
(Millions) (Unaudited)	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
GAAP net income	$	771		$	265		$	299		$	1,159		$	187
Interest expense		23			25			26			73			79
Other (income) expense, net		(36	)		(55	)		(59	)		(144	)		(148	)
Income tax provision (benefit)		(27	)		41			(39	)		(38	)		(49	)
Equity income in investee		(7	)		(7	)		(3	)		(21	)		(10	)
Stock-based compensation		351			346			353			1,068			1,006
Depreciation and amortization		171			166			163			499			478
Amortization of acquisition-related intangibles		585			603			660			1,810			2,176
Inventory loss at contract manufacturer		—			—			—			65			—
Acquisition-related and other costs		56			46			39			141			201
Adjusted EBITDA	$	1,887		$	1,430		$	1,439		$	4,612		$	3,920

The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other (income) expense, net, income tax provision (benefit), equity income in investee, stock-based compensation, depreciation and amortization expense, amortization of acquisition-related intangibles, inventory loss at contract manufacturer, and acquisition-related and other costs. The Company calculates and presents Adjusted EBITDA because management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of income or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities that can affect cash flows.

(3)

Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow

	Three Months Ended									Nine Months Ended
(Millions except percentages) (Unaudited)	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
GAAP net cash provided by operating activities	$	628		$	593		$	421		$	1,742		$	1,286
Operating cash flow margin %		9	%		10	%		7	%		10	%		8	%
Purchases of property and equipment		(132	)		(154	)		(124	)		(428	)		(407	)
Free cash flow	$	496		$	439		$	297		$	1,314		$	879
Free cash flow margin %		7	%		8	%		5	%		7	%		5	%

The Company also presents free cash flow as a supplemental Non-GAAP measure of its performance. Free cash flow is determined by adjusting GAAP net cash provided by operating activities for capital expenditures, and free cash flow margin % is free cash flow expressed as a percentage of the Company’s net revenue. The Company calculates and communicates free cash flow in the financial earnings press release because management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities.

The MIL Network –

January 25, 2025

MIL-OSI: Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three Months Ended September 30, 2024

Source: GlobeNewswire (MIL-OSI)

Shreveport, Oct. 29, 2024 (GLOBE NEWSWIRE) — Home Federal Bancorp, Inc. of Louisiana (the “Company”) (Nasdaq: HFBL), the holding company of Home Federal Bank, reported net income for the three months ended September 30, 2024, of $941,000 compared to net income of $1.2 million reported for the three months ended September 30, 2023. The Company’s basic and diluted earnings per share were $0.31 for the three months ended September 30, 2024, compared to basic and diluted earnings per share of $0.40 and $0.39, respectively, for the three months ended September 30, 2023.

The decrease in net income for the three months ended September 30, 2024, compared to the same period in 2023, resulted from a decrease in net interest income of $857,000, or 16.2%, and a decrease in non-interest income of $134,000, or 30.9%, partially offset by a decrease in non-interest expense of $177,000, or 4.2%, a decrease in provision for income taxes of $312,000, or 100.6%, a decrease in the provision of credit losses of $223,000. The decrease in net interest income for the three months ended September 30, 2024, compared to the same period in 2023, resulted from an increase in total interest expense of $524,000, or 18.8%, and a decrease in total interest income of $333,000, or 4.1%. The Company’s average interest rate spread was 2.23% for the three months ended September 30, 2024, compared to 2.68% for the three months ended September 30, 2023. The Company’s net interest margin was 2.98% for the three months ended September 30, 2024, compared to 3.37% for the three months ended September 30, 2023.

The following table sets forth the Company’s average balances and average yields earned and rates paid on its interest-earning assets and interest-bearing liabilities for the periods indicated.

	For the Three Months Ended September 30,
	2024					2023
	Average Balance		Average Yield/Rate			Average Balance		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	466,170		5.87	%	$	498,242		5.79	%
Investment securities		96,749		2.09			113,584		2.18
Interest-earning deposits		25,617		5.20			10,066		6.98
Total interest-earning assets	$	588,536		5.22	%	$	621,892		5.15	%

Interest-bearing liabilities:
Savings accounts	$	82,556		1.61	%	$	78,572		0.38	%
NOW accounts		72,787		1.10			55,900		0.48
Money market accounts		75,216		2.29			108,891		2.26
Certificates of deposit		204,019		4.30			194,785		3.73
Total interest-bearing deposits		434,578		2.92			438,148		2.47
Other bank borrowings		5,989		7.75			8,654		8.39
FHLB advances		—		—			1,138		5.23
Total interest-bearing liabilities	$	440,567		2.98	%	$	447,940		2.47	%

The $134,000 decrease in non-interest income for the three months ended September 30, 2024, compared to the same period in 2023, resulted from an increase in loss on sale of real estate of $220,000, partially offset by an increase in gain on sale of loans of $58,000, an increase in other non-interest income of $26,000, and an increase in income on bank owned life insurance of $2,000.

The $177,000 decrease in non-interest expense for the three months ended September 30, 2024, compared to the same period in 2023, resulted from decreases in advertising expense of $86,000, compensation and benefits expense of $54,000, professional fees of $43,000, loan and collection expense of $32,000, data processing expense of $26,000, amortization of core deposit intangible expense of $20,000, and deposit insurance premium expense of $1,000, partially offset by increases in audit and examination fees of $30,000, other non-interest expense of $28,000, occupancy and equipment expense of $15,000, and franchise and bank shares tax expense of $12,000.

Total assets decreased $9.1 million, or 1.4%, from $637.5 million at June 30, 2024 to $628.4 million at September 30, 2024. The decrease in assets was comprised of decreases in net loans receivable of $16.9 million, or 3.6%, from $470.9 million at June 30, 2024 to $454.0 million at September 30, 2024, real estate owned of $296,000, or 70.8% from $418,000 at June 30, 2024 to $122,000 at September 30, 2024, premises and equipment of $238,000, or 1.3%, from $18.3 million at June 30, 2024 to $18.1 million at September 30, 2024, core deposit intangible of $74,000, or 6.2%, from $1.2 million at June 30, 2024 to $1.1 million at September 30, 2024, and accrued interest receivable of $14,000, or 0.8%, from $1.78 million at June 30, 2024 to $1.76 million at September 30, 2024, partially offset by increases in cash and cash equivalents of $6.1 million, or 17.4%, from $34.9 million at June 30, 2024 to $41.0 million at September 30, 2024, investment securities of $1.4 million, or 1.5%, from $96.0 million at June 30, 2024 to $97.4 million at September 30, 2024, loans-held-for-sale of $535,000, or 30.9%, from $1.7 million at June 30, 2024 to $2.3 million at September 30, 2024, other assets of $224,000, or 16.6%, from $1.3 million at June 30, 2024 to $1.6 million at September 30, 2024, deferred tax asset of $29,000, or 2.5%, from $1.18 million at June 30, 2024 to $1.21 million at September 30, 2024, and bank owned life insurance of $29,000, or 0.4%, from $6.81 million at June 30, 2024 to $6.84 million at September 30, 2024. The increase in investment securities was primarily due to $4.0 million in security purchases and a $1.3 million reduction in unrealized losses on available for sale securities, partially offset by $3.5 million in principal payments. The increase in cash and cash equivalents from $34.9 million at June 30, 2024 to $41.0 million at September 30, 2024 was mainly due to decreases in loans receivable.

Total liabilities decreased $10.6 million, or 1.8%, from $584.7 million at June 30, 2024 to $574.1 million at September 30, 2024. The decrease in liabilities was comprised of decreases in total deposits of $9.4 million, or 1.6%, from $574.0 million at June 30, 2024 to $564.6 million at September 30, 2024, and other borrowings of $1.5 million, or 21.4%, from $7.0 million at June 30, 2024 to $5.5 million at September 30, 2024, partially offset by increases in other accrued expenses and liabilities of $252,000, or 7.9%, from $3.2 million at June 30, 2024 to $3.4 million at September 30, 2024, and advances from borrowers for taxes and insurance of $123,000, or 23.6%, from $521,000 at June 30, 2024 to $644,000 at September 30, 2024,. The decrease in deposits resulted from decreases in certificates of deposit of $17.5 million, or 8.2%, from $214.9 million at June 30, 2024 to $197.3 million at September 30, 2024, and money market deposits of $5.9 million, or 6.9%, from $85.5 million at June 30, 2024 to $79.6 million at September 30, 2024, partially offset by increases in savings deposits of $9.2 million, or 12.0%, from $76.6 million at June 30, 2024 to $85.8 million at September 30, 2024, non-interest deposits of $3.0 million, or 2.3%, from $130.3 million at June 30, 2024 to $133.3 million at September 30, 2024, and NOW accounts of $1.9 million, or 2.8%, from $66.6 million at June 30, 2024 to $68.5 million at September 30, 2024. The Company had no balances in brokered deposits at September 30, 2024 or June 30, 2024.

At September 30, 2024, the Company had $1.9 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $2.0 million on non-performing assets at June 30, 2024, consisting of two commercial non-real estate loans, five single-family residential loans, four home equity line-of-credit loans, and one single-family residence in other real estate owned at September 30, 2024, compared to five single-family residential loans, three commercial non-real estate loans, four home equity line-of-credit loans and three single-family residences in other real estate owned at June 30, 2024. At September 30, 2024 the Company had five commercial non-real-estate loans, one commercial real-estate loan, six single family residential loans, four home-equity line-of-credit loans, and one auto loan classified as substandard, compared to six single family residential loans, five commercial non-real-estate loans, four home equity line-of-credit loans and one auto loan classified as substandard at June 30, 2024. There were no loans classified as doubtful at September 30, 2024 or June 30, 2024.

Shareholders’ equity increased $1.5 million, or 2.8%, from $52.8 million at June 30, 2024 to $54.3 million at September 30, 2024. The increase in shareholders’ equity was comprised of net income for the three month period of $941,000, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $94,000, proceeds from the issuance of common stock from the exercise of stock options of $19,000, and a decrease in the Company’s accumulated other comprehensive loss of $1.0 million, partially offset by dividends paid totaling $409,000, and stock repurchases of $182,000.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its ten full-service banking offices and home office in northwest Louisiana.

Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe”, “expect”, “anticipate”, “estimate”, and “intend”, or future or conditional verbs such as “will”, “would”, “should”, “could”, or “may”. We undertake no obligation to update any forward-looking statements.

In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, competition, changes in the quality or composition of the Company’s loans, investment and mortgage-backed securities portfolios; geographic concentration of the Company’s business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees.

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share and per share data)

	September 30, 2024			June 30, 2024
	(Unaudited)
ASSETS

Cash and Cash Equivalents (Includes Interest-Bearing Deposits with Other Banks of $32,743 and $25,505 at September 30, 2024 and June 30, 2024, Respectively)	$	41,044		$	34,948
Securities Available-for-Sale (amortized cost September 30, 2024: $31,977; June 30, 2024: $30,348, Respectively)		29,934			27,037
Securities Held-to-Maturity (fair value September 30, 2024: $56,584; June 30, 2024: $54,450, Respectively)		65,800			67,302
Other Securities		1,633			1,614
Loans Held-for-Sale		2,268			1,733
Loans Receivable, Net of Allowance for Credit Losses (September 30, 2024: $4,703; June 30, 2024: $4,574, Respectively)		454,039			470,852
Accrued Interest Receivable		1,761			1,775
Premises and Equipment, Net		18,065			18,303
Bank Owned Life Insurance		6,839			6,810
Goodwill		2,990			2,990
Core Deposit Intangible		1,125			1,199
Deferred Tax Asset		1,210			1,181
Real Estate Owned		122			418
Other Assets		1,574			1,350

Total Assets	$	628,404		$	637,512

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

Deposits:
Non-interest bearing	$	133,293		$	130,334
Interest-bearing		431,267			443,673
Total Deposits		564,560			574,007
Advances from Borrowers for Taxes and Insurance		644			521
Other Borrowings		5,500			7,000
Other Accrued Expenses and Liabilities		3,433			3,181

Total Liabilities		574,137			584,709

SHAREHOLDERS’ EQUITY

Preferred Stock – $0.01 Par Value; 10,000,000 Shares Authorized: None Issued and Outstanding		–			–
Common Stock – $0.01 Par Value; 40,000,000 Shares Authorized: 3,129,668 and 3,144,168 Shares Issued and Outstanding at September 30, 2024 and June 30, 2024, Respectively		32			32
Additional Paid-in Capital		41,822			41,739
Unearned ESOP Stock		(379	)		(408	)
Retained Earnings		14,406			14,055
Accumulated Other Comprehensive Loss		(1,614	)		(2,615	)

Total Shareholders’ Equity		54,267			52,803

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	628,404		$	637,512

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (In thousands except share and per share data)

	Three Months Ended
	September 30,
	2024			2023
INTEREST INCOME
Loans, including fees	$	6,895		$	7,274
Investment securities		67			150
Mortgage-backed securities		443			473
Other interest-earning assets		336			177
Total interest income		7,741			8,074

INTEREST EXPENSE
Deposits		3,197			2,592
Federal Home Loan Bank borrowings		—			15
Other bank borrowings		117			183
Total interest expense		3,314			2,790
Net interest income		4,427			5,284

RECOVERY OF CREDIT LOSSES		(223	)		—
Net interest income after recovery of credit losses		4,650			5,284

NON-INTEREST INCOME
Gain on sale of loans		96			38
Loss on sale of real estate		(254	)		(34	)
Income on bank owned life insurance		28			26
Service charges on deposit accounts		391			391
Other income		39			13

Total non-interest income		300			434

NON-INTEREST EXPENSE
Compensation and benefits		2,302			2,356
Occupancy and equipment		564			549
Data processing		219			245
Audit and examination fees		132			102
Franchise and bank shares tax		168			156
Advertising		57			143
Professional fees		117			160
Loan and collection		28			60
Amortization core deposit intangible		74			94
Deposit insurance premium		90			91
Other expenses		260			232
Total non-interest expense		4,011			4,188

Income before income taxes		939			1,530
PROVISION FOR INCOME TAX EXPENSE		(2	)		310

NET INCOME	$	941		$	1,220

EARNINGS PER SHARE
Basic	$	0.31		$	0.40
Diluted	$	0.31		$	0.39

	Three Months Ended September 30,
	2024			2023

Selected Operating Ratios⁽¹⁾:
Average interest rate spread		2.23	%		2.68	%
Net interest margin		2.98	%		3.37	%
Return on average assets		0.59	%		0.73	%
Return on average equity		7.23	%		9.46	%

Asset Quality Ratios⁽²⁾:
Non-performing assets as a percent of total assets		0.31	%		0.28	%
Allowance for credit losses as a percent of non-performing loans		258.46	%		403.96	%
Allowance for credit losses as a percent of total loans receivable		1.03	%		1.00	%

Per Share Data:
Shares outstanding at period end		3,129,668			3,133,351
Weighted average shares outstanding:
Basic		3,058,286			3,028,597
Diluted		3,071,716			3,107,834

(1) Ratios for the three-month period are annualized.
(2) Asset quality ratios are end of period ratios.

The MIL Network –

January 25, 2025

Category: Emissions Trading