Finance – Page 864 – NewzIntel.com

MIL-OSI: Trupanion Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

SEATTLE, Oct. 30, 2024 (GLOBE NEWSWIRE) — Trupanion, Inc. (Nasdaq: TRUP), a leading provider of medical insurance for cats and dogs, today announced financial results for the third quarter ended September 30, 2024.

“Q3 was a very strong financial quarter for the company, combining consistent revenue growth with a 66% year-over-year increase in subscription discretionary profit,” said Margi Tooth, Chief Executive Officer and President of Trupanion. “This outperformance was driven by aligning the cost of veterinary care with member pricing, resulting in the achievement of our target value proposition of 71%. Trupanion is solving a bigger problem today than ever before, and after generating $30 million in free cash flow over the past 12 months, we are well positioned to reach even more pets in this globally underpenetrated market.”

Third Quarter 2024 Financial and Business Highlights

Total revenue was $327.5 million, an increase of 15% compared to the third quarter of 2023.
Total enrolled pets (including pets from our other business segment) was 1,688,903 at September 30, 2024, a decrease of 1% over September 30, 2023.
Subscription business revenue was $219.0 million, an increase of 20% compared to the third quarter of 2023.
Subscription enrolled pets was 1,032,042 at September 30, 2024, an increase of 6% over September 30, 2023.
Net income was $1.4 million, or $0.03 per basic and diluted share, compared to a net loss of $(4.0) million, or $(0.10) per basic and diluted share, in the third quarter of 2023.
Adjusted EBITDA was $14.5 million, compared to adjusted EBITDA of $6.1 million in the third quarter of 2023.
Operating cash flow was $15.3 million and free cash flow was $13.4 million in the third quarter of 2024. This compared to operating cash flow of $11.4 million and free cash flow of $7.0 million in the third quarter of 2023.

First Nine Months 2024 Financial and Business Highlights

Total revenue was $948.4 million, an increase of 17% compared to the first nine months of 2023.
Subscription business revenue was $628.7 million, an increase of 21% compared to the first nine months of 2023.
Net loss was $(11.3) million, or $(0.27) per basic and diluted share, compared to a net loss of $(42.5) million, or $(1.03) per basic and diluted share, in the first nine months of 2023.
Adjusted EBITDA was $26.7 million, compared to adjusted EBITDA of $(2.1) million in the first nine months of 2023.
Operating cash flow was $24.6 million and free cash flow was $16.7 million in the first nine months of 2024. This compared to operating cash flow of $1.1 million and free cash flow of $(13.2) million in the first nine months of 2023.
At September 30, 2024, the Company held $293.1 million in cash and short-term investments, including $36.4 million held outside the insurance entities, with an additional $15 million available under its credit facility.
The Company maintained $274.6 million of capital surplus at its insurance subsidiaries. This was $139.9 million more than the estimated risk-based capital requirement of $134.7 million.

Conference Call
Trupanion’s management will host a conference call today to review its third quarter 2024 results. The call is scheduled to begin shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of Trupanion’s website at https://investors.trupanion.com/ and will be archived online for 3 months upon completion of the conference call. Participants can access the conference call by dialing 1-877-300-8521 (United States) or 1-412-317-6026 (International). A telephonic replay of the call will also be available after the completion of the call, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 10192561.

About Trupanion
Trupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada, Continental Europe, Australia, and Puerto Rico with over 1,000,000 pets enrolled. For over two decades, Trupanion has given pet owners peace of mind so they can focus on their pet’s recovery, not financial stress. Trupanion is committed to providing pet owners with the highest value in pet medical insurance with unlimited payouts for the life of their pets. With its patented process, Trupanion is the only North American provider with the technology to pay veterinarians directly in seconds at the time of checkout. Trupanion is listed on NASDAQ under the symbol “TRUP”. The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the United States, by its wholly-owned insurance entity American Pet Insurance Company and, in Canada, by Accelerant Insurance Company of Canada. Trupanion Australia is a partnership between Trupanion and Hollard Insurance Company. Policies are sold and administered by Trupanion Managers USA, Inc. (CA license No. 0G22803, NPN 9588590). For more information, please visit trupanion.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results for Trupanion, including, but not limited to, its expectations regarding its ability to continue to grow its enrollments and revenue, and otherwise execute its business plan. These forward-looking statements are based upon the current expectations and beliefs of Trupanion’s management as of the date of this press release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements made in this press release are based on information available to Trupanion as of the date hereof, and Trupanion has no obligation to update these forward-looking statements.

In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability to achieve or maintain profitability and/or appropriate levels of cash flow in future periods; the ability to keep growing our membership base and revenue; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of claims; the ability to maintain high retention rates; the accuracy of assumptions used in pricing medical plan subscriptions and the ability to accurately estimate the impact of new products or offerings on claims frequency; actual claims expense exceeding estimates; regulatory and other constraints on the ability to institute, or the decision to otherwise delay, pricing modifications in response to changes in actual or estimated claims expense; the effectiveness and statutory or regulatory compliance of our Territory Partner model and of our Territory Partners, veterinarians and other third parties in recommending medical plan subscriptions to potential members; the ability to retain existing Territory Partners and increase the number of Territory Partners and active hospitals; compliance by us and those referring us members with laws and regulations that apply to our business, including the sale of a pet medical plan; the ability to maintain the security of our data; fluctuations in the Canadian currency exchange rate; the ability to protect our proprietary and member information; the ability to maintain our culture and team; the ability to maintain the requisite amount of risk-based capital; our ability to implement and maintain effective controls, including to remediate material weaknesses in internal controls over financial reporting; the ability to protect and enforce Trupanion’s intellectual property rights; the ability to successfully implement our alliance with Aflac; the ability to continue key contractual relationships with third parties; third-party claims including litigation and regulatory actions; the ability to recognize benefits from investments in new solutions and enhancements to Trupanion’s technology platform and website; our ability to retain key personnel; and deliberations and determinations by the Trupanion board based on the future performance of the company or otherwise.

For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequently filed reports on Forms 10-Q, 10-K and 8-K. All documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system at https://www.sec.gov or the Investor Relations section of Trupanion’s website at https://investors.trupanion.com.

Non-GAAP Financial Measures
Trupanion’s stated results may include certain non-GAAP financial measures. These non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry as other companies in its industry may calculate or use non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Trupanion’s reported financial results. The presentation and utilization of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Trupanion urges its investors to review the reconciliation of its non-GAAP financial measures to the most directly comparable GAAP financial measures in its consolidated financial statements, and not to rely on any single financial or operating measure to evaluate its business. These reconciliations are included below and on Trupanion’s Investor Relations website.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Trupanion believes that providing various non-GAAP financial measures that exclude stock-based compensation expense and depreciation and amortization expense allows for more meaningful comparisons between its operating results from period to period. Trupanion offsets new pet acquisition expense with sign-up fee revenue in the calculation of net acquisition cost because it collects sign-up fee revenue from new members at the time of enrollment and considers it to be an offset to a portion of Trupanion’s new pet acquisition expense. Trupanion believes this allows it to calculate and present financial measures in a consistent manner across periods. Trupanion’s management believes that the non-GAAP financial measures and the related financial measures derived from them are important tools for financial and operational decision-making and for evaluating operating results over different periods of time.

Trupanion, Inc. Condensed Consolidated Statements of Operations (in thousands, except share data)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
	(unaudited)
Revenue:
Subscription business	$	218,986		$	182,906		$	628,738		$	521,369
Other business		108,470			102,947			319,639			291,379
Total revenue		327,456			285,853			948,377			812,748
Cost of revenue:
Subscription business⁽¹⁾		177,365			157,444			525,237			455,055
Other business		100,712			93,176			297,265			266,741
Total cost of revenue⁽²⁾		278,077			250,620			822,502			721,796
Operating expenses:
Technology and development⁽¹⁾		7,933			5,302			23,083			15,434
General and administrative⁽¹⁾		16,977			12,664			46,903			46,817
New pet acquisition expense⁽¹⁾		18,308			17,772			53,025			60,183
Depreciation and amortization		4,381			2,990			12,542			9,445
Total operating expenses		47,599			38,728			135,553			131,879
Gain (loss) from investment in joint venture		(34	)		4			(184	)		(140	)
Operating income (loss)		1,746			(3,491	)		(9,862	)		(41,067	)
Interest expense		3,820			3,053			11,071			8,380
Other income, net		(3,538	)		(2,465	)		(9,601	)		(6,445	)
Income (loss) before income taxes		1,464			(4,079	)		(11,332	)		(43,002	)
Income tax expense (benefit)		39			(43	)		(43	)		(472	)
Net income (loss)	$	1,425		$	(4,036	)	$	(11,289	)	$	(42,530	)

Net income (loss) per share:
Basic	$	0.03		$	(0.10	)	$	(0.27	)	$	(1.03	)
Diluted	$	0.03		$	(0.10	)	$	(0.27	)	$	(1.03	)
Weighted average shares of common stock outstanding:
Basic		42,233,903			41,536,575			42,076,998			41,344,195
Diluted		42,822,505			41,536,575			42,076,998			41,344,195

⁽¹⁾Includes stock-based compensation expense as follows:	Three Months Ended September 30,						Nine Months Ended September 30,
⁽¹⁾Includes stock-based compensation expense as follows:	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Cost of revenue	$	1,401		$	1,176		$	4,186		$	3,801
Technology and development		1,259			650			3,774			1,985
General and administrative		4,125			3,281			11,435			14,448
New pet acquisition expense		1,555			1,785			5,743			5,626
Total stock-based compensation expense	$	8,340		$	6,892		$	25,138		$	25,860

⁽²⁾The breakout of cost of revenue between veterinary invoice expense and other cost of revenue is as follows:
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Veterinary invoice expense	$	238,814		$	212,441		$	703,485		$	613,316
Other cost of revenue		39,263			38,179			119,017			108,480
Total cost of revenue	$	278,077		$	250,620		$	822,502		$	721,796

Trupanion, Inc. Condensed Consolidated Balance Sheets (in thousands, except share data)
	September 30, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	137,477		$	147,501
Short-term investments		155,580			129,667
Accounts and other receivables, net of allowance for doubtful accounts of $1,015 at September 30, 2024 and $1,085 at December 31, 2023		289,823			267,899
Prepaid expenses and other assets		16,692			17,022
Total current assets		599,572			562,089
Restricted cash		23,394			22,963
Long-term investments		14,215			12,866
Property, equipment and internal-use software, net		102,862			103,650
Intangible assets, net		14,888			18,745
Other long-term assets		16,004			18,922
Goodwill		45,183			43,713
Total assets	$	816,118		$	782,948
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	10,136		$	10,505
Accrued liabilities and other current liabilities		33,461			34,052
Reserve for veterinary invoices		56,668			63,238
Deferred revenue		260,238			235,329
Long-term debt – current portion		1,350			1,350
Total current liabilities		361,853			344,474
Long-term debt		127,548			127,580
Deferred tax liabilities		2,166			2,685
Other liabilities		4,376			4,487
Total liabilities		495,943			479,226
Stockholders’ equity:
Common stock: $0.00001 par value per share, 100,000,000 shares authorized; 43,368,881 and 42,340,695 issued and outstanding at September 30, 2024; 42,887,052 and 41,858,866 shares issued and outstanding at December 31, 2023		—			—
Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized; no shares issued and outstanding		—			—
Additional paid-in capital		561,010			536,108
Accumulated other comprehensive income (loss)		3,243			403
Accumulated deficit		(227,544	)		(216,255	)
Treasury stock, at cost: 1,028,186 shares at September 30, 2024 and December 31, 2023		(16,534	)		(16,534	)
Total stockholders’ equity		320,175			303,722
Total liabilities and stockholders’ equity	$	816,118		$	782,948

Trupanion, Inc. Condensed Consolidated Statements of Cash Flows (in thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
	(unaudited)
Operating activities
Net income (loss)	$	1,425		$	(4,036	)	$	(11,289	)	$	(42,530	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		4,381			2,990			12,542			9,445
Stock-based compensation expense		8,341			6,892			25,138			25,860
Other, net		(136	)		(549	)		(453	)		(1,134	)
Changes in operating assets and liabilities:
Accounts and other receivables		(3,794	)		(12,409	)		(22,020	)		(45,593	)
Prepaid expenses and other assets		101			452			2,398			(2,761	)
Accounts payable, accrued liabilities, and other liabilities		1,377			2,632			(350	)		(3,832	)
Reserve for veterinary invoices		(3,934	)		5,258			(6,469	)		17,697
Deferred revenue		7,535			10,168			25,088			43,979
Net cash provided by (used in) operating activities		15,296			11,398			24,585			1,131
Investing activities
Purchases of investment securities		(26,125	)		(29,458	)		(107,375	)		(109,389	)
Maturities and sales of investment securities		26,089			29,713			81,767			147,365
Purchases of property, equipment, and internal-use software		(1,914	)		(4,391	)		(7,858	)		(14,310	)
Other		490			837			1,552			1,420
Net cash provided by (used in) investing activities		(1,460	)		(3,299	)		(31,914	)		25,086
Financing activities
Proceeds from debt financing, net of financing fees		—			24,972			—			60,102
Proceeds from exercise of stock options		258			628			729			1,281
Shares withheld to satisfy tax withholding		(802	)		(272	)		(1,390	)		(1,296	)
Repayments of debt financing		(338	)		(338	)		(1,013	)		(1,380	)
Other financing		(157	)		(150	)		(609	)		(150	)
Net cash provided by (used in) financing activities		(1,039	)		24,840			(2,283	)		58,557
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net		481			(906	)		19			(830	)
Net change in cash, cash equivalents, and restricted cash		13,278			32,033			(9,593	)		83,944
Cash, cash equivalents, and restricted cash at beginning of period		147,593			136,548			170,464			84,637
Cash, cash equivalents, and restricted cash at end of period	$	160,871		$	168,581		$	160,871		$	168,581

The following tables set forth our key operating metrics.

	Nine Months Ended September 30,
		2024			2023
Total Business:
Total pets enrolled (at period end)		1,688,903			1,712,177
Subscription Business:
Total subscription pets enrolled (at period end)		1,032,042			969,322
Monthly average revenue per pet	$	71.94		$	64.63
Lifetime value of a pet, including fixed expenses	$	493		$	428
Average pet acquisition cost (PAC)	$	227		$	232
Average monthly retention		98.29	%		98.55	%


	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023			Jun. 30, 2023			Mar. 31, 2023			Dec. 31, 2022
Total Business:
Total pets enrolled (at period end)		1,688,903			1,699,643			1,708,017			1,714,473			1,712,177			1,679,659			1,616,865			1,537,573
Subscription Business:
Total subscription pets enrolled (at period end)		1,032,042			1,020,934			1,006,168			991,426			969,322			943,958			906,369			869,862
Monthly average revenue per pet	$	74.27		$	71.72		$	69.79		$	67.07		$	65.82		$	64.41		$	63.58		$	63.11
Lifetime value of a pet, including fixed expenses	$	493		$	450		$	428		$	419		$	428		$	470		$	541		$	641
Average pet acquisition cost (PAC)	$	243		$	231		$	207		$	217		$	212		$	236		$	247		$	283
Average monthly retention		98.29	%		98.34	%		98.41	%		98.49	%		98.55	%		98.61	%		98.65	%		98.69	%

The following table reflects the reconciliation of cash provided by operating activities to free cash flow (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Net cash provided by operating activities	$	15,296		$	11,398		$	24,585		$	1,131
Purchases of property, equipment, and internal-use software		(1,914	)		(4,391	)		(7,858	)		(14,310	)
Free cash flow	$	13,382		$	7,007		$	16,727		$	(13,179	)

The following table reflects the reconciliation between GAAP and non-GAAP measures (in thousands except percentages):
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Veterinary invoice expense	$	238,814		$	212,441		$	703,485		$	613,316
Less:
Stock-based compensation expense⁽¹⁾		(830	)		(870	)		(2,535	)		(2,565	)
Other business cost of paying veterinary invoices⁽⁴⁾		(82,507	)		(72,694	)		(239,342	)		(210,286	)
Subscription cost of paying veterinary invoices (non-GAAP)	$	155,477		$	138,877		$	461,608		$	400,465
% of subscription revenue		71.0	%		75.9	%		73.4	%		76.8	%

Other cost of revenue	$	39,263		$	38,179		$	119,017		$	108,480
Less:
Stock-based compensation expense⁽¹⁾		(536	)		(282	)		(1,479	)		(1,158	)
Other business variable expenses⁽⁴⁾		(18,126	)		(20,482	)		(57,713	)		(56,455	)
Subscription variable expenses (non-GAAP)	$	20,601		$	17,415		$	59,825		$	50,867
% of subscription revenue		9.4	%		9.5	%		9.5	%		9.8	%

Technology and development expense	$	7,933		$	5,302		$	23,083		$	15,434
General and administrative expense		16,977			12,664			46,903			46,817
Less:
Stock-based compensation expense⁽¹⁾		(5,258	)		(3,754	)		(14,465	)		(16,072	)
Non-recurring transaction or restructuring expenses⁽²⁾		—			(8	)		—			(4,175	)
Development expenses⁽³⁾		(1,474	)		(1,594	)		(4,307	)		(3,417	)
Fixed expenses (non-GAAP)	$	18,178		$	12,610		$	51,214		$	38,587
% of total revenue		5.6	%		4.4	%		5.4	%		4.7	%

New pet acquisition expense	$	18,308		$	17,772		$	53,025		$	60,183
Less:
Stock-based compensation expense⁽¹⁾		(1,503	)		(1,679	)		(5,426	)		(5,433	)
Other business pet acquisition expense⁽⁴⁾		(8	)		(10	)		(31	)		(123	)
Subscription acquisition cost (non-GAAP)	$	16,797		$	16,083		$	47,568		$	54,627
% of subscription revenue		7.7	%		8.8	%		7.6	%		10.5	%

⁽¹⁾ Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation according to GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.2 million and $1.3 million for the three and nine months ended September 30, 2024, respectively. ⁽²⁾ Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures, and a $3.8 million non-recurring settlement of accounts receivable in the first quarter of 2023 related to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers. ⁽³⁾ Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant. ⁽⁴⁾ Excludes the portion of stock-based compensation expense attributable to the other business segment.

The following table reflects the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages):
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Operating income (loss)	$	1,746		$	(3,491	)	$	(9,862	)	$	(41,067	)
Non-GAAP expense adjustments
Acquisition cost		16,805			16,093			47,599			54,750
Stock-based compensation expense⁽¹⁾		8,127			6,585			23,905			25,228
Development expenses⁽³⁾		1,474			1,594			4,307			3,417
Depreciation and amortization		4,381			2,990			12,542			9,445
Non-recurring transaction or restructuring expenses⁽²⁾		—			8			—			4,175
Gain (loss) from investment in joint venture		(34	)		4			(184	)		(140	)
Total adjusted operating income (non-GAAP)	$	32,567		$	23,775		$	78,675		$	56,088

Subscription Business:
Subscription operating income (loss)	$	3,824		$	(5,709	)	$	(4,109	)	$	(37,294	)
Non-GAAP expense adjustments
Acquisition cost		16,797			16,083			47,568			54,627
Stock-based compensation expense⁽¹⁾		6,215			4,996			18,723			19,229
Development expenses⁽³⁾		986			1,257			2,855			2,439
Depreciation and amortization		2,929			1,913			8,315			6,060
Non-recurring transaction or restructuring expenses⁽²⁾		—			5			—			223
Subscription adjusted operating income (non-GAAP)	$	30,751		$	18,545		$	73,352		$	45,284

Other Business:
Other business operating income (loss)	$	(2,044	)	$	2,214		$	(5,569	)	$	(3,633	)
Non-GAAP expense adjustments
Acquisition cost		8			10			31			123
Stock-based compensation expense⁽¹⁾		1,912			1,589			5,182			5,999
Development expenses⁽³⁾		488			337			1,452			978
Depreciation and amortization		1,452			1,077			4,227			3,385
Non-recurring transaction or restructuring expenses⁽²⁾		—			3			—			3,952
Other business adjusted operating income (non-GAAP)	$	1,816		$	5,230		$	5,323		$	10,804

⁽¹⁾ Trupanion employees may elect to take restricted stock units in lieu of cash payment for their bonuses. We account for such expense as stock-based compensation in accordance with GAAP, but we do not include it in any non-GAAP adjustments. Stock-based compensation associated with bonuses was approximately $0.2 million and $1.3 million for the three and nine months ended September 30, 2024, respectively.
⁽²⁾ Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures, and a $3.8 million non-recurring settlement of accounts receivable in the first quarter of 2023 related to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.
⁽³⁾ Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.

The following table reflects the reconciliation of GAAP measures to non-GAAP measures (in thousands, except percentages):
	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Subscription revenue	$	218,986		$	182,906		$	628,738		$	521,369
Subscription cost of paying veterinary invoices		155,477			138,877			461,608			400,465
Subscription variable expenses		20,601			17,415			59,825			50,867
Subscription fixed expenses*		12,157			8,069			33,953			24,753
Subscription adjusted operating income (non-GAAP)	$	30,751		$	18,545		$	73,352		$	45,284
Other business revenue		108,470			102,947		$	319,639		$	291,379
Other business cost of paying veterinary invoices		82,507			72,694			239,342			210,286
Other business variable expenses		18,126			20,482			57,713			56,455
Other business fixed expenses*		6,021			4,541			17,261			13,834
Other business adjusted operating income (non-GAAP)	$	1,816		$	5,230		$	5,323		$	10,804
Revenue		327,456			285,853		$	948,377		$	812,748
Cost of paying veterinary invoices		237,984			211,571			700,950			610,751
Variable expenses		38,727			37,897			117,538			107,322
Fixed expenses*		18,178			12,610			51,214			38,587
Total business adjusted operating income (non-GAAP)	$	32,567		$	23,775		$	78,675		$	56,088

As a percentage of revenue:	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Subscription revenue		100.0	%		100.0	%		100.0	%		100.0	%
Subscription cost of paying veterinary invoices		71.0	%		75.9	%		73.4	%		76.8	%
Subscription variable expenses		9.4	%		9.5	%		9.5	%		9.8	%
Subscription fixed expenses*		5.6	%		4.4	%		5.4	%		4.7	%
Subscription adjusted operating income (non-GAAP)		14.0	%		10.1	%		11.7	%		8.7	%

Other business revenue		100.0	%		100.0	%		100.0	%		100.0	%
Other business cost of paying veterinary invoices		76.1	%		70.6	%		74.9	%		72.2	%
Other business variable expenses		16.7	%		19.9	%		18.1	%		19.4	%
Other business fixed expenses*		5.6	%		4.4	%		5.4	%		4.7	%
Other business adjusted operating income (non-GAAP)		1.7	%		5.1	%		1.7	%		3.7	%

Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of paying veterinary invoices		72.7	%		74.0	%		73.9	%		75.1	%
Variable expenses		11.8	%		13.3	%		12.4	%		13.2	%
Fixed expenses*		5.6	%		4.4	%		5.4	%		4.7	%
Total business adjusted operating income (non-GAAP)		9.9	%		8.3	%		8.3	%		6.9	%

*Fixed expenses represent shared services that support both our subscription and other business segments and, as such, are generally allocated to each segment pro-rata based on revenues.

Adjusted operating income is a non-GAAP financial measure that adjusts operating income (loss) to remove the effect of acquisition cost, development expenses, non-recurring transaction or restructuring expenses, and gain (loss) from investment in joint venture. Non-cash items, such as stock-based compensation expense and depreciation and amortization, are also excluded. Acquisition cost, development expenses, gain (loss) from investment in joint venture, stock-based compensation expense, and depreciation and amortization are expected to remain recurring expenses for the foreseeable future, but are excluded from this metric to measure scale in other areas of the business. Management believes acquisition costs primarily represent the cost to acquire new subscribers and are driven by the amount of growth we choose to pursue based primarily on the amount of our adjusted operating income period over period. Accordingly, this measure is not indicative of our core operating income performance. We also exclude development expenses, gain (loss) from investment in joint venture, stock-based compensation expense, and depreciation and amortization because some investors may not view those items as reflective of our core operating income performance.

Management uses adjusted operating income and the margin on adjusted operating income to understand the effects of scale in its non-acquisition cost and development expenses and to plan future advertising expenditures, which are designed to acquire new pets. Management uses this measure as a principal way of understanding the operating performance of its business exclusive of acquisition cost and new product exploration and development initiatives. Management believes disclosure of this metric provides investors with the same data that the Company employs in assessing its overall operations and that disclosure of this measure may provide useful information regarding the efficiency of our utilization of revenues, return on advertising dollars in the form of new subscribers and future use of available cash to support the continued growth of our business.

The following tables reflect the reconciliation of adjusted EBITDA to net income (loss) (in thousands):

	Nine Months Ended September 30,
		2024			2023
Net loss	$	(11,289	)	$	(42,530	)
Excluding:
Stock-based compensation expense		23,906			25,228
Depreciation and amortization expense		12,542			9,445
Interest income		(9,412	)		(6,169	)
Interest expense		11,071			8,380
Other non-operating expenses		—			—
Income tax benefit		(43	)		(472	)
Non-recurring transaction or restructuring expenses		—			4,175
(Gain) loss from equity method investment		(33	)		(110	)
Adjusted EBITDA	$	26,742		$	(2,053	)

	Three Months Ended
	Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sep. 30, 2023			Jun. 30, 2023			Mar. 31, 2023			Dec. 31, 2022
Net income (loss)	$	1,425		$	(5,862	)	$	(6,852	)	$	(2,163	)	$	(4,036	)	$	(13,714	)	$	(24,780	)	$	(9,285	)
Excluding:
Stock-based compensation expense		8,127			8,381			7,398			6,636			6,585			6,503			12,140			8,412
Depreciation and amortization expense		4,381			4,376			3,785			3,029			2,990			3,253			3,202			2,897
Interest income		(3,232	)		(3,135	)		(3,045	)		(2,842	)		(2,389	)		(2,051	)		(1,729	)		(1,614	)
Interest expense		3,820			3,655			3,596			3,697			3,053			2,940			2,387			1,587
Other non-operating expenses		—						—						—			—			—			—
Income tax expense (benefit)		39			(44	)		(38	)		130			(43	)		(238	)		(191	)		(15	)
Non-recurring transaction or restructuring expenses		—						—						8			65			4,102			193
(Gain) loss from equity method investment		(33	)					—						(110	)		—			—			—
Adjusted EBITDA	$	14,527		$	7,371		$	4,844		$	8,487		$	6,058		$	(3,242	)	$	(4,869	)	$	2,175

Contacts:

Investors:
Laura Bainbridge, Senior Vice President, Corporate Communications
Gil Melchior, Director, Investor Relations
Investor.Relations@trupanion.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/214fb96d-127a-4bf6-af8e-cc7b9498e1ec

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: Remitly Reports Third Quarter 2024 Results and Raises Full Year 2024 Outlook

Source: GlobeNewswire (MIL-OSI)

Active customers up 35% year over year
Revenue up 39% year over year
Achieved GAAP net income profitability and record Adjusted EBITDA

SEATTLE, Oct. 30, 2024 (GLOBE NEWSWIRE) — Remitly Global, Inc. (NASDAQ: RELY), a trusted provider of digital financial services that transcend borders, reported results for the third quarter ended September 30, 2024.

“I am grateful to our customers and global teams for the exceptional third quarter results,” said Matt Oppenheimer, co-founder and Chief Executive Officer, Remitly. “As our performance in the third quarter exceeded expectations, we are pleased to increase our 2024 outlook for both revenue and Adjusted EBITDA. We are excited about growth opportunities in 2025 and beyond as we execute on our vision of transforming lives with trusted financial services that transcend borders.”

Third Quarter 2024 Highlights and Key Operating Data
(All comparisons relative to the third quarter of 2023)

Active customers increased to 7.3 million, from 5.4 million, up 35%.
Send volume increased to $14.5 billion, from $10.2 billion, up 42%.
Revenue totaled $336.5 million, compared to $241.6 million, up 39%.
Net income was $1.9 million, compared to net loss of $35.7 million.
Adjusted EBITDA was $46.7 million, compared to $10.5 million, up 345%.

2024 Financial Outlook
For fiscal year 2024, Remitly currently expects:

Total revenue in the range of $1.250 billion to $1.254 billion, representing a growth rate of 32% to 33% year over year. This outlook reflects an increase from our prior revenue outlook in the range of $1.230 billion to $1.250 billion.
To remain in a GAAP net loss position for 2024 and for Adjusted EBITDA to be in the range of $108 million to $112 million. This outlook reflects an increase from our prior Adjusted EBITDA outlook in the range of $90 million and $100 million.

For the fourth quarter of 2024, Remitly currently expects:

Total revenue in the range of $338 million to $342 million, representing a growth rate of 28% to 29% year over year.
A GAAP net loss position for the fourth quarter of 2024 and for Adjusted EBITDA to be in the range of $17 million to $21 million.

Reconciliation of GAAP to Non-GAAP Financial Measures
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this earnings release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.” We have not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) or to forecasted GAAP income (loss) before income taxes within this earnings release because we cannot, without unreasonable effort, calculate certain reconciling items with confidence due to the variability, complexity, and limited visibility of the adjusting items that would be excluded from forecasted Adjusted EBITDA. These items include, but are not limited to, income taxes and stock-based compensation expense, which are directly impacted by unpredictable fluctuations in the market price of our common stock. The variability of these items could have a significant impact on our future GAAP financial results.

Note: All percentage changes described within this press release are calculated using amounts in the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”), for which revenue and active customers are presented in thousands and send volume is presented in millions. Rounding differences may occur when individually calculating percentages or totals from rounded amounts included within the press release body as compared to the amounts included within the Company’s SEC filings.

Webcast Information
Remitly will host a webcast at 5:00 p.m. Eastern time on Wednesday, October 30, 2024 to discuss its third quarter 2024 financial results. The live webcast and investor presentation will be accessible on Remitly’s website at https://ir.remitly.com. A webcast replay will be available on our website at https://ir.remitly.com following the live event.

We have used, and intend to continue to use, the Investor Relations section of our website at https://ir.remitly.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.

Non-GAAP Financial Measures
Some of the financial information and data contained in this earnings release, such as Adjusted EBITDA and non-GAAP operating expenses, have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). We regularly review our key business metrics and non-GAAP financial measures to evaluate our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that these key business metrics and non-GAAP financial measures provide meaningful supplemental information for management and investors in assessing our historical and future operating performance. Adjusted EBITDA and non-GAAP operating expenses are key output measures used by our management to evaluate our operating performance, inform future operating plans, and make strategic long-term decisions, including those relating to operating expenses and the allocation of internal resources. Remitly believes that the use of Adjusted EBITDA and non-GAAP operating expenses provides additional tools to assess operational performance and trends in, and in comparing Remitly’s financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. Remitly’s non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Because of the limitations of non-GAAP financial measures, you should consider the non-GAAP financial measures presented herein in conjunction with Remitly’s financial statements and the related notes thereto. Please refer to the non-GAAP reconciliations in this press release for a reconciliation of these non-GAAP financial measures to the most comparable financial measure prepared in accordance with GAAP.

We calculate Adjusted EBITDA as net income (loss) adjusted by (i) interest (income) expense, net, (ii) provision for income taxes, (iii) noncash charges of depreciation and amortization, (iv) gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency, (v) noncash charges associated with our donation of common stock in connection with our Pledge 1% commitment, (vi) noncash stock-based compensation expense, net, and (vii) certain acquisition, integration, restructuring, and other costs. We calculate non-GAAP operating expenses as our GAAP operating expenses adjusted by (i) noncash stock-based compensation expense, net, (ii) noncash charges associated with our donation of common stock in connection with our Pledge 1% commitment, as well as (iii) certain acquisition, integration, restructuring, and other costs.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. These statements include, but are not limited to, statements regarding our future operating results and financial position, including our fiscal year 2024 financial outlook, including forecasted fiscal year 2024 revenue and Adjusted EBITDA, anticipated future expenses and investments, expectations relating to certain of our key financial and operating metrics, our business strategy and plans, market growth, our market position and potential market opportunities, and our objectives for future operations. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on management’s expectations, assumptions, and projections based on information available at the time the statements were made. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including risks and uncertainties related to our ability to successfully execute our business and growth strategy, our ability to achieve and maintain future profitability, our ability to further penetrate our existing customer base and expand our customer base in existing and new corridors, our ability to expand into broader financial services, our ability to expand internationally, the effects of seasonal trends on our results of operations, the current inflationary environment, our expectations concerning relationships with third parties, including strategic, banking, and disbursement partners, our ability to obtain, maintain, protect, and enhance our intellectual property and other proprietary rights, our ability to maintain the security and availability of our solutions, the success of any acquisitions or investments that we make, our ability to compete effectively, our ability to stay in compliance with applicable laws and regulations, our ability to buy foreign currency at generally advantageous rates, and the effects of macroeconomic and geopolitical conditions, including regulatory changes, on our customers and business operations. 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, our actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Further information on risks that could cause actual results to differ materially from forecasted results is included in our quarterly report on Form 10-Q for the quarter ended September 30, 2024 to be filed with the SEC, and within our annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC, which are or will be available on our website at https://ir.remitly.com and on the SEC’s website at www.sec.gov. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

About Remitly
Remitly is a trusted provider of digital financial services that transcend borders. With a global footprint spanning more than 170 countries, Remitly’s digitally native, cross-border payments app delights customers with a fast, reliable, and transparent money movement experience. Building on its strong foundation, Remitly is expanding its suite of products to further its vision and transform lives around the world.

Contacts

Media:
Kendall Sadler
kendall@remitly.com

Investor Relations:
Stephen Shulstein
stephens@remitly.com

REMITLY GLOBAL, INC. Condensed Consolidated Statements of Operations (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share data)		2024			2023			2024			2023
Revenue	$	336,527		$	241,629		$	912,068		$	679,527
Costs and expenses
Transaction expenses⁽¹⁾		115,554			85,742			313,215			239,995
Customer support and operations⁽¹⁾		21,792			21,190			61,910			62,604
Marketing⁽¹⁾		74,792			61,351			219,862			159,074
Technology and development⁽¹⁾		68,446			57,014			199,206			160,699
General and administrative⁽¹⁾		50,920			49,817			140,982			130,715
Depreciation and amortization		4,655			3,418			12,240			9,634
Total costs and expenses		336,159			278,532			947,415			762,721
Income (loss) from operations		368			(36,903	)		(35,347	)		(83,194	)
Interest income		2,065			1,808			6,233			5,200
Interest expense		(760	)		(585	)		(2,274	)		(1,566	)
Other income (expense), net		2,094			283			6,272			(2,774	)
Income (loss) before provision for income taxes		3,767			(35,397	)		(25,116	)		(82,334	)
Provision for income taxes		1,850			258			6,138			485
Net income (loss)	$	1,917		$	(35,655	)	$	(31,254	)	$	(82,819	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.01		$	(0.20	)	$	(0.16	)	$	(0.46	)
Diluted	$	0.01		$	(0.20	)	$	(0.16	)	$	(0.46	)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic		196,169,417			182,598,013			193,167,942			178,956,602
Diluted		205,251,546			182,598,013			193,167,942			178,956,602

_________________________⁽¹⁾ Exclusive of depreciation and amortization, shown separately.

REMITLY GLOBAL, INC. Condensed Consolidated Balance Sheets (unaudited)

	September 30,			December 31,
(in thousands)		2024			2023
Assets
Current assets
Cash and cash equivalents	$	324,434		$	323,710
Disbursement prefunding		219,643			195,848
Customer funds receivable, net		276,096			379,417
Prepaid expenses and other current assets		41,083			33,143
Total current assets		861,256			932,118
Property and equipment, net		24,364			16,010
Operating lease right-of-use assets		10,768			9,525
Goodwill		54,940			54,940
Intangible assets, net		12,548			16,642
Other noncurrent assets, net		6,554			7,071
Total assets	$	970,430		$	1,036,306
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	16,825		$	35,051
Customer liabilities		194,122			177,473
Short-term debt		2,426			2,481
Accrued expenses and other current liabilities		105,234			145,802
Operating lease liabilities		5,488			6,032
Total current liabilities		324,095			366,839
Operating lease liabilities, noncurrent		5,770			4,477
Long-term debt		—			130,000
Other noncurrent liabilities		9,742			5,653
Total liabilities		339,607			506,969
Commitments and contingencies
Stockholders’ equity
Common stock		20			19
Additional paid-in capital		1,151,479			1,020,286
Accumulated other comprehensive income		1,881			335
Accumulated deficit		(522,557	)		(491,303	)
Total stockholders’ equity		630,823			529,337
Total liabilities and stockholders’ equity	$	970,430		$	1,036,306

REMITLY GLOBAL, INC. Condensed Consolidated Statements of Cash Flows (unaudited)

	Nine Months Ended September 30,
(in thousands)		2024			2023
Cash flows from operating activities
Net loss	$	(31,254	)	$	(82,819	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		12,240			9,634
Stock-based compensation expense, net		110,523			101,007
Donation of common stock		2,587			4,600
Other		299			4,674
Changes in operating assets and liabilities:
Disbursement prefunding		(23,795	)		(52,162	)
Customer funds receivable		100,539			(68,553	)
Prepaid expenses and other assets		(6,787	)		(9,652	)
Operating lease right-of-use assets		4,475			3,796
Accounts payable		(18,285	)		10,448
Customer liabilities		16,811			29,211
Accrued expenses and other liabilities		(23,521	)		28,118
Operating lease liabilities		(4,982	)		(3,470	)
Net cash provided by (used in) operating activities		138,850			(25,168	)
Cash flows from investing activities
Purchases of property and equipment		(3,192	)		(2,268	)
Capitalized internal-use software costs		(9,288	)		(4,249	)
Cash paid for acquisition, net of acquired cash, cash equivalents, and restricted cash		—			(40,933	)
Net cash used in investing activities		(12,480	)		(47,450	)
Cash flows from financing activities
Proceeds from exercise of stock options		5,754			12,258
Proceeds from issuance of common stock in connection with ESPP⁽¹⁾		9,382			6,046
Proceeds from revolving credit facility borrowings		863,000			424,000
Repayments of revolving credit facility borrowings		(993,000	)		(424,000	)
Taxes paid related to net share settlement of equity awards		(3,774	)		(4,711	)
Cash paid for settlement of amounts previously held back for acquisition consideration		(10,261	)		—
Repayment of assumed indebtedness		—			(17,068	)
Net cash used in financing activities		(128,899	)		(3,475	)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash		3,941			(599	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		1,412			(76,692	)
Cash, cash equivalents, and restricted cash at beginning of period		325,029			300,734
Cash, cash equivalents, and restricted cash at end of period	$	326,441		$	224,042
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	324,434		$	223,273
Restricted cash included in prepaid expenses and other current assets		1,034			715
Restricted cash included in other noncurrent assets, net		973			54
Total cash, cash equivalents, and restricted cash	$	326,441		$	224,042

_________________________
⁽¹⁾ Beginning with the fourth quarter of 2023, the Company changed the presentation of shares purchased under the Employee Stock Purchase Plan (“ESPP”) to reflect an operating cash outflow for compensation paid to employees and a financing cash inflow for cash paid by employees in exchange for shares. Previously such activity was treated and disclosed as noncash activity for the nine months ended September 30, 2023.

REMITLY GLOBAL, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)

*Reconciliation of net income (loss) to Adjusted EBITDA:*

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Net income (loss)	$	1,917		$	(35,655	)	$	(31,254	)	$	(82,819	)
Add:
Interest income, net		(1,305	)		(1,223	)		(3,959	)		(3,634	)
Provision for income taxes		1,850			258			6,138			485
Depreciation and amortization		4,655			3,418			12,240			9,634
Foreign exchange (gain) loss		(2,274	)		(376	)		(6,667	)		2,611
Donation of common stock		2,587			4,600			2,587			4,600
Stock-based compensation expense, net		39,278			36,573			110,523			101,007
Acquisition, integration, restructuring, and other costs⁽¹⁾		—			2,901			1,468			4,390
Adjusted EBITDA	$	46,708		$	10,496		$	91,076		$	36,274

_________________________
⁽¹⁾ Acquisition, integration, restructuring, and other costs for the nine months ended September 30, 2024 consisted primarily of $0.8 million in restructuring charges incurred, $0.5 million of non-recurring legal charges, and $0.2 million related to the change in the fair value of the holdback liability associated with the acquisition of Rewire (O.S.G.) Research and Development Ltd. (“Rewire”). Acquisition, integration, restructuring, and other costs for the three months ended September 30, 2023 consisted primarily of $1.4 million in restructuring charges incurred, $0.9 million related to the change in the fair value of the holdback liability, and $0.6 million of expenses incurred in connection with the acquisition and integration of Rewire. Acquisition, integration, restructuring, and other costs for the nine months ended September 30, 2023 consisted primarily of $1.9 million related to the change in the fair value of the holdback liability, $1.4 million in restructuring charges incurred, and $1.1 million of expenses incurred in connection with the acquisition and integration of Rewire.

*Reconciliation of operating expenses to non-GAAP operating expenses:*

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Customer support and operations	$	21,792	$	21,190	$	61,910	$	62,604
Excluding: Stock-based compensation expense, net		278		386		890		1,010
Excluding: Acquisition, integration, restructuring, and other costs		—		749		758		749
Non-GAAP customer support and operations	$	21,514	$	20,055	$	60,262	$	60,845

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Marketing	$	74,792	$	61,351	$	219,862	$	159,074
Excluding: Stock-based compensation expense, net		4,514		4,525		13,014		12,235
Non-GAAP marketing	$	70,278	$	56,826	$	206,848	$	146,839

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Technology and development	$	68,446	$	57,014	$	199,206	$	160,699
Excluding: Stock-based compensation expense, net		21,873		19,828		61,854		55,047
Excluding: Acquisition, integration, restructuring, and related costs		—		510		—		510
Non-GAAP technology and development	$	46,573	$	36,676	$	137,352	$	105,142

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
General and administrative	$	50,920	$	49,817	$	140,982	$	130,715
Excluding: Stock-based compensation expense, net		12,613		11,834		34,765		32,715
Excluding: Donation of common stock		2,587		4,600		2,587		4,600
Excluding: Acquisition, integration, restructuring, and other costs		—		1,642		710		3,131
Non-GAAP general and administrative	$	35,720	$	31,741	$	102,920	$	90,269

The MIL Network –

January 25, 2025

MIL-OSI: Alto Ingredients, Inc. to Release Third Quarter 2024 Financial Results on November 6, 2024

Source: GlobeNewswire (MIL-OSI)

PEKIN, Ill., Oct. 30, 2024 (GLOBE NEWSWIRE) — Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients, announced it will release its third quarter 2024 financial results after the close of market on Wednesday, November 6, 2024.

Management will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time and will deliver prepared remarks via webcast followed by a question-and-answer session. How to participate:

To listen to the webcast, visit the Alto Ingredients website.
To receive a number and unique PIN by email, register here.
To dial directly twenty minutes prior to the scheduled call time, dial (833) 630-0017 domestically and (412) 317-1806 internationally. Please ask to join Alto Ingredients.

The webcast will be archived for replay on the Alto Ingredients website for one year. In addition, a telephonic replay will be available at 8:00 p.m. Eastern Time on Wednesday, November 6, 2024, through 8:00 p.m. Eastern Time on Wednesday, November 13, 2024. To access the replay, please dial (877) 344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 8828903.

About Alto Ingredients, Inc.
Alto Ingredients, Inc. (NASDAQ: ALTO) is a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients. Leveraging the unique qualities of its facilities, the company serves customers in a wide range of consumer and commercial products in the Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels markets. For more information, please visit www.altoingredients.com.

Media and Company IR Contact:
Michael Kramer, Alto Ingredients, Inc., 916-403-2755 Investorrelations@altoingredients.com

IR Agency Contact:
Kirsten Chapman, LHA Investor Relations, 415-433-3777 Investorrelations@altoingredients.com

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: Archrock Announces Timing for Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

HOUSTON, Oct. 30, 2024 (GLOBE NEWSWIRE) — Archrock, Inc. (NYSE:AROC) (“Archrock”) will host a conference call on Tuesday, November 12, 2024, to discuss its third quarter 2024 financial and operating results. The call will begin at 9:00 a.m. Eastern Time. Archrock will release its third quarter 2024 earnings report prior to the conference call.

To listen to the call via a live webcast, please visit Archrock’s website at www.archrock.com. The call will also be available by dialing 1 (800) 715-9871 in the United States and Canada, or 1 (646) 307-1963 for international calls. The access code is 4749623. A replay of the webcast will be available for 90 days on Archrock’s website shortly after the call.

About Archrock

Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how the Company embodies its purpose, WE POWER A CLEANER AMERICA™, visit www.archrock.com.

SOURCE: Archrock, Inc.

For information, contact:

Megan Repine
Vice President, Investor Relations
(281) 836-8360
investor.relations@archrock.com

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: iRhythm Technologies Announces Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

SAN FRANCISCO, Oct. 30, 2024 (GLOBE NEWSWIRE) — iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care company focused on creating trusted solutions that detect, predict, and prevent disease, today reported financial results for the three months ended September 30, 2024.

Third Quarter 2024 Financial Highlights

Revenue of $147.5 million, an 18% increase compared to third quarter 2023
Gross margin of 68.8%, a 260-basis point increase compared to third quarter 2023
Unrestricted cash, cash equivalents and marketable securities of $522.0 million as of September 30, 2024

Recent Operational Highlights

Strong quarterly registration volume driven by record demand from existing accounts combined with another record quarter of new account openings in the United States and record registrations in the United Kingdom
Received FDA 510(k) clearance for updates previously made to the Zio AT device as letter to file
Expanded global reach with commercial launch of Zio monitor in Austria, the Netherlands, Switzerland, and Spain, and received Japanese PMDA regulatory approval for Zio monitor, highlighting our continued commitment to bringing our innovative digital healthcare solutions to millions of people worldwide
Entered into technology license agreement with BioIntelliSense to incorporate medical grade, connected, multi-sensor capabilities into our future ambulatory cardiac monitoring products, positioning us to expand the capabilities of our product platform
Upcoming data at American Heart Association’s Scientific Sessions 2024 in Chicago from November 16–18

“The third quarter of 2024 was an exceptional quarter of execution as our teams drove significant demand in our core business, made substantial progress in expanding our Zio services into global markets, and established an important licensing agreement with an external partner to drive future platform capabilities for long term growth,” said Quentin Blackford, president and chief executive officer of iRhythm. “Third quarter revenue growth of over 18% year-over-year was driven by record volume demand from existing accounts, and our field teams were also able to open a record number of new accounts during the quarter while continuing our expansion into primary care channels. We were also very pleased to be able to celebrate one million patients having been registered for Zio monitor – our newest generation, long-term continuous monitoring system – in October and have officially launched our first commercial account using Aura – Epic’s specialty diagnostics and devices suite.”

“We also made tangible progress towards long-term initiatives to drive future growth. For the first time ever, we have achieved more than 10,000 billable registrations in a single quarter in the UK, and we are excited that we have begun receiving physician orders following commercial launch in four additional European countries. Furthermore, we have recently received a FDA 510(k) clearance for updates to our Zio AT device associated with our FDA remediation efforts, an ongoing and critical priority for our teams to demonstrate our commitment to quality, compliance and performance. With strong execution across multiple growth levers and with additional catalysts on the horizon, we could not be more excited about the future of iRhythm.”

Third Quarter Financial Results
Revenue for the third quarter of 2024 was $147.5 million, up 18% from $124.6 million during the same period in 2023. The increase was driven by growth in demand for Zio services.

Gross profit for the third quarter of 2024 was $101.5 million, up 23% from $82.5 million during the same period in 2023, while gross margin was 68.8%, up from 66.2% during the same period in 2023. The increase in gross profit was primarily due to increased volume of Zio services provided due to higher demand. The increase in gross margin was primarily due to operational efficiencies as well as the absence of increased reserves for excess Zio XT printed circuit board assembly (PCBA) components that were incurred during the prior year.

Operating expenses for the third quarter of 2024 were $151.8 million, compared to $110.1 million for the same period in 2023. Adjusted operating expenses for the third quarter of 2024 were $143.8 million, compared to $107.1 million during the same period in 2023. The increase in adjusted operating expenses was primarily driven by a $32.1 million charge for license consideration payable to BioIntelliSense that was recognized on iRhythm’s unaudited condensed consolidated statements of operations as acquired in-process research and development (“IPR&D”) expense during the third quarter of 2024. In alignment with SEC guidance around non-GAAP financial measures relating to acquired IPR&D expense, iRhythm does not exclude expenses related to acquired IPR&D from its non-GAAP results.

Net loss for the third quarter of 2024 was $46.2 million, or a diluted loss of $1.48 per share, compared with net loss of $27.1 million, or a diluted loss of $0.89 per share, for the same period in 2023. Adjusted net loss for the third quarter of 2024 was $39.2 million, or a diluted loss of $1.26 per share, compared with an adjusted net loss of $24.1 million, or a diluted loss of $0.79 per share, for the same period in 2023. The increase in net loss was primarily driven by a $32.1 million charge for license consideration payable to BioIntelliSense that was recognized on iRhythm’s unaudited condensed consolidated statements of operations as acquired IPR&D expense during the third quarter of 2024.

Unrestricted cash, cash equivalents, and marketable securities were $522.0 million as of September 30, 2024.

2024 Annual Guidance
iRhythm projects revenue for the full year 2024 to grow approximately 18% to 19% compared to prior year results, ranging from approximately $582.5 million to $587.5 million. Gross margin for the full year 2024 is expected to range from 68.5% to 69.0%. iRhythm now expects adjusted EBITDA margin for the full year 2024 to range from approximately negative 2% to negative 1.5% of full year revenues. Adjusted EBITDA guidance includes license consideration payable to BioIntelliSense that is recognized on iRhythm’s consolidated statements of operations as acquired IPR&D expenses, including a charge of approximately $32 million of expense incurred during the third quarter of 2024. In alignment with SEC guidance around non-GAAP financial measures relating to acquired IPR&D expense, iRhythm will not exclude expenses related to acquired IPR&D from its non-GAAP results, which include adjusted EBITDA.

Webcast and Conference Call Information
iRhythm’s management team will host a conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET. Interested parties may access a live and archived webcast of the presentation on the “Events & Presentations” section of the company’s investor website at investors.irhythmtech.com.

About iRhythm Technologies, Inc.
iRhythm is a leading digital health care company that creates trusted solutions that detect, predict, and prevent disease. Combining wearable biosensors and cloud-based data analytics with powerful proprietary algorithms, iRhythm distills data from millions of heartbeats into clinically actionable information. Through a relentless focus on patient care, iRhythm’s vision is to deliver better data, better insights, and better health for all.

Reclassifications
Certain prior period amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact on previously reported results of operations or financial position.

Use of Non-GAAP Financial Measures
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted net loss, adjusted net loss per share and adjusted operating expenses. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. See the schedules attached to this press release for additional information and reconciliations of such non-GAAP financial measures. We have not reconciled our adjusted operating expenses and adjusted EBITDA estimates for full year 2024 because certain items that impact these figures are uncertain or out of our control and cannot be reasonably predicted. Accordingly, a reconciliation of adjusted operating expenses and adjusted EBITDA estimates is not available without unreasonable effort.

Adjusted EBITDA excludes non-cash operating charges for stock-based compensation expense, changes in fair value of strategic investments, impairment and restructuring charges, business transformation costs, and loss on extinguishment of debt. Business transformation costs include costs associated with professional services, employee termination and relocation, third-party merger and acquisition, integration, and other costs to augment and restructure the organization, inclusive of both outsourced and offshore resources.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements include statements regarding financial guidance, market opportunity, ability to penetrate the market, anticipated productivity improvements and expectations for growth. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled “Risk Factors” and elsewhere in our filings made with the Securities and Exchange Commission, including those on the Form 10-Q expected to be filed on or about October 30, 2024. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.

Investor Contact
Stephanie Zhadkevich
investors@irhythmtech.com

Media Contact
Kassandra Perry
irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC. Condensed Consolidated Balance Sheets (In thousands, except par value) (unaudited)

	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	519,535		$	36,173
Marketable securities		2,496			97,591
Accounts receivable, net		77,427			61,484
Inventory		15,032			13,973
Prepaid expenses and other current assets		13,419			21,591
Total current assets		627,909			230,812
Property and equipment, net		122,390			104,114
Operating lease right-of-use assets		45,570			49,317
Restricted cash, long-term		8,358			—
Goodwill		862			862
Long-term strategic investments		59,059			3,000
Other assets		45,540			45,039
Total assets	$	909,688		$	433,144
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,593		$	5,543
Accrued liabilities		73,958			83,362
Deferred revenue		3,031			3,306
Operating lease liabilities, current portion		15,522			15,159
Total current liabilities		100,104			107,370
Long-term senior convertible notes		645,821			—
Debt, noncurrent portion		—			34,950
Other noncurrent liabilities		17,978			1,012
Operating lease liabilities, noncurrent portion		74,019			79,715
Total liabilities		837,922			223,047
Stockholders’ equity:
Preferred stock, $0.001 par value – 5,000 shares authorized; none issued and outstanding at September 30, 2024 and December 31, 2023		—			—
Common stock, $0.001 par value – 100,000 shares authorized; 31,516 shares issued and 31,287 shares outstanding at September 30, 2024, respectively; and 30,954 shares issued and outstanding at December 31, 2023		31			31
Additional paid-in capital		854,363			855,784
Accumulated other comprehensive loss		(66	)		(112	)
Accumulated deficit		(757,562	)		(645,606	)
Treasury stock, at cost; 229 and 0 shares at September 30, 2024 and December 31, 2023, respectively		(25,000	)		—
Total stockholders’ equity		71,766			210,097
Total liabilities and stockholders’ equity	$	909,688		$	433,144

IRHYTHM TECHNOLOGIES, INC. Condensed Consolidated Statements of Operations (In thousands, except per share data) (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Revenue, net	$	147,538		$	124,604		$	427,514		$	360,170
Cost of revenue		46,062			42,130			135,051			115,790
Gross profit		101,476			82,474			292,463			244,380
Operating expenses:
Research and development		15,694			16,309			52,378			44,828
Acquired in-process research and development		32,069			—			32,069			—
Selling, general and administrative		103,375			93,768			318,797			285,531
Impairment charges		641			—			641			—
Total operating expenses		151,779			110,077			403,885			330,359
Loss from operations		(50,303	)		(27,603	)		(111,422	)		(85,979	)
Interest and other income (expense), net:
Interest income		6,456			1,717			16,198			4,619
Interest expense		(3,329	)		(927	)		(9,501	)		(2,709	)
Loss on extinguishment of debt		—			—			(7,589	)		—
Other income (expense), net		1,182			(108	)		772			(143	)
Total interest and other income (expense), net		4,309			682			(120	)		1,767
Loss before income taxes		(45,994	)		(26,921	)		(111,542	)		(84,212	)
Income tax provision		188			195			414			495
Net loss	$	(46,182	)	$	(27,116	)	$	(111,956	)	$	(84,707	)
Net loss per common share, basic and diluted	$	(1.48	)	$	(0.89	)	$	(3.59	)	$	(2.78	)
Weighted-average shares, basic and diluted		31,262			30,607			31,147			30,470

IRHYTHM TECHNOLOGIES, INC. Reconciliation of GAAP to Non-GAAP Financial Information (in thousands, except per share data) (unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Adjusted EBITDA reconciliation*
Net loss¹	$	(46,182	)	$	(27,116	)	$	(111,956	)	$	(84,707	)
Interest expense		3,329			927			9,501			2,709
Interest income		(6,456	)		(1,717	)		(16,198	)		(4,619	)
Changes in fair value of strategic investments		(1,059	)		—			(1,059	)		—
Income tax provision		188			195			414			495
Depreciation and amortization		5,135			4,067			15,426			11,434
Stock-based compensation		17,158			21,008			59,970			53,358
Impairment charges		641			—			641			—
Business transformation costs		7,360			2,999			8,656			14,094
Loss on extinguishment of debt		—			—			7,589			—
Adjusted EBITDA	$	(19,886	)	$	363		$	(27,016	)	$	(7,236	)

Adjusted net loss reconciliation*
Net loss, as reported¹	$	(46,182	)	$	(27,116	)	$	(111,956	)	$	(84,707	)
Impairment charges		641			—			641			—
Business transformation costs		7,360			2,999			8,656			14,094
Changes in fair value of strategic investments		(1,059	)		—			(1,059	)		—
Loss on extinguishment of debt		—			—			7,589			—
Adjusted net loss	$	(39,240	)	$	(24,117	)	$	(96,129	)	$	(70,613	)

Adjusted net loss per share reconciliation*
Net loss per share, as reported¹	$	(1.48	)	$	(0.89	)	$	(3.59	)	$	(2.78	)
Impairment charges per share		0.02			—			0.02			—
Business transformation costs per share		0.24			0.10			0.28			0.46
Changes in fair value of strategic investments per share		(0.03	)		—			(0.03	)		—
Loss on extinguishment of debt per share		—			—			0.24			—
Adjusted net loss per share	$	(1.26	)	$	(0.79	)	$	(3.09	)	$	(2.32	)
Weighted-average shares, basic and diluted		31,262			30,607			31,147			30,470

Adjusted operating expense reconciliation*
Operating expense, as reported	$	151,779		$	110,077		$	403,885		$	330,359
Impairment charges		(641	)		—			(641	)		—
Business transformation costs		(7,360	)		(2,999	)		(8,656	)		(14,094	)
Adjusted operating expense	$	143,778		$	107,078		$	394,588		$	316,265

*Certain numbers expressed may not sum due to rounding.
¹ Net loss for the three and nine months ended September 30, 2024 includes $32.1 million of acquired in-process research and development expense.

The MIL Network –

January 25, 2025

MIL-OSI: Compass Diversified Reports Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

WESTPORT, Conn., Oct. 30, 2024 (GLOBE NEWSWIRE) — Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, announced today its consolidated operating results for the three months ended September 30, 2024.

“Despite a dynamic macroeconomic environment, we had another great quarter,” said Elias Sabo, CEO of Compass Diversified. “Our differentiated business model and strong operating companies position us to create long-term value for all stakeholders. In the third quarter, we saw double-digit sales growth driven by continued demand in our Branded Consumer businesses. Our Industrial businesses are stabilizing and delivered low single-digit growth in the quarter. Given our momentum, we are raising our 2024 outlook and believe we are well positioned for growth in 2025 and beyond.”

Third Quarter 2024 Financial Summary vs. Same Year-Ago Period (where applicable)

Net sales up 11.8% to $582.6 million and up 6.6% on a pro forma basis.
Branded Consumer net sales up 9.2% on a pro forma basis to $399.2 million.
Industrial net sales up 1.2% to $183.4 million.
Income from continuing operations of $31.5 million vs. loss from continuing operations of $14.0 million.
Net income of $31.5 million vs. net loss of $3.8 million.
Adjusted Earnings, a non-GAAP financial measure, up 65% to $48.7 million vs. $29.6 million.
Adjusted EBITDA, a non-GAAP financial measure, was up 28% to $114.0 million vs. $89.0 million

Recent Business Highlights

On October 24, 2024, CODI paid a third quarter 2024 cash distribution of $0.25 per share on its common shares.
On October 16, 2024, CODI announced a $100 million share repurchase program through December 31, 2024, subject to extension by the Company’s board.
On October 1, 2024, Altor Solutions, a subsidiary of CODI and a leading designer and manufacturer of custom protective and cold-chain packaging solutions for the industrial and life sciences markets, completed the acquisition of Lifoam Industries, a manufacturer and distributor of temperature-controlled shipping solutions.
On August 26, 2024, CODI announced the appointment of Stephen Keller as Chief Financial Officer.

Third Quarter 2024 Financial Results

Net sales in the third quarter of 2024 were $582.6 million, up 11.8% compared to $521.1 million in the third quarter of 2023. This was driven by the Company’s acquisition of The Honey Pot Co. in January 2024 and continued strong sales growth at Lugano and BOA. On a pro forma basis, assuming CODI had acquired The Honey Pot Co. on January 1, 2023, net sales were up 6.6%.

On a pro forma basis, Branded Consumer net sales increased 9.2% to $399.2 million compared to the third quarter of 2023.

Industrial net sales increased 1.2% to $183.4 million compared to the third quarter of 2023.

Operating income for the third quarter of 2024 was $70.3 million compared to $17.4 million in the third quarter of 2023. Operating income in the third quarter of 2024 reflected higher gross profit at the Company’s Branded Consumer businesses, offset by increased SG&A and amortization expense from the acquisition of The Honey Pot Co. in the first quarter of 2024.

Income from continuing operations in the third quarter of 2024 was $31.5 million compared to a loss from continuing operations of $14.0 million in the third quarter of 2023, primarily driven by strong growth at Lugano and BOA and the Company’s acquisition of The Honey Pot Co. in January 2024. In the prior year, the Company recognized an impairment charge of $32.6 million at Velocity that drove the loss in the third quarter.

Net income in the third quarter of 2024 was $31.5 million compared to a net loss of $3.8 million in the third quarter of 2023.

Adjusted Earnings (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the third quarter of 2024 increased 65% to $48.7 million compared to $29.6 million a year ago. CODI’s weighted average number of shares outstanding in the third quarter of 2024 was 75.65 million compared to 71.88 million in the prior year third quarter.

Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below) in the third quarter of 2024 was $114.0 million, up 28% compared to $89.0 million in the third quarter of 2023. The increase was primarily due to strong results at Lugano and BOA, and the addition of The Honey Pot Co. in the first quarter of 2024. Management fees incurred during the third quarter were $18.8 million.

Liquidity and Capital Resources

As of September 30, 2024, CODI had approximately $71.9 million in cash and cash equivalents, $110 million outstanding on its revolver, $377.5 million outstanding in term loans, $1 billion outstanding in 5.250% Senior Notes due 2029 and $300 million outstanding in 5.000% Senior Notes due 2032.

As of September 30, 2024, the Company had no significant debt maturities until 2027 and had net borrowing availability of approximately $486.6 million under its revolving credit facility.

Third Quarter 2024 Distributions

On October 3, 2024, CODI’s board of directors declared a third quarter distribution of $0.25 per share on the Company’s common shares. The cash distribution was paid on October 24, 2024, to all holders of record of common shares as of October 17, 2024.

The board also declared a quarterly cash distribution of $0.453125 per share on the Company’s 7.250% Series A Preferred Shares (the “Series A Preferred Shares”). The distribution on the Series A Preferred Shares covers the period from, and including, July 30, 2024, up to, but excluding, October 30, 2024. The distribution for such period was payable on October 30, 2024, to all holders of record of Series A Preferred Shares as of October 15, 2024.

The board also declared a quarterly cash distribution of $0.4921875 per share on the Company’s 7.875% Series B Preferred Shares (the “Series B Preferred Shares”). The distribution on the Series B Preferred Shares covers the period from, and including, July 30, 2024, up to, but excluding, October 30, 2024. The distribution for such period was payable on October 30, 2024, to all holders of record of Series B Preferred Shares as of October 15, 2024.

The board also declared a quarterly cash distribution of $0.4921875 per share on the Company’s 7.875% Series C Preferred Shares (the “Series C Preferred Shares”). The distribution on the Series C Preferred Shares covers the period from, and including, July 30, 2024, up to, but excluding, October 30, 2024. The distribution for such period was payable on October 30, 2024, to all holders of record of Series C Preferred Shares as of October 15, 2024.

2024 Outlook

As a result of CODI’s strong financial performance in the third quarter, the Company is raising its Adjusted EBITDA and Adjusted Earnings outlook (see “Note Regarding Use of Non-GAAP Financial Measures” below). For the full year 2024, CODI now expects consolidated pro-forma subsidiary Adjusted EBITDA of between $510 million and $525 million. This is inclusive of The Honey Pot Co. as if it was owned from January 1, 2024.

Of this range, CODI now expects its Branded Consumer vertical to deliver between $390 million to $400 million and its Industrial vertical to deliver between $120 million to $125 million. These estimates are based on the summation of the Company’s expectations for its current subsidiaries in 2024, absent additional acquisitions or divestitures, and excludes corporate expenses such as interest expense, management fees paid by CODI and corporate overhead.

CODI expects to earn Adjusted EBITDA (see “Note Regarding Use of Non-GAAP Financial Measures” below), which includes management fees and corporate expenses, of between $420 million and $435 million for the full year 2024. Adjusted EBITDA only includes results from The Honey Pot Co. from the date of acquisition.

The Company further expects Adjusted Earnings to be between $155 million and $165 million (see “Note Regarding Use of Non-GAAP Financial Measures” below) for the full year 2024.

In reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, CODI has not reconciled 2024 subsidiary Adjusted EBITDA, 2024 Adjusted EBITDA or 2024 Adjusted Earnings to their comparable GAAP measure because it does not provide guidance on Income (Loss) from Continuing Operations or Net Income (Loss) or the applicable reconciling items as a result of the uncertainty regarding, and the potential variability of, these items. For the same reasons, CODI is unable to address the probable significance of the unavailable information, which could be material to future results.

Conference Call

In conjunction with this announcement, CODI will host a conference call on October 30, 2024, at 5:00 p.m. E.T. / 2:00 p.m. PT with the Company’s Chief Executive Officer, Elias Sabo, the Company’s Chief Financial Officer, Stephen Keller, and Pat Maciariello, the Chief Operating Officer of Compass Group Management. A live webcast of the call will be available on the Investor Relations section of CODI’s website. To access the call by phone, please go to this link (registration link) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call 15 minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time on the Company’s website.

Note Regarding Use of Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted Earnings are non-GAAP measures used by the Company to assess its performance. We have reconciled Adjusted EBITDA to Income (Loss) from Continuing Operations and Adjusted Earnings to Net Income (Loss) on the attached schedules. We consider Income (Loss) from Continuing Operations to be the most directly comparable GAAP financial measure to Adjusted EBITDA and Net Income (Loss) to be the most directly comparable GAAP financial measure to Adjusted Earnings. We believe that Adjusted EBITDA and Adjusted Earnings provides useful information to investors and reflect important financial measures as each excludes the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near-term operations. When compared to Net Income (Loss) and Income (Loss) from Continuing Operations, Adjusted Earnings and Adjusted EBITDA, respectively, are each limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our businesses or the non-cash charges associated with impairments, as well as certain cash charges. The presentation of Adjusted EBITDA allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition. The presentation of Adjusted Earnings provides insight into our operating results.

Pro forma net sales is defined as net sales including the historical net sales relating to the pre-acquisition periods of The Honey Pot Co., assuming that the Company acquired The Honey Pot Co. on January 1, 2023. We have reconciled pro forma net sales to net sales, the most directly comparable GAAP financial measure, on the attached schedules. We believe that pro forma net sales is useful information for investors as it provides a better understanding of sales performance, and relative changes thereto, on a comparable basis. Pro forma net sales is not necessarily indicative of what the actual results would have been if the acquisition had in fact occurred on the date or for the periods indicated nor does it purport to project net sales for any future periods or as of any date.

Adjusted EBITDA, Adjusted Earnings and pro forma net sales are not meant to be a substitute for GAAP measures and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.

About Compass Diversified

Since its IPO in 2006, CODI has consistently executed its strategy of owning and managing a diverse set of highly defensible, middle-market businesses across the industrial, branded consumer and healthcare sectors. The Company leverages its permanent capital base, long-term disciplined approach, and actionable expertise to maintain controlling ownership interests in each of its subsidiaries, maximizing its ability to impact long-term cash flow generation and value creation. The Company provides both debt and equity capital for its subsidiaries, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its subsidiaries to invest in the long-term growth of the Company and has consistently generated strong returns through its culture of transparency, alignment and accountability. For more information, please visit compassdiversified.com.

Forward Looking Statements

Certain statements in this press release may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements as to our future performance or liquidity, such as expectations regarding our results of operations and financial condition, our 2024 Subsidiary Adjusted EBITDA, our 2024 Adjusted EBITDA, our 2024 Adjusted Earnings, our pending acquisitions and divestitures, and other statements with regard to the future performance of CODI. We may use words such as “plans,” “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “seek,” “look,” and similar expressions to identify forward-looking statements. The forward-looking statements contained in this press release involve risks and uncertainties. Actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in CODI’s annual report on Form 10-K and its quarterly reports on Form 10-Q. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment, including changes in inflation and interest rates; risks associated with possible disruption in CODI’s operations or the economy generally due to terrorism, war, natural disasters or social, civil and political unrest; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); environmental risks affecting the business or operations of our subsidiaries; disruption in the global supply chain, labor shortages and high labor costs; our business prospects and the prospects of our subsidiaries; the impact of, and ability to successfully complete and integrate, acquisitions that we may make; the ability to successfully complete when we’ve executed divestitures agreements; the dependence of our future success on the general economy and its impact on the industries in which we operate; the ability of our subsidiaries to achieve their objectives; the adequacy of our cash resources and working capital; the timing of cash flows, if any, from the operations of our subsidiaries; and other considerations that may be disclosed from time to time in CODI’s publicly disseminated documents and filings. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. Although, except as required by law, CODI undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that CODI may make directly to you or through reports that it in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Investor Relations

Compass Diversified
irinquiry@compassdiversified.com

Gateway Group
Cody Slach
949.574.3860
CODI@gateway-grp.com

Media Relations
Compass Diversified
mediainquiry@compassdiversified.com

The IGB Group
Leon Berman
212-477-8438
lberman@igbir.com

Compass Diversified Holdings Condensed Consolidated Balance Sheets


	September 30, 2024		December 31, 2023
(in thousands)	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	71,948	$	450,477
Accounts receivable, net		412,688		318,241
Inventories, net		939,361		740,387
Prepaid expenses and other current assets		100,550		94,715
Total current assets		1,524,547		1,603,820
Property, plant and equipment, net		186,555		192,562
Goodwill		1,004,084		901,428
Intangible assets, net		1,062,425		923,905
Other non-current assets		183,803		195,266
Total assets	$	3,961,414	$	3,816,981

Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses	$	293,267	$	250,868
Due to related party		18,116		16,025
Current portion, long-term debt		12,500		10,000
Other current liabilities		37,337		35,465
Total current liabilities		361,220		312,358
Deferred income taxes		135,777		120,131
Long-term debt		1,763,687		1,661,879
Other non-current liabilities		198,849		203,232
Total liabilities		2,459,533		2,297,600
Stockholders’ equity
Total stockholders’ equity attributable to Holdings		1,236,965		1,326,750
Noncontrolling interest		264,916		192,631
Total stockholders’ equity		1,501,881		1,519,381
Total liabilities and stockholders’ equity	$	3,961,414	$	3,816,981

Compass Diversified Holdings 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
Net sales	$	582,623		$	521,065		$	1,649,508		$	1,491,887
Cost of sales		308,045			295,754			873,989			844,871
Gross profit		274,578			225,311			775,519			647,016
Operating expenses:
Selling, general and administrative expense		158,754			132,944			460,914			396,963
Management fees		18,758			18,471			55,689			51,536
Amortization expense		26,798			23,955			80,547			71,906
Impairment expense		—			32,568			8,182			32,568
Operating income		70,268			17,373			170,187			94,043
Other income (expense):
Interest expense, net		(27,358	)		(27,560	)		(77,494	)		(80,353	)
Amortization of debt issuance costs		(1,005	)		(1,005	)		(3,014	)		(3,034	)
Gain (loss) on sale of Crosman		388			—			(24,218	)		—
Other income (expense), net		(78	)		1,045			(4,327	)		2,100
Net income (loss) from continuing operations before income taxes		42,215			(10,147	)		61,134			12,756
Provision for income taxes		10,754			3,837			40,960			15,077
Income (loss) from continuing operations		31,461			(13,984	)		20,174			(2,321	)
Income from discontinued operations, net of income tax		—			8,950			—			21,790
Gain on sale of discontinued operations		—			1,274			3,345			103,495
Net income (loss)		31,461			(3,760	)		23,519			122,964
Less: Net income from continuing operations attributable to noncontrolling interest		9,397			5,721			22,632			13,390
Less: Net income from discontinued operations attributable to noncontrolling interest		—			673			—			725
Net income (loss) attributable to Holdings	$	22,064		$	(10,154	)	$	887		$	108,849

Amounts attributable to Holdings
Income (loss) from continuing operations	$	22,064		$	(19,705	)	$	(2,458	)	$	(15,711	)
Income from discontinued operations		—			8,277			—			21,065
Gain on sale of discontinued operations, net of income tax		—			1,274			3,345			103,495
Net income (loss) attributable to Holdings	$	22,064		$	(10,154	)	$	887		$	108,849

Basic income (loss) per common share attributable to Holdings
Continuing operations	$	0.08		$	(0.45	)	$	(1.18	)	$	(1.00	)
Discontinued operations		—			0.12			0.04			1.69
	$	0.08		$	(0.33	)	$	(1.14	)	$	0.69

Basic weighted average number of common shares outstanding		75,645			71,881			75,437			71,996

Cash distributions declared per Trust common share	$	0.25		$	0.25		$	0.75		$	0.75

Compass Diversified Holdings Net Income (Loss) to Non-GAAP Adjusted Earnings and Non-GAAP Adjusted EBITDA (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Net income (loss)	$	31,461		$	(3,760	)	$	23,519		$	122,964
Income from discontinued operations, net of tax		—			8,950			—			21,790
Gain on sale of discontinued operations, net of tax		—			1,274			3,345			103,495
Net income (loss) from continuing operations	$	31,461		$	(13,984	)	$	20,174		$	(2,321	)
Less: income from continuing operations attributable to noncontrolling interest		9,397			5,721			22,632			13,390
Net income (loss) attributable to Holdings – continuing operations	$	22,064		$	(19,705	)	$	(2,458	)	$	(15,711	)
Adjustments:
Distributions paid – preferred shares		(6,345	)		(6,045	)		(18,491	)		(18,136	)
Amortization expense – intangibles and inventory step up		26,798			23,956			84,553			73,081
Impairment expense		—			32,568			8,182			32,568
Tax effect – impairment expense		—			(4,308	)		—			(4,308	)
(Gain) loss on sale of Crosman		(388	)		—			24,218			—
Tax effect – loss on sale of Crosman		—			—			7,254			—
Stock compensation		4,769			2,750			13,026			7,598
Acquisition expenses		—			—			3,479			—
Integration services fee		875			—			1,750			2,375
Other		963			349			1,368			1,129
Adjusted Earnings	$	48,736		$	29,565		$	122,881		$	78,596
Plus (less):
Depreciation expense		10,366			11,994			31,763			35,255
Income tax provision		10,754			3,837			40,960			15,077
Interest expense		27,357			27,560			77,494			80,353
Amortization of debt issuance costs		1,005			1,005			3,014			3,034
Tax effect – loss on sale of Crosman					—			(7,254	)		—
Income from continuing operations attributable to noncontrolling interest		9,397			5,721			22,632			13,390
Distributions paid – preferred shares		6,345			6,045			18,491			18,136
Other (income) expense		79			(1,045	)		4,327			(2,100	)
Adjusted EBITDA	$	114,039		$	88,990		$	314,308		$	246,049

Compass Diversified Holdings Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation Three Months Ended September 30, 2024 (Unaudited)

	Corporate				5.11		BOA			Ergobaby			Lugano			PrimaLoft			THP			Velocity Outdoor			Altor		Arnold		Sterno			Consolidated
Income (loss) from continuing operations	$	(8,715	)	$	9,737		$	3,902		$	(3,229	)	$	24,272		$	(4,273	)	$	(160	)	$	1,831		$	2,682	$	2,260	$	3,154		$	31,461
Adjusted for:
Provision (benefit) for income taxes		—			1,782			1,451			136			8,342			(2,315	)		(20	)		(2,223	)		1,466		1,196		939			10,754
Interest expense, net		27,238			(2	)		(4	)		—			—			(10	)		(3	)		(1	)		—		139		—			27,357
Intercompany interest		(41,375	)		3,334			4,925			2,116			15,080			4,480			2,907			2,038			1,735		1,816		2,944			—
Depreciation and amortization		118			5,617			5,402			2,053			2,699			5,337			4,166			1,397			4,080		2,340		4,960			38,169
EBITDA		(22,734	)		20,468			15,676			1,076			50,393			3,219			6,890			3,042			9,963		7,751		11,997			107,741
Other (income) expense		—			13			(110	)		17			(68	)		1			25			(164	)		58		—		(81	)		(309	)
Noncontrolling shareholder compensation		—			544			1,504			232			459			828			540			186			237		4		235			4,769
Integration services fee		—			—			—			—			—			—			875			—			—		—		—			875
Other		—			—			—			—			—			—			—			—			—		880		83			963
Adjusted EBITDA	$	(22,734	)	$	21,025		$	17,070		$	1,325		$	50,784		$	4,048		$	8,330		$	3,064		$	10,258	$	8,635	$	12,234		$	114,039

Compass Diversified Holdings Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation Three Months Ended September 30, 2023 (Unaudited)


	Corporate				5.11		BOA			Ergobaby			Lugano		PrimaLoft			Velocity Outdoor			Altor			Arnold		Sterno			Consolidated
Income (loss) from continuing operations	$	(13,750	)	$	5,834		$	4,257		$	(261	)	$	14,584	$	(4,893	)	$	(28,881	)	$	5,042		$	2,103	$	1,981		$	(13,984	)
Adjusted for:
Provision (benefit) for income taxes		—			1,920			865			(620	)		4,210		(2,566	)		(2,951	)		1,460			876		643			3,837
Interest expense, net		27,525			(2	)		(4	)		—			—		(3	)		38			—			6		—			27,560
Intercompany interest		(34,708	)		5,477			1,571			2,144			8,930		4,635			3,633			2,549			1,706		4,063			—
Depreciation and amortization		380			6,573			5,930			2,033			2,081		5,361			3,272			4,215			2,126		4,984			36,955
EBITDA		(20,553	)		19,802			12,619			3,296			29,805		2,534			(24,889	)		13,266			6,817		11,671			54,368
Other (income) expense		—			98			(63	)		—			71		(9	)		(425	)		(362	)		8		(363	)		(1,045	)
Noncontrolling shareholder compensation		—			258			736			312			472		262			228			234			8		240			2,750
Impairment expense		—			—			—			—			—		—			32,568			—			—		—			32,568
Other		—			—			—			—			—		—			—			—			—		349			349
Adjusted EBITDA	$	(20,553	)	$	20,158		$	13,292		$	3,608		$	30,348	$	2,787		$	7,482		$	13,138		$	6,833	$	11,897		$	88,990

Compass Diversified Holdings Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation Nine Months Ended September 30, 2024 (Unaudited)

	Corporate				5.11		BOA			Ergobaby			Lugano			PrimaLoft			THP			Velocity Outdoor			Altor		Arnold			Sterno			Consolidated
Income (loss) from continuing operations	$	(21,151	)	$	18,594		$	16,248		$	(6,337	)	$	59,257		$	(5,261	)	$	(7,764	)	$	(53,368	)	$	6,076	$	6,169		$	7,711		$	20,174
Adjusted for:
Provision (benefit) for income taxes		—			4,792			3,920			516			20,010			(1,731	)		(2,589	)		7,074			3,192		3,182			2,594			40,960
Interest expense, net		77,280			(3	)		(16	)		—			3			(15	)		(28	)		53			—		220			—			77,494
Intercompany interest		(122,209	)		10,114			15,716			6,364			40,417			13,526			7,827			7,620			5,612		5,313			9,700			—
Depreciation and amortization		552			17,198			16,251			6,427			7,571			15,987			14,811			6,679			12,250		6,754			14,850			119,330
EBITDA		(65,528	)		50,695			52,119			6,970			127,258			22,506			12,257			(31,942	)		27,130		21,638			34,855			257,958
Other (income) expense		462			86			22			12			(61	)		5			(5	)		25,734			2,722		(9	)		(423	)		28,545
Non-controlling shareholder compensation		—			1,630			4,352			738			1,662			1,823			1,157			556			741		13			354			13,026
Impairment expense		—			—			—			—			—			—			—			8,182			—		—			—			8,182
Acquisition expenses		—			—			—			—			—			—			3,479			—			—		—			—			3,479
Integration services fee		—			—			—			—			—			—			1,750			—			—		—			—			1,750
Other		—			—			—			—			—			—			90			—			—		880			398			1,368
Adjusted EBITDA	$	(65,066	)	$	52,411		$	56,493		$	7,720		$	128,859		$	24,334		$	18,728		$	2,530		$	30,593	$	22,522		$	35,184		$	314,308

Compass Diversified Holdings Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation Nine Months Ended September 30, 2023 (Unaudited)

	Corporate				5.11		BOA			Ergobaby			Lugano			PrimaLoft			Velocity Outdoor			Altor		Arnold			Sterno			Consolidated
Income (loss) from continuing operations	$	(40,914	)	$	11,850		$	15,151		$	(1,114	)	$	31,468		$	(5,500	)	$	(36,862	)	$	12,244	$	6,911		$	4,445		$	(2,321	)
Adjusted for:
Provision (benefit) for income taxes		—			3,990			2,224			(1,272	)		10,295			(3,125	)		(5,905	)		4,094		3,264			1,512			15,077
Interest expense, net		80,123			(4	)		(9	)		—			4			(9	)		232			—		16			—			80,353
Intercompany interest		(99,433	)		15,698			5,032			6,484			22,660			13,343			10,070			8,183		5,078			12,885			—
Depreciation and amortization		1,056			19,866			17,436			6,112			6,971			16,084			10,023			12,558		6,248			15,016			111,370
EBITDA		(59,168	)		51,400			39,834			10,210			71,398			20,793			(22,442	)		37,079		21,517			33,858			204,479
Other (income) expense		(128	)		(103	)		117			29			(5	)		130			(1,179	)		201		(1	)		(1,161	)		(2,100	)
Non-controlling shareholder compensation		—			988			2,069			936			1,312			219			686			800		26			562			7,598
Impairment expense		—			—			—			—			—			—			32,568			—		—			—			32,568
Integration services fee		—			—			—			—			—			2,375			—			—		—			—			2,375
Other		—			—			—			—			—			—			—			—		—			1,129			1,129
Adjusted EBITDA	$	(59,296	)	$	52,285		$	42,020		$	11,175		$	72,705		$	23,517		$	9,633		$	38,080	$	21,542		$	34,388		$	246,049

Compass Diversified Holdings Non-GAAP Adjusted EBITDA (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023

Branded Consumer
5.11	$	21,025		$	20,158		$	52,411		$	52,285
BOA		17,070			13,292			56,493			42,020
Ergobaby		1,325			3,608			7,720			11,175
Lugano		50,784			30,348			128,859			72,705
PrimaLoft		4,048			2,787			24,334			23,517
The Honey Pot Co.⁽¹⁾		8,330			—			18,728			—
Velocity Outdoor		3,064			7,482			2,530			9,633
Total Branded Consumer	$	105,646		$	77,675		$	291,075		$	211,335

Niche Industrial
Altor Solutions		10,258			13,138			30,593			38,080
Arnold Magnetics		8,635			6,833			22,522			21,542
Sterno		12,234			11,897			35,184			34,388
Total Niche Industrial	$	31,127		$	31,868		$	88,299		$	94,010
Corporate expense		(22,734	)		(20,553	)		(65,066	)		(59,296	)
Total Adjusted EBITDA	$	114,039		$	88,990		$	314,308		$	246,049

⁽¹⁾ The above results for The Honey Pot Co. do not include management’s estimate of Adjusted EBITDA, before the Company’s ownership of $3.9 million for the nine months ended September 30, 2024, and $5.1 million and $20.9 million, respectively, for the three and nine months ended September 30, 2023. The Honey Pot Co. was acquired on January 31, 2024.

Compass Diversified Holdings Net Sales to Pro Forma Net Sales Reconciliation (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)		2024		2023		2024		2023

Net Sales	$	582,623	$	521,065	$	1,649,508	$	1,491,887
Acquisitions⁽¹⁾		—		25,560		10,671		82,447
Pro Forma Net Sales	$	582,623	$	546,625	$	1,660,179	$	1,574,334

⁽¹⁾ Acquisitions reflects the net sales for The Honey Pot Co. on a pro forma basis as if the Company had acquired The Honey Pot Co. on January 1, 2023.

Compass Diversified Holdings Subsidiary Pro Forma Net Sales (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)		2024		2023		2024		2023

Branded Consumer
5.11	$	139,218	$	135,213	$	387,393	$	385,695
BOA		45,607		37,281		142,670		113,390
Ergobaby		21,755		23,218		71,530		71,785
Lugano		118,584		78,735		320,981		203,571
PrimaLoft		13,686		10,930		61,518		57,619
The Honey Pot⁽¹⁾		31,545		25,560		86,563		82,447
Velocity Outdoor		28,809		54,469		77,419		126,348
Total Branded Consumer	$	399,204	$	365,406	$	1,148,074	$	1,040,855

Niche Industrial
Altor Solutions		52,129		59,215		157,746		181,613
Arnold Magnetics		46,103		41,819		130,545		122,047
Sterno		85,187		80,185		223,814		229,819
Total Niche Industrial	$	183,419	$	181,219	$	512,105	$	533,479

Total Subsidiary Net Sales	$	582,623	$	546,625	$	1,660,179	$	1,574,334

⁽¹⁾ Net sales for The Honey Pot Co. are pro forma as if the Company had acquired this business on January 1, 2023.

Compass Diversified Holdings Condensed Consolidated Cash Flows (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023

Net cash provided by (used in) operating activities	$	(29,227	)	$	19,713		$	(77,610	)	$	56,952
Net cash provided by (used in) investing activities		(16,177	)		(13,538	)		(352,251	)		104,291
Net cash provided by (used in) financing activities		47,516			(8,308	)		50,882			(157,927	)
Foreign currency impact on cash		1,466			(484	)		449			150
Net increase (decrease) in cash and cash equivalents		3,578			(2,617	)		(378,530	)		3,466
Cash and cash equivalents – beginning of the period⁽¹⁾		68,370			67,354			450,478			61,271
Cash and cash equivalents – end of the period⁽²⁾	$	71,948		$	64,737		$	71,948		$	64,737

⁽¹⁾ Includes cash from discontinued operations of $4.7 million at January 1, 2023.

⁽²⁾ Includes cash from discontinued operations of $0.1 million at September 30, 2023.

Compass Diversified Holding
Selected Financial Data – Cash Flows
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023

Changes in operating assets and liabilities	$	(99,778	)	$	(36,806	)	$	(253,902	)	$	(128,920	)
Purchases of property and equipment	$	(15,588	)	$	(9,933	)	$	(34,507	)	$	(38,537	)
Distributions paid – common shares	$	(18,913	)	$	(17,974	)	$	(56,577	)	$	(54,012	)
Distributions paid – preferred shares	$	(6,345	)	$	(6,045	)	$	(18,491	)	$	(18,136	)

The MIL Network –

January 25, 2025

MIL-OSI: Micron Announces Changes to its Board of Directors

Source: GlobeNewswire (MIL-OSI)

BOISE, Idaho, Oct. 30, 2024 (GLOBE NEWSWIRE) — Micron Technology, Inc. (Nasdaq: MU) today announced that Robert (Bob) Switz, its current Board Chair, will retire at the annual shareholders meeting on Jan. 16, 2025. The Board has unanimously approved the appointment of Micron’s President and CEO, Sanjay Mehrotra, to serve as Board Chair and Lynn Dugle as Lead Independent Director following the annual shareholders meeting.

Switz joined Micron’s Board of Directors in 2006 and was named Chair in 2012. With broad experience, a clear-headed approach and exceptional business acumen, Switz has been a leading voice in driving strong governance and the company’s successful strategy. Throughout his tenure, Micron introduced many industry-first products and increased revenues over five times. Also, Switz was instrumental in recruiting Mehrotra as the company’s CEO in 2017.

“Bob has been an invaluable partner and advisor to Micron for nearly 20 years, and I am deeply grateful to him for his leadership and counsel,” said Mehrotra. “On behalf of my fellow board members and the over 48,000 team members at Micron, I want to thank him for all his contributions. During his tenure, Micron has gained tremendous momentum and is now a recognized leader in the memory and storage industry. I am honored to succeed Bob as the Board Chair, and I look forward to working with Lynn Dugle and the rest of the Micron Board to continue to advance Micron’s market leadership position and financial strength.”

“I have thoroughly enjoyed my time serving on the Micron Board, and I’m grateful for the opportunity to have worked alongside many talented executives as we expanded the company’s global footprint and product portfolio,” said Switz. “Memory and storage are essential to the growth of AI in the digital economy, and Micron holds the strongest competitive position in its history. Working with Sanjay to take Micron, an iconic American company, to industry leadership has been very rewarding.”

Since joining Micron in 2017 as President and CEO, Mehrotra has transformed the company into a technology, product, and manufacturing leader. During his time as CEO, the company has introduced multiple generations of both DRAM and NAND ahead of its competitors and delivered the best products in the industry acknowledged for their world-class quality. Mehrotra has been widely recognized for his leadership and contributions to the memory and storage industry.

“Sanjay has done an outstanding job of transforming Micron and creating value for all stakeholders. I am confident that in this expanded role, Sanjay will lead the company to new heights,” said Switz.

Dugle joined the Board in 2020 and has over 30 years of experience in the defense, intelligence, and technology industries. She currently serves on Micron’s Governance and Sustainability and Security Committees and previously served on the Audit Committee and as Chair of the Security Committee.

“I congratulate Bob on his retirement, and I’m grateful to him for his consensus-minded leadership,” said Dugle. “Being selected as lead independent director is an honor and a great responsibility, and I am excited to step into this role and partner with Sanjay, my fellow board members and the company’s management team to help realize the company’s potential.”

About Micron Technology, Inc.
We are an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence (AI) and compute-intensive applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience. To learn more about Micron Technology, Inc. (Nasdaq: MU), visit micron.com.

© 2024 Micron Technology, Inc. All rights reserved. Information, products, and/or specifications are subject to change without notice. Micron, the Micron logo, and all other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are the property of their respective owners.

Micron Media Relations Contact
Erica Rodriguez Pompen
Micron Technology, Inc.
+1 (408) 834-1873
epompen@micron.com

Micron Investor Relations Contact
Satya Kumar
Micron Technology, Inc.
+1 (408) 450-6199
satyakumar@micron.com

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: Apollo Commercial Real Estate Finance, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 30, 2024 (GLOBE NEWSWIRE) — Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today reported results for the quarter ended September 30, 2024.

Net loss attributable to common stockholders per diluted share of common stock was ($0.69) for the quarter ended September 30, 2024. Distributable Earnings (a non-GAAP financial measure defined below) and Distributable Earnings prior to net realized loss on investments per share of common stock was ($0.59) and $0.31 for the quarter ended September 30, 2024, respectively.

Massachusetts Healthcare
In March 2022, ARI and other Apollo-managed entities co-originated a 55% loan-to-cost first mortgage loan secured by eight hospitals in Massachusetts. ARI’s pro-rata interest in the commercial mortgage loan represented 41.2% of the original whole loan amount. The loan was made in connection with the capitalization of a joint venture between two parties and eight property owner subsidiaries of the joint venture (the “Borrowers”) to own the hospitals which were leased to Steward Health Care (“Steward”), who served as operator. ARI and other Apollo-managed entities (“Apollo Co-Lenders”) did not lend to Steward and do not have any involvement in Steward’s operation of the hospitals or performance under the lease.

During the three months ended September 30, 2024, ARI ceased accruing interest on its loan and debt service payments received in July through September 2024 reduced the carrying value of the loan. During the three months ended September 30, 2024, ARI recorded a $127.5 million Specific CECL Allowance which was written-off on resolution of the loan during the same period. On September 4, 2024, ARI and Apollo Co-Lenders, through a joint venture, acquired title to one of the eight hospitals that previously secured the loan. On September 26, 2024, the hospital was taken by eminent domain by the Commonwealth of Massachusetts (the “Commonwealth”). In conjunction with this taking, ARI recorded a realized loss representing the difference between ARI’s allocation of the amount to be paid by the Commonwealth for the taking and ARI’s allocation of the loan related to the underlying property. ARI and Apollo Co-Lenders have challenged the Commonwealth’s taking of the hospital by eminent domain in Massachusetts court. If the challenge is not successful, ARI and Apollo Co-Lenders intend to further challenge the valuation of the hospital from which the amount to be paid by the Commonwealth was determined. If successful, ARI and other Apollo Co-Lenders may receive additional recovery of realized losses. The amount to be paid by the Commonwealth is $21.9 million ($9.0 million attributable to ARI), while the 2024 tax assessed value of the hospital was $200.8 million. On September 30, 2024, the guarantors made a guaranty payment on the loan and Borrowers transferred the deeds of the remaining seven hospitals into escrow, thereby releasing the Borrowers from their obligation under the loan agreement. Accordingly, ARI wrote-off the remaining Specific CECL Allowance and recorded a realized loss representing the difference between the loan’s remaining amortized cost basis and the allocation of the fair value of the seven remaining hospitals, less costs to sell, per the executed purchase and sale agreements and appraised values, where applicable, of the properties underlying the deeds in escrow. In aggregate, ARI recorded a $127.5 million realized loss within net realized loss on investments in its September 30, 2024 condensed consolidated statement of operations, and all Specific CECL Allowances related to ARI’s loan were written off.

As of September 30, 2024, ARI recorded $159.7 million in other assets on its condensed consolidated balance sheet consisting of an equity method interest in the joint venture with other Apollo-managed entities and an interest in the property deeds in escrow. ARI did not hold title to the underlying properties as of September 30, 2024.

Subsequently, on October 1, 2024, five of the seven hospitals were sold to third parties, and the proceeds were allocated among ARI and other Apollo Co-Lenders based on its pro-rata interests in the commercial mortgage loan.

ARI issued a detailed presentation of the Company’s quarter ended September 30, 2024 results, which can be viewed at www.apollocref.com.

Conference Call and Webcast
The Company will hold a conference call to review third quarter results on October 31, 2024 at 9am ET. To register for the call, please use the following link:

https://register.vevent.com/register/BIa37467c5213342ac9459168840830682

After you register, you will receive a dial-in number and unique pin. The Company will also post a link in the Stockholders’ section on ARI’s website for a live webcast. For those unable to listen to the live call or webcast, there will be a webcast replay link posted in the Stockholders’ section on ARI’s website approximately two hours after the call.

Distributable Earnings
“Distributable Earnings,” a non-GAAP financial measure, is defined as net income available to common stockholders, computed in accordance with GAAP, adjusted for (i) equity-based compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding), (ii) any unrealized gains or losses or other non-cash items (including depreciation and amortization related to real estate owned) included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains (losses), other than (a) realized gains/(losses) related to interest income, and (b) forward point gains/(losses) realized on the Company’s foreign currency hedges, and (v) provision for loan losses.

As a REIT, U.S. federal income tax law generally requires the Company to distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that the Company pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. Given these requirements and the Company’s belief that dividends are generally one of the principal reasons shareholders invest in a REIT, the Company generally intends over time to pay dividends to its stockholders in an amount equal to its net taxable income, if and to the extent authorized by the Company’s board of directors. Distributable Earnings is a key factor considered by the Company’s board of directors in setting the dividend and as such the Company believes Distributable Earnings is useful to investors.

During the nine months ended September 30, 2024, the Company recorded in the consolidated statement of operations realized losses on the sale of a commercial mortgage loan secured by a hotel in Honolulu, Hawaii, and the extinguishment of a commercial mortgage loan secured by a portfolio of eight hospitals in Massachusetts.

The Company believes it is useful to its investors to also present Distributable Earnings prior to net realized loss on investments and realized gain on extinguishment of debt, in applicable periods, to reflect its operating results because (i) the Company’s operating results are primarily comprised of earning interest income on its investments net of borrowing and administrative costs, which comprise the Company’s ongoing operations and (ii) it has been a useful factor related to the Company’s dividend per share because it is one of the considerations when a dividend is determined. The Company believes that its investors use Distributable Earnings and Distributable Earnings prior to net realized loss on investments and realized gain on extinguishment of debt, or a comparable supplemental performance measure, to evaluate and compare the performance of the Company and its peers.

A significant limitation associated with Distributable Earnings as a measure of the Company’s financial performance over any period is that it excludes unrealized gains (losses) from investments. In addition, the Company’s presentation of Distributable Earnings may not be comparable to similarly titled measures of other companies, that use different calculations. As a result, Distributable Earnings should not be considered as a substitute for the Company’s GAAP net income as a measure of its financial performance or any measure of its liquidity under GAAP. Distributable Earnings are reduced for realized losses on loans which include losses that management believes are near certain to be realized.

A reconciliation of Distributable Earnings to GAAP net income (loss) available to common stockholders is included in the detailed presentation of the Company’s quarter ended September 30, 2024 results, which can be viewed at www.apollocref.com.

About Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a real estate investment trust that primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings and other commercial real estate-related debt investments. The Company is externally managed and advised by ACREFI Management, LLC, a Delaware limited liability company and an indirect subsidiary of Apollo Global Management, Inc., a high-growth, global alternative asset manager with approximately $696 billion of assets under management at June 30, 2024.

Additional information can be found on the Company’s website at www.apollocref.com.

Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. These forward-looking statements include information about possible or assumed future results of the Company’s business, financial condition, liquidity, results of operations, plans and objectives. When used in this release, the words believe, expect, anticipate, estimate, plan, continue, intend, should, may or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: higher interest rates and inflation; market trends in the Company’s industry, real estate values, the debt securities markets or the general economy; the timing and amounts of expected future fundings of unfunded commitments; the return on equity; the yield on investments; the ability to borrow to finance assets; the Company’s ability to deploy the proceeds of its capital raises or acquire its target assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

CONTACT: Hilary Ginsberg
Investor Relations
(212) 822-0767

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: Great Elm Capital Corp. (“GECC”) Schedules Third Quarter 2024 Earnings Release and Conference Call

Source: GlobeNewswire (MIL-OSI)

PALM BEACH GARDENS, Fla., Oct. 30, 2024 (GLOBE NEWSWIRE) — Great Elm Capital Corp. (the “Company” or “GECC”), (NASDAQ: GECC), a business development company, today announced it will release its financial results for the third quarter ended September 30, 2024 prior to the opening of the stock market on Thursday, October 31, 2024, and discuss these results in a conference call at 8:30 a.m. ET.

Date/Time:	Thursday, October 31, 2024 – 8:30 a.m. ET

Participant Dial-In Numbers:
(United States):	(877) 407-0789
(International):	(201) 689-8562

To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with passcode “GECC”. An accompanying slide presentation will be available in pdf format via the “Events and Presentations” section of Great Elm Capital Corp.’s website here after the issuance of the earnings release.

Webcast
The call and presentation will also be simultaneously webcast over the internet via the “Events and Presentations” section of GECC’s website or by clicking on the webcast link here.

About Great Elm Capital Corp.
GECC is an externally managed business development company that seeks to generate current income and capital appreciation by investing in debt and income generating equity securities, including investments in specialty finance businesses.

Media & Investor Contact:
Investor Relations
investorrelations@greatelmcap.com

Source: Great Elm Capital Corp.

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 USA: Capito Accepts Inaugural West Virginia Women in Energy “Woman of the Year” Award

US Senate News:

Source: United States Senator for West Virginia Shelley Moore Capito
CHARLESTON, W.Va. – Today, U.S. Senator Shelley Moore Capito (R-W.Va.), Ranking Member of the Senate Environment and Public Works (EPW) Committee, received the first annual West Virginia Women in Energy “Woman of the Year” award and provided acceptance remarks at the 2024 Governor’s Energy Summit. The award recognizes Senator Capito’s accomplishments and contributions across the energy sector and her dedication to women empowerment and leadership.
“I’m honored to receive this award, and express my most heartfelt thankfulness to the West Virginia Office of Energy for recognizing me and my contributions to this vital industry. Energy is something that is synonymous with the very name of our state. For generations, the resources our state is blessed with and our diligent, tireless workforce have kept lights on and our country on the move. I have made it a central aspect of my career to support that tradition and find new and innovative ways to keep American energy generation right here in West Virginia. We must continue to generate the baseload power that our nation relies on, and you can be certain that I will always be an advocate for expanding that capacity in our state and supporting the men and women who make that possible,” Senator Capito said.
Prior to receiving the award, Senator Capito participated in the summit’s “Women in Energy Breakfast” where she spoke to attendees about female empowerment and encouraged the women of the summit to support the next generation of West Virginia female leaders in the energy field.
BACKGROUND:
Throughout her time in Congress, Senator Capito has been a staunch advocate and defender of American energy generation in West Virginia. Her leadership has helped advance efforts and important legislation aimed at enhancing energy infrastructure and providing reliable energy sources to West Virginians and Americans.
Some of Senator Capito’s energy accomplishments include:
Championing and serving as a bill manager of the Infrastructure Investment and Jobs Act (IIJA), which funded the hydrogen hubs, priority West Virginia infrastructure projects, and other critical national energy projects. Senator Capito is also a founding member of the West Virginia Hydrogen Hub Coalition that led to the creation of the Appalachian Regional Clean Hydrogen Hub (ARCH2).
Leading efforts to support the completion of the Mountain Valley Pipeline, and authoring language included in the Fiscal Responsibility Act that finalized the pipeline.
Championing 45Q Carbon Capture Utilization and Storage (CCUS) Tax Credits, as well as serving an original co-sponsor of the USE It Act to reduce regulatory barriers to deployment of CCUS technology.
Consistently supporting investments in new markets for coal, including carbon manufacturing and extracting rare earth elements essential to America’s high tech and defense sectors.
Leading Congressional efforts to stop the Environmental Protection Agency’s (EPA) attempt to shut down coal-fired power plants through the Obama Clean Power Plan and authored successful amicus brief, co-signed with 90 members of Congress, to the Supreme Court in West Virginia v. EPA.
Additionally, as West Virginia’s first female United States Senator for West Virginia, Senator Capito has made it a point to inspire the next generation of female leaders. In an effort to do this, she launched her West Virginia Girls Rise Up program in 2015. The purpose of the initiative is to empower young women through education, physical fitness, and self-confidence. Earlier this month, Senator Capito completed her 34th event since the program’s launch. Learn more about Senator Capito’s West Virginia Girls Rise Up program here.
Photos from today’s event are included below:

U.S. Senator Shelley Moore Capito (R-W.Va.) accepts the first annual West Virginia Women in Energy “Woman of the Year” award at the 2024 Governor’s Energy Summit in Charleston, W.Va. on Wednesday, October 30, 2024.

U.S. Senator Shelley Moore Capito (R-W.Va.) participates in the Women in Energy Breakfast at the 2024 Governor’s Energy Summit in Charleston, W.Va. on Wednesday, October 30, 2024.

MIL OSI USA News –

January 25, 2025

MIL-OSI New Zealand: Your rates in action – an Auckland that is thriving and beautiful

Source: Auckland Council

1 July 2024

Your rates help deliver a wide range of day-to-day activities and services, and support investment in Auckland’s assets.

For 2024/2025, Auckland has some of the lowest rates rises in the country, at 6.8 per cent for the average value residential property.

We are working hard to keep your rates down by carefully balancing the need to strengthen the financial and physical resilience of Auckland, while investing where it is needed most to manage growth.

What your rates deliver

Your rates support community services and activities that make Auckland thriving and beautiful. This includes improving public transport, maintaining parks, providing local and regional events, delivering environmental services, rubbish collection and a variety of community facilities and services.

A rising population means your rates need to work hard to meet increasing demand for the activities and services council provides and supports.

Where we are investing

We’ve been planning for the region’s growth and have just completed our Long-term Plan 2024-2034, which sets out how Auckland Council will use your rates to improve the daily lives of Aucklanders.

This includes making the most of what we have and investing where it is needed most. This involves extensive investment in capital projects across the region, as well as funding many services for Aucklanders.

In the next 10 years, your rates will help deliver:

More travel choices
Better public transport and new travel solutions (including a $50 capped weekly public transport pass).

Safer, improved transport
Investments to alleviate congestion, improve public transport and address safety issues.

Flood protection
Reducing existing flood risks, prevention, awareness and preparation.

Rejuvenated neighbourhoods
Regeneration continuing in Wynyard Quarter, City Centre, Takapuna, Northcote, Henderson, Avondale, Maungawhau, Panmure, Onehunga, Papatoetoe, Manukau, Pukekohe and Ormiston.

Community investment
Increased sports and recreation facilities through a $35 million fund, continued library and digital services, community-led arts and cultural activities, and local development. Local boards have a new, fairer funding model to support local communities.

A transformed city centre
A City Centre Masterplan will deliver a vibrant city centre, regenerating midtown to benefit from the City Rail Link and progress toward transforming Wynyard Point, the port and waterfront.

A safer city
We are increasing community patrols and CCTV surveillance to keep people safe in our city centres.

Food scraps collection
All urban households will have weekly kerbside food scraps collection. Rates-funded refuse collection will also be phased in for North Shore, Waitakere, Papakura, Franklin and Rodney.

A growing Auckland economy
Promoting Auckland as a great place to live, work, invest, study and visit – continuing our large cultural events and securing international and domestic events.

Well-managed local government
The Auckland Future Fund will help improve the financial and physical resilience of the council. The council will also be progressing Maori outcomes and continuing with storm recovery activities.

Want to learn more?

Our Long-term Plan 2024-2034 is our 10-year plan for Auckland.

It focuses on our physical and financial resilience, while investing where it is needed most to manage growth. We are doing this in a way that recognises cost of living concerns and provides the greatest benefit to our communities.

To learn more about all the investment priorities where your rates will go in the coming decade, see the Long-term Plan 2024-2034.

MIL OSI New Zealand News –

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: Landmark Bancorp, Inc. Announces 30.5% Increase in Third Quarter Net Earnings and Earnings Per Share of $0.72. Declares Cash Dividend of $0.21 per Share and 5% Stock Dividend

Source: GlobeNewswire (MIL-OSI)

Manhattan, KS, Oct. 30, 2024 (GLOBE NEWSWIRE) — Landmark Bancorp, Inc. (“Landmark”; Nasdaq: LARK) reported diluted earnings per share of $0.72 for the three months ended September 30, 2024, compared to $0.55 per share in the second quarter of 2024 and $0.52 per share in the same quarter last year. Net earnings for the third quarter of 2024 amounted to $3.9 million, compared to $3.0 million in the prior quarter and $2.9 million for the third quarter of 2023. For the three months ended September 30, 2024, the return on average assets was 1.00%, the return on average equity was 11.82%, and the efficiency ratio was 66.5%.

For the first nine months of 2024, diluted earnings per share totaled $1.77 compared to $1.75 during the same period in 2023. Net earnings for the first nine months of 2024 totaled $9.7 million, compared to $9.6 million in the first nine months of 2023. For the nine months ended September 30, 2024, the return on average assets was 0.84%, the return on average equity was 10.18%, and the efficiency ratio was 68.8%.

In making this announcement, Abby Wendel, President and Chief Executive Officer of Landmark, said, “The Company delivered strong results in the third quarter 2024. Net earnings grew 30.5 percent over the prior quarter and 36.6 percent over the same period last year. Earnings per share also increased 36.5 percent over the third quarter last year. Growth in loans, margin expansion, and higher non-interest income all contributed to strong revenue growth. This quarter total loans grew $21.3 million, or 8.6 percent annualized, driven mainly by strong growth in residential mortgage, agriculture and commercial real estate loans. Additionally, net interest income grew 5.7 percent, to $11.6 million, as higher interest on loans exceeded interest costs on deposits and our net interest margin expanded by nine basis points and was 3.30 percent for the quarter. Non-interest income also increased $533,000 over the prior quarter mainly due to increases in fees and service charges earned along with a gain on the sale of a former branch. During the third quarter 2024, non-interest expense declined by $536,000, as the prior quarter included a $979,000 valuation adjustment on a former branch facility. Deposit balances increased 8.0 percent annualized during the third quarter mainly due to growth in money market, checking, and certificate of deposit accounts. Stockholders’ equity also increased by $11.4 million as lower rates this quarter reduced our net unrealized securities losses and increased our book value per share.”

Landmark’s Board of Directors declared a cash dividend of $0.21 per share, to be paid November 27, 2024, to common stockholders of record as of the close of business on November 13, 2024. The Board of Directors also declared a 5% stock dividend payable on December 16, 2024, to common stockholders of record on December 2, 2024. This is the 24th consecutive year that the Board has declared a 5% stock dividend.

Management will host a conference call to discuss the Company’s financial results at 10:00 a.m. (Central time) on Thursday, October 31, 2024. Investors may participate via telephone by dialing (833) 470-1428 and using access code 242414. A replay of the call will be available through November 30, 2024, by dialing (866) 813-9403 and using access code 908094.

SUMMARY OF THIRD QUARTER RESULTS

Net earnings in the third quarter of 2024 increased $919,000, to $3.9 million mainly due to growth in net interest income coupled with higher non-interest income and lower non-interest expense. The current quarter included a gain of $273,000 on the sale of a former branch and we also recorded a provision for credit losses of $500,000.

Net Interest Income

Net interest income in the third quarter of 2024 amounted to $11.6 million representing an increase of $630,000, or 5.7%, compared to the previous quarter. The increase in net interest income was due mainly to growth in interest income on loans, but partially offset by higher interest expense on deposits. The net interest margin increased to 3.30% during the third quarter from 3.21% during the prior quarter. Compared to the previous quarter, interest income on loans increased $911,000, or 6.1%, to $15.9 million due to both higher average balances and rates. The average tax-equivalent yield on the loan portfolio increased 10 basis points to 6.43%. Interest expense on deposits increased $157,000, or 2.8%, in the third quarter 2024, compared to the prior quarter, mainly due to higher rates on interest-bearing deposits. The average rate on interest-bearing deposits increased in the third quarter to 2.48% compared to 2.44% in the prior quarter. Interest on borrowed funds increased $55,000 due to slightly higher average balances in the current quarter.

Non-Interest Income

Non-interest income totaled $4.3 million for the third quarter of 2024, an increase of $533,000, or 14.3%, from the previous quarter. The increase in non-interest income compared to the second quarter of 2024 was primarily the result of increases of $282,000 in other non-interest income and $189,000 in fees and service charges. Gain on sales of residential mortgage loans also increased 8.6% compared to the prior quarter. The increase in other non-interest income was primarily due to a $273,000 gain on the sale of a former branch.

Non-Interest Expense

During the third quarter of 2024, non-interest expense totaled $10.6 million, a decrease of $536,000, or 4.8%, compared to the prior quarter. As mentioned above, non-interest expense in the prior quarter included a valuation allowance of $979,000 recorded on a former branch facility that was ultimately sold in the third quarter of 2024. Partially offsetting that decline were increases of $299,000 in compensation and benefits and $135,000 in occupancy and equipment.

Income Tax Expense

Landmark recorded income tax expense of $867,000 in the third quarter of 2024 compared to $587,000 in the prior quarter. The effective tax rate was 18.1% in the third quarter of 2024 compared to 16.3% in the second quarter of 2024. The increase in the effective tax rate was primarily due to higher earnings before taxes as tax-exempt income was consistent between the periods.

Balance Sheet Highlights

As of September 30, 2024, gross loans totaled $1.0 billion, an increase of $21.3 million, or 8.6% annualized since June 30, 2024. During the quarter, loan growth was primarily comprised of one-to-four family residential real estate (growth of $12.3 million), agriculture (growth of $7.5 million) and commercial real estate (growth of $5.2 million) loans. The increase in one-to-four family residential real estate loans reflects continued demand for adjustable-rate mortgage loans which are retained in our portfolio. Investment securities decreased $9.4 million during the third quarter of 2024, while pre-tax unrealized net losses on these investment securities decreased from $24.8 million at June 30, 2024 to $13.3 million at September 30, 2024.

Period end deposit balances increased $25.0 million to $1.3 billion at September 30, 2024. The increase in deposits was mainly driven by increases in money market and checking (increase of $19.2 million) and certificates of deposit (increase of $11.4 million). Average interest-bearing deposits however were down slightly this quarter compared to the second quarter. Total borrowings decreased $38.5 million during the third quarter 2024. Average borrowings, including FHLB advances and repurchase agreements increased $4.3 million this quarter compared to the second quarter. At September 30, 2024, the loan to deposits ratio was 77.6% compared to 77.5% in the prior quarter.

Stockholders’ equity increased to $139.7 million (book value of $25.39 per share) as of September 30, 2024, from $128.3 million (book value of $23.45 per share) as of June 30, 2024. The increase in stockholders’ equity was primarily due to a decline in accumulated other comprehensive losses as the unrealized net losses on investments securities declined during the third quarter. The ratio of equity to total assets increased to 8.93% on September 30, 2024, from 8.22% on June 30, 2024.

The allowance for credit losses totaled $11.5 million, or 1.15% of total gross loans on September 30, 2024, compared to $10.9 million, or 1.11% of total gross loans on June 30, 2024. Net loan charge-offs totaled $9,000 in the third quarter of 2024, compared to net loan recoveries of $52,000 during the second quarter of 2024. A provision for credit losses of $500,000 was recorded in the third quarter of 2024 compared to a no provision for credit losses in the second quarter of 2024.

Non-performing loans totaled $13.4 million, or 1.34% of gross loans at September 30, 2024 compared to $5.0 million, or 0.51% of gross loans at June 30, 2024. The increase in non-accrual loans was primarily related to one commercial loan which was put on non-accrual status this quarter. Loans 30-89 days delinquent totaled $7.3 million, or 0.73% of gross loans, as of September 30, 2024, compared to $1.9 million, or 0.19% of gross loans, as of June 30, 2024. The increase in delinquent loans was primarily related to two commercial-related loans. Foreclosed real estate owned totaled $428,000 at September 30, 2024.

About Landmark

Landmark Bancorp, Inc., the holding company for Landmark National Bank, is listed on the Nasdaq Global Market under the symbol “LARK.” Headquartered in Manhattan, Kansas, Landmark National Bank is a community banking organization dedicated to providing quality financial and banking services. Landmark National Bank has 30 locations in 24 communities across Kansas: Manhattan (2), Auburn, Dodge City (2), Fort Scott (2), Garden City, Great Bend (2), Hoisington, Iola, Junction City, Kincaid, La Crosse, Lawrence (2), Lenexa, Louisburg, Mound City, Osage City, Osawatomie, Overland Park, Paola, Pittsburg, Prairie Village, Topeka (2), Wamego and Wellsville, Kansas. Visit www.banklandmark.com for more information.

Contact:
Mark A. Herpich
Chief Financial Officer
(785) 565-2000

Special Note Concerning Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of Landmark. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this press release, including forward-looking statements, speak only as of the date they are made, and Landmark undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements. These factors include, among others, the following: (i) the strength of the local, national and international economies, including the effects of inflationary pressures and supply chain constraints on such economies; (ii) changes in state and federal laws, regulations and governmental policies concerning banking, securities, consumer protection, insurance, monetary, trade and tax matters, including any changes in response to the recent failures of other banks; (iii) changes in interest rates and prepayment rates of our assets; (iv) increased competition in the financial services sector and the inability to attract new customers, including from non-bank competitors such as credit unions and “fintech” companies; (v) timely development and acceptance of new products and services; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) our risk management framework; (viii) interruptions in information technology and telecommunications systems and third-party services; (ix) changes and uncertainty in benchmark interest rates, including the timing of rate changes, if any, by the Federal Reserve; (x) the effects of severe weather, natural disasters, widespread disease or pandemics, or other external events; (xi) the loss of key executives or employees; (xii) changes in consumer spending; (xiii) integration of acquired businesses; (xiv) unexpected outcomes of existing or new litigation; (xv) changes in accounting policies and practices, such as the implementation of the current expected credit losses accounting standard; (xvi) the economic impact of past and any future terrorist attacks, acts of war, including the current Israeli-Palestinian conflict and the conflict in Ukraine, or threats thereof, and the response of the United States to any such threats and attacks; (xvii) the ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; (xviii) fluctuations in the value of securities held in our securities portfolio; (xix) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xx) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (xxi) the level of non-performing assets on our balance sheets; (xxii) the ability to raise additional capital; (xxiii) cyber-attacks; (xxiv) declines in real estate values; (xxv) the effects of fraud on the part of our employees, customers, vendors or counterparties; and (xxvi) any other risks described in the “Risk Factors” sections of reports filed by Landmark with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Additional information concerning Landmark and its business, including additional risk factors that could materially affect Landmark’s financial results, is included in our filings with the Securities and Exchange Commission.

LANDMARK BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)

(Dollars in thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Assets
Cash and cash equivalents	$	21,211		$	23,889		$	16,468		$	27,101		$	23,821
Interest-bearing deposits at other banks		4,363			4,881			4,920			4,918			5,904
Investment securities available-for-sale, at fair value:
U.S. treasury securities		83,753			89,325			93,683			95,667			118,341
Municipal obligations, tax exempt		112,126			114,047			118,445			120,623			115,706
Municipal obligations, taxable		75,129			74,588			75,371			79,083			73,993
Agency mortgage-backed securities		140,004			142,499			149,777			157,396			148,817
Total investment securities available-for-sale		411,012			420,459			437,276			452,769			456,857
Investment securities held-to-maturity		3,643			3,613			3,584			3,555			3,525
Bank stocks, at cost		7,894			9,647			7,850			8,123			8,009
Loans:
One-to-four family residential real estate		344,380			332,090			312,833			302,544			289,571
Construction and land		23,454			30,480			24,823			21,090			21,657
Commercial real estate		324,016			318,850			323,397			320,962			323,427
Commercial		181,652			178,876			181,945			180,942			185,831
Agriculture		91,986			84,523			86,808			89,680			84,560
Municipal		7,098			6,556			5,690			4,507			3,200
Consumer		29,263			29,200			28,544			28,931			29,180
Total gross loans		1,001,849			980,575			964,040			948,656			937,426
Net deferred loan (fees) costs and loans in process		(63	)		(583	)		(578	)		(429	)		(396	)
Allowance for credit losses		(11,544	)		(10,903	)		(10,851	)		(10,608	)		(10,970	)
Loans, net		990,242			969,089			952,611			937,619			926,060
Loans held for sale, at fair value		3,250			2,513			2,697			853			1,857
Bank owned life insurance		39,176			38,826			38,578			38,333			38,090
Premises and equipment, net		20,976			20,986			20,696			19,709			23,911
Goodwill		32,377			32,377			32,377			32,377			32,377
Other intangible assets, net		2,729			2,900			3,071			3,241			3,414
Mortgage servicing rights		3,041			2,997			2,977			3,158			3,368
Real estate owned, net		428			428			428			928			934
Other assets		23,309			28,149			29,684			28,988			29,459
Total assets	$	1,563,651		$	1,560,754		$	1,553,217		$	1,561,672		$	1,557,586

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand		360,188			360,631			364,386			367,103			395,046
Money market and checking		565,629			546,385			583,315			613,613			586,651
Savings		145,825			150,996			154,000			152,381			157,112
Certificates of deposit		203,860			192,470			191,823			183,154			169,225
Total deposits		1,275,502			1,250,482			1,293,524			1,316,251			1,308,034
FHLB and other borrowings		92,050			131,330			74,716			64,662			82,569
Subordinated debentures		21,651			21,651			21,651			21,651			21,651
Repurchase agreements		9,528			8,745			15,895			12,714			12,590
Accrued interest and other liabilities		25,229			20,292			20,760			19,480			23,185
Total liabilities		1,423,960			1,432,500			1,426,546			1,434,758			1,448,029
Stockholders’ equity:
Common stock		55			55			55			55			52
Additional paid-in capital		89,532			89,469			89,364			89,208			84,568
Retained earnings		60,549			57,774			55,912			54,282			57,280
Treasury stock, at cost		(396	)		(330	)		(249	)		(75	)		–
Accumulated other comprehensive loss		(10,049	)		(18,714	)		(18,411	)		(16,556	)		(32,343	)
Total stockholders’ equity		139,691			128,254			126,671			126,914			109,557
Total liabilities and stockholders’ equity	$	1,563,651		$	1,560,754		$	1,553,217		$	1,561,672		$	1,557,586

LANDMARK BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings (unaudited)

(Dollars in thousands, except per share amounts)	Three months ended,						Nine months ended,
	September 30,		June 30,		September 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
Interest income:
Loans	$	15,933	$	15,022	$	13,531	$	45,445	$	37,530
Investment securities:
Taxable		2,301		2,359		2,445		7,088		7,141
Tax-exempt		747		759		772		2,270		2,333
Interest-bearing deposits at banks		41		40		46		144		193
Total interest income		19,022		18,180		16,794		54,947		47,197
Interest expense:
Deposits		5,830		5,673		4,384		16,960		10,375
FHLB and other borrowings		1,100		1,027		1,251		3,149		2,845
Subordinated debentures		416		418		417		1,246		1,168
Repurchase agreements		72		88		116		267		403
Total interest expense		7,418		7,206		6,168		21,622		14,791
Net interest income		11,604		10,974		10,626		33,325		32,406
Provision for credit losses		500		–		–		800		299
Net interest income after provision for credit losses		11,104		10,974		10,626		32,525		32,107
Non-interest income:
Fees and service charges		2,880		2,691		2,618		8,032		7,457
Gains on sales of loans, net		704		648		491		1,864		2,014
Bank owned life insurance		254		248		230		747		671
Other		415		133		313		730		834
Total non-interest income		4,253		3,720		3,652		11,373		10,976
Non-interest expense:
Compensation and benefits		5,803		5,504		5,811		16,839		16,925
Occupancy and equipment		1,429		1,294		1,373		4,113		4,136
Data processing		464		492		458		1,437		1,478
Amortization of mortgage servicing rights and other intangibles		256		256		474		924		1,407
Professional fees		573		649		624		1,869		1,722
Valuation allowance on real estate held for sale		–		979		–		1,108		–
Other		2,034		1,921		1,989		5,915		5,753
Total non-interest expense		10,559		11,095		10,729		32,205		31,421
Earnings before income taxes		4,798		3,599		3,549		11,693		11,662
Income tax expense		867		587		671		1,972		2,065
Net earnings	$	3,931	$	3,012	$	2,878	$	9,721	$	9,597

Net earnings per share (1)
Basic	$	0.72	$	0.55	$	0.53	$	1.77	$	1.75
Diluted		0.72		0.55		0.52		1.77		1.75
Dividends per share (1)		0.21		0.21		0.20		0.63		0.60
Shares outstanding at end of period (1)		5,501,221		5,469,566		5,481,805		5,501,221		5,481,805
Weighted average common shares outstanding – basic (1)		5,490,808		5,471,724		5,479,909		5,477,453		5,476,703
Weighted average common shares outstanding – diluted (1)		5,495,728		5,474,336		5,482,633		5,481,456		5,481,270

Tax equivalent net interest income	$	11,777	$	11,167	$	10,809	$	33,852	$	32,974

(1) Share and per share values at or for the period ended September 30, 2023 have been adjusted to give effect to the 5% stock dividend paid during December 2023.

LANDMARK BANCORP, INC. AND SUBSIDIARIES
Select Ratios and Other Data (unaudited)

(Dollars in thousands, except per share amounts)	As of or for the three months ended,									As of or for the nine months ended,
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Performance ratios:
Return on average assets (1)		1.00	%		0.78	%		0.74	%		0.84	%		0.84	%
Return on average equity (1)		11.82	%		9.72	%		9.87	%		10.18	%		11.13	%
Net interest margin (1)(2)		3.30	%		3.21	%		3.06	%		3.21	%		3.19	%
Effective tax rate		18.1	%		16.3	%		18.9	%		16.9	%		17.7	%
Efficiency ratio (3)		66.5	%		67.9	%		73.8	%		68.8	%		71.0	%
Non-interest income to total income (3)		25.5	%		25.4	%		25.6	%		25.0	%		25.3	%

Average balances:
Investment securities	$	428,301		$	437,136		$	486,706		$	440,744		$	493,853
Loans		985,659			955,104			906,289			962,252			877,048
Assets		1,562,482			1,545,816			1,549,724			1,554,682			1,528,938
Interest-bearing deposits		936,218			936,237			902,727			935,958			886,227
FHLB and other borrowings		77,958			72,875			89,441			74,496			70,774
Subordinated debentures		21,651			21,651			21,651			21,651			21,651
Repurchase agreements		10,774			11,524			15,387			12,218			19,903
Stockholders’ equity	$	132,271		$	124,624		$	115,644		$	127,597		$	115,275

Average tax equivalent yield/cost (1):
Investment securities		2.99	%		3.04	%		2.77	%		2.99	%		2.72	%
Loans		6.43	%		6.33	%		5.93	%		6.31	%		5.72	%
Total interest-bearing assets		5.38	%		5.29	%		4.81	%		5.26	%		4.62	%
Interest-bearing deposits		2.48	%		2.44	%		1.93	%		2.42	%		1.57	%
FHLB and other borrowings		5.61	%		5.67	%		5.55	%		5.65	%		5.37	%
Subordinated debentures		7.64	%		7.76	%		7.64	%		7.69	%		7.21	%
Repurchase agreements		2.66	%		3.07	%		2.99	%		2.92	%		2.71	%
Total interest-bearing liabilities		2.82	%		2.78	%		2.38	%		2.77	%		1.98	%

Capital ratios:
Equity to total assets		8.93	%		8.22	%		7.03	%
Tangible equity to tangible assets (3)		6.84	%		6.09	%		4.85	%
Book value per share	$	25.39		$	23.45		$	19.99
Tangible book value per share (3)	$	19.01		$	17.00		$	13.46

Rollforward of allowance for credit losses (loans):
Beginning balance	$	10,903		$	10,851		$	10,449		$	10,608		$	8,791
Adoption of CECL		–			–			–			–			1,523
Charge-offs		(153	)		(119	)		(142	)		(413	)		(408	)
Recoveries		144			171			663			449			814
Provision for credit losses for loans		650			–			–			900			250
Ending balance	$	11,544		$	10,903		$	10,970		$	11,544		$	10,970

Allowance for unfunded loan commitments	$	150		$	300		$	200

Non-performing assets:
Non-accrual loans	$	13,415		$	5,007		$	4,440
Accruing loans over 90 days past due		–			–			–
Real estate owned		428			428			934
Total non-performing assets	$	13,843		$	5,435		$	5,374

Loans 30-89 days delinquent	$	7,301		$	1,872		$	6,173

Other ratios:
Loans to deposits		77.64	%		77.50	%		70.80	%
Loans 30-89 days delinquent and still accruing to gross loans outstanding		0.73	%		0.19	%		0.66	%
Total non-performing loans to gross loans outstanding		1.34	%		0.51	%		0.47	%
Total non-performing assets to total assets		0.89	%		0.35	%		0.35	%
Allowance for credit losses to gross loans outstanding		1.15	%		1.11	%		1.17	%
Allowance for credit losses to total non-performing loans		86.05	%		217.76	%		247.07	%
Net loan charge-offs to average loans (1)		0.00	%		-0.02	%		-0.23	%		0.00	%		-0.06	%

(1	)	Information is annualized.
(2	)	Net interest margin is presented on a fully tax equivalent basis, using a 21% federal tax rate.
(3	)	Non-GAAP financial measures. See the “Non-GAAP Financial Measures” section of this press release for a reconciliation to the most comparable GAAP equivalent.

LANDMARK BANCORP, INC. AND SUBSIDIARIES
Non-GAAP Finacials Measures (unaudited)

(Dollars in thousands, except per share amounts)	As of or for the three months ended,									As of or for the nine months ended,
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023

Non-GAAP financial ratio reconciliation:
Total non-interest expense	$	10,559		$	11,095		$	10,729		$	32,205		$	31,421
Less: foreclosure and real estate owned expense		(23	)		39			(1	)		(34	)		(21	)
Less: amortization of other intangibles		(171	)		(171	)		(196	)		(512	)		(591	)
Less: valuation allowance on real estate held for sale		–			(979	)		–			(1,108	)		–
Adjusted non-interest expense (A)		10,365			9,984			10,532			30,551			30,809

Net interest income (B)		11,604			10,974			10,626			33,325			32,406

Non-interest income		4,253			3,720			3,652			11,373			10,976
Less: losses (gains) on sales of investment securities, net		–			–			–			–			–
Less: gains on sales of premises and equipment and foreclosed assets		(273	)		9			–			(264	)		(1	)
Adjusted non-interest income (C)	$	3,980		$	3,729		$	3,652		$	11,109		$	10,975

Efficiency ratio (A/(B+C))		66.5	%		67.9	%		73.8	%		68.8	%		71.0	%
Non-interest income to total income (C/(B+C))		25.5	%		25.4	%		25.6	%		25.0	%		25.3	%

Total stockholders’ equity	$	139,691		$	128,254		$	109,557
Less: goodwill and other intangible assets		(35,106	)		(35,277	)		(35,791	)
Tangible equity (D)	$	104,585		$	92,977		$	73,766

Total assets	$	1,563,651		$	1,560,754		$	1,557,586
Less: goodwill and other intangible assets		(35,106	)		(35,277	)		(35,791	)
Tangible assets (E)	$	1,528,545		$	1,525,477		$	1,521,795

Tangible equity to tangible assets (D/E)		6.84	%		6.09	%		4.85	%

Shares outstanding at end of period (F)		5,501,221			5,469,566			5,481,805

Tangible book value per share (D/F)	$	19.01		$	17.00		$	13.46

The MIL Network –

January 25, 2025

MIL-OSI: Nokia Corporation: Repurchase of own shares on 30.10.2024

Source: GlobeNewswire (MIL-OSI)

Nokia Corporation
Stock Exchange Release
30 October 2024 at 22:30 EET

Nokia Corporation: Repurchase of own shares on 30.10.2024

Espoo, Finland – On 30 October 2024 Nokia Corporation (LEI: 549300A0JPRWG1KI7U06) has acquired its own shares (ISIN FI0009000681) as follows:

Trading venue (MIC Code)	Number of shares	Weighted average price / share, EUR*
XHEL	1,347,700	4.45
CEUX	200,000	4.45
BATE	–	–
AQEU	–	–
TQEX	–	–
Total	1,547,700	4.45

* Rounded to two decimals

On 25 January 2024, Nokia announced that its Board of Directors is initiating a share buyback program to return up to EUR 600 million of cash to shareholders in tranches over a period of two years. The first phase of the share buyback program started on 20 March 2024. On 19 July 2024, Nokia decided to accelerate the share buybacks by increasing the number of shares to be repurchased during the year 2024. The post-increase repurchases in compliance with the Market Abuse Regulation (EU) 596/2014 (MAR), the Commission Delegated Regulation (EU) 2016/1052 and under the authorization granted by Nokia’s Annual General Meeting on 3 April 2024 started on 22 July 2024 and end by 31 December 2024 with a maximum aggregate purchase price of EUR 600 million for all purchases during 2024.

Total cost of transactions executed on 30 October 2024 was EUR 6,883,705. After the disclosed transactions, Nokia Corporation holds 190,407,909 treasury shares.

Details of transactions are included as an appendix to this announcement.

On behalf of Nokia Corporation

BofA Securities Europe SA

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

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

Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.

Inquiries:

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

Nokia Investor Relations
Phone: +358 40 803 4080
Email: investor.relations@nokia.com

Attachment

Daily Report 2024-10-30

The MIL Network –

January 25, 2025

MIL-OSI: Altair Signs Definitive Agreement with Siemens to be Acquired for $10.6 Billion

Source: GlobeNewswire (MIL-OSI)

TROY, Mich., Oct. 30, 2024 (GLOBE NEWSWIRE) — Altair (Nasdaq: ALTR), a global leader in computational intelligence, today announced that it has entered into a definitive agreement to be acquired by Siemens, a leading technology company focused on industry, infrastructure, mobility, and healthcare. Altair stockholders will receive $113.00 per share in cash, representing an equity value of approximately $10.6 billion. The $113.00 per share cash consideration represents a 19% premium to the closing price of Altair common stock on October 21, 2024, the last trading day prior to media speculation regarding a potential transaction, and a 13% premium to Altair’s unaffected all-time high closing price.

“This acquisition represents the culmination of nearly 40 years in which Altair has grown from a startup in Detroit to a world-class software and technology company. We have added thousands of customers globally in manufacturing, life sciences, energy and financial services, and built an amazing workforce, and innovative culture,” said James Scapa, Altair’s founder and CEO. “We believe this combination of two strongly complementary leaders in the engineering software space brings together Altair’s broad portfolio in simulation, data science, and HPC with Siemens’ strong position in mechanical and EDA design. Siemens’ outstanding technology, strategic customer relationships, and honest, technical culture is an excellent fit for Altair to continue its journey driving innovation with computational intelligence.”

“Acquiring Altair marks a significant milestone for Siemens. This strategic investment aligns with our commitment to accelerate the digital and sustainability transformations of our customers by combining the real and digital worlds. The addition of Altair’s capabilities in simulation, high performance computing, data science, and artificial intelligence together with Siemens Xcelerator will create the world’s most complete AI-powered design and simulation portfolio,” said Roland Busch, President and CEO of Siemens AG. “It is a logical next step: we have been building our leadership in industrial software for the last 15 years, most recently, democratizing the benefits of data and AI for entire industries.”

Approvals and Timing

The transaction, which was unanimously approved by the Altair Board of Directors, is expected to close in the second half of 2025, following the receipt of regulatory approvals, Altair stockholder approval and the satisfaction of customary closing conditions. Upon completion of the transaction, Altair’s common stock will no longer be listed on any public stock exchange.

Third Quarter 2024 Financial Results

In a separate press release, Altair today announced its third quarter fiscal year 2024 financial results. The press release is available on the Investor Relations section of the Company’s website. In light of the announced transaction with Siemens, Altair has cancelled its earnings conference call previously scheduled for 5:00 p.m. ET / 2:00 p.m. PT this afternoon, October 30, 2024.

Advisors

Citi and J.P. Morgan Securities LLC are serving as financial advisors to Altair, and Davis Polk & Wardwell LLP and Lowenstein Sandler LLP are serving as the Company’s legal advisors.

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 www.altair.com.

About Siemens

Siemens AG (Berlin and Munich) is a leading technology company focused on industry, infrastructure, mobility, and healthcare. The company’s purpose is to create technology to transform the everyday, for everyone. By combining the real and the digital worlds, Siemens empowers customers to accelerate their digital and sustainability transformations, making factories more efficient, cities more livable, and transportation more sustainable. Siemens also owns a majority stake in the publicly listed company, Siemens Healthineers, a leading global medical technology provider shaping the future of healthcare. In fiscal 2023, which ended on September 30, 2023, the Siemens Group generated revenue of €74.9 billion and net income of €8.5 billion. As of September 30, 2023, the company employed around 305,000 people worldwide on the basis of continuing operations. Further information is available on the Internet at www.siemens.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 Altairs 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
Jennifer Ristic
216-849-3109
jristic@altair.com

Investor Relations
Stephen Palmtag
669-328-9111
spalmtag@altair.com

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 USA: Congressman Kim, Burlington County Commissioners Break Ground on Emergency Shelter and Celebrate the Impact of Federal Project Funding

Source: United States House of Representatives – Congressman Andy Kim (NJ-03)

WESTAMPTON, N.J. – Today, Congressman Andy Kim (NJ-03) joined Burlington County Commissioners for a groundbreaking ceremony to celebrate the start of construction on Burlington County’s first-ever emergency shelter. In 2022, Congressman Kim helped secure $3 million in Community Project Funding for Burlington County to address local needs with the new facility.

“As we continue working to address affordability and housing access issues, we must also look after people’s immediate needs and uphold the basic right for everyone to have a roof over their head,” said Congressman Kim. “Today’s groundbreaking is a culmination of incredible planning and leadership in Burlington County to address a long-overdue community need. The first of its kind in Burlington, this shelter will not just look after people’s safety, but also help set them up for healthy and secure lives after they leave. I am proud to have brought federal dollars back to get shovels in the ground and look forward to seeing this project through to its completion.”

“The Burlington County emergency shelter will assist and guide those experiencing emergent housing needs through the services and programs available to help them move into transitional and permanent housing,” said Burlington County Commissioner Director Felicia Hopson. “This is something our county has desperately needed for decades. We’re excited to be taking this important step, and we are grateful for the support of leaders like Congressman Kim who have championed this initiative by helping to secure significant federal assistance that is moving this project toward completion.”

For Fiscal Year 2023, Congressman Kim secured Burlington County $3 million to help construct a non-congregate homeless shelter, support county residents who fall below the poverty line, and provide a safer alternative than emergency housing in unsupervised area motels and hotels. The emergency shelter will be a standalone two-story, 33,792 square-foot building and will serve adult men and women experiencing an emergent housing crisis, providing them sleeping accommodations, warm meals, showers, laundry facilities, and bathrooms. Individuals will be paired with a case manager to guide them through the services and programs to help them move into transitional or permanent housing.

The groundbreaking ceremony was held at the site of the new shelter behind the existing Burlington County Human Services Building in Westampton and included Congressman Kim, Burlington County Commissioner Director Felicia Hopson and Commissioners Daniel O’Connell, Allison Eckel, and Balvir Singh, State Senator Troy Singleton, Westampton Mayor Sandy Henley, Assemblywoman Andrea Katz, Assemblyman Herb Conaway, and Pastor Darlene Trappier, founder and director of Beacon of Hope, a Mount Holly-based social service provider that aids and advocates for those experiencing homelessness.

Congressman Kim is committed to supporting individuals experiencing homelessness and tackling the affordability crisis and other root causes of housing insecurity. In Congress, he has supported $2.5 billion for the HOME Investment Partnerships Program to help meet the needs of the millions of low income households across the U.S. without access to affordable housing. Congressman Kim is also a cosponsor of the Housing Crisis Response Act to build fair and affordable housing and the Housing Supply and Affordability Act to remove barriers to local and state governments from increasing housing supply.

Congressman Kim is the Ranking Member on the Military Personnel Subcommittee, and a member of the House Armed Services Committee, the Foreign Affairs Committee, and the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party. More information about Congressman Kim’s accessibility, his work serving New Jersey’s 3rd Congressional District, and information on newsletters and his monthly town halls can be found on his website by clicking here.

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MIL OSI USA News –

January 25, 2025

MIL-OSI USA: Governor Ron DeSantis Appoints Brad Embry as Okaloosa County Clerk of the Circuit Court and Comptroller

Source: US State of Florida

TALLAHASSEE, Fla.—Today, Governor Ron DeSantis announced the appointment of Brad Embry as Okaloosa County Clerk of the Circuit Court and Comptroller. This appointment is effective January 1, 2025.

Brad Embry
Embry is the Okaloosa County Clerk of the Circuit Court and Comptroller-Elect. Previously, he served as Chief of Staff for the Okaloosa County Clerk of the Circuit Court and Comptroller, a Special Agent for the Florida Department of Law Enforcement, and an Investigator for the Okaloosa County Sheriff’s Office. Embry earned his bachelor’s degree in criminal justice from Troy University and his master’s degree in public administration from the University of West Florida.

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MIL OSI USA News –

January 25, 2025

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