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  • MIL-OSI United Nations: Deputy Secretary-General’s remarks to the Qatar Foundation: “Towards the Second World Social Development Summit 2025: Reinforcing global efforts to achieve the 2030 Agenda” [as prepared for delivery]

    Source: United Nations secretary general

    Ladies and Gentlemen,

    I am delighted to be here and to see so many of you present here today.

    Let me start by thanking the Qatar Foundation for organizing this important and timely event, and the Government of Qatar for generously agreeing to host the Second World Summit for Social Development in November 2025.

    This is a great opportunity to shape our common vision for the upcoming Summit and ensure its success, building on the recent Pact for the Future.

    Almost 30 years ago, the Copenhagen Declaration on Social Development and its Programme of Action established a pathbreaking new consensus for people-centred development. Theis was strengthened by the Beijing Platform for Women, and this vision was later enshrined in the 2030 Agenda for Sustainable Development.

    Since the Copenhagen Summit in 1995, remarkable progress has been achieved. However, recent overlapping crises have further stalled or reversed progress in many areas.

    Uneven progress – coupled with the lingering effects of economic recovery from the COVID-19 pandemic, rising geopolitical conflicts, the climate crisis, and economic disruptions like the debt crisis – have deepened inequalities and placed significant stress on countries fiscal space for investing in sustainable development and the brunt felt by people.

    The number of people living in extreme poverty is almost 700 million and growing. The number of people facing hunger is over 730 million and growing. Access to quality and relevant education, decent work, universal healthcare, social protection, and digital connectivity remains limited, with billions at risk of being left behind.

    The message is clear – and it is stark.

    The outlook for achieving people-centered development and meeting the Sustainable Development Goals is fragile.

    But it is not too late to change course if we step up our efforts and reaffirm our commitment to leave no one behind. We need urgent, coordinated reforms and harmonization of social, economic, and fiscal policies. We need genuine partnerships.

    The recently adopted Pact for the Future proposes a number of commitments and solutions. It reinforces the promise to deliver on Agenda 2030.

    This includes an SDG Stimulus, a review of the sovereign debt architecture, and a commitment to reform the global financial architecture, so it provides developing countries with the support and safety net they need to invest in their people and the systems they require.

    The Pact also proposes solutions to strengthen peace and security and redoubles the world’s commitment to human rights and international law.

    This is an important reminder that social development cannot be attained in the absence of peace and security – or in the absence of respect for human rights and all fundamental freedoms.

    The Pact goes further to embrace the new era of technology and provide the guard rails for the opportunity of AI to better connect and reap the benefits for all.

    Ladies and gentlemen,

    The Social Summit comes at an opportune time. With only five years left to achieve the SDGs, we must address all seventeen goals – from poverty, hunger and inequality, to education, peace and inclusivity.

    The 2025 Summit must culminate in a detailed and measurable action plan for social development fit for the 21st century, safeguarding progress for years to come.

    The Summit will also be informed by the outcomes of the Fourth International Conference on Financing for Development and by Member States’ progress on the Pact for the Future’s commitments to invest in people, end poverty and hunger, and strengthen trust and social cohesion.

    At every step, the process towards the Summit must be inclusive and respond to people’s realities and expectations. We must listen to their voices and ensure that people – particularly youth – have a say in shaping their future.

    Open and broad consultations will be an opportunity to build trust and reinforce the connection between people and their governments, but also between people and global institutions.

    It will be an opportunity to shape the societies we want, tailormade to benefit our rich heritage and fabric which underpin the very foundation of inclusive and caring societies.

    To safeguard progress in the long run, we need to join forces around a shared agenda, underpinned by solidarity, respect and trust.

    Throughout, we must all aim high. Let us seek innovative approaches to engagement, cocreation and finding consensus at the highest ambition, while remaining steadfast in our pursuit of accelerating progress towards the SDGs.

    With the leadership of the Government of Qatar, and key partners such as the Qatar Foundation, I am confident that the Social Summit will lay solid foundations for advancing a key strand of the DNA of sustainable development, the social pillar.

    Thank you for joining us on this journey and let’s begin the conversation today.  
     

    MIL OSI United Nations News –

  • MIL-OSI NGOs: Hurricane Unpreparedness in the Caribbean, Disaster by Imperial Design

    Source: Council on Hemispheric Affairs –

    St. Lucia during and post Hurricane Beryl

    by Tamanisha J. John

    Toronto, Ontario

    Whenever a hurricane hits in the Caribbean, people rush to point out that it is an indicator of “disaster capitalism” and/or that “disaster capitalism” will surely come. While I agree that non-governmental organizations (NGO) and other organizations profit from disasters in the Caribbean region, and have a long history of doing so, I am less inclined to believe that “disaster capitalism” exists there unless one takes an ahistorical view. Disaster capitalism in the Caribbean can only exist in those states whose revolutions have been defeated and/or undermined, but overall, there has been no massive structural changes in these states. The region is already, and historically has been, ultra-accommodating to capitalism. Disaster capitalism refers to “the use of the shock of disastrous situations to dismantle state participation in the economy and to implant structural changes in the form of laissez-faire capitalism” (Schwartz, 2015, p. 311). To claim that disaster capitalism will come to the Caribbean region would thus indicate a marked period of state participation in the Caribbean that provided for the peoples living there.

    Instead, all states’ independence was marked by US interventions given the ideological and economic struggle of the Cold War and the neoliberal turn, which attacked state input and intervention in the market. Caribbean states’ independence was marked by debt and lack of access to capital. It occurred alongside financial institutions’ proliferation of structural adjustment policies whose implementation was necessitated for states in the region to acquire access to loaned capital (John, 2023). Though struggles for nationalizations did occur – in industries like mining, banking, insurance, and others – harsh retaliations from the US and Canada made them unsustainable (John, 2023, p. 134) – with no real reductions in foreign ownership “despite the changes in legal forms of ownership” (Thomas, 1984, p. 168-9). Thus, large foreign ownership of resource extractive industries and financial institutions remained a feature of Caribbean societies when they became independent – just as it also marked the colonial landscape in these spaces. The foreign players that controlled corporations, land, and industries in these countries did change somewhat, but this was also typical with imperial rivalries (Caribbean states themselves having been subject to multiple phases of European colonization throughout their histories).

    It was Walter Rodney, who in his 1972 text How Europe Underdeveloped Africa, put forward a critique of the thesis that capitalism had to develop prior to ushering in socialism – which was Marx’s estimation – given that this thesis went against the trajectory of capitalist development in both the Caribbean and in Africa, where the capitalist logics of extraction with disregard for these societies left them in almost permanent states of underdevelopment, that only physical and ideological anti-imperialism could rectify. One of the consequences of this underdevelopment, I argue, is the lack of hurricane preparedness. The logic of “getting people back to work” and “security” in these colonized spaces have always trumped wellbeing for the people and environment – precisely because the people in them have always been categorized as disposable, while the natural resources have been reduced to instruments for the generation of profit. This ideology was true under European empires, and now true under US hegemony in the region – where foreign imposing actors continue to have more say on preparedness, wealth distribution, land ownership, security, economic development, and entrepreneurship (innovation).

    In a Region Prone to Hurricanes, Unpreparedness is an Ideological Policy Choice

    “Hurricanes are not random phenomena. Atmospheric conditions and physics limit their movement” (Schwartz, 2015, p. xvi). In the Caribbean, the Yucatán Peninsula, the Gulf of Mexico, and the South-Eastern United States, we have come to expect a lack of preparedness whenever hurricanes strike. Though Hurricane Beryl’s strength and early formation in June was unprecedented for the Caribbean’s hurricane season, what is precedent is the lack of regional preparedness for hurricanes in a region prone to have them – no matter when these hurricanes form. Forming around June 25th it was clear that Beryl would break the record for earliest formed Category 5 hurricane by the time that it made way into the Caribbean. This was due to the unusually warm temperatures registered in both the Atlantic Ocean and the Caribbean Sea as early as March, various heatwave advisories and warnings were placed on the region acknowledging that the summer 2024 would be “hotter than usual” (Loop News 2024). When news of Beryl’s formation first spread, people expected the worst given unusually hot increases in temperatures (+4°c) for the region so early in the year.

    Making landfall as a Category 4 hurricane in one of the smaller islands of Grenada, Carriacou, on July 1st Beryl would destroy 95% of the infrastructure there before strengthening to a Category 5 hurricane. It would bring even worse devastation to a smaller island of St. Vincent and the Grenadines, Mayreu, where reports proclaim that island to have nearly been “erased from the map” (AP News 2024). In its Caribbean path, Beryl brought devastation as a Category 5 and 4 storm to Grenada, St. Vincent and the Grenadines, Dominica, Tobago and northern Venezuela, Barbados, and the southern portion of Jamaica. In its North American path, Beryl brought devastation as a Category 2 and 1 storm to Mexico’s Yucatan Peninsula, before making landfall in Texas and Louisiana. Thereafter the storm was experienced elsewhere in the form of a tropical cyclone and massive downpours of rain. Beryl eventually tapered off in Canada on July 11th where it left heavy rain that caused massive flooding (due to Canada’s neglected flood systems). Beryl’s death toll currently stands at 33, with the storm causing 6 deaths “in Venezuela, 1 in Grenada, 2 in Carriacou, 6 in St. Vincent and the Grenadines, 4 in Jamaica […] at least 11 in the Greater Houston area, 1 in Louisiana, and 2 in Vermont.” (TT Weather Center 2024)”

    Now that the storm has passed, people in impacted areas must contend with the loss of life, destruction of physical infrastructure – including homes and businesses, the lack of food and other basic products, as well as the lack of power and electricity. While contending with loss, victims of this severe weather will start to question the inability of their governments – rich or poor – to adequately address the post hurricane scenarios that they find themselves in repeatedly. This discontent with unpreparedness is now prevalent even before the hurricane season itself has ended.

    A Note on Cuba’s Hurricane Preparedness, The Importance of Ideology

    One of the most infuriating elements of hurricanes in this region is the “disaster” narratives that come after them, which falsely assert the “naturalness” of unpreparedness given the chaos of the disaster itself – when unpreparedness is, in fact, an ideological policy choice. Poorer states in this region are shackled by an unwillingness of the state to drastically deviate from “larger institutional constraints from which the logic of colonial administration derived its central purpose” and are inherited (Pérez Jr., 2001, p. 133-4).  On the other hand, richer states are shackled by their individualist ideologies which offer “vigorous critiques of government expenditure” which leave preparedness up to “market-driven, neoliberal economic policies,” that turn state and local responsibilities over “to charitable institutions, to churches, or to the victims themselves and their communities” (Schwartz, 2015, p. 300).

    When looking at states in the Western Hemisphere which frequently experience hurricanes, Cuba stands out as a state which tends to fare better in the post hurricane environment given that state’s policies of shared responsibility towards its people. This even as Cuba has been subjected to a draining embargo and sanctions which places a burden on economic growth there. Yet still, Washington maintains that Cuba’s successful hurricane response and disaster mitigation strategies amount to “the exchange of liberty for effectiveness” (Schwartz, 2015, p. 293-4). Though couched in this language of ‘liberty,’ mitigating the loss of life ensures one’s longtime enjoyment of liberty – as opposed to dying for ‘liberty’s’ sake during a hurricane (or other disasters like the COVID-19 pandemic). For example, Cuba’s hurricane preparedness in relation to the US stands out. Cuba’s disaster response compares a bit more favorably to the Federal Emergency Management Agency (FEMA). FEMA “oversaw 15 times more deaths from hurricanes than Cuba from 2005 — the year that Katrina struck New Orleans — to 2015” (Wolfe, 2021).

    This is because Cuba’s disaster preparedness is proactive, prioritizing human life and well-being given the ideological foundations of its revolution that transformed political, social, economic, and environmental relations in the country. US disaster preparedness on the other hand prioritizes profit at the expense of people – it is reactionary and reactive, often blaming victims of hurricane disasters for the lack of state preparedness.

    The Caribbean Hurricane as Natural Phenomena, the Disaster as Colonial Inheritance

    Hurricanes are not experienced equally amongst states in the Western Hemisphere. People living on Caribbean islands tend to experience the worst effects of hurricanes when they do strike, and it is also people on these same islands which tend to have less resources to recover from the impacts of a hurricane. Though Cuba’s hurricane preparedness is commendable, infrastructure and livelihoods there are still devastated by hurricanes. Many of the Caribbean islands are geographically located “in the Atlantic Hurricane Alley, [and] the region is sensitive to large-scale fluctuation of ocean patterns that are disrupted by warming seas” (Zodgekar, et. al 2023, p. 321). Additionally, populations and infrastructure on these islands tend to be concentrated on the coast – a colonial holdover – given that European “settlements were established directly in the path of oncoming hurricanes (Pérez Jr., 2001, p. 8). Initially due to lack of knowledge, this trend remained unchanged amongst Europeans given the need to export what was being extracted from these islands using the ports developed on the coasts.

    Historically, environmental disasters (hurricanes, earthquakes, and droughts) throughout the 1600s-1900s would consolidate land amongst the wealthiest European settlers on different islands and would foil settler attempts to diversify agriculture on islands. This was because wealthy settlers could more easily recover and rebuild what was lost in the aftermath of a hurricane, due to their ability to access credit from Europe and resort to using their own fortunes (wealth and networks). On the other hand, smaller settlers unable to rebuild and recover from hurricane losses had a harder time accessing credit – and creditors within Europe viewed loaning to smaller settlers as a financial burden. If these smaller settlers were already in debt, the passing of a hurricane meant that they would either have to work off debt by giving all that they had to a creditor in Europe, or one on the island, by entering into a credit arrangement with a wealthier plantation owner (Mulcahy, 2006, p. 86-8). These losses were quite frequent, as it is known that these phenomena made it so that some European creditors in Europe would amass plantation wealth, even if they themselves had never visited a Caribbean island or formally engaged in plantation life (Mulcahy, 2006, p. 87-8).

    These dynamics, in part, explain the predominance of the cultivation of sugar (and rice in what would become the South-Eastern United States) within the region, and even then, “plantership […] necessitated deep pockets (or strong credit) to survive its constant and rapid fluctuations” (Mulcahy, 2006, p. 66). “Without access to credit, smaller farmers were forced to sell their lands to wealthier and more secure planters, who thereby expanded their landholdings and production capabilities” (Mulcahy, 2006, p. 86). This consolidation of larger and wealthier plantations also made other concerns arise, namely the depopulation of settlers from the islands, as debtors opted to leave in the aftermath of storms, and later the transfers of estates to owners outside of the colonies (Mulcahy, 2006, p. 86-7). In essence, settlers’ decision to flee in the wake of, or after, a hurricane shaped population dynamics and demographics in colonies. They also shaped the lack of hurricane preparedness in colonies. Wealthier planters on the islands, and Europeans in Europe, who could suffer from hurricane losses (hurricanes themselves not being guaranteed every season), rebuild afterwards, and recover previous losses given the profit from plantation trade goods – had less incentives to plan ahead if they were not as risk of losing everything they had amassed in their life after a hurricane.

    In smaller island states’, where plantation systems were heavily disrupted or stunted in growth due to geography of the land (especially in the Lesser Antilles), even fewer attempts were made to develop any infrastructure which could protect against storms (Mulcahy, 2006). To be clear, this does not mean that these landscapes were spared from destruction which made the impacts of hurricanes worse: deforestation, overgrazing, and over-cultivation of Caribbean islands during centuries of European colonialism that included dispossession of indigenous groups and the enslavement of Africans, also impacted how hurricanes came to be experienced. While planter consolidation, rebuilding, and profits have so far been underscored here – the elephant in the room is that all of this occurred alongside the massive death toll of enslaved Africans who suffered the most both during and after the passage of a hurricane. Outside of the high death tolls for enslaved Africans on the islands, once a hurricane passed, the ultimate goal in the colonies became the reestablishment of ‘law-and-order’ given fears of slave revolt in the wake of destruction (Mulcahy, 2006; Schwartz, 2015). Although slave-revolts post hurricane remained a consistent fear of settlers, slave revolts did not occur after a hurricane due to its disproportionate toll on enslaved populations who were “often the most debilitated by the shortage of food and the diseases that followed the hurricane” (Schwartz, 2015, p. 49).

    Caribbean Indigenous Peoples Blamed European Imperial Settlement for Increased Hurricane Devastation

    From historical accounts, we know that the Spaniards were the first Europeans to experience a hurricane within the Western Hemisphere during Columbus’s second voyage in 1494/5 (Pérez Jr., 2001; Mulcahy, 2006; Schwartz, 2015). The hurricane experience was unlike anything that Europeans had observed in Europe, and it was from this experience that they sought out intel from the indigenous peoples in the Caribbean. For Caribbean indigenous peoples, “the great storms were part of the annual cycle of life. They respected their power and often deified it, but they also sought practical ways to adjust their lives to the storms. Examples were many: The Calusas of southwest Florida planted rows of trees to serve as windbreaks to protect their villages from hurricanes. On the islands of the Greater Antilles—Cuba, Jamaica, Hispaniola, and Puerto Rico—the Taino people preferred root crops like yucca, malanga, and yautia because of their resistance to windstorm damage. The Maya of Yucatan generally avoided building their cities on the coast because they understood that such locations were vulnerable to the winds and to ocean surges that accompanied the storms” (Schwartz, 2015, p. 5). Further, Indigenous representations of hurricanes were overall accurate and are similar to modern meteorological mapping of these storms. Europeans also learned from Caribbean Indigenous groups that you could “track” when a hurricane would strike. These developments meant that Indigenous Caribbean knowledge of the hurricane was not only limited to the occurrence of storm, but also meant that Indigenous Caribbean societies factored in preparedness for hurricanes within their worldviews.

    Given Caribbean Indigenous knowledge of hurricanes, it is these same people who also recognized that the changes to the landscape by European colonialism contributed to the increased devastation caused by hurricanes between the 1600s-1900s. As such, English colonists who would also come to experience the hurricanes report that “several elderly Caribs stated that hurricanes had become more frequent in recent years, which they viewed as a punishment for their interactions with Europeans” and the main “alteration that our people attribute the more frequent happenings of Hurricanes” (Mulcahy, 2006, p. 35). What these settler accounts reveal about Indigenous Caribbean peoples is what Schwartz notes in his 2015 book, Sea of Storms: A History of Hurricanes in the Greater Caribbean from Columbus to Katrina, that although “hurricanes were a natural phenomenon; what made them disasters was the patterns of settlement, economic activity, and other human action” (p. 74). Nonetheless, colonial ecological and environmental destruction in the Caribbean – which increased the felt impact of hurricanes – remained worthwhile for Europeans given the high profits to be made from export crops, which kept people there to rebuild after hurricanes. Mulcahy in his 2006 book, Hurricanes and Society in the British Greater Caribbean, 1624 – 1783, writes “European settlers and colonists were engaged in a never-ending struggle against nature in their quest for wealth” (p. 93)

    Additionally, the European empire’s responses to hurricanes also influenced decisions to stay. Because colonial societies in the Caribbean were stratified along racial and other social hierarchies – hurricanes presented opportunities for large scale consolidation of plantation property on islands which privileged wealthy plantation owners. Additionally, smaller merchants and plantations which could not recover post hurricane were sometimes forced to transfer ownership to merchants in Europe – who never had to visit these properties while amassing wealth from them thereafter (Mulcahy 2006, p. 88). Disaster relief to the colonies thus came to be historically designed as a way for further economic integration, and “assistance to the colonies in times of disaster would bring wealth and affluence to the empire” (Mulcahy 2006, p. 162). Disaster assistance – while increasing inequalities between all peoples in the colonies – did overall benefit imperial capitalism and patriotism within the empire, amongst loyal subjects, especially amongst elite classes, who received the majority of aid based on their losses.

    Banking on Hurricanes and Absolving Empire of Responsibility: Debates in Europe

    While debates in Europe raged regarding enriching the already wealthy within the colonies with disaster relief – these debates did not change the post-hurricane reality of which those most needing of aid (Indigenous groups, enslaved Africans, indentured workers, small merchants, and small planters) were the least likely to receive it, which was true across all of the different European colonies (Pérez Jr., 2001; Mulcahy, 2006; Schwartz, 2015). “Vulnerability to the hurricane itself was a function of the material determinants” around which colonial social hierarchies were arranged (Pérez Jr., 2001, p. 111). In Europe, debates focused primarily on creditors, so it was argued that the wealthy were more primed to repay creditors when/if they received disaster relief after a hurricane. On the other hand, the proliferation of print news meant that individuals and organizations (e.g., the Church) could send aid to the colonies after disaster struck. Previously, when disaster struck it would take months for news to reach those in Europe, even as the disruptions in trade were more readily felt. Moreover, it was hard for the public in Europe to understand the scale of destruction caused by hurricanes in the Americas, given that this kind of natural disaster did not occur in Europe.

    With the establishment of print media, the destruction caused by hurricanes and the damages that they did to plantation systems – which would require a lot of assistance to recover – was made much more readily available to people who could empathize and assist in recovery efforts. Within the British empire, some newspapers even published who would send what amount and type of post disaster relief to the colonies, which undoubtedly contributed to the charitable giving of some wealthy individuals (Mulcahy 2006; Schwartz 2015). Given that the voyage from Europe to the various colonies was long, there was illegal trading between different colonies to provide relief to one another faster – including with the United States, even after the American Revolution.

    It is this colonial history which still shapes the lack of hurricane preparedness in a region prone to have them. Thus, most scholars on hurricanes in the region continue to highlight the colonial and slave legacies which have shaped regional unpreparedness to hurricanes. Though the United States is a wealthier country today with the capabilities to develop hurricane preparedness – even if only within its own borders – it is elite US security interests and ideological leanings which have prevented it from doing so. Additionally, historians like Schwartz (2015) make a compelling argument that “the United States, by its military and political expansion into the Caribbean after 1898, its foreign policy objectives in the Cold War, and through its advocacy of certain forms of capitalism joined with its ability to impose its preferences on international institutions, has also influenced the way in which the whole region has faced hurricanes and other disasters” (Schwartz, 2015, p. xviii-xix). This implies that the United States – like the European empire’s past – also has a stake, or interest, in regional hurricane unpreparedness for both political, economic, and security objectives.

    US Imperial Extensions in the Caribbean, Impact on Hurricane Preparedness

    From this overview of the history of hurricanes in the Caribbean, the Yucatán Peninsula, the Gulf of Mexico, and the South-Eastern United States a few things become clear: hurricane preparedness has never been a concern for colonial capitalist development. Hurricane disasters came to be recognized as extremely ruinous to those occupying the lowest rungs of colonial societies, aid was given to the wealthy people who were understood as being able to put aid to better usage, and disaster situations consolidated preferred modes of accumulation in otherwise “chaotic” and uncivilized landscapes. Thus, outside of patriotic tales and misremembering of the storm events, historically “hopes of communal solidarity” in the wake and aftermath of hurricanes “were either naïve or disingenuous [… with] social divisions ha[ving] always shaped the responses to hurricanes (Schwartz, 2015, p. 68-9). Given strict colonial hierarchies, the maintenance of order – to dissuade slave revolts and looting – were always preeminent concerns of empires and those with wealth and power. This is important to plainly state, given that little has changed in today’s experience with hurricanes in the region.

    Today’s granting of conditioned relief and temporary debt removals still serve to subordinate Caribbean states to the Western capitalist system and the US security apparatus. Those areas hardest hit by storms and less likely to receive aid, continue to be occupied by the poor populations that are largely non-white/Euro peoples. Settlements on islands continue to be concentrated on coasts, where the tourist industry quickly rebuilds its infrastructure post-hurricane and are the first to receive aid. This at once dispels the myths that recovery is impossible, as it happens in the large coastal areas owned and controlled by foreign hotel chains and entities which quickly beckon tourists back to their “lovely beaches” less than a day after a hurricane. Preparedness for hurricanes in the Caribbean islands are “subordinated to political, military, or what today would be called ‘security’ concerns” (Schwartz, 2015, p. 276). I would include economic and ideological concerns as well. These latter concerns are maintained by the wealthiest states in the hemisphere – the United States and Canada.

    Hurricane Flora in the 1960s claimed the lives of over 5,000 Haitians under the Duvalier dictatorship – which failed to even warn Haitians about the arrival of the hurricane so that disorder against Duvalier would not take over the country. The lack of preparedness was accepted by both the United States and Canadian governments given their fear of communism in the Caribbean region. Thus “unlike Haiti’s U.S.-backed right-wing president, François Duvalier, Castro’s Communist government ordered residents living in the hurricane’s projected path to evacuate their homes, and if they were unable, to stay and prepare appropriately for the storm.” This preparation and the establishment of Cuba’s defense system in 1966 accounted for significantly less deaths (1,157) in Cuba (Wolfe, 2021). Today, unpreparedness remains a feature in most Caribbean countries that put corporate interests and the interests of the US (and its allies) security objectives above the prioritization of human life and livelihoods in the Caribbean.

    As further illustration of this point, even though the 2004 Hurricane Jeanne hit Cuba a lot harder than Haiti – killing 3,000 Haitians – no Cuban lives were lost due to the hurricane (Wolfe, 2021). The historical and present-day case of Haiti is both informative and a cause for worry as we expect future hurricane seasons to be quite bad. Not only is Haiti a fully privatized economy (Wilentz, 2008); but it is also one that has been under the tutelage of the CORE group – a group composed primarily of foreign ambassadors from the US, France, Canada, Spain, Brazil, Germany, and a few representatives from the European Union (EU), the United Nations (UN), and the Organization of American States (OAS) – for over two decades. The CORE group’s tutelage of Haiti has been exceptionally negative, as these states and their ambassadors secure their own corporate and labor interests in the country at the expense of that state’s democracy and national sovereignty (Edmonds, 2024). Thus, disaster preparedness in Haiti has never been an agenda item – and has only gotten worse as those governing the country continue to benefit from political, economic, and environmental disasters there. Present day armed intervention and occupation in Haiti, further makes it unlikely that Haiti will be able to weather the next hurricane season.

    Hurricane Unpreparedness, A Note on Canada

    It is important to remind here that although much is said about US imperialism and security concerns trumping human rights and pro-people development in the region – Canada is not exempt from this critique. For instance, although Canada touts that its military base (OSH-LAC) in the Caribbean is a “support hub” – that also seeks to assist states experiencing disasters, of which hurricanes are included – in 2017 when Category 5 Hurricane’s Irma and Maria wreaked havoc on Dominica, OSH-LAC warships monitored the situation but provided no on the ground help to Caribbean peoples there (John, 2024, p. 12-3). The Canadian government also enacted restrictive migration policies towards those fleeing from the hurricane and its damages. This practice would be repeated by Canada again in 2019 during the aftermath of Hurricane Dorian in The Bahamas (John, 2024, p. 12-3). Given that I am currently living in Canada, it is important to point out that Canada is a state that frequently touts progressive rhetoric on climate change, resiliency, and disaster preparedness in the Caribbean region. However, Canada’s actions continue to render the Caribbean region unprepared alongside the actions of the US.

    In the 2023 Canada-CARICOM summit hosted by Canada, Caribbean prime ministers sought to place climate issues and climate infrastructure at the top of the agenda – however, Canada was mainly concerned with getting support for an armed intervention in Haiti (Thurton, 2023). Haiti remains the most unprepared country in the Caribbean when disasters hit, which made Canada’s insistence on armed intervention and occupation even more tone deaf. Haiti’s unpreparedness is directly tied to US, Canada, France, and CORE group members tutelage and rejection of Haitian democracy ever since that country’s integration into the Western capitalist system via US occupation. These examples illuminate the fact that the wealthier states in the Western Hemisphere, namely the US and Canada, actively disregard the lives of those impacted by hurricanes and other natural disasters to their south – while first and foremost safeguarding their own economic, ideological, and security priorities. In my analysis of ‘south,’ the Caribbean, the Yucatán Peninsula, the Gulf of Mexico, and the South-Eastern United States are included.

    Conclusion

    Ideologically, the promotion of capitalism, colonialism, and imperialism in the Caribbean (of which the South-Eastern United States, the Gulf of Mexico and Yucatán Peninsula is included) continues to pose an obstacle to disaster preparedness in a region prone to hurricanes.  More importantly, the promotion of these harmful ideologies often comes at the expense of human life. Nothing makes this clearer than the fact that it is the revolutionary state – which is also the most heavily economically sanctioned state in the region – Cuba, that continues to be the most prepared state in times of disaster. This stands in stark contrast to other Caribbean states and to wealthier states, like the US, which mandate regional unpreparedness. Today, while we await (but hope that it is not so) a bad hurricane season, the Caribbean region is more militarized than it has been since the end of the 20th century and beginning of the 21st century. Militarization is directly due to US security objectives that aim to keep China’s investments (thus competition) out of the region. This policy is backed by Canada, which seeks to advance its own corporate interests in the region.

    The US and Canada continue to militarize the Caribbean region, exacerbating climate change and neglecting the urgency of developing resiliency infrastructure. In fact, militarization in the Caribbean region today (and in Africa and Asia) occurs alongside the tightening of both the US and Canadian borders given hostile narratives towards immigrants and immigration within them. This even with the region’s long history (as has been pointed out) of people fleeing the region both during and after a hurricane. All of which indicates that while these states are undoubtedly deepening the climate crisis with their global “security” endeavors, they view the people harmed and negatively impacted by their actions as disposable.

    Postscript

    Three months after the writing of this document, 5 hurricanes – Debby, Ernesto, Francine, Helene, and Milton – have impacted peoples and infrastructure in the south. The 2024 Atlantic Hurricane season thus far (October 11th, 2024) has taken almost 400 lives – with the actual figure being uncertain, given that the damage from Milton is still being assessed. Each storm is estimated to have cost between $80 – $250 billion (USD) in damages across the region. While governments talk about costs and recovery efforts to get economies “back on track” and provide people with temporary and conditional aid – which is the post disaster norm – we are presented with an uncomfortable, yet undeniable fact: states in the region, whether by colonial inheritance or commitment to capitalism, are banking on unpreparedness continuing well into the future. We must be proactive in defeating this dangerous ideology that places people’s lives, livelihoods and the physical environment at stake; while perpetuating, in its aftermath, conditions that make it so.

    References

    Clark, John I, and Léon Tabah, eds. 1995. Population and Environment Population – Environment – Development Interactions. Paris, France: Comité International de Coopération dans les Recherches Nationales en Démographie (CICRED). http://www.cicred.org/Eng/Publications/pdf/c-a1.pdf.

    Direct Relief. 2024. “Direct Relief Responds as Hurricane Beryl Impacts the Caribbean. The Region, Watchful and Ready, Will Weather the Storm Today.” Direct Relief. https://www.directrelief.org/2024/07/direct-relief-responds-as-hurricane-beryl-impacts-the-caribbean-the-region-watchful-and-ready-will-weather-the-storm-today/.

    Edmonds, Kevin. 2024. “CARICOM, Regional Arm of the Core Group, Sells Out Haiti Again.” Black Agenda Report. https://www.blackagendareport.com/caricom-regional-arm-core-group-sells-out-haiti-again.

    Forecast Centre. 2024. “Atlantic Canada Next in Line for a Soaking, Flood Risk from Beryl Remnants.” The Weather Network.https://www.theweathernetwork.com/en/news/weather/forecasts/atlantic-canada-next-in-line-for-a-soaking-flood-risk-from-beryl-remnants.

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    Photo Credit: InOldNews, by Delia Louis
    Description: Depicts St. Lucia during and post Hurricane Beryl
    License info: Creative Commons taken from Flickr.

    About the author: Tamanisha J. John is an Assistant Professor at York University in the Department of Politics

    MIL OSI NGO –

  • MIL-OSI United Nations: Experts of the Committee against Torture Commend Kuwait on Positive Measures to Prevent Torture, Raise Questions on the Independence of the Judiciary and the Death Penalty

    Source: United Nations – Geneva

    The Committee against Torture today concluded its consideration of the fourth periodic report of Kuwait, with Committee Experts commending the State on positive measures introduced to combat torture, while raising questions on the independence of the judiciary and the application of the death penalty. 

    Peter Vedel Kessing, Committee Expert and Rapporteur, commended Kuwait for all the positive measures taken, including new laws and regulations to prevent torture.

    Abdul Razzaq Rawan, Committee Expert and Rapporteur for Kuwait, asked if the State party could inform the Committee of any legislative amendments or developments aimed at establishing the judiciary as an authority that was independent of the executive authority, and granting it the full authority to manage the affairs of judges and supervise the preparation of relevant regulations? What measures had been taken to implement the constitutional principle guaranteeing the independence of the judiciary and to implement the requirements of article 163?

    Mr. Vedel Kessing said the number of death sentences and executions carried out had reportedly increased, particularly since 2022.  How many persons had been sentenced to death over the last five years and how many of those persons had been executed?  Was it correct that a person could be sentenced to death for crimes not involving intentional killing, for example drug-related crimes? Allegedly, the abolition of the death penalty would be incompatible with Islamic Sharia, which was the main source of all Kuwaiti domestic legislation, including criminal law.  Would this also apply to a moratorium for the execution of death sentences?   

    The delegation said judges needed to be fully competent and qualified in the field of law or Sharia and did not have the right to exercise political activities. Judges could not be removed from their posts unless disciplinary measures were issued against them.  If judges were related to the accused by four degrees, they were required to recuse themselves from proceedings.  The Ministry of Justice could not get involved in daily cases or the running of the judiciary.  The judiciary was fully independent; there was no involvement from the executive or the parliament in the judiciary.

    The delegation said the death penalty was one of last instance, the maximum penalty issued in the Criminal Code of Kuwait.  It was only enacted for the most serious crimes and was not in contradiction with Islamic Sharia.  At any stage of proceedings, the accused murderer could appeal, or ask for a lighter or reduced sentence, rather than the death penalty.  From 2022 to 2024, there were 80 penalties reduced from the death penalty to a lighter sentence, with people even being released in some cases. In the case of a woman who was pregnant, the death penalty could not be carried out until the child was born. Minors could not be subjected to the death penalty.

    Introducing the report, Naser Alhayen, Permanent Representative of Kuwait to the United Nations Office at Geneva and head of the delegation, said the accession of Kuwait to the Convention against Torture in 1996 was a pioneering step towards promoting rights and preserving freedoms.  Since the submission of the fourth periodic report, Kuwait had taken steps to strengthen the legislative framework related to combatting torture.  These efforts were represented in the issuance of decree-law no. 93 of 2024, which clearly stipulated the definition and prohibition of torture.  The new law tightened the penalties imposed on perpetrators of torture crimes, and strictly criminalised any act of discrimination or ill treatment.

    In closing remarks, Claude Heller, Committee Chairperson, thanked the delegation for the dialogue which had been very constructive.  The Committee aimed to contribute to the improvement of human rights in all States.

    Mr. Alhayen, in concluding remarks, thanked the Committee for the dialogue.  Kuwait was fully committed to the implementation of all international standards and human rights and would continue the constructive dialogue with the Committee and the international community. 

    The delegation of Kuwait consisted of representatives from the Ministry of Foreign Affairs; the Ministry of Justice; the Ministry of Interior; the Ministry of Defense; the Ministry of Social Affairs; the Ministry of Information; the Ministry of Health; the Ministry of Education; the Central System for the Remedy of Situations of Illegal Residents; the Public Authority of Manpower; and the Permanent Mission of Kuwait to the United Nations Office at Geneva.

    The Committee will issue concluding observations on the report of Kuwait at the end of its eighty-first session on 22 November. Those and other documents relating to the Committee’s work, including reports submitted by States parties, will be available on the session’s webpage.  Summaries of the public meetings of the Committee can be found here, and webcasts of the public meetings can be found here.

    The Committee will next meet in public on Thursday, 31 October at 3 p.m. to conclude its consideration of the third periodic report of Namibia (CAT/C/NAM/3).

    Report

    The Committee has before it the fourth periodic report of Kuwait (CAT/C/KWT/4).

    Presentation of Report

    NASER ALHAYEN, Permanent Representative of Kuwait to the United Nations Office at Geneva and head of the delegation, said the accession of Kuwait to the Convention against Torture in 1996 was a pioneering step towards promoting rights and preserving freedoms.  Since the submission of the fourth periodic report, Kuwait had taken steps to strengthen the legislative framework related to combatting torture. These efforts were represented in the issuance of decree-law no. 93 of 2024, which clearly stipulated the definition and prohibition of torture.  The new law tightened the penalties imposed on perpetrators of torture crimes, and strictly criminalised any act of discrimination or ill treatment.  This decree was a milestone in the State’s efforts to strengthen the rule of law and protect human rights, and it imposed severe penalties of up to life imprisonment for certain crimes.  A decree had also been adopted which redefined measures for receiving complaints relating to human rights.

    Kuwaiti legislation included comprehensive protection for women and criminalisation of all forms of violence against them.  The protection from domestic violence law no. 160 of 2020 was issued, which established shelters for victims of domestic violence, and the possibility of reporting violence.  A child protection centre was also established.  The Supreme Council for Family Affairs was working on establishing the third centre for protection from domestic violence and the rehabilitation of survivors.  Law no. 21 of 2015 guaranteed the rights of the child, prohibiting children from deliberately being subjected to any physical or psychological abuse and punishing those who violated these provisions. 

    Specialised enforcement departments had been established to implement family court rulings and settle family disputes.  Social security and insurance were provided to persons with disabilities.  Monthly financial allocations were provided, in addition to a cash allowance for hiring a domestic worker or a driver to meet their daily needs.  During the first half of 2024, the number of residents in social care homes reached 518 people, including 362 citizens and 165 non-citizens. These homes provided integrated rehabilitation and training programmes focused on reintegration.

    The protection of the rights of contracted workers was a top priority for Kuwait, and this was highlighted in law no. 68 of 2015 on the protection of the rights of contracted workers.  Since the adoption of the law, the situation of domestic workers had improved substantially, as strict laws had been imposed to prevent the exploitation of these workers and ensure them full legal protection.  Inspection campaigns were conducted periodically on domestic labour recruitment offices and agencies to ensure that they applied the law; these campaigns issued fines in the event procedures were not followed. 

    Law no. 91 of 2013 aimed to criminalise all forms of human trafficking and provide legal protection for victims.  The National Committee to Combat Trafficking in Persons was established, as well as a specialised prosecutor to investigate these cases.  There had been a significant decrease in the number of trafficking crimes committed from 82 cases in 2020 to nine cases in 2023. A special system had been established for the early identification of victims by training workers at border crossings and hospitals to detect signs of exploitation.  Victims were then transferred to care centres where they received medical, psychological and legal support. 

    Kuwait had adopted an approach that achieved more security for detainees by subjecting all prisons to the supervision of the judicial authority, represented by the Public Prosecution, which was an independent authority.  The current system guaranteed every detainee the right to access a lawyer from the first moment of detention, and ensured that all detainees obtained their legal rights, and were granted an independent medical examination. 

    Mechanisms had been developed which allowed detainees or their families to submit confidential complaints for immediate investigation, with any official found to be involved in ill treatment held accountable.  Advanced training programmes for police officers and prison staff had been developed in cooperation with the Office of the High Commissioner for Human Rights, with a special focus on practical aspects related to dealing with detainees.  Mr. Alhayen concluded by emphasising Kuwait’s full commitment to human rights and to cooperation with the international community. 

    Questions by Committee Experts

    ABDUL RAZZAQ RAWAN, Committee Expert and Rapporteur for Kuwait, congratulated Kuwait for the desire expressed with regards to continued cooperation and dialogue with the Committee.  The Committee congratulated Kuwait on announcing a number of important initiatives and legislation.  The Committee also congratulated the State party on the fact that half the delegation were women, and that the delegation represented multiple sectors, reflecting the importance of the Convention. 

    The Committee congratulated Kuwait for the work of the National Standing Committee on follow-up and communications that prepared the report, while asking for further clarification around the work of this body.  What was the number of organizations which attended consultations for preparing the report, and how did these consultations impact the report? Could the State party elaborate further on the place of the Convention within the national legal system, in particular article 70 of the Kuwaiti Constitution?  What was the impact of this jurisprudence in the country?  To what extent was there an application of the provisions of the Convention by law enforcement officers? 

    Decree-law no. 93 of 2024 amended some provisions of the Kuwaiti Penal Code, with a new article which stipulated that the punishment of a public official who caused physical or psychological harm to a person, or induced him to confess to committing a crime, would face imprisonment for a period not exceeding five years and a fine not exceeding 5,000 dinars.  Penalties for torture should be proportionate to the acts committed and the damage resulting from them.  Torture leading to death was a crime that should be treated as more severe than murder, and should have its own punishment to distinguish it from ordinary murder.  Could the State party comment on this? 

    Could the State party also comment regarding article 37 of the Code of Criminal Procedure, which allowed the use of “any means” during investigations to obtain evidence, provided that it was not contrary to public morals or infringed on the rights and freedoms of individuals?  What procedural safeguards prevented coercion to remove confessions during interrogations and pretrial detention?  What legal texts and legislative measures ensured the exclusion of torture from national legislation on amnesty and immunities?  What was being done to fill this gap at the legislative level and in practice?  The Convention obliged States parties to prevent and prohibit torture in all circumstances, including a state of emergency, war or any other exceptional circumstance.  What were the State’s planned future actions to implement this commitment?

    The Committee was satisfied with the provisions of paragraph 126 of the national report, in particular the requirements of articles 158 and 159 concerning the prohibition of coercion or inducement of the accused to make statements and the invalidity of a confession obtained under duress or torture.  Could current examples be provided of judicial decisions invalidating confessions of accused persons as a result of torture? 

    The Committee had questions regarding the right of detainees to challenge the lawfulness or necessity of their detention.  What actions had been taken to establish safeguards currently, or in the future, as well as the measures taken to enforce respect for them by law enforcement officials?  What measures had been taken with regard to the control of records in all places of deprivation of liberty?  Was there a centralised national information register that included all the data of the records in the detention centres in the country?

    The Committee had expressed concern that judges were appointed by the Supreme Judiciary Council. There was also concern about the independence of foreign judges due to a lack of career security.  Could the State party inform the Committee of any legislative amendments or developments aimed at establishing the judiciary as an authority that was independent of the executive authority, and granting it the full authority to manage the affairs of judges and supervise the preparation of relevant regulations?  This included the conditions for managing the judiciary, appointing judges, tracking their careers, including their dismissal and promotion, and the conditions for appointing foreign judges to ensure their job security.  What measures had been taken to implement the constitutional principle guaranteeing the independence of the judiciary and to implement the requirements of article 163?

    The Committee had previously recommended that the State party adopt a legislative and institutional framework that incorporated international standards on asylum.  Was this on the legislative agenda?  While noting the decisions reported in the report whereby the daily fines imposed in many cases had been abolished, what measures had been taken to give effect to the Committee’s previous recommendation to amend the laws imposing such fines?  What was the nature of cooperation with the Office of the United Nations High Commissioner for Refugees, and could any statistics be provided?   

    What measures were taken during the period under review to ensure that no person was returned to a country where they were in danger of being subjected to torture or ill treatment?  Were those concerned with expulsion, return or extradition informed that they were entitled to seek asylum and appeal against deportation decisions?  What legal and practical safeguards existed to ensure the right of persons for whom deportation orders had been issued, to have their cases reviewed by a competent judicial body?  How many cases of return, extradition and expulsion had been carried out by the State party during the reporting period in exchange for diplomatic assurances?

    Did Kuwaiti law and jurisprudence allow for universal jurisdiction, which was the following and prosecution of crimes of torture, so as to establish jurisdiction in all cases and to ensure that perpetrators did not go unpunished?  If the State received a request for extradition from a State where Kuwait had no extradition agreement or treaty, what were the legislative and administrative measures needed to ensure that the Convention could be invoked as a legal basis for extradition?  Had the State ever refused a request by another State for the extradition of an individual suspected of the crime of torture?  Had it initiated any criminal proceedings against that individual as a result?  If so, could information on the status and results of these proceedings be provided?

    Could the delegation provide the Committee with information on any specialised programmes aimed at raising awareness of law enforcement officials, including security and prison personnel, and the measures adopted by the State party to prevent torture?  Had any programmes been adopted and implemented to train police cadets and officers in non-coercive investigative techniques?  Could information be provided on the assessment, review and updating of interrogation rules for persons who had been subjected to any form of arrest, detention or imprisonment?  What did the State of Kuwait intend to do to fulfil the obligation of monitoring practices related to interrogation, methods of detention, and treatment of persons arrested?

    The Committee would appreciate receiving information on the cases in which the legal provisions on the protection of witnesses and medical professionals documenting acts of torture and ill treatment had applied, in particular cases where these provisions had not been respected and action that had been taken against persons who had violated these legal requirements?  Taking into account the legal amendments on torture, did Kuwait intend to accompany these amendments by allocating legal provisions related to the protection of victims, witnesses and medical experts in criminal law? 

    Article 14 of the Convention obligated States parties to provide a legislative framework for the right of victims to effective remedy and adequate compensation.  What measures would be taken to give effect to this commitment through the adoption of legislation and institutional requirements? What measures of reparation and compensation, including court-ordered rehabilitation methods, had been made available to victims of torture and ill treatment or their families since the consideration of the previous periodic report?  Were programmes being implemented to provide reparation to victims of torture and ill treatment, including health and psychological rehabilitation?

    PETER VEDEL KESSING, Committee Expert and Rapporteur, asked what progress had been made to establish a fully independent National Human Rights Institution in line with the Paris Principles?  Did the Government agree with reports that some law enforcement officers still engaged in abuse and ill treatment during arrest or interrogation? How many complaints of torture and ill treatment had been received over the last three years and what was the outcome of these complaints?

    Were the three institutions which could investigate allegations of torture – the Office of the Public Prosecution, the General Directorate for Oversights and Inspection in the Ministry of Interior, and the National Bureau for Human Rights – completely independent from the Government as required under the Convention?  Would the State party consider establishing a fully independent institution that could investigate violations of the Convention in an effective and impartial way?  How many complaints had the Bureau received over alleged torture and ill treatment over the last three years?  What was the outcome of these cases? 

    Overcrowding in prisons continued to be a significant problem, particularly in the central prison. The prison population was reported to be at an occupancy rate of 126 per cent in 2023.  What efforts that had been taken to improve the living conditions in prisons?  Was the Government considering additional efforts since the problem with overcrowding had not been solved?  What progress had been made on the building of the new prison? 

    A law reportedly allowed the use of shackling of hands and feet for up to a month and the deprivation of certain types of food for a week as disciplinary punishment.  How many detainees had been shackled over the last three years?  What kind of offence warranted this punishment?  How many detainees had been deprived of food over the last three years? 

     

    How could a prisoner make a complaint over ill treatment in the prison?  How many complaints of ill treatment had been received over the last three years and what was the outcome of these cases?  Was it correct that some officers only received a decrease in their salaries as a penalty for having subjected detainees to torture and other forms of ill treatment?  How many visits had the International Committee of the Red Cross undertaken to places of detention from 2019 and onwards?  How many announced and unannounced visits had the National Bureau for Human Rights carried out to places of detention over the last three years? How had Kuwait followed-up and implemented the recommendations from the independent institutions visiting places of detention in Kuwait?

    The number of death sentences and executions carried out had reportedly increased, particularly since 2022.  How many persons had been sentenced to death over the last five years and how many of those persons had been executed?  Was it correct that a person could be sentenced to death for crimes not involving intentional killing, for example drug-related crimes?  Allegedly, the abolition of the death penalty would be incompatible with Islamic Sharia, which was the main source of all Kuwaiti domestic legislation, including criminal law.  Did this also apply to a moratorium for the execution of death sentences?   

    The delegation had provided important information on steps taken to improve the protection of foreign workers, including reviewing the laws, improving working conditions, and criminalising trafficking, which were positive steps.  However, it was reported that there was a high death rate among migrant workers who carried out dangerous work, particularly in construction sites.  How many migrant workers had died in Kuwait over the last three years?  What measures were taken to protect migrant workers from ill treatment and exploitation?  Why was a domestic worker not allowed to freely resign and change workplace?  Why did they need the consent of or authorisation from the employer to change workplace?

    The Committee appreciated the steps taken by Kuwait to counter domestic and sexual violence. Could marital rape be punished in Kuwait?  Were there concrete court cases where martial rape had been punished as a criminal offence? What was the outcome of the court cases involving violence against women?  In how many cases were the accused persons convicted for a crime and what were the sentences?  Was the Government considering a ban on corporal punishment in all settings? 

    There had been reported concerns that Bidoon citizens were being denied access to education, health care and employment, and faced mass arrests, torture and abuse when trying to exercise their right to freedom of peaceful assembly.  Did the Government accept the criticism and recommendations from the United Nations Human Rights Committee and from other sources, and was it willing to improve conditions for the Bidoons?

    A Committee Expert said prolonged solitary confinement was proven to undermine the standards outlined in the Convention.  Under what circumstances was incommunicado detention authorised?  Would the State party consider abolishing incommunicado detention? 

    Responses by the Delegation 

    The delegation said the National Standing Committee on follow-up and communications was established in 2019.  This Committee was delegated to respond to reports regarding the human rights situation in Kuwait and was assigned with preparing periodic reports presented to international bodies, and coordinating with non-governmental organizations working in the field of human rights.  The Committee was operational and was present in the meeting.  Its staff received the necessary training to support its mandate. This Committee had been in contact and coordinated with the Office of the High Commissioner for Human Rights. 

    The promulgation of the 1996 law approving the adoption of the Convention meant that this instrument was part of the national legal framework in Kuwait.  A judge could invoke the Convention in the issuance of verdicts.  There was no need for another process or procedure for the Convention to be part of national legislation.  A new text in the legislation included a penalty for using torture to extract a confession.  A new law punished every official who had acquiesced to a request of torture. 

    Any official or service provider who inflicted physical or mental harm against a person or their family members, or forced them to provide statements thereof, could be found guilty of torture.  The punishment was a sentence of not more than five years and not less than 5,000 dinars. There was also a criminalisation of discrimination in connection with torture.  If torture led to death, then a person was charged with the crime of a deliberate murder.  The sentence was then death, and there was no harsher punishment. 

    The Public Prosecutor conducted investigations and interrogations into charges of torture. Defendants could deny such charges. Everything took place under the supervision of the courts.  A defendant could adhere to the invalidity of such a confession.  If a confession was obtained under torture, then it was dismissed by the court.  The court resorted to many principles related to the invalidity of confessions extracted under torture.  In a case when a police officer had forced a defendant to provide a confession, the defendant was acquitted.  Acquittal was premised on the examination of evidence in the case. 

    If a detainee requested a medical evacuation, medical care was provided under the supervision of the police.  Anyone sentenced to imprisonment had their names recorded in an electronic system which was supervised by multiple agencies.  If their detention period exceeded the terms stipulated in the law, there was a notification, and those in charge were held accountable. 

    Judicial safeguards were in place, including that the individual had the right to know the reason for their arrest.  If the individual could not appoint a lawyer, the State had the right to appoint a lawyer for them.  All questioning should be done by specialist bodies, and it was up to the judge to release the person or keep them in detention.  Detainees could appeal at any stage of the judgement.  Questioning could only be conducted by trained, specialised staff, not just the police.  The accused individual had the right to request an examination to ensure there were no injuries, which needed to be included in the investigation report. The arrested individual had the possibility of appointing somebody to witness this. 

    Judges needed to be fully competent and qualified in the field of law or Sharia and did not have the right to exercise political activities.  Judges could not be removed from their posts unless disciplinary measures were issued against them.  If judges were related to the accused by four degrees, they were required to recuse themselves from proceedings.  The Ministry of Justice could not get involved in daily cases or the running of the judiciary.  They could recommend the appointment of judges when necessary.  Kuwait had chosen to ensure a separation of powers.  The judiciary was fully independent; there was no involvement from the executive or the parliament in the judiciary. 

    Currently, there were no persons subject to a decision of exile or expulsion.  If such a decision was taken, it was implemented in cooperation with the United Nations High Commissioner for Refugees, allowing the affected persons to be supported.  All foreign individuals could not be exonerated from fines imposed upon them. Any individual who had received fines was obliged to pay them before being deported.  In cases where people were unable to pay the fines, they could pay them subsequently in cooperation with third parties. 

    Responses by the Delegation

    The delegation said the definition of the crime of torture was challenging, as there was a need to define what behaviours constituted torture.  For example, if an individual was compelled to disclose information under duress, this could equate to torture, even if they were not subject to physical constraint.  One did not have to be the perpetrator of torture to be covered by the acts under the law; individuals could be sanctioned as a standby witness.  Any physical act of torture was a crime and the Kuwaiti legislator had established as a minimum threshold, a three-year imprisonment.  If the acts committed had long-term impacts and were severe, the sanctions would be increased.  Pre-mediated crimes could be punished by life imprisonment or the death penalty.  The crime of torture was an absolute crime, and mitigating circumstances could not be used to downplay or excuse acts of torture. 

    Awareness campaigns had been rolled out on national radio and television stations to make the public aware of the serious nature of the act of torture.  Social media networks had published advertisements and short awareness-raising videos and clips.  The campaign aimed to ensure that violence was not seen as mainstream or normal, whether in schools or in the family.  All channels were used to repeat this point.  A robust checking system was in place to monitor campaigns and check results.  Steps were taken to ensure unjustified violence was never promoted or mainstreamed, and to crack down on misinformation which could foster unrest and discrimination.  Producers who violated requirements were held accountable.  There were rare cases where scenes of violence had been broadcast, for example during the COVID-19 pandemic.  These were immediately followed up on and assessed, and action was taken to hold those responsible to account. 

    Initiatives had been conducted to be conducive to awareness raising in schools, to ensure victims of violence could have access to support.  All measures were taken to support the psychological wellbeing of women. Around 60 clinics provided women victims of violence with psychological support.  Specialised non-governmental organizations worked with victims of domestic violence and conducted training for self-defence.  Each State had rules for interrogation and treating any person who was under arrest, in such a way to ensure there were no acts of torture involved.  There first needed to be a medical observation of the entire body of the arrested person prior to interrogation, and they were then given the opportunity to meet with a lawyer.  If the arrested person did not speak Arabic, they would receive the support of an interpreter. 

    In the cases of detention, the detainee was entitled to all communication tools, access to a lawyer, and the ability to communicate with their family members to inform about their whereabouts.  All cases involving compensation for acts of torture were actioned through a special administration.  From 2020 to 2023, there were only nine torture complaints.  Torture was not considered a phenomenon or a scourge in Kuwait. 

    The National Bureau for Human Rights conducted training and developed content to disseminate a general culture about human rights, and also contributed to building programmes on human rights training in schools.  The protection and promotion of human rights was promoted through a website, social media networks, and awareness raising campaigns.  This year, the Bureau participated in a conference on local and regional initiatives for human rights.  The Bureau supported rehabilitation and penitentiary centres and could conduct visits to places of detention, women’s shelters, and other institutions without any clearance needed.  Investigations against the police were conducted in the event of complaints.  If it was found that these complaints were legitimate, sanctions were imposed, including the loss of salary or job. 

    Twenty-one memorandums of understanding had been signed with other countries to govern the issue of domestic workers.  Kuwait heeded its commitments under the International Labour Organization conventions.  A hotline was provided to all workers, enabling them to file complaints at any time.  One hundred and fifty-three inspection campaigns had been conducted in July.  Seven violations against domestic workers had been recorded in 2024. 

    Any domestic worker could request a change of employment without requiring the approval of their previous employer.  An awareness campaign which targeted domestic workers was being rolled out, focused on raising awareness for current and prospective domestic workers about their rights, as well as promoting the hotlines and contact points they might need.  

    Being held incommunicado in isolation cells could only be imposed in specific circumstances, for example if the person was self-harming while in detention.  The death penalty was one of last instance, the maximum penalty issued in the Criminal Code of Kuwait.  It was only enacted for the most serious crimes and was not in contradiction with Islamic Sharia.  At any stage of proceedings, the accused murderer could appeal, or ask for a lighter or reduced sentence, rather than the death penalty.  From 2022 to 2024, there were 80 penalties reduced from the death penalty to a lighter sentence, with people even being released in some cases. In the case of a woman who was pregnant, the death penalty could not be carried out until the child was born. Minors could not be subjected to the death penalty. 

    The crime of rape was defined with the non-presence of consent.  Consent was a constant, including in a marriage.  If consent had not been given, this was recognised as being a rape and was defined as a rape in the Criminal Code.  If marital rape occurred, this was criminalised and the perpetrator was punished. This relied on the woman registering a complaint of rape.  The existing legislation in Kuwait did meet the requisite standards.  The sanctions and punishments were commensurate with the degree of harm suffered. 

    Crimes of sexual violence had multiplied, including rape and non-consensual sexual relationships with minors.  Some of the sentences handed down for these cases were life imprisonment, with the minimum sentences being 15 years in certain circumstances.  This highlighted that the justice system was working as it should in Kuwait, with perpetrators being duly sanctioned. 

    The State did not currently intend to lift its reservations to the Convention, as doing this would pose a risk to the State’s sovereignty.  Any detainee who had health concerns where their lives were at risk were assessed by doctors, and in some cases could be provided with a conditional release. 

    The Government was continuing its tireless efforts to address the issue of stateless persons.  An action plan had been adopted which served as a roadmap. There were 10,260 stateless persons in Kuwait who were currently in the regularisation process.  People undergoing this process received long-term resident permits and received medical insurance cards.

    Kuwait guaranteed the right to freedom of expression and peaceful assembly.  The country had signed 15 extradition agreements, which were bilateral agreements between Kuwait and third parties.  In the event no treaty was in place, Kuwait referred to the principle of reciprocity.

    Laws and regulations punished terrorist acts and crimes, money laundering, and the financing of terrorism. Kuwait had a specialised department on combatting terrorism, money laundering and terrorism financing. Twenty-eight terrorist cases had been registered over the past four years.  Thirty-five inmates currently were being held in prison for being associated with a group which presented a threat to the nation. 

    Kuwait had rehabilitation and mental health follow-up programmes for persons in institutions, which allowed these persons to avoid relapse.  Therapy sessions were conducted, in which persons were evaluated at the psycho-social level and evaluated from a general risk perspective before they were discharged. A social and family integration programme was in place for persons with disabilities.  Allowances were provided for personal assistants and drivers. Five hundred and eighteen persons were in social care institutions.  These included persons with severe psychological and motor disabilities. 

    Questions by Committee Experts

    ABDUL RAZZAQ RAWAN, Committee Expert and Rapporteur for Kuwait, said torture was a serious and grave crime within international human rights law.  Therefore, it was absurd that there were no provisions thereon, and the Committee insisted on this.  Mr. Rawan commended the provisions in the civic law of Kuwait, which provided for reparations.  Could the delegation explain in detail the course of the reforms undertaken by Kuwait? Were there any special education programmes to support the Convention among law enforcement officers? 

    All countries were recommended to provide training in the provisions of the Istanbul Protocol.  Did Kuwait provide such training?  Was there a law which governed the use of forensic medicine in Kuwait?  The Convention considered mechanisms monitoring deprivation of liberty as an effective means to combat torture.  It was hoped that Kuwait would ratify the Optional Protocol to the Convention. Regarding fundamental legal safeguards, it was vital for family members to be notified of one’s place of detention.  Could clarifications be provided on whether this was complied with?   

    PETER VEDEL KESSING, Committee Expert and Rapporteur, commended Kuwait for all the positive measures taken, including new laws and regulations to prevent torture.  It was understood that the State was willing to tighten the penalty for torture to more than five years, which was commensurate with the gravity of the crime.  This was commendable.  What was to process from here on?  When could it be hoped that there would be changes?  Would the Government apply for international accreditation for the National Bureau for Human Rights?  Was it common to have video or audio recordings of police interrogations?  If there were allegations against a police officer, who would investigate that complaint? 

    Could a domestic worker easily terminate a contract with a month’s notice, or were they always required to supply a reason?  It was encouraging to learn that Kuwait was considering a ban on the use of shackles. Could the State be more specific on the timeline?  Had the new prison been built to tackle the issue of overcrowding?  Could updated statistics be provided on deaths in custody? Had deaths in custody been investigated? What measures were being taken to prevent these kinds of deaths? 

    Responses by the Delegation

    The delegation said sovereignty was a sensitive issue, all the more so when international texts and treaties departed from national legislation.  The State of Kuwait was firmly resolved to prosecute and punish any act of torture, irrespective of the perpetrator of that act.  The law on protection from corporal punishment 2020 expressly prohibited any act of violence against a child.  A unit was set up which responded to complaints of ill treatment against children, including corporal punishment.  Immediate investigations were launched into allegations of abuse in schools.  Any report of abuse needed to be followed up on immediately. 

    The Office of the Prosecutor was mandated to prosecute crimes brought before it, including torture.  Once the Office was seized with a case of torture, an effective streamlined system ensured a rapid investigation into the reported case of torture.  The Public Prosecutor’s Office was also an independent, oversight body which enacted measures to ensure oversight of places of deprivation of liberty.  Since 2009, it had the right to carry out visits to verify the conditions of places of deprivation of liberty.  The visits were also used to ensure that there were not acts tantamount to torture, ill treatment or abuse being carried out. 

    If an act of torture had led to a loss of life, the sentence would be toughened up to the death penalty.  If a doctor believed a patient in hospital ran the risk of being tortured, they would report it to the police unit in the hospital which would take legal measures against the perpetrator. 

    Around 53,000 domestic workers had changed careers to jobs in the public sector.  When a suspect or defendant was under interrogation, they were informed of their rights.  Twenty-two cases of detention without grounds between 2020 and 2024 had been referred to the competent judicial authorities, who referred the cases to the competent courts. A decree regulated the suspension of a police officer, following reports of excessive use of force. 

    A study was being conducted to amend the article in regard to the use of discipline of inmates.  It was hoped that this amendment would see the light of day, and the article would then be in line with the Mandela and Bangkok Rules. Remand in custody was limited by law and could not be extended.  The provision of a hotline was a safeguard, which was open to Kuwaitis or non-Kuwaitis to lodge any abuse of their rights, including complaints against police officers. Kuwait would recommend that the National Bureau for Human Rights seek accreditation under the Global Alliance of National Human Rights Institutions.

    Question by a Committee Expert

    ABDUL RAZZAQ RAWAN, Committee Expert and Rapporteur for Kuwait, said the judiciary had a fundamental role in preventing torture and implementing the provisions of the Convention. It was hoped the State would take into account shortcomings which could impact the work of the judges and judiciary into account. 

    Responses by the Delegation

    The delegation said the judicial authority in Kuwait was fully independent of the executive and legislative authority; these were separate powers.  In practice, there was no interference whatsoever.  Rules might imply an interference, but in practice, this was not the reality.  The Kuwaiti judiciary and the Office of the Prosecutor General were fully independent from a technical standpoint. 

    Closing Remarks

    CLAUDE HELLER, Committee Chairperson, thanked the delegation for the dialogue which had been very constructive.  The Convention was respectful of sovereignty.  The Committee aimed to contribute to the improvement of human rights in all States. 

    NASER ALHAYEN, Permanent Representative of Kuwait to the United Nations Office at Geneva and head of the delegation, thanked the Committee for the dialogue.  Kuwait was fully committed to the implementation of all international standards and human rights and would continue the constructive dialogue with the Committee and the international community. 

     

    Produced by the United Nations Information Service in Geneva for use of the media; 
    not an official record. English and French versions of our releases are different as they are the product of two separate coverage teams that work independently.

     

    CAT24.019E

    MIL OSI United Nations News –

  • MIL-OSI USA: USAID Announces New Project to Strengthen Systems that Prevent, Detect, and Respond to New and Emerging Health Threats

    Source: USAID

    Today, the United States Agency for International Development announced a new project that will strengthen the capacity of our partner countries to prevent, detect, and respond to the increasing occurrence and severity of epidemics, pandemics, and novel infectious disease threats.  

    Under the new project, Strengthening Infectious Disease Detection Systems (STRIDES), USAID will work with partner countries to build more reliable, safe and secure laboratory and disease surveillance systems, as well as more effective data management and reporting platforms – systems that are critical to preventing new and emerging infectious disease threats from spreading widely and rapidly.

    In more than 50 countries, USAID is strengthening the specific components necessary for strong global health security and pandemic preparedness. The work of STRIDES will be integral to these efforts, and to USAID’s role in achieving the United States commitment to apply a whole-of-government, science-based approach to strengthening global health security, as laid out in the U.S. Global Health Security Strategy and the National Biodefense Strategy and Implementation Plan for Countering Biological Threats, Enhancing Pandemic Preparedness, and Achieving Global Health Security. 

    STRIDES will be implemented by a consortium led by FHI 360 and consisting of other partners including PATH, Black & Veatch and Panagora Group, and six regional-based public health organizations: Amref Health Africa, African Society for Laboratory Medicine, Prisma, Africa One Health University Network, Southeast Asia One Health University and The Eastern Mediterranean Public Health Network.

    MIL OSI USA News –

  • MIL-OSI Submissions: Research – Great Place To Work® Releases Study On Workplace Well-being With Johns Hopkins University

    Source: Great Place To Work®

    Great Place To Work® Releases Study On Workplace Well-being With Johns Hopkins University In Critical Areas Of Mental And Emotional Support, Teamwork, Psychological Safety And Finance Stability

    Singapore, 30 October 2024 – Great Place To Work® Singapore marked its 10th anniversary at its Best Workplaces in Singapore 2024 event with the release of the Great is Possible: Charting a Decade of Progress in Singapore Workplaces (2015-2024) insights report. The report highlights the transformation of Singapore’s workplaces over the past decade, with a special focus on well-being and mental health. This year’s event also introduced the new Legends category, honouring organisations that have consistently made the Best Workplaces list for five or more consecutive years.

    Held at The Ritz-Carlton, the milestone celebration was graced by Deputy Prime Minister Heng Swee Keat and attended by close to 420 guests, including business leaders and employees from Great Place To Work Certified companies.

    Michael C. Bush, Chief Executive Officer of Great Place To Work®, giving his keynote address at the 10th Anniversary of Best Workplaces in Singapore / Great Place to Work® Singapore.

    A Decade of Change in Singapore’s Workplaces

    Over the past ten years, Great Place To Work has led the way in understanding what makes workplaces thrive in Singapore. Great Place To Work Singapore has administered over 400,000 surveys across nearly 1,000 workplaces from more than 440,000 employees since its establishment in 2015.

    In conjunction with its 10th anniversary, Great Place To Work Singapore unveiled the Great is Possible: Charting a Decade of Progress in Singapore Workplaces (2015-2024) insights report, which provides a comprehensive analysis of data collected from 2015 to 2024. The report, based on input from approximately 440,000 employees in the Trust Index Employee Survey, examines the evolving trends and shifts in workplace culture, leadership, and employee well-being. Key findings include:

    • Leadership integrity and psychological safety remain pivotal in fostering positive employee experiences
    • Concerns about fairness in compensation and bridging experience gaps across different organisational levels
    • Employee trust and satisfaction have been on the rise at Best Workplaces for the past ten years, evidenced by a steady increase in overall Trust Index scores

    Spotlight on Employee Well-Being and Burnout

    In response to the rising focus on employee burnout and mental health, Great Place To Work also conducted a study on workplace well-being over the past five years in Singapore. Produced in collaboration with Johns Hopkins University’s Human Capital Development Lab, Well-Being At Work: Fostering a Healthy Work Climate For All examines well-being trends from 2019 to 2024, identifying key factors that influence workplace well-being in Singapore. It draws on data from Great Place To Work’s proprietary Trust Index survey, which included insights from over 200 organisations and 40,000 respondents in the critical areas of mental and emotional support, teamwork, psychological safety, and financial stability.

    The results revealed significant variations in well-being across several dimensions:

    Age and Gender
    • Women and younger employees reported lower well-being levels
    • However, the gender gap narrows among younger generations, suggesting future workforces may experience fewer gender-based disparities.

    Management Levels
    • Senior management reported higher well-being scores, attributed to a sense of purpose, personal growth, and financial stability.

    Impact of COVID-19
    • The pandemic initially boosted employee well-being as organisations prioritised care for their teams.
    • A decline in overall well-being levels was observed as businesses returned to traditional work environments.

    Importance of Connections
    • Strong connections and personal support play a crucial role in fostering a positive work climate.
    • There are strong correlations between teamwork, psychological safety, and overall well-being.

    Notably, Best Workplaces lead the way in well-being, consistently demonstrating higher employee well-being scores. Many of these companies achieve this through certified mental well-being ambassadors and comprehensive health and wellness programs. However, the success of such initiatives depends on employee perceptions influenced by organisational culture and values, highlighting the need for solutions that align with management practices and HR processes, rather than merely addressing issues superficially.

    “Over the past decade, Great Place To Work has witnessed the evolving needs of Singapore’s workplaces. Our reports highlight the growing importance of leadership integrity, psychological safety, and employee well-being. Despite the challenges of the past few years, leading organisations have shown that prioritising inclusion and investing in their people is essential for creating thriving work environments. We hope our findings will inspire more organisations to create high-trust, high-performing workplace cultures where everyone can thrive,” shared Ms Evelyn Kwek, Managing Director of Great Place To Work ASEAN and ANZ.

    Looking Ahead: “Great is Possible”

    This year’s milestone event embraced the theme “Great is Possible,” acknowledging the resilience and innovation of organisations in the face of an ever-changing business climate. A highlight of the 10th anniversary celebration was the introduction of the new Legends category to recognise exceptional companies with an impressive record—having been placed on the Best Workplaces in Singapore List for at least five consecutive years. These Legends stand as models of excellence in what Great looks like in the ever-evolving landscape of the modern workplace.

    The inaugural Legends list includes:
    • Cisco (5 Years)
    • DHL Express (Singapore) Pte Ltd (8 Years)
    • HP (5 Years)
    • Micron Technology (6 Years)
    • Salesforce (10 Years)
    • World Wide Technology (5 Years)

    CEO Michael C. Bush delivered a keynote address on how businesses can transform into great workplaces by prioritising trust, inclusion, and employee value. He emphasised the necessity of achieving greatness for both the present and future of work, and urged leaders to take actionable steps to create environments where all employees can thrive and drive outstanding business outcomes.

    Managing Director of Great Place To Work ASEAN and ANZ, Ms Evelyn Kwek said, “As we celebrate 10 years of the Best Workplaces list in Singapore, we are proud to honour our Legends. They have set the standard for what it means to be a truly Great Workplace, and their success shows what organisations can achieve when they put their people first. We hope our list-makers continue to inspire more organisations to reach for Great.”

    About Great Place To Work®

    As the global authority on workplace culture, Great Place To Work brings 30 years of ground-breaking research and data to help every place become a great place to work for all. Their proprietary platform and For AllTM Model helps companies evaluate the experience of every employee, with exemplary workplaces becoming Great Place To Work Certified or receiving recognition on a coveted Best Workplaces List. Follow Great Place To Work® on LinkedIn, Facebook, and Instagram or visit greatplacetowork.com.sg to learn more.

    About Great Place To Work® Certification

    Great Place To Work Certification is the most definitive “employer-of-choice” recognition that companies aspire to achieve. It is the only recognition based entirely on what employees report about their workplace experience – specifically, how consistently they experience a high-trust workplace. Great Place To Work Certification is recognised worldwide by employees and employers alike and is the global benchmark for identifying and recognising outstanding employee experience. Every year, more than 10,000 companies across 97 countries apply to earn Great Place To Work Certification.

    MIL OSI – Submitted News –

  • MIL-OSI: FormFactor, Inc. Reports 2024 Third Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    Record Quarterly Revenue, Profitability at the Top End of the Outlook Range;
    Sees Reduced Demand for Foundry and Logic in Q4, Partially Offset by Continued Strength in DRAM

    LIVERMORE, Calif., Oct. 30, 2024 (GLOBE NEWSWIRE) — FormFactor, Inc. (Nasdaq: FORM) today announced its financial results for the third quarter of fiscal 2024 ended September 28, 2024. Quarterly revenues were $207.9 million, a company record and an increase of 5.3% compared to $197.5 million in the second quarter of fiscal 2024, and an increase of 21.2% from $171.6 million in the third quarter of fiscal 2023.

    • Record revenue in the third quarter exceeded outlook range and non-GAAP EPS was at the top end of the range.
    • Strong DDR5 demand produced third consecutive record-setting quarter of DRAM probe-card revenue.
    • FormFactor’s diversification strategy enabled participation in expanding investments in generative AI and data center applications.

    “We are proud to have posted our all-time revenue record in the third quarter,” said Mike Slessor, CEO of FormFactor, Inc. “This performance was driven by continued strength in our DRAM probe-card business, layered on top of moderate growth in our Foundry & Logic and Systems businesses.”

    Third Quarter and Fiscal 2024 Highlights

    On a GAAP basis, net income for the third quarter of fiscal 2024 was $18.7 million, or $0.24 per fully-diluted share, compared to net income for the second quarter of fiscal 2024 of $19.4 million, or $0.25 per fully-diluted share, and net income for the third quarter of fiscal 2023 of $4.4 million, or $0.06 per fully-diluted share. Gross margin for the third quarter of 2024 was 40.7%, compared with 44.0% in the second quarter of 2024, and 40.4% in the third quarter of 2023.

    On a non-GAAP basis, net income for the third quarter of fiscal 2024 was $27.2 million, or $0.35 per fully-diluted share, compared to net income for the second quarter of fiscal 2024 of $27.3 million, or $0.35 per fully-diluted share, and net income for the third quarter of fiscal 2023 of $17.3 million, or $0.22 per fully-diluted share. On a non-GAAP basis, gross margin for the third quarter of 2024 was 42.2%, compared with 45.3% in the second quarter of 2024, and 41.9% in the third quarter of 2023.

    A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below.

    GAAP net cash provided by operating activities for the third quarter of fiscal 2024 was $26.7 million, compared to $21.9 million for the second quarter of fiscal 2024, and $20.6 million for the third quarter of fiscal 2023. Free cash flow for the third quarter of fiscal 2024 was $20.0 million, compared to free cash flow for the second quarter of fiscal 2024 of $14.2 million, and free cash flow for the third quarter of 2023 of $16.9 million. A reconciliation of net cash provided by operating activities to non-GAAP free cash flow is provided in the schedules included below.

    Outlook

    Dr. Slessor added, “We continue to experience record levels of DRAM probe card demand, with contributions from both DDR5 and High Bandwidth Memory applications. This, combined with slightly higher Systems Segment revenue, is helping to partially offset the forecasted reduction in Foundry & Logic probe-card demand.”

    For the fourth quarter ending December 28, 2024, FormFactor is providing the following outlook*:

      GAAP   Reconciling Items**   Non-GAAP
    Revenue $190 million +/- $5 million   —   $190 million +/- $5 million
    Gross Margin 40% +/- 1.5%   $3 million   41% +/- 1.5%
    Net income per diluted share $0.16 +/- $0.04   $0.13   $0.29 +/- $0.04
    *This outlook assumes consistent foreign currency rates.
    **Reconciling items are stock-based compensation, amortization of intangible assets and fixed asset fair value adjustments due to acquisitions, and restructuring charges, net of applicable income tax impacts.
       

    We posted our revenue breakdown by geographic region, by market segment and with customers with greater than 10% of total revenue on the Investor Relations section of our website at www.formfactor.com. We will conduct a conference call at 1:25 p.m. PT, or 4:25 p.m. ET, today.

    The public is invited to listen to a live webcast of FormFactor’s conference call on the Investor Relations section of our website at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The replay will be available on the Investor Relations section of our website, www.formfactor.com.

    Use of Non-GAAP Financial Information:

    To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we disclose certain non-GAAP measures of non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and free cash flow, that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses, gains and losses. Reconciliations of the adjustments to GAAP results for the three and nine months ended September 28, 2024, and for outlook provided before, as well as for the comparable periods of fiscal 2023, are provided below, and on the Investor Relations section of our website at www.formfactor.com. Information regarding the ways in which management uses non-GAAP financial information to evaluate its business, management’s reasons for using this non-GAAP financial information, and limitations associated with the use of non-GAAP financial information, is included under “About our Non-GAAP Financial Measures” following the tables below.

    About FormFactor:

    FormFactor, Inc. (NASDAQ: FORM), is a leading provider of essential test and measurement technologies along the full semiconductor product life cycle – from characterization, modeling, reliability, and design de-bug, to qualification and production test. Semiconductor companies rely upon FormFactor’s products and services to accelerate profitability by optimizing device performance and advancing yield knowledge. The Company serves customers through its network of facilities in Asia, Europe, and North America. For more information, visit the Company’s website at www.formfactor.com.

    Forward-looking Statements:

    This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws, including with respect to the Company’s future financial and operating results, and the Company’s plans, strategies and objectives for future operations. These statements are based on management’s current expectations and beliefs as of the date of this release, and are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding future financial and operating results, including under the heading “Outlook” above, customer demand, conditions in the semiconductor industry, and other statements regarding the Company’s business. Forward-looking statements may contain words such as “may,” “might,” “will,” “expect,” “plan,” “anticipate,” “forecast,” and “continue,” the negative or plural of these words and similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in demand for the Company’s products; customer-specific demand; market opportunity; anticipated industry trends; the availability, benefits, and speed of customer acceptance or implementation of new products and technologies; manufacturing, processing, and design capacity, goals, expansion, volumes, and progress; difficulties or delays in research and development; industry seasonality; risks to the Company’s realization of benefits from acquisitions, investments in capacity and investments in new electronic data systems and information technology; reliance on customers or third parties (including suppliers); changes in macro-economic environments; events affecting global and regional economic and market conditions and stability such as military conflicts, political volatility, infectious diseases and pandemics, and similar factors, operating separately or in combination; and other factors, including those set forth in the Company’s most current annual report on Form 10-K, quarterly reports on Form 10-Q and other filings by the Company with the U.S. Securities and Exchange Commission. In addition, there are varying barriers to international trade, including restrictive trade and export regulations such as the US-China restrictions, dynamic tariffs, trade disputes between the U.S. and other countries, and national security developments or tensions, that may substantially restrict or condition our sales to or in certain countries, increase the cost of doing business internationally, and disrupt our supply chain. No assurances can be given that any of the events anticipated by the forward-looking statements within this press release will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of the Company. Unless required by law, the Company is under no obligation (and expressly disclaims any such obligation) to update or revise its forward-looking statements whether as a result of new information, future events, or otherwise.

    FORMFACTOR, INC. 
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (In thousands, except per share amounts)
    (Unaudited)

      Three Months Ended   Nine Months Ended
      September 28,
    2024    		   June 29,
    2024    		   September 30,
    2023    		   September 28,
    2024    		   September 30,
    2023
    Revenues $ 207,917     $ 197,474     $ 171,575     $ 574,116     $ 494,939  
    Cost of revenues   123,212       110,574       102,290       339,773       304,293  
    Gross profit   84,705       86,900       69,285       234,343       190,646  
    Operating expenses:                  
    Research and development   31,243       31,564       31,014       91,434       87,599  
    Selling, general and administrative   35,607       37,874       35,564       106,560       101,561  
    Total operating expenses   66,850       69,438       66,578       197,994       189,160  
    Gain on sale of business   —       310       —       20,581       —  
    Operating income   17,855       17,772       2,707       56,930       1,486  
    Interest income, net   3,650       3,415       1,662       10,221       4,420  
    Other income (expense), net   (558 )     360       788       322       1,261  
    Income before income taxes   20,947       21,547       5,157       67,473       7,167  
    Provision for income taxes   2,211       2,155       786       7,564       626  
    Net income $ 18,736     $ 19,392     $ 4,371     $ 59,909     $ 6,541  
    Net income per share:                  
    Basic $ 0.24     $ 0.25     $ 0.06     $ 0.77     $ 0.08  
    Diluted $ 0.24     $ 0.25     $ 0.06     $ 0.76     $ 0.08  
    Weighted-average number of shares used in per share calculations:                
    Basic   77,406       77,235       77,571       77,364       77,265  
    Diluted   78,439       78,717       78,412       78,495       77,860  
    FORMFACTOR, INC.
    NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
    (In thousands, except per share amounts)
    (Unaudited)
     
      Three Months Ended   Nine Months Ended
      September 28,
    2024    		   June 29,
    2024    		   September 30,
    2023    		   September 28,
    2024    		   September 30,
    2023
    GAAP Gross Profit $ 84,705     $ 86,900     $ 69,285     $ 234,343     $ 190,646  
    Adjustments:                  
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other   530       584       1,118       1,661       3,580  
    Stock-based compensation   1,934       1,932       1,376       5,794       4,801  
    Restructuring charges   524       —       —       607       357  
    Non-GAAP Gross Profit $ 87,693     $ 89,416     $ 71,779     $ 242,405     $ 199,384  
                       
    GAAP Gross Margin   40.7 %     44.0 %     40.4 %     40.8 %     38.5 %
    Adjustments:                  
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other   0.3 %     0.3 %     0.7 %     0.3 %     0.7 %
    Stock-based compensation   0.9 %     1.0 %     0.8 %     1.0 %     1.0 %
    Restructuring charges   0.3 %     — %     — %     0.1 %     0.1 %
    Non-GAAP Gross Margin   42.2 %     45.3 %     41.9 %     42.2 %     40.3 %
                       
    GAAP operating expenses $ 66,850     $ 69,438     $ 66,578     $ 197,994     $ 189,160  
    Adjustments:                  
    Amortization of intangibles and other   (240 )     (240 )     (466 )     (720 )     (3,563 )
    Stock-based compensation   (7,002 )     (8,277 )     (9,463 )     (23,756 )     (24,532 )
    Restructuring charges   (249 )     —       —       (249 )     (1,183 )
    Costs related to sale of business   (13 )     (43 )     (2,139 )     (702 )     (2,139 )
    Non-GAAP operating expenses $ 59,346     $ 60,878     $ 54,510     $ 172,567     $ 157,743  
                       
    GAAP operating income $ 17,855     $ 17,772     $ 2,707     $ 56,930     $ 1,486  
    Adjustments:                  
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other   770       824       1,584       2,381       7,143  
    Stock-based compensation   8,936       10,209       10,839       29,550       29,333  
    Restructuring charges   773       —       —       856       1,540  
    Gain on sale of business and related costs   13       (267 )     2,139       (19,879 )     2,139  
    Non-GAAP operating income $ 28,347     $ 28,538     $ 17,269     $ 69,838     $ 41,641  
    FORMFACTOR, INC. 
    NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
    (In thousands, except per share amounts)
    (Unaudited)
     
      Three Months Ended   Nine Months Ended
      September 28,
    2024    		   June 29,
    2024    		   September 30,
    2023    		   September 28,
    2024    		   September 30,
    2023
    GAAP net income $ 18,736     $ 19,392     $ 4,371     $ 59,909     $ 6,541  
    Adjustments:                  
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other   770       824       1,584       2,381       7,143  
    Stock-based compensation   8,936       10,209       10,839       29,550       29,333  
    Restructuring charges   773       —       —       856       1,540  
    Gain on sale of business and related costs   13       (267 )     2,139       (19,879 )     2,139  
    Income tax effect of non-GAAP adjustments   (2,002 )     (2,835 )     (1,617 )     (3,924 )     (5,650 )
    Non-GAAP net income $ 27,226     $ 27,323     $ 17,316     $ 68,893     $ 41,046  
                       
    GAAP net income per share:                  
    Basic $ 0.24     $ 0.25     $ 0.06     $ 0.77     $ 0.08  
    Diluted $ 0.24     $ 0.25     $ 0.06     $ 0.76     $ 0.08  
                       
    Non-GAAP net income per share:                  
    Basic $ 0.35     $ 0.35     $ 0.22     $ 0.89     $ 0.53  
    Diluted $ 0.35     $ 0.35     $ 0.22     $ 0.88     $ 0.53  
    FORMFACTOR, INC. 
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)
     
      Nine Months Ended
      September 28,
    2024    		   September 30,
    2023
    Cash flows from operating activities:      
    Net income $ 59,909     $ 6,541  
    Selected adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation   22,197       22,880  
    Amortization   1,920       6,043  
    Stock-based compensation expense   29,550       29,333  
    Provision for excess and obsolete inventories   10,052       12,566  
    Gain on sale of business   (20,581 )     —  
    Other activity impacting operating cash flows   (21,426 )     (22,011 )
    Net cash provided by operating activities   81,621       55,352  
    Cash flows from investing activities:      
    Acquisition of property, plant and equipment   (30,773 )     (46,094 )
    Proceeds from sale of business   21,585       —  
    Purchases of marketable securities, net   (15,464 )     (3,900 )
    Purchase of promissory note receivable   (1,500 )     —  
    Net cash used in investing activities   (26,152 )     (49,994 )
    Cash flows from financing activities:      
    Purchase of common stock through stock repurchase program   (37,211 )     —  
    Proceeds from issuances of common stock   9,748       8,822  
    Principal repayments on term loans   (803 )     (781 )
    Tax withholdings related to net share settlements of equity awards   (17,990 )     (9,349 )
    Net cash used financing activities   (46,256 )     (1,308 )
    Effect of exchange rate changes on cash, cash equivalents and restricted cash   3       (3,324 )
    Net increase in cash, cash equivalents and restricted cash   9,216       726  
    Cash, cash equivalents and restricted cash, beginning of period   181,273       112,982  
    Cash, cash equivalents and restricted cash, end of period $ 190,489     $ 113,708  
    FORMFACTOR, INC. 
    RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW
    (In thousands)
    (Unaudited)
     
      Three Months Ended   Nine Months Ended
      September 28,
    2024    		   June 29,
    2024    		   September 30,
    2023    		   September 28,
    2024    		   September 30,
    2023
    Net cash provided by operating activities $ 26,731     $ 21,878     $ 20,571     $ 81,621     $ 55,352  
    Adjustments:                  
    Sale of business related payments in working capital   2,134       630       2,139       2,811       2,139  
    Cash paid for interest   97       101       105       298       317  
    Capital expenditures   (8,939 )     (8,398 )     (5,917 )     (30,773 )     (46,094 )
    Free cash flow $ 20,023     $ 14,211     $ 16,898     $ 53,957     $ 11,714  
    FORMFACTOR, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands)
    (Unaudited) 
     
      September 28,
    2024    		   June 29,
    2024    		   December 30,
    2023
    ASSETS          
    Current assets:          
    Cash and cash equivalents $ 184,506     $ 195,914     $ 177,812  
    Marketable securities   169,961       161,710       150,507  
    Accounts receivable, net of allowance for credit losses   116,866       113,277       102,957  
    Inventories, net   105,374       114,814       111,685  
    Restricted cash   3,773       5,939       1,152  
    Prepaid expenses and other current assets   34,302       28,964       29,667  
    Total current assets   614,782       620,618       573,780  
    Restricted cash   2,210       2,098       2,309  
    Operating lease, right-of-use-assets   25,034       26,650       30,519  
    Property, plant and equipment, net of accumulated depreciation   204,108       204,102       204,399  
    Goodwill   200,137       199,548       201,090  
    Intangibles, net   11,017       11,657       12,938  
    Deferred tax assets   92,826       88,841       78,964  
    Other assets   3,669       2,751       2,795  
    Total assets $ 1,153,783     $ 1,156,265     $ 1,106,794  
               
    LIABILITIES AND STOCKHOLDERS’ EQUITY          
    Current liabilities:          
    Accounts payable $ 52,086     $ 62,235     $ 63,857  
    Accrued liabilities   46,508       49,523       41,037  
    Current portion of term loan, net of unamortized issuance costs   1,098       1,090       1,075  
    Deferred revenue   20,972       17,953       16,704  
    Operating lease liabilities   8,512       8,240       8,422  
    Total current liabilities   129,176       139,041       131,095  
    Term loan, less current portion, net of unamortized issuance costs   12,488       12,765       13,314  
    Long-term operating lease liabilities   19,731       21,441       25,334  
    Deferred grant   18,000       18,000       18,000  
    Other liabilities   19,378       17,102       10,247  
    Total liabilities   198,773       208,349       197,990  
               
    Stockholders’ equity:          
    Common stock   77       77       77  
    Additional paid-in capital   845,466       863,283       861,448  
    Accumulated other comprehensive loss   (1,773 )     (7,948 )     (4,052 )
    Accumulated income   111,240       92,504       51,331  
    Total stockholders’ equity   955,010       947,916       908,804  
    Total liabilities and stockholders’ equity $ 1,153,783     $ 1,156,265     $ 1,106,794  
     

    About our Non-GAAP Financial Measures:

    We believe that the presentation of non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and free cash flow provides supplemental information that is important to understanding financial and business trends and other factors relating to our financial condition and results of operations. Non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income are among the primary indicators used by management as a basis for planning and forecasting future periods, and by management and our board of directors to determine whether our operating performance has met certain targets and thresholds. Management uses non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income when evaluating operating performance because it believes that the exclusion of the items indicated herein, for which the amounts or timing may vary significantly depending upon our activities and other factors, facilitates comparability of our operating performance from period to period. We use free cash flow to conduct and evaluate our business as an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Many investors also prefer to track free cash flow, as opposed to only GAAP earnings. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures, and therefore it is important to view free cash flow as a complement to our entire consolidated statements of cash flows. We have chosen to provide this non-GAAP information to investors so they can analyze our operating results closer to the way that management does, and use this information in their assessment of our business and the valuation of our Company. We compute non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income, by adjusting GAAP net income, GAAP net income per basic and diluted share, GAAP gross profit, GAAP gross margin, GAAP operating expenses, and GAAP operating income to remove the impact of certain items and the tax effect, if applicable, of those adjustments. These non-GAAP measures are not in accordance with, or an alternative to, GAAP, and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income, net income per basic and diluted share, gross profit, gross margin, operating expenses, or operating income in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. We may expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income should not be construed as an inference that these costs are unusual, infrequent or non-recurring. For more information on the non-GAAP adjustments, please see the table captioned “Non-GAAP Financial Measure Reconciliations” and “Reconciliation of Cash Provided by Operating Activities to non-GAAP Free Cash Flow” included in this press release.

    Source: FormFactor, Inc.
    FORM-F

    Investor Contact:
    Stan Finkelstein
    Investor Relations
    (925) 290-4321
    ir@formfactor.com

    The MIL Network –

  • MIL-OSI: Credit Acceptance Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

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

    (In millions, except per share data)   For the Three Months Ended   For the Nine Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023     September 30, 2024     September 30, 2023
    GAAP net income (loss)   $         78.8    $         (47.1)     $         70.8    $         96.0    $         192.5 
    GAAP net income (loss) per diluted share   $         6.35    $         (3.83)     $         5.43    $         7.68    $         14.73 
                         
    Adjusted net income (1)   $         109.1    $         126.4      $         139.5    $         352.9    $         406.5 
    Adjusted net income per diluted share (1)   $         8.79    $         10.29      $         10.70    $         28.25    $         31.10 

    (1)   Represents a non-GAAP financial measure.

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

    • A similar decline in forecasted collection rates
      A decline in forecasted collection rates decreased forecasted net cash flows from our loan portfolio by $62.8 million, or 0.6%, compared to a decrease in forecasted collection rates during the third quarter of 2023 that decreased forecasted net cash flows from our loan portfolio by $69.4 million, or 0.7%.
    • A decrease in forecasted profitability for Consumer Loans assigned in 2021 through 2024
      Forecasted profitability was lower than our estimates at September 30, 2023, due to both a decline in forecasted collection rates and slower forecasted net cash flow timing since the third quarter of 2023. The slower forecasted net cash flow timing was primarily a result of a decrease in Consumer Loan prepayments, which remain at below-average levels.
    • Growth in Consumer Loan assignment volume and the average balance of our loan portfolio
      Unit and dollar volumes grew 17.7% and 12.2%, respectively, as compared to the third quarter of 2023. The average balance of our loan portfolio, which is our largest-ever, increased 14.9% and 18.6% on a GAAP and adjusted basis, respectively, as compared to the third quarter of 2023.
    • An increase in the initial spread on Consumer Loan assignments
      The initial spread increased to 21.9% compared to 21.4% on Consumer Loans assigned in the third quarter of 2023.
    • An increase in our average cost of debt
      Our average cost of debt increased from 5.8% to 7.3%, primarily a result of higher interest rates on recently completed or extended secured financings and recently issued senior notes and the repayment of older secured financings and senior notes with lower interest rates.
    • A decrease in common shares outstanding due to stock repurchases
      Since the third quarter of 2023, we have repurchased approximately 566,000 shares, or 4.5% of the shares outstanding as of September 30, 2023. There were no stock repurchases during the third quarter of 2024.

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

    • A smaller decline in forecasted collection rates
      A decline in forecasted collection rates decreased forecasted net cash flows from our loan portfolio by $62.8 million, or 0.6%, compared to a decrease in forecasted collection rates during the second quarter of 2024 that decreased forecasted net cash flows from our loan portfolio by $189.3 million, or 1.7%. The $189.3 million decrease in forecasted net cash flows for the second quarter of 2024 was composed of an ordinary decrease in forecasted net cash flows of $42.1 million, or 0.3%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%.
    • A decrease in forecasted profitability for Consumer Loans assigned in 2021 through 2024
      Forecasted profitability was lower than our estimates at June 30, 2024, due to both the decline in forecasted collection rates and the slower forecasted net cash flow timing during the third quarter of 2024 discussed above.
    • Growth in the average balance of our loan portfolio
      The average balance of our loan portfolio, which is our largest-ever, increased 2.6% and 4.3% on a GAAP and adjusted basis, respectively, as compared to the second quarter of 2024.
    • Loss on sale of building
      We recognized a $23.7 million loss during the second quarter of 2024 related to the sale of one of our two office buildings, which we have excluded from our adjusted results. The building was sold to reduce excess office space and eliminate the associated annual operating costs of approximately $2.1 million.

    Consumer Loan Metrics

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Consumer Loan Volume

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

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

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

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

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

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

      For the Three Months Ended September 30,       For the Nine Months Ended
    September 30,    		    
      2024   2023   % Change   2024   2023   % Change
    Consumer Loan unit volume         95,670           81,299           17.7  %           307,215           253,847           21.0  %
    Active dealers (1)         10,678           9,818           8.8  %           14,326           13,008           10.1  %
    Average volume per active dealer         9.0           8.3           8.4  %           21.4           19.5           9.7  %
                           
    Consumer Loan unit volume from dealers active both periods         74,108           67,930           9.1  %           262,564           228,157           15.1  %
    Dealers active both periods         6,595           6,595           —              9,604           9,604           —   
    Average volume per dealer active both periods         11.2           10.3           9.1  %           27.3           23.8           15.1  %
                           
    Consumer loan unit volume from dealers not active both periods         21,562           13,369           61.3  %           44,651           25,690           73.8  %
    Dealers not active both periods         4,083           3,223           26.7  %           4,722           3,404           38.7  %
    Average volume per dealer not active both periods         5.3           4.1           29.3  %           9.5           7.5           26.7  %

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

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

      For the Three Months Ended September 30,       For the Nine Months Ended
    September 30,    		    
      2024     2023     % Change   2024     2023     % Change
    Consumer Loan unit volume from new active dealers         3,447             3,926             -12.2  %           29,441             29,005             1.5  %
    New active dealers (1)         1,038             983             5.6  %           3,428             3,095             10.8  %
    Average volume per new active dealer         3.3             4.0             -17.5  %           8.6             9.4             -8.5  %
                           
    Attrition (2)         -16.4  %           -17.2  %               -10.1  %           -8.9  %    

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

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

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

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

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

    Financial Results

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

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

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

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

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

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

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

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

    (In millions)   For the Nine Months Ended September 30,    
    Provision for Credit Losses     2024     2023   Change
    Forecast changes   $         430.9   $         319.4   $         111.5
    New Consumer Loan assignments             260.4             253.1             7.3
    Total   $         691.3   $         572.5   $         118.8
    • An increase in operating expenses of 10.2% ($35.1 million), primarily due to:
      • An increase in salaries and wages expense of 8.2% ($17.5 million), primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for dealers and consumers and (ii) fringe benefits, primarily due to higher medical claims.
      • An increase in general and administrative expense of 26.9% ($16.1 million), primarily due to increases in legal and technology systems expenses.
    • A loss on sale of building of $23.7 million related to the sale of one of our two office buildings. The building was sold to reduce excess office space and eliminate the associated annual operating costs of approximately $2.1 million.
    • An increase in premiums earned of 22.9% ($13.3 million), primarily due to growth in the size of our reinsurance portfolio, which resulted from growth in new Consumer Loan assignments and an increase in the average premium written per reinsured vehicle service contract in recent periods.
    • A decrease in provision for income taxes of 29.1% ($17.1 million), primarily due to a decrease in pre-tax income.
    • An increase in finance charges of 13.1% ($170.7 million), primarily due to an increase in the average balance of our loan portfolio.

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

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

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

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

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

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

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

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

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

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

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

    (1)   Annualized.

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

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

    (Dollars in millions, except per share data)   For the Three Months Ended
        Sept. 30, 2024   Jun. 30, 2024   Mar. 31, 2024   Dec. 31, 2023   Sept. 30, 2023   Jun. 30, 2023   Mar. 31, 2023   Dec. 31, 2022
    Adjusted net income                                
    GAAP net income (loss)   $         78.8      $         (47.1)     $         64.3      $         93.6      $         70.8      $         22.2      $         99.5      $         127.3   
    Floating yield adjustment (after-tax)             (115.1)               (96.1)               (92.4)               (83.9)               (76.4)               (73.9)               (75.9)               (69.3)  
    GAAP provision for credit losses (after-tax)             142.2                246.9                143.2                126.1                142.1                192.9                 105.8                100.4   
    Loss on sale of building (1)             —                18.3                —                —                —                 —                 —                —   
    Senior notes adjustment (after-tax)             —                —                —                (2.6)               (0.5)               (0.6)               (0.5)               (0.5)  
    Income tax adjustment (2)             3.2                4.4                2.3                (4.1)               3.5                (0.6)               (1.9)               (1.8)  
    Adjusted net income   $         109.1      $         126.4      $         117.4      $         129.1      $         139.5      $         140.0      $         127.0      $         156.1   
                                     
    Adjusted net income per diluted share (3)   $         8.79     $         10.29     $         9.28     $         10.06     $         10.70     $         10.69     $         9.71     $         11.74  
    Diluted weighted average shares outstanding     12,415,143       12,282,174       12,646,529       12,837,181       13,039,638       13,099,961       13,073,316       13,294,506  
                                     
    Adjusted revenue                                
    GAAP total revenue   $         550.3      $         538.2      $         508.0      $         491.6      $         478.6      $         477.9      $         453.8      $         459.0   
    Floating yield adjustment             (149.4)               (124.8)               (120.0)               (108.9)               (99.3)               (96.1)               (98.4)               (90.0)  
    GAAP provision for claims             (18.5)               (20.3)               (17.0)               (16.6)               (16.5)               (19.7)               (17.9)               (12.4)  
    Adjusted revenue   $         382.4      $         393.1      $         371.0      $         366.1      $         362.8      $         362.1      $         337.5      $         356.6   
                                     
    Adjusted average capital                                
    GAAP average debt   $         6,071.1      $         5,818.2      $         5,306.8      $         4,986.3      $         4,831.4      $         4,730.3      $         4,594.7      $         4,591.1   
    Deferred debt issuance adjustment             —                —                —                20.9                24.5                24.0                21.2                21.3   
    Senior notes debt adjustment             —                —                —                2.8                3.4                3.4                3.4                3.4   
    Adjusted average debt             6,071.1                5,818.2                5,306.8                5,010.0                4,859.3                4,757.7                4,619.3                4,615.8   
    GAAP average shareholders’ equity             1,594.2                1,623.5                1,678.5                1,734.3                1,731.3                1,752.6                1,673.3                1,635.2   
    Senior notes equity adjustment             —                —                —                2.0                2.9                3.4                4.0                4.5   
    Income tax adjustment (4)             (118.5)               (118.5)               (118.5)               (118.5)               (118.5)               (118.5)               (118.5)               (118.5)  
    Floating yield adjustment             840.8                710.1                641.0                606.5                548.9                433.9                373.7                353.2   
    Adjusted average equity             2,316.5                2,215.1                2,201.0                2,224.3                2,164.6                2,071.4                1,932.5                1,874.4   
    Adjusted average capital   $         8,387.6      $         8,033.3      $         7,507.8      $         7,234.3      $         7,023.9      $         6,829.1      $         6,551.8      $         6,490.2   
                                     
    Adjusted revenue as a percentage of adjusted average capital (5)             18.2  %             19.6  %             19.8  %             20.2  %             20.7  %             21.2  %             20.6  %             22.0  %
                                     
    Adjusted loans receivable                                
    GAAP loans receivable, net   $         7,781.5      $         7,547.7      $         7,345.6      $         6,955.3      $         6,780.5      $         6,610.3      $         6,500.3      $         6,297.7   
    Floating yield adjustment             1,100.8                1,065.6                869.7                803.8                748.9                663.7                509.2                470.2   
    Adjusted loans receivable   $         8,882.3      $         8,613.3      $         8,215.3      $         7,759.1      $         7,529.4      $         7,274.0      $         7,009.5      $         6,767.9   
                                     
    Adjusted interest expense (after-tax)                                
    GAAP interest expense   $         111.2      $         104.5      $         92.5      $         78.8      $         70.5      $         62.8      $         54.4      $         49.4   
    Senior notes adjustment             —                —                —                 3.5                0.7                0.7                0.7                0.7   
    Adjusted interest expense (pre-tax)             111.2                104.5                92.5                82.3                71.2                63.5                55.1                50.1   
    Adjustment to record tax effect (2)             (25.6)               (24.0)               (21.3)               (18.9)               (16.4)               (14.6)               (12.7)               (11.5)  
    Adjusted interest expense (after-tax)   $         85.6      $         80.5      $         71.2      $         63.4      $         54.8      $         48.9      $         42.4      $         38.6   

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

    (Dollars in millions)   For the Three Months Ended
        Sept. 30, 2024   Jun. 30, 2024   Mar. 31, 2024   Dec. 31, 2023   Sept. 30, 2023   Jun. 30, 2023   Mar. 31, 2023   Dec. 31, 2022
    Adjusted return on capital (1)                                
    Adjusted net income   $         109.1      $         126.4      $         117.4      $         129.1      $         139.5      $         140.0      $         127.0      $         156.1   
    Adjusted interest expense (after-tax)             85.6                80.5                71.2                63.4                54.8                48.9                42.4                38.6   
    Adjusted net income plus adjusted interest expense (after-tax)   $         194.7      $         206.9      $         188.6      $         192.5      $         194.3      $         188.9      $         169.4      $         194.7   
                                     
    Reconciliation of GAAP return on equity to adjusted return on capital (4)                                
    GAAP return on equity (2)             19.8  %             -11.6  %             15.3  %             21.6  %             16.4  %             5.1  %             23.8  %             31.1  %
    Non-GAAP adjustments             -10.5  %             21.9  %             -5.2  %             -11.0  %             -5.3  %             6.0  %             -13.5  %             -19.1  %
    Adjusted return on capital (1)             9.3  %             10.3  %             10.1  %             10.6  %             11.1  %             11.1  %             10.3  %             12.0  %
                                     
    Economic profit                                
    Adjusted return on capital             9.3  %             10.3  %             10.1  %             10.6  %             11.1  %             11.1  %             10.3  %             12.0  %
    Cost of capital (3) (4)             7.3  %             7.5  %             7.3  %             7.6  %             7.1  %             6.7  %             6.6  %             6.6  %
    Adjusted return on capital in excess of cost of capital             2.0  %             2.8  %             2.8  %             3.0  %             4.0  %             4.4  %             3.7  %             5.4  %
    Adjusted average capital   $         8,387.6      $         8,033.3      $         7,507.8      $         7,234.3      $         7,023.9      $         6,829.1      $         6,551.8      $         6,490.2   
        Economic profit   $         41.4      $         56.2      $         51.4      $         55.9      $         69.1      $         74.1      $         61.4      $         88.1   
                                     
    Reconciliation of GAAP net income (loss) to economic profit                                
    GAAP net income (loss)   $         78.8      $         (47.1)     $         64.3      $         93.6      $         70.8      $         22.2      $         99.5      $         127.3   
    Non-GAAP adjustments             30.3                173.5                53.1                35.5                68.7                117.8                27.5                28.8   
    Adjusted net income             109.1                126.4                117.4                129.1                139.5                140.0                127.0                156.1   
    Adjusted interest expense (after-tax)             85.6                80.5                71.2                63.4                54.8                48.9                42.4                38.6   
    Adjusted net income plus adjusted interest expense (after-tax)             194.7                206.9                188.6                 192.5                194.3                188.9                169.4                194.7   
    Less: cost of capital             153.3                150.7                137.2                136.6                125.2                114.8                108.0                106.6   
    Economic profit   $         41.4      $         56.2      $         51.4      $         55.9      $         69.1      $         74.1      $         61.4      $         88.1   
                                     
    Economic profit per diluted share (5)   $         3.33      $         4.58      $         4.06      $         4.35      $         5.30      $         5.66      $         4.70      $         6.63   
                                     
    Operating expenses as a percentage of adjusted average capital (4)             6.2  %             6.2  %             6.7  %             6.3  %             6.3  %             6.9  %             7.2  %             6.4  %
                                     
    Percentage change in adjusted average capital compared to the same period in the prior year             19.4  %             17.6  %             14.6  %             11.5  %             8.8  %             6.2  %             1.0  %             -2.4  %

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

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

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

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

    (In millions, except share and per share data)   For the Nine Months Ended September 30,
          2024       2023  
    Adjusted net income        
    GAAP net income   $         96.0      $         192.5   
    Floating yield adjustment (after-tax)             (303.6)               (226.2)  
    GAAP provision for credit losses (after-tax)             532.3                440.8   
    Loss on sale of building (1)             18.3                —   
    Senior notes adjustment (after-tax)             —                (1.6)  
    Income tax adjustment (2)             9.9                1.0   
    Adjusted net income   $         352.9      $         406.5   
             
    Adjusted net income per diluted share   $         28.25     $         31.10  
    Diluted weighted average shares outstanding     12,494,011       13,068,998  
             
    Adjusted average capital        
    GAAP average debt   $         5,732.1      $         4,718.7   
    Deferred debt issuance adjustment             —                23.3   
    Senior notes debt adjustment             —                3.4   
    Adjusted average debt             5,732.1                4,745.4   
    GAAP average shareholders’ equity             1,632.1                1,719.1   
    Senior notes equity adjustment             —                3.4   
    Income tax adjustment (3)             (118.5)               (118.5)  
    Floating yield adjustment             730.5                452.2   
    Adjusted average equity             2,244.1                2,056.2   
    Adjusted average capital   $         7,976.2      $         6,801.6   
             
    Adjusted interest expense (after-tax)        
    GAAP interest expense   $         308.2      $         187.7   
    Senior notes adjustment             —                2.1   
    Adjusted interest expense (pre-tax)             308.2                189.8   
    Adjustment to record tax effect (2)             (70.9)               (43.7)  
    Adjusted interest expense (after-tax)   $         237.3      $         146.1   
             
    Adjusted return on capital (5)        
    Adjusted net income   $         352.9      $         406.5   
    Adjusted interest expense (after-tax)             237.3                146.1   
        Adjusted net income plus adjusted interest expense (after-tax)   $         590.2      $         552.6   
             
    Reconciliation of GAAP return on equity to adjusted return on capital (7)        
    GAAP return on equity (4)             7.8  %             14.9  %
    Non-GAAP adjustments             2.1  %             -4.1  %
    Adjusted return on capital (5)             9.9  %             10.8  %
             
    Economic profit        
    Adjusted return on capital             9.9  %             10.8  %
    Cost of capital (6) (7)             7.4  %             6.8  %
    Adjusted return on capital in excess of cost of capital             2.5  %             4.0  %
    Adjusted average capital   $         7,976.2      $         6,801.6   
        Economic profit   $         149.0      $         204.6   
             
    Reconciliation of GAAP net income to economic profit        
    GAAP net income   $         96.0      $         192.5   
    Non-GAAP adjustments             256.9                214.0   
    Adjusted net income             352.9                406.5   
    Adjusted interest expense (after-tax)             237.3                146.1   
    Adjusted net income plus adjusted interest expense (after-tax)             590.2                552.6   
    Less: cost of capital             441.2                348.0   
    Economic profit   $         149.0      $         204.6   
             
    Economic profit per diluted share (8)   $         11.93      $         15.66   

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

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

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

    Floating Yield Adjustment

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

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

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

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

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

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

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

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

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

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

    Cautionary Statement Regarding Forward-Looking Information

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

    Industry, Operational, and Macroeconomic Risks

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

    Capital and Liquidity Risks

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

    Technology and Cybersecurity Risks

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

    Legal and Regulatory Risks

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

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

    Webcast Details

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

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

    Description of Credit Acceptance Corporation

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

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

    CREDIT ACCEPTANCE CORPORATION
    CONSOLIDATED STATEMENTS OF INCOME
    (UNAUDITED)
            

    (Dollars in millions, except per share data) For the Three Months Ended September 30,   For the Nine Months Ended September 30,
        2024     2023     2024     2023
    Revenue:              
    Finance charges $         507.6    $         441.7    $         1,474.5    $         1,303.8 
    Premiums earned           25.1              20.8              71.3              58.0 
    Other income           17.6              16.1              50.7              48.5 
    Total revenue           550.3              478.6              1,596.5              1,410.3 
    Costs and expenses:              
    Salaries and wages           77.3              66.7              231.6              214.1 
    General and administrative           29.0              21.3              75.9              59.8 
    Sales and marketing           23.1              22.5              72.4              70.9 
    Total operating expenses           129.4              110.5              379.9              344.8 
                   
    Provision for credit losses on forecast changes           105.9              106.3              430.9              319.4 
    Provision for credit losses on new Consumer Loan assignments           78.8              78.3              260.4              253.1 
    Total provision for credit losses           184.7              184.6              691.3              572.5 
                   
    Interest           111.2              70.5              308.2              187.7 
    Provision for claims           18.5              16.5              55.8              54.1 
    Loss on sale of building           —              —              23.7              — 
    Total costs and expenses           443.8              382.1              1,458.9              1,159.1 
    Income before provision for income taxes           106.5              96.5              137.6              251.2 
    Provision for income taxes           27.7              25.7              41.6              58.7 
    Net income $         78.8    $         70.8    $         96.0    $         192.5 
                   
    Net income per share:              
    Basic $         6.42    $         5.47    $         7.78    $         14.79 
    Diluted $         6.35    $         5.43    $         7.68    $         14.73 
                   
    Weighted average shares outstanding:              
    Basic           12,274,685              12,933,377              12,345,739              13,013,344 
    Diluted           12,415,143              13,039,638              12,494,011              13,068,998 

    CREDIT ACCEPTANCE CORPORATION
    CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)

    (Dollars in millions, except per share data) As of
      September 30, 2024   December 31, 2023
    ASSETS:      
    Cash and cash equivalents $         159.7      $         13.2   
    Restricted cash and cash equivalents           556.6                457.7   
    Restricted securities available for sale           113.9                93.2   
           
    Loans receivable           11,197.6                10,020.1   
    Allowance for credit losses           (3,416.1)               (3,064.8)  
    Loans receivable, net           7,781.5                6,955.3   
           
    Property and equipment, net           15.2                46.5   
    Income taxes receivable           26.4                4.3   
    Other assets           29.9                40.0   
    Total assets $         8,683.2      $         7,610.2   
           
    LIABILITIES AND SHAREHOLDERS’ EQUITY:      
    Liabilities:      
    Accounts payable and accrued liabilities $         364.4      $         318.8   
    Revolving secured lines of credit           1.0                79.2   
    Secured financing           5,257.1                3,990.9   
    Senior notes           990.8                989.0   
    Mortgage note           —                8.4   
    Deferred income taxes, net           423.2                389.2   
    Income taxes payable           0.2                81.0   
    Total liabilities           7,036.7                5,856.5   
           
    Shareholders’ Equity:      
    Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued           —                —   
    Common stock, $.01 par value, 80,000,000 shares authorized, 12,111,600 and 12,522,397 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively           0.1                0.1   
    Paid-in capital           324.5                279.0   
    Retained earnings           1,321.0                1,475.6   
    Accumulated other comprehensive income (loss)           0.9                (1.0)  
    Total shareholders’ equity           1,646.5                1,753.7   
    Total liabilities and shareholders’ equity $         8,683.2      $         7,610.2   

    The MIL Network –

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

    Source: GlobeNewswire (MIL-OSI)

    Financial Highlights:

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

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

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

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

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

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

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

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

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

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

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

    Forward-Looking Statements

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

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except per share data)    		  
        Three Months Ended     Six Months Ended  
        September 30,     September 30,  
        2024     2023     2024     2023  
    Revenues                                
    Grid   $ 46,936     $ 28,515     $ 79,272     $ 54,251  
    Wind     7,535       5,489       15,489       10,007  
    Total revenues     54,471       34,004       94,761       64,258  
                                     
    Cost of revenues     38,858       25,418       66,923       49,390  
                                     
    Gross margin     15,613       8,586       27,838       14,868  
                                     
    Operating expenses:                                
    Research and development     2,646       1,641       4,931       3,493  
    Selling, general and administrative     10,525       7,946       19,423       15,815  
    Amortization of acquisition-related intangibles     433       538       845       1,076  
    Change in fair value of contingent consideration     2,762       850       6,682       2,200  
    Restructuring     —       (20 )     —       (14 )
    Total operating expenses     16,366       10,955       31,881       22,570  
                                     
    Operating loss     (753 )     (2,369 )     (4,043 )     (7,702 )
                                     
    Interest income, net     979       194       2,099       368  
    Other expense, net     (329 )     (204 )     (489 )     (321 )
    Loss before income tax expense (benefit)     (103 )     (2,379 )     (2,433 )     (7,655 )
                                     
    Income tax (benefit) expense     (4,990 )     106       (4,796 )     228  
                                     
    Net income (loss)   $ 4,887     $ (2,485 )   $ 2,363     $ (7,883 )
                                     
    Net income (loss) per common share                                
    Basic   $ 0.13     $ (0.09 )   $ 0.07     $ (0.28 )
    Diluted   $ 0.13     $ (0.09 )   $ 0.06     $ (0.28 )
                                     
    Weighted average number of common shares outstanding                                
    Basic     36,952       28,828       36,317       28,545  
    Diluted     37,499       28,828       36,951       28,545  
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands, except per share data)    		  
        September 30, 2024     March 31, 2024  
    ASSETS                
    Current assets:                
    Cash and cash equivalents   $ 72,131     $ 90,522  
    Accounts receivable, net     40,059       26,325  
    Inventory, net     70,880       41,857  
    Prepaid expenses and other current assets     10,806       7,295  
    Restricted cash     1,201       468  
    Total current assets     195,077       166,467  
                     
    Property, plant and equipment, net     38,765       10,861  
    Intangibles, net     7,329       6,369  
    Right-of-use assets     3,744       2,557  
    Goodwill     48,950       43,471  
    Restricted cash     1,454       1,290  
    Deferred tax assets     1,201       1,119  
    Equity-method investments     1,245       —  
    Other assets     683       637  
    Total assets   $ 298,448     $ 232,771  
                     
    LIABILITIES AND STOCKHOLDERS’ EQUITY                
                     
    Current liabilities:                
    Accounts payable and accrued expenses   $ 25,158     $ 24,235  
    Lease liability, current portion     555       716  
    Debt, current portion     —       25  
    Contingent consideration     —       3,100  
    Deferred tax liabilities, current portion     16       —  
    Deferred revenue, current portion     69,356       50,732  
    Total current liabilities     95,085       78,808  
                     
    Deferred revenue, long term portion     11,915       7,097  
    Lease liability, long term portion     2,814       1,968  
    Deferred tax liabilities     1,591       300  
    Other liabilities     28       27  
    Total liabilities     111,433       88,200  
                     
    Stockholders’ equity:                
    Common stock     398       373  
    Additional paid-in capital     1,253,168       1,212,913  
    Treasury stock     (3,765 )     (3,639 )
    Accumulated other comprehensive income     1,509       1,582  
    Accumulated deficit     (1,064,295 )     (1,066,658 )
    Total stockholders’ equity     187,015       144,571  
    Total liabilities and stockholders’ equity   $ 298,448     $ 232,771  
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)    		  
        Six Months Ended September 30,  
        2024     2023  
    Cash flows from operating activities:                
                     
    Net income (loss)   $ 2,363     $ (7,883 )
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:                
    Depreciation and amortization     2,395       2,234  
    Stock-based compensation expense     2,072       2,468  
    Provision for excess and obsolete inventory     780       1,070  
    Amortization of operating lease right-of-use assets     546       122  
    Deferred income taxes     (5,165 )     —  
    Change in fair value of contingent consideration     6,682       2,200  
    Other non-cash items     (15 )     273  
    Changes in operating asset and liability accounts:                
    Accounts receivable     2,538       3,152  
    Inventory     (6,672 )     (11,935 )
    Prepaid expenses and other assets     (2,082 )     8,015  
    Operating leases     (1,048 )     (123 )
    Accounts payable and accrued expenses     (4,455 )     (9,399 )
    Deferred revenue     18,182       8,458  
    Net cash provided by (used in) operating activities     16,121       (1,348 )
                     
    Cash flows from investing activities:                
    Purchases of property, plant and equipment     (852 )     (430 )
    Cash paid to settle contingent consideration liabilities     (3,278 )     —  
    Cash paid for acquisition, net of cash acquired     (29,577 )     —  
    Change in other assets     218       (10 )
    Net cash used in investing activities     (33,489 )     (440 )
                     
    Cash flows from financing activities:                
    Repurchase of treasury stock     (126 )     —  
    Repayment of debt     (25 )     (33 )
    Cash paid related to registration of common stock shares     (148 )     —  
    Proceeds from exercise of employee stock options and ESPP     157       136  
    Net cash (used in) provided by financing activities     (142 )     103  
                     
    Effect of exchange rate changes on cash     16       (10 )
                     
    Net decrease in cash, cash equivalents and restricted cash     (17,494 )     (1,695 )
    Cash, cash equivalents and restricted cash at beginning of period     92,280       25,675  
    Cash, cash equivalents and restricted cash at end of period   $ 74,786     $ 23,980  
    RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
    (In thousands, except per share data)    		  
        Three Months Ended
    September 30,    		     Six Months Ended
    September 30,    		  
        2024     2023     2024     2023  
    Net income (loss)   $ 4,887     $ (2,485 )   $ 2,363     $ (7,883 )
    Stock-based compensation     843       1,111       2,072       2,468  
    Acquisition costs     850       —       1,080       —  
    Amortization of acquisition-related intangibles     608       538       1,020       1,082  
    Change in fair value of contingent consideration     2,762       850       6,682       2,200  
    Non-GAAP net income (loss)   $ 9,950     $ 14     $ 13,217     $ (2,133 )
                                     
    Non-GAAP net income (loss) per share – basic   $ 0.27     $ –     $ 0.36     $ (0.07 )
    Non-GAAP net income (loss) per share – diluted   $ 0.27     $ –     $ 0.36     $ (0.07 )
    Weighted average shares outstanding – basic     36,952       28,828       36,317       28,545  
    Weighted average shares outstanding – diluted     37,499       28,828       36,951       28,545  
    Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Income
    (In millions, except per share data)
        Three Months Ending  
        December 31, 2024  
    Net loss   $ (1.0 )
    Stock-based compensation     2.3  
    Amortization of acquisition-related intangibles     0.7  
    Non-GAAP net income   $ 2.0  
    Non-GAAP net income per share   $ 0.05  
    Shares outstanding     38.5  


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

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

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

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

    The MIL Network –

  • 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 –

  • 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,

     

    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,

     

    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,

     

    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,

     

     

    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 –

  • MIL-OSI: Silicon Motion Announces Results for the Period Ended September 30, 2024

    Source: GlobeNewswire (MIL-OSI)

    Business Highlights

    • Third quarter of 2024 sales increased 1% Q/Q and increased 23% Y/Y
      • SSD controller sales: 3Q of 2024 were flat Q/Q and increased 20% to 25% Y/Y
      • eMMC+UFS controller sales: 3Q of 2024 increased 0% to 5% Q/Q and increased 40% to 45% Y/Y
      • SSD solutions sales: 3Q of 2024 increased 5% to 10% Q/Q and increased 5% to 10% Y/Y

    Financial Highlights

      3Q 2024 GAAP 3Q 2024 Non-GAAP
    • Net sales $212.4 million (+1% Q/Q, +23% Y/Y) $212.4 million (+1% Q/Q, +23% Y/Y)
    • Gross margin 46.7% 46.8%
    • Operating margin 11.5% 16.1%
    • Earnings per diluted ADS $0.62 $0.92

    TAIPEI, Taiwan and MILPITAS, Calif., Oct. 31, 2024 (GLOBE NEWSWIRE) — Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion,” the “Company” or “we”) today announced its financial results for the quarter ended September 30, 2024. For the third quarter of 2024, net sales (GAAP) increased sequentially to $212.4 million from $210.7 million in the second quarter of 2024. Net income (GAAP) decreased to $20.8 million, or $0.62 per diluted American Depositary Share of the Company (“ADS”) (GAAP), from net income (GAAP) of $30.8 million, or $0.91 per diluted ADS (GAAP), in the second quarter of 2024.

    For the third quarter of 2024, net income (non-GAAP) decreased to $31.0 million, or $0.92 per diluted ADS (non-GAAP), from net income (non-GAAP) of $32.5 million, or $0.96 per diluted ADS (non-GAAP), in the second quarter of 2024.

    All financial numbers are in U.S. dollars unless otherwise noted.

    Third Quarter of 2024 Review
    “We continued to execute well in the third quarter of 2024, delivering revenue above the mid-point of our guided range and further expanding our gross margins,” said Wallace Kou, President and CEO of Silicon Motion. “Our eMMC and UFS controller revenue grew modestly, and our SSD controller revenue remained strong given continued growth in the OEM channel. We continue to outperform the market through new wins we secured this quarter with both NAND makers and module makers that we expect will ramp-up in 2025. We expect this trend to continue as we expand our product portfolio and deliver world-class controllers to the market.”

    Key Financial Results

    (in millions, except percentages and per ADS amounts) GAAP Non-GAAP
    3Q 2024
    		   2Q 2024
    		   3Q 2023
    		   3Q 2024
    		   2Q 2024
    		   3Q 2023
    		  
    Revenue $212.4   $210.7   $172.3   $212.4   $210.7   $172.3  
    Gross profit   $99.3     $96.8     $73.1     $99.3     $96.8     $73.3  
    Percent of revenue   46.7%     45.9%     42.4%     46.8%     46.0%     42.5%  
    Operating expenses $74.8   $66.0   $58.1   $65.1   $62.1   $49.5  
    Operating income   $24.5     $30.7     $15.0     $34.2     $34.7     $23.8  
    Percent of revenue   11.5%     14.6%     8.7%     16.1%     16.5%     13.8%  
    Earnings per diluted ADS $0.62   $0.91   $0.32   $0.92   $0.96   $0.63  


    Other Financial Information

    (in millions) 3Q 2024
    		   2Q 2024
    		   3Q 2023
    		  
    Cash, cash equivalents, restricted cash and short-term investments—end of period $368.6   $343.6   $350.3  
    Routine capital expenditures $7.4   $6.3   $6.3  
    Dividend payments $16.8   $16.8     —  

    During the third quarter of 2024, we had $12.4 million of capital expenditures, including $7.4 million for the routine purchase of testing equipment, software, design tools and other items, and $5.0 million for building construction in Hsinchu.

    Business Outlook
    “Looking ahead, we expect to experience gains from greater outsourcing by our NAND flash maker partners, which should continue to deliver revenue and profitability growth for the company,” said Wallace Kou, President and CEO of Silicon Motion. “In the current quarter, we are introducing two key new controllers, including our first AI/enterprise server MonTitan controller and our first PCIe Gen 5.0 client SSD controller, placing Silicon Motion in an exceptionally strong position entering calendar 2025. While the seasonal holiday demand is expected to be more muted than in past years, we are confident that our highly differentiated controller solutions for PCs, smartphones and now enterprise-class storage controllers will further strengthen our market leadership position and will build on our foundation for strong, sustainable long-term growth.” 

    For the fourth quarter of 2024, management expects:

    ($ in millions) GAAP Non-GAAP Adjustment Non-GAAP
    Revenue $191 to $202
    -10% to -5% Q/Q
    -6% to 0% Y/Y    		 — $191 to $202
    -10% to -5% Q/Q
    -6% to 0% Y/Y
    Gross margin 46.3% to 47.4% Approximately $0.3* 46.5 % to 47.5%
    Operating margin 8.0% to 9.9% Approximately $13.4 to $14.4** 15.6% to 16.6%

    * Projected gross margin (non-GAAP) excludes $0.3 million of stock-based compensation.
    ** Projected operating margin (non-GAAP) excludes $13.4 million to $14.4 million of stock-based compensation and dispute related expenses.

    Conference Call & Webcast:
    The Company’s management team will conduct a conference call at 8:00 am Eastern Time on October 31, 2024.

    Conference Call Details
    Participants must register in advance to join the conference call using the link provided below. Conference access information (including dial-in information and a unique access PIN) will be provided in the email received upon registration.

    Participant Online Registration:
    https://register.vevent.com/register/BI3e5d77077ee94ca9b9fd61325f52a0e9

    A webcast of the call will be available on the Company’s website at www.siliconmotion.com.

    Discussion of Non-GAAP Financial Measures

    To supplement the Company’s unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation and other items, including gross profit (non-GAAP), gross margin (non-GAAP), operating expenses (non-GAAP), operating profit (non-GAAP), operating margin (non-GAAP), non-operating income (expense) (non-GAAP), net income (non-GAAP), and earnings per diluted ADS (non-GAAP). These non-GAAP measures are not in accordance with or an alternative to GAAP and may be different from similarly-titled non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

    Our non-GAAP financial measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because they are consistent with the financial models and estimates published by many analysts who follow the Company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target’s performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management’s perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering:

    • the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;
    • the ability to better identify trends in the Company’s underlying business and perform related trend analysis;
    • a better understanding of how management plans and measures the Company’s underlying business; and
    • an easier way to compare the Company’s operating results against analyst financial models and operating results of our competitors that supplement their GAAP results with non-GAAP financial measures.

    The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each of these individual items in our reconciliation of these non-GAAP financial measures:

    Stock-based compensation expense consists of non-cash charges related to the fair value of restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact of share-based compensation on its operating results.

    Restructuring charges relate to the restructuring of our underperforming product lines, principally the write-down of NAND flash, embedded DRAM and SSD inventory valuation and severance payments. 

    M&A transaction expenses consist of legal, financial advisory and other fees related to the transaction.

    Dispute related expenses consist of legal, consultant, other fees and resolution related to the dispute.

    Foreign exchange loss (gain) consists of translation gains and/or losses of non-US$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-US$ currencies against the US$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures.

    Unrealized holding loss (gain) on investments relates to the net change in fair value of long-term investments.

     
    Silicon Motion Technology Corporation
    Consolidated Statements of Income
    (in thousands, except percentages and per ADS data, unaudited)
             
        For Three Months Ended   For the Nine Months Ended
        Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,
        2023   2024   2024   2023   2024
        ($)   ($)   ($)   ($)   ($)
    Net Sales   172,333     210,670     212,412     436,763     612,392  
    Cost of sales   99,193     113,893     113,142     254,897     331,227  
    Gross profit   73,140     96,777     99,270     181,866     281,165  
    Operating expenses                    
    Research & development   41,740     50,788     58,486     117,926     163,666  
    Sales & marketing   6,862     6,777     7,009     20,715     20,090  
    General & administrative   8,939     7,215     9,315     20,323     23,003  
    Loss from settlement of litigation   591     1,250     –     591     1,250  
    Operating income   15,008     30,747     24,460     22,311     73,156  
    Non-operating income (expense)                    
    Interest income, net   3,480     4,175     3,518     8,026     10,760  
    Foreign exchange gain (loss), net   569     245     (488 )   2,030     345  
    Unrealized holding gain(loss) on investments   (2,828 )   1,855     (602 )   8,053     (355 )
    Subtotal   1,221     6,275     2,428     18,109     10,750  
    Income before income tax   16,229     37,022     26,888     40,420     83,906  
    Income tax expense   5,642     6,201     6,045     8,639     16,226  
    Net income   10,587     30,821     20,843     31,781     67,680  
                         
    Earnings per basic ADS   0.32     0.92     0.62     0.95     2.01  
    Earnings per diluted ADS   0.32     0.91     0.62     0.95     2.01  
                         
    Margin Analysis:                    
    Gross margin   42.4 %   45.9 %   46.7 %   41.6 %   45.9 %
    Operating margin   8.7 %   14.6 %   11.5 %   5.1 %   11.9 %
    Net margin   6.1 %   14.6 %   9.8 %   7.3 %   11.1 %
                         
    Additional Data:                    
    Weighted avg. ADS equivalents   33,413     33,684     33,687     33,332     33,627  
    Diluted ADS equivalents   33,471     33,697     33,700     33,431     33,691  
                                   
     
    Silicon Motion Technology Corporation
    Reconciliation of GAAP to Non-GAAP Operating Results
    (in thousands, except percentages and per ADS data, unaudited)
             
        For Three Months Ended   For the Nine Months Ended
        Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,
        2023   2024   2024   2023   2024
        ($)   ($)   ($)   ($)   ($)
    Gross profit (GAAP)   73,140     96,777     99,270     181,866     281,165  
    Gross margin (GAAP)   42.4 %   45.9 %   46.7 %   41.6 %   45.9 %
    Stock-based compensation (A)   94     14     63     300     149  
    Restructuring charges   88     46     –     3,347     46  
    Gross profit (non-GAAP)   73,322     96,837     99,333     185,513     281,360  
    Gross margin (non-GAAP)   42.5 %   46.0 %   46.8 %   42.5 %   45.9 %
                         
    Operating expenses (GAAP)   58,132     66,030     74,810     159,555     208,009  
    Stock-based compensation (A)   (3,751 )   (371 )   (3,595 )   (11,460 )   (7,059 )
    M&A transaction expenses   (708 )   –     –     (2,893 )   –  
    Dispute related expenses   (3,495 )   (3,527 )   (6,076 )   (3,495 )   (11,135 )
    Restructuring charges   (661 )   –     –     (4,581 )   –  
    Operating expenses (non-GAAP)   49,517     62,132     65,139     137,126     189,815  
                         
    Operating profit (GAAP)   15,008     30,747     24,460     22,311     73,156  
    Operating margin (GAAP)   8.7 %   14.6 %   11.5 %   5.1 %   11.9 %
    Total adjustments to operating profit   8,797     3,958     9,734     26,076     18,389  
    Operating profit (non-GAAP)   23,805     34,705     34,194     48,387     91,545  
    Operating margin (non-GAAP)   13.8 %   16.5 %   16.1 %   11.1 %   14.9 %
                         
    Non-operating income (expense) (GAAP)   1,221     6,275     2,428     18,109     10,750  
    Foreign exchange loss (gain), net   (569 )   (245 )   488     (2,030 )   (345 )
    Unrealized holding loss (gain) on investments   2,828     (1,855 )   602     (8,053 )   355  
                         
    Non-operating income (expense) (non-GAAP)   3,480     4,175     3,518     8,026     10,760  
                         
    Net income (GAAP)   10,587     30,821     20,843     31,781     67,680  
    Total pre-tax impact of non-GAAP adjustments   11,056     1,858     10,824     15,993     18,399  
    Income tax impact of non-GAAP adjustments   (584 )   (218 )   (649 )   (2,968 )   (1,014 )
    Net income (non-GAAP)   21,059     32,461     31,018     44,806     85,065  
                         
    Earnings per diluted ADS (GAAP)   $0.32     $0.91     $0.62     $0.95     $2.01  
    Earnings per diluted ADS (non-GAAP)   $0.63     $0.96     $0.92     $1.33     $2.52  
                         
    Shares used in computing earnings per diluted ADS (GAAP)   33,471     33,697     33,700     33,431     33,691  
    Non-GAAP adjustments   128     18     109     136     52  
    Shares used in computing earnings per diluted ADS (non-GAAP)   33,599     33,715     33,809     33,567     33,743  
                         
    (A) Excludes stock-based compensation as follows:                    
    Cost of sales   94     14     63     300     149  
    Research & development   2,422     94     2,377     7,605     4,614  
    Sales & marketing   521     173     455     1,496     975  
    General & administrative   808     104     763     2,359     1,470  
                                   
     
    Silicon Motion Technology Corporation
    Consolidated Balance Sheet
    (In thousands, unaudited)
                       
        Sep. 30,
    		   Jun. 30,
    		   Sep. 30,
        2023
    		   2024
    		   2024
        ($)
    		   ($)
    		   ($)
    Cash and cash equivalents   295,385     289,175     313,924  
    Accounts receivable (net)   193,389     191,692     202,726  
    Inventories   199,003     240,811     214,574  
    Refundable deposits – current   49,445     51,036     51,102  
    Prepaid expenses and other current assets   16,896     31,460     38,246  
    Total current assets   754,118     804,174     820,572  
    Long-term investments   17,023     17,301     16,878  
    Property and equipment (net)   162,107     179,550     181,983  
    Other assets   33,672     29,121     29,304  
    Total assets   966,920     1,030,146     1,048,737  
                       
    Accounts payable   26,975     36,411     30,888  
    Income tax payable   26,279     14,103     14,444  
    Accrued expenses and other current liabilities   77,502     134,947     131,143  
    Total current liabilities   130,756     185,461     176,475  
    Other liabilities   62,112     60,182     62,673  
    Total liabilities   192,868     245,643     239,148  
    Shareholders’ equity   774,052     784,503     809,589  
    Total liabilities & shareholders’ equity   966,920     1,030,146     1,048,737  
                       
     
    Silicon Motion Technology Corporation
    Condensed Consolidated Statements of Cash Flows
    (in thousands, unaudited)
             
        For Three Months Ended   For the Nine Months Ended
        Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,
        2023   2024   2024   2023   2024
        ($)   ($)   ($)   ($)   ($)
    Net income   10,587     30,821     20,843     31,781     67,680  
    Depreciation & amortization   8,043     5,802     6,664     19,032     18,075  
    Stock-based compensation   3,845     385     3,658     11,760     7,208  
    Investment losses (gain) & disposals   3,135     (1,855 )   602     (7,556 )   355  
    Changes in operating assets and liabilities   39,302     (13,660 )   22,280     52,910     (9,967 )
    Net cash provided by (used in) operating activities   64,912     21,493     54,047     107,927     83,351  
                         
    Purchase of property & equipment   (17,052 )   (10,427 )   (12,436 )   (40,687 )   (33,612 )
    Net cash provided by (used in) investing activities   (17,052 )   (10,427 )   (12,436 )   (40,687 )   (33,612 )
                         
    Dividend payments   –     (16,820 )   (16,812 )   (15 )   (50,441 )
    Net cash used in financing activities   –     (16,820 )   (16,812 )   (15 )   (50,441 )
                         
    Net increase (decrease) in cash, cash equivalents & restricted cash   47,860     (5,754 )   24,799     67,225     (702 )
    Effect of foreign exchange changes   (2,528 )   86     186     (3,977 )   308  
    Cash, cash equivalents & restricted cash—beginning of period   304,971     349,279     343,611     287,055     368,990  
    Cash, cash equivalents & restricted cash—end of period   350,303     343,611     368,596     350,303     368,596  
                                   

    Shareholder Litigation
    On August 31, 2023, a Silicon Motion ADS holder (the “Plaintiff”) filed a putative class action complaint in the United States District Court for the Southern District of California, captioned Water Island Event-Driven Fund v. MaxLinear, Inc., No. 23-cv-01607 (S.D. Cal.), asserting claims against MaxLinear and two of its officers (the “MaxLinear Defendants”) for alleged violations of (i) Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder and (ii) Section 20(a) of the Exchange Act, in connection with alleged false and misleading statements made by the MaxLinear Defendants between June 6, 2023 and July 26, 2023 concerning MaxLinear’s intent to consummate the merger agreement it had entered into with Silicon Motion. On August 28, 2024, the Court dismissed the complaint against the MaxLinear Defendants without prejudice for lack of standing.  On September 18, 2024, the Plaintiff filed an amended complaint against the MaxLinear Defendants, and also added Silicon Motion and two of its officers (the “Silicon Motion Defendants”), asserting substantially similar claims under the Exchange Act. The complaint seeks compensatory damages, including interest, costs and expenses, and such other equitable or injunctive relief that the court deems appropriate. Motions to dismiss the amended complaint are expected to be fully briefed by February 2025.  The Silicon Motion Defendants believe that the claims asserted against them are without merit and intend to defend themselves vigorously.

    About Silicon Motion:
    We are the global leader in supplying NAND flash controllers for solid state storage devices.  We supply more SSD controllers than any other company in the world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and UFS embedded storage controllers used in smartphones, IoT devices and other applications.  We also supply customized high-performance hyperscale data center and specialized industrial and automotive SSD solutions.  Our customers include most of the NAND flash vendors, storage device module makers and leading OEMs.  For further information on Silicon Motion, visit us at www.siliconmotion.com.

    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. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to the unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from one or more customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; the impact of inflation on our business and customer’s businesses and any effect this has on economic activity in the markets in which we operate; the functionalities and performance of our information technology (“IT”) systems, which are subject to cybersecurity threats and which support our critical operational activities, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology; the effects on our business and our customer’s business taking into account the ongoing U.S.-China tariffs and trade disputes; the uncertainties associated with any future global or regional pandemic; the continuing tensions between Taiwan and China including enhanced military activities; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; supply chain disruptions that have affected us and our industry as well as other industries on a global basis; the payment, or non-payment, of cash dividends in the future at the discretion of our board of directors and any announced planned increases in such dividends; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in the products we sell given the current raw material supply shortages being experienced in our industry; our customers’ sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; any potential impairment charges that may be incurred related to businesses previously acquired or divested in the future; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 30, 2024. Other than as required under the securities laws, we do not intend, and do not undertake any obligation to, update or revise any forward-looking statements, which apply only as of the date of this press release.

    The MIL Network –

  • MIL-OSI: Silicon Motion Appoints Jason Tsai as Chief Financial Officer

    Source: GlobeNewswire (MIL-OSI)

    TAIPEI, Taiwan and MILPITAS, Calif., Oct. 31, 2024 (GLOBE NEWSWIRE) — Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion” or the “Company”), a global leader in designing and marketing NAND flash controllers for solid state storage devices, today announced, following a search process, that Jason Tsai, currently the Interim Chief Financial Officer and VP of Investor Relations and Finance of the Company, has been appointed the Chief Financial Officer, effective October 28, 2024. Mr. Tsai has served as our Interim CFO since April 25, 2024.

    Wallace Kou, Chief Executive Officer of Silicon Motion, said, “Jason has made innumerable contributions to the strong performance of our finance team and the financial results of the Company in his previous roles as Interim CFO and VP of Investor Relations and Finance. After a six-month search, our Board unanimously resolved that with his long history with the Company and his in-depth knowledge of our business, our customers and our industry, Jason is the ideal choice to help align our long-term strategy with our strong financial performance and operational excellence in the years ahead.”

    “I am excited for this opportunity to help Silicon Motion through its next chapter,” said Jason Tsai. “I believe that the Company is poised for significant growth as it extends its market leading position in its current markets and capitalize on its new and growing opportunities in the enterprise storage market.”

    Jason has over 25 years of finance leadership experience in the semiconductor, hardware and software (SaaS) sectors. Prior to rejoining Silicon Motion last year, he held finance leadership positions at Zendesk and Synaptics and brings an extensive background in financial planning, treasury, capital markets, investor relations and strategic planning.

    ABOUT SILICON MOTION:

    We are the global leader in supplying NAND flash controllers for solid state storage devices.  We supply more SSD controllers than any other company in the world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and UFS embedded storage controllers used in smartphones, IoT devices and other applications.  We also supply customized high-performance hyperscale data center and specialized industrial and automotive SSD solutions.  Our customers include most of the NAND flash vendors, storage device module makers and leading OEMs.  For further information on Silicon Motion, visit us at www.siliconmotion.com.

    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. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to the unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from one or more customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; the impact of inflation on our business and customer’s businesses and any effect this has on economic activity in the markets in which we operate; the functionalities and performance of our information technology (“IT”) systems, which are subject to cybersecurity threats and which support our critical operational activities, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology; the effects on our business and our customer’s business taking into account the ongoing U.S.-China tariffs and trade disputes; the uncertainties associated with any future global or regional pandemic; the continuing tensions between Taiwan and China including enhanced military activities; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; supply chain disruptions that have affected us and our industry as well as other industries on a global basis; the payment, or non-payment, of cash dividends in the future at the discretion of our board of directors and any announced planned increases in such dividends; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in the products we sell given the current raw material supply shortages being experienced in our industry; our customers’ sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; any potential impairment charges that may be incurred related to businesses previously acquired or divested in the future; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 30, 2024. Other than as required under the securities laws, we do not intend, and do not undertake any obligation to, update or revise any forward-looking statements, which apply only as of the date of this press release.

    Investor Contact:

    Tom Sepenzis
    Senior Director of IR & Strategy
    E-mail: tsepenzis@siliconmotion.com

    Selina Hsieh
    Investor Relations
    ir@siliconmotion.com

    The MIL Network –

  • MIL-Evening Report: Not the time to share: NZ needs to rethink multi-bed hospital rooms

    Source: The Conversation (Au and NZ) – By Cindy Towns, Senior Lecturer, University of Otago Wellington, University of Otago

    As New Zealand agonises over its hospitals – where they are, how they should be staffed and how they should be funded – a key element in the debate is being missed: the need for single rooms in all public hospitals.

    It’s currently normal for patients to stay in shared rooms with up to five other people. In some hospitals this includes accommodating men and women in the same room, despite serious safety and ethical concerns.

    But it shouldn’t be this way. For a number of reasons, including infection control, privacy and cost, new hospitals and renovations need to be based on single occupancy rooms.

    Our new research brings together both the clinical and ethical arguments for single rooms for all patients as the most basic standard of care.

    Infection control

    Many may view shared rooms as a cost saving. But one of the key arguments for individual rooms in hospitals is the cost and harm of infections and bacterial resistance.

    Single rooms reduce risks by eliminating exposure to shared infection sources such as touched surfaces, unfiltered air, toilets and water systems.

    They also reduce the need for room transfers within the hospital which increase the risk for infection transmission between patients.

    There is strong evidence single occupancy rooms result in reduced infections in intensive care units. And further research has also found single occupancy reduces hospital transmission of COVID-19.

    In New Zealand, single rooms are prioritised for patients known to be infectious. But the key word here is known. This policy fails to recognise that a large proportion of transmissible infections are unknown at the time of ward placement.

    However, even when infection is known, our hospitals cannot meet basic guidelines due to the lack of single rooms. Only 30% of Wellington and Hutt hospital rooms are single occupancy, for example.

    Without single occupancy as the standard in hospitals, infection control will remain compromised.

    Delirium and dementia

    Individual rooms are also required for older adults. New Zealand’s population is ageing; as a result, patients with delirium and dementia needing hospitalisation will increase.

    Delirium affects about 25% of patients in hospital and is associated with a longer stay, more complications and an increased risk for death.

    Delirium prevention and management requires a low-stimulus environment, undisrupted sleep, and control of light and noise which cannot be achieved in shared hospital rooms.

    Research has shown a reduction in delirium with single rooms.

    The behavioural and psychological symptoms of dementia also pose significant challenges in hospital. Symptoms include hallucinations, delusions, sleep disturbance, depression, inappropriate sexual behaviour and aggression.

    These can be highly distressing for the patient and those around them and – like delirium – cannot be managed to a basic standard of care within a shared room.

    Dementia prevalence will more than double by 2050. And yet New Zealand hospitals are ill-prepared to accommodate this rise in demand.

    The right to security, privacy and dignity

    Shared rooms in hospitals clearly undermine clinical care, but they also violate human and patient rights.

    One of the most fundamental human rights is “security of person”. Nobody should have to share rooms with patients who are agitated, aggressive or sexually inappropriate due to delirium or dementia.

    Unfortunately, patients frequently share with those who are unable to manage their own behaviour. While the risks to women have been highlighted, no patient should be endangered or frightened by another patient’s behaviour.

    Dignity and privacy are also a fundamental patient rights, with privacy covered by by both the Health Information Privacy Code and the Health and Disability patient Code of Rights.

    Hospital patients often need assistance with dressing, showering and toileting. Many admissions involve vomiting, diarrhoea or incontinence. And design that relies on curtains to maintain privacy renders this right farcical.

    Research and complaints clearly show patients do not believe their privacy is adequately protected in shared spaces.

    Some may argue for multi-bed rooms on the basis that some patients prefer company. However patient surveys on privacy and confidentiality are overwhelmingly in favour of single occupancy.

    Factoring in cost

    While there is an increase in up-front costs when building single rooms due to the larger hospital footprint, research has found there is no convincing economic evidence in favour of multi-bed rooms.

    The potential savings for future pandemics – in mortality, patient transfers and disease transmission – should not be underestimated. Improved management of delirium and dementia, will also decrease length of stay and cost.

    The argument for single occupancy hospital rooms on clinical, ethical and legal grounds is collectively unequivocal.

    New Zealand needs to follow international best practice and introduce single occupancy rooms as a basic standard for new hospital builds and upgrades.

    Not doing so would ignore the lessons learnt in the COVID-19 pandemic, fail to account for the needs of an ageing population and continue to render New Zealand’s code of patient rights a fairy tale.

    The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

    – ref. Not the time to share: NZ needs to rethink multi-bed hospital rooms – https://theconversation.com/not-the-time-to-share-nz-needs-to-rethink-multi-bed-hospital-rooms-241573

    MIL OSI Analysis – EveningReport.nz –

  • MIL-OSI: Farmers & Merchants Bancorp, Inc. Reports 2024 Third-Quarter and Year-to-Date Financial Results

    Source: GlobeNewswire (MIL-OSI)

    ARCHBOLD, Ohio, Oct. 30, 2024 (GLOBE NEWSWIRE) — Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2024 third quarter and year-to-date ended September 30, 2024.

    2024 Third Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

    • 86 consecutive quarters of profitability
    • Net income increased 36.4% to $6.5 million, or $0.48 per basic and diluted share, from $4.8 million, or $0.35 per basic and diluted share, and net income expanded 14.7% from the 2024 second quarter
    • Net interest margin increased 12 basis points to 2.71%
    • Efficiency ratio improved to 67.98%, compared to 73.07% for the same period a year ago, and 69.03% for the 2024 second quarter
    • Total net loans remain stable at $2.54 billion at September 30, 2024
    • Total assets increased 4.8% to a record $3.39 billion
    • Deposits increased 4.3% to a record $2.68 billion
    • Stockholders’ equity increased 10.6% to a record $335.4 million
    • Asset quality remains at historically strong levels with nonperforming loans of only $2.9 million at September 30, 2024, compared to $22.4 million at September 30, 2023
    • Allowance for credit losses was 879.37% of nonperforming loans
    • F&M ended the quarter with excellent liquidity levels, and over $635 million in contingent funding sources, and a cash-to-assets ratio of 7.2%
    • According to the FDIC, F&M continued to have the third largest share of deposits out of the 58 financial institutions that are also operating within its local markets

    Lars B. Eller, President and Chief Executive Officer, stated, “F&M produced excellent earnings growth on a year-over-year and sequential basis, driven by higher net interest income, historically strong asset quality, and prudent expense management. Most importantly, our third quarter results reflect the talent of our associates, as we continue to work hard to drive operating improvements at F&M, serve our local Ohio, Indiana, and Michigan communities, and position F&M for long-term success. In addition, I am pleased to report that F&M was the third largest bank out of 58 financial institutions within the markets we compete, according to the FDIC, reflecting the leading value we provide to our local communities. In fact, F&M is the number one bank, based on deposits, in almost half of the communities in which we operate.”  

    Income Statement
    Net income for the 2024 third quarter ended September 30, 2024, was $6.5 million, compared to $4.8 million for the same period last year. Net income per basic and diluted share for the 2024 third quarter was $0.48, compared to $0.35 for the same period last year. Net income for the 2024 nine months ended September 30, 2024, was $17.6 million, compared to $17.2 million for the same period last year. Net income per basic and diluted share for the 2024 nine months was $1.28, compared to $1.26 for the same period last year.

    Mr. Eller continued, “Our 2024 third quarter and year-to-date performance demonstrate the success of the near-term strategies we are pursuing to navigate a complex operating environment and improve earnings. Most importantly, while the demand for loans is high across our markets, our approach to risk and pricing remains conservative. This near-term strategy has contributed to excellent asset quality. In addition, we continue to focus on strategies aimed at optimizing our deposit base and growing low-cost checking (DDA) deposits. Since the beginning of 2024, we have added over 5,600 new checking accounts, and benefited from new and expanded relationships at offices that were opened in 2023. As a result, we ended the quarter with a loan-to-deposit ratio of 93.6%, compared to 97.2% at September 30, 2023, and 96.0% at June 30, 2024. Our third quarter of 2024 loan-to-deposit ratio was the lowest quarterly value in two years. The final near-term strategy we are pursuing is focused on controlling expenses, and I am encouraged by the continued year-over-year and sequential improvement in our efficiency ratio. This reflects the opportunities we are pursuing to manage operating costs and expand productivity.”

    Deposits
    At September 30, 2024, total deposits were $2.68 billion, an increase of 4.3% from September 30, 2023. The Company’s cost of interest-bearing liabilities was 3.2% for the quarter ended September 30, 2024, compared to 2.82% for the quarter ended September 30, 2023, and 3.02% for the 2023 fourth quarter ended December 31, 2023.

    Loan Portfolio and Asset Quality
    “F&M’s teams continue to do an excellent job managing our cost of funds, loan pricing, deposit growth and overall net interest margin. Since the quarter ended December 31, 2023, our yield on earning assets has increased by 34 basis points, compared to a 19 basis point increase in our cost of interest bearing liabilities – representing the third consecutive quarter our yield on earning assets has outpaced our cost of interest bearing liabilities. We expect this trend will continue as more of our loan portfolio reprices in 2024,” continued Mr. Eller.

    Total loans, net at September 30, 2024, increased 0.3%, or by $8.7 million to $2.54 billion, compared to $2.53 billion at September 30, 2023. The year-over-year growth was driven by higher consumer real estate, commercial and industrial, and agricultural loans, partially offset by lower commercial real estate, agricultural real estate, and consumer loans.

    F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $2.9 million, or 0.11% of total loans at September 30, 2024, compared to $22.4 million, or 0.89% of total loans at September 30, 2023, and $22.4 million, or 0.87% at December 31, 2023.

    F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.3% of the Company’s total loan portfolio at September 30, 2024. In addition, F&M’s commercial real estate office credit exposure represented 5.3% of the Company’s total loan portfolio at September 30, 2024, with a weighted average loan-to-value of approximately 64% and an average loan of approximately $880,000.

    F&M’s CRE portfolio included the following categories at September 30, 2024:

    CRE Category   Dollar
    Balance    		   Percent of CRE Portfolio(*)   Percent of Total Loan Portfolio(*)
                 
    Industrial   $ 274,953   21.1 %   10.8 %
    Retail   $ 237,622   18.2 %   9.4 %
    Multi-family   $ 223,926   17.2 %   8.8 %
    Hotels   $ 141,642   10.9 %   5.6 %
    Office   $ 134,973   10.4 %   5.3 %
    Gas Stations   $ 62,028   4.8 %   2.5 %
    Food Service   $ 46,526   3.6 %   1.8 %
    Development   $ 30,999   2.4 %   1.2 %
    Senior Living   $ 29,866   2.3 %   1.2 %
    Auto Dealers   $ 25,068   1.9 %   1.0 %
    Other   $ 93,557   7.2 %   3.7 %
    Total CRE   $ 1,301,160   100.0 %   51.3 %

             * Numbers have been rounded

    At September 30, 2024, the Company’s allowance for credit losses to nonperforming loans was 879.37%, compared to 112.61% at September 30, 2023, and 111.95% at December 31, 2023. The allowance to total loans was 1.01% at September 30, 2024, compared to 1.00% at September 30, 2023. Including accretable yield adjustments, associated with the Company’s recent acquisitions, F&M’s allowance for credit losses to total loans was 1.10% at September 30, 2024, compared to 1.18% at September 30, 2023.

    Mr. Eller concluded, “With two months remaining in 2024, I am encouraged by F&M’s strong financial and operating performance to date. F&M ended the quarter with record stockholders’ equity, historically strong asset quality, record deposits, and excellent liquidity levels with over $635 million in contingent funding sources, and a cash-to-assets ratio of 7.2%. We remain focused on continual improvements, managing the items under our control, and providing our customers and communities with outstanding, and local financial services. As a result, F&M’s financial and operating performance continues to strengthen and I believe the Company is well positioned to create lasting value for our communities, customers, team members, and shareholders.”

    Stockholders’ Equity and Dividends
    Total stockholders’ equity increased 10.6% to $335.4 million, or $24.48 per share at September 30, 2024, from $303.2 million, or $22.19 per share at September 30, 2023. The Company’s Tier 1 leverage ratio of 8.04%, remained stable compared to September 30, 2023.

    Tangible stockholders’ equity increased to $242.8 million at September 30, 2024, compared to $208.8 million at September 30, 2023. On a per share basis, tangible stockholders’ equity at September 30, 2024, was $17.72 per share, compared to $15.28 per share at September 30, 2023.

    For the nine months ended September 30, 2024, the Company has declared cash dividends of $0.66125 per share, which is a 5.0% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 30 consecutive years. For the nine months ended September 30, 2024, the dividend payout ratio was 50.99% compared to 49.50% for the same period last year.

    About Farmers & Merchants State Bank:
    Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) is the holding company of F&M Bank, a local independent community bank that has been serving its communities since 1897. F&M Bank provides commercial banking, retail banking and other financial services. Our locations are in Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties. The Michigan footprint includes Oakland County, and we have Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Perrysburg and Bryan, Ohio.

    Safe Harbor Statement
    Farmers & Merchants Bancorp, Inc. (“F&M”) wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management’s expectations and comments, may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M’s SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC’s website, www.sec.gov or through F&M’s website www.fm.bank.

    Non-GAAP Financial Measures
    This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is included within this press release.

     
    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
    (Unaudited) (in thousands of dollars, except per share data)
             
          Three Months Ended   Nine Months Ended
          September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   September 30, 2024   September 30, 2023
    Interest Income                              
    Loans, including fees     $ 36,873     $ 36,593     $ 35,200     $ 34,493   $ 33,783     $ 108,666     $ 94,851  
    Debt securities:                              
    U.S. Treasury and government agencies       1,467       1,148       1,045       987     1,005       3,660       3,103  
    Municipalities       387       389       394       397     392       1,170       1,201  
    Dividends       334       327       333       365     246       994       517  
    Federal funds sold       7       7       7       8     6       21       36  
    Other       2,833       2,702       1,675       2,020     927       7,210       1,830  
    Total interest income       41,901       41,166       38,654       38,270     36,359       121,721       101,538  
    Interest Expense                              
    Deposits       16,947       16,488       15,279       15,015     13,323       48,714       31,908  
    Federal funds purchased and securities sold under agreements to repurchase       277       276       284       293     349       837       1,181  
    Borrowed funds       2,804       2,742       2,689       2,742     2,741       8,235       6,134  
    Subordinated notes       284       285       284       285     284       853       853  
    Total interest expense       20,312       19,791       18,536       18,335     16,697       58,639       40,076  
    Net Interest Income – Before Provision for Credit Losses     21,589       21,375       20,118       19,935     19,662       63,082       61,462  
    Provision for Credit Losses – Loans       282       605       (289 )     278     460       598       1,420  
    Provision for Credit Losses – Off Balance Sheet Credit Exposures   (267 )     (18 )     (266 )     189     (76 )     (551 )     (143 )
    Net Interest Income After Provision for Credit Losses       21,574       20,788       20,673       19,468     19,278       63,035       60,185  
    Noninterest Income                              
    Customer service fees       300       189       598       415     248       1,087       917  
    Other service charges and fees       1,155       1,085       1,057       1,090     1,133       3,297       3,253  
    Interchange income       1,315       1,330       1,429       1,310     1,266       4,074       4,008  
    Loan servicing income       710       513       539       666     502       1,762       3,739  
    Net gain on sale of loans       215       314       107       230     294       636       469  
    Increase in cash surrender value of bank owned life insurance       265       236       216       216     221       717       618  
    Net loss on sale of available-for-sale securities       –       –       –       –     –       –       (891 )
    Total noninterest income       3,960       3,667       3,946       3,927     3,664       11,573       12,113  
    Noninterest Expense                              
    Salaries and wages       7,713       7,589       7,846       6,981     6,777       23,148       19,934  
    Employee benefits       2,112       2,112       2,171       1,218     2,066       6,395       6,302  
    Net occupancy expense       1,054       999       1,027       1,187     950       3,080       2,646  
    Furniture and equipment       1,472       1,407       1,353       1,370     1,189       4,232       3,652  
    Data processing       339       448       500       785     840       1,287       2,362  
    Franchise taxes       410       265       555       308     434       1,230       1,179  
    ATM expense       472       397       473       665     640       1,342       1,946  
    Advertising       597       519       530       397     865       1,646       2,209  
    Net (gain) loss on sale of other assets owned       –       (49 )     –       86     49       (49 )     49  
    FDIC assessment       516       507       580       594     586       1,603       1,388  
    Servicing rights amortization – net       219       187       168       182     106       574       429  
    Loan expense       244       251       229       246     241       724       809  
    Consulting fees       251       198       186       192     179       635       640  
    Professional fees       453       527       445       331     358       1,425       1,099  
    Intangible asset amortization       445       444       445       446     445       1,334       1,334  
    Other general and administrative       1,128       1,495       1,333       1,532     1,319       3,956       4,841  
    Total noninterest expense       17,425       17,296       17,841       16,520     17,044       52,562       50,819  
    Income Before Income Taxes       8,109       7,159       6,778       6,875     5,898       22,046       21,479  
    Income Taxes       1,593       1,477       1,419       1,332     1,121       4,489       4,235  
    Net Income       6,516       5,682       5,359       5,543     4,777       17,557       17,244  
    Other Comprehensive Income (Loss) (Net of Tax):                              
    Net unrealized gain (loss) on available-for-sale securities     11,664       2,531       (1,995 )     13,261     (4,514 )     12,200       (2,480 )
    Reclassification adjustment for realized loss on sale of available-for-sale securities       –       –       –       –     –       –       891  
    Net unrealized gain (loss) on available-for-sale securities     11,664       2,531       (1,995 )     13,261     (4,514 )     12,200       (1,589 )
    Tax expense (benefit)       2,449       531       (418 )     2,784     (947 )     2,562       (333 )
    Other comprehensive income (loss)       9,215       2,000       (1,577 )     10,477     (3,567 )     9,638       (1,256 )
    Comprehensive Income     $ 15,731     $ 7,682     $ 3,782     $ 16,020   $ 1,210     $ 27,195     $ 15,988  
    Basic Earnings Per Share     $ 0.48     $ 0.42     $ 0.39     $ 0.41   $ 0.35     $ 1.28     $ 1.26  
    Diluted Earnings Per Share     $ 0.48     $ 0.42     $ 0.39     $ 0.41   $ 0.35     $ 1.28     $ 1.26  
    Dividends Declared     $ 0.22125     $ 0.22     $ 0.22     $ 0.22   $ 0.21     $ 0.66125     $ 0.63  
                                   
    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited) (in thousands of dollars, except per share data)
     
          September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023
          (Unaudited)   (Unaudited)   (Unaudited)       (Unaudited)
    Assets                    
    Cash and due from banks   $ 244,572     $ 191,785     $ 186,541     $ 140,917     $ 151,711  
    Federal funds sold     932       1,283       1,241       1,284       1,471  
      Total cash and cash equivalents     245,504       193,068       187,782       142,201       153,182  
                           
    Interest-bearing time deposits     2,727       3,221       2,735       2,740       2,989  
    Securities – available-for-sale     404,881       365,209       347,516       358,478       348,255  
    Other securities, at cost     15,028       14,721       14,744       17,138       16,995  
    Loans held for sale     1,706       1,628       2,410       1,576       1,039  
    Loans, net of allowance for credit losses of $25,484 9/30/24 and $25,024 12/31/23     2,512,852       2,534,468       2,516,687       2,556,167       2,504,329  
    Premises and equipment     33,779       34,507       35,007       35,790       31,723  
    Construction in progress     35       38       9       8       3,044  
    Goodwill     86,358       86,358       86,358       86,358       86,358  
    Loan servicing rights     5,644       5,504       5,555       5,648       5,687  
    Bank owned life insurance     34,624       34,359       34,123       33,907       33,691  
    Other assets     46,047       49,552       54,628       43,218       47,388  
                           
    Total Assets   $ 3,389,185     $ 3,322,633     $ 3,287,554     $ 3,283,229     $ 3,234,680  
                           
      Liabilities and Stockholders’ Equity                    
    Liabilities                    
    Deposits                    
      Noninterest-bearing   $ 481,444     $ 479,069     $ 510,731     $ 528,465     $ 505,358  
      Interest-bearing                    
      NOW accounts     865,617       821,145       829,236       816,790       778,133  
      Savings     661,565       673,284       635,430       599,191       591,344  
      Time     676,187       667,592       645,985       663,017       700,445  
      Total deposits     2,684,813       2,641,090       2,621,382       2,607,463       2,575,280  
                           
    Federal funds purchased and securities sold under agreements to repurchase     27,292       27,218       28,218       28,218       30,527  
    Federal Home Loan Bank (FHLB) advances     263,081       266,102       256,628       265,750       266,286  
    Subordinated notes, net of unamortized issuance costs     34,789       34,759       34,731       34,702       34,673  
    Dividend payable     2,998       2,975       2,975       2,974       2,838  
    Accrued expenses and other liabilities     40,832       27,825       25,930       27,579       21,892  
      Total liabilities     3,053,805       2,999,969       2,969,864       2,966,686       2,931,496  
                           
    Commitments and Contingencies                    
                           
    Stockholders’ Equity                    
    Common stock – No par value 20,000,000 shares authorized; issued                    
    14,564,425 shares 9/30/24 and 12/31/23; outstanding 13,702,593     135,193       135,829       135,482       135,515       135,171  
    shares 9/30/24 and 13,664,641 shares 12/31/23                    
    Treasury stock – 861,832 shares 9/30/24 and 899,784 shares 12/31/23     (10,904 )     (11,006 )     (10,851 )     (11,040 )     (11,008 )
    Retained earnings     230,465       226,430       223,648       221,080       218,510  
    Accumulated other comprehensive loss     (19,374 )     (28,589 )     (30,589 )     (29,012 )     (39,489 )
      Total stockholders’ equity     335,380       322,664       317,690       316,543       303,184  
                           
    Total Liabilities and Stockholders’ Equity   $ 3,389,185     $ 3,322,633     $ 3,287,554     $ 3,283,229     $ 3,234,680  
                           
    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    SELECT FINANCIAL DATA
                                               
        For the Three Months Ended   For the Nine Months Ended
    Selected financial data   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   September 30, 2024   September 30, 2023
    Return on average assets     0.78 %     0.69 %     0.66 %     0.67 %     0.59 %     0.71 %     0.73 %
    Return on average equity     7.93 %     7.13 %     6.76 %     7.27 %     6.26 %     7.28 %     7.52 %
    Yield on earning assets     5.27 %     5.22 %     5.00 %     4.93 %     4.79 %     5.17 %     4.57 %
    Cost of interest bearing liabilities     3.21 %     3.18 %     3.06 %     3.02 %     2.82 %     3.16 %     2.35 %
    Net interest spread     2.06 %     2.04 %     1.94 %     1.91 %     1.97 %     2.01 %     2.22 %
    Net interest margin     2.71 %     2.71 %     2.60 %     2.57 %     2.59 %     2.68 %     2.77 %
    Efficiency     67.98 %     69.03 %     74.08 %     69.23 %     73.07 %     70.36 %     68.24 %
    Dividend payout ratio     45.99 %     52.35 %     55.52 %     54.23 %     60.07 %     50.99 %     49.50 %
    Tangible book value per share   $ 17.72     $ 16.79     $ 16.39     $ 16.29     $ 15.28              
    Tier 1 leverage ratio     8.04 %     8.02 %     8.40 %     8.20 %     8.02 %            
    Average shares outstanding     13,687,119       13,681,501       13,671,166       13,665,773       13,650,823       13,679,955       13,633,101  
                                               
    Loans   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023            
    (Dollar amounts in thousands)                                          
    Commercial real estate   $ 1,301,160     $ 1,303,598     $ 1,304,400     $ 1,337,766     $ 1,304,118              
    Agricultural real estate     220,328       222,558       227,455       223,791       225,672              
    Consumer real estate     524,055       525,902       525,178       521,895       512,973              
    Commercial and industrial     260,732       268,426       256,051       254,935       250,891              
    Agricultural     137,252       142,909       127,670       132,560       123,735              
    Consumer     67,394       70,918       74,819       79,591       83,024              
    Other     25,916       26,449       26,776       30,136       31,083              
    Less: Net deferred loan fees, costs and other (1)     1,499       (1,022 )     (982 )     517       (1,890 )            
    Total loans, net   $ 2,538,336     $ 2,559,738     $ 2,541,367     $ 2,581,191     $ 2,529,606              
                                               
                                               
    Asset quality data   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023            
    (Dollar amounts in thousands)                                          
    Nonaccrual loans   $ 2,898     $ 2,487     $ 19,391     $ 22,353     $ 22,447              
    90 day past due and accruing   $ –     $ –     $ –     $ –     $ –              
    Nonperforming loans   $ 2,898     $ 2,487     $ 19,391     $ 22,353     $ 22,447              
    Other real estate owned   $ –     $ –     $ –     $ –     $ –              
    Nonperforming assets   $ 2,898     $ 2,487     $ 19,391     $ 22,353     $ 22,447              
                                               
                                               
    Allowance for credit losses   $ 25,484     $ 25,270     $ 24,680     $ 25,024     $ 25,277              
    Allowance for unfunded     1,661       1,928       1,946       2,212       2,023              
    Total Allowance for Credit Losses   $ 27,145     $ 27,198     $ 26,626     $ 27,236     $ 27,300              
    Allowance for credit losses/total loans     1.01 %     0.99 %     0.97 %     0.97 %     1.00 %            
    Adjusted credit losses with accretable yield/total loans     1.10 %     1.10 %     1.11 %     1.13 %     1.18 %            
    Net charge-offs:                                          
    Quarter-to-date   $ 68     $ 15     $ 55     $ 531     $ 93              
    Year-to-date   $ 138     $ 70     $ 55     $ 551     $ 20              
    Net charge-offs to average loans                                          
    Quarter-to-date     0.00 %     0.00 %     0.00 %     0.02 %     0.00 %            
    Year-to-date     0.01 %     0.00 %     0.00 %     0.02 %     0.00 %            
    Nonperforming loans/total loans     0.11 %     0.10 %     0.76 %     0.87 %     0.89 %            
    Allowance for credit losses/nonperforming loans     879.37 %     1016.08 %     127.28 %     111.95 %     112.61 %            
    NPA coverage ratio     879.37 %     1016.08 %     127.28 %     111.95 %     112.61 %            
                                               
    (1) Includes carrying value adjustments of $3.0 million as of September 30, 2024, $612 thousand as of June 30, 2024, $969 thousand as of March 31, 2024 and $2.7 million as of December 31, 2023 related to interest rate swaps associated with fixed rate loans            
     
    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
    (in thousands of dollars, except percentages)
                             
        For the Three Months Ended   For the Three Months Ended
        September 30, 2024   September 30, 2023
    Interest Earning Assets:   Average Balance   Interest/Dividends   Annualized Yield/Rate   Average Balance   Interest/Dividends   Annualized Yield/Rate
    Loans   $ 2,551,899   $ 36,873   5.78 %   $ 2,536,885   $ 33,783   5.33 %
    Taxable investment securities     415,943     2,107   2.03 %     393,910     1,559   1.58 %
    Tax-exempt investment securities     19,661     81   2.09 %     23,986     84   1.77 %
    Fed funds sold & other     197,258     2,840   5.76 %     85,515     933   4.36 %
    Total Interest Earning Assets     3,184,761   $ 41,901   5.27 %     3,040,296   $ 36,359   4.79 %
                             
    Nonearning Assets     168,055             180,193        
                             
    Total Assets   $ 3,352,816           $ 3,220,489        
                             
    Interest Bearing Liabilities:                        
    Savings deposits   $ 1,538,387   $ 10,691   2.78 %   $ 1,367,168   $ 7,673   2.24 %
    Other time deposits     667,224     6,256   3.75 %     667,880     5,650   3.38 %
    Other borrowed money     264,539     2,804   4.24 %     266,467     2,741   4.11 %
    Fed funds purchased & securities sold under agreement to repurchase     27,481     277   4.03 %     34,128     349   4.09 %
    Subordinated notes     34,769     284   3.27 %     34,654     284   3.28 %
    Total Interest Bearing Liabilities   $ 2,532,400   $ 20,312   3.21 %   $ 2,370,297   $ 16,697   2.82 %
                             
    Noninterest Bearing Liabilities     491,851             544,801        
                             
    Stockholders’ Equity   $ 328,565           $ 305,391        
                             
    Net Interest Income and Interest Rate Spread       $ 21,589   2.06 %       $ 19,662   1.97 %
                             
    Net Interest Margin           2.71 %           2.59 %
                             
    Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts    
                             
                             
        For the Nine Months Ended   For the Nine Months Ended
        September 30, 2024   September 30, 2023
    Interest Earning Assets:   Average Balance   Interest/Dividends   Annualized Yield/Rate   Average Balance   Interest/Dividends   Annualized Yield/Rate
    Loans   $ 2,561,774   $ 108,666   5.66 %   $ 2,470,770   $ 94,851   5.12 %
    Taxable investment securities     397,466     5,575   1.87 %     396,917     4,544   1.53 %
    Tax-exempt investment securities     20,684     249   2.03 %     24,865     277   1.88 %
    Fed funds sold & other     165,227     7,231   5.84 %     67,869     1,866   3.67 %
    Total Interest Earning Assets     3,145,151   $ 121,721   5.17 %     2,960,421   $ 101,538   4.57 %
                             
    Nonearning Assets     161,113             176,568        
                             
    Total Assets   $ 3,306,264           $ 3,136,989        
                             
    Interest Bearing Liabilities:                        
    Savings deposits   $ 1,487,809   $ 30,291   2.71 %   $ 1,373,110   $ 18,854   1.83 %
    Other time deposits     662,129     18,423   3.71 %     620,071     13,054   2.81 %
    Other borrowed money     264,310     8,235   4.15 %     204,927     6,134   3.99 %
    Fed funds purchased & securities sold under agreement to repurchase     27,887     837   4.00 %     37,649     1,181   4.18 %
    Subordinated notes     34,741     853   3.27 %     34,625     853   3.28 %
    Total Interest Bearing Liabilities   $ 2,476,876   $ 58,639   3.16 %   $ 2,270,382   $ 40,076   2.35 %
                             
    Noninterest Bearing Liabilities     507,843             561,001        
                             
    Stockholders’ Equity   $ 321,545           $ 305,606        
                             
    Net Interest Income and Interest Rate Spread       $ 63,082   2.01 %       $ 61,462   2.22 %
                             
    Net Interest Margin           2.68 %           2.77 %
                             
    Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts    
                             
    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
    (in thousands of dollars, except percentages)    		  
                                         
      For the Three Months Ended September 30, 2024   For the Three Months Ended September 30, 2023  
      As Reported   Excluding Acc/Amort Difference   As Reported   Excluding Acc/Amort Difference  
      $ Yield   $ Yield   $ Yield   $ Yield   $ Yield   $ Yield  
    Interest Earning Assets:                                    
    Loans $ 36,873 5.78 %   $ 36,149 5.67 %   $ 724   0.11 %   $ 33,783 5.33 %   $ 32,631 5.15 %   $ 1,152   0.18 %  
    Taxable investment securities   2,107 2.03 %     2,107 2.03 %     –   0.00 %     1,559 1.58 %     1,559 1.58 %     –   0.00 %  
    Tax-exempt investment securities   81 2.09 %     81 2.09 %     –   0.00 %     84 1.77 %     84 1.77 %     –   0.00 %  
    Fed funds sold & other   2,840 5.76 %     2,840 5.76 %     –   0.00 %     933 4.36 %     933 4.36 %     –   0.00 %  
    Total Interest Earning Assets   41,901 5.27 %     41,177 5.17 %     724   0.10 %     36,359 4.79 %     35,207 4.64 %     1,152   0.15 %  
                                         
    Interest Bearing Liabilities:                                    
    Savings deposits $ 10,691 2.78 %   $ 10,691 2.78 %   $ –   0.00 %   $ 7,673 2.24 %   $ 7,673 2.24 %   $ –   0.00 %  
    Other time deposits   6,256 3.75 %     6,256 3.75 %     –   0.00 %     5,650 3.38 %     5,500 3.29 %     150   0.09 %  
    Other borrowed money   2,804 4.24 %     2,800 4.23 %     4   0.01 %     2,741 4.11 %     2,759 4.14 %     (18 ) -0.03 %  
    Federal funds purchased and securities sold under agreement to repurchase   277 4.03 %     277 4.03 %     –   0.00 %     349 4.09 %     349 4.09 %     –   0.00 %  
    Subordinated notes   284 3.27 %     284 3.27 %     –   0.00 %     284 3.28 %     284 3.28 %     –   0.00 %  
    Total Interest Bearing Liabilities   20,312 3.21 %     20,308 3.21 %     4   0.00 %     16,697 2.82 %     16,565 2.80 %     132   0.02 %  
                                         
    Interest/Dividend income/yield   41,901 5.27 %     41,177 5.17 %     724   0.10 %     36,359 4.79 %     35,207 4.64 %     1,152   0.15 %  
    Interest Expense / yield   20,312 3.21 %     20,308 3.21 %     4   0.00 %     16,697 2.82 %     16,565 2.80 %     132   0.02 %  
    Net Interest Spread   21,589 2.06 %     20,869 1.96 %     720   0.10 %     19,662 1.97 %     18,642 1.84 %     1,020   0.13 %  
    Net Interest Margin   2.71 %     2.62 %     0.09 %     2.59 %     2.46 %     0.13 %  
                                         
                                         
      For the Nine Months Ended September 30, 2024   For the Nine Months Ended September 30, 2023  
      As Reported   Excluding Acc/Amort Difference   As Reported   Excluding Acc/Amort Difference  
      $ Yield   $ Yield   $ Yield   $ Yield   $ Yield   $ Yield  
    Interest Earning Assets:                                    
    Loans $ 108,666 5.66 %   $ 106,588 5.55 %   $ 2,078   0.11 %   $ 94,851 5.12 %   $ 92,364 4.99 %   $ 2,487   0.13 %  
    Taxable investment securities   5,575 1.87 %     5,575 1.87 %     –   0.00 %     4,544 1.53 %     4,544 1.53 %     –   0.00 %  
    Tax-exempt investment securities   249 2.03 %     249 2.03 %     –   0.00 %     277 1.88 %     277 1.88 %     –   0.00 %  
    Fed funds sold & other   7,231 5.84 %     7,231 5.84 %     –   0.00 %     1,866 3.67 %     1,866 3.67 %     –   0.00 %  
     Total Interest Earning Assets   121,721 5.17 %     119,643 5.08 %     2,078   0.09 %     101,538 4.57 %     99,051 4.47 %     2,487   0.10 %  
                                         
    Interest Bearing Liabilities:                                    
    Savings deposits $ 30,291 2.71 %   $ 30,291 2.71 %   $ –   0.00 %   $ 18,854 1.83 %   $ 18,854 1.83 %   $ –   0.00 %  
    Other time deposits   18,423 3.71 %     18,423 3.71 %     –   0.00 %     13,054 2.81 %     13,458 2.89 %     (404 ) -0.08 %  
    Other borrowed money   8,235 4.15 %     8,254 4.16 %     (19 ) -0.01 %     6,134 3.99 %     6,187 4.03 %     (53 ) -0.04 %  
    Federal funds purchased and securities sold under agreement to repurchase   837 4.00 %     837 4.00 %     –   0.00 %     1,181 4.18 %     1,181 4.18 %     –   0.00 %  
    Subordinated notes   853 3.27 %     853 3.27 %     –   0.00 %     853 3.28 %     853 3.28 %     –   0.00 %  
    Total Interest Bearing Liabilities   58,639 3.16 %     58,658 3.16 %     (19 ) 0.00 %     40,076 2.35 %     40,533 2.38 %     (457 ) -0.03 %  
                                         
    Interest/Dividend income/yield   121,721 5.17 %     119,643 5.08 %     2,078   0.09 %     101,538 4.57 %     99,051 4.47 %     2,487   0.10 %  
    Interest Expense / yield   58,639 3.16 %     58,658 3.16 %     (19 ) 0.00 %     40,076 2.35 %     40,533 2.38 %     (457 ) -0.03 %  
    Net Interest Spread   63,082 2.01 %     60,985 1.92 %     2,097   0.09 %     61,462 2.22 %     58,518 2.09 %     2,944   0.13 %  
    Net Interest Margin   2.68 %     2.59 %     0.09 %     2.77 %     2.64 %     0.13 %  
                                         
    Company Contact: Investor and Media Contact:
    Lars B. Eller
    President and Chief Executive Officer Farmers & Merchants Bancorp, Inc.
    (419) 446-2501
    leller@fm.bank    		 Andrew M. Berger
    Managing Director
    SM Berger & Company, Inc.
    (216) 464-6400
    andrew@smberger.com

    The MIL Network –

  • MIL-OSI Australia: Minister Rishworth interviewed on Radio National Breakfast with Patricia Karvelas

    Source: Ministers for Social Services

    E&OE TRANSCRIPT

    Topics: COVID-19 pandemic; COVID inquiry report; Australian Centre for Disease Control; PLACE announcement; Qantas flight upgrades.

    PATRICIA KARVELAS, HOST: What would you do if Australia faced another global pandemic and you were again asked to make big sacrifices in the name of public health? A major review of Australia’s handling of the COVID-19 pandemic has found many people will be less accommodating of those requests in the future, while warning another pandemic is likely to happen in our lifetimes. Now, the Government says a new disease control centre will help restore public trust. We’re going to be joined now by Amanda Rishworth, who is the Minister for Social Services. She’s going to talk to us about this and another scheme the Government’s announcing today. Welcome to the programme, Minister.

    AMANDA RISHWORTH, MINISTER FOR SOCIAL SERVICES: Great to be with you.

    PATRICIA KARVELAS: The COVID inquiry found mistakes were made, but overall, Australia was one of the most successful countries in its pandemic response. Do you think history will give the Morrison Government more credit?

    AMANDA RISHWORTH: Well, look, I think really what this review tried to do is identify what can we do better next time and what actually worked. And so the report’s been very useful in that. But what really, I think, came out of the report is we need to be better prepared in the future. I think that was one of the really key findings. How do we get in a position where we are better prepared to respond to something like that in the future? And I think in terms of key learnings of this report, I think that is one of the key learnings, that we need to be prepared for what may come next.

    PATRICIA KARVELAS: You’ve promised to fund an Australian Centre for Disease Control, and you say it will restore public trust, but will that be enough?

    AMANDA RISHWORTH: Well, look, the public trust issue is a very concerning element of this report. If you remember back to that time during COVID you know, people were very compliant. But I think one of the elements is that this Centre for Disease Control will be independent, but I think importantly, it will be much more responsive and transparent with the evidence. I think that is one of the things coming out of this report that really talked about how do we make sure that the health data, the evidence, that what we’re asking people to do is very much embedded in real-time evidence, is really critical. And I hope that as we build up this capability, this transparency, but also the real-time evidence, provides people with the reassurance that what we’re asking them to do actually is something that they should do, because it’s backed up by that real-time evidence.

    PATRICIA KARVELAS: The coalition says this review didn’t look at the states and territories. They are right. And given they were the ones that imposed some of these restrictions, isn’t that a major flaw?

    AMANDA RISHWORTH: This wasn’t wanting to go over the existing reviews that have been done in states and territories. I think from the Commonwealth’s perspective, this report was really about how do we prepare for a future pandemic. What are the lessons learned for the Commonwealth? It’s very important that the Commonwealth is better prepared and that came through clearly both in its economic response and its health response. So, I’m focused on, as is the Government, what can we do better next time? And this report has been really important in identifying what went right, but where we could have adjusted the settings as well.

    PATRICIA KARVELAS: You’re the Minister for Social Services and that involves really many vulnerable communities. It was in fact vulnerable communities, particularly when I think about the NSW lockdowns, that were disproportionately affected. Was that wrong with the benefit of hindsight?

    AMANDA RISHWORTH: Well, look, I don’t want to second guess, but the report did highlight the disproportionate impact [the lockdowns] had on some vulnerable communities. So, I think that is really important. And what the report said is we, obviously, had to have a strong response to understand what we were dealing with, but how do we transition really quickly and weigh up the health benefits and the non-health risks, which were things at both economic but also wellbeing risks. So, this report does talk about how we better transition in different phases, but it did highlight that as a result of perhaps not transitioning from the initial response to the suppression response, that some vulnerable communities were particularly targeted or not targeted – that’s probably not the right word – were particularly impacted as a result. And I think we have to be very much aware of that. The other element that really came out in the report is the impact on mental health and wellbeing. And I think that’s something we need to be very conscious of and work into the future on repairing.

    PATRICIA KARVELAS: I want to move to what you’re launching today. You’re launching a new policy that brings philanthropic donors and the Government together to take on entrenched social issues. How will it work?

    AMANDA RISHWORTH: Today is a really exciting day because we’re announcing a new organisation called PLACE, which will be a not-for-profit, independent national organisation that will work with communities about responding to the issues that they know are in their communities, but in a way that they would like to see responded. Now, this is different, because this isn’t the Government just giving a grant to an organisation to do this work. This is a true partnership where five philanthropic organisations are putting money on the table, with government, to create this organisation in true partnership, and it will work with local communities to get better outcomes and shift in some areas – which have been seeing entrenched disadvantage – to see things move. So, this is really exciting. There is really amazing work being done in communities when it comes to what we call place-based solutions. That’s where communities have a say and help design the solutions. And money isn’t top down, but it really is directed to where communities want. But it’s pretty sporadic, and a lot of communities don’t have the data they need, for example, this organisation will work with communities, so if they want to implement this type of response, they can.

    PATRICIA KARVELAS: It’s not a lot of money. So, how would it work? How do you get the money to actually be meaningful in a community that’s identified as being high needs?

    AMANDA RISHWORTH: Well, this money is not about funding the services and support. That money is often there being provided by philanthropy and being provided by Government, but it’s not being directed into the initiatives or into the areas that community want. So, what this organisation will do will work with communities and government and philanthropic organisations to get the money that’s often already in their community, working better in programs that align to what the community wants. So, this isn’t about funding programs, this is about doing the work, working on how to get the data, for example. A lot of communities have a gut feeling something’s working, but they can’t see the data. And where we’ve implemented this place-based response, we can see it really working. One example is the community in Burnie decided they wanted to focus on completion rates, year 12 completion rates and it has gone up since 2011 to 2020 by 86%. And so this organisation is about working with communities to help them build these responses and attract the investment and get the money working for their community.

    PATRICIA KARVELAS: Before I let you go, there’s been a lot of talk about the Prime Minister in the wake of this book on Qantas and upgrades. There is a proposal from Peter Dutton that the Prime Minister should refer himself to the National Anti-Corruption Commission. Will he?

    AMANDA RISHWORTH: Well, look, I think that instead of focusing on the Prime Minister and his family, the Opposition Leader needs to start explaining about his upgrades, about his use of Gina Reinhart’s private jet. I mean, the Prime Minister has been incredibly transparent about this. He has declared on the public record over and over again. But Peter Dutton seems to be absolutely focused on the politics of this and not on the substance.

    PATRICIA KARVELAS: But you didn’t kind of go to my fundamental question, which is, do you think this should be looked at by the National Anti Corruption Commission? If there’s nothing to see, where’s the harm in him referring himself?

    AMANDA RISHWORTH: Well, I think the Prime Minister, as with other members of Parliament, are required to be transparent through their declarations on their register of interest. And, you know, we’ve seen over the last couple of days many, many politicians from all sides having flight upgrades.

    PATRICIA KARVELAS: Have you ever asked for one?

    AMANDA RISHWORTH: To be honest, I’ve got a young family and I don’t travel into very many places, but I haven’t asked for one. But I think that there are many politicians that have had upgrades. And so there’s a register of public interest, so that it’s all transparent. And, you know, if Peter Dutton is saying there’s questions to be answered, he needs to answer the question, explain his use of Gina Rinehart’s private jet.

    PATRICIA KARVELAS: It doesn’t have to be a competition between will you answer questions? Will you answer questions? Shouldn’t, you know, both sides just answer the questions? And there are some additional questions that the Prime Minister has not addressed about if he discussed upgraded flights directly with Alan Joyce when he was Transport Minister.

    AMANDA RISHWORTH: Well, I think that there needs to be a consistent approach. The opposition is making this completely political. It’s a complete pile on the Prime Minister. Peter Dutton can’t explain his use of Gina Rinehart’s private jet. So, quite frankly, I think there’s a lot of politics here and a lot of hypocrisy from the opposition. I mean, we have Paul Fletcher, who’s declared sixty-nine upgrades. So, I think what I’m pointing out here is the hypocrisy of the opposition playing politics with this.

    PATRICIA KARVELAS: Thank you so much for joining us, Minister.

    AMANDA RISHWORTH: Thank you.

    MIL OSI News –

  • MIL-OSI Asia-Pac: LCQ5: Enhancing Express Rail Link services

    Source: Hong Kong Government special administrative region

         Following is a question by the Hon Yiu Pak-leung and a reply by the Secretary for Transport and Logistics, Mr Lam Sai-hung, in the Legislative Council today (October 30):

    Question:

         Some members of the tourism industry are of the view that further increasing the number of destinations in the Mainland served by the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) connecting to the Hong Kong West Kowloon Station (WKS), as well as building up the XRL’s long-haul sleeper service network in an orderly manner, are conducive to promoting the development of the tourism industry and facilitating Hong Kong’s integration into the country’s overall development. In this connection, will the Government inform this Council:

    (1) of the respective monthly patronage of the XRL service plying between WKS and Guangzhoudong Station and Guangzhounan Station, as well as those plying between WKS and each of the intermediate stations along the routes between WKS and these two stations, since the resumption of XRL service last year; as it has been reported that at present, it takes at least about 90 minutes to travel from WKS to Guangzhoudong Station, which fails to demonstrate the advantages of XRL, whether the authorities have studied with the Mainland authorities the feasibility of raising the speed of the relevant route; if so, of the details; if not, the reasons for that;

    (2) as it is learnt that Xintang Station, commissioned last year with its location at the core of the new development area in the eastern part of Guangzhou, is not only a necessary stop but also an important hub for travelling to the eastern part of Guangzhou, yet the relevant XRL routes only pass the station currently without stopping on it, whether the authorities will expedite negotiation with the Mainland authorities to make Xintang Station an intermediate station of XRL, so as to achieve better linkage between the XRL Hong Kong Section and the Mainland’s railway network; and

    (3) as some members of the industry have relayed that XRL sleeper trains plying between Hong Kong and Beijing/Shanghai are well-received by travellers, whether the authorities have studied the provision of long-haul sleeper train service to more destinations, such as Xi’an and Chengdu in western China, so as to open up the long-‍haul rail passenger market in the western part of the country, thereby facilitating “two-way travel” by travellers?

    Reply:

    President,

         The Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) was commissioned on September 23, 2018, connecting with the over 46 000 kilometres long national high-speed rail network. It is a key component of the highly accessible transport network and economic circle of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), and consolidates Hong Kong’s position as a regional transport hub. The MTR Corporation Limited (MTRCL) is responsible for operating the XRL Hong Kong Section, and has been in active liaison and collaboration with the Hong Kong Special Administrative Region (HKSAR) Government and the Mainland railway authorities to continuously enhance the various operational arrangements of the XRL Hong Kong Section, with a view to fully realising its socio-economic benefits and the advantages of interconnectivity in the national high-speed rail network for the promotion of better integration of Hong Kong into the national development. Serving 80 directly connected destinations at present, the Hong Kong Section of the XRL is a crucial link between Hong Kong and the Mainland, and a testament to the increasingly frequent exchanges between the two places for business, leisure and other purposes.

         In consultation with the MTRCL, my reply to the question raised by the Hon Yiu Pak-leung is as follows:

    (1) and (2) With the resumption of normal travel between Hong Kong and the Mainland after the pandemic, the XRL Hong Kong Section has progressively resumed train services since January 15, 2023. New short-haul and long-haul destinations have been introduced progressively, including the short-haul destinations of Dongguannan, Dongguan, Guangzhoudong and Changping, making it a more comprehensive network. In view of the increasingly frequent flow of people between the two places, upon discussion between the MTRCL and the Mainland railway authorities, the frequency of short-haul train trips of the XRL Hong Kong Section have been increased continuously. The number of trains running to and from Guangzhounan Station has increased from 16 trips per day in early 2023 to the present 38 trips per day. Passengers may also take long-haul trains that call at Guangzhounan Station, which are operating at 20 train trips per day; whilst the number of trains running to and from Guangzhoudong Station has increased from 12 trips per day in early 2023 to the present 26 trips per day. 

         The services of the XRL Hong Kong Section have been popular among passengers. In the first nine months of 2024, the XRL Hong Kong Section recorded an average daily patronage of about 70 000 passenger trips, with the total number of passenger trips approaching the annual total of approximately 20 million passenger trips in 2023. According to the ticket sales provided by the MTRCL, for short-haul destinations, more than 60 per cent of short-haul passengers are destined for stations in Shenzhen (i.e. Futian and Shenzhenbei), and nearly 30 per cent are destined for Guangzhoudong and Guangzhounan. Less than 10 per cent travel to the remaining short-haul destinations (i.e. Guangmingcheng, Humen, Qingsheng, Dongguannan, Changping and Dongguan).

         To meet the travel needs of passengers, the MTRCL and the Mainland railway authorities review the operation schedule of train trips from time to time and enhance services in a timely manner. For instance, train trips running between Hong Kong West Kowloon Station (WKS) and Futian Station or Shenzhenbei Station have been enhanced during weekends since early April this year. The MTRCL will also operate additional short-haul train trips for popular destinations during festive holidays in response to passengers’ travel needs. As for the travelling time of trains between WKS and Guangzhoudong Station, a balance has been struck between the journey time of trains and the number of intermediate stops needed for passenger convenience. The MTRCL will continue to liaise with the Mainland railway authorities with a view to providing better cross-boundary rail service.

         As for new stations, the number of directly connected destinations on the XRL Hong Kong Section has increased from 44 at the beginning of its operation to 80 currently. In addition to the aforementioned short-haul destinations, the XRL Hong Kong Section has been connected to the Chengdudong Line in southwest part of the country, including Chengdudong and Leshan, as well as the Zhanjiangxi Line, including Jiangmen, Kaipingnan, Yangjiang, Maoming and Zhanjiangxi. A long-haul route to Hunan Province was introduced in mid-2024, which directly connects to popular tourist destinations such as Zhangjiajie and Fenghuanggucheng. As for the proposal of introducing Xintang Station as a directly connected destination to the XRL Hong Kong Section, the MTRCL and the Mainland railway authorities are actively looking into the matter with a view to offering passengers a more convenient and comfortable travelling experience, while facilitating the flow of people between the two places.

    (3) Thanks to the Central Government’s care for Hong Kong and the strong support from various Mainland authorities, sleeper train service between WKS and Beijingxi Station/Shanghai Hongqiao Station was introduced on the XRL Hong Kong Section on June 15, 2024, with trains departing in the evenings and arriving the following mornings. This arrangement was an upgrade of the original ordinary-speed train service between the Hong Kong Hung Hom Station and Beijing/Shanghai, and reduced the journey time by almost a half. The trains also call at Shijiazhuang in Hebei and Hangzhou in Zhejiang as intermediate stations. In October 2024, the sleeper train service to Beijing and Shanghai was further upgraded. Fuxing high-speed sleeper trains have been deployed to serve passengers, along with adjustments to routes and departure times. The journey time between WKS and Beijing/Shanghai takes about 11.5 hours and 11 hours respectively. The service upgrade provides passengers with more caring, comfortable and comprehensive service, further leveraging the benefits of “evening departures and morning arrivals”.

         The HKSAR Government and the MTRCL have been actively observing the development of the high-speed rail network in the Mainland, and striving to further introduce destinations directly connected to the XRL Hong Kong Section, so as to provide passengers with more diversified options and services. Regarding the western region of the Mainland, direct train services are currently available at WKS, serving stations such as Chengdudong, Chongqing and Kunming. As for the introduction of direct sleeper trains to those destinations, various considerations and arrangement of different railway authorities are involved. The HKSAR Government and the MTRCL will maintain liaison and co-ordination with the Mainland railway authorities and relevant departments to explore feasible options for further enhancing the service of the XRL Hong Kong Section.

         Thank you, President.

    MIL OSI Asia Pacific News –

  • MIL-OSI Africa: Zambia: African Development Bank’s Sustainable Energy Fund for Africa approves $8 million for development of 25 MW Solar Plant

    Source: Africa Press Organisation – English (2) – Report:

    ABIDJAN, Ivory Coast, October 30, 2024/APO Group/ —

    The African Development Bank Group’s (www.AfDB.org) Board of Directors has approved an $8 million concessional loan to support the construction of a 25MW Solar Photovoltaic power plant in Zambia. The financing for the Ilute Plant will be sourced from the Sustainable Energy Fund for Africa (SEFA), a multi-donor Special Fund managed by the Bank. Ilute is expected to advance  Zambia’s sustainable development and help the country unlock its renewable energy potential.

    The venture has faced rising costs associated with  the COVID-19 pandemic and other challenges. Serengeti Energy Ltd (http://apo-opa.co/4hth8dE) and Western Solar Power Ltd (http://apo-opa.co/3YJBxUr) are leading the plant development in Zambia’s Sesheke District. Competitively selected by GreenCo Power Services Ltd (GreenCo) (http://apo-opa.co/4hiM3ci), this project will serve as a pilot for GreenCo’s energy aggregator model under the Zambia Electricity Supply Corporation Limited (ZESCO) (http://apo-opa.co/3YIpw1h) open grid access framework. Acting as an intermediary off-taker, GreenCo will purchase the generated electricity through a 25-year Power Purchase Agreement and sell it to the Southern African Power Pool Day-Ahead Market (http://apo-opa.co/3YELlih).

    “We are delighted to support the Ilute Solar PV project – which will be the first project to use Africa GreenCo as an intermediate off-taker. SEFA’s support has been instrumental in bridging the financing gap and will pave the way for future projects that contribute to Southern Africa’s energy transition,” said Dr Daniel Schroth, African Development Bank Director for Renewable Energy and Energy Efficiency.

    Anton-Louis Olivier, CEO of Serengeti Energy, acknowledged SEFA’s support. He said, “We appreciate the support from the African Development Bank Group and SEFA in helping us move the Ilute 25MW Solar PV project forward. This loan addresses the financial challenges we’ve faced due to the pandemic and rising costs. The Ilute project is a testament to innovative collaboration and serves as a pioneering model for future renewable energy initiatives in Zambia as well as the wider region.” Serengeti Energy is a leading renewable independent power producer specialising in the development, construction, and operation of utility-scale renewable energy plants tailored to the needs of both public and private off-takers.

    MIL OSI Africa –

  • MIL-OSI: Banco Santander-Chile Announces Third Quarter 2024 Earnings

    Source: GlobeNewswire (MIL-OSI)

    SANTIAGO, Chile, Oct. 30, 2024 (GLOBE NEWSWIRE) — Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today its results1 for the nine-month period ended September 30, 2024, and third quarter 2024 (3Q24).

    ROAE2of 23.1% in 3Q243and 18.2% in 9M244.

    In the third quarter of 2024 (3Q24), the Bank’s net income attributable to shareholders totaled $243,133 million ($1.29 per share and US$ 0.58 per ADR), reflecting an increase of 11.7% compared to the previous quarter (2Q24), with an ROAE of 23.1%.

    As of September 30, 2024, the Bank’s net income attributable to shareholders totaled $581.109 billion ($3.08 per share and US$1.37 per ADR), reflecting an increase of 81.9% compared to the same period of the previous year and with an ROAE of 18.2%.

    The increase in results in the quarter is explained by an increase in the Bank’s main income lines, with operating income increasing by 6.3% in the quarter, driven by a better interest margin and readjustments.

    Strong recovery of NIM5to 3.9% in 3Q24 and 3.4% in 9M24.

    Net interest and readjustment income (NII) accumulated as of September 30, 2024 increased by 74.8% compared to the same period in 2023. This increase in NII was due to higher interest income due to improvements in the cost of funds resulting from a lower monetary policy rate, partially offset by lower readjustment income due to lower inflation in the period.

    In 3Q24, total net interest and readjustment income increased by 4.2% compared to 2Q24. This is explained by higher net interest income due to lower funding costs and better investment portfolio performance, offset by lower net readjustment income due to lower UF variation in the quarter.

    Net fees increase 8.3% in the quarter, reaching recurrence6levels of 63.4%.

    Net fees increased 8.3% QoQ due to increased customer numbers and greater use of products such as mutual funds, cards and current accounts. With this, the recurrence ratio (total net fees divided by total core expenses) is 63.4% in 3Q24, demonstrating that more than half of the Bank’s expenses are financed by fees generated by our customers.

    In the nine months to September 30, 2024, fees increased by 5.4% compared to the same period in 2023, mainly due to higher fees from current accounts, mutual fund brokerage and Getnet. This was partially offset by the impact of interchange fee regulation.

    Getnet’s customer base continues to grow and its expansion continues

    As a result of our strategy to strengthen digital products, the Bank’s market share in current accounts remains strong. According to the latest publicly available information, which is as of July 2024, our market share reaches 23.8% in current accounts, which includes products such as Santander Life and PYME Life, while our US$ current account solution is already attracting 41.2% of customers in this market. In total, our digital customers total around 2.2 million and represent 86% of our active customers, with the products with the greatest traction being deposits, credit cards, investment funds and general insurance brokerage.

    Getnet’s entry into the Chilean acquiring market continues to surprise with good results, with net commissions of $54 billion in 9M24 (not including operating expenses). Customer reception has been high, with more than 182 thousand affiliated merchants and more than 243 thousand operational POSs, with a strong demand from SME clients and an expansion towards larger clients that require a Host to Host solution, offering an integrated payment system for more sophisticated clients. Thanks to Getnet and other initiatives such as the Cuenta Pyme Life, we are seeing significant growth in current accounts for SMEs and companies, growing 26.7% YoY by July 2024, and with a market share of 39.3% according to the CMF.

    For the fifth consecutive year we are Top 1 in NPS among our Chilean peers

    As a result of all our efforts, our customers are the most satisfied with us. As of September 2024, our NPS is 59 points, top 1 among our peers. We also rank first in net satisfaction in the evaluation of our account executives and contact center with 66 and 72 points respectively. Regarding digital channels, they also continue to be a strength, with the website standing out with a net satisfaction of 72 and the App with 74 points.

    Efficiency ratio of 36.3% in the quarter as income improves and costs remain under control

    The Bank’s efficiency ratio reached 40.0% as of September 30, 2024, better than the 48.0% of the same period last year, with a quarterly efficiency ratio of 36.3%, explained by the recovery of revenues in the quarter and solid cost control.

    Core support expenses (salaries, administration and amortization) grew 4.4% in 9M24 compared to 9M23 and 0.4% compared to 2Q24, in line with the growth of inflation, as we mentioned in our previous guidance. Total operating expenses (which includes other expenses) increased 13.1% in 9M24 compared to the same period in 2023 driven by higher other operating expenses, related to a provision for the restructuring of our branch network and the transformation to Work/Café and also the progress in Digital Banking.

    Cost of credit of 1.28% in 9M24, in line with the evolution of asset quality given the economic scenario.

    During the Covid-19 pandemic, asset quality benefited from state aid and pension fund withdrawals, which led to a positive performance in assets during that period, before normalizing in line with the performance of the economy and the drainage of excess liquidity from households. Currently, our clients’ performance is reflecting the state of the economy and the labor market, where delinquency is higher than the levels we saw before the pandemic with the non-performing loans (NPL) ratio increasing to 3.1% and the impaired portfolio to 6.7% at September 2024. Overall the cost of credit remained stable at 1.28% in the quarter.

    Solid capital levels with a BIS7ratio of 17.2% and a CET18of 10.7%.

    Our total BIS ratio reached 17.2% as of September 30, 2024 and the CET1 ratio remains solid at 10.7%, even considering that we increased the dividend provision for the 2024 income from 30% to 60% in June 2024 and then to 70% in September 2024. Risk-weighted assets (RWA) increased 0.8% since December 31, 2023 and 0.3% QoQ, explained by a growth in market risk-weighted assets offset by a decrease in credit risk-weighted assets. Additionally, in January 2024, the CMF announced the Pillar II charges for six banks in the Chilean system, and we highlight that, on this occasion, they did not assign a charge to the Bank.

    Upgrading guidance for 2024 and soft guidance for 2025

    Given the strong recovery in our results and our current economic estimates for the fourth quarter, we are improving our ROAE guidance for 2024 to 18%-19%. We have upgraded our medium term guidance for ROAEs to 18%-20% and our soft guidance for 2025 indicates a ROAE within this range.

    Banco Santander Chile is one of the companies with the highest risk classifications in Latin America with an A2 rating from Moody’s, A- from Standard and Poor’s, A+ from Japan Credit Rating Agency, AA- from HR Ratings and A from KBRA. All our ratings as of the date of this report have a Stable Outlook.

    As of September 30, 2024, the Bank has total assets of $65,890,254 million (US$73,419 million), total gross loans (including loans to banks) at amortized cost of $40,362,740 million (US$44,975 million), total deposits of $29,617,085 million (US$33,001 million) and shareholders’ equity of $4,218,883 million (US$4,701 million). The BIS capital ratio was 17.2%, with a core capital ratio of 10.7%. As of September 30, 2024, Santander Chile employed 8,861 people and has 234 branches throughout Chile.

    CONTACT INFORMATION
    Cristian Vicuña
    Chief Strategy Officer and Head of Investor Relations
    Banco Santander Chile
    Bandera 140, Floor 20
    Santiago, Chile
    Email: irelations@santander.cl Website: www.santander.cl

    1 The information contained in this report is presented in accordance with Chilean Bank GAAP as defined by the Financial Markets Commission (FMC).
    2 Annualized net income attributable to shareholders of the Bank divided by the average equity attributable to equity holders
    3 The third quarter of 2024
    4 The nine months accumulated as of September 30, 2024
    5 NIM: Net interest margin. Annualized net interest income and annualized readjustments divided by interest-earning assets
    6Recurrence: Net commissions divided by structural operating expenses (excludes other operating expenses).
    7 Regulatory capital divided by risk-weighted assets, according to CMF BIS III definitions
    8 Core capital divided by risk-weighted assets, according to CMF BIS III definitions.

    The MIL Network –

  • MIL-OSI Africa: South Africa’s fight against extreme poverty needs a new strategy – model shows how social grants could work

    Source: The Conversation – Africa – By Ramos Emmanuel Mabugu, Professor, Sol Plaatje University

    South Africa has been struggling for decades to reduce poverty, inequality and unemployment and raise the rate of economic growth.

    Economic growth has been slow since a recession in 2008. The annual growth rate averaged 1.1% between 2009 and 2021, slowing to 0.6% in 2023.

    Unemployment remains stubbornly above 30%. It was 32.9% in the first quarter of 2024.

    The country’s Gini coefficient, a measure of how income is distributed across the population, is estimated to be 0.63, one of the worst in the world. Poverty levels remain high too. A large number of people live in extreme poverty. According to Statistics South Africa, an estimated 40.0% of the population (or 25 million people) have a monthly consumption expenditure of below R9,096 (which is used as the lower-bound poverty line). And 55.5% of the population falls within the upper-bound poverty line, with monthly consumption expenditure of below R13,656.

    This is despite government’s extensive spending on social assistance and other support mechanisms. In the 2023/24 fiscal year, there were 18.8 million social grant beneficiaries (about 35% of the population) with an annual cost to the fiscus of R217.1 billion (US$12.2 billion). This is expected to increase to R259.3 billion (US$14.6 billion) in 2026/27.

    Social support also includes spending on health, education, social protection, community development and employment programmes which protect the most vulnerable groups. In addition, the government has extended the Social Relief of Distress Grant which was introduced during the COVID pandemic.

    Based on my research as an economist for the last 20 years, I believe the government won’t make much progress in reducing unemployment, inequality and poverty unless it adopts a different strategy – one that targets extreme poverty reduction explicitly.

    In a recent paper, colleagues and I identify key conditions for reducing extreme poverty through social transfers. We designed an economic simulation model to track the effect of increasing social grants to very poor South Africans to move them out of extreme poverty. This would be done by transferring an average of R4,020 (US$225) to every extremely poor South African. Based on our assumptions, about 25 million individuals would be eligible for this social transfer.

    Moving about 25 million South Africans out of extreme poverty would cost on average US$6.5 billion per year. We argue that this cost is worth carrying. Our model also showed that, under certain conditions, poverty-alleviation social transfers can be good for the broader economy.

    Additional benefits

    We know that social grants are important instruments to fight poverty and inequality in South Africa. They can produce sizeable multiplier effects in the economy.

    But we wanted to know more about how society benefits when a large share of the public budget is transferred to poor households.

    What makes the model we built to explore this different is that we simulated the economic implications of a hypothetical South Africa with lower poverty and inequality outcomes. More precisely, we set the poverty headcount rate at the lower-bound poverty line at 5.0% under both unconstrained and constrained scenarios. This is the conventionally accepted definition of extreme poverty eradication.

    The tool combined a macroeconomic model to project the economic impacts and a micro-simulation model to work out the poverty and inequality effects.

    We tested a combination of policy options, including social grants, and their multiplier effects and funding implications. We considered two financing scenarios: one that involved a budget deficit and one which was budget-neutral.

    Under a budget-neutral scenario, funding for interventions would be taken from budgets allocated for other purposes and put towards poverty alleviation instead.

    Key findings

    The model showed that the South African economy, measured by the level of gross domestic product (GDP), would grow faster (by 0.5 percentage points) when the transfer was designed to support poor people’s progressive engagement in economic participation rather than simply providing them with a basic cash grant. This can be done, for instance, by expanding and upgrading the current social assistance schemes such as the public work programmes. These have been shown to have positive outcomes for economic participation.

    When people who receive income transfers are able to work, they contribute to a higher supply of goods and services as well as to higher demand.

    The inflationary effects, in particular food price increases, are limited under this scenario.

    On the other hand, GDP deteriorates by 1 percentage point when there is no requirement or condition for participation (when grant recipients still don’t have a job). Under this scenario food demand increases and related price increases contribute to reducing consumers’ purchasing power.

    What needs to be done

    Our model shows how poverty-alleviation social transfers can have positive economic outcomes under two conditions.

    First, the expansion of the grant lifting approximately 25 million South Africans above the lower-bound poverty line of R9,606 has to be done under a budget-neutral funding arrangement.

    Second, the transfer has to be made with a requirement that there is an increase in the economic participation of extremely poor beneficiaries. In other words, the grant only has a positive effect if the very poor beneficiaries can find work or are required to participate in a certain kind of public work activity.

    The fiscal cost of the poverty alleviating grant transfer would be around 1.6% of GDP or 4.9% of public expenditure. This would mean increasing social spending by 4.9%. Alternatively, spending on other areas would have to be cut by the same proportion.

    In either scenario, the findings show that this constraint might even be relaxed if the fiscal transfer enabled poor people to get work or if the cash transfer was conditional on recipients doing certain work.

    In our view the benefits of this are massive in terms of extreme poverty eradication.

    – South Africa’s fight against extreme poverty needs a new strategy – model shows how social grants could work
    – https://theconversation.com/south-africas-fight-against-extreme-poverty-needs-a-new-strategy-model-shows-how-social-grants-could-work-241694

    MIL OSI Africa –

  • MIL-OSI Economics: Thirty years of WTO technical assistance enhancing participation in world trade

    Source: World Trade Organization

    Since its establishment in 1995, the WTO has supported the participation of developing economies and least-developed countries (LDCs) in the multilateral trading system through the provision of technical assistance, helping beneficiaries develop their capacity to take full advantage of global trade. Over the past 30 years, more than 320,000 government officials have benefited from this assistance.

    WTO technical assistance is a pivotal function of the organization and has evolved constantly to meet the emerging needs of the beneficiaries and a changing global environment, with an increasing focus on achieving measurable results.

    Regional breakdown of activities

    The WTO has conducted over 10,000 technical assistance activities for its eligible members and observers since 1995. In the initial three years following the organization’s establishment, these activities were carried out globally, without focusing on particular regions. However, starting in 1998, the focus shifted toward addressing the specific needs of individual members, either regionally or at the domestic level.

    Africa has consistently received the largest share of technical assistance, averaging around 30 per cent of annual activities and rising as high as 40 per cent between 2005 and 2011 (see Chart 1). The Asia-Pacific region has benefited from roughly 20 per cent of activities. The Middle East, the Caribbean, and Central and Eastern Europe and Central Asia have received respectively between 5 per cent and 10 per cent annually. Latin America has also featured prominently in technical assistance programmes, receiving on average approximately 10 per cent of activities.

    Developing online technical assistance

    The launch in 2004 of the WTO technical assistance e-Learning platform, which was upgraded in 2022, was a game-changer in terms of delivering more accessible technical assistance and providing more cost-effective training. The platform gained additional importance during the COVID-19 pandemic, when travel restrictions prevented face-to-face activities.

    Since 1995, over 110,000 government officials have been trained via the e-Learning platform, representing more than a third of the total number of beneficiaries (see Chart 2). The number of e‑Learning participants per year has surpassed the number of beneficiaries of face-to-face activities since 2014. More recently, a new approach, combining e‑Learning, face-to-face and virtual activities is gradually being introduced.

    WTO technical assistance is primarily aimed at government officials, but its outreach extends to other key groups, including the academic community through the WTO Chairs Programme, as well as members of parliament, journalists, the private sector and non-governmental organizations.

    Evolving pedagogical approaches

    In 2010, a progressive learning strategy was introduced to improve the efficient use of resources in technical assistance delivery by focusing on advancing participants’ skills progressively. This progressive learning strategy structures technical assistance activities around three levels of learning — introductory, intermediate and advanced — and two training paths — for generalists and for specialists — with the aim of building beneficiaries’ capacity in a sustainable and cumulative manner.

    The training methods used in the delivery of technical assistance programmes have also evolved over time. While the approach in 1995 was predominantly lecture-based, the proportion of lectures in the total training time has been somewhat reduced since 2013 in favour of face-to-face activities incorporating more hands-on sessions and interactive pedagogical techniques (see Chart 3). Recent years have seen the introduction of mentoring and coaching.

    In addition to training programmes, the first internship programme was launched in 1998. Since then, four other similar programmes have been set up. These internship opportunities have collectively benefited more than 800 participants from over 100 WTO members and observers.

    Priorities for technical assistance

    WTO technical assistance is governed by biennial plans setting out priorities and strategies to ensure that the needs of beneficiaries are effectively met. In 2013, a results-based management approach was implemented to improve monitoring of all WTO technical assistance activities, from planning to evaluation. The approach aims to produce specific and measurable results to improve beneficiaries’ capacity to participate in the multilateral trading system.

    Since its introduction, the proportion of technical assistance targets fully or partially met, such as successful completion of the courses, reached 91 per cent in 2018. This number declined between 2020 and 2022 due to the impact of the COVID-19 pandemic on technical assistance delivery but rose again in 2023 (see Chart 4).

    WTO negotiations and implementation of WTO agreements: Some measurable results

    Technical assistance has contributed to improving the capacity of developing WTO members and observers, and particularly LDCs, to engage effectively in WTO negotiations and participate in the work of WTO bodies. It has also been essential to economies wishing to join the WTO as they proceed through their WTO accession processes.

    For several recent agreements negotiated at the WTO (e.g., the agreements on trade facilitation, fisheries subsidies and investment facilitation for development), provisions related to technical assistance for developing and LDC members have been crucial to concluding the negotiations. Over the past 10 years alone, thousands of government officials have benefited from technical assistance training programmes designed to strengthen their capacity to comply with obligations under WTO agreements and to benefit fully from these WTO agreements (see Chart 5).

    The topics covered by technical assistance training programmes have continued to evolve over the years in line with the priorities defined by beneficiaries. This flexibility allows WTO technical assistance to take account of evolving issues on the WTO agenda, such as digital trade, the green economy and inclusive trade.

    The impact of these efforts can be measured in different ways. For example, WTO technical assistance has striven through capacity-building to stimulate a sustained increase in the number of proposals or other documents covering a variety of topics under negotiation or discussion submitted to WTO bodies by technical assistance beneficiaries. These contributions have been invaluable in making trade deliberations and decision-making more inclusive.

    Strengthening the capacity of technical assistance beneficiaries to fulfil their transparency obligations under various WTO agreements, including by notifying new trade measures, is among the performance targets for WTO technical assistance. As the overall volume of notification obligations has increased each year, technical assistance efforts have enabled beneficiaries not only to keep pace with their new notification obligations, but even to reduce their backlog progressively.  

    Financial commitments to WTO technical assistance

    WTO technical assistance is financed both by the regular budget of the WTO Secretariat and by means of voluntary contributions made by WTO members to trust funds. A total of over CHF 500 million has been committed since 1995. Contributions from the regular budget reached their highest levels between 2002 and 2013 and have remained at CHF 4.5 million since then. Meanwhile, members’ voluntary contributions have steadily declined, dropping from CHF 23 million on average between 2007 and 2009 to CHF 6.3 million in 2023 (see Chart 6).

    Sustained funding continues to be essential to responding efficiently to the evolving needs of members and securing the technical assistance necessary for an inclusive multilateral trading system.

    MIL OSI Economics –

  • MIL-OSI Global: South Africa’s fight against extreme poverty needs a new strategy – model shows how social grants could work

    Source: The Conversation – Africa – By Ramos Emmanuel Mabugu, Professor, Sol Plaatje University

    South Africa has been struggling for decades to reduce poverty, inequality and unemployment and raise the rate of economic growth.

    Economic growth has been slow since a recession in 2008. The annual growth rate averaged 1.1% between 2009 and 2021, slowing to 0.6% in 2023.

    Unemployment remains stubbornly above 30%. It was 32.9% in the first quarter of 2024.

    The country’s Gini coefficient, a measure of how income is distributed across the population, is estimated to be 0.63, one of the worst in the world. Poverty levels remain high too. A large number of people live in extreme poverty. According to Statistics South Africa, an estimated 40.0% of the population (or 25 million people) have a monthly consumption expenditure of below R9,096 (which is used as the lower-bound poverty line). And 55.5% of the population falls within the upper-bound poverty line, with monthly consumption expenditure of below R13,656.

    This is despite government’s extensive spending on social assistance and other support mechanisms. In the 2023/24 fiscal year, there were 18.8 million social grant beneficiaries (about 35% of the population) with an annual cost to the fiscus of R217.1 billion (US$12.2 billion). This is expected to increase to R259.3 billion (US$14.6 billion) in 2026/27.

    Social support also includes spending on health, education, social protection, community development and employment programmes which protect the most vulnerable groups. In addition, the government has extended the Social Relief of Distress Grant which was introduced during the COVID pandemic.

    Based on my research as an economist for the last 20 years, I believe the government won’t make much progress in reducing unemployment, inequality and poverty unless it adopts a different strategy – one that targets extreme poverty reduction explicitly.

    In a recent paper, colleagues and I identify key conditions for reducing extreme poverty through social transfers. We designed an economic simulation model to track the effect of increasing social grants to very poor South Africans to move them out of extreme poverty. This would be done by transferring an average of R4,020 (US$225) to every extremely poor South African. Based on our assumptions, about 25 million individuals would be eligible for this social transfer.

    Moving about 25 million South Africans out of extreme poverty would cost on average US$6.5 billion per year. We argue that this cost is worth carrying. Our model also showed that, under certain conditions, poverty-alleviation social transfers can be good for the broader economy.

    Additional benefits

    We know that social grants are important instruments to fight poverty and inequality in South Africa. They can produce sizeable multiplier effects in the economy.

    But we wanted to know more about how society benefits when a large share of the public budget is transferred to poor households.

    What makes the model we built to explore this different is that we simulated the economic implications of a hypothetical South Africa with lower poverty and inequality outcomes. More precisely, we set the poverty headcount rate at the lower-bound poverty line at 5.0% under both unconstrained and constrained scenarios. This is the conventionally accepted definition of extreme poverty eradication.

    The tool combined a macroeconomic model to project the economic impacts and a micro-simulation model to work out the poverty and inequality effects.

    We tested a combination of policy options, including social grants, and their multiplier effects and funding implications. We considered two financing scenarios: one that involved a budget deficit and one which was budget-neutral.

    Under a budget-neutral scenario, funding for interventions would be taken from budgets allocated for other purposes and put towards poverty alleviation instead.

    Key findings

    The model showed that the South African economy, measured by the level of gross domestic product (GDP), would grow faster (by 0.5 percentage points) when the transfer was designed to support poor people’s progressive engagement in economic participation rather than simply providing them with a basic cash grant. This can be done, for instance, by expanding and upgrading the current social assistance schemes such as the public work programmes. These have been shown to have positive outcomes for economic participation.

    When people who receive income transfers are able to work, they contribute to a higher supply of goods and services as well as to higher demand.

    The inflationary effects, in particular food price increases, are limited under this scenario.

    On the other hand, GDP deteriorates by 1 percentage point when there is no requirement or condition for participation (when grant recipients still don’t have a job). Under this scenario food demand increases and related price increases contribute to reducing consumers’ purchasing power.

    What needs to be done

    Our model shows how poverty-alleviation social transfers can have positive economic outcomes under two conditions.

    First, the expansion of the grant lifting approximately 25 million South Africans above the lower-bound poverty line of R9,606 has to be done under a budget-neutral funding arrangement.

    Second, the transfer has to be made with a requirement that there is an increase in the economic participation of extremely poor beneficiaries. In other words, the grant only has a positive effect if the very poor beneficiaries can find work or are required to participate in a certain kind of public work activity.

    The fiscal cost of the poverty alleviating grant transfer would be around 1.6% of GDP or 4.9% of public expenditure. This would mean increasing social spending by 4.9%. Alternatively, spending on other areas would have to be cut by the same proportion.

    In either scenario, the findings show that this constraint might even be relaxed if the fiscal transfer enabled poor people to get work or if the cash transfer was conditional on recipients doing certain work.

    In our view the benefits of this are massive in terms of extreme poverty eradication.

    Ramos Emmanuel Mabugu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. South Africa’s fight against extreme poverty needs a new strategy – model shows how social grants could work – https://theconversation.com/south-africas-fight-against-extreme-poverty-needs-a-new-strategy-model-shows-how-social-grants-could-work-241694

    MIL OSI – Global Reports –

  • MIL-OSI Europe: Written question – Impact of school closures on children’s health and education in connection with measures taken during the COVID-19 pandemic – E-002197/2024

    Source: European Parliament

    21.10.2024

    Question for written answer  E-002197/2024
    to the Commission
    Rule 144
    Christine Anderson (ESN), Marc Jongen (ESN)

    Many Member States resorted to closing schools as a way of containing the pandemic. It appears that, in the process, sufficient account was not taken of the impact on children’s mental health and education. Internal Robert Koch Institute files suggest that measures were not always underpinned by sound scientific data.

    • 1.How does the Commission support Member States in collecting and analysing scientific data in order to assess the effectiveness of school closures?
    • 2.What studies and analyses has the Commission launched or encouraged in order to understand the long-term impact of school closures on children’s mental health and education?
    • 3.What action is the Commission planning to take in order to assume political responsibility for wrong decisions and ensure that future decisions on school closures are taken on a balanced and scientifically sound basis so as to minimise adverse impact on children?

    Submitted: 21.10.2024

    Last updated: 30 October 2024

    MIL OSI Europe News –

  • MIL-OSI Global: Time to freak out? How the existential terror of hurricanes can fuel climate change denial

    Source: The Conversation – USA – By Jamie Goldenberg, Professor of Psychology and Area Director, Cognitive, Neuroscience and Social Psychology, University of South Florida

    Hurricane Milton flooded parts of the Tampa Bay region just days after Hurricane Helene made landfall nearby. Bryan R. Smithy/AFP via Getty Images

    As TVs across Florida broadcast the all-too-familiar images of a powerful hurricane headed for the coast in early October 2024, people whose homes had been damaged less than two weeks earlier by Hurricane Helene watched anxiously. Hurricane Milton was rapidly intensifying into a dangerous storm, fueled by the Gulf of Mexico’s record-breaking temperatures.

    Many residents scrambled to evacuate, clogging roads away from the region. Officials urged those near the coast who ignored evacuation warnings to scrawl their names on their arms with indelible ink so their corpses could be identified.

    The two hurricanes were among the most destructive in recent memory. They are also stark reminders of the increasingly extreme weather events that scientists have long warned would be the consequence of human-driven climate change.

    Still, many people deny that climate change is a worsening threat, or that it exists at all. As its impacts grow more visible and destructive, how is this possible?

    Views of Hurricane Milton’s damage across Florida.

    One answer lies in a unique facet of human psychology – specifically, in how people manage the fear aroused by existential threats. For many people, denying the existence of a climate crisis is not only convenient, but may feel psychologically necessary.

    Terror management theory

    The Pulitzer Prize-winning anthropologist Ernest Becker put it this way: “The idea of death, the fear of it, haunts the human animal like nothing else … to overcome it by denying it in some way is the final destiny for man.”

    In plain terms, he was saying that most people struggle to accept their mortality and take pains to distort their perception of reality to avoid confronting it.

    In the 1980s, social psychologists developed “terror management theory,” showing the lengths people go to deny death. Hundreds of experiments have tested its implications. In a common method, participants reflect on their own death, while control groups consider less threatening topics, like dental pain. The key question: What does death awareness do to people?

    After writing about death, people tend to quickly move on, pushing thoughts of it from consciousness with distractions, rationalizations and other tactics. Health care professionals see this every day. For example, people often dodge screenings and diagnostic tests to avoid the frightening possibility of discovering cancer.

    Skidmore College psychologist Sheldon Solomon discusses Ernest Becker’s ‘The Denial of Death’ and terror management theory in the context of humanity’s history of brutal behavior.

    But here’s the rub: Terror management theory suggests that when people are not thinking about death, it nevertheless holds influence. The unconscious mind lingers on the problem even after people have used strategies to quiet the fear by pushing it from awareness.

    Social psychology experiments show that people often cope with the specter of death by attaching themselves to cultural ideologies, such as religious, political or even sports fandom. These worldviews imbue life with meaning, values and purpose. And that can ease the terror of mortality by connecting people to an enduring and comforting web of ideas and beliefs that transcend one’s own existence.

    When people are made aware of death, those systems of meaning become even more critical to their psychological functioning. Existential threats make us cling even tighter to the meaning systems that sustain us.

    Climate denial as a defense mechanism

    Much like a terror management lab experiment – or the onset of the COVID-19 pandemic – natural disasters like hurricanes Helene and Milton trigger death anxiety.

    Rising sea levels, warming oceans and intensifying storms – all tied to global warming fueled by human actions – represent an existential threat.

    From our perspective, it is not surprising that climate-related disasters disappear from the public consciousness almost as soon as they have passed. Google Trends data exemplifies this: Incoming storms instigated an uptick in searches for “climate change” and “global warming” in the days before Hurricane Helene made landfall on Sept. 25, 2024, and Hurricane Milton on Oct. 9, 2024. Then those searches quickly declined as people shifted their focus away from the threat.

    Unfortunately, climate change isn’t going away, no matter how hard anyone tries to deny it.

    While climate denial allows people to protect themselves from feelings of distress, terror management theory suggests that denying death is just the tip of the iceberg. For some people, accepting the reality of climate change would necessitate reevaluating their ideologies.

    Terror management theory predicts that individuals whose ideologies conflict with environmental concerns may ironically double down on those beliefs to psychologically manage the existential threat posed by climate-related disasters. It’s similar to how mortality reminders can lead people to engage in risky behavior, such as smoking or tanning. Hurricanes may reinforce denial and commitment to a worldview that rejects climate change.

    A path forward: Building new worldviews

    Although denial may be a natural psychological response to existential threats, the U.S. may be getting to a point where even deniers can’t ignore the existential threat associated with climate change.

    Again and again, Americans are gobsmacked by the devastation – from hurricanes to severe flooding, wildfires and more.

    A terror management analysis suggests that overcoming this crisis requires weaving a solutions-focused narrative into the ideologies that people rely on for comfort. As psychologists who work on terror management, we believe the fight against climate change should be framed not as an apocalyptic battle that humanity is destined to lose, but as a moral and practical challenge that humanity can collectively overcome.

    Tampa, Florida, meteorologist Denis Phillips had the right idea as the two hurricanes headed for his community: His fact-based social media updates eschew partisan critique, encourage neighbors to support one another and emphasize preparedness and resilience in the face of incoming storms.

    As Milton approached, Phillips told residents to remember his Rule #7: Don’t freak out. That doesn’t mean do nothing – it means evaluate risks without letting emotion interfere, and take action.

    Shifting the narrative from helplessness to collective empowerment and action can help people confront climate change without triggering the existential anxieties that lead to denial – offering a vision for a future that is both secure and personally meaningful.

    The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

    – ref. Time to freak out? How the existential terror of hurricanes can fuel climate change denial – https://theconversation.com/time-to-freak-out-how-the-existential-terror-of-hurricanes-can-fuel-climate-change-denial-242390

    MIL OSI – Global Reports –

  • MIL-OSI USA: Statement from President Joe  Biden on Third Quarter 2024  GDP

    US Senate News:

    Source: The White House
    Today’s GDP report shows how far we’ve come since I took office—from the worst economic crisis since the Great Depression to the strongest economy in the world. Since I took office, the economy has grown 12.6%, we’ve had the lowest average unemployment in 50 years, nearly 16 million jobs have been created, and incomes have risen $4,000 more than inflation. While critics thought we’d need a recession to lower inflation, instead we’ve grown around 3% a year on average, while inflation has fallen to the level right before the pandemic.
    We need to keep building on this progress. Instead, Congressional Republicans are proposing across-the-board tariffs that would cost families nearly $4,000 a year, reignite inflation, and kill hundreds of thousands of jobs. The Vice President and I are fighting to lower costs on everyday goods—from housing and groceries to health care and child care—while Republicans fight for more tax breaks for the wealthy and large corporations. The best way to grow the economy is from the middle out and the bottom up, not the top down.

    MIL OSI USA News –

  • MIL-OSI Russia: Head of the Kirov Military Medical Academy Evgeny Kryukov became an Honorary Doctor of the Polytechnic University

    Translation. Region: Russian Federation –

    Source: Peter the Great St Petersburg Polytechnic University – Peter the Great St Petersburg Polytechnic University –

    At the meeting of the Academic Council of the Polytechnic University on October 30, a ceremony was held to present the diploma and mantle of the Honorary Doctor of SPbPU to the head of the S. M. Kirov Military Medical Academy (VMedA), Lieutenant General of the Medical Service, Academician of the Russian Academy of Sciences Evgeny Kryukov.

    The decision to award the honorary title to Evgeny Kryukov was made unanimously by the members of the Academic Councilmeeting on May 24 this year.

    Evgeny Vladimirovich graduated with a gold medal from the military medical faculty of the Gorky Medical Institute, served in the Black Sea Fleet as a doctor and head of the medical service of a submarine. He was a senior resident and head of the therapeutic department, chief therapist, and since 2009 – head of the Naval Hospital named after Academician N. I. Pirogov. From 2014 to 2020, he headed the Main Military Clinical Hospital named after Academician N. N. Burdenko. In 2020, he was appointed to the post of head of the Military Medical Academy named after S. M. Kirov.

    Evgeny Vladimirovich is a legendary man who has visited all the hot spots, a doctor with a capital letter. In our difficult times, he heads the Military Medical Academy named after Sergei Mironovich Kirov, famous for the names of outstanding scientists and healers. It is the highest honor for us to accept you, Evgeny Vladimirovich, into our ranks as an Honorary Doctor of the Polytechnic University, – the rector of SPbPU, chairman of the St. Petersburg branch of the Russian Academy of Sciences Andrei Rudskoy opened the ceremony.

    The new Honorary Doctor of the University was presented by the University Scientific Secretary Dmitry Karpov: Today, the large family of Polytechnicians welcomes a man for whom caring for the lives of others has become his life’s work. Often, saving lives. Evgeny Vladimirovich is a military doctor: from the Crimean Medical Institute and the Military Medical Faculty of the Gorky Medical Institute, which he graduated with honors, to the title of Honored Doctor of Russia and veteran of military service. Evgeny Vladimirovich is a scientist: since 1994 – Candidate of Medical Sciences, since 2004 – Doctor of Sciences, since 2016 – Corresponding Member of the Russian Academy of Sciences in the Department of Medical Sciences, since 2022 – Academician of the Russian Academy of Sciences in the specialty of “military field therapy”. The author of more than six hundred scientific papers, prepared eleven candidates and doctors of science.

    Dmitry Karpov noted that Evgeny Kryukov contributed to the formation of a system for providing troops in armed conflicts, the creation of principles for interaction between military and civilian healthcare, and the adjustment of the scientific process to the needs of the army and navy.

    Dmitry Anatolyevich also said that Yevgeny Vladimirovich made a significant contribution to the fight against the COVID-19 pandemic and participated in the trials of the Sputnik V vaccine. As the head of the Main Military Clinical Hospital at the time, Yevgeny Kryukov put on a protective suit and carried out procedures in the red zone himself to understand the operating conditions of medical personnel. For his dedicated work during the pandemic, he received the specially established Pirogov Order. Yevgeny Vladimirovich’s awards also include the Certificate of Honor of the President of the Russian Federation (2021), the Order of Honor (2022) and “For Military Merit” (2024).

    Evgeny Kryukov significantly strengthened the ties of the Military Medical Academy with the Russian Academy of Sciences and relevant international organizations. In conclusion of the presentation, Dmitry Karpov expressed confidence that such a connection will also be strengthened with the St. Petersburg Polytechnic University.

    After all the welcoming words, the rector of the Polytechnic gave the command: Bring in the Honorary Doctorate Diploma, the mantle and the medal!

    According to tradition, the doctoral gown and cap were brought into the hall of the Academic Council by students dressed in the uniform of polytechnics of the early 20th century. The ceremony was accompanied by the Gaudeamus anthem performed by the Polyhymnia choir. Yevgeny Vladimirovich was also presented with a book about the Honorary Doctors of the Polytechnic — his page is already in it.

    In his response, Evgeny Kryukov thanked the members of the Academic Council for the honor of being elected as an Honorary Doctor of the country’s leading engineering university.

    Our cooperation in medicine dates back about sixty years, when the Department of Biophysics was created at the Polytechnic University. In 1997, the outstanding professor of the Military Medical Academy Vladimir Olegovich Samoilov headed the faculty of medical physics at your university, – said Evgeny Vladimirovich. – Over this time, more than a hundred people have been awarded the high honor of becoming Honorary Doctors of the Polytechnic University, mainly representatives of engineering and exact sciences. Today’s event is especially valuable for me, because for the first time a doctor has been elected Honorary Doctor of the Polytechnic University. First of all, this is, of course, the merit of scientific schools, professors of the Military Medical Academy, the merit of all military medicine. Your decision demonstrates the unity of science, the army and society. Probably, it was this unity that allowed our country to win victories over enemies in all historical periods, preserve its cultural identity and gave a powerful incentive to the scientific and technical development of the country. It is symbolic that this event is taking place on the eve of the great holiday of National Unity Day.

    At the end of the ceremony, the rector of the Polytechnic invited Evgeny Kryukov, as an Honorary Doctor, to support the tradition and give a lecture to the students.

    Please note: This information is raw content directly from the source of the information. It is exactly what the source states and does not reflect the position of MIL-OSI or its clients.

    MIL OSI Russia News –

  • MIL-OSI USA News: Statement from President Joe  Biden on Third Quarter 2024  GDP

    Source: The White House

    Today’s GDP report shows how far we’ve come since I took office—from the worst economic crisis since the Great Depression to the strongest economy in the world. Since I took office, the economy has grown 12.6%, we’ve had the lowest average unemployment in 50 years, nearly 16 million jobs have been created, and incomes have risen $4,000 more than inflation. While critics thought we’d need a recession to lower inflation, instead we’ve grown around 3% a year on average, while inflation has fallen to the level right before the pandemic.

    We need to keep building on this progress. Instead, Congressional Republicans are proposing across-the-board tariffs that would cost families nearly $4,000 a year, reignite inflation, and kill hundreds of thousands of jobs. The Vice President and I are fighting to lower costs on everyday goods—from housing and groceries to health care and child care—while Republicans fight for more tax breaks for the wealthy and large corporations. The best way to grow the economy is from the middle out and the bottom up, not the top down.

    ###

    MIL OSI USA News –

  • MIL-OSI Security: Florida Company Pleads Guilty to Conspiring to Sell Misbranded N95 Masks to Hospital in Early Months of COVID-19 Pandemic

    Source: Office of United States Attorneys

    Two individuals also pleaded guilty to misbranding N95 masks and conspiracy to commit price gouging

    BOSTON – A Florida company, and two individuals associated with the company, have pleaded guilty to charges associated with shipping facemasks that were misbranded as N95 respirators, and price gouging hospitals, during the earliest phase of the COVID-19 pandemic.  

    JDM Supply LLC (JDM) pleaded guilty to one count of conspiracy to introduce misbranded devices into interstate commerce with intent to defraud or mislead, in violation of the Federal Food, Drug and Cosmetic Act. Daniel Motha, 40, of Miami, Fla., and Jeffrey Motha, 36, of Norfolk, Mass., also pleaded guilty to one count of introduction of misbranded devices into interstate commerce and one count of conspiracy to commit price gouging in violation of the Defense Production Act. U.S. District Court Judge Myong J. Joun scheduled sentencing for Daniel Motha and Jeffrey Motha on March 4, 2025 and JDM on March 25, 2025. In August 2023, a third individual, Jason Colantuoni of Norfolk, Mass, pleaded guilty to conspiracy to commit price gouging in connection with this investigation.  

    In the spring of 2020, during the earliest phase of the COVID-19 pandemic, JDM and a company identified as “Company 1” conspired to ship facemasks that were misbranded as National Institute of Occupational Safety and Health (NIOSH)-approved, N95 respirators. One hospital accepted and paid for hundreds of thousands of purported N95 masks that were manufactured by Company 1 and sold by JDM. Ultimately, the hospital did not use the masks, which were eventually returned to Company 1. JDM misled the hospital into believing that the Company 1 masks were NIOSH-approved N95s, when in fact they were not.

    In August 2020, a NIOSH lab tested a sample of the Company 1 masks that had been shipped to the hospital. The masks tested between 83.94% and 93.24% filtration efficiency, thus falling below the 95% minimum level of filtration efficiency required for N95 respirators.  

    Daniel Motha and Jeff Motha conspired to use JDM to exploit and profit off of the critical need of hospitals and healthcare workers for scarce N95 masks during the COVID-19 pandemic. They accumulated N95 masks from various sources and then sold the N95 masks through JDM to hospitals in Massachusetts, and elsewhere, at prices in excess of the prevailing market price.

    The charge of conspiracy to introduce or deliver for introduction into interstate commerce a misbranded device with intent to defraud or mislead, brought against JDM, provides for a fine of $500,000 or twice the pecuniary gain or loss of the offense, whichever is greater and up to five years of probation. The charge of introduction or delivery for introduction into interstate commerce a misbranded device provides for a sentence of up to one year in prison; up to one year of supervised release; and a fine of $100,000. The charge of conspiracy to commit price gouging in violation of the Defense Production Act provides for a sentence of up to one year in prison; up to one year of supervised release; and a fine of up to $10,000. Sentences are imposed by a federal judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

    Acting United States Attorney Joshua S. Levy; Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; Fernando McMillan, Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations; Christopher Algieri, Special Agent in Charge of the U.S. Department of Veterans Affairs Office of Inspector General, Northeast Field Office; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; and Michael J. Krol, Acting Special Agent in Charge of Homeland Security Investigations in New England made the announcement today. Assistant U.S. Attorneys Bill Brady and Howard Locker of the Health Care Fraud Unit are prosecuting the case.

    On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus and https://www.justice.gov/coronavirus/combatingfraud. 
        
    Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline via the NCDF Web Complaint Form.
     

    MIL Security OSI –

  • MIL-OSI USA: $5 Million Investment to Expand Access to Behavioral Health Care in Primary Care Offices

    Source: US State of North Carolina

    Headline: $5 Million Investment to Expand Access to Behavioral Health Care in Primary Care Offices

    $5 Million Investment to Expand Access to Behavioral Health Care in Primary Care Offices
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    The North Carolina Department of Health and Human Services announces $5 million to help providers build capacity and implement the Collaborative Care Model in primary care offices across the state. Through the Collaborative Care Model, primary care providers work with an integrated behavioral health case manager and a psychiatric consultant to monitor and treat patients for mild to moderate behavioral health conditions. The need for integrated medical and behavioral health care is greater than ever as rates of anxiety and depression have substantially increased following the COVID-19 pandemic.

    “Too many individuals with mental health and substance use disorders delay the care they need because they struggle finding a provider,” said NC Health and Human Services Secretary Kody H. Kinsley. “Collaborative Care can serve more people earlier by supporting primary care providers in reaching people at the onset of behavioral health symptoms.”

    Collaborative Care is covered by NC Medicaid, Medicare and most commercial insurance plans in North Carolina, helping to break down barriers that separate how physical and behavioral health services are delivered and paid for. Patients are able to receive services through a provider, and in a setting, they already know and trust, which gives them easier access to the care they need. Collaborative Care improves patient outcomes, reduces health care costs and reduces stigma related to mental health and substance use disorders.

    NCDHHS’ investment is designed to help with the startup costs of implementing Collaborative Care, particularly for primary care providers in rural or high-need areas that have limited access to behavioral health services. The department is partnering with Community Care of North Carolina (CCNC) to select eligible provider applications and distribute funding to approximately 100 providers across the state.

    As of Oct. 10, providers can apply for up to $50,000 per site to help with hiring and start up costs. Primary care practices are encouraged to apply and can find more information through CCNC’s dedicated Collaborative Care website. Efforts will be made to ensure primary care practices in western North Carolina impacted by Hurricane Helene will have an opportunity to apply for inclusion in the program, even if they are unable to apply for funds at this time.

    “The need is greater than ever before,” said Dr. Carrie Brown, Chief Psychiatrist for NCDHHS. “From 2019 to 2021, the percentage of Americans reporting symptoms of anxiety and depression nearly quadrupled, from 11% to 41%. The Collaborative Care partnership between primary care and psychiatrists is one example of the department’s efforts to increase access to behavioral health care for those who need it as we focus on whole-person health.”

    Nationally, the Collaborative Care Model is a strategic response to the shortage of mental health care professionals across the country. Recent data show more than 123 million people in the U.S. live in a Federally Designated Mental Health Professional shortage area, including one in four North Carolina counties. In North Carolina, a recent study finds there are 28 counties without a practicing psychiatrist, and it can take weeks or even months to get an appointment with a mental health provider. 

    With the Collaborative Care Model, a behavioral health care manager is embedded within a primary care office and, through consultation with a psychiatrist, helps the primary care physician implement evidence-based interventions for patients who screen positive for targeted behavioral health conditions. In this model, one psychiatrist can reach far more North Carolinians with mild to moderate behavioral health needs than they could directly provide care for through traditional behavioral health services.

    “Through this partnership with primary care professionals, we are working to create a more accessible mental healthcare system,” said Kelly Crosbie, MSW, LCSW, Director of the NCDHHS Division of Mental Health, Developmental Disabilities, and Substance Use Services. “This ensures our community receives the mental health care they need and deserve, in a setting where they are most comfortable.”

    The $5 million investment in capacity building is made possible by the NC General Assembly through the signing bonus North Carolina received from the federal government when it approved Medicaid Expansion. The investment builds on the department’s strategic work to enhance access to the Collaborative Care Model, which has already resulted in a nearly 100% increase in utilization among NC Medicaid primary care providers between April 2023 and May 2024.

    NC Medicaid, in coordination with key stakeholders, has led a statewide effort over the past two years to align requirements and reimbursement for Collaborative Care across payors, increase NC Medicaid reimbursement for behavioral health services to 120% of Medicare rates and remove copays for Medicaid beneficiaries. Additionally, NC Medicaid has provided training and technical assistance to support model implementation through Area Health Education Centers, connected interested primary care practices with psychiatric consultants, and created a customized Collaborative Care registry for providers through CCNC. These efforts are outlined in detail in a white paper published by NC Medicaid in December 2023.   

    NCDHHS’ investment in the Collaborative Care Model is part of a broader commitment to build an integrated behavioral health system in North Carolina. The NC General Assembly last year allocated a historic $835 million to strengthen the behavioral health system, and millions of North Carolinians are already benefiting from the sweeping, systemic improvements these funds are making for their health, well-being and day-to-day lives. More information is available in the NCDHHS Transforming North Carolina’s Behavioral Health System white paper.

    El Departamento de Salud y Servicios Humanos de Carolina del Norte anuncia $ 5 millones para ayudar a los proveedores a desarrollar capacidades e implementar el Modelo de Atención Colaborativa en las oficinas de atención médica primaria de todo el estado. A través del Modelo de Atención Colaborativa, los proveedores de atención médica primaria trabajan con un administrador de casos de salud conductual integrado y un consultor psiquiátrico para monitorear y tratar a los pacientes con condiciones de salud conductual de leves a moderadas. La necesidad de atención médica y de salud conductual integrada es mayor que nunca, ya que las tasas de ansiedad y depresión han aumentado sustancialmente después de la pandemia de COVID-19.

    “Demasiadas personas con trastornos de salud mental y uso de sustancias retrasan la atención que necesitan porque tienen dificultades para encontrar un proveedor”, dijo el secretario de Salud y Servicios Humanos de Carolina del Norte, Kody H. Kinsley. “La Atención Colaborativa puede servir a más personas antes, al ayudar a los proveedores de atención médica primaria a llegar a las personas al inicio de los síntomas de salud conductual”.

    La Atención Colaborativa está cubierta por NC Medicaid, Medicare y la mayoría de los planes de seguros comerciales en Carolina del Norte, lo que ayuda a derribar las barreras que separan la forma en que se prestan y pagan los servicios de salud física y conductual. Los pacientes pueden recibir servicios a través de un proveedor y en un entorno que ya conocen y en el que confían, lo que les brinda un acceso más fácil a la atención que necesitan. La Atención Colaborativa mejora los resultados de los pacientes, reduce los costos de atención médica y reduce el estigma relacionado con la salud mental y los trastornos por uso de sustancias.

    La inversión del Departamento de Salud y Servicios Humanos de Carolina del Norte (NCDHHS, por sus siglas en inglés) está diseñada para ayudar con los costos iniciales de la implementación de la Atención Colaborativa, particularmente para los proveedores de atención médica primaria en áreas rurales o de alta necesidad que tienen acceso limitado a los servicios de salud conductual. El departamento se está asociando con Atención Comunitaria de Carolina del Norte (Community Care of North Carolina, CCNC, por sus siglas en inglés) para seleccionar solicitudes de proveedores elegibles y distribuir fondos a aproximadamente 100 proveedores en todo el estado.

    A partir del 10 de octubre, los proveedores pueden solicitar hasta $50,000 por sitio para ayudar con los costos de contratación e iniciación. Se alienta a las prácticas de atención médica primaria a aplicar y encontrar más información a través del sitio web dedicado a la Atención Colaborativa de CCNC. Se harán esfuerzos para garantizar que las prácticas de atención médica primaria en el oeste de Carolina del Norte afectadas por el huracán Helene tengan la oportunidad de solicitar su inclusión en el programa, incluso si no pueden solicitar fondos en este momento.

    “La necesidad es mayor que nunca”, dijo la doctora Carrie Brown, directora psiquiatra del NCDHHS. “De 2019 a 2021, el porcentaje de estadounidenses que reportaron síntomas de ansiedad y depresión casi se cuadruplicó, del 11% al 41%. La asociación de Atención Colaborativa entre la atención médica primaria y los psiquiatras es un ejemplo de los esfuerzos del departamento para aumentar el acceso a la atención de salud conductual para quienes la necesitan, ya que nos centramos en la salud integral de la persona”.

    A nivel nacional, el Modelo de Atención Colaborativa es una respuesta estratégica a la escasez de profesionales de la salud mental en todo el país. Datos recientes muestran que más de 123 millones de personas en Estados Unidos viven en un área de escasez de profesionales de la salud mental designados por el gobierno federal, incluido uno de cada cuatro condados de Carolina del Norte. En Carolina del Norte, un estudio reciente encuentra que hay 28 condados sin un psiquiatra que ejerza, y puede tomar semanas o incluso meses obtener una cita con un proveedor de salud mental. 

    Con el Modelo de Atención Colaborativa, un administrador de atención de salud conductual está integrado en una oficina de atención médica primaria y, a través de la consulta con un psiquiatra, ayuda al médico de atención médica primaria a implementar intervenciones basadas en evidencia para pacientes que dan positivo para condiciones de salud conductual específicas. En este modelo, un psiquiatra puede llegar a muchos más habitantes de Carolina del Norte con necesidades de salud conductual de leves a moderadas de las que podrían atender directamente a través de los servicios tradicionales de salud conductual.

    “A través de esta asociación con profesionales de atención médica primaria, estamos trabajando para crear un sistema de salud mental más accesible”, dijo Kelly Crosbie, MSW, LCSW, directora de la División de Salud Mental, Discapacidades del Desarrollo y Servicios de Uso de Sustancias del NCDHHS. “Esto garantiza que nuestra comunidad reciba la atención de salud mental que necesita y merece, en un entorno más cómodo”.

    La inversión de $ 5 millones en el desarrollo de capacidades es posible gracias a la Asamblea General de Carolina del Norte a través del bono por contratación que Carolina del Norte recibió del gobierno federal cuando aprobó la Expansión de Medicaid. La inversión se basa en el trabajo estratégico del departamento para mejorar el acceso al Modelo de Atención Colaborativa, que ya ha resultado en un aumento de casi el 100% en la utilización entre los proveedores de atención médica primaria de Medicaid de Carolina del Norte entre abril de 2023 y mayo de 2024.

    NC Medicaid, en coordinación con las principales partes interesadas, ha liderado un esfuerzo estatal en los últimos dos años para alinear los requisitos y el reembolso de la Atención Colaborativa entre los contribuyentes, aumentar el reembolso de NC Medicaid por servicios de salud conductual al 120% de las tasas de Medicare y eliminar los copagos para los beneficiarios de Medicaid. Además, NC Medicaid ha brindado capacitación y asistencia técnica para apoyar la implementación del modelo a través de los Centros de Educación para la Salud del Área (Area Health Education Centers, AHEC, por sus siglas en inglés), ha conectado las prácticas de atención médica primaria interesadas con los consultores psiquiátricos y ha creado un registro personalizado de Atención Colaborativa para los proveedores a través de CCNC. Estos esfuerzos se describen en detalle en un libro blanco publicado por NC Medicaid en diciembre de 2023.   

    La inversión del NCDHHS en el Modelo de Atención Colaborativa es parte de un compromiso más amplio para construir un sistema integrado de salud conductual en Carolina del Norte. El año pasado, la Asamblea General de Carolina del Norte asignó $ 835 millones históricos para fortalecer el sistema de salud conductual, y millones de habitantes de Carolina del Norte ya se están beneficiando de las mejoras radicales y sistémicas que estos fondos están haciendo para su salud, bienestar y vida cotidiana. Para obtener más información, visite [$835 reporte]. 

    Oct 30, 2024

    MIL OSI USA News –

  • MIL-OSI United Kingdom: Mind the gap… in public toilets on the tube

    Source: Mayor of London

    [1] Transport for London quarterly performance report 

    Caroline has been pushing for toilet funding in every Mayoral budget since the 2020-2021 cycle. During the coronavirus pandemic in 2020, Caroline pointed out the serious public health consequences of the lack of public toilets across London.  

    The following summer, Caroline incorporated her work with the charity Muscular Dystrophy to again implore the Mayor to see how essential toilets are to accessibility on Lonon’s transport network.  

    In the 2022 budget cycle, Caroline’s Green Group budget amendment tried to once more fund public toilets, this time by proposing a £10 million investment for a brand-new London toilets fund to give local councils access to money to refurbish, reopen and revitalise these essential local amenities. 

    The following year, Caroline’s fully costed and feasible 2023 budget amendment for new TfL toilets was mysteriously blocked by the Assembly Labour group in a shocking blow to older and disabled Londoners, new parents, and so many more travellers in need of a loo on their journeys. Seeming to understand the gravity of his party’s mistake, the TfL toilet feasibility study was first proposed by London’s Mayor following his party’s puzzling opposition to that blocked Toilet amendment.  

    The Mayor’s team indicated the feasibility study would be shared by June 2023, but by August that deadline had been pushed back as well.   

    Later that month, Caroline published the ‘Loo League Table,’ analysing the many loo ‘deserts’ across the transport network and pushing TfL to explain its failure to make use of the existing upgrade programme on the tube to provide new toilet facilities. This report followed her 2021 “Toilet Paper” report as Chair of the London Assembly Health Committee, in which the committee found 91.3 per cent of respondents to their survey do not feel toilet provision is adequate to meet their needs.   

    In January 2024, Caroline welcomed the Mayor’s allocation of £3 million for public toilets on the TfL network in the Mayor’s budget, though urged the Mayor to commit to the full £20 million investment needed to ensure every tube stop has a safe, clean, and operable public toilet.   

    Building on that momentum, in February 2024 Caroline commissioned new polling from YouGov showing that 74 per cent of respondents believe that there should be more toilets on the TfL network. 

    Most recently, in March 2024 Caroline pressed the Mayor directly over the latest delay in his long-promised feasibility study, where the Mayor explained that while “good progress has been made” on the feasibility study, TfL now plans to “publish the full study in the summer.”   

    Though several weeks after summer’s end now, Caroline proudly joined the Mayor, Deputy Mayor for Transport Seb Dance, and TfL Customer Director Emma Strain at White Hart Lane station today to welcome in an era of what will, hopefully, culminate with toilets built across the TfL network.

    MIL OSI United Kingdom –

  • MIL-OSI: Expand Energy Corporation Reports Third Quarter 2024 Results, Provides Preliminary 2025 Capital and Operating Plan and Announces Enhanced Capital Return Framework

    Source: GlobeNewswire (MIL-OSI)

    OKLAHOMA CITY, Oct. 29, 2024 (GLOBE NEWSWIRE) — Expand Energy Corporation (NASDAQ: EXE) (“Expand Energy” or the “company”) today reported third quarter 2024 financial and operating results. In addition, the company provided its preliminary 2025 capital and operating plan and announced details regarding its enhanced capital return framework. On October 1, 2024, Expand Energy announced the completion of the previously disclosed merger between Chesapeake Energy Corporation (“Chesapeake”) and Southwestern Energy Company (“Southwestern”).

    Legacy Chesapeake Third Quarter Highlights

    • Net cash provided by operating activities of $422 million
    • Net loss of $114 million, or $0.85 per fully diluted share; adjusted net income(1)of $22 million, or $0.16 per share
    • Adjusted EBITDAX(1)of $365 million
    • Produced approximately 2.65 bcf/d net (100% natural gas)

    Expand Energy Highlights

    • Raised annual synergy target by $100 million; expected to achieve approximately $225 million in 2025 and approximately $500 million in annual synergies by year end 2027
    • Upgraded at the start of fourth quarter to Investment Grade credit rating from S&P (BBB-) and Fitch (BBB-)
    • Quarterly base dividend of $0.575 per common share to be paid in December 2024, 15th straight quarter paying a dividend
    • 2025 capital expenditures expected to be approximately $2.7 billion, yielding net production of approximately 7 bcf/day (~91% natural gas)
    • Enhanced capital return framework to more effectively return cash to shareholders and reduce net debt; announced new $1 billion share repurchase authorization

    (1) Definitions of non-GAAP financial measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure are included at the end of this news release.

    “Our strong third quarter results, recent Investment Grade rating and preliminary 2025 outlook demonstrate the power of our advantaged portfolio and resilient financial foundation,” said Nick Dell’Osso, Expand Energy’s President and Chief Executive Officer. “Our integration efforts are already delivering, allowing us to raise our annual synergy expectations by 25% to $500 million, as we drive to lower our breakeven costs and more efficiently reach markets in need. As the largest domestic producer of natural gas, and a top producer globally, we are built to answer the call for affordable, reliable, lower carbon energy and expand opportunity for all stakeholders.”
    Operations Update

    In the third quarter, legacy Chesapeake operated an average of seven rigs to drill 30 wells and turned seven wells in line, resulting in net production of approximately 2.65 bcfe per day (100% natural gas). Additionally, the company built an inventory of 18 drilled but uncompleted (“DUCs”) wells and 12 deferred turn in lines (“TILs”). A detailed breakdown of third quarter production, capital expenditures and activity can be found in supplemental slides which have been posted at https://investors.expandenergy.com/events-presentations.

    Expand Energy continues to execute its previously disclosed plan to defer completions and new TILs. As of October 1, 2024, the combined company had 58 DUCs, excluding working inventory, and 58 deferred TILs. The company intends to prudently activate production as market conditions warrant.

    Expand Energy is currently running 12 rigs (8 in Haynesville, 2 in Northeast Appalachia, and 2 in Southwest Appalachia) and 6 completion crews (3 in Haynesville, 2 in Northeast Appalachia, and 1 in Southwest Appalachia). At current market conditions, the company expects to drop two rigs in the first quarter of 2025.

    Annual Synergy Outlook and Preliminary 2025 Capital & Operating Program

    Expand Energy increased its expected annual synergy outlook by $100 million to $500 million. The company expects to achieve approximately $225 million in synergies in 2025 and to achieve the full $500 million in annual synergies by year end 2027.

    In 2025, at current market conditions, the company expects to run 10 to 12 rigs and invest approximately $2.7 billion yielding an estimated daily production of approximately 7 bcfe per day. Expand Energy will provide complete guidance in early 2025.

    Shareholder Returns Update

    Expand Energy plans to pay its quarterly base dividend of $0.575 per share on December 4, 2024 to shareholders of record at the close of business on November 14, 2024.

    The company announced today its enhanced capital return framework which is designed to more effectively return cash to shareholders and reduce net debt. The plan is expected to go into effect January 1, 2025, and prioritizes the base dividend of $2.30 per share and $500 million of annual net debt reduction. Once both have been funded, it is anticipated that 75% of remaining free cash flow be distributed as market conditions warrant, between share repurchases and additional dividend payments. The remaining free cash flow would be maintained on the balance sheet.

    In conjunction with the enhanced framework, Expand Energy’s Board of Directors approved a $1 billion repurchase authorization.

    Conference Call Information

    A conference call to discuss the results and preliminary 2025 plan has been scheduled for 9 a.m. EDT on October 30, 2024. Participants can view the live webcast here. Participants who would like to ask a question, can register here, and will receive the dial-in info and a unique PIN to join the call. Links to the conference call will be provided on Expand Energy’s website. A replay will be available on the website following the call.

    Financial Statements, Non-GAAP Financial Measures and 2024 Guidance and Outlook Projections

    Reconciliations of each non-GAAP financial measure used in this news release to the most directly comparable GAAP financial measure are provided below. Additional detail on the company’s 2024 third quarter financial and operational results, along with non-GAAP measures that adjust for items typically excluded by certain securities analysts, are available on the company’s website. Non-GAAP measures should not be considered as an alternative to GAAP measures. Management’s updated guidance for 2024 and preliminary plan for 2025 can be found on the company’s website at www.expandenergy.com.

    Expand Energy Corporation (NASDAQ: EXE) is the largest independent natural gas producer in the United States, powered by dedicated and innovative employees focused on disrupting the industry’s traditional cost and market delivery model to responsibly develop assets in the nation’s most prolific natural gas basins. Expand Energy’s returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. Expand Energy is committed to expanding America’s energy reach to fuel a more affordable, reliable, lower carbon future.

    Forward-Looking Statements

    This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include our current expectations or forecasts of future events, including matters relating to the combined company after the merger with Southwestern Energy Company (“Southwestern”), armed conflict and instability in Europe and the Middle East, along with the effects of the current global economic environment, and the impact of each on our business, financial condition, results of operations and cash flows, actions by, or disputes among or between, members of OPEC+ and other foreign oil-exporting countries, market factors, market prices, our ability to meet debt service requirements, our ability to continue to pay cash dividends, the amount and timing of any cash dividends and our ESG initiatives. Forward-looking and other statements in this release regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “expect,” “could,” “may,” “anticipate,” “intend,” “plan,” “ability,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “guidance,” “outlook,” “opportunity” or “strategy.” The absence of such words or expressions does not necessarily mean the statements are not forward-looking.

    Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

    • conservation measures and technological advances could reduce demand for natural gas and oil;
    • negative public perceptions of our industry;
    • competition in the natural gas and oil exploration and production industry;
    • the volatility of natural gas, oil and NGL prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles;
    • risks from regional epidemics or pandemics and related economic turmoil, including supply chain constraints;
    • write-downs of our natural gas and oil asset carrying values due to low commodity prices;
    • significant capital expenditures are required to replace our reserves and conduct our business;
    • our ability to replace reserves and sustain production;
    • uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;
    • drilling and operating risks and resulting liabilities;
    • our ability to generate profits or achieve targeted results in drilling and well operations;
    • leasehold terms expiring before production can be established;
    • risks from our commodity price risk management activities;
    • uncertainties, risks and costs associated with natural gas and oil operations;
    • our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used;
    • pipeline and gathering system capacity constraints and transportation interruptions;
    • our plans to participate in the LNG export industry;
    • terrorist activities and/or cyber-attacks adversely impacting our operations;
    • risks from failure to protect personal information and data and compliance with data privacy and security laws and regulations;
    • disruption of our business by natural or human causes beyond our control;
    • a deterioration in general economic, business or industry conditions;
    • the impact of inflation and commodity price volatility, including as a result of armed conflict and instability in Europe and the Middle East, along with the effects of the current global economic environment, on our business, financial condition, employees, contractors, vendors and the global demand for natural gas and oil and on U.S. and global financial markets;
    • our inability to access the capital markets on favorable terms;
    • the limitations on our financial flexibility due to our level of indebtedness and restrictive covenants from our indebtedness;
    • our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information;
    • risks related to acquisitions or dispositions, or potential acquisitions or dispositions, including risks related to the merger with Southwestern, such as risks related to loss of management personnel, other key employees, customers, suppliers, vendors, landlords, joint venture partners and other business partners following the merger; risks related to disruption of management time from ongoing business operations due to integration; the risk of any litigation relating to the transaction; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; and the risk that the combined company may be unable to achieve synergies or other anticipated benefits of the transaction or it may take longer than expected to achieve those synergies or benefits;
    • our ability to achieve and maintain ESG certifications, goals and commitments;
    • legislative, regulatory and ESG initiatives, addressing environmental concerns, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring or water disposal;
    • federal and state tax proposals affecting our industry;
    • risks related to an annual limitation on the utilization of our tax attributes, as well as trading in our common stock, additional issuance of common stock, and certain other stock transactions, which could lead to an additional, potentially more restrictive, annual limitation; and
    • other factors that are described under Risk Factors in Item 1A of Part I of our Annual Report on Form 10-K.

    We caution you not to place undue reliance on the forward-looking statements contained in this release, which speak only as of the filing date, and we undertake no obligation to update this information. We urge you to carefully review and consider the disclosures in this release and our filings with the SEC that attempt to advise interested parties of the risks and factors that may affect our business.

    CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
     
    ($ in millions, except per share data) September 30, 2024   December 31, 2023
    Assets      
    Current assets:      
    Cash and cash equivalents $ 1,044     $ 1,079  
    Restricted cash   76       74  
    Accounts receivable, net   261       593  
    Derivative assets   199       637  
    Other current assets   217       226  
    Total current assets   1,797       2,609  
    Property and equipment:      
    Natural gas and oil properties, successful efforts method      
    Proved natural gas and oil properties   12,373       11,468  
    Unproved properties   1,806       1,806  
    Other property and equipment   518       497  
    Total property and equipment   14,697       13,771  
    Less: accumulated depreciation, depletion and amortization   (4,743 )     (3,674 )
    Total property and equipment, net   9,954       10,097  
    Long-term derivative assets   15       74  
    Deferred income tax assets   1,038       933  
    Other long-term assets   588       663  
    Total assets $ 13,392     $ 14,376  
           
    Liabilities and stockholders’ equity      
    Current liabilities:      
    Accounts payable $ 264     $ 425  
    Accrued interest   41       39  
    Derivative liabilities   5       3  
    Other current liabilities   589       847  
    Total current liabilities   899       1,314  
    Long-term debt, net   2,017       2,028  
    Long-term derivative liabilities   —       9  
    Asset retirement obligations, net of current portion   271       265  
    Other long-term liabilities   17       31  
    Total liabilities   3,204       3,647  
    Contingencies and commitments      
    Stockholders’ equity:      
    Common stock, $0.01 par value, 450,000,000 shares authorized: 135,107,576 and 130,789,936 shares issued   1       1  
    Additional paid-in capital   5,778       5,754  
    Retained earnings   4,409       4,974  
    Total stockholders’ equity   10,188       10,729  
    Total liabilities and stockholders’ equity $ 13,392     $ 14,376  
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024       2023       2024       2023  
    ($ in millions, except per share data)              
    Revenues and other:              
    Natural gas, oil and NGL $ 407     $ 682     $ 1,374     $ 2,784  
    Marketing   193       724       641       1,987  
    Natural gas and oil derivatives   46       106       207       1,195  
    Gains on sales of assets   2       —       12       807  
    Total revenues and other   648       1,512       2,234       6,773  
    Operating expenses:              
    Production   50       73       158       293  
    Gathering, processing and transportation   152       192       479       663  
    Severance and ad valorem taxes   11       27       58       136  
    Exploration   2       4       7       19  
    Marketing   192       723       656       1,985  
    General and administrative   39       29       133       95  
    Separation and other termination costs   —       —       23       3  
    Depreciation, depletion and amortization   335       382       1,082       1,148  
    Other operating expense, net   22       3       55       15  
    Total operating expenses   803       1,433       2,651       4,357  
    Income (loss) from operations   (155 )     79       (417 )     2,416  
    Other income (expense):              
    Interest expense   (20 )     (23 )     (59 )     (82 )
    Losses on purchases, exchanges or extinguishments of debt   —       —       (2 )     —  
    Other income   17       15       58       48  
    Total other income (expense)   (3 )     (8 )     (3 )     (34 )
    Income (loss) before income taxes   (158 )     71       (420 )     2,382  
    Income tax expense (benefit)   (44 )     1       (105 )     532  
    Net income (loss) $ (114 )   $ 70     $ (315 )   $ 1,850  
    Earnings (loss) per common share:              
    Basic $ (0.85 )   $ 0.53     $ (2.39 )   $ 13.86  
    Diluted $ (0.85 )   $ 0.49     $ (2.39 )   $ 12.90  
    Weighted average common shares outstanding (in thousands):              
    Basic   133,794       132,153       131,958       133,460  
    Diluted   133,794       142,348       131,958       143,463  
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
    ($ in millions)   2024       2023       2024       2023  
    Cash flows from operating activities:              
    Net income (loss) $ (114 )   $ 70     $ (315 )   $ 1,850  
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:              
    Depreciation, depletion and amortization   335       382       1,082       1,148  
    Deferred income tax expense (benefit)   (44 )     (80 )     (105 )     319  
    Derivative gains, net   (46 )     (106 )     (207 )     (1,195 )
    Cash receipts on derivative settlements, net   207       216       695       167  
    Share-based compensation   10       9       29       25  
    Gains on sales of assets   (2 )     —       (12 )     (807 )
    Losses on purchases, exchanges or extinguishments of debt   —       —       2       —  
    Other   (9 )     6       (16 )     35  
    Changes in assets and liabilities   85       9       30       368  
    Net cash provided by operating activities   422       506       1,183       1,910  
    Cash flows from investing activities:              
    Capital expenditures   (298 )     (423 )     (1,021 )     (1,450 )
    Receipts of deferred consideration   —       —       116       —  
    Contributions to investments   (26 )     (61 )     (71 )     (149 )
    Proceeds from divestitures of property and equipment   5       4       17       1,967  
    Net cash provided by (used in) investing activities   (319 )     (480 )     (959 )     368  
    Cash flows from financing activities:              
    Proceeds from Credit Facility   —       —       —       1,125  
    Payments on Credit Facility   —       —       —       (2,175 )
    Funds held for transition services   —       (6 )     —       91  
    Proceeds from warrant exercise   —       —       1       —  
    Debt issuance and other financing costs   —       —       (4 )     —  
    Cash paid to repurchase and retire common stock   —       (132 )     —       (313 )
    Cash paid for common stock dividends   (78 )     (77 )     (254 )     (412 )
    Net cash used in financing activities   (78 )     (215 )     (257 )     (1,684 )
    Net increase (decrease) in cash, cash equivalents and restricted cash   25       (189 )     (33 )     594  
    Cash, cash equivalents and restricted cash, beginning of period   1,095       975       1,153       192  
    Cash, cash equivalents and restricted cash, end of period $ 1,120     $ 786     $ 1,120     $ 786  
                   
    Cash and cash equivalents $ 1,044     $ 713     $ 1,044     $ 713  
    Restricted cash   76       73       76       73  
    Total cash, cash equivalents and restricted cash $ 1,120     $ 786     $ 1,120     $ 786  
    NATURAL GAS, OIL AND NGL PRODUCTION AND AVERAGE SALES PRICES (unaudited)
     
      Three Months Ended September 30, 2024
      Natural Gas   Oil   NGL   Total
      MMcf
    per day    		   $/Mcf   MBbl
    per day    		   $/Bbl   MBbl
    per day    		   $/Bbl   MMcfe
    per day    		   $/Mcfe
    Marcellus 1,531   1.51   —   —   —   —   1,531   1.51
    Haynesville 1,116   1.88   —   —   —   —   1,116   1.88
    Total 2,647   1.67   —   —   —   —   2,647   1.67
                                   
    Average NYMEX Price     2.16       —                
    Average Realized Price (including realized derivatives)     2.51       —       —       2.51
      Three Months Ended September 30, 2023
      Natural Gas   Oil   NGL   Total
      MMcf
    per day    		   $/Mcf   MBbl
    per day    		   $/Bbl   MBbl
    per day    		   $/Bbl   MMcfe
    per day    		   $/Mcfe
    Marcellus 1,734   1.63   —   —   —   —   1,734   1.63
    Haynesville 1,568   2.15   —   —   —   —   1,568   2.15
    Eagle Ford 76   2.52   9   82.33   10   25.76   193   6.36
    Total 3,378   1.89   9   82.33   10   25.76   3,495   2.12
                                   
    Average NYMEX Price     2.55       82.26                
    Average Realized Price (including realized derivatives)     2.58       82.33       25.76       2.79
      Nine Months Ended September 30, 2024
      Natural Gas   Oil   NGL   Total
      MMcf
    per day    		   $/Mcf   MBbl
    per day    		   $/Bbl   MBbl
    per day    		   $/Bbl   MMcfe
    per day    		   $/Mcfe
    Marcellus 1,601   1.65   —   —   —   —   1,601   1.65
    Haynesville 1,261   1.88   —   —   —   —   1,261   1.88
    Total 2,862   1.75   —   —   —   —   2,862   1.75
                                   
    Average NYMEX Price     2.10       —                
    Average Realized Price
    (including realized derivatives)    		     2.64       —       —       2.64
      Nine Months Ended September 30, 2023
      Natural Gas   Oil   NGL   Total
      MMcf
    per day    		   $/Mcf   MBbl
    per day    		   $/Bbl   MBbl
    per day    		   $/Bbl   MMcfe
    per day    		   $/Mcfe
    Marcellus 1,845   2.24   —   —   —   —   1,845   2.24
    Haynesville 1,569   2.26   —   —   —   —   1,569   2.26
    Eagle Ford 96   2.22   26   77.41   12   25.61   323   7.82
    Total 3,510   2.25   26   77.41   12   25.61   3,737   2.73
                                   
    Average NYMEX Price     2.69       77.39                
    Average Realized Price
    (including realized derivatives)    		     2.56       72.10       25.61       2.99
    CAPITAL EXPENDITURES ACCRUED (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024       2023       2024       2023  
    ($ in millions)              
    Drilling and completion capital expenditures:              
    Marcellus $ 82     $ 91     $ 280     $ 324  
    Haynesville   151       191       477       704  
    Eagle Ford   —       9       —       222  
    Total drilling and completion capital expenditures   233       291       757       1,250  
    Non-drilling and completion – field   32       48       106       100  
    Non-drilling and completion – corporate   24       18       73       56  
    Total capital expenditures $ 289     $ 357     $ 936     $ 1,406  
    NON-GAAP FINANCIAL MEASURES
     

    As a supplement to the financial results prepared in accordance with U.S. GAAP, Expand Energy’s quarterly earnings releases contain certain financial measures that are not prepared or presented in accordance with U.S. GAAP. These non-GAAP financial measures include Adjusted Net Income, Adjusted Diluted Earnings Per Common Share, Adjusted EBITDAX, Free Cash Flow, Adjusted Free Cash Flow and Net Debt. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below. Management believes these adjusted financial measures are a meaningful adjunct to earnings and cash flows calculated in accordance with GAAP because (a) management uses these financial measures to evaluate the company’s trends and performance, (b) these financial measures are comparable to estimates provided by certain securities analysts, and (c) items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

    Expand Energy’s definitions of each non-GAAP measure presented herein are provided below. Because not all companies or securities analysts use identical calculations, Expand Energy’s non-GAAP measures may not be comparable to similarly titled measures of other companies or securities analysts.

    Adjusted Net Income: Adjusted Net Income is defined as net income (loss) adjusted to exclude unrealized (gains) losses on natural gas and oil derivatives, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Expand Energy believes that Adjusted Net Income facilitates comparisons of the company’s period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Net Income should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

    Adjusted Diluted Earnings Per Common Share: Adjusted Diluted Earnings Per Common Share is defined as diluted earnings (loss) per common share adjusted to exclude the per diluted share amounts attributed to unrealized (gains) losses on natural gas and oil derivatives, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Expand Energy believes that Adjusted Diluted Earnings Per Common Share facilitates comparisons of the company’s period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Diluted Earnings Per Common Share should not be considered an alternative to, or more meaningful than, earnings (loss) per common share as presented in accordance with GAAP.

    Adjusted EBITDAX: Adjusted EBITDAX is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense, exploration expense, unrealized (gains) losses on natural gas and oil derivatives, separation and other termination costs, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results. Adjusted EBITDAX is presented as it provides investors an indication of the company’s ability to internally fund exploration and development activities and service or incur debt. Adjusted EBITDAX should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

    Free Cash Flow: Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures. Free Cash Flow is a liquidity measure that provides investors additional information regarding the company’s ability to service or incur debt and return cash to shareholders. Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

    Adjusted Free Cash Flow: Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures and cash contributions to investments, adjusted to exclude certain items management believes affect the comparability of operating results. Adjusted Free Cash Flow is a liquidity measure that provides investors additional information regarding the company’s ability to service or incur debt and return cash to shareholders and is used to determine Expand Energy’s returns framework payout. Adjusted Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

    Net Debt: Net Debt is defined as GAAP total debt excluding premiums, discounts, and deferred issuance costs less cash and cash equivalents. Net Debt is useful to investors as a widely understood measure of liquidity and leverage, but this measure should not be considered as an alternative to, or more meaningful than, total debt presented in accordance with GAAP.

    RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
    ($ in millions)   2024       2023       2024       2023  
    Net income (loss) (GAAP) $ (114 )   $ 70     $ (315 )   $ 1,850  
                   
    Adjustments:              
    Unrealized (gains) losses on natural gas and oil derivatives   160       110       489       (931 )
    Separation and other termination costs   —       —       23       3  
    Gains on sales of assets   (2 )     —       (12 )     (807 )
    Other operating expense, net   23       3       58       18  
    Losses on purchases, exchanges or extinguishments of debt   —       —       2       —  
    Other   (4 )     (4 )     (17 )     (19 )
    Tax effect of adjustments(a)   (41 )     (24 )     (125 )     403  
    Adjusted net income (Non-GAAP) $ 22     $ 155     $ 103     $ 517  
    (a) The three- and nine-month periods ended September 30, 2024 and September 30, 2023 include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%.
    RECONCILIATION OF EARNINGS (LOSS) PER COMMON SHARE TO ADJUSTED DILUTED EARNINGS PER COMMON SHARE (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
    ($/share)   2024       2023       2024       2023  
    Earnings (loss) per common share (GAAP) $ (0.85 )   $ 0.53     $ (2.39 )   $ 13.86  
    Effect of dilutive securities   —       (0.04 )     —       (0.96 )
    Diluted earnings (loss) per common share (GAAP) $ (0.85 )   $ 0.49     $ (2.39 )   $ 12.90  
                   
    Adjustments:              
    Unrealized (gains) losses on natural gas and oil derivatives   1.20       0.78       3.70       (6.49 )
    Separation and other termination costs   —       —       0.17       0.02  
    Gains on sales of assets   (0.02 )     —       (0.09 )     (5.63 )
    Other operating expense, net   0.17       0.02       0.44       0.13  
    Losses on purchases, exchanges or extinguishments of debt   —       —       0.01       —  
    Other   (0.03 )     (0.03 )     (0.13 )     (0.13 )
    Tax effect of adjustments(a)   (0.31 )     (0.17 )     (0.95 )     2.81  
    Effect of dilutive securities   —       —       (0.03 )     —  
    Adjusted diluted earnings per common share (Non-GAAP) $ 0.16     $ 1.09     $ 0.73     $ 3.61  
    (a) The three- and nine-month periods ended September 30, 2024 and September 30, 2023 include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%.
    RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDAX (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024       2023       2024       2023  
    ($ in millions)              
    Net income (loss) (GAAP) $ (114 )   $ 70     $ (315 )   $ 1,850  
                   
    Adjustments:              
    Interest expense   20       23       59       82  
    Income tax expense (benefit)   (44 )     1       (105 )     532  
    Depreciation, depletion and amortization   335       382       1,082       1,148  
    Exploration   2       4       7       19  
    Unrealized (gains) losses on natural gas and oil derivatives   160       110       489       (931 )
    Separation and other termination costs   —       —       23       3  
    Gains on sales of assets   (2 )     —       (12 )     (807 )
    Other operating expense, net   23       3       58       18  
    Losses on purchases, exchanges or extinguishments of debt   —       —       2       —  
    Other   (15 )     (13 )     (57 )     (36 )
    Adjusted EBITDAX (Non-GAAP) $ 365     $ 580     $ 1,231     $ 1,878  
    RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW (unaudited)
     
      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024       2023       2024       2023  
    ($ in millions)              
    Net cash provided by operating activities (GAAP) $ 422     $ 506     $ 1,183     $ 1,910  
    Cash capital expenditures   (298 )     (423 )     (1,021 )     (1,450 )
    Free cash flow (Non-GAAP)   124       83       162       460  
    Cash contributions to investments   (26 )     (61 )     (71 )     (149 )
    Free cash flow associated with divested assets(a)   —       (57 )     —       (195 )
    Adjusted free cash flow (Non-GAAP) $ 98     $ (35 )   $ 91     $ 116  
    (a) In March and April of 2023, we closed two divestitures of certain Eagle Ford assets. Due to the structure of these transactions, both of which had an effective date of October 1, 2022, the cash generated by these assets was delivered to the respective buyers through a reduction in the proceeds we received at the closing of each transaction. Additionally, in August 2023, we entered into an agreement to sell the final portion of our Eagle Ford assets, with an economic effective date of February 1, 2023. Included within the adjustment above reflects the cash flows from the three months ended September 30, 2023, associated with the final portion of our Eagle Ford assets as the cash generated by those assets were delivered to the buyer through a reduction in the proceeds we received once the transaction closed during the fourth quarter of 2023.
    RECONCILIATION OF TOTAL DEBT TO NET DEBT (unaudited)
     
    ($ in millions) September 30, 2024
    Total debt (GAAP) $ 2,017  
    Premiums and issuance costs on debt   (67 )
    Principal amount of debt   1,950  
    Cash and cash equivalents   (1,044 )
    Net debt (Non-GAAP) $ 906  
    INVESTOR CONTACT: MEDIA CONTACT: EXPAND ENERGY CORPORATION
    Chris Ayres Brooke Coe 6100 North Western Avenue
    (405) 935-8870 (405) 935-8878 P.O. Box 18496
    ir@expandenergy.com media@expandenergy.com Oklahoma City, OK 73154

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