Category: Politics

  • MIL-OSI Security: Former Sanger Police Officer Indicted for Illegal Firearms Dealing, Obstruction Charges

    Source: Office of United States Attorneys

    FRESNO, Calif. — A federal grand jury returned a three-count indictment today against Daniel Battenfield, 40, of Visalia, alleging the unlawful dealing of firearms without a license, making materially false statements to a federal agent, and lying on a federal firearms form.

    According to court documents, Battenfield has purchased and resold hundreds of firearms since at least 2016, purchasing the firearms below market price because of his law enforcement status and then reselling them for a profit. On at least one occasion, he placed an order directly for a customer, lying on a federal firearms form about purchasing the firearm for himself. When confronted by federal agents, he made false statements to them about his activities. Battenfield was placed on leave by the Sanger Police Department because of these activities in July 2024.

    This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives with assistance from the Sanger Police Department. Assistant U.S. Attorney Robert Veneman-Hughes is prosecuting the case.

    If convicted of unlawful dealing in firearms or making false statement to a government agency, Battenfield faces a maximum statutory penalty of five years in prison and a $250,000 fine. If convicted of making materially false statement in purchase of firearms, he faces a maximum of 10 years in prison and a fine up to $250,000. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

    This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the U.S. Department of Justice launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.

    MIL Security OSI

  • MIL-OSI: IBEX Reports Record Quarterly Revenue and Strong EPS

    Source: GlobeNewswire (MIL-OSI)

    • Quarterly revenue grew 6.1% versus prior year quarter – highest growth in 9 quarters
    • Strong adjusted EBITDA margin expansion year-over-year – 10 out of the last 11 quarters
    • Adjusted EPS of $0.59 – an increase of 36% to prior year quarter
    • Raises guidance on revenue and lower end of EBITDA range
    • Repurchased approximately 3.6 million shares from TRGI during the second quarter of fiscal year 2025, representing 21% of our shares outstanding and eliminating controlled company status

    WASHINGTON, Feb. 06, 2025 (GLOBE NEWSWIRE) — IBEX Limited (“ibex”), a leading provider in global business process outsourcing and end-to-end customer engagement technology solutions, today announced financial results for its second fiscal quarter ended December 31, 2024.

      Three months ended
    December 31,
      Six months ended
    December 31,
    ($ millions, except per share amounts)   2024       2023     Change     2024       2023     Change
    Revenue $ 140,682     $ 132,634     6.1 %   $ 270,399     $ 257,243     5.1 %
    Net income $ 9,268     $ 6,075     52.6 %   $ 16,799     $ 13,500     24.4 %
    Net income margin   6.6 %     4.6 %   200bps     6.2 %     5.2 %   100bps
    Adjusted net income (1) $ 9,615     $ 8,024     19.8 %   $ 18,647     $ 15,598     19.5 %
    Adjusted net income margin (1)   6.8 %     6.0 %   80bps     6.9 %     6.1 %   80bps
    Adjusted EBITDA (1) $ 16,537     $ 14,324     15.4 %   $ 32,125     $ 28,035     14.6 %
    Adjusted EBITDA margin (1)   11.8 %     10.8 %   100bps     11.9 %     10.9 %   100bps
    Earnings per share – diluted (2) $ 0.57     $ 0.33     73.6 %   $ 1.00     $ 0.72     38.0 %
    Adjusted earnings per share – diluted (1,2) $ 0.59     $ 0.44     36.3 %   $ 1.11     $ 0.84     32.5 %
                           
    (1)See accompanying Exhibits for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure.
    (2)The current period percentages are calculated based on exact amounts, and therefore may not recalculate exactly using rounded numbers as presented.
     

    “Coming off an outstanding start to fiscal year 2025, I am thrilled to report another quarter of record financial results,” said Bob Dechant, ibex CEO. “Q2 saw our highest revenue growth for ibex in two years with revenues growing over 6%. Our growth continues to be driven by winning new clients and increasing market share within our embedded base clients. These key wins resulted in 14% revenue growth in our most profitable offshore regions. I am also excited to report that we have continued to add key AI opportunity wins that will be deployed in the second half of the year that are expected to drive accretive revenue and margin.”

    “Q2 fiscal year 2025 was a strong quarter on all profitability metrics as adjusted EPS grew 36%, adjusted EBITDA grew 15%, and adjusted net income increased 20%, compared to prior year quarter,” added Dechant. “Beyond this, over the last three months we completed a number of important strategic actions, highlighted by the $70 million share repurchase from The Resource Group International Limited (“TRGI”) in November, which has numerous benefits including removing our controlled company status, the additions of JJ Zhuang and Patrick McGinnis to our Board of Directors, and the most recent addition to our Board in January, Karen Batungbacal.”

    Second Quarter Financial Performance
    Revenue

    • Revenue of $140.7 million, an increase of 6.1% from $132.6 million in the prior year quarter. Growth in HealthTech (+31.2%), Travel, Transportation and Logistics (+16.7%), and Retail & E-commerce (+4.4%), was partially offset by declines in the FinTech vertical (-14.7%).

    Net Income and Earnings Per Share

    • Net income increased to $9.3 million compared to $6.1 million in the prior year quarter. Diluted earnings per share increased to $0.57 compared to $0.33 in the prior year quarter. The increases were primarily the result of the impact of revenue growth particularly in our higher margin offshore regions, improved gross margin performance, and fewer diluted shares outstanding compared to the prior year quarter.
    • Net income margin increased to 6.6% compared to 4.6% in the prior year quarter.
    • Non-GAAP adjusted net income increased to $9.6 million compared to $8.0 million in the prior year quarter (see Exhibit 1 for reconciliation).
    • Non-GAAP adjusted diluted earnings per share increased to $0.59 compared to $0.44 in the prior year quarter (see Exhibit 1 for reconciliation). The increase per share was primarily attributable to the impact of higher revenue, improved operating margins and a lower share count.

    Non-GAAP adjusted EBITDA

    • Adjusted EBITDA increased to $16.5 million compared to $14.3 million in the prior year quarter (see Exhibit 2 for reconciliation).
    • Adjusted EBITDA margin increased to 11.8% compared to 10.8% in the prior year quarter (see Exhibit 2 for reconciliation).

    Cash Flow and Balance Sheet

    • Repurchased approximately 3.6 million shares from TRGI for an aggregate price of $70 million during the second quarter of fiscal 2025.
    • Capital expenditures were $4.3 million compared to $2.9 million in the prior year quarter. The increase in capital expenditures during this quarter was driven by capacity expansion to meet growing demand in our offshore and nearshore regions.
    • Cash flow from operating activities was $1.1 million compared to $(1.6) million in the prior year quarter. Free cash flow was $(3.2) million compared to $(4.5) million in the prior year quarter (see Exhibit 3 for reconciliation).
    • Net debt was $13.7 million compared to net cash of $61.2 million as of June 30, 2024 (see Exhibit 4 for reconciliation). The utilization of cash and debt is primarily attributable to the share repurchase from TRGI.

    “We achieved strong top and bottom line second quarter results. We accelerated our top-line momentum with over 6% revenue growth, driven by new client wins over the last year and continued expansion of our embedded client base made possible by our strong service delivery,” said Taylor Greenwald, CFO of ibex.

    “Our profitability continues to improve, where for 10 of the last 11 quarters we have delivered year-over-year adjusted EBITDA margin expansion, enabling strategic investments in AI capabilities and sales resources. These results instill continued confidence in the execution of our strategy throughout 2025, enabling us to raise our fiscal year guidance and continue to return value to shareholders.”

    Raised Fiscal Year 2025 Guidance

    • Revenue is expected to be in the range of $525 to $535 million versus a previous range of $515 to $525 million.
    • Adjusted EBITDA is expected to be in the range of $68 to $69 million versus a previous range of $67 to $69 million.
    • Capital expenditures are expected to remain in the range of $15 to $20 million.

    Conference Call and Webcast Information
    IBEX Limited will host a conference call and live webcast to discuss its second quarter of fiscal year 2025 financial results at 4:30 p.m. Eastern Time today, February 6, 2025. We will also post to this section of our website the earning slides, which will accompany our conference call and live webcast, and encourage you to review the information that we make available on our website.

    Live and archived webcasts can be accessed at: https://investors.ibex.co/.

    Financial Information
    This announcement does not contain sufficient information to constitute an interim financial report as defined in Financial Accounting Standards ASC 270, “Interim Reporting.” The financial information in this press release has not been audited.

    Non-GAAP Financial Measures
    We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. We also use these measures internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance, as we believe that these non-GAAP financial measures provide a more helpful depiction of our performance of the business by encompassing only relevant and manageable events, enabling us to evaluate and plan more effectively for the future. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies, have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our operating results as reported in accordance with accounting principles generally accepted in the United States (“GAAP”). Non-GAAP financial measures and ratios are not measurements of our performance, financial condition or liquidity under GAAP and should not be considered as alternatives to operating profit or net income / (loss) or as alternatives to cash flow from operating, investing or financing activities for the period, or any other performance measures, derived in accordance with GAAP.

    ibex is not providing a quantitative reconciliation of forward-looking non-GAAP adjusted EBITDA to the most directly comparable GAAP measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, non-recurring expenses, foreign currency gains and losses, and share-based compensation expense. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.

    About ibex
    ibex helps the world’s preeminent brands more effectively engage their customers with services ranging from customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, and CX surveys and feedback analytics.

    Forward Looking Statements
    In addition to historical information, this press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: our ability to attract new business and retain key clients; our profitability based on our utilization, pricing and managing costs; the potential for our clients or potential clients to consolidate; our clients deciding to enter into or further expand their insourcing activities and current trends toward outsourcing services may reverse; general economic uncertainty in global markets and unfavorable economic conditions, including inflation, rising interest rates, recession, foreign exchange fluctuations and supply-chain issues; our ability to manage our international operations, particularly in the Philippines, Jamaica, Pakistan and Nicaragua; natural events, health epidemics, global geopolitical conditions, including developing or ongoing conflicts, widespread civil unrest, terrorist attacks and other attacks of violence involving any of the countries in which we or our clients operate; our ability to anticipate, develop and implement information technology solutions that keep pace with evolving industry standards and changing client demands, including the effective adoption of Artificial Intelligence into our offerings; our ability to recruit, engage, motivate, manage and retain our global workforce; our ability to comply with applicable laws and regulations, including those regarding privacy, data protection and information security, employment and anti-corruption; the effect of cyberattacks or cybersecurity vulnerabilities on our information technology systems; our ability to realize the anticipated strategic and financial benefits of our relationship with Amazon; the impact of tax matters, including new legislation and actions by taxing authorities; and other factors discussed in the “Risk Factors” described in our periodic reports filed with the U.S. Securities and Exchange Commission (“SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, and past filings on Form 20-F, and any other risk factors we include in subsequent filings with the SEC. Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.

    IR Contact:  Michael Darwal, EVP, Investor Relations, ibex, michael.darwal@ibex.co
    Media Contact:  Daniel Burris, VP, Marketing and Communication, ibex, daniel.burris@ibex.co

    IBEX LIMITED AND SUBSIDIARIES
    Consolidated Balance Sheets
    (Unaudited)
    (in thousands)

      December 31,
    2024
      June 30,
    2024
    Assets      
    Current assets      
    Cash and cash equivalents $ 20,206     $ 62,720  
    Accounts receivable, net   120,581       98,366  
    Prepaid expenses   6,905       7,712  
    Due from related parties   317       192  
    Tax advances and receivables   8,968       9,080  
    Other current assets   2,039       1,888  
    Total current assets   159,016       179,958  
           
    Non-current assets      
    Property and equipment, net   32,168       29,862  
    Operating lease assets   54,057       59,145  
    Goodwill   11,832       11,832  
    Deferred tax asset, net   5,052       4,285  
    Other non-current assets   10,373       8,822  
    Total non-current assets   113,482       113,946  
    Total assets $ 272,498     $ 293,904  
           
    Liabilities and stockholders’ equity      
    Current liabilities      
    Accounts payable and accrued liabilities $ 19,924     $ 16,719  
    Accrued payroll and employee-related liabilities   33,278       30,674  
    Current deferred revenue   7,223       4,749  
    Current operating lease liabilities   12,208       12,051  
    Current maturities of long-term debt   8,217       660  
    Convertible debt   25,000        
    Due to related parties   149       60  
    Income taxes payable   4,643       6,083  
    Total current liabilities   110,642       70,996  
           
    Non-current liabilities      
    Non-current deferred revenue   1,119       1,128  
    Non-current operating lease liabilities   48,286       53,441  
    Long-term debt   695       867  
    Other non-current liabilities   2,819       1,673  
    Total non-current liabilities   52,919       57,109  
    Total liabilities   163,561       128,105  
           
    Stockholders’ equity      
    Common stock   1       2  
    Additional paid-in capital   212,116       210,200  
    Treasury stock   (101,606 )     (25,367 )
    Accumulated other comprehensive loss   (7,250 )     (7,913 )
    Retained earnings / (deficit)   5,676       (11,123 )
    Total stockholders’ equity   108,937       165,799  
    Total liabilities and stockholders’ equity $ 272,498     $ 293,904  

    14IBEX LIMITED AND SUBSIDIARIES
    Consolidated Statements of Comprehensive Income
    (Unaudited)
    (in thousands, except per share data)

      Three Months Ended December 31,   Six Months Ended December 31,
        2024       2023       2024       2023  
    Revenue $ 140,682     $ 132,634     $ 270,399     $ 257,243  
                   
    Cost of services (exclusive of depreciation and amortization presented separately below)   98,762       95,884       188,803       184,080  
    Selling, general and administrative   25,706       24,857       51,921       47,897  
    Depreciation and amortization   4,286       4,946       8,655       9,988  
    Total operating expenses   128,754       125,687       249,379       241,965  
    Income from operations   11,928       6,947       21,020       15,278  
                   
    Interest income   311       512       894       1,098  
    Interest expense   (620 )     (111 )     (782 )     (215 )
    Income before income taxes   11,619       7,348       21,132       16,161  
                   
    Provision for income tax expense   (2,351 )     (1,273 )     (4,333 )     (2,661 )
    Net income $ 9,268     $ 6,075     $ 16,799     $ 13,500  
                   
    Other comprehensive income              
    Foreign currency translation adjustments $ (911 )   $ 679     $ 477     $ (22 )
    Unrealized (loss) / gain on cash flow hedging instruments, net of tax   (193 )     395       186       201  
    Total other comprehensive (loss) / income   (1,104 )     1,074       663       179  
    Total comprehensive income $ 8,164     $ 7,149     $ 17,462     $ 13,679  
                   
    Net income per share              
    Basic $ 0.61     $ 0.34     $ 1.05     $ 0.75  
    Diluted $ 0.57     $ 0.33     $ 1.00     $ 0.72  
                   
    Weighted average common shares outstanding              
    Basic   15,126       17,885       16,007       18,084  
    Diluted   16,456       18,440       16,977       18,667  

    IBEX LIMITED AND SUBSIDIARIES
    Consolidated Statements of Cash Flows
    (Unaudited)
    (in thousands)

      Three Months Ended December 31,   Six Months Ended December 31,
        2024       2023       2024       2023  
    CASH FLOWS FROM OPERATING ACTIVITIES              
    Net income $ 9,268     $ 6,075     $ 16,799     $ 13,500  
    Adjustments to reconcile net income to net cash provided by operating activities:              
    Depreciation and amortization   4,286       4,946       8,655       9,988  
    Noncash lease expense   3,083       3,297       6,409       6,522  
    Warrant contra revenue         307             594  
    Deferred income tax   (637 )     52       (767 )     296  
    Share-based compensation expense   1,235       1,427       1,905       2,275  
    Allowance of expected credit losses   240       (5 )     323       6  
    Change in assets and liabilities:              
    Increase in accounts receivable   (14,856 )     (14,544 )     (22,505 )     (18,336 )
    Decrease / (increase) in prepaid expenses and other current assets   722       (936 )     (1,013 )     (2,192 )
    (Decrease) / increase in accounts payable and accrued liabilities   (1,496 )     338       3,078       544  
    Increase in deferred revenue   2,386       673       2,465       301  
    Decrease in operating lease liabilities   (3,090 )     (3,267 )     (6,446 )     (6,451 )
    Net cash inflow / (outflow) from operating activities   1,141       (1,637 )     8,903       7,047  
                   
    CASH FLOWS FROM INVESTING ACTIVITIES              
    Purchase of property and equipment   (4,319 )     (2,892 )     (7,949 )     (4,944 )
    Net cash outflow from investing activities   (4,319 )     (2,892 )     (7,949 )     (4,944 )
                   
    CASH FLOWS FROM FINANCING ACTIVITIES              
    Proceeds from line of credit   9,100       59       9,160       96  
    Repayments of line of credit   (1,600 )     (59 )     (1,660 )     (148 )
    Proceeds from the exercise of options   342       6       724       11  
    Principal payments on finance leases   (182 )     (116 )     (353 )     (204 )
    Purchase of treasury shares   (46,562 )     (8,442 )     (51,369 )     (10,274 )
    Net cash outflow from financing activities   (38,902 )     (8,552 )     (43,498 )     (10,519 )
    Effects of exchange rate difference on cash and cash equivalents   (19 )     68       30       3  
    Net decrease in cash and cash equivalents   (42,099 )     (13,013 )     (42,514 )     (8,413 )
    Cash and cash equivalents, beginning   62,305       62,029       62,720       57,429  
    Cash and cash equivalents, ending $ 20,206     $ 49,016     $ 20,206     $ 49,016  
                   
                   

    IBEX LIMITED AND SUBSIDIARIES
    Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

    EXHIBIT 1: Adjusted net income, adjusted net income margin, and adjusted earnings per share

    We define adjusted net income as net income before the effect of the following items: warrant contra revenue, foreign currency gain / loss, and share-based compensation expense, net of the tax impact of such adjustments. We define adjusted net income margin as adjusted net income divided by revenue. We define adjusted earnings per share as adjusted net income divided by weighted average diluted shares outstanding.

    The following table provides a reconciliation of net income to adjusted net income, net income margin to adjusted net income margin, and diluted earnings per share to adjusted earnings per share for the periods presented:

      Three Months Ended December 31, Six Months Ended December 31,
    ($000s, except per share amounts)   2024       2023       2024       2023  
    Net income $ 9,268     $ 6,075     $ 16,799     $ 13,500  
    Net income margin   6.6 %     4.6 %     6.2 %     5.2 %
                   
    Warrant contra revenue         307             594  
    Foreign currency (gain) / loss   (912 )     697       545       (100 )
    Share-based compensation expense   1,235       1,427       1,905       2,275  
    Total adjustments $ 323     $ 2,431     $ 2,450     $ 2,769  
    Tax impact of adjustments1   24       (482 )     (602 )     (671 )
    Adjusted net income $ 9,615     $ 8,024     $ 18,647     $ 15,598  
    Adjusted net income margin   6.8 %     6.0 %     6.9 %     6.1 %
                   
    Diluted earnings per share $ 0.57     $ 0.33     $ 1.00     $ 0.72  
    Per share impact of adjustments to net income   0.02       0.11       0.11       0.11  
    Adjusted earnings per share $ 0.59     $ 0.44     $ 1.11     $ 0.84  
                   
    Weighted average diluted shares outstanding   16,456       18,440       16,977       18,667  
                   
                   

    EXHIBIT 2:  EBITDA, adjusted EBITDA, and adjusted EBITDA margin

    EBITDA is a non-GAAP profitability measure that represents net income before the effect of the following items: interest expense, income tax expense, and depreciation and amortization. Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items: interest income, warrant contra revenue, foreign currency gain / loss, and share-based compensation expense. Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.

    The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA and net income margin to adjusted EBITDA margin for the periods presented:

      Three Months Ended December 31, Six Months Ended December 31,
    ($000s)   2024       2023       2024       2023  
    Net income $ 9,268     $ 6,075     $ 16,799     $ 13,500  
    Net income margin   6.6 %     4.6 %     6.2 %     5.2 %
                   
    Interest expense   620       111       782       215  
    Income tax expense   2,351       1,273       4,333       2,661  
    Depreciation and amortization   4,286       4,946       8,655       9,988  
    EBITDA $ 16,525     $ 12,405     $ 30,569     $ 26,364  
    Interest income   (311 )     (512 )     (894 )     (1,098 )
    Warrant contra revenue         307             594  
    Foreign currency (gain) / loss   (912 )     697       545       (100 )
    Share-based compensation expense   1,235       1,427       1,905       2,275  
    Adjusted EBITDA $ 16,537     $ 14,324     $ 32,125     $ 28,035  
                   
    Adjusted EBITDA margin   11.8 %     10.8 %     11.9 %     10.9 %
                   
                   

    EXHIBIT 3: Free cash flow

    We define free cash flow as net cash provided by operating activities less capital expenditures.

      Three Months Ended December 31, Six Months Ended December 31,
    ($000s)   2024       2023       2024     2023
    Net cash provided by operating activities $ 1,141     $ (1,637 )   $ 8,903   $ 7,047
    Less: capital expenditures   4,319       2,892       7,949     4,944
    Free cash flow $ (3,178 )   $ (4,529 )   $ 954   $ 2,103

    EXHIBIT 4: Net (debt) / cash

    We define net (debt) / cash as total cash and cash equivalents less debt.

      December 31,   June 30,
    ($000s)   2024       2024
    Cash and cash equivalents $ 20,206     $ 62,720
           
    Debt      
    Current $ 8,217     $ 660
    Convertible debt   25,000      
    Non-current   695       867
    Total debt $ 33,912     $ 1,527
    Net (debt) / cash $ (13,706 )   $ 61,193

    1The tax impact of each adjustment is calculated using the effective tax rate in the relevant jurisdictions.

    The MIL Network

  • MIL-OSI: Synaptics Reports Second Quarter Fiscal 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    Q2’25 Financial Results and Recent Business Highlights

    • Revenue of $267.2 million
    • GAAP gross margin of 45.7 percent
    • Non-GAAP gross margin of 53.6 percent
    • GAAP diluted earnings per share of $0.05
    • Non-GAAP diluted earnings per share of $0.92
    • Signed a new agreement with Broadcom, accelerating our Edge AI strategy
    • Repurchased approximately one million shares for $74.5 million

    SAN JOSE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — Synaptics Incorporated (Nasdaq: SYNA) today reported financial results for its second quarter of fiscal 2025 ended December 28, 2024.

    Net revenue for the second quarter of fiscal 2025 was $267.2 million. GAAP net income for the second quarter of fiscal 2025 was $1.8 million, or $0.05 per diluted share. Non-GAAP net income for the second quarter of fiscal 2025 was $36.6 million, or $0.92 per diluted share.

    “We delivered another solid quarter, marking our third consecutive quarter of both sequential and year-over-year revenue growth. Core IoT products grew 63% year-over-year in the second quarter—a testament to our leadership in this rapidly expanding market. Additionally, our strategic transaction with Broadcom further strengthens our Core IoT position. This agreement, coupled with our ongoing organic growth, increases my confidence in the company’s long-term growth potential,” said Ken Rizvi, Synaptics’ Interim CEO and Chief Financial Officer.

    Business Outlook
    Ken Rizvi, added, “We are seeing stable to improving trends in most of our end markets. While the fiscal third quarter is down sequentially due to seasonality, our guidance reflects continued year-over-year growth in our business. Our strong balance sheet and positive cash flow, positions us to capitalize on both organic and inorganic growth opportunities, while also returning capital to shareholders through share buybacks.”

    The third quarter fiscal 2025 outlook information provided below is based on the company’s current estimates and is not a guarantee of future performance. These statements are forward-looking and actual results may differ materially. Refer to the “Cautionary Statement Regarding Forward-Looking Statements” section below for information on the factors that could cause the Company’s actual results to differ materially from these forward-looking statements.

    For the third quarter of fiscal 2025, the company expects:

           
      GAAP Non-GAAP Adjustment Non-GAAP
           
    Revenue $265M ± $15M N/A N/A
           
    Gross Margin* 45.2 percent ±
    2.0 percent
    $22M ± $1M 53.5 percent ± 1.0 percent
           
    Operating Expense** $141M ± $3M $40M ± $1M $101M ± $2M
           
    Earnings (loss) per share*** ($0.47) ± $0.30 $1.32 ± $0.10 $0.85 ± $0.20
           
    * Projected Non-GAAP gross margin excludes $20.0 to $22.0 million acquisition and integration-related costs and $1.0 million share-based compensation.
    ** Projected Non-GAAP operating expense excludes $34.0 to $35.0 million share-based compensation, $1.0 to $2.0 million restructuring costs, and $4.0 million acquisition and integration related costs.
    *** Projected Non-GAAP earnings (loss) per share excludes $0.89 to $0.92 share-based compensation, $0.03 to $0.05 restructuring costs, $0.60 to $0.65 acquisition and integration related costs, and ($0.20) other non-cash and Non-GAAP tax adjustments.

    Our outlook incorporates the effects of the company’s recent asset acquisition from Broadcom. However, the company has not completed its assessment of the provisional fair values of the assets and liabilities, and therefore, our GAAP outlook does not reflect the impact of any differences between the carrying values and fair values of Broadcom’s assets or liabilities, including share-based compensation and the impact of amortization of any identifiable intangible assets.

    Earnings Call and Supplementary Materials
    The Synaptics second quarter fiscal 2025 teleconference and webcast is scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET), on Thursday, February 6, 2025, during which the company may discuss forward-looking information.

    Speaker:

    • Ken Rizvi, Interim CEO and Chief Financial Officer

    To participate on the live call, analysts and investors should pre-register at Synaptics Q2 FY2025 Earnings Call Registration.
    https://register.vevent.com/register/BI158a46a65d6743c6b0846d8242dcea87. Supplementary slides, a copy of the prepared remarks, and a live and archived webcast of the conference call will be accessible from the “Investor Relations” section of the company’s website at https://investor.synaptics.com/.

    About Synaptics Incorporated:
    Synaptics (Nasdaq: SYNA) is driving innovation in AI at the Edge, bringing AI closer to end users and transforming how we engage with intelligent connected devices, whether at home, at work, or on the move. As a go-to partner for forward-thinking product innovators, Synaptics powers the future with its cutting-edge Synaptics Astra™ AI-Native embedded compute, Veros™ wireless connectivity, and multimodal sensing solutions. We’re making the digital experience smarter, faster, more intuitive, secure, and seamless. From touch, display, and biometrics to AI-driven wireless connectivity, video, vision, audio, speech, and security processing, Synaptics is the force behind the next generation of technology enhancing how we live, work, and play. Follow Synaptics on LinkedIn, X and Facebook, or visit synaptics.com.

    Use of Non-GAAP Financial Information
    In evaluating its business, Synaptics considers and uses Non-GAAP Net Income, which we define as net income excluding share-based compensation, acquisition-related costs, and certain other non-cash or recurring and non-recurring items the company does not believe are indicative of its core operating performance, as a supplemental measure of operating performance. Non-GAAP Net Income is not a measurement of the company’s financial performance under GAAP and should not be considered as an alternative to GAAP Net Income. The company presents Non-GAAP Net Income because it considers it an important supplemental measure of its performance since it facilitates operating performance comparisons from period to period by eliminating potential differences in net income caused by the existence and timing of share-based compensation charges, acquisition and integration-related costs, restructuring costs, and certain other non-cash or recurring and non-recurring items. Non-GAAP Net Income has limitations as an analytical tool and should not be considered in isolation or as a substitute for the company’s GAAP Net Income. The principal limitations of this measure are that it does not reflect the company’s actual expenses and may thus have the effect of inflating its net income and net income per share as compared to its operating results reported under GAAP. In addition, the company presents components of Non-GAAP Net Income, such as Non-GAAP Gross Margin, Non-GAAP operating expenses and Non-GAAP operating margin, for similar reasons.

    As presented in the “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” tables that follow, Non-GAAP Net Income and each of the other Non-GAAP financial measures excludes one or more of the following items:

    Acquisition and integration-related costs
    Acquisition and integration-related costs primarily consist of:

    • amortization of purchased intangibles, which include acquired intangibles such as developed technology, customer relationships, trademarks, backlog, licensed technology, patents, and in-process technology when post-acquisition development is determined to be substantively complete;
    • inventory fair value adjustments affecting the carrying value of inventory acquired in an acquisition;
    • transitory post-acquisition incentive programs negotiated in connection with an acquired business or designed to encourage post-acquisition retention of key employees; and
    • legal and consulting costs directly associated with acquisitions, potential acquisitions and refinancing costs, including non-recurring acquisition related costs and services.

    These acquisition and integration-related costs are not factored into the company’s evaluation of its ongoing business operating performance or potential acquisitions, as they are not considered as part of the company’s principal operations. Further, the amount of these costs can vary significantly from period to period based on the terms of an earn-out arrangement, revisions to assumptions that went into developing the estimate of the contingent consideration associated with an earn-out arrangement, the size and timing of an acquisition, the lives assigned to the acquired intangible assets, and the maturity of the business acquired. Excluding acquisition related costs from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability and potential earnings volatility associated with purchase accounting and acquisition-related items.

    Share-based compensation
    Share-based compensation expense relates to employee equity award programs and the vesting of the underlying awards, which includes stock options, deferred stock units, market stock units, performance stock units, phantom stock units and the employee stock purchase plan. Share-based compensation settled with stock, which includes stock options, deferred stock units, market stock units, performance stock units and the employee stock purchase plan, is a non-cash expense, while share-based compensation settled with cash, which includes phantom stock units, is a cash expense. Settlement of all employee equity award programs, whether settled with cash or stock, varies in amount from period to period and is dependent on market forces that are often beyond the company’s control. As a result, the company excludes share-based compensation from its internal operating forecasts and models. The company believes that Non-GAAP measures reflecting adjustments for share-based compensation provide investors with a basis to compare the company’s principal operating performance against the performance of peer companies without the variability created by share-based compensation resulting from the variety of equity-linked compensatory awards used by other companies and the varying methodologies and assumptions used.

    Intangible asset impairment charge
    Intangible asset impairment charge represent the excess carrying value of an indefinite-lived asset over its fair value. The intangible asset impairment charge is a non-cash charge. The company excludes intangible asset impairment charge from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that Non-GAAP measures, reflecting adjustments for intangible asset impairment charge, provide investors with a basis to compare the company’s principal operating performance against the performance of other companies without the variability created by the intangible asset impairment charge.

    Restructuring costs
    Restructuring costs are costs incurred to address cost structure inefficiencies of acquired or existing business operations and consist primarily of employee termination, asset disposal and office closure costs, including the reversal of such costs. As a result, the company excludes restructuring costs from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that Non-GAAP measures reflecting adjustments for restructuring costs provide investors with a basis to compare the company’s principal operating performance against the performance of other companies without the variability created by restructuring costs designed to address cost structure inefficiencies of acquired or existing business operations.

    Site remediation accrual
    Site remediation accrual represents an update to the estimated future costs associated with the ongoing planning and remediation of a site contamination project from an acquisition. As we evaluate progress on our ongoing remediation effort and as we work with governmental organizations to update our remediation plan to meet the evolving guidelines, we estimate costs associated with plan revisions to determine if our liability has changed. Excluding the site remediation accrual from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability associated with the site remediation accrual.

    Legal settlement accruals and other
    Legal settlement accruals and other represent our estimated cost of settling legal claims and any obligations to indemnify a counterparty against third party claims that are unusual or infrequent. As a result, the company will exclude these settlement charges from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that non-GAAP measures reflecting an adjustment for settlement charges provide investors with a basis to compare the company’s principal operating performance against the performance of other companies without the variability created by unusual or infrequent settlement accruals designed to address non-recurring or non-routine costs.

    Loss on early extinguishment of debt
    Loss on extinguishment of debt represents a non-cash item based on the difference in the carrying value of the debt and the fair value of the debt when extinguished. Loss on early extinguishment of debt is excluded from Non-GAAP results as it is non-cash. Excluding loss on early extinguishment of debt from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability associated with loss on early extinguishment of debt.

    Other non-cash items
    Other non-cash items include non-cash amortization of debt discount and issuance costs. These items are excluded from Non-GAAP results as they are non-cash. Excluding other non-cash items from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability associated with other non-cash items.

    Non-GAAP tax adjustments
    The company forecasts its long-term Non-GAAP tax rate in order to provide investors with improved long-term modeling accuracy and consistency across financial reporting periods by eliminating the effects of certain items in our Non-GAAP net income and Non-GAAP net income per share, including the type and amount of share-based compensation, the taxation of post-acquisition intercompany intellectual property cross-licensing or transfer transactions, and the impact of other acquisition items that may or may not be tax deductible. The company intends to evaluate its long-term Non-GAAP tax rate annually for significant events, including material tax law changes in the major tax jurisdictions in which the company operates, corporate organizational changes related to acquisitions or tax planning opportunities, and substantive changes in our geographic earnings mix.

    Cautionary Statement Regarding Forward-Looking Statements
    This press release contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements related to the company’s current expectations and projections relating to its financial condition, results of operations, including the company’s financial guidance for third quarter fiscal 2025, plans, objectives, future performance and business, including the expected benefits from the transaction with Broadcom. Such forward-looking statements may include words such as “expect,” “anticipate,” “intend,” “believe,” “estimate,” “plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,” variations of such words, or other words and terms of similar meaning. All forward-looking statements are based upon the company’s current expectations or various assumptions. The company’s expectations and assumptions are expressed in good faith, and the company believes there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those set out in the forward-looking statements, including risks related to the company’s dependence on its solutions for the Core IoT and Enterprise and Automotive product applications market for a substantial portion of its revenue; the volatility of the company’s net revenue from its solutions for Core IoT and Enterprise and Automotive product applications; the company’s dependence on one or more large customers; the company’s exposure to industry downturns and cyclicality in its target markets; the company’s ability to successfully offer product solutions for new markets; the company’s expectations regarding technology and strategic investments and the anticipated timing or benefits thereof; the company’s ability to execute on its cost reduction initiatives and to achieve expected synergies and expense reductions; the company’s ability to maintain and build relationships with its customers; the company’s dependence on third parties to maintain satisfactory manufacturing yields and deliverable schedule; the company’s indemnification obligations for any third party claims; the uncertainty surrounding macroeconomic factors in the United States, and globally, impacting the supply chain environment, inflationary pressure, workforce reductions, regional instabilities and hostilities (including the conflict in the Middle East), the company’s ability to recruit and retain key personnel, the company’s ability to realize anticipated benefits from the transaction with Broadcom, the company’s ability to grow sales and expand into the serviceable wireless market as expected, and other risks as identified in the “Risk Factors,” “Management’ Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections of the company’s most recent Annual Report on Form 10-K and the company’s most recent Quarterly Report on Form 10-Q; and other risks as identified from time to time in the company’s Securities and Exchange Commission reports. For any forward-looking statements contained in this press release, the company claims ​the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and the company assumes no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.

    Synaptics and the Synaptics logo are trademarks of Synaptics in the United States and/or other countries. All other marks are the property of their respective owners.

    For more information, please contact:
    Munjal Shah
    Head of Investor Relations
    +1-408-518-7639
    munjal.shah@synaptics.com

     
    SYNAPTICS INCORPORATED
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In millions)
    (Unaudited)
     
      December 2024   June 2024
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $ 596.1     $ 876.9  
    Accounts receivable, net   146.5       142.4  
    Inventories, net   119.5       114.0  
    Prepaid expenses and other current assets   28.4       29.0  
    Total current assets   890.5       1,162.3  
    Property and equipment, net   75.3       75.5  
    Goodwill   819.9       816.4  
    Acquired intangibles, net   242.0       288.4  
    Deferred tax asset   368.5       345.6  
    Non-current other assets   131.3       136.8  
    Total assets $ 2,527.5     $ 2,825.0  
    LIABILITIES AND STOCKHOLDERS’ EQUITY      
    Current Liabilities:      
    Accounts payable $ 84.0     $ 87.5  
    Accrued compensation   31.2       27.4  
    Other accrued liabilities   114.6       156.3  
    Current portion of long-term debt         6.0  
    Total current liabilities   229.8       277.2  
    Long-term debt   832.5       966.9  
    Other long-term liabilities   89.1       114.1  
    Total liabilities   1,151.4       1,358.2  
    Stockholders’ Equity:      
    Common stock and additional paid-in capital   1,112.4       1,107.1  
    Treasury stock   (952.7 )     (878.0 )
    Retained earnings   1,216.4       1,237.7  
    Total stockholders’ equity   1,376.1       1,466.8  
    Total liabilities and stockholders’ equity $ 2,527.5     $ 2,825.0  
     
    SYNAPTICS INCORPORATED
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (In millions, except per share data)
    (Unaudited)
     
      Three Months Ended   Six Months Ended
      December   December
        2024       2023       2024       2023  
    Net revenue $ 267.2     $ 237.0     $ 524.9     $ 474.7  
    Cost of revenue   145.0       128.0       281.8       258.6  
    Gross margin   122.2       109.0       243.1       216.1  
    Operating expenses:              
    Research and development   83.3       82.0       164.6       168.5  
    Selling, general, and administrative   49.5       39.7       99.5       82.0  
    Acquired intangibles amortization (1)   3.8       3.9       7.6       9.4  
    Restructuring costs (2)   0.8       1.3       15.0       9.3  
    Total operating expenses   137.4       126.9       286.7       269.2  
    Operating loss   (15.2 )     (17.9 )     (43.6 )     (53.1 )
    Interest and other expense, net   (4.3 )     (6.1 )     (10.2 )     (11.5 )
    Loss on early extinguishment of debt   (6.5 )           (6.5 )      
    Loss before benefit from income taxes   (26.0 )     (24.0 )     (60.3 )     (64.6 )
    Benefit from income taxes   (27.8 )     (15.0 )     (39.0 )      
    Net income (loss) $ 1.8     $ (9.0 )   $ (21.3 )   $ (64.6 )
    Net income (loss) per share:              
    Basic $ 0.05     $ (0.23 )   $ (0.54 )   $ (1.66 )
    Diluted $ 0.05     $ (0.23 )   $ (0.54 )   $ (1.66 )
    Shares used in computing net income (loss):              
    Basic   39.7       39.2       39.7       38.9  
    Diluted   39.8       39.2       39.7       38.9  
    (1) These acquisition related costs consist primarily of amortization associated with certain acquired intangible assets.

    (2) Restructuring costs primarily include severance related costs associated with operational restructurings.    

     
    SYNAPTICS INCORPORATED
    Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
    (In millions, except per share data)
    (Unaudited)
     
      Three Months Ended   Six Months Ended
      December   December
        2024       2023       2024       2023  
    GAAP gross margin $ 122.2     $ 109.0     $ 243.1     $ 216.1  
    Acquisition and integration related costs   20.8       14.4       41.6       32.2  
    Share-based compensation   0.3       1.1       (2.4 )     2.2  
    Non-GAAP gross margin $ 143.3     $ 124.5     $ 282.3     $ 250.5  
    GAAP gross margin – percentage of revenue   45.7 %     46.0 %     46.3 %     45.5 %
    Acquisition and integration related costs – percentage of revenue   7.8 %     6.1 %     7.9 %     6.8 %
    Share-based compensation – percentage of revenue   0.1 %     0.4 %     (0.5 %)     0.5 %
    Non-GAAP gross margin – percentage of revenue   53.6 %     52.5 %     53.8 %     52.8 %
    GAAP research and development expense $ 83.3     $ 82.0     $ 164.6     $ 168.5  
    Share-based compensation   (15.6 )     (15.5 )     (30.1 )     (30.7 )
    Non-GAAP research and development expense $ 67.7     $ 66.5     $ 134.5     $ 137.8  
    GAAP selling, general, and administrative expense $ 49.5     $ 39.7       99.5       82.0  
    Share-based compensation   (18.7 )     (12.6 )     (34.1 )     (29.5 )
    Acquisition and integration related costs   (1.4 )           (4.7 )      
    Site remediation accrual         (1.6 )           (1.6 )
    Legal settlement accruals and other               (2.2 )      
    Non-GAAP selling, general, and administrative expense $ 29.4     $ 25.5     $ 58.5     $ 50.9  
    GAAP operating loss $ (15.2 )   $ (17.9 )   $ (43.6 )   $ (53.1 )
    Acquisition and integration related costs   26.0       18.3       53.9       41.6  
    Share-based compensation   34.6       29.2       61.8       62.4  
    Legal settlement accruals and other               2.2        
    Restructuring costs   0.8       1.3       15.0       9.3  
    Site remediation accrual         1.6             1.6  
    Non-GAAP operating income $ 46.2     $ 32.5     $ 89.3     $ 61.8  
    GAAP net income (loss) $ 1.8     $ (9.0 )   $ (21.3 )   $ (64.6 )
    Acquisition and integration related costs   26.0       18.3       53.9       41.6  
    Share-based compensation   34.6       29.2       61.8       62.4  
    Restructuring costs   0.8       1.3       15.0       9.3  
    Site remediation accrual         1.6             1.6  
    Legal settlement accruals and other               2.2        
    Loss on early extinguishment of debt   6.5             6.5        
    Other non-cash items   0.6       0.7       1.2       1.3  
    Non-GAAP tax adjustments   (33.7 )     (19.6 )     (50.2 )     (8.8 )
    Non-GAAP net income $ 36.6     $ 22.5     $ 69.1     $ 42.8  
    GAAP net income (loss) per share $ 0.05     $ (0.23 )   $ (0.54 )   $ (1.66 )
    Acquisition and integration related costs   0.65       0.47       1.36       1.07  
    Share-based compensation   0.87       0.74       1.56       1.60  
    Restructuring costs   0.02       0.03       0.38       0.24  
    Site remediation accrual         0.04             0.04  
    Legal settlement accruals and other               0.06        
    Loss on early extinguishment of debt   0.16             0.16        
    Other non-cash items   0.02       0.02       0.03       0.03  
    Non-GAAP tax adjustments   (0.85 )     (0.50 )     (1.26 )     (0.23 )
    Share adjustment               (0.02 )      
    Non-GAAP net income per share – diluted $ 0.92     $ 0.57     $ 1.73     $ 1.09  
     
    SYNAPTICS INCORPORATED
    CONDENSED CONSOLIDATED CASH FLOWS
    (In millions)
    (Unaudited)
     
      Six Months Ended
      December
        2024       2023  
    Net loss $ (21.3 )   $ (64.6 )
    Non-cash operating items   97.3       128.3  
    Changes in working capital   (64.6 )     20.9  
    Net cash provided by operating activities   11.4       84.6  
           
    Acquisition of business, net of cash and cash equivalents acquired   (0.8 )      
    Purchase of intangible assets         (13.5 )
    Purchases of short-term investments         (16.6 )
    Advance payment on intangible assets         (116.5 )
    Net proceeds from maturities and sales of short-term investments and other         23.9  
    Purchases of property and equipment   (13.8 )     (17.1 )
    Net cash used in investing activities   (14.6 )     (139.8 )
           
    Proceeds from issuance of convertible senior notes, net of issuance costs   439.5        
    Payment of debt issuance costs on convertible senior notes and revolving credit facility   (4.4 )      
    Payments for capped call transactions related to the convertible senior notes   (49.9 )      
    Repurchases of common stock, excluding excise taxes   (74.5 )      
    Equity compensation, net   (6.6 )     (21.1 )
    Repayment of debt   (583.5 )     (4.5 )
    Other   1.2       1.7  
    Net cash used in financing activities   (278.2 )     (23.9 )
    Effect of exchange rate changes on cash and cash equivalents   0.6       0.5  
    Net decrease in cash and cash equivalents   (280.8 )     (78.6 )
    Cash and cash equivalents, beginning of period   876.9       924.7  
    Cash and cash equivalents, end of period $ 596.1     $ 846.1  

    The MIL Network

  • MIL-OSI: Lantronix Reports Results for Second Quarter of Fiscal 2025

    Source: GlobeNewswire (MIL-OSI)

    • Second Quarter Net Revenue of $31.2 Million
    • Second Quarter GAAP EPS of ($0.06)
    • Second Quarter Non-GAAP EPS of $0.04

    IRVINE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — Lantronix Inc. (NASDAQ: LTRX), a global leader of compute and connectivity for the Internet of Things (IoT) solutions enabling Artificial Intelligence (AI) Edge Intelligence, today reported results for its second quarter of fiscal 2025.

    Net revenue totaled $31.2 million, near the midpoint of the guidance range provided for the quarter.

    GAAP EPS of ($0.06), compared to ($0.07) in the prior year and $(0.07) in the prior quarter.

    Non-GAAP EPS of $0.04, compared to $0.08 in the prior year and $0.06 in the prior quarter.

    “Lantronix has the key assets in Compute and Connect to drive Edge Intelligence, and the company remains focused on three key vertical markets: Enterprise; Smart Cities including critical infrastructure; and Transportation,” said Lantronix President and CEO Saleel Awsare. “We are actively advancing Edge AI solutions, integrating the recently acquired IoT assets from Netcomm, and positioning Lantronix for exciting future growth.”

    Business Outlook

    For the third fiscal quarter of 2025, the company expects revenue in a range of $27.0 million to $31.0 million and non-GAAP EPS of $0.01 to $0.05 per share.

    Conference Call and Webcast

    Management will host an investor conference call and audio webcast on Thursday, Feb. 6, 2025, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its results for the second quarter of fiscal 2025 that ended Dec. 31, 2024. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q2 FY 2025 call. The webcast will be available simultaneously via the investor relations section of the company’s website.

    Investors can access a replay of the conference call starting at approximately 7:00 p.m. Pacific Time on Feb. 6, 2025, at the Lantronix website. A telephonic replay will also be available through Feb. 13, 2025, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) or Canada toll-free at 1-855-669-9658 and entering passcode 3433776.

    About Lantronix

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

    For more information, visit the Lantronix website.

    Discussion of Non-GAAP Financial Measures

    Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

    Non-GAAP net income consists of net loss excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) restructuring, severance and related charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, (x) amortization of manufacturing profit in acquired inventory, (xi) fair value remeasurement of earnout consideration, and (xii) loss on extinguishment of debt.

    Non-GAAP EPS is calculated by dividing non-GAAP net loss by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP EPS, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

    Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.

    Forward-Looking Statements

    This news release contains forward-looking statements, including statements concerning our revenue and earnings expectations for the third fiscal quarter of 2025, the market opportunities offered by the current shift towards edge computing and our positioning to capitalize on this trend, and our expectations regarding the benefits of our acquisition of Netcomm Wireless Pty Ltd. and our cost reduction initiatives. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Other factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: the effects of negative or worsening regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers; our ability to mitigate any disruption in our and our suppliers’ and vendors’ supply chains due to a pandemic or similar outbreak, wars and recent conflicts in Europe, Asia and the Middle East, hostilities in the Red Sea, or other causes; our ability to successfully convert our backlog and current demand;  the impact of a pandemic or similar outbreak on our business, employees, customers, supply and distribution chains and the global economy; our ability to successfully implement our acquisition strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; our use of AI may result in reputational, competitive or financial harm and liability; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights; issues relating to the stability of our financial and banking institutions and relationships; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; the impact of rising interest rates; our ability to attract and retain qualified management; and any additional factors included in our Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission (the “SEC”) on Sept. 9, 2024, including in the section entitled “Risk Factors” in Item 1A of Part I of that report; in our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2024, to be filed with the SEC on Feb. 7, 2025, including in the section entitled “Risk Factors” in Item 1A of Part II of such report; and in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.

    © 2025 Lantronix Inc. All rights reserved. Lantronix is a registered trademark.

    Lantronix Investor Relations Contact:
    investors@lantronix.com

    LANTRONIX, INC.
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
     (In thousands)
           
      December 31,
      June 30,
        2024       2024  
    Assets      
    Current assets:      
    Cash and cash equivalents $ 19,210     $ 26,237  
    Accounts receivable, net   30,472       31,279  
    Inventories, net   29,070       27,698  
    Contract manufacturers’ receivables   3,473       1,401  
    Prepaid expenses and other current assets   3,329       2,335  
    Total current assets   85,554       88,950  
    Property and equipment, net   3,155       4,016  
    Goodwill   30,491       27,824  
    Intangible assets, net   4,910       5,251  
    Lease right-of-use assets   9,430       9,567  
    Other assets   683       600  
    Total assets $ 134,223     $ 136,208  
           
    Liabilities and stockholders’ equity      
    Current liabilities:      
    Accounts payable $ 15,975     $ 10,347  
    Accrued payroll and related expenses   2,968       5,836  
    Current portion of long-term debt, net   3,056       3,002  
    Other current liabilities   11,436       10,971  
    Total current liabilities   33,435       30,156  
    Long-term debt, net   11,630       13,219  
    Other non-current liabilities   11,245       11,478  
    Total liabilities   56,310       54,853  
           
    Commitments and contingencies      
           
    Stockholders’ equity:      
    Common stock   4       4  
    Additional paid-in capital   305,433       304,001  
    Accumulated deficit   (227,895 )     (223,021 )
    Accumulated other comprehensive income   371       371  
    Total stockholders’ equity   77,913       81,355  
    Total liabilities and stockholders’ equity $ 134,223     $ 136,208  
           
    LANTRONIX, INC.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except per share data)
                       
                       
      Three Months Ended   Six Months Ended
      December 31,   September 30,   December 31,   December 31,
        2024       2024       2023       2024       2023  
    Net revenue $ 31,161     $ 34,423     $ 37,038     $ 65,584     $ 70,069  
    Cost of revenue   17,877       19,948       22,007       37,825       40,941  
    Gross profit   13,284       14,475       15,031       27,759       29,128  
    Operating expenses:                  
    Selling, general and administrative   8,811       9,467       10,224       18,278       19,394  
    Research and development   4,984       4,956       4,725       9,940       9,831  
    Restructuring, severance and related charges   193       900       530       1,093       550  
    Acquisition-related costs   208       29             237        
    Fair value remeasurement of earnout consideration                           (9 )
    Amortization of intangible assets   1,248       1,251       1,310       2,499       2,694  
    Total operating expenses   15,444       16,603       16,789       32,047       32,460  
    Loss from operations   (2,160 )     (2,128 )     (1,758 )     (4,288 )     (3,332 )
    Interest expense, net   (126 )     (119 )     (232 )     (245 )     (570 )
    Other income (loss), net   8       (37 )     (23 )     (29 )     (4 )
    Loss before income taxes   (2,278 )     (2,284 )     (2,013 )     (4,562 )     (3,906 )
    Provision for income taxes   94       218       580       312       573  
    Net loss $ (2,372 )   $ (2,502 )   $ (2,593 )   $ (4,874 )   $ (4,479 )
    Net loss per share – basic and diluted $ (0.06 )   $ (0.07 )   $ (0.07 )   $ (0.13 )   $ (0.12 )
    Weighted-average common shares – basic and diluted   38,631       38,024       37,354       38,330       37,170  
                       
    LANTRONIX, INC.
    UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
    (In thousands, except per share data)
                       
      Three Months Ended   Six Months Ended
      December 31,   September 30,   December 31,   December 31,
        2024       2024       2023       2024       2023  
                       
    GAAP net loss $ (2,372 )   $ (2,502 )   $ (2,593 )   $ (4,874 )   $ (4,479 )
    Non-GAAP adjustments:                  
    Cost of revenue:                  
    Share-based compensation   48       64       64       112       105  
    Employer portion of withholding taxes on stock grants   2       5       1       7       5  
    Amortization of manufacturing profit in acquired inventory               189             506  
    Depreciation and amortization   114       123       109       237       195  
    Total adjustments to cost of revenue   164       192       363       356       811  
    Selling, general and administrative:                  
    Share-based compensation   1,044       1,126       1,628       2,170       2,901  
    Employer portion of withholding taxes on stock grants   20       78       10       98       47  
    Depreciation and amortization   348       351       338       699       672  
    Total adjustments to selling, general and administrative   1,412       1,555       1,976       2,967       3,620  
    Research and development:                  
    Share-based compensation   421       410       484       831       912  
    Employer portion of withholding taxes on stock grants   2       19       5       21       18  
    Depreciation and amortization   111       69       52       180       160  
    Total adjustments to research and development   534       498       541       1,032       1,090  
    Restructuring, severance and related charges   193       900       530       1,093       550  
    Acquisition related costs   208       29             237        
    Fair value remeasurement of earnout consideration                           (9 )
    Amortization of purchased intangible assets   1,248       1,251       1,310       2,499       2,694  
    Litigation settlement cost   158       40             198        
    Total non-GAAP adjustments to operating expenses   3,753       4,273       4,357       8,026       7,945  
    Interest expense, net   126       119       232       245       570  
    Other (income) expense, net   (8 )     37       23       29       4  
    Provision for income taxes   94       218       580       312       573  
    Total non-GAAP adjustments   4,129       4,839       5,555       8,968       9,903  
    Non-GAAP net income $ 1,757     $ 2,337     $ 2,962     $ 4,094     $ 5,424  
                       
                       
    Non-GAAP net income per share – diluted $ 0.04     $ 0.06     $ 0.08     $ 0.10     $ 0.14  
                       
    Denominator for GAAP net income (loss) per share – diluted   38,631       38,024       37,354       38,330       37,170  
    Non-GAAP adjustment   953       1,257       1,228       901       938  
    Denominator for non-GAAP net income per share – diluted   39,584       39,281       38,582       39,231       38,108  
                       
    GAAP cost of revenue $ 17,877     $ 19,948     $ 22,007     $ 37,825     $ 40,941  
    Non-GAAP adjustments to cost of revenue   (164 )     (192 )     (363 )     (356 )     (811 )
    Non-GAAP cost of revenue   17,713       19,756       21,644       37,469       40,130  
    Non-GAAP gross profit $ 13,448     $ 14,667     $ 15,394     $ 28,115     $ 29,939  
    Non-GAAP gross margin   43.2 %     42.6 %     41.6 %     42.9 %     42.7 %
                       
    LANTRONIX, INC.
    UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
    (In thousands)
                       
      Three Months Ended   Six Months Ended
      December 31, 2024   September 30, 2024   December 31, 2023   December 31, 2024   December 31, 2023
    Embedded IoT Solutions $ 10,784     $ 13,387     $ 11,764     $ 24,171     $ 23,137  
    IoT System Solutions   18,592       18,759       23,022       37,351       42,058  
    Software & Services   1,785       2,277       2,252       4,062       4,874  
      $ 31,161     $ 34,423     $ 37,038     $ 65,584     $ 70,069  
                       
                       
      Three Months Ended   Six Months Ended
      December 31, 2024   September 30, 2024   December 31, 2023   December 31, 2024   December 31, 2023
    Americas $ 16,386     $ 17,420     $ 20,601     $ 33,806     $ 43,534  
    EMEA   9,036       10,484       12,886       19,520       19,477  
    Asia Pacific Japan   5,739       6,519       3,551       12,258       7,058  
      $ 31,161     $ 34,423     $ 37,038     $ 65,584     $ 70,069  
                       

    The MIL Network

  • MIL-OSI: Cerence Announces First Quarter Fiscal 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    BURLINGTON, Mass., Feb. 06, 2025 (GLOBE NEWSWIRE) — Cerence Inc. (NASDAQ: CRNC) (“Cerence AI”), a global industry leader in AI for transportation, today reported its first quarter fiscal year 2025 results for the quarter ended December 31, 2024.

     
    ResultsSummary(1,2)
    (in millions, except per share data)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    GAAP revenue   $ 50.9     $ 138.3  
    GAAP gross margin     65.0 %     81.0 %
    Non-GAAP gross margin     65.9 %     81.5 %
    GAAP operating margin     -33.3 %     42.3 %
    Non-GAAP operating margin     -1.0 %     49.4 %
    GAAP net (loss) income   $ (24.3 )   $ 23.9  
    GAAP net (loss) income margin     -47.7 %     17.2 %
    Non-GAAP net (loss) income   $ (1.5 )   $ 54.3  
    Adjusted EBITDA   $ 1.4     $ 70.4  
    Adjusted EBITDA margin     2.7 %     50.9 %
    GAAP net (loss) income per share – diluted   $ (0.57 )   $ 0.53  
    Non-GAAP net (loss) income per share – diluted   $ (0.03 )   $ 1.12  
    (1) As previously disclosed, Q1FY24 revenue includes the non-cash revenue associated with the Toyota “Legacy” contract and related impacts totaling $86.6M.
    (2) Please refer to the “Discussion of Non-GAAP Financial Measures” and “Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures” included elsewhere in this release for more information regarding our use of non-GAAP financial measures.
       

    “I’m incredibly proud of the team’s progress and our performance in Q1, most notably beating the upper end of guidance on top-line revenue and adjusted EBITDA and showing strong free cash flow,” said Brian Krzanich, CEO, Cerence AI. “We believe we have solid momentum for 2025: we’ve made significant progress on our generative AI roadmap, achieving critical development milestones for our next-gen agentic, conversational AI platform. We have continued momentum with our automaker customers, including six design wins and two wins for our generative AI solutions, as well as six major customer SOPs and two generative AI SOPs within the quarter. In addition, our transformation and cost reduction initiatives are having a solid impact on the business. As we look to the future, we believe we are well positioned to continue on our path to long-term, sustainable growth and profitability.”

    Cerence Key Performance Indicators
    To help investors gain further insight into the Cerence business and its performance, management provides a set of key performance indicators that includes:

    Key Performance Indicator1   Q1FY25  
    Percent of worldwide auto production with Cerence Technology (TTM)     51 %
    Change in number of Cerence connected cars shipped2 (TTM over prior year TTM)     5 %
    Change in Adjusted Total Billings (TTM over prior year TTM)     3 %
    (1) Please refer to the “Key Performance Indicators” section included elsewhere in this release for more information regarding the definitions and our use of key performance indicators.
    (2) Based on IHS Markit data, global auto production decreased 2% over the same time period ended on December 31, 2024.
       

    Second Quarter and Full Year Fiscal 2025 Outlook
    For the fiscal quarter ending March 31, 2025, revenue is expected to be in the range of $74 million to $77 million. This includes $20 million of projected Fixed License revenue expected to be signed during the quarter. Gross margins are projected between 74% and 76% and net income is projected in the range of $1 million to $5 million. Adjusted EBITDA is expected to be in the range of $18 million to $22 million.

    Guidance for the full fiscal year ending September 30, 2025 remains unchanged.

    The adjusted EBITDA guidance excludes amortization of acquired intangible assets, stock-based compensation, restructuring and other costs.

    Additional details regarding guidance will be provided during the earnings call.

    Cerence Conference Call and Webcast
    The company will host a live conference call and webcast with slides to discuss the results today at 5:00pm Eastern Time / 2:00pm Pacific Time. Interested investors and analysts are invited to dial into the conference call by registering here.

    Webcast access will also be available on the Investor Information section of the company’s website at https://www.cerence.com/investors/events-and-resources.

    A replay of the webcast can be accessed by visiting the company’s website 90 minutes following the conference call at https://www.cerence.com/investors/events-and-resources.

    Forward Looking Statements
    Statements in this press release regarding: Cerence’s future performance, results and financial condition; expected growth and profitability; outlook and momentum; transformation plans and cost efficiency initiatives, including the estimated net annualized cost savings; strategy; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backlog; revenue visibility; revenue timing and mix; demand for Cerence products; innovation and new product offerings, including AI technology; expected benefits of technology partnerships; cost efficiency initiatives; and management’s future expectations, estimates, assumptions, beliefs, goals, objectives, targets, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “goal,” “anticipates,” “projects,” “forecasts,” “expects,” “intends,” “continues,” “will,” “may,” or “estimates” or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain and semiconductor shortage, or the global economy more generally; volatility in the political, legal and regulatory environment in which we operate, including trade, tariffs and other policies implemented by the new administration or actions taken by other countries in response; automotive production delays; changes in customer forecasts; the impacts of the COVID-19 pandemic on our and our customers’ businesses; the ongoing conflicts in Ukraine and the Middle East; our inability to control and successfully manage our expenses and cash position; our inability to deliver improved financial results from process optimization efforts and cost reduction actions; escalating pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the cancellation or postponement of existing contracts; the loss of business from any of our largest customers; effects of customer defaults; our inability to successfully introduce new products, applications and services; our strategies to increase cloud offerings and deploy generative AI and large language models (LLMs); the inability to expand into adjacent markets; the inability to recruit and retain qualified personnel; disruptions arising from transitions in management personnel, including the transition to our new Chief Executive Officer; cybersecurity and data privacy incidents; failure to protect our intellectual property; defects or interruptions in service with respect to our products; fluctuating currency rates and interest rates; inflation; financial and credit market volatility; restrictions on our current and future operations under the terms of our debt, the use of cash to service or repay our debt; and our inability to generate sufficient cash from our operations; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

    Discussion of Non-GAAP Financial Measures
    We believe that providing the non-GAAP information in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.

    We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements.

    Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance. In assessing the overall health of the business during the three months ended December 31, 2024 and 2023, our management has either included or excluded the following items in general categories, each of which is described below.

    Adjusted EBITDA.
    Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net or impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs.

    Restructuring and other costs, net.
    Restructuring and other costs, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as employee severance costs, consulting costs relating to our transformation initiatives, and costs for consolidating duplicate facilities.

    Amortization of acquired intangible assets.
    We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes these charges allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Future acquisitions may result in the amortization of additional intangible assets.

    Non-cash expenses.
    We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follows:

    i) Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we exclude stock-based compensation from our operating results. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and awards granted are influenced by the Company’s stock price and other factors such as volatility that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in operating plans. Stock-based compensation will continue in future periods.
    ii) Non-cash interest. We exclude non-cash interest because we believe that excluding this expense provides management, as well as other users of the financial statements, with a valuable perspective on the cash-based performance and health of the business, including the current near-term projected liquidity. Non-cash interest expense will continue in future periods.
       

    Other expenses.
    We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, in order to measure operating performance and current and future liquidity both with and without these expenses. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our organic, continuing operations. Included in these expenses are items such as other charges (credits), net, (gains) losses from extinguishment of debt, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions.

    Adjustments to income tax provision.
    Adjustments to our GAAP income tax provision to arrive at non-GAAP net income is determined based on our non-GAAP pre-tax income. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur.

    Key Performance Indicators
    We believe that providing key performance indicators (“KPIs”) allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand information used by management to evaluate and measure such performance. KPIs should not be considered superior to, or a substitute for, operating results prepared in accordance with GAAP. In assessing the performance of the business during the three months ended December 31, 2024, our management has reviewed the following KPIs, each of which is described below:

    • Percent of worldwide auto production with Cerence Technology: The number of Cerence enabled cars shipped as compared to IHS Markit car production data.
    • Change in number of Cerence connected cars shipped: The year-over-year change in the number of cars shipped with Cerence connected solutions. Amounts calculated on a TTM basis.
    • Change in Adjusted total billings YoY (TTM): The year over year change in total billings excluding Professional Services, prepay billings and adjusted for prepay consumption.

    ____________

    See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures.

    To learn more about Cerence AI, visit www.cerence.ai, and follow the company on LinkedIn.

    About Cerence Inc.
    Cerence Inc. (NASDAQ: CRNC) is a global industry leader in creating intuitive, seamless, AI-powered experiences across automotive and transportation. Leveraging decades of innovation and expertise in voice, generative AI, and large language models, Cerence powers integrated experiences that create safer, more connected, and more enjoyable journeys for drivers and passengers alike. With more than 500 million cars shipped with Cerence technology, the company partners with leading automakers, transportation OEMs, and technology companies to advance the next generation of user experiences. Cerence is headquartered in Burlington, Massachusetts, with operations globally and a worldwide team dedicated to pushing the boundaries of AI innovation. For more information, visit www.cerence.ai.

    Contact Information
    Investor Relations | Email: investorrelations@cerence.com 

     
    CERENCE INC.
    Condensed Consolidated Statements of Operations
    (in thousands, except per share data)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    Revenues:            
    License   $ 22,725     $ 20,823  
    Connected services     13,707       96,820  
    Professional services     14,464       20,692  
    Total revenues     50,896       138,335  
    Cost of revenues:            
    License     1,782       1,604  
    Connected services     6,311       7,303  
    Professional services     9,731       17,325  
    Amortization of intangible assets           103  
    Total cost of revenues     17,824       26,335  
    Gross profit     33,072       112,000  
    Operating expenses:            
    Research and development     20,869       33,306  
    Sales and marketing     4,766       6,071  
    General and administrative     12,754       12,793  
    Amortization of intangible assets     554       545  
    Restructuring and other costs, net     11,062       705  
    Total operating expenses     50,005       53,420  
    (Loss) income from operations     (16,933 )     58,580  
    Interest income     1,437       1,432  
    Interest expense     (3,393 )     (3,236 )
    Other income, net     272       1,422  
    (Loss) income before income taxes     (18,617 )     58,198  
    Provision for income taxes     5,671       34,341  
    Net (loss) income   $ (24,288 )   $ 23,857  
    Net (loss) income per share:            
    Basic   $ (0.57 )   $ 0.58  
    Diluted   $ (0.57 )   $ 0.53  
    Weighted-average common share outstanding:            
    Basic     42,897       41,186  
    Diluted     42,897       49,255  
                     
     
    CERENCE INC.
    Condensed Consolidated Balance Sheets
    (in thousands, except per share amounts)
                 
        December 31,     September 30,  
        2024     2024  
        (Unaudited)        
    ASSETS            
    Current assets:            
    Cash and cash equivalents   $ 104,103       121,485  
    Marketable securities     3,889       5,502  
    Accounts receivable, net of allowances of $53 and $1,613     47,671       62,755  
    Deferred costs     4,739       5,286  
    Prepaid expenses and other current assets     39,670       70,481  
    Total current assets     200,072       265,509  
    Long-term marketable securities     2,552       3,453  
    Property and equipment, net     29,371       30,139  
    Deferred costs     15,539       18,051  
    Operating lease right of use assets     13,156       12,879  
    Goodwill     288,886       296,858  
    Intangible assets, net     1,059       1,706  
    Deferred tax assets     46,035       51,398  
    Other assets     20,858       22,365  
    Total assets   $ 617,528     $ 702,358  
    LIABILITIES AND STOCKHOLDERS’ EQUITY            
    Current liabilities:            
    Accounts payable   $ 7,609     $ 3,959  
    Deferred revenue     47,626       52,822  
    Short-term operating lease liabilities     3,828       4,528  
    Short-term debt     59,954       87,094  
    Accrued expenses and other current liabilities     32,967       68,405  
    Total current liabilities     151,984       216,808  
    Long-term debt     196,208       194,812  
    Deferred revenue, net of current portion     113,444       114,354  
    Long-term operating lease liabilities     10,071       8,803  
    Other liabilities     25,119       26,484  
    Total liabilities     496,826       561,261  
    Stockholders’ Equity:            
    Common stock, $0.01 par value, 560,000 shares authorized; 42,988 and 41,924 shares issued and outstanding, respectively     430       419  
    Accumulated other comprehensive loss     (29,785 )     (25,912 )
    Additional paid-in capital     1,096,085       1,088,330  
    Accumulated deficit     (946,028 )     (921,740 )
    Total stockholders’ equity     120,702       141,097  
    Total liabilities and stockholders’ equity   $ 617,528     $ 702,358  
                     
     
    CERENCE INC.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    Cash flows from operating activities:            
    Net (loss) income   $ (24,288 )   $ 23,857  
    Adjustments to reconcile net (loss) income to net cash provided by (used in) operations:            
    Depreciation and amortization     2,445       2,686  
    Provision for expected credit loss reserve     207        
    Stock-based compensation     7,771       8,380  
    Non-cash interest expense     1,861       1,468  
    Gain on debt extinguishment     (327 )      
    Deferred tax provision     4,927       30,298  
    Unrealized foreign currency transaction losses (gains)     1,997       (2,012 )
    Other, net     (33 )     382  
    Changes in operating assets and liabilities:            
    Accounts receivable     8,800       4,933  
    Prepaid expenses and other assets     27,201       1,170  
    Deferred costs     1,859       2,589  
    Accounts payable     3,814       2,382  
    Accrued expenses and other liabilities     (33,087 )     3,712  
    Deferred revenue     6,107       (82,660 )
    Net cash provided by (used in) operating activities     9,254       (2,815 )
    Cash flows from investing activities:            
    Capital expenditures     (1,360 )     (931 )
    Sale and maturities of marketable securities     2,493       2,442  
    Other investing activities     (374 )     (322 )
    Net cash provided by investing activities     759       1,189  
    Cash flows from financing activities:            
    Principal payments of short-term debt     (26,964 )      
    Common stock repurchases for tax withholdings for net settlement of equity awards     (1,369 )     (6,209 )
    Principal payment of lease liabilities arising from a finance lease     (115 )     (122 )
    Proceeds from the issuance of common stock     1,364       6,201  
    Net cash used in financing activities     (27,084 )     (130 )
    Effects of exchange rate changes on cash and cash equivalents     (311 )     (662 )
    Net change in cash and cash equivalents     (17,382 )     (2,418 )
    Cash and cash equivalents at beginning of period     121,485       101,154  
    Cash and cash equivalents at end of period   $ 104,103     $ 98,736  
                     
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
    (unaudited – in thousands)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    GAAP revenue   $ 50,896     $ 138,335  
                 
    GAAP gross profit   $ 33,072     $ 112,000  
    Stock-based compensation     490       641  
    Amortization of intangible assets           103  
    Non-GAAP gross profit   $ 33,562     $ 112,744  
    GAAP gross margin     65.0 %     81.0 %
    Non-GAAP gross margin     65.9 %     81.5 %
                 
    GAAP operating (loss) income   $ (16,933 )   $ 58,580  
    Stock-based compensation*     4,808       8,380  
    Amortization of intangible assets     554       648  
    Restructuring and other costs, net*     11,062       705  
    Non-GAAP operating (loss) income   $ (509 )   $ 68,313  
    GAAP operating margin     -33.3 %     42.3 %
    Non-GAAP operating margin     -1.0 %     49.4 %
                 
    GAAP net (loss) income   $ (24,288 )   $ 23,857  
    Stock-based compensation*     4,808       8,380  
    Amortization of intangible assets     554       648  
    Restructuring and other costs, net*     11,062       705  
    Depreciation     1,891       2,038  
    Total other expense, net     (1,684 )     (382 )
    Provision for income taxes     5,671       34,341  
    Adjusted EBITDA   $ 1,382     $ 70,351  
    GAAP net (loss) income margin     -47.7 %     17.2 %
    Adjusted EBITDA margin     2.7 %     50.9 %
    * – $3.0 million in stock-based compensation is included in Restructuring and other costs, net for Q1’25.            
                 
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited – in thousands, except per share data)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    GAAP net (loss) income   $ (24,288 )   $ 23,857  
    Stock-based compensation*     4,808       8,380  
    Amortization of intangible assets     554       648  
    Restructuring and other costs, net*     11,062       705  
    Gain on debt extinguishment     (327 )      
    Non-cash interest expense     1,861       1,468  
    Other     (33 )     (27 )
    Adjustments to income tax expense     4,895       19,259  
    Non-GAAP net (loss) income   $ (1,468 )   $ 54,290  
                 
    Adjusted EPS:            
    GAAP Numerator:            
    Net (loss) income attributed to common shareholders – basic   $ (24,288 )   $ 23,857  
    Interest on the Notes, net of tax           2,250  
    Net (loss) income attributed to common shareholders – diluted   $ (24,288 )   $ 26,107  
                 
    Non-GAAP Numerator:            
    Net (loss) income attributed to common shareholders – basic   $ (1,468 )   $ 54,290  
    Interest on the Notes, net of tax           1,120  
    Net (loss) income attributed to common shareholders – diluted   $ (1,468 )   $ 55,410  
                 
    GAAP Denominator:            
    Weighted-average common shares outstanding – basic     42,897       41,186  
    Adjustment for diluted shares           8,069  
    Weighted-average common shares outstanding – diluted     42,897       49,255  
                 
    Non-GAAP Denominator:            
    Weighted-average common shares outstanding- basic     42,897       41,186  
    Adjustment for diluted shares           8,069  
    Weighted-average common shares outstanding – diluted     42,897       49,255  
                 
    GAAP net (loss) income per share – diluted   $ (0.57 )   $ 0.53  
    Non-GAAP net (loss) income per share – diluted   $ (0.03 )   $ 1.12  
                 
    GAAP net cash provided by (used in) operating activities   $ 9,254     $ (2,815 )
    Capital expenditures     (1,360 )     (931 )
    Free Cash Flow   $ 7,894     $ (3,746 )
    * – $3.0 million in stock-based compensation is included in Restructuring and other costs, net for Q1’25.            
                 
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited – in thousands)
                 
        Q2 2025     FY2025  
        Low     High     Low     High  
    GAAP revenue   $ 74,000     $ 77,000     $ 236,000     $ 247,000  
                             
    GAAP gross profit   $ 54,700     $ 58,700     $ 158,400     $ 169,400  
    Stock-based compensation     700       700       2,500       2,500  
    Amortization of intangible assets                        
    Non-GAAP gross profit   $ 55,400     $ 59,400     $ 160,900     $ 171,900  
    GAAP gross margin     74 %     76 %     67 %     69 %
    Non-GAAP gross margin     75 %     77 %     68 %     70 %
                             
    GAAP operating income (loss)   $ 7,100     $ 11,100     $ (27,100 )   $ (16,100 )
    Stock-based compensation     7,000       7,000       22,500       22,500  
    Amortization of intangible assets     500       500       1,600       1,600  
    Restructuring and other costs, net     1,300       1,300       8,100       8,100  
    Non-GAAP operating income   $ 15,900     $ 19,900     $ 5,100     $ 16,100  
    GAAP operating margin     10 %     14 %     -11 %     -7 %
    Non-GAAP operating margin     21 %     26 %     2 %     7 %
                             
    GAAP net income (loss)   $ 1,200     $ 5,200     $ (39,600 )   $ (28,600 )
    Stock-based compensation     7,000       7,000       22,500       22,500  
    Amortization of intangible assets     500       500       1,600       1,600  
    Restructuring and other costs, net     1,300       1,300       8,100       8,100  
    Depreciation     1,900       1,900       10,200       10,200  
    Total other expense, net     (1,300 )     (1,300 )     (5,100 )     (5,100 )
    Provision for income taxes     4,600       4,600       7,400       7,400  
    Adjusted EBITDA   $ 17,800     $ 21,800     $ 15,300     $ 26,300  
    GAAP net income (loss) margin     2 %     7 %     -17 %     -12 %
    Adjusted EBITDA margin     24 %     28 %     6 %     11 %
                                     
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited – in thousands)
                 
        Q2 2025     FY2025  
        Low     High     Low     High  
    GAAP net income (loss)   $ 1,200     $ 5,200     $ (39,600 )   $ (28,600 )
    Stock-based compensation     7,000       7,000       22,500       22,500  
    Amortization of intangibles     500       500       1,600       1,600  
    Restructuring and other costs, net     1,300       1,300       8,100       8,100  
    Non-cash interest expense     1,500       1,500       5,500       5,500  
    Other                 (100 )     (100 )
    Adjustments to income tax expense     1,500       1,500       (4,600 )     (4,600 )
    Non-GAAP net income (loss)   $ 13,000     $ 17,000     $ (6,600 )   $ 4,400  
                             
    Adjusted EPS:                        
    GAAP Numerator:                        
    Net income (loss) attributed to common shareholders – basic and diluted   $ 1,200     $ 5,200     $ (39,600 )   $ (28,600 )
                             
    Non-GAAP Numerator:                        
    Net income (loss) attributed to common shareholders – basic   $ 13,000     $ 17,000     $ (6,600 )   $ 4,400  
    Interest on the Notes, net of tax     900       900              
    Net income (loss) attributed to common shareholders – diluted   $ 13,900     $ 17,900     $ (6,600 )   $ 4,400  
                             
    GAAP Denominator:                        
    Weighted-average common shares outstanding – basic     43,000       43,000       43,000       43,000  
    Adjustment for diluted shares     100       100              
    Weighted-average common shares outstanding – diluted     43,100       43,100       43,000       43,000  
                             
    Non-GAAP Denominator:                        
    Weighted-average common shares outstanding- basic     43,000       43,000       43,000       43,000  
    Adjustment for diluted shares     6,800       6,800             100  
    Weighted-average common shares outstanding – diluted     49,800       49,800       43,000       43,100  
                             
    GAAP net income (loss) per share – diluted   $ 0.03     $ 0.12     $ (0.92 )   $ (0.67 )
    Non-GAAP net income (loss) per share – diluted   $ 0.28     $ 0.36     $ (0.15 )   $ 0.10  
                             
    GAAP net cash provided by operating activities               $ 34,000     $ 40,000  
    Capital expenditures                 (14,000 )     (10,000 )
    Free Cash Flow               $ 20,000     $ 30,000  
                                 

    The MIL Network

  • MIL-OSI: Fortinet Reports Fourth Quarter and Full Year 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    Fourth Quarter 2024 Highlights

    • Total revenue of $1.66 billion, up 17% year over year
    • Product revenue of $574 million, up 18% year over year
    • Billings of $2.00 billion, up 7% year over year1
    • Record GAAP operating margin of 35%
    • Record Non-GAAP operating margin of 39%1
    • Unified SASE ARR2up 28% and Security Operations ARR2up 32%, year over year
    • Ranked #7 on the Forbes Most Trusted Companies in America 2025 list, the only cybersecurity company in the top 50

    Full Year 2024 Highlights

    • Total revenue of $5.96 billion, up 12% year over year
    • Service revenue of $4.05 billion, up 20% year over year
    • Record GAAP operating margin of 30%
    • Record Non-GAAP operating margin of 35%1
    • Remaining performance obligations of $6.42 billion, up 12% year over year
    • Cash flow from operations of $2.26 billion
    • Free cash flow of $1.88 billion1
    • Exceeded the ‘Rule of 45’ for the fifth consecutive year

    SUNNYVALE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, today announced financial results for the fourth quarter of 2024 and full year ended December 31, 2024.

    “In the fourth quarter, we successfully balanced growth and profitability as our non-GAAP operating margin increased 720 basis points year-over-year to a company record of 39%, while revenue grew 17%,” said Ken Xie, Founder, Chairman and Chief Executive Officer of Fortinet. “We continue to execute our strategy of investing in the high-growth Unified SASE and Security Operations markets, while strengthening our position in Secure Networking. Our customers are increasingly recognizing the benefits of a single-vendor approach to SASE, and we expect to emerge as a leader in this space, being the only company to natively develop all SASE functions within a unified operating system, FortiOS, which seamlessly integrates networking and security capabilities.”

    Financial Summary for the Fourth Quarter of 2024

    • Revenue: Total revenue was $1.66 billion for the fourth quarter of 2024, an increase of 17.3% compared to $1.42 billion for the same quarter of 2023.
    • Service Revenue: Service revenue was $1.09 billion for the fourth quarter of 2024, an increase of 17.2% compared to $927.0 million for the same quarter of 2023.
    • Product Revenue: Product revenue was $574.0 million for the fourth quarter of 2024, an increase of 17.6% compared to $488.1 million for the same quarter of 2023.
    • Billings1: Total billings were $2.00 billion for the fourth quarter of 2024, an increase of 7.4% compared to $1.86 billion for the same quarter of 2023.
    • Unified SASE ARR2: Unified SASE ARR was $1.12 billion for the fourth quarter of 2024, an increase of 27.9% compared to $875.3 million for the same quarter of 2023.
    • Security Operations ARR2: Security Operations ARR was $422.4 million for the fourth quarter of 2024, an increase of 32.2% compared to $319.6 million for the same quarter of 2023.
    • GAAP Operating Income and Margin: GAAP operating income was $574.1 million for the fourth quarter of 2024, representing a GAAP operating margin of 34.6%. GAAP operating income was $385.4 million for the same quarter of 2023, representing a GAAP operating margin of 27.2%.
    • Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $650.9 million for the fourth quarter of 2024, representing a non-GAAP operating margin of 39.2%. Non-GAAP operating income was $453.5 million for the same quarter of 2023, representing a non-GAAP operating margin of 32.0%.
    • GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $526.2 million for the fourth quarter of 2024, compared to GAAP net income of $310.9 million for the same quarter of 2023. GAAP diluted net income per share was $0.68 for the fourth quarter of 2024, based on 775.2 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.40 for the same quarter of 2023, based on 772.3 million diluted weighted-average shares outstanding.
    • Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $571.5 million for the fourth quarter of 2024, compared to non-GAAP net income of $392.0 million for the same quarter of 2023. Non-GAAP diluted net income per share was $0.74 for the fourth quarter of 2024, based on 775.2 million diluted weighted-average shares outstanding, compared to $0.51 for the same quarter of 2023, based on 772.3 million diluted weighted-average shares outstanding.
    • Cash Flow: Cash flow from operations was $477.6 million for the fourth quarter of 2024, compared to $191.7 million for the same quarter of 2023.
    • Free Cash Flow1: Free cash flow was $380.0 million for the fourth quarter of 2024, compared to $164.8 million for the same quarter of 2023.

    Financial Summary for the Full Year 2024

    • Revenue: Total revenue was $5.96 billion for 2024, an increase of 12.3% compared to $5.30 billion in 2023.
    • Service Revenue: Service revenue was $4.05 billion for 2024, an increase of 19.8% compared to $3.38 billion in 2023.
    • Product Revenue: Product revenue was $1.91 billion for 2024, a decrease of 1.0% compared to $1.93 billion in 2023.
    • Billings1: Total billings were $6.53 billion for 2024, an increase of 2.1% compared to $6.40 billion in 2023.
    • Remaining performance obligations: Remaining performance obligations were $6.42 billion as of December 31, 2024, an increase of 11.7% compared to $5.75 billion as of December 31, 2023.
    • Deferred Revenue: Total deferred revenue was $6.36 billion as of December 31, 2024, an increase of 10.9% compared to $5.74 billion as of December 31, 2023.
    • GAAP Operating Income and Margin: GAAP operating income was $1.80 billion for 2024, representing a GAAP operating margin of 30.3%. GAAP operating income was $1.24 billion for 2023, representing a GAAP operating margin of 23.4%.
    • Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $2.09 billion for 2024, representing a non-GAAP operating margin of 35.0%. Non-GAAP operating income was $1.51 billion for 2023, representing a non-GAAP operating margin of 28.4%.
    • GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $1.75 billion for 2024, compared to GAAP net income of $1.15 billion for 2023. GAAP diluted net income per share was $2.26 for 2024, based on 771.9 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $1.46 for 2023, based on 788.2 million diluted weighted-average shares outstanding.
    • Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $1.83 billion for 2024, compared to non-GAAP net income of $1.29 billion for 2023. Non-GAAP diluted net income per share was $2.37 for 2024, based on 771.9 million diluted weighted-average shares outstanding, compared to $1.63 for 2023, based on 788.2 million diluted weighted-average shares outstanding.
    • Cash Flow: Cash flow from operations was $2.26 billion in 2024 compared to $1.94 billion in 2023.
    • Free Cash Flow1: Free cash flow was $1.88 billion in 2024, compared to $1.73 billion in 2023.

    Guidance

    For the first quarter of 2025, Fortinet currently expects:

    • Revenue in the range of $1.500 billion to $1.560 billion
    • Billings in the range of $1.520 billion to $1.600 billion
    • Non-GAAP gross margin in the range of 80.0% to 81.0%
    • Non-GAAP operating margin in the range of 30.0% to 31.0%
    • Diluted non-GAAP net income per share in the range of $0.52 to $0.54, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 774 million to 780 million.

    For the fiscal year 2025, Fortinet currently expects:

    • Revenue in the range of $6.650 billion to $6.850 billion
    • Service revenue in the range of $4.575 billion to $4.725 billion
    • Billings in the range of $7.200 billion to $7.400 billion
    • Non-GAAP gross margin in the range of 79.0% to 81.0%
    • Non-GAAP operating margin in the range of 31.0% to 33.0%
    • Diluted non-GAAP net income per share in the range of $2.41 to $2.47, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 773 million to 783 million.

    These statements are forward looking and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

    Our guidance with respect to non-GAAP financial measures excludes stock-based compensation, amortization of acquired intangible assets, charges in connection with litigation settlement, gain on intellectual property matters, gain on bargain purchase related to acquisition, non-cash charge of impairment on an equity method investment and a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We have not reconciled our guidance with respect to non-GAAP financial measures to the corresponding GAAP measures because certain items that impact these measures are uncertain or out of our control, or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is not available without unreasonable effort.

    1 A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”.
    2 ARR is defined as the annualized value of renewable / recurring customer agreements as of the measurement date, assuming any contract that expires during the next 12 months is renewed at its existing value.

    Conference Call Details

    Fortinet will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the earnings results. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet’s website at https://investor.fortinet.com and a replay will be archived and accessible at https://investor.fortinet.com/events-and-presentations.

    First Quarter 2025 Conference Participation Schedule:

    • Morgan Stanley Technology, Media & Telecom Conference
      March 4, 2025

    Members of Fortinet’s management team are expected to present at this conference and discuss the latest company strategies and initiatives. Fortinet’s conference presentations are expected to be available via webcast on the company’s website. To access the most updated information, pre-register and listen to the webcast of each event, please visit the Investor Presentation & Events page of Fortinet’s website at https://investor.fortinet.com/events-and-presentations. The schedule is subject to change.

    About Fortinet (www.fortinet.com)

    Fortinet (Nasdaq: FTNT) is a driving force in the evolution of cybersecurity and the convergence of networking and security. Our mission is to secure people, devices and data everywhere, and today we deliver cybersecurity everywhere our customers need it with the largest integrated portfolio of over 50 enterprise-grade products. Well over half a million customers trust Fortinet’s solutions, which are among the most deployed, most patented and most validated in the industry. The Fortinet Training Institute, one of the largest and broadest training programs in the industry, is dedicated to making cybersecurity training and new career opportunities available to everyone. Collaboration with esteemed organizations from both the public and private sectors, including Computer Emergency Response Teams (“CERTs”), government entities, and academia, is a fundamental aspect of Fortinet’s commitment to enhance cyber resilience globally. FortiGuard Labs, Fortinet’s elite threat intelligence and research organization, develops and utilizes leading-edge machine learning and AI technologies to provide customers with timely and consistently top-rated protection and actionable threat intelligence. Learn more at https://www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

    Copyright © 2025 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiMail, FortiSandbox, FortiADC, FortiAgent, FortiAI, FortiAIOps, FortiAntenna, FortiAP, FortiAPCam, FortiAppSec, FortiAuthenticator, FortiCache, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCART, FortiCASB, FortiCentral, FortiCNP, FortiConnect, FortiController, FortiConverter, FortiCSPM, FortiCWP, FortiDAST, FortiDATA, FortiDB, FortiDDoS, FortiDeceptor, FortiDeploy, FortiDevice, FortiDevSec, FortiDLP, FortiEdge, FortiEDR, FortiEndpoint, FortiExplorer, FortiExtender, FortiFirewall, FortiFlex, FortiFone, FortiGSLB, FortiGuest, FortiHypervisor, FortiInsight, FortiIsolator, FortiLAN, FortiLink, FortiMonitor, FortiNAC, FortiNDR, FortiPAM, FortiPenTest, FortiPhish, FortiPoint, FortiPolicy, FortiPortal, FortiPresence, FortiProxy, FortiRecon, FortiRecorder, FortiSASE, FortiScanner, FortiSDNConnector, FortiSEC, FortiSIEM, FortiSMS, FortiSOAR, FortiSRA, FortiStack, FortiSwitch, FortiTester, FortiTIP, FortiToken, FortiTrust, FortiVoice, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLM, FortiXDR and Lacework FortiCNAPP. Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments.

    FTNT-F

    Forward-Looking Statements

    This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding any indications related to future growth and market share gains, our strategy going forward, and guidance and expectations around future financial results, including guidance and expectations for the first quarter of 2025 and full year 2025, and any statements regarding our market opportunity and market size, and business momentum. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based such that actual results are materially different from our forward-looking statements in this release. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks, including those caused by economic challenges, a possible economic downturn or recession and the effects of inflation or stagflation, rising interest rates or reduced information technology spending; supply chain challenges; negative impacts from the ongoing war in Ukraine and its related macroeconomic effects and our decision to reduce operations in Russia; competitiveness in the security market; the dynamic nature of the security market and its products and services; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding demand and increased business and renewals from existing customers; sales execution risks, including risks in connection with the timing and completion of large strategic deals; uncertainties around continued success in sales growth and market share gains; uncertainties in market opportunities and the market size; actual or perceived vulnerabilities in our supply chain, products or services, and any actual or perceived breach of our network or our customers’ networks; longer sales cycles, particularly for larger enterprise, service providers, government and other large organization customers; the effectiveness of our salesforce and failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; risks associated with integrating acquisitions and changes in circumstances and plans associated therewith, including, among other risks, changes in plans related to product and services integrations, product and services plans and sales strategies; sales and marketing execution risks; execution risks around new product development and introductions and innovation; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby or by other factors; cybersecurity threats, breaches and other disruptions; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive, including advances in artificial intelligence; risks associated with the adoption of, and demand for, our products and services in general and by specific customer segments, including those caused by competition and pricing pressure; excess product inventory for any reason, including those caused by the effects of increased inflation and interest rates in certain geographies and the war in Ukraine; risks associated with business disruption caused by natural disasters and health emergencies such as earthquakes, fires, power outages, typhoons, floods, health epidemics and viruses, and by manmade events such as civil unrest, labor disruption, international trade disputes, international conflicts such as the war in Ukraine or tensions between China and Taiwan, terrorism, wars, and critical infrastructure attacks; tariffs, trade disputes and other trade barriers, and negative impact on sales based on geo-political dynamics and disputes and protectionist policies, including the impact of any future shutdowns of the U.S. government and the transition in administrations; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.

    Non-GAAP Financial Measures

    We have provided in this release financial information that has not been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial and liquidity measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.

    Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.

    Billings (non-GAAP). We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drive current and future revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings include amounts that have not yet been recognized as revenue and are impacted by the term of security and support agreements. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue.

    Free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus purchases of property and equipment. We believe free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including repurchasing outstanding common stock, investing in our business, making strategic acquisitions and strengthening the balance sheet. A limitation of using free cash flow rather than the GAAP measures of cash provided by or used in operating activities, investing activities, and financing activities is that free cash flow does not represent the total increase or decrease in the cash and cash equivalents balance for the period because it excludes investing activities other than capital expenditures and cash flows from financing activities. Management accounts for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting cash flows from investing and financing activities in our reconciliation of free cash flow. In addition, it is important to note that other companies, including companies in our industry, may not use free cash flow, may calculate free cash flow in a different manner than we do or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a comparative measure.

    Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus stock-based compensation, amortization of acquired intangible assets and charges in connection with litigation settlement, less gain on intellectual property matter and, when applicable, other significant non-recurring items in a given quarter. Non-GAAP operating margin is defined as non-GAAP operating income divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the items noted above so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating income instead of operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes the items noted above. Second, the components of the costs that we exclude from our calculation of non-GAAP operating income may differ from the components that peer companies exclude when they report their non-GAAP results of operations. Management accounts for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.

    Non-GAAP net income and diluted net income per share. We define non-GAAP net income as net income plus the items noted above under non-GAAP operating income and operating margin. In addition, we adjust non-GAAP net income and diluted net income per share for a gain on bargain purchase related to acquisition, a non-cash charge of impairment on an equity method investment and a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We define non-GAAP diluted net income per share as non-GAAP net income divided by the non-GAAP diluted weighted-average shares outstanding. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income and non-GAAP operating margin. However, in order to provide a more complete picture of our recurring core business operating results, we include in non-GAAP net income and non-GAAP diluted net income per share, the tax adjustment required resulting in an effective tax rate on a non-GAAP basis, which often differs from the GAAP tax rate. We believe the non-GAAP effective tax rates we use are reasonable estimates of normalized tax rates for our current and prior fiscal years under our global operating structure. The same limitations described above regarding our use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted net income per share. We account for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted net income per share and evaluating non-GAAP net income and non-GAAP diluted net income per share together with net income and diluted net income per share calculated in accordance with GAAP.

    FORTINET, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited, in millions)
     
      December 31,
    2024
      December 31,
    2023
    ASSETS      
    CURRENT ASSETS:      
    Cash and cash equivalents $ 2,875.9     $ 1,397.9  
    Short-term investments   1,126.4       1,021.5  
    Marketable equity securities   64.2       21.0  
    Accounts receivable—net   1,463.4       1,402.0  
    Inventory   315.5       484.8  
    Prepaid expenses and other current assets   126.1       101.1  
    Total current assets   5,971.5       4,428.3  
    PROPERTY AND EQUIPMENT—NET   1,349.5       1,044.4  
    DEFERRED CONTRACT COSTS   622.9       605.6  
    DEFERRED TAX ASSETS   1,335.6       868.8  
    GOODWILL AND OTHER INTANGIBLE ASSETS—NET   350.4       161.8  
    OTHER ASSETS   133.2       150.0  
    TOTAL ASSETS $ 9,763.1     $ 7,258.9  
    LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)      
    CURRENT LIABILITIES:      
    Accounts payable $ 190.9     $ 204.3  
    Accrued liabilities   337.9       423.7  
    Accrued payroll and compensation   255.7       242.3  
    Deferred revenue   3,276.2       2,848.7  
    Total current liabilities   4,060.7       3,719.0  
    DEFERRED REVENUE   3,084.7       2,886.3  
    LONG-TERM DEBT   994.3       992.3  
    OTHER LIABILITIES   129.6       124.7  
    Total liabilities   8,269.3       7,722.3  
    COMMITMENTS AND CONTINGENCIES      
    STOCKHOLDERS’ EQUITY (DEFICIT):      
    Common stock   0.8       0.8  
    Additional paid-in capital   1,636.2       1,416.4  
    Accumulated other comprehensive loss   (26.1 )     (18.9 )
    Accumulated deficit   (117.1 )     (1,861.7 )
    Total stockholders’ equity (deficit)   1,493.8       (463.4 )
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 9,763.1     $ 7,258.9  
    FORTINET, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited, in millions, except per share amounts)

     
      Three Months Ended   Year Ended
      December 31,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
    REVENUE:              
    Product $ 574.0     $ 488.1     $ 1,908.7     $ 1,927.3  
    Service   1,086.1       927.0       4,047.1       3,377.5  
    Total revenue   1,660.1       1,415.1       5,955.8       5,304.8  
    COST OF REVENUE:              
    Product   178.0       197.2       652.0       763.6  
    Service   136.5       118.7       505.6       473.6  
    Total cost of revenue   314.5       315.9       1,157.6       1,237.2  
    GROSS PROFIT:              
    Product   396.0       290.9       1,256.7       1,163.7  
    Service   949.6       808.3       3,541.5       2,903.9  
    Total gross profit   1,345.6       1,099.2       4,798.2       4,067.6  
    OPERATING EXPENSES:              
    Research and development   191.1       152.5       716.8       613.8  
    Sales and marketing   526.5       507.4       2,044.8       2,006.0  
    General and administrative   55.1       55.1       237.8       211.3  
    Gain on intellectual property matter   (1.2 )     (1.2 )     (4.6 )     (4.6 )
    Total operating expenses   771.5       713.8       2,994.8       2,826.5  
    OPERATING INCOME   574.1       385.4       1,803.4       1,241.1  
    INTEREST INCOME   42.3       30.5       155.2       119.7  
    INTEREST EXPENSE   (4.9 )     (5.4 )     (20.0 )     (21.0 )
    GAIN ON BARGAIN PURCHASE               106.3        
    OTHER INCOME (EXPENSE)—NET   6.9       5.1       13.6       (6.1 )
    INCOME BEFORE INCOME TAXES AND LOSS FROM EQUITY METHOD INVESTMENTS   618.4       415.6       2,058.5       1,333.7  
    PROVISION FOR INCOME TAXES   86.7       95.2       283.9       143.8  
    LOSS FROM EQUITY METHOD INVESTMENTS   (5.5 )     (9.5 )     (29.4 )     (42.1 )
    NET INCOME $ 526.2     $ 310.9     $ 1,745.2     $ 1,147.8  
    Net income per share:              
    Basic $ 0.69     $ 0.41     $ 2.28     $ 1.47  
    Diluted $ 0.68     $ 0.40     $ 2.26     $ 1.46  
    Weighted-average shares outstanding:              
    Basic   766.5       764.9       764.4       778.6  
    Diluted   775.2       772.3       771.9       788.2  
    FORTINET, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited, in millions)

     
      Year Ended
      December 31,
    2024
      December 31,
    2023
    CASH FLOWS FROM OPERATING ACTIVITIES:      
    Net income $ 1,745.2     $ 1,147.8  
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Stock-based compensation   257.9       249.0  
    Amortization of deferred contract costs   293.7       266.3  
    Depreciation and amortization   122.8       113.4  
    Amortization of investment discounts   (48.8 )     (27.7 )
    Loss from equity method investments   29.4       42.1  
    Gain on bargain purchase   (106.3 )      
    Other   (15.2 )     18.5  
    Changes in operating assets and liabilities, net of impact of business combinations:      
    Accounts receivable—net   (45.4 )     (146.4 )
    Inventory   131.2       (253.5 )
    Prepaid expenses and other current assets   (13.7 )     (27.6 )
    Deferred contract costs   (311.1 )     (353.5 )
    Deferred tax assets   (223.2 )     (301.9 )
    Other assets   (11.0 )     17.7  
    Accounts payable   (10.2 )     (43.1 )
    Accrued liabilities   (106.7 )     137.4  
    Accrued payroll and compensation         23.4  
    Other liabilities   (8.3 )     (21.7 )
    Deferred revenue   577.8       1,095.3  
         Net cash provided by operating activities   2,258.1       1,935.5  
    CASH FLOWS FROM INVESTING ACTIVITIES:      
    Purchases of investments   (1,948.6 )     (1,855.8 )
    Sales of investments   0.5       4.0  
    Maturities of investments   1,891.7       1,414.8  
    Purchases of property and equipment   (378.9 )     (204.1 )
    Purchase of investment in privately held company         (8.5 )
    Payments made in connection with business combinations, net of cash acquired   (275.5 )      
    Purchases of marketable equity securities   (16.7 )      
    Other   0.1       0.3  
         Net cash used in investing activities   (727.4 )     (649.3 )
    CASH FLOWS FROM FINANCING ACTIVITIES:      
    Repurchase and retirement of common stock   (0.6 )     (1,500.5 )
    Proceeds from issuance of common stock   63.1       43.8  
    Taxes paid related to net share settlement of equity awards   (100.9 )     (112.5 )
    Other   (11.7 )     (1.2 )
         Net cash used in financing activities   (50.1 )     (1,570.4 )
    EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS   (2.6 )     (0.8 )
    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   1,478.0       (285.0 )
    CASH AND CASH EQUIVALENTS—Beginning of year   1,397.9       1,682.9  
    CASH AND CASH EQUIVALENTS—End of year $ 2,875.9     $ 1,397.9  
    Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
    (Unaudited, in millions, except per share amounts)

    Reconciliation of GAAP operating income to non-GAAP operating income, operating margin, net income and diluted net income per share

      Three Months Ended   Year Ended
      December 31,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
    Reconciliation of non-GAAP operating income:              
    GAAP operating income $ 574.1     $ 385.4     $ 1,803.4     $ 1,241.1  
    GAAP operating margin   34.6 %     27.2 %     30.3 %     23.4 %
    Add back:              
    Stock‐based compensation   66.5       64.0       260.2       251.6  
    Amortization of acquired intangible assets   11.5       5.3       23.1       18.9  
    Litigation-related matter (a)               3.2        
    Gain on intellectual property matter   (1.2 )     (1.2 )     (4.6 )     (4.6 )
    Non‐GAAP operating income $ 650.9     $ 453.5     $ 2,085.3     $ 1,507.0  
    Non‐GAAP operating margin   39.2 %     32.0 %     35.0 %     28.4 %
                   
    Reconciliation of non-GAAP net income:              
    GAAP net income $ 526.2     $ 310.9     $ 1,745.2     $ 1,147.8  
    Add back:              
    Stock‐based compensation   66.5       64.0       260.2       251.6  
    Amortization of acquired intangible assets   11.5       5.3       23.1       18.9  
    Litigation-related matter (a)               3.2        
    Gain on intellectual property matter   (1.2 )     (1.2 )     (4.6 )     (4.6 )
    Gain on bargain purchase (b)               (106.3 )      
    Tax adjustment (c)   (31.5 )     13.0       (95.9 )     (128.1 )
    Non-cash charge on equity method investment (d)               8.0        
    Non-GAAP net income $ 571.5     $ 392.0     $ 1,832.9     $ 1,285.6  
                   
    Non-GAAP net income per share, diluted              
    Non-GAAP net income $ 571.5     $ 392.0     $ 1,832.9     $ 1,285.6  
    Non-GAAP shares used in diluted net income per share calculations   775.2       772.3       771.9       788.2  
    Non-GAAP net income per share, diluted $ 0.74     $ 0.51     $ 2.37     $ 1.63  
                   
    Reconciliation of non-GAAP net income per share, diluted              
    GAAP net income per share, diluted $ 0.68     $ 0.40     $ 2.26     $ 1.46  
    Add back:              
    Non-GAAP adjustments to net income per share   0.06       0.11       0.11       0.17  
    Non-GAAP net income per share, diluted $ 0.74     $ 0.51     $ 2.37     $ 1.63  

    (a) To exclude a $3.2 million adjustment for a litigation settlement in the three months ended September 30, 2024.
    (b) To exclude a $106.3 million gain on bargain purchase related to our acquisition of Lacework Inc in the three months ended September 30, 2024.
    (c) Non-GAAP financial information is adjusted to an effective tax rate of 17% in the three months and year ended December 31, 2024 and 2023, respectively, on a non-GAAP basis, which differs from the GAAP effective tax rate.
    (d) To exclude an $8.0 million non-cash charge of impairment on our equity method investment in Linksys.

    Reconciliation of net cash provided by operating activities to free cash flow

      Three Months Ended   Year Ended
      December 31,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
    Net cash provided by operating activities $ 477.6     $ 191.7     $ 2,258.1     $ 1,935.5  
    Less: Purchases of property and equipment   (97.6 )     (26.9 )     (378.9 )     (204.1 )
    Free cash flow $ 380.0     $ 164.8     $ 1,879.2     $ 1,731.4  
    Net cash used in investing activities $ (79.9 )   $ (71.6 )   $ (727.4 )   $ (649.3 )
    Net cash used in financing activities $ (8.8 )   $ (910.1 )   $ (50.1 )   $ (1,570.4 )


    Reconciliation of total revenue to total billings

      Three Months Ended   Year Ended
      December 31,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
    Total revenue $ 1,660.1     $ 1,415.1     $ 5,955.8     $ 5,304.8  
    Add: Change in deferred revenue   349.2       449.7       625.9       1,094.7  
    Less: Deferred revenue balance acquired in business acquisitions   (6.8 )           (49.2 )      
    Total billings $ 2,002.5     $ 1,864.8     $ 6,532.5     $ 6,399.5  
    Investor Contact: Media Contact:
       
    Aaron Ovadia Michelle Zimmermann
    Fortinet, Inc. Fortinet, Inc.
    408-235-7700 408-235-7700
    investors@fortinet.com pr@fortinet.com

    The MIL Network

  • MIL-OSI: Microchip Technology Announces Financial Results for Third Quarter of Fiscal Year 2025

    Source: GlobeNewswire (MIL-OSI)

    • Net sales of $1.026 billion, down 11.8% sequentially and down 41.9% from the year ago quarter. Our updated guidance provided on December 2, 2024 was net sales of $1.025 billion.
    • On a GAAP basis: gross profit of 54.7%; operating income of $30.9 million and 3.0% of net sales; net loss of $53.6 million; and loss of $0.10 per diluted share. Our guidance provided on November 5, 2024 was for GAAP earnings (loss) per share of $(0.04) to $0.03 per diluted share.
    • On a Non-GAAP basis: gross profit of 55.4%; operating income of $210.7 million and 20.5% of net sales; net income of $107.3 million; and EPS of $0.20 per diluted share. Our updated guidance provided on December 2, 2024 was for Non-GAAP EPS of $0.25 per diluted share.
    • Returned approximately $244.6 million to stockholders in the December quarter through dividends.
    • Quarterly dividend declared today for the March quarter of 45.5 cents per share, an increase of 1.1% from the year ago quarter.

    CHANDLER, Ariz., Feb. 06, 2025 (GLOBE NEWSWIRE) — (NASDAQ: MCHP) – Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today reported results for the three months ended December 31, 2024, as summarized in the table below.

      Three Months Ended December 31, 2024(1)
    Net sales $1,026.0      
      GAAP % Non-GAAP(2) %
    Gross profit $561.4 54.7% $568.8 55.4%
    Operating income $30.9 3.0% $210.7 20.5%
    Other expense $(77.0)   $(76.7)  
    Income tax provision $7.5   $26.7  
    Net (loss) income $(53.6) (5.2)% $107.3 10.5%
    Net (loss) income per diluted share $(0.10)   $0.20  

    (1) In millions, except per share amounts and percentages of net sales.
    (2) See the “Use of Non-GAAP Financial Measures” section of this release.

    Net sales for the third quarter of fiscal 2025 were $1.026 billion, down 41.9% from net sales of $1.766 billion in the prior year’s third fiscal quarter.

    GAAP net loss for the third quarter of fiscal 2025 was $53.6 million, or $0.10 per diluted share, down from GAAP net income of $419.2 million, or $0.77 per diluted share, in the prior year’s third fiscal quarter. For the third quarters of fiscal 2025 and fiscal 2024, GAAP results were adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions.

    Non-GAAP net income for the third quarter of fiscal 2025 was $107.3 million, or $0.20 per diluted share, down from non-GAAP net income of $592.7 million, or $1.08 per diluted share, in the prior year’s third fiscal quarter. For the third quarters of fiscal 2025 and fiscal 2024, our non-GAAP results exclude the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, severance, and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, and losses on the settlement of debt. For the third quarters of fiscal 2025 and fiscal 2024, our non-GAAP income tax expense is presented based on projected cash taxes for the applicable fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act. A reconciliation of our non-GAAP and GAAP results is included in this press release.

    Microchip announced today that its Board of Directors declared a quarterly cash dividend on its common stock of 45.5 cents per share, up 1.1% from the year ago quarter. The quarterly dividend is payable on March 7, 2025 to stockholders of record on February 24, 2025.

    “Our December quarter performance reflects the need for the decisive steps we are taking to realign our business, as revenue declined to $1.026 billion and inventory levels reached 266 days,” said Steve Sanghi, Microchip’s CEO and President. “Since returning as CEO in November, we have already initiated several key actions, including restructuring our manufacturing footprint, adjusting our channel strategy and intensifying our customer engagement. Our initial assessment indicates clear areas for operational enhancement, and we are taking a methodical yet urgent approach to evaluating all aspects of our business and implementing necessary changes to strengthen our competitive position.”

    Eric Bjornholt, Microchip’s Chief Financial Officer, said, “We are executing on multiple operational initiatives to enhance our financial performance. Our focus remains on returning to premium profitability levels that have historically differentiated Microchip, supported by our diversified business model. While navigating the current cycle, we continue to focus on inventory management while maintaining our commitment to shareholder returns.”

    Rich Simoncic, Microchip’s Chief Operating Officer, said, “Our comprehensive technology platform is driving innovation across critical markets, with our new RISC-V processors and expanded connectivity solutions demonstrating strong momentum in industrial, automotive, and aerospace applications. By delivering advanced AI capabilities, enhanced networking, and robust security technologies, we believe we are well-positioned to meet the evolving needs of our customers in increasingly complex technological environments.”

    Mr. Sanghi concluded, “While we have seen substantial inventory destocking at our customers and channel partners, we believe the correction cycle is still not completed. Our March quarter bookings are running at a higher rate than December, though overall levels remain low. With net sales guidance of $920.0 million to $1.000 billion for our March quarter, we maintain a cautious but focused approach and look forward to providing a comprehensive update during our business update call on March 3, 2025.”

    Fourth Quarter Fiscal Year 2025 Outlook:

    The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

      Microchip Consolidated Guidance
    Net Sales $920.0 million to $1.000 billion    
      GAAP(5) Non-GAAP Adjustments(1) Non-GAAP(1)
    Gross Profit 51.2% to 53.1% $7.8 to $8.8 million 52.0% to 54.0%
    Operating Expenses(2) 56.1% to 60.0% $179.7 to $183.7 million 37.7% to 40.5%
    Operating Income (loss) (8.9)% to (2.9)% $187.5 to $192.5 million 11.5% to 16.3%
    Other Expense, net $69.7 to $71.3 million $(0.2) to $0.2 million $69.5 to $71.5 million
    Income Tax (Benefit) Provision $(24.5) to $(19.8) million(3) $29.5 to $33.4 million $5.0 to $13.6 million(4)
    Net Income (loss) $(128.5) to $(79.4) million $157.8 to $159.3 million $29.3 to $79.9 million
    Diluted Common Shares Outstanding Approximately 538.4 million shares   Approximately 541.5 to 542.5 million shares
    Earnings (loss) per Diluted Share $(0.24) to $(0.14) $0.29 $0.05 to $0.15

    (1) See the “Use of Non-GAAP Financial Measures” section of this release for information regarding our non-GAAP guidance.
    (2) We are not able to estimate the amount of certain Special Charges and Other, net that may be incurred during the quarter ending March 31, 2025. Therefore, our estimate of GAAP operating expenses excludes certain amounts that may be recognized as Special Charges and Other, net in the quarter ending March 31, 2025.
    (3) The forecast for GAAP tax expense excludes any unexpected tax events that may occur during the quarter, as these amounts cannot be forecasted.
    (4) Represents the expected cash tax rate for fiscal 2025, excluding any transition tax payments associated with the Tax Cuts and Jobs Act.
    (5) Our GAAP guidance excludes the impact of any potential charges related to our ongoing evaluation of restructuring activities.

    Capital expenditures for the quarter ending March 31, 2025 are expected to be about $23 million. Capital expenditures for all of fiscal 2025 are expected to be about $135 million. Consistent with the slowing macroeconomic environment in fiscal 2025, we have paused most of our factory expansion actions and reduced our planned capital investments through fiscal 2026. However, we are adding capital equipment to selectively expand our production capacity and add research and development equipment.

    Under the GAAP revenue recognition standard, we are required to recognize revenue when control of the product changes from us to a customer or distributor. We focus our sales and marketing efforts on creating demand for our products in the end markets we serve and not on moving inventory into our distribution network. We also manage our manufacturing and supply chain operations, including our distributor relationships, towards the goal of having our products available at the time and location the end customer desires.

    Use of Non-GAAP Financial Measures: Our non-GAAP adjustments, where applicable, include the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, severance, and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, and losses on the settlement of debt. For the third quarters of fiscal 2025 and fiscal 2024, our non-GAAP income tax expense is presented based on projected cash taxes for the fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act.

    We are required to estimate the cost of certain forms of share-based compensation, including employee stock options, restricted stock units, and our employee stock purchase plan, and to record a commensurate expense in our income statement. Share-based compensation expense is a non-cash expense that varies in amount from period to period and is affected by the price of our stock at the date of grant. The price of our stock is affected by market forces that are difficult to predict and are not within the control of management. Our other non-GAAP adjustments are either non-cash expenses, unusual or infrequent items, or other expenses related to transactions. Management excludes all of these items from its internal operating forecasts and models.

    We are using non-GAAP operating expenses in dollars, including non-GAAP research and development expenses and non-GAAP selling, general and administrative expenses, non-GAAP other expense, net, and non-GAAP income tax rate, which exclude the items noted above, as applicable, to permit additional analysis of our performance.

    Management believes these non-GAAP measures are useful to investors because they enhance the understanding of our historical financial performance and comparability between periods. Many of our investors have requested that we disclose this non-GAAP information because they believe it is useful in understanding our performance as it excludes non-cash and other charges that many investors feel may obscure our underlying operating results. Management uses non-GAAP measures to manage and assess the profitability of our business and for compensation purposes. We also use our non-GAAP results when developing and monitoring our budgets and spending. Our determination of these non-GAAP measures might not be the same as similarly titled measures used by other companies, and it should not be construed as a substitute for amounts determined in accordance with GAAP. There are limitations associated with using these non-GAAP measures, including that they exclude financial information that some may consider important in evaluating our performance. Management compensates for this by presenting information on both a GAAP and non-GAAP basis for investors and providing reconciliations of the GAAP and non-GAAP results.

    Generally, gross profit fluctuates over time, driven primarily by the mix of products sold and licensing revenue; variances in manufacturing yields; fixed cost absorption; wafer fab loading levels; costs of wafers from foundries; inventory reserves; pricing pressures in our non-proprietary product lines; and competitive and economic conditions. Operating expenses fluctuate over time, primarily due to net sales and profit levels.

    Diluted Common Shares Outstanding can vary for, among other things, the trading price of our common stock, the exercise of options or vesting of restricted stock units, the potential for incremental dilutive shares from our convertible debentures (additional information regarding our share count is available in the investor relations section of our website under the heading “Supplemental Information”), and repurchases or issuances of shares of our common stock. The diluted common shares outstanding presented in the guidance table above assumes an average Microchip stock price in the March 2025 quarter between $55 and $65 per share (however, we make no prediction as to what our actual share price will be for such period or any other period and we cannot estimate what our stock option exercise activity will be during the quarter).

     
    MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions, except per share amounts; unaudited)
     
      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Net sales $ 1,026.0     $ 1,765.7     $ 3,431.1     $ 6,308.6  
    Cost of sales   464.6       645.7       1,464.3       2,102.8  
    Gross profit   561.4       1,120.0       1,966.8       4,205.8  
                   
    Research and development   246.2       266.0       728.6       857.1  
    Selling, general and administrative   158.2       172.2       465.7       572.4  
    Amortization of acquired intangible assets   122.6       151.3       368.3       454.2  
    Special charges and other, net   3.5       1.1       7.6       4.6  
    Operating expenses   530.5       590.6       1,570.2       1,888.3  
                   
    Operating income   30.9       529.4       396.6       2,317.5  
                   
    Other expense, net   (77.0 )     (45.1 )     (189.4 )     (151.3 )
    (Loss) income before income taxes   (46.1 )     484.3       207.2       2,166.2  
    Income tax provision   7.5       65.1       53.1       414.0  
    Net (loss) income $ (53.6 )   $ 419.2     $ 154.1     $ 1,752.2  
                   
    Basic net (loss) income per common share $ (0.10 )   $ 0.78     $ 0.29     $ 3.23  
    Diluted net (loss) income per common share $ (0.10 )   $ 0.77     $ 0.28     $ 3.19  
                   
    Basic common shares outstanding   537.4       540.8       536.9       543.0  
    Diluted common shares outstanding   537.4       546.5       542.1       549.0  
     
    MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in millions; unaudited)
     
    ASSETS
      December 31,   March 31,
        2024       2024  
    Cash and short-term investments $ 586.0     $ 319.7  
    Accounts receivable, net   857.2       1,143.7  
    Inventories   1,356.3       1,316.0  
    Other current assets   196.3       233.6  
    Total current assets   2,995.8       3,013.0  
           
    Property, plant and equipment, net   1,152.1       1,194.6  
    Other assets   11,484.3       11,665.6  
    Total assets $ 15,632.2     $ 15,873.2  
           
    LIABILITIES AND STOCKHOLDERS’ EQUITY
           
    Accounts payable and accrued liabilities $ 1,330.3     $ 1,520.0  
    Current portion of long-term debt         999.4  
    Total current liabilities   1,330.3       2,519.4  
           
    Long-term debt   6,749.5       5,000.4  
    Long-term income tax payable   598.7       649.2  
    Long-term deferred tax liability   22.9       28.8  
    Other long-term liabilities   899.3       1,017.6  
           
    Stockholders’ equity   6,031.5       6,657.8  
    Total liabilities and stockholders’ equity $ 15,632.2     $ 15,873.2  


    MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

    RECONCILIATION OF GAAP TO NON-GAAP MEASURES
    (in millions, except per share amounts and percentages; unaudited)

    RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Gross profit, as reported $ 561.4     $ 1,120.0     $ 1,966.8     $ 4,205.8  
    Share-based compensation expense   7.4       6.0       18.3       20.2  
    Cybersecurity incident expenses               20.1        
    Non-GAAP gross profit $ 568.8     $ 1,126.0     $ 2,005.2     $ 4,226.0  
    GAAP gross profit percentage   54.7 %     63.4 %     57.3 %     66.7 %
    Non-GAAP gross profit percentage   55.4 %     63.8 %     58.4 %     67.0 %

    RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Research and development expenses, as reported $ 246.2     $ 266.0     $ 728.6     $ 857.1  
    Share-based compensation expense   (28.8 )     (24.4 )     (79.0 )     (71.0 )
    Other adjustments         (0.1 )           (0.5 )
    Non-GAAP research and development expenses $ 217.4     $ 241.5     $ 649.6     $ 785.6  
    GAAP research and development expenses as a percentage of net sales   24.0 %     15.1 %     21.2 %     13.6 %
    Non-GAAP research and development expenses as a percentage of net sales   21.2 %     13.7 %     18.9 %     12.5 %

    RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Selling, general and administrative expenses, as reported $ 158.2     $ 172.2     $ 465.7     $ 572.4  
    Share-based compensation expense   (13.2 )     (14.4 )     (42.4 )     (43.5 )
    Cybersecurity incident expenses               (1.3 )      
    Other adjustments   (3.9 )     (1.0 )     (7.3 )     (0.5 )
    Professional services associated with certain legal matters   (0.4 )     (0.4 )     (1.1 )     (1.2 )
    Non-GAAP selling, general and administrative expenses $ 140.7     $ 156.4     $ 413.6     $ 527.2  
    GAAP selling, general and administrative expenses as a percentage of net sales   15.4 %     9.8 %     13.6 %     9.1 %
    Non-GAAP selling, general and administrative expenses as a percentage of net sales   13.7 %     8.9 %     12.1 %     8.4 %

    RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Operating expenses, as reported $ 530.5     $ 590.6     $ 1,570.2     $ 1,888.3  
    Share-based compensation expense   (42.0 )     (38.8 )     (121.4 )     (114.5 )
    Cybersecurity incident expenses               (1.3 )      
    Other adjustments   (3.9 )     (1.1 )     (7.3 )     (1.0 )
    Professional services associated with certain legal matters   (0.4 )     (0.4 )     (1.1 )     (1.2 )
    Amortization of acquired intangible assets (1)   (122.6 )     (151.3 )     (368.3 )     (454.2 )
    Special charges and other, net   (3.5 )     (1.1 )     (7.6 )     (4.6 )
    Non-GAAP operating expenses $ 358.1     $ 397.9     $ 1,063.2     $ 1,312.8  
    GAAP operating expenses as a percentage of net sales   51.7 %     33.4 %     45.8 %     29.9 %
    Non-GAAP operating expenses as a percentage of net sales   34.9 %     22.5 %     31.0 %     20.8 %

    (1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations. Such charges are excluded for purposes of calculating certain non-GAAP measures.

    RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Operating income, as reported $ 30.9     $ 529.4     $ 396.6     $ 2,317.5  
    Share-based compensation expense   49.4       44.8       139.7       134.7  
    Cybersecurity incident expenses               21.4        
    Other adjustments   3.9       1.1       7.3       1.0  
    Professional services associated with certain legal matters   0.4       0.4       1.1       1.2  
    Amortization of acquired intangible assets (1)   122.6       151.3       368.3       454.2  
    Special charges and other, net   3.5       1.1       7.6       4.6  
    Non-GAAP operating income $ 210.7     $ 728.1     $ 942.0     $ 2,913.2  
    GAAP operating income as a percentage of net sales   3.0 %     30.0 %     11.6 %     36.7 %
    Non-GAAP operating income as a percentage of net sales   20.5 %     41.2 %     27.5 %     46.2 %

    (1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations. Such charges are excluded for purposes of calculating certain non-GAAP measures. The use of acquired intangible assets contributed to our revenues earned during the periods presented.

    RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Other expense, net, as reported $ (77.0 )   $ (45.1 )   $ (189.4 )   $ (151.3 )
    Loss on settlement of debt   0.3             0.3       12.2  
    Loss on available-for-sale investments               1.8        
    Non-GAAP other expense, net $ (76.7 )   $ (45.1 )   $ (187.3 )   $ (139.1 )
    GAAP other expense, net, as a percentage of net sales (7.5 )%   (2.6 )%   (5.5 )%   (2.4 )%
    Non-GAAP other expense, net, as a percentage of net sales (7.5 )%   (2.6 )%   (5.5 )%   (2.2 )%

    RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP INCOME TAX PROVISION

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Income tax provision as reported $ 7.5     $ 65.1     $ 53.1     $ 414.0  
    Income tax rate, as reported (16.3 )%     13.4 %     25.6 %     19.1 %
    Other non-GAAP tax adjustment   19.2       25.2       54.2       (27.2 )
    Non-GAAP income tax provision $ 26.7     $ 90.3     $ 107.3     $ 386.8  
    Non-GAAP income tax rate   19.9 %     13.2 %     14.2 %     13.9 %

    RECONCILIATION OF GAAP NET (LOSS) INCOME AND GAAP DILUTED NET (LOSS) INCOME PER COMMON SHARE TO NON-GAAP NET INCOME AND NON-GAAP DILUTED NET INCOME PER COMMON SHARE

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Net (loss) income, as reported $ (53.6 )   $ 419.2     $ 154.1     $ 1,752.2  
    Share-based compensation expense   49.4       44.8       139.7       134.7  
    Cybersecurity incident expenses               21.4        
    Other adjustments   3.9       1.1       7.3       1.0  
    Professional services associated with certain legal matters   0.4       0.4       1.1       1.2  
    Amortization of acquired intangible assets   122.6       151.3       368.3       454.2  
    Special charges and other, net   3.5       1.1       7.6       4.6  
    Loss on settlement of debt   0.3             0.3       12.2  
    Loss on available-for-sale investments               1.8        
    Other non-GAAP tax adjustment   (19.2 )     (25.2 )     (54.2 )     27.2  
    Non-GAAP net income $ 107.3     $ 592.7     $ 647.4     $ 2,387.3  
    GAAP net (loss) income as a percentage of net sales (5.2 )%     23.7 %     4.5 %     27.8 %
    Non-GAAP net income as a percentage of net sales   10.5 %     33.6 %     18.9 %     37.8 %
    Diluted net (loss) income per common share, as reported $ (0.10 )   $ 0.77     $ 0.28     $ 3.19  
    Non-GAAP diluted net income per common share $ 0.20     $ 1.08     $ 1.19     $ 4.35  
    Diluted common shares outstanding, as reported   537.4       546.5       542.1       549.0  
    Diluted common shares outstanding non-GAAP   541.6       546.5       542.1       549.0  

    RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE CASH FLOW

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    GAAP cash flow from operations, as reported $ 271.5     $ 853.3     $ 692.2     $ 2,462.7  
    Capital expenditures   (18.1 )     (59.5 )     (111.8 )     (245.0 )
    Free cash flow $ 253.4     $ 793.8     $ 580.4     $ 2,217.7  
    GAAP cash flow from operations as a percentage of net sales   26.5 %     48.3 %     20.2 %     39.0 %
    Free cash flow as a percentage of net sales   24.7 %     45.0 %     16.9 %     35.2 %

    Microchip will host a conference call today, February 6, 2025 at 5:00 p.m. (Eastern Time) to discuss this release. This call will be simulcast over the Internet at www.microchip.com. The webcast will be available for replay until February 27, 2025.

    A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time) on February 6, 2025 and will remain available until 5:00 p.m. (Eastern Time) on February 27, 2025. Interested parties may listen to the replay by dialing 201-612-7415/877-660-6853 and entering access code 13750989.

    Cautionary Statement:
    The statements in this release relating to the decisive steps we are taking to realign our business, restructuring our manufacturing footprint, adjusting our channel strategy and intensifying our customer engagement, clear areas for operational enhancements, taking a methodical yet urgent approach to evaluating all aspects of our business and implementing necessary changes to strengthen our competitive position, executing on multiple operational initiatives to enhance our financial performance, that our focus remains on returning to premium profitability levels that have historically differentiated Microchip, supported by our diversified business model, that we continue to focus on inventory management while maintaining our commitment to shareholder returns, that our comprehensive technology platform is driving innovation across critical markets, with our new RISC-V processors and expanded connectivity solutions demonstrating strong momentum in industrial, automotive, and aerospace applications, that we believe we are well-positioned to meet the evolving needs of our customers in increasingly complex technological environments, that we believe the correction cycle is still not completed, our net sales guidance of $920.0 million to $1.000 billion for our March 2025 quarter, that we maintain a cautious but focused approach, our fourth quarter fiscal 2025 guidance for net sales and GAAP and non-GAAP gross profit, operating expenses, operating income (loss), other expense, net, income tax (benefit) provision, net income (loss), diluted common shares outstanding, earnings (loss) per diluted share, capital expenditures for the March 2025 quarter and for all of fiscal 2025, adding capital equipment to selectively expand our production capacity and add research and development equipment, our belief that non-GAAP measures are useful to investors and our assumed average stock price in the March 2025 quarter are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: any continued uncertainty, fluctuations or weakness in the U.S. and world economies (including China and Europe) due to changes in interest rates or high inflation, actions taken or which may be taken by the Trump administration or the new U.S. Congress, monetary policy, political, geopolitical, trade or other issues in the U.S. or internationally (including the military conflicts in Ukraine-Russia and the Middle East), further changes in demand or market acceptance of our products and the products of our customers and our ability to respond to any increases or decreases in market demand or customer

    requests to reschedule or cancel orders; the mix of inventory we hold, our ability to satisfy any short-term orders from our inventory and our ability to effectively manage our inventory levels; foreign currency effects on our business; changes in utilization of our manufacturing capacity and our ability to effectively manage our production levels to meet any increases or decreases in market demand or any customer requests to reschedule or cancel orders; the impact of inflation on our business; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; our ability to realize the expected benefits of our long-term supply assurance program; changes or fluctuations in customer order patterns and seasonality; our ability to effectively manage our supply of wafers from third party wafer foundries to meet any decreases or increases in our needs and the cost of such wafers, our ability to obtain additional capacity from our suppliers to increase production to meet any future increases in market demand; our ability to successfully integrate the operations and employees, retain key employees and customers and otherwise realize the expected synergies and benefits of our acquisitions; the impact of any future significant acquisitions or strategic transactions we may make; the costs and outcome of any current or future litigation or other matters involving our acquisitions (including the acquired business, intellectual property, customers, or other issues); the costs and outcome of any current or future tax audit or investigation regarding our business or our acquired businesses; the impact that the CHIPS Act will have on increasing manufacturing capacity in our industry by providing incentives for us, our competitors and foundries to build new wafer manufacturing facilities or expand existing facilities; the amount and timing of any incentives we may receive under the CHIPS Act, the impact of current and future changes in U.S. corporate tax laws (including the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017); fluctuations in our stock price and trading volume which could impact the number of shares we acquire under our share repurchase program and the timing of such repurchases; disruptions in our business or the businesses of our customers or suppliers due to natural disasters (including any floods in Thailand), terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally.

    For a detailed discussion of these and other risk factors, please refer to Microchip’s filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip’s website (www.microchip.com) or the SEC’s website (www.sec.gov) or from commercial document retrieval services.

    Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this February 6, 2025 press release, or to reflect the occurrence of unanticipated events.

    About Microchip:

    Microchip Technology Incorporated is a leading provider of smart, connected and secure embedded control solutions. Its easy-to-use development tools and comprehensive product portfolio enable customers to create optimal designs, which reduce risk while lowering total system cost and time to market. Our solutions serve approximately 112,000 customers across the industrial, automotive, consumer, aerospace and defense, communications and computing markets. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at www.microchip.com.

    Note: The Microchip name and logo are registered trademarks of Microchip Technology Incorporated in the U.S.A. and other countries. All other trademarks mentioned herein are the property of their respective companies.

    INVESTOR RELATIONS CONTACT:

    Sajid Daudi — Head of investor Relations….. (480) 792-7385

    The MIL Network

  • MIL-OSI: ESCO Reports First Quarter Fiscal 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    St. Louis, Feb. 06, 2025 (GLOBE NEWSWIRE) — ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the first quarter ended December 31, 2024 (Q1 2025).

    Operating Highlights

    • Q1 2025 Sales increased $28.7 million (13.2 percent) to $247.0 million compared to $218.3 million in Q1 2024.
    • Q1 2025 Entered Orders were $275.0 million for a book-to-bill ratio of 1.11x, resulting in record backlog of $907 million.
    • Q1 2025 GAAP EPS increased 54 percent to $0.91 per share compared to $0.59 per share in Q1 2024.
    • Q1 2025 Adjusted EPS as defined in prior guidance increased 48 percent to $0.92 per share compared to $0.62 per share in Q1 2024.
    • Beginning in Q1 2025 we are excluding acquisition related amortization (which was $0.15 per share in Q1 2025) from our Adjusted EPS calculation. Q1 2025 Adjusted EPS excluding acquisition related amortization increased 41 percent to $1.07 per share compared to $0.76 per share in Q1 2024.  
    • Net cash provided by operating activities was $34 million in Q1 2025, an increase of $25 million compared to the prior year period, as cash flow was positively impacted by higher net earnings and favorable working capital impacts.

    Bryan Sayler, Chief Executive Officer and President, commented, “Our fiscal year got off to an outstanding start as we delivered 13 percent top line growth, over 200 basis points of Adjusted EBITDA margin expansion, and a 41 percent increase in Adjusted EPS compared to the prior year. All three segments delivered solid revenue growth, highlighted by notable strength across our Navy, commercial aerospace and utility end-markets. It was also great to see our Test business deliver a solid quarter with improving order flow, double digit revenue growth, and over 500 basis points of margin expansion.

    “The ESCO team continues to build upon our strong position in attractive markets to increase value across the enterprise. Overall, it was a great way to start the year, with continuing momentum across our end markets giving us the confidence to raise our full year earnings guidance.”  

    Segment Performance

    Aerospace & Defense (A&D)

    • Sales increased $19.6 million (21 percent) to $114.3 million in Q1 2025 from $94.7 million in Q1 2024. The Q1 increase was driven by strength in Navy and commercial aerospace, partially offset by lower defense aerospace.
    • Q1 2025 EBIT and Adjusted EBIT both increased $4.9 million to $21.6 million (18.9 percent margin) from $16.7 million (17.6 percent margin) in Q1 2024. Margin improvement was driven by leverage on higher volume and price increases, partially offset by inflationary pressures and mix.
    • Entered Orders decreased $51 million (30 percent) to $121 million in Q1 2025 compared to $172 million in Q1 2024.   The decrease in orders was primarily driven by large Navy orders for Virginia Class Block V surface hull tiles and Block VI long lead material procurement for the Light-Weight Wide Aperture Array (LWWAA) in Q1 2024, partially offset by higher Q1 2025 Navy ejection valve and spares orders.   Orders in the quarter resulted in a segment book-to-bill of 1.06x and record ending backlog of $607 million.

    Utility Solutions Group (USG)

    • Sales increased $3.7 million (4 percent) to $86.7 million in Q1 2025 from $83.0 million in Q1 2024. Doble’s sales increased by $7.9 million (12 percent) driven by a strong quarter for offline and protection testing products and services. NRG sales decreased $4.2 million (22 percent) due to moderation in renewable energy projects in the quarter.
    • EBIT increased $2.9 million in Q1 2025 to $20.5 million from $17.6 million in Q1 2024. Adjusted EBIT increased $2.8 million to $20.5 million (23.6 percent margin) from $17.7 million (21.4 percent margin) in Q1 2024.   Margin was favorably impacted by leverage on higher volume, price increases, and mix, partially offset by inflationary pressures.  
    • Entered Orders increased $13 million (16 percent) to $90 million in Q1 2025. Doble orders increased by $10 million (15 percent) on strength across their product portfolio and highlighted by a $4.3 million order for offline test equipment at Phenix. NRG orders increased by $3 million in the quarter.   The segment book-to-bill was 1.03x in the quarter and resulted in an ending backlog of $123 million.

    RF Test & Measurement (Test)

    • Sales increased $5.5 million (13 percent) to $46.1 million in Q1 2025 from $40.6 million in Q1 2024. Sales growth primarily related to higher U.S. shielding, Test and Measurement in EMEA, and MPE filter sales.
    • EBIT increased $2.6 million in Q1 2025 to $4.4 million from $1.8 million in Q1 2024. Adjusted EBIT increased $2.8 million in Q1 2025 to $4.9 million (10.6 percent margin) from $2.1 million (5.1 percent margin) in Q1 2024. Margin was favorably impacted by leverage on higher volume, price increases, and cost reduction efforts, partially offset by inflationary pressures and mix.  
    • Entered Orders increased $20 million (43 percent) to $65 million in Q1 2025. The increase was driven by a strong quarter for EMC Test & Measurement, A&D, and medical and industrial shielding orders. The segment book-to-bill was 1.41x in the quarter and resulted in ending backlog of $177 million.

    Business Outlook – 2025
    Beginning in Q1 2025, acquisition related amortization will be excluded from our Adjusted Earnings calculation. Our current assessment of FY 2025 acquisition related amortization does not include the impact of the pending SM&P acquisition. The initial fiscal 2025 guidance issued in our November press release is revised as follows:

        Guidance Range
    November FY 2025 Adjusted EPS Guidance   $ 4.70   $ 4.90
    Acquisition Related Amortization   $ 0.60   $ 0.60
    Revised November FY 2025 Adjusted EPS Guidance   $ 5.30   $ 5.50

    Due to strong market conditions and continued improvement in operational performance, we are raising our full-year guidance by $0.25 to a range of $5.55 to $5.75 (16 to 21 percent growth over the prior year) from $5.30 to $5.50. This guidance is in line with our initial revenue guidance range of $1.09 to $1.11 billion (6 to 8 percent annual growth).  

        Guidance Range
    Revised November FY 2025 Adjusted EPS Guidance   $ 5.30   $ 5.50
    Guidance Increase   $ 0.25   $ 0.25
    Revised FY 2025 Adjusted EPS Guidance   $ 5.55   $ 5.75

    Management’s current expectation is for Q2 Adjusted EPS in the range of $1.20 to $1.30, which represents 10 to 19 percent growth over the prior year quarter.

        Guidance Range
    Q2 2025 Adjusted EPS Guidance (prior methodology)   $ 1.05   $ 1.15
    Acquisition Related Amortization   $ 0.15   $ 0.15
    Q2 2025 Adjusted EPS Guidance   $ 1.20   $ 1.30

    SM&P Acquisition
    As announced on July 8, 2024, ESCO has agreed to acquire the Signature Management & Power (SM&P) business of Ultra Maritime for a purchase price of $550 million. The closing of the transaction is subject to certain conditions, including the completion of the regulatory approval processes in the United States (US) and the United Kingdom (UK). The US closing conditions have been met. We are in the final stages of the UK government assessment of the transaction and we are optimistic that the assessment will be positively resolved in the near term. Our current expectation would be to close the transaction either in our second or early in our third fiscal quarter. SM&P’s sole source product offerings will add significant scale to the ESCO Navy business, providing increased content on domestic Navy submarine and surface ship programs and expansion into vital UK and AUKUS navy platforms.

    Dividend Payment
    The next quarterly cash dividend of $0.08 per share will be paid on April 17, 2025 to stockholders of record on April 2, 2025.

    Conference Call
    The Company will host a conference call today, February 6, at 4:00 p.m. Central Time, to discuss the Company’s Q1 2025 results. A live audio webcast and an accompanying slide presentation will be available in the Investor Center of ESCO’s website. Participants may also access the webcast using this registration link. For those unable to participate, a webcast replay will be available after the call in the Investor Center of ESCO’s website.

    Forward-Looking Statements
    Statements in this press release regarding Management’s intentions, expectations and guidance for fiscal 2025, including restructuring and cost reduction actions, sales, orders, revenues, margin, earnings, Adjusted EPS, acquisition related amortization, and any other statements which are not strictly historical, are “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. securities laws.

    Investors are cautioned that such statements are only predictions and speak only as of the date of this presentation, and the Company undertakes no duty to update them except as may be required by applicable laws or regulations. The Company’s actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment including but not limited to those described in Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and the following: the timing and outcome, if any, of the Company’s strategic alternatives review of VACCO and its Space business; of the Company’s pending acquisition of SM&P; the impacts of climate change and related regulation of greenhouse gases; the impacts of labor disputes, civil disorder, wars, elections, political changes, tariffs and trade disputes, terrorist activities, cyberattacks or natural disasters on the Company’s operations and those of the Company’s customers and suppliers; disruptions in manufacturing or delivery arrangements due to shortages or unavailability of materials or components or supply chain disruptions; inability to access work sites; the timing and content of future contract awards or customer orders; the timely appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts or orders; weakening of economic conditions in served markets; the success of the Company’s competitors; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties or data breaches; the availability of acquisitions; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; material changes in the costs and availability of certain raw materials; material changes in the cost of credit; changes in laws and regulations including but not limited to changes in accounting standards and taxation; changes in interest, inflation and employment rates; costs relating to environmental matters arising from current or former facilities; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the integration and performance of acquired businesses.

    Non-GAAP Financial Measures
    The financial measures EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS are presented in this press release. The Company defines “EBIT” as earnings before interest and taxes, “EBITDA” as earnings before interest, taxes, depreciation and amortization, “Adjusted EBIT” and “Adjusted EBITDA” as excluding the net impact of the items described in the attached Reconciliation of Non-GAAP Financial Measures, and “Adjusted EPS” as GAAP earnings per share excluding the net impact of the items described and reconciled in the attached Reconciliation of Non-GAAP Financial Measures.

    EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, Management believes EBIT, Adjusted EBIT, EBITDA, and Adjusted EBITDA are useful in assessing the operational profitability of the Company’s business segments because they exclude interest, taxes, depreciation, and amortization, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by Management in determining resource allocations within the Company as well as incentive compensation. The presentation of EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS provides important supplemental information to investors by facilitating comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. The use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.

    About ESCO
    ESCO is a global provider of highly engineered products and solutions serving diverse end-markets. It manufactures filtration and fluid control products for the aviation, Navy, space, and process markets worldwide and composite-based products and solutions for Navy, defense, and industrial customers. ESCO is an industry leader in designing and manufacturing RF test and measurement products and systems; and provides diagnostic instruments, software and services to industrial power users and the electric utility and renewable energy industries. Headquartered in St. Louis, Missouri, ESCO and its subsidiaries have offices and manufacturing facilities worldwide. For more information on ESCO and its subsidiaries, visit the Company’s website at www.escotechnologies.com.
       
       

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES  
    Condensed Consolidated Statements of Operations (Unaudited)  
    (Dollars in thousands, except per share amounts)  
        
              Three Months
    Ended
    December 31,
    2024
      Three Months
    Ended
    December 31,
    2023
     
                     
    Net Sales   $ 247,026     218,314  
    Cost and Expenses:          
      Cost of sales   148,642     134,151  
      Selling, general and administrative expenses   58,784     53,968  
      Amortization of intangible assets   7,993     7,868  
      Interest expense   2,257     2,667  
      Other (income) expenses, net   (591 )   206  
        Total costs and expenses   217,085     198,860  
                     
    Earnings before income taxes   29,941     19,454  
    Income tax expense   6,468     4,285  
                     
        Net earnings $ 23,473     15,169  
                     
        Earnings Per Share (EPS)          
                     
        Diluted – GAAP $ 0.91     0.59  
                     
        Diluted – As Adjusted Basis $ 1.07   (1 ) 0.76 (2 )
                     
        Diluted average common shares O/S:   25,834     25,846  
                     
    (1 ) Q1 2025 Adjusted EPS excludes $0.16 per share of after-tax charges consisting primarily of $0.01 of restructuring charges within the Test segment and acquisition related costs at Corporate and $0.15 of acquisition related amortization.
                     
    (2 ) Q1 2024 Adjusted EPS excludes $0.17 per share of after-tax charges consisting primarily of $0.03 of MPE acquisition inventory step-up and backlog charges and acquisition related costs and $0.14 of acquisition related amortization.

       
       

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
    Condensed Business Segment Information (Unaudited)
    (Dollars in thousands)
       
            GAAP   As Adjusted  
            Q1 2025   Q1 2024   Q1 2025   Q1 2024  
    Net Sales                  
      Aerospace & Defense $ 114,301     94,733     114,301     94,733    
      USG   86,660     82,984     86,660     82,984    
      Test   46,065     40,597     46,065     40,597    
        Totals $ 247,026     218,314     247,026     218,314    
                           
    EBIT                    
      Aerospace & Defense $ 21,596     16,663     21,622     16,663    
      USG   20,489     17,625     20,489     17,745    
      Test   4,422     1,779     4,887     2,052    
      Corporate   (14,309 )   (13,946 )   (9,310 )   (8,600 )  
        Consolidated EBIT   32,198     22,121     37,688     27,860    
        Less: Interest expense   (2,257 )   (2,667 )   (2,257 )   (2,667 )  
        Less: Income tax expense   (6,468 )   (4,285 )   (7,730 )   (5,605 )  
        Net earnings $ 23,473     15,169     27,701     19,588    
                              
    Note 1: Adjusted net earnings of $27.7 million in Q1 2025 exclude $4.2 million (or $0.16 per share) of after-tax charges consisting primarily of restructuring charges within the Test segment and acquisition related costs at Corporate, and acquisition related amortization.
                           
    Note 2: Adjusted net earnings of $19.6 million in Q1 2024 exclude $4.4 million (or $0.17 per share) of after-tax charges consisting primarily of MPE acquisition inventory step-up and backlog charges and acquisition related costs, and acquisition related amortization.
                           
    EBITDA Reconciliation to Net earnings:           Adjusted   Adjusted  
            Q1 2025   Q1 2024   Q1 2025   Q1 2024  
    Consolidated EBITDA $ 46,005     35,573     46,498     36,408    
    Less: Depr & Amort   (13,807 )   (13,452 )   (8,810 )   (8,548 )  
    Consolidated EBIT   32,198     22,121     37,688     27,860    
    Less: Interest expense   (2,257 )   (2,667 )   (2,257 )   (2,667 )  
    Less: Income tax expense   (6,468 )   (4,285 )   (7,730 )   (5,605 )  
    Net earnings $ 23,473     15,169     27,701     19,588    
                           

       
       

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
    Condensed Consolidated Balance Sheets (Unaudited)
    (Dollars in thousands)
       
            December 31,
    2024
      September 30,
    2024
                 
    Assets          
      Cash and cash equivalents $ 71,284   65,963
      Accounts receivable, net   202,661   240,680
      Contract assets   131,404   130,534
      Inventories   219,383   209,164
      Other current assets   20,779   22,308
        Total current assets   645,511   668,649
      Property, plant and equipment, net   168,468   170,596
      Intangible assets, net   396,302   407,602
      Goodwill   532,312   539,899
      Operating lease assets   38,710   37,744
      Other assets   13,761   14,130
          $ 1,795,064   1,838,620
                 
    Liabilities and Shareholders’ Equity        
      Current maturities of long-term debt $ 20,000   20,000
      Accounts payable   75,881   98,371
      Contract liabilities   129,737   124,845
      Other current liabilities   90,491   106,638
        Total current liabilities   316,109   349,854
      Deferred tax liabilities   75,520   75,333
      Non-current operating lease liabilities   36,400   34,810
      Other liabilities   38,102   39,273
      Long-term debt   92,000   102,000
      Shareholders’ equity   1,236,933   1,237,350
          $ 1,795,064   1,838,620

       
       

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
    Consolidated Statements of Cash Flows
    (Dollars in thousands)
           
        Three Months
    Ended
    December 31,
    2024
      Three Months
    Ended
    December 31,
    2023
    Cash flows from operating activities:        
    Net earnings $ 23,473     15,169  
    Adjustments to reconcile net earnings to net cash        
    provided by operating activities:        
    Depreciation and amortization   13,807     13,452  
    Stock compensation expense   2,524     2,180  
    Changes in assets and liabilities   (7,151 )   (22,539 )
    Effect of deferred taxes   1,521     484  
    Net cash provided by operating activities   34,174     8,746  
             
    Cash flows from investing activities:        
    Acquisition of business, net of cash acquired       (56,179 )
    Capital expenditures   (5,208 )   (7,848 )
    Additions to capitalized software   (2,587 )   (2,942 )
    Net cash used by investing activities   (7,795 )   (66,969 )
             
    Cash flows from financing activities:        
    Proceeds from long-term debt   42,000     99,000  
    Principal payments on long-term debt and short-term borrowings   (52,000 )   (29,000 )
    Dividends paid   (2,064 )   (2,064 )
    Purchases of common stock into treasury        
    Other   (6,031 )   (1,432 )
    Net cash (used) provided by financing activities   (18,095 )   66,504  
             
    Effect of exchange rate changes on cash and cash equivalents   (2,963 )   1,249  
             
    Net increase in cash and cash equivalents   5,321     9,530  
    Cash and cash equivalents, beginning of period   65,963     41,866  
    Cash and cash equivalents, end of period $ 71,284     51,396  

       
       

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
    Other Selected Financial Data (Unaudited)
    (Dollars in thousands)
       
    Backlog And Entered Orders – Q1 2025   A&D   USG   Test   Total
      Beginning Backlog – 10/1/24 $ 600,382     119,943     158,644     878,969  
      Entered Orders   120,606     89,574     64,825     275,005  
      Sales     (114,301 )   (86,660 )   (46,065 )   (247,026 )
      Ending Backlog – 12/31/24 $ 606,687     122,857     177,404     906,948  
                         

         
      

    ESCO TECHNOLOGIES INC. AND SUBSIDIARIES    
    Reconciliation of Non-GAAP Financial Measures (Unaudited)    
               
    EPS – Adjusted Basis Reconciliation – Q1 2025        
      EPS – GAAP Basis – Q1 2025 $ 0.91    
      Adjustments (defined below)   0.16    
      EPS – As Adjusted Basis – Q1 2025 $ 1.07    
               
      Adjustments exclude $0.16 per share consisting primarily of $0.01 of restructuring        
      charges within the Test segment and acquisition related costs at Corporate and        
      $0.15 of acquisition related amortization.        
      The $0.16 of EPS adjustments per share consists of $5,490K of pre-tax charges        
      offset by $1,262K of tax benefit for net impact of $4,228K.        
               
    EPS – Adjusted Basis Reconciliation – Q1 2024        
      EPS – GAAP Basis – Q1 2024 $ 0.59    
      Adjustments (defined below)   0.17    
      EPS – As Adjusted Basis – Q1 2024 $ 0.76    
               
      Adjustments exclude $0.17 per share consisting primarily of $0.03 of MPE        
      acquisition inventory step-up and backlog charges and acquisition related costs and        
      $0.14 of acquisition related amortization.        
      The $0.17 of EPS adjustments per share consists of $5,739K of pre-tax charges        
      offset by $1,320K of tax benefit for net impact of $4,419K.        
               
    EPS – Adjusted Basis Reconciliation – Q2 2025 Guidance   Low   High
      EPS – GAAP Basis – Q2 2025 $ 1.05   1.15
      Adjustments (defined below)   0.15   0.15
      EPS – As Adjusted Basis – Q2 2025 $ 1.20   1.30
               
      Adjustments exclude an estimated $0.15 of acquisition related amortization.        
      The estimated $0.15 of EPS adjustment per share consists of $5.0 million of pre-tax charges    
      offset by $1.15 million of tax benefit for net impact of $3.85 million.        
               
    EPS – Adjusted Basis Reconciliation – FY 2025 Guidance   Low   High
      EPS – GAAP Basis – FY 2025 $ 4.94   5.14
      Adjustments (defined below)   0.61   0.61
      EPS – As Adjusted Basis – FY 2025 $ 5.55   5.75
               
      Adjustments exclude $0.61 per share consisting primarily of $0.01 of restructuring charges within    
      the Test segment and acquisition related costs at Corporate and an estimated $0.60 of acquisition    
      related amortization. The estimated $0.61 of EPS adjustments per share consists of $20.5    
      million of pre-tax charges offset by $4.7 million of tax benefits for net impact of $15.8 million.    

       
    SOURCE ESCO Technologies Inc.
    Kate Lowrey, Vice President of Investor Relations, (314) 213-7277
       

    The MIL Network

  • MIL-OSI USA: Rosen Introduces Bill to Make More Federal Lands Available for Housing Development, Protect Public Lands in Washoe County

    US Senate News:

    Source: United States Senator Jacky Rosen (D-NV)

    The Washoe County Lands Bill Would Protect Public Lands, Support Tribal Communities, Allow For Responsible Development, And Create New Opportunities To Lower Housing Costs
    WASHINGTON, D.C. – Today, U.S. Senator Jacky Rosen (D-NV) announced that she is reintroducing the Truckee Meadows Public Lands Management Act, also known as the Washoe County Lands Bill, to expand economic development opportunities and make more land available for housing in Washoe County, support local Tribal communities, increase access to outdoor recreation, and protect public lands . As the state with the highest percentage of public land in the nation, Nevada relies on federal legislation to make land available for development, like affordable housing, and to permanently protect outdoor spaces for future generations.
    For years, Senator Rosen has been working with a wide range of stakeholders across Washoe County to develop this comprehensive legislation. In 2023, she unveiled a working draft of the bill and collected feedback from hundreds of Nevadans during a public comment period, which she then incorporated into this legislation, which was previously introduced last year with the support of local government officials, conservation advocates, and business leaders.
    “As Nevadans continue to deal with high housing costs, I’m working to increase the amount of federal land available for housing development to bring down home prices and support sustainable growth for Washoe County,” said Senator Rosen. “My Washoe County Lands Bill will do that while also protecting hundreds of thousands of acres of public lands and supporting our state’s Tribal communities. I’ll keep working to ensure that this bill passes this new Congress to lower housing prices for hardworking Nevada families and help shape a better future for our state.”
    “I’m so proud that the Washoe County Board of County Commissioners supported Senator Rosen’s Truckee Meadows Public Lands Bill,” said Alexis Hill, Chair of the Washoe County Board of Commissioners. “We are committed to preserving our natural resources while allocating appropriate land for affordable and workforce housing, local governmental and tribal interests. We are especially excited about the potential revenue opportunities for Truckee River investments. This Bill will be a game changer for the future of northern Nevada.” 
    “Thank you to Senator Rosen for taking this all-important step to introduce a Lands Bill, which I believe is the single largest federal priority for the City of Sparks, Washoe County, and Reno areas,” said Ed Lawson, Mayor of the City of Sparks. “It will have a significant impact for all of us as we address the affordable housing issues throughout the region.”
    “With the collaborative effort from all stakeholders and Senator Rosen’s Office since 2017, a lands bill was created to greatly benefit the entire Truckee Meadows region,” said Daryl D. Gardipe, Chair of the Reno Sparks Indian Colony. “We are hopeful the re-introduction of this bill will pass unanimously as it represents all parties’ interests in an equitable fashion. Reno-Sparks Indian Colony is appreciative of all the support we received from all stakeholders to preserve our culturally important areas and our future growth.”
    “This legislation is a milestone in the history of public lands conservation in Nevada,” said Shaaron Netherton, Executive Director of Friends of Nevada Wilderness. “Northern Washoe County is home to critical wildlife habitat, uniquely dark skies, priceless cultural resources, and amazing outdoor recreation opportunities. Because Senator Rosen and her team spent countless hours consulting with multiple stakeholders, we now have a widely supported bill that will protect these values. We thank the Senator for her persistent leadership and look forward to working with her to help move this bill through Congress.”
    “The Nevada Chapter of Backcountry Hunters & Anglers is pleased to support the Truckee Meadows Public Land Management Act as recently introduced by Sen. Rosen and we thank her for her leadership. We see this legislation as a good representation of compromise by many stakeholders and interests that took many years and many versions to achieve,” said Bryce Pollock, Vice Chair, Nevada Chapter of Backcountry Hunters & Anglers. “We are very appreciative of Sen. Rosen’s consideration to ensure that public land access would not be limited for hunters and anglers along the Truckee River. We look forward to the conservation of more than one million acres of public lands, including many valuable recreation areas in North Washoe County, and are excited for the addition of a public shooting range that hunters can utilize for many generations to come.”
    “The Nevada Wildlife Federation thanks Senator Rosen for bringing all stakeholders together to create the Truckee Meadows Public Lands Management Act,” said Russell Kuhlman, Executive Director of Nevada Wildlife Federation. “This legislation provides the county with the opportunity to balance our increasing human population while safeguarding our access to public lands, wildlife habitat, and outdoor recreation, which includes hunting and fishing.”
    “EDAWN truly appreciates the dedication Senator Rosen has given this critical issue,” said Taylor Adams, President and CEO of the Economic Development Authority of Western Nevada (EDAWN). “In addition to safeguarding the natural beauty of Northern Nevada for future generations, this bill provides much-needed land that will ensure our region can continue to deliver sustainable growth of commercial development, housing, and the infrastructure required for both.”
    “The Reno + Sparks Chamber of Commerce is pleased to support Senator Rosen’s land management legislation,” said Ann Silver, CEO of the Reno + Sparks Chamber of Commerce. “The legislation provides a pathway for communities in the Truckee Meadows to develop much-needed affordable housing and expanded land uses that can be managed as we continue to grow. The legislation also conserves pristine areas in northern Nevada where residents, tribes, and visitors can explore and recreate.”
    Senator Rosen’s Truckee Meadows Public Lands Management Act will: 

    Permanently protect more than 1,000,000 acres of public lands.
    Promote sustainable growth and economic development by directing over 15,200 acres of public lands to be made eligible for sale, all of which must be assessed for its suitability for new affordable housing. An additional 33 acres are set aside to only be sold for affordable housing. Any land sold for affordable housing would have to be sold at less than fair market value.
    Support local Tribal communities by expanding land held in trust by more than 8,400 acres for the Reno-Sparks Indian Colony, 11,300 acres for the Pyramid Lake Paiute Tribe, and over 1,000 acres for the Washoe Tribe of Nevada and California.
    Provide local governments over 3,700 acres for public purposes such as parks, water treatment facilities, and schools. Land is specifically conveyed to Washoe County, the City of Reno, the City of Sparks, the Incline Village General Improvement District, the Gerlach General Improvement District, the State of Nevada, the Truckee River Flood Management Authority, the Washoe County School District, and the University of Nevada Reno.

    Senator Rosen has been working tirelessly to pass her Washoe County Lands Bill. Last year, she successfully urged the Senate Energy and Natural Resources Committee to hold a hearing on this legislation. After it passed out of committee, she took to the Senate floor to try to pass the legislation by unanimous consent, but was blocked by Washington politicians. She vowed to reintroduce the Washoe County Bill in her second term and is fulfilling that promise today.

    MIL OSI USA News

  • MIL-OSI USA: VIDEO: On Senate Floor, Rosen Opposes Confirmation of Project 2025 Co-Author Russell Vought as Director of the Office of Management and Budget

    US Senate News:

    Source: United States Senator Jacky Rosen (D-NV)

    Senator Rosen: “Nevadans are hurting, and they are looking to Congress for help. If Vought is given the power to shape our federal budget, we risk seeing critical programs slashed, leaving our seniors, working people, families facing higher costs, fewer services, and with less financial security.”

    Watch Senator Rosen’s Full Remarks HERE.
    WASHINGTON, DC – Today, U.S. Senator Jacky Rosen (D-NV) took the Senate floor to oppose the confirmation of one of the key authors of Project 2025, Russell Vought, to lead the Office of Management and Budget. In her speech, Senator Rosen highlighted Mr. Vought’s extreme far-right views and plans that would harm hard-working families, including putting programs like Medicare and Social Security on the chopping block, and giving tax breaks to billionaires and big corporations on the backs of seniors and working families.
    Below are excerpts of Senator Rosen’s floor remarks:
    Mr. President,
    Nevadans sent me to the Senate to stand up and fight for hardworking families throughout our state.
    And that’s exactly why I’m here today – to sound the alarm about Russell Vought’s nomination to lead the Trump Administration’s Office of Management and Budget. They oversee virtually every agency and the entire federal budget.
    Mr. Vought would be a disaster if he’s put in this role again. 
    Russell Vought vote is an extremist who will betray working families, betray your family – and there’s simply no other way to put it.
    After all, he was the main architect behind [the] Project 2025 agenda.
    You might have heard of it, but for those who don’t know, Project 2025 is Russell Vought’s far-right playbook for seizing full control of the federal government. I’m going to repeat that: this is he wrote the playbook to seize full control over the federal government. Our government. Your government.
    It’s filled with extreme ideas that would hurt families like yours. Ideas like putting essential government programs like Medicare, Medicaid, Social Security on the chopping block. And it’s going to give handouts to billionaires and big corporations on the backs of America’s middle class. On your backs.
    Seeing how much power this Administration has already given to unelected, unelected billionaire CEOs, it’s not hard to imagine what’s coming next.
    […]
    I urge my colleagues who are considering a vote for this nomination to think about what working people in this country are going through at this moment.
    I urge my colleagues to think about the Moms and the Dads who come home from a hard day at work. They have dinner with their family, they put their kids to bed, and then, instead of relaxing in front of the TV, they sit at the kitchen table, and they worry. And they’re worried sick about how they’re going to pay the bills, how they’re going to keep a roof over their head, how they’re going to keep putting food on the table.
    They’re going back and forth, trying to figure out what essentials they can live without just to make ends meet.
    At the same time, the billionaires that Russell Vought is looking out for, well, they don’t understand the struggle, I can bet you that. I’m going to say here: let’s ask those billionaires last time they went grocery shopping and worried about the price of eggs or milk. I bet they don’t have an answer for that. That’s who Mr. Vought fights for. And these struggles that real families are going through, they’re tough choices that far, far too many working families face every single day.
    And these are the people who will be hurt most by Russell Vought’s extreme, extreme agenda.
    And we know that, right now, these same families are feeling the squeeze of rising costs – it’s everywhere, the grocery store to the gas pump. 
    And with the added price spikes from President Trump’s reckless tariff threats, it’s going to get even harder to afford food, pay off an energy bill, or make rent – let alone, let alone buy a home.
    And so, it’s no wonder people are so frustrated with the way things are –  it shouldn’t have to be this way.
    We should be looking for opportunities to help make their lives better – to make things a little easier.
    At a time when Americans are already paying an arm and a leg for essentials – when they desperately need the support of critical government programs that make such a meaningful difference, why on earth would we confirm someone who will just make their lives harder? Why on earth would we do this?
    So, make no mistake: if Russell Vought is allowed to head up the OMB, he, Vought will work to make sure the ultra-wealthy get more, while struggling families get even less than they have now. This is who Russel Vought is, and this is what he’ll do – what he’ll do to you.
    Mr. President, Nevadans are hurting, and they are looking to Congress for help. 
    If Vought is given the power to shape our federal budget, we risk seeing critical programs slashed, leaving our seniors, working people, families facing higher costs, fewer services, and with less financial security. 
    And this isn’t just an ideological difference; it’s a real threat to millions of people’s well-being. To the very core of what’s most important to them: their families.
    And the stakes couldn’t be higher. And so, I urge my colleagues in the Senate to reject this reckless nomination for the sake of all of our families.

    MIL OSI USA News

  • MIL-OSI USA: 02.06.2025 Sen. Cruz Introduces Constitutional Amendment to Prevent Democrats from Court Packing the Supreme Court

    US Senate News:

    Source: United States Senator for Texas Ted Cruz

    WASHINGTON, D.C. – U.S. Sen. Ted Cruz (R-Texas), a member of the Senate Judiciary Committee and Chairman of the Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights, introduced a constitutional amendment to maintain a total of nine Supreme Court justices on the bench at a time.
    Once approved by Congress, the amendment would go to the states for ratification.
    Upon introduction, Sen. Cruz said, “For years, Democrats have openly said they intend to pack the Supreme Court. They seek to use the Court to advance policy goals they can’t accomplish electorally. Such a move would be a direct assault on the design of our Constitution, which is designed to ensure the Supreme Court remains a non-partisan guardian of the rule of law. This amendment is a badly-needed check on their efforts to undermine the integrity of the Court.”
    Sen. Grassley said, “Democrats’ radical court packing scheme would erase the legitimacy of the Supreme Court and destroy historic precedent. The Court is a co-equal branch of government, and our Keep Nine Amendment will ensure that it remains independent from political pressure.”
    Sen. Cornyn said, “Democrats have turned the legal system into a vehicle for advancing policy goals they can’t achieve at the ballot box or in Congress. I’m proud to join Sen. Cruz in supporting this resolution calling for a constitutional amendment to prevent the Democrats from packing the Court and undermining the rule of law.”
    Sen. Lee said, “It is vital that we protect the independence and integrity of the Supreme Court. Radical Democrats will not stop trying to rig the decisions they want through court packing, and this legislation would permanently take that dangerous option off the table.”
    Sen. Crapo said, “Throughout our nation’s history, the Supreme Court has successfully safeguarded our Constitution. Packing the Court would unnecessarily increase partisanship within the institution, creating greater challenges in settling the pressing cases that matter to Americans in a constitutional and just way.”
    Sen. Capito said, “A nine Justice court has worked for our country for more than 150 years. Increasing that number in a partisan effort to achieve a desired policy result is a never-ending proposition. If court-packing were pursued, respect for the Supreme Court would plummet and the checks and balances of our constitutional order would be threatened. We should preserve our independent judiciary by closing the door to the Democrats radical court packing proposals.”
    Sen. Blackburn said, “The radical left wants to pack the Supreme Court to implement their socialist agenda. The number of justices on our nation’s highest court should stay the same regardless of which party is in power.”
    Sen. Cassidy said, “Packing the courts to achieve a preordained outcome is not what our Founding Fathers had in mind. Nine justices has been a good number for 156 years; I’m sure it will be for another 156.”
    Sen. Young said, “Though there is less talk about court packing these days from Democrats, adding to the Supreme Court remains a bad idea. I am again supporting this legislation to protect the constitutional credibility of the Supreme Court.”
    Sen. Hyde-Smith said, “The Supreme Court was designed by our Founders to protect justice, not be used as a political pawn.  We need to keep it that way.  Packing the Court for political leverage destabilizes the integrity of the institution and is dangerous for our country.  If this constitutional amendment is approved by Congress and the states, the issue will be settled for good.”
    Sen. Banks said, “Americans forcefully rejected Democrats at the ballot box last year. Their backup plan is to override the will of the voters by packing the Court. This amendment crushes that plan.”
    Sen. Risch said, “Democrats’ attempts to pack the Supreme Court with radical appointees undermines our democracy and American confidence in our judicial system. The Keep Nine Constitutional Amendment would ensure justices focus on upholding the rule of law rather than legislating from the bench.”
    The proposed constitutional amendment was co-sponsored by Sens. Chuck Grassley (R-Iowa), John Cornyn (R-Texas), Mike Lee (R-Utah), Mike Crapo (R-Idaho), Shelley Moore Capito (R-W.Va.), Marsha Blackburn (R-Tenn.), Bill Cassidy (R-La.), Todd Young (R-Ind.), Cindy Hyde-Smith (R-Miss.), Jim Banks (R-Ind.), Jim Risch (R-Idaho), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Katie Britt (R-Ala.), Tim Sheehy (R-Mont.), Roger Wicker (R-Miss.), and Deb Fischer (R-Neb.).
    Read the complete text of the amendment here.
    BACKGROUND
    Sen. Cruz previously introduced this amendment in 2023 and 2020.
    Over the past several years, top Democrats have pledged to expand the number of justices on the Supreme Court when they are able to.
    Former Vice President Kamala Harris said “We are on the verge of a crisis of confidence in the Supreme Court […] We have to take this challenge head on, and everything is on the table to do that.” Sen. Ed Markey (D-Mass.) posted online “Mitch McConnell set the precedent. No Supreme Court vacancies filled in an election year. If he violates it, when Democrats control the Senate in the next Congress, we must abolish the filibuster and expand the Supreme Court.” Sen. Mazie Hirono (D-Hawaii)called court-packing “long-overdue court reform.” Sen. Elizabeth Warren (D-Mass.) said “I’m open. […] Actually, I mean, we could. […] Look, there are a lot of different ways to do it. The number of people on the Supreme Court is not constitutionally constricted.”
    Meanwhile Democrats, including Joe Biden, falsely called Senate Republican’s efforts to confirm Judge Barrett “court-packing.” Sen. Cruz has said, “Court-packing does not mean nominating a justice to fill a vacancy. […] It is expanding the number of justices. And, you know, Joe Biden in 1983 said court-packing was ‘a bone-headed idea,’ and now that bone-headed idea I think is their agenda number one if they win on Election Day.”

    MIL OSI USA News

  • MIL-OSI Australia: Cost-of-living help for students visiting nation’s capital

    Source: Australia Government Ministerial Statements

    The Albanese Government is taking the pressure off family budgets by boosting travel rebates for students who visit the nation’s capital in 2025.

    The Parliament and Civics Education Rebate (PACER) program provides financial assistance for students to visit Canberra and experience our national democratic, historical and cultural institutions first-hand.

    Rebates have been extended for 2025 and will range up to $2,040 per student, depending on the location of the school, with additional loadings for eligible schools in disadvantaged, regional, and remote areas. Home schooling families are also eligible for the rebate. 

    These additional rebates, for example, take the rebate amount for a student from a remote, disadvantaged school in New South Wales, 500-999 kilometres from Canberra, from $45 to $165.

    For a student from a very remote, disadvantaged school in the Northern Territory, 3,000 kilometres or more from Canberra, the rebate has increased from $510 to $2,040.

    To further boost student knowledge of Australia’s system of government, legal system and Australian citizenship, a new online hub has been launched. 

    The Civics and Citizenship Education (CCE) Hub contains more than 200 nationally coordinated, high-quality teaching resources that will save teachers time and support them to teach students from Years 3 to 10. 

    Teachers have access to resources to help them run mock parliamentary debates and elections, quizzes, case studies and a range of other sources to support student learning.

    The CCE Hub forms part of a suite of online resources and professional learning from the Albanese Government to support teaching and learning of the Australian Curriculum, with $34.6 million being invested over four years.

    For more information on the PACER rebate including the eligibility criteria, visit www.pacer.org.au.

    Quotes attributable to Minister for Education Jason Clare:

    “It’s important to get out of the classroom and experience our historical and cultural institutions first-hand.

    “To see and feel our history at the War Memorial and Old Parliament House, and see it being made in the new Parliament.

    “That’s why the Albanese Government is helping families with cost-of-living by offering rebates to make it more affordable to come to the Capital.

    “I want more Australian students, wherever they live, to do this and that’s what these rebates do.”
     

    MIL OSI News

  • MIL-OSI Security: Dallas, Texas, Man Admits Making Threats of Violence Against Sikh Organization

    Source: Federal Bureau of Investigation (FBI) State Crime Alerts (c)

    CAMDEN, N.J. – A man from Dallas County, Texas admitted to a federal hate crime and for making interstate threats against the employees of a Sikh nonprofit organization, Acting U.S. Attorney Vikas Khanna for the District of New Jersey and Deputy Assistant Attorney General Kathleen Wolfe of the Justice Department’s Civil Rights Division announced.

    Bushan Athale, 49, of Dallas, Texas, pleaded guilty today before U.S. District Judge Edward S. Kiel in Camden federal court to an Information charging him with one count of interfering with federally protected activities through the threatened use of a dangerous weapon and one count of transmitting an interstate threat to injure another person.  Sentencing is scheduled for June 3, 2025.

    “Threats of violence have no place in our society,” said Vikas Khanna, Acting U.S. Attorney for the District of New Jersey.  “Every individual in this country must be free to practice their religion without fear of violence or persecution.  We will continue to ensure the safety of our communities by prosecuting those who threaten our basic American freedoms.”

    “Every citizen has the right to feel safe, secure, and free from fear of violence or hate,” said Wayne A. Jacobs, Special Agent in Charge of the FBI’s Philadelphia Field Office. “We are deeply grateful to our law enforcement and community partners who stand with us daily. Together, we remain steadfast in pursuing those who threaten the safety and well-being of the people we are sworn to protect.”

    According to documents filed in the case and statements made in court:

    On or about September 17, 2022, Athale called the main number of an organization that advocates for the civil rights of Sikh individuals within the United States.  Over the course of the next hour, Athale left seven voicemails expressing hatred toward Sikh individuals working at this same organization and threatening to injure or kill these individuals with a razor.

    Athale’s voicemails, which were filled with violent imagery and obscenity, contained references to places, people, and tenets that are particularly significant within the Sikh religion.  Among other things, Athale stated his intention to “catch” the Sikhs at Organization 1, forcibly shave their “top and bottom hair,” use a “razor” to “cut” their hair and “make” them bald, “make” them smoke and eat tobacco, and “show [them] the heaven.”

    On March 21, 2024, Athale again called the same Sikh organization and left two more voicemails.  In these voicemails, Athale again used violent, sexual imagery to express his hatred toward Sikhs as well as Muslims, and spouted antisemitic rhetoric.

    During his guilty plea, Athale also admitted to additional conduct reflecting his long history of making violent threats rooted in religious animus.  For example, Athale admitted that on November 6, 2021 and November 7, 2021, he had sent electronic messages to a former co-worker, in which he stated that he “hate[d] Pakistan” and “hate[d] Muslims.”  Athale wrote, “I hate you, I just don’t know how to kill your whole family including you?  Tell me???  I will figure it out […] Probably I will hire a Jew, they will be most happy.”

    Athale also admitted that, from May 28, 2024 to May 31, 2024, he had sent threatening electronic messages to a recruiter who he believed to be a Muslim. Athale wrote statements such as “you will be dead, get out [expletive] Muslim” and “If you dont [sic] back off you are killed.”

    The charge of interfering with federally protected activities carries a maximum potential penalty of ten years in prison and the charge of transmitting an interstate threat carries a maximum potential penalty of five years in prison. Both charges also carry a maximum potential penalty of up to a $250,000 fine. The defendant also may be sentenced to a term of supervised release after any term of imprisonment imposed.

    Acting U.S. Attorney Khanna credited the special agents of the FBI of the Philadelphia Division, under the direction of Special Agent in Charge Wayne A. Jacobs, with the investigation leading up to this guilty plea.     

    The government is represented by Assistant U.S. Attorney Sara A. Aliabadi of the Special Prosecutions Division in Camden, Assistant U.S. Attorney Jason M. Richardson of the Civil Rights Division in Camden, and Trial Attorney Eric Peffley of the Justice Department’s Civil Rights Division.

                                                                 ###                               

    Defense Counsel: AFPD Maggie Moy

    MIL Security OSI

  • MIL-OSI: First Pacific Bancorp Reports Fourth Quarter and Full Year 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    WHITTIER, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — First Pacific Bancorp (the “Company”) (OTC Pink: FPBC), the holding company for First Pacific Bank (the “Bank”), today reported consolidated results for the fourth quarter and year ending December 31, 2024, marking its seventh consecutive quarter of profitability. The Company remains well-capitalized, with a robust liquidity position supported by a stable core deposit base and access to substantial sources of liquidity.

    Highlights for the fourth quarter and full year 2024 include:

    • Total assets ended 2024 at $433 million, up $13 million from $420 million at year end 2023.
    • Total deposits ended 2024 at $351 million, up $18 million since year end 2023.
    • Total loans ended 2024 at $277 million, up $2 million from year end 2023.
    • Asset quality remains excellent with minimal levels of classified or non-performing assets.
    • The Bank ended the fourth quarter with a strong capital position, with a leverage capital ratio of 9.0% and a total risk-based capital ratio of 13.4%.
    • As of December 31, 2024, cash and cash equivalents totaled $41 million, including funds invested overnight, up $19 million since year end 2023.
    • Unused borrowing capacity from credit facilities in place on December 31, 2024, totaled $167 million.

    For the fourth quarter ending December 31, 2024, the Company realized a pre-tax, pre-provision profit of $702 thousand, compared to a pre-tax, pre-provision profit of $345 thousand in Q3 2024. Net income for the fourth quarter of 2024 was $500 thousand, up from $249 thousand in Q3 2024. For the twelve months ending December 31, 2024, the Company reported $1.1 million in net income, up from a net loss of $164 thousand reported for the twelve months ending December 31, 2023.     

    Asset quality remains excellent with minimal non-performing assets and the allowance for credit losses is 1.15% of total loans. There was no provision for credit losses recognized for the year ending 2024, compared to $906 thousand for the year ending December 31, 2023.

    “We are pleased to close out 2024 on a strong note, achieving seven consecutive quarters of profitability and demonstrating the success of our strategic approach,” said Joe Matranga, Chairman of the Board of Directors. “With a solid capital position, strong liquidity, and sound financial standing, we are well-positioned to continue to execute our strategy and drive sustainable, long-term value for our stakeholders.”

    “We delivered another strong quarter of financial results highlighted by loan and deposit growth, excellent asset quality, and a solid capital and liquidity position,” said Nathan Rogge, President and Chief Executive Officer. “We enter 2025 with strong momentum and a clear growth strategy, driven by strategic investments in technology and innovation designed to enhance the banking experience and reinforce our competitive advantage.”

    “As a Southern California-based company, we are deeply saddened by the devastation caused by the recent wildfires. Our thoughts and prayers are with everyone impacted by this disaster and we are committed to helping Los Angeles move forward.”

    ABOUT FIRST PACIFIC BANK

    First Pacific Bank is a wholly owned subsidiary of First Pacific Bancorp (OTC Pink: FPBC) and is a growing community bank catering to individuals, professionals, and small-to-medium sized businesses throughout Southern California. Since opening in 2006, the Bank has offered a personalized approach, access to decision makers, a broad range of solutions, and a commitment to delivering an exceptional customer experience. First Pacific Bank operates locations in Los Angeles County, Orange County, San Diego County, and the Inland Empire. For more information, visit firstpacbank.com or call 888.BNK.AT.FPB.

    FORWARD-LOOKING STATEMENTS

    This news release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, and First Pacific Bancorp intends for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. Forward-looking statements relate to, among other things, our business plan, and strategies, and can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” and similar expressions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Factors that might cause such differences include, but are not limited to: successfully realizing the benefits of our business strategy and plans,; changes in general economic and financial market conditions, either nationally or locally, in areas in which First Pacific Bank conducts its operations; effects of inflation and changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; impact of any natural disasters, including earthquakes; effect of governmental supervision and regulation, including any regulatory or other enforcement actions; legislation or regulatory changes which adversely affect First Pacific Bank’s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company does not undertake, and specifically disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events, or circumstances after the date of such statements except as required by law.  

    — Summary Financial Tables Follow —

    First PacificBancorp          
    Consolidated Balance Sheets          
    (Unaudited)          
      Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023
    ASSETS          
    Cash and due from banks $ 4,708,926   $ 23,584,084   $ 4,671,483   $ 7,317,500   $ 4,308,149  
    Fed funds sold & int-bearing balances   36,290,000     25,520,000     37,860,000     37,575,000     18,060,000  
    Total cash and cash equivalents   40,998,926     49,104,084     42,531,483     44,892,500     22,368,149  
               
    Debt securities (AFS)   1,866,022     3,041,852     3,077,666     5,138,340     5,257,049  
    Debt securities (HTM)   100,257,560     101,260,391     102,202,926     103,474,749     104,343,133  
    Total debt securities   102,123,582     104,302,243     105,280,592     108,613,089     109,600,182  
               
    Construction & land development   23,320,351     23,067,204     24,651,513     25,480,398     27,070,749  
    1-4 Family residential   58,588,090     58,082,570     68,588,393     68,521,663     66,567,165  
    Multifamily residential   28,561,276     28,966,811     26,800,829     26,947,419     27,128,177  
    Nonfarm, nonresidential real estate   100,066,570     99,715,860     94,643,169     97,893,840     99,627,812  
    Commercial & industrial   62,322,690     57,342,017     53,504,969     54,785,564     53,938,659  
    Consumer & Other   4,525,108     780,639     1,831,036     1,123,918     865,849  
    Total loans   277,384,085     267,955,101     270,019,909     274,752,802     275,198,411  
    Allowance for credit losses (loans)   (3,179,637 )   (3,109,975 )   (3,109,975 )   (3,109,975 )   (3,109,975 )
    Total loans, net   274,204,448     264,845,126     266,909,934     271,642,827     272,088,436  
               
    Premises, equipment, and ROU net   1,328,964     1,452,886     1,714,833     1,992,588     2,268,671  
    Goodwill, core deposit & other intangibles   1,273,134     1,287,129     1,298,084     1,313,367     1,328,651  
    Bank owned life insurance   5,287,738     5,257,550     5,227,763     5,198,654     5,170,521  
    Accrued interest and other assets   7,755,355     7,505,380     7,476,554     7,415,609     7,392,301  
               
    Total Assets $ 432,972,147   $ 433,754,398   $ 430,439,243   $ 441,068,634   $ 420,216,911  
               
    LIABILITIES AND SHAREHOLDERS’ EQUITY          
    Deposits:          
    Noninterest-bearing demand $ 131,515,568   $ 129,473,091   $ 144,240,187   $ 133,945,262   $ 121,348,095  
    Interest-bearing transaction accounts   28,454,639     24,660,000     24,797,108     28,166,207     34,716,150  
    Money market and savings   146,423,126     143,270,628     143,497,864     148,732,230     139,011,862  
    Time deposits   44,302,867     44,388,137     41,060,590     38,662,227     38,235,413  
    Total deposits   350,696,200     341,791,856     353,595,749     349,505,926     333,311,520  
               
    Borrowings   40,000,000     50,000,000     35,000,000     50,000,000     45,000,000  
    Accrued interest and other liabilities   3,122,902     3,430,132     3,781,444     3,936,909     4,530,208  
    Total liabilities   393,819,102     395,221,988     392,377,193     403,442,835     382,841,728  
               
    Shareholders’ Equity:          
    Capital stock and APIC   37,272,567     37,117,627     36,970,386     36,788,606     36,699,786  
    Retained earnings   2,650,877     2,151,305     1,902,788     1,705,174     1,543,264  
    Accum other comprehensive income   (770,399 )   (736,522 )   (811,124 )   (867,981 )   (867,867 )
    Total shareholders’ equity   39,153,045     38,532,410     38,062,050     37,625,799     37,375,183  
               
    Total Liabilities and Shareholders’ Equity $ 432,972,147   $ 433,754,398   $ 430,439,243   $ 441,068,634   $ 420,216,911  
               
    First PacificBancorp          
    Consolidated Income Statements – Quarterly          
    (Unaudited)          
               
      Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023
    INTEREST INCOME          
    Loans, including fees $ 4,814,128 $ 4,817,174 $ 4,655,844 $ 4,700,535 $ 4,653,303  
    Debt securities   484,508   499,268   514,613   543,857   544,330  
    Fed funds & int-bearing balances   419,597   450,166   573,022   410,685   258,178  
    Total interest income   5,718,233   5,766,608   5,743,479   5,655,077   5,455,811  
               
    INTEREST EXPENSE          
    Deposits   1,777,351   1,790,578   1,687,121   1,746,032   1,542,541  
    Borrowings   332,375   444,250   524,599   507,390   705,324  
    Total interest expense   2,109,726   2,234,828   2,211,720   2,253,422   2,247,865  
               
    Net interest income   3,608,507   3,531,780   3,531,759   3,401,655   3,207,946  
               
    Provision for credit losses           101,538  
               
    Net interest income after provision   3,608,507   3,531,780   3,531,759   3,401,655   3,106,408  
               
    NONINTEREST INCOME          
    Service charges, fees and other income   119,173   106,628   96,460   108,365   108,769  
    Sublease income     53,975   52,970   53,872   53,872  
    Gains (losses) on sale of assets     15,335       (12,982 )
    Gains on early payoff of debt   54,125     144,325      
    Total noninterest income   173,298   175,938   293,755   162,237   149,659  
               
    NONINTEREST EXPENSE          
    Salaries and benefits   1,984,774   2,154,290   2,182,674   2,178,486   1,954,029  
    Occupancy and equipment   258,180   374,069   363,695   368,816   384,088  
    Other expense   836,692   834,281   1,007,247   794,158   894,440  
    Total noninterest expense   3,079,646   3,362,640   3,553,616   3,341,460   3,232,557  
               
    Income before income tax expense   702,159   345,078   271,898   222,432   23,510  
               
    Income tax expense (benefit)   202,586   96,563   74,281   60,524   (31,955 )
               
    Net Income $ 499,573 $ 248,515 $ 197,617 $ 161,908 $ 55,465  
               
    Earnings per share basic (QTR) $ 0.12 $ 0.06 $ 0.05 $ 0.04 $ 0.01  
    Weighted average shares outstanding (QTR)   4,293,829   4,288,851   4,283,351   4,281,653   4,231,841  
               
    First PacificBancorp    
    Consolidated Income Statements – Year-to-Date    
    (Unaudited)    
         
      Dec 31, 2024 Dec 31, 2023
    INTEREST INCOME    
    Loans, including fees $ 18,987,681 $ 16,705,212  
    Investment securities   2,042,246   2,279,349  
    Fed funds & int-bearing balances   1,853,470   1,000,827  
    Total interest income   22,883,397   19,985,388  
         
    INTEREST EXPENSE    
    Deposits   7,001,082   4,744,486  
    Borrowings   1,808,614   2,440,727  
    Total interest expense   8,809,696   7,185,213  
         
    Net interest income   14,073,701   12,800,175  
         
    Provision for credit losses     905,966  
         
    Net interest income after provision   14,073,701   11,894,209  
         
    NONINTEREST INCOME    
    Service charges, fees and other income   430,626   455,823  
    Sublease income   160,817   212,074  
    Gains (losses) on sale of assets   15,335   129,093  
    Gains on early payoff of debt   198,450   123,077  
    Total noninterest income   805,228   920,067  
         
    NON INTEREST EXPENSE    
    Salaries and benefits   8,500,224   8,558,603  
    Occupancy and equipment   1,364,760   1,470,277  
    Other expense   3,472,378   3,124,577  
    Total noninterest expense   13,337,362   13,153,457  
         
    Income before income tax expense   1,541,567   (339,181 )
         
    Income tax expense (benefit)   433,954   (175,262 )
         
    Net Income (loss) $ 1,107,613 $ (163,919 )
         
    Earnings (loss) per share basic (YTD) $ 0.26 $ (0.04 )
    Weighted average shares outstanding (YTD)   4,286,945   3,992,738  
               
    First PacificBancorp            
    Quarterly Financial Highlights            
    (Unaudited)            
        Quarterly
        2024 2024 2024 2024 2023
    ($ in thousands except per share data)   4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
    EARNINGS            
    Net interest income $ 3,609   3,532   3,532   3,402   3,208  
    Provision for loan losses $ 0   0   0   0   102  
    Noninterest income $ 173   176   294   162   150  
    Noninterest expense $ 3,080   3,363   3,554   3,341   3,233  
    Income tax expense $ 203   97   74   61   (32 )
    Net income $ 500   249   198   162   55  
                 
    Earnings per share basic $ 0.12   0.06   0.05   0.04   0.01  
    Weighted average shares outstanding   4,293,829   4,288,851   4,283,351   4,281,653   4,231,841  
    Ending shares outstanding   4,294,500   4,291,927   4,283,351   4,283,351   4,231,841  
                 
    PERFORMANCE RATIOS            
    Return on average assets   0.47 % 0.23 % 0.18 % 0.15 % 0.05 %
    Return on average common equity   5.12 % 2.58 % 2.10 % 1.73 % 0.59 %
    Yield on loans   6.91 % 6.98 % 6.97 % 6.84 % 6.69 %
    Yield on earning assets   5.50 % 5.58 % 5.52 % 5.49 % 5.35 %
    Cost of deposits   1.98 % 2.05 % 1.96 % 2.05 % 1.89 %
    Cost of funding   2.18 % 2.32 % 2.28 % 2.35 % 2.37 %
    Net interest margin   3.47 % 3.42 % 3.40 % 3.31 % 3.15 %
    Efficiency ratio   81.4 % 90.7 % 92.9 % 93.8 % 96.3 %
                 
    CAPITAL            
    Tangible equity to tangible assets   8.77 % 8.61 % 8.57 % 8.26 % 8.61 %
    Book value (BV) per common share $ 9.12   8.98   8.89   8.78   8.83  
    Tangible BV per common share $ 8.82   8.68   8.58   8.48   8.52  
                 
    ASSET QUALITY            
    Net loan charge-offs (recoveries) $ 0   0   0   0   0  
    Allowance for credit losses (loans) $ 3,180   3,110   3,110   3,110   3,110  
    Allowance to total loans   1.15 % 1.16 % 1.15 % 1.13 % 1.13 %
    Nonperforming loans $ 672   991   77   160   61  
                 
    END OF PERIOD BALANCES            
    Total loans $ 277,384   267,955   270,020   274,753   275,198  
    Total assets $ 432,972   433,754   430,439   441,069   420,217  
    Deposits $ 350,696   341,792   353,596   349,506   333,312  
    Loans to deposits   79.1 % 78.4 % 76.4 % 78.6 % 82.6 %
    Shareholders’ equity $ 39,153   38,532   38,062   37,626   37,375  
    Full-time equivalent employees   49   44   44   46   45  
                 
    AVERAGE BALANCES (QTRLY)            
    Total loans $ 276,294   273,960   267,766   275,578   276,016  
    Earning assets $ 412,417   410,298   416,965   412,791   404,210  
    Total assets $ 425,750   424,199   430,830   426,592   417,595  
    Deposits $ 355,369   346,142   346,032   341,226   323,300  
    Shareholders’ equity $ 38,746   38,267   37,788   37,443   37,179  

    The MIL Network

  • MIL-OSI: NMI Holdings, Inc. Reports Fourth Quarter and Full Year 2024 Financial Results; Announces Additional $250 Million Share Repurchase Authorization

    Source: GlobeNewswire (MIL-OSI)

    EMERYVILLE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $86.2 million, or $1.07 per diluted share, for the fourth quarter ended December 31, 2024, which compares to $92.8 million, or $1.15 per diluted share, for the third quarter ended September 30, 2024 and $83.4 million, or $1.01 per diluted share, for the fourth quarter ended December 31, 2023. Adjusted net income for the quarter was $86.1 million, or $1.07 per diluted share, which compares to $92.8 million, or $1.15 per diluted share, for the third quarter ended September 30, 2024 and $83.4 million, or $1.01 per diluted share, for the fourth quarter ended December 31, 2023.

    Net income for the full year ended December 31, 2024 was $360.1 million, or $4.43 per diluted share, which compares to $322.1 million, or $3.84 per diluted share, for the year ended December 31, 2023. Adjusted net income for the year was $365.6 million, or $4.50 per diluted share, which compares to $322.1 million, or $3.84 per diluted share, for the year ended December 31, 2023. The non-GAAP financial measures adjusted net income and adjusted diluted earnings per share are presented in this release to enhance the comparability of financial results between periods. See “Use of Non-GAAP Financial Measures” and our reconciliation of such measures to their most comparable GAAP measures, below.

    The company also announced today that its Board of Directors has authorized an additional $250 million share repurchase plan effective through December 31, 2027.

    Adam Pollitzer, President and Chief Executive Officer of National MI, said, “The fourth quarter capped another year of standout success for National MI. In 2024, we delivered strong operating performance, generated significant NIW volume and consistent growth in our insured portfolio, and achieved record financial results and a 17.4% return on equity. We have a strong customer franchise, a talented team driving us forward every day, an exceptionally high-quality book covered by a comprehensive set of risk transfer solutions, and a robust balance sheet supported by the significant earnings power of our platform. Looking forward, we’re well-positioned to continue delivering differentiated growth, returns and value for our shareholders, and today’s incremental $250 million share repurchase authorization will provide investors with further ability to access value as we continue to perform, grow our earnings and compound book value.”

    Selected fourth quarter 2024 highlights include:

    • Primary insurance-in-force at quarter end was $210.2 billion, compared to $207.5 billion at the end of the third quarter and $197.0 billion at the end of the fourth quarter of 2023.
    • Net premiums earned were $143.5 million, compared to $143.3 million in the third quarter and $132.9 million in the fourth quarter of 2023.
    • Total revenue was $166.5 million, compared to $166.1 million in the third quarter and $151.4 million in the fourth quarter of 2023.
    • Insurance claims and claim expenses were $17.3 million, compared to $10.3 million in the third quarter and $8.2 million in the fourth quarter of 2023. Loss ratio was 12.0%, compared to 7.2% in the third quarter and 6.2% in the fourth quarter of 2023.
    • Underwriting and operating expenses were $31.1 million, compared to $29.2 million in the third quarter and $29.7 million in the fourth quarter of 2023. Expense ratio was 21.7%, compared to 20.3% in the third quarter and 22.4% in the fourth quarter of 2023.
    • Net income was $86.2 million, compared to $92.8 million in the third quarter and $83.4 million in the fourth quarter of 2023. Diluted EPS was $1.07, compared to $1.15 in the third quarter and $1.01 in the fourth quarter of 2023.
    • Shareholders’ equity was $2.2 billion at quarter end and book value per share was $28.21. Book value per share excluding the impact of net unrealized gains and losses in the investment portfolio was $29.80, up 4% compared to $28.71 in the third quarter and 17% compared to $25.54 in the fourth quarter of 2023.
    • Annualized return on equity for the quarter was 15.6%, compared to 17.5% in the third quarter and 18.0% in the fourth quarter of 2023.
    • At quarter-end, total PMIERs available assets were $3.1 billion and net risk-based required assets were $1.8 billion.
        Quarter
    Ended
    Quarter
    Ended
    Quarter
    Ended
    Change(1) Change(1)
        12/31/2024 9/30/2024 12/31/2023 Q/Q Y/Y
    INSURANCE METRICS ($billions)
    Primary Insurance-in-Force $ 210.2   $ 207.5   $ 197.0   1  % 7  %
    New Insurance Written – NIW   11.9     12.2     8.9   (2 )% 34  %
               
    FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts)
    Net Premiums Earned $ 143.5   $ 143.3   $ 132.9   0  % 8  %
    Net Investment Income   22.7     22.5     18.2   1  % 25  %
    Insurance Claims and Claim Expenses   17.3     10.3     8.2   67  % 110  %
    Underwriting and Operating Expenses   31.1     29.2     29.7   7  % 5  %
    Net Income   86.2     92.8     83.4   (7 )% 3  %
    Diluted EPS $ 1.07   $ 1.15   $ 1.01   (7 )% 6  %
    Book Value per Share (excluding net unrealized gains and losses) (2) $ 29.80   $ 28.71   $ 25.54   4  % 17  %
    Loss Ratio   12.0  %   7.2  %   6.2  %    
    Expense Ratio   21.7  %   20.3  %   22.4  %    

    (1) Percentages may not be replicated based on the rounded figures presented in the table.
    (2) Book value per share (excluding net unrealized gains and losses) is defined as total shareholders’ equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.

    Conference Call and Webcast Details

    The company will hold a conference call, which will be webcast live today, February 6, 2025, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company’s website, www.nationalmi.com, in the “Investor Relations” section. The conference call can also be accessed by dialing (844) 481-2708 in the U.S., or (412) 317-0664 internationally, by referencing NMI Holdings, Inc.

    About NMI Holdings, Inc.

    NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower’s default. To learn more, please visit www.nationalmi.com.

    Cautionary Note Regarding Forward-Looking Statements

    Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995 (the “PSLRA”). The PSLRA provides a “safe harbor” for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “can,” “could,” “may,” “predict,” “assume,” “potential,” “should,” “will,” “estimate,” “perceive,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: changes in general economic, market and political conditions and policies (including changes in interest rates and inflation) and investment results or other conditions that affect the U.S. housing market or the U.S. markets for home mortgages, mortgage insurance, reinsurance and credit risk transfer markets, including the risk related to geopolitical instability, inflation, an economic downturn (including any decline in home prices) or recession, and their impacts on our business, operations and personnel; changes in the charters, business practices, policies, pricing or priorities of Fannie Mae and Freddie Mac (collectively, the GSEs), which may include decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (“FHFA”), such as the FHFA’s priority to increase the accessibility to and affordability of homeownership for low-and-moderate income borrowers and underrepresented communities; our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (“PMIERs”) and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (“D.C.”) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and government mortgage insurers such as the Federal Housing Administration, the U.S. Department of Agriculture’s Rural Housing Service and the U.S. Department of Veterans Affairs, and potential market entry by new competitors or consolidation of existing competitors; adoption of new or changes to existing laws, rules and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the implementation of the final rules defining and/or concerning “Qualified Mortgage” and “Qualified Residential Mortgage”; U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations; legislative or regulatory changes to the GSEs’ role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular; potential legal and regulatory claims, investigations, actions, audits or inquiries that could result in adverse judgements, settlements, fines or other reliefs that could require significant expenditures or have other negative effects on our business; our ability to successfully execute and implement our capital plans, including our ability to access the equity, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; lenders, the GSEs, or other market participants seeking alternatives to private mortgage insurance; our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of risk management or pricing or investment strategies; decrease in the length of time our insurance policies are in force; emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience; potential adverse impacts arising from natural disasters including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; climate risk and efforts to manage or regulate climate risk by government agencies could affect our business and operations; potential adverse impacts arising from the occurrence of any man-made disasters or public health emergencies, including pandemics; the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks (including the exposure of our confidential customer and other information); and ability to recruit, train and retain key personnel. These risks and uncertainties also include, but are not limited to, those set forth under the heading “Risk Factors” detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

    Use of Non-GAAP Financial Measures

    We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company’s business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.

    Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital markets transactions, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.

    Adjusted net income is defined as GAAP net income, excluding the after-tax effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital markets transactions, and other infrequent, unusual or non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.

    Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the periods that non-vested shares are anti-dilutive under GAAP.

    Adjusted return on equity is calculated by dividing adjusted net income on an annualized basis by the average shareholders’ equity for the period.

    Adjusted expense ratio is defined as GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions, divided by net premiums earned.

    Adjusted combined ratio is defined as the total of GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions and insurance claims and claims expenses, divided by net premiums earned.

    Book value per share (excluding net unrealized gains and losses) is defined as total shareholders’ equity, excluding the after-tax effects of unrealized gains and losses on investments, divided by shares outstanding.

    Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.

    (1) Net realized investment gains and losses. The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.
    (2) Capital markets transaction costs. Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.
    (3) Other infrequent, unusual or non-operating items. Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in September 2021 and the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.
    (4) Net unrealized gains and losses on investments. The recognition of the net unrealized gains or losses on investment can vary significantly across periods and is influenced by factors such as interest rate movement, overall market and economic conditions, and tax and capital profiles. These valuation adjustments may not necessarily result in economic gains or losses and not reflective of ongoing operations.

    Investor Contact
    Gregory Epps
    Manager, Investor Relations and Treasury
    Investor.relations@nationalmi.com

    Consolidated statements of operations and comprehensive income (unaudited) For the three months ended
    December 31,
      For the year ended
    December 31,
        2024       2023       2024       2023  
      (In Thousands, except for per share data)
    Revenues              
    Net premiums earned $ 143,520     $ 132,940     $ 564,688     $ 510,768  
    Net investment income   22,718       18,247       85,316       67,512  
    Net realized investment gains (losses)   33             23       (33 )
    Other revenues   233       193       944       756  
    Total revenues   166,504       151,380       650,971       579,003  
    Expenses              
    Insurance claims and claim expenses   17,253       8,232       31,544       22,618  
    Underwriting and operating expenses   31,092       29,716       118,397       110,699  
    Service expenses   184       185       723       771  
    Interest expense   7,102       8,066       36,896       32,212  
    Total expenses   55,631       46,199       187,560       166,300  
                   
    Income before income taxes   110,873       105,181       463,411       412,703  
    Income tax expense   24,706       21,768       103,305       90,593  
    Net income $ 86,167     $ 83,413     $ 360,106     $ 322,110  
                   
    Earnings per share              
    Basic $ 1.09     $ 1.03     $ 4.51     $ 3.91  
    Diluted $ 1.07     $ 1.01     $ 4.43     $ 3.84  
                   
    Weighted average common shares outstanding              
    Basic   78,997       81,005       79,844       82,407  
    Diluted   80,623       82,685       81,273       83,854  
                   
    Loss ratio (1)   12.0  %     6.2  %     5.6  %     4.4  %
    Expense ratio (2)   21.7  %     22.4  %     21.0  %     21.7  %
    Combined ratio (3)   33.7  %     28.5  %     26.6  %     26.1  %
                   
    Net income $ 86,167     $ 83,413     $ 360,106     $ 322,110  
    Other comprehensive (loss) income, net of tax:              
    Unrealized (losses) gains in accumulated other comprehensive loss, net of tax (benefit) expense of $(11,374) and $19,580 for the three months ended December 31, 2024 and 2023, and $3,921 and $17,113 for the years ended December 31, 2024 and 2023, respectively   (42,787 )     73,660       15,113       64,380  
    Reclassification adjustment for realized (gains) losses included in net income, net of tax expense (benefit) of $7 and $0 for the three months ended December 31, 2024 and 2023, and $0 and $(7) for the years ended December 31, 2024, and 2023, respectively   (26 )                 26  
    Other comprehensive (loss) income, net of tax   (42,813 )     73,660       15,113       64,406  
    Comprehensive income $ 43,354     $ 157,073     $ 375,219     $ 386,516  

    (1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
    (2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
    (3) Combined ratio may not foot due to rounding.

    Consolidated balance sheets (unaudited) December 31, 2024   December 31, 2023
    Assets (In Thousands, except for share data)
    Fixed maturities, available-for-sale, at fair value (amortized cost of $2,876,343 and $2,542,862 as of December 31, 2024 and December 31, 2023, respectively) $ 2,723,541     $ 2,371,021  
    Cash and cash equivalents (including restricted cash of $90 and $1,338 as of December 31, 2024 and December 31, 2023, respectively)   54,308       96,689  
    Premiums receivable, net   82,804       76,456  
    Accrued investment income   22,386       19,785  
    Deferred policy acquisition costs, net   64,327       62,905  
    Software and equipment, net   25,681       30,252  
    Intangible assets and goodwill   3,634       3,634  
    Reinsurance recoverable   32,260       27,514  
    Prepaid federal income taxes   322,175       235,286  
    Other assets   18,857       16,965  
    Total assets $ 3,349,973     $ 2,940,507  
           
    Liabilities      
    Debt $ 415,146     $ 397,595  
    Unearned premiums   65,217       92,295  
    Accounts payable and accrued expenses   103,164       86,189  
    Reserve for insurance claims and claim expenses   152,071       123,974  
    Deferred tax liability, net   386,192       301,573  
    Other liabilities   10,751       12,877  
    Total liabilities   1,132,541       1,014,503  
           
    Shareholders’ equity      
    Common stock – $0.01 par value; 87,902,626 shares issued and 78,600,726 shares outstanding as of December 31, 2024 and 87,334,138 shares issued and 80,881,280 shares outstanding as of December 31, 2023 (250,000,000 shares authorized)   879       873  
    Additional paid-in capital   1,004,692       990,816  
    Treasury stock, at cost: 9,301,900 and 6,452,858 common shares as of December 31, 2024 and December 31, 2023, respectively   (246,594 )     (148,921 )
    Accumulated other comprehensive loss, net of tax   (124,804 )     (139,917 )
    Retained earnings   1,583,259       1,223,153  
    Total shareholders’ equity   2,217,432       1,926,004  
    Total liabilities and shareholders’ equity $ 3,349,973     $ 2,940,507  
    Non-GAAP Financial Measure Reconciliations (unaudited)
      As of and for the three months ended   For the year ended December 31,
      12/31/2024   9/30/2024   12/31/2023     2024       2023  
    As Reported (In Thousands, except for per share data)
    Revenues                  
    Net premiums earned $ 143,520     $ 143,343     $ 132,940     $ 564,688     $ 510,768  
    Net investment income   22,718       22,474       18,247       85,316       67,512  
    Net realized investment gains (losses)   33       (10 )           23       (33 )
    Other revenues   233       285       193       944       756  
    Total revenues   166,504       166,092       151,380       650,971       579,003  
    Expenses                  
    Insurance claims and claim expenses   17,253       10,321       8,232       31,544       22,618  
    Underwriting and operating expenses   31,092       29,160       29,716       118,397       110,699  
    Service expenses   184       208       185       723       771  
    Interest expense   7,102       7,076       8,066       36,896       32,212  
    Total expenses   55,631       46,765       46,199       187,560       166,300  
                       
    Income before income taxes   110,873       119,327       105,181       463,411       412,703  
    Income tax expense   24,706       26,517       21,768       103,305       90,593  
    Net income $ 86,167     $ 92,810     $ 83,413     $ 360,106     $ 322,110  
                       
    Adjustments:                  
    Net realized investment (gains) losses   (33 )     10             (23 )     33  
    Capital markets transaction costs                     6,966        
    Adjusted income before taxes   110,840       119,337       105,181       470,354       412,736  
                       
    Income tax (benefit) expense on adjustments (1)   (7 )     2             1,458       7  
    Adjusted net income $ 86,141     $ 92,818     $ 83,413     $ 365,591     $ 322,136  
                       
    Weighted average diluted shares outstanding   80,623       81,045       82,685       81,273       83,854  
                       
    Diluted EPS $ 1.07     $ 1.15     $ 1.01     $ 4.43     $ 3.84  
    Adjusted diluted EPS $ 1.07     $ 1.15     $ 1.01     $ 4.50     $ 3.84  
                       
    Return on equity   15.6  %     17.5  %     18.0  %     17.4  %     18.2  %
    Adjusted return on equity   15.6  %     17.5  %     18.0  %     17.6  %     18.2  %
                       
    Expense ratio (2)   21.7  %     20.3  %     22.4  %     21.0  %     21.7  %
    Adjusted expense ratio (3)   21.7  %     20.3  %     22.4  %     21.0  %     21.7  %
                       
    Combined ratio (4)   33.7  %     27.5  %     28.5  %     26.6  %     26.1  %
    Adjusted combined ratio (5)   33.7  %     27.5  %     28.5  %     26.6  %     26.1  %
                       
    Book value per share (6) $ 28.21     $ 27.67     $ 23.81          
    Book value per share (excluding net unrealized gains and losses) (7) $ 29.80     $ 28.71     $ 25.54          

    (1) Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for those items that are not eligible for an income tax deduction.
    (2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
    (3) Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions) by net premiums earned.
    (4) Combined ratio is calculated by dividing the total of underwriting and operating expenses and insurance claims and claim expenses by net premiums earned.
    (5) Adjusted combined ratio is calculated by dividing the total of adjusted underwriting and operating expenses (underwriting and operating expenses excluding costs related to capital market reinsurance transaction) and insurance claims and claim expenses by net premiums earned.
    (6) Book value per share is calculated by dividing total shareholders’ equity by shares outstanding.
    (7) Book value per share (excluding net unrealized gains and losses) is defined as total shareholders’ equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.

    Historical Quarterly Data  2024    2023 
      December 31   September 30   June 30   March 31   December 31
      (In Thousands, except for per share data)
    Revenues                  
    Net premiums earned $ 143,520     $ 143,343     $ 141,168     $ 136,657     $ 132,940  
    Net investment income   22,718       22,474       20,688       19,436       18,247  
    Net realized investment gains (losses)   33       (10 )                  
    Other revenues   233       285       266       160       193  
    Total revenues   166,504       166,092       162,122       156,253       151,380  
    Expenses                  
    Insurance claims and claim expenses   17,253       10,321       276       3,694       8,232  
    Underwriting and operating expenses   31,092       29,160       28,330       29,815       29,716  
    Service expenses   184       208       194       137       185  
    Interest expense   7,102       7,076       14,678       8,040       8,066  
    Total expenses   55,631       46,765       43,478       41,686       46,199  
                       
    Income before income taxes   110,873       119,327       118,644       114,567       105,181  
    Income tax expense   24,706       26,517       26,565       25,517       21,768  
    Net income $ 86,167     $ 92,810     $ 92,079     $ 89,050     $ 83,413  
                       
    Earnings per share                  
    Basic $ 1.09     $ 1.17     $ 1.15     $ 1.10     $ 1.03  
    Diluted $ 1.07     $ 1.15     $ 1.13     $ 1.08     $ 1.01  
                       
    Weighted average common shares outstanding                  
    Basic   78,997       79,549       80,117       80,726       81,005  
    Diluted   80,623       81,045       81,300       82,099       82,685  
                       
    Other data                  
    Loss ratio (1)   12.0  %     7.2  %     0.2  %     2.7  %     6.2  %
    Expense ratio (2)   21.7  %     20.3  %     20.1  %     21.8  %     22.4  %
    Combined ratio (3)   33.7  %     27.5  %     20.3  %     24.5  %     28.5  %

    (1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
    (2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
    (3) Combined ratio may not foot due to rounding.

    Portfolio Statistics

    The table below highlights trends in our primary portfolio as of the date and for the periods indicated.

    Primary portfolio trends As of and for the three months ended
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      ($ Values In Millions, except as noted below)
    New insurance written (NIW) $ 11,925     $ 12,218     $ 12,503     $ 9,398     $ 8,927  
    New risk written   3,134       3,245       3,335       2,486       2,354  
    Insurance-in-force (IIF) (1)   210,183       207,538       203,501       199,373       197,029  
    Risk-in-force (RIF) (1)   56,113       55,253       53,956       52,610       51,796  
    Policies in force (count) (1)   659,567       654,374       645,276       635,662       629,690  
    Average loan size ($ value in thousands) (1) $ 319     $ 317     $ 315     $ 314     $ 313  
    Coverage percentage (2)   26.7  %     26.6  %     26.5  %     26.4  %     26.3  %
    Loans in default (count) (1)   6,642       5,712       4,904       5,109       5,099  
    Default rate (1)   1.01  %     0.87  %     0.76  %     0.80  %     0.81  %
    Risk-in-force on defaulted loans (1) $ 545     $ 468     $ 401     $ 414     $ 408  
    Average net premium yield (3)   0.27  %     0.28  %     0.28  %     0.28  %     0.27  %
    Earnings from cancellations $ 0.8     $ 0.8     $ 1.0     $ 0.6     $ 1.0  
    Annual persistency (4)   84.6 %     85.5 %     85.4 %     85.8 %     86.1 %
    Quarterly run-off (5)   4.5 %     4.0 %     4.2 %     3.6 %     3.4 %

    (1) Reported as of the end of the period.
    (2) Calculated as end of period RIF divided by end of period IIF.
    (3) Calculated as net premiums earned, divided by average primary IIF for the period, annualized.
    (4) Defined as the percentage of IIF that remains on our books after a given twelve-month period.
    (5) Defined as the percentage of IIF that is no longer on our books after a given three-month period.

    NIW, IIF and Premiums

    The tables below present primary NIW and primary IIF, as of the dates and for the periods indicated.

    Primary NIW For the three months ended
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      (In Millions)
    Monthly $ 11,688   $ 11,978   $ 12,288   $ 9,175   $ 8,614
    Single   237     240     215     223     313
    Total $ 11,925   $ 12,218   $ 12,503   $ 9,398   $ 8,927
    Primary IIF As of
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      (In Millions)
    Monthly $ 192,228   $ 189,241   $ 184,862   $ 180,343   $ 177,764
    Single   17,955     18,297     18,639     19,030     19,265
    Total $ 210,183   $ 207,538   $ 203,501   $ 199,373   $ 197,029

    The following table presents the amounts related to the company’s quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction, 2020 QSR Transaction, 2021 QSR Transaction, 2022 QSR Transaction, 2022 Seasoned QSR Transaction, 2023 QSR Transaction, and 2024 QSR Transaction and collectively, the QSR Transactions), insurance-linked note transactions (the 2021-1 ILN Transaction, and 2021-2 ILN Transaction and collectively, the ILN Transactions), and traditional reinsurance transactions (the 2022-1 XOL Transaction, 2022-2 XOL Transaction, 2022-3 XOL Transaction, 2023-1 XOL Transaction, 2023-2 XOL Transaction, and 2024 XOL Transaction and collectively, the XOL Transactions) for the periods indicated.

      For the three months ended
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      (In Thousands)
    The QSR Transactions                  
    Ceded risk-in-force $ 13,024,200     $ 12,968,039     $ 12,815,434     $ 12,669,207     $ 12,626,541  
    Ceded premiums earned   (41,596 )     (41,761 )     (41,555 )     (41,269 )     (41,218 )
    Ceded claims and claim expenses (benefits)   4,075       2,449       (138 )     659       2,447  
    Ceding commission earned   9,997       10,152       10,222       10,292       9,561  
    Profit commission   20,149       21,883       24,351       23,407       22,057  
                       
    The ILN Transactions (1)                  
    Ceded premiums $ (4,217 )   $ (4,302 )   $ (5,858 )   $ (5,976 )   $ (6,305 )
                       
    The XOL Transactions                  
    Ceded premiums $ (9,969 )   $ (9,760 )   $ (9,403 )   $ (9,223 )   $ (8,302 )

    (1) Effective July 25, 2024 and December 27, 2024, NMIC exercised its optional termination rights to terminate and commute its previously outstanding excess-of-loss reinsurance agreements with Oaktown Re III Ltd. and Oaktown Re V Ltd., respectively. In connection with the terminations and commutations, the insurance-linked notes issued by Oaktown Re III Ltd. and Oaktown Re V Ltd. were redeemed in full with a distribution of remaining collateral assets.

    The tables below present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.

    Primary NIW by FICO For the three months ended   For the year ended
      December 31,
    2024
      September 30,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
      (In Millions)
    >= 760 $ 6,508   $ 6,615   $ 4,564   $ 24,808   $ 22,995
    740-759   2,090     2,057     1,542     8,098     6,769
    720-739   1,621     1,529     1,280     5,907     5,484
    700-719   890     1,040     816     3,794     2,816
    680-699   575     652     568     2,392     1,946
    <=679   241     325     157     1,045     463
    Total $ 11,925   $ 12,218   $ 8,927   $ 46,044   $ 40,473
    Weighted average FICO   758     757     755     757     760
    Primary NIW by LTV For the three months ended   For the year ended
      December 31,
    2024
      September 30,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
      (In Millions)
    95.01% and above $ 1,510     $ 1,568     $ 990     $ 5,908     $ 3,713  
    90.01% to 95.00%   5,370       5,720       4,107       21,149       18,929  
    85.01% to 90.00%   3,740       3,584       2,947       13,994       13,597  
    85.00% and below   1,305       1,346       883       4,993       4,234  
    Total $ 11,925     $ 12,218     $ 8,927     $ 46,044     $ 40,473  
    Weighted average LTV   92.1  %     92.3  %     92.2  %     92.3  %     92.1  %
    Primary NIW by purchase/refinance mix For the three months ended   For the year ended
      December 31,
    2024
      September 30,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
      (In Millions)
    Purchase $ 10,799   $ 11,708   $ 8,759   $ 43,921   $ 39,629
    Refinance   1,126     510     168     2,123     844
    Total $ 11,925   $ 12,218   $ 8,927   $ 46,044   $ 40,473

    The table below presents a summary of our primary IIF and RIF by book year as of December 31, 2024.

    Primary IIF and RIF As of December 31, 2024
      IIF   RIF
    Book Year (In Millions)
    2024 $ 43,560   $ 11,552
    2023   34,284     9,047
    2022   47,598     12,703
    2021   50,699     13,634
    2020   21,145     5,795
    2019 and before   12,897     3,382
    Total $ 210,183   $ 56,113

    The tables below present our total primary IIF and RIF by FICO and LTV, and total primary RIF by loan type as of the dates indicated.

    Primary IIF by FICO As of
      December 31, 2024   September 30, 2024   December 31, 2023
      (In Millions)
    >= 760 $ 105,315   $ 103,764   $ 98,034
    740-759   37,321     36,830     34,829
    720-739   29,343     28,930     27,755
    700-719   19,766     19,654     18,734
    680-699   13,374     13,326     12,867
    <=679   5,064     5,034     4,810
    Total $ 210,183   $ 207,538   $ 197,029
    Primary RIF by FICO As of
      December 31, 2024   September 30, 2024   December 31, 2023
      (In Millions)
    >= 760 $ 27,883   $ 27,396   $ 25,523
    740-759   10,006     9,850     9,207
    720-739   7,926     7,788     7,387
    700-719   5,383     5,337     5,021
    680-699   3,615     3,590     3,433
    <=679   1,300     1,292     1,225
    Total $ 56,113   $ 55,253   $ 51,796
    Primary IIF by LTV As of
      December 31, 2024   September 30, 2024   December 31, 2023
      (In Millions)
    95.01% and above $ 23,555   $ 22,644   $ 19,609
    90.01% to 95.00%   103,472     101,872     95,415
    85.01% to 90.00%   64,290     63,568     60,348
    85.00% and below   18,866     19,454     21,657
    Total $ 210,183   $ 207,538   $ 197,029
    Primary RIF by LTV As of
      December 31, 2024   September 30, 2024   December 31, 2023
      (In Millions)
    95.01% and above $ 7,345   $ 7,054   $ 6,062
    90.01% to 95.00%   30,563     30,100     28,184
    85.01% to 90.00%   15,956     15,777     14,961
    85.00% and below   2,249     2,322     2,589
    Total $ 56,113   $ 55,253   $ 51,796
    Primary RIF by Loan Type As of
      December 31, 2024   September 30, 2024   December 31, 2023
               
    Fixed 98  %   98  %   98  %
    Adjustable rate mortgages:          
    Less than five years          
    Five years and longer 2     2     2  
    Total 100  %   100  %   100  %

    The table below presents a summary of the change in total primary IIF during the periods indicated.

    Primary IIF As of and for the three months ended
      December 31, 2024   September 30, 2024   December 31, 2023
      (In Millions)
    IIF, beginning of period $ 207,538     $ 203,501     $ 194,781  
    NIW   11,925       12,218       8,927  
    Cancellations, principal repayments and other reductions   (9,280 )     (8,181 )     (6,679 )
    IIF, end of period $ 210,183     $ 207,538     $ 197,029  


    Geographic Dispersion

    The following table shows the distribution by state of our primary RIF as of the periods indicated:

    Top 10 primary RIF by state As of
      December 31, 2024   September 30, 2024   December 31, 2023
    California 10.1  %   10.1  %   10.2  %
    Texas 8.6     8.7     8.7  
    Florida 7.3     7.4     7.6  
    Georgia 4.1     4.1     4.1  
    Washington 3.9     3.9     4.0  
    Illinois 3.8     3.9     4.0  
    Virginia 3.7     3.8     3.9  
    Pennsylvania 3.4     3.4     3.4  
    Ohio 3.3     3.2     3.0  
    North Carolina 3.2     3.1     3.0  
    Total 51.4  %   51.6  %   51.9  %

    The table below presents selected primary portfolio statistics, by book year, as of December 31, 2024.

      As of December 31, 2024
    Book year Original
    Insurance
    Written
      Remaining
    Insurance
    in Force
      %
    Remaining
    of Original
    Insurance
      Policies
    Ever in
    Force
      Number
    of Policies
    in Force
      Number
    of Loans
    in
    Default
      # of
    Claims
    Paid
      Incurred
    Loss Ratio
    (Inception
    to Date)
    (1)
      Cumulative
    Default Rate
    (2)
      Current
    Default
    Rate
    (3)
      ($ Values in Millions)    
    2015 and prior $ 16,035   $ 885   6  %   67,989   4,903   99   208   2.7  %   0.5  %   2.0  %
    2016   21,187     1,498   7  %   83,626   8,076   158   187   1.7  %   0.4  %   2.0  %
    2017   21,582     1,867   9  %   85,897   10,577   267   184   1.9  %   0.5  %   2.5  %
    2018   27,295     2,433   9  %   104,043   13,152   420   184   2.5  %   0.6  %   3.2  %
    2019   45,141     6,214   14  %   148,423   27,442   511   97   2.0  %   0.4  %   1.9  %
    2020   62,702     21,145   34  %   186,174   73,926   598   51   1.4  %   0.3  %   0.8  %
    2021   85,574     50,699   59  %   257,972   167,892   1,679   74   3.5  %   0.7  %   1.0  %
    2022   58,734     47,598   81  %   163,281   138,915   2,002   68   17.9  %   1.3  %   1.4  %
    2023   40,473     34,284   85  %   111,994   98,711   725   10   14.4  %   0.7  %   0.7  %
    2024   46,044     43,560   95  %   120,747   115,973   183     6.2  %   0.2  %   0.2  %
    Total $ 424,767   $ 210,183       1,330,146   659,567   6,642   1,063            

    (1) Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
    (2) Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.
    (3) Calculated as the number of loans in default divided by number of policies in force.

    The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses:

      For the three months ended
    December 31,
      For the year ended
    December 31,
        2024       2023       2024       2023  
      (In Thousands)
    Beginning balance $ 135,520     $ 116,078     $ 123,974     $ 99,836  
    Less reinsurance recoverables (1)   (29,214 )     (25,956 )     (27,514 )     (21,587 )
    Beginning balance, net of reinsurance recoverables   106,306       90,122       96,460       78,249  
                   
    Add claims incurred:              
    Claims and claim expenses incurred:              
    Current year (2)   21,674       17,298       93,206       78,285  
    Prior years (3)   (4,421 )     (9,789 )     (61,662 )     (56,390 )
    Total claims and claim expenses incurred (4)   17,253       7,509       31,544       21,895  
                   
    Less claims paid:              
    Claims and claim expenses paid:              
    Current year (2)   458       481       638       600  
    Prior years (3)   3,290       1,181       7,555       3,575  
    Reinsurance terminations         (491 )           (491 )
    Total claims and claim expenses paid   3,748       1,171       8,193       3,684  
                   
    Reserve at end of period, net of reinsurance recoverables   119,811       96,460       119,811       96,460  
    Add reinsurance recoverables (1)   32,260       27,514       32,260       27,514  
    Ending balance $ 152,071     $ 123,974     $ 152,071     $ 123,974  

    (1) Related to ceded losses recoverable under the QSR Transactions
    (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year. Amounts are presented net of reinsurance and included $83.5 million attributed to net case reserves and $8.1 million attributed to net IBNR reserves for the year ended December 31, 2024, $70.6 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the year ended December 31, 2023.
    (3) Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance and included $54.1 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the year ended December 31, 2024, $50.9 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the year ended December 31, 2023.
    (4) Excludes a $0.7 million termination fee for the year ended December 31, 2023 incurred in connection with the amendment of the 2020 QSR Transaction.

    The following table provides a reconciliation of the beginning and ending count of loans in default:

      For the three months ended
    December 31,
      For the year ended
    December 31,
      2024    2023    2024    2023 
    Beginning default inventory 5,712     4,594     5,099     4,449  
    Plus: new defaults 2,742     2,039     8,757     6,758  
    Less: cures (1,684 )   (1,458 )   (6,899 )   (5,892 )
    Less: claims paid (108 )   (70 )   (276 )   (199 )
    Less: rescission and claims denied (20 )   (6 )   (39 )   (17 )
    Ending default inventory 6,642     5,099     6,642     5,099  

    The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions, for the periods indicated:

      For the three months ended
    December 31,
      For the year ended
    December 31,
        2024       2023       2024       2023  
      ($ Values In Thousands)
    Number of claims paid (1)   108       70       276       199  
    Total amount paid for claims $ 4,777     $ 2,060     $ 10,491     $ 5,192  
    Average amount paid per claim $ 44     $ 29     $ 38     $ 26  
    Severity (2)   65  %     64  %     61  %     55  %

    (1) Count includes 32 and 88 claims settled without payment during the three months and year ended December 31, 2024, respectively, and 23 and 70 claims settled without payment during the three months and year ended December 31, 2023, respectively.
    (2) Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment.

    The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the dates indicated:

    Average reserve per default: As of
      December 31, 2024   December 31, 2023
      (In Thousands)
    Case (1) $ 21.0   $ 22.4
    IBNR (1) (2)   1.9     1.9
    Total $ 22.9   $ 24.3

    (1) Defined as the gross reserve per insured loan in default.
    (2) Amount includes claims adjustment expenses.

    The following table provides a comparison of the PMIERs available assets and net risk-based required asset amount as reported by NMIC as of the dates indicated:

      As of
      December 31, 2024   September 30, 2024   December 31, 2023
      (In Thousands)
    Available assets $ 3,108,211   $ 3,006,892   $ 2,717,804
    Net risk-based required assets   1,828,807     1,735,790     1,516,140

    The MIL Network

  • MIL-OSI: Monolithic Power Systems Earnings Commentary for the Quarter and Year Ended December 31, 2024

    Source: GlobeNewswire (MIL-OSI)

    KIRKLAND, Wash., Feb. 06, 2025 (GLOBE NEWSWIRE) — MPS will report its results after the market closes on February 6, 2025 and host a question-and-answer webinar at 2:00 p.m. PT / 5:00 p.m. ET. The live event will be held via a Zoom webcast, which can be accessed at https://mpsic.zoom.us/j/96816578886.

    2024 Financial Summary  (Unaudited)
    GAAP
        2024     2023     YoY Change YoY Change (%)
    Revenue ($k) $ 2,207,100   $ 1,821,072     Up $ 386,028 Up 21.2%
    Gross Margin   55.3 %   56.1 %   Down 0.8 pts Down 1.4%
    Opex ($k) $ 681,512   $ 539,383     Up $ 142,129 Up 26.4%
    Operating Margin   24.4 %   26.5 %   Down 2.1 pts Down 7.9%
    Net income ($k) $ 1,786,700   $ 427,374     Up $ 1,359,326 Up 318.1%
    Diluted EPS $ 36.59   $ 8.76     Up $ 27.83 Up 317.7%
        2024     2023     YoY Change YoY Change (%)
    Revenue ($k) $ 2,207,100   $ 1,821,072     Up $ 386,028 Up 21.2%
    Gross Margin   55.8 %   56.4 %   Down 0.6 pts Down 1.1%
    Opex ($k) $ 466,379   $ 385,395     Up $ 80,984 Up 21.0%
    Operating Margin   34.6 %   35.2 %   Down 0.6 pts Down 1.7%
    Net income ($k) $ 689,755   $ 574,647     Up $ 115,108 Up 20.0%
    Diluted EPS $ 14.12   $ 11.78     Up $ 2.34 Up 19.9%
    Revenue by End Market
        Revenue   YoY Change   % of Total Rev
    End Market ($M)     2024     2023     $   %     2024   2023  
    Enterprise Data   $ 716.2 $ 323.0   $ 393.2   121.7 %   32.5 % 17.7 %
    Storage & Computing     501.6   491.1     10.5   2.1 %   22.7   27.0  
    Automotive     414.0   394.7     19.3   4.9 %   18.8   21.7  
    Communications     225.9   204.9     21.0   10.2 %   10.2   11.3  
    Consumer     202.0   234.7     (32.7 ) (13.9 %)   9.1   12.9  
    Industrial     147.4   172.7     (25.3 ) (14.6 %)   6.7   9.4  
    Total   $ 2,207.1 $ 1,821.1   $ 386.0   21.2 %   100 % 100 %
    Q4 2024 Financial Summary  (Unaudited)
    GAAP
        Q4’24     Q3’24     Q4’23     QoQ Change YoY Change
    Revenue ($k) $ 621,665   $ 620,119   $ 454,012     Up 0.2% Up 36.9%
    Gross Margin   55.4 %   55.4 %   55.3 %   Flat Up 0.1 pts
    Opex ($k) $ 181,101   $ 179,415   $ 141,554     Up 0.9% Up 27.9%
    Operating Margin   26.3 %   26.5 %   24.1 %   Down 0.2 pts Up 2.2 pts
    Net income ($k) $ 1,449,363   $ 144,430   $ 96,905     Up 903.5% Up 1395.7%
    Diluted EPS $ 29.88   $ 2.95   $ 1.98     Up 912.9% Up 1409.1%
      Q4’24   Q3’24     Q4’23     QoQ Change YoY Change
    Revenue ($k) $ 621,665   $ 620,119   $ 454,012     Up 0.2% Up 36.9%
    Gross Margin   55.8 %   55.8 %   55.7 %   Flat Up 0.1 pts
    Opex ($k) $ 126,117   $ 125,169   $ 96,745     Up 0.8% Up 30.4%
    Operating Margin   35.5 %   35.6 %   34.4 %   Down 0.1 pts Up 1.1 pts
    Net income ($k) $ 198,401   $ 198,786   $ 140,852     Down 0.2% Up 40.9%
    Diluted EPS $ 4.09   $ 4.06   $ 2.88     Up 0.7% Up 42.0%
    Revenue by End Market
        Revenue   YoY Change   % of Total Rev
    End Market ($M)     Q4’24     Q4’23   $   %   Q4’24   Q4’23  
    Enterprise Data   $ 194.9 $ 128.9   $ 66.0 51.2 %   31.3 % 28.4 %
    Storage & Computing     136.5   117.3     19.2 16.4 %   22.0   25.8  
    Automotive     128.4   89.8     38.6 43.0 %   20.6   19.8  
    Communications     63.8   40.9     22.9 55.9 %   10.3   9.0  
    Consumer     57.3   43.7     13.6 31.0 %   9.2   9.6  
    Industrial     40.8   33.4     7.4 22.3 %   6.6   7.4  
    Total   $ 621.7 $ 454.0   $ 167.7 36.9 %   100 % 100 %

    Ongoing Business Conditions

    In 2024, MPS’s revenue grew 21.2% year-over-year and achieved record revenue of $2.2 billion. This is our 13th consecutive year of revenue growth driven by consistent execution, continued innovation, and strong customer focus.

    Highlights from 2024 include:

    • We introduced a Silicon Carbide inverter for high power clean energy applications. Initial revenue is expected to ramp in late 2025. Other Silicon Carbide-based applications are expected to be introduced in multiple geographies during 2025 and 2026.
    • We developed a family of high quality, cost efficient automotive audio products utilizing DSP technology from our 2024 Axign acquisition powered by MPS solutions.
    • For enterprise notebooks, we launched a battery management solution and are sampling our new mini-phase power stage. These products enable faster charge time and significantly improve notebook battery life.
    • Building on our first analog to digital converter design win in 2024, we are developing new high accuracy 24-bit converters which are expected to ramp in the second half of 2025.
    • We executed a $640M stock repurchase program offsetting dilution for our shareholders.

    In Q4 2024, MPS achieved record quarterly revenue of $621.7 million, slightly higher than revenue in the third quarter of 2024 and 36.9% higher than revenue in the fourth quarter of 2023.   Our performance during the quarter reflected the continued strength of our diversified market strategy and a continued trend of the improved ordering patterns we saw in Q3 2024.

    MPS continues to focus on innovation, solving our customers’ most challenging problems, and maintaining the highest level of quality. We continue to invest in new technology, expand into new markets, and to diversify our end-market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply stability, and swiftly adapt to market changes as they occur.

    “Our proven, long-term growth strategy remains intact as we continue our transformation from being a chip-only, semiconductor supplier to a full service, silicon-based solutions provider,” said Michael Hsing, CEO and founder of MPS.

    2024 Full Year Revenue Results

    Our full year 2024 revenue by market segment was as follows:

    Full year 2024 Enterprise Data revenue grew $393.2 million to $716.2 million. This 121.7% increase was due to higher sales of our power management solutions for AI and server applications. Enterprise Data revenue represented 32.5% of MPS’s total revenue in 2024 compared with 17.7% in 2023.

    Communications revenue grew by $21.0 million in 2024 to $225.9 million. This 10.2% increase was a result of higher sales of power solutions for optical modules and routers, partially offset by lower sales of networking solutions. Communications revenue represented 10.2% of our 2024 revenue compared with 11.3% in 2023.

    Automotive revenue grew $19.3 million year-over-year to $414.0 million in 2024. This 4.9% gain was driven by increased sales of our highly integrated applications supporting advanced driver assistance systems. Automotive revenue represented 18.8% of MPS’s full year 2024 revenue compared with 21.7% in 2023.

    Storage and Computing revenue for 2024 grew $10.5 million over the prior year to $501.6 million. This 2.1% increase was primarily driven by increased sales of products for notebooks. Storage and Computing revenue represented 22.7% of MPS’s total revenue in 2024 compared with 27.0% in 2023.

    Consumer revenue decreased $32.7 million to $202.0 million in 2024. This 13.9% year-over-year decrease was a result of broad market weakness. Consumer revenue represented 9.1% of MPS’s full year 2024 revenue compared with 12.9% in 2023.

    Industrial revenue fell by $25.3 million to $147.4 million in 2024. This 14.6% decrease was due to general market weakness across all industrial segments. Industrial revenue represented 6.7% of MPS’s full year 2024 revenue compared with 9.4% in 2023.

    Q4’24 Revenue Results

    MPS reported fourth quarter revenue of $621.7 million, slightly higher than the third quarter of 2024 and 36.9% higher than the fourth quarter of 2023. Compared with the third quarter of 2024, sales in Automotive and Enterprise Data improved sequentially.

    Fourth quarter Automotive revenue of $128.4 million increased 15.3% from the third quarter of 2024 primarily from higher sales in ADAS and infotainment power solutions. Fourth quarter 2024 Automotive revenue was up 43.0% year over year. Automotive revenue represented 20.6% of MPS’s fourth quarter 2024 revenue compared with 19.8% in the fourth quarter of 2023.

    In our Enterprise Data market, fourth quarter 2024 revenue of $194.9 million increased 5.6% from the third quarter of 2024. Fourth quarter 2024 Enterprise Data revenue was up 51.2% year over year. Enterprise Data revenue represented 31.3% of MPS’s fourth quarter 2024 revenue compared with 28.4% in the fourth quarter of 2023.

    Fourth quarter 2024 Storage and Computing revenue of $136.5 million decreased 5.2% from the third quarter of 2024. The sequential decrease was primarily driven by lower sales in notebooks, partially offset by stronger sales in graphic cards. Fourth quarter 2024 Storage and Computing revenue was up 16.4% year over year. Storage and Computing revenue represented 22.0% of MPS’s fourth quarter 2024 revenue compared with 25.8% in the fourth quarter of 2023.

    Fourth quarter 2024 Industrial revenue of $40.8 million decreased 7.3% from the third quarter of 2024 due to lower sales for security and power sources. Fourth quarter 2024 Industrial revenue was up 22.3% year over year. Industrial revenue represented 6.6% of our total fourth quarter 2024 revenue compared with 7.4% in the fourth quarter of 2023.

    Fourth quarter Consumer revenue of $57.3 million decreased 11.0% from the third quarter of 2024 primarily from lower sales in smart TVs, home appliance and gaming solutions. Fourth quarter 2024 Consumer revenue was up 31.0% year over year. Consumer revenue represented 9.2% of MPS’s fourth quarter 2024 revenue compared with 9.6% in the fourth quarter of 2023.

    Fourth quarter 2024 Communications revenue of $63.8 million was down 11.2% from the third quarter of 2024 reflecting lower sales in networking solutions, partially offset by higher sales in optical solutions. Fourth quarter 2024 Communications revenue was up 55.9% year over year. Communications sales represented 10.3% of our total fourth quarter 2024 revenue compared with 9.0% in the fourth quarter of 2023.

    Q4’24 Gross Margin & Operating Income

    GAAP gross margin was 55.4%, flat to the third quarter of 2024. Our GAAP operating income was approximately $163.3 million compared to $164.0 million reported in the third quarter of 2024.

    Non-GAAP gross margin for the fourth quarter of 2024 was 55.8%, flat to the third quarter of 2024. Our non-GAAP operating income was $220.7 million compared to $220.8 million reported in the third quarter of 2024.

    Q4’24 Operating Expenses

    Our GAAP operating expenses were $181.1 million in the fourth quarter of 2024 compared with $179.4 million in the third quarter of 2024.

    Our Non-GAAP operating expenses were approximately $126.1 million, up from $125.2 million in the third quarter of 2024.

    The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are primarily stock-based compensation and related expense and deferred compensation plan expense.

    Total stock-based compensation and related expenses, including approximately $1.7 million charged to cost of goods sold, was $56.3 million compared with $52.4 million recorded in the third quarter of 2024.

    The Bottom Line

    Fourth quarter 2024 GAAP net income was $1.4 billion or $29.88 per fully diluted share, compared with $144.4 million or $2.95 per share in the third quarter of 2024. Fourth quarter GAAP net income and EPS included the recognition of a tax benefit granted to a foreign subsidiary.

    Fourth quarter 2024 non-GAAP net income was $198.4 million or $4.09 per fully diluted share, compared with $198.8 million or $4.06 per fully diluted share in the third quarter of 2024.

    There were 48.5 million fully diluted shares outstanding at the end of the fourth quarter of 2024. MPS repurchased $622M in stock during the fourth quarter of 2024.

    Balance Sheet and Cash Flow

    Cash, cash equivalents and short-term investments were $862.9 million at the end of the fourth quarter of 2024 compared to $1.46 billion at the end of the third quarter of 2024. The change was driven primarily by the share repurchases made in the fourth quarter. For the fourth quarter of 2024, MPS generated operating cash flow of approximately $167.7 million compared with the third quarter of 2024 operating cash flow of $231.7 million.

    Accounts receivable at the end of the fourth quarter of 2024 at $172.5 million, representing 25 days of sales outstanding, which was 1 day higher than the 24 days reported at the end of the third quarter of 2024.

    Our internal inventories at the end of the fourth quarter of 2024 were $419.6 million, down from $424.9 million at the end of the third quarter of 2024. Days of inventory of 138 days at the end of the fourth quarter of 2024 was 2 days lower than at the end of the third quarter of 2024.

    We have carefully managed our internal inventories throughout the year, balancing the uncertainty in the market with being prepared to capture market upturns when they occur. Comparing current inventory levels using next quarter’s projected revenue, days of inventory at the end of the fourth quarter of 138 days was 2 days lower than at the end of the third quarter of 2024.

    Selected Balance Sheet and Inventory Data (Unaudited)
           
      Q4’24 Q3’24 Q4’23
    Cash, Cash Equivalents, and Short-Term Investments $ 862.9 M $ 1,462.4 M $ 1,108.5 M
    Operating Cash Flow $ 167.7 M $ 231.7 M $ 153.3 M
    Accounts Receivable $ 172.5 M $ 164.7 M $ 179.9 M
    Days of Sales Outstanding 25 Days 24 Days 36 Days
    Internal Inventories $ 419.6 M $ 424.9 M $ 383.7 M
    Days of Inventory (current quarter revenue) 138 Days 140 Days 172 Days
    Days of Inventory (next quarter revenue) 138 Days 140 Days 170 Days

    Q1’25 Business Outlook

    For the first quarter of 2025 ending March 31, we are forecasting:

    • Revenue in the range of $610 million to $630 million.
    • GAAP gross margin in the range of 55.1% to 55.7%.
    • Non-GAAP gross margin in the range of 55.4% to 56.0%, which excludes the impact from stock-based compensation and related expenses as well as the impact from amortization of acquisition-related intangible assets.
    • Total stock-based compensation and related expenses in the range of $55.0 million to $57.0 million including approximately $1.7 million that would be charged to cost of goods sold.
    • GAAP operating expenses between $180.2 million and $186.2 million.
    • Non-GAAP operating expenses in the range of $126.9 million to $130.9 million. This estimate excludes stock-based compensation and related expenses in the range of $53.3 million to $55.3 million.
    • Interest and other income in the range from $5.8 million to $6.2 million before foreign exchange gains or losses.
    • Non-GAAP tax rate of 15% for 2025.
    • Fully diluted shares outstanding in the range of 47.8 to 48.2 million shares.

    Our quarterly dividend will increase 25% to $1.56 per share from $1.25 per share for stockholders of record as of March 31, 2025.

    In addition, our board of directors has authorized a new $500 million stock repurchase program effective over the next 3 years. The $640 million share repurchase program authorized in October of 2023 has been fully executed.

    For further information, contact:

    Bernie Blegen
    Executive Vice President and Chief Financial Officer
    Monolithic Power Systems, Inc.
    408-826-0777
    MPSInvestor.Relations@monolithicpower.com

    Safe Harbor Statement

    This earnings commentary contains, and statements that will be made during the accompanying webinar will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including under the “Q1’25 Business Outlook” section herein, our statement regarding our business focus, our statement regarding the expansion and diversification of our global supply chain and the quote from our CEO and founder, including, among other things, (i) projected revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, stock-based compensation and related expenses, amortization of acquisition-related intangible assets, other income before foreign exchange gains or losses, and fully diluted shares outstanding, (ii) our outlook for the first quarter of fiscal year 2025 and the near-term, medium-term and long-term prospects of MPS, including our ability to adapt to changing market conditions, performance against our business plan, our ability to grow despite the various challenges facing our business, our industry and the global economic environment, revenue growth in certain of our market segments, potential new business segments, our continued investment in research and development (“R&D”), expected revenue growth, customers’ acceptance of our new product offerings, the prospects of our new product development, our expectations regarding market and industry segment trends and prospects, and our projected expansion of capacity and the impact it may have on our business, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements regarding the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this earnings commentary and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, continued uncertainties in the global economy, including due to the Russia-Ukraine and Middle East conflicts, inflation, consumer sentiment and other factors; adverse events arising from orders or regulations of governmental entities, including such orders or regulations that impact our customers or suppliers, and adoption of new or amended accounting standards; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, and tax laws or the interpretation of same, including in foreign countries where MPS has offices or operations; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; acceptance of, or demand for, our products, in particular the new products launched recently, being different than expected; our ability to increase market share in our targeted markets; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of any continuing impact from the Russia-Ukraine and Middle East conflicts); our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to attract new customers and retain existing customers; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; our ability to expand manufacturing capacity to support future growth; adverse changes in production and testing efficiency of our products; any political, cultural, military, regulatory, economic, foreign exchange and operational changes in China, where a significant portion of our manufacturing capacity comes from; any market disruptions or interruptions in our schedule of new product development releases; our ability to manage our inventory levels; adequate supply of our products from our third-party manufacturing partners; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; the ongoing consolidation of companies in the semiconductor industry; competition generally and the increasingly competitive nature of our industry; our ability to realize the anticipated benefits of companies and products that MPS acquires, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the risks, uncertainties and costs of litigation in which MPS is involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on our financial performance if its tax and litigation provisions are inadequate; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of epidemics and pandemics on the global economy and on our business; the risks associated with the financial market, economy and geopolitical uncertainties, including the Russia-Ukraine and Middle East conflicts; and other important risk factors identified under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on February 29, 2024. MPS assumes no obligation to update the information in this earnings commentary or in the accompanying webinar.

    Non-GAAP Financial Measures

    This CFO Commentary contains references to certain non-GAAP financial measures. Non-GAAP net income, non-GAAP net income per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before income taxes differ from net income, net income per share, gross margin, operating expenses, other income, net, operating income and income before income taxes determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Non-GAAP net income and non-GAAP net income per share exclude the effect of stock-based compensation and related expenses, which include stock-based compensation expense and employer payroll taxes in relation to the stock-based compensation, net deferred compensation plan expense, amortization of acquisition-related intangible assets and related tax effects. Non-GAAP net income and non-GAAP net income per share also exclude the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating income excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP other income, net excludes the effect of deferred compensation plan income. Non-GAAP income before income taxes excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and net deferred compensation plan expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, and amortization of acquisition-related intangible assets. Projected non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of MPS’s core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS. See the GAAP to Non-GAAP reconciliations in the tables set forth below.

    RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
    (Unaudited, in thousands, except per share amounts)
        Three Months Ended
    December 31,
      Year Ended December 31,
        2024   2023   2024   2023
    Net income   $ 1,449,363     $ 96,905     $ 1,786,700     $ 427,374  
                                     
    Adjustments to reconcile net income to non-GAAP net income:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense, net     573       288       867       1,055  
    Tax effect of non-GAAP adjustments     (22,773 )     2,519       (26,922 )     (3,625 )
    Recognition of a tax benefit granted to a foreign subsidiary     (1,285,402 )           (1,285,402 )      
    Non-GAAP net income   $ 198,401     $ 140,852     $ 689,755     $ 574,647  
                                     
    Non-GAAP net income per share:                                
    Basic   $ 4.11     $ 2.94     $ 14.19     $ 12.07  
    Diluted   $ 4.09     $ 2.88     $ 14.12     $ 11.78  
                                     
    Shares used in the calculation of non-GAAP net income per share:                                
    Basic     48,317       47,936       48,599       47,610  
    Diluted     48,506       48,881       48,835       48,771  

    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.

    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
    (Unaudited, in thousands)
        Three Months Ended
    December 31,
      Year Ended December 31,
        2024   2023   2024   2023
    Gross profit   $ 344,408     $ 251,123     $ 1,220,870     $ 1,021,119  
    Gross margin     55.4 %     55.3 %     55.3 %     56.1 %
                                     
    Adjustments to reconcile gross profit to non-GAAP gross profit:                                
    Stock-based compensation and related expenses*     1,745       1,228       6,975       4,545  
    Amortization of acquisition-related intangible assets     287             1,171        
    Deferred compensation plan expense     417       486       1,500       871  
    Non-GAAP gross profit   $ 346,857     $ 252,837     $ 1,230,516     $ 1,026,535  
    Non-GAAP gross margin     55.8 %     55.7 %     55.8 %     56.4 %

    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.

    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
    (Unaudited, in thousands)
        Three Months Ended
    December 31,
      Year Ended December 31,
        2024   2023   2024   2023
    Total operating expenses   $ 181,101     $ 141,554     $ 681,512     $ 539,383  
                                     
    Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:                                
    Stock-based compensation and related expenses*     (54,575 )     (39,879 )     (206,234 )     (145,166 )
    Amortization of acquisition-related intangible assets     (33 )     (33 )     (132 )     (132 )
    Deferred compensation plan expense     (376 )     (4,897 )     (8,767 )     (8,690 )
    Non-GAAP operating expenses   $ 126,117     $ 96,745     $ 466,379     $ 385,395  

    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.

    RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
    (Unaudited, in thousands)
        Three Months Ended
    December 31,
      Year Ended December 31,
        2024   2023   2024   2023
    Total operating income   $ 163,307     $ 109,569     $ 539,358     $ 481,736  
                                     
    Adjustments to reconcile total operating income to non-GAAP total operating income:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense     793       5,383       10,267       9,561  
    Non-GAAP operating income   $ 220,740     $ 156,092     $ 764,137     $ 641,140  

    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.

    RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET
    (Unaudited, in thousands)
        Three Months Ended
    December 31,
      Year Ended December 31,
        2024   2023   2024   2023
    Total other income, net   $ 6,224     $ 9,976     $ 33,554     $ 24,105  
                                     
    Adjustments to reconcile other income, net to non-GAAP other income, net:                                
    Deferred compensation plan income     (220 )     (5,095 )     (9,400 )     (8,506 )
    Non-GAAP other income, net   $ 6,004     $ 4,881     $ 24,154     $ 15,599  
    RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
    (Unaudited, in thousands)
        Three Months Ended
    December 31,
      Year Ended December 31,
        2024   2023   2024   2023
    Total income before income taxes   $ 169,531     $ 119,545     $ 572,912     $ 505,841  
                                     
    Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense, net     573       288       867       1,055  
    Non-GAAP income before income taxes   $ 226,744     $ 160,973     $ 788,291     $ 656,739  

    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.

    2025 FIRST QUARTER OUTLOOK
    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
    (Unaudited)
        Three Months Ending
    March 31, 2025
       
        Low   High
    Gross margin     55.1 %     55.7 %
    Adjustment to reconcile gross margin to non-GAAP gross margin:                
    Stock-based compensation and other expenses     0.3 %     0.3 %
    Non-GAAP gross margin     55.4 %     56.0 %
    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
    (Unaudited, in thousands)
        Three Months Ending
    March 31, 2025
       
        Low   High
    Operating expenses   $ 180,200     $ 186,200  
    Adjustments to reconcile operating expenses to non-GAAP operating expenses:                
    Stock-based compensation and other expenses     (53,300 )     (55,300 )
    Non-GAAP operating expenses   $ 126,900     $ 130,900  

    The MIL Network

  • MIL-OSI: Monolithic Power Systems Announces Results for the Fourth Quarter and Year Ended December 31, 2024 and an Increase in Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    KIRKLAND, Wash., Feb. 06, 2025 (GLOBE NEWSWIRE) — Monolithic Power Systems, Inc. (“MPS”) (Nasdaq: MPWR), a fabless global company that provides high-performance, semiconductor-based power electronics solutions, today announced financial results for the quarter and year ended December 31, 2024. MPS also announced that its Board of Directors has approved an increase in the quarterly cash dividend from $1.25 per share to $1.56 per share. The first quarter dividend of $1.56 per share will be paid on April 15, 2025 to all stockholders of record as of the close of business on March 31, 2025.

    The financial results for the quarter ended December 31, 2024 were as follows:

    • Revenue was $621.7 million for the quarter ended December 31, 2024, a 0.2% increase from $620.1 million for the quarter ended September 30, 2024 and a 36.9% increase from $454.0 million for the quarter ended December 31, 2023.
    • GAAP gross margin was 55.4% for the quarter ended December 31, 2024, compared with 55.3% for the quarter ended December 31, 2023.
    • Non-GAAP gross margin (1) was 55.8% for the quarter ended December 31, 2024, excluding the impact of $1.7 million for stock-based compensation and related expenses, $0.4 million for deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with 55.7% for the quarter ended December 31, 2023, excluding the impact of $1.2 million for stock-based compensation expense and $0.5 million for deferred compensation plan expense.
    • GAAP operating expenses were $181.1 million for the quarter ended December 31, 2024, compared with $141.6 million for the quarter ended December 31, 2023.
    • Non-GAAP operating expenses (1) were $126.1 million for the quarter ended December 31, 2024, excluding $54.6 million for stock-based compensation and related expenses, and $0.4 million for deferred compensation plan expense, compared with $96.7 million for the quarter ended December 31, 2023, excluding $39.9 million for stock-based compensation expense and $4.9 million for deferred compensation plan expense.
    • GAAP operating income was $163.3 million for the quarter ended December 31, 2024, compared with $109.6 million for the quarter ended December 31, 2023.
    • Non-GAAP operating income (1) was $220.7 million for the quarter ended December 31, 2024, excluding $56.3 million for stock-based compensation and related expenses, $0.8 million for deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with $156.1 million for the quarter ended December 31, 2023, excluding $41.1 million for stock-based compensation expense and $5.4 million for deferred compensation plan expense.
    • GAAP other income, net was $6.2 million for the quarter ended December 31, 2024, compared with $10.0 million for the quarter ended December 31, 2023.
    • Non-GAAP other income, net (1) was $6.0 million for the quarter ended December 31, 2024, excluding $0.2 million for deferred compensation plan income, compared with $4.9 million for the quarter ended December 31, 2023, excluding $5.1 million for deferred compensation plan income.
    • GAAP income before income taxes was $169.5 million for the quarter ended December 31, 2024, compared with $119.5 million for the quarter ended December 31, 2023.
    • Non-GAAP income before income taxes (1) was $226.7 million for the quarter ended December 31, 2024, excluding $56.3 million for stock-based compensation and related expenses, $0.6 million for net deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with $161.0 million for the quarter ended December 31, 2023, excluding $41.1 million for stock-based compensation expense and $0.3 million for net deferred compensation plan expense.
    • GAAP net income was $1.4 billion and $29.88 per diluted share for the quarter ended December 31, 2024. Comparatively, GAAP net income was $96.9 million and $1.98 per diluted share for the quarter ended December 31, 2023. GAAP net income and income per diluted share for the quarter ended December 31, 2024 included $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary.
    • Non-GAAP net income (1) was $198.4 million and $4.09 per diluted share for the quarter ended December 31, 2024 excluding $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP net income (1) for the quarter ended December 31, 2024 also excluded $56.3 million for stock-based compensation and related expenses, $0.6 million for net deferred compensation plan expense, $0.3 million for amortization of acquisition-related intangible assets and $22.8 million for the related tax effects, compared with $140.9 million and $2.88 per diluted share for the quarter ended December 31, 2023, excluding $41.1 million for stock-based compensation expense, $0.3 million for net deferred compensation plan expense and $2.5 million for the related tax effects.

     

    The financial results for the year ended December 31, 2024 were as follows:

    • Revenue was $2.2 billion for the year ended December 31, 2024, a 21.2% increase from $1.8 billion for the year ended December 31, 2023.
    • GAAP gross margin was 55.3% for the year ended December 31, 2024, compared with 56.1% for the year ended December 31, 2023.
    • Non-GAAP gross margin (1) was 55.8% for the year ended December 31, 2024, excluding the impact of $7.0 million for stock-based compensation and related expenses, $1.5 million for deferred compensation plan expense and $1.2 million for amortization of acquisition-related intangible assets, compared with 56.4% for the year ended December 31, 2023, excluding the impact of $4.5 million for stock-based compensation expense and $0.9 million for deferred compensation plan expense.
    • GAAP operating expenses were $681.5 million for the year ended December 31, 2024, compared with $539.4 million for the year ended December 31, 2023.
    • Non-GAAP operating expenses (1) were $466.4 million for the year ended December 31, 2024, excluding $206.2 million for stock-based compensation and related expenses, $8.8 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets, compared with $385.4 million for the year ended December 31, 2023, excluding $145.2 million for stock-based compensation expense, $8.7 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
    • GAAP operating income was $539.4 million for the year ended December 31, 2024, compared with $481.7 million for the year ended December 31, 2023.
    • Non-GAAP operating income (1) was $764.1 million for the year ended December 31, 2024, excluding $213.2 million for stock-based compensation and related expenses, $10.3 million for deferred compensation plan expense and $1.3 million for amortization of acquisition-related intangible assets, compared with $641.1 million for the year ended December 31, 2023, excluding $149.7 million for stock-based compensation expense, $9.6 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
    • GAAP other income, net was $33.6 million for the year ended December 31, 2024, compared with $24.1 million for the year ended December 31, 2023.
    • Non-GAAP other income, net (1) was $24.2 million for the year ended December 31, 2024, excluding $9.4 million for deferred compensation plan income, compared with $15.6 million for the year ended December 31, 2023, excluding $8.5 million for deferred compensation plan income.
    • GAAP income before income taxes was $572.9 million for the year ended December 31, 2024, compared with $505.8 million for the year ended December 31, 2023.
    • Non-GAAP income before income taxes (1) was $788.3 million for the year ended December 31, 2024, excluding $213.2 million for stock-based compensation and related expenses, $1.3 million for amortization of acquisition-related intangible assets and $0.9 million for net deferred compensation plan expense, compared with $656.7 million for the year ended December 31, 2023, excluding $149.7 million for stock-based compensation expense, $1.1 million for net deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
    • GAAP net income was $1.8 billion and $36.59 per diluted share for the year ended December 31, 2024. Comparatively, GAAP net income was $427.4 million and $8.76 per diluted share for the year ended December 31, 2023. GAAP net income and income per diluted share for the year ended December 31, 2024 included $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary.
    • Non-GAAP net income (1) was $689.8 million and $14.12 per diluted share for the year ended December 31, 2024 excluding $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP net income (1) for the year ended December 31, 2024 also excluded $213.2 million for stock-based compensation and related expenses, $1.3 million for amortization of acquisition-related intangible assets, $0.9 million for net deferred compensation plan expense and $26.9 million for the related tax effects, compared with $574.6 million and $11.78 per diluted share for the year ended December 31, 2023, excluding $149.7 million for stock-based compensation expense, $1.1 million for net deferred compensation plan expense, $0.1 million for amortization of acquisition-related intangible assets and $3.6 million for the related tax effects.

    The following is a summary of revenue by end market (in thousands):

        Three Months Ended December 31,   Year Ended December 31,
    End Market   2024   2023   2024   2023
    Enterprise Data   $ 194,867     $ 128,897     $ 716,264     $ 322,980  
    Storage and Computing     136,507       117,312       501,576       491,139  
    Automotive     128,344       89,758       413,973       394,665  
    Communications     63,810       40,926       225,905       204,911  
    Consumer     57,311       43,741       202,015       234,660  
    Industrial     40,826       33,378       147,367       172,717  
    Total   $ 621,665     $ 454,012     $ 2,207,100     $ 1,821,072  
                                     

    “Our proven, long-term growth strategy remains intact as we continue our transformation from being a chip-only, semiconductor supplier to a full service, silicon-based solutions provider,” said Michael Hsing, CEO and founder of MPS. 

    Business Outlook

    The following are MPS’s financial targets for the first quarter ending March 31, 2025:

    • Revenue in the range of $610.0 million to $630.0 million.
    • GAAP gross margin between 55.1% and 55.7%. Non-GAAP gross margin (1) between 55.4% and 56.0%, which excludes estimated stock-based compensation and related expenses of $1.7 million as well as the impact from amortization of acquisition-related intangible assets.
    • GAAP operating expenses between $180.2 million and $186.2 million. Non-GAAP operating expenses (1) between $126.9 million and $130.9 million, which excludes estimated stock-based compensation and related expenses in the range of $53.3 million to $55.3 million.
    • Total stock-based compensation and related expenses of $55.0 million to $57.0 million including approximately $1.7 million that would be charged to cost of goods sold.
    • Interest and other income in the range of $5.8 million to $6.2 million before foreign exchange gains or losses.
    • Non-GAAP tax rate of 15.0% for 2025.
    • Fully diluted shares outstanding between 47.8 million and 48.2 million. 

    (1) Non-GAAP net income, non-GAAP net income per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before income taxes differ from net income, net income per share, gross margin, operating expenses, other income, net, operating income and income before income taxes determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Non-GAAP net income and non-GAAP net income per share exclude the effect of stock-based compensation and related expenses, which include stock-based compensation expense and employer payroll taxes in relation to the stock-based compensation, net deferred compensation plan expense, amortization of acquisition-related intangible assets and related tax effects. Non-GAAP net income and non-GAAP net income per share also exclude the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating income excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP other income, net excludes the effect of deferred compensation plan income. Non-GAAP income before income taxes excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and net deferred compensation plan expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, and amortization of acquisition-related intangible assets. Projected non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of MPS’s core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS. See the GAAP to non-GAAP reconciliations in the tables set forth below.

    Earnings Commentary
    Earnings commentary on the results of operations for the quarter and year ended December 31, 2024 is available under the Investor Relations page on the MPS website.

    Earnings Webinar
    MPS plans to host a question-and-answer conference call covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, February 6, 2025. The live event will be held via a Zoom webcast, which can be accessed at: https://mpsic.zoom.us/j/96816578886. The Zoom webcast can also be accessed live over the phone by dialing (669) 444-9171; the webcast ID is 96816578886. A replay of the event will be archived and available for replay for one year under the Investor Relations page on the MPS website.

    Safe Harbor Statement
    This press release contains, and statements that will be made during the accompanying webinar will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including under the “Business Outlook” section and the quote from our CEO herein, including, among other things, (i) projected revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, stock-based compensation and related expenses, amortization of acquisition-related intangible assets, other income before foreign exchange gains or losses, and fully diluted shares outstanding, (ii) our outlook for the first quarter of fiscal year 2025 and the near-term, medium-term and long-term prospects of MPS, including our ability to adapt to changing market conditions, performance against our business plan, our ability to grow despite the various challenges facing our business, our industry and the global economic environment, revenue growth in certain of our market segments, potential new business segments, our continued investment in research and development (“R&D”), expected revenue growth, customers’ acceptance of our new product offerings, the prospects of our new product development, our expectations regarding market and industry segment trends and prospects, and our projected expansion of capacity and the impact it may have on our business, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements regarding the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, continued uncertainties in the global economy, including due to the Russia-Ukraine and Middle East conflicts, inflation, consumer sentiment and other factors; adverse events arising from orders or regulations of governmental entities, including such orders or regulations that impact our customers or suppliers, and adoption of new or amended accounting standards; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, and tax laws or the interpretation of same, including in foreign countries where MPS has offices or operations; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; acceptance of, or demand for, our products, in particular the new products launched recently, being different than expected; our ability to increase market share in our targeted markets; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of any continuing impact from the Russia-Ukraine and Middle East conflicts); our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to attract new customers and retain existing customers; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; our ability to expand manufacturing capacity to support future growth; adverse changes in production and testing efficiency of our products; any political, cultural, military, regulatory, economic, foreign exchange and operational changes in China, where a significant portion of our manufacturing capacity comes from; any market disruptions or interruptions in our schedule of new product development releases; our ability to manage our inventory levels; adequate supply of our products from our third-party manufacturing partners; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; the ongoing consolidation of companies in the semiconductor industry; competition generally and the increasingly competitive nature of our industry; our ability to realize the anticipated benefits of companies and products that MPS acquires, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the risks, uncertainties and costs of litigation in which MPS is involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on our financial performance if its tax and litigation provisions are inadequate; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of epidemics and pandemics on the global economy and on our business; the risks associated with the financial market, economy and geopolitical uncertainties, including the collapse of certain banks in the U.S. and elsewhere and the Russia-Ukraine and Middle East conflicts; and other important risk factors identified under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on February 29, 2024. MPS assumes no obligation to update the information in this press release or in the accompanying webinar.

    About Monolithic Power Systems

    Monolithic Power Systems, Inc. (“MPS”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life. Founded in 1997 by our CEO Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging. These combined advantages enable MPS to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

    Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries. 

    Contact:
    Bernie Blegen
    Executive Vice President and Chief Financial Officer
    Monolithic Power Systems, Inc.
    408-826-0777
    MPSInvestor.Relations@monolithicpower.com

     
    Monolithic Power Systems, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited, in thousands, except par value)
     
        December 31,   December 31,
        2024   2023
    ASSETS                
    Current assets:                
    Cash and cash equivalents   $ 691,816     $ 527,843  
    Short-term investments     171,130       580,633  
    Accounts receivable, net     172,518       179,858  
    Inventories     419,611       383,702  
    Other current assets     109,978       147,463  
    Total current assets     1,565,053       1,819,499  
    Property and equipment, net     494,945       368,952  
    Acquisition-related intangible assets, net     9,938        
    Goodwill     25,944       6,571  
    Deferred tax assets, net     1,326,840       28,054  
    Other long-term assets     194,377       211,277  
    Total assets   $ 3,617,097     $ 2,434,353  
                     
    LIABILITIES AND STOCKHOLDERS’ EQUITY                
    Current liabilities:                
    Accounts payable   $ 102,526     $ 62,958  
    Accrued compensation and related benefits     63,918       56,286  
    Other accrued liabilities     128,123       115,791  
    Total current liabilities     294,567       235,035  
    Income tax liabilities     65,193       60,724  
    Other long-term liabilities     111,570       88,655  
    Total liabilities     471,330       384,414  
    Commitments and contingencies                
    Stockholders’ equity:                
    Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 47,823 and 48,028, respectively     706,817       1,129,937  
    Retained earnings     2,487,461       947,064  
    Accumulated other comprehensive loss     (48,511 )     (27,062 )
    Total stockholders’ equity     3,145,767       2,049,939  
    Total liabilities and stockholders’ equity   $ 3,617,097     $ 2,434,353  
     
    Monolithic Power Systems, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited, in thousands, except per share amounts)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Revenue   $ 621,665     $ 454,012     $ 2,207,100     $ 1,821,072  
    Cost of revenue     277,257       202,889       986,230       799,953  
    Gross profit     344,408       251,123       1,220,870       1,021,119  
    Operating expenses:                                
    Research and development     85,762       71,459       324,748       263,643  
    Selling, general and administrative     95,339       70,095       356,764       275,740  
    Total operating expenses     181,101       141,554       681,512       539,383  
    Operating income     163,307       109,569       539,358       481,736  
    Other income, net     6,224       9,976       33,554       24,105  
    Income before income taxes     169,531       119,545       572,912       505,841  
    Income tax expense (benefit), net     (1,279,832 )     22,640       (1,213,788 )     78,467  
    Net income   $ 1,449,363     $ 96,905     $ 1,786,700     $ 427,374  
                                     
    Net income per share:                                
    Basic   $ 30.00     $ 2.02     $ 36.76     $ 8.98  
    Diluted   $ 29.88     $ 1.98     $ 36.59     $ 8.76  
    Weighted-average shares outstanding:                                
    Basic     48,317       47,936       48,599       47,610  
    Diluted     48,506       48,881       48,835       48,771  
     
    SUPPLEMENTAL FINANCIAL INFORMATION
    STOCK-BASED COMPENSATION EXPENSE
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Cost of revenue   $ 1,720     $ 1,228     $ 6,305     $ 4,545  
    Research and development     12,166       10,204       45,626       36,611  
    Selling, general and administrative     42,124       29,675       153,709       108,555  
    Total stock-based compensation expense   $ 56,010     $ 41,107     $ 205,640     $ 149,711  
     
    RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
    (Unaudited, in thousands, except per share amounts)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Net income   $ 1,449,363     $ 96,905     $ 1,786,700     $ 427,374  
                                     
    Adjustments to reconcile net income to non-GAAP net income:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense, net     573       288       867       1,055  
    Tax effect of non-GAAP adjustments     (22,773 )     2,519       (26,922 )     (3,625 )
    Recognition of a tax benefit granted to a foreign subsidiary     (1,285,402 )           (1,285,402 )      
    Non-GAAP net income   $ 198,401     $ 140,852     $ 689,755     $ 574,647  
                                     
    Non-GAAP net income per share:                                
    Basic   $ 4.11     $ 2.94     $ 14.19     $ 12.07  
    Diluted   $ 4.09     $ 2.88     $ 14.12     $ 11.78  
                                     
    Shares used in the calculation of non-GAAP net income per share:                                
    Basic     48,317       47,936       48,599       47,610  
    Diluted     48,506       48,881       48,835       48,771  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Gross profit   $ 344,408     $ 251,123     $ 1,220,870     $ 1,021,119  
    Gross margin     55.4 %     55.3 %     55.3 %     56.1 %
                                     
    Adjustments to reconcile gross profit to non-GAAP gross profit:                                
    Stock-based compensation and related expenses*     1,745       1,228       6,975       4,545  
    Amortization of acquisition-related intangible assets     287             1,171        
    Deferred compensation plan expense     417       486       1,500       871  
    Non-GAAP gross profit   $ 346,857     $ 252,837     $ 1,230,516     $ 1,026,535  
    Non-GAAP gross margin     55.8 %     55.7 %     55.8 %     56.4 %
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total operating expenses   $ 181,101     $ 141,554     $ 681,512     $ 539,383  
                                     
    Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:                                
    Stock-based compensation and related expenses*     (54,575 )     (39,879 )     (206,234 )     (145,166 )
    Amortization of acquisition-related intangible assets     (33 )     (33 )     (132 )     (132 )
    Deferred compensation plan expense     (376 )     (4,897 )     (8,767 )     (8,690 )
    Non-GAAP operating expenses   $ 126,117     $ 96,745     $ 466,379     $ 385,395  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total operating income   $ 163,307     $ 109,569     $ 539,358     $ 481,736  
                                     
    Adjustments to reconcile total operating income to non-GAAP total operating income:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense     793       5,383       10,267       9,561  
    Non-GAAP operating income   $ 220,740     $ 156,092     $ 764,137     $ 641,140  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total other income, net   $ 6,224     $ 9,976     $ 33,554     $ 24,105  
                                     
    Adjustments to reconcile other income, net to non-GAAP other income, net:                                
    Deferred compensation plan income     (220 )     (5,095 )     (9,400 )     (8,506 )
    Non-GAAP other income, net   $ 6,004     $ 4,881     $ 24,154     $ 15,599  
     
    RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total income before income taxes   $ 169,531     $ 119,545     $ 572,912     $ 505,841  
                                     
    Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense, net     573       288       867       1,055  
    Non-GAAP income before income taxes   $ 226,744     $ 160,973     $ 788,291     $ 656,739  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    2025 FIRST QUARTER OUTLOOK
    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
    (Unaudited)
     
        Three Months Ending
        March 31, 2025
        Low   High
    Gross margin     55.1 %     55.7 %
    Adjustment to reconcile gross margin to non-GAAP gross margin:                
    Stock-based compensation and other expenses     0.3 %     0.3 %
    Non-GAAP gross margin     55.4 %     56.0 %
     
    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
    (Unaudited, in thousands)
     
        Three Months Ending
        March 31, 2025
        Low   High
    Operating expenses   $ 180,200     $ 186,200  
    Adjustments to reconcile operating expenses to non-GAAP operating expenses:                
    Stock-based compensation and other expenses     (53,300 )     (55,300 )
    Non-GAAP operating expenses   $ 126,900     $ 130,900  

    The MIL Network

  • MIL-OSI Submissions: Amnesty International – Trump’s claim that US will take over Gaza and forcibly deport Palestinians is appalling and unlawful

    Source: Amnesty International

    Israel/ OPT: President Trump’s claim that US will take over Gaza and forcibly deport Palestinians appalling and unlawful

    Reacting to President Donald Trump’s comments that the USA will “take over the Gaza Strip”, advocating again for the forcible transfer of around 2 million Palestinians from Gaza to neighbouring countries, Amnesty International’s Secretary General Agnès Callamard said:

    “President Trump’s remarks calling for the forcible transfer of Palestinians from the occupied Gaza Strip must be unequivocally and widely condemned. His language is inflammatory, outrageous and shameful, and his proposal amounts to a flagrant violation of international law.

    “Any plan to forcibly deport Palestinians outside the occupied territory against their will is a war crime, and when committed as part of a widespread or systematic attack on the civilian population, it would constitute a crime against humanity.

    “President Trump’s comments dangerously dehumanizes Palestinians, who for the last 16-months have been victims of Israel’s genocide in Gaza, and for decades have been living under illegal occupation and apartheid. Most of Gaza’s Palestinians are descendants and survivors of the 1948 Nakba, they have already been repeatedly uprooted and dispossessed by Israel and denied their right of return yet have continued to struggle to remain on their lands and defend their human rights.

    “Israel’s genocide in Gaza, including through unlawful killings, injuries and the deliberate infliction of conditions of life that are calculated to bring about their physical destruction,  has been accompanied by an alarming rise in unlawful killings in the occupied West Bank, state-backed settler violence, mass land confiscation and arbitrary arrests, enforced disappearances, torture and other ill-treatment of Palestinians across the Occupied Palestinian Territory and Israel.

    “President Trump repeatedly referenced the destruction, killing and unlivable conditions in Gaza calling it a ‘demolition site’ while seated next to Israeli Prime Minister Netanyahu, yet he completely failed to mention the Israeli government’s responsibility for causing this devastation. Nor did he acknowledge the US government’s role in providing arms that have repeatedly been used to carry out deadly, unlawful attacks in Gaza.

    “In the face of President Trump’s dangerous threats, it’s more important than ever for the rest of the international community to categorically reject these proposals and expedite diplomatic efforts, in line with international law, to end Israel’s unlawful occupation, dismantle apartheid and uphold human rights for Palestinians and Israelis. History has abundantly demonstrated that sidelining international law for political expediency is a recipe for the perpetuation of violations.

    “Amnesty International also warns against the misuse of desperately needed humanitarian aid and reconstruction as a bargaining chip or as a means to coerce Palestinians in Gaza into leaving. No state is entitled to treat a protected population living under occupation as pawns in a geopolitical chess game.”

    MIL OSI – Submitted News

  • MIL-OSI Global: Trump’s push to shut down USAID shows how international development is also about strategic interests

    Source: The Conversation – Canada – By Nelson Duenas, Assistant Professor of Accounting, L’Université d’Ottawa/University of Ottawa

    The U.S. Agency for International Development (USAID) is on the verge of being shut down by United States President Donald Trump’s administration.

    On Feb. 4, U.S. Secretary of State Marco Rubio announced the agency would be taken over by the State Department. He stated that “all USAID direct hire personnel will be placed on administrative leave globally.”

    This move comes after Trump and his officials have heavily criticized the role and ineffectiveness of the agency. Trump said USAID had “been run by a bunch of radical lunatics, and we’re getting them out,” while Tesla CEO and special government employee Elon Musk said it was “time for it to die.”

    The closure of USAID will have significant consequences for many countries in the Global South. USAID is one of the largest development agencies in the world and funds programs that benefit millions of people, from supporting peace agreements in Colombia to fighting the spread of HIV in Uganda.

    Around US$40 billion is allocated annually from the U.S. federal budget for humanitarian and development aid. If USAID is dismantled, it raises questions about how these funds will be redirected and the long-term impacts it will have on global development efforts.

    A geopolitical fallout?

    The potential dismantling of USAID has raised concerns among international development experts about a potential geopolitical fallout that could create unintended consequences for the U.S. itself.

    Global issues, such as human security and climate change, are expected to be heavily affected. The U.S. also risks losing influence in the fight for soft power since dismantling USAID could leave behind a power vacuum. Other countries like Russia or China may occupy the space left by what was the largest international aid program in the world.




    Read more:
    USAid shutdown isn’t just a humanitarian issue – it’s a threat to American interests


    This shift could result in the U.S. losing its influence in regions like Africa, South America and Asia, where the country distributed aid to a number of non-governmental organizations, aid agencies and non-profits.

    While the future of U.S. foreign assistance remains uncertain, other world powers have a role to play. European donors, despite some limitations in resources, remain committed to the 2030 Sustainable Development agenda.

    Beyond humanitarianism

    If the agency is shut down, it may be widely condemned on moral and humanitarian grounds. However, its closure would respond to a logic of strategic and ideological interests that has long shaped the international development system. This a key finding from my longstanding field research with organizations that receive funding, not only from USAID, but also from Canadian and European donors.

    International development largely unfolded in the aftermath of the Second World War when global powers competed to establish a new world order. This led to the creation of international agreements and multilateral institutions, with major industrialized nations emerging as the primary donors of foreign aid.

    While many international initiatives, like the Millennium Development Goals and the 2030 Agenda for Sustainable Development, have guided development as we know it, the governments of main donor countries have their own interests in mind when providing aid.

    In my research, I have interviewed many people involved in the foreign aid chain, including directors and offices of international non-governmental organizations and governmental co-operation agencies. Many said development relationships are shaped by both the interests of donors and those of recipient populations and organizations.

    While these relationships may be based on humanitarian objectives, such as disaster relief or human rights advocacy, they can also be influenced by ideological, geopolitical, economic and social agendas.

    In this context, the American move to eliminate USAID could be seen as one that prioritizes national security and economic goals over traditional global humanitarian concerns. Governments steer the wheel of international development according to their political ideologies and interests, regardless of the shock this may generate among citizens.

    Canada’s role in all this

    The U.S. is not the only country re-evaluating its international development policy. Sweden, another major country in the foreign aid sphere, is also changing its co-operation strategy following changes in its government and criticism of the NGOs that deploy their development assistance.

    Canada’s role in this unfolding situation remains uncertain. With the resignation of Prime Minister Justin Trudeau as head of the Liberal Party and the upcoming federal election, it’s unclear what will happen to Canada’s international development strategy going forward.

    Under Stephen Harper, the country’s international development strategy was closely tied to expanding trade with developing countries based on maximizing the value of extractive economies and a strong defence policy. This approach aimed to bring value not only to the recipient country of aid, but to Canada as well.

    When Trudeau took office, Canada’s development strategy turned to a more progressive agenda centred on peace keeping, feminist approaches and humanitarian programs.

    Will Canada continue to champion human rights, human security and progressive agendas? Or will Canada reduce funds for foreign assistance, which seems to be the wish of many of its citizens?

    The answer to these questions will depend on the direction that our political leaders decide to take, and the sentiments of citizens. Still, Canada’s approach to development aid will probably remain in a trade-off between moral imperatives of humanitarianism and strategic national interests.

    Nelson Duenas receives funding from the Social Sciences and Humanities Research Council (SSHRC)
    Nelson Duenas is a researcher associated to l’Observatoire canadien sur les crises et l’action humanitaires

    ref. Trump’s push to shut down USAID shows how international development is also about strategic interests – https://theconversation.com/trumps-push-to-shut-down-usaid-shows-how-international-development-is-also-about-strategic-interests-249118

    MIL OSI – Global Reports

  • MIL-OSI USA: Kennedy, Crapo reintroduce Hearing Protection Act to remove regulatory burden for lawful gun owners

    US Senate News:

    Source: United States Senator John Kennedy (Louisiana)

    WASHINGTON – Sen. John Kennedy (R-La.) today joined Sen. Mike Crapo (R-Idaho) and colleagues in reintroducing the Hearing Protection Act (HPA) to help law-abiding gun owners better access suppressors to preserve their hearing and safety. The HPA would reclassify suppressors so that they receive the same regulation as traditional firearms, removing regulatory burdens.

    “Big government shouldn’t stand in the way of protecting lawful gun owners’ hearing. I’m proud to help introduce this bill to make it easier for Louisianians and all Americans to practice their Second Amendment rights safely,” said Kennedy.

    “Federal red tape continues to follow the false Hollywood narrative that suppressors are silent, and ignores the reality that they serve a genuine purpose in protecting the hearing of law-abiding American citizens exercising their Second Amendment rights. It is past time Congress removes the burdensome barriers to accessing this equipment for the safety of Idaho’s hunters and sportsmen,” said Crapo. 

    Suppressors are currently subject to additional regulatory burdens under the National Firearms Act (NFA). The HPA would remove suppressors from regulation under the NFA and replace the overly burdensome federal transfer process with an instantaneous background check through the National Instant Criminal Background Check System. This process would make the purchasing and transfer process for suppressors equal to that for a rifle or shotgun.

    By taxing suppressors under the Pittman-Robertson Wildlife Restoration Act, rather than the NFA, the bill would also generate funding for state wildlife conservation agencies. 

    The legislation does not impact any state laws that prevent suppressors, and it does not eliminate background check requirements.

    The full bill text is available here. 

    MIL OSI USA News

  • MIL-OSI USA: Kennedy: America won’t forget if UK gives away Chagos Islands with US military base

    US Senate News:

    Source: United States Senator John Kennedy (Louisiana)

    Watch Kennedy’s comments here.

    WASHINGTON – Sen. John Kennedy (R-La.) warned the United Kingdom that it could damage its relationship with the United States if it threatens the future of the joint U.S.-U.K. military base on the island of Diego Garcia by ceding sovereignty of the Chagos Islands to Mauritius.

    Key excerpts of the speech are below:

    “Do you know who is loving all of this? China, because China has a close relationship with Mauritius. And do you know what? It is going to get a lot closer.

    “This is insane. This is cell-deep stupid. This is bone-deep, down-to-the-marrow stupid. Because the United Nations wants the United Kingdom to feel guilty, they want to give our military base and their military base to Mauritius. Now, the prime minister of the United Kingdom can stop this.”

    . . .

    “Please, Mr. Prime Minister, don’t do this. Don’t do this. We will stand with you in telling the United Nations, who is upset with you, to go fill out a hurt feelings report because we are not doing it. We will stand with you. Please say no. Don’t give our military base away. It is going to really hurt the relationship between the United States of America and the United Kingdom.”

    Background

    • The U.K. had previously announced on Oct. 3, 2024, that it had reached a deal with Mauritius to cede the sovereignty of the Chagos Islands. This deal between the U.K. and Mauritius would jeopardize the security of a key U.S.-U.K. military base on Deigo Garcia by potentially exposing the island to Chinese espionage efforts, according to a report from the Policy Exchange.
    • Negotiations between the U.K. and Mauritius followed a years-long pressure campaign from the United Nations to get England out of the Chagos Islands. The Biden administration also reportedly pressured the U.K. to enter the deal with Mauritius before the American and Mauritian elections took place—an idea Prime Minister Keir Starmer initially endorsed. 
    • On Oct. 23, 2024, Kennedy wrote to then-Secretary of State Antony Blinken seeking answers about the Biden administration’s involvement in the deal between the U.K. and Mauritius.
    • Kennedy also penned this op-ed in Oct. 2024 arguing that the Biden administration owes the American people an explanation for its decision to allow this deal between the U.K. and Mauritius to move forward.
    • On Jan. 15, 2025, Starmer announced that he wanted President Trump and his administration to weigh in on any deal struck between the U.K. and Mauritius regarding the transfer of the Chagos Islands, including the transfer of the U.S.-U.K. shared military base on the island of Diego Garcia. 
    • Kennedy published this op-ed in Jan. 2025 welcoming the U.K.’s change of heart after Starmer announced that he would include the Trump administration in the ongoing negotiations with Mauritius.
    • Former Rep. Mike Waltz (R-Fla.), President Trump’s nominee for National Security Advisor, has criticized the deal, saying, “Should the U.K. cede control of the Chagos to Mauritius, I have no doubt that China will take advantage of the resulting vacuum.”
    • Secretary of State Marco Rubio has similarly condemned the deal and said it “poses a serious threat to our national security interests in the Indian Ocean and threatens critical U.S. military posture in the region.”

    Watch Kennedy’s full speech here.

    MIL OSI USA News

  • MIL-OSI New Zealand: Opposition to seabed mining remains strong as Fast-Track process opens for applications – Kiwis Against Seabed Mining (KASM)

    Source: Kiwis Against Seabed Mining (KASM)

    As the government opens the floodgates today for project applications under its new Fast-Track Approvals Act, opposition to seabed mining is as strong as ever, Kiwis Against Seabed Mining (KASM) said today.

    The KASM team spent Waitangi Day in Patea, one of the closest settlements to the proposed mine site in the South Taranaki Bight, and found nothing but fierce opposition, from iwi to fishermen, from surfers to teachers and pensioners – and local councils.

    “There’s a real anger in this community at the prospect that this project could still go ahead after being so roundly and repeatedly rejected by the highest court in the land,” said KASM chairperson Cindy Baxter.

    “This seabed mining project is called a zombie project because it simply did not stand up to scrutiny: there’s so many uncertainties, and the company simply hasn’t done the work.”

    This was evident in the hearing Trans Tasman Resources walked away from last year, when it gave up on trying to meet the Supreme Court’s test of causing “no material harm.”

    KASM doesn’t expect the TTR application to be vastly different from what the company presented to those hearings. Trans Tasman Resources appears to only have focussed on lobbying politicians and spending as little money as possible on the mahi it needed to do, while grossly exaggerating the projected economic impact.

    “Right around the country today communities like Patea are gearing up for a fight to keep their land, their water and their oceans free from pollution, pitted against a government determined to ride roughshod over their future. It shouldn’t have to be this way.”

    The Fast-Track website is now online, advertising that it will post “news” today (ref. https://kasm.us6.list-manage.com/track/click?u=40fd433e2f2344060946f0bb8&id=378af0d022&e=26e06db549 )

    MIL OSI New Zealand News

  • MIL-OSI New Zealand: Universities – ‘Inequities stick out to me’, says new Professor Sir Collin Tukuitonga – UoA

    Source: University of Auckland (UoA)

    This month, Sir Collin Tukuitonga became one of two professors of Niuean descent in the world.

    Professor Sir Collin says it’s an honour to join the ranks of his University of Auckland colleague, Professor of Pacific Health Vili Nosa, also from Niue – one of the smallest countries on the globe, with a population of less than 1,700 people.

    “I’m not a true-blue academic. I didn’t do a PhD and stay in the university forever. I gained a lot of practical experience elsewhere, so it’s nice to be accepted by my peers in academic medicine,” says Sir Collin.

    He is a director of Poutoko Ora a Kiwa – Centre for Pacific and Global Health at the University, was knighted in 2022 and is a man with his own Wikipedia page. His ‘practical experience’ spans everything from being chief executive of the New Zealand Ministry of Pacific Affairs from 2007 to 2012 to developing a global strategy to improve diet and physical activity that was adopted by the World Health Organisation (WHO) in 2004.

    Addressing health inequities faced by Pacific and Māori people has been the motivating force behind Sir Collin’s career over the past 45 years.

    “People with the means often get too much medicine and those who need it the most get the least.

    “Those inequities stick out to me – Māori and Pacific people have poorer health and it’s entrenched.

    “We have the resources, skills, equipment and facilities to make a change and yet we haven’t.

    “It seems unfair, unacceptable to me – and that’s the key driver, why I’m involved in public health,” he says.

    Growing up in Niue, seeds of caring for family and community were planted that have borne fruit during his career in public health.

    “We didn’t have much, not many books. We first had the radio when I was 10, electricity wasn’t a regular thing, so it was a pretty basic existence.

    “You didn’t expect much for yourself – you didn’t think about whether you had the latest flashy clothes or shoes.

    “You helped in the plantation, going fishing, it was all centred around contributing to the family and helping in the village.

    “I guess that’s where I got my sense of social justice – your talents are not just for yourself.”

    At the age of 15, Sir Collin’s fate was shaped by gaining a scholarship to study medicine.

    “I was lucky I had a decent brain and I got one of two New Zealand government scholarships to go to university in Fiji.

    “I had always been interested in helping people, so medicine was a natural selection, but the availability of the scholarship was a big factor.

    “My family would not have been able to send me to university – I would have been a fisherman,” he says.

    Leaving behind his “charmed life” in Niue, where he had been pampered by three sisters and surrounded by cousins, was a huge step, but Fiji still offered the simple pleasures of island life.

    Sir Collin graduated as a junior doctor in 1979 and worked as a “real doctor” in family medicine for about 15 years.

    He returned to Niue to offer his skills to his island community, before being appointed to teach public health at the Fiji School of Medicine in 1987. A military coup later that year raised fears for the safety of his first wife and their young children, so they fled to New Zealand – a place Sir Collin has called home ever since.

    In the late 1980s, he was a key figure involved in setting up a Pacific healthcare clinic in West Auckland, which is now called The Fono.

    Having mainly Pasifika staff and low fees has helped make healthcare more accessible for many Pacific people.

    While working as a GP in West Auckland, he saw patterns of hardship and poor health that made him determined to help change the health system.

    “It was predominantly families with young children and you saw the same things over and over again – chesty coughs, skin infections, those kinds of things, which if you’re a thinking person, you have to say, ‘there has to be a better way than waiting for them to come back to the clinic with the same thing’.

    “Those things were to do with cold, damp, overcrowded housing, poor nutrition and delayed access to health care.

    “I thought if I was involved in public health, you could theoretically prevent those problems.”

    He became Director of Public Health at the New Zealand Ministry of Health in 2001.

    In this role, he contributed to programmes designed to reduce smoking harm in Pacific communities. Over the past 30 years, smoking rates have halved, though about twice as many Māori and Pacific people still smoke, compared to Pakeha New Zealanders.

    “Smoking in young people in New Zealand is now 4.2 percent, compared to 27 percent of adults smoking in 1993. So that’s a significant achievement for New Zealand and I helped contribute to that.”

    Sir Collin helped introduce a vaccine for meningitis B, during an epidemic of the disease in the early 2000s.

    “We had high mortality rates among young Māori and Pacific people in New Zealand and the vaccine led to a significant drop in occurrence of the disease, so I was pleased to help that along.”

    His overseas roles have included three years at the World Health Organisation in Geneva, Switzerland, and seven years in New Caledonia, where he was director-general of the Pacific Community.

    More recently, he played an important role in advising the New Zealand government and communicating with Pacific communities during the Covid pandemic.

    However, in December 2023, he resigned from his role as chairperson of Te Whatu Ora Pacific Senate and spoke out regarding his concerns about the new government’s direction.

    “I was really incensed when they repealed our smoke-free legislation. I know that by undoing that world-leading legislation, Māori and Pacific people are going to be the worst affected – and all for the purpose of them meeting their commitment to their friends to make tax cuts.

    “I couldn’t continue on the advisory committees when clearly they were not interested in anything apart from what was on their agenda.”

    The roots of Pacific people having higher rates of health problems, ranging from cancer to measles, lie in deeper disadvantages, says Sir Collin.

    “Health is a symptom of underlying social conditions. It’s an extension of disparities in education, income, housing and diet.

    “We can’t just deal with it in the health sector, we have to deal with those issues – and they’re difficult issues.”

    Through the hard times, Sir Collin has been buoyed up by Pacific people thanking him for looking out for their wellbeing and speaking up for them.

    These days, the 67-year-old father of five is enjoying mentoring and supporting young people at the University, while much of his spare time is spent developing and planting native trees on his family’s lifestyle block near Pakiri.

    “There’s no set retirement age these days and I love working with my many clever colleagues at the university.

    “My friends say that when you retire and you don’t use your brain, it rots. I’m terrified of that possibility,” he laughs.

    MIL OSI New Zealand News

  • MIL-OSI USA: February 6th, 2025 Heinrich Sounds the Alarm on “DOGE” Risk to National Security & American Privacy

    US Senate News:

    Source: United States Senator for New Mexico Martin Heinrich

    WASHINGTON — Today, U.S. Senator Martin Heinrich (D-N.M.), a member of the Senate Select Committee on Intelligence, pressed the White House on the risks of allowing unvetted “Department of Government Efficiency” (DOGE) staff and representatives to access classified and sensitive government materials. In a letter to White House Chief of Staff Susie Wiles, Heinrich sounded the alarm on the risk DOGE poses to our national security and Americans’ privacy.

    In the letter, Heinrich, U.S. Senator Mark R. Warner (D-Va.), and several colleagues demanded that the administration provide details to Congress about how DOGE staff and representatives are being vetted, which systems, records and information are being shared, and what steps the Trump administration is taking to safeguard them from misuse or disclosure.

    “According to press reports, DOGE inspectors already have gained access to classified materials, including intelligence reports, at the United States Agency for International Development (USAID), sensitive government payment systems, including for Social Security and Medicare, at the Treasury Department, and federal personnel data from the Office of Personnel Management. Further, as of today the scope of DOGE’s access only seems to be expanding, as reports indicate DOGE has now entered the Department of Labor and other agencies,” Heinrich wrote. “No information has been provided to Congress or the public as to who has been formally hired under DOGE, under what authority or regulations DOGE is operating, or how DOGE is vetting and monitoring its staff and representatives before providing them seemingly unfettered access to classified materials and Americans’ personal information.”

    Heinrich added, “As you know, information is classified to protect the national security interests of the United States. Government employees and contractors only receive access to such information after they have undergone a rigorous background investigation and demonstrated a ‘need to know.’ Circumventing these requirements creates enormous counterintelligence and security risks. For example, improper access to facilities and systems containing security clearance files of Intelligence Community personnel puts at risk the safety of the men and women who serve this country. In addition, unauthorized access to classified information risks exposure of our operations and potentially compromises not only our own sources and methods, but also those of our allies and partners. If our sources, allies, and partners stop sharing intelligence because they cannot trust us to protect it, we will all be less safe.”

    Heinrich also raised alarms about the privacy implications of allowing an unknown number of DOGE staff to access unclassified systems containing information about individual American taxpayers and organizations.

    Heinrich continued, “Unclassified government systems also contain sensitive data, the unintended disclosure of which could result in significant harm to individuals or organizations, including financial loss, identity theft, and exposure of medical and other private personal information. The U.S. Treasury payment systems, in particular, are used to disburse trillions of dollars each year, and contain everyday Americans’ personal information, such as Social Security numbers, home addresses, and bank accounts. Allowing DOGE access to this information raises unprecedented risks to Americans’ private personal and financial information.”

    The letter also noted that there are strict cybersecurity controls in place for federal networks that DOGE does not seem to be following, including by reportedly connecting personal devices to sensitive government systems.

    “Such unregulated practices with our government’s most sensitive networks render Americans’ personal and financial information, and our classified national secrets, vulnerable to ransomware and cyber-attacks by criminals and foreign adversaries. The recent unprecedented Salt Typhoon and Change Healthcare attacks that affected tens of millions of Americans further underscore the importance of rigorously fortifying our government systems,” Heinrich stated.

    Alongside Heinrich and Warner, U.S. Senators Ron Wyden (D-Ore.), Angus King (I-Maine), Michael Bennet (D-Colo.), Kirsten Gillibrand (D-N.Y.), Jon Ossoff (D-Ga.), and Mark Kelly (D-Ariz.) joined the letter.

    The full text of the letter is here.

    MIL OSI USA News

  • MIL-OSI USA: Murray, Sanders, Baldwin, DeLauro, Scott Demand Answers on Trump’s Plans to Dismantle Education Department

    US Senate News:

    Source: United States Senator for Washington State Patty Murray

    Washington, D.C. — Senators Patty Murray (D-WA), Vice Chair of the Senate Appropriations Committee; Tammy Baldwin (D-WI), Ranking Member of the Senate Appropriations Subcommittee on Labor, Health, and Human Services, and Education; and Bernie Sanders (I-VT), Member of the Senate Health, Education, Labor and Pensions (HELP) Committee alongside Representatives Bobby Scott (D-VA), Ranking Member of the House Committee on Education and Workforce, and Rosa DeLauro (D-Conn.), Ranking Member of the House Appropriations Committee and the Subcommittee on Labor, Health, and Human Services, and Education sent a letter warning against the Trump administration’s reported plans to unilaterally dismantle the Department of Education. The lawmakers asked the acting Secretary of Education for answers on recent actions taken by the Trump administration to put federal workers on administrative leave, coerce employees into leaving their jobs, provide access to students’ sensitive data, and illegally freeze vital funding.

    “Over the course of two weeks, the Trump Administration issued sweeping executive orders and sought to broadly and illegally freeze federal financial assistance,” wrote Sanders and the lawmakers. “Federal employees have been targeted, in some cases for simply following the law. Elon Musk is attempting to shut down the work of entire agencies while gaining access to some of the federal government’s most far reaching and sensitive data systems. Media reports indicate a similar effort may be underway at the Department of Education.”

    “We will not stand by and allow this to happen to the nation’s students, parents, borrowers, educators, and communities. Congress created the Department to ensure all students in America have equal access to a high-quality education and that their civil rights are protected no matter their zip code,” continued the lawmakers. “We urge you to provide information on the steps the Department is taking to ensure the continuity of programs that Americans depend on, the ability of the Department to effectively administer programs for their intended purposes without waste, fraud and abuse, and the safeguards in place to protect student data privacy.”

    The lawmakers note that Trump and Elon Musk have not shared any plans regarding intended changes to the Department of Education with the Congressional committees responsible for its oversight and funding. In their letter, they request information about access to the Department’s sensitive data and steps taken to safeguard it, communications and details regarding Department employees who have been placed on leave and confirmation that no awards have been blocked or terminated.

    The full letter is available HERE.

    MIL OSI USA News

  • MIL-OSI Canada: Minister’s statement on Richmond supportive housing

    Source: Government of Canada regional news

    Ravi Kahlon, Minister of Housing and Municipal Affairs, has released the following statement about supportive housing in Richmond: 

    “Our government is committed to connecting people with the housing and supports they need to get on a better path and live full, healthy lives. We’re also dedicated to keeping communities and businesses safe.

    “In summer 2024, we temporarily paused moving forward with the proposed supportive housing project at 3780 Sexsmith Rd. in Richmond so BC Housing staff could explore other potential sites.

    “Since then, staff have evaluated five other locations within the community.

    “Upon review, it was determined that these sites would not meet the needs for supportive housing for various reasons, such as location, lot size and proximity to key services. These are important factors that support residents’ abilities to stabilize their lives, successfully integrate within the community and access required services.

    “Furthermore, shifting to a new location at this stage would require new project designs, adding significant delays to project completion.

    “After careful consideration and exploring all viable options within the community, we have determined the Sexsmith site remains the best option for a supportive housing site in Richmond.

    “This project is crucial to helping address the urgent need for long-term, supportive housing to deal with the growing number of people facing homelessness in Richmond, which has increased 91% since the pandemic to more than 160 people at last count.  

    “We will now initiate engagement with neighbours by organizing facilitated dialogue sessions starting in March 2025. Invitations will be sent to neighbours, providing an opportunity to further discuss the project. We will also continue working with city staff and stakeholders to safely integrate this housing into the community.

    “Following this engagement, the site will be put forward to Richmond city council for final consideration. I would like to acknowledge the work of Richmond city council to date, and members of council’s assertions on the need to move forward with permanent supportive housing in Richmond.

    “Lastly, there has been a significant amount of misinformation about this project. I encourage neighbours to engage directly with BC Housing on the project, either through the upcoming neighbourhood dialogue sessions, submitting questions and feedback directly to BC Housing, and learning more about the proposal online. 

    “This building will be purpose-built for supportive housing, allowing residents to gather indoors. It will have 24/7 staffing and security features, such as cameras, fencing and lighting. Clean-up teams will help keep surroundings tidy, and neighbours will be able to report concerns via a dedicated phone line with the housing provider.

    “We will continue working with BC Housing, the City of Richmond and residents, to bring inside people who are sheltering outdoors, and build a safer and healthier community for everyone.”

    Learn More:

    Learn more about BC Housing’s proposal here: 
    https://letstalkhousingbc.ca/richmond-cambie-sexsmith

    MIL OSI Canada News

  • MIL-OSI Security: Upshur County Woman Sentenced for Methamphetamine Trafficking

    Source: Office of United States Attorneys

    ELKINS, WEST VIRGINIA – Devonna Nicole Moul, 30, of Buckhannon, West Virginia, was sentenced to 56 months for possession with intent to distribute methamphetamine.

    According to court documents and statements made in court, Moul, also known as “Devonna Nicole Keyser,” was selling methamphetamine in Elkins. Moul has prior convictions for drug violations, escape, and fleeing.

    Moul will serve three years of supervised release after her prison sentence.

    Assistant U.S. Attorney Stephen Warner prosecuted the case on behalf of the government.

    The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Mountain Region Drug Task Force, a HIDTA-funded initiative., investigated.

    Chief U.S. District Judge Thomas S. Kleeh presided.

    MIL Security OSI

  • MIL-OSI USA: Capito, Colleagues Call for Quick Implementation of the Social Security Fairness Act

    US Senate News:

    Source: United States Senator for West Virginia Shelley Moore Capito

    WASHINGTON, D.C. – Today, U.S. Senator Shelley Moore Capito (R-W.Va.) joined a bipartisan group of 27 Senate colleagues in letter—led by U.S. Senator Bill Cassidy M.D. (R-La.)—to Acting Social Security Administrator Michelle King calling for the immediate implementation of the Social Security Fairness Act to provide full Social Security benefits for millions of public servants impacted by Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The Social Security Fairness Act, which fully repeals the two unfair Social Security provisions WEP and GPO, was signed into law on January 5, 2025. 

    “The Social Security Fairness Act restores full Social Security benefits for the millions of teachers, police officers, firefighters, and other public servants who are unfairly penalized by the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO),” the senators wrote. 

    “The Social Security Administration’s website currently states, ‘SSA expects that it could take more than one year to adjust benefits and pay all retroactive benefits’ owed under the Social Security Fairness Act. We call for the immediate implementation of this legislation to provide prompt relief to the millions of Americans impacted by WEP and GPO,” the senators continued. 

    BACKGROUND:

    The Social Security Fairness Act restores full Social Security benefits for law enforcement officers, firefighters, and other public servants by repealing two provisions of current law – the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) – that unfairly reduce the Social Security benefits that public employees receive.

    The WEP, enacted in 1983, reduces the Social Security benefits of workers who receive pensions from a federal, state, or local government for employment not covered by Social Security. The GPO, enacted in 1977, reduces Social Security spousal benefits for spouses, widows, and widowers whose spouses receive pensions from a federal, state, or local government. Currently, nearly 7,000 West Virginians are affected by WEP and GPO.

    The Social Security Fairness Act repealed both of these laws, ensuring law enforcement, firefighters, park rangers, and other public sector workers and their families receive the full Social Security benefits they’ve earned.

    The full letter can be found here or below:

    Dear Acting Commissioner King,

    We write to you concerning the implementation of the Social Security Fairness Act (Public Law No: 118-273). This legislation passed Congress on an overwhelmingly bipartisan basis on December 21st, 2024 and was signed into law on January 5th, 2025. The Social Security Fairness Act restores full Social Security benefits for the millions of teachers, police officers, firefighters, and other public servants who are unfairly penalized by the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).

    The Social Security Administration’s website currently states, “SSA expects that it could take more than one year to adjust benefits and pay all retroactive benefits” owed under the Social Security Fairness Act. We call for the immediate implementation of this legislation to provide prompt relief to the millions of Americans impacted by WEP and GPO. In the interim, we request monthly updates and briefings regarding the status of the Social Security Administration’s progress towards implementing the Social Security Fairness Act

    Thank you for your prompt attention to this important matter.  We look forward to your response.

    Sincerely,

    MIL OSI USA News

  • MIL-OSI USA: Capito, Colleagues Introduce Constitutional Amendment to Prevent Democrats from Court Packing the Supreme Court

    US Senate News:

    Source: United States Senator for West Virginia Shelley Moore Capito

    WASHINGTON, D.C. Today, U.S. Senator Shelley Moore Capito (R-W.Va.) joined 17 of her Republican Senate colleagues—led by U.S. Senator Ted Cruz (R-Texas)—to introduce a constitutional amendment to maintain a total of nine Supreme Court justices on the bench at a time. Once approved by Congress, the amendment would go to the states for ratification.

    “A nine Justice court has worked for our country for more than 150 years. Increasing that number in a partisan effort to achieve a desired policy result is a never-ending proposition. If court-packing were pursued, respect for the Supreme Court would plummet and the checks and balances of our constitutional order would be threatened. We should preserve our independent judiciary by closing the door to the Democrats radical court packing proposals,” Senator Capito said.

    Full text of the constitutional amendment can be found here.

    BACKGROUND:

    Over the past several years, top Democrats have pledged to expand the number of justices on the Supreme Court when they are able to.

    Former Vice President Kamala Harris said“We are on the verge of a crisis of confidence in the Supreme Court […] We have to take this challenge head on, and everything is on the table to do that.”

    Sen. Ed Markey (D-Mass.) posted online“Mitch McConnell set the precedent. No Supreme Court vacancies filled in an election year. If he violates it, when Democrats control the Senate in the next Congress, we must abolish the filibuster and expand the Supreme Court.”

    Sen. Mazie Hirono (D-Hawaii) called court-packing: “long-overdue court reform.”

    Sen. Elizabeth Warren (D-Mass.) said: “I’m open. […] Actually, I mean, we could. […] Look, there are a lot of different ways to do it. The number of people on the Supreme Court is not constitutionally constricted.”

    Meanwhile Democrats, including Joe Biden, falsely called Senate Republicans’ efforts to confirm Judge Barrett “court-packing.”

    MIL OSI USA News

  • MIL-OSI United Nations: Experts of the Committee on the Elimination of Discrimination against Women Praise Belarus for Progress in Preventing Trafficking, Ask about Criminalisation of HIV Transmission and Reported Repression of Civil Society

    Source: United Nations – Geneva

    The Committee on the Elimination of Discrimination against Women today concluded its consideration of the ninth periodic report of Belarus, with Committee Experts praising the State’s progress in preventing trafficking, and raising questions about the criminalisation of HIV transmission and reports of repression of civil society.

    Elgun Safarov, Committee Expert and Rapporteur for Belarus, and other Experts commended Belarus’ awareness-raising projects on the prevention of trafficking and women’s empowerment.

    One Committee Expert noted that Belarus had a high number of criminal cases related to HIV.  Transmission of HIV was penalised with imprisonment of up to five years. Was the State party rethinking this law?

    Mr. Safrov said many very important non-governmental organizations had been closed recently.  What were the reasons for these closures?  There were reports of repression of women journalists and activists.

    Several other Experts expressed concern about reports that women who expressed dissent were punished and detained.  What plans were in place to protect women activists from gender-based violence and State repression?  Why were civil society organizations engaged in the protection of human rights dissolved by the State?

    Introducing the report, Larysa Belskaya, Permanent Representative of Belarus to the United Nations Office at Geneva and head of the delegation, said Belarus strived to fully ensure equal rights and opportunities for women in all spheres. In an extremely difficult geopolitical situation, Belarus progressively built a society where every person could have decent living conditions and benefit society.

    The delegation said Belarus had taken measures to eliminate trafficking in persons and to identify and rehabilitate victims.  In 2024, authorities identified 1,500 cases of suspected trafficking and identified several victims, including minors.  The State worked with civil society to build the capacity of law enforcement staff related to trafficking; 90 training sessions had been held in 2024.

    Concerning the transmission of HIV, the delegation said that in 2023, nine women had been penalised for transmitting HIV and 12 women were penalised in 2022.  The State party was continuing to reduce the stringency of HIV legislation.  A draft law had been developed to decriminalise unintentional transmission of HIV.  Penalties for the deliberate transmission of HIV would remain.

    The delegation said the Committee’s assessments related to repression were not appropriate.  The protests that took place in Belarus over the reporting period were in many cases not peaceful.  Certain extremist actions were taken by media workers.  The Government was working to increase understanding of the situation.

    Civil society in Belarus was active, the delegation added.  The State party had over 1,500 civil society organizations, including women’s organizations.  In 2020, there was an attempt to carry out a coup d’etat by several non-governmental organizations engaged in anti-Government activities.  A court decision held these organizations and their members responsible for violating the law.  This should not be considered repression of civil society.  In 2023, a new law on the activities of civil society was adopted that required organizations to re-register.  Many non-governmental organizations had not completed the new registration procedure and had been shut down.  Citizens were entitled to renew the activities of previous non-governmental organizations.

    In closing remarks, Ms. Belskaya said Belarus had achieved much in terms of gender equality and empowering women.  The discussion helped the State party to identify the remaining issues to be addressed. The Committee’s recommendations would be carefully considered by the National Council on Gender Equality and used to construct the next national action plan on gender equality

    In her closing remarks, Nahla Haidar, Committee Chair, commended the State party for its efforts and encouraged it to implement the Committee’s recommendations for the benefit of all women and girls in Belarus.

    The delegation of Belarus consisted of representatives from the Ministry of Labour and Social Protection; Ministry of Health; and the Permanent Mission of Belarus to the United Nations Office at Geneva.

    The Committee will issue the concluding observations on the report of Belarus at the end of its ninetieth session on 21 February.  All documents relating to the Committee’s work, including reports submitted by States parties, can be found on the session’s webpage.  Meeting summary releases can be found here.  The webcast of the Committee’s public meetings can be accessed via the UN Web TV webpage.

    The Committee will next meet at 10 a.m. on Friday, 7 February to consider the eighth periodic report of Luxembourg (CEDAW/C/LUX/8).

    Report

    The Committee has before it the ninth periodic report of Belarus (CEDAW/C/BLR/9).

    Presentation of Report

    LARYSA BELSKAYA, Permanent Representative of Belarus to the United Nations Office at Geneva and head of the delegation, said Belarus was committed to the principles of the Convention and strived to fully ensure equal rights and opportunities for women and men in all spheres.  Its Gender Gap Index score had almost halved from 0.152 in 2014 to 0.096 in 2024, placing the country 29th out of 166 countries.  In an extremely difficult geopolitical situation, Belarus preserved its State, peace and tranquillity, and progressively built a society of equal opportunities, where every person could have decent living conditions and benefit society.

    Over the years, the Government had made serious efforts to implement the Convention and had achieved concrete results for the advancement of women.  Gender policy was coordinated by the National Council on Gender Policy.  Every five years, national action plans on gender equality were adopted.  This year, the sixth national action plan (2021-2025), the goals and objectives of which were linked to the Sustainable Development Goals, was being implemented.  Work was also progressively being carried out to introduce mechanisms for gender analysis of legislation and gender budgeting in the development of draft State plans and programmes. 

    The National Statistical Committee had developed thematic information systems that made it possible to analyse the situation in the field of gender equality.  The “Gender Statistics Web Portal” contained 178 gender statistics.  In 2020, the Labour Code introduced a norm establishing paternity leave of up to 14 days within six months after the birth of the child.  The Government was also working to calculate the value of unpaid domestic services not included in gross domestic product.  The final data would be published in June 2025.

    Belarussian women were actively promoted to managerial positions.  In the National Assembly, the share of women in 2023 was 36 per cent. At the same time, in the House of Representatives, their share was 40.6 per cent.  Women accounted for 47 per cent of local self-government bodies. Among senior civil servants, the share of women in 2023 was 54.6 per cent; among judges, 64.4 per cent.

    Labour legislation provided for parents with family responsibilities an additional day off from work per month or reduced working days, flexible forms of employment, and remote employment.  The country guaranteed access for all citizens to health care, education, social services, culture and sports.  At the birth of a child, the State provided material support to all families and the payment of insurance premiums.  Benefits for pregnancy, childbirth and temporary disability had been increased, as had social support for parents raising a child with disabilities.  Since 2015, the State also provided a one-time non-cash provision equalling 10,000 United States dollars at the birth or adoption of third or subsequent children.

    The Belarussian Women’s Union, which united 162,000 women, worked to raise the status of women in society and their role in all spheres of life, and there were 15 more women’s organizations in Belarus.  In total, as of October 2024, there were 1,466 public associations; 18 new public associations were registered in 2024. 

    In Belarus, the literacy rate of the population aged 15 and over was almost 100 per cent. General secondary education was compulsory for all.  The percentage of women in higher education was about 53 per cent.  Almost 92 per cent of women aged 16-72 used the Internet.

    For several years, there had been a decrease in the female working age unemployment rate, from 3.1 per cent in 2019 to 2.7 per cent in 2023.  This figure was lower than the male unemployment rate, which was 4.1 per cent in 2023.  More than 42 per cent of employed women had completed higher education and 70 per cent of civil servants were women.  The share of women among researchers in Belarus was 39.2 per cent.  In 2024, for the first time, a female cosmonaut from Belarus, Marina Vasilevskaya, flew to the International Space Station.  Belarus was also actively developing women’s entrepreneurship; the representation of women in this area was 36.4 per cent.  In 2023, the first Forum of Women Entrepreneurs was held, with the active participation of the Belarussian Women’s Union.

    Every woman, regardless of income, had the opportunity to receive any type of medical care free of charge.  Unprecedented measures were being taken in the country to protect motherhood and childhood, to accompany women during pregnancy, and to carry out annual medical examinations.  Belarus was among the 25 countries with the highest rating in terms of access to sexual and reproductive health, information and education.  The proportion of women using various types of contraception increased from 39.9 per cent in 2010 to 53.2 per cent in 2021. The number of abortions per 1,000 women of childbearing age over the past 10 years had decreased by almost two times to 6.2 per cent in 2023.  Since 2011, no cases of illegal abortions had been registered in the country.

    Specific measures were being taken in Belarus to prevent domestic violence.  In 2022, protective measures for victims and preventive measures against violators were strengthened.  Every year, about 15,000 victims turned to regional social service centres for help.  A network of “crisis” rooms was being developed, with 134 rooms having been established as of 2024.  There were no restrictions on the time in which people could live in these rooms; in the first half of 2024, 81 women lived in them.  Public and international organizations were involved in aiding women victims of domestic violence.

    From today’s dialogue, Belarus expected practical and implementable recommendations that would allow it to implement high international standards in State policy to ensure equal rights and expand opportunities for women.

    Questions by a Committee Expert 

    ELGUN SAFAROV, Committee Expert and Rapporteur for Belarus, said that Belarus had developed family and women policy, implemented many awareness-raising projects on the prevention of trafficking and women’s empowerment, organised several international conferences on women in entrepreneurship and science, and adopted several legislative acts on women rights protection during the reporting period. He expressed appreciation for the State party’s activities for the harmonisation of legislation and measures for the adoption of international standards. 

    However, the Committee had witnessed multiple violations of women’s rights.  The State party did not have comprehensive anti-discrimination legislation that specifically prohibited discrimination against women, including direct and indirect discrimination, and also had no specific, stand-alone legislation on gender equality, or a law explicitly focused on ending all forms of gender-based violence, including domestic violence.  Sexual harassment in the workplace remained unaddressed in legislation, and laws prohibited women’s participation in certain jobs. 

    There were many problems related to access to justice for women.  There needed to be effective remedies for victims of discrimination.  There was no special body for deciding cases related to discrimination against women.  HIV transmission was criminalised.  Why had some women lawyers’ licenses been terminated?

    What measures were in place to incorporate a definition of equality between women and men in the Constitution and the Criminal Code?  What mechanisms were in place to protect against discrimination?  Had the Convention been translated into Belarussian? Were there any court cases that had referenced the Convention?  Why had closed court sessions been held to try women who had participated in peaceful demonstrations?  How were lawyers appointed?  Did the State party keep data on criminal cases related to gender?

    Responses by the Delegation

    The delegation said Belarus did not have a comprehensive definition of discrimination against women in its legislation, but principles of equality were included in the Constitution and various laws.  The Government had considered developing a single act on discrimination, but had found that existing legislation sufficiently banned discrimination. Legal amendments were introduced in 2022 to provide women and men with equal opportunities in employment, training and education.  The rights of victims of sexual discrimination needed to be restored under law. All complaints of discrimination, including from women and foreign citizens, needed to be reviewed by relevant State authorities within a tight deadline.  Discriminatory norms were not permitted in legislation.  Follow-up on implementation of gender legislation was carried out by a dedicated group of the National Council on Gender Policy.

    The Bar Association carried out activities to inform citizens about how they could access legal aid.  Women who lodged a complaint related to workplace discrimination or the deprivation of parental rights, as well as pregnant women, vulnerable families and victims of trafficking, received legal aid free of charge. Women in prisons could receive legal aid when they submitted complaints.  Women could choose their own lawyer, or were appointed one if they could not afford one.

    Belarus had two national languages: Belarussian and Russian.  Russian was more represented in State correspondence, but this did not hinder access to information on legislation for the population.  The Convention was part of the national legal system and had been referenced in court proceedings.  The Criminal Code recognised undermining of women’s bodily integrity as an offence.  There were around 50 cases related to bodily harm in the first half of 2024, and 44 cases of other sexual offences.

    Questions by Committee Experts 

    A Committee Expert commended the Government on efforts to align policies with the Sustainable Development Goals. However, the Committee was concerned by the absence of an independent national human rights institution, and by the exclusion of civil society organizations that worked to safeguard women’s rights.  Would the State party consider establishing a national human rights institution in line with the Paris Principles?  Which Government agency was responsible for protecting women’s rights.

    The Expert welcomed the policy to promote gender empowerment and gender sensitive budgeting.  How would the national action plan on gender equality be monitored?  How would the State party ensure the meaningful participation of civil society in this regard?

    The Committee was deeply concerned by the increasingly shrinking civic space.  Many women human rights defenders faced detention and restriction of activities. What plans were in place to protect women activists from gender-based violence and State repression?  Why were civil society organizations that were engaged in the protection of human rights dissolved by the State?

    Belarus had not adopted a national action plan on women, peace and security.  Would it consider developing such a plan to mainstream gender perspectives into peacebuilding efforts?

    One Committee Expert said the share of women in regional leadership positions was low and there were very few female ambassadors.  Women who peacefully expressed diverse political opinions were at a high risk of being treated as extremists.  Had the State party implemented temporary special measures to ensure gender equality in recent years?  Were there measures to increase the representation of women in leadership positions, as well as in employment and education?  What measures were in place to support vulnerable women and to mitigate the impact of the COVID-19 pandemic on gender equality?

    Responses by the Delegation

    The delegation said Belarus had State and public institutions protecting human rights, including the national councils on gender equality, children and disability, and the Environmental Committee, among others.  The State had conducted consultations with civil society, international organizations and State agencies in 2017 related to the establishment of a national human rights institution.  Belarus believed that creating a national human rights institution was not a priority as its existing bodies were working efficiently to protect human rights. This issue could be examined in more detail at a later stage.

    The National Council on Gender Equality coordinated and monitored the implementation of national action plans on gender equality.  From 2023 to 2024, a gender assessment methodology for legislation was adopted. Based on assessments, problems had been identified and measures were being planned to address them in the next national action plan.

    Belarus was not a party to any conflict currently, so it had not implemented special measures related to women, peace and security.  However, the Government had taken measures to protect Ukrainian refugees.  Over 200,000 people had arrived from Ukraine in the past three years, more than half of whom were women.  Belarus offered refugees temporary protection and the choice of becoming Belarussian citizens.

    Civil society in Belarus was active. The State party had over 1,500 civil society organizations, as well as professional unions and women’s organizations. The Belarussian Women’s Union actively engaged with State authorities.  There were also specialised civil society organizations supporting vulnerable women.  The process for registering a civil society organization was simple and transparent; the State did not interfere in the registration of such organizations and provided regular support to existing organizations.  Under the law on civil society organizations, such organizations could be closed based on court decisions finding that the organization had carried out unlawful propaganda or violated State legislation. 

    Citizens active in social activities had the right to be defended but were held liable when they violated the law. In 2020, there was an attempt to carry out a coup d’etat by several non-governmental organizations engaged in anti-Government activities.  A court decision had held these organizations and their members responsible for violating the law.  This should not be considered repression of civil society.  After these events, laws on civil society were amended to provide incentives for more constructive civic activities.  Non-governmental organizations in Belarus needed to work cooperatively with the State and could not be funded from abroad.

    Questions by Committee Experts

    A Committee Expert welcomed that the State party had not ruled out establishing a national human rights institution and called for serious consideration of its establishment.  The Expert called for the development of a dedicated policy on women, peace and security.  How many women’s organizations participated in the development and analysis of the national action plan on gender equality?

    Another Committee Expert welcomed advances in protection from domestic violence, including the law on crisis prevention.  However, gender stereotypes were spread in media communications and women were systematically silenced and controlled by the State – women who expressed dissent were attacked, punished and detained.  Vulnerable women were often blamed and stigmatised when they sought protection.  The State party implemented restraining orders for only 30 days and perpetrators were not expelled from homes. 

    Would the State party adopt a comprehensive strategy to address gender stereotyping, a comprehensive law against domestic violence, and penal protection against marital rape?  How would the State party protect victims in criminal proceedings?  What remedies had been provided to victims in recent years?  How many persons had been convicted for domestic violence crimes? What services were provided in crisis rooms and how were personnel in these rooms trained?  Why did the rooms also house men?  Over 30 non-governmental organizations managing hotlines and shelters had been closed; why was this?

    One Committee Expert commended the State party for addressing trafficking in persons by ratifying international conventions on trafficking and developing comprehensive laws related to trafficking.  Could the State party provide data on trafficking and prostitution?  What measures were in place to protect women with disabilities from trafficking and to identify victims of trafficking?  How many investigations into trafficking had been carried out and how many persons were convicted?  How was the State party strengthening protections for women and girls against trafficking, promoting their access to justice, and building the capacity of State officials on the gendered aspects of trafficking?

    Responses by the Delegation

    The delegation said analysis of the national action plan on gender equality was carried out twice a year. The Belarus Women’s Union was represented in the National Commission on Gender Equality and other bodies.  The State party also closely cooperated with the Red Cross and other international organizations, and supported organizations of persons with disabilities.  Seventy per cent of civil servants were women; 50 per cent were in middle management positions and were involved in preparing important political decisions.

    Eliminating gender stereotypes was one of the goals of the national action plan for gender equality.  The State party was working to enhance the role of fathers in carrying out domestic tasks and was working with civil society on a joint project encouraging responsible fatherhood.  There was a programme on State television that presented case studies of successful professional women.

    Persons who perpetrated domestic violence were required to leave the homes where victims lived, and authorities monitored compliance.  The law on preventing domestic violence had been amended to address violence against former partners and cohabitants.  The number of protective measures that had been implemented had increased significantly from around 18,000 in 2022 to 33,000 in 2024.  The Government supported victims to stay in their homes.  There were awareness raising campaigns in place to inform potential victims about reporting channels and preventing gender-based violence.  All types of bodily harm were criminalised.

    Every year, around 17,500 complaints of domestic violence were made.  If women victims required temporary housing, it was provided. Shelters could be accessed 24 hours a day by victims and their children without documentation.  There were hundreds of crisis rooms available, including 132 equipped for children.  Work was underway to ensure access to the rooms for persons with disabilities.

    Belarus had taken measures to eliminate trafficking in persons and to identify and rehabilitate victims.  In 2024, authorities identified 1,500 cases of suspected trafficking and identified several victims, including minors. The State worked with civil society to build the capacity of law enforcement staff related to trafficking; 90 training sessions had been held in 2024.  Specialists had been hired to support victims of various forms of trafficking.  The State was also working to align national trafficking legislation with international norms, and various awareness raising campaigns on trafficking were also in place. Involvement in prostitution was an administrative offence; however, victims of trafficking were not prosecuted, but were provided with support.

    Questions by Committee Experts

    A Committee Expert welcomed that legislation was being amended regarding domestic violence, which needed to be made an aggravated circumstance in homicide offences.  What measures were in place to ensure the safety of victims of domestic violence?

    Another Committee Expert commended progress being made related to trafficking and prostitution.

    ELGUN SAFAROV, Committee Expert and Rapporteur for Belarus, asked why there was a shortage of female Belarussian ambassadors.  None of the chambers of Parliament had female chairs; there were no parliamentary committees working to protect women’s rights; and only one out of 24 Ministers was a woman.  Why was this? How many Deputy Ministers were women? To what extent were women represented in the technological sector?

    Many very important non-governmental organizations had been closed recently.  What were the reasons for these closures?  There were reports of repression of women journalists and activists.

    One Committee Expert noted progress made in reducing statelessness through nationalisation efforts. However, 2,473 women remained stateless in the State party.  Were there programmes addressing statelessness?  When would the State party ratify the 1954 and 1967 United Nations conventions on statelessness?  The State party had not established a clear procedure for protecting migrant mothers and newborns.  Would it do so?

    Responses by the Delegation

    The delegation said the law on prevention of violence included a clause on educational programmes for perpetrators. The State party was interested in best practices in this field in other countries.

    Women made up around 70 per cent of Belarus’ Ministry of Foreign Affairs.  At a time, Belarus had four female ambassadors.  Appointment to ambassadorial roles was based on competitive selection and there was a shortage of women applicants.  Women were broadly represented as deputy chairs of parliamentary committees and made up around 50 per cent of the members of local councils. Belarus aimed to improve women’s representation in all fields.

    The Committee’s assessments related to repression were not appropriate.  The protests that took place in Belarus over the reporting period were in many cases not peaceful.  Certain extremist actions were taken by media workers.  The Government was working to increase understanding of the situation.

    In 2023, a new law on the activities of civil society was adopted that required organizations to re-register. Many non-governmental organizations had not completed the new registration procedure and had been shut down. Citizens were entitled to renew the activities of previous non-governmental organizations.

    Belarus strived to eradicate statelessness.  The number of stateless women in Belarus had significantly decreased by around 5,000 persons over the past 10 years, thanks to the work of authorities in collaboration with United Nations bodies.  The State supported stateless persons and their children to apply for Belarussian citizenship.  It was continuing work towards ratification of the United Nations conventions on statelessness.  The Government had not received reports of unlawful treatment of stateless persons. Stateless persons in Belarus were primarily citizens of the former Soviet Union.  Their numbers were low; the number of stateless children was less than 10.  To receive citizenship, people needed to demonstrate that they had sufficient income and had not committed offences.

    Questions by a Committee Expert 

    A Committee Expert said Belarus had near universal enrolment of girls and boys in primary education.  Educational instructions could reproduce harmful tropes of men as breadwinners and women as caregivers.  What measures were in place to enforce the role of men as caregivers? Only 23 per cent of persons in science, technology, engineering and maths education were women.  What measures were in place to promote their participation?  Only 17 per cent of university professors were female.  How would this be addressed?  Many students had been arrested and prosecuted for their engagement in protest movements.  Nine of the 11 students detained were women, including a woman professor.  What was the status of these women?

    Responses by the Delegation

    The delegation said traditional values in Belarus promoted families with children. Many educational programmes aimed to uphold traditional values and promote gender equality and the equal roles of men and women.  Around 52 per cent of higher education students were women.  Around 40 per cent of workers in the information technology sphere were women.  The Government was implementing incentives and other measures to attract girls to science, technology, engineering and maths careers.

    Students were detained on the grounds that they had broken a criminal law.  There was no persecution of students simply for exercising freedom of expression.

    Questions by a Committee Expert

    One Committee Expert said the employment rate of men was 72 per cent compared to 63 per cent for women. Although the list of closed professions for women had been reduced significantly, significant barriers for women accessing the labour market remained, and the list itself was a form of discrimination.  Women were underrepresented in higher-paid industries.  Workplace harassment remained common and legislation did not provide adequate remedies for victims and penalties for perpetrators.  Detained women were legally required to engage in labour; this was a form of modern slavery.  In July 2022, all independent trade unions were banned in Belarus. What protection mechanisms were available related to workplace sexual harassment?  Was there a national action plan for addressing the gender pay gap? When would the State party abolish forced labour for prisoners?

    In 2017, the State introduced pension reform, raising the retirement age.  Many citizens had lost their pensions due to the reforms.  Why did men and women have different pension ages?

    Responses by the Delegation

    The delegation said the rate of employment for women from 15 to 74 was 63 per cent, whereas the employment rate for women of working age was above 80 per cent. Belarus promoted equal pay for work of equal value.  Overall, women earned around 75 per cent of what men earned.  In the transport sector and the agricultural sector, wage gaps were much lower.  The State party was implementing measures to reduce the gender pay gap.  Women were now able to work in professions that were previously not accessible, such as truck drivers.  The State party was encouraging men to take parental leave. Women who experienced workplace harassment could report the incident to local authorities and receive remedies. 

    The Supreme Court had ruled that trade unions were to be closed when their activities were harmful to public interests or State values. The federation of trade unions covered almost all unions in the country.  It promoted general and collective agreements, which provided additional social and labour rights for workers.

    Women earned 92.5 per cent of the pension earned by men. Less than one per cent of the elderly were poor.  Women could continue working after they reached pension age; around 20 per cent of women did so.  The Presidential Decree on Employment did not punish individuals who were not working. Under the decree, women who were not working had the right to access State subsidies.

    The State party was exerting efforts to address the gender pay gap.  The national action plan on gender equality, which was based on the Committee’s previous recommendations, introduced measures to support female entrepreneurs and workers.

    Questions by a Committee Expert

    A Committee Expert said there had been significant advances in the field of public health in Belarus in recent years, but access to medicines was better in cities than in rural areas, and the quality of healthcare had declined nation-wide.  How was the State party supporting equal access to affordable healthcare for women from vulnerable groups?  What measures were in place to remove obstacles to accessing abortions?  Did both men and women need to undergo cancer screenings before they could obtain a driver’s licence?

    Women with disabilities faced barriers in accessing sexual and reproductive health services.  How was the State party meeting the needs of women with disabilities in this regard?  Some women with disabilities had been pressured to hand over their children to the State.  How would the State party address the discrimination faced by women with disabilities?  How did the delegation respond to reports of sterilisation of women with disabilities?

    Women with HIV reportedly faced systematic discrimination in health care.  The Penal Code sanctioned the transmission of HIV regardless of the circumstances. What measures were in place to support women with HIV?  What was the situation of sexual and reproductive health education?

    Responses by the Delegation

    The delegation said that in Belarus, medical assistance for persons with HIV was provided in line with health protocols from 2018 and 2022.  In 2018, Belarus had been certified as being free from mother-to-child transmission of HIV.  There were around 27,000 HIV positive people in the State.  The State party worked closely with non-governmental organizations to provide treatment for HIV positive people.  Around 95 per cent of HIV positive people were receiving retroviral treatment.  Women formerly had to present certificates from gynaecologists to receive a driver’s licence; as of last year, this was no longer necessary.  A draft law had been developed to decriminalise unintentional transmission of HIV.  Penalties for the deliberate transmission of HIV would remain.

    The protection of maternal and child health was a priority for the State.  Women who sought abortions could receive free counselling.  Over five years, these counselling sessions had prevented 23,000 abortions.  Pregnancies were interrupted only when the pregnant woman provided permission.

    All women, including women with disabilities, had access to medical assistance without discrimination.  Resources were set aside to allow for high quality medical care of the population.

    The World Health Organization had highly rated the medical care provided in Belarus.  The assessment that the quality of medical care had declined in recent years was not in line with reality.  Mobile health clinics provided in-home medical care in rural areas.  The State party was addressing shortages in healthcare staff.  It had difficulties in accessing certain types of medications due to sanctions from Western countries.

    Questions by Committee Experts

    A Committee Expert commended measures reforming regulations on universal social protection and access to support funds for entrepreneurs. Were there schemes guiding social protection for workers in the informal sector?  What steps had been taken to incorporate gender considerations into the tax regime?  What percentage of business grants were received by female entrepreneurs over the past five years?  How had technological training helped to bridge gender gaps in digital fields? How was the State party strengthening women’s role in sports and cultural activities and addressing stereotypes related to sports and culture?

    Another Committee Expert congratulated Belarus on co-sponsoring the United Nations Convention against Cybercrime and for implementing measures to protect elder women in digital spheres.  What social security and economic policies were in place for elderly women?  Belarus had a high number of criminal cases related to HIV.  Transmission of HIV was penalised with imprisonment of up to five years.  Was the State party rethinking this law?

    Women with disabilities’ right to work could only be realised after a medical examination.  How would the State party allow for the full realisation of these women’s right to work?

    Women in prisons were reportedly denied access to menstrual products.  How would the State party ensure that all detained women were treated in a dignified manner?  Belarus had in 2022 broadened its definition of pornography to include non-traditional relationships.  How would this affect the lesbian, bisexual, transgender and queer community?  Were the rights of indigenous women considered in plans to develop a second nuclear powerplant in the State? 

    Responses by the Delegation

    The delegation said there were around 400,000 people engaged in entrepreneurship in Belarus, 40 per cent of whom were women.  There was a framework for supporting women entrepreneurs, including in rural areas, and norms and laws aimed to support small businesses. Special taxation measures were provided to women entrepreneurs.  The share of women entrepreneurs had increased by around 10 per cent in recent years.  A State support programme for the unemployed had been established; almost half of all beneficiaries were women.

    In 2023, nine women had been penalised for transmitting HIV and 12 women were penalised in 2022.  The State party was continuing to reduce the stringency of HIV legislation.

    There was a Government mechanism which visited prisons regularly to examine living conditions.  The Attorney-General also monitored compliance with legislation on prisons.  Access to all forms of medical care was granted to detainees.  All detainees could file complaints to courts related to the lawfulness of their detention as well as other problems.  Prisoners who violated prison regimes were placed in solitary confinement.

    The State party had a plan for implementing the Convention on the Rights of Persons with Disabilities.  It supported employers who hired persons with disabilities and provided training to help persons with disabilities access work.  An act on quotas for persons with disabilities in the workplace had been implemented.

    Legislative changes addressed the circulation of products that harmed public morality.  They were not expected to have an impact on the lesbian, bisexual, transgender and intersex community.  People could choose the type of relationship they had.

    The impact on human health of the State’s nuclear power plants was negligible.  Belarus upheld the highest standards of safety.

    Women were being encouraged to participate in sports traditionally favoured by men.

    Questions by a Committee Expert

    ELGUN SAFAROV, Committee Expert and Rapporteur for Belarus, asked if the State party had statistics on the amount of property inherited by women.  How did courts protect women’s property rights in divorce proceedings? How were children’s rights protected in international adoption proceedings?  The dialogue and the Committee’s recommendations would help with protecting the rights of women in Belarus.

    Responses by the Delegation

    The delegation said Belarus’ legislation on divorce promoted the best interests of the child.  Mediation was increasingly used in custody cases.  The interests of the mother and father were duly protected.  Belarus worked with several States on regulating international adoptions.  The State party monitored families who had adopted Belarussian children to ensure that their rights were upheld.

    Concluding Remarks

    LARYSA BELSKAYA, Permanent Representative of Belarus to the United Nations Office at Geneva and head of the delegation, thanked the Committee for the dialogue. Belarus had achieved much in terms of gender equality and empowering women.  The discussion helped the State party to identify the remaining issues to be addressed.  The Belarussian population supported the State’s measures, but there was more to be done.  The Committee’s recommendations would be carefully considered by the National Council on Gender Equality and used to construct the next national action plan on gender equality

    NAHLA HAIDAR, Committee Chair, thanked the delegation for its engagement with the Committee.  The dialogue had provided insights into the achievements made in Belarus and the areas in which further progress was needed.  The Committee commended the State party for its efforts and encouraged it to implement the Committee’s recommendations for the benefit of all women and girls in Belarus.

     

    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.

     

    CEDAW25.004E

    MIL OSI United Nations News