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

Source: GlobeNewswire (MIL-OSI)

Third Quarter Results

Total revenues of $44.0 million, a 15% year-over-year improvement, driven in part by increased international revenues
Net income of $4.1 million and diluted earnings per share of $1.60, compared to $4.4 million and diluted earnings per share of $1.77 one year ago
Adjusted EBITDA of $7.1 million, a $0.3 million year-over-year improvement
Cash flows from operating activities of $2.1 million for the first nine months of 2024; free cash flow less distributions to non-controlling interest of $0.4 million, a $3.3 million improvement over the first nine months of 2023
$15.3 million in cash and $8.6 million of total debt as of September 30, 2024

HOUSTON, Oct. 30, 2024 (GLOBE NEWSWIRE) — NCS Multistage Holdings, Inc. (Nasdaq: NCSM) (the “Company,” “NCS,” “we” or “us”), a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies, today announced its results for the quarter ended September 30, 2024.

Financial Review

Total revenues were $44.0 million for the quarter ended September 30, 2024 compared to $38.3 million for the third quarter of 2023. Revenue growth was driven by increases in international services revenues, U.S. product sales, and Canada product sales and services. These gains were partially offset by lower U.S. services revenues and international product sales. The significant increase in international revenues was driven by Middle East tracer work and North Sea frac systems, while the increase in the United States reflects higher frac plug and perforating gun sales by our joint venture, Repeat Precision, LLC (“Repeat Precision”). Despite the increase in U.S. revenues, customer activity continues to be negatively impacted by lower natural gas prices. The increase in our Canadian revenue was due in part to higher fracturing systems activity in 2024, as the prior year was impacted more significantly by Canadian wildfires stemming from drought conditions.

Compared to the second quarter of 2024, total revenues increased by 48%, with an increase in Canada of 139%, primarily due to seasonality associated with spring break-up in the second quarter. This increase was partially offset by a decline of 31% in international revenues, primarily associated with the timing of tracer service work in the Middle East, and a 6% decline in the United States.

Gross profit was $17.8 million, with a gross margin of 41%, for the third quarter of 2024, compared to $15.2 million, with a gross margin of 40%, for the third quarter of 2023. Gross margin for 2024 improved due to an increase in higher-margin international work in both the Middle East and North Sea, an increase in frac plug and perforating gun sales in the United States, as well as the benefits realized from operational restructurings enacted in 2023. Adjusted gross profit, which we define as total revenues less total cost of sales, exclusive of depreciation and amortization (“DD&A”), was $18.5 million, or an adjusted gross margin of 42%, for the third quarter of 2024, compared to $15.7 million, or 41%, for the third quarter of 2023.

Selling, general and administrative (“SG&A”) expenses totaled $14.1 million for the third quarter of 2024, an increase of $1.5 million compared to the same period in 2023. This increase in expense reflects a higher annual incentive bonus accrual year-over-year partially offset by the benefit of cost-saving measures implemented through our restructuring efforts in 2023.

Other income was $1.5 million for the third quarter of 2024 compared to $2.0 million for the third quarter of 2023. This change in other income is primarily attributable to the prior year recovery of unpaid invoices through a litigation settlement and the reversal of a legal contingency fee in 2023 that was not repeated in 2024. This was partially offset in 2024 by increases in royalty income from licensees and the benefit associated with our technical services and assistance agreement with our local partner in Oman.

Net income was $4.1 million, or $1.60 per diluted share, for the quarter ended September 30, 2024 compared to net income of $4.4 million, or $1.77 per diluted share for the quarter ended September 30, 2023.

Adjusted EBITDA was $7.1 million for the quarter ended September 30, 2024, an increase of $0.3 million compared to the same period a year ago. This improvement is primarily the result of an increase in higher-margin international projects partially offset by an increase in SG&A expenses due to higher annual incentive bonus accruals. Our resulting Adjusted EBITDA margin of 16% for the quarter ended September 30, 2024 compared to 18% for the same period a year ago.

Cash flow from operating activities for the nine months ended September 30, 2024 was $2.1 million, a $3.5 million improvement compared to the same period in 2023. For the nine months ended September 30, 2024, free cash flow, less distributions to non-controlling interest, provided cash of $0.4 million compared to a use of cash of $(3.0) million for the same period in 2023. The overall increase in free cash flow was largely attributed to our operating results, change in net working capital, and a reduction in net cash used in investing activities, partially offset by a distribution to our non-controlling interest.

Liquidity and Capital Expenditures

As of September 30, 2024, NCS had $15.3 million in cash and $8.6 million in total debt, and a borrowing base under the undrawn asset-based revolving credit facility (“ABL Facility”) of $21.7 million. Our working capital, defined as current assets minus current liabilities, was $77.3 million and $71.2 million as of September 30, 2024 and December 31, 2023, respectively.

Net working capital, calculated as working capital, less cash and excluding the current maturities of long-term debt, was $64.1 million and $56.3 million as of September 30, 2024 and December 31, 2023, respectively. The increase in our net working capital was primarily attributable to an increase in our accounts receivable, partially offset by an increase in accrued expenses.

NCS incurred capital expenditures, net of proceeds from the sale of property and equipment, of $0.7 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Review and Outlook

NCS’s Chief Executive Officer, Ryan Hummer commented, “NCS has continued to outperform expectations in a challenging market environment. This quarter marks the third consecutive quarter in which our total revenue has been at the high end or exceeded our expectations, and in which our Adjusted EBITDA exceeded the high end of our expectations.

Our revenue for the first nine months of 2024 of $117.6 million is over $10 million, or approximately 10%, higher than the same period last year. Importantly, we are also demonstrating the operating leverage in our business, with a modest improvement in gross margin percentage paired with a reduction in SG&A expenses for these periods. Our resulting Adjusted EBITDA of $14.1 million for the first nine months of 2024 is approximately 50% higher than the same period last year, a demonstration of the attractive incremental margins our business can generate as we grow.

This performance reflects the way our team has embraced and executed our core strategies to build upon our leading market positions, capitalize on international and offshore opportunities and to commercialize innovative solutions to complex customer challenges. One example of this is the 124% improvement in revenue derived outside North America for the first nine months of 2024 as compared to 2023, with international revenue comprising 10% of our total revenue in that period, as compared to 5% last year. Our multi-year efforts to grow our customer base in the North Sea and to enter certain markets in the Middle East are being rewarded.

Our team at NCS and Repeat Precision has delivered year-over-year revenue growth of 15% in the U.S. through the first nine months of the year, an impressive performance in light of meaningful reductions in industry activity, whether measured by the rig count or unconventional completion counts.

We are pairing this growth with improved free cash flow generation, with free cash flow after distributions to non-controlling interest for the first nine months of 2024 of $0.4 million, increasing by more than $3 million as compared to the same period in 2023. We maintain a net cash position of $6.7 million, and had total liquidity of over $37 million as of September 30, 2024, which includes our cash on hand and availability under our undrawn revolving credit facility.

We expect that we will continue to deliver improved revenue performance in the fourth quarter of 2024 as compared to 2023 in each of the U.S., Canada and international markets. However, sequentially we expect a 5-15% reduction in revenue in each of these markets, reflecting the potential for a more significant reduction in year-end activity than in prior years for the U.S. and Canadian markets due to industry drilling and completion efficiencies, and more challenging winter operating conditions in selected international markets, including the North Sea.

We believe the value that we bring to our customers across our product and service portfolio, our continued product and service innovation, and our targeted efforts to penetrate international markets positions us to outperform the anticipated changes in industry drilling and completion activity. As demonstrated thus far in 2024, we believe that this revenue growth, paired with previously enacted and continued efforts to control our operating expenses, will enable higher year-over-year Adjusted EBITDA Margins.

These results are reflective of the talent, effort and dedication of the outstanding team at NCS and at Repeat Precision. By delivering on our core strategies, we are providing extraordinary outcomes to our customers, driving innovation in the industry and creating value for our shareholders.”

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net Income (Loss), Adjusted Earnings (Loss) per Diluted Share, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to Non-Controlling Interest and Net Working Capital are non-GAAP financial measures. For an explanation of these measures and a reconciliation, refer to “Non-GAAP Financial Measures” below.

Conference Call

The Company will host a conference call to discuss its third quarter 2024 results and updated guidance on Thursday, October 31, 2024 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). The conference call will be available via a live audio webcast. Participants who wish to ask questions may register for the call here to receive the dial-in numbers and unique PIN. If you wish to join the conference call but do not plan to ask questions, you may join the listen-only webcast here. The live webcast can also be accessed by visiting the Investors section of the Company’s website at ir.ncsmultistage.com. It is recommended that participants join at least 10 minutes prior to the event start.

The replay will be available in the Investors section of the Company’s website shortly after the conclusion of the call and will remain available for approximately seven days.

About NCS Multistage Holdings, Inc.

NCS Multistage Holdings, Inc. is a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies. NCS provides products and services primarily to exploration and production companies for use in onshore and offshore wells, predominantly wells that have been drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations. NCS’s products and services are utilized in oil and natural gas basins throughout North America and in selected international markets, including the North Sea, the Middle East, Argentina and China. NCS’s common stock is traded on the Nasdaq Capital Market under the symbol “NCSM.” Additional information is available on the website, www.ncsmultistage.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause our actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following: declines in the level of oil and natural gas exploration and production activity in Canada, the United States and internationally; oil and natural gas price fluctuations; significant competition for our products and services that results in pricing pressures, reduced sales, or reduced market share; inability to successfully implement our strategy of increasing sales of products and services into the U.S. and international markets; loss of significant customers; losses and liabilities from uninsured or underinsured business activities and litigation; our failure to identify and consummate potential acquisitions; the financial health of our customers including their ability to pay for products or services provided; our inability to integrate or realize the expected benefits from acquisitions; our inability to achieve suitable price increases to offset the impacts of cost inflation; loss of any of our key suppliers or significant disruptions negatively impacting our supply chain; risks in attracting and retaining qualified employees and key personnel; risks resulting from the operations of our joint venture arrangement; currency exchange rate fluctuations; impact of severe weather conditions; our inability to accurately predict customer demand, which may result in us holding excess or obsolete inventory; impairment in the carrying value of long-lived assets including goodwill; failure to comply with or changes to federal, state and local and non-U.S. laws and other regulations, including anti-corruption and environmental regulations, guidelines and regulations for the use of explosives; change in trade policy, including the impact of tariffs; our inability to successfully develop and implement new technologies, products and services that align with the needs of our customers, including addressing the shift to more non-traditional energy markets as part of the energy transition; our inability to protect and maintain critical intellectual property assets or losses and liabilities from adverse decisions in intellectual property disputes; loss of, or interruption to, our information and computer systems; system interruptions or failures, including complications with our enterprise resource planning system, cybersecurity breaches, identity theft or other disruptions that could compromise our information; our failure to establish and maintain effective internal control over financial reporting; restrictions on the availability of our customers to obtain water essential to the drilling and hydraulic fracturing processes; changes in legislation or regulation governing the oil and natural gas industry, including restrictions on emissions of greenhouse gases; our inability to meet regulatory requirements for use of certain chemicals by our tracer diagnostics business; the reduction in our ABL Facility borrowing base or our inability to comply with the covenants in our debt agreements; and our inability to obtain sufficient liquidity on reasonable terms, or at all and other factors discussed or referenced in our filings made from time to time with the Securities and Exchange Commission. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Contact

Mike Morrison
Chief Financial Officer and Treasurer
(281) 453-2222
IR@ncsmultistage.com

NCS MULTISTAGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Revenues
Product sales	$	31,675		$	27,286		$	82,455		$	76,149
Services		12,331			10,993			35,099			31,075
Total revenues		44,006			38,279			117,554			107,224
Cost of sales
Cost of product sales, exclusive of depreciation and amortization expense shown below		19,408			17,118			51,309			47,945
Cost of services, exclusive of depreciation and amortization expense shown below		6,066			5,449			18,171			16,564
Total cost of sales, exclusive of depreciation and amortization expense shown below		25,474			22,567			69,480			64,509
Selling, general and administrative expenses		14,139			12,669			42,789			43,297
Depreciation		1,188			1,001			3,395			2,892
Amortization		168			168			502			502
Income (loss) from operations		3,037			1,874			1,388			(3,976	)
Other income (expense)
Interest expense, net		(108	)		(27	)		(323	)		(447	)
Provision for litigation, net of recoveries		—			(98	)		—			(42,498	)
Other income, net		1,523			1,983			4,863			3,753
Foreign currency exchange gain (loss), net		217			(157	)		(788	)		(79	)
Total other income (expense)		1,632			1,701			3,752			(39,271	)
Income (loss) before income tax		4,669			3,575			5,140			(43,247	)
Income tax (benefit) expense		(35	)		(537	)		722			(287	)
Net income (loss)		4,704			4,112			4,418			(42,960	)
Net income (loss) attributable to non-controlling interest		557			(296	)		1,296			(168	)
Net income (loss) attributable to NCS Multistage Holdings, Inc.	$	4,147		$	4,408		$	3,122		$	(42,792	)
Earnings (loss) per common share
Basic earnings (loss) per common share attributable to NCS Multistage Holdings, Inc.	$	1.63		$	1.78		$	1.23		$	(17.33	)
Diluted earnings (loss) per common share attributable to NCS Multistage Holdings, Inc.	$	1.60		$	1.77		$	1.21		$	(17.33	)
Weighted average common shares outstanding
Basic		2,548			2,479			2,535			2,469
Diluted		2,588			2,489			2,571			2,469

NCS MULTISTAGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS*
(In thousands, except share data)
(Unaudited)

	September 30,			December 31,
	2024			2023
Assets
Current assets
Cash and cash equivalents	$	15,330		$	16,720
Accounts receivable—trade, net		36,652			23,981
Inventories, net		41,199			41,612
Prepaid expenses and other current assets		1,996			1,862
Other current receivables		4,276			4,042
Insurance receivable		—			15,000
Total current assets		99,453			103,217
Noncurrent assets
Property and equipment, net		22,656			23,336
Goodwill		15,222			15,222
Identifiable intangibles, net		3,905			4,407
Operating lease assets		3,644			4,847
Deposits and other assets		777			937
Deferred income taxes, net		186			66
Total noncurrent assets		46,390			48,815
Total assets	$	145,843		$	152,032
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable—trade	$	7,512		$	6,227
Accrued expenses		6,874			3,702
Income taxes payable		713			364
Operating lease liabilities		1,388			1,583
Accrual for legal contingencies		—			15,000
Current maturities of long-term debt		2,111			1,812
Other current liabilities		3,511			3,370
Total current liabilities		22,109			32,058
Noncurrent liabilities
Long-term debt, less current maturities		6,525			6,344
Operating lease liabilities, long-term		2,588			3,775
Other long-term liabilities		200			213
Deferred income taxes, net		311			249
Total noncurrent liabilities		9,624			10,581
Total liabilities		31,733			42,639
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2024 and December 31, 2023		—			—
Common stock, $0.01 par value, 11,250,000 shares authorized, 2,557,648 shares issued and 2,502,680 shares outstanding at September 30, 2024 and 2,482,796 shares issued and 2,443,744 shares outstanding at December 31, 2023		26			25
Additional paid-in capital		446,721			444,638
Accumulated other comprehensive loss		(86,300	)		(85,752	)
Retained deficit		(262,495	)		(265,617	)
Treasury stock, at cost, 54,968 shares at September 30, 2024 and 39,052 shares at December 31, 2023		(1,913	)		(1,676	)
Total stockholders’ equity		96,039			91,618
Non-controlling interest		18,071			17,775
Total equity		114,110			109,393
Total liabilities and stockholders’ equity	$	145,843		$	152,032

_____________________
* Preliminary

NCS MULTISTAGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Nine Months Ended
	September 30,
	2024			2023
Cash flows from operating activities
Net income (loss)	$	4,418		$	(42,960	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		3,897			3,394
Amortization of deferred loan costs		155			153
Share-based compensation		3,403			4,198
Provision for inventory obsolescence		945			256
Deferred income tax expense		3			147
Gain on sale of property and equipment		(363	)		(423	)
Provision for credit losses		44			112
Provision for litigation, net of recoveries		—			42,498
Net foreign currency unrealized loss (gain)		855			(127	)
Proceeds from note receivable		61			338
Changes in operating assets and liabilities:
Accounts receivable—trade		(13,050	)		(2,847	)
Inventories, net		(1,210	)		(6,356	)
Prepaid expenses and other assets		821			544
Accounts payable—trade		1,124			2,894
Accrued expenses		3,224			(1,025	)
Other liabilities		(2,433	)		(2,023	)
Income taxes receivable/payable		188			(219	)
Net cash provided by (used in) operating activities		2,082			(1,446	)
Cash flows from investing activities
Purchases of property and equipment		(1,083	)		(1,704	)
Purchase and development of software and technology		(70	)		(263	)
Proceeds from sales of property and equipment		421			454
Net cash used in investing activities		(732	)		(1,513	)
Cash flows from financing activities
Payments on finance leases		(1,442	)		(1,159	)
Line of credit borrowings		3,062			11,702
Payments of line of credit borrowings		(3,062	)		(11,758	)
Treasury shares withheld		(237	)		(265	)
Distribution to noncontrolling interest		(1,000	)		—
Net cash used in financing activities		(2,679	)		(1,480	)
Effect of exchange rate changes on cash and cash equivalents		(61	)		(397	)
Net change in cash and cash equivalents		(1,390	)		(4,836	)
Cash and cash equivalents beginning of period		16,720			16,234
Cash and cash equivalents end of period	$	15,330		$	11,398
Noncash investing and financing activities
Assets obtained in exchange for new finance lease liabilities	$	2,145		$	1,665
Assets obtained in exchange for new operating lease liabilities	$	—		$	1,791

NCS MULTISTAGE HOLDINGS, INC.
REVENUES BY GEOGRAPHIC AREA
(In thousands)
(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
United States
Product sales	$	9,489	$	5,200	$	25,806	$	20,202
Services		1,645		2,812		7,130		8,511
Total United States		11,134		8,012		32,936		28,713
Canada
Product sales		22,140		21,531		53,078		54,062
Services		6,725		6,613		19,514		19,074
Total Canada		28,865		28,144		72,592		73,136
Other Countries
Product sales		46		555		3,571		1,885
Services		3,961		1,568		8,455		3,490
Total other countries		4,007		2,123		12,026		5,375
Total
Product sales		31,675		27,286		82,455		76,149
Services		12,331		10,993		35,099		31,075
Total revenues	$	44,006	$	38,279	$	117,554	$	107,224

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net Income (Loss), Adjusted Earnings (Loss) per Diluted Share, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to Non-Controlling Interest and Net Working Capital (our “non-GAAP financial measures”) are not defined under generally accepted accounting principles (“GAAP”), are not measures of net income (loss), income (loss) from operations, gross profit and gross margin (inclusive of DD&A), cash provided by (used in) operating activities, working capital or any other performance measure derived in accordance with GAAP, and are subject to important limitations. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies in our industry and are not measures of performance calculated in accordance with GAAP. Our non-GAAP financial measures have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our financial performance as reported under GAAP, and they should not be considered as alternatives to net income (loss), income (loss) from operations, gross profit, gross margin, cash provided by (used in) operating activities, working capital or any other performance measures derived in accordance with GAAP as measures of operating performance or as alternatives to cash flow from operating activities as measures of our liquidity.

However, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net Income (Loss), Adjusted Earnings (Loss) per Diluted Share, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to Non-Controlling Interest and Net Working Capital are key metrics that management uses to assess the period-to-period performance of our core business operations or metrics that enable investors to assess our performance from period to period to evaluate our performance relative to other companies that are not subject to such factors, or who may provide similar non-GAAP measures in their public disclosures.

The tables below set forth reconciliations of our non-GAAP financial measures to the most directly comparable measures of financial performance calculated under GAAP:

NET WORKING CAPITAL*

Net working capital is defined as total current assets, excluding cash and cash equivalents, minus total current liabilities, excluding current maturities of long-term debt. Net working capital excludes cash and cash equivalents and current maturities of long-term debt in order to evaluate the investments in working capital that we believe are required to support our business. We believe that net working capital is useful in analyzing the cash flow and working capital needs of the Company, including determining the efficiencies of our operations and our ability to readily convert assets into cash.

	September 30,			December 31,
	2024			2023
Working capital	$	77,344		$	71,159
Cash and cash equivalents		(15,330	)		(16,720	)
Current maturities of long term debt		2,111			1,812
Net working capital	$	64,125		$	56,251

_____________________
*Preliminary

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)

ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN

Adjusted gross profit is defined as total revenues minus cost of sales, exclusive of depreciation and amortization expense, which we present as a separate line item in our statement of operations. Adjusted gross margin represents adjusted gross profit as a percentage of total revenues.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Total revenues	$	44,006		$	38,279		$	117,554		$	107,224
Total cost of sales, exclusive of depreciation and amortization expense		25,474			22,567			69,480			64,509
Total depreciation and amortization associated with cost of sales		699			558			1,968			1,601
Gross Profit	$	17,833		$	15,154		$	46,106		$	41,114
Gross Margin		41	%		40	%		39	%		38	%
Exclude total depreciation and amortization associated with cost of sales		(699	)		(558	)		(1,968	)		(1,601	)
Adjusted Gross Profit	$	18,532		$	15,712		$	48,074		$	42,715
Adjusted Gross Margin		42	%		41	%		41	%		40	%

ADJUSTED NET INCOME (LOSS) AND ADJUSTED EARNINGS (LOSS) PER DILUTED SHARE

Adjusted net income (loss) is defined as net income (loss) attributable to NCS Multistage Holdings, Inc. adjusted to exclude certain items which we believe are not reflective of ongoing performance. Adjusted income (loss) per diluted share is defined as adjusted net income (loss) divided by our diluted weighted average common shares outstanding during the relevant period.

	Three Months Ended										Nine Months Ended
	September 30, 2024						September 30, 2023				September 30, 2024						September 30, 2023
	Effect on Net Income			Impact on Diluted Earnings Per Share			Effect on Net Income		Impact on Diluted Earnings Per Share		Effect on Net Income			Impact on Diluted Earnings Per Share			Effect on Net (Loss) Income			Impact on Diluted (Loss) Earnings Per Share
Net income (loss) attributable to NCS Multistage Holdings, Inc.	$	4,147		$	1.60		$	4,408	$	1.77	$	3,122		$	1.21		$	(42,792	)	$	(17.33	)
Adjustments
Provision for litigation, net of recoveries (a)		—			—			98		0.04		—			—			42,498			17.21
Foreign currency exchange (gain) loss (b)		(262	)		(0.10	)		237		0.10		679			0.26			132			0.06
Income tax impact from adjustments (c)		2			—			1		—		(90	)		(0.03	)		303			0.12
Adjusted net income attributable to NCS Multistage Holdings, Inc.	$	3,887		$	1.50		$	4,744	$	1.91	$	3,711		$	1.44		$	141		$	0.06

__________________

(a)	Represents litigation provision primarily associated with a legal matter in Texas for the nine months ended September 30, 2023. In December 2023, we settled the matter where the insurance carrier agreed to pay the mutually-agreed settlement amounts to the plaintiff in January 2024, resulting in no cash payments by NCS.
(b)	Represents realized and unrealized foreign currency exchange gains and losses attributable to NCS Multistage Holdings, Inc. primarily due to movement in the foreign currency exchange rates during the applicable periods.
(c)	Represents income tax impacts based on applicable effective tax rates.

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)

EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN, AND ADJUSTED EBITDA LESS SHARE-BASED COMPENSATION

EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain items which we believe are not reflective of ongoing operating performance or which, in the case of share-based compensation, is non-cash in nature. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of total revenues. Adjusted EBITDA Less Share-Based Compensation is defined as Adjusted EBITDA minus share-based compensation expense. We believe that Adjusted EBITDA is an important measure that excludes costs that management believes do not reflect our ongoing operating performance, legal proceedings for intellectual property as further described below, and certain costs associated with our capital structure. We believe that Adjusted EBITDA Less Share-Based Compensation presents our financial performance in a manner that is comparable to the presentation provided by many of our peers.

We periodically incur legal costs associated with the assertion of, or defense of, intellectual property, which we exclude from our definition of Adjusted EBITDA and Adjusted EBITDA Less Share-Based Compensation, unless we believe that settlement will occur prior to any material legal spend (included in the table below as “Professional Fees”). Although these costs may recur between periods, depending on legal matters then outstanding or in process, we believe the timing of when these costs are incurred does not typically match the settlement or recoveries associated with such matters, and therefore, can distort our operating results. Similarly, we exclude from Adjusted EBITDA and Adjusted EBITDA Less Share-Based Compensation the one-time settlement or recovery payment associated with these excluded legal matters when realized but would not exclude any go forward royalties or payments, if applicable. We expect to continue to incur these legal costs for current matters under appeal and for any future cases that may go to trial, provided that the amount will vary by period.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Net income (loss)	$	4,704		$	4,112		$	4,418		$	(42,960	)
Income tax (benefit) expense		(35	)		(537	)		722			(287	)
Interest expense, net		108			27			323			447
Depreciation		1,188			1,001			3,395			2,892
Amortization		168			168			502			502
EBITDA		6,133			4,771			9,360			(39,406	)
Provision for litigation, net of recoveries (a)		—			98			—			42,498
Share-based compensation (b)		651			1,328			2,084			3,285
Professional fees (c)		333			(375	)		1,263			1,286
Foreign currency exchange (gain) loss (d)		(217	)		157			788			79
Severance and other termination benefits (e)		—			671			—			980
Other (f)		175			145			573			698
Adjusted EBITDA	$	7,075		$	6,795		$	14,068		$	9,420
Adjusted EBITDA Margin		16	%		18	%		12	%		9	%
Adjusted EBITDA Less Share-Based Compensation	$	6,424		$	5,467		$	11,984		$	6,135

___________________

(a)	Represents litigation provision primarily associated with a legal matter in Texas. See footnote (a) in the “Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Diluted Share” table above for more information.
(b)	Represents non-cash compensation charges related to share-based compensation granted to our officers, employees and directors.
(c)	Represents non-capitalizable costs of professional services primarily incurred or reversed in connection with our legal proceedings associated with the assertion of, or defense of, intellectual property as further described above as well as the cost incurred for the evaluation of potential strategic transactions.
(d)	Represents realized and unrealized foreign currency exchange gains and losses primarily due to movement in the foreign currency exchange rates during the applicable periods.
(e)	Represents certain expenses associated with consolidations of our tracer diagnostics business operations and Repeat Precision’s manufacturing operations in Mexico.
(f)	Represents the impact of a research and development subsidy that is included in income tax expense in accordance with GAAP along with other charges and credits.

NCS MULTISTAGE HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)

FREE CASH FLOW AND FREE CASH FLOW LESS DISTRIBUTIONS TO NON-CONTROLLING INTEREST

Free cash flow is defined as net cash provided by (used in) operating activities less purchases of property and equipment (inclusive of the purchase and development of software and technology) plus proceeds from sales of property and equipment, as presented in our consolidated statement of cash flows. We define free cash flow less distributions to non-controlling interest as free cash flow less amounts reported in the financing activities section of the statement of cash flows as distributions to non-controlling interest. We believe free cash flow is useful because it provides information to investors regarding the cash that was available in the period that was in excess of our needs to fund our capital expenditures and other investment needs. We believe that free cash flow less distributions to non-controlling interest is useful because it provides information to investors regarding the cash that was available in the period that was in excess of our needs to fund our capital expenditures, other investment needs, and cash distributions to our joint venture partner.

	Nine Months Ended
	September 30,
	2024			2023
Net cash provided by (used in) operating activities	$	2,082		$	(1,446	)
Purchases of property and equipment		(1,083	)		(1,704	)
Purchase and development of software and technology		(70	)		(263	)
Proceeds from sales of property and equipment		421			454
Free cash flow	$	1,350		$	(2,959	)
Distributions to non-controlling interest		(1,000	)		—
Free cash flow less distributions to non-controlling interest	$	350		$	(2,959	)

The MIL Network –

January 25, 2025

MIL-OSI: Transocean Ltd. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

	Three months ended											Three months ended
	September 30,				June 30,				sequential			September 30,				year-over-year
	2024				2024				change			2023				change
(In millions, except per share amounts, percentages and backlog)
Contract drilling revenues	$	948			$	861			$	87		$	713			$	235
Adjusted contract drilling revenues	$	948			$	861			$	87		$	721			$	227
Revenue efficiency ⁽¹⁾		94.5		%		96.9		%					95.4		%
Operating and maintenance expense	$	563			$	534			$	29		$	524			$	39
Net loss attributable to controlling interest	$	(494	)		$	(123	)		$	(371	)	$	(220	)		$	(274	)
Diluted loss per share	$	(0.58	)		$	(0.15	)		$	(0.43	)	$	(0.28	)		$	(0.30	)

Adjusted EBITDA	$	342			$	284			$	58		$	162			$	180
Adjusted EBITDA margin		36.0		%		33.0		%					22.5		%
Adjusted net income (loss)	$	64			$	(123	)		$	187		$	(280	)		$	344
Adjusted diluted earnings (loss) per share	$	—			$	(0.15	)		$	0.15		$	(0.36	)		$	0.36


Backlog as of the October 2024 Fleet Status Report	$	9.3		billion

STEINHAUSEN, Switzerland, Oct. 30, 2024 (GLOBE NEWSWIRE) — Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $494 million, $0.58 per diluted share, for the three months ended September 30, 2024.

Third quarter results included net unfavorable items of $558 million or $0.58 per diluted share as follows:

$617 million, $0.64 per diluted share, loss on impairment of assets, net of tax.

Partially offset by:

$21 million , $0.02 per diluted share, gain on retirement of debt; and
$38 million, $0.04 per diluted share, discrete tax items, net.

After consideration of these net unfavorable items, third quarter 2024 adjusted net income was $64 million.

Contract drilling revenues for the three months ended September 30, 2024, increased sequentially by $87 million to $948 million, primarily due to increased rig utilization, increased dayrates for two rigs, higher reimbursement revenues and a full quarter of revenues from the newbuild ultra-deepwater drillship Deepwater Aquila, partially offset by lower revenue efficiency across the fleet.

Operating and maintenance expense was $563 million, compared with $534 million in the prior quarter. The sequential increase was the result of increased fleet activity, including a full quarter of operations from Deepwater Aquila, partially offset by reduced operating costs related to Transocean Norge following the acquisition of Orion Holdings (Cayman) Limited in June 2024.

General and administrative expense was $47 million, down from $59 million in the second quarter. The decrease was primarily due to reduced costs associated with the early retirement of certain personnel and lower professional fees.

Interest expense net of capitalized amounts was $154 million, compared to $143 million in the prior quarter, excluding the favorable adjustment of $74 million and $69 million in the third and second quarter, respectively, for the fair value of the bifurcated exchange feature related to the 4.625% exchangeable bonds. Interest income was $11 million, compared to $14 million in the prior quarter.

The Effective Tax Rate⁽²⁾ was 6.0%, down from 474.5% in the prior quarter. The decrease was primarily due to rig impairments, rig sales and other ordinary movement in income before tax. The Effective Tax Rate excluding discrete items was 22.5% compared to 416.3% in the previous quarter.

Cash provided by operating activities was $194 million during the third quarter of 2024, representing an increase of $61 million compared to the prior quarter. The sequential increase was primarily due to increased operating activities, improved cash collected from customers and timing of payments to suppliers, partially offset by higher interest payments.

Third quarter 2024 capital expenditures of $58 million were primarily associated with Deepwater Aquila. This compares with $84 million in the prior quarter.

“As illustrated by the nearly $1.3 billion in backlog booked in the third quarter, including the recent award for Deepwater Conqueror, the demand for our fleet of high specification ultra-deepwater and harsh environment rigs remains strong,” said Chief Executive Officer, Jeremy Thigpen. “With these most recent awards, more than 97% of Transocean’s active fleet is contracted in 2025, once again demonstrating that our customers clearly recognize Transocean’s unique capabilities – our rigs, crews and superior operational performance – add value to their programs.”

Thigpen concluded, “With approximately $9.3 billion in backlog, and clear visibility to future demand, we will remain focused on delivering safe, reliable and efficient operations for our customers and continue to maximize cash generation to improve our balance sheet, as we did in the third quarter with $136 million of free cash flow.”

Non-GAAP Financial Measures
We present our operating results in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and operates the highest specification floating offshore drilling fleet in the world.

Transocean owns or has partial ownership interests in and operates a fleet of 34 mobile offshore drilling units, consisting of 26 ultra-deepwater floaters and eight harsh environment floaters.

For more information about Transocean, please visit: www.deepwater.com.

Conference Call Information

Transocean will conduct a teleconference starting at 9 a.m. EDT, 2 p.m. CET, on Thursday, October 31, 2024, to discuss the results. To participate, dial +1 785-424-1226 and refer to conference code 827284 approximately 15 minutes prior to the scheduled start time.

The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.

A replay of the conference call will be available after 12 p.m. EDT, 5 p.m. CET, on Thursday, October 31, 2024. The replay, which will be archived for approximately 30 days, can be accessed at +1 402-220-9184, passcode 827284. The replay will also be available on the company’s website.

Forward-Looking Statements

The statements described herein that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements could contain words such as “possible,” “intend,” “will,” “if,” “expect,” or other similar expressions. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the company’s newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the fluctuation of current and future prices of oil and gas, the global and regional supply and demand for oil and gas, the intention to scrap certain drilling rigs, the success of our business following prior acquisitions, the effects of the spread of and mitigation efforts by governments, businesses and individuals related to contagious illnesses, and other factors, including those and other risks discussed in the company’s most recent Annual Report on Form 10-K for the year ended December 31, 2023, and in the company’s other filings with the SEC, which are available free of charge on the SEC’s website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of the Swiss Financial Services Act (“FinSA”) or advertising within the meaning of the FinSA. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.

Notes

(1)

Revenue efficiency is defined as actual operating revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations. See the accompanying schedule entitled “Revenue Efficiency.”

(2)

Effective Tax Rate is defined as income tax expense or benefit divided by income or loss before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”

Analyst Contact:
Alison Johnson
+1 713-232-7214

Media Contact:
Pam Easton
+1 713-232-7647

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
	Three months ended						Nine months ended
	September 30,						September 30,
	2024			2023			2024			2023

Contract drilling revenues	$	948		$	713		$	2,572		$	2,091

Costs and expenses
Operating and maintenance		563			524			1,620			1,417
Depreciation and amortization		190			192			559			560
General and administrative		47			44			158			137
		800			760			2,337			2,114

Loss on impairment of assets		(629	)		(5	)		(772	)		(58	)
Loss on disposal of assets, net		(4	)		(3	)		(10	)		(173	)
Operating loss		(485	)		(55	)		(547	)		(254	)

Other income (expense), net
Interest income		11			12			40			42
Interest expense, net of amounts capitalized		(80	)		(232	)		(271	)		(649	)
Gain (loss) on retirement of debt		21			—			161			(32	)
Other, net		8			12			32			35
		(40	)		(208	)		(38	)		(604	)
Loss before income tax benefit		(525	)		(263	)		(585	)		(858	)
Income tax benefit		(31	)		(43	)		(66	)		(8	)

Net loss		(494	)		(220	)		(519	)		(850	)
Net income attributable to noncontrolling interest		—			—			—			—
Net loss attributable to controlling interest	$	(494	)	$	(220	)	$	(519	)	$	(850	)

Loss per share
Basic	$	(0.56	)	$	(0.28	)	$	(0.62	)	$	(1.13	)
Diluted	$	(0.58	)	$	(0.28	)	$	(0.65	)	$	(1.13	)

Weighted-average shares outstanding
Basic		879			774			840			755
Diluted		954			774			915			755

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
	September 30,			December 31,
	2024			2023
Assets
Cash and cash equivalents	$	435		$	762
Accounts receivable, net of allowance of $2 at September 30, 2024 and December 31, 2023		594			512
Materials and supplies, net of allowance of $176 and $198 at September 30, 2024 and December 31, 2023, respectively		425			426
Assets held for sale		345			49
Restricted cash and cash equivalents		365			233
Other current assets		179			144
Total current assets		2,343			2,126

Property and equipment		22,412			23,875
Less accumulated depreciation		(6,424	)		(6,934	)
Property and equipment, net		15,988			16,941
Contract intangible assets		—			4
Deferred tax assets, net		165			44
Other assets		1,014			1,139
Total assets	$	19,510		$	20,254

Liabilities and equity
Accounts payable	$	255		$	323
Accrued income taxes		13			23
Debt due within one year		457			370
Other current liabilities		706			681
Total current liabilities		1,431			1,397

Long-term debt		6,503			7,043
Deferred tax liabilities, net		570			540
Other long-term liabilities		778			858
Total long-term liabilities		7,851			8,441

Commitments and contingencies

Shares, $0.10 par value, 1,057,879,029 authorized, 141,262,093 conditionally authorized, 940,828,901 issued
and 875,803,595 outstanding at September 30, 2024, and CHF 0.10 par value, 1,021,294,549 authorized,
142,362,093 conditionally authorized, 843,715,858 issued and 809,030,846 outstanding at December 31, 2023		87			81
Additional paid-in capital		14,871			14,544
Accumulated deficit		(4,552	)		(4,033	)
Accumulated other comprehensive loss		(179	)		(177	)
Total controlling interest shareholders’ equity		10,227			10,415
Noncontrolling interest		1			1
Total equity		10,228			10,416
Total liabilities and equity	$	19,510		$	20,254

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
	Nine months ended
	September 30,
	2024			2023
Cash flows from operating activities
Net loss	$	(519	)	$	(850	)
Adjustments to reconcile to net cash provided by operating activities:
Amortization of contract intangible asset		4			45
Depreciation and amortization		559			560
Share-based compensation expense		38			30
Loss on impairment of assets		772			58
Loss on impairment of investment in unconsolidated affiliate		5			—
Loss on disposal of assets, net		10			173
Fair value adjustment to bifurcated compound exchange feature		(153	)		272
Amortization of debt-related balances, net		39			38
(Gain) loss on retirement of debt		(161	)		32
Deferred income tax expense (benefit)		(91	)		1
Other, net		(6	)		21
Changes in deferred revenues, net		98			40
Changes in deferred costs, net		(26	)		(125	)
Changes in other operating assets and liabilities, net		(328	)		(229	)
Net cash provided by operating activities		241			66

Cash flows from investing activities
Capital expenditures		(225	)		(207	)
Investment in loans to unconsolidated affiliates		(3	)		(3	)
Investment in equity of unconsolidated affiliate		—			(10	)
Proceeds from disposal of assets, net of costs to sell		99			10
Cash acquired in acquisition of unconsolidated affiliates		5			7
Net cash used in investing activities		(124	)		(203	)

Cash flows from financing activities
Repayments of debt		(2,073	)		(1,707	)
Proceeds from issuance of debt, net of issue costs		1,767			1,664
Other, net		(6	)		(3	)
Net cash used in financing activities		(312	)		(46	)

Net decrease in unrestricted and restricted cash and cash equivalents		(195	)		(183	)
Unrestricted and restricted cash and cash equivalents, beginning of period		995			991
Unrestricted and restricted cash and cash equivalents, end of period	$	800		$	808

TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS


	Three months ended
	September 30,		June 30,		September 30,
Contract Drilling Revenues (in millions)	2024		2024		2023
Ultra-deepwater floaters	$	668	$	606	$	516
Harsh environment floaters		280		255		197
Total contract drilling revenues	$	948	$	861	$	713

	Three months ended
	September 30,		June 30,		September 30,
Average Daily Revenue ⁽¹⁾	2024		2024		2023
Ultra-deepwater floaters	$	426,700	$	433,900	$	406,500
Harsh environment floaters		464,900		449,600		357,400
Total fleet average daily revenue	$	436,800	$	438,300	$	391,300

	Three months ended
	September 30,		June 30,		September 30,
Utilization ⁽²⁾	2024		2024		2023
Ultra-deepwater floaters	60.7	%	53.5	%	45.0	%
Harsh environment floaters	75.0	%	73.0	%	63.0	%
Total fleet average rig utilization	63.9	%	57.8	%	49.4	%

	Three months ended
	September 30,		June 30,		September 30,
Revenue Efficiency ⁽³⁾	2024		2024		2023
Ultra-deepwater floaters	92.5	%	96.5	%	94.3	%
Harsh environment floaters	100.1	%	98.1	%	98.1	%
Total fleet average revenue efficiency	94.5	%	96.9	%	95.4	%


⁽¹⁾ Average daily revenue is defined as operating revenues, excluding revenues for contract terminations, reimbursements and contract intangible amortization, earned per operating day. An operating day is defined as a day for which a rig is contracted to earn a dayrate during the firm contract period after operations commence.

⁽²⁾ Rig utilization is defined as the total number of operating days divided by the total number of rig calendar days in the measurement period, expressed as a percentage.

⁽³⁾ Revenue efficiency is defined as actual operating revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations.

TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
(in millions, except per share data)


	YTD			QTD			YTD			QTD			YTD
	09/30/24			09/30/24			06/30/24			06/30/24			03/31/24
Adjusted Net Income (Loss)
Net income (loss) attributable to controlling interest, as reported	$	(519	)	$	(494	)	$	(25	)	$	(123	)	$	98
Loss on impairment of assets, net of tax		755			617			138			138			—
Loss on impairment of investment in unconsolidated affiliates		5			—			5			4			1
Gain on retirement of debt		(161	)		(21	)		(140	)		(140	)		—
Discrete tax items		(161	)		(38	)		(123	)		(2	)		(121	)
Net income (loss), as adjusted	$	(81	)	$	64		$	(145	)	$	(123	)	$	(22	)

Adjusted Diluted Earnings (Loss) Per Share:
Diluted earnings (loss) per share, as reported	$	(0.65	)	$	(0.58	)	$	(0.03	)	$	(0.15	)	$	0.11
Loss on impairment of assets, net of tax		0.82			0.64			0.17			0.17			—
Loss on impairment of investment in unconsolidated affiliates		0.01			—			—			—			—
Gain on retirement of debt		(0.18	)		(0.02	)		(0.17	)		(0.17	)		—
Discrete tax items		(0.18	)		(0.04	)		(0.15	)		—			(0.14	)
Diluted earnings (loss) per share, as adjusted	$	(0.18	)	$	—		$	(0.18	)	$	(0.15	)	$	(0.03	)

	YTD			QTD			YTD			QTD			YTD			QTD			YTD
	12/31/23			12/31/23			09/30/23			09/30/23			06/30/23			06/30/23			03/31/23
Adjusted Net Loss
Net loss attributable to controlling interest, as reported	$	(954	)	$	(104	)	$	(850	)	$	(220	)	$	(630	)	$	(165	)	$	(465	)
Loss on impairment of assets		57			(1	)		58			5			53			53			—
Loss on disposal of assets, net		169			—			169			—			169			—			169
Loss on impairment of investment in unconsolidated affiliate		5			5			—			—			—			—			—
Loss on conversion of debt to equity		27			24			3			—			3			3			—
(Gain) loss on retirement of debt		31			(1	)		32			—			32			—			32
Discrete tax items		(74	)		3			(77	)		(65	)		(12	)		(1	)		(11	)
Net loss, as adjusted	$	(739	)	$	(74	)	$	(665	)	$	(280	)	$	(385	)	$	(110	)	$	(275	)

Adjusted Diluted Loss Per Share:
Diluted loss per share, as reported	$	(1.24	)	$	(0.13	)	$	(1.13	)	$	(0.28	)	$	(0.85	)	$	(0.22	)	$	(0.64	)
Loss on impairment of assets		0.07			—			0.08			0.01			0.07			0.07			—
Loss on disposal of assets, net		0.22			—			0.23			—			0.23			—			0.23
Loss on impairment of investment in unconsolidated affiliate		0.01			0.01			—			—			—			—			—
Loss on conversion of debt to equity		0.04			0.03			—			—			—			—			—
(Gain) loss on retirement of debt		0.04			—			0.04			—			0.04			—			0.04
Discrete tax items		(0.10	)		—			(0.10	)		(0.09	)		(0.01	)		—			(0.01	)
Diluted loss per share, as adjusted	$	(0.96	)	$	(0.09	)	$	(0.88	)	$	(0.36	)	$	(0.52	)	$	(0.15	)	$	(0.38	)

TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED CONTRACT DRILLING REVENUES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND RELATED MARGINS
(in millions, except percentages)


	YTD				QTD				YTD				QTD				YTD
	09/30/24				09/30/24				06/30/24				06/30/24				03/31/24

Contract drilling revenues	$	2,572			$	948			$	1,624			$	861			$	763
Contract intangible asset amortization		4				—				4				—				4
Adjusted Contract Drilling Revenues	$	2,576			$	948			$	1,628			$	861			$	767

Net income (loss)	$	(519	)		$	(494	)		$	(25	)		$	(123	)		$	98
Interest expense, net of interest income		231				69				162				60				102
Income tax expense (benefit)		(66	)			(31	)			(35	)			156				(191	)
Depreciation and amortization		559				190				369				184				185
Contract intangible asset amortization		4				—				4				—				4
EBITDA		209				(266	)			475				277				198

Loss on impairment of assets		772				629				143				143				—
Loss on impairment of investment in unconsolidated affiliates		5				—				5				4				1
Gain on retirement of debt		(161	)			(21	)			(140	)			(140	)			—
Adjusted EBITDA	$	825			$	342			$	483			$	284			$	199


Profit (loss) margin		(20.2	)	%		(52.0	)	%		(1.5	)	%		(14.3	)	%		12.9		%
EBITDA margin		8.1		%		(28.1	)	%		29.2		%		32.2		%		25.8		%
Adjusted EBITDA margin		32.0		%		36.0		%		29.7		%		33.0		%		26.0		%

	YTD				QTD				YTD				QTD				YTD				QTD				YTD
	12/31/23				12/31/23				09/30/23				09/30/23				06/30/23				06/30/23				03/31/23

Contract drilling revenues	$	2,832			$	741			$	2,091			$	713			$	1,378			$	729			$	649
Contract intangible asset amortization		52				7				45				8				37				19				18
Adjusted Contract Drilling Revenues	$	2,884			$	748			$	2,136			$	721			$	1,415			$	748			$	667

Net loss	$	(954	)		$	(104	)		$	(850	)		$	(220	)		$	(630	)		$	(165	)		$	(465	)
Interest expense, net of interest income		594				(13	)			607				220				387				157				230
Income tax expense (benefit)		13				21				(8	)			(43	)			35				(16	)			51
Depreciation and amortization		744				184				560				192				368				186				182
Contract intangible asset amortization		52				7				45				8				37				19				18
EBITDA		449				95				354				157				197				181				16

Loss on impairment of assets		57				(1	)			58				5				53				53				—
Loss on disposal of assets, net		169				—				169				—				169				—				169
Loss on impairment of investment in unconsolidated affiliate		5				5				—				—				—				—				—
Loss on conversion of debt to equity		27				24				3				—				3				3				—
(Gain) loss on retirement of debt		31				(1	)			32				—				32				—				32
Adjusted EBITDA	$	738			$	122			$	616			$	162			$	454			$	237			$	217


Loss margin		(33.7	)	%		(14.0	)	%		(40.7	)	%		(30.9	)	%		(45.7	)	%		(22.6	)	%		(71.6	)	%
EBITDA margin		15.6		%		12.7		%		16.6		%		21.8		%		13.9		%		24.2		%		2.4		%
Adjusted EBITDA margin		25.6		%		16.3		%		28.9		%		22.5		%		32.1		%		31.7		%		32.5		%

TRANSOCEAN LTD. AND SUBSIDIARIES
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS
(in millions, except tax rates)


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

Income (loss) before income taxes	$	(525	)		$	33			$	(263	)		$	(585	)		$	(858	)
Loss on impairment of assets		629				143				5				772				58
Loss on disposal of assets, net		—				—				—				—				169
Loss on impairment of investment in unconsolidated affiliates		—				4				—				5				—
Loss on conversion of debt to equity		—				—				—				—				3
(Gain) loss on retirement of debt		(21	)			(140	)			—				(161	)			32
Adjusted income (loss) before income taxes	$	83			$	40			$	(258	)		$	31			$	(596	)


Income tax expense (benefit)	$	(31	)		$	156			$	(43	)		$	(66	)		$	(8	)
Loss on impairment of assets		12				5				—				17				—
Loss on disposal of assets, net		—				—				—				—				—
Loss on impairment of investment in unconsolidated affiliates		—				—				—				—				—
Loss on conversion of debt to equity		—				—				—				—				—
(Gain) loss on retirement of debt		—				—				—				—				—
Changes in estimates (1)		38				2				65				161				77
Adjusted income tax expense (benefit) (2)	$	19			$	163			$	22			$	112			$	69

Effective Tax Rate (3)		6.0		%		474.5		%		16.3		%		11.3		%		0.9		%

Effective Tax Rate, excluding discrete items (4)		22.5		%		416.3		%		(8.7	)	%		364.0		%		(11.7	)	%


(1) Our estimates change as we file tax returns, settle disputes with tax authorities, or become aware of changes in laws and other events that have an effect on our (a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities.

(2) The three months ended September 30, 2024 included $283 million of additional tax benefit, reflecting the cumulative effect of a decrease in the annual effective tax rate from the previous quarter estimate.

(3) Our effective tax rate is calculated as income tax expense or benefit divided by income or loss before income taxes.

(4) Our effective tax rate, excluding discrete items, is calculated as income tax expense or benefit, excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income or loss before income taxes, excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes related to estimating the annual effective tax rate.

Transocean Ltd. and subsidiaries
Non-GAAP Financial Measures and Reconciliations
Free Cash Flow and Levered Free Cash Flow
(in millions)


							YTD			QTD			YTD			QTD			YTD
							09/30/24			09/30/24			06/30/24			06/30/24			03/31/24

Cash provided by (used in) operating activities							$	241		$	194		$	47		$	133		$	(86	)
Capital expenditures								(225	)		(58	)		(167	)		(84	)		(83	)
Free Cash Flow								16			136			(120	)		49			(169	)
Debt repayments								(2,073	)		(258	)		(1,815	)		(1,664	)		(151	)
Debt repayments, paid from debt proceeds								1,748			99			1,649			1,649			–
Levered Free Cash Flow							$	(309	)	$	(23	)	$	(286	)	$	34		$	(320	)



	YTD			QTD			YTD			QTD			YTD			QTD			YTD
	12/31/23			12/31/23			09/30/23			09/30/23			06/30/23			06/30/23			03/31/23

Cash provided by (used in) operating activities	$	164		$	98		$	66		$	(44	)	$	110		$	157		$	(47	)
Capital expenditures		(427	)		(220	)		(207	)		(50	)		(157	)		(76	)		(81	)
Free Cash Flow		(263	)		(122	)		(141	)		(94	)		(47	)		81			(128	)
Debt repayments		(1,717	)		(10	)		(1,707	)		(139	)		(1,568	)		(4	)		(1,564	)
Debt repayments, paid from debt proceeds		1,156			–			1,156			–			1,156			–			1,156
Levered Free Cash Flow	$	(824	)	$	(132	)	$	(692	)	$	(233	)	$	(459	)	$	77		$	(536	)



	YTD			QTD			YTD			QTD			YTD			QTD			YTD
	12/31/22			12/31/22			09/30/22			09/30/22			06/30/22			06/30/22			03/31/22

Cash provided by (used in) operating activities	$	448		$	178		$	270		$	230		$	40		$	41		$	(1	)
Capital expenditures		(717	)		(409	)		(308	)		(87	)		(221	)		(115	)		(106	)
Free Cash Flow		(269	)		(231	)		(38	)		143			(181	)		(74	)		(107	)
Debt repayments		(554	)		(101	)		(453	)		(196	)		(257	)		(92	)		(165	)
Debt repayments, paid from debt proceeds		–			–			–			–			–			–			–
Levered Free Cash Flow	$	(823	)	$	(332	)	$	(491	)	$	(53	)	$	(438	)	$	(166	)	$	(272	)

The MIL Network –

January 25, 2025

MIL-OSI: Ponce Financial Group, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 30, 2024 (GLOBE NEWSWIRE) — Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the third quarter of 2024.

Third Quarter 2024 Highlights (Compared to Prior Periods):

Net income available to common stockholders was $2.2 million, or $0.10 per diluted share for the three months ended September 30, 2024, as compared to net income available to common stockholders of $3.1 million, or $0.14 per diluted share for the three months ended June 30, 2024 and net income available to common stockholders of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023. Total net income for the three months ended September 30, 2024 was $2.4 million. The Company paid dividends of $0.3 million on its preferred stock during the quarter ended September 30, 2024.
Included in the $2.2 million of net income available to common stockholders for the third quarter of 2024 results is $41.3 million in interest and dividend income and $1.2 million in non-interest income, offset by $22.3 million in interest expense, $16.3 million in non-interest expense, $0.8 million in provision for credit losses, $0.6 million in provision for income taxes and $0.3 million in dividends on preferred shares.
Net interest income of $19.0 million for the third quarter of 2024 increased $1.1 million, or 6.25%, from the prior quarter and increased $2.5 million, or 15.00%, from the same quarter last year.
Net interest margin was 2.65% for the third quarter of 2024, versus 2.62% for the prior quarter and versus 2.58% for the same quarter last year.

Nine Months 2024 Highlights (Compared to 2023):

Net income available to common stockholders was $7.7 million, or $0.34 per diluted share for the nine months ended September 30, 2024, as compared to net income available to common stockholders of $2.8 million, or $0.12 per diluted share for the nine months ended September 30, 2023. Total net income for the nine months ended September 30, 2024, prior to the payment of $0.4 million in dividends on preferred shares, was $8.0 million.
Net interest income for the nine months ended September 30, 2024 was $55.8 million, an increase of $7.7 million, or 15.98%, compared to $48.1 million for the nine months ended September 30, 2023.
Non-interest income for the nine months ended September 30, 2024 was $5.1 million, a decrease of $3.8 million, or 42.76%, from $8.9 million for the nine months ended September 30, 2023. The decrease was primarily driven by a $3.7 million in grants that were received in the prior year.
Non-interest expense for the nine months ended September 30, 2024 was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023.
Cash and equivalents were $155.8 million as of September 30, 2024, an increase of $16.6 million, or 11.94%, from $139.2 million as of December 31, 2023.
Securities totaled $514.7 million as of September 30, 2024, a decrease of $66.9 million, or 11.50%, from $581.7 million as of December 31, 2023 primarily due to regular principal payments, maturity of one available-for-sale security in the amount of $4.0 million and call of one held-to-maturity security in the amount of $25.0 million.
Net loans receivable were $2.18 billion as of September 30, 2024, an increase of $284.4 million, or 15.00%, from $1.90 billion as of December 31, 2023.
Deposits were $1.87 billion as of September 30, 2024, an increase of $362.7 million, or 24.06%, from $1.51 billion as of December 31, 2023.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “We continue to make progress quarter over quarter both in terms of our economic performance as well as serving our communities. Book value per share continues to grow and is now $11.74 (up $0.75 vs last year) and total equity per common share stands at $21.18. Our levels of liquidity and capital remain strong. Our net interest income grew quarter over quarter, and we’re well positioned for a decline in interest rates. We reduced our borrowings during the quarter, paying off the entirety of our Bank Term Funding Program Loan, while lowering the overall cost and extending our maturities. We remain committed to the communities we serve and our status as a Minority Depository Institution (“MDI”)/Community Development Financial Institution (“CDFI”), and we continue to invest in our people and in technology to improve our efficiency.”

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added, “During the quarter, the US Treasury Department issued proposed guidelines under which it may sell their ECIP investment back to the issuers or related non-profit affiliates. We believe the adoption of the proposed regulations would be greatly beneficial to Ponce Financial Group, although there can be no assurance that the proposed regulations will be adopted, or that that will be adopted in their current form. Most of our loan growth of $157.6 million this quarter is explained by our desire to ensure qualification under the proposed regulations, if adopted. Deposits also grew significantly during the quarter including $35.0 million from the Banking Development District program of New York.”

Selected performance metrics are as follows (refer to “Key Metrics” for additional information):

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratios (Annualized):	2024			2024			2024			2023			2023
Return on average assets (1)		0.33	%		0.45	%		0.33	%		0.08	%		0.39	%
Return on average equity (1)		1.93	%		2.59	%		1.97	%		0.42	%		2.11	%
Net interest rate spread (1) (2)		1.77	%		1.72	%		1.82	%		1.74	%		1.68	%
Net interest margin (1) (3)		2.65	%		2.62	%		2.71	%		2.66	%		2.58	%
Non-interest expense to average assets (1)		2.19	%		2.28	%		2.35	%		2.66	%		2.58	%
Efficiency ratio (4)		80.87	%		80.09	%		82.56	%		96.83	%		78.11	%
Average interest-earning assets to average interest- bearing liabilities		128.35	%		129.73	%		129.69	%		133.50	%		134.49	%
Average equity to average assets		16.97	%		17.41	%		17.00	%		18.25	%		18.32	%

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Capital Ratios (Annualized):	2024			2024			2024			2023			2023
Total capital to risk-weighted assets (Bank only)		21.61	%		22.47	%		22.79	%		23.30	%		25.10	%
Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Tier 1 capital to average assets (Bank only)		16.19	%		16.70	%		16.26	%		17.49	%		17.51	%

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Asset Quality Ratios (Annualized):	2024			2024			2024			2023			2023
Allowance for loan losses as a percentage of total loans		1.09	%		1.18	%		1.23	%		1.36	%		1.51	%
Allowance for loan losses as a percentage of nonperforming loans		139.52	%		130.28	%		140.90	%		152.99	%		169.49	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.17	%)		(0.10	%)		(0.25	%)		(0.24	%)		(0.34	%)
Non-performing loans as a percentage of total gross loans		0.78	%		0.89	%		0.87	%		0.89	%		0.89	%
Non-performing loans as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.73	%		0.82	%		0.79	%		0.81	%		0.82	%

	(1)	Annualized where appropriate.
	(2)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
	(3)	Net interest margin represents net interest income divided by average total interest-earning assets.
	(4)	Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
	(5)	Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.

Summary of Results of Operations

Net income for the three months ended September 30, 2024 was $2.4 million compared to net income of $3.2 million for the three months ended June 30, 2024 and net income of $2.6 million for the three months ended September 30, 2023.

The decrease of net income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was attributed mainly to an increase of $1.2 million in provision for credit losses, a decrease of $1.1 million in non-interest income, an increase of $0.2 million in non-interest expense, partially offset by an increase of $1.1 million in net interest income and a decrease of $0.6 million in provision for income taxes .

The decrease of net income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely due to a decrease of $4.5 million in non-interest income as a result of a $3.7 million grant reported in the third quarter of 2023 and an increase of $0.3 million in provision for credit losses, partially offset by an increase of $2.5 million in net interest income and decreases of $1.1 million in provision for income taxes and $ 1.0 million in non-interest expense.

Net income for the nine months ended September 30, 2024 was $8.0 million compared to a net income of $2.8 million for the nine months ended September 30, 2023. The increase of $5.2 million in net income was attributable to an increase of $7.7 million in net interest income, a decrease of $1.3 million in non-interest expense and a decrease of $1.1 million in provision for credit losses, partially offset by a decrease of $3.8 million in non-interest income and an increase of $1.1 million in provision for income taxes.

Net Interest Income and Net Margin

Net interest income for the three months ended September 30, 2024, increased $1.1 million, or 6.25%, to $19.0 million compared to $17.9 million for the three months ended June 30, 2024 and increased $2.5 million, or 15.00%, compared to $16.5 million for the three months ended September 30, 2023.

Net interest income for the nine months ended September 30, 2024, increased $7.7 million, or 15.98%, to $55.8 million, compared to $48.1 million for the nine months ended September 30, 2023. The increase of $7.7 million of net interest income was attributable to an increase of $28.8 million in total interest and dividend income, offset by an increase of $21.1 million in total interest expense.

For the nine months ended September 30, 2024, provision for credit losses amounted to $0.2 million consisting of a provision for credit losses on loans in the amount of $0.4 million and a benefit for credit losses on held-to-maturity securities in the amount of $0.2 million. The $0.4 million provision for credit losses on loans for the nine months ended September 30, 2024 resulted from a benefit of $2.1 million related to microloans offset by a provision of $2.5 million related to non-microloans.

Net interest margin was 2.65% for the three months ended September 30, 2024 compared to 2.62% for the prior quarter, an increase of 3bps and 2.58% for the same period last year, an increase of 7bps.

Net interest margin was 2.66% for the nine months ended September 30, 2024 compared to 2.65% for the nine months ended September 30, 2023, an increase of 1bp.

Non-interest Income

Non-interest income for the three months ended September 30, 2024, was $1.2 million, a decrease of $1.1 million, or 49.03%, compared to $2.3 million the three months ended June 30, 2024 and a decrease of $4.5 million, or 79.55%, compared to $5.6 million the three months ended September 30, 2023.

The $1.1 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was largely attributable to decreases of $0.7 million in other non-interest income related to the mark to market adjustments on a private equity fund investment and $0.3 million in late and prepayment charges.

The $4.5 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely attributable to $3.7 million in grants received in the third quarter of 2023 and a decrease of $0.8 million in late and prepayment charges.

Non-interest income for the nine months ended September 30, 2024, was $5.1 million, a decrease of $3.8 million, or 42.76%, compared to $8.9 million for the nine months ended September 30, 2023. The decrease was largely attributable to $3.7 million related to grants received in the third quarter of 2023 and a decrease of $1.1 million in late and prepayment charges, partially, offset by increases of $0.6 million in other non-interest income and $0.4 million in income on sale of mortgage loans.

Non-interest Expense

Non-interest expense for the three months ended September 30, 2024, was $16.3 million, an increase of $0.2 million, or 1.03%, compared to $16.1 million for the three months ended June 30, 2024 and a decrease of $1.0 million, or 5.79%, compared to $17.3 million for the three months ended September 30, 2023.

The $0.2 million increase from the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was mainly attributable to a decrease of $0.2 million in benefit for contingencies and an increase of $0.2 million in occupancy and equipment, partially offset by a decrease of $0.3 million in other operating expense.

The $1.0 million decrease from the three months ended September 30, 2023 compared to the three months ended September 30, 2023 was mainly attributable to decreases of $0.6 million in provision for contingencies, $0.5 million in data processing expenses and $0.3 million in professional fees, partially offset by increases of $0.2 million in direct loan expenses, $0.2 million in occupancy and equipment and $0.1 million in compensation and benefits.

Non-interest expense for the nine months ended September 30, 2024, was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023. The $1.4 million decrease from the nine months ended September 30, 2023 was mainly attributable to decreases of $2.5 million in provision for contingencies, $0.7 million in data processing expenses, $0.6 million in professional fees and $0.5 million in office supplies, telephone and postage, partially offset by a decrease of $1.2 million in microloans recoveries and increases of $0.8 million in compensation and benefits and $0.8 million in direct loan expenses.

Balance Sheet Summary

Total assets increased $265.2 million, or 9.64%, to $3.02 billion as of September 30, 2024 from $2.75 billion as of December 31, 2023. The increase in total assets is largely attributable to increases of $284.4 million in net loans receivable, $26.7 million in other assets, $16.6 million in cash and cash equivalents, $9.1 million in Federal Home Loan Bank of New York stock and $0.8 million in net premises and equipment, partially offset by decreases of $58.0 million in held-to-maturity securities, $8.9 million in available-for-sale securities, $2.5 million in deferred tax assets, $1.5 million in right of use assets, $1.1 million in accrued interest receivable and $0.4 million in mortgage loans held for sale.

Total liabilities increased $252.1 million, or 11.16%, to $2.51 billion as of September 30, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to an increase of $362.7 million in deposits, $3.0 million in advance payments by borrowers for taxes and insurance and $0.8 million in other liabilities, partially offset by decreases of $104.0 million in borrowings, $9.0 million in accrued interest payable and $1.4 million in operating lease liabilities.

Total stockholders’ equity increased $13.2 million, or 2.69%, to $504.6 million as of September 30, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders’ equity was largely attributable to $8.0 million in net income, $3.0 million in other comprehensive income, $1.6 million impact to additional paid in capital as a result of share-based compensation and $1.0 million from release of ESOP shares, offset by $0.4 million in preferred stock dividend for shares issued pursuant to the ECIP.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc. is the holding company for Ponce Bank. Ponce Bank is a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. Ponce Bank’s business primarily consists of taking deposits from the general public and to a lesser extent alternative funding sources and investing those funds, together with funds generated from operations and borrowings, in mortgage loans, consisting of 1-4 family residences (investor-owned and owner-occupied), multifamily residences, nonresidential properties, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank’s market area; Ponce Bank’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in Ponce Financial Group, Inc.’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)


	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
ASSETS
Cash and due from banks:
Cash	$	32,061		$	23,128		$	29,972		$	28,930		$	26,046
Interest-bearing deposits		123,751			80,038			104,752			110,260			90,966
Total cash and cash equivalents		155,812			103,166			134,724			139,190			117,012
Available-for-sale securities, at fair value		111,005			113,125			116,044			119,902			116,753
Held-to-maturity securities, at amortized cost		403,736			442,113			452,955			461,748			471,065
Placement with banks		249			249			249			249			996
Mortgage loans held for sale, at fair value		9,566			37,764			7,860			9,980			14,103
Loans receivable, net		2,180,331			2,022,173			1,981,428			1,895,886			1,787,607
Accrued interest receivable		16,890			17,441			18,063			18,010			16,624
Premises and equipment, net		16,843			16,976			17,396			16,053			16,453
Right of use assets		29,785			30,349			31,021			31,272			32,110
Federal Home Loan Bank of New York stock (FHLBNY), at cost		28,515			23,972			23,892			19,377			18,870
Deferred tax assets		11,845			13,172			13,919			14,332			15,984
Other assets		51,392			21,507			21,151			24,723			16,286
Total assets	$	3,015,969		$	2,842,007		$	2,818,702		$	2,750,722		$	2,623,863
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	1,870,323		$	1,606,097		$	1,585,784		$	1,507,620		$	1,401,132
Operating lease liabilities		31,343			31,861			32,486			32,684			33,459
Accrued interest payable		2,918			6,820			4,218			11,965			8,385
Advance payments by borrowers for taxes and insurance		13,733			10,838			13,245			10,778			13,743
Borrowings		580,421			680,421			680,421			684,421			675,100
Other liabilities		12,642			8,313			8,866			11,859			6,986
Total liabilities		2,511,380			2,344,350			2,325,020			2,259,327			2,138,805
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000			225,000			225,000			225,000			225,000
Common stock, $0.01 par value; 200,000,000 shares authorized		249			249			249			249			249
Treasury stock, at cost		(9,445	)		(9,519	)		(9,702	)		(9,747	)		(10,975	)
Additional paid-in-capital		208,478			207,934			207,584			207,106			207,626
Retained earnings		105,103			102,951			99,834			97,420			96,902
Accumulated other comprehensive loss		(12,686	)		(16,557	)		(16,590	)		(15,649	)		(20,468	)
Unearned compensation ─ ESOP		(12,110	)		(12,401	)		(12,693	)		(12,984	)		(13,276	)
Total stockholders’ equity		504,589			497,657			493,682			491,395			485,058
Total liabilities and stockholders’ equity	$	3,015,969		$	2,842,007		$	2,818,702		$	2,750,722		$	2,623,863

Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Interest and dividend income:
Interest on loans receivable	$	32,945		$	31,281		$	30,664		$	27,814		$	25,276
Interest on deposits due from banks		2,430			1,542			2,911			990			1,969
Interest and dividend on securities and FHLBNY stock		5,918			5,969			6,091			6,146			6,261
Total interest and dividend income		41,293			38,792			39,666			34,950			33,506
Interest expense:
Interest on certificates of deposit		6,926			6,358			6,380			5,103			4,362
Interest on other deposits		8,519			7,389			6,540			5,706			5,639
Interest on borrowings		6,825			7,141			7,923			6,944			6,963
Total interest expense		22,270			20,888			20,843			17,753			16,964
Net interest income		19,023			17,904			18,823			17,197			16,542
Provision (benefit) for credit losses		789			(374	)		(180	)		(375	)		535
Net interest income after provision (benefit) for credit losses		18,234			18,278			19,003			17,572			16,007
Non-interest income:
Service charges and fees		508			492			473			498			516
Brokerage commissions		—			9			8			13			17
Late and prepayment charges		77			426			359			365			899
Income on sale of mortgage loans		218			274			302			244			173
Grant income		—			—			—			438			3,718
Other		348			1,057			565			(273	)		304
Total non-interest income		1,151			2,258			1,707			1,285			5,627
Non-interest expense:
Compensation and benefits		7,674			7,724			7,844			8,262			7,566
Occupancy and equipment		3,786			3,564			3,667			3,686			3,588
Data processing expenses		1,099			1,013			1,127			1,101			1,582
Direct loan expenses		573			633			732			497			369
(Benefit) provision for contingencies		(252	)		(493	)		164			418			391
Insurance and surety bond premiums		292			263			253			250			255
Office supplies, telephone and postage		222			233			249			294			301
Professional fees		1,351			1,369			1,723			2,040			1,693
Microloans recoveries		(54	)		(65	)		(53	)		(152	)		(69	)
Marketing and promotional expenses		180			145			100			146			248
Directors fees and regulatory assessment		178			176			179			173			169
Other operating expenses		1,265			1,585			965			1,182			1,223
Total non-interest expense		16,314			16,147			16,950			17,897			17,316
Income before income taxes		3,071			4,389			3,760			960			4,318
Provision for income taxes		638			1,197			1,346			442			1,728
Net income	$	2,433		$	3,192		$	2,414		$	518		$	2,590
Dividends on preferred shares		281			75			—			—			—
Net income available to common stockholders	$	2,152		$	3,117		$	2,414		$	518		$	2,590
Earnings per common share:
Basic	$	0.10		$	0.14		$	0.11		$	0.02		$	0.12
Diluted	$	0.10		$	0.14		$	0.11		$	0.02		$	0.12
Weighted average common shares outstanding:
Basic		22,446,009			22,409,803			22,353,492			22,224,945			22,272,076
Diluted		22,612,028			22,419,309			22,366,728			22,406,102			22,349,217

Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

	For the Nine Months Ended September 30,
	2024			2023			Variance $			Variance %
Interest and dividend income:
Interest on loans receivable	$	94,890		$	67,991		$	26,899			39.56	%
Interest on deposits due from banks		6,883			3,983			2,900			72.81	%
Interest and dividend on securities and FHLBNY stock		17,978			18,943			(965	)		(5.09	%)
Total interest and dividend income		119,751			90,917			28,834			31.71	%
Interest expense:
Interest on certificates of deposit		19,664			11,468			8,196			71.47	%
Interest on other deposits		22,448			12,864			9,584			74.50	%
Interest on borrowings		21,889			18,516			3,373			18.22	%
Total interest expense		64,001			42,848			21,153			49.37	%
Net interest income		55,750			48,069			7,681			15.98	%
Provision for credit losses		235			1,348			(1,113	)		(82.57	%)
Net interest income after provision for credit losses		55,515			46,721			8,794			18.82	%
Non-interest income:
Service charges and fees		1,473			1,488			(15	)		(1.01	%)
Brokerage commissions		17			67			(50	)		(74.63	%)
Late and prepayment charges		862			2,000			(1,138	)		(56.90	%)
Income on sale of mortgage loans		794			354			440			124.29	%
Grant income		—			3,718			(3,718	)		(100.00	%)
Other		1,970			1,311			659			50.27	%
Total non-interest income		5,116			8,938			(3,822	)		(42.76	%)
Non-interest expense:
Compensation and benefits		23,242			22,437			805			3.59	%
Occupancy and equipment		11,017			10,882			135			1.24	%
Data processing expenses		3,239			3,982			(743	)		(18.66	%)
Direct loan expenses		1,938			1,126			812			72.11	%
(Benefit) provision for contingencies		(581	)		1,893			(2,474	)		(130.69	%)
Insurance and surety bond premiums		808			768			40			5.21	%
Office supplies, telephone and postage		704			1,189			(485	)		(40.79	%)
Professional fees		4,443			5,052			(609	)		(12.05	%)
Microloans recoveries		(172	)		(1,329	)		1,157			(87.06	%)
Marketing and promotional expenses		425			679			(254	)		(37.41	%)
Directors fees and regulatory assessment		533			484			49			10.12	%
Other operating expenses		3,815			3,603			212			5.88	%
Total non-interest expense		49,411			50,766			(1,355	)		(2.67	%)
Income before income taxes		11,220			4,893			6,327			129.31	%
Provision for income taxes		3,181			2,059			1,122			54.49	%
Net income	$	8,039		$	2,834		$	5,205			183.66	%
Dividends on preferred shares		356			—			356			100.00	%
Net income available to common stockholders	$	7,683		$	2,834		$	4,849			171.10	%
Earnings per common share:
Basic	$	0.34		$	0.12		$	0.22			177.36	%
Diluted	$	0.34		$	0.12		$	0.22			177.10	%
Weighted average common shares outstanding:
Basic		22,403,258			22,920,680			(517,422	)		(2.26	%)
Diluted		22,466,178			22,962,956			(496,778	)		(2.16	%)

Ponce Financial Group, Inc. and Subsidiaries
Key Metrics

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Performance Ratios:
Return on average assets (1)		0.33	%		0.45	%		0.33	%		0.08	%		0.39	%
Return on average equity (1)		1.93	%		2.59	%		1.97	%		0.42	%		2.11	%
Net interest rate spread (1) (2)		1.77	%		1.72	%		1.82	%		1.74	%		1.68	%
Net interest margin (1) (3)		2.65	%		2.62	%		2.71	%		2.66	%		2.58	%
Non-interest expense to average assets (1)		2.19	%		2.28	%		2.35	%		2.66	%		2.58	%
Efficiency ratio (4)		80.87	%		80.09	%		82.56	%		96.83	%		78.11	%
Average interest-earning assets to average interest- bearing liabilities		128.35	%		129.73	%		129.69	%		133.50	%		134.49	%
Average equity to average assets		16.97	%		17.41	%		17.00	%		18.25	%		18.32	%
Capital Ratios:
Total capital to risk-weighted assets (Bank only)		21.61	%		22.47	%		22.79	%		23.30	%		25.10	%
Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		20.45	%		21.24	%		21.54	%		22.05	%		23.85	%
Tier 1 capital to average assets (Bank only)		16.19	%		16.70	%		16.26	%		17.49	%		17.51	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.09	%		1.18	%		1.23	%		1.36	%		1.51	%
Allowance for credit losses on loans as a percentage of nonperforming loans		139.52	%		130.28	%		140.90	%		152.99	%		169.49	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.17	%)		(0.10	%)		(0.25	%)		(0.24	%)		(0.34	%)
Non-performing loans as a percentage of total gross loans		0.78	%		0.89	%		0.87	%		0.89	%		0.89	%
Non-performing loans as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets as a percentage of total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.73	%		0.82	%		0.79	%		0.81	%		0.82	%
Other:
Number of offices		19			18			18			18			19
Number of full-time equivalent employees		228			227			233			237			243

	(1)	Annualized where appropriate.
	(2)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
	(3)	Net interest margin represents net interest income divided by average total interest-earning assets.
	(4)	Efficiency ratio represents noninterest expense divided by the sum of net interest income and non-interest income.
	(5)	Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.

Ponce Financial Group, Inc. and Subsidiaries
Securities Portfolio

	September 30, 2024										December 31, 2023
				Gross		Gross								Gross		Gross
	Amortized			Unrealized		Unrealized					Amortized			Unrealized		Unrealized
	Cost			Gains		Losses			Fair Value		Cost			Gains		Losses			Fair Value
	(in thousands)										(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,993		$	—	$	(124	)	$	2,869	$	2,990		$	—	$	(206	)	$	2,784
Corporate Bonds		21,766			—		(1,438	)		20,328		25,790			—		(2,122	)		23,668
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		35,620			—		(4,976	)		30,644		39,375			—		(6,227	)		33,148
FHLMC Certificates		9,310			—		(1,119	)		8,191		10,163			—		(1,482	)		8,681
FNMA Certificates		57,345			—		(8,463	)		48,882		61,359			—		(9,842	)		51,517
GNMA Certificates		91			—		—			91		104			—		—			104
Total available-for-sale securities	$	127,125		$	—	$	(16,120	)	$	111,005	$	139,781		$	—	$	(19,879	)	$	119,902

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(49	)	$	24,951	$	25,000		$	—	$	(181	)	$	24,819
Corporate Bonds		57,500			—		(618	)		56,882		82,500			—		(2,691	)		79,809
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		193,440			454		(2,946	)		190,948		212,093			104		(5,170	)		207,027
FHLMC Certificates		3,441			—		(169	)		3,272		3,897			—		(244	)		3,653
FNMA Certificates		108,577			22		(1,967	)		106,632		118,944			—		(4,088	)		114,856
SBA Certificates		15,985			153		—			16,138		19,712			166		—			19,878
Allowance for Credit Losses		(207	)		—		—			—		(398	)		—		—			—
Total held-to-maturity securities	$	403,736		$	629	$	(5,749	)	$	398,823	$	461,748		$	270	$	(12,374	)	$	450,042

	(1)	Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.

The following table presents the activity in the allowance for credit losses for held-to-maturity securities.

	For the Nine			For the
	Months Ended			Year Ended
	September 30, 2024			December 31, 2023
Allowance for credit losses on securities at beginning of the period	$	398		$	—
CECL adoption		—			662
Benefit for credit losses		(191	)		(264	)
Allowance for credit losses on securities at end of the period	$	207		$	398

Ponce Financial Group, Inc. and Subsidiaries
Loan Portfolio

	As of
	September 30,						June 30,						March 31,						December 31,						September 30,
	2024						2024						2024						2023						2023
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	332,380			15.09	%	$	337,292			16.49	%	$	339,331			16.92	%	$	343,689			17.89	%	$	347,082			19.13	%
Owner-Occupied		145,065			6.59	%		147,485			7.21	%		150,842			7.52	%		152,311			7.93	%		151,866			8.37	%
Multifamily residential		678,029			30.78	%		545,323			26.66	%		545,825			27.22	%		550,559			28.65	%		553,694			30.52	%
Nonresidential properties		383,277			17.40	%		337,583			16.51	%		327,350			16.32	%		342,343			17.81	%		321,472			17.71	%
Construction and land		631,461			28.67	%		641,879			31.39	%		608,665			30.35	%		503,925			26.22	%		411,383			22.67	%
Total mortgage loans		2,170,212			98.53	%		2,009,562			98.26	%		1,972,013			98.33	%		1,892,827			98.50	%		1,785,497			98.40	%
Non-mortgage loans:
Business loans		28,499			1.29	%		30,222			1.48	%		26,664			1.33	%		19,779			1.03	%		18,416			1.02	%
Consumer loans (1)		4,021			0.18	%		5,305			0.26	%		6,741			0.34	%		8,966			0.47	%		10,416			0.58	%
Total non-mortgage loans		32,520			1.47	%		35,527			1.74	%		33,405			1.67	%		28,745			1.50	%		28,832			1.60	%
Total loans, gross		2,202,732			100.00	%		2,045,089			100.00	%		2,005,418			100.00	%		1,921,572			100.00	%		1,814,329			100.00	%
Net deferred loan origination costs		1,565						1,145						674						468						692
Allowance for credit losses on loans		(23,966	)					(24,061	)					(24,664	)					(26,154	)					(27,414	)
Loans, net	$	2,180,331					$	2,022,173					$	1,981,428					$	1,895,886					$	1,787,607

	(1)	As of September 30, 2024, June 30,2024, March 31, 2024, December 31, 2023, and September 30, 2023, consumer loans include $3.0 million, $4.3 million, $5.7 million, $8.0 million, and $9.3 million, respectively, of microloans originated by the Bank.

Ponce Financial Group, Inc. and Subsidiaries
Microloans Exposure (previously originated by the Bank under its arrangement with Grain)

Total Microloans Exposure as of September 30, 2024
(in thousands)
Microloans Receivable from Grain
Microloans originated – put back (inception-to-September 30, 2024)	$	23,932
Write-downs, net of recoveries (inception-to-date as of September 30, 2024)		(15,287	)
Cash receipts (inception-to-September 30, 2024)		(6,819	)
Grant/reserve		(1,826	)
Net receivable as of September 30, 2024	$	—
Microloans Receivables from Borrowers
Microloans receivable as of September 30, 2024	$	3,033
Allowance for credit losses on loans as of September 30, 2024 ⁽¹⁾		(2,570	)
Microloans, net of allowance for credit losses on loans as of September 30, 2024	$	463
Investments
Investment in Grain	$	1,000
Investment write-off in Q3 2022		(1,000	)
Net investment as of September 30, 2024		—
Total exposure related to microloans as of September 30, 2024 ⁽²⁾	$	463

	(1)	Excludes $1.5 million of security deposits by microloans originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.
	(2)	Total remaining exposure to microloan borrowers. These loans are now serviced by the Bank.

On November 1, 2023, Ponce Financial Group, Inc. and Grain Technologies, Inc. (“Grain”) signed a Perpetual Software License Agreement in order for the Bank to assume the servicing of the remaining microloans. In order to facilitate the transfer of the servicing responsibilities to the Bank, Grain granted the Bank a perpetual right and license to use the Grain software, including the source code to service the remaining microloans.

Ponce Financial Group, Inc. and Subsidiaries
Allowance for Credit Losses on Loans

	For the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	24,061		$	24,664		$	26,154		$	27,414		$	28,173
Provision (benefit) for credit losses on loans		801			(120	)		(255	)		(126	)		750
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			—
Multifamily residences		—			—			—			—			—
Nonresidential properties		(7	)		—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		(450	)		—			(52	)		(63	)		—
Consumer		(634	)		(747	)		(1,302	)		(1,135	)		(1,592	)
Total charge-offs		(1,091	)		(747	)		(1,354	)		(1,198	)		(1,592	)
Recoveries:
Non-mortgage loans:
Business		1			7			1			—			3
Consumer		194			257			118			64			80
Total recoveries		195			264			119			64			83
Net (charge-offs) recoveries		(896	)		(483	)		(1,235	)		(1,134	)		(1,509	)
Allowance for credit losses on loans at end of the period	$	23,966		$	24,061		$	24,664		$	26,154		$	27,414

Ponce Financial Group, Inc. and Subsidiaries
Deposits

	As of
	September 30,					June 30,					March 31,					December 31,					September 30,
	2024					2024					2024					2023					2023
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Demand ⁽¹⁾	$	182,737		9.78	%	$	178,125		11.09	%	$	191,541		12.07	%	$	185,151		12.28	%	$	214,326		15.30	%
Interest-bearing deposits:
NOW/IOLA accounts ⁽¹⁾		71,445		3.82	%		81,178		5.05	%		73,202		4.62	%		77,909		5.17	%		74,055		5.29	%
Money market accounts		660,168		35.30	%		502,255		31.27	%		482,344		30.42	%		432,735		28.70	%		370,500		26.44	%
Reciprocal deposits		94,145		5.03	%		109,945		6.85	%		97,718		6.16	%		96,860		6.42	%		82,670		5.90	%
Savings accounts		108,941		5.82	%		109,694		6.83	%		112,713		7.11	%		114,139		7.57	%		117,870		8.41	%
Total NOW, money market, reciprocal and savings accounts		934,699		49.97	%		803,072		50.00	%		765,977		48.31	%		721,643		47.86	%		645,095		46.04	%
Certificates of deposit of $250K or more		174,053		9.31	%		156,224		9.73	%		146,296		9.23	%		132,153		8.77	%		122,353		8.73	%
Brokered certificates of deposit ⁽²⁾		94,531		5.05	%		94,614		5.89	%		94,689		5.97	%		98,729		6.55	%		98,729		7.05	%
Listing service deposits ⁽²⁾		7,376		0.39	%		9,361		0.58	%		12,688		0.80	%		14,433		0.96	%		15,180		1.08	%
All other certificates of deposit less than $250K		476,927		25.50	%		364,701		22.71	%		374,593		23.62	%		355,511		23.58	%		305,449		21.80	%
Total certificates of deposit		752,887		40.25	%		624,900		38.91	%		628,266		39.62	%		600,826		39.86	%		541,711		38.66	%
Total interest-bearing deposits		1,687,586		90.22	%		1,427,972		88.91	%		1,394,243		87.93	%		1,322,469		87.72	%		1,186,806		84.70	%
Total deposits	$	1,870,323		100.00	%	$	1,606,097		100.00	%	$	1,585,784		100.00	%	$	1,507,620		100.00	%	$	1,401,132		100.00	%

	(1)	As of December 31, 2023 and September 30, 2023 $58.2 million and $51.5 million, respectively, were reclassified from demand to NOW/IOLA accounts.
	(2)	As of December 31, 2023, and September 30, 2023, there were $0.3 million and $0.3 million, respectively, in individual listing service deposits amounting to $250,000 or more. As of September 30, 2024, there were no individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.

Ponce Financial Group, Inc. and Subsidiaries
Borrowings

	September 30,							December 31,
	2024							2023
	Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate			Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate
	(Dollars in thousands)
Term advances ending:
2024	$	59,321	$	59,321		4.00	%	$	363,321	$	363,321		4.55	%
2025		50,000		50,000		4.41			50,000		50,000		4.41
2026		200,000		200,000		4.25			—		—		—
2027		212,000		212,000		3.44			212,000		212,000		3.44
2028		9,100		9,100		3.84			9,100		9,100		3.84
Thereafter		50,000		50,000		3.35			50,000		50,000		3.35
	$	580,421	$	580,421		3.86	%	$	684,421	$	684,421		4.10	%

Ponce Financial Group, Inc. and Subsidiaries
Nonperforming Assets

	As of Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	436		$	436		$	399		$	793		$	396
Owner occupied		1,423			1,423			1,426			1,682			1,685
Multifamily residential		4,685			5,754			4,098			2,979			1,444
Nonresidential properties		824			828			441			—			—
Construction and land		8,907			8,907			10,277			10,759			11,721
Non-mortgage loans:
Business		180			396			146			165			209
Consumer		—			—			—			—			—
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty) ⁽¹⁾	$	16,455		$	17,744		$	16,787		$	16,378		$	15,455

Non-accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾:
Mortgage loans:
1-4 family residential
Investor owned	$	278		$	277		$	270		$	270		$	270
Owner occupied		444			448			447			447			449
Multifamily residential		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾		722			725			717			717			719
Total non-accrual loans ⁽²⁾	$	17,177		$	18,469		$	17,504		$	17,095		$	16,174

Accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	1,821		$	1,830		$	1,850		$	2,112		$	2,131
Owner occupied		2,116			2,171			2,288			2,313			2,335
Multifamily residential		—			—			—			—			—
Nonresidential properties		672			707			748			757			765
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		222			—			—			—			—
Consumer		—			—			—			—			—
Total accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾	$	4,831		$	4,708		$	4,886		$	5,182		$	5,231
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty ⁽¹⁾	$	22,008		$	23,177		$	22,390		$	22,277		$	21,405
Total non-performing loans to total gross loans		0.78	%		0.89	%		0.87	%		0.89	%		0.89	%
Total non-performing assets to total assets		0.57	%		0.65	%		0.62	%		0.62	%		0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets ⁽¹⁾		0.73	%		0.82	%		0.79	%		0.81	%		0.82	%

	(1)	Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.
	(2)	Includes nonperforming mortgage loans held for sale.

Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

	For the Three Months Ended September 30,
	2024						2023
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹⁾		Balance		Interest		Yield/Rate ⁽¹⁾
	(Dollars in thousands)
Interest-earning assets:
Loans ⁽²⁾	$	2,096,592	$	32,945	6.25	%	$	1,777,585	$	25,276	5.64	%
Securities ⁽³⁾		548,708		5,324	3.86	%		599,573		5,821	3.85	%
Other ⁽⁴⁾		210,057		3,024	5.73	%		169,570		2,409	5.64	%
Total interest-earning assets		2,855,357		41,293	5.75	%		2,546,728		33,506	5.22	%
Non-interest-earning assets		107,153						111,771
Total assets	$	2,962,510					$	2,658,499
Interest-bearing liabilities:
NOW/IOLA ^{(5) (6)}	$	74,690	$	174	0.93	%	$	69,935	$	141	0.80	%
Money market ⁽⁶⁾		711,385		8,318	4.65	%		485,042		5,468	4.47	%
Savings		109,571		25	0.09	%		118,095		29	0.10	%
Certificates of deposit		655,562		6,926	4.20	%		527,302		4,362	3.28	%
Total deposits		1,551,208		15,443	3.96	%		1,200,374		10,000	3.31	%
Advance payments by borrowers		13,151		2	0.06	%		14,537		1	0.03	%
Borrowings		660,312		6,825	4.11	%		678,676		6,963	4.07	%
Total interest-bearing liabilities		2,224,671		22,270	3.98	%		1,893,587		16,964	3.55	%
Non-interest-bearing liabilities:
Non-interest-bearing demand ⁽⁵⁾		185,543		—				231,299		—
Other non-interest-bearing liabilities		49,702		—				46,643		—
Total non-interest-bearing liabilities		235,245		—				277,942		—
Total liabilities		2,459,916		22,270				2,171,529		16,964
Total equity		502,594						486,970
Total liabilities and total equity	$	2,962,510			3.98	%	$	2,658,499			3.55	%
Net interest income			$	19,023					$	16,542
Net interest rate spread ⁽⁷⁾					1.77	%					1.67	%
Net interest-earning assets ⁽⁸⁾	$	630,686					$	653,141
Net interest margin ⁽⁹⁾					2.65	%					2.58	%
Average interest-earning assets to interest-bearing liabilities					128.35	%					134.49	%

	(1)	Annualized where appropriate.
	(2)	Loans include loans and mortgage loans held for sale, at fair value.
	(3)	Securities include available-for-sale securities and held-to-maturity securities.
	(4)	Includes FHLBNY demand account, FHLBNY stock dividends and FRBNY demand deposits.
	(5)	Includes reclassification of $47.1 million average outstanding balances from non-interest bearing demand to NOW/IOLA for the three months ended September 30, 2023.
	(6)	Includes $0.1 million of interest expense reclassified from money market to NOW/IOLA for the three months ended September 30, 2023.
	(7)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
	(8)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
	(9)	Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

	For the Nine Months Ended September 30,
	2024							2023
	Average							Average
	Outstanding				Average			Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹⁾			Balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans ⁽²⁾	$	2,038,879	$	94,890		6.22	%	$	1,678,369	$	67,991		5.42	%
Securities ⁽³⁾		562,451		16,429		3.90	%		614,987		17,627		3.83	%
Other ⁽⁴⁾		196,668		8,432		5.73	%		127,961		5,299		5.54	%
Total interest-earning assets		2,797,998		119,751		5.72	%		2,421,317		90,917		5.02	%
Non-interest-earning assets		106,500							118,609
Total assets	$	2,904,498						$	2,539,926
Interest-bearing liabilities:
NOW/IOLA ^{(5) (6)}	$	76,817	$	543		0.94	%	$	69,331	$	1,133		2.18	%
Money market ⁽⁶⁾		618,725		21,819		4.71	%		403,171		11,637		3.86	%
Savings		111,636		80		0.10	%		123,218		88		0.10	%
Certificates of deposit		640,369		19,664		4.10	%		522,740		11,468		2.93	%
Total deposits		1,447,547		42,106		3.89	%		1,118,460		24,326		2.91	%
Advance payments by borrowers		13,660		6		0.06	%		14,814		6		0.05	%
Borrowings		703,775		21,889		4.15	%		617,912		18,516		4.01	%
Total interest-bearing liabilities		2,164,982		64,001		3.95	%		1,751,186		42,848		3.27	%
Non-interest-bearing liabilities:
Non-interest-bearing demand ⁽⁵⁾		191,087		—					251,645		—
Other non-interest-bearing liabilities		51,061		—					43,864		—
Total non-interest-bearing liabilities		242,148		—					295,509		—
Total liabilities		2,407,130		64,001					2,046,695		42,848
Total equity		497,368							493,231
Total liabilities and total equity	$	2,904,498				3.95	%	$	2,539,926				3.27	%
Net interest income			$	55,750						$	48,069
Net interest rate spread ⁽⁷⁾						1.77	%						1.74	%
Net interest-earning assets ⁽⁸⁾	$	633,016						$	670,131
Net interest margin ⁽⁹⁾						2.66	%						2.65	%
Average interest-earning assets to
interest-bearing liabilities						129.24	%						138.27	%

	(1)	Annualized where appropriate.
	(2)	Loans include loans and mortgage loans held for sale, at fair value.
	(3)	Securities include available-for-sale securities and held-to-maturity securities.
	(4)	Includes FHLBNY demand account, FHLBNY stock dividends and FRBNY demand deposits.
	(5)	Includes reclassification of $46.5 million average outstanding balances from non-interest bearing demand to NOW/IOLA for the nine months ended September 30, 2023.
	(6)	Includes $1.1 million of interest expense reclassified from money market to NOW/IOLA for the nine months ended September 30, 2023.
	(7)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
	(8)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
	(9)	Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries
Other Data

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
	2024		2024		2024		2023		2023
Other Data
Common shares issued		24,886,711		24,886,711		24,886,711		24,886,711		24,886,711
Less treasury shares		1,067,248		1,074,979		1,096,214		1,101,191		1,233,111
Common shares outstanding at end of period		23,819,463		23,811,732		23,790,497		23,785,520		23,653,600

Book value per common share	$	11.74	$	11.45	$	11.29	$	11.20	$	10.99
Tangible book value per common share	$	11.74	$	11.45	$	11.29	$	11.20	$	10.99

Contact:
Sergio Vaccaro
sergio.vaccaro@poncebank.net
718-931-9000

The MIL Network –

January 25, 2025

MIL-OSI Global: ‘A Different Man’ examines tensions between personal identity and societal expectations

Source: The Conversation – Canada – By Billie Anderson, Ph.D. Candidate, Media Studies, Western University

This story contains spoilers about ‘A Different Man.’

A Different Man, a new film by Aaron Schimberg, offers a complex and nuanced portrayal of disability, one that both disabled and non-disabled audiences can learn from.

The film premiered at notable festivals and is now playing in select theatres.

In an era where disability is receiving long-overdue attention in cinema and films are under greater scrutiny to authentically represent disability, A Different Man pushes the conversation. It does so by emphasizing disability is not merely a challenge to overcome — but an integral part of the human experience.

It’s crucial for audiences to seek out this film, as its limited release means that many may miss out on Schimberg’s provocative exploration of the tensions between identity, performance and societal expectations.

Perceptions of disability

The story centres on Edward (played by Sebastian Stan), a man with neurofibromatosis — a condition that causes tumours to grow on nerves.

After living for a long time with the condition, Edward seeks out an experimental drug meant to “fix” his appearance. The drug is successful and overnight, Edward transforms from disfigured to conventionally attractive.

The narrative hinges on Edward’s struggle with self-esteem issues that stem from societal perceptions of his disability. However, the change in his outward appearance only deepens his internal conflict: although Edward physically transforms, his struggles with self-perception and societal rejection persist.

Trailer for ‘A Different Man.’

This highlights a critical point made by disability studies scholars, including Rosemarie Garland-Thomson, who argue that our culture pressures disabled individuals to conform to non-disabled norms. Norms about how to look, sure, but also norms about how to behave, communicate and even think.

Even when the visible markers of disability are removed, the underlying societal pressures and biases remain, illustrating that the true challenge lies not in the body itself, but in the societal structures that dictate what is considered an acceptable life.

Embracing one’s identity

This message, however, is turned on its head when audiences meet Oswald, played by Adam Pearson.

Oswald, who has the same disability that Edward was just cured of, embodies a different relationship with his appearance; he is confident and self-assured, fully embracing his identity without the desire to conform to societal expectations.

Oswald’s confidence is evident in how he navigates the world unapologetically, refusing to hide or downplay his appearance, a stark contrast to Edward’s desire for transformation. Pearson plays Oswald with a larger-than-life charisma, reminiscent of an Austin Powers type — loud, brash and fully aware of his own charm.

This boldness not only serves as comic relief but also positions Oswald as a character who owns every room he walks into, subverting what disability studies scholars David T. Mitchell and Sharon L. Snyder argue are expectations of disabled people as passive or self-conscious figures.

By embracing this energetic, self-assured persona, Oswald disrupts the traditional narrative that disabled people must seek a “cure” or hide their differences to be accepted or achieve happiness.

His character challenges audiences to rethink the value society places on external appearance, demonstrating that self-acceptance can be far more powerful than fitting into conventional standards of beauty or normalcy.

Through Oswald’s defiant approach, A Different Man invites viewers to question whether the real issue lies in disability or in society’s limited perceptions of what it means to live fully. Perhaps more than that, for disabled viewers, Oswald’s character offers a refreshing alternative — a model of self-acceptance that defies the pressure to overcome, and instead embrace, radical difference.

Appearance and conformity

This contrast raises important questions about the value society places on appearance and conformity. Through Oswald, the film critiques the prevailing belief that a “normal” life — a non-disabled life — is synonymous with happiness or fulfilment.

Schimberg pushes back against reductive portrayals of disability that have long been seen in the film industry that either elicit pity or offer a misguided sense of inspiration. A Different Man offers a more nuanced and honest representation, capturing the complexity that disability can be: simultaneously challenging and liberating, visible yet invisible, empowering yet stigmatizing.

With Edward and Oswald as richly developed characters, each embodies distinct relationships with their disabilities — neither character “incorrect” in their interpretation of their lived experience. These contradicting portrayals illustrate it is possible to craft authentic narratives that reflect the realities of disabled life, while also challenging our perception of disability, and highlighting the real struggles that disabled people overcome.

Questions of identity

One of the most striking aspects of A Different Man is how it handles identity. After Edward’s transformation, he adopts the name “Guy” and begins living a double life, even wearing a replica of his old face as a mask for a theatre role.

This surreal detail critiques the performance of disability in the film industry — a theme Schimberg also explored in his 2018 film, Chained for Life.

Disabled actors are often cast because of their differences, but they are still expected to perform that difference in ways that conform to able-bodied expectations.

Authenticity in disability representation

In A Different Man, the relationship between how disabled individuals are perceived by others and their own lived experiences raises crucial questions about authenticity in disability representation.

Can a non-disabled actor like Sebastian Stan authentically portray a disabled character? Or does it reinforce the objectification of disabled bodies? Schimberg invites the audience to grapple with these questions.

Such questions and a shift toward complexity is critical as audiences and filmmakers increasingly recognize the need for inclusive storytelling that goes beyond race and gender to encompass disability.

As disability studies scholars Mitchell and Snyder argue, narratives that embrace multifaceted identities can disrupt the status quo, offering new insights into how society views disabled individuals outside of the cinema.

A Different Man serves as a roadmap for these richer portrayals, inviting viewers to engage with the complexities of identity, societal expectations and the human body. The film signifies a reimagining of cinema’s potential to elevate marginalized voices and foster a deeper understanding of diverse experiences that shape people’s stories about disability.

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

– ref. ‘A Different Man’ examines tensions between personal identity and societal expectations – https://theconversation.com/a-different-man-examines-tensions-between-personal-identity-and-societal-expectations-241100

MIL OSI – Global Reports –

January 25, 2025

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

Source: Auckland Council

1 July 2024

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

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

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

What your rates deliver

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

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

Where we are investing

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

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

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

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

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

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

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

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

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

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

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

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

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

Want to learn more?

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

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

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

MIL OSI New Zealand News –

January 25, 2025

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

Source: GlobeNewswire (MIL-OSI)

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

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

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

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

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

SUMMARY OF THIRD QUARTER RESULTS

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

Net Interest Income

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

Non-Interest Income

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

Non-Interest Expense

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

Income Tax Expense

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

Balance Sheet Highlights

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

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

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

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

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

About Landmark

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

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

Special Note Concerning Forward-Looking Statements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Allowance for unfunded loan commitments	$	150		$	300		$	200

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The MIL Network –

January 25, 2025

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

Source: GlobeNewswire (MIL-OSI)

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

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

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

Approvals and Timing

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

Third Quarter 2024 Financial Results

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

Advisors

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

About Altair
Altair is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics, and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com.

About Siemens

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

Important Information and Where to Find It

This communication relates to a proposed transaction between Altair and Siemens Industry Software Inc. (“Parent”). In connection with this proposed transaction, Altair will file a Current Report on Form 8-K with further information regarding the terms and conditions contained in the definitive transaction agreements and a proxy statement on Schedule 14A or other documents with the United States Securities and Exchange Commission (the “SEC”). This communication is not a substitute for any proxy statement or other document that Altair may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ALTAIR ARE URGED TO READ THE PROXY STATEMENT, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT, AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The definitive proxy statement, when available, will be mailed to stockholders of Altair as applicable. Investors and security holders will be able to obtain free copies of these documents, when available, and other documents filed with the SEC by Altair through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Altair will be available free of charge on Altairs internet website at https://investor.altair.com or by contacting Altair’s primary investor relations contact by email at ir@altair.com or by phone at (248) 614-2400.

Participants in Solicitation

Altair, Parent, Siemens AG, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Altair, their ownership of Altair common shares, and Altair’s transactions with related persons is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 22, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001701732/000095017024018804/altr-20231231.htm), in its proxy statement on Schedule 14A for its 2024 Annual Meeting of Stockholders in the sections entitled “Corporate Governance Matters,” “Security Ownership of Certain Beneficial Owners and Management” and “Transactions with Related Persons”, which was filed with the SEC on April 5, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001701732/000119312524087903/d722499ddef14a.htm), certain of its Quarterly Reports on Form 10-Q and certain of its Current Reports on Form 8-K.

These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward Looking Statements

This communication contains “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. Any statements contained in this communication that are not statements of historical fact, including statements regarding the proposed transaction, including the expected timing and closing of the proposed transaction; Altair’s ability to consummate the proposed transaction; the expected benefits of the proposed transaction and other considerations taken into account by the Altair Board of Directors in approving the proposed transaction; the amounts to be received by stockholders and expectations for Altair prior to and following the closing of the proposed transaction, may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’s current expectations for the future of Altair based on current expectations and assumptions relating to Altair’s business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs,” and other words of similar meaning in connection with the discussion of future performance, plans, actions or events. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others: (i) the timing to consummate the proposed transaction, (ii) the risk that a condition of closing of the proposed transaction may not be satisfied or that the closing of the proposed transaction might otherwise not occur, (iii) the risk that a regulatory approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated, (iv) the diversion of management time on transaction-related issues, (v) risks related to disruption of management time from ongoing business operations due to the proposed transaction, (vi) the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of Altair, (vii) the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Altair to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers, (viii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, dated October 30, 2024, with Siemens (the “Merger Agreement”), including in circumstances requiring Altair to pay a termination fee, (ix) the risk that competing offers will be made; (x) unexpected costs, charges or expenses resulting from the merger, (xi) potential litigation relating to the merger that could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto, (xii) worldwide economic or political changes that affect the markets that Altair’s businesses serve which could have an effect on demand for Altair’s products and impact Altair’s profitability and (xiii) disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, including tariffs and trade restrictions, cyber-security vulnerabilities, foreign currency volatility, swings in consumer confidence and spending, raw material pricing and supply issues, retention of key employees, increases in fuel prices, and outcomes of legal proceedings, claims and investigations. Accordingly, actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in Altair’s filings with the SEC, including the risks and uncertainties identified in Part I, Item 1A – Risk Factors of Altair’s Annual Report on Form 10-K for the year ended December 31, 2023 and in Altair’s other filings with the SEC. The list of factors is not intended to be exhaustive.

These forward-looking statements speak only as of the date of this communication, and Altair does not assume any obligation to update or revise any forward-looking statement made in this communication or that may from time to time be made by or on behalf of Altair.

Media Relations
Jennifer Ristic
216-849-3109
jristic@altair.com

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

The MIL Network –

January 25, 2025

MIL-OSI: Altair Announces Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

TROY, Mich., Oct. 30, 2024 (GLOBE NEWSWIRE) — Altair (Nasdaq: ALTR), today released its financial results for the third quarter and nine months ended September 30, 2024.

Immediately prior to the dissemination of this press release, Altair issued a press release announcing that it has entered into a merger agreement with a subsidiary of Siemens pursuant to which Altair will be acquired and stockholders of Altair will receive cash merger consideration as more fully described in that press release.

Third Quarter 2024 Financial Results

Software revenue was $138.7 million compared to $119.1 million for the third quarter of 2023, an increase of 16.5% in reported currency and 16.2% in constant currency
Total revenue was $151.5 million compared to $134.0 million for the third quarter of 2023, an increase of 13.0% in reported currency and 12.8% in constant currency
Net income was $1.8 million compared to a net loss of $(4.4) million for the third quarter of 2023, an improvement in earnings of $6.2 million. Net income per share, diluted was $0.02 based on 88.4 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.05) for the third quarter of 2023, based on 80.4 million diluted weighted average common shares outstanding. Net income margin was 1.2% compared to net loss margin of (3.3)% for the third quarter of 2023
Non-GAAP net income was $21.2 million, compared to non-GAAP net income of $12.7 million for the third quarter of 2023, an increase of $8.5 million. Non-GAAP net income per share, diluted was $0.24 based on 88.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.15 for the third quarter of 2023, based on 85.3 million non-GAAP diluted common shares outstanding
Adjusted EBITDA was $25.7 million compared to $15.5 million for the third quarter of 2023, an increase of 66.3% Adjusted EBITDA margin was 17.0% compared to 11.5% for the third quarter of 2023
Cash provided by operating activities was $14.5 million, compared to $16.4 million for the third quarter of 2023
Free cash flow was $9.8 million, compared to $14.7 million for the third quarter of 2023.

Conference Call Information

In light of the proposed transaction with Siemens, Altair is suspending quarterly financial results conference calls and its quarterly and annual guidance.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

Non-GAAP diluted common shares is calculated using the treasury stock method to calculate the effect of dilutive securities, stock options, restricted stock units and employee stock purchase plan shares and using the if-converted method to calculate the effect of convertible instruments. This is the same methodology that is used when calculating GAAP diluted shares. However, the determination of whether the shares are dilutive or antidilutive is made independently on a GAAP and non-GAAP net income (loss) basis and therefore the number of diluted shares outstanding for GAAP and non-GAAP may be different.

Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.

Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

Free cash flow consists of cash flow from operations less capital expenditures.

Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense and other special items as identified by management and described elsewhere in this press release.

Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair

Altair is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit https://www.altair.com.

Important Information and Where to Find It

This communication relates to a proposed transaction between Altair and Siemens Industry Software Inc. (“Parent”). In connection with this proposed transaction, Altair will file a Current Report on Form 8-K with further information regarding the terms and conditions contained in the definitive transaction agreements and a proxy statement on Schedule 14A or other documents with the United States Securities and Exchange Commission (the “SEC”). This communication is not a substitute for any proxy statement or other document that Altair may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ALTAIR ARE URGED TO READ THE PROXY STATEMENT, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT, AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The definitive proxy statement, when available, will be mailed to stockholders of Altair as applicable. Investors and security holders will be able to obtain free copies of these documents, when available, and other documents filed with the SEC by Altair through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Altair will be available free of charge on Altair’s internet website at https://investor.altair.com or by contacting Altair’s primary investor relations contact by email at ir@altair.com or by phone at (248) 614-2400.

Participants in Solicitation

Altair, Parent, Siemens AG, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Altair, their ownership of Altair common shares, and Altair’s transactions with related persons is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 22, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001701732/000095017024018804/altr-20231231.htm), in its proxy statement on Schedule 14A for its 2024 Annual Meeting of Stockholders in the sections entitled “Corporate Governance Matters,” “Security Ownership of Certain Beneficial Owners and Management” and “Transactions with Related Persons”, which was filed with the SEC on April 5, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001701732/000119312524087903/d722499ddef14a.htm), certain of its Quarterly Reports on Form 10-Q and certain of its Current Reports on Form 8-K.

These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements

This communication contains “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. Any statements contained in this communication that are not statements of historical fact, including statements regarding the proposed transaction, including the expected timing and closing of the proposed transaction; Altair’s ability to consummate the proposed transaction; the expected benefits of the proposed transaction and other considerations taken into account by the Altair Board of Directors in approving the proposed transaction; the amounts to be received by stockholders and expectations for Altair prior to and following the closing of the proposed transaction, may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’s current expectations for the future of Altair based on current expectations and assumptions relating to Altair’s business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs,” and other words of similar meaning in connection with the discussion of future performance, plans, actions or events. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others: (i) the timing to consummate the proposed transaction, (ii) the risk that a condition of closing of the proposed transaction may not be satisfied or that the closing of the proposed transaction might otherwise not occur, (iii) the risk that a regulatory approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated, (iv) the diversion of management time on transaction-related issues, (v) risks related to disruption of management time from ongoing business operations due to the proposed transaction, (vi) the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of Altair, (vii) the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Altair to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers, (viii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, dated October 30, 2024, with Siemens (the “Merger Agreement”), including in circumstances requiring Altair to pay a termination fee, (ix) the risk that competing offers will be made; (x) unexpected costs, charges or expenses resulting from the merger, (xi) potential litigation relating to the merger that could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto, (xii) worldwide economic or political changes that affect the markets that Altair’s businesses serve which could have an effect on demand for Altair’s products and impact Altair’s profitability and (xiii) disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, including tariffs and trade restrictions, cyber-security vulnerabilities, foreign currency volatility, swings in consumer confidence and spending, raw material pricing and supply issues, retention of key employees, increases in fuel prices, and outcomes of legal proceedings, claims and investigations. Accordingly, actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in Altair’s filings with the SEC, including the risks and uncertainties identified in Part I, Item 1A – Risk Factors of Altair’s Annual Report on Form 10-K for the year ended December 31, 2023 and in Altair’s other filings with the SEC. The list of factors is not intended to be exhaustive.

These forward-looking statements speak only as of the date of this communication, and Altair does not assume any obligation to update or revise any forward-looking statement made in this communication or that may from time to time be made by or on behalf of Altair.

Media Relations
Altair
Jennifer Ristic
216-849-3109
jristic@altair.com

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

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

	September 30, 2024			December 31, 2023
(In thousands)	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	513,371		$	467,459
Accounts receivable, net		121,345			190,461
Income tax receivable		20,794			16,650
Prepaid expenses and other current assets		31,489			26,053
Total current assets		686,999			700,623
Property and equipment, net		40,908			39,803
Operating lease right of use assets		31,856			30,759
Goodwill		476,209			458,125
Other intangible assets, net		84,904			83,550
Deferred tax assets		9,661			9,955
Other long-term assets		47,331			40,678
TOTAL ASSETS	$	1,377,868		$	1,363,493
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,607		$	8,995
Accrued compensation and benefits		43,497			45,081
Current portion of operating lease liabilities		8,212			8,825
Other accrued expenses and current liabilities		40,267			48,398
Deferred revenue		114,525			131,356
Current portion of convertible senior notes, net		—			81,455
Total current liabilities		210,108			324,110
Convertible senior notes, net		226,812			225,929
Operating lease liabilities, net of current portion		24,484			22,625
Deferred revenue, non-current		26,310			32,347
Other long-term liabilities		53,254			47,151
TOTAL LIABILITIES		540,968			652,162
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding		—			—
Common stock ($0.0001 par value)
Class A common stock, authorized 513,797 shares, issued and outstanding 59,518 and 55,240 shares as of September 30, 2024, and December 31, 2023, respectively		5			5
Class B common stock, authorized 41,203 shares, issued and outstanding 25,432 and 26,814 shares as of September 30, 2024, and December 31, 2023, respectively		3			3
Additional paid-in capital		971,835			864,135
Accumulated deficit		(117,324	)		(130,503	)
Accumulated other comprehensive loss		(17,619	)		(22,309	)
TOTAL STOCKHOLDERS’ EQUITY		836,900			711,331
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,377,868		$	1,363,493

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2024			2023			2024			2023
Revenue
License	$	92,939		$	79,825		$	303,345		$	279,972
Maintenance and other services		45,733			39,252			129,179			114,069
Total software		138,672			119,077			432,524			394,041
Engineering services and other		12,778			14,926			40,633			47,157
Total revenue		151,450			134,003			473,157			441,198
Cost of revenue
License		2,795			3,083			10,437			11,888
Maintenance and other services		16,045			13,689			46,410			41,754
Total software *		18,840			16,772			56,847			53,642
Engineering services and other		11,175			12,314			34,577			38,976
Total cost of revenue		30,015			29,086			91,424			92,618
Gross profit		121,435			104,917			381,733			348,580
Operating expenses:
Research and development *		56,111			51,598			164,014			160,126
Sales and marketing *		45,559			44,069			136,468			132,543
General and administrative *		17,500			17,218			54,555			53,791
Amortization of intangible assets		9,246			7,704			24,313			23,143
Other operating (income) expense, net		(2,669	)		(4,408	)		(4,337	)		1,324
Total operating expenses		125,747			116,181			375,013			370,927
Operating (loss) income		(4,312	)		(11,264	)		6,720			(22,347	)
Interest expense		1,317			1,529			4,497			4,583
Other income, net		(10,758	)		(1,890	)		(20,465	)		(9,698	)
Income (loss) before income taxes		5,129			(10,903	)		22,688			(17,232	)
Income tax expense (benefit)		3,350			(6,541	)		9,509			11,369
Net income (loss)	$	1,779		$	(4,362	)	$	13,179		$	(28,601	)
Earnings (loss) per share, basic
Earnings (loss) per share	$	0.02		$	(0.05	)	$	0.16		$	(0.36	)
Weighted average shares		84,835			80,431			83,680			80,204
Earnings (loss) per share, diluted
Earnings (loss) per share	$	0.02		$	(0.05	)	$	0.15		$	(0.36	)
Weighted average shares		88,425			80,431			87,854			80,204

* Amounts include stock-based compensation expense as follows (in thousands):

	(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Cost of revenue – software	$	2,131	$	2,468	$	6,230	$	7,792
Research and development		6,378		7,824		19,356		26,510
Sales and marketing		5,176		6,933		14,675		22,105
General and administrative		3,671		3,301		10,449		10,016
Total stock-based compensation expense	$	17,356	$	20,526	$	50,710	$	66,423

ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)

	Nine Months Ended September 30,
(In thousands)	2024			2023
OPERATING ACTIVITIES:
Net income (loss)	$	13,179		$	(28,601	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		31,120			29,271
Stock-based compensation expense		50,710			66,423
Deferred income taxes		(114	)		2,178
Loss on mark-to-market adjustment of contingent consideration		189			4,494
Other, net		1,520			1,385
Changes in assets and liabilities:
Accounts receivable, net		72,916			47,226
Prepaid expenses and other current assets		(7,895	)		959
Other long-term assets		408			(1,491	)
Accounts payable		(5,416	)		(5,494	)
Accrued compensation and benefits		(1,977	)		(2,726	)
Other accrued expenses and current liabilities		(12,261	)		(4,526	)
Deferred revenue		(25,825	)		(3,442	)
Net cash provided by operating activities		116,554			105,656
INVESTING ACTIVITIES:
Payments for acquisition of businesses, net of cash acquired		(25,575	)		(3,235	)
Capital expenditures		(9,739	)		(7,882	)
Other investing activities, net		(5,036	)		(2,452	)
Net cash used in investing activities		(40,350	)		(13,569	)
FINANCING ACTIVITIES:
Settlement of convertible senior notes		(81,729	)		—
Proceeds from the exercise of common stock options		43,721			25,526
Proceeds from employee stock purchase plan contributions		7,112			5,772
Payments for repurchase and retirement of common stock		—			(6,255	)
Other financing activities		—			(73	)
Net cash (used in) provided by financing activities		(30,896	)		24,970
Effect of exchange rate changes on cash, cash equivalents and restricted cash		554			(2,599	)
Net increase in cash, cash equivalents and restricted cash		45,862			114,458
Cash, cash equivalents and restricted cash at beginning of year		467,576			316,958
Cash, cash equivalents and restricted cash at end of period	$	513,438		$	431,416

Change in Presentation of Revenue and Cost of Revenue

Effective in the first quarter of 2024, the Company changed the presentation of revenue and cost of revenue in its Consolidated Statements of Operations to combine the financial statement line items (“FSLIs”) labeled “Software related services”, “Client engineering services” and “Other” into one FSLI labeled “Engineering services and other”. The change in presentation has been applied retrospectively and does not affect the software revenue, total revenue, software cost of revenue or total cost of revenue amounts previously reported or have any effect on segment reporting.

Financial Results

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:

		(Unaudited)
		Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)		2024			2023			2024			2023
Net income (loss)		$	1,779		$	(4,362	)	$	13,179		$	(28,601	)
Stock-based compensation expense			17,356			20,526			50,710			66,423
Amortization of intangible assets			9,246			7,704			24,313			23,143
Non-cash interest expense			310			469			1,204			1,399
Impact of non-GAAP tax rate ⁽¹⁾			(3,721	)		(10,997	)		(14,564	)		(8,897	)
Special adjustments and other ⁽²⁾			(3,756	)		(658	)		(2,622	)		4,212
	Non-GAAP net income	$	21,214		$	12,682		$	72,220		$	57,679

Net income (loss) per share, diluted		$	0.02		$	(0.05	)	$	0.15		$	(0.36	)
Non-GAAP net income per share, diluted		$	0.24		$	0.15		$	0.82		$	0.68

GAAP diluted shares outstanding			88,425			80,431			87,854			80,204
Non-GAAP diluted shares outstanding			88,425			85,347			87,854			84,857

(1)	For the three and nine months ended September 30, 2024, the Company used a non-GAAP effective tax rate of 25%. For the three and nine months ended September 30, 2023, the Company used a non-GAAP effective tax rate of 26%.
(2)	The three months ended September 30, 2024, includes $3.8 million of currency gains on acquisition-related intercompany loans. The three months ended September 30, 2023, includes a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $2.8 million of currency losses on acquisition-related intercompany loans. The nine months ended September 30, 2024, includes $2.8 million of currency gains on acquisition-related intercompany loans, and a $0.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2023, includes a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million of currency gains on acquisition-related intercompany loans.

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		2024			2023			2024			2023
Net income (loss)		$	1,779		$	(4,362	)	$	13,179		$	(28,601	)
Income tax (benefit) expense			3,350			(6,541	)		9,509			11,369
Stock-based compensation expense			17,356			20,526			50,710			66,423
Interest expense			1,317			1,529			4,497			4,583
Depreciation and amortization			11,563			9,783			31,120			29,271
Special adjustments, interest income and other ⁽¹⁾			(9,660	)		(5,481	)		(20,144	)		(7,480	)
	Adjusted EBITDA	$	25,705		$	15,454		$	88,871		$	75,565

(1)	The three months ended September 30, 2024, includes $5.9 million of interest income and $3.8 million of currency gains on acquisition-related intercompany loans. The three months ended September 30, 2023, includes $4.8 million of interest income, a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.8 million currency losses on acquisition-related intercompany loans. The nine months ended September 30, 2024, includes $17.5 million of interest income, $2.8 million of currency gains on acquisition-related intercompany loans, and a $0.2 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2023, includes $11.7 million of interest income, a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.3 million currency gains on acquisition-related intercompany loans.

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Net cash provided by operating activities	$	14,547		$	16,427		$	116,554		$	105,656
Capital expenditures		(4,735	)		(1,698	)		(9,739	)		(7,882	)
Free cash flow	$	9,812		$	14,729		$	106,815		$	97,774

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Gross profit	$	121,435		$	104,917		$	381,733		$	348,580
Stock-based compensation expense		2,131			2,468			6,230			7,792
Non-GAAP gross profit	$	123,566		$	107,385		$	387,963		$	356,372

Gross profit margin		80.2	%		78.3	%		80.7	%		79.0	%
Non-GAAP gross margin		81.6	%		80.1	%		82.0	%		80.8	%

The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Total operating expense	$	125,747		$	116,181		$	375,013		$	370,927
Stock-based compensation expense		(15,225	)		(18,058	)		(44,480	)		(58,631	)
Amortization		(9,246	)		(7,704	)		(24,313	)		(23,143	)
Loss on mark-to-market adjustment of contingent consideration		—			3,493			(189	)		(4,494	)
Non-GAAP operating expense	$	101,276		$	93,912		$	306,031		$	284,659

The following table provides the calculation of non-GAAP diluted common shares and non-GAAP net income per share, diluted:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Numerator:
	Non-GAAP net income	$	21,214	$	12,682	$	72,220	$	57,679
	Interest expense related to convertible notes, net of tax ⁽¹⁾		—		—		—		—
	Numerator for non-GAAP diluted income per share	$	21,214	$	12,682	$	72,220	$	57,679
Denominator:
	Weighted average shares outstanding, basic		84,835		80,431		83,680		80,204
	Effect of dilutive shares		3,590		4,916		4,174		4,653
	Non-GAAP diluted shares outstanding		88,425		85,347		87,854		84,857
Non-GAAP net income per share, diluted		$	0.24	$	0.15	$	0.82	$	0.68

(1)	Interest expense related to the convertible notes has been excluded from the numerator for non-GAAP diluted earnings per share because its effect would have been anti-dilutive.

The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Revenue	$	151,450		$	134,003		$	473,157		$	441,198
Ending deferred revenue		140,835			138,933			140,835			138,933
Beginning deferred revenue		(152,184	)		(148,547	)		(163,703	)		(144,460	)
Deferred revenue acquired		(253	)		—			(1,825	)		—
Billings	$	139,848		$	124,389		$	448,464		$	435,671

The following table provides Software revenue, Total revenue, Billings and Adjusted EBITDA on a constant currency basis:

	(Unaudited)
	Three Months Ended September 30, 2024							Three Months Ended September 30, 2023		Increase/ (Decrease) %
(in thousands)	As reported		Currency changes			As adjusted for constant currency		As reported		As reported			As adjusted for constant currency
Software revenue	$	138.7	$	(0.3	)	$	138.4	$	119.1		16.5	%		16.2	%
Total revenue	$	151.5	$	(0.4	)	$	151.1	$	134.0		13.0	%		12.8	%
Billings	$	139.8	$	(0.1	)	$	139.7	$	124.4		12.4	%		12.3	%
Adjusted EBITDA	$	25.7	$	(0.1	)	$	25.6	$	15.5		66.3	%		65.5	%


	Nine Months Ended September 30, 2024							Nine Months Ended September 30, 2023		Increase/ (Decrease) %
(in thousands)	As reported		Currency changes			As adjusted for constant currency		As reported		As reported			As adjusted for constant currency
Software revenue	$	432.5	$	4.4		$	436.9	$	394.0		9.8	%		10.9	%
Total revenue	$	473.2	$	4.6		$	477.8	$	441.2		7.2	%		8.3	%
Billings	$	448.5	$	4.5		$	453.0	$	435.7		2.9	%		4.0	%
Adjusted EBITDA	$	88.9	$	3.3		$	92.2	$	75.6		17.6	%		22.0	%

The MIL Network –

January 25, 2025

MIL-OSI Economics: Microsoft Cloud strength drives first quarter results

Source: Microsoft

Headline: Microsoft Cloud strength drives first quarter results

Microsoft Cloud Strength Drives First Quarter Results

REDMOND, Wash. — October 30, 2024 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2024, as compared to the corresponding period of last fiscal year:

· Revenue was $65.6 billion and increased 16%

· Operating income was $30.6 billion and increased 14%

· Net income was $24.7 billion and increased 11% (up 10% in constant currency)

· Diluted earnings per share was $3.30 and increased 10%

“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” said Satya Nadella, chairman and chief executive officer of Microsoft. “We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”

“Strong execution by our sales teams and partners delivered a solid start to our fiscal year with Microsoft Cloud revenue of $38.9 billion, up 22% year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

Revenue in Productivity and Business Processes was $28.3 billion and increased 12% (up 13% in constant currency), with the following business highlights:

· Microsoft 365 Commercial products and cloud services revenue increased 13% (up 14% in constant currency) driven by Microsoft 365 Commercial cloud revenue growth of 15% (up 16% in constant currency)

· Microsoft 365 Consumer products and cloud services revenue increased 5% (up 6% in constant currency) driven by Microsoft 365 Consumer cloud revenue growth of 6% (up 7% in constant currency)

· LinkedIn revenue increased 10% (up 9% in constant currency)

· Dynamics products and cloud services revenue increased 14% driven by Dynamics 365 revenue growth of 18% (up 19% in constant currency)

Revenue in Intelligent Cloud was $24.1 billion and increased 20% (up 21% in constant currency), with the following business highlights:

· Server products and cloud services revenue increased 23% driven by Azure and other cloud services revenue growth of 33% (up 34% in constant currency)

Revenue in More Personal Computing was $13.2 billion and increased 17%, with the following business highlights:

· Windows OEM and Devices revenue increased 2%

· Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision acquisition

· Search and news advertising revenue excluding traffic acquisition costs increased 18% (up 19% in constant currency)

Microsoft returned $9.0 billion to shareholders in the form of dividends and share repurchases in the first quarter of fiscal year 2025.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To learn more about Microsoft’s corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency.

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on October 30, 2025.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended September 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2023 As Reported (GAAP)	$56,517	$26,895	$22,291	$2.99
2024 As Reported (GAAP)	$65,585	$30,552	$24,667	$3.30
Percentage Change Y/Y (GAAP)	16%	14%	11%	10%
Constant Currency Impact	$(217)	$(181)	$78	$0.01
Percentage Change Y/Y Constant Currency	16%	14%	10%	10%

Segment Revenue Constant Currency Reconciliation

	Three Months Ended September 30,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2023 As Reported (GAAP)	$25,226	$20,013	$11,278
2024 As Reported (GAAP)	$28,317	$24,092	$13,176
Percentage Change Y/Y (GAAP)	12%	20%	17%
Constant Currency Impact	$(128)	$(72)	$(17)
Percentage Change Y/Y Constant Currency	13%	21%	17%

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

Selected Product and Service Revenue Constant Currency Reconciliation

	Three Months Ended September 30, 2024
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Microsoft Cloud	22%	0%	22%
Microsoft 365 Commercial products and cloud services	13%	1%	14%
Microsoft 365 Commercial cloud	15%	1%	16%
Microsoft 365 Consumer products and cloud services	5%	1%	6%
Microsoft 365 Consumer cloud	6%	1%	7%
LinkedIn	10%	(1)%	9%
Dynamics products and cloud services	14%	0%	14%
Dynamics 365	18%	1%	19%
Server products and cloud services	23%	0%	23%
Azure and other cloud services	33%	1%	34%
Windows OEM and Devices	2%	0%	2%
Xbox content and services	61%	0%	61%
Search and news advertising excluding traffic acquisition costs	18%	1%	19%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

· intense competition in all of our markets that may adversely affect our results of operations;

· focus on cloud-based and AI services presenting execution and competitive risks;

· significant investments in products and services that may not achieve expected returns;

· acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

· impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

· cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

· disclosure and misuse of personal data that could cause liability and harm to our reputation;

· the possibility that we may not be able to protect information stored in our products and services from use by others;

· abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;

· products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;

· issues about the use of AI in our offerings that may result in reputational or competitive harm, or legal liability;

· excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

· supply or quality problems;

· government enforcement under competition laws and new market regulation may limit how we design and market our products;

· potential consequences of trade and anti-corruption laws;

· potential consequences of existing and increasing legal and regulatory requirements;

· laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

· claims against us that may result in adverse outcomes in legal disputes;

· uncertainties relating to our business with government customers;

· additional tax liabilities;

· sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk;

· an inability to protect and utilize our intellectual property may harm our business and operating results;

· claims that Microsoft has infringed the intellectual property rights of others;

· damage to our reputation or our brands that may harm our business and results of operations;

· adverse economic or market conditions that may harm our business;

· catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;

· exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and

· the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of September 30, 2024. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

For more information, financial analysts and investors only:

Brett Iversen, Vice President, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

**MICROSOFT CORPORATION**

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Revenue:
Product	$15,272	$15,535
Service and other	50,313	40,982
Total revenue	65,585	56,517
Cost of revenue:
Product	3,294	3,531
Service and other	16,805	12,771
Total cost of revenue	20,099	16,302
Gross margin	45,486	40,215
Research and development	7,544	6,659
Sales and marketing	5,717	5,187
General and administrative	1,673	1,474
Operating income	30,552	26,895
Other income (expense), net	(283)	389
Income before income taxes	30,269	27,284
Provision for income taxes	5,602	4,993
Net income	$24,667	$22,291
Earnings per share:
Basic	$3.32	$3.00
Diluted	$3.30	$2.99
Weighted average shares outstanding:
Basic	7,433	7,429
Diluted	7,470	7,462

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Net income	$24,667	$22,291
Other comprehensive income (loss), net of tax:
Net change related to derivatives	(10)	21
Net change related to investments	1,114	(260)
Translation adjustments and other	304	(355)
Other comprehensive income (loss)	1,408	(594)
Comprehensive income	$26,075	$21,697

BALANCE SHEETS

(In millions) (Unaudited)
	September 30, 2024	June 30, 2024
Assets
Current assets:
Cash and cash equivalents	$20,840	$18,315
Short-term investments	57,588	57,228
Total cash, cash equivalents, and short-term investments	78,428	75,543
Accounts receivable, net of allowance for doubtful accounts of $647 and $830	44,148	56,924
Inventories	1,626	1,246
Other current assets	25,724	26,021
Total current assets	149,926	159,734
Property and equipment, net of accumulated depreciation of $80,517 and $76,421	152,863	135,591
Operating lease right-of-use assets	20,528	18,961
Equity and other investments	15,778	14,600
Goodwill	119,374	119,220
Intangible assets, net	26,751	27,597
Other long-term assets	37,793	36,460
Total assets	$523,013	$512,163
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$22,768	$21,996
Short-term debt	0	6,693
Current portion of long-term debt	2,249	2,249
Accrued compensation	8,326	12,564
Short-term income taxes	9,717	5,017
Short-term unearned revenue	53,026	57,582
Other current liabilities	19,114	19,185
Total current liabilities	115,200	125,286
Long-term debt	42,868	42,688
Long-term income taxes	24,452	27,931
Long-term unearned revenue	2,663	2,602
Deferred income taxes	2,581	2,618
Operating lease liabilities	16,361	15,497
Other long-term liabilities	31,165	27,064
Total liabilities	235,290	243,686
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,436 and 7,434	102,976	100,923
Retained earnings	188,929	173,144
Accumulated other comprehensive loss	(4,182)	(5,590)
Total stockholders’ equity	287,723	268,477
Total liabilities and stockholders’ equity	$523,013	$512,163

CASH FLOWS STATEMENTS

(In millions) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Operations
Net income	$24,667	$22,291
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other	7,383	3,921
Stock-based compensation expense	2,832	2,507
Net recognized losses (gains) on investments and derivatives	(125)	14
Deferred income taxes	(1,433)	(568)
Changes in operating assets and liabilities:
Accounts receivable	14,037	11,034
Inventories	(373)	(505)
Other current assets	(82)	(796)
Other long-term assets	(1,761)	(2,013)
Accounts payable	(916)	1,214
Unearned revenue	(5,553)	(4,126)
Income taxes	1,016	1,425
Other current liabilities	(5,479)	(4,106)
Other long-term liabilities	(33)	291
Net cash from operations	34,180	30,583
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net	(5,746)	18,692
Proceeds from issuance of debt	0	7,073
Repayments of debt	(966)	(1,500)
Common stock issued	706	685
Common stock repurchased	(4,107)	(4,831)
Common stock cash dividends paid	(5,574)	(5,051)
Other, net	(889)	(307)
Net cash from (used in) financing	(16,576)	14,761
Investing
Additions to property and equipment	(14,923)	(9,917)
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets	(1,849)	(1,186)
Purchases of investments	(1,620)	(8,460)
Maturities of investments	2,136	15,718
Sales of investments	1,968	5,330
Other, net	(913)	(982)
Net cash from (used in) investing	(15,201)	503
Effect of foreign exchange rates on cash and cash equivalents	122	(99)
Net change in cash and cash equivalents	2,525	45,748
Cash and cash equivalents, beginning of period	18,315	34,704
Cash and cash equivalents, end of period	$20,840	$80,452

SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)
	Three Months Ended September 30,
	Three Months Ended September 30,
	2024	2023
Revenue
Productivity and Business Processes	$28,317	$25,226
Intelligent Cloud	24,092	20,013
More Personal Computing	13,176	11,278
Total	$65,585	$56,517
Operating Income
Productivity and Business Processes	$16,516	$14,297
Intelligent Cloud	10,503	8,908
More Personal Computing	3,533	3,690
Total	$30,552	$26,895

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

MIL OSI Economics –

January 25, 2025

MIL-OSI Canada: Manitoba Government Introduces Bill 41 to Expand Mandatory Training for Prospective Judges and Judicial Justices of the Peace

Source: Government of Canada regional news

October 30, 2024

Manitoba Government Introduces Bill 41 to Expand Mandatory Training for Prospective Judges and Judicial Justices of the Peace

New Training Would Include Intimate Partner Violence and Experiences of Indigenous and 2SLGBTQIA+ Persons: Wiebe

The Manitoba government has introduced legislation that would expand continuing education requirements for prospective provincial court judges and judicial justices of the peace in areas of intimate partner violence, coercive control and the experiences of Indigenous persons and 2SLGBTQIA+ persons, Justice Minister Matt Wiebe announced today.

“Training in intimate partner violence, coercive control and the experience of Indigenous persons and 2SLGBTQIA+ community would help ensure that everyone feels respected in our justice system,” said Wiebe. “Manitoba would be among the leaders in Canada by requiring continuing education on these topics. I want to thank all the advocates who have worked tirelessly to enact Keira’s Law and acknowledge members of the judiciary who are committed to enhancing judicial education. Our government is dedicated to creating a more just system for all Manitobans.”

Under proposed amendments to the Provincial Court Act, candidates for appointment as provincial court judges would be required to participate in continuing education in three new areas:

intimate partner violence;
coercive control in intimate partner and family relationships; and
the experience of Indigenous persons and 2SLGBTQIA+ persons in the justice system and in society generally.

These would be in addition to current requirements to participate in continuing education on sexual assault law and social context including systemic racism and systemic discrimination.

Currently, the Provincial Court Act does not address continuing education for judicial justices of the peace. With the proposed amendments, judicial justice of the peace candidates would be required to participate in continuing education on the same subjects as provincial court judge candidates. This is important because judicial justices of the peace have jurisdiction to make decisions regarding protection orders, provincial offences and search orders, the minister noted.

The governments of Canada and Ontario have enacted similar legislation known as “Keira’s Law” to ensure judges receive education on domestic violence and coercive control in intimate partner and family relationships.

The Manitoba government’s proposed legislation includes additional requirements, the minister noted, formalizing the requirement of training surrounding the experiences of Indigenous persons and 2SLGBTQIA+ persons in the justice system and in society.

Continuing education seminars may be developed by the chief judge in consultation with affected persons including survivors of sexual assault and intimate partner violence along with persons, groups or organizations that support them. For seminars on social context and community experiences, consultation may include representatives of Indigenous and 2SLQBTQIA+ communities and other communities that have experienced systemic racism and discrimination. This legislation would also ensure funding for these continuing education seminars established by the chief judge does not lapse at the end of the fiscal year, noted Wiebe.

– 30 –

MIL OSI Canada News –

January 25, 2025

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

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

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

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

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

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

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

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

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

###

MIL OSI USA News –

January 25, 2025

MIL-OSI USA: Wyden, Merkley, Blumenauer, Hoyle: State of Oregon & Four Tribes Earn More Than $12 Million in Federal Funds for Grid Resilience

US Senate News:

Source: United States Senator Ron Wyden (D-Ore)
October 30, 2024
Tribes with Oregon presence to receive federal investments are the Confederated Tribes of the Warm Springs, Cow Creek Band of Umpqua Tribe of Indians, Burns Paiute and Nez Perce
Washington, D.C. – U.S. Sens. Ron Wyden and Jeff Merkley as well as U.S. Reps. Earl Blumenauer and Val Hoyle today announced that Oregon’s Energy Department has secured $10.9 million and four Tribes with members in Oregon have earned a combined $1.16 million in federal investment to modernize the electric grid and reduce the impacts of extreme weather while also ensuring power sector reliability.
The four Tribes securing the federal funds are the Confederated Tribes of the Warm Springs, Cow Creek Band of Umpqua Tribe of Indians, Burns Paiute and Nez Perce.
“Oregon families, small businesses, schools, hospitals and more rely on a dependable energy grid, said Wyden, who also has introduced the Grid Resilience Improvement through Dedicated (GRID) Assistance Act. “These fresh federal investments in grid resilience are incredibly timely after this year’s state record of nearly 2 million acres burned by wildfires. I’m gratified these resources are heading to these Tribes along with the state Energy Department, and will keep battling for similar funds for communities throughout the state.”
“As devastating wildfires, droughts, and intense winter storms continue to grip Oregon, we must invest in strengthening our power grids to safeguard Oregon families and businesses,” Merkley said. “It is great news that these federal funds from the Bipartisan Infrastructure Law are heading to the Oregon Department of Energy and Tribes to make these critical improvements that will make all the difference for communities across Oregon when disasters strike.”
“Our communities need an electric grid that can withstand the increasingly severe impacts of the climate crisis. Thanks to Democrats in Congress, Oregon and Tribal nations are receiving the investments necessary build this reality with a smarter, more resilient power grid,” said Blumenauer.
“As this season’s record-breaking wildfire season showed, extreme weather, caused by the climate crisis, is becoming increasingly common across Oregon,” Hoyle said. “These funds will help to fortify our energy infrastructure against extreme weather and improve its dependability across the state and in Tribal communities. I’ll continue working with federal and state partners to ensure Oregon’s electric grid is safe and resilient.”
The federal money for the state Energy Department and four Tribes is part of a combined total of $473.6 million nationally in fiscal year 2024 Grid Resilience State and Tribal Formula Grants from the U.S. Department of Energy. The resources will be distributed as follows:
·      Oregon Department of Energy, $10.9 million
·      Confederated Tribes of the Warm Springs, $454,958
·      Nez Perce Tribe, $290,877
·      Cow Creek Band of Umpqua Tribes of Indians, $268,172
·      Burns Paiute Tribe, $148,901
“The Confederated Tribes of the Warm Springs is thankful for the federal government’s financial investment in our ability to protect our communities from extreme weather situations,” said Jonathan W. Smith, Sr., Chairman, Tribal Council for the Confederated Tribes of the Warm Springs Reservation of Oregon. “These funds will allow us to develop community resilience centers on our reservation for our tribal members to seek refuge during unbearably hot and cold weather patterns.”
“The Burns-Paiute tribe has identified energy security and resilience as a key priority,” said Tracy Kennedy, Chair of the Burns-Paiute Tribe. “We appreciate the support from Senator Wyden and Senator Merkley in helping us get funding to achieve our goals.”
“For the Cow Creek Band of Umpqua Tribe of Indians, we aim to use these generous funds to improve the reliability of delivering power, water and utility services provided by our own Umpqua Indian Utility Cooperative to the many Cow Creek Umpqua Tribally-owned properties, our Tribal citizens, and our community members in Canyonville,” said Carla Keene, Chairman of the Cow Creek Band of Umpqua Tribe of Indians. “This grant allows us to exercise our sovereign rights, strengthen the resilience of our system, and put us closer to achieving one of our long-term goals of energy independence.”–
“The Nez Perce Tribe is committed to helping the Northwest meet its energy needs in a cleaner and smarter way that will address the impacts of current energy demands on salmon restoration,” said Shannon F. Wheeler, Chairman, Nez Perce Tribal Executive Committee. “These funds are an important component of this collaborative work with energy utilities and other stakeholders in the Northwest and we are excited that these funds will allow us to continue to do this work.”

MIL OSI USA News –

January 25, 2025

MIL-OSI Economics: IMF Executive Board Concludes the Seventh and Eighth Reviews under the Extended Fund Facility and Extended Credit Facility and Review under the Resilience and Sustainability Facility Arrangement with Kenya

Source: International Monetary Fund

October 30, 2024

The Executive Board’s decision to complete the reviews enables a combined disbursement of around US$606 million to support the authorities’ efforts to rebuild fiscal and external buffers, including to enhance resilience to climate shocks.
Resolution of the exceptional external financing pressure earlier this year has revived market confidence, aided stabilization of the shilling, and enabled a faster buildup of foreign exchange reserves. However, large revenue shortfalls in FY2023/24 and pushback against revenue measures owing to governance concerns pose a challenge to the ongoing fiscal consolidation efforts.
The Kenyan authorities face a difficult balancing act of boosting domestic revenues to protect critical spending in priority areas while meeting heavy debt service obligations. Delivering on this would call for improving governance and transparency to restore public trust in the effective use of public resources.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded today the seventh and the eighth reviews under the extended arrangement under the Extended Fund Facility (EFF) and the arrangement under the Extended Credit Facility (ECF), approved in April 2021, and a review under the Resilience and Sustainability Facility (RSF) arrangement, approved in July 2023, with Kenya.

The EFF/ECF arrangements aim to support Kenya’s program to address debt vulnerabilities while safeguarding resources for priority social and developmental needs; build resilience to shocks; improve governance and transparency; and support broader economic reforms to realize the country’s medium-term potential. The RSF arrangement aims to reinforce Kenya’s strong efforts to address climate-related challenges and catalyze further private climate finance.

The Executive Board’s decision allows for the immediate disbursements of SDR365.28 million (about US$485.8 million) under the EFF/ECF arrangements and SDR90.47 million (about US$120.3 million) under the RSF arrangement. In addition, following the resolution of exceptional financing needs earlier this year, the Board approved a reduction in the total access under the EFF/ECF arrangements from exceptional access, approved in January 2024 (see PR24/12), to within the normal access limits and a rebalancing of access toward the zero-interest ECF arrangement. Together with the recent changes to the IMF’s charges and surcharges policy, these adjustments would lower Kenya’s interest payments to the IMF.

Under the EFF/ECF arrangements, total IMF financial commitment stands at SDR2.714 billion (about US$3.61 billion), of which SDR2.343 billion (about US$3.12 billion) has been approved for disbursement. For the RSF arrangement, the corresponding amounts are SDR407.1 million (about US$541.3 million) and SDR135.70 million (about US$180.4 million), respectively.

In completing the reviews, the Executive Board recognized that the resolution of the exceptional external financing pressure earlier this year has revived market confidence, supporting shilling stabilization and facilitating faster buildup of reserves. However, the fiscal consolidation efforts have faced headwinds following a sizable tax revenue shortfall in FY2023/24 and withdrawal of the 2024 Finance Bill after widespread public protests. Nevertheless, the EFF/ECF program has delivered on reducing inflation, strengthening external buffers, and stabilizing the exchange rate. In addition, the Board approved waivers of non-observance for the end-December 2023 tax revenue and the end-June 2024 primary budget balance and tax revenue targets based on the corrective action taken through the passage of the Supplementary FY2024/25 Budget, which together with medium-term fiscal consolidation would help reduce debt vulnerabilities, a core objective of the program. The Board also completed review under the RSF arrangement and approved the disbursements associated with two reform measures implemented.

The Board emphasized that sustaining progress requires improving the quality of fiscal adjustment, addressing fiscal and financial sector vulnerabilities, advancing governance reforms, and implementing the structural agenda, including climate-related reforms. Continued efforts to support the vulnerable population, broadening the socio-political support for reforms, and ensuring agile policymaking will also be necessary.

At the conclusion of the Executive Board’s discussion, Ms. Gita Gopinath, First Deputy Managing Director of the IMF and Acting Chair, made the following statement:

“Kenya’s economy remains resilient, with growth above the regional average, inflation decelerating, and external inflows supporting the shilling and a buildup of external buffers, despite a difficult socio-economic environment.

“The EFF/ECF and the RSF arrangements continue to support the authorities’ efforts to anchor macroeconomic stability, reduce debt vulnerabilities, promote reforms, and mitigate climate-related risks.

“Performance since the last reviews of these arrangements has weakened. While accumulation of foreign exchange reserves and inflation were better than expected, the fiscal performance fell significantly short of the targets. The revenue and export underperformances increased debt vulnerabilities. Implementation of several reforms was also delayed.

“In this context, a difficult adjustment path lies ahead. A credible fiscal consolidation strategy remains central to addressing debt vulnerabilities while protecting social and development spending. Reforms to make the tax regime more efficient, equitable, and progressive as well as strengthening accountability, transparency, and efficiency of public finances will help garner political and societal support for reforms. Clearly communicating the necessity and benefits of the reforms is paramount.

“Given the elevated risks around the fiscal strategy, policymaking needs to be agile. Contingency planning remains critical, with policies adapting to evolving outcomes to safeguard stability and ensure that program objectives continue to be met.

“The Central Bank of Kenya’s decisive actions have supported price stability and external sustainability, including through institutional changes to improve the functioning of the monetary policy operational framework and the money and foreign exchange markets. Exchange rate flexibility is vital to improve resilience to external shocks and competitiveness. Addressing banks’ deteriorating asset quality and emerging risks requires close monitoring and strengthened oversight.

“Fast-tracking key reforms would raise medium-term potential. In particular, addressing deficiencies in governance, anti-corruption frameworks, and AML/CFT, including leveraging the requested governance diagnostic, is essential for garnering public trust and enhancing policy credibility, and for attracting fresh investments, including finance to build climate resilience.”

Kenya: Selected Economic Indicators, 2021–2026

2021		2022	2023	2024	2025	2026
Act.		Act.	Act.	Est./ Proj.	Proj.	Proj.
Output
Real GDP growth (percent)	7.6	4.9	5.6	5.0	5.0	5.0
Prices
Inflation –average (percent)	6.1	7.6	7.7	5.0	5.3	5.1
Central government finances (fiscal year)¹
Total revenue (percent of GDP)	16.1	17.5	16.7	17.2	18.0	18.7
Expenditure and net lending (percent of GDP)	24.4	23.7	22.5	22.8	22.3	22.7
Overall fiscal balance (percent of GDP)	–8.3	–6.2	–5.6	–5.3	–4.3	–4.0
Public debt
Gross nominal debt (percent of GDP)	68.1	67.8	73.1	67.0	68.8	68.8
Gross external debt (percent of GDP)	34.7	34.6	40.4	34.9	37.0	37.4
Money and Credit (end of period)
Broad money (percent change)	6.1	7.1	21.3	5.6	10.3	10.2
Credit to private sector (percent change)	8.6	12.5	13.9	3.3	12.4	11.2
Policy rate, end-of-period (percent)	7.0	8.75	12.50	…	…	…
Balance of payments
Current account balance (percent of GDP)	–5.2	–5.0	–4.0	–3.9	–4.0	–4.1
Gross international reserves (in months of imports)	4.7	4.4	3.8	4.1	4.1	4.2
Exchange rate
REER (average percent change; positive = appreciation)	–2.6	2.2	–8.3	…	…	…

Sources: Kenyan authorities; and IMF staff estimates and projections.

¹ Based on fiscal year (i.e., 2025 represents fiscal year 2024/25, covering July 2024–June 2025).

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: Pavis Devahasadin

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson

MIL OSI Economics –

January 25, 2025

MIL-OSI USA: Congressman Jake Ellzey’s Staff Deployed as Election Observers

Source: United States House of Representatives – Representative Jake Ellzey (Texas, 6)

The Constitution entrusts each House of Congress with the responsibility to “judge the Elections, Returns, and Qualifications of its own Members.” This authority was brought into focus in 2020 when Democrats attempted to overturn the certified results of an Iowa congressional race and install their preferred candidate instead.

The Election Observer Program deploys congressional observers to polling locations nationwide to collect real-time, factual data that can assist in election disputes, seating challenges, and other election-related matters. This initiative is essential to House Administration Republicans’ work to promote election integrity and rebuild public confidence in the voting process. House staff members are encouraged to volunteer, and mandatory training is required for participation.

“Elections have consequences, and there are few elections as consequential as the one taking place this November,” said Ellzey. We must ensure that every citizen has their voice heard, and I am grateful to the members of my staff who have volunteered to participate in the Election Observer Program. Through this program, they will be deployed across the country in New Mexico’s 2^nd district, Michigan’s 13^th, and Connecticut’s 5^th. These races currently sit within the margin of error, and we must ensure that every vote is counted.”

Ellzey continued, “Whoever you vote for, as a citizen of the United States, you have a right to have the vote count, and we have a duty to ensure that it does. So, I want to thank every volunteer who is dedicating their time to ensure that we have safe and fair elections.”

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MIL OSI USA News –

January 25, 2025

MIL-OSI Canada: Larger fines for illegal slaughter, uninspected meat

Source: Government of Canada regional news

[embedded content]

The sale of uninspected meat is illegal in Alberta. Illegal slaughter and food safety non-compliance pose a risk to human and animal health and could harm Alberta’s entire livestock and meat processing industry. If passed, the Meat Inspection Amendment Act would increase fines from a maximum of $10,000 to $100,000 for each offence.

Alberta’s government is proposing to increase these fines to ensure there is a significant deterrent, so offenders are motivated to comply with the Meat Inspection Act. The proposed changes would support food safety for Albertans without increasing consumer costs for inspected meat or operating costs for industry. The changes propose increased fines for those who commit an offence under the Meat Inspection Act and would bring Alberta in line with other jurisdictions.

“We are taking action to maintain public confidence in our food system. I strongly encourage all Albertans to buy their meat from licensed operators and retailers, and while buying meat, ask your retailer where the meat comes from and if it’s inspected.”

RJ Sigurdson, Minister of Agriculture and Irrigation

In addition to increasing fines, amendments would extend the amount of time to investigate and lay charges for the illegal slaughter and sale of uninspected meat. Currently, the act allows inspectors one year after the offence to investigate allegations of illegal slaughter or sale of uninspected meat. If passed, the investigation timeframe for a complex case would be extended to two years from the date the offence came to the attention of an inspector.

“Food safety is something that most Albertans take for granted because Alberta has some of the best people in our province and country looking out for our health. Both the federal and provincial regulatory bodies truly have the best interests of all Albertans in mind when they go out each day to do their jobs. That is the reason why changes are needed and made, to improve overall food safety and strengthen our provincial acts and regulations, to protect the health and safety of all Albertans.”

Mike Bouma, general manager, Family Meats

“As a meat safety and quality researcher, I applaud the Alberta government for their proposed amendments to the Meat Inspection Act. The substantial increase in penalties for contravention of the Meat Inspection Act will help to ensure that the meat that is available to consumers is safe for consumption.”

Lynn McMullen, professor emerita, University of Alberta

Quick facts

The sale of uninspected meat is illegal in Alberta.
Any meat or meat product that is sold or distributed in Alberta must come from an inspected slaughter facility (abattoir) or processing facility.
Alberta government meat inspectors are on site in provincially licensed abattoirs to ensure the meat produced is safe for consumption.
When required, Alberta provides additional inspected slaughter days to provincially licensed facilities, including on weekends, to support cultural celebrations.
Alberta licenses 121 abattoirs that produce inspected meat under the supervision of provincial meat inspectors.
Alberta has 65 meat inspectors and program specialists who support licensing, inspections and surveillance.

Related information

Meat Inspection Act – rules on the slaughter and sale of inspected meat
Directory of licensed slaughter operations – abattoirs, mobile butchers, mobile butcher facilities and on-farm slaughter operations
Resources for provincially licensed slaughter operations
Bill 28: Meat Inspection Amendment Act

Multimedia

Watch the news conference
Listen to the news conference

MIL OSI Canada News –

January 25, 2025

MIL-OSI New Zealand: Affordable housing project supporting home ownership

Source: New Zealand Government

Up to 300 affordable, healthy, community-tailored homes helping to support home ownership are set to be built in eastern Porirua, supported by Government funding for Our Whare Our Fale through the Building Homes for Pacific in Porirua initiative, Minister for Pacific Peoples Dr Shane Reti and Associate Housing Minister Tama Potaka say.

The blessing of the whenua and the groundbreaking ceremony took place today in Cannons Creek, with attendees from Pasefika communities, government, and members of local iwi Ngāti Toa Rangatira and Central Pacific Collective (CPC).

“This is a fantastic initiative that is helping address housing needs in our communities,” Dr Reti says.

“I am pleased that it’s achieving this in a way that transcends just providing housing, through designs that will strengthen communities and an initiative that will help people to purchase homes,” adds Mr Potaka.

The project, led in partnership by Central Pacific Collective and Ngāti Toa Rangatira, was allocated $114.611 million in government funding in 2022, managed by the Ministry for Pacific Peoples.

The housing and the spaces, inspired by Pacific villages and cultures, are intended to promote connection and belonging through community support and collective living.

The builds focus on promoting better health outcomes among Pacific peoples and factor in environmental sustainability.

Affordability is being ensured through several features:

The land in eastern Porirua is being leased into perpetuity from Ngāti Toa, removing land costs from the purchase price.
CPC is the developer, with houses built at cost and margins not passed on to the buyers.
The project benefits from scale, minimising costs from suppliers, and keeping costs down through innovation and partnerships.
CPC offers a shared equity scheme making it easier for households to raise a deposit and service housing costs.

Building for the first 18 homes will commence tomorrow on 1 November, following the turning of the first sod, and construction is expected to be completed in 2025.

Resource consent for the following two sites is underway.

“I want to acknowledge Central Pacific Collective, Te Rūnanga o Toa Rangatira, Ministry for Pacific Peoples and Kāinga Ora in coming together to support better housing outcomes in our communities,” says Dr Reti.

“This is an exciting development that ultimately will improve the lives of families, ease the cost of living, and improve outcomes in communities while we continue to help rebuild the economy, build more houses, and grow the economy for the benefit of New Zealanders.”

MIL OSI New Zealand News –

January 25, 2025

MIL-OSI USA: Kishida’s legacy: Scandals and compromise at home, global respect for security and diplomacy – AP

Source: United States Institute of Peace

TOKYO (AP) — Japanese Prime Minister Fumio Kishida will step down Tuesday, handing over leadership to his successor Shigeru Ishiba,…

TOKYO (AP) — Japanese Prime Minister Fumio Kishida will step down Tuesday, handing over leadership to his successor Shigeru Ishiba, who is expected to formally take office later in the day. He says he plans to call a snap election for Oct. 27.

Kishida’s popularity ratings were precarious during most of his three-year term due to damaging corruption scandals that eventually led him to bow out.

At home, Kishida was seen as a leader without a vision who compromised with powerful conservative nationalists within the ruling Liberal Democratic Party to stay in power. But he has won respect outside Japan, especially from the United States, for pushing bold changes in Japanese defense and security policies and for standing tougher against Russia and China.

Here is a lookback at Kishida’s leadership and his legacy:

Distress at home

After taking office in October 2021, Kishida made a number of major decisions, such as reversing Japan’s nuclear energy phase-out and pursuing a rapid military buildup. But he avoided controversial social issues related to gender and sexual diversity. As head of a smaller faction in the ruling party, his top priority appeared to be keeping a stable grip on power by avoiding clashes with members of the Liberal Democrats’ powerful conservative group, led by the late Prime Minister Shinzo Abe.

Abe’s assassination in July 2022 and subsequent major corruption scandals linked to Abe’s faction members left constantly in damage control mode, as his support ratings tumbled. Kishida himself narrowly escaped an explosives attack during a speech at a fishing port in western Japan’s Wakayama in April, 2023.

Investigations into Abe’s assassination led to revelations of the Liberal Democrats’ decades-long links to South Korea’s Unification Church. That was followed by a more damaging corruption scandal involving more than 80 LDP lawmakers, again mostly in Abe’s faction, involving illegal slush funds.

Several lawmakers, their aides and accountants were indicted in that scandal.

Kishida led internal probes and moved to reform and tighten political funding laws, but opposition lawmakers and voters viewed the measures as inadequate.

Public outrage over the slush funds scandal has caused the LDP to lose a few local elections this year and lawmakers within the party called for a fresh face to shake off the scandals in order to win the next national election.

Kishida ends his term as a kingmaker who could remain influential behind the scenes after he helped lift Ishiba to a come-from-behind victory in the party’s vote on Friday against staunch conservative Sanae Takaichi.

Stronger defense

Kishida, who long served as foreign minister under Abe, has won respect for his national security and foreign policies that significantly deepened ties with the United States and other partners such as Australia, the U.K., South Korea and the Philippines, while elevating the country’s international profile.

In December 2022, Kishida’s government adopted a security and defense strategy involving a rapid buildup of Japan’s military power to acquire a “counter-strike” capability with long-range cruise missiles, a major break from Japan’s post-World War II self-defense-only principle.

Kishida’s government set a five-year goal to double Japan’s military spending to nearly 2% of GDP, eventually to about 10 trillion yen ($70 billion), making it the world’s third biggest spender after the United States and China. But it’s unclear how Japan will fund that spending and balance it against other urgent needs such as coping with the country’s shrinking population.

In December, Kishida substantially eased Japan’s weapons export rules, allowing licensing of Japanese-made PAC-3 missile interceptors to the United States and future foreign sales of fighter jets that Japan is developing with the U.K. and Italy.

Kishida quickly joined other G7 countries in sanctioning Russia and supporting Ukraine. He has repeatedly said “Ukraine today may be East Asia tomorrow,” comparing the Russian invasion of Ukraine to China’s growing assertiveness in the Asia-Pacific region. He has worked on strengthening economic and security cooperation in the region.

“Although Kishida’s successes on foreign affairs were overshadowed by domestic political scandals involving his Liberal Democratic Party, as well as lackluster economic growth, he oversaw increases in Japan’s reputation and popularity in the region and globally, as well as the institutionalization of related partnership gains,” Mirna Galic, a senior policy analyst at the U.S. Institute of Peace, wrote in a recent article.

Better ties with South Korea

One of Kishida’s diplomatic successes was Japan’s improved ties with South Korea, especially in regional security and in ties with their mutual ally, the United Sates, due to shared concerns about China and North Korea.

Kishida, under pressure from Washington and with support from South Korean President Yoon Suk Yeol, helped mend ties between the two Asian neighbors that have suffered over Japan’s colonial-era legacy of colonialism and atrocities. Stable relations are key to the U.S.-led united front in the Pacific.

In April, Kishida made a state visit to Washington and spoke to Congress, stressing Japan’s determination to stand by America as a global partner. In 2023, President Joe Biden invited him to a trilateral summit at Camp David with Yoon where they agreed to strengthen their trilateral security framework.

When Kishida announced in August his plans to step down, Biden lauded Kishida’s leadership, saying he had helped take the U.S.-Japan alliance “to new heights.”

“Guided by unflinching courage and moral clarity, Prime Minister Kishida has transformed Japan’s role in the world,” Biden said in a statement. Kishida’s “courageous leadership will be remembered on both sides of the Pacific for decades to come,” he said.

Kishida also recently helped work out a deal with Beijing to lift a Chinese ban on imports of Japanese seafood that Beijing imposed due to Japan’s release of treated radioactive wastewater into the Pacific from its wrecked Fukushima Daiichi nuclear power plant. Tensions over China’s military activity near Japanese water and airspace persist.

He also deepened ties with Southeast Asian countries, the Pacific Island nations as well as so-called Global South developing countries.

G7 Hiroshima and nuclear disarmament

Kishida represents a constituency in Hiroshima and hosting a summit of the Group of Seven wealthy nations in the city in May 2023 was a highlight of his time in office aligned with his career goal of working toward a world free of nuclear weapons.

However, the G7 summit statement on nuclear disarmament defended the possession of nuclear weapons as a deterrence, disappointing and angering survivors of the U.S. 1945 atomic bomb attack.

Kishida says he adheres to Japan’s principles of not developing, possessing or allowing the deployment of nuclear weapons in its territory. Ishiba, a former defense minister, has advocated deepening a discussion among regional partners about the U.S. nuclear deterrence strategy.

“New Capitalism” never took off

Kishida espoused a “new capitalism” economic strategy calling for more equitable distribution of national wealth, an alternative to Abe’s heavy government spending and hyper-easy monetary policy. Neither policy has managed to get flagging growth back on track.

Kishida’s defense and childcare policies would require big spending and the wage hikes he supported failed to keep pace with price increases.

Government moves to try to reverse Japan’s falling birth rate involved mostly childcare allowances for married couples and didn’t address the problems of the growing number of young Japanese reluctant to marry and start families due to bleak job prospects, the high cost of living and a corporate culture that is unfriendly to working mothers.

MIL OSI USA News –

January 25, 2025

MIL-OSI USA: Scott, Colleagues to Lead Legislation to Replenish the SBA Disaster Loan Program Following Hurricanes Helene and Milton

US Senate News:

Source: United States Senator for South Carolina Tim Scott
WASHINGTON — U.S. Senator Tim Scott (R-S.C.) joined Senators Thom Tillis (R-N.C.), Ted Budd (R-N.C.), Bill Cassidy, M.D. (R-La.), and Rick Scott (R-Fla.) in announcing plans to introduce legislation that would replenish the Small Business Administration (SBA) Disaster Loan Program. The senators plan to seek passage of the legislation when Congress returns to session. On October 15th, the SBA announced the Disaster Loan Fund had run out of money.
“Hurricane Helene brought a level of devastation to South Carolina we haven’t seen since Hugo. With a natural disaster of this magnitude, Congress should take the opportunity to show leadership and help ease the pain of those who have lost everything,” said Senator Tim Scott. “Communities back home and in surrounding states have come together to recover, but it will take every possible effort to get us back to where we were.”
“The SBA Disaster Loan Program running out of funds risks delays in processing the loans of those affected by Helene and Milton and their ability to get their lives back on track,” said Senator Tillis. “That is why I am leading legislation to replenish this fund when Congress returns to Washington, and I look forward to working across the aisle to pass a long-term disaster aid package that will provide additional resources to help make the victims of these hurricanes whole again.”
“The citizens of Western North Carolina are some of the toughest and most resilient people in this country,” said Senator Budd. “As they recover and rebuild their communities, they must be able to access disaster loans from SBA. This recovery will take many years, and I look forward to working with my colleagues to cut through the delays and provide WNC with the resources they need as quickly as possible.”
“Hurricanes Francine, Helene, and Milton hit us hard, but Louisianans and Americans are resilient,” said Dr. Cassidy. “This funding is essential to help small businesses recover from these storms and support our local economies.”
“We cannot allow frontline federal agencies, like the SBA, to run out of disaster relief funds. This is especially important in the wake of Hurricanes Helene and Milton which devastated Florida, North Carolina and communities across the Southeast U.S.,” said Senator Rick Scott. “I continue to call on Leader Schumer to immediately reconvene the Senate so we can fund disaster relief functions at FEMA, the SBA, USDA and other agencies to get folks what they need and deserve. I won’t stop fighting to get this done and am proud to join my colleagues to introduce a bill that funds SBA disaster loans and makes sure the federal government is a reliable partner as families continue their recovery.”
The Restoring an Economic Lifeline with Immediate Emergency Funding (Relief) Act would appropriate $550 million to fund the SBA Disaster Loan Program Account, which would provide $2.475B in lending capacity projected to last until the end of 2024.
Read text of the bill here.

MIL OSI USA News –

January 25, 2025

MIL-OSI USA: Senators Carper, Coons, colleagues push administration to release additional seasonal work visas to support small businesses

US Senate News:

Source: United States Senator for Delaware Christopher Coons
WILMINGTON, Del. – U.S. Senators Tom Carper (D-Del.), Chris Coons (D-Del.), Angus King (I-Maine), Mike Rounds (R-S.D.), and 36 of their colleagues sent a bipartisan letter to Secretary Alejandro Mayorkas of the U.S. Department of Homeland Security (DHS) and Acting Secretary Julie Su of the U.S. Department of Labor, urging the departments to address the seasonal labor shortage by releasing the maximum allowable number of additional H-2B visas for fiscal year 2025.
Employers must first make a concerted effort to hire American works for open positions, but when there are not enough Americans to fill temporary positions, H-2B visas help small businesses meet their labor needs. During the busy summer seasons, Delaware businesses – especially in the agriculture and tourism sectors – are often dependent on foreign workers given local staffing shortages. Releasing the maximum number of H-2B visas will help Delaware’s farms operate at full capacity and its beach towns remain open for visitors.
“Many employers turn to the H-2B program to meet their workforce needs to not only sustain their businesses, but also support their American workers,” the senators wrote. “The H-2B program places requirements on employers to recruit U.S. workers, who are intentionally prioritized by the program and also receive demonstrated, positive impacts from their seasonal colleagues. In fact, a 2020 Government Accountability Office report concluded that ‘counties with H-2B employers generally had lower unemployment rates and higher average weekly wages than counties that do not have any H-2B employers.’
“The most current employment data illustrates the workforce struggles of seasonal businesses nationwide,” the senators continued. “The Department of Labor’s Job Openings and Labor Turnover Surveys … show the rate of job openings have increased year over year for the industries that represent the top five H-2B occupations. As you know, the [fiscal year] 2025 H-2B first half fiscal year cap was met on September 18, 2024 – roughly three weeks earlier than the cap was met in [fiscal year] 2024. The result is that seasonal employers whose peak seasons are in late fall and winter are capped out before their period of seasonal need begins. Absent cap relief, these employers will be unable to receive temporary, U.S. government-vetted guest workers.”
In addition to Senators Carper, Coons, King, and Rounds, the letter was signed by Senators John Barrasso (R-Wyo.), Michael Bennet (D-Colo.), Maria Cantwell (D-Wash.), Ben Cardin (D-Md.), Susan Collins (R-Maine), John Cornyn (R-Texas), Kevin Cramer (R-N.D.), Mike Crapo (R-Idaho), John Fetterman (D-Pa.), Lindsey Graham (R-S.C.), Maggie Hassan (D-N.H.), George Helmy (D-N.J.), John Hickenlooper (D-Colo.), Cindy Hyde-Smith (R-Miss.), Tim Kaine (D-Va.), Amy Klobuchar (D-Minn.), Cynthia Lummis (R-Wyo.), Joe Manchin (I-W.Va.), Jerry Moran (R-Kan.), Lisa Murkowski (R-Alaska), Pete Ricketts (R-Neb.), Jim Risch (R-Idaho), Jeanne Shaheen (D-N.H.), Tina Smith (D-Minn.), Dan Sullivan (R-Alaska), John Thune (R-S.D.), Thom Tillis (R-N.C.), Chris Van Hollen (D-Md.), Mark Warner (D-Va.), Raphael Warnock (D-Ga.), Peter Welch (D-Vt.), Sheldon Whitehouse (D-R.I.), Roger Wicker (R-Miss.), Ron Wyden (D-Ore.), Kyrsten Sinema (I-Ariz.), and Tim Scott (R-S.C.).
The full text of the letter is available here.

MIL OSI USA News –

January 25, 2025

MIL-OSI Russia: Materials for the Government meeting on October 31, 2024

Translation. Region: Russian Federation –

Source: Government of the Russian Federation – An important disclaimer is at the bottom of this article.

The following issues are planned to be considered at the meeting:

1. On the draft amendments of the Government of the Russian Federation to the draft federal law No. 727320-8 “On the federal budget for 2025 and for the planning period of 2026 and 2027”

The draft amendments are aimed at clarifying the provisions of the draft federal law adopted by the State Duma in the first reading.

2. On the draft federal law “On Amendments to Article 2 of the Federal Law “On Assistance to the Development and Improvement of Management Efficiency in the Housing Sector and on Amendments to Certain Legislative Acts of the Russian Federation”

The adoption of the bill will contribute to achieving the goals of the state program of the Russian Federation “Provision of affordable and comfortable housing and utilities to citizens of the Russian Federation”, approved by the Decree of the Government of the Russian Federation of December 30, 2017 No. 1710.

3. On the draft federal law “On Amendments to Articles 340 and 342 of Part Two of the Tax Code of the Russian Federation”

The bill is aimed at eliminating ambiguous interpretations of the current legislation on taxes and fees.

4. On the draft federal law “On Amendments to Certain Legislative Acts of the Russian Federation” (in terms of bringing the provisions of certain federal laws into line with the provisions of the Civil Code of the Russian Federation)

The bill is aimed at bringing legislative acts regulating the specifics of the civil-legal status of non-profit organizations of certain organizational-legal forms, types and kinds, as well as the special procedure for their state registration, into line with the provisions of the Civil Code.

5. On the draft federal law “On Amendments to the Code of the Russian Federation on Administrative Offenses”

The bill was prepared in order to secure the legal basis for the use of modern information technologies in proceedings on administrative offences.

6. On the draft federal law “On Amendments to the Federal Law “On the Implementation of the Code of the Russian Federation on Administrative Offenses” (in terms of the use of electronic documents and regulation of remote participation in proceedings on administrative offenses)

The bill was prepared with the aim of empowering individual government agencies to adopt regulatory legal acts governing the procedure for electronic document management and remote participation in proceedings on administrative offenses.

7. On the draft federal law “On Amendments to the Labor Code of the Russian Federation” (in terms of providing guarantees to employees undergoing military service in connection with a special military operation, during the period of suspension of the employment contract, regardless of the term of the contract)

The bill is aimed at protecting the labor rights of workers.

8. On the draft amendments of the Government of the Russian Federation to the draft federal law No. 727321-8 “On the budget of the Pension and Social Insurance Fund of the Russian Federation for 2025 and for the planning period of 2026 and 2027”

The draft amendments are aimed at clarifying certain provisions of the draft federal law in terms of the areas of expenditure carried out by the Social Fund of Russia and the names of budget classification codes.

Moscow, October 30, 2024

The content of the press releases of the Department of Press Service and References is a presentation of materials submitted by federal executive bodies for discussion at a meeting of the Government of the Russian Federation.

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

MIL OSI Russia News –

January 25, 2025

MIL-OSI Russia: Government meeting (2024, No. 32)