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  • MIL-OSI: Parex Resources Announces Third Quarter Results, Declaration of Q4 2024 Dividend, and Operational Update

    Source: GlobeNewswire (MIL-OSI)

    CALGARY, Alberta, Nov. 05, 2024 (GLOBE NEWSWIRE) — Parex Resources Inc. (“Parex” or the “Company”) (TSX: PXT) is pleased to announce its financial and operating results for the three-month period ended September 30, 2024, the declaration of its Q4 2024 regular dividend of C$0.385 per share, as well as an operational update. All amounts herein are in United States Dollars (“USD”) unless otherwise stated.

    “Following lower than expected results, Management is focused on driving production efficiency and optimizing performance from our key assets,” commented Imad Mohsen, President & Chief Executive Officer.

    “As we transition from 2024 to our 2025 planning phase, we are committed to improving results, delivering safe and reliable production, and positioning Parex to outperform.”

    Key Highlights

    • Generated Q3 2024 funds flow provided by operations (“FFO”)(1) of $152 million and FFO per share(2)(3) of $1.50.
    • FY 2024 average production guidance increased from 48,000-50,000 boe/d to 49,000-50,000 boe/d, based on stable operations at key assets as well as successful well results at Capachos and LLA-32.
    • FY 2024 capital expenditure(6) guidance updated from $370-390 million to $350-370 million, based on a conservative capital program focused on improving capital returns.
    • Declared Q4 2024 regular dividend of C$0.385 per share(4) or C$1.54 per share annualized.
    • Repurchased approximately 4.5 million shares YTD 2024 under the Company’s current normal course issuer bid (“NCIB”).
    • October 2024 average production was 47,000 boe/d(5).

    Q3 2024 Results

    • Quarterly average oil & natural gas production was 47,569 boe/d(7).
    • Realized net income of $66 million or $0.65 per share basic(3).
    • Generated quarterly FFO(1) of $152 million and FFO per share(2)(3) of $1.50, a 4% decrease and a 1% increase from Q3 2023, respectively.
    • Current taxes decreased from Q2 2024 by $39 million due to reduced corporate production as well as lower global oil prices; the Company also moved from an estimated 15% surtax to a projected 10% surtax with the depreciation of Brent oil price in the quarter.
    • Produced an operating netback(2) of $39.64/boe and an FFO netback(2) of $34.58/boe from an average Brent price of $78.71/bbl.
    • Incurred $82 million of capital expenditures(6), primarily from activities at LLA-34, Capachos, LLA-32 and LLA-122.
    • Generated $69 million of free funds flow(6) that was used for return of capital initiatives and $20 million of bank debt repayment; working capital surplus(1) was $38 million and cash $147 million at quarter end.
    • Paid a C$0.385 per share(4) regular quarterly dividend and repurchased 1,584,650 shares.

    (1) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory.”
    (2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory.”
    (3) Per share amounts (with the exception of dividends) are based on weighted-average common shares; dividends paid per share are based on the number of common shares outstanding at each dividend date.
    (4) Supplementary financial measure. See “Non-GAAP and Other Financial Measures Advisory.”
    (5) Light & medium crude oil: ~8,956 bbl/d, heavy crude oil: ~37,325 bbl/d, conventional natural gas: ~4,316 mcf/d; rounded for presentation purposes.
    (6) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory.”
    (7) See “Operational and Financial Highlights” for a breakdown of production by product type.

    Operational and Financial Highlights Three Months Ended Nine Months Ended  
    (unaudited) Sep. 30,   Sep. 30,   Jun. 30,   Sep. 30,  
      2024   2023   2024   2024  
    Operational        
    Average daily production        
    Light Crude Oil and Medium Crude Oil (bbl/d) 9,064   8,837   9,541   8,615  
    Heavy Crude Oil (bbl/d) 37,777   44,779   43,229   42,167  
    Crude Oil (bbl/d) 46,841   53,616   52,770   50,782  
    Conventional Natural Gas (mcf/d) 4,368   5,742   4,788   4,170  
    Oil & Gas (boe/d)(1) 47,569   54,573   53,568   51,477  
             
    Operating netback ($/boe)        
    Reference price – Brent ($/bbl) 78.71   85.92   85.03   81.82  
    Oil & gas sales(4) 68.75   75.83   75.21   71.69  
    Royalties(4) (10.59 ) (13.72 ) (12.54 ) (11.48 )
    Net revenue(4) 58.16   62.11   62.67   60.21  
    Production expense(4) (14.81 ) (9.73 ) (12.95 ) (13.43 )
    Transportation expense(4) (3.71 ) (3.56 ) (3.40 ) (3.50 )
    Operating netback ($/boe)(2) 39.64   48.82   46.32   43.28  
             
    Funds flow provided by operations netback ($/boe)(2) 34.58   31.28   37.34   34.43  
             
    Financial ($000s except per share amounts)        
             
    Net income 65,793   119,736   3,845   129,731  
    Per share – basic(6) 0.65   1.13   0.04   1.27  
             
    Funds flow provided by operations(5) 151,773   157,839   180,952   481,032  
    Per share – basic(2)(6) 1.50   1.49   1.77   4.71  
             
    Capital expenditures(3) 82,367   156,747   97,797   265,585  
             
    Free funds flow(3) 69,406   1,092   83,155   215,447  
             
    EBITDA(3) 167,763   221,271   195,940   555,781  
    Adjusted EBITDA(3) 164,002   225,784   230,547   582,777  
             
    Long-term inventory expenditures (6,318 ) (374 ) 9,817   7,342  
             
    Dividends paid 28,467   29,239   28,528   85,526  
    Per share – Cdn$(4) 0.385   0.375   0.385   1.145  
             
    Shares repurchased 20,723   24,273   21,367   57,381  
    Number of shares repurchased (000s) 1,585   1,240   1,298   3,803  
             
    Outstanding shares (end of period) (000s)        
    Basic 100,031   105,014   101,616   100,031  
    Weighted average basic 100,891   105,621   102,259   102,203  
    Diluted(8) 100,933   105,722   102,528   100,933  
             
    Working capital surplus (deficit)(5) 37,509   (57,511 ) 34,156   37,509  
    Bank debt(7) 30,000   —   50,000   30,000  
    Cash 147,454   34,548   119,468   147,454  

    (1) Reference to crude oil or natural gas in the above table and elsewhere in this press release refer to the light and medium crude oil and heavy crude oil and conventional natural gas, respectively, product types as defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.
    (2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory”.
    (3) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory”.
    (4) Supplementary financial measure. See “Non-GAAP and Other Financial Measures Advisory”.
    (5) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory”.
    (6) Per share amounts (with the exception of dividends) are based on weighted average common shares. Dividends paid per share are based on the number of common shares outstanding at each dividend record date.
    (7) Syndicated bank credit facility borrowing base of $200.0 million as at September 30, 2024.
    (8) Diluted shares as stated include common shares and stock options outstanding at period end; September 30, 2024 closing price was C$12.00 per share.

    Operational Update

    2024 Corporate Guidance Update

    FY 2024 average production guidance has been updated to 49,000 to 50,000 boe/d (49,500 boe/d midpoint) and concurrently, capital expenditure(5) guidance for the year has been updated to $350 to $370 million ($360 million midpoint).

    At $80/bbl Brent crude oil price, funds flow provided by operations(4) is expected to be $575 to $585 million and generate roughly $220 million of free funds flow(5) at the midpoint of guidance. A key driver of the funds flow provided by operations increase from the prior updated guidance is a lower projected effective tax rate for FY 2024.

    Category 2024 Updated Guidance
    (August 28, 2024)    		 2024 Updated Guidance
    (November 5, 2024)
    Brent Crude Oil Average Price $80/bbl $80/bbl
    Average Production 48,000-50,000 boe/d 49,000-50,000 boe/d
    Funds Flow Provided by Operations Netback(1)(2)(3) $30-32/boe $31-33/boe
    Funds Flow Provided by Operations(4) $545-565 million $575-585 million
    Capital Expenditures(5) $370-390 million $350-370 million
    Free Funds Flow(5) $175 million (midpoint) $220 million (midpoint)

    (1) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory”.
    (2) 2024 updated assumptions: Vasconia differential: ~$4/bbl; production expense: $13-14/bbl; transportation expense: ~$3.50/bbl; G&A expense: ~$4.00/bbl; effective tax rate: 14-17%.
    (3) Supplementary financial measure. See “Non-GAAP and Other Financial Measures Advisory”.
    (4) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory”.
    (5) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory”.

    Cabrestero and LLA-34(1)(2)

    The Cabrestero and LLA-34 blocks had average production of approximately 37,000 bbl/d of heavy crude oil (net) combined in Q3 2024. During the quarter, both blocks experienced higher-than-expected downtime that adversely affected quarterly production.

    Additionally, at both blocks, annual decline rates are broadly in line with Management budgeting where there is a continued focus on ramping up injection rates. At Cabrestero specifically, the Company continues to progress its polymer injection pilot and is moving towards approving a full field expansion based on success to date.

    (1) Cabrestero: 100% W.I.
    (2) LLA-34: 55% W.I.

    LLA-32 – Exploitation Update(1)

    Following the mid-year reallocation of 2024 capital to LLA-32, the Company has now drilled three successful wells on the block. The most recent well, the second follow-up appraisal well, is producing roughly 2,000 bbl/d of light crude oil (gross)(2). Based on success to date, Parex is continuing to invest capital and has spud a horizontal well.

    (1) 87.5% W.I.
    (2) Short-term production rate. See “Oil & Gas Matters Advisory.”

    Northern Llanos – Capachos Update(1)

    The first well of a three-well campaign came online in late Q3 2024. The well is currently producing roughly 4,000 bbl/d of light crude oil with approximately 6,000 mcf/d of natural gas (gross)(2).

    Parex plans to fulfill an exploration commitment and spud the second well of the campaign in the coming weeks.

    (1) 50% W.I.
    (2) Short-term production rate. See “Oil & Gas Matters Advisory.”

    Northern Llanos – Arauca(1)

    The Arauca-81 well is expected to be onstream in Q4 2024, following a successful operational sidetrack.

    (1) Business Collaboration Agreement with Ecopetrol S.A. (Parex 50% Participating Share); Ecopetrol S.A. currently holds 100% of the working interest in the Convenio Arauca while the assignment procedure is pending.

    Big ‘E’ Exploration – Llanos Foothills – LLA-122(1)

    The drilling of the Arantes well in the high-potential Colombian Foothills continues to progress on an extended timeline. In Q3 2024, an operational sidetrack was executed following a stuck pipe event; the sidetrack was successful, and the well is now at roughly 17,750 feet. Parex is progressing toward the setting of the final liner immediately above the zones of interest, prior to drilling and evaluating the prospective zones. Based on the current pace of operations, the Company expects preliminary results by YE 2024.

    (1) 50% W.I.

    Return of Capital Update

    Q4 2024 Dividend

    Parex’s Board of Directors have approved a Q4 2024 regular dividend of C$0.385 per share to shareholders of record on December 9, 2024, to be paid on December 16, 2024. This regular dividend payment to shareholders is designated as an “eligible dividend” for purposes of the Income Tax Act (Canada).

    Current Normal Course Issuer Bid

    As at October 31, 2024, Parex has repurchased approximately 4.5 million shares under its current NCIB, for total consideration of roughly C$85 million.

    2025 Budget & Guidance

    The Company continues to assess its short- and long-term development and exploration opportunities as it progresses through its 2025 budgeting and planning process, with next year’s corporate guidance expected to be released in January 2025.

    Q3 2024 Results – Conference Call & Webcast

    Parex will host a conference call and webcast to discuss its Q3 2024 results on Wednesday, November 6, 2024, beginning at 9:30 am MT (11:30 am ET). To participate in the conference call or webcast, please see the access information below:

    Conference ID:   7102953
    Participant Toll-Free Dial-In Number   1-646-307-1963
    Participant Dial-In Number:   1-647-932-3411
    Webcast:   https://events.q4inc.com/attendee/321063614
         

    About Parex Resources Inc.

    Parex is one of the largest independent oil and gas companies in Colombia, focusing on sustainable conventional production. The Company’s corporate headquarters are in Calgary, Canada, with an operating office in Bogotá, Colombia. Parex shares trade on the Toronto Stock Exchange under the symbol PXT.

    For more information, please contact:

    Mike Kruchten
    Senior Vice President, Capital Markets & Corporate Planning
    Parex Resources Inc.
    403-517-1733
    investor.relations@parexresources.com

    Steven Eirich
    Investor Relations & Communications Advisor
    Parex Resources Inc.
    587-293-3286
    investor.relations@parexresources.com

    NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES

    Non-GAAP and Other Financial Measures Advisory

    This press release uses various “non-GAAP financial measures”, “non-GAAP ratios”, “supplementary financial measures” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below. Such measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Investors are cautioned that non-GAAP financial measures should not be construed as alternatives to or more meaningful than the most directly comparable GAAP measures as indicators of Parex’s performance.

    These measures facilitate management’s comparisons to the Company’s historical operating results in assessing its results and strategic and operational decision-making and may be used by financial analysts and others in the oil and natural gas industry to evaluate the Company’s performance. Further, management believes that such financial measures are useful supplemental information to analyze operating performance and provide an indication of the results generated by the Company’s principal business activities.

    Set forth below is a description of the non-GAAP financial measures, non-GAAP ratios, supplementary financial measures and capital management measures used in this press release.

    Non-GAAP Financial Measures

    Capital expenditures, is a non-GAAP financial measure which the Company uses to describe its capital costs associated with oil and gas expenditures. The measure considers both property, plant and equipment expenditures and exploration and evaluation asset expenditures which are items in the Company’s statement of cash flows for the period and is calculated as follows:

     
      For the three months ended       For the nine months ended  
      Sep. 30,     Sep. 30,   Jun. 30,       Sep. 30,  
    ($000s)   2024       2023     2024       2024  
    Property, plant and equipment expenditures $ 68,406     $ 93,957   $ 49,214     $ 158,451  
    Exploration and evaluation expenditures   13,961       62,790     48,583       107,134  
    Capital expenditures $ 82,367     $ 156,747   $ 97,797     $ 265,585  


    Free funds flow,     is a non-GAAP financial measure that is determined by funds flow provided by operations less capital expenditures. The Company considers free funds flow to be a key measure as it demonstrates Parex’s ability to fund return of capital, such as the NCIB and dividends, without accessing outside funds and is calculated as follows:

     
      For the three months ended     For the nine months ended  
        Sep. 30,     Sep. 30,     Jun. 30,       Sep. 30,  
    ($000s)   2024       2023     2024       2024  
    Cash provided by operating activities $ 181,874     $ 87,568   $ 222,782     $ 502,068  
    Net change in non-cash working capital   (30,101 )     70,271     (41,830 )     (21,036 )
    Funds flow provided by operations   151,773       157,839     180,952       481,032  
    Capital expenditures   82,367       156,747     97,797       265,585  
    Free funds flow $ 69,406     $ 1,092   $ 83,155     $ 215,447  


    EBITDA    , is a non-GAAP financial measure that is defined as net income adjusted for finance income and expenses, income tax expense (recovery) and depletion, depreciation and amortization.

    Adjusted EBITDA, is a non-GAAP financial measure defined as EBITDA adjusted for non-cash impairment charges, unrealized foreign exchange gains (losses), unrealized gains (losses) on risk management contracts and share-based compensation expense (recovery).

    The Company considers EBITDA and Adjusted EBITDA to be key measures as they demonstrates Parex’s profitability before finance income and expenses, taxes, depletion, depreciation and amortization and other non-cash items. A reconciliation from net income to EBITDA and Adjusted EBITDA is as follows:

     
      For the three months ended     For the nine months ended  
        Sep. 30,       Sep. 30,       Jun. 30,       Sep. 30,  
    ($000s)   2024       2023       2024       2024  
    Net income $ 65,793     $ 119,736     $ 3,845     $ 129,731  
    Adjustments to reconcile net income to EBITDA:              
    Finance income   (963 )     (2,496 )     (1,097 )     (3,317 )
    Finance expense   7,494       5,219       5,421       18,109  
    Income tax expense   42,767       49,995       130,888       249,472  
    Depletion, depreciation and amortization   52,672       48,817       56,883       161,786  
    EBITDA $ 167,763     $ 221,271     $ 195,940     $ 555,781  
    Non-cash impairment charges   —       2,189       4,661       4,661  
    Share-based compensation expense (recovery)   (7,994 )     4,642       5,770       (4,687 )
    Unrealized foreign exchange loss (gain)   4,233       (2,318 )     24,176       27,022  
    Adjusted EBITDA $ 164,002     $ 225,784     $ 230,547     $ 582,777  


    Non-GAAP Ratios

    Operating netback per boe, is a non-GAAP ratio that the Company considers to be a key measure as it demonstrates Parex’ profitability relative to current commodity prices. Parex calculates operating netback per boe as operating netback (calculated as oil and natural gas sales from production, less royalties, operating, and transportation expense) divided by the total equivalent sales volume including purchased oil volumes for oil and natural gas sales price and transportation expense per boe and by the total equivalent sales volume excluding purchased oil volumes for royalties and operating expense per boe.

    Funds flow provided by operations netback per boe or FFO netback per boe, is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by produced oil and natural gas sales volumes. The Company considers funds flow provided by operations netback per boe to be a key measure as it demonstrates Parex’s profitability after all cash costs relative to current commodity prices.

    Basic funds flow provided by operations per share or FFO per share, is a non-GAAP ratio that is calculated by dividing funds flow provided by operations by the weighted average number of basic shares outstanding. Parex presents basic funds flow provided by operations per share whereby per share amounts are calculated using weighted-average shares outstanding, consistent with the calculation of earnings per share. The Company considers basic funds flow provided by operations per share or FFO per share to be a key measure as it demonstrates Parex’s profitability after all cash costs relative to the weighted average number of basic shares outstanding.

    Capital Management Measures

    Funds flow provided by operations, is a capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. The Company considers funds flow provided by operations to be a key measure as it demonstrates Parex’s profitability after all cash costs. A reconciliation from cash provided by operating activities to funds flow provided by operations is as follows:

     
      For the three months ended     For the nine months ended  
        Sep. 30,     Sep. 30,     Jun. 30,       Sep. 30,  
    ($000s)   2024       2023     2024       2024  
    Cash provided by operating activities $ 181,874     $ 87,568   $ 222,782     $ 502,068  
    Net change in non-cash working capital   (30,101 )     70,271     (41,830 )     (21,036 )
    Funds flow provided by operations $ 151,773     $ 157,839   $ 180,952     $ 481,032  


    Working capital surplus (deficit),     is a capital management measure which the Company uses to describe its liquidity position and ability to meet its short-term liabilities. Working capital surplus (deficit) defined as current assets less current liabilities.

     
      For the three months ended     For the nine months ended  
      Sep. 30,       Sep. 30,     Jun. 30,     Sep. 30,  
    ($000s)   2024       2023       2024     2024  
    Current assets $ 248,208     $ 240,559     $ 281,846   $ 248,208  
    Current liabilities   210,699       298,070       247,690     210,699  
    Working capital surplus (deficit) $ 37,509     $ (57,511 )   $ 34,156   $ 37,509  


    Supplementary Financial Measures

    “Oil and natural gas sales per boe” is determined by sales revenue excluding risk management contracts, as determined in accordance with IFRS, divided by total equivalent sales volume including purchased oil volumes.

    “Royalties per boe” is comprised of royalties, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.

    “Net revenue per boe” is comprised of net revenue, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.

    “Production expense per boe” is comprised of production expense, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.

    “Transportation expense per boe” is comprised of transportation expense, as determined in accordance with IFRS, divided by the total equivalent sales volumes including purchased oil volumes.

    “Dividends paid per share” is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.

    Oil & Gas Matters Advisory

    The term “Boe” means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil (“bbl”). Boe’s may be misleading, particularly if used in isolation. A boe conversation ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value.

    This press release contains a number of oil and gas metrics, including, operating netbacks and FFO netbacks. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company’s performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods and therefore such metrics should not be unduly relied upon. Management uses these oil and gas metrics for its own performance measurements and to provide security holders with measures to compare the Company’s operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.

    Any reference in this press release to short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determination of the rates at which such wells will continue production and decline thereafter and readers are cautioned not to place reliance on such rates in calculating the aggregate production of Parex.

    Distribution Advisory

    The Company’s future shareholder distributions, including but not limited to the payment of dividends and the acquisition by the Company of its shares pursuant to an NCIB, if any, and the level thereof is uncertain. Any decision to pay further dividends on the common shares (including the actual amount, the declaration date, the record date and the payment date in connection therewith and any special dividends) or acquire shares of the Company will be subject to the discretion of the Board of Directors of Parex and may depend on a variety of factors, including, without limitation the Company’s business performance, financial condition, financial requirements, growth plans, expected capital requirements and other conditions existing at such future time including, without limitation, contractual restrictions and satisfaction of the solvency tests imposed on the Company under applicable corporate law. Further, the actual amount, the declaration date, the record date and the payment date of any dividend are subject to the discretion of the Board. There can be no assurance that the Company will pay dividends or repurchase any shares of the Company in the future.

    Advisory on Forward Looking Statements

    Certain information regarding Parex set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words “plan”, “expect”, “prospective”, “project”, “intend”, “believe”, “should”, “anticipate”, “estimate”, “forecast”, “guidance”, “budget” or other similar words, or statements that certain events or conditions “may” or “will” occur are intended to identify forward-looking statements. Such statements represent Parex’s internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Parex’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Parex.

    In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to: the Company’s focus, plans, priorities and strategies; average production guidance and capital expenditure guidance; expectations and plans regarding the Cabrestero and LLA-34 blocks, the LLA-32 block, Northern Llanos – Capachos, the Arauca-81 well, and Llanos Foothills – LLA-122; the anticipated terms of the Company’s Q4 2024 regular quarterly dividend, including its expectation that it will be designated as an “eligible dividend”; and the anticipated date and time of Parex’s conference call to discuss Q3 2024 results.

    These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in Canada and Colombia; prolonged volatility in commodity prices; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced in Canada and Colombia; determinations by OPEC and other countries as to production levels; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities in Canada and Colombia; the risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs relating to the oil industry; changes to pipeline capacity; ability to access sufficient capital from internal and external sources; failure of counterparties to perform under contracts; the risk that Brent oil prices may be lower than anticipated; the risk that Parex’s evaluation of its existing portfolio of development and exploration opportunities may not be consistent with its expectations; the risk that Parex may not have sufficient financial resources in the future to provide distributions to its shareholders; the risk that the Board may not declare dividends in the future or that Parex’s dividend policy changes; the risk that Parex may not be responsive to changes in commodity prices; the risk that Parex may not meet its production guidance for the year ended December 31, 2024; the risk that Parex’s 2024 capital expenditures may be greater than anticipated; the risk that plans and expectations related to Parex’s drilling program as disclosed herein do not materialize as expected and/or at all; the risk that Parex may not be able to increase production into year end; and other factors, many of which are beyond the control of the Company.

    Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Parex’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR+ website (www.sedarplus.ca).

    Although the forward-looking statements contained in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this document, Parex has made assumptions regarding, among other things: current and anticipated commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil, including the anticipated Brent oil price; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; receipt of partner, regulatory and community approvals; royalty rates; future operating costs; uninterrupted access to areas of Parex’s operations and infrastructure; recoverability of reserves and future production rates; the status of litigation; timing of drilling and completion of wells; on-stream timing of production from successful exploration wells; operational performance of non-operated producing fields; pipeline capacity; that Parex will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Parex’s conduct and results of operations will be consistent with its expectations; that Parex will have the ability to develop its oil and gas properties in the manner currently contemplated; that Parex’s evaluation of its existing portfolio of development and exploration opportunities is consistent with its expectations; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of Parex’s production and reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Parex will be able to obtain contract extensions or fulfill the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; that Parex will have sufficient financial resources to pay dividends and acquire shares pursuant to its NCIB in the future; that Parex is able to execute its plans with respect to the Company’s drilling program as disclosed herein; and other matters.

    Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on Parex’s current and future operations and such information may not be appropriate for other purposes. Parex’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Parex will derive. These forward-looking statements are made as of the date of this document and Parex disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

    This press release contains information that may be considered a financial outlook under applicable securities laws about the Company’s potential financial position, including, but not limited to; Parex’s FY 2024 capital expenditure guidance and midpoint capital expenditure guidance; Parex 2024 guidance, including anticipated Brent crude oil average prices, funds flow provided by operations netback; funds flow provided by operations, capital expenditures, free funds flow; and the anticipated terms of the Company’s Q4 2024 regular quarterly dividend including its expectation that it will be designated as an “eligible dividend”, all of which are subject to numerous assumptions, risk factors, limitations and qualifications, including those set forth in the above paragraphs. The actual results of operations of the Company and the resulting financial results will vary from the amounts set forth in this press release and such variations may be material. This information has been provided for illustration only and with respect to future periods are based on budgets and forecasts that are speculative and are subject to a variety of contingencies and may not be appropriate for other purposes. Accordingly, these estimates are not to be relied upon as indicative of future results. Except as required by applicable securities laws, the Company undertakes no obligation to update such financial outlook. The financial outlook contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about the Company’s potential future business operations. Readers are cautioned that the financial outlook contained in this press release is not conclusive and is subject to change.

    The following abbreviations used in this press release have the meanings set forth below:

    bbl   one barrel
    bbls   barrels
    bbl/d   barrels per day
    boe   barrels of oil equivalent of natural gas; one barrel of oil or natural gas liquids for six thousand cubic feet of natural gas
    boe/d   barrels of oil equivalent of natural gas per day
    mcf   thousand cubic feet
    mcf/d   thousand cubic feet per day
    W.I.   working interest
     

    PDF available: http://ml.globenewswire.com/Resource/Download/036d688c-0a1e-4b88-a59e-ea8a6ec811a7

    The MIL Network –

  • MIL-OSI Asia-Pac: DH invites proposals for Community Dental Support Programme

    Source: Hong Kong Government special administrative region

    DH invites proposals for Community Dental Support Programme
    DH invites proposals for Community Dental Support Programme
    ***********************************************************

         The Department of Health (DH) today (November 6) invited interested organisations to submit proposals for providing services under the Community Dental Support Programme (CDSP).     Organisational applicants interested in participating in the CDSP must meet all of the following requirements:     

    Be a non-profit-making entity exempted from tax under Section 88 of the Inland Revenue Ordinance (Cap. 112) on or before the application closing date;
    Have established at least one clinic providing dental services to the public on or before the application closing date;
    Ensure that the registered dentists providing services are registered with eHealth and enrolled in the Primary Care Directory; and
    Be registered under Section 12 of the Dentists Registration Ordinance (Cap. 156) on or before the application closing date.

         In evaluating the submitted proposals, the DH will consider the requirements specified in the invitation documents.           The Working Group on Oral Health and Dental Care of the Health Bureau indicated in its Interim Report that in order to address the high demand for dental service provided through General Public (GP) Sessions under the DH, a new service model should be developed in collaboration with non-governmental organisations to supplement the GP Sessions. In response, the Government will pilot a Community Dental Support Programme in 2025 to increase service capacity, add service points and expand service scope, targeting designated underprivileged groups with financial difficulties requiring GP Session services.               ???Interested applicants can collect invitation documents from the DH’s Community Dental Service at Unit 01-P03, P08-09, 26/F, One Kowloon, 1 Wang Yuen Street, Kowloon Bay, or via email (aa1a_cds@dh.gov.hk).          Applications must be submitted to the DH’s Community Dental Service at Unit 01-P03, P08-09, 26/F, One Kowloon, 1 Wang Yuen Street, Kowloon Bay, by 9.30 am on December 2, 2024. Late applications will not be accepted. For enquiries, please call the Community Dental Service (2111 3465).

     
    Ends/Wednesday, November 6, 2024Issued at HKT 11:30

    NNNN

    MIL OSI Asia Pacific News –

  • MIL-OSI: Orezone Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    All dollar amounts are in USD unless otherwise stated and abbreviation “M” means million.

    VANCOUVER, British Columbia, Nov. 05, 2024 (GLOBE NEWSWIRE) —  Orezone Gold Corporation (TSX: ORE, OTCQX: ORZCF) (“Orezone” or “Company”) reported its operational and financial results for the three and nine months ended September 30, 2024. The Company will host a conference call and webcast on November 6, 2024 commencing at 8:00am PT to discuss its quarterly and year-to-date performance, and outlook for the remainder of the year, including commentary on the progress of its Phase II hard rock expansion and early success on its multi-year, discovery-focus drilling campaign. Call access and webcast details are provided at the end of this press release.

    Patrick Downey, President and CEO, commented, “The third quarter provided a number of positive developments for our Bomboré Mine. Operationally, mining access was opened up in the Siga pits and grid power returned to normalized levels, both of which will ensure ongoing improved gold production and costs in Q4-2024. We generated solid free cash flow during the quarter and continued to pay down debt and advance the Phase II hard rock expansion which will set the path for Bomboré to increase annual gold production by 50% within the next 12 months. We also commenced our multi-year exploration program with the first two diamond drill holes from the current campaign returning robust results, with broad and above-average grade mineralization to 240 metres below the current pit limit, validating our belief that with further targeted drilling, Bomboré can grow into a 7 to 10 million ounce orebody.

    With unhedged gold sales at record prices continuing into the fourth quarter, we forecast generation of continued strong operating cashflow that will help support the Phase II expansion construction. The $58M Phase II term loan previously announced with Coris Bank is advancing and is expected to close in the coming weeks.”

    2024 THIRD QUARTER HIGHLIGHTS AND SIGNIFICANT SUBSEQUENT EVENTS

    (All mine site figures on a 100% basis)   Q3-2024 Q3-2023 9M-2024 9M-2023
    Operating Performance          
    Gold production oz 26,581 30,726   82,244   107,509
    Gold sales oz 27,698 29,167   83,864   105,914
    Average realized gold price $/oz 2,473 1,910   2,280   1,922
    Cash costs per gold ounce sold1 $/oz 1,410 1,152   1,297   936
    All-in sustaining costs1 (“AISC”) per gold ounce sold $/oz 1,655 1,306   1,519   1,088
    Financial Performance          
    Revenue $000s 68,652 55,803   191,680   203,911
    Earnings from mine operations $000s 22,340 13,882   72,389   81,042
    Net income attributable to shareholders of Orezone1 $000s 4,984 5,194   25,620   39,134
    Net income per common share attributable to shareholders of Orezone1
    Basic
    Diluted

    $
    $

    0.01
    0.01

    0.01
    0.01

    		  

    0.07
    0.06

    		  

    0.11
    0.11
    Adjusted EBITDA1 $000s 25,756 19,163   72,175   93,334
    Adjusted earnings attributable to shareholders of Orezone1 $000s 7,365 3,588   18,427   39,398
    Adjusted earnings per share attributable to shareholders of Orezone1 $ 0.02 0.01   0.05   0.11
    Cash and Cash Flow Data          
    Operating cash flow before changes in working capital $000s 18,888 16,474   53,876   82,839
    Operating cash flow $000s 24,043 6,978   29,677   66,059
    Free cash flow1 $000s 14,120 (4,024 ) (818 ) 35,490
    Cash, end of period $000s 66,900 27,711   66,900   27,711

    1 Cash costs, AISC, Adjusted EBITDA, Adjusted earnings, Adjusted earnings per share, and Free cash flow are non-IFRS measures. See “Non-IFRS Measures” section below for additional information.

    • Safety: Continued strong safety performance with 1.31M and 3.68M hours worked without a lost-time injury for Q3-2024 and 9M-2024, respectively.
    • Liquidity: Free cashflow generation of $14.1M in Q3-2024 despite the continued build-up of VAT receivables and Phase II Expansion capital expenditures in the quarter. Cash stood at $66.9M at September 30, 2024, increases of $55.5M from June 30, 2024 and $47.4M from December 31, 2023, respectively.    
    • Gold Production and Costs:   Gold production of 26,581 ounces at an AISC of $1,655/oz as a result of an above-average strip ratio due to mine sequencing, and drawdown of lower-grade stockpiles due to heavy rainfall events restricting pit access during the quarter combined with higher-than-budgeted government royalties from a better realized gold price.
    • Siga Pits Mining Extension: Mining at Siga East ramped up in Q3-2024 after the relocation of households to the new MV3 resettlement site in June 2024 while mining at Siga South commenced in August 2024. The Q4-2024 mine plan calls for greater mill delivery of higher-grade ore tonnes from the Siga pits as mining productivity and material movement are forecasted to improve with the end of the rainy season and the recent expansion of the contractor mining fleet. Two new heavy-duty excavators and twenty new haul trucks were mobilized to site at the end of October and were placed into service at the start of November. As a result, quarterly gold production is expected to be the highest in Q4-2024 as demonstrated by the production of 12,096 gold ounces in October.
    • Phase II Hard Rock Expansion (“Phase II Expansion”) Approval: The Company announced on July 10, 2024 that its Board of Directors had approved the Phase II Expansion after securing over $105M in new debt and equity for the construction. On August 8, 2024, the Company completed the issuance of 92,743,855 common shares at a share price of C$0.70 for net proceeds of C$64.8M ($47.3M). Concurrently, the Company is working on closing its XOF 35.0 billion ($58M) senior secured loan (“Phase II Term Loan”) with Coris Bank International (“Coris Bank”) in November 2024. The draft loan agreement with Coris Bank is in final form and the Company is now arranging for intercreditor consents from the convertible debenture holders for this additional senior debt.      
    • Phase II Expansion Early Achievements: Expansion activities are advancing ahead of schedule while committed costs are tracking on budget. The Company has placed over 50% of all packages, including CIL tank platework and 95% of all process equipment, including the purchase of a new, pre-owned 9MW 26’ diameter SAG mill. For site activities, all bulk earthwork is complete, and the laydown area is ready to receive deliveries. Rapid progress on major site contracts such as concrete will see these contracts awarded early, thereby adding further float to the schedule for first gold. For the 9M-2024, the Company has expended $9.8M on both early works and the on-going Phase II Expansion, and expects to expend a further $9M – $12M in Q4-2024 as the Company rapidly advances the expansion towards first gold in Q4-2025.
    • Multi-year Exploration Campaign Commencement: The Company initiated a 30,000 m, multi-year discovery focused drill program designed to test the broader size and scale of the Bomboré mineralized system with the goal of increasing the Bomboré global resource to 7M to 10M gold ounces. Results from the first two drill holes at the North Zone intercepted mineralization 240 m below the current reserve pit limit, including 1.67 g/t gold over 46.00 m, demonstrating the continuity of the mineralized system at depth, both in terms of grade and overall width (see the Company’s October 10, 2024 news release). Additional drill results from the next round of drilling are set for release before the end of 2024.
    • Better Grid Power Availability: Availability of grid power normalized in Q3-2024 with the national grid supplying 92% of Bomboré mine’s power needs, up significantly from Q2-2024 when grid power provided only 34% of power consumption.  
    • Debt Reduction: Scheduled principal repayments of XOF 3.0 billion ($5.0M) were made in Q3-2024 on the Company’s Phase I senior loan with Coris Bank.

    2024 Guidance for Bomboré Mine

    Operating Guidance (100% basis) Unit Original
    2024 Guidance    		 Revised
    2024 Guidance    		 9M-2024
    Actuals
    Gold production Au oz 110,000 – 125,000 Unchanged   82,244
    All-In Sustaining Costs123 $/oz Au sold $1,300 – $1,375 $1,400 – $1,475 $1,519
    Sustaining capital2 $M $14 – $15 Unchanged $11.7
    Growth capital – non Phase II Expansion2 $M $16 – $17 Unchanged $13.2
    Growth capital – Phase II Expansion early works2 $M No guidance provided $3.6 $3.6
    Growth capital – Phase II Expansion2 $M No guidance provided $15.0 – $18.0 $6.2
    1. AISC is a non-IFRS measure. See “Non-IFRS Measures” section below for additional information.
    2. Foreign exchange rates used to forecast cost metrics include XOF/USD of 600 and CAD/USD of 1.30.
    3. Government royalties of $160/oz included in original AISC guidance based on an assumed gold price of $2,000 per oz. Government royalties of $200/oz is now estimated in the revised AISC guidance from a better gold price realized.

    2024 gold production is expected to be at or above the mid-point of guidance with AISC now guided to fall within $1,400/oz to $1,475/oz, a minor increase to the original guidance, mainly due to the impact of higher power costs from the lack of grid availability in H1-2024 (~$60/oz) and from higher government royalties (~$40/oz) on better realized gold prices.

    Sustaining capital for 2024 is expected to reach the low-end of the $14M – $15M guidance range as spending in Q4-2024 will be limited mainly to the ongoing tailings storage facility (“TSF”) expansion (stage 4 lift) and completion of the new on-site explosives magazine.

    Growth capital consists of two carryover projects from 2023:

          (i)      Power connection to Burkina Faso’s national grid (9M-2024 actuals: $1.4M)

    The powerline was energized in January 2024, and system commissioning of the new line and substations were completed in March 2024. Remaining equipment and software upgrades to shorten the transfer between the grid and back-up gensets, and to reduce the quantity of reactive power are expected to be implemented by year-end.

          (ii)      Resettlement Action Plan (“RAP”) – Phases II and III (9M-2024 actuals: $11.8M)

    RAP Phases II and III commenced in 2023 and will see the construction of over 2,200 private and public structures in three new resettlement communities (MV3, MV2, and BV2) to help relocate communities occupying areas in the southern half of the Bomboré mining permit.

    The Company successfully relocated families to the new MV3 resettlement site in June 2024 and is currently constructing the new MV2 resettlement site with construction progress reaching 85% at the end of Q3-2024. Relocation of households to MV2 and the start of construction works at BV2 are scheduled for in Q4-2024.

    RAP spending, including costs for compensation, consultants, relocation allowances, and livelihood restoration programs, is forecasted to remain unchanged at between $15M to $16M for 2024.

    BOMBORÉ GOLD MINE (100% BASIS) – OPERATING HIGHLIGHTS

        Q3-2024 Q3-2023 9M-2024 9M-2023
    Safety          
    Lost-time injuries frequency rate per 1M hrs 0.00 0.00   0.00 0.00  
    Personnel-hours worked 000s hours 1,308 1,128   3,680 3,093  
    Mining Physicals          
    Ore tonnes mined tonnes 1,457,631 2,231,360   5,826,711 6,364,169  
    Waste tonnes mined tonnes 2,690,759 2,654,010   9,265,615 8,188,409  
    Total tonnes mined tonnes 4,148,390 4,885,370   15,092,326 14,552,578  
    Strip ratio waste:ore 1.85 1.19   1.59 1.29  
    Processing Physicals          
    Ore tonnes milled tonnes 1,491,740 1,453,541   4,275,755 4,299,394  
    Head grade milled Au g/t 0.64 0.74   0.68 0.86  
    Recovery rate % 87.4 88.8   87.8 90.9  
    Gold produced Au oz 26,581 30,726   82,244 107,509  
    Unit Cash Cost          
    Mining cost per tonne $/tonne 3.76 3.19   3.49 2.99  
    Mining cost per ore tonne processed $/tonne 9.58 7.79   8.85 6.93  
    Processing cost $/tonne 7.94 9.80   8.77 9.90  
    Site general and admin (“G&A”) cost $/tonne 3.77 3.98   3.84 3.64  
    Cash cost per ore tonne processed $/tonne 21.29 21.57   21.46 20.47  
    Cash Costs and AISC Details          
    Mining cost (net of stockpile movements) $000s 14,295 11,319   37,834 29,786  
    Processing cost $000s 11,846 14,238   37,486 42,566  
    Site G&A cost $000s 5,617 5,787   16,405 15,671  
    Refining and transport cost $000s 51 66   304 378  
    Government royalty cost $000s 5,500 3,503   15,227 12,345  
    Gold inventory movements $000s 1,748 (1,303 ) 1,539 (1,584 )
    Cash costs1on a sales basis $000s 39,057 33,610   108,795 99,162  
    Sustaining capital $000s 4,453 2,606   11,752 10,444  
    Sustaining leases $000s 73 41   219 228  
    Corporate G&A cost $000s 2,255 1,837   6,643 5,451  
    All-In Sustaining Costs1on a sales basis $000s 45,838 38,094   127,409 115,285  
    Gold sold Au oz 27,698 29,167   83,864 105,914  
    Cash costs per gold ounce sold1 $/oz 1,410 1,152   1,297 936  
    All-In Sustaining Costs per gold ounce sold1 $/oz 1,655 1,306   1,519 1,088  

    1 Non-IFRS measure. See “Non-IFRS Measures” section for additional details.

    Bomboré Production Results

    Q3-2024 vs Q3-2023

    Gold production in Q3-2024 was 26,581 ounces, a decline of 13% from the 30,726 ounces produced in Q3-2023. The lower gold production is attributable to a 14% decrease in head grades and a 2% decrease in plant recoveries, partially offset by a 3% increase in plant throughput. The better head grades in Q3-2023 were from the sequencing of higher-grade pits in earlier periods of the mine plan, and greater ore release from more tonnes mined allowing for the stockpiling of lower-grade ore. Less tonnes were mined in Q3-2024 due to lower contractor equipment availability and heavier-than-average rainfall events combined with mining rates in Q3-2023 benefiting from the deployment of a second mining contractor. Pre-stripping activities at the Siga pits increased the strip ratio (1.85 vs 1.19) in Q3-2024, leading to the temporary drawdown of lower grade stockpiles to maintain mill throughput in August 2024. Plant recoveries for Q3-2024 were marginally lower from the greater blend of transition ore in the mill feed as mining deepens in certain pits. The presence of transition ore results in slightly lower metallurgical recoveries and additional plant maintenance due to the harder nature of the ore. Plant throughput increased in Q3-2024 as the Company successfully improved hourly plant throughput by increasing mill power draw and reducing residence time in the CIL circuit without a noticeable effect of recovery rates. Plant throughput was further impacted in Q3-2024 by a ball mill reline performed at the end the quarter (no comparable mill reline in Q3-2023). This mill reline was brought forward from Q4-2024 to ensure maximum mill availability during Q4-2024 when higher-grade ore from the SIGA pits is mined.

    Plant throughput, head grades, and recoveries in Q4-2024 are expected to improve quarter-over-quarter as mining ramps up at Siga East and Siga South for the full quarter, with more contribution of higher-grade, softer ore to the mill feed, and from the completion of all scheduled major plant maintenance in earlier periods of the year.

    9M-2024 vs 9M-2023

    Gold production in 9M-2024 was 82,244 ounces, a decline of 24% from the 107,509 ounces produced in 9M-2023. The lower gold production is attributable to a 20% decrease in head grades, a 3% decrease in plant recoveries, and a 1% decrease in plant throughput. Head grades were higher in 9M-2023 as a result of processing high-grade stockpiles accumulated during the Phase I construction, which were fully depleted by June 2023, and from the sequencing of higher-grade pits in earlier periods of the mine plan. Plant recoveries were lower in 9M-2024 mainly from a greater blend of transition ore. Plant throughput was marginally lower in 9M-2024 due to plant downtime in Q2-2024 caused by frequent grid blackouts and power dips, and time lost to switch to back-up gensets. Grid availability returned to normal levels beginning in July 2024 and with steady grid power, plant throughput is expected to reach a quarterly record in Q4-2024.

    Bomboré Operating Costs

    Q3-2024 vs Q3-2023

    AISC per gold ounce sold in Q3-2024 was $1,655, a 27% increase from $1,306 per ounce sold in Q3-2023. The higher AISC is primarily the result of: (a) a 14% decline in Q3-2024 gold production as explained above; (b) greater per ounce royalty costs from new royalty rates that took effect in October 2023, coupled with a 29% higher realized selling price ($2,473/oz vs $1,910/oz); and (c) increased unit mining costs with deeper pits, drill-and-blast associated with harder transition ore mined, and higher strip ratio, partially offset by a reduction in power costs from the utilization of lower-cost grid energy.

    Cash cost per ore tonne processed in Q3-2024 was $21.29 per tonne, a decrease of 1% from $21.57 per tonne in Q3-2023 mainly from the use of lower-cost grid power in Processing ($7.94/tonne vs $9.80/tonne) and lower site G&A costs ($3.77/tonne vs $3.98/tonne) from tight spending control, partially offset by a 23% increase ($9.58/tonne versus $7.79/tonne) in mining costs per ore tonne processed.

    Mining costs have increased as lower benches are mined resulting in longer hauls and more transition material that requires some drill-and-blast prior to excavation and greater rehandle prior to feeding into the dump pocket on the ROM pad. In addition, unit costs have increased from a higher strip ratio from the pre-stripping of the Siga pits and the waste pushback to the H1 pit that experienced a minor wall failure in 2023.

    Processing costs per ore tonne have benefitted from the introduction of grid power to the Bomboré mine in February 2024 with power cost per tonne dropping to $2.80/tonne in Q3-2024 from $4.94/tonne in Q3-2023, a decrease of $2.14/tonne. Further savings in power costs were offset by a greater blend of transition ore requiring higher per tonne consumption of power and from the rental and use of back-up diesel gensets to supply power when the grid was unavailable. Grid utilization dramatically improved in Q3-2024 at 92% versus 34% in Q2-2024 when issues with the supply system in Ghana and Côte D’Ivoire temporarily reduced the export of power into Burkina Faso. Processing costs in Q3-2024 was also impacted by higher maintenance costs from the ball mill reline.

    9M-2024 vs 9M-2023

    AISC per gold ounce sold in 9M-2024 was $1,519, a 40% increase from $1,088 per ounce sold in 9M-2023. The higher AISC were due namely for the same reasons as explained in the above section.

    NON-IFRS MEASURES

    The Company has included certain terms or performance measures commonly used in the mining industry that is not defined under IFRS, including “cash costs”, “AISC”, “EBITDA”, “adjusted EBITDA”, “adjusted earnings”, “adjusted earnings per share”, and “free cash flow”. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore, they may not be comparable to similar measures presented by other companies. The Company uses such measures to provide additional information and they should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For a complete description of how the Company calculates such measures and reconciliation of certain measures to IFRS terms, refer to “Non-IFRS Measures” in the Management’s Discussion and Analysis for the three and nine months ended September 30, 2024 which is incorporated by reference herein.

    CONFERENCE CALL AND WEBCAST

    The condensed consolidated interim financial statements and Management’s Discussion and Analysis are available at www.orezone.com and on the Company’s profile on SEDAR+ at www.sedarplus.ca. Orezone will host a conference call and audio webcast to discuss 2024 third quarter results on November 6, 2024 at 8:00am PT (11:00am ET).

    Webcast
    Date:    Wednesday, November 6, 2024
    Time:    8:00 am Pacific time (11:00 am Eastern time)
    Please register for the webcast here:  Orezone Q3-2024 Conference Call and Webcast

    Conference Call

    Toll-free in U.S. and Canada: 1-800-715-9871
    International callers: +646-307-1963
    Event ID: 9776163

    QUALIFIED PERSONS
    The scientific and technical information in this news release was reviewed and approved by Mr. Rob Henderson, P. Eng, Vice-President of Technical Services and Mr. Dale Tweed, P. Eng., Vice-President of Engineering, both of whom are Qualified Persons as defined under NI 43-101 Standards of Disclosure for Mineral Projects.

    About Orezone Gold Corporation

    Orezone Gold Corporation (TSX: ORE OTCQX: ORZCF) is a West African gold producer engaged in mining, developing, and exploring its 90%-owned flagship Bomboré Gold Mine in Burkina Faso. The Bomboré mine achieved commercial production on its Phase I oxide operations on December 1, 2022, and is now proceeding with its staged Phase II hard rock expansion that is expected to materially increase annual and life-of-mine gold production from the processing of hard rock mineral reserves. Orezone is led by an experienced team focused on social responsibility and sustainability with a proven track record in project construction and operations, financings, capital markets, and M&A.   

    The technical report entitled Bomboré Phase II Expansion, Definitive Feasibility Study is available on SEDAR+ and the Company’s website.

    Patrick Downey
    President and Chief Executive Officer

    Vanessa Pickering
    Manager, Investor Relations

    Tel: 1 778 945 8977 / Toll Free: 1 888 673 0663
    info@orezone.com / www.orezone.com

    For further information please contact Orezone at +1 (778) 945-8977 or visit the Company’s website at www.orezone.com.

    The Toronto Stock Exchange neither approves nor disapproves the information contained in this news release.

    Cautionary Note Regarding Forward-Looking Statements

    This press release contains certain information that constitutes “forward-looking information” within the meaning of applicable Canadian Securities laws and “forward-looking statements” within the meaning of applicable U.S. securities laws (together, “forward-looking statements”). Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “potential”, “possible” and other similar words, or statements that certain events or conditions “may”, “will”, “could”, or “should” occur, and include, amongst other statements, the Phase II hard rock expansion setting the path for Bomboré to increase annual gold production by 50% within the next 12 months and that Bomboré can grow into a 7 to 10 million ounce orebody.

    All forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements including, but not limited to, terrorist or other violent attacks, the failure of parties to contracts to honour contractual commitments, unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; social or labour unrest; changes in commodity prices; unexpected failure or inadequacy of infrastructure, the possibility of project cost overruns or unanticipated costs and expenses, accidents and equipment breakdowns, political risk, unanticipated changes in key management personnel, the spread of diseases, epidemics and pandemics diseases, market or business conditions, the failure of exploration programs, including drilling programs, to deliver anticipated results and the failure of ongoing and uncertainties relating to the availability and costs of financing needed in the future, and other factors described in the Company’s most recent annual information form and management’s discussion and analysis filed on SEDAR+ on www.sedarplus.ca. Readers are cautioned not to place undue reliance on forward-looking statements.

    Forward-looking statements are based on the applicable assumptions and factors management considers reasonable as of the date hereof, based on the information available to management at such time. These assumptions and factors include, but are not limited to, assumptions and factors related to the Company’s ability to carry on current and future operations, including: development and exploration activities; the timing, extent, duration and economic viability of such operations, including any mineral resources or reserves identified thereby; the accuracy and reliability of estimates, projections, forecasts, studies and assessments; the Company’s ability to meet or achieve estimates, projections and forecasts; the availability and cost of inputs; the price and market for outputs, including gold; foreign exchange rates; taxation levels; the timely receipt of necessary approvals or permits; the ability to meet current and future obligations; the ability to obtain timely financing on reasonable terms when required; the current and future social, economic and political conditions; and other assumptions and factors generally associated with the mining industry.

    Although the forward-looking statements contained in this press release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this press release.

    The MIL Network –

  • MIL-OSI Asia-Pac: LCQ18: Promoting the development of low-altitude economy

    Source: Hong Kong Government special administrative region

          ​Following is a question by the Hon Elizabeth Quat and a written reply by the Secretary for Transport and Logistics, Mr Lam Sai-hung, in the Legislative Council today (November 6):Question:     Low-altitude economy is one of the country’s strategic emerging industries, and the 2024 Policy Address has proposed to establish the Working Group on Developing Low-altitude Economy to formulate strategies and interdepartmental action plans for the development of low-altitude economy. In this connection, will the Government inform this Council:(1) whether the Government will set up research and development (R&D)-cum-test flight bases for low-altitude economic technologies in Hong Kong, so as to actively promote R&D and application certification of drones and electric vertical take-off and landing (eVTOL) aircrafts, including conducting studies on how to design vertical take-off and landing points, how to ensure aviation safety of drones and eVTOL aircrafts in airways of narrow urban area or structurally complex landscape, the related automated flight technologies, remote control flight design, etc.;(2) as there are views pointing out that radio mobile communication network is indispensable for promoting low-altitude economic activities, whether the Government will, in respect of the planning of dedicated spectrum resources for low-altitude communications, advance discussions with telecommunications operators on the licensing arrangements for fifth generation (5G)/sixth generation (6G) mobile services radio base stations, and make planning for the allocation of dedicated spectrum resources for low-altitude communications towards building a low-altitude intelligent network;(3) whether the Government will assist telecommunications operators in advancing the testing and construction of the relevant ancillary network facilities, and formulate supporting policies (e.g. tax concessions) to encourage the early construction of a low-altitude intelligent network by telecommunications operators, including (i)‍ expediting the integration of various technologies such as 5G and 5G-Advanced (i.e. 5G-A with new enhanced capabilities such as integrated sensing and communication), BeiDou Navigation Satellite ‍System, satellite interconnection network, automatic dependant‍ surveillance-broadcast system, radar, etc., (ii) improving the‍ construction of an ancillary facilities network in respect of‍ low-‍altitude communications, navigation, surveillance, identification, meteorology, counter-drone, etc., and (iii) achieving interconnection with the relevant platforms in Guangdong Province and collating sensory data of various regions, so as to progressively build a comprehensive central low-altitude intelligent network serving the entire Guangdong-Hong Kong-Macao Greater Bay Area (GBA);(4) as there are views that the development of low-altitude economy hinges on talents in different fields (including interdisciplinary talents in aviation, law, finance and engineering), whether the Government will estimate the number of talents required in different fields, conduct studies on the formulation of unified professional standards (including the certification standards of software and hardware, as well as the arrangements for mutual recognition of licences of the relevant professionals in GBA), and provide the relevant training;(5) as there are views pointing out that low altitude-international civil aviation intermodal transport is a cost-‍effective and convenient mode of travelling, and Mainland residents can fly to urban areas in Hong Kong or directly to the airport from in-town take-off and landing points in other Mainland GBA cities by helicopters or eVTOL aircrafts before making use of the frequents flights departing from Hong Kong to travel to places all over the world, while travellers from all over the world can use Hong Kong as a hub to travel to and from other Mainland GBA cities by helicopters or eVTOL aircrafts, and Hong Kong residents can also travel to and from urban areas in the Mainland via take-off and landing points in the urban areas of Hong Kong, whether the Government will conduct studies to improve the policy on low altitude traffic rights in GBA and enhance the utilization grouping of air traffic rights, including establishing low-altitude transport agreements with the relevant Mainland authorities, negotiating the extension of the existing civil aviation traffic rights to low-altitude airspace, and drawing up co-location or joint boundary control arrangement for low-altitude intercity transport, with a view to establishing such intermodal transport; and(6) as it is learnt that the Shenzhen Municipal Plan for Constructing High-quality Taking-off/Landing Facilities for Low-altitude Flying ‍(2024-2025) published by the Shenzhen Development and Reform ‍Commission has proposed the construction of more than 1 ‍000 ‍low-‍altitude aircraft take-off and landing platforms and 123‍ new‍ take-off and landing points for logistic transportation by the end of 2025, and that the Implementation Plan for Low-altitude Economic Development in Guangzhou Province issued by the People’s‍ Government of Guangzhou Province has also proposed the construction of more than five new hub-type vertical take-off and landing ports and more than 100 new regular take-off and landing points by 2027, and it has been reported that at present, there are 30, 8 and 11 national general aviation airports in Shenzhen, Guangzhou and Shanghai respectively, whether the Government will draw reference from the experience of the aforesaid cities in planning the construction of general aviation airports as well as take-off and landing points for low-altitude aircrafts and logistic transportation in Hong Kong; if so, of the details; if not, the reasons for that?Reply:President,     Low-altitude economy (LAE), with its great potentials, can be applied widely in different areas and help promote the development of various industries, thereby injecting new impetus into Hong Kong’s economy. In the 2024 Policy Address, the Chief Executive announced the work direction for promoting the development of LAE, including the establishment of the Working Group on Developing LAE (the Working Group) led by the Deputy Financial Secretary to formulate development strategies and action plans. The Government will commence work on various fronts to press ahead with the promotion of LAE as one of the growth engines of new quality productive forces.     In consultation with the Commerce and Economic Development Bureau, the Development Bureau, the Innovation, Technology and Industry Bureau, the Civil Aviation Department (CAD) and the Office of the Communications Authority (OFCA), the reply to Hon Elizabeth Quat’s question is as follows:(1) and (6) Promoting the development of LAE requires coordination of different policies, among which the development of infrastructure is of paramount importance. In the long run, the vibrant development of low-altitude activities requires a highly efficient, intelligent and digitalised low‑altitude infrastructure system to manage the networks of low‑altitude activities in real time and address the complex management and safety issues arising from low-altitude flying activities. Therefore, the Working Group will embark on technical studies and planning for low-altitude infrastructure. The scope of studies include the design of take-off/ landing points and related hardware facilities (including charging facilities, spatial requirements), air route network, communications network, signal reception of the global navigation satellite system, requirements of the low-altitude surveillance system, etc.      We note that some Mainland cities are planning to develop take-off/ landing point networks for low-altitude aircraft, with a view to facilitating different low-altitude flying activities. The Working Group will continue to closely monitor and make reference to the latest development in Mainland cities in respect of infrastructural development for LAE, and deploy relevant planning in Hong Kong according to local conditions. We are of the view that large-scale land creation projects such as the Northern Metropolis are well-positioned to provide sufficient land and design flexibility to cope with the land and spatial requirements of the infrastructural needs arising from LAE. In terms of specific town planning, facilities related to LAE such as vertiports and charging facilities can generally be accommodated under the permitted uses of the relevant zoning or their ancillary uses. In addition, even for developed areas, having regard to the economic development potentials and demand for LAE in the area, the Government will make feasible and pragmatic arrangements accordingly. The overall development of low-altitude infrastructure is a huge systematic project. The Working Group will co-ordinate the work of different bureaux and departments to ensure that the relevant work complements one another.      As regards the promotion of technological research and development (R&D) in LAE, the Government has all along been supporting R&D in different technology areas through the Innovation and Technology Fund (ITF), including supporting local universities, R&D centres and enterprises to conduct R&D in electronics, data transfer and processing, which are related to LAE, through funding schemes under ITF. To promote the development of the innovation and technology (I&T) industry, the Government encourages enterprises (including those involved in industries related to LAE) to set up R&D centres and new smart production lines in Hong Kong, including enabling production activities by capitalising on resources of Hong Kong’s existing manufacturing industry, to promote the development of the real economy. (2) and (3) Among the various infrastructure facilities, mobile radio communications network is inevitably an indispensable part for promoting low-altitude flying activities. To promote the effective use of spectrum and prevent interference among different services, the Communications Authority (CA) takes into account multiple factors in planning spectrum, including recommendations of the International Telecommunication Union, development trends in the Mainland and worldwide, relevant users’ demand for various radio equipment, technological development etc., for designating the uses of relevant spectrum bands, such as public mobile services, fixed services, broadcasting services and fixed satellite services. At present, unmanned aircrafts for aerial photography or performances can generally use the shared 2.4 GHz and 5 GHz bands assigned for wireless local area networks, or the fourth generation (4G) or fifth generation (5G) mobile networks for remote control, data transmission, and positioning purposes.     The Government will conduct two spectrum auctions in November 2024 and another one in 2025. The spectrum concerned can effectively support the operation of unmanned aircrafts. The OFCA will continue to closely monitor telecommunications market developments in the Mainland and worldwide, including the feasibility of planning dedicated spectrum bands for the exclusive use of unmanned aircrafts, so as to ensure that the spectrum planning in Hong Kong will align with the Mainland and other advanced economies, thereby promoting the development of LAE activities in Hong Kong.     On the development of mobile network, the Government has been implementing different initiatives to encourage mobile network operators (MNOs) to expand their communications infrastructure, including enabling MNOs to access the reserved space in specified buildings with building plans approved on or after April 1, 2025 to install and maintain mobile communications facilities through the amendment to the Telecommunications Ordinance (Cap. 106) (TO), proactively facilitating MNOs in installing radio base stations (RBSs) at government premises through pilot scheme, reserving space and loading capacity on multi-functional smart lampposts in various districts for installation of RBSs by MNOs, improving mobile coverage in remote and rural areas through subsidy scheme and actively coordinating 5G network capacity expansion at major public event venues, etc. In addition, under the amended Inland Revenue Ordinance (Cap. 112) which came into effect in January this year, MNOs can enjoy tax deductions for spectrum utilisation fees payable on radio spectrum acquired in future, providing greater incentives for MNOs to participate in spectrum auctions and invest in mobile network infrastructure to further improve network quality.     On conducting tests, CA will issue permits pursuant to section 7E of the TO for short-term assignment of spectrum in different frequency bands to MNOs and other interested parties free of charge, so that they can use their radio equipment for various radio transmission tests and applications, including unmanned aircrafts.      In the meantime, the Government will take forward the regulatory sandbox pilot projects progressively starting from early next year to explore more application scenarios for low-altitude flying activities. The pilot projects will be conducted under different scenarios to test various technical and ancillary facilities requirements, including the mobile radio communications network, signal reception of the global navigation satellite system and requirements of the low-altitude surveillance system, etc. The experience and data gathered from the implementation of pilot projects will help the Government formulate appropriate infrastructure system and related network supporting facilities in the long run. The Government will also continue to closely monitor and make reference to the latest developments in the Mainland, worldwide and other developed regions, drawing reference from the experience of other places to ensure that the infrastructure and ancillary facilities to be built will be compatible with those in the Mainland and worldwide. (4) The development of LAE requires talents in various fields, including those engaging in industries such as I&T. In respect of I&T talents, the Government has been adopting a multi-pronged approach to enlarging the local I&T talent pool. For example, regarding the nurturing of I&T talents, the Government launched the STEM Internship Scheme and sponsored the Innovation and Technology Scholarship, which encourage university students to experience I&T-related work and take part in in I&T-related exchange activities respectively. The Government also launches different schemes to assist the youth in pursuing a career in I&T after graduation. For example, through the Research Talent Hub, the Government funds qualified institutions and enterprises to recruit university graduates of STEM subjects (Science, Technology, Engineering and Mathematics) to conduct R&D work. The Hong Kong Science and Technology Parks Corporation and Cyberport also provide the youth with internship and start-up opportunities through various schemes. In order to facilitate talent admission to Hong Kong, the Technology Talent Admission Scheme handles applications that involve the admission of non-local talent to undertake R&D work in Hong Kong expeditiously, covering 14 technology areas. While taking forward the development of LAE, the Government will review the talents required by the relevant industries and make timely planning accordingly. (5) The Government and the Civil Aviation Administration of China (CAAC) expanded the Memorandum of Understanding under the Air Services Arrangement between the Mainland and the Hong Kong Special Administrative Region in 2019, under which designated helicopter operators of both sides may operate flights between take-off/ landing points in Hong Kong and within the whole Guangdong Province that fulfill relevant customs, immigration and quarantine (CIQ) arrangements. This greatly enhances the choice of potential take-off/ landing points and the flexibility of services, providing a solid basis for expanding cross-boundary helicopter services between Hong Kong and other cities in the Guangdong–Hong Kong–Macao Greater Bay Area. Hong Kong and Guangdong will continue to explore measures to promote cross-boundary commercial helicopter services within the framework of the above-mentioned air services arrangement. The Transport and Logistics Bureau will also maintain close communication with CAAC on the relevant air services arrangement.     At present, there are two cross-boundary heliports in Hong Kong with permanent CIQ facilities, namely the cross-boundary heliports at the rooftop of the Sheung Wan Hong Kong-Macau Ferry Terminal and the Hong Kong International Airport (HKIA). Since 2019, serveral Mainland helicopter operators conducted trial flights between Hong Kong and Shenzhen/ Guangzhou. Relevant services are technically and operationally feasible. The Government will continue to facilitate the trial flight activities carried out by the helicopter operators, with a view to implementing cross-boundary helicopter services between Hong Kong and Guangdong as soon as possible. In addition, HKIA launched the Business Jet & Commercial Flight Wing-to-Wing Transfer Service in March this year, which allows passengers arriving at HKIA using cross-boundary helicopters and business jets to directly proceed to transfer to commercial flights under the escort of staff within the airside area, and vice versa. As the service can save about one-third of the transit time for travellers, it will help promote their use of cross-boundary helicopter services and transit through HKIA. The Government will continue to closely monitor the development and market demand of cross-boundary helicopter services and the services of other Advanced Air Mobility, and review the development of relevant facilities in a timely manner.

    MIL OSI Asia Pacific News –

  • MIL-OSI: Credit Agricole Sa: Third quarter and first nine months 2024 results – VERY STRONG QUARTER, 2024 INCOME TARGET CONFIRMED

    Source: GlobeNewswire (MIL-OSI)

    VERY STRONG QUARTER, 2024 INCOME TARGET CONFIRMED
    CASA AND CAG STATED AND UNDERLYING DATA Q3-2024
               
      CRÉDIT AGRICOLE S.A.   CRÉDIT AGRICOLE GROUP
        Stated   Underlying     Stated   Underlying
    Revenues   €6,487m
    +2.3% Q3/Q3    		   €6,484m
    +7.0% Q3/Q3    		     €9,213m
    -0.4% Q3/Q3    		   €9,210m
    +4.1% Q3/Q3
    Expenses   -€3,689m
    +9.2% Q3/Q3    		   -€3,654m
    +8.2% Q3/Q3    		     -€5,590m
    +6.2% Q3/Q3    		   -€5,556m
    +5.5% Q3/Q3
    Gross Operating Income   €2,799m
    -5.7% Q3/Q3    		   €2,830m
    +5.5% Q3/Q3    		     €3,623m
    -9.1% Q3/Q3    		   €3,654m
    +2.0% Q3/Q3
    Cost of risk   -€433m
    +0.9% Q3/Q3    		   -€433m
    +0.9% Q3/Q3    		     -€801m
    +15.6% Q3/Q3    		   -€801m
    +15.6% Q3/Q3
    Net income group share   €1,666m
    -4.7% Q3/Q3    		   €1,686m
    +10.9% Q3/Q3    		             €2,080m

    -12.8% Q3/Q3

    		   €2,100m
    +1.5% Q3/Q3
    C/I ratio   56.9%
    +3.6 pp Q3/Q3    		   56.4%
    +0.6 pp Q3/Q3    		     60.7%
    +3.7 pp Q3/Q3    		   60.3%
    +0.8 pp Q3/Q3
    RESULTS UP FOR THE FIRST NINE MONTHS OF THE YEAR; TARGET CONFIRMED OF >€6BN IN NET INCOME GROUP SHARE FOR 2024

    STRONG QUARTERLY RESULT

    • +8.2% growth in net income Group share excluding base effect related to reversals of Home Purchase Savings Plan provisions in Q3-23
    • High level of revenues, sharply up in underlying vision
    • Low cost/income ratio; support for business line development with a +4.1% increase in recurring expenses

    STRONG ACTIVITY IN ALL BUSINESS LINES

    • Solid performance in retail banking and consumer finance, supported by a good level of customer capture, higher on-balance sheet deposits in France and stable on-balance sheet deposits in Italy, gradual recovery in home loan activity and increased corporate loan production in France, continued momentum in international loan activity, and consumer finance activity stable at a high level
      • Excellent business momentum in CIB, asset management and insurance, reflected in high gross inflows in life insurance, continued brisk business in property and casualty and personal insurance, solid level of inflows and a record level of assets under management, CIB business still robust and record nine-month revenues

    CONTINUED STRATEGIC PROJECTS

    • Partnership with GAC in China on leasing and in Europe on automotive financing
    • Signing of an agreement to acquire Merca Leasing
    • Acquisition of Nexity Property Management

    VERY SOLID CAPITAL AND LIQUIDITY POSITIONS

    • Crédit Agricole S.A. phased-in CET1 11.7%
    • CA Group phased-in CET1 17.4%
     

    Dominique Lefebvre,
    Chairman of SAS Rue La Boétie and Chairman of the Crédit Agricole S.A. Board of Directors

    “The Group reports solid results this quarter. These results reinforce its desire to be useful to all its customers and to play a leading role in actively supporting the economy.”  
     
     

    Philippe Brassac,
    Chief Executive Officer of Crédit Agricole S.A.

    “Quarter after quarter, the Group publishes high-level results confirming the outlook for a 2024 result that is one year ahead of Crédit Agricole S.A.’s Ambitions for 2025.”

    		  

    This press release comments on the results of Crédit Agricole S.A. and those of Crédit Agricole Group, which comprises the Crédit Agricole S.A. entities and the Crédit Agricole Regional Banks, which own 62.4% of Crédit Agricole S.A. Please see the appendices to this press release for details of specific items, which are restated in the various indicators to calculate underlying income.

    Crédit Agricole Group

    Group activity

    The Group’s commercial activity during the quarter continued at a steady pace across all business lines, with a good level of customer capture. During the third quarter of 2024, the Group recorded +482,000 new customers in retail banking, and the customer base grew by +104,000 customers. More specifically, over the quarter, the Group recorded +383,000 new customers for Retail Banking in France and +99,000 new International Retail Banking customers (Italy and Poland), and the customer base also grew (+64,000 and +40,000 customers, respectively).

    At 30 September 2024, retail banking on-balance sheet deposits totalled €830 billion, up +2.8% year-on-year in France and Italy (+3.1% for Regional Banks and LCL and -0.4% in Italy). Outstanding loans totalled €876 billion, up +0.4% year-on-year in France and Italy (+0.2% for Regional Banks and LCL and +3.0% in Italy). Home loan production picked up gradually in France during this quarter, recording an increase of +20% for the Regional Banks and +73% for LCL compared to the second quarter of 2024, and -11% and +17% respectively compared to the third quarter of 2023. In Italy, home loan production was down -12% for CA Italy due to a base effect related to successful marketing campaigns in the third quarter of 2023. However, they were still up on second quarter 2024. The property and casualty insurance equipment rate1 rose to 43.8% for the Regional Banks (+0.7 percentage points compared to the third quarter of 2023), 27.9% for LCL (+0.3 percentage point) and 20.0% for CA Italy (+1.7 percentage point).

    In asset management, inflows remained healthy (+€14.4 billion excluding an insurance mandate withdrawal totalling -€11.6 billion), particularly with regard to medium/long-term assets excluding JVs (+€9 billion). Commercial momentum within JVs was also solid. In savings/retirement, Crédit Agricole Assurances posted a high level of gross inflows (€7.2 billion, up +56% year-on-year), the unit-linked rate remained high in production (32.8%), and net inflows were positive (+€1.6 billion) and growing. In property and casualty insurance, the portfolio grew by +5.1% year-on-year to 16.6 million policies. Assets under management were once again at their highest level ever, rising compared to the end of September 2023 in asset management (€2,192 billion, or +11.1%), life insurance (€343.2 billion, or +5.8%) and wealth management, which benefited from the integration of Degroof Petercam (IWM and Private Banking of LCL €274 billion, or +46.9%).

    SFS business line registered an activity stable at a high level, with an increase in consumer finance outstandings at CAPFM (+5.2% compared to the end of September 2023), driven by automotive activities, which account for 53%2 of total outstandings, and growth in production and leasing outstandings at CAL&F (€20.1 billion, or +8.8% compared to the end of September 2023).

    Momentum is strong in Large Customers, with record revenues in corporate and investment banking (best nine-month cumulative total), with capital markets and investment banking being driven by capital market activities, and financing activities benefiting from growth in commercial banking. CACEIS also posted a high level of assets under custody (€5,061 billion, +12.1% compared to the end of September 2023) and assets under administration (€3,386 billion, +4.2% compared to the end of September 2023). It benefited during the quarter from strong commercial momentum and positive market effects.

    Each of the Group’s business lines posted strong activity (see Infra).

    Continued support of transition

    Crédit Agricole Assurances has set out its new climate commitments, announcing its target to reduce carbon intensity of its portfolio3 by -50% by 2029 (compared to 2019).

    Crédit Agricole Group has also decided to participate in CDC’s energy and ecological transition financing support scheme. The Group will thus be able to raise up to €5.3 billion in liquidity by November 2025, exclusively for financing new projects contributing to the energy and ecological transition.

    The Group is continuing the mass roll-out of financing and investment to promote the transition. As such, the Crédit Agricole Group doubled its exposure to low-carbon energy financing4 between the end of 2020 and September 2024, with €21.9 billion at 30 September 2024. In addition, Crédit Agricole Assurances’s financing of renewable energy production capacity increased by +17% compared to the end of 2022, representing 13.8 gigawatts at 30 June 2024.

    Lastly, Crédit Agricole CIB’s green loan portfolio5 grew by +67% between the end of 2022 and September 2024, and represented €20.7 billion at 30 September 2024.

    Group results

    In the third quarter of 2024, the Crédit Agricole Group’s stated net income Group share came to €2,080 million, down -12.8% compared to the third quarter of 2023. This was due to significant specific items in the third quarter of 2023.

    Specific items in the third quarter of 2024 had a negative net impact of -€20 million on the net income Group share of the Crédit Agricole Group. These items comprise the following recurring accounting items: recurring accounting volatility items, namely the DVA (Debt Valuation Adjustment), the issuer spread portion of the FVA, and secured lending for +€3 million in net income Group share from capital markets and investment banking, and the hedging of the loan book in Large Customers for -€1 million in net income Group share. In addition to these recurring items, there were other items specific to this quarter: ISB integration costs of -€14 million in net income Group share of Large Customers, the Degroof Petercam integration costs of -€6 million in net income Group share of Asset Gathering, and the acquisition costs of Degroof Petercam totalling -€2 million in net income Group share of private banking.

    Specific items in the third quarter of 2023 had a cumulative positive impact of +€317 million in net income Group share and comprised DVA and hedging items for +€1 million under Large Customers, reversals of the Home Purchase Savings Plan provisions for +€297 million (+€38 million for LCL, +€171 million for the Corporate Centre and +€88 million for the Regional Banks), and the impact of the SFS division’s Mobility6 business for -€26 million under the equity method and +€45 million under gains and losses on other assets.

    Excluding these specific items, Crédit Agricole Group’s underlying net income Group share7 amounted to €2,100 million, up +1.5% compared to third quarter 2023.

    Crédit Agricole Group – Stated and underlying results, Q3-24 and Q3-23

    €m Q3-24
    stated    		 Specific items Q3-24
    underlying    		 Q3-23
    stated    		 Specific items Q3-23
    underlying    		 ∆ Q3/Q3
    stated    		 ∆ Q3/Q3
    underlying
                     
    Revenues 9,213 3 9,210 9,249 402 8,847 (0.4%) +4.1%
    Operating expenses excl.SRF (5,590) (34) (5,556) (5,265) 0 (5,265) +6.2% +5.5%
    SRF – – – – – – n.m. n.m.
    Gross operating income 3,623 (31) 3,654 3,984 402 3,582 (9.1%) +2.0%
    Cost of risk (801) 0 (801) (693) 0 (693) +15.6% +15.6%
    Equity-accounted entities 61 – 61 37 (26) 63 +65.7% (3.5%)
    Net income on other assets (5) (3) (2) 69 61 9 n.m. n.m.
    Change in value of goodwill – – – – – – n.m. n.m.
    Income before tax 2,877 (34) 2,912 3,397 436 2,961 (15.3%) (1.6%)
    Tax (587) 8 (595) (810) (120) (691) (27.6%) (13.8%)
    Net income from discont’d or held-for-sale ope. – – – 2 – 2 (100.0%) (100.0%)
    Net income 2,291 (26) 2,317 2,588 317 2,272 (11.5%) +2.0%
    Non controlling interests (211) 6 (217) (204) – (204) +3.4% +6.5%
    Net income Group Share 2,080 (20) 2,100 2,384 317 2,068 (12.8%) +1.5%
    Cost/Income ratio excl.SRF (%) 60.7%   60.3% 56.9%   59.5% +3.7 pp +0.8 pp

    In the third quarter of 2024, underlying revenues amounted to €9,210 million, up +4.1% compared to the third quarter of 2023, driven by favourable results from most of the business lines. Underlying revenues were up in French Retail Banking (+1.8%), while the Asset Gathering division benefited from good business momentum and the integration of Degroof Petercam, and the Large Customers division enjoyed a high level of revenues across all of its business lines, in addition to the integration of ISB. Meanwhile, revenues were down slightly for International Retail Banking and Specialised Financial Services, which were penalised by the drop in interest rates. Underlying operating expenses increased by +5.5% in the third quarter of 2024 to €5,556 million. This was due to scope effects, base effects on taxes and support for business line development. Overall, the Group saw its underlying cost/income ratio reach 60.3% in the third quarter of 2024, a moderate rise of +0.8 percentage point. As a result, the underlying gross operating income stood at €3,654 million, up +2.0% compared to the third quarter of 2023.

    The underlying cost of credit risk stood at -€801 million, a year-on-year increase of +15.6%. This figure comprises an addition of -€93 million for prudential provisions on performing loans (stages 1 and 2), an addition of -€709 million for the cost of proven risk (stage 3), the consequence of an increase in defaults in the corporate market, and additional provisioning for a number of corporate-specific files. There was also a reversal of +€1 million on other risks. The provisioning levels were determined by taking into account several weighted economic scenarios and by applying some flat-rate adjustments on sensitive portfolios. The weighted economic scenarios for the third quarter were unchanged from the second quarter, with a favourable scenario (French GDP at +1.2% in 2024, +1.5% in 2025) and an unfavourable scenario (French GDP at -0.2% in 2024 and +0.5% in 2025). The cost of risk/outstandings8reached 26 basis points over a four rolling quarter period and 27 basis points on an annualised quarterly basis9.

    Underlying pre-tax income stood at €2,912 million, a year-on-year decrease of -1.6%. This includes the contribution from equity-accounted entities of €61 million (down -3.5%) and net income on other assets, which came to -€2 million this quarter. The underlying tax charge fell by -13.8% over the period, the tax rate this quarter falling by -3.0 percentage points to 20.9%. Underlying net income before non-controlling interests was up +2.0% to €2,317 million. Non-controlling interests rose +6.5%. Lastly, underlying net income Group share was €2,100 million, +1.5% higher than in the third quarter of 2023.

    Crédit Agricole Group – Stated and underlying results 9M-24 and 9M-23

    €m 9M-24
    stated    		 Specific items 9M-24
    underlying    		 9M-23
    stated    		 Specific items 9M-23
    underlying    		 ∆ 9M/9M
    stated    		 ∆ 9M/9M
    underlying
                     
    Revenues 28,244 117 28,127 27,722 758 26,965 +1.9% +4.3%
    Operating expenses excl.SRF (16,866) (84) (16,782) (15,782) (18) (15,764) +6.9% +6.5%
    SRF – – – (620) – (620) (100.0%) (100.0%)
    Gross operating income 11,378 33 11,345 11,321 739 10,581 +0.5% +7.2%
    Cost of risk (2,324) (20) (2,304) (2,179) (84) (2,095) +6.6% +10.0%
    Equity-accounted entities 203 (0) 203 190 (39) 229 +6.7% (11.2%)
    Net income on other assets (19) (23) 4 107 89 18 n.m. (78.5%)
    Change in value of goodwill – – – – – – n.m. n.m.
    Income before tax 9,238 (10) 9,248 9,438 705 8,733 (2.1%) +5.9%
    Tax (2,104) (4) (2,100) (2,293) (180) (2,113) (8.2%) (0.6%)
    Net income from discont’d or held-for-sale ope. – – – 7 – 7 (100.0%) (100.0%)
    Net income 7,134 (14) 7,148 7,153 525 6,628 (0.3%) +7.9%
    Non controlling interests (643) 17 (659) (619) (0) (619) +3.8% +6.5%
    Net income Group Share 6,491 3 6,489 6,534 525 6,009 (0.6%) +8.0%
    Cost/Income ratio excl.SRF (%) 59.7%   59.7% 56.9%   58.5% +2.8 pp +1.2 pp

    In the first nine months of 2024, stated net income Group share amounted to €6,491 million, compared with €6,534 million in the first nine months of 2023, a difference of just -0.6%.

    Specific items for the first nine months of 2024 include the specific items of the Regional Banks for the first nine months of 2024 (+€47 million in reversals of Home Purchase Savings Plan provisions) and Crédit Agricole S.A. specific items, which are detailed in the Crédit Agricole S.A. section.

    Excluding specific items, underlying net income Group share reached €6,489 million, up +8.0% compared to the first nine months of 2023.

    Underlying revenues totalled €28,127 million, up +4.3% compared to the first nine months of 2023. This increase is attributable to growth in all business lines, reaching a total, excluding the Corporate Centre division, of +4.6% compared to the first nine months of 2023.

    Underlying operating expenses amounted to -€16,782 million, up +6.5% excluding SRF compared to the first nine months of 2023, mainly due to higher compensation in an inflationary environment, support for business development, IT expenditure and scope effects as detailed for each division. The underlying cost/income ratio for the first nine months of 2024 was 59.7%, up +1.2 percentage points compared to the first nine months of 2023 excluding SRF. The SRF stood at -€620 million in 2023.

    Underlying gross operating income totalled €11,345 million, up +7.2% compared to the first nine months of 2023.

    The underlying cost of risk for the first nine months of 2024 rose to -€2,304 million (of which -€178 million in cost of risk on performing loans (stages 1 and 2), -€2,148 million in cost of proven risk, and +€22 million in other risks corresponding mainly to reversals of legal provisions), i.e. an increase of +10.0% compared to the first nine months of 2023.

    As at 30 September 2024, risk indicators confirm the high quality of Crédit Agricole Group’s assets and risk coverage level. The diversified loan book is mainly geared towards home loans (45% of gross outstandings) and corporates (33% of gross outstandings). Loan loss reserves amounted to €21.3 billion at the end of September 2024 (€11.7 billion for Regional Banks), 41% of which represented provisioning of performing loans (47% for Regional Banks). The prudent management of these loan loss reserves meant that the Crédit Agricole Group’s overall coverage ratio for doubtful loans at the end of September 2024 was 82.8%.

    Underlying net income on other assets stood at €4 million in the first nine months of 2024, versus €18 million in the first nine months of 2023. Underlying pre-tax income before discontinued operations and non-controlling interests rose by +5.9% to €9,248 million. The tax charge was -€2,100 million, a change of just -0.6%, with an underlying effective tax rate of 23.2%, down -1.6 percentage points compared to the first nine months of 2023. Underlying net income before non-controlling interests was therefore up by +7.9%. Non-controlling interests amounted to -€659 million in the first nine months of 2023, up +6.5%.

    Underlying net income Group share for first nine months of 2024 thus stood at €6,489 million, up +8.0% compared to the first nine months of 2023.

    Regional banks

    Gross customer capture stands at +275,000 new customers and the customer base grew by +27,000 new customers over the same period. The percentage of customers using demand deposits as their main account and those who use digital tools continued to increase.

    Loan production was down -7% compared to the third quarter of 2023, reflecting the -11% drop in home loans and the decline in specialised markets. Home loan production has been gradually recovering since the beginning of the year (+20% compared to the second quarter 2024). The average lending production rate for home loans stood at 3.47%10 over July and August 2024, -16 basis points lower than in the second quarter of 2024. By contrast, the global loan stock rate showed a gradual improvement (+27 basis points compared to the third quarter of 2023). Outstanding loans totalled €646 billion at the end of September 2024, stable year-on-year across all markets but up slightly by +0.5% over the quarter.

    Customer assets were up +3.6% year-on-year to reach €903 billion at the end of September 2024. This growth was driven both by on-balance sheet deposits, which reached €601 billion (+2.5% compared to end September year-on-year), and off-balance sheet deposits, which reached €302 billion (+5.9% year-on-year) benefiting from favourable market effects and strong inflows in unit-linked bonds (€8 billion cumulative year-on-year). The mix of on-balance sheet deposits for the quarter remained almost unchanged, with demand deposits and term deposits fluctuating by -0.6% and +1% respectively from end-June 2024.

    The equipment rate for property and casualty insurance11 was 43.8% at the end of September 2024 and continues to rise (up +0.7 percentage point compared to the end of September 2023). In terms of payment instruments, the number of cards rose by +1.7% year-on-year, as did the percentage of premium cards in the stock, which increased by 1.9 percentage points year-on-year to account for 16.0% of total cards.

    In the third quarter of 2024, the Regional Banks’ consolidated revenues including the SAS Rue La Boétie dividend12 stood at €3,220 million, down -2.1% compared to the third quarter of 2023, notably impacted by a base effect of +€118 million13 related to the reversal of the Home Purchase Savings Plan provision in the third quarter of 2023. Excluding this item, revenues were up +1.5% year-on-year, the decline in the net interest margin (-11.6% excluding the Home Purchase Savings Plan13 base effect) being offset by the rise in portfolio revenues (+41.8%) and fee and commission income (+4.9%), itself driven by buoyant business in life insurance and account management. Operating expenses were up +3.5%, due to an increase in staff costs, property expenses and IT costs. Gross operating income was down -15.3% year-on-year (-3.8% excluding the Home Purchase Savings Plan13 base effect). The cost of risk was up by +43.7% compared to the third quarter of 2023 to stand at -€369 million. mainly due to the increase in proven risk in the corporate sector. Cost of risk/outstandings remained under control, at 22 basis points.

    The Regional Banks’ consolidated net income, including the SAS Rue La Boétie dividend,12 amounted to €351 million, down -38.0% compared to the third quarter of 2023 (-26.5% excluding the base effect13).

    The Regional Banks’ contribution to net income Group share was €371 million in the third quarter of 2024, down -36.9% compared to the third quarter of 2023.

    In the first nine months of 2024, revenues including the SAS Rue La Boétie dividend were up +2.2% compared to the same period in 2023. Operating expenses rose by +1.7%, resulting in a rise in gross operating income of +3% for the first nine months of 2024. Finally, with a cost of risk up +29%, the Regional Banks’ net income Group share, including the SAS Rue La Boétie dividend, amounted to €3,051 million, up +0.5% compared to the first nine months of 2023 (+1.9% excluding the Home Purchase Savings Plan base effect).

    The Regional Banks’ contribution to the results of Crédit Agricole Group in the first nine months of 2024 amounted to €1,021 million in stated net income Group share (-28.1% compared to the same period in 2023), with revenues of €9,834 million (-2%), expenses of -€7,453 (+3.3%) and a cost of risk of -€1,056 million (+27%).

    Crédit Agricole S.A.

    Results

    Crédit Agricole S.A.’s Board of Directors, chaired by Dominique Lefebvre, met on 5 November 2024 to examine the financial statements for third quarter 2024.

    Crédit Agricole S.A. – Stated and underlying results, Q3-24 and Q3-23

    €m Q3-24
    stated    		 Specific items Q3-24
    underlying    		 Q3-23
    stated    		 Specific items Q3-23
    underlying    		 ∆ Q3/Q3
    stated    		 ∆ Q3/Q3
    underlying
                     
    Revenues 6,487 3 6,484 6,343 284 6,060 +2.3% +7.0%
    Operating expenses excl.SRF (3,689) (34) (3,654) (3,376) 0 (3,376) +9.2% +8.2%
    SRF – – – – – – n.m. n.m.
    Gross operating income 2,799 (31) 2,830 2,967 284 2,684 (5.7%) +5.5%
    Cost of risk (433) 0 (433) (429) 0 (429) +0.9% +0.9%
    Equity-accounted entities 42 – 42 23 (26) 50 +81.3% (15.3%)
    Net income on other assets (4) (3) (1) 69 61 8 n.m. n.m.
    Change in value of goodwill – – – – – – n.m. n.m.
    Income before tax 2,404 (34) 2,438 2,630 318 2,312 (8.6%) +5.4%
    Tax (476) 8 (484) (633) (89) (544) (24.8%) (11.0%)
    Net income from discont’d or held-for-sale ope. – – – 2 – 2 n.m. n.m.
    Net income 1,928 (26) 1,954 1,999 229 1,770 (3.5%) +10.4%
    Non controlling interests (262) 6 (268) (251) (2) (250) +4.2% +7.5%
    Net income Group Share 1,666 (20) 1,686 1,748 227 1,520 (4.7%) +10.9%
    Earnings per share (€) 0.50 (0.01) 0.51 0.53 0.07 0.46 (5.5%) +11.4%
    Cost/Income ratio excl. SRF (%) 56.9%   56.4% 53.2%   55.7% +3.6 pp +0.6 pp

    In the third quarter of 2024, Crédit Agricole S.A.’s stated net income Group share came to €1,666 million, down -4.7% compared to the third quarter of 2023, having benefited from non-recurring items related to reversals of the Home Purchase Savings Plan provisions (see below). This was an excellent result for the third quarter of 2024, based on high revenues and a cost/income ratio kept at a low level.

    Specific items for this quarter had a cumulative impact of -€20 million on net income Group share, and included the following recurring accounting items: recurring accounting volatility items in revenues, such as the DVA (Debt Valuation Adjustment), the issuer spread portion of the FVA and secured lending for +€3 million in net income Group share in the Large Customers segment, and the hedging of the loan book in the Large Customers segment for -€1 million in net income Group share. In addition to these recurring items, there were a number of items specific to this quarter: Degroof Petercam integration costs of -€6 million in the net income Group share in Asset Gathering; ISB integration costs for -€14 million in the net income Group share in Large Customers, and the acquisition costs of Degroof Petercam for -€2 million in the net income Group share in Asset Gathering.

    Specific items for the third quarter of 2023 had a cumulative impact of +€227 million on net income Group share, and comprised recurring accounting items amounting to +€208 million (primarily reversals of Home Purchase Savings Plan provisions for +€37 million at LCL and +€171 million at the Corporate Centre). Non-recurring items were related to the ongoing reorganisation of the SFS division’s Mobility business amounting to +€19 million.

    Excluding a positive base effect related to the reversals of Home Purchase Savings Plan provisions, net income Group share was up +8.2% for the period.

    Excluding specific items, underlying net income Group share14 stood at €1,686 million in the third quarter of 2024, up +10.9% compared to the third quarter of 2023.

    In the third quarter of 2024, underlying revenues were at a high level, standing at €6,484 million. They were up sharply by +7.0% compared to the third quarter of 2023. This growth was driven by the Asset Gathering business line, which recorded growth of +12.9% as a result of strong business momentum and the integration of Degroof Petercam15; the Large Customers business line (+8.7%), which saw good results from all business lines with continued revenue growth in the third quarter in Corporate and Investment Banking, in addition to an improvement in the net interest margin and fee and commission income within CACEIS; Specialised Financial Services (-1.5%), which benefited from favourable scope and volume effects as well as a more stable margin in the Personal Finance and Mobility business line; French Retail Banking (+3.7%), which was boosted by an improved net interest margin and higher fee and commission income; and lastly, International Retail Banking (-1.8%), which was essentially impacted by the decline in the net interest margin in Italy. The Corporate Centre division recorded an increase in revenues of +€43 million.

    Underlying operating expenses totalled -€3,654 million in the third quarter of 2024, an increase of +8.2% compared to the third quarter of 2023, reflecting the support given to business line development. The -€278 million year-on-year increase in expenses was mainly due to a -€112 million scope effect,16 integration costs of -€29 million17, and a positive tax-related base effect of -€30 million. Recurring expenses were up by -€141 million, or +4.1% (-€38 million in staff costs, -€76 million in IT investments and -€27 million in other expenses).

    The underlying cost/income ratio in the third quarter of 2024 thus stood at 56.4%, an increase of +0.6 percentage points compared to the third quarter of 2023.

    Underlying gross operating income in the third quarter of 2024 stood at €2,830 million, an increase of +5.5% compared to the third quarter of 2023. It was up +4.2% when restated solely for reversals of the Home Purchase Savings Plan provisions.

    As at 30 September 2024, risk indicators confirm the high quality of Crédit Agricole S.A.’s assets and risk coverage level. The diversified loan book is mainly geared towards home loans (26% of gross outstandings) and corporates (43% of Crédit Agricole S.A. gross outstandings). The Non Performing Loans ratio showed little change from the previous quarter and remained low at 2.5%. The coverage ratio18 was high at 71.4%, up +0.1 percentage points over the quarter. Loan loss reserves amounted to €9.6 billion for Crédit Agricole S.A., a -€0.1 billion decline from end-June 2024. Of those loan loss reserves, 34% were for performing loans (percentage in line with previous quarters).

    The underlying cost of risk showed a net addition of -€433 million, up +0.9% from the third quarter of 2023, which included a -€38 million addition for performing loans (stages 1 and 2) (versus a reversal of +€59 million in the third quarter of 2023) and -€388 million in provisioning for proven risks (stage 3) (versus -€487 million in the third quarter of 2023). There was also a small addition of -€7 million for other items (legal provisions). By business line, 52% of the net addition for the quarter came from Specialised Financial Services (unchanged from end-September 2023), 19% from LCL (16% at end-September 2023), 14% from International Retail Banking (28% at end-September 2023), 4% from Large Customers (3% at end-September 2023) and 8% from the Corporate Centre (zero at end-September 2023). The increase in the cost of risk for the Corporate Centre was mainly due to the increase in the risk on financing secured by Foncaris. The provisioning levels were determined by taking into account several weighted economic scenarios and by applying some flat-rate adjustments on sensitive portfolios. The weighted economic scenarios for the third quarter were unchanged from the second quarter, with a favourable scenario (French GDP at +1.2% in 2024, +1.5% in 2025) and an unfavourable scenario (French GDP at -0.2% in 2024 and +0.5% in 2025). In the third quarter of 2024, the cost of risk/outstandings was 32 basis points over a rolling four-quarter period19 and 32 basis points on an annualised quarterly basis20 (an improvement of 1 basis point compared to the third quarter of 2023 for both bases).

    The underlying contribution from equity-accounted entities amounted to €42 million in the third quarter of 2024, down -15.3% compared to the third quarter of 2023, driven in particular by the strong growth of equity-accounted entities in asset management and a decline in the Personal Finance and Mobility business line.

    Underlying income21before tax, discontinued operations and non-controlling interests was up +5.4% to €2,438 million. The underlying effective tax rate stood at 20.2%, i.e. down -3.8 percentage points compared to the third quarter of 2023. The underlying tax charge was -€484 million, down -11% mainly due to the impact of reduced-tax disposals of equity interests and the revaluation of securities at fair value in the Insurance business line, partially offset by the increase in the tax rate in Ukraine. Underlying net income before non-controlling interests was up +10.4% to €1,954 million. Non-controlling interests amounted to -€268 million in the third quarter of 2024, an increase of +7.5%.

    Underlying earnings per share in third quarter of 2024 reached €0.51, increasing by +11.4% compared to the third quarter of 2023.

    Crédit Agricole S.A. – Stated and underlying results, 9M-24 and 9M-23

    €m 9M-24
    stated    		 Specific items 9M-24
    underlying    		 9M-23
    stated    		 Specific items 9M-23
    underlying    		 ∆ 9M/9M
    stated    		 ∆ 9M/9M
    underlying
                     
    Revenues 20,089 53 20,036 19,140 598 18,542 +5.0% +8.1%
    Operating expenses excl.SRF (10,978) (84) (10,894) (9,922) (18) (9,904) +10.6% +10.0%
    SRF – – – (509) – (509) (100.0%) (100.0%)
    Gross operating income 9,111 (30) 9,141 8,709 580 8,129 +4.6% +12.5%
    Cost of risk (1,256) (20) (1,236) (1,338) (84) (1,253) (6.1%) (1.3%)
    Equity-accounted entities 132 (0) 132 136 (39) 175 (3.4%) (24.7%)
    Net income on other assets 5 (23) 28 102 89 13 (95.3%) x 2.1
    Change in value of goodwill – – – – – – n.m. n.m.
    Income before tax 7,991 (73) 8,064 7,609 545 7,064 +5.0% +14.2%
    Tax (1,790) 12 (1,803) (1,832) (149) (1,682) (2.3%) +7.1%
    Net income from discont’d or held-for-sale ope. – – – 7 – 7 n.m. n.m.
    Net income 6,201 (61) 6,262 5,785 396 5,389 +7.2% +16.2%
    Non controlling interests (803) 16 (820) (771) (2) (769) +4.2% +6.6%
    Net income Group Share 5,397 (45) 5,442 5,014 394 4,620 +7.6% +17.8%
    Earnings per share (€) 1.59 (0.01) 1.60 1.53 0.13 1.40 +3.8% +14.5%
    Cost/Income ratio excl.SRF (%) 54.6%   54.4% 51.8%   53.4% +2.8 pp +1.0 pp

    In the first nine months of 2024, stated net income Group share amounted to €5,397 million, compared with €5,014 million in the first nine months of 2023, an increase of +7.6%.

    Specific items in the first nine months of 2024 had a negative impact of -€45 million on stated net income Group share, and comprise +€39 million in recurring accounting items and -€84 million in non-recurring items. The recurring items mainly correspond to the reversals of and additions to the Home Purchase Savings Plans provisions for +€1 million net, as well as the accounting volatility items of the Large Customers division (the DVA for +€33 million and loan book hedging for +€5 million). Non-recurring items relate to the costs of integrating and acquiring Degroof Petercam (-€27 million) within the Asset Gathering division, the costs of integrating (-€37 million) and acquiring (-€17 million) ISB within the Large Customers division and an additional provision for risk in Ukraine (-€20 million) within the International Retail Banking division.

    Excluding specific items, underlying Net income Group share reached €5,442 million, up +17.8% compared to the first nine months of 2023.

    Underlying revenues were up +8.1% compared to the first nine months of 2023, driven by all business lines. Underlying operating expenses were +10% higher than in 2023, essentially reflecting the development of the Group’s business lines and the integration of scope effects, partially offset by the end of the SRF22 building-up period. The underlying cost/income ratio excluding SRF for the period was 54.4%, an increase of 1 percentage point compared to the same period in 2023. Underlying gross operating income totalled €9,141 million, up +12.5% compared to the first nine months of 2023. The underlying cost of risk decreased by -1.3% over the period to -€1,236 million, versus -€1,253 million in 2023. Lastly, underlying contributions from equity-accounted entities amounted to €132 million, down -24.7% over the period.

    Underlying earnings per share were €1.60 per share in the first nine months of 2024, up +14.5% compared to the first nine months of 2023.

    Underlying RoTE 23, which is calculated on the basis of an annualised underlying Net Income Group Share 24 and IFRIC charges linearised over the year, net of annualised Additional Tier 1 coupons (return on equity Group share excluding intangibles) and net of foreign exchange impact on reimbursed AT1, and restated for certain volatile items recognised in equity (including unrealised gains and/or losses), reached 14.5% over the first nine months of 2024, up by +1 percentage point compared to the first nine months of 2023.

    Analysis of the activity and the results of Crédit Agricole S.A.’s divisions and business lines

    Activity of the Asset Gathering division

    In the third quarter of 2024, assets under management in the Asset Gathering division (AG) totalled €2,809 billion, up +€46 billion over the quarter (or +1.7%), mainly due to a positive market effect and a good level of net inflows in the three business lines of Asset Management, Insurance and Wealth Management. Over the year, assets under management rose by +13.1%.

    Insurance activity (Crédit Agricole Assurances) was very strong with total premium income of €9.7 billion – a record level for a third quarter – up +38.9% compared to the third quarter of 2023, and up in all three segments: savings/retirement, property and casualty, and death & disability/creditor/group insurance. In total, overall premium income stood at €32.8 billion, up +18.2% compared to the first nine months of 2023.

    In Savings/Retirement, third-quarter premium income stood at €7.2 billion, up +56.4% compared to the third quarter of 2023. Business was driven by euro payment bonus campaigns in France, launched during the first quarter, which boosted gross euro inflows, as well as by a confirmed upturn in international business. The unit-linked rate accounted for 32.8% of gross inflows, down -7.5 percentage points compared to the third quarter of 2023. This decline is linked to the recovery in gross euro inflows and less favourable market conditions for unit-linked products, in particular the reduced attractiveness of unit-linked bond products. Net inflows totalled +€1.6 billion this quarter, on par with last quarter. This level is made up of positive net inflows from unit-linked contracts (+€0.9 billion) and also from euro funds (+€0.8 billion). In total, Savings/Retirement premium income reached €23.9 billion at the end of September, up +23.1% compared to the end of September 2023.

    Assets under management (savings, retirement and funeral insurance), which stood at €343.2 billion, continued to rise and reached their highest level ever. They were up +€19.0 billion over one year, or +5.8%, and +€12.9 billion since the beginning of the year, or +3.9%. The growth of assets under management was supported by a positive market effect and positive net inflows. Unit-linked contracts reached 29.9% of assets under management, up +2.3 percentage points over one year and +1.0 percentage point compared to the end of December 2023.

    In property and casualty insurance, premium income stood at €1.2 billion in the third quarter of 2024, up +9.2%25 compared to the third quarter of 2023. This growth was driven by volume and price effects. Indeed, at the end of September 2024, the portfolio stood at nearly 16.6 million26 contracts, up +5.1% year-on-year. At the same time, the average premium was up, benefiting from rate revisions in addition to changes in the product mix.  Lastly, the combined ratio at the end of September 2024 stood at 95.5%27, a deterioration of +0.3 percentage point year-on-year due to the unfavourable impact of discounting. In total, at the end of September 2024, premium income stood at €4.9 billion, an increase of +7.8% compared to the first nine months of 2023.

    In death & disability/creditor/group insurance, premium income for the third quarter of 2024 stood at €1.3 billion, up +2.2% compared to the third quarter of 2023. Creditor insurance premium income rose by +1.6% compared to the third quarter of 2023, thanks to an upturn in consumer finance and good performance in real estate. Death and disability was up +3.5% compared to the third quarter of 2023, mainly driven by group insurance, which posted an increase of +9.5%. In group insurance, an agreement was signed with Industries Electriques et Gazières in October 2024, with effect from the second half of 2025. In total, at the end of September, premium income from personal protection stood at €4.0 billion, an increase of +5.7% compared to the first nine months of 2023.

    In Asset Management (Amundi), Amundi’s assets under management saw a +11.1% increase year-on-year at 30 September 2024 and a +1.6% increase over the quarter to €2,192 billion, an all-time high. The +€35.4 billion increase in assets under management over the quarter was due to a positive market and foreign exchange impact of +€32.5 billion and positive net inflows of +€2.9 billion.

    This quarter’s net inflows include the exit from a mandate worth €11.6 billion with a European insurer, which was not generating much revenue. Adjusted for this outflow, net inflows for the quarter stood at +€14.4 billion, including +€9.1 billion in medium- and long-term assets28, driven by active management and ETFs. Structured products and real and alternative assets also recorded positive inflows, while treasury products28 were stable. Lastly, the JVs continued their solid commercial momentum, with net inflows of +€5.3 billion, reflecting a positive contribution from India and South Korea.

    By customer segment, Retail inflows (+€6.3 billion in the third quarter of 2024) were driven by the excellent momentum of third-party distributors (+€6.8 billion), across all regions and with good diversification of inflows by asset class. Excluding the loss of the insurance mandate mentioned above, the Institutional segment recorded very positive inflows in MLT assets across all segments, in particular Institutional and Sovereign, and on mandates from insurers in the Crédit Agricole Groupe and the Société Générale group, thanks to the continued recovery in the euro-denominated life insurance policies market in France during the quarter. Treasury products, on the other hand, experienced sharp seasonal outflows in this segment.

    In Wealth Management, total assets under management (CA Indosuez Wealth Management and LCL Private Banking) amounted to €274 billion at the end of September 2024, and were up +2.7% compared to June 2024 and +46.9% compared to September 2023.

    Indosuez Wealth Management had assets under management of €209.2 billion29 at the end of September, up +2.1%, or +€4.2 billion, compared to the end of June 2024 due to a positive market effect of +€2.5 billion and good level of activity with positive net inflows of +€1.8 billion, driven in particular by Switzerland and Asia. The quarter also saw Degroof Petercam funds begin to be marketed to Indosuez clients. Compared with the end of September 2023, assets under management were up by +€84.3 billion (or +67.5%), taking into account a scope effect of €69 billion (integration of Degroof Petercam in June 2024), a positive market effect and a good level of net inflows.

    In LCL’s Private Banking division, assets under management at the end of September totalled €64.8 billion, up by +€1.0 billion or +1.5% compared to the end of June 2024, thanks to a positive market effect and positive net inflows. Compared with the end of September 2023, assets under management were up by +€3.2 billion (or +5.3%), mainly due to a positive market effect, and also to positive net inflows.

    Results of the Asset Gathering division

    In the third quarter of 2024, AG generated €1,870 million in revenues, up +12.9% compared to the third quarter of 2023. Expenses rose by +20.9% to -€868 million. Thus, the cost/income ratio stood at 46.4%, up +3.0 percentage points compared to the third quarter of 2023. Gross operating income stood at €1,002 million, up +6.9% compared to the third quarter of 2023. Taxes stood at -€157 million, compared with -€221 million at the end of September 2023 (down -29.1%). The net income Group share of AG stood at €728 million, up +17.1% compared to the third quarter of 2023.

    At the end of September 2024, AG generated revenues of €5,603 million, up +9.1% compared to the end of September 2023. The increase is explained by a very high level of revenues in all three business lines: Insurance, Asset Management and Wealth Management. Costs excluding SRF increased +13.4%. As a result, the cost/income ratio excluding SRF stood at 43.5%, up +1.6 percentage points compared to the end of September 2023. Gross operating income stood at €3,168 million, an increase of +6.3% compared to the end of September 2023. Taxes stood at -€659 million, compared with -€699 million at the end of September 2023 (down -5.7%). The net income Group share of AG stood at €2,180 million, up +9.3% compared to the first nine months of 2023. Net income Group share increased between the first nine months of 2023 and the first nine months of 2024 in Asset Management (+10.2%) and the Insurance business lines (+11.3%), but was down in Wealth Management (-18.9%).

    At the end of September 2024, the Asset Gathering division contributed by 37% to the underlying net income Group share of the Crédit Agricole S.A. core businesses (excluding Corporate Centre division) and 27% to underlying revenues excluding the Corporate Centre division.

    As at 30 September 2024, equity allocated to the division amounted to €12.6 billion, including €10.4 billion for Insurance, €1.3 billion for Asset Management, and €0.8 billion for Wealth Management. The division’s risk-weighted assets amounted to €58.7 billion, including €35.7 billion for Insurance, €14.1 billion for Asset Management and €8.9 billion for Wealth Management.

    The underlying RoNE (return on normalised equity) stood at 27.1% for the first nine months of 2024.

    Insurance results

    In the third quarter of 2024, insurance revenues amounted to €635 million, down -1.2% compared to the third quarter of 2023. This includes €418 million from savings/retirement30, €117 million from personal protection31 and €40 million from property and casualty insurance32. Against a backdrop of increased business activity, the decline in revenues is explained in particular by the change in Property & Casualty claims, which were low in the third quarter of 2023 and higher in the third quarter of 2024, particularly for crop insurance, as well as by an unfavourable effect linked to the replacement of AT1 debt (for which the expense was recorded as minority interests) by Tier 2 debt (the cost of which is deducted from revenues).

    The contractual service margin (CSM) stood at €24.9 billion, up +4.5% since 31 December 2023. In the first nine months of 2024, the impact of the stock revaluation was positive, and the impact of new business exceeded the CSM allocation.

    Non-attributable expenses for the quarter stood at €85 million, up +5.1% over the third quarter of 2023. Gross operating income stood at €550 million, down -2.1% compared to the third quarter of 2023. Taxes stood at -€51 million, compared with -€131 million for the third quarter of 2023. This decline is due to a re-estimation of the tax rate including the impact of reduced-tax disposals of equity interests and the revaluation of securities at fair value, which took place during the quarter. Net income Group share stood at €478 million, up +16.2% compared to the third quarter of 2023.

    Revenues from insurance in the first nine months of 2024 came to €2,130 million, up +5.4% compared to the total at the end of September 2023. Non-attributable expenses came to €264 million, i.e. an increase of +11.4%. The cost/income ratio stood at 12.4%, below the target ceiling of 15% set by the Medium-Term Plan. Gross operating income stood at €1,866 million, up +4.6% compared to the first nine months of 2023. The tax charge stood at -€354 million, below the September 2023 level of -€411 million. Net income Group share amounted to €1,466 million, up +11.3% compared to the first nine months of 2023.

    Insurance contributed by 25% to the underlying net income Group share of the Crédit Agricole S.A. core businesses (excluding the Corporate Centre division) at the end of September 2024 and by 10% to their underlying revenues.

    Asset Management results

    In the third quarter of 2024, revenues amounted to €838 million, showing double-digit growth (+10.3% compared to the third quarter of 2023). The +9.2% increase in management fee and commission income compared to the third quarter of 2023 reflects the good level of activity and the increase in average assets under management excluding JVs (which increased by +8.6% over the same period, and by +1.2% between the second and third quarter). Performance fees increased by +€10 million compared with the third quarter of 2023, but there were fewer crystallisation dates in the third quarter than in the second or fourth quarters. Amundi Technology’s revenues increased by +41.8% compared to the third quarter of 2023. Financial revenues were down by -10.6% compared to third quarter of 2023. Operating expenses stood at -€466 million, up +7.5% mainly due to the consolidation of Alpha Associates, accelerated investment and the impact of revenue growth on variable compensation. The jaws effect was positive over the quarter. The cost/income ratio thus stood at 55.6%, an improvement year-on-year (-1.5 percentage point). Gross operating income increased by +14.1% compared to the third quarter of 2023. The contribution from equity-accounted entities, comprising the contribution from Amundi’s Asian joint ventures, stood at €33 million, up +36.4% from the third quarter of 2023, driven mainly by the strong growth of the contribution from SBI MF in India. The income tax charge stood at -€92 million, up +14.9%. Net income before non-controlling interests was €312 million, up +16.4% compared to the total at the end of September 2023. Net income Group share stood at €208 million, up +16.8% compared to the third quarter of 2023.

    In the first nine months of 2024, revenues rose by +7.2% in asset management, reflecting sustained growth in management fee and commission income and a sharp increase in Amundi Technology revenues (€54m, +28.2%) and net financial income. Performance fees were down slightly (-2.0%). Operating expenses excluding SRF increased by +6.3%. The cost/income ratio excluding SRF was 55.3%, stable compared to the total at the end of September 2023. As a result, gross operating income was up +8.8% compared to the first nine months of 2023. The net income of equity-accounted entities increased by +28.4%. All in all, net income Group share for the half-year stood at €623 million, an increase of +10.2%.

    Asset management contributed 10% to the underlying net income Group share of Crédit Agricole S.A.’s core businesses (excluding the Corporate Centre division) at end September 2024 and by 12% to their underlying revenues.

    At 30 September 2024, equity allocated to the Asset Management business line amounted to €1.3 billion, while risk-weighted assets totalled €14.1 billion.

    Wealth Management results33

    Revenues of Wealth Management stood at €397 million in the third quarter of 2024, up +56.6% compared to the third quarter of 2023. Revenues benefited from the impact of the integration of Degroof Petercam in June 2024; excluding this effect, they were supported by the good momentum of management fee and commission income, which offset the erosion of interest revenues. Expenses totalled -€317 million, up +55.5% compared to the third quarter of 2023, due to the impact of the integration of Degroof Petercam in June 202434 and integration costs of -€8 million in the third quarter. Restated for these impacts, growth in expenses is stable (+0.2% compared to the third quarter of 2023). The cost/income ratio in the third quarter of 2024 stood at 79.9%, down -0.6 percentage points compared to the third quarter of 2023. Gross operating income stood at €80 million, up +61.4% compared to the third quarter of 2023. Cost of risk was -€11 million in the third quarter of 2024, including the recognition of litigations and provisions for various cases. Net income on other assets stood at -€3 million in the third quarter of 2024, corresponding to the Degroof Petercam acquisition costs, restated as specific items. Net income Group share amounted to €42 million, up +30.6% compared to the third quarter of 2023.

    In the first nine months of 2024, Wealth Management’s revenues rose by +24.7% compared to the end of September 2023, notably benefiting from the integration of Degroof Petercam in June 2024 to reach €967 million. Expenses excluding SRF rose by +29.3% due to the impact of the integration of Degroof Petercam in June 2024 and the €14 million in integration costs. Restated for these impacts, growth in expenses is under control, increasing by +3.6% compared to the first nine months of 2023, due in particular to an unfavourable base effect in 2023. Gross operating income thus rose by +10.0% to €181 million. The cost of risk was -€12 million at the end of September 2024 (it was +€1 million at the end of September 2023). Net income on other assets stood at -€23 million at the end of September 2024, corresponding to the Degroof Petercam acquisition costs, restated as specific items. Net income Group share stood at €91 million for the first nine months of 2024, down -18.9% compared to the first nine months of 2023, but up +4.5% after restatement for integration and acquisition costs.

    Wealth Management contributed 2% of Crédit Agricole S.A.’s business lines underlying net income Group share. (excluding the Corporate Centre division) at end September 2024 and by 5% to their underlying revenues.

    At 30 September 2024, equity allocated to Wealth Management was €0.8 billion and risk-weighted assets totalled €8.9 billion.

    Activity of the Large Customers division

    Corporate and Investment Banking (CIB) once again posted a very good performance in the third quarter of 2024 (best third quarter and best year-to-date in terms of both revenues and results). Asset servicing also recorded strong business momentum during the period.

    CIB third-quarter underlying revenues rose sharply to €1,528 million, an increase of +8.0% compared to the third quarter of 2023, driven by growth in its two business lines. Revenues from Financing activities were up +7.2% compared to the third quarter of 2023, at €809 million. This was mainly due to the excellent performance of Commercial Banking (+9.5% compared to the third quarter of 2023), driven by the development of Corporate activities, especially in the Telecom sector, and a good level of revenues from asset financing and project financing. Capital Markets and Investment Banking also reported revenue growth of +9.0% compared to the third quarter of 2023, at €719 million, driven by the continued high level of performance of Capital Markets (+6.2% compared to the third quarter of 2023 for FICC) and the good level of activity in Investment Banking, (+22.8% compared to the third quarter of 2023), confirming the trend observed at the end of the first half of 2024.

    Financing activities thus confirmed its leading position in syndicated loans (#2 in France35 and #2 in EMEA35). Crédit Agricole CIB reaffirmed its strong position in bond issues (#3 All bonds in EUR Worldwide35) and was ranked #2 in Green, Social & Sustainable bonds in EUR36. Average regulatory VaR stood at €10.1 million in the third quarter of 2024, unchanged from the second quarter of 2024 when it was €10.1 million. It remained at a level that reflected prudent risk management.

    In addition, the third quarter of 2024 saw the continued migration of ISB (formerly RBC Investor Services in Europe) customer portfolios to CACEIS platforms, following the effective merger of the legal entities with those of CACEIS on 31 May 2024. Customer migration is expected to continue until the end of 2024. As a reminder, ISB integration costs will be recorded during the year for an amount of around €80 million to €100 million, including €25.9 million in the third quarter of 2024, i.e. €70 million recorded in the first nine months of 2024.

    In the third quarter of 2024, solid customer business and market effects supported growth in assets over the year. Assets under custody increased by +1.9% at the end of September 2024 compared to the end of June 2024 and increased by +12.1% compared to the end of September 2023, to reach €5,061 billion. Assets under administration were down -1.2% over the quarter (planned exit of some ISB customers) and up +4.2% year-on-year, reaching €3,386 billion at the end of September 2024.

    Results of the Large Customers division

    In the third quarter of 2024, stated revenues of the Large Customers division once again reached a record level of €2,054 million, up +8.8% compared to the third quarter of 2023, buoyed by excellent performance in the Corporate and Investment Banking and Asset Servicing business lines. The division’s specific items this quarter had an impact of +€2.8 million on Corporate and Investment Banking and comprised the DVA, the issuer spread portion of the FVA and secured lending amounting to +€3.6 million, and loan book hedging totalling -€0.8 million. Operating expenses were up compared to the third quarter of 2023 (+8.8%), due, on the one hand, to IT investments and the development of the business lines’ activity and, on the other hand, to the recognition of ISB integration costs of -€25.9 million, restated as specific items. As a result, the division’s gross operating income was up +8.8% from the third quarter of 2023 to €814 million. The division recorded an overall net addition for cost of risk of -€19 million in the third quarter of 2024, compared with an addition of -€13 million in the third quarter of 2023. Stated pre-tax income totalled €800 million, an increase over the period (+8.2%). The tax charge was
    -€234 million. Lastly, stated Net income Group share reached €520 million in the third quarter of 2024, compared with stated income of €488 million in the third quarter of 2023. Underlying net income Group share came to €532 million in the third quarter of 2024, versus €488 million in the third quarter of 2023.

    Over the first nine months of 2024, stated revenues of the Large Customers division amounted to a record high of €6,543 million, i.e. +12.0% compared to the first nine months of 2023. Operating expenses excluding SRF rose +13.4% compared to the same period to -€3,298 million, largely related to employee expenses and IT investments, and including ISB integration costs of -€70 million. Gross operating income for the first nine months of 2024 totalled €2,802 million, representing an increase of +25.4% compared to the first nine months of 2023. Over the period, the cost of risk recorded a net addition of -€25 million, compared to an addition of -€81 million in the same period. The business line’s contribution to stated Net income Group share was €1,936 million, a strong increase of +30.3% compared to the first nine months of 2023. Underlying net income Group share came to €1,935 million in the first nine months of 2024, versus €1,520 million in the first nine months of 2023.

    The division contributed 33% to the underlying net income Group share of Crédit Agricole S.A.’s core businesses (excluding the Corporate Centre division) at end September 2024 and 31% to underlying revenues excluding the Corporate Centre.

    At 30 September 2024, the equity allocated to the division was €13.3 billion and its risk-weighted assets were €140.5 billion.

    Underlying RoNE (return on normalised equity) stood at 19.0% at the end of September 2024.

    Corporate and Investment Banking results

    In the third quarter of 2024, Corporate and Investment Banking stated revenues reached a record at €1,531 million, up +8.2% from the third quarter of 2023. The Corporate and Investment Banking division’s specific items this quarter had an impact of +€2.8 million and comprised the DVA, the issuer spread portion of the FVA, and secured lending amounting to +€3.6 million, and loan book hedging totalling -€0.8 million. Operating expenses rose by +7.2% to -€864 million, mainly due to IT investments and the development of business line activities. Gross operating income rose sharply by +9.5% compared to the third quarter of 2023, taking it to a high level of +€667 million. The cost/income ratio was 56.4%, a slight change of -0.5 percentage point over the period. The cost of risk recorded a limited net provision of -€14 million, stable compared to the third quarter of 2023. Lastly, pre-tax income in the third quarter of 2024 stood at €653 million, versus €596 million in the third quarter of 2023. The tax charge stood at -€195 million. Lastly, stated net income Group share rose sharply by +10.3% to €446 million in the third quarter of 2024.

    Over the first nine months of 2024, stated revenues rose by +7.6% compared to the excellent level recorded in the first nine months of 2023, to a record level of €4,995 million. The specific items over the period had an impact of +€52.2 million and comprised the DVA (the issuer spread portion of the FVA and secured lending) amounting to +€45.8 million, and loan book hedging totalling +€6.3 million. Operating expenses excluding SRF rose +5.1%, mainly due to variable compensation and investments in IT and employees to support the development of the business lines. Thus, gross operating income of €2,370 million was up sharply (+26.5% compared to the first nine months of 2023). The cost of risk recorded a net provision of -€7 million in the first nine months of 2024, compared to a net provision of -€80 million in the first nine months of 2023. The income tax charge stood at -€609 million, up +27.1%. Lastly, stated net income Group share stood at €1,715 million for the first nine months of 2024, an increase of +33.6% over the period, the highest historical level. Underlying Net income Group share stood at €1,677 million over the first nine months of 2024, versus €1,318 million over the same period in 2023.

    Risk-weighted assets at the end of September 2024 were down -€2.7 billion compared to the end of June 2024 at €128.6 billion, still well under control with business growth.

    Asset servicing results

    In the third quarter of 2024, the revenues of Asset Servicing were up +10.7% compared to the third quarter of 2023, standing at €523 million. This rise was driven in particular by high fee and commission income, itself driven by the increase in assets and by the favourable trend in NIM. Operating expenses rose by +12.8% to
    -€376 million, including -€4 million in scope effects linked to the consolidation of the remaining ISB entities and a -€25.8 million in ISB integration costs restated as specific items. Excluding these effects, the increase in expenses was +5.5% compared to the third quarter of 2023. As a result, gross operating income was up by +5.7% to €147 million in the third quarter of 2024. Thus, the cost/income ratio stood at 71.9%, up +1.3 percentage points. Excluding ISB integration costs and the consolidation of the remaining ISB entities, it stood at 66.2%, an improvement of 3.3 percentage points compared to the third quarter of 2023. The quarter also recorded +€6 million in income from equity-accounted entities. Net income thus totalled €109 million, down -10.8% compared to the third quarter of 2023. Adjusted for the €35 million share of non-controlling interests, the business line’s contribution to stated net income Group share totalled €74 million in the third quarter of 2024, down -11.7% compared to the third quarter of 2023. Excluding ISB integration costs, net income Group share was up +4.8% compared to the third quarter of 2023.

    Stated revenues for the first nine months of 2024 were up +28.7% compared to the same period in 2023, buoyed by the integration of ISB, strong commercial momentum and a favourable trend in the interest margin over the period. Expenses excluding SRF were up +39.2% and included a scope effect of -€207 million over the first six months of 2024 and -€70 million in ISB integration costs. Gross operating income was up +20.0% compared to the first nine months of 2023. The cost/income ratio stood at 72.1%, an improvement of 5.5 points compared to the third quarter of 2023. Net income thus rose by +10.1%. The overall contribution of the business line to net income Group share in the first nine months of 2024 was €221 million, a +9.3% increase compared to the first nine months of 2023.

    Specialised financial services activity

    Crédit Agricole Personal Finance & Mobility’s (CAPFM) commercial production totalled €11.6 billion in the third quarter of 2024, stable compared to the third quarter of 2023. The share of automotive financing37 in quarterly new business production stood at 50.6% this quarter. The average customer rate for production was down -24 basis points from the second quarter of 2024. CAPFM’s assets under management stood at €116.8 billion at the end of September 2024, up +5.2% compared to the end of September 2023, driven by all activities (Automotive +6,9%38; LCL and Regional Banks +5.6%; Other entities +3.3%). Lastly, consolidated outstandings totalled €68.9 billion at the end of September 2024, up +4.7% compared to the third quarter of 2023.

    CAPFM has announced a number of recent developments: a plan to acquire 50% of GAC Leasing; a pan-European partnership with GAC Motor International to entrust CA Auto Bank with the financing of vehicles made by Chinese manufacturer GAC; a partnership with FATEC to offer a fleet management service to its customers; and an agreement with EDF to ramp up the installation of electric charging stations in France.

    Crédit Agricole Leasing & Factoring (CAL&F) commercial production increased by +13.6% compared to the third quarter of 2023. It was driven by all business lines, and was particularly strong in property leasing and renewable energy financing. Property leasing continued to grow in France and abroad. Leasing outstandings rose +8.8% year-on-year, both in France (+6.7%) and internationally (+17.4%), to reach €20.1 billion at the end of September 2024 (of which €15.9 billion in France and €4.2 billion internationally). Commercial factoring production fell by -17% compared to the third quarter of 2023. As a reminder, the third quarter of 2023 was marked by record production in Germany. Factoring outstandings at the end of September 2024 were stable compared to the end of September 2023.

    On 31 October 2024, Crédit Agricole Leasing & Factoring announced that it had signed an agreement to acquire Merca Leasing in Germany.

    Specialised financial services’ results

    The revenues of Specialised Financial Services rose to €869 million in the third quarter of 2024, down slightly by -1.6% compared to the third quarter of 2023. Expenses stood at -€437 million, up +3.1% compared to the third quarter of 2023. The cost/income ratio stood at 48%, up +2.3 percentage points compared to the same period in 2023. Gross operating income thus stood at €433 million, down -5.9% compared to the third quarter of 2023. Cost of risk reached -€223 million, stable compared to the third quarter of 2023. Net income from equity-accounted entities rose significantly (x4.5 compared to the third quarter of 2023) to €23 million. Excluding the base effect39 related to the reorganisation of Mobility activities at CAPFM, the change was -20.7%. Net income on other assets stood at -€2 million, versus €57 million in the third quarter of 2023. Excluding the base effect39 related to the reorganisation of Mobility activities at CAPFM, the change was -52.5%. The division’s Net income Group share amounted to €172 million, down -15.6% compared to the same period in 2023, and down -7% excluding the base effect39.

    Over the first nine months of 2024, revenues for the Specialised Financial Services division fell by-4.1%, but rose by +7.8% excluding the base effect40 related to the reorganisation of Mobility activities at CAPFM, compared to the first nine months of 2023. This favourable trend was driven by a good performance in CAL&F (+8.5%) and by higher revenues for CAPFM excluding the base effect40 (+7,6%), benefiting from the scope effects linked to the strategic pivot around Mobility at CAPFM, which led to the 100% consolidation of Crédit Agricole Auto Bank from the second quarter of 2023 and of ALD and LeasePlan activities in six European countries, as well as the acquisition of a majority stake in the capital of Hiflow in the third quarter of 2023. Underlying costs excluding SRF increased by +8.9% compared to the first nine months of 2023. Expenses excluding SRF, the base effect40 and scope effects rose by +3.1%. The cost/income ratio stood at 51.2%, or +6.1 percentage points versus the same period in 2023; excluding the base effect40, the change was +1.3 percentage points. The cost of risk was down -4.9% compared to the first nine months of 2023, to -€653 million, and up +8.4% excluding the base effect40. This increase incorporated in particular the impact of scope effects. The contribution from equity-accounted entities was down -8.5% versus the same period in 2023, and down -35.9% excluding the base effect40, due to the full consolidation of Crédit Agricole Auto Bank in the second quarter of 2023, which was previously accounted for using the equity method. Net income on other assets amounted to -€3 million at the end of September 2024, compared to €81 million at the end of September 2023 (-€7 million excluding the base effect40). Net income Group share thus came to €502 million, down -21% compared to the first nine months of 2023, but up +5.4% excluding the base effect40 related to the reorganisation of Mobility activities at CAPFM.

    The business line contributed 8% to the underlying net income Group share of Crédit Agricole S.A.’s core businesses. (excluding the Corporate Centre division) at the end of September 2024 and 13% to underlying revenues excluding the Corporate Centre.

    At 30 September 2024, the equity allocated to the division was €6.8 billion and its risk-weighted assets were €71.8 billion.

    The underlying RoNE (return on normalised equity) stood at 9.0% for the first nine months of 2024.

    Personal Finance and Mobility results

    CAPFM revenues totalled €678 million in the third quarter of 2024, down -4.2% compared to the third quarter of 2023. The price effect remained negative in the third quarter of 2024 compared to the third quarter of 2023, but stabilised compared to the second quarter of 2024, thanks in particular to an improved production margin rate over the last few quarters (stable in the third quarter of 2024 compared to the second quarter of 2024, and up by +86 basis points compared to the third quarter of 2023). Expenses remained under control at -€338 million, up +2.4% compared to the same period in 2023. Gross operating income stood at €340 million, down -10%. The cost/income ratio stood at 49.8%, up +3.2 percentage points compared to the same period in 2023. The cost of risk stood at -€201 million, down -2.4% from the third quarter of 2023. The cost of risk/outstandings thus stood at 112 basis points41, an improvement of -16 basis points compared to the third quarter of 2023. The Non Performing Loans ratio was 4.5% at the end of June 2024, up +0.2 percentage point compared to the end of June 2024, while the coverage ratio reached 74.2%, down -1.6 percentage points compared to the end of June 2024. The contribution from equity-accounted entities rose sharply (x5.1) compared to the same period in 2023, and fell by -20.7% excluding the base effect related to the reorganisation of Mobility activities39. Net income on other assets amounted to -€2 million in the third quarter of 2024, compared to €57 million in the third quarter of 2023. Excluding the base effect39, net income on other assets of the third quarter of 203 amounted to -€4 million. As a result, net income Group share totalled €118 million in the third quarter of 2024, i.e. -20.9% compared to the same period the previous year. Excluding the base effect39, net income Group share was down -9.3%.

    In the first nine months of 2024, CAPFM’s revenues totalled €2,042 million, down -7.1% compared with the first nine months of 2023, but up +7.6% excluding the base effect related to the reorganisation of Mobility activities42. Revenues benefited from scope effects related to the strategic pivot around Mobility, leading to the full consolidation of Crédit Agricole Auto Bank from the second quarter of 2023 and the consolidation of the ALD and LeasePlan activities in six European countries, as well as the acquisition of a majority stake in the capital of Hiflow in the third quarter of 2023. Expenses excluding SRF stood at -€1,035 million, an increase of +9.9% on 2023. Expenses excluding SRF, excluding the base effect42 and scope effects, were up +2.2%. Gross operating income therefore came in at €1,007 million, which was a drop of -19% but an increase of +4.7% excluding the base effect42. The cost/income ratio stood at 50.7%, or +7.9 percentage points versus the same period in 2023. When restated for the base effect, the change was +2.1 percentage points. Cost of risk fell -7.3% compared with the first nine months of 2023 to -€591 million, but rose +6.8% when the base effect42 is excluded. This rise notably includes the impact of scope effects. The contribution from equity-accounted entities was down -5.4% versus the same period in 2023, and down -33.1% excluding the base effect42 related to the scope effects of Crédit Agricole Auto Bank, which was fully consolidated in the second quarter of 2023 having previously been accounted for using the equity method. Income on other assets fell -55.5%, or -63,4% excluding the base effect42. As a result, net income Group share stood at €349 million in the first nine months of 2024, i.e. -31.3% from the same period one year earlier. Excluding the base effect42, net income Group share was stable at -0.1% compared with the same period in 2023.

    Leasing & Factoring results

    CAL&F’s revenues totalled €192 million, up +8.5% compared with the third quarter of 2023. This increase was driven by all business lines and benefited from volume effects (increase in factored revenues and equipment leasing outstandings). Expenses remained under control with an increase of +4.8%, while the cost/income ratio stood at 51.6%, an improvement of -1.8 percentage points from the third quarter of 2023. Gross operating income rose +12.7% to €93 million, with a positive jaws effect of +3.7 percentage points. Cost of risk totalled -€22 million, up +25.1% compared with the same period in 2023, linked to economic conditions in the corporate market. Cost of risk/outstandings stood at 22 basis points41, down slightly from the third quarter of 2023. As a result, net income Group share was €54 million, down -1.8% compared with the third quarter of 2023.

    In the first nine months of 2024, revenues totalled €563 million, an increase of +8.5% compared with the first nine months of 2023. Costs excluding SRF increased by +5.7% to €298 million. Gross operating income rose sharply to €265 million, a +19.8% increase compared with the first nine months of 2023. The underlying cost/income ratio excluding SRF amounted to 53%, an improvement of -1.4 percentage points compared with the first nine months of 2023. Cost of risk was up compared with the same period of 2023 (+26.7%). The business line’s contribution to underlying net income Group share was €153 million, up +20.2% compared with the first nine months of 2023.

    Crédit Agricole S.A. Retail Banking activity

    Activity in Crédit Agricole S.A.’s Retail Banking business was solid during the quarter, with customer capture continuing at a good pace and an increasing number of customers taking out insurance policies. Home loan production in France is steadily recovering, while continuing to rise for corporate loans. Outside France, loan activity was dynamic.

    Retail banking activity in France

    In the third quarter of 2024, activity remained buoyant with the confirmed recovery in mortgage lending and the continued stabilisation of the mix of inflows.

    Gross customer capture for the quarter stood at 76,000 new customers and net customer capture came in at 9,700 customers. The equipment rate for car, multi-risk home, health, legal, all mobile phones or personal accident insurance rose by +0.3 percentage points to stand at 27.9% at end-September 2024.

    Loan production totalled €7.5 billion, representing a year-on-year increase of +11%. The third quarter of 2024 confirmed the recovery in home loan production (+17% compared to the third quarter of 2023 and +73% compared to the second quarter of 2023), boosted by the proactive pricing policy. The average production rate for home loans came to 3.38%, down -46 basis points from the second quarter of 2024 and -32 basis points year on year. The home loan stock rate improved by +5 basis points over the quarter and by +18 basis points year on year. The solid momentum continued in the corporate market (+16% year on year). Production for small businesses declined in a competitive market and challenging economic environment.

    Outstanding loans stood at €169 billion at end-September 2024, representing a quarter-on-quarter increase of +0.4% and a year-on-year increase of +0.5% (of which +0.6% for home loans, +0.7% for loans to small businesses, +1.0% for consumer finance and -0.1% for corporate loans). Customer assets totalled €253.3 billion at end-September 2024, up +5.1% year on year, driven by interest-earning deposits and off-balance sheet funds. Customer assets also edged up +0.6% during the quarter. This was accompanied by the continued stabilisation of demand deposit volumes (+0.4% compared with end-June 2024) in a still-uncertain environment, as well as term deposits (-2.9% compared with end-June 2024). Off-balance sheet deposits benefited from a positive year-on-year market effect across all segments and positive net inflows in life insurance.

    Retail banking activity in Italy

    In the third quarter of 2024, CA Italy posted a gross customer capture of 43,000, while the customer base grew by around 13,000 customers.

    Loan outstandings at CA Italy stood at €61.3 billion43 at end-September 2024, up +3.0% compared with end-September 2023. This was despite the downturn in the Italian market44, mostly in the retail segment, which posted an increase in outstandings of +3.6%. Loan production, buoyed by the solid momentum in all markets, rose 7.5% compared with the third quarter of 2023. Home loan production remained steady (+7% compared with the second quarter of 2024), despite a -12% year-on-year decline due to a base effect linked to the success of the promotional campaign which ran in the third quarter of 2023. The loan stock rate was down -17 basis points on the second quarter of 2024, in line with the general trend in Italian market rates.

    Customer assets at end-September 2024 totalled €117.4 billion, up +3.7% compared with end-September 2023; on-balance sheet deposits were relatively unchanged from the previous year at +0.4%, while the cost of inflows decreased. Lastly, off-balance sheet deposits rose +9.2%, benefiting from a market effect and positive net inflows.

    CA Italy’s equipment rate in car, multi-risk home, health, legal, all mobile phones or personal accident insurance increased to 20.0%, up 1.7 percentage points compared with the third quarter of 2023.

    International Retail Banking activity excluding Italy

    For International Retail Banking excluding Italy, loan outstandings were up +4.2% at current exchange rates at end-September 2024 compared with end-September 2023 (+6.7% at constant exchange rates). Customer assets rose slightly by +0.4% over the same period at current exchange rates (+8.1% at constant exchange rates).

    In Poland in particular, loan outstandings increased by +11.8% versus September 2023 (+3.6% at constant exchange rates) and customer assets by +14% (+5.5% at constant exchange rates), against a backdrop of fierce competition for deposits. Loan production in Poland also remained strong, rising +32.4% compared with the third quarter of 2023 at current exchange rates (up +26% at constant exchange rates).

    In Egypt, loan outstandings rose -18.3% between end-September 2024 and end-September 2023 (+34.6% at constant exchange rates). Over the same period, inflows fell by -36.6% but were still up +4% at constant exchange rates.

    The surplus of deposits over loans in Poland and Egypt amounted to €1.6 billion at 30 September 2024, and totalled €3.2 billion including Ukraine.

    French retail banking results

    In the third quarter of 2024, LCL’s revenues stood at €979 million, down -1.7% compared with the third quarter of 2023 due to a base effect related to the reversal of the provision for Home Purchase Saving Plans in the third quarter of 202345. Excluding this base effect, revenues grew by +3.7% as a result of both net interest margin and fee and commission income. Net interest margin, excluding the Home Purchase Saving Plan base effect45, rose +2.3%45 year on year, benefiting from positive exceptional items related to the revaluation of equity investments. In addition, the increase in the cost of funding continued to weigh on the net interest margin, partially offset by the positive impact of gradual loan repricing and the favourable impact of the contribution of macro-hedging (virtually unchanged year on year). Fee and commission income was up +5.1% compared with the third quarter of 2023, driven by all activities.

    Expenses rose +3.2% to stand at -€608 million. The increase for the period is mainly related to the increase in property expenses and IT costs. The cost/income ratio stood at 62.1%, a rise of +2.9 percentage points compared with the third quarter of 2023. Gross operating income was down -8.8%, to €371 million (up +4.5% excluding the Home Purchase Saving Plan base effect45).

    The cost of risk was up +17% compared with the third quarter of 2023 to -€82 million (including +€18 million in cost of risk on performing loans, -€94 million in proven risk, and -€5 million in other risks). This increase was mainly due to corporate specific files and to the consumer finance segment. The cost of risk/outstandings remained under control, at 23 basis points. The coverage ratio stood at 59.8% at end-September 2024 (-1 percentage point compared with end-June 2024). The Non Performing Loans ratio reached 2.1% at end-September 2024, stable compared with end-June 2024 (+0.1 percentage point). As a result, net income Group share decreased by -19.2% compared with the third quarter of 2024 (-6.2% excluding the Home Purchase Saving Plan base effect45).

    In the first nine months of 2024, LCL revenues totalled €2,912 million, a +0.7% increase compared with the first nine months of 2023. The net interest margin was slightly up (+0.5%), benefiting from gradual loan repricing and the positive impact of macro-hedging, in the context of rising refinancing and funding costs, and positive exceptional items in the second and third quarters of 2024 (positive valuation effects on equity investments). Fee and commission income was up +0.9% compared with the first nine months of 2023 (impacted by the base effect of Image cheque in 202346, particularly in the life insurance and payment instrument segments. Expenses excluding SRF rose +3.4% over the period as a result of the increase in staff and IT costs, partially offset by a one-off impact on taxation and a base effect related to end-of-career allowances. The cost/income ratio excluding SRF stood at 61.8% (+1.6 percentage points compared with the first nine months of 2023). Gross operating income grew slightly by +0.5% year on year. Cost of risk increased by +44.3%, impacted by the rise in proven risk from corporates and recent consumer finance production. All in all, the business line’s contribution to net income Group share stood at €607 million, down -9.8% (-5% excluding Home Purchase Saving Plan base effect)

    In the end, the business line contributed 10% to the underlying net income Group share of Crédit Agricole S.A.’s core businesses. (excluding the Corporate Centre division) in the first nine months of 2024 and 14% to underlying revenues excluding the Corporate Centre.

    At 30 September 2024, the equity allocated to the business line stood at €5.3 billion and risk-weighted assets amounted to €55.3 billion. LCL’s underlying RoNE (return on normalised equity) stood at 14.4% for the first nine months of 2024.

    International Retail Banking results47

    In the third quarter of 2024, revenues for International Retail Banking totalled €1,006 million, falling slightly by -1.8% (+1.2% at constant exchange rates) compared with the third quarter of 2023. Operating expenses were under control at €519 million, an increase of +3.1% (+4.4% at constant exchange rates) Gross operating income consequently totalled €486 million, down -6.5% (-2.1% at constant exchange rates) for the period. Cost of risk amounted to -€59 million, down -51.1% compared with the third quarter of 2023 (-50.1% at constant exchange rates).

    All in all, net income Group share for CA Italy, CA Egypt, CA Poland and CA Ukraine amounted to €194 million in the third quarter of 2024, up +13.9% (-12.9% at constant exchange rates). This included a negative impact of -€40 million following the change in the corporate income tax rate in Ukraine.

    For the first nine months of 2024, International Retail Banking revenues rose by +3.9% to €3,090 million (+0.6% at constant exchange rates). Expenses excluding SRF and DGS stood at -€1,522 million, an increase of 2.1% compared with the first nine months of 2023. Gross operating income totalled €1,510 million, up +4.6% (+1.1% at constant exchange rates). Cost of risk fell by -41.0% (-23.0% at constant exchange rates) to -€213 million compared with the first nine months of 2023. In the end, net income Group share for International Retail Banking came to €678 million, versus €600 million in the first nine months of 2023, and included a negative impact of around -€40 million following the change in corporate income tax rate in Ukraine.

    In the first nine months of 2024, International Retail Banking contributed 12% to the underlying net income Group share of Crédit Agricole S.A.’s core businesses (excluding the Corporate Centre) and 15% to underlying revenues excluding the Corporate Centre.

    As at 30 September 2024, the capital allocated to International Retail Banking was €4.4 billion and risk-weighted assets totalled €46.3 billion.

    Results in Italy

    In the third quarter of 2024, revenues for Crédit Agricole Italy amounted to €764 million, down -2.5% compared with the third quarter of 2023. Revenues were impacted by a -2.5% decline in net interest margin compared with the third quarter of 2023 but were boosted by fee and commission income from assets under management, which remained relatively unchanged at +0.7%. Operating expenses were stable at 0.9% compared with the third quarter of 2023.

    Cost of risk amounted to -€48 million in the third quarter of 2024, down -43.4% from the third quarter of 2023, and corresponded almost entirely to provisions for proven risk. Cost of risk/outstandings48 stood at 44 basis points, an improvement of 6 basis points compared with the second quarter of 2024. The Non Performing Loans ratio improved compared with the first quarter of 2024 to stand at 3.0%, while the coverage ratio was 73.6% (+1.2 percentage points compared with the second quarter of 2024). Net income Group share for CA Italy was €164 million, down -1.3% compared with the third quarter of 2023.

    In the first nine months of 2024, revenues for Crédit Agricole Italy rose slightly by +0.8% to €2,323 million. Expenses excluding SRF and DGS (deposit guarantee fund in Italy) were under control at €1,161 million, a slight decrease of -0.2% compared with the first nine months of 2023. Gross operating income stood at €1,105 million, a slight increase of +0.3% compared with the first nine months of 2023. Cost of risk amounted to -€170 million, down -27.2% compared with the first nine months of 2023. As a result, CA Italy’s net income Group share totalled €497 million, an increase of +4.4% compared with the first nine months of 2023.

    CA Italy’s underlying RoNE (return on normalised equity) was 22.6% at 30 September 2024.

    International Retail Banking results – excluding Italy

    In the third quarter of 2024, revenues for International Retail Banking excluding Italy totalled €242 million, up +0.4% (+14.8% at constant exchange rates) compared with the third quarter of 2023. Revenues in Poland were up +22.2% compared with the third quarter of 2023 (+16.1% at constant exchange rates), boosted by a higher net interest margin and a strong upwards trend in fee and commission income. Revenues in Egypt were down (-19.9% compared with the third quarter of 2023) due to foreign exchange rate movements (depreciation of the Egyptian pound), but were particularly buoyant at constant exchange rates (+32.7%), benefiting from a sharp increase in the interest margin. Operating expenses for International Retail Banking excluding Italy amounted to €122 million, up +11.0% compared with the third quarter of 2023 (+17.8% at constant exchange rates). Gross operating income amounted to €120 million, a decrease of -8.5% (+11.8% at constant exchange rates) compared with the third quarter of 2023. Cost of risk amounted to -€11 million, down -68.9% (-68.9% at constant exchange rates). Furthermore, at end-September 2024, the coverage ratio for loan outstandings remained high in Poland and Egypt, at 121% and 139% respectively. In Ukraine, the local coverage ratio remains prudent (335%). All in all, the contribution of International Retail Banking excluding Italy to net income Group share was €30 million, down 49.1% compared with the third quarter of 2023.

    In the first nine months of 2024, revenues for International Retail Banking excluding Italy totalled €767 million, up +14.3% (+25.0% at constant exchange rates) compared with the first nine months of 2023, driven by the increase in net interest margin. Operating expenses amounted to -€361 million, up +10.2% compared with the first nine months of 2023 (+12.8% at constant exchange rates). The cost/income ratio at end-September 2024 was 47.1% (an improvement of 1.8 points on the cost/income ratio at end-September 2023). Thanks to strong growth in revenues, gross operating income came to €406 million, up 18.3% (+38.4% at constant exchange rates) from the first nine months of 2023. Cost of risk amounted to -€43 million, down -66.4% (-65.8% at constant exchange rates) compared with the first nine months of 2023. All in all, International Retail Banking excluding Italy contributed €182 million to net income Group share.

    The underlying RoNE (return on normalised equity) of Other IRB (excluding CA Italy) stood at 33.0% at 30 September 2024.

    At 30 September 2024, the entire Retail Banking business line contributed 22% to the underlying net income Group share of Crédit Agricole S.A.’s core businesses (excluding the Corporate Centre division) and 29% to underlying revenues excluding the Corporate Centre.

    At 30 September 2024, the division’s equity amounted to €9.7 billion. Its risk-weighted assets totalled €101.6 billion.

    Corporate Centre results

    The net income Group share of the Corporate Centre was -€161 million in the third quarter of 2024, down -€106 million compared with the third quarter of 2023. The negative contribution of the Corporate Centre division can be analysed by distinguishing between the “structural” contribution (-€161 million) and other items (+€1 million).
    The contribution of the “structural” component (-€161 million) decreased by -€138 million compared with the third quarter of 2023 and can be broken down into three types of activity:

    • The activities and functions of the Corporate Centre of the Crédit Agricole S.A. Parent Company. This contribution amounted to -€140 million in the third quarter of 2024, down -€75 million, notably due to a base effect of -€171 million related to reversals of provisions for Home Purchase Saving Plans recorded in the third quarter of 2023.
    • The business lines that are not part of the core businesses, such as CACIF (private equity), CA Immobilier, CATE and BforBank (equity-accounted). They contributed -€28 million in the third quarter of 2024, down -€65 million from the third quarter of 2023. This was due to the unfavourable impact of the revaluation of Banco BPM securities for -€35 million (+€5 million in the third quarter of 2024, against +€40 million in the third quarter of 2023), as well as a deterioration in the portfolio which pushed up the cost of potential risk (stages 1 and 2), particularly on financing guaranteed by Foncaris49
    • Group support functions. Their contribution amounted to +€7 million this quarter (+€3 million compared with the third quarter of 2023).

    The contribution of “other items” was up +€32 million compared with the third quarter of 2023.
    The “internal margins” effect at the time of the consolidation of the insurance activity at the Crédit Agricole level was accounted for through the Corporate Centre. Over the quarter, the impact of internal margins was -€211 million in revenues and +€211 million in expenses.

    In the first nine months of 2024, underlying net income Group share of the Corporate Centre division was -€506 million, down -€131 million compared with the first nine months of 2023. The structural component contributed -€513 million and other items of the division recorded a positive contribution of +€7 million in the first nine months.
    The “structural” component contribution was down -€2 million compared with the first nine months of 2023. It can be broken down into three types of activities:

    • The activities and functions of the Corporate Centre of the Crédit Agricole S.A. Parent Company. This contribution amounted to -€767 million in the first nine months of 2024, down -€55 million compared with the first nine months of 2023, including a base effect of -€171 million related to the reversal of the provision for Home Purchase Saving Plans recorded in the third quarter of 2023;
    • Business lines not attached to the core businesses, such as CACIF (private equity), CA Immobilier and BforBank: their contribution, at +€234 million in the first nine months of 2024, was up on the first nine months of 2023 (+€46 million), primarily due to the end of the SRF building-up period (-€77 million in the first half of 2023), as well as the impact of the valuation and dividend of Banco BPM securities for +€99 million;
    • The Group’s support functions: their contribution for the first nine months of 2024 was +€20 million, up +€7 million compared with the first nine months of 2023.

    The contribution of “other items” was down -€129 million compared with the first nine months of 2023.

    At 30 September 2024, risk-weighted assets stood at €29.6 billion.

    Financial strength

    Crédit Agricole Group

    At 30 September 2024, the phased-in Common Equity Tier 1 (CET1) ratio of Crédit Agricole Group was 17.4%, an increase of +0.1 percentage point compared with end-June 2024. Therefore, the Crédit Agricole Group posted a substantial buffer of 7.6 percentage points between the level of its CET1 ratio and the 9.8% SREP requirement. The fully loaded CET1 ratio was 17.3%.

    During the third quarter 2024:

    • The CET1 ratio benefited from an impact of +25 basis points related to retained earnings.
    • Changes in risk-weighted assets related to business lines organic growth impacted the Group’s CET1 ratio by -27 basis points (see below).
    • The methodological and other effects have a favourable impact of +4 basis points and include the contribution of the capital increase reserved for employees and a favourable change in unrealised gains and/or losses.

    The phased-in Tier 1 ratio stood at 18.3%, while the phased-in total ratio was 21.0% at end-September 2024.

    The phased-in leverage ratio stood at 5.5%, remaining stable compared with end-June 2024, well above the regulatory requirement of 3.5%.

    Risk-weighted assets for the Crédit Agricole Group amounted to €636 billion, up +€8.2 billion compared with 30 June 2024. The change can be broken down by business line as follows: Retail Banking +€7.3 billion, Asset Gathering +€3.2 billion (including +€3.1 billion in Insurance equity-accounted value), Specialised Financial Services +€0.3 billion, Large Customers -€2.3 billion (benefiting from favourable foreign exchange and regulatory impacts for Crédit Agricole CIB) and Corporate Centre -€0.2 billion.

    Maximum Distributable Amount (MDA and L-MDA) trigger thresholds

    The transposition of Basel regulations into European law (CRD) introduced a restriction mechanism for distribution that applies to dividends, AT1 instruments and variable compensation. The Maximum Distributable Amount (MDA, the maximum sum a bank is allowed to allocate to distributions) principle aims to place limitations on distributions in the event the latter were to result in non-compliance with combined capital buffer requirements.

    The distance to the MDA trigger is the lowest of the respective distances to the SREP requirements in CET1 capital, Tier 1 capital and total capital.

    At 30 September 2024, Crédit Agricole Group posted a buffer of 670 basis points above the MDA trigger, i.e. €43 billion in CET1 capital.

    Failure to comply with the leverage ratio buffer requirement would result in a restriction of distributions and the calculation of a maximum distributable amount (L-MDA).

    At 30 September 2024, Crédit Agricole Group posted a buffer of 196 basis points above the L-MDA trigger, i.e. €42 billion in Tier 1 capital. At the Crédit Agricole Group level, it is the distance to the L-MDA trigger that determines the distance to distribution restriction.

    At 30 September 2024, Crédit Agricole S.A. posted a buffer of 280 basis points above the MDA trigger, i.e. €11 billion in CET1 capital. Crédit Agricole S.A. is not subject to the L-MDA requirement.

    The issuance of a new AT1 instrument carried out by Crédit Agricole S.A. on 2 October 2024, for a nominal amount of US$1.25 billion, has a positive impact of 18 basis points on the Tier 1 and Total capital ratios of Crédit Agricole Group, as well as a positive impact of 5 basis points on its leverage ratio. This issuance also has a positive impact of 28 basis points on the Tier 1 and Total capital ratios of Crédit Agricole S.A. Taking this issuance into account in the solvency ratios at 30 September 2024, Crédit Agricole Group would post a buffer of 688 basis points above the MDA trigger, i.e. €44 billion in CET1 capital, and 201 basis points above the L-MDA trigger, i.e. €43 billion in Tier 1 capital. Crédit Agricole S.A. would post a buffer of 308 basis points above the MDA trigger, i.e. €12 billion in CET1 capital.

    TLAC

    Crédit Agricole Group must comply with the following TLAC ratio requirements at all times:

    • a TLAC ratio above 18% of risk-weighted assets (RWA), plus – in accordance with EU directive CRD 5 – a combined capital buffer requirement (including, for Crédit Agricole Group, a 2.5% capital conservation buffer, a 1% G-SIB buffer, the counter-cyclical buffer set at 0.77% and the 0.01% systemic risk buffer for CA Group at 30 September 2024). Considering the combined capital buffer requirement, Crédit Agricole Group must adhere to a TLAC ratio of above 22.3%;
    • a TLAC ratio of above 6.75% of the Leverage Ratio Exposure (LRE).

    The Crédit Agricole Group’s 2025 target is to maintain a TLAC ratio greater than or equal to 26% of RWA excluding eligible senior preferred debt.

    At 30 September 2024, Crédit Agricole Group’s TLAC ratio stood at 27.3% of RWA and 8.2% of leverage ratio exposure, excluding eligible senior preferred debt50, which is well above the requirements. The TLAC ratio, expressed as a percentage of risk weighted assets, increased by 20 basis points over the quarter, due to equity and eligible items increasing more rapidly than risk-weighted assets over the period. Expressed as a percentage of leverage ratio exposure (LRE), the TLAC ratio was up 20 basis points compared with June 2024.

    The Group thus has a TLAC ratio excluding eligible senior preferred debt that is 510 basis points higher, i.e. €32 billion, than the current requirement of 22.3% of RWA.

    At end-September 2024, €10.4 billion equivalent had been issued in the market (senior non-preferred and Tier 2 debt) as well as €1.25 billion of AT1. The amount of Crédit Agricole Group senior non-preferred securities taken into account in the calculation of the TLAC ratio was €35.2 billion.

    MREL

    The required minimum levels are set by decisions of resolution authorities and then communicated to each institution, then revised periodically. At 30 September 2024, Crédit Agricole Group has to meet a minimum total MREL requirement of:

    • 22.01% of RWA, plus – in accordance with EU directive CRD 5 – a combined capital buffer requirement (including, for Crédit Agricole Group, a 2.5% capital conservation buffer, a 1% G-SIB buffer, the counter-cyclical buffer set at 0.77% and the 0.01% systemic risk buffer for CA Group at 30 September 2024). Considering the combined capital buffer requirement, the Crédit Agricole Group has to meet to a total MREL ratio of above 26.3%;
    • 6.25% of the LRE.

    At 30 September 2024, the Crédit Agricole Group had a total MREL ratio of 32.9% of RWA and 9.8% of leverage exposure, well above the requirement.

    An additional subordination requirement (“subordinated MREL”) is also determined by the resolution authorities and expressed as a percentage of RWA and LRE. At 30 September 2024, this subordinated MREL requirement for the Crédit Agricole Group was:

    • 18.25% of RWA, plus a combined capital buffer requirement. Considering the combined capital buffer requirement, the Crédit Agricole Group has to meet to a subordinated MREL ratio of above 22.5%;
    • 6.25% of leverage exposure.

    At 30 September 2024, Crédit Agricole Group had a subordinated MREL ratio of 27.3% of RWA and 8.2% of leverage exposure, well above the requirement.

    The distance to the maximum distributable amount trigger related to MREL requirements (M-MDA) is the lowest of the respective distances to the MREL, subordinated MREL and TLAC requirements expressed in RWA.

    At 30 September 2024, Crédit Agricole Group had a buffer of 480 basis points above the M-MDA trigger, i.e. €31 billion in CET1 capital; the distance to the M-MDA trigger corresponds to the distance between the subordinated MREL ratio and the corresponding requirement.

    Crédit Agricole S.A.

    At 30 September 2024, Crédit Agricole S.A.’s solvency ratio was higher than the Medium-Term Plan target, with a phased-in Common Equity Tier 1 (CET1) ratio of 11.7%, up +0.1 percentage point from end-June 2024. Crédit Agricole S.A. therefore had a comfortable buffer of 3.1 percentage points between the level of its CET1 ratio and the 8.6% SREP requirement. The fully loaded CET1 ratio was 11.7%.

    During the third quarter 2024:

    • The CET1 ratio benefited this quarter from a positive impact of +19 basis points linked to retained earnings. This impact corresponds to net income Group share net of AT1 coupons (impact of +38 basis points) and of the distribution of 50% of earnings, i.e. a provision for dividends of 25 euro cents per share in third quarter 2024 (-19 basis points).
    • Changes in risk-weighted assets related to business line organic growth impacted the CET1 ratio by
      -14 basis points, of which -5 basis points in the Insurance business line (increase in the equity-accounted value over the quarter).
    • Methodological and other effects had a positive impact of +10 basis points and included the contribution of the capital increase reserved for employees and a favourable trend in unrealised gains and/or losses.

    The phased-in leverage ratio was 3.8% at end-September 2024, stable compared to end-June 2024 and above the 3% requirement.

    The phased-in Tier 1 ratio stood at 13.2% and the phased-in total ratio at 17.3% this quarter.

    Risk weighted assets for Crédit Agricole S.A. amounted to €402 billion at end of September 2024, up by +€3.1 billion compared to 30 June 2024. The change can be broken down by core business line as follows:

    • The Retail Banking divisions showed an increase of +€1.7 billion, particularly in France.
    • Asset Gathering posted an increase of +€3.2 billion, including +€3.1 billion in RWA for Insurance (increase in the equity-accounted value in the third quarter of 2024).
    • Specialised Financial Services remained stable at +€0.2 billion.
    • Large Customers recorded a decrease in risk-weighted assets of -€2.4 billion over the quarter, mainly as a result of foreign exchange and regulatory impacts in CIB.
    • The Corporate Centre divisions posted an increase in risk-weighted assets of +€0.4 billion.

    Liquidity and Funding

    Liquidity is measured at Crédit Agricole Group level.

    In order to provide simple, relevant and auditable information on the Group’s liquidity position, the banking cash balance sheet’s stable resources surplus is calculated quarterly.

    The banking cash balance sheet is derived from Crédit Agricole Group’s IFRS financial statements. It is based on the definition of a mapping table between the Group’s IFRS financial statements and the sections of the cash balance sheet and whose definition is commonly accepted in the marketplace. It relates to the banking scope, with insurance activities being managed in accordance with their own specific regulatory constraints.

    Further to the breakdown of the IFRS financial statements in the sections of the cash balance sheet, netting calculations are carried out. They relate to certain assets and liabilities that have a symmetrical impact in terms of liquidity risk. Deferred taxes, fair value impacts, collective impairments, short-selling transactions and other assets and liabilities were netted for a total of €68 billion at end-September 2024. Similarly, €157 billion in repos/reverse repos were eliminated insofar as these outstandings reflect the activity of the securities desk carrying out securities borrowing and lending operations that offset each other. Other nettings calculated in order to build the cash balance sheet – for an amount totalling €181 billion at end September 2024 – relate to derivatives, margin calls, adjustment/settlement/liaison accounts and to non-liquid securities held by Corporate and Investment banking (CIB) and are included in the “Customer-related trading assets” section.

    Note that deposits centralised with Caisse des Dépôts et Consignations are not netted in order to build the cash balance sheet; the amount of centralised deposits (€105 billion at end-September 2024) is booked to assets under “Customer-related trading assets” and to liabilities under “Customer-related funds”.

    In a final stage, other restatements reassign outstandings that accounting standards allocate to one section, when they are economically related to another. As such, Senior issuances placed through the banking networks as well as financing by the European Investment Bank, the Caisse des Dépôts et Consignations and other refinancing transactions of the same type backed by customer loans, which accounting standards would classify as “Medium long-term market funds”, are reclassified as “Customer-related funds”.

    Medium to long-term repurchase agreements are also included in “Long-term market funds”.

    Finally, the CIB’s counterparties that are banks with which we have a commercial relationship are considered as customers in the construction of the cash balance sheet.

    Standing at €1,719 billion at 30 September 2024, the Group’s banking cash balance sheet shows a surplus of stable funding resources over stable application of funds of €188 billion, down -€10 billion compared with end-June 2024.

    Total T-LTRO 3 outstandings for Crédit Agricole Group amounted to €0.7 billion at 30 September 2024.

    Furthermore, given the excess liquidity, the Group remained in a short-term lending position at 30 September 2024 (central bank deposits exceeding the amount of short-term net debt).

    Medium-to-long-term market resources were €263 billion at 30 September 2024, up slightly from end-June 2024.

    They included senior secured debt of €76 billion, senior preferred debt of €125 billion, senior non-preferred debt of €37 billion and Tier 2 securities amounting to €25 billion.

    The Group’s liquidity reserves, at market value and after haircuts, amounted to €466 billion at 30 September 2024, down -€12 billion compared to 30 June 2024.

    They covered short-term net debt more than two times over (excluding the replacements with Central Banks).

    The decrease in liquidity reserves was mainly due to:

    • The decrease in Central Bank deposits for -€15 billion;
    • The decrease in eligible claims to Central Bank (mainly due to the temporary removal of TRICP credit claims with an internal rating) for -€3 billion;
    • The increase in the securities portfolio for +€6 billion (+€3 billion of HQLA securities/+€3 billion of non-HQLA securities).

    Crédit Agricole Group also continued its efforts to maintain immediately available reserves (after recourse to ECB financing). Central bank eligible non-HQLA assets after haircuts amounted to €152 billion.

    Credit institutions are subject to a threshold for the LCR ratio, set at 100% on 1 January 2018.

    At 30 September 2024, the end of month LCR ratios were 147% for Crédit Agricole Group (representing a surplus of €97.7 billion) and 152% for Crédit Agricole S.A. (representing a surplus of €92.2 billion). They were higher than the Medium-Term Plan target (around 110%).

    In addition, the NSFR of Crédit Agricole Group and Crédit Agricole S.A. exceeded 100%, in accordance with the regulatory requirement applicable since 28 June 2021 and above the Medium-Term Plan target (>100%).

    The Group continues to follow a prudent policy as regards medium-to-long-term refinancing, with a very diversified access to markets in terms of investor base and products.

    At 30 September 2024, the Group’s main issuers raised the equivalent of €51 billion51,52in medium-to-long-term debt on the markets, 47% of which was issued by Crédit Agricole S.A. In particular, the following amounts are noted for the Group:

    • Crédit Agricole CIB issued €17.9 billion in structured format, including €1.2 billion in Green Bond format;
    • Crédit Agricole Personal Finance & Mobility issued €2 billion equivalent in EMTN issuances through Crédit Agricole Auto Bank (CAAB) and €0.7 billion equivalent in securitisations;
    • CA Italy issued two senior secured debt issuances for a total of €1.5 billion, of which €500 million in Green Bond format;
    • Crédit Agricole next bank (Switzerland) issued two tranches in senior secured format for a total of 200 million Swiss francs, of which 100 million Swiss francs in Green Bond format;
    • Crédit Agricole Assurances issued a €750 million Tier 2 10-year bullet subordinated bond and made a tender offer on two subordinated perpetual issuances (FR0012444750 & FR0012222297) for €788.5 million in September.

    The Group’s medium-to-long-term financing can be broken down into the following categories:

    • €9.0 billion in secured financing;
    • €22.0 billion in plain-vanilla unsecured financing;
    • €17.9 billion in structured financing;
    • €2.3 billion in long-term institutional deposits and CDs.

    In addition, €11.7 billion was raised through off-market issuances, split as follows:

    • €9.5 billion from banking networks (the Group’s retail banking or external networks);
    • €0.65 billion from supranational organisations or financial institutions;
    • €1.6 billion from national refinancing vehicles (including the credit institution CRH).

    At 30 September 2024, Crédit Agricole S.A. raised the equivalent of €24.1 billion on the market53,54representing 93% of its 2024 refinancing programme:

    The bank raised the equivalent of €24.1 billion, of which €7.3 billion in senior non-preferred debt and €3.1 billion in Tier 2 debt, as well as €7.2 billion in senior preferred debt and €6.5 billion in senior secured debt at end-September. The financing comprised a variety of formats and currencies, including:

    • €6.3 billion55;
    • 6.35 billion US dollars (€5.8 billion equivalent);
    • 1.1 billion pounds sterling (€1.3 billion equivalent);
    • 230 billion Japanese yen (€1.4 billion equivalent);
    • 0.8 billion Swiss francs (€0.8 billion equivalent);
    • 1.75 billion Australian dollars (€1.1 billion equivalent);
    • 7 billion renminbi (€0.9 billion equivalent).

    At end-September, Crédit Agricole S.A. had issued 64% of its funding plan in currencies other than the euro56,57.

    In addition, on 2 January 2024, Crédit Agricole S.A. issued a PerpNC6 AT1 bond for €1.25 billion at an initial rate of 6.5% and, on 24 September 2024, a PerpNC10 AT1 bond for $1.25 billion at an initial rate of 6.7%.

    Appendix 1 – Specific items, Crédit Agricole Group et Crédit Agricole S.A.

    Crédit Agricole Group – Specific items

      Q3-24 Q3-23 9M-24 9M-23
    €m Gross
    impact*    		 Impact on
    Net income    		 Gross
    impact*    		 Impact on
    Net income    		 Gross
    impact*    		 Impact on
    Net income    		 Gross
    impact*    		 Impact on
    Net income
                     
    DVA (LC) 4 3 2 2 46 34 (21) (15)
    Loan portfolio hedges (LC) (1) (1) (2) (1) 6 5 (26) (19)
    Home Purchase Savings Plans (LCL) – – 52 38 1 1 52 38
    Home Purchase Savings Plans (CC) – – 230 171 (0) (0) 230 171
    Home Purchase Savings Plans (RB) – – 118 88 63 47 118 88
    Mobility activities reorganisation (SFS) – – 1 0 – – 300 214
    Check Image Exchange penalty (CC) – – – – – – 42 42
    Check Image Exchange penalty (LCL) – – – – – – 21 21
    Check Image Exchange penalty (RB) – – – – – – 42 42
    Total impact on revenues 3 2 402 298 117 87 758 581
    Degroof Petercam integration costs (AG) (8) (6) – – (14) (10) – –
    ISB integration costs (LC) (26) (14) – – (70) (37) – –
    Mobility activities reorganisation (SFS) – – – – – – (18) (13)
    Total impact on operating expenses (34) (20) – – (84) (47) (18) (13)
    Mobility activities reorganisation (SFS) – – – – – – (85) (61)
    Provision for risk Ukraine (IRB) – – – – (20) (20) – –
    Total impact on cost of credit risk – – – – (20) (20) (85) (61)
    Mobility activities reorganisation (SFS) – – (26) (26) – – (39) (39)
    Total impact equity-accounted entities – – (26) (26) – – (39) (39)
    Degroof Petercam aquisition costs (AG) (3) (2) – – (23) (17) – –
    Mobility activities reorganisation (SFS) – – 61 45 – – 89 57
    Total impact on Net income on other assets (3) (2) 61 45 (23) (17) 89 57
                     
    Total impact of specific items (34) (20) 436 317 (10) 3 705 525
    Asset gathering (11) (8) – – (37) (27) – –
    French Retail banking – – 170 126 65 48 233 189
    International Retail banking – – – – (20) (20) – –
    Specialised financial services – – 35 19 – – 247 159
    Large customers (23) (12) 1 0 (18) 1 (47) (35)
    Corporate centre – – 230 171 (0) (0) 272 213
    * Impact before tax and before minority interests                

    Crédit Agricole S.A. – Specific Items

      Q3-24 Q3-23 9M-24 9M-23
    €m Gross
    impact*    		 Impact on
    Net income    		 Gross
    impact*    		 Impact on
    Net income    		 Gross
    impact*    		 Impact on
    Net income    		 Gross
    impact*    		 Impact on
    Net income
                     
    DVA (LC) 4 3 2 2 46 33 (21) (15)
    Loan portfolio hedges (LC) (1) (1) (2) (1) 6 5 (26) (19)
    Home Purchase Savings Plans (FRB) – – 52 37 3 2 52 37
    Home Purchase Savings Plans (CC) – – 230 171 (2) (1) 230 171
    Mobility activities reorganisation (SFS) – – 1 0.5 – – 300 214
    Check Image Exchange penalty (CC) – – – – – – 42 42
    Check Image Exchange penalty (LCL) – – – – – – 21 20
    Total impact on revenues 3 2 284 209 53 39 598 450
    Degroof Petercam integration costs (AG) (8) (6) – – (14) (10) – –
    ISB integration costs (LC) (26) (14) – – (70) (37) – –
    Mobility activities reorganisation (SFS) – – – – – – (18) (13)
    Total impact on operating expenses (34) (19) – – (84) (47) (18) (13)
    Provision for risk Ukraine (IRB) – – – – (20) (20) – –
    Mobility activities reorganisation (SFS) – – – – – – (85) (61)
    Total impact on cost of credit risk – – – – (20) (20) (85) (61)
                     
    Mobility activities reorganisation (SFS) – – (26) (26) – – (39) (39)
    Total impact equity-accounted entities – – (26) (26) – – (39) (39)
    Degroof Petercam aquisition costs (AG) (3) (2) – – (23) (17) – –
    Mobility activities reorganisation (SFS) – – 61 45 – – 89 57
    Total impact Net income on other assets (3) (2) 61 45 (23) (17) 89 57
                     
    Total impact of specific items (34) (20) 318 227 (73) (45) 545 394
    Asset gathering (11) (8) – – (37) (26) – –
    French Retail banking – – 52 37 3 2 73 57
    International Retail banking – – – – (20) (20) – –
    Specialised financial services – – 35 19 – – 247 159
    Large customers (23) (12) 1 0 (18) 1 (47) (34)
    Corporate centre – – 230 171 (2) (1) 272 213
    * Impact before tax and before minority interests          

    Appendix 2 – Crédit Agricole Group: income statement by business line

    Crédit Agricole Group – Results by business line, Q3-23 and Q3-24

      Q3-24 (stated)
    €m RB LCL IRB AG SFS LC CC Total
                     
    Revenues 3,266 979 1,029 1,857 869 2,054 (842) 9,213
    Operating expenses excl. SRF (2,409) (608) (539) (868) (437) (1,240) 511 (5,590)
    SRF – – – – – – – –
    Gross operating income 857 371 490 989 433 814 (331) 3,623
    Cost of risk (364) (82) (60) (13) (223) (19) (40) (801)
    Equity-accounted entities 0 – – 33 23 6 – 61
    Net income on other assets 0 0 0 (3) (2) (0) (2) (5)
    Income before tax 493 290 430 1,006 231 801 (372) 2,877
    Tax (122) (66) (176) (156) (42) (234) 210 (587)
    Net income from discont’d or held-for-sale ope. – – – – – – – –
    Net income 371 224 254 850 189 566 (162) 2,291
    Non controlling interests (1) (0) (40) (128) (17) (35) 10 (211)
    Net income Group Share 371 223 214 722 172 531 (153) 2,080
      Q3-23 (stated)
    €m RB LCL IRB AG SFS LC CC Total
                     
    Revenues 3,345 996 1,046 1,657 883 1,888 (567) 9,249
    Operating expenses excl. SRF (2,328) (589) (522) (718) (424) (1,139) 454 (5,265)
    SRF – – – – – – – –
    Gross operating income 1,018 407 524 939 460 749 (113) 3,984
    Cost of risk (254) (70) (126) (0) (224) (13) (6) (693)
    Equity-accounted entities 1 – 1 24 5 6 0 37
    Net income on other assets 0 18 1 (5) 57 (2) (0) 69
    Income before tax 765 355 400 958 298 740 (119) 3,397
    Tax (178) (79) (118) (221) (77) (203) 65 (810)
    Net income from discont’d or held-for-sale ope. (0) – 2 – (0) – – 2
    Net income 587 277 284 737 220 537 (53) 2,588
    Non controlling interests (0) (0) (42) (110) (17) (39) 4 (204)
    Net income Group Share 587 277 242 628 204 497 (49) 2,384

    Crédit Agricole Group – Results by business line, 9M-24 et 9M-23

      9M-24 (stated)
    €m RB LCL IRB AG SFS LC CC Total
                     
    Revenues 9,834 2,912 3,161 5,596 2,605 6,544 (2,407) 28,244
    Operating expenses excl. SRF (7,453) (1,801) (1,637) (2,435) (1,333) (3,741) 1,535 (16,866)
    SRF – – – – – – – –
    Gross operating income 2,381 1,111 1,523 3,161 1,272 2,803 (872) 11,378
    Cost of risk (1,056) (295) (219) (18) (653) (25) (59) (2,324)
    Equity-accounted entities 7 – – 94 83 20 – 203
    Net income on other assets 3 5 0 (23) (3) 2 (3) (19)
    Income before tax 1,335 820 1,305 3,214 699 2,800 (935) 9,238
    Tax (313) (185) (436) (658) (138) (717) 343 (2,104)
    Net income from discontinued or held-for-sale operations – – – – – – – –
    Net income 1,022 635 869 2,557 560 2,083 (592) 7,134
    Non controlling interests (1) (0) (129) (364) (59) (104) 15 (643)
    Net income Group Share 1,021 635 739 2,193 502 1,979 (577) 6,491
      9M-23 (stated)
    €m RB LCL IRB AG SFS LC CC Total
                     
    Revenues 10,032 2,891 3,040 5,144 2,717 5,844 (1,946) 27,722
    Operating expenses excl. SRF (7,217) (1,742) (1,542) (2,148) (1,224) (3,298) 1,389 (15,782)
    SRF (111) (44) (40) (6) (29) (312) (77) (620)
    Gross operating income 2,704 1,105 1,458 2,989 1,465 2,234 (634) 11,321
    Cost of risk (831) (205) (366) (1) (686) (81) (8) (2,179)
    Equity-accounted entities 9 – 1 73 90 17 – 190
    Net income on other assets 6 21 1 (5) 81 3 (1) 107
    Income before tax 1,887 921 1,095 3,057 950 2,173 (643) 9,438
    Tax (467) (217) (321) (696) (254) (561) 222 (2,293)
    Net income from discontinued or held-for-sale operations (0) – 7 1 (0) – – 7
    Net income 1,421 704 781 2,361 696 1,612 (421) 7,153
    Non controlling interests (1) (0) (121) (343) (61) (93) (0) (619)
    Net income Group Share 1,420 704 660 2,018 635 1,519 (421) 6,534

    Appendix 3 – Crédit Agricole S.A.:   Results by business line

    Crédit Agricole S.A. – Results by business line, Q3-24 et Q3-23

      Q3-24 (stated)
    €m AG LC SFS FRB (LCL) IRB CC Total
                   
    Revenues 1,870 2,054 869 979 1,006 (290) 6,487
    Operating expenses excl. SRF (868) (1,240) (437) (608) (519) (17) (3,689)
    SRF – – – – – – –
    Gross operating income 1,002 814 433 371 486 (307) 2,799
    Cost of risk (13) (19) (223) (82) (59) (37) (433)
    Equity-accounted entities 33 6 23 – – (19) 42
    Net income on other assets (3) (0) (2) 0 0 0 (4)
    Income before tax 1,019 800 231 290 427 (363) 2,404
    Tax (157) (234) (42) (66) (176) 199 (476)
    Net income from discontinued or held-for-sale operations – – – – – – –
    Net income 862 566 189 224 252 (164) 1,928
    Non controlling interests (135) (46) (17) (10) (58) 4 (262)
    Net income Group Share 728 520 172 214 194 (161) 1,666
      Q3-23 (stated)
    €m AG LC SFS FRB (LCL) IRB CC Total
                   
    Revenues 1,656 1,888 883 996 1,024 (103) 6,343
    Operating expenses excl. SRF (718) (1,139) (424) (589) (504) (2) (3,376)
    SRF – – – – – – –
    Gross operating income 937 748 460 407 520 (105) 2,967
    Cost of risk (0) (13) (224) (70) (121) (2) (429)
    Equity-accounted entities 24 6 5 – 1 (12) 23
    Net income on other assets (5) (2) 57 18 1 (0) 69
    Income before tax 956 739 298 355 401 (119) 2,630
    Tax (221) (203) (77) (79) (118) 65 (633)
    Net income from discontinued or held-for-sale operations – – (0) – 2 – 2
    Net income 736 536 220 277 285 (55) 1,999
    Non controlling interests (114) (48) (17) (12) (60) 0 (251)
    Net income Group Share 621 488 204 264 225 (55) 1,748

    Crédit Agricole S.A. – Results by business line, 9M-24 et 9M-23

      9M-24 (stated)
    €m AG LC SFS FRB (LCL) IRB CC Total
                   
    Revenues 5,603 6,543 2,605 2,912 3,090 (665) 20,089
    Operating expenses excl. SRF (2,435) (3,741) (1,333) (1,801) (1,580) (88) (10,978)
    SRF – – – – – – –
    Gross operating income 3,168 2,802 1,272 1,111 1,510 (752) 9,111
    Cost of risk (18) (25) (653) (295) (213) (53) (1,256)
    Equity-accounted entities 94 20 83 – – (65) 132
    Net income on other assets (23) 2 (3) 5 0 24 5
    Change in value of goodwill – – – – – – –
    Income before tax 3,221 2,800 699 820 1,297 (846) 7,991
    Tax (659) (717) (138) (185) (435) 343 (1,790)
    Net income from discontinued or held-for-sale operations – – – – – – –
    Net income 2,563 2,083 560 635 862 (503) 6,201
    Non controlling interests (382) (147) (59) (28) (184) (3) (803)
    Net income Group Share 2,180 1,936 502 607 678 (506) 5,397
      9M-23 (stated)
    €m AG LC SFS FRB (LCL) IRB CC Total
                   
    Revenues 5,133 5,844 2,717 2,891 2,975 (421) 19,140
    Operating expenses excl. SRF (2,148) (3,298) (1,224) (1,742) (1,491) (20) (9,922)
    SRF (6) (312) (29) (44) (40) (77) (509)
    Gross operating income 2,979 2,234 1,465 1,105 1,444 (519) 8,709
    Cost of risk (1) (81) (686) (205) (362) (2) (1,338)
    Equity-accounted entities 73 17 90 – 2 (45) 136
    Net income on other assets (5) 3 81 21 1 (0) 102
    Change in value of goodwill – – – – – – –
    Income before tax 3,047 2,173 950 921 1,085 (566) 7,609
    Tax (699) (561) (254) (217) (320) 218 (1,832)
    Net income from discontinued or held-for-sale operations 1 – (0) – 7 – 7
    Net income 2,349 1,612 696 704 772 (348) 5,785
    Non controlling interests (353) (125) (61) (31) (172) (27) (771)
    Net income Group Share 1,996 1,486 635 673 600 (375) 5,014

    Appendix 4 – Data per share

    Crédit Agricole S.A. – Earnings p/share, net book value p/share and RoTE
    (€m)   Q3-2024 Q3-2023   9M-24 9M-23
                 
    Net income Group share – stated   1,666 1,748   5,397 5,014
    – Interests on AT1, including issuance costs, before tax   (130) (136)   (351) (371)
    – Foreign exchange impact on reimbursed AT1   (19) –   (266) –
    NIGS attributable to ordinary shares – stated [A] 1,517 1,612   4,780 4,643
    Average number shares in issue, excluding treasury shares (m) [B] 3,031 3,043   3,007 3,031
    Net earnings per share – stated [A]/[B] 0.50 € 0.53 €   1.59 € 1.53 €
    Underlying net income Group share (NIGS)   1,686 1,520   5,442 4,620
    Underlying NIGS attributable to ordinary shares [C] 1,537 1,384   4,825 4,249
    Net earnings per share – underlying [C]/[B] 0.51 € 0.46 €   1.60 € 1.40 €
                 
                 
    (€m)         30/09/2024 30/09/2023
    Shareholder’s equity Group share         71,386 69,416
    – AT1 issuances         (6,102) (7,235)
    – Unrealised gains and losses on OCI – Group share         1,042 1,644
    Net book value (NBV), not revaluated, attributable to ordin. sh. [D]       66,326 63,825
    – Goodwill & intangibles* – Group share         (17,778) (17,255)
    Tangible NBV (TNBV), not revaluated attrib. to ordinary sh. [E]       48,548 46,570
    Total shares in issue, excluding treasury shares (period end, m) [F]       3,040 3,052
    NBV per share , after deduction of dividend to pay (€) [D]/[F]       21.8 € 20.9 €
    TNBV per share, after deduction of dividend to pay (€) [G]=[E]/[F]       16.0 € 15.3 €
    * including goodwill in the equity-accounted entities            
                 
    (€m)         9M-24 9M-23
    Net income Group share – stated [K]       5,397 5,014
    Impairment of intangible assets [L]       0 0
    IFRIC [M]       -110 -542
    Stated NIGS annualised [N] = ([K]-[L]-[M])*2+[M]       7,233 6,866
    Interests on AT1, including issuance costs, before tax, foreign exchange impact, annualised [O]       -734 -495
    Stated result adjusted [P] = [N]+[O]       6,499 6,371
    Tangible NBV (TNBV), not revaluated attrib. to ord. sh. – avg *** (3) [J]       45,219 43,200
    Stated ROTE adjusted (%) = [P] / [J]       14.4% 14.7%
    Underlying Net income Group share [Q]       5,442 4,620
    Underlying NIGS annualised [R] = ([Q]-[M])*2+[M]       7,293 6,341
    Underlying NIGS adjusted [S] = [R]+[O]       6,559 5,846
    Underlying ROTE adjusted(%) = [S] / [J]       14.5% 13.5%
    *** including assumption of dividend for the current exercise         0.0%

    (1) Underlying: see appendixes for more details on specific items
    (2) Underlying ROTE calculated on the basis of an annualised underlying net income Group share and linearised IFRIC costs over the year
    (3) Average of the NTBV not revalued attributable to ordinary shares, calculated between 31/12/2023 and 30/09/2024 (line [E]), restated with an assumption of dividend for current exercises

    Alternative Performance Indicators58

    NBV Net Book Value (not revalued)
    The Net Book Value not revalued corresponds to the shareholders’ equity Group share from which the amount of the AT1 issues, the unrealised gains and/or losses on OCI Group share and the pay-out assumption on annual results have been deducted.

    NBV per share Net Book Value per share – NTBV Net Tangible Book Value per share
    One of the methods for calculating the value of a share. This represents the Net Book Value divided by the number of shares in issue at end of period, excluding treasury shares.

    Net Tangible Book Value per share represents the Net Book Value after deduction of intangible assets and goodwill, divided by the number of shares in issue at end of period, excluding treasury shares.

    EPS Earnings per Share
    This is the net income Group share, from which the AT1 coupon has been deducted, divided by the average number of shares in issue excluding treasury shares. It indicates the portion of profit attributable to each share (not the portion of earnings paid out to each shareholder, which is the dividend). It may decrease, assuming the net income Group share remains unchanged, if the number of shares increases.

    Cost/income ratio
    The cost/income ratio is calculated by dividing operating expenses by revenues, indicating the proportion of revenues needed to cover operating expenses.

    Cost of risk/outstandings
    Calculated by dividing the cost of credit risk (over four quarters on a rolling basis) by outstandings (over an average of the past four quarters, beginning of the period). It can also be calculated by dividing the annualised cost of credit risk for the quarter by outstandings at the beginning of the quarter. Similarly, the cost of risk for the period can be annualised and divided by the average outstandings at the beginning of the period.

    Since the first quarter of 2019, the outstandings taken into account are the customer outstandings, before allocations to provisions.

    The calculation method for the indicator is specified each time the indicator is used.

    Doubtful loan
    A doubtful loan is a loan in default. The debtor is considered to be in default when at least one of the following two conditions has been met:

    • a payment generally more than 90 days past due, unless specific circumstances point to the fact that the delay is due to reasons independent of the debtor’s financial situation.
    • the entity believes that the debtor is unlikely to settle its credit obligations unless it avails itself of certain measures such as enforcement of collateral security right.

    Impaired loan
    Loan which has been provisioned due to a risk of non-repayment.

    MREL
    The MREL (Minimum Requirement for Own Funds and Eligible Liabilities) ratio is defined in the European “Bank Recovery and Resolution Directive” (BRRD). This Directive establishes a framework for the resolution of banks throughout the European Union, with the aim to provide resolution authorities with shared instruments and powers to pre-emptively tackle banking crises, preserve financial stability and reduce taxpayers’ exposure to losses. Directive (EU) 2019/879 of 20 May 2019 known as “BRRD2” amended the BRRD and was transposed into French law by Order 2020-1636 of 21 December 2020.

    The MREL ratio corresponds to an own funds and eligible liabilities buffer required to absorb losses in the event of resolution. Under BRRD2, the MREL ratio is calculated as the amount of eligible capital and liabilities expressed as a percentage of risk weighted assets (RWA), as well as a leverage ratio exposure (LRE). Are eligible for the numerator of the total MREL ratio the Group’s regulatory capital, as well as eligible liabilities issued by the corporate centre and the Crédit Agricole network affiliated entities, i.e. subordinated notes, senior non-preferred debt instruments and certain senior preferred debt instruments with residual maturities of more than one year.

    Impaired (or non-performing) loan coverage ratio 
    This ratio divides the outstanding provisions by the impaired gross customer loans.

    Impaired (or non-performing) loan ratio 
    This ratio divides the impaired gross customer loans on an individual basis, before provisions, by the total gross customer loans.

    TLAC
    The Financial Stability Board (FSB) has defined the calculation of a ratio aimed at estimating the adequacy of the bail-in and recapitalisation capacity of Global Systemically Important Banks (G-SIBs). This Total Loss Absorbing Capacity (TLAC) ratio provides resolution authorities with the means to assess whether G-SIBs have sufficient bail-in and recapitalisation capacity before and during resolution. It applies to Global Systemically Important Banks, and therefore to Crédit Agricole Group. Agricole. The TLAC ratio requirement was transposed into European Union law via CRR2 and has been applicable since 27 June 2019.

    The Group’s regulatory capital as well as subordinated notes and eligible senior non-preferred debt with residual maturities of more than one year issued by Crédit Agricole S.A. are eligible for the numerator of the TLAC ratio.

    Net income Group share
    Net income/(loss) for the financial year (after corporate income tax). Equal to net income Group share, less the share attributable to non-controlling interests in fully consolidated subsidiaries.

    Underlying Net income Group share
    The underlying net income Group share represents the stated net income Group share from which specific items have been deducted (i.e., non-recurring or exceptional items) to facilitate the understanding of the company’s actual earnings.

    Net income Group share attributable to ordinary shares
    The net income Group share attributable to ordinary shares represents the net income Group share from which the AT1 coupon has been deducted, including issuance costs before tax.

    RoTE Return on Tangible Equity
    The RoTE (Return on Tangible Equity) measures the return on tangible capital by dividing the Net income Group share annualised by the Group’s NBV net of intangibles and goodwill. The annualised Net income Group share corresponds to the annualisation of the Net income Group share (Q1x4; H1x2; 9Mx4/3) excluding impairments of intangible assets and restating each period of the IFRIC impacts in order to linearise them over the year.

    Disclaimer

    The financial information on Crédit Agricole S.A. and Crédit Agricole Group for the third quarter and the first nine months of 2024 comprises this presentation and the attached appendices and press release which are available on the website: https://www.credit-agricole.com/en/finance/financial-publications.

    This presentation may include prospective information on the Group, supplied as information on trends. This data does not represent forecasts within the meaning of EU Delegated Act 2019/980 of 14 March 2019 (Chapter 1, article 1, d).

    This information was developed from scenarios based on a number of economic assumptions for a given competitive and regulatory environment. Therefore, these assumptions are by nature subject to random factors that could cause actual results to differ from projections. Likewise, the financial statements are based on estimates, particularly in calculating market value and asset impairment.

    Readers must take all these risk factors and uncertainties into consideration before making their own judgement.

    Applicable standards and comparability

    The figures presented for the nine-month period ending 30 September 2024 have been prepared in accordance with IFRS as adopted in the European Union and applicable at that date, and with prudential regulations currently in force. This financial information does not constitute a set of financial statements for an interim period as defined by IAS 34 “Interim Financial Reporting” and has not been audited.

    Note: The scopes of consolidation of the Crédit Agricole S.A. and Crédit Agricole Groups have not changed materially since the Crédit Agricole S.A. 2023 Universal Registration Document and its A.01 update (including all regulatory information about the Crédit Agricole Group) were filed with the AMF (the French Financial Markets Authority).

    The sum of values contained in the tables and analyses may differ slightly from the total reported due to rounding.

    At 30 June 2024, Indosuez Wealth Management had completed the acquisition of Degroof Petercam and now holds 65% of Banque Degroof Petercam alongside with CLdN Cobelfret, its historical shareholder, which would maintain a 20% stake in capital. As of 30 September 2024, Indosuez Wealth Management’s stake in Degroof Petercam has increased to 76%.

    At 30 June 2024, Amundi had completed the acquisition of Alpha Associates, an independent asset manager offering multi-management investment solutions in private assets.

    Financial Agenda

    05 February 2025        Publication of the 2024 fourth quarter and full year results
    30 April 2025                Publication of the 2025 first quarter results
    14 May 2025                General Meeting
    31 July 2025                Publication of the 2025 second quarter and the first half-year results
    30 October 2025                Publication of the 2025 third quarter and first nine months results

    Contacts

    CREDIT AGRICOLE PRESS CONTACTS

    CRÉDIT AGRICOLE S.A. INVESTOR RELATIONS CONTACTS

    Institutional investors + 33 1 43 23 04 31 investor.relations@credit-agricole-sa.fr
    Individual shareholders + 33 800 000 777 (freephone number – France only) relation@actionnaires.credit-agricole.com
         
    Cécile Mouton + 33 1 57 72 86 79 cecile.mouton@credit-agricole-sa.fr
     

    Equity investor relations:

    		    
    Jean-Yann Asseraf
    Fethi Azzoug    		 + 33 1 57 72 23 81
    + 33 1 57 72 03 75    		 jean-yann.asseraf@credit-agricole-sa.fr fethi.azzoug@credit-agricole-sa.fr
    Oriane Cante + 33 1 43 23 03 07 oriane.cante@credit-agricole-sa.fr
    Nicolas Ianna + 33 1 43 23 55 51 nicolas.ianna@credit-agricole-sa.fr
    Leila Mamou + 33 1 57 72 07 93 leila.mamou@credit-agricole-sa.fr
    Anna Pigoulevski + 33 1 43 23 40 59 anna.pigoulevski@credit-agricole-sa.fr
         
         
    Credit investor and rating agency relations:  
    Gwenaëlle Lereste + 33 1 57 72 57 84 gwenaelle.lereste@credit-agricole-sa.fr
    Florence Quintin de Kercadio + 33 1 43 23 25 32 florence.quintindekercadio@credit-agricole-sa.fr
         
         
         

    See all our press releases at: www.credit-agricole.com  

    1 Car, home, health, legal, all mobile phones or personal accident insurance.
    2 CA Auto Bank, automotive JVs and automotive activities of other entities
    3 50% reduction in the carbon footprint (tonnes of CO₂ equivalent/€m invested) of its equity-listed and corporate bond investment portfolios and directly held property. (The previous target was a 25% reduction in the carbon footprint of its equity-listed and corporate bond investment portfolio in 2025 vs 2019.)

    4 Low-carbon energy outstandings made up of renewable energy produced by the clients of all Crédit Agricole Group entities, including nuclear energy outstandings for Crédit Agricole CIB.
    5 Crédit Agricole CIB green asset portfolio, in line with the eligibility criteria of the Group Green Bond Framework published in November 2023.
    6 The reorganisation of the Mobility activities of the CA Consumer Finance Group had a non-recurring impact in Q3 2023 due to the transfer of business assets, indemnities received and paid, the accounting treatment of the 100% consolidation of CA Auto Bank (formerly FCA Bank) and the reorganisation of the automotive financing activities within the CA Consumer Finance Group (particularly the review of application solutions).
    7 See Appendixes for more details on specific items.
    8 The cost of risk/outstandings (in basis points) on a four-quarter rolling basis is calculated on the cost of risk of the past four quarters divided by the average outstandings at the start of each of the four quarters
    9 The cost of risk/outstandings (in basis points) on an annualised basis is calculated on the cost of risk of the quarter multiplied by four and divided by the outstandings at the start of the quarter
    10 Average rate of loans to monthly production for July and August 2024.
    11 Equipment rate – Home-Car-Health policies, Legal, All Mobile/Portable or personal accident insurance
    12 SAS Rue La Boétie dividend paid annually in Q2
    13 Home Purchase Savings Plan base effect (reversal of the Home Purchase Savings Plan provision) in Q3-23 totalling +€118m in revenues and +€88m in net income Group share. 

    14 Underlying, excluding specific items.
    15 Scope effect of Degroof Petercam revenues: +€140 million in the third quarter of 2024.
    16 Scope effect in expenses in the third quarter of 2024: Degroof Petercam for -€104 million and miscellaneous others.
    17 Costs related to the integration of ISB (CACEIS): -€26 million in third quarter 2024 versus -€5 million in third quarter 2023; costs related to the integration of Degroof Petercam: -€8 million in third quarter 2024.

    18 Provisioning rate calculated with outstandings in Stage 3 as denominator, and the sum of the provisions recorded in Stages 1, 2 and 3 as numerator.
    19 The cost of risk/outstandings (in basis points) on a four-quarter rolling basis is calculated on the cost of risk of the past four quarters divided by the average outstandings at the start of each of the four quarters
    20 The cost of risk/outstandings (in basis points) on an annualised basis is calculated on the cost of risk of the quarter multiplied by four and divided by the outstandings at the start of the quarter
    21         See Appendixes for more details on specific items.
    22 SRF costs amounted to -€509 million over the first nine months of 2023

    23 See Appendixes for details on the calculation of the RoTE (return on tangible equity)
    24 The annualised underlying net income Group share corresponds to the annualisation of the underlying net income Group share (Q1x4; H1x2; 9Mx4/3) by restating each period for IFRIC impacts to linearise them over the year
    25 Property and casualty insurance premium income includes a scope effect linked to the first consolidation of CATU (a property and casualty insurance entity in Poland): Impact of +0.5% on growth in property and casualty insurance premium income (+8.7% change in premium income excluding CATU between the third quarter of 2023 and the third quarter of 2024); Impact of +2.0% on portfolio growth, i.e. an impact of 314,000 contracts (+3.1% growth excluding CATU between September 2023 and September 2024).

    26 Scope: property and casualty in France and abroad
    27 P&C combined ratio in France (Pacifica) including discounting and excluding undiscounting, net of reinsurance: (claims + operating expenses + fee and commission income) to gross earned premiums; the ratio is calculated for the first nine months of 2024. The net combined ratio excluding the effect of discounting for the first nine months of 2024 is 97.7% (-0.2 percentage point year-on-year).
    28 Excl. JVs
    29 Excluding assets under custody for institutional clients
    30 Amount of allocation of Contractual Service Margin (CSM) and Risk Adjustment (RA) including funeral guarantees
    31 Amount of allocation of CSM and RA
    32 Net of cost of reinsurance, excluding financial results
    33 Indosuez Wealth Management scope
    34 Degroof Petercam data for the quarter included in Wealth Management results: Revenues of €140m and expenses of -€104m (excluding integration costs partly borne by Degroof Petercam)

    35 Refinitiv LSEG
    36 Bloomberg in EUR
    37 CA Auto Bank, automotive JVs and auto activities of other entities
    38 CA Auto Bank and automotive JVs
    39 Base effect related to the reorganisation of Mobility activities in Q3-23: +€1m in revenues, -€26m in equity-accounted entities, +€61m in net income on other assets, -€16m in corporate income tax, i.e. +€19m in net income Group share
    40 Base effect related to the reorganisation of Mobility activities in 9M-23: +€300 million in revenues, -€18 million in expenses, -€85 million in cost of risk, -€39 million in equity-accounted entities, +€89 million in net income on other assets, -€89 million in corporate income tax, i.e. +€159 million in net income Group share.
    41 Cost of risk for the last four quarters as a proportion of the average outstandings at the beginning of the period for the last four quarters.
    42 Base effect related to the reorganisation of Mobility activities in 9M-23: +€300 million in revenues, -€18 million in expenses, -€85 million in cost of risk, -€39 million in equity-accounted entities, +€89 million in net income on other assets, -€89 million in corporate income tax, i.e. +€159 million in net income Group share.
    43 Net of POCI outstandings
    44 Source: Abi Monthly Outlook, July 2024: -1.9% June/June and -1.2% year to date for all loans
    45 Home Purchase Saving Plan base effect (reversal of the provision for Home Purchase Saving Plans) in Q2-23 of +€52 million in revenues and +€37 million in net income Group share.
    46 Reversal of provision for Cheque Image Exchange Provision of + €21m in Q2-23
    47 At 30 September 2024 this scope includes the entities CA Italy, CA Polska, CA Egypt and CA Ukraine.

    48 Over a rolling four quarter period.
    49 A credit institution that is a wholly owned subsidiary of Crédit Agricole S.A. Large credit exposures borne by the Regional Banks must be presented to Foncaris, which partially guarantees such exposures.
    50 As part of its annual resolvability assessment, Crédit Agricole Group has chosen to waive the possibility offered by Article 72ter(3) of the Capital Requirements Regulation (CRR) to use senior preferred debt for compliance with its TLAC requirements in 2024.
    51 Gross amount before buy-backs and amortisations
    52 Excl. AT1 issuances
    53 Gross amount before buy-backs and amortisations
    54 Excl. AT1 issuances
    55 Excl. senior secured debt
    56 Excl. senior secured debt
    57 Excl. AT1 issuances
    58 APMs are financial indicators not presented in the financial statements or defined in accounting standards but used in the context of financial communications, such as underlying net income Group share or RoTE. They are used to facilitate the understanding of the company’s actual performance. Each APM indicator is matched in its definition to accounting data.

    Attachment

    The MIL Network –

  • MIL-OSI: Report for the nine months ended 30 September 2024

    Source: GlobeNewswire (MIL-OSI)

    Highlights

    • Added 33 GWh of annual proportionate power generation in the SE3 and SE4 price areas through acquisitions and increased ownership in existing windfarms.
    • Power generation amounted to 620 GWh for the reporting period, which was approximately ten percent below expectations, due to lower-than-average wind speeds and voluntary production curtailments during periods of low electricity prices.
    • Continued progress on the Company’s greenfield projects, with additional land secured and the first projects in the UK and Germany approaching the ready-to-permit stage.

    Consolidated financials – 9 months

    • Cash flows from investing activities amounted to MEUR 39.5 and was positively impacted by the sale of the Leikanger hydropower plant in the second quarter.
    • Cash flows from operating activities amounted to MEUR -3.6.

    Proportionate financials – 9 months

    • Achieved electricity price amounted to EUR 35 per MWh, which resulted in a proportionate EBITDA of MEUR 6.9.
    • Proportionate net debt of MEUR 55.9, with significant liquidity headroom available through the MEUR 170 revolving credit facility.

    Financial Summary

    Orrön Energy owns renewables assets directly and through joint ventures and associated companies and is presenting proportionate financials to show the net ownership and related results of these assets. The purpose of the proportionate reporting is to give an enhanced insight into the Company’s operational and financial results.

    Expressed in MEUR

    		 1 Jan 2024-
    30 Sep 2024
    9 months    		 1 Jul 2024-
    30 Sep 2024
    3 months    		 1 Jan 2023-
    30 Sep 2023
    9 months    		 1 Jul 2023-
    30 Sep 2023
    3 months    		 1 Jan 2023-
    31 Dec 2023
    12 months
    Consolidated financials          
    Revenue 18.6 1.6 19.6 2.3 28.0
    EBITDA 0.9 -7.1 -4.2 -6.7 -5.1
    Operating profit (EBIT) -11.2 -11.3 -12.6 -9.4 -17.0
    Net result -6.7 -11.1 -15.6 -7.8 -7.6
    Earnings per share – EUR -0.02 -0.04 -0.05 -0.03 -0.03
    Earnings per share diluted – EUR -0.02 -0.04 -0.05 -0.03 -0.03
    Proportionate financials1          
    Power generation (GWh) 620 164 539 161 765
    Average price achieved per MWh – EUR 35 18 49 23 47
    Operating expenses per MWh – EUR 18 21 18 20 18
    Revenue 22.0 2.9 26.6 3.6 36.2
    EBITDA 6.9 -4.9 4.0 -4.3 5.3
    Operating profit (EBIT) -8.1 -10.1 -7.8 -8.2 -11.0

    1 Proportionate financials represent Orrön Energy’s proportionate ownership (net) of assets and related financial results, including joint ventures. For more details see section Key Financial Data in the report for the interim report for the third quarter.

    Comment from Daniel Fitzgerald, CEO of Orrön Energy AB
    “The third quarter provided many opportunities for our business, in a period characterised by low and volatile electricity prices. We continued to grow our business through selective acquisitions and consolidation opportunities, and continued to lay the foundation for future growth through our greenfield projects across Europe. However, the third quarter was challenging from a revenue and electricity price perspective, impacting our financial results. In the Nordics this was primarily due to lower-than-expected electricity demand, low gas prices and an oversupply of electricity during peak hours. Despite these challenges, we successfully expanded our asset base through strategic acquisitions of shares and assets across wind farms and companies, delivered in line with our cost guidance and maintained high technical availability across our operational portfolio. Orrön Energy’s balance sheet remains robust and we have ample liquidity to continue to invest in growth while withstanding periods with lower electricity prices, allowing us to capitalise on opportunities when markets are weak.

    Proportionate power generation amounted to 620 GWh for the reporting period and was below expectations due to lower-than-average wind speeds and voluntary production curtailments during periods of low electricity prices. I am pleased that we continue to achieve high technical availability across our operational assets, reaching an average of 96 percent in the third quarter, which demonstrates that we have the capacity to produce more if not for the weather conditions and low prices. Lower seasonal demand, coupled with high volatility in the electricity markets, resulted in a higher number of hours with low or negative electricity prices across the Nordics this summer. During these periods, we proactively curtailed production for short periods to avoid uneconomical power generation, returning to full operation once prices strengthened. As we move into winter, we expect to see higher demand which should help to strengthen electricity pricing into the fourth quarter this year and the first quarter next year, as already reflected in the futures price. Based on our power generation year to date, we now expect to produce around 900 GWh in 2024, depending on wind speeds and power prices during the fourth quarter.

    The third quarter marks one year since the start of the Sudan trial in the Stockholm District Court, which will conclude in early 2026 with a verdict expected around the summer 2026. My view on this case remains unchanged and, if anything, it has strengthened over the past 12 months, and I expect a complete and unequivocal acquittal of all parties involved, given the baseless nature of the allegations. Once the trial is complete, we will no longer need to fund the ongoing legal costs related to this case which reduces our G&A expenses by around MEUR 7 per annum, leading to higher underlying EBITDA for the Company in the long term.

    Strategic Growth
    We have been active on the M&A front since the start of the summer, adding 33 GWh of annual power generation in the SE3 and SE4 price areas through increased ownership in various wind farms and companies. These investments strengthen our operational portfolio, and we will continue to seek opportunities to further consolidate ownership in assets that are complementary to our existing portfolio.

    On the greenfield front, we continue to make good progress with our growth strategy. Having secured additional land, we are now moving closer to the ready-to-permit phase for our first large-scale projects in both the UK and Germany, where market valuations and demand for such projects remain high. Additionally, we have commissioned our first battery project in Sweden and continue to advance a pipeline of projects across wind, solar and batteries in the Nordics.

    Financially Resilient
    We remain in a financially robust position, with liquidity headroom exceeding MEUR 110. Proportionate revenues and other income amounted to MEUR 2.9 for the third quarter, which was impacted by low electricity prices, resulting in a proportionate EBITDA of MEUR -4.9 for the third quarter and MEUR 6.9 for the reporting period. Due to cost savings and phasing of investments into 2025, we are revising our capital expenditure guidance to MEUR 11 for 2024.

    Looking Ahead
    Throughout the remainder of the year, we will intensify our efforts on the greenfield side to reach the ready-to-permit phase for our first large-scale projects, while continuing to explore opportunities to capitalise on the current market conditions. Orrön Energy has a resilient financial position, enabling us to withstand periods of low pricing while still investing in accretive growth opportunities and acquisitions. I expect market conditions to improve as we come into the winter months, and over time, I am convinced that we will see further value creation through the growth in our core business and greenfield projects.

    Once again, I thank our shareholders for their continued support and look forward to sharing updates as we continue to grow the business.”

    Webcast
    Listen to Daniel Fitzgerald, CEO and Espen Hennie, CFO commenting on the report and presenting the latest developments in Orrön Energy and its future growth strategy at a webcast held on 8 August 2024 at 14.00 CEST. The presentation will be followed by a question-and-answer session.

    Registration for the webcast presentation is available on the website and the below link:
    https://vimeo.com/event/4678321/54544efc16

    For further information, please contact:

    Robert Eriksson
    Director Corporate Affairs and Investor Relations
    Tel: +46 701 11 26 15
    robert.eriksson@orron.com

    Jenny Sandström
    Communications Lead
    Tel: +41 79 431 63 68
    jenny.sandstrom@orron.com

    Orrön Energy is an independent, publicly listed (Nasdaq Stockholm: “ORRON”) renewable energy company within the Lundin Group of Companies. Orrön Energy’s core portfolio consists of high quality, cash flow generating assets in the Nordics, coupled with greenfield growth opportunities in the Nordics, the UK, Germany and France. With financial capacity to fund further growth and acquisitions, and backed by a major shareholder, management and Board with a proven track record of investing into, leading and growing highly successful businesses, Orrön Energy is in a unique position to create shareholder value through the energy transition.

    Forward-looking statements
    Statements in this press release relating to any future status or circumstances, including statements regarding future performance, growth and other trend projections, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as “anticipate”, “believe”, “expect”, “intend”, “plan”, “seek”, “will”, “would” or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that could occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to several factors, many of which are outside the company’s control. Any forward-looking statements in this press release speak only as of the date on which the statements are made and the company has no obligation (and undertakes no obligation) to update or revise any of them, whether as a result of new information, future events or otherwise.

    Attachment

    The MIL Network –

  • MIL-OSI Asia-Pac: LCQ17: Monitoring of charitable institutions

    Source: Hong Kong Government special administrative region

         Following is a question by the Hon Carmen Kan and a written reply by the Secretary for Home and Youth Affairs, Miss Alice Mak, in the Legislative Council today (November 6):
     
    Question:
     
         Regarding the monitoring of charitable institutions, will the Government inform this Council:
     
    (1) of the following information of charitable institutions as at ‍September 30 of each of the past three years (set out in a table):

         (i) the respective numbers of tax-exempt charitable institutions recognised by the Inland Revenue Department under section ‍88 of the Inland Revenue Ordinance (Cap. 112) whose tax exemption status was approved and withdrawn, as well as the percentages of such numbers in the total number of institutions for that year and the year-on-year rates of change; 
         (ii) the number of charitable institutions (set out by type) as well as the amounts of donations exempted from tax and the year-‍on-year rates of change; and 
         (iii) a list of the 50 charitable institutions being granted the highest amounts of government funding, the amounts of funding granted to them, as well as the percentages of such amounts in the total amount of funding for that year and the year-on-year rates of change; 

    (2) whether it will, on the basis of its experience in making reference to common law precedents over the years, study the formulation of a legal definition of “a charitable institution or charitable trust of a public character” under section 88 of Cap. 112 applicable to the situation in Hong Kong; if so, of the details; if not, the reasons for that; 

    (3) as the newly amended Charity Law of the People’s Republic of China has been formally implemented on the Mainland since  September 5 this year to regulate charitable organisations, whether the authorities will enact a Charity Ordinance; if so, of the details; if not, the reasons for that; 

    (4) given that in reply to a question raised by a Member of this Council on February 21 this year, the Financial Services and the Treasury Bureau indicated that the Bureau would, in the light of the relevant circumstances, consider setting up a dedicated department or organisation as the regulator of charitable institutions, of the factors considered by the authorities in the light of the current situation, and whether they will set up the relevant organisation as soon as possible; if so, of the details; if not, the reasons for that, as well as the measures in place to monitor the operation of charitable institutions; and 

    (5) given that pursuant to a recommendation in Report No. 68 of the Public Accounts Committee, the authorities have drawn up a new “Good Practice Guide on Charitable Fund-raising” (the Guide), of the effectiveness of the Guide; whether they will consider making it mandatory for charitable institutions to comply with the Guide; if so, of the details; if not, the reasons for that? 

    Reply:
     
    President,
     
         In consultation with the Financial Services and the Treasury Bureau (FSTB), the Food and Environmental Hygiene Department (FEHD), the Home Affairs Department (HAD) and the Social Welfare Department (SWD), my reply, on behalf of the Government, to the various parts of the question raised by the the Hon Carmen Kan is as follows:
     
    (1) (i) Charities are exempted from tax if they meet the conditions stipulated in section 88 of the Inland Revenue Ordinance (Cap. 112) (IRO), i.e. (a) the profits are applied solely for charitable purposes; (b) the profits are not expended substantially outside Hong Kong; and (c) either the trade or business is exercised in the course of the actual carrying out of the expressed objects of the charity, or the work in connection with the trade or business is mainly carried on by persons for whose benefit the charity is established.
     
         As at September 30 of the past three years, the total number of tax-exempt charities, charities newly exempted from paying tax and charities with tax exemption status withdrawn by the Inland Revenue Department (IRD); and their year-on-year rates of change and percentages in the total number of tax-exempt charities are set out below:
     

    Year
    Total number of tax-exempt charities
    Charities newly exempted from paying tax
    Charities with tax exemption status withdrawn

    Number (Note) and year-on-year change
    Percentage in total number of tax-exempt charities
    Number and year-on-year change
    Percentage in total number of tax-exempt charities

    2022 
    9 856
    449
    4.6%
    211
    2.1%

    2023
    10 347
    655 (+45.9%)
    6.3%
    208 (-1.4%)
    2%

    2024
    10 699
    578 (-11.8%)
    5.4%
    267 (+28.4%)
    2.5%

    Note: The figures do not include charities tax exemption status of which had been withdrawn and later reinstated.
     
    (ii) As at September 30 of the past three years, the numbers of tax-exempt charities (categorised by legal structure) are as follow:
     

    Year
    Number of tax-exempt charities
    Total

    Incorporated under the Companies Ordinance
    Registered under the Societies Ordinance
    Trusts
    Others (Note)

    2022 
    7 586
    743
    432
    1 095
    9 856 

    2023
    8 071
    742
    438
    1 096
    10 347

    2024
    8 419
    743
    441
    1 096
    10 699

    Note: “Others” comprises mostly incorporated management committees established under the Education Ordinance, statutory bodies, ad hoc special committees and overseas companies registered under the Companies Ordinance.
     
         Donations made by taxpayers to charities exempted from paying tax under section 88 of the IRO are tax deductible. In the past three financial years, the amounts of approved charitable donations allowed and the year-on-year rates of change are set out below. However, as there is a cap on the amount of tax-deductible donations to charities, the following figures do not represent the amount of tax-exempt donations received by charities each year:
     

    Year of assessment
    Approved charitable donations allowed under profits tax
    Approved charitable donations allowed under salaries tax
    Total and year-on-year rate of change
    ($ billion)

    Amount and year-on-year rate of change
    ($ billion)
    Amount and year-on-year rate of change
    ($ billion)

    2020/21
    4.35
    7.45
    11.8

    2021/22
    6.9 (+58.6%)
    7.4 (-0.7%)
    14.3 (+21.2%)

    2022/23
    5.16 (-25.2%)
    7.27 (-1.8%)
    12.43 (-13.1%)

           
         The tax returns for the year of assessment 2023/24 are being processed. Hence, IRD is unable to provide the statistics for that financial year at the moment.
     
    (iii) At present, the monitoring of different charitable organisations currently involves various policy bureaux/departments. The Government does not centrally maintain and consolidate the relevant data.
     
    (2) to (4) In processing applications for tax exemption under section 88 of the IRO, IRD has been making reference to the relevant common law cases to determine whether an organisation’s object is a charitable purpose at law, and whether the organisation is established for public benefit. IRD regularly reviews the tax-exempt charities to ascertain whether their objects are still of charitable nature and whether the activities are compatible with their stated objects. The existing mechanism has been effective in handling tax matters under section 88 of the IRO.
     
         In addition to the abovementioned tax arrangement for charitable organisations, charitable organisations which wish to conduct fund-raising activities in public places shall apply for the relevant permits or licences from the FEHD, HAD or SWD.
     
         With reference to the recommendations in the Law Reform Commission Report on Charities published in December 2013 (LRC Report), relevant Audit Report and the Public Accounts Committee Report (PAC Report), the Government has introduced a series of administrative measures in phase since 2018 with a view to further enhancing the transparency and accountability of charitable fund-raising activities. For example, uploading all audited accounts submitted by organisations which obtained approval to organise charitable fund-raising activities to the fund-raising activities page of GovHK for reference by the public; issuing the “Good Practice Guide on Charitable Fund-raising” (Good Practice Guide) and encourage adoption by charitable organisations; and setting up a dedicated hotline for handling enquiries or complaints in relation to charitable fund-raising activities held by organisations in public places, etc.
     
         Since the legislation and monitoring in relation to charitable organisations involve different bureaux / departments, and that the recommendation of setting up a dedicated department or organisation as the regulator of charitable organisations carries significant implications on the definition and operation of charitable organisations in Hong Kong, it takes time for the Government to study and consider the recommendations thoroughly and carefully.
     
    (5) As mentioned above, with reference to the LRC Report, relevant Audit Report and the PAC Report, the HAD, SWD and FEHD issued the Good Practice Guide to provide the best practices for organising charitable fund-raising activities. Relevant departments have been encouraging the adoption of the Good Practice Guide by charitable organisations to ensure the accountability and transparency of charitable fund-raising activities and the use of donations so received.
     
         In respect of the HAD, under the Gambling Ordinance (Cap. 148), anyone who wishes to conduct a lottery event in Hong Kong has to apply for a licence. The Office of the Licensing Authority (OLA) under the HAD is responsible for processing applications for lottery licences. Lottery licences are issued to bona fide organisations to conduct lottery ticket sales for the purpose of fund-raising, and funds so raised are to be used to meet the organisations’ operating expenses or for donations to local registered charities, or both. In fact, the conditions stated in the lottery licences issued have already covered some of the suggested good practices, including the preparation of income and expenditure statement regarding the sales of lottery tickets. The OLA will continue to promote the voluntary adoption of the Good Practice Guide.
     
         Besides, the FEHD also encourages charitable organisations which applied for a Temporary Hawker Licence for setting up any booth in public places to sell goods for raising funds, to adopt the Good Practice Guide on a voluntary basis. The FEHD has provided a link for downloading the Guidelines on its website.
     
         In respect of the SWD, since the publication of the Good Practice Guide, all organisations that have applied for a Public Subscription Permit (PSP) from the SWD have committed to observing the Guide (except for one organisation that had adopted another set of guidelines which also complies with the standards of good practice). The major arrangements contained in the Good Practice Guide, including the rights of donors, fund-raising practices and financial accountability, etc., have been incorporated into the permit conditions of the PSP for organisations issued with the PSP to comply with.
     
         As some or the major arrangements contained in the Good Practice Guide have already been incorporated into the conditions stated in different permits or licences for conducting charitable fund-raising activities, the Government has no plan to further mandate the charitable organisations to adopt the Good Practice Guide at this stage. The Government will continue to encourage charitable organisations to adopt the Good Practice Guide.

    MIL OSI Asia Pacific News –

  • MIL-OSI Security: Fraudulent Tax Preparer Sentenced to Ten Years on Federal Charges

    Source: United States Bureau of Alcohol Tobacco Firearms and Explosives (ATF)

    ROANOKE, Va. – A Roanoke woman who prepared and filed false tax returns for others, committed wire fraud, distributed fentanyl, and illegally sold firearms, was sentenced last week to 120 months in federal prison.

    Alisha Warrick, 40, pled guilty in November 2023 to filing a false and fictitious claim against the United States, wire fraud, aggravated identity theft, distribution of fentanyl, possession of a firearm in furtherance of a drug trafficking crime and possession of a firearm by a prohibited person.

    According to court documents, beginning in 2015 and continuing at least through 2019, Warrick prepared and filed tax returns for other individuals, and she deliberately included false and fraudulent information in the tax returns. As part of this scheme, Warrick would “boost” the tax returns she filed on behalf of other individuals by including false employment and wage information or false information about the named filer’s dependents, or both. Warrick knew the information was false when she submitted the tax returns.

    Warrick also filed tax returns for certain individuals without their knowledge, and used those individuals’ names and personal identifying information to file the tax returns.

    While on bond pending trial, Warrick arranged with a confidential informant to sell the informant heroin (which later testing showed to contain fentanyl), and two firearms, one of which was connected to a prior fatal shooting in the Roanoke area.

    United States Attorney Christopher R. Kavanagh and Kareem Carter, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation (IRS-CI), Washington, D.C. Field Office made the announcement today.

    The Internal Revenue Service-Criminal Investigations and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated the case.

    Assistant U.S. Attorneys Jonathan Jones and Kelly McGann prosecuted the case.

    MIL Security OSI –

  • MIL-OSI: Media Advisory: Fortinet Returns to World Economic Forum Annual Meeting on Cybersecurity

    Source: GlobeNewswire (MIL-OSI)

    SUNNYVALE, Calif., Nov. 04, 2024 (GLOBE NEWSWIRE) —

    Derek Manky, Chief Security Strategist and VP of Global Threat Intelligence at Fortinet
    “In today’s interconnected world, the fight against cybercrime requires a unified front. Public-private partnerships are vital for sharing threat intelligence, resources, and innovations that collectively help organizations worldwide stay ahead of digital adversaries. The World Economic Forum’s Annual Meeting on Cybersecurity continues to offer a unique opportunity for collaboration where fellow cybersecurity leaders share effective strategies and develop real-world solutions for disrupting cybercrime.”

    News Summary
    Fortinet® (NASDAQ: FTNT), the global cybersecurity leader driving the convergence of networking and security, today announced that the company will return to the World Economic Forum’s Annual Meeting on Cybersecurity in Geneva, Switzerland, from November 11 to 13. Fortinet is a founding member of the Forum’s Centre for Cybersecurity and will again engage in the yearly event, which brings together global cybersecurity leaders from business, government, international organizations, civil society, and academia to foster collaboration and enhance collective cyber resilience.

    Derek Manky, Fortinet Chief Security Strategist and VP of Global Threat Intelligence, will share expertise and insights as the moderator of a panel discussion on November 13 about countering cybercrime through public-private partnerships. In addition to his active role in the Forum and its Centre for Cybersecurity’s Partnership Against Cybercrime and the Cybercrime Atlas initiative, Derek is actively involved with global threat intelligence initiatives, including NATO NICP, INTERPOL Expert Working Group, the Cyber Threat Alliance working committee, and FIRST, all in effort to shape the future of actionable threat intelligence and proactive security strategy.

    In the past year, as a leading contributor to the Cybercrime Atlas initiative, Fortinet has collaborated to promote new approaches to accelerate the fight against cybercrime. Significant progress has been made, with the Cybercrime Atlas community vetting more than 10,000 actionable data points, creating seven intelligence packages to support cyber defenders, and supporting two cross-border disruption campaigns through the group’s research and intelligence.

    Session Details

    Title: Better, Faster, Stronger: Accelerating Operational Collaborations to Disrupt Cybercrime
    When: November 13, 2024, 10:30 a.m. CET
    Where: World Economic Forum headquarters, Geneva, Switzerland
    Overview: Operational collaborations to counter cybercrime are leading to arrests and shutdowns of massive criminal networks in 2024. However, we are not yet collaborating at a scale or speed that will change the calculation for criminals. This session will offer insights into how to harness the lessons from successful operational collaborations around the world to systematically disrupt cybercriminals in 2025.
    Speakers:

    • Derek Manky, Chief Security Strategist and VP of Global Threat Intelligence, Fortinet (facilitator)
    • Edvardas Šileris, Head, European Cybercrime Centre (EC3), Europol
    • Brigadier General Oleksandr Potii, Deputy Chairman, State Service of Special Communications and Information Protection of Ukraine
    • Craig Rice, Chief Executive Officer, Cyber Defence Alliance
    • Samantha Kight, Head, Industry Security, Global System for Mobile Communications Association (GSMA)

    More about the World Economic Forum Annual Meeting on Cybersecurity

    In a rapidly evolving cyberspace, where innovation and technology continuously redefine boundaries, systemic inequity is emerging when it comes to the capabilities of
    organizations and countries to safeguard the benefits of technological progress.

    According to the World Economic Forum’s Global Cybersecurity Outlook 2024, the number of organizations maintaining minimum viable cyber resilience has decreased by 30%. This decline has further widened the skills gap in organizational cyber capabilities. The risks associated with this growing technological divide threaten the entire ecosystem and disproportionately impact the already vulnerable.

    Against this backdrop, the Annual Meeting on Cybersecurity 2024 will bring together over 150 of the world’s foremost cybersecurity leaders from business, government, international organizations, civil society, and academia to foster collaboration on making cyberspace safer and more resilient for all.

    Additional Resources

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

    Copyright © 2024 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiMail, FortiSandbox, FortiADC, FortiAI, FortiAIOps, FortiAntenna, FortiAP, FortiAPCam, FortiAuthenticator, FortiCache, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCASB, FortiCentral, FortiConnect, FortiController, FortiConverter, FortiCSPM, FortiCWP, FortDAST, FortiDB, FortiDDoS, FortiDeceptor, FortiDeploy, FortiDevSec, FortiEDR, FortiExplorer, FortiExtender, FortiFirewall, FortiFlex FortiFone, FortiGSLB, FortiGuest, FortiHypervisor, FortiInsight, FortiIsolator, FortiLAN, FortiLink, FortiMonitor, FortiNAC, FortiNDR, FortiPenTest, FortiPhish, FortiPoint, FortiPolicy, FortiPortal, FortiPresence, FortiProxy, FortiRecon, FortiRecorder, FortiSASE, FortiSDNConnector, FortiSEC, FortiSIEM, FortiSMS, FortiSOAR, FortiStack, FortiSwitch, FortiTester, FortiToken, FortiTrust, FortiVoice, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLM and FortiXDR. Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments.

    The MIL Network –

  • MIL-OSI: Exterro Expands Leadership Team to Accelerate Growth in the Data Risk Management Market

    Source: GlobeNewswire (MIL-OSI)

    PORTLAND, Ore., Nov. 04, 2024 (GLOBE NEWSWIRE) — Exterro, Inc., the leading provider of data risk management software, today announced it continues to build its world-class executive team with the appointments of Jim Cox as Chief Revenue Officer and John Vincenzo as Chief Marketing Officer. These strategic hires are critical additions to the management team as it focuses on rapidly scaling the company to capitalize on the fast-growing market.

    “I’m incredibly excited to welcome both Jim and John to Exterro as we build an industry-leading go to market team to complement our award-winning product and innovation engine,” said Exterro Founder and CEO Bobby Balachandran. “John and Jim have a history of creating highly efficient and productive teams that exceed expectations. We will continue to invest in a customer-centric approach to both technology and our go to market teams. We’re primed to accelerate our growth and fully leverage our internal and partner resources to ensure we capitalize on the great momentum we’ve built.”

    A successful, dynamic, sales leader, Jim has more than 20 years of experience driving exceptional growth by building sales teams that focus on execution and cultivating outstanding partnerships. During more than a decade in cybersecurity, Jim built a network of CISOs and executive relationships that, while at Proofpoint, helped the organization scale from $100M to $1.4B in just over six years.

    As CRO at Exterro, one key area will be the increased focus and expansion of the company’s partner programs.“The time is now for Exterro to seize this substantial market opportunity,” stated Cox. “We offer the only platform that offers legal teams, cybersecurity professionals, and C-level leaders an integrated solution to e-discovery, digital forensics, cybersecurity compliance, and data privacy, governance, and security challenges. I’m excited about our ability to accelerate growth by expanding platform sales, to not only the market but to the extensive list of customers we have.”

    John Vincenzo has led both public and private technology companies’ marketing teams and helped them take their go-to-market efforts to new heights. He has spent the last 25+ years in technology industries, most recently with cybersecurity companies such as the privately held Nozomi Networks; Silver Peak (acquired by HPE/Aruba Networks) in the software-defined wide area networking (SD-WAN) space; and global networking leader 3Com (acquired by HP). In each instance, he has helped increase overall awareness and drive revenue growth.

    As CMO, Vincenzo will be responsible for increasing the visibility of the company so it matches the success the company is seeing in the market. He will also help accelerate revenue growth by working closely with the Sales teams as well as the Exterro Partner ecosystem.

    “Exterro may be the best kept secret in the industry and we need to change that,” added Vincenzo. “It’s amazing the growth and level of technology innovation the company has already achieved. I’m excited about the opportunity to tell our story to the world and help customers understand the value and return on their investment they can achieve by leveraging the Exterro data risk management platform. No company helps organizations better protect data, minimize risk and ensure safer digital environments than Exterro, and we will make it our mission to put a spotlight on our role in making the world a safer place.”

    Exterro has taken a holistic and integrated approach to data risk since its inception and is the first and only company to use an AI-powered technology platform to assess and mitigate data risks in a comprehensive and integrated manner. The more we learn about data risks–posed by privacy regulations, litigation, data breaches and cybersecurity incidents, data governance and compliance challenges–the more we recognize they cannot be comprehended in isolation. They are interconnected and interdependent, and must be assessed and addressed holistically with a unified data risk management platform.

    About Exterro, Inc.

    Exterro empowers organizations and law enforcement agencies to achieve better legal, regulatory, and investigatory outcomes, while saving money and minimizing the impact of data risk. Its data risk management software is the only comprehensive platform that leverages data discovery, automation, and workflow optimization, and one of the first to utilize responsible AI to give users insight into and control over the complex interconnections of privacy, legal operations, digital investigations, cybersecurity response, compliance, and data governance. Thousands of corporations, law firms, managed services providers, and government and law enforcement agencies trust Exterro to manage their risks and drive successful outcomes at a lower cost. For more information, visit www.exterro.com.

    Press inquiries:

    Hazel Ramirez

    570-975-9261

    hazel@plat4orm.com

    The MIL Network –

  • MIL-OSI Canada: Oil and gas greenhouse gas pollution cap – Backgrounder to CGI Regulations

    Source: Government of Canada News

    Backgrounder

    November 4, 2024

    Context

    The proposed oil and gas greenhouse gas (GHG) pollution cap will incentivize the sector to invest in technically achievable decarbonization to attain significant emission reductions by 2030-2032. The policy will put the sector on a pathway to carbon neutrality by 2050, while enabling it to continue to respond to global demand.

    Oil and gas companies in Canada have proven repeatedly that they can innovate and develop new technologies to produce more competitive oil and gas with less pollution.

    While it continues to be a major supplier to global markets, Canada’s oil and gas sector has the opportunity to reinvest in its own competitiveness ahead of the anticipated future decline in global demand for oil and gas in a low-carbon future. Reinvesting in cleaner oil and gas production ensures that the sector contributes its fair share to GHG reductions in Canada and positions Canada for a stronger future for its workers and economy.

    The oil and gas sector is experiencing record profits within Canada. Coming out of the pandemic, operating profits in the oil and gas sector increased tenfold from $6.6 billion in 2019 to $66.6 billion in 2022. Despite that, there has been limited and declining overall investment in the sector in Canada over the last several years.

    The proposed Regulations would establish a cap-and-trade system that is designed to recognize producers with better emission performance and motivate higher-polluting facilities to reinvest record profits into more pollution-reducing projects.

    The oil and gas sector is a major contributor to Canada’s economy. In 2023, the sector generated $209 billion in gross domestic product (GDP) (PDF) and accounted for 25% of Canada’s exports (valued at $177 billion). It is also a major employer across the country, directly employing 181,800 people in 2023.

    The oil and gas sector is also Canada’s largest source of GHG pollution, responsible for 31% of Canada’s GHG emissions in 2022. Decreasing emissions in the oil and gas sector by introducing a cap on GHG pollution is necessary to ensure that the sector contributes its fair share to Canada’s ongoing efforts to tackle climate change and reach our GHG emission reduction targets and international commitments under the Paris Agreement.

    Strengthening emission performance and carbon management technologies in Canada’s oil and gas sector

    Canada’s oil and gas sector has the potential to be a supplier of choice as the demand for oil and gas for combustion declines in a low-carbon future. This would enable the sector to continue to be a major employer and source of economic activity across Canada, particularly in oil- and gas-producing regions.

    The proposed Regulations put a limit on pollution, not production. The proposed Regulations are carefully designed around what is technically achievable within the sector, while enabling continued production growth in response to global demand. In fact, modelling shows that Canadian oil and gas production is projected to increase 16% between 2019 and the 2030-2032 period with the proposed Regulations in place.

    Major emissions-reduction opportunities are available, and oil and gas producers are already investing in them. Methane is a particularly potent greenhouse gas, and most methane emissions represent a wasted resource because they are from leaks and other unintended sources. Preventing methane emissions is one of the lowest-cost ways to reduce GHG emissions, and the sector’s efforts have resulted in a steady decline in these emissions. New regulations to be finalized later this fall will ensure that the sector continues to cut methane emissions by at least 75% from 2012 levels by 2030. 

    Carbon capture is also going to play an increasingly important role in reducing emissions from oil and gas production, and Canada is well placed to cement its position as a global leader in this critical technology. According to both the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), there is no credible path to carbon neutrality without carbon management technologies, such as carbon capture and storage, and their deployment must be rapid and immense, scaling up by nearly 200 times by 2050.

    The shift toward a low-carbon economy has created a rush of capital toward carbon management technologies worldwide. In the United States, there are many new carbon capture projects being deployed, with 150 currently under review at the U.S. Environmental Protection Agency.

    Canada has already established itself as a first mover and leader in the global carbon management sector, with some of the world’s first large-scale projects; favourable geology; cutting-edge innovators and start-ups; early investments in research, development, and demonstration; deep technical expertise; a robust policy and regulatory environment at the federal and provincial levels; and active international collaboration. The Government of Canada has launched a suite of policies with a mix of financial supports and regulatory measures to better position Canada’s economy for success.

    Approximately one-sixth of the world’s active large-scale carbon management projects, which use a range of approaches to capture carbon dioxide from point sources or directly from the atmosphere to be reused or durably stored, can be found in Canada, with a growing number in the construction, design and development phase across multiple sectors and regions.

    The continued development and deployment of carbon management technologies to help achieve Canada’s climate objectives will form the basis of a world-leading, multi-billion-dollar carbon management sector in Canada that supports inclusive, high-value employment, significant export opportunities and a more sustainable economy.

    Point-source carbon capture is a leading option for deep emissions reductions from the upstream oil and gas sector. Given the long lifespan of many existing heavy industrial facilities and the value of these industries to the Canadian economy, public-private collaboration is critical to advance strategic, economical, and regionally appropriate decarbonization pathways.

    The GHG oil and gas pollution cap adds to a suite of policy measures, which are designed to shift the oil and gas industry increasingly toward cleaner production through the use of carbon management systems and other technologies, including to reduce methane emissions and to switch to cleaner fuels. Those include other successful regulatory measures, such as federal, provincial, and territorial carbon pricing systems for industry, including Alberta’s TIER system, the federal Output-Based Pricing System, federal and provincial methane regulations, and the Clean Fuel Regulations.

    They also include a wide range of financial supports to support deployment and help develop the innovation ecosystem for carbon reduction technologies in Canada, including:

    • $319 million over 7 years for RD&D to advance the commercial viability of emerging carbon management technologies.
    • Refundable CCUS Investment Tax Credit (ITC), expected to provide $12.5 billion between 2022-2023 and 2034-2035, for eligible projects that enable permanent CO2 storage.
    • The Canada Growth Fund, totalling $15 billion, offers investment tools such as contracts for differences designed to address risk and accelerate private sector investment to grow Canada’s clean economy, including in the carbon management sector.
    • Strategic Innovation Fund, with $8 billion in funding to help companies reduce emissions and grow their business sustainably.
    • The Canada Infrastructure Bank (CIB) invests in CCUS infrastructure projects, including through its Project Acceleration funding for front-end engineering and design (FEED) capital expenditures.

    Increasingly, large-scale carbon capture projects are being built in both the oil and gas sector and other sectors. Recent projects include:

    • Strathcona Resources, an oilsands company with assets in Saskatchewan and Alberta and Canada’s fifth-largest oil producer, is launching a $2 billion project to store up to two million tonnes of CO2 per year, while creating hundreds of new jobs. The project has received support from the Canada Growth Fund.
    • Entropy, an Alberta-based company, is working on a project that will enable emissions reductions of approximately 2.8 million tonnes over 15 years and support more than 1,200 good jobs for Albertans.
    • Shell announced two new projects in Alberta: the Polaris Carbon Capture project and the Atlas Carbon Storage Hub. These projects aim to reduce industrial emissions by transitioning to cleaner technology. The Polaris project will capture approximately 650,000 tonnes of carbon a year while the Atlas project will store the captured carbon from Polaris and potentially other industrial facilities in the future. Once complete in 2028, these projects are expected to generate up to 2,000 jobs for Albertans.
    • The North West Redwater (NWR) Sturgeon Refinery, also operating in the Alberta Industrial Heartland, is the world’s first bitumen refinery built with carbon capture. 
    • The Alberta Carbon Trunk Line (ACTL), which transports captured carbon from facilities for storage in oil fields, will be used by new carbon capture projects throughout the province to transport captured CO2 to final storage sites.  
    • Linde announced an investment of more than $2 billion to build a clean hydrogen facility that will supply Dow’s Path2Zero production complex in Alberta. The facility will capture more than 2 million tonnes of carbon dioxide emissions per year for sequestration.

    Extensive consultation to date on the oil and gas GHG pollution cap

    The Government of Canada has engaged a broad range of partners and stakeholders on the oil and gas GHG pollution cap, including provinces and territories, Indigenous partners, industry, environmental groups, and Canadians. The government has held webinars, convened meetings, and published discussion papers to seek input and feedback. Since November 2021, the government has received over 250 written submissions from organizations, held over 100 meetings, and hosted seven public webinars.  

    The government published a Regulatory Framework to Cap Oil and Gas Sector GHG Emissions in December 2023. This Framework confirmed the government’s intent to implement the oil and gas GHG pollution cap through a new cap-and-trade system, and proposed various regulatory design features, including which subsectors would be covered by the oil and gas GHG pollution cap, the level of the GHG pollution cap, and rules about flexible compliance options.

    The proposed Regulations are carefully designed based on what is technically achievable in the sector, setting a limit on pollution, not production. Technically achievable emissions reductions were estimated based on an assessment of the abatement technologies that could feasibly be deployed within the upstream and LNG activities in the oil and gas sector by 2030-2032, considering the status of available technologies, projected levels of production, the availability of equipment and labour, and timelines for permitting and approvals.

    Estimates of technically achievable reductions included reductions related to compliance with the strengthened methane regulations, installation of carbon capture and storage technology, and electrification. The risk that not all technically achievable reductions would be implemented in time for the first compliance period was also taken into consideration.

    The government has now published proposed Regulations (PDF) to implement the oil and gas GHG pollution cap, and invites input from November 9, 2024, to January 8, 2025. The government will continue to engage with partners and stakeholders in the development of final regulations.

    Key components of the proposed national cap-and-trade system for oil and gas greenhouse gas pollution

    The proposed Oil and Gas Sector Greenhouse Gas Emissions Cap Regulations (proposed Regulations) would establish a national cap-and-trade system that would apply to upstream oil and gas activities including onshore and offshore oil and gas production; oil sands production and upgrading; natural gas production and processing; and the production of LNG.

    The proposed Regulations have been developed under the Canadian Environmental Protection Act, 1999 (CEPA). Since 1988, CEPA has been used to address a wide range of environmental issues, including air pollution, chemicals, plastics and GHG emissions.

    • The cap-and-trade system will freely allocate emissions allowances to facilities covered by the system. At the end of each year, each facility will need to remit to the government one allowance for each tonne of carbon pollution it has emitted. Over time, the government will give out fewer allowances, corresponding to the declining emissions cap.
    • Operators will face an ongoing incentive to reduce their emissions. If an operator does not have enough allowances to cover their emissions, they will be able to buy allowances from other operators that have invested in pollution reduction. Operators can also contribute to a decarbonization program or use GHG offset credits to cover a small portion of their emissions (up to 10% for the decarbonization program and up to 20% for offsets, for a maximum of 20% for both options). The decarbonization program would fund projects that support the reduction of emissions from the sector. The total of all allowances and the overall 20% limit on compliance flexibility creates a legal upper bound on emissions from the sector.
    • The oil and gas GHG pollution cap will limit emissions, not production, and will encourage industry to reinvest into projects that lower pollution while providing flexibility to respond to changes in the global market.  
    • To make sure the oil and gas GHG pollution cap accounts for current activity levels, the proposed Regulations would use data reported by operators for 2026 to set the first oil and gas GHG pollution cap level. The oil and gas GHG pollution cap for the first compliance period, 2030-2032, would be set at 27% below emissions reported for 2026, which is estimated to be equivalent to 35% below 2019 emissions.
    • Using 2026 for reported data means the oil and gas GHG pollution cap would be based on real-world conditions. The final oil and gas GHG pollution cap level would be published before the end of 2027.
    • The proposed Regulations allocate allowances to covered operators using specified distribution rates—defined in allowances per unit of production—for each type of covered activity. Allowances will be distributed before the start of each year (starting in 2029 for 2030, the first compliance year). To ensure that allowances are distributed to the level of the emissions cap for each year, the allowances distributed would be pro-rated across all facilities receiving them.

    The system would be phased in for the first four years (2026-2029). During that period, operators would be required to register and report their emissions and production. Large emitters will start reporting in 2027 for their 2026 emissions and production levels. Reporting for small operators would start in 2029 for their 2028 levels. Operators would need to submit verified annual reports to Environment and Climate Change Canada for their facilities for every calendar year. Reports would be due on June 1 of the following year. The reports would be used to identify which operators will be subject to the pollution cap and have remittance obligations.

    Annual reports would include the GHG emissions attributed to the facility and the production amount by industrial activity. The Quantification Methods for the Oil and Gas Sector Greenhouse Gas Emissions Cap Regulations (the Quantification Methods) would define methods to calculate each source of emissions and would provide certain default values. In addition to the draft regulations, the government is seeking feedback on the Quantification Methods.

    All operators would be required to register and report, but only large operators (producing above an annual threshold of 365,000 barrels of oil equivalent) would have to remit allowances to cover their emissions. Large operators account for approximately 99% of the upstream sector’s emissions. The government would distribute emissions allowances to covered operators annually, before the start of each compliance year. Allowances would be pro-rated across all covered operators’ facilities based on historical production volumes. Allowances would not be able to be used for compliance under other carbon pricing systems, such as the federal Output-Based Pricing System (OBPS). There would be no limits to the number of allowances operators covered under the oil and gas GHG pollution cap could hold, and allowances could be traded among operators.

    Emissions allowances and offsets could be banked for use in a limited number of future years. Decarbonization units would not be tradable or bankable.

    Economic impacts of the proposed Regulations

    Environment and Climate Change Canada undertook an economic cost-benefit analysis of the proposed Regulations. Costs and benefits have been evaluated relative to a baseline that assumes production in the oil and gas sector grows, existing federal and provincial GHG measures remain in place, and the sector achieves the 75% reduction in methane emissions relative to 2012 levels, as a result of the forthcoming oil and gas methane regulations.

    The proposed pollution cap Regulations are estimated to result in net cumulative GHG emission reductions of 13.4 Mt above the baseline of reductions between 2025 and 2030-2032 that will be achieved by existing measures. That incremental reduction is valued at almost $4 billion in avoided global climate change damages. When compared to the costs, modelling showed that the proposed Regulations are estimated to have net benefits of $428 million for Canada.

    Importantly, this multi-million-dollar benefit does not account for a wide range of additional benefits likely to be associated with the proposed Regulations, including:

    • the additional economic activity and jobs associated with post-2032 investments in carbon capture, utilization and storage (CCUS) and other major decarbonization activities;
    • the stimulation of innovation and new low-carbon industries, such as clean hydrogen;
    • the economic and health benefits of reducing air pollution, which will improve the quality of life for many people and reduce the strain on our healthcare systems; and
    • the longer-term competitiveness benefits of a decarbonized Canadian oil and gas sector in a world that continues to take action to fight climate change and adhere to existing international and domestic climate commitments.

    The oil and gas sector directly and indirectly supports a significant workforce, especially in British Columbia, Alberta, Saskatchewan, and Newfoundland and Labrador. Modelling for the 2019 to 2030-2032 period shows that labour expenditure in the sectors covered by the proposed Regulations is expected to grow by 53%, which is only slightly below the 55 % growth in the baseline scenario.

    Additionally, jobs in clean energy will continue to grow. A 2023 Clean Energy Canada report found that Canada will see 700,000 more energy jobs in a carbon-neutral 2050 scenario than we have today. 419,000 of these jobs will be in Alberta, representing three jobs for every individual worker employed in Alberta’s upstream energy sector as of 2022.

    Oil and gas prices correspond to global market demand, and they do not typically reflect the cost of production. As such, the risk of compliance costs passed through from the oil and gas sector to Canadians is very low, and the proposed Regulations are not expected to affect the cost of everyday items such as fuel or groceries.

    Provincial leadership

    British Columbia previously announced it will put in place an oil and gas emissions cap to serve as a backstop to the federal policy. The goal will be to meet BC’s greenhouse gas emission reduction targets and avoid regulatory duplication and administrative burden for the oil and gas sector.

    Alberta, in its Emissions Reduction and Energy Development Plan (2023), communicated its goal to achieve carbon neutrality by 2050 and signalled it would explore options to achieve a 75-80% reduction in methane emissions from conventional oil and gas by 2030. Alberta has had a price on carbon emissions since 2007, making it the first jurisdiction in North America to price carbon. The province’s industrial carbon pricing system, implemented as set out in the Technology Innovation and Emissions Reduction (TIER) Regulation, recycles its proceeds to invest in emissions reduction projects including in the oil and gas sector, such as methane emissions abatement.

    Saskatchewan is a leader in carbon capture and sequestration technology, with several projects aimed at capturing CO2 emissions from oil and gas production. In 2014, the Boundary Dam project became the first power station in the world to successfully use carbon capture and storage technology. The province is also addressing methane emissions, including improving leak detection and repair practices and implementing best practices for gas flaring and venting.

    Newfoundland and Labrador’s offshore oil sector is already one of the lowest-emitting in the country. The newest planned production project—Bay du Nord—was approved with the historic requirement for the project to reach net-zero emissions by 2050. Like all other oil- and gas-producing provinces, NL implements a price on industrial carbon emissions via its provincial output-based pricing system.

    Note on third party reports

    The Government of Canada is aware of third-party reports conducted by Conference Board of Canada, Deloitte and S&P.

    These reports are based on a broad range of assumptions including elements of the previously published Regulatory Framework or, in some cases, other assumptions made by the authors. A common assumption found in the reports was that the oil and gas sector would take limited to no additional action to reduce emissions without the regulations.

    These reports do not reflect an accurate analysis of the current draft regulations. The Government of Canada welcomes continued sharing of analysis to help refine the proposed Regulations.

    MIL OSI Canada News –

  • MIL-OSI Global: The budget is good news overall for young professionals – here’s how the changes will affect you

    Source: The Conversation – UK – By Andy Lymer, Professor of Taxation and Personal Finance, Aston University

    fizkes/Shutterstock

    Chancellor Rachel Reeves’s first budget was full of a dizzying array of measures to raise over £40 billion to fund public services and boost investment.

    The headlines suggest most of the extra taxes to be paid will fall on businesses, not directly on “working people”. If you are recently out of university or early in your career, here are a few measures most likely to affect your life.

    Inheritance tax

    This 40% tax is paid by the estates of those who pass away, before the remaining amount is distributed based on their wishes. It is really more of an estate tax, than a tax on what you inherit personally.

    Little was changed to the tax itself in this budget – you can still receive £325,000 tax-free from each parent, or from your spouse or civil partner. If the estate includes a family home, they can pass this tax free between them and then to their descendants up to a value of £1 million (both get £500,000 each). Estate values beyond this are taxed at 40%.

    The £325,000 threshold hasn’t changed since April 2009, so as house and asset prices rise it means more of an estate’s value over these levels will be subject to tax each year. If this threshold level had kept pace with changes in general prices, the basic inheritance tax threshold should now be more than £500,000.

    The chancellor has decided to extend the fixing of this threshold for another two years – now to at least 2030.

    Does this matter? Very much so, as budget forecasts suggest that while only 5% of current estates are subject to any tax, by 2029-30 this will double, so many more of us will get taxed on inheritances than ever before. This is because as prices keep rising, more and more inheritances will go over the threshold level and be subject to this tax.

    However, this still implies 90% of all estates will be passed on tax-free so most will never end up bearing this tax.

    No one’s 20s and 30s look the same. You might be saving for a mortgage or just struggling to pay rent. You could be swiping dating apps, or trying to understand childcare. No matter your current challenges, our Quarter Life series has articles to share in the group chat, or just to remind you that you’re not alone.

    Read more from Quarter Life:

    One change that Reeves did announce was that inherited pension pots will now all be taxable. Currently, if you inherit unused parts of a pension pot and the owner died aged less than 75, it was passed on tax-free. This won’t happen in the future, and it will instead form part of the estate and be subject to the tax rules above. This means estate sizes could be larger and more will therefore end up getting taxed.

    Reeves also announced the end of the exemption that allows owners of agricultural land and farms, and owners of businesses to avoid inheritance tax. Instead, from April 2026 a £1 million exemption cap will be applied and any assets passed on above this will be taxed at 20% (half the rate applied to other inheritances).

    Housing and stamp duty

    Reeves also announced a rise in stamp duty (the tax paid when you buy a house or flat over a certain value) for those purchasing second homes. While you and your peers are more likely to be trying to buy a first home, the government argues that this increase will give first-time buyers a competitive advantage in the housing market.

    However, there is risk that these extra costs could be passed on, for example to renters of a landlord’s second property in the form of higher rent.

    The government also did not extend the higher thresholds for stamp duty that were announced by the previous Conservative government in the October 2022 mini-budget. So from April next year, first-time buyers will once again have to pay stamp duty on any properties over £300,000, rather than £425,000.

    National insurance

    Employer national insurance contributions (NICs) are also set to rise in April 2025 to 15% (from 13.8%). This doesn’t directly affect employees, as their NIC rate will stay at 8%. However, this may mean there will be less money to pay wage increases or hire new staff.

    The Office for Budget Responsibility expects about 60% of this extra employer NIC cost on average to fall on wages, and about 15% to be passed on to customers in higher prices – so only 25% will affect business profits.

    However, this impact will vary. Smaller businesses and businesses in low margin industries such as low-end retailing or grocery stores, may find this harder to pass on to their employees or customers.

    They will have to absorb more of this cost as reduced profits, which in turn would lead to less money for wage increases or hiring. In effect, it will be cheaper to have more self-employed people (employer NICs are not paid on the self-employed, who have to sort this out themselves).

    Stamp duty has risen – but only on second homes.
    fizkes/Shutterstock

    Minimum wage rising

    Another key change that is likely to disproportionately affect younger workers – national minimum wage is to rise. For those over 21, this will be by 6.7% to £12.21 per hour from April 2025. For a full-time employee, that is an extra £1,400 a year (before tax).

    Those aged 18-20 will be getting an even larger rise to £10 per hour (a 16.3% increase on the current £8.60/hour).

    This is good news for employees, but some fear it could lead to fewer jobs. However, it is a buyer’s market for some lower paid roles, as some industries are struggling to fill vacancies. This may not be a worry for all jobs. Employers will have to pay the minimum wage to get staff they need.

    As always, we will have to wait and see what changes this really creates as people react to the full range of announcements. But the overall government distribution predictions is that all but the very richest will be better off from this budget.

    Very few young professionals fall into this category, so you can almost certainly expect to gain overall from this budget, even if not personally from every change.

    Andy Lymer receives funding from a variety of sources for his work and that of the Centre for Personal Financial Wellbeing that he directs. Most recently this has included the UK’s Money and Pension Service, the Aviva Foundation, and Fair4All Finance.

    – ref. The budget is good news overall for young professionals – here’s how the changes will affect you – https://theconversation.com/the-budget-is-good-news-overall-for-young-professionals-heres-how-the-changes-will-affect-you-242643

    MIL OSI – Global Reports –

  • MIL-OSI Global: The 27 Club isn’t true, but it is real − a sociologist explains why myths endure and how they shape reality

    Source: The Conversation – USA – By Zackary Okun Dunivin, Postdoctoral Fellow in Communication, University of California, Davis

    Many members of the 27 Club are outsize in their cultural influence. Psychology Forever/Wikimedia Commons, CC BY-SA

    There’s a certain allure to the notion that some of the world’s brightest stars burn out at the age of 27. The so-called 27 Club has captivated the public imagination for half a century. Its members include legendary musicians Jimi Hendrix, Janis Joplin, Jim Morrison, Kurt Cobain and Amy Winehouse. The idea is as seductive as it is tragic: a convergence of talent, fame and untimely death at a singular age.

    But is there any truth to this phenomenon, or is it merely a story we tell ourselves and each other about fame and youth?

    In our newly published research, my colleague Patrick Kaminski and I explore why the 27 Club persists in culture. We didn’t set out to debunk the myth. After all, there is no reason to think that 27 is an especially dangerous age beyond superstition.

    Rather, we wanted to explore the 27 Club to understand how such a myth gains traction and affects people’s perception of reality.

    Is the 27 Club real?

    The origin of the 27 Club dates back to the early 1970s, following the deaths of Brian Jones, Jimi Hendrix, Janis Joplin and Jim Morrison – all at age 27, within a span of two years.

    This uncanny coincidence left its mark on collective memory. It wasn’t just their age. It was the common thread of musical genius, countercultural influence and the tragic allure of lives cut short by a cocktail of fame, drug use and the struggle of being human. The narrative is not just compelling but almost mystical in its synchronicity.

    Analyzing data from 344,156 notable deceased individuals listed on Wikipedia, we found that while there’s no increased risk of dying at 27, those who do die at that age receive significantly more public attention. Using Wikipedia page views as a proxy for fame, our study revealed that the legacies of these 27-year-olds are amplified, garnering more visibility than those who die at adjacent ages.

    This increased visibility has a strange effect: People are more likely to encounter those who died at 27 than other young ages, even if they are not aware of the myth. This in turn creates the appearance of greater risk of mortality at 27. The myth of the 27 Club is a self-fulfilling prophecy: It became “real” because we believed it.

    Why is the 27 Club a thing?

    We believe this phenomenon can be understood through three interrelated concepts: path dependence, stigmergy and memetic reification.

    Path dependence refers to how random events can set a precedent that influences future outcomes. The initial cluster of high-profile deaths at age 27 was statistically improbable – we estimate that one in 100,000 timelines would have four such famous deaths at age 27 – but it established a narrative pathway that has persisted and shaped collective reality.

    Stigmergy describes how traces of an event or action left in the environment can indirectly coordinate future events or actions. In the digital age, platforms such as Wikipedia serve as repositories of collective memory. The existence of a dedicated 27 Club page, with links to its members’ pages, increases the visibility of those who die at 27. This creates a feedback loop: The more we click, the more prominent these figures become, and the more the myth is reinforced.

    Finally, what we call memetic reification captures how beliefs can shape reality. We draw from a sociological concept called the Thomas theorem, which states that if you “define a situation as real, they are real in their consequences.” The 27 Club myth has tangible effects on cultural memory and fame. By imbuing significance into the age of 27, society elevates the legacies of those who die at that age, making the myth materially consequential.

    Why do myths endure?

    Why do such myths endure? At their core, myths are not about factual accuracy but about narratives that resonate with people. They thrive on mystery, tragedy and the human penchant for finding patterns even in randomness. The story of the 27 Club is poetic, encapsulating the fleeting nature of genius and the fragility of life. It’s a story that begs to be told and retold, regardless of its veracity.

    This isn’t an isolated phenomenon. Cultural patterns often arise from chance events that, through collective commitment and storytelling, become embedded in our understanding of the world.

    Your social world shapes what you value and how you behave.

    Consider the evolution of language – why do we call a dog a “dog”? There is nothing doggy about the word. Philosopher Ludwig Wittgenstein observed that nearly all symbols are arbitrary. Some countries drive on the left side of the road while others on the right. While the choice to adopt left- or right-side traffic is influenced by neighboring countries or car producers, ultimately these followed from an arbitrary resolution to the need to pick one side or the other. These conventions began as random occurrences that, over time, became standardized and meaningful through social reinforcement.

    The 27 Club serves as a lens through which you can examine the power of mythmaking in shaping perceptions of history and reality. It highlights how collective beliefs can have real-world consequences, influencing who becomes immortalized in cultural memory. It’s a testament to the complex interplay between chance events, storytelling and the mechanisms by which myths are perpetuated.

    Though we may appear to dispel the myth of the 27 Club, let’s not abandon the story. We’re myth trusters, not myth busters. In unraveling the myth, we’re acknowledging the profound ways in which narratives influence our collective consciousness. By understanding the processes behind myth formation, we can better appreciate the richness of culture and the stories people choose to tell.

    Zackary Dunivin has received funding from the National Science Foundation Research Traineeship Grant 1735095 “Interdisciplinary Training in Complex Networks and Systems.”

    – ref. The 27 Club isn’t true, but it is real − a sociologist explains why myths endure and how they shape reality – https://theconversation.com/the-27-club-isnt-true-but-it-is-real-a-sociologist-explains-why-myths-endure-and-how-they-shape-reality-242693

    MIL OSI – Global Reports –

  • MIL-OSI New Zealand: The Achieving Society, and Paku Manu Ariki Whakatakapōkai

    Source: ACT Party

    The Haps

    The media and the usual suspects are breathless at David Seymour’s school lunch success. He’s halved the cost and delivered for more children, despite believing it’s the parents’ job in the first place. If Labour had done it the same way, they could have saved over $800 million. First they said he’d cancel it. Then they said he couldn’t do it. Now they say the savings are too great, and not enough businesses will make money from the scheme. Moaning Report managed to hang their coverage of the Government saving $170m off one Principal who didn’t like it.

    The Achieving Society, and Paku Manu Ariki Whakatakapōkai

    David McClelland was a psychologist who analysed children’s books to understand the values of different cultures. His work is summarised in Richard Prebble’s classic I’ve Been thinking.

    The basic conclusion is that societies who tell their children they can make a difference in their own lives, if they take responsibility and make an effort, will grow wealthy and peaceful. Those who tell their children that life is a bit like bad weather, something you’re powerless to change, have difficult times ahead.

    It worked. Writing in the 1950s, McClelland was able to forecast Japan’s economic miracle based on his study of their nursery rhymes. It was a big call for a war-torn country under foreign occupation.

    That basic story has become the kernel of the modern ACT Party. Own your future, change your future, real change, change makers, make a difference in your own life and the lives of those you care about… Individuals matter because they’re the only entity that can choose to act, and sometimes the most unlikely people have insights that will benefit us all.

    Why does the Party care about property rights? Because it’s hard to make a difference if everything you acquire gets nicked by criminals, or the IRD, or if you can’t use your property the way you want to because of red tape. It’s also why education matters, and you shouldn’t be discriminated against on any personal characteristic.

    What, then to make of Paku Manu Ariki Whakatakapōkai? Apparently the best picture book at the book awards for children this year, by McClelland’s standards it shows New Zealand is stuffed.

    The story has barely been covered in New Zealand, with two exceptions. A beautiful op-ed by Josie Pagani, that contrasts the book with Barack Obama’s liberalism, and a gushing interview with the author published by the parallel state-funded universe that is The Spinoff.

    The story is a stream of consciousness from a young boy. My name is Paku Manu Ariki Whakatakapōkai, you can call me Paku Manu Ariki Whakatakapōkai. And he’s off. The usual reason for saying ‘you can call me…’ is to offer an alternative. It’s a sign of friendship and a will to get on with one another. Instead Paku uses the phrase to insist right off the bat that you must use his 13 syllables.

    The book carries on in this vein, Paku believes that he was created at the same time as the universe and everyone was created at the same time. He doesn’t understand why there are rules or anyone is required to follow them, but he’s sure they shouldn’t apply to him.

    Then the author has him say “I will hit all the English people in the face because they stole the land”. And “My Dad is Māori like me. I feel sorry for my Mum. She’s only Pākehā.”

    The kind interpretation, that the author sells (and may genuinely believe) is that the book is designed to ‘stimulate conversations.’ The voice is simply the musings of a child, why be so hard on him?

    As Pagani says, ‘those sound like adult words.’ The author doesn’t challenge the tropes that she puts in the mouth of the young child. There’s no conclusion that racially motivated violence is actually a bad thing. There’s only reference to Nana, who says you shouldn’t hit people, but she is abandoned as a quaint figure.

    Parents (Paku is modelled on the author’s son) are apparently not to guide their children, they’re there to be their friends. Rather than passing on values of achievement, cooperation, respect for the dignity of others, Paku’s worst instincts (or is that the author’s prejudices?) are amplified.

    Besides winning the Picture Book award, this book was funded by Creative New Zealand. This is the same Creative New Zealand that funded Tusi’ata Avia’s poem that cast Captain Cook as an avatar for Europeans in New Zealand and celebrated stabbing him with a pig knife.

    Of course, the Government, and specifically Arts Minister Paul Goldsmith, is turning over appointments in these outfits and setting new expectations. Nonetheless this book, its taxpayer funding, and its national award show how deeply ingrained is New Zealand’s appetite for self-destruction.

    Only by recommitting ourselves to universal human rights—equal rights—for each and every person can we overcome such corrosive thinking. Thankfully, there is a whole political party committed to doing just that.

    MIL OSI New Zealand News –

  • MIL-OSI: Revenue as of September 30, 2024

    Source: GlobeNewswire (MIL-OSI)

    • €742.8 million in revenue over 9 months, down 3.5%, reflecting the group’s strategic orientations
      • Implementation of a strategy to prioritize margins over revenue growth
      • Continuing diversification into activities related to the energy transition, with strong growth of +28%
      • Accelerating growth in Germany, the group’s future third pillar, at +28%.
    • Third quarter: €225.4 million in revenue, down 10.1%, reflecting the continuation of 2nd quarter trends
      • Impact of selectivity measures implemented in Q2 in French and Spanish telecom sectors in France and Spain .
      • Temporarily reduced fiber activity in Belgium as negotiations continue between telco service providers looking to pool their investments
      • Sustained strong growth in Germany: +33%.
      • Strong growth in Energy activity, despite unfavorable seasonal effects in Q3: +26 %
    • 2024 full-year outlook confirmed   
      9 months Q3
    In millions of euros (unaudited data) 2024 2023 % change 2024 2023 % change
    Group 742.8 769.7         -3.5% 225.4 250.7         -10.1%
    Benelux 278.9 269.6         3.5% 82.1 89.6         -8.3%
    France 270.2 297.8         -9.3% 81.7 98.4         -16.9%
    Other Countries 193.8 202.4         -4.3% 61.6 62.7         -1.8%

    Gianbeppi Fortis, Chief Executive Officer of Solutions30, stated: “The evolution of Solutions30’s revenue since the beginning of the year reflects the strategic orientations we shared at our Capital Markets Day last September. We are prioritizing margins over revenue growth, with an increased selectivity in our mature markets. At the same time, we are continuing our expansion in Germany, which is set to become a profitable growth pillar for Solutions30, as well as our diversification into energy transition-related services, buoyed by favorable structural trends. The decrease in revenue in the third quarter was a continuation of trends seen in the second quarter, with the deepening impact of measures to reduce our exposure to certain insufficiently profitable contracts in France and Spain and a temporary slowdown in the fiber business in Belgium. In the current contrasted market environment, we are confident that our strategic choices are fully relevant.”

    Consolidated revenue

    In the first nine months of 2024, Solutions30’s consolidated revenue amounted to €742.8 million, down 3.5% from €769.7 million in the same period of 2023. This includes an organic contraction of -4.2%, a +0.3% impact from acquisitions, and a +0.4% favorable currency effect.

    This decrease reflects the group’s strategic orientations, as presented at the Capital Markets Day held on September 26, 2024. Namely, the prioritization of margins over revenue growth with the measures taken in Q2 to reduce exposure to certain telecoms contracts, notably in France and Spain, which no longer met the Group’s profitability requirements. Solutions30’s growth drivers, however, maintained strong momentum: Germany, which is proving to be its best-performing market in terms of growth, and energy-related services, which continue to develop successfully, confirming the relevance of the strategic diversification undertaken.

    Third-quarter consolidated revenue totaled €225.4 million, compared with €250.7 million in Q3 2023, representing a decline of -10.1% (-10.5% organically). This sharper decline than in Q2 (-4.5%) mainly reflects (i) the deepening impact of selectivity measures implemented in Q2 in the telecoms sector in France and Spain, and (ii) ongoing negotiations between Belgian telecom service providers, begun in Q2, with a view to pooling their fiber deployment investments.

    Benelux

    Revenue in Benelux for the first nine months of the year totaled €278.9 million, representing 38% of total revenue, up 3.5% (+3.4% organic growth). Following a year of exceptional growth (+77.2% in the first nine months of 2023), which set a particularly high comparison basis, business in the Benelux countries remains slowed down by ongoing negotiations between Belgian telecoms service providers to streamline the rollout of fiber nationwide. Although the Belgian market’s potential remains high, these negotiations are causing delays for Solutions30’s business. In Q4, these effects will be amplified due to the merger of two of the Group’s customers, Proximus and Fiberklaar, impacting the pace of the connection market.

    In the third quarter of 2024, Benelux revenue totaled €82.1 million, down 8.3% (-8.6% organic). Connectivity activity posted revenue of €61.3 million, down -15.3%. This decline reflects the full impact of delays in fiber roll-out in Belgium from the 2nd quarter onwards, due to the above-mentioned negotiations, as well as, to a lower extent, the impact of the Belgian communal and provincial elections, which was limited by efficient planning.

    The development of Energy activity continues, with growth accelerating to +23% in the third quarter of 2024 and revenue reaching €15.8 million. In September 2024, Solutions30 announced its acquisition of Xperal, a Netherlands-based photovoltaic project specialist (see press release dated September 23, 2024). This acquisition significantly enhances the group’s offering in the sector, providing an integrated range of energy services in the Benelux countries that cover smart meters, electric vehicle charging stations, low-voltage electricity grids, photovoltaic installation, and energy storage solutions. The acquisition of Xperal is fully in line with the Group’s strategy to become a leading energy services player in all the regions where it operates.

    Technology activity posted revenue of €5.0 million in the third quarter of 2024, up +16.1%.         

    France

    In France, revenue for the first nine months of the year was €270.2 million, or 36% of total revenue, down
    -9.3%. This change includes an organic contraction of -9.9% and a +0.6% positive impact from the acquisition of Elec-ENR, consolidated since July 2023.

    In the third quarter of 2024, revenue amounted to €81.7 million, a purely organic decline of -16.9%, driven by the sharp -35.3% decrease in Connectivity revenue to €45.8 million. This reflects the deepening impact of the selective measures implemented in the 2nd quarter, which led the Group to significantly reduce its exposure to certain contracts that no longer met its profitability standards. It also reflects a slowdown in the fiber roll-out market, which is set to continue in the quarters ahead.

    Revenue from Energy activity continued to grow strongly, rising by +42.5% in the third quarter to €18,6 million. Solutions30 continues to successfully diversify in this sector, which is buoyed by favorable structural trends, and is gradually establishing itself as a leading player. Growth, however, was less strong than in the second quarter (+56%), due to the seasonal nature of these services, which usually experience lower activity during the summer period, before tending to rebound in the fourth quarter.

    Technology activity’s revenue was €17.3 million, rising sharply by +19.8% and reflecting a temporary increase in business linked to the 2024 Paris Olympics. Drawing on its expertise in these fields, Solutions30 was on call at all Olympic sites to provide technical assistance for IT and payment systems.

    Other countries

    In other countries, the Group generated €193.8 million in revenue over the first nine months of the year, or 26% of total revenue, down -4.3%. This includes an organic decline of -5.8% and a positive currency effect of +1.5%, reflecting the appreciation of the zloty and the pound sterling against the euro during this period. In the third quarter of 2024, revenue was €61.6 million, down -1.8% (-3.0% organic) but with highly contrasting situations from one country to another.

    In Germany, Solutions30 is benefiting from exceptional market momentum, with revenue increasing +33.2% in the third quarter of 2024 to €21.8 million. Coaxial network activity remains strong, while fiber activities continue to ramp up. Solutions30 is now firmly established as a trusted partner for the six national telecom service providers.

    In Poland, growth remained solid at +24.2%, with revenue reaching €14.5 million in the third quarter.

    In Italy, revenue amounted to €12.8 million in the third quarter. Normal activity has resumed with more favorable economic conditions, after the Group voluntarily limited its call-outs with its main fiber customer from the second half of 2023. Solutions30 returned to slight growth of +0.8% in the third quarter, and will benefit from a favorable base effect in the fourth quarter.

    In Spain, revenue fell by -43.5% to €7.3 million, reflecting the full impact of measures taken in the second quarter to reduce the Group’s exposure to the mature fiber market. The Connectivity business is currently being restructured, while the Group refocuses its development on Energy and Technology. In the third quarter, it won a strategic contract with Atlante to install an initial set of 50 electric vehicle charging stations (see press release from September 30, 2024).

    Lastly, in the United Kingdom, revenue fell by -42.5% to €5.2 million, reflecting the continued refocusing of Connectivity activities on the fiber market. Solutions30 is also focusing on developing its Energy business, as demonstrated by the multi-year contract signed with Connected Kerb to develop its electric vehicle charging infrastructure network (see press release from September 24, 2024).

    2024 full-year outlook confirmed

    For the full year 2024, Solutions30 expects slightly lower revenue compared to 2023, along with improvement in the Group’s adjusted EBITDA margin, leading to an overall increase in adjusted EBITDA.

    2026 Roadmap

    At the Capital Markets Day held on September 26, 2024, Solutions30 shared its 2026 roadmap, with concrete action plans and objectives tailored to each of its markets.

    In the Benelux, the group is confident it will be able to capitalize on its leading market position and return to a profitable growth trajectory as early as 2025, whatever the outcome of the current negotiations with service providers. It is targeting an adjusted EBITDA margin above 10% by 2026.

    In France, Energy activity revenue is set to triple compared with 2023, reaching €150 million by 2026. In Connectivity activity, the Group is working to stabilize its business while applying strict contract selectivity. It is also positioning itself to seize future opportunities such as the forthcoming dismantling of the copper network. Adjusted EBITDA margin, benefiting from the global transformation plan launched in 2022, should exceed 10% by 2026.

    In Germany, Solutions30 is aiming for a first milestone in 2026, with revenue of between €150 and €200 million, and an adjusted EBITDA margin well above 10%. The country should then continue to grow faster than the rest of the Group, becoming one of its biggest contributors.

    In the rest of Europe, Solutions30 has adopted a differentiated approach, with the aim of maintaining profitable growth in Poland, continuing to improve performance in the United Kingdom, and restoring margins in Italy and Spain by 2026, or else envisaging strategic actions for its activities in these two countries.

    Webcast for investors and analysts
    Date: Monday, November 4, 2024
    6:30 PM (CET) – 5:30 PM (GMT)

    Speakers
    Gianbeppi Fortis, Chief Executive Officer
    Jonathan Crauwels, Chief Financial Officer
    Amaury Boilot, Group General Secretary

    Connection details
    Webcast in English: https://channel.royalcast.com/solutions30-en/#!/solutions30-en/20241104_1

    Upcoming events

    Gilbert Dupont Forum Valeurs Familiales  (Paris) – November 5, 2024

    CIC Forum (Virtual Day)  – November 21, 2024

    2024 Q4 Revenue  – January 29, 2025

    About Solutions30 SE

    Solutions30 provides consumers and businesses with access to the key technological advancements that are shaping our everyday lives, especially those driving the digital transformation and energy transition. With its network of more than 16,000 technicians, Solutions30 has completed over 65 million call-outs since its inception and led over 500 renewable energy projects with a combined maximum output surpassing 1600 MWp. Every day, Solutions30 is doing its part to build a more connected and sustainable world. Solutions30 has become an industry leader in Europe with operations in 10 countries: France, Italy, Germany, the Netherlands, Belgium, Luxembourg, Spain, Portugal, the United Kingdom, and Poland.
    The capital of Solutions30 SE consists of 107,127,984 shares, equal to the number of theoretical votes that can be exercised. Solutions30 SE is listed on the Euronext Paris exchange (ISIN FR0013379484- code S30).
    Indices: CAC Mid & Small | CAC Small | CAC Technology | Euro Stoxx Total Market Technology | Euronext Tech Growth.
    Visit our website for more information: www.solutions30.com.

    Contact

    Individual Shareholders:
    shareholders@solutions30.com – Tel: +33 (0)1 86 86 00 63

    Analysts/investors:
    investor.relations@solutions30.com

    Press – Image 7:
    Charlotte Le Barbier – Tel: +33 6 78 37 27 60 – clebarbier@image7.fr

    Attachment

    The MIL Network –

  • MIL-OSI: Viper Energy, Inc., a Subsidiary of Diamondback Energy, Inc., Reports Third Quarter 2024 Financial and Operating Results

    Source: GlobeNewswire (MIL-OSI)

    MIDLAND, Texas, Nov. 04, 2024 (GLOBE NEWSWIRE) — Viper Energy, Inc., (NASDAQ:VNOM) (“Viper” or the “Company”), a subsidiary of Diamondback Energy, Inc. (NASDAQ:FANG) (“Diamondback”), today announced financial and operating results for the third quarter ended September 30, 2024.

    THIRD QUARTER HIGHLIGHTS

    • Q3 2024 average production of 26,978 bo/d (49,370 boe/d), an increase of 2.4% from Q2 2024
    • Q3 2024 consolidated net income (including non-controlling interest) of $109.0 million; net income attributable to Viper Energy, Inc. of $48.9 million, or $0.52 per common share
    • Q3 2024 cash available for distribution to Viper’s common shares (as defined and reconciled below) of $75.4 million, or $0.73 per Class A common share
    • Declared Q3 2024 base cash dividend of $0.30 per Class A common share; implies a 2.3% annualized yield based on the November 1, 2024, share closing price of $52.16
    • Q3 2024 variable cash dividend of $0.31 per Class A common share; total base-plus-variable dividend of $0.61 per Class A common share implies a 4.7% annualized yield based on the November 1, 2024, share closing price of $52.16
    • Total Q3 2024 return of capital of $62.4 million, or $0.61 per Class A common share, represents 83% of cash available for distribution
    • 330 total gross (6.8 net 100% royalty interest) horizontal wells turned to production on Viper’s acreage during Q3 2024 with an average lateral length of 11,866 feet
    • As previously announced, closed acquisition of certain mineral and royalty interest-owning subsidiaries of Tumbleweed-Q Royalty Partners, LLC and MC Tumbleweed Royalty, LLC on September 3, 2024; closed acquisition of subsidiaries of Tumbleweed Royalty IV, LLC on October 1, 2024 (the “TWR IV acquisition” and collectively with the other Tumbleweed acquisitions, the “Tumbleweed Acquisitions”)
    • Initiating average daily production guidance for Q4 2024 of 29,250 to 29,750 bo/d (52,500 to 53,000 boe/d)
    • Increasing full year 2024 average daily production guidance to 27,000 to 27,250 bo/d (48,750 to 49,250 boe/d)

    “The third quarter marked a continuation of Viper delivering on its differentiated strategy and value proposition, and was highlighted by both continued organic production growth on our legacy asset base and the closing of the Tumbleweed Acquisitions. As we prepare to head into 2025, we look forward to further delivering on our strategy of consolidating high quality mineral and royalty assets through a disciplined and focused approach,” stated Travis Stice, Chief Executive Officer of Viper.

    Mr. Stice continued, “Looking specifically at current operations, activity remains strong across our acreage position as represented by the substantial amount of work-in-progress and line-of-sight wells, and we continue to benefit from Diamondback’s large scale development of our high concentration royalty acreage. We expect our durable production profile, along with our best-in-class cost structure, to continue to highlight the advantaged nature of our business model as we can maintain our strong free cash flow conversion despite the volatility in commodity prices.”

    FINANCIAL UPDATE

    Viper’s third quarter 2024 average unhedged realized prices were $75.24 per barrel of oil, $0.13 per Mcf of natural gas and $19.89 per barrel of natural gas liquids, resulting in a total equivalent realized price of $45.83/boe.

    Viper’s third quarter 2024 average hedged realized prices were $74.27 per barrel of oil, $0.56 per Mcf of natural gas and $19.89 per barrel of natural gas liquids, resulting in a total equivalent realized price of $45.87/boe.

    During the third quarter of 2024, the Company recorded total operating income of $209.6 million and consolidated net income (including non-controlling interest) of $109.0 million.

    As of September 30, 2024, the Company had a cash balance of $168.6 million and total long-term debt outstanding (excluding debt issuance costs, discounts and premiums) of $830.4 million, resulting in net debt (as defined and reconciled below) of $661.7 million. Viper’s outstanding long-term debt as of September 30, 2024 consisted of $430.4 million in aggregate principal amount of its 5.375% Senior Notes due 2027, $400.0 million in aggregate principal amount of its 7.375% Senior Notes due 2031 and no borrowings on its revolving credit facility, leaving $850.0 million available for future borrowings and $1.0 billion of total liquidity.

    Giving effect to the closing of the TWR IV acquisition on October 1, 2024 and the funding of the cash consideration of $458.9 million (of which $43.1 million had previously been paid into escrow, and the remainder was funded at closing with net proceeds from the underwritten public equity offering of Class A common stock that was completed on September 13, 2024, cash on hand, and borrowings under the revolving credit facility), pro forma net debt as of October 1, 2024 was approximately $1.1 billion.

    THIRD QUARTER 2024 CASH DIVIDEND & CAPITAL RETURN PROGRAM

    Viper announced today that the Board of Directors (the “Board”) of Viper Energy, Inc., declared a base dividend of $0.30 per Class A common share for the third quarter of 2024 payable on November 21, 2024 to Class A common shareholders of record at the close of business on November 14, 2024.

    The Board also declared a variable cash dividend of $0.31 per Class A common share for the third quarter of 2024 payable on November 21, 2024 to Class A common shareholders of record at the close of business on November 14, 2024.

    OPERATIONS UPDATE

    During the third quarter of 2024, Viper estimates that 330 gross (6.8 net 100% royalty interest) horizontal wells with an average royalty interest of 2.1% were turned to production on its acreage position with an average lateral length of 11,866 feet. Of these 330 gross wells, Diamondback is the operator of 81 gross wells, with an average royalty interest of 5.1%, and the remaining 249 gross wells, with an average royalty interest of 1.1%, are operated by third parties.

    Viper’s footprint of mineral and royalty interests was 32,567 net royalty acres as of September 30, 2024. Giving effect to the closing of the TWR IV acquisition on October 1, 2024, Viper’s pro forma acreage position was approximately 35,634 net royalty acres, of which Diamondback operated approximately 19,227 net royalty acres.

    Our gross well information as of October 1, 2024 is as follows, after giving effect to the Tumbleweed Acquisitions and Diamondback’s completed merger with Endeavor Energy Resources, L.P.:

      Diamondback
    Operated    		   Third Party
    Operated    		   Total
    Horizontal wells turned to production(1):          
    Gross wells         81     249     330  
    Net 100% royalty interest wells         4.1     2.7     6.8  
    Average percent net royalty interest         5.1 %   1.1 %   2.1 %
               
    Horizontal producing well count:          
    Gross wells         2,755     7,969     10,724  
    Net 100% royalty interest wells         150.1     102.0     252.1  
    Average percent net royalty interest         5.4 %   1.3 %   2.4 %
               
    Horizontal active development well count:          
    Gross wells         179     624     803  
    Net 100% royalty interest wells         10.4     7.3     17.7  
    Average percent net royalty interest         5.8 %   1.2 %   2.2 %
               
    Line of sight wells:          
    Gross wells         266     859     1,125  
    Net 100% royalty interest wells         8.6     13.4     22.0  
    Average percent net royalty interest         3.2 %   1.6 %   2.0 %

    (1) Average lateral length of 11,866 feet.

    The 803 gross wells currently in the process of active development are those wells that have been spud and are expected to be turned to production within approximately the next six to eight months. Further in regard to the active development on Viper’s asset base, there are currently 60 gross rigs operating on Viper’s acreage, seven of which are operated by Diamondback. The 1,125 line-of-sight wells are those that are not currently in the process of active development, but for which Viper has reason to believe that they will be turned to production within approximately the next 15 to 18 months. The expected timing of these line-of-sight wells is based primarily on permitting by third party operators or Diamondback’s current expected completion schedule. Existing permits or active development of Viper’s royalty acreage does not ensure that those wells will be turned to production.

    GUIDANCE UPDATE

    Below is Viper’s updated guidance for the full year 2024, as well as production guidance for Q4 2024.

       
      Viper Energy, Inc.
       
    Q4 2024 Net Production – MBo/d 29.25 – 29.75
    Q4 2024 Net Production – MBoe/d 52.50 – 53.00
    Full Year 2024 Net Production – MBo/d 27.00 – 27.25
    Full Year 2024 Net Production – MBoe/d 48.75 – 49.25
       
    Share costs ($/boe)  
    Depletion $11.50 – $12.00
    Cash G&A $0.80 – $1.00
    Non-Cash Share-Based Compensation $0.10 – $0.20
    Interest Expense $4.00 – $4.25
       
    Production and Ad Valorem Taxes (% of Revenue) ~7%
    Cash Tax Rate (% of Pre-Tax Income Attributable to Viper Energy, Inc.)(1) 20% – 22%
    Q4 2024 Cash Taxes ($ – million)(2) $13.0 – $18.0

    (1)   Pre-tax income attributable to Viper Energy, Inc. is reconciled below.
    (2)   Attributable to Viper Energy, Inc.

    CONFERENCE CALL

    Viper will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2024 on Tuesday, November 5, 2024 at 10:00 a.m. CT. Access to the live audio-only webcast, and replay which will be available following the call, may be found here. The live webcast of the earnings conference call will also be available via Viper’s website at www.viperenergy.com under the “Investor Relations” section of the site.

    About Viper Energy, Inc.

    Viper is a corporation formed by Diamondback to own, acquire and exploit oil and natural gas properties in North America, with a focus on owning and acquiring mineral and royalty interests in oil-weighted basins, primarily the Permian Basin. For more information, please visit www.viperenergy.com.

    About Diamondback Energy, Inc.

    Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. For more information, please visit www.diamondbackenergy.com.

    Forward-Looking Statements

    This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding Viper’s: future performance; business strategy; future operations; estimates and projections of operating income, losses, costs and expenses, returns, cash flow, and financial position; production levels on properties in which Viper has mineral and royalty interests, developmental activity by other operators; reserve estimates and Viper’s ability to replace or increase reserves; anticipated benefits or other effects of strategic transactions (including the recently completed TWR IV acquisition and other acquisitions or divestitures); and plans and objectives (including Diamondback’s plans for developing Viper’s acreage and Viper’s cash dividend policy and common stock repurchase program) are forward-looking statements. When used in this news release, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to Viper are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although Viper believes that the expectations and assumptions reflected in its forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond its control. Accordingly, forward-looking statements are not guarantees of Viper’s future performance and the actual outcomes could differ materially from what Viper expressed in its forward-looking statements.

    Factors that could cause the outcomes to differ materially include (but are not limited to) the following: changes in supply and demand levels for oil, natural gas, and natural gas liquids, and the resulting impact on the price for those commodities; the impact of public health crises, including epidemic or pandemic diseases, and any related company or government policies or actions; actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments, including any impact of the ongoing war in Ukraine and the Israel-Hamas war on the global energy markets and geopolitical stability; instability in the financial sector; higher interest rates and their impact on the cost of capital; regional supply and demand factors, including delays, curtailment delays or interruptions of production on Viper’s mineral and royalty acreage, or governmental orders, rules or regulations that impose production limits on such acreage; federal and state legislative and regulatory initiatives relating to hydraulic fracturing, including the effect of existing and future laws and governmental regulations; physical and transition risks relating to climate change and the risks and other factors disclosed in Viper’s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the Securities and Exchange Commission’s web site at http://www.sec.gov.

    In light of these factors, the events anticipated by Viper’s forward-looking statements may not occur at the time anticipated or at all. Moreover, the new risks emerge from time to time. Viper cannot predict all risks, nor can it assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those anticipated by any forward-looking statements it may make. Accordingly, you should not place undue reliance on any forward-looking statements made in this news release. All forward-looking statements speak only as of the date of this news release or, if earlier, as of the date they were made. Viper does not intend to, and disclaims any obligation to, update or revise any forward-looking statements unless required by applicable law.

    Viper Energy, Inc.
    Condensed Consolidated Balance Sheets
    (unaudited, in thousands, except share amounts)
           
      September 30,   December 31,
       2024     2023 
    Assets      
    Current assets:      
    Cash and cash equivalents         $ 168,649     $ 25,869  
    Royalty income receivable (net of allowance for credit losses)           108,857       108,681  
    Royalty income receivable—related party           35,997       3,329  
    Income tax receivable           —       813  
    Derivative instruments           2,795       358  
    Prepaid expenses and other current assets           3,882       4,467  
    Total current assets           320,180       143,517  
    Property:      
    Oil and natural gas interests, full cost method of accounting ($1,622,601 and $1,769,341 excluded from depletion at September 30, 2024 and December 31, 2023, respectively)           4,771,268       4,628,983  
    Land           5,688       5,688  
    Accumulated depletion and impairment           (1,016,173 )     (866,352 )
    Property, net           3,760,783       3,768,319  
    Funds held in escrow           43,050       —  
    Derivative instruments           2,727       92  
    Deferred income taxes (net of allowances)           74,617       56,656  
    Other assets           4,653       5,509  
    Total assets         $ 4,206,010     $ 3,974,093  
    Liabilities and Stockholders’ Equity      
    Current liabilities:      
    Accounts payable         $ 26     $ 19  
    Accounts payable—related party           —       1,330  
    Accrued liabilities           41,465       27,021  
    Derivative instruments           901       2,961  
    Income taxes payable           1,816       1,925  
    Total current liabilities           44,208       33,256  
    Long-term debt, net           821,505       1,083,082  
    Derivative instruments           —       201  
    Other long-term liabilities           4,789       —  
    Total liabilities           870,502       1,116,539  
    Stockholders’ equity:      
    Class A Common Stock, $0.000001 par value: 1,000,000,000 shares authorized; 102,947,008 shares issued and outstanding as of September 30, 2024 and 86,144,273 shares issued and outstanding as of December 31, 2023           —       —  
    Class B Common Stock, $0.000001 par value: 1,000,000,000 shares authorized; 85,431,453 shares issued and outstanding as of September 30, 2024 and 90,709,946 shares issued and outstanding as of December 31, 2023           —       —  
    Additional paid-in capital           1,429,649       1,031,078  
    Retained earnings (accumulated deficit)           (28,691 )     (16,786 )
    Total Viper Energy, Inc. stockholders’ equity           1,400,958       1,014,292  
    Non-controlling interest           1,934,550       1,843,262  
    Total equity           3,335,508       2,857,554  
    Total liabilities and stockholders’ equity         $ 4,206,010     $ 3,974,093  
     
    Viper Energy, Inc.
    Condensed Consolidated Statements of Operations
    (unaudited, in thousands, except per share data)
                   
      Three Months Ended September 30,   Nine Months Ended September 30,
       2024     2023     2024     2023 
    Operating income:              
    Oil income         $ 186,750     $ 168,008     $ 558,203     $ 443,927  
    Natural gas income           823       8,893       8,763       22,974  
    Natural gas liquids income           20,585       18,713       61,745       47,995  
    Royalty income           208,158       195,614       628,711       514,896  
    Lease bonus income—related party           107       97,237       227       105,585  
    Lease bonus income           1,143       196       2,289       1,730  
    Other operating income           180       193       461       774  
    Total operating income           209,588       293,240       631,688       622,985  
    Costs and expenses:              
    Production and ad valorem taxes           15,113       12,286       44,720       37,794  
    Depletion           54,528       36,280       149,821       101,331  
    General and administrative expenses—related party           2,569       924       7,391       2,772  
    General and administrative expenses           2,046       956       6,712       3,880  
    Other operating (income) expense           (236 )     —       (3 )     —  
    Total costs and expenses           74,020       50,446       208,641       145,777  
    Income (loss) from operations           135,568       242,794       423,047       477,208  
    Other income (expense):              
    Interest expense, net           (16,739 )     (10,970 )     (54,736 )     (31,636 )
    Gain (loss) on derivative instruments, net           7,410       (2,988 )     5,264       (30,685 )
    Other income, net           —       256       —       258  
    Total other expense, net           (9,329 )     (13,702 )     (49,472 )     (62,063 )
    Income (loss) before income taxes           126,239       229,092       373,575       415,145  
    Provision for (benefit from) income taxes           17,194       21,879       42,729       39,735  
    Net income (loss)           109,045       207,213       330,846       375,410  
    Net income (loss) attributable to non-controlling interest           60,128       128,614       181,668       232,294  
    Net income (loss) attributable to Viper Energy, Inc.         $ 48,917     $ 78,599     $ 149,178     $ 143,116  
                   
    Net income (loss) attributable to common shares:              
    Basic         $ 0.52     $ 1.11     $ 1.64     $ 1.99  
    Diluted         $ 0.52     $ 1.11     $ 1.64     $ 1.99  
    Weighted average number of common shares outstanding:              
    Basic           93,695       70,925       90,895       71,803  
    Diluted           93,747       70,925       90,989       71,803  
                                   
    Viper Energy, Inc.
    Condensed Consolidated Statements of Cash Flows
    (unaudited, in thousands)
                   
      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
    Cash flows from operating activities:              
    Net income (loss)         $ 109,045     $ 207,213     $ 330,846     $ 375,410  
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:                      
    Provision for (benefit from) deferred income taxes           1,777       355       (505 )     887  
    Depletion           54,528       36,280       149,821       101,331  
    (Gain) loss on derivative instruments, net           (7,410 )     2,988       (5,264 )     30,685  
    Net cash receipts (payments) on derivatives           187       (3,807 )     (2,038 )     (10,019 )
    Other           1,390       823       4,470       2,045  
    Changes in operating assets and liabilities:              
    Royalty income receivable           26,163       (23,039 )     2,886       (22,147 )
    Royalty income receivable—related party           (1,015 )     (3,047 )     (32,667 )     (1,171 )
    Accounts payable and accrued liabilities           19,107       6,739       14,192       4,156  
    Accounts payable—related party           —       —       (1,330 )     (306 )
    Income taxes payable           (385 )     11,738       (109 )     12,411  
    Other           (413 )     3,485       1,398       (885 )
    Net cash provided by (used in) operating activities           202,974       239,728       461,700       492,397  
    Cash flows from investing activities:              
    Acquisitions of oil and natural gas interests—related party           —       —       —       (75,073 )
    Acquisitions of oil and natural gas interests           (241,877 )     (51,101 )     (271,052 )     (98,510 )
    Proceeds from sale of oil and natural gas interests           (2,967 )     (1,191 )     87,674       (3,166 )
    Net cash provided by (used in) investing activities           (244,844 )     (52,292 )     (183,378 )     (176,749 )
    Cash flows from financing activities:              
    Proceeds from borrowings under credit facility           375,000       69,000       470,000       260,000  
    Repayment on credit facility           (552,000 )     (43,000 )     (733,000 )     (162,000 )
    Net proceeds from public offering           475,904       —       475,904       —  
    Repurchased shares/units under buyback program           —       (9,650 )     —       (67,181 )
    Dividends/distributions to stockholders           (58,649 )     (25,300 )     (156,553 )     (84,181 )
    Dividends/distributions to Diamondback            (64,947 )     (40,200 )     (191,830 )     (127,929 )
    Other           —       (4,551 )     (63 )     (5,722 )
    Net cash provided by (used in) financing activities           175,308       (53,701 )     (135,542 )     (187,013 )
    Net increase (decrease) in cash and cash equivalents           133,438       133,735       142,780       128,635  
    Cash, cash equivalents and restricted cash at beginning of period           35,211       13,079       25,869       18,179  
    Cash, cash equivalents and restricted cash at end of period         $ 168,649     $ 146,814     $ 168,649     $ 146,814  
     
    Viper Energy, Inc.
    Selected Operating Data
    (unaudited)
               
      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
    Production Data:          
    Oil (MBbls)           2,482     2,398     2,037
    Natural gas (MMcf)           6,150     5,631     4,900
    Natural gas liquids (MBbls)           1,035     983     867
    Combined volumes (MBoe)(1)           4,542     4,320     3,721
               
    Average daily oil volumes (bo/d)           26,978     26,352     22,141
    Average daily combined volumes (boe/d)           49,370     47,473     40,446
               
    Average sales prices:          
    Oil ($/Bbl)         $ 75.24   $ 81.04   $ 82.48
    Natural gas ($/Mcf)         $ 0.13   $ 0.20   $ 1.81
    Natural gas liquids ($/Bbl)         $ 19.89   $ 20.35   $ 21.58
    Combined ($/boe)(2)         $ 45.83   $ 49.88   $ 52.57
               
    Oil, hedged ($/Bbl)(3)         $ 74.27   $ 80.24   $ 81.44
    Natural gas, hedged ($/Mcf)(3)         $ 0.56   $ 0.64   $ 1.47
    Natural gas liquids ($/Bbl)(3)         $ 19.89   $ 20.35   $ 21.58
    Combined price, hedged ($/boe)(3)         $ 45.87   $ 50.00   $ 51.55
               
    Average Costs ($/boe):          
    Production and ad valorem taxes         $ 3.33   $ 3.52   $ 3.30
    General and administrative – cash component           0.83     0.84     0.41
    Total operating expense – cash         $ 4.16   $ 4.36   $ 3.71
               
    General and administrative – non-cash stock compensation expense         $ 0.19   $ 0.19   $ 0.10
    Interest expense, net         $ 3.69   $ 4.32   $ 2.95
    Depletion         $ 12.01   $ 11.19   $ 9.75

    (1)   Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.
    (2)   Realized price net of all deducts for gathering, transportation and processing.
    (3)   Hedged prices reflect the impact of cash settlements of our matured commodity derivative transactions on our average sales prices.

    NON-GAAP FINANCIAL MEASURES

    Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. Viper defines Adjusted EBITDA as net income (loss) attributable to Viper Energy, Inc. plus net income (loss) attributable to non-controlling interest (“net income (loss)”) before interest expense, net, non-cash share-based compensation expense, depletion, non-cash (gain) loss on derivative instruments, (gain) loss on extinguishment of debt, if any, other non-cash operating expenses, other non-recurring expenses and provision for (benefit from) income taxes. Adjusted EBITDA is not a measure of net income as determined by United States’ generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA is useful because it allows them to more effectively evaluate Viper’s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income, royalty income, cash flow from operating activities or any other measure of financial performance or liquidity presented as determined in accordance with GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA.

    Viper defines cash available for distribution to Viper Energy, Inc. shareholders generally as an amount equal to its Adjusted EBITDA for the applicable quarter less cash needed for income taxes payable for the current period, debt service, contractual obligations, fixed charges and reserves for future operating or capital needs that the Board may deem appropriate, lease bonus income, net of tax, distribution equivalent rights payments, preferred dividends, and an adjustment for changes in ownership interests that occurred subsequent to the quarter, if any. Management believes cash available for distribution is useful because it allows them to more effectively evaluate Viper’s operating performance excluding the impact of non-cash financial items and short-term changes in working capital. Viper’s computations of Adjusted EBITDA and cash available for distribution may not be comparable to other similarly titled measures of other companies or to such measure in its credit facility or any of its other contracts. Viper further defines cash available for variable dividends as at least 75 percent of cash available for distribution less base dividends declared and repurchased shares as part of its share buyback program for the applicable quarter.

    The following tables present a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measures of Adjusted EBITDA, cash available for distribution and cash available for variable dividends:

    Viper Energy, Inc.
    (unaudited, in thousands, except per share data)
       
      Three Months Ended
    September 30, 2024
    Net income (loss) attributable to Viper Energy, Inc.         $ 48,917  
    Net income (loss) attributable to non-controlling interest           60,128  
    Net income (loss)           109,045  
    Interest expense, net           16,739  
    Non-cash share-based compensation expense           845  
    Depletion           54,528  
    Non-cash (gain) loss on derivative instruments           (7,223 )
    Other non-cash operating expenses           (236 )
    Other non-recurring expenses           92  
    Provision for (benefit from) income taxes           17,194  
    Consolidated Adjusted EBITDA           190,984  
    Less: Adjusted EBITDA attributable to non-controlling interest           86,613  
    Adjusted EBITDA attributable to Viper Energy, Inc.         $ 104,371  
       
    Adjustments to reconcile Adjusted EBITDA to cash available for distribution:  
    Income taxes payable for the current period         $ (15,416 )
    Debt service, contractual obligations, fixed charges and reserves           (8,922 )
    Lease bonus income, net of tax           (479 )
    Distribution equivalent rights payments           (123 )
    Preferred distributions                   (20 )
    Effect of subsequent ownership changes                   (3,963 )
    Cash available for distribution to Viper Energy, Inc. shareholders         $ 75,448  
      Three Months Ended September 30, 2024
      Amounts   Amounts Per
    Common Share
    Reconciliation to cash available for variable dividends:      
    Cash available for distribution to Viper Energy, Inc. shareholders         $ 75,448   $ 0.73
           
    Return of Capital          $ 62,375   $ 0.61
    Less:      
    Base dividend           30,884     0.30
    Cash available for variable dividends         $ 31,491   $ 0.31
           
    Total approved base and variable dividend per share             $ 0.61
           
    Class A common stock outstanding               102,947

    The following table presents a reconciliation of the GAAP financial measure of income (loss) before income taxes to the non-GAAP financial measure of pre-tax income attributable to Viper Energy, Inc. Management believes this measure is useful to investors given it provides the basis for income taxes payable by Viper Energy, Inc, which is an adjustment to reconcile Adjusted EBITDA to cash available for distribution to holders of Viper Energy, Inc. Class A common stock.

    Viper Energy, Inc.
    Pre-tax income attributable to Viper Energy, Inc.
    (unaudited, in thousands)
       
      Three Months Ended
    September 30, 2024
     
    Income (loss) before income taxes         $ 126,239  
    Less: Net income (loss) attributable to non-controlling interest           60,128  
    Pre-tax income attributable to Viper Energy, Inc.         $ 66,111  
       
    Income taxes payable for the current period         $ 15,416  
    Effective cash tax rate attributable to Viper Energy, Inc.           23.3 %

    Adjusted net income (loss) is a non-GAAP financial measure equal to net income (loss) attributable to Viper Energy, Inc. plus net income (loss) attributable to non-controlling interest adjusted for non-cash (gain) loss on derivative instruments, net, (gain) loss on extinguishment of debt, if any, other non-cash operating expenses, other non-recurring expenses and related income tax adjustments. The Company’s computation of adjusted net income may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts. Management believes adjusted net income helps investors in the oil and natural gas industry to measure and compare the Company’s performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors.

    The following table presents a reconciliation of the GAAP financial measure of net income (loss) attributable to Viper Energy, Inc. to the non-GAAP financial measure of adjusted net income (loss):

    Viper Energy, Inc.
    Adjusted Net Income (Loss)
    (unaudited, in thousands, except per share data)
       
      Three Months Ended September 30, 2024
      Amounts   Amounts Per
    Diluted Share
    Net income (loss) attributable to Viper Energy, Inc. (1)         $ 48,917     $ 0.52  
    Net income (loss) attributable to non-controlling interest           60,128       0.64  
    Net income (loss)(1)            109,045       1.16  
    Non-cash (gain) loss on derivative instruments, net           (7,223 )     (0.08 )
    Other non-cash operating expenses           (236 )     —  
    Other non-recurring expenses           92       —  
    Adjusted income excluding above items(1)            101,678       1.08  
    Income tax adjustment for above items           1,003       0.02  
    Adjusted net income (loss)(1)            102,681       1.10  
    Less: Adjusted net income (loss) attributed to non-controlling interests           57,059       0.61  
    Adjusted net income (loss) attributable to Viper Energy, Inc. (1)          $ 45,622     $ 0.49  
           
    Weighted average Class A common shares outstanding:      
    Basic           93,695  
    Diluted           93,747  

    (1) The Company’s earnings (loss) per diluted share amount has been computed using the two-class method in accordance with GAAP. The two-class method is an earnings allocation which reflects the respective ownership among holders of Class A common shares and participating securities. Diluted earnings per share using the two-class method is calculated as (i) net income attributable to Viper Energy, Inc., (ii) less the reallocation of $0.1 million in earnings attributable to participating securities, (iii) divided by diluted weighted average Class A common shares outstanding.

    RECONCILIATION OF LONG-TERM DEBT TO NET DEBT

    The Company defines the non-GAAP measure of net debt as debt (excluding debt issuance costs, discounts and premiums) less cash and cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Company believes this metric is useful to analysts and investors in determining the Company’s leverage position because the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt.

        September 30, 2024   Net Q3
    Principal
    Borrowings/
    (Repayments)    		   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023
        (in thousands)
    Total long-term debt(1)   $ 830,350     $ (177,000 )   $ 1,007,350     $ 1,103,350     $ 1,093,350     $ 680,350  
    Cash and cash equivalents     (168,649 )         (35,211 )     (20,005 )     (25,869 )     (146,814 )
    Net debt   $ 661,701         $ 972,139     $ 1,083,345     $ 1,067,481     $ 533,536  

    (1) Excludes debt issuance costs, discounts & premiums.

    Derivatives

    As of the filing date, the Company had the following outstanding derivative contracts. The Company’s derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing and Crude Oil Brent. When aggregating multiple contracts, the weighted average contract price is disclosed.

      Crude Oil (Bbls/day, $/Bbl)
      Q4 2024   Q1 2025   Q2 2025   Q3 2025   Q4 2025
    Deferred Premium Puts – WTI (Cushing)   16,000       20,000       20,000       —     —
    Strike $ 55.00     $ 55.00     $ 55.00     $ —   $ —
    Premium $ (1.70 )   $ (1.62 )   $ (1.61 )   $ —   $ —
      Crude Oil (Bbls/day, $/Bbl)
      Q4 2024   Q1 2025   Q2 2025   Q3 2025   Q4 2025
    Costless Collars – WTI (Cushing)   4,000     —     —     —     —
    Floor $ 55.00   $ —   $ —   $ —   $ —
    Ceiling $ 93.66   $ —   $ —   $ —   $ —
      Natural Gas (Mmbtu/day, $/Mmbtu)
      Q4 2024   Q1 2025   Q2 2025   Q3 2025   Q4 2025
    Costless Collars – Henry Hub   —     60,000     60,000     60,000     60,000
    Floor $ —   $ 2.50   $ 2.50   $ 2.50   $ 2.50
    Ceiling $ —   $ 4.93   $ 4.93   $ 4.93   $ 4.93
      Natural Gas (Mmbtu/day, $/Mmbtu)
      Q4 2024   Q1 2025   Q2 2025   Q3 2025   Q4 2025
    Natural Gas Basis Swaps – Waha Hub   30,000       60,000       60,000       60,000       60,000  
    Swap Price $ (1.20 )   $ (0.80 )   $ (0.80 )   $ (0.80 )   $ (0.80 )

    Investor Contact:

    Austen Gilfillian
    +1 432.221.7420
    agilfillian@viperenergy.com 

    Source: Viper Energy, Inc.; Diamondback Energy, Inc.

    The MIL Network –

  • MIL-OSI: Diamondback Energy, Inc. Announces Third Quarter 2024 Financial and Operating Results

    Source: GlobeNewswire (MIL-OSI)

    MIDLAND, Texas, Nov. 04, 2024 (GLOBE NEWSWIRE) — Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the “Company”) today announced financial and operating results for the third quarter ended September 30, 2024.

    THIRD QUARTER 2024 HIGHLIGHTS

    • As previously announced, closed merger with Endeavor Energy Resources, L.P. (“Endeavor”) on September 10, 2024
    • Average production of 321.1 MBO/d (571.1 MBOE/d)
    • Net cash provided by operating activities of $1.2 billion; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $1.4 billion
    • Cash capital expenditures of $688 million
    • Free Cash Flow (as defined and reconciled below) of $708 million; Adjusted Free Cash Flow (as defined and reconciled below) of $1.0 billion
    • Declared Q3 2024 base cash dividend of $0.90 per share payable on November 21, 2024; implies a 2.0% annualized yield based on November 1, 2024 closing share price of $175.81
    • Repurchased 2,919,763 shares of common stock in Q3 2024 for $515 million, excluding excise tax (at a weighted average price of $176.40 per share); repurchased 1,029,191 shares of common stock to date in Q4 2024 for $185 million, excluding excise tax (at a weighted average price of $180.13 per share)
    • Total Q3 2024 return of capital of $780 million; represents ~78% of Adjusted Free Cash Flow (as defined and reconciled below) from stock repurchases and the declared Q3 2024 base dividend
    • As previously announced, Board approved a $2.0 billion increase to share repurchase authorization to $6.0 billion from $4.0 billion previously

    TRP ENERGY (“TRP”) TRADE

    • On November 3rd, Diamondback and TRP entered into a definitive agreement under which Diamondback will trade certain Delaware Basin assets and pay approximately $238 million in cash to TRP in exchange for TRP’s Midland Basin assets
    • TRP’s Midland Basin assets are made up of ~15,000 net acres across Upton and Reagan counties and consist of 55 remaining undeveloped operated locations, the majority of which immediately compete for capital
    • The asset also includes 18 Drilled Uncompleted Wells (“DUCs”) which provide for additional capital allocation flexibility
    • The trade is expected to be accretive to both Cash Flow and Free Cash Flow per share and enhances Diamondback’s near-term oil production profile
    • Expected to close in December 2024, subject to customary regulatory approvals and closing conditions
    • Jefferies LLC is serving as financial advisor to Diamondback. Kirkland & Ellis LLP is serving as legal advisor to Diamondback. J.P. Morgan Securities LLC, Moelis & Company and RBC Capital Markets are acting as financial advisors to TRP. Clifford Chance US LLP is serving as legal advisor to TRP.

    OPERATIONS UPDATE

    The tables below provide a summary of operating activity for the third quarter of 2024.

      Total Activity (Gross Operated):        
        Number of Wells
    Drilled    		   Number of Wells
    Completed    		  
      Midland Basin 71   87  
      Delaware Basin 5   8  
      Total 76   95  
      Total Activity (Net Operated):        
        Number of Wells
    Drilled    (1)    		   Number of Wells
    Completed    (1)    		  
      Midland Basin 67   95  
      Delaware Basin 4   7  
      Total 71   102  
      (1) Includes two additional net wells drilled and nine additional net wells completed, respectively, from interests acquired in the Endeavor Acquisition during the first six months of 2024.  
               

    During the third quarter of 2024, Diamondback drilled 71 gross wells in the Midland Basin and five gross wells in the Delaware Basin. The Company turned 87 operated wells to production in the Midland Basin and eight gross wells in the Delaware Basin, with an average lateral length of 12,238 feet. Operated completions during the third quarter consisted of 22 Wolfcamp A wells, 21 Lower Spraberry wells, 15 Jo Mill wells, 14 Wolfcamp B wells, 12 Middle Spraberry wells, four Dean wells, four Third Bone Spring wells and three Upper Spraberry wells.

    For the first nine months of 2024, Diamondback drilled 211 gross wells in the Midland Basin and 24 gross wells in the Delaware Basin. The Company turned 267 operated wells to production in the Midland Basin and 15 operated wells to production in the Delaware Basin. The average lateral length for wells completed during the first nine months of 2024 was 11,645 feet, and consisted of 72 Lower Spraberry wells, 61 Wolfcamp A wells, 45 Wolfcamp B wells, 40 Jo Mill wells, 34 Middle Spraberry wells, nine Wolfcamp D wells, nine Dean wells, six Upper Spraberry wells, four Third Bone Spring wells, one Second Bone Spring well and one Barnett well.

    FINANCIAL UPDATE

    Diamondback’s third quarter 2024 net income was $659 million, or $3.19 per diluted share. Adjusted net income (as defined and reconciled below) for the third quarter was $698 million, or $3.38 per diluted share.

    Third quarter 2024 net cash provided by operating activities was $1.2 billion. Through the first nine months of 2024, Diamondback’s net cash provided by operating activities was $4.1 billion.

    During the third quarter of 2024, Diamondback spent $633 million on operated and non-operated drilling and completions, $52 million on infrastructure and environmental and $3 million on midstream, for total cash capital expenditures of $688 million. Through the first nine months of 2024, Diamondback spent $1.8 billion on operated and non-operated drilling and completions, $128 million on infrastructure and environmental and $8 million on midstream, for total cash capital expenditures of $1.9 billion.

    Third quarter 2024 Consolidated Adjusted EBITDA (as defined and reconciled below) was $1.8 billion. Adjusted EBITDA net of non-controlling interest (as defined and reconciled below) for the third quarter was $1.7 billion.

    Diamondback’s third quarter 2024 Free Cash Flow (as defined and reconciled below) was $708 million. Adjusted Free Cash Flow (as reconciled and defined below) for the third quarter was $1.0 billion. Through September 30, 2024, Diamondback’s Free Cash Flow was $2.3 billion, with $2.7 billion of Adjusted Free Cash Flow over the same period.

    Third quarter 2024 average unhedged realized prices were $73.13 per barrel of oil, $(0.26) per Mcf of natural gas and $17.70 per barrel of natural gas liquids (“NGLs”), resulting in a total equivalent unhedged realized price of $44.80 per BOE.

    Diamondback’s cash operating costs for the third quarter of 2024 were $11.49 per BOE, including lease operating expenses (“LOE”) of $6.01 per BOE, cash general and administrative (“G&A”) expenses of $0.63 per BOE, production and ad valorem taxes of $2.91 per BOE and gathering, processing and transportation expenses of $1.94 per BOE.

    As of September 30, 2024, Diamondback had $201 million in standalone cash and $115 million in borrowings outstanding under its revolving credit facility, with approximately $2.4 billion available for future borrowings under the facility and approximately $2.6 billion of total liquidity. As of September 30, 2024, the Company had consolidated total debt of $13.1 billion and consolidated net debt (as defined and reconciled below) of $12.7 billion, up from consolidated total debt of $12.2 billion and up from consolidated net debt of $5.3 billion as of June 30, 2024. Effective in September 2024, the Company’s borrowing base and elected commitment was increased to $2.5 billion from $1.6 billion previously.

    DIVIDEND DECLARATIONS

    Diamondback announced today that the Company’s Board of Directors declared a base cash dividend of $0.90 per common share for the third quarter of 2024 payable on November 21, 2024 to stockholders of record at the close of business on November 14, 2024.

    Future base and variable dividends remain subject to review and approval at the discretion of the Company’s Board of Directors.

    COMMON STOCK REPURCHASE PROGRAM

    During the third quarter of 2024, Diamondback repurchased ~2.9 million shares of common stock at an average share price of $176.40 for a total cost of approximately $515 million, excluding excise tax. To date, Diamondback has repurchased ~23.3 million shares of common stock at an average share price of $133.48 for a total cost of approximately $3.1 billion and has approximately $2.9 billion remaining on its current share buyback authorization. Subject to factors discussed below, Diamondback intends to continue to purchase common stock under the common stock repurchase program opportunistically with cash on hand, free cash flow from operations and proceeds from potential liquidity events such as the sale of assets. This repurchase program has no time limit and may be suspended from time to time, modified, extended or discontinued by the Board at any time. Purchases under the repurchase program may be made from time to time in privately negotiated transactions, or in open market transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and will be subject to market conditions, applicable regulatory and legal requirements and other factors. Any common stock purchased as part of this program will be retired.

    UPDATED 2024 GUIDANCE

    Below is Diamondback’s guidance for the full year 2024, which includes fourth quarter production, unit costs and capital guidance. The Company’s production and capital guidance for the full year 2024 has been updated to give effect to the Endeavor merger, which was completed on September 10, 2024.

      2024 Guidance 2024 Guidance
      Diamondback Energy, Inc. Viper Energy, Inc.
         
    2024 Net production – MBOE/d 587 – 590 (from 462 – 470) 48.75 – 49.25
    2024 Oil production – MBO/d 335 – 337 (from 273 – 276) 27.00 – 27.25
    Q4 2024 Oil production – MBO/d (total – MBOE/d) 470 – 475 (840 – 850) 29.25 – 29.75 (52.50 – 53.00)
         
    Q4 2024 Unit costs ($/BOE)    
    Lease operating expenses, including workovers $5.90 – $6.20  
    G&A    
    Cash G&A $0.55 – $0.65  
    Non-cash equity-based compensation $0.25 – $0.40  
    DD&A $14.00 – $15.00  
    Interest expense (net of interest income) $0.25 – $0.50  
    Gathering, processing and transportation $1.60 – $1.80  
         
    Production and ad valorem taxes (% of revenue) ~7%  
    Corporate tax rate (% of pre-tax income) 23%  
    Cash tax rate (% of pre-tax income) 15% – 18%  
    Cash taxes ($ – million) $240 – $300 $13 – $18
         
    Capital Budget ($ – million)    
    2024 Total capital expenditures $2,875 – $3,000 (from $2,350 – $2,450)  
    Q4 2024 Capital expenditures $950 – $1,050  
         
    Q4 2024 Gross horizontal wells drilled (net) 105 – 125 (100 – 118)  
    Q4 2024 Gross horizontal wells completed (net) 110 – 130 (102 – 120)  
         

    CONFERENCE CALL

    Diamondback will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2024 on Tuesday, November 5, 2024 at 8:00 a.m. CT. Access to the webcast, and replay which will be available following the call, may be found here. The live webcast of the earnings conference call will also be available via Diamondback’s website at www.diamondbackenergy.com under the “Investor Relations” section of the site.

    About Diamondback Energy, Inc.

    Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. For more information, please visit www.diamondbackenergy.com.

    Forward-Looking Statements

    This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding Diamondback’s: future performance; business strategy; future operations (including drilling plans and capital plans); estimates and projections of revenues, losses, costs, expenses, returns, cash flow, and financial position; reserve estimates and its ability to replace or increase reserves; anticipated benefits or other effects of strategic transactions (including the recently completed Endeavor merger and other acquisitions or divestitures); and plans and objectives of management (including plans for future cash flow from operations and for executing environmental strategies) are forward-looking statements. When used in this news release, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to Diamondback are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although Diamondback believes that the expectations and assumptions reflected in its forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond Diamondback’s control. Accordingly, forward-looking statements are not guarantees of future performance and Diamondback’s actual outcomes could differ materially from what Diamondback has expressed in its forward-looking statements.

    Factors that could cause the outcomes to differ materially include (but are not limited to) the following: changes in supply and demand levels for oil, natural gas, and natural gas liquids, and the resulting impact on the price for those commodities; the impact of public health crises, including epidemic or pandemic diseases and any related company or government policies or actions; actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments, including any impact of the ongoing war in Ukraine and the Israel-Hamas war on the global energy markets and geopolitical stability; instability in the financial markets; inflationary pressures; higher interest rates and their impact on the cost of capital; regional supply and demand factors, including delays, curtailment delays or interruptions of production, or governmental orders, rules or regulations that impose production limits; federal and state legislative and regulatory initiatives relating to hydraulic fracturing, including the effect of existing and future laws and governmental regulations; physical and transition risks relating to climate change; those risks described in Item 1A of Diamondback’s Annual Report on Form 10-K, filed with the SEC on February 22, 2024, and those risks disclosed in its subsequent filings on Forms 10-Q and 8-K, which can be obtained free of charge on the SEC’s website at http://www.sec.gov and Diamondback’s website at www.diamondbackenergy.com/investors.

    In light of these factors, the events anticipated by Diamondback’s forward-looking statements may not occur at the time anticipated or at all. Moreover, Diamondback operates in a very competitive and rapidly changing environment and new risks emerge from time to time. Diamondback cannot predict all risks, nor can it assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those anticipated by any forward-looking statements it may make. Accordingly, you should not place undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this letter or, if earlier, as of the date they were made. Diamondback does not intend to, and disclaims any obligation to, update or revise any forward-looking statements unless required by applicable law.

     
    Diamondback Energy, Inc.
    Condensed Consolidated Balance Sheets
    (unaudited, in millions, except share amounts)
           
      September 30,   December 31,
        2024       2023  
    Assets      
    Current assets:      
    Cash and cash equivalents ($169 million and $26 million related to Viper) $ 370     $ 582  
    Restricted cash   3       3  
    Accounts receivable:      
    Joint interest and other, net   233       192  
    Oil and natural gas sales, net ($109 million and $109 million related to Viper)   1,197       654  
    Inventories   126       63  
    Derivative instruments   42       17  
    Prepaid expenses and other current assets   51       110  
    Total current assets   2,022       1,621  
    Property and equipment:      
    Oil and natural gas properties, full cost method of accounting ($21,971 million and $8,659 million excluded from amortization at September 30, 2024 and December 31, 2023, respectively) ($4,771 million and $4,629 million related to Viper and $1,623 million and $1,769 million excluded from amortization related to Viper)   79,718       42,430  
    Other property, equipment and land   1,417       673  
    Accumulated depletion, depreciation, amortization and impairment ($1,016 million and $866 million related to Viper)   (18,082 )     (16,429 )
    Property and equipment, net   63,053       26,674  
    Funds held in escrow   43       —  
    Equity method investments   377       529  
    Derivative instruments   38       1  
    Deferred income taxes, net   62       45  
    Investment in real estate, net   81       84  
    Other assets   71       47  
    Total assets $ 65,747     $ 29,001  
    Liabilities and Stockholders’ Equity      
    Current liabilities:      
    Accounts payable – trade $ 198     $ 261  
    Accrued capital expenditures   641       493  
    Current maturities of long-term debt   1,000       —  
    Other accrued liabilities   857       475  
    Revenues and royalties payable   1,444       764  
    Derivative instruments   34       86  
    Income taxes payable   289       29  
    Total current liabilities   4,463       2,108  
    Long-term debt ($822 million and $1,083 million related to Viper)   11,923       6,641  
    Derivative instruments   79       122  
    Asset retirement obligations   493       239  
    Deferred income taxes   9,952       2,449  
    Other long-term liabilities   18       12  
    Total liabilities   26,928       11,571  
    Stockholders’ equity:      
    Common stock, $0.01 par value; 800,000,000 shares authorized; 292,742,664 and 178,723,871 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively   3       2  
    Additional paid-in capital   34,007       14,142  
    Retained earnings (accumulated deficit)   3,427       2,489  
    Accumulated other comprehensive income (loss)   (8 )     (8 )
    Total Diamondback Energy, Inc. stockholders’ equity   37,429       16,625  
    Non-controlling interest   1,390       805  
    Total equity   38,819       17,430  
    Total liabilities and stockholders’ equity $ 65,747     $ 29,001  
     
    Diamondback Energy, Inc.
    Condensed Consolidated Statements of Operations
    (unaudited, $ in millions except per share data, shares in thousands)
                   
      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Revenues:              
    Oil, natural gas and natural gas liquid sales $ 2,354     $ 2,265     $ 6,629     $ 6,063  
    Sales of purchased oil   282       59       698       59  
    Other operating income   9       16       28       62  
    Total revenues   2,645       2,340       7,355       6,184  
    Costs and expenses:              
    Lease operating expenses   316       226       825       618  
    Production and ad valorem taxes   153       118       413       421  
    Gathering, processing and transportation   102       73       261       209  
    Purchased oil expense   280       59       696       59  
    Depreciation, depletion, amortization and accretion   742       442       1,694       1,277  
    General and administrative expenses   49       34       141       111  
    Merger and integration expense   258       1       273       11  
    Other operating expenses   35       47       68       113  
    Total costs and expenses   1,935       1,000       4,371       2,819  
    Income (loss) from operations   710       1,340       2,984       3,365  
    Other income (expense):              
    Interest expense, net   (18 )     (37 )     (101 )     (130 )
    Other income (expense), net   89       33       87       61  
    Gain (loss) on derivative instruments, net   131       (76 )     101       (358 )
    Gain (loss) on extinguishment of debt   —       —       2       (4 )
    Income (loss) from equity investments, net   6       9       23       39  
    Total other income (expense), net   208       (71 )     112       (392 )
    Income (loss) before income taxes   918       1,269       3,096       2,973  
    Provision for (benefit from) income taxes   210       276       685       648  
    Net income (loss)   708       993       2,411       2,325  
    Net income (loss) attributable to non-controlling interest   49       78       147       142  
    Net income (loss) attributable to Diamondback Energy, Inc. $ 659     $ 915     $ 2,264     $ 2,183  
                   
    Earnings (loss) per common share:              
    Basic $ 3.19     $ 5.07     $ 12.00     $ 12.01  
    Diluted $ 3.19     $ 5.07     $ 12.00     $ 12.01  
    Weighted average common shares outstanding:              
    Basic   204,730       178,872       187,253       180,400  
    Diluted   204,730       178,872       187,253       180,400  
     
    Diamondback Energy, Inc.
    Condensed Consolidated Statements of Cash Flows
    (unaudited, in millions)
                   
      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Cash flows from operating activities:              
    Net income (loss) $ 708     $ 993     $ 2,411     $ 2,325  
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:              
    Provision for (benefit from) deferred income taxes   51       10       180       185  
    Depreciation, depletion, amortization and accretion   742       442       1,694       1,277  
    (Gain) loss on extinguishment of debt   —       —       (2 )     4  
    (Gain) loss on derivative instruments, net   (131 )     76       (101 )     358  
    Cash received (paid) on settlement of derivative instruments   (4 )     (24 )     (36 )     (62 )
    (Income) loss from equity investment, net   (6 )     (9 )     (23 )     (39 )
    Equity-based compensation expense   16       13       49       40  
    Other   20       3       77       (23 )
    Changes in operating assets and liabilities:              
    Accounts receivable   106       (256 )     61       (218 )
    Income tax receivable   —       103       12       267  
    Prepaid expenses and other current assets   (11 )     (8 )     78       5  
    Accounts payable and accrued liabilities   (395 )     (28 )     (490 )     46  
    Income taxes payable   (36 )     23       (51 )     4  
    Revenues and royalties payable   95       53       109       139  
    Other   54       (33 )     104       (12 )
       Net cash provided by (used in) operating activities   1,209       1,358       4,072       4,296  
    Cash flows from investing activities:              
    Drilling, completions, infrastructure and midstream additions to oil and natural gas properties   (688 )     (684 )     (1,934 )     (2,052 )
    Property acquisitions   (7,791 )     (168 )     (7,994 )     (1,193 )
    Proceeds from sale of assets   207       868       459       1,400  
    Other   106       (1 )     103       (14 )
       Net cash provided by (used in) investing activities   (8,166 )     15       (9,366 )     (1,859 )
    Cash flows from financing activities:              
    Proceeds under term loan agreement   1,000       —       1,000       —  
    Proceeds from borrowings under credit facilities   1,011       1,015       1,185       4,466  
    Repayments under credit facilities   (1,073 )     (1,332 )     (1,333 )     (4,368 )
    Proceeds from senior notes   —       —       5,500       —  
    Repayment of senior notes   —       —       (25 )     (134 )
    Repurchased shares under buyback program   (515 )     (56 )     (557 )     (709 )
    Repurchased shares/units under Viper’s buyback program   —       (10 )     —       (67 )
    Proceeds from partial sale of investment in Viper Energy, Inc.   —       —       451       —  
    Net proceeds from Viper’s issuance of common stock   476       —       476       —  
    Dividends paid to stockholders   (416 )     (149 )     (1,316 )     (841 )
    Dividends/distributions to non-controlling interest   (59 )     (25 )     (157 )     (84 )
    Other   (5 )     (7 )     (142 )     (34 )
       Net cash provided by (used in) financing activities   419       (564 )     5,082       (1,771 )
    Net increase (decrease) in cash and cash equivalents   (6,538 )     809       (212 )     666  
    Cash, cash equivalents and restricted cash at beginning of period   6,911       21       585       164  
    Cash, cash equivalents and restricted cash at end of period $ 373     $ 830     $ 373     $ 830  
     
    Diamondback Energy, Inc.
    Selected Operating Data
    (unaudited)
               
      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
    Production Data:          
    Oil (MBbls)   29,537       25,129       24,482  
    Natural gas (MMcf)   66,519       51,310       49,423  
    Natural gas liquids (MBbls)   11,918       9,514       8,943  
    Combined volumes (MBOE)(1)   52,541       43,195       41,662  
               
    Daily oil volumes (BO/d)   321,054       276,143       266,109  
    Daily combined volumes (BOE/d)   571,098       474,670       452,848  
               
    Average Prices:          
    Oil ($ per Bbl) $ 73.13     $ 79.51     $ 81.57  
    Natural gas ($ per Mcf) $ (0.26 )   $ 0.10     $ 1.62  
    Natural gas liquids ($ per Bbl) $ 17.70     $ 17.97     $ 21.02  
    Combined ($ per BOE) $ 44.80     $ 50.33     $ 54.37  
               
    Oil, hedged ($ per Bbl)(2) $ 72.32     $ 78.55     $ 80.51  
    Natural gas, hedged ($ per Mcf)(2) $ 0.60     $ 1.03     $ 1.62  
    Natural gas liquids, hedged ($ per Bbl)(2) $ 17.70     $ 17.97     $ 21.02  
    Average price, hedged ($ per BOE)(2) $ 45.43     $ 50.89     $ 53.74  
               
    Average Costs per BOE:          
    Lease operating expenses $ 6.01     $ 5.88     $ 5.42  
    Production and ad valorem taxes   2.91       3.26       2.83  
    Gathering, processing and transportation expense   1.94       1.90       1.75  
    General and administrative – cash component   0.63       0.63       0.51  
    Total operating expense – cash $ 11.49     $ 11.67     $ 10.51  
               
    General and administrative – non-cash component $ 0.30     $ 0.44     $ 0.31  
    Depreciation, depletion, amortization and accretion per BOE $ 14.12     $ 11.18     $ 10.61  
    Interest expense, net $ 0.34     $ 1.02     $ 0.89  

    (1)   Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.
    (2)   Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices and include gains and losses on cash settlements for matured commodity derivatives, which we do not designate for hedge accounting. Hedged prices exclude gains or losses resulting from the early settlement of commodity derivative contracts.


    NON-GAAP FINANCIAL MEASURES

    ADJUSTED EBITDA

    Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as net income (loss) attributable to Diamondback Energy, Inc., plus net income (loss) attributable to non-controlling interest (“net income (loss)”) before non-cash (gain) loss on derivative instruments, net, interest expense, net, depreciation, depletion, amortization and accretion, depreciation and interest expense related to equity method investments, (gain) loss on extinguishment of debt, if any, non-cash equity-based compensation expense, capitalized equity-based compensation expense, merger and integration expenses, other non-cash transactions and provision for (benefit from) income taxes, if any. Adjusted EBITDA is not a measure of net income as determined by United States generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA is useful because the measure allows it to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company adds the items listed above to net income (loss) to determine Adjusted EBITDA because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Further, the Company excludes the effects of significant transactions that may affect earnings but are unpredictable in nature, timing and amount, although they may recur in different reporting periods. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets. The Company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts.

    The following tables present a reconciliation of the GAAP financial measure of net income (loss) attributable to Diamondback Energy, Inc. to the non-GAAP financial measure of Adjusted EBITDA:

    Diamondback Energy, Inc.
    Reconciliation of Net Income (Loss) to Adjusted EBITDA
    (unaudited, in millions)
               
      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
    Net income (loss) attributable to Diamondback Energy, Inc. $ 659     $ 837     $ 915  
    Net income (loss) attributable to non-controlling interest   49       57       78  
    Net income (loss)   708       894       993  
    Non-cash (gain) loss on derivative instruments, net   (135 )     (46 )     52  
    Interest expense, net   18       44       37  
    Depreciation, depletion, amortization and accretion   742       483       442  
    Depreciation and interest expense related to equity method investments   15       23       18  
    Non-cash equity-based compensation expense   24       26       21  
    Capitalized equity-based compensation expense   (8 )     (7 )     (8 )
    Merger and integration expenses   258       3       1  
    Other non-cash transactions   (72 )     6       (12 )
    Provision for (benefit from) income taxes   210       252       276  
    Consolidated Adjusted EBITDA   1,760       1,678       1,820  
    Less: Adjustment for non-controlling interest   104       103       78  
    Adjusted EBITDA attributable to Diamondback Energy, Inc. $ 1,656     $ 1,575     $ 1,742  


    ADJUSTED NET INCOME

    Adjusted net income is a non-GAAP financial measure equal to net income (loss) attributable to Diamondback Energy, Inc. plus net income (loss) attributable to non-controlling interest (“net income (loss)”) adjusted for non-cash (gain) loss on derivative instruments, net, (gain) loss on extinguishment of debt, if any, merger and integration expense, other non-cash transactions and related income tax adjustments, if any. The Company’s computation of adjusted net income may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts. Management believes adjusted net income helps investors in the oil and natural gas industry to measure and compare the Company’s performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors. Further, in order to allow investors to compare the Company’s performance across periods, the Company excludes the effects of significant transactions that may affect earnings but are unpredictable in nature, timing and amount, although they may recur in different reporting periods.

    The following table presents a reconciliation of the GAAP financial measure of net income (loss) attributable to Diamondback Energy, Inc. to the non-GAAP measure of adjusted net income:

    Diamondback Energy, Inc.
    Adjusted Net Income
    (unaudited, $ in millions except per share data, shares in thousands)
       
      Three Months Ended September 30, 2024
      Amounts   Amounts Per
    Diluted Share
    Net income (loss) attributable to Diamondback Energy, Inc.(1) $ 659     $ 3.19  
    Net income (loss) attributable to non-controlling interest   49       0.24  
    Net income (loss)(1)   708       3.43  
    Non-cash (gain) loss on derivative instruments, net   (135 )     (0.66 )
    Merger and integration expense   258       1.26  
    Other non-cash transactions   (72 )     (0.35 )
    Adjusted net income excluding above items(1)   759       3.68  
    Income tax adjustment for above items   (12 )     (0.06 )
    Adjusted net income(1)   747       3.62  
    Less: Adjusted net income attributable to non-controlling interest   49       0.24  
    Adjusted net income attributable to Diamondback Energy, Inc.(1) $ 698     $ 3.38  
           
    Weighted average common shares outstanding:      
    Basic     204,730  
    Diluted     204,730  

    (1) The Company’s earnings (loss) per diluted share amount has been computed using the two-class method in accordance with GAAP. The two-class method is an earnings allocation which reflects the respective ownership among holders of common stock and participating securities. Diluted earnings per share using the two-class method is calculated as (i) net income attributable to Diamondback Energy, Inc, (ii) less the reallocation of $6 million in earnings attributable to participating securities, (iii) divided by diluted weighted average common shares outstanding.


    OPERATING CASH FLOW BEFORE WORKING CAPITAL CHANGES AND FREE CASH FLOW

    Operating cash flow before working capital changes, which is a non-GAAP financial measure, represents net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities. The Company believes operating cash flow before working capital changes is a useful measure of an oil and natural gas company’s ability to generate cash used to fund exploration, development and acquisition activities and service debt or pay dividends. The Company also uses this measure because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements that the Company may not control and may not relate to the period in which the operating activities occurred. This allows the Company to compare its operating performance with that of other companies without regard to financing methods and capital structure.

    Free Cash Flow, which is a non-GAAP financial measure, is cash flow from operating activities before changes in working capital in excess of cash capital expenditures. The Company believes that Free Cash Flow is useful to investors as it provides measures to compare both cash flow from operating activities and additions to oil and natural gas properties across periods on a consistent basis as adjusted for non-recurring tax impacts from divestitures, merger and integration expenses, the early termination of derivative contracts and settlements of treasury locks. These measures should not be considered as an alternative to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance. The Company’s computation of Free Cash Flow may not be comparable to other similarly titled measures of other companies. The Company uses Free Cash Flow to reduce debt, as well as return capital to stockholders as determined by the Board of Directors.

    The following tables present a reconciliation of the GAAP financial measure of net cash provided by operating activities to the non-GAAP measure of operating cash flow before working capital changes and to the non-GAAP measure of Free Cash Flow:

    Diamondback Energy, Inc.
    Operating Cash Flow Before Working Capital Changes and Free Cash Flow
    (unaudited, in millions)
                   
      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Net cash provided by operating activities $ 1,209     $ 1,358     $ 4,072     $ 4,296  
    Less: Changes in cash due to changes in operating assets and liabilities:              
    Accounts receivable   106       (256 )     61       (218 )
    Income tax receivable   —       103       12       267  
    Prepaid expenses and other current assets   (11 )     (8 )     78       5  
    Accounts payable and accrued liabilities   (395 )     (28 )     (490 )     46  
    Income taxes payable   (36 )     23       (51 )     4  
    Revenues and royalties payable   95       53       109       139  
    Other   54       (33 )     104       (12 )
    Total working capital changes   (187 )     (146 )     (177 )     231  
    Operating cash flow before working capital changes   1,396       1,504       4,249       4,065  
    Drilling, completions, infrastructure and midstream additions to oil and natural gas properties   (688 )     (684 )     (1,934 )     (2,052 )
    Total Cash CAPEX   (688 )     (684 )     (1,934 )     (2,052 )
    Free Cash Flow   708       820       2,315       2,013  
    Tax impact from divestitures(1)   —       64       —       64  
    Merger and integration expenses   258       —       273       —  
    Early termination of derivatives   37       —       37       —  
    Treasury locks   —       —       25       —  
    Adjusted Free Cash Flow $ 1,003     $ 884     $ 2,650     $ 2,077  

    (1) Includes the tax impact for the disposal of certain Midland Basin water assets and Delaware Basin oil gathering assets.


    NET DEBT

    The Company defines the non-GAAP measure of net debt as total debt (excluding debt issuance costs, discounts, premiums and unamortized basis adjustments) less cash and cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Company believes this metric is useful to analysts and investors in determining the Company’s leverage position because the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt.

    Diamondback Energy, Inc.
    Net Debt
    (unaudited, in millions)
                           
      September 30,
    2024    		   Net Q3
    Principal
    Borrowings/
    (Repayments)    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023    		   September 30,
    2023
      (in millions)
    Diamondback Energy, Inc.(1) $ 12,284     $ 1,115     $ 11,169     $ 5,669     $ 5,697     $ 5,697  
    Viper Energy, Inc.(1)   830       (177 )     1,007       1,103       1,093       680  
    Total debt   13,114     $ 938       12,176       6,772       6,790       6,377  
    Cash and cash equivalents   (370 )         (6,908 )     (896 )     (582 )     (827 )
    Net debt $ 12,744         $ 5,268     $ 5,876     $ 6,208     $ 5,550  

    (1)  Excludes debt issuance costs, discounts, premiums and unamortized basis adjustments.


    DERIVATIVES

    As of November 1, 2024, the Company had the following outstanding consolidated derivative contracts, including derivative contracts at Viper Energy, Inc. The Company’s derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing and Crude Oil Brent pricing and with natural gas derivative settlements based on the New York Mercantile Exchange Henry Hub pricing. When aggregating multiple contracts, the weighted average contract price is disclosed.

      Crude Oil (Bbls/day, $/Bbl)
      Q4 2024   Q1 2025   Q2 2025   Q3 2025   Q4 2025   FY2026
    Long Puts – Crude Brent Oil 82,000   52,000   33,000   10,000   —   —
    Long Put Price ($/Bbl) $57.44   $60.00   $60.00   $60.00   —   —
    Deferred Premium ($/Bbl) $-1.52   $-1.48   $-1.50   $-1.63   —   —
    Long Puts – WTI (Magellan East Houston) 35,000   58,000   46,000   22,000   —   —
    Long Put Price ($/Bbl) $57.57   $56.21   $55.22   $55.00   —   —
    Deferred Premium ($/Bbl) $-1.61   $-1.58   $-1.56   $-1.64   —   —
    Long Puts – WTI (Cushing) 125,000   138,000   109,000   38,000   —   —
    Long Put Price ($/Bbl) $57.28   $56.63   $55.73   $55.00   —   —
    Deferred Premium ($/Bbl) $-1.61   $-1.58   $-1.56   $-1.50   —   —
    Costless Collars – WTI (Cushing) 46,000   13,000   —   —   —   —
    Long Put Price ($/Bbl) $60.87   $60.00   —   —   —   —
    Short Call Price ($/Bbl) $89.91   $89.55   —   —   —   —
    Basis Swaps – WTI (Midland) 43,000   58,000   45,000   45,000   45,000   —
    $1.18   $1.10   $1.08   $1.08   $1.08   —
    Roll Swaps – WTI 40,000   —   —   —   —   —
    $0.82   —   —   —   —   —
      Natural Gas (Mmbtu/day, $/Mmbtu)
      Q4 2024   Q1 2025   Q2 2025   Q3 2025   Q4 2025   FY 2026
    Costless Collars – Henry Hub 398,261   690,000   630,000   630,000   630,000   80,000
    Long Put Price ($/Mmbtu) $2.78   $2.53   $2.49   $2.49   $2.49   $2.50
    Ceiling Price ($/Mmbtu) $6.53   $5.41   $5.46   $5.46   $5.46   $5.95
    Natural Gas Swaps – Henry Hub 13,370   —   —   —   —   —
    $3.23   —   —   —   —   —
    Natural Gas Basis Swaps – Waha Hub 471,630   650,000   590,000   590,000   590,000   10,000
    $-1.11   $-0.80   $-0.83   $-0.83   $-0.83   $-1.25

    Investor Contact:
    Adam Lawlis
    +1 432.221.7467
    alawlis@diamondbackenergy.com

    The MIL Network –

  • MIL-OSI: HighPeak Energy, Inc. Announces Third Quarter 2024 Financial and Operating Results

    Source: GlobeNewswire (MIL-OSI)

    FORT WORTH, Texas, Nov. 04, 2024 (GLOBE NEWSWIRE) — HighPeak Energy, Inc. (“HighPeak” or the “Company”) (NASDAQ: HPK) today announced financial and operating results for the quarter and nine months ended September 30, 2024, and provided updated 2024 production guidance.

    Highlights
    Third Quarter 2024

    • Sales volumes averaged 51,346 barrels of crude oil equivalent per day (“Boe/d”), consisting of 88% liquids (crude oil and NGL), representing a 6% increase over the second quarter 2024.
    • Net income was $49.9 million, or $0.35 per diluted share, and EBITDAX (a non-GAAP financial measure defined and reconciled below) was $214.3 million, or $1.51 per diluted share.
    • Generated free cash flow (a non-GAAP financial measure defined and reconciled below) of $36.1 million, which marks the fifth consecutive quarter of positive free cash flow generation.
    • The Company reduced long-term debt by $30 million during the third quarter and has reduced long-term debt by $90 million year-to-date, paid a quarterly dividend of $0.04 per share and continued to execute its share buyback plan by repurchasing over 870,000 shares during the third quarter.

    Recent Events

    • Increased 2024 average production guidance by more than 5% from the second quarter guidance revision and 10% from our original 2024 guidance to a range of 48,000 to 51,000 Boe/d expected for the full year 2024.
    • On November 4, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.04 per common share outstanding payable in December 2024.

    Statement from HighPeak Chairman and CEO, Jack Hightower:

    “We promised this would be a year marked by steady and reliable achievements, and I am proud we have continued to demonstrate that commitment. There are three main takeaways from our third quarter results. First, our current well performance has led us to increase our full year production guidance 10% higher than originally projected. Second, our operations team continues to tighten costs, resulting in more capital and operating efficiencies across the corporate structure. Third, we continue to generate free cash flow, more than $200 million over the last five quarters, which in turn has strengthened our balance sheet and positioned us to take advantage of opportunities that increase shareholder value.

    “With HighPeak’s core values of maintaining disciplined operations, strengthening our balance sheet and maximizing value for our shareholders, we will finish strong in 2024 and set the course for continued momentum in 2025. Concurrently, we will remain diligent in our strategic alternatives process, with the goal of identifying a line of sight that will realize optimal value of this high quality asset.”

    Third Quarter 2024 Operational Update

    HighPeak’s sales volumes during the third quarter of 2024 averaged 51,346 Boe/d, a 6% increase over second quarter of 2024. Third quarter sales volumes consisted of approximately 88% liquids (crude oil and NGL).

    The Company ran two drilling rigs and one frac crew during the third quarter, drilled 17 gross (16.9 net) horizontal wells and completed 14 gross (10.5 net) producing horizontal wells. At September 30, 2024, the Company had 24 gross (23.9 net) horizontal wells and 1 gross (1.0 net) salt-water disposal well in various stages of drilling and completion.

    HighPeak President, Michael Hollis, commented,

    “The third quarter was another operationally disciplined, beat-and-raise quarter for HighPeak Energy. We increased the midpoint of our yearly production guide by an additional 5%, which is up 10% from our original guide. We also have exciting results both in our northern extension areas and our first well in the Middle Spraberry zone. The results of these successful wells bolster our massive runway of over 1,150 sub $50 oil breakeven drilling location inventory. At our current development cadence, that is over two decades of highly economic inventory.

    “As most are aware, there are structural differences between the Delaware and the Midland Basins that results in the D,C&E cost to be less in the Midland Basin. These structural differences of depth, pressure and horse-power requirements for stimulation can lead to over $3 million of savings per well. HighPeak’s acreage enjoys similar structural differences compared with the more central portions of the Midland Basin. HighPeak’s D,C&E costs are roughly $2 million dollars cheaper per well than average Midland Basin wells. Generating similar oil recoveries for roughly 25% less cost per foot, generates superior returns. Sustaining this for decades will drive significant shareholder value.

    “The HighPeak team continues to be focused on reducing operational and capital costs. All the hard work and effort over the last few years is now paying off. HighPeak lowered the midpoint of its 2024 LOE guide by 12.5% last quarter and we reaffirm our LOE range and tightened capital expenditure range for 2024. As continuous improvement is in our DNA, we look forward to achieving additional efficiency gains in 2025.”

    Third Quarter 2024 Financial Results

    HighPeak reported net income of $49.9 million for the third quarter of 2024, or $0.35 per diluted share. The Company reported EBITDAX of $214.3 million, or $1.51 per diluted share.

    Third quarter average realized prices were $75.99 per barrel (“$/Bbl”) of crude oil, $21.14 per barrel of NGL and $0.42 per Mcf of natural gas, resulting in an overall realized price of $57.49 per Boe, or 76.3% of the weighted average of NYMEX crude oil prices, excluding the effects of derivatives. HighPeak’s cash costs for the third quarter were $11.81 per Boe, including lease operating expenses of $7.12 per Boe, workover expenses of $0.38 per Boe, production and ad valorem taxes of $3.26 per Boe and G&A expenses of $1.05 per Boe. As a result, the Company’s unhedged EBITDAX per Boe was $45.68, or 79.5% of the overall realized price per Boe for the quarter, excluding the effects of derivatives.

    HighPeak’s third quarter 2024 capital expenditures to drill, complete, equip, provide facilities and for infrastructure were $140.0 million. 

    Dividends

    During the third quarter of 2024, HighPeak’s Board of Directors approved a quarterly dividend of $0.04 per share, or $5.0 million in dividends paid to stockholders during the quarter. In addition, in November 2024, the Company’s Board of Directors declared a quarterly dividend of $0.04 per share, or approximately $5.0 million in dividends, to be paid on December 23, 2024 to stockholders of record on December 2, 2024.

    Conference Call

    HighPeak will host a conference call and webcast on Tuesday, November 5, 2024, at 10:00 a.m. Central Time for investors and analysts to discuss its results for the third quarter of 2024. Conference call participants may register for the call here. Access to the live audio-only webcast and replay of the earnings release conference call may be found here. A live broadcast of the earnings conference call will also be available on the HighPeak Energy website at www.highpeakenergy.com under the “Investors” section of the website. A replay will also be available on the website following the call.

    When available, a copy of the Company’s earnings release, investor presentation and Quarterly Report on Form 10-Q may be found on its website at www.highpeakenergy.com.

    About HighPeak Energy, Inc.

    HighPeak Energy, Inc. is a publicly traded independent crude oil and natural gas company, headquartered in Fort Worth, Texas, focused on the acquisition, development, exploration and exploitation of unconventional crude oil and natural gas reserves in the Midland Basin in West Texas. For more information, please visit our website at www.highpeakenergy.com.

    Cautionary Note Regarding Forward-Looking Statements

    The information in this press release contains forward-looking statements that involve risks and uncertainties. When used in this document, the words “believes,” “plans,” “expects,” “anticipates,” “forecasts,” “intends,” “continue,” “may,” “will,” “could,” “should,” “future,” “potential,” “estimate” or the negative of such terms and similar expressions as they relate to HighPeak Energy, Inc. (“HighPeak Energy,” the “Company” or the “Successor”) are intended to identify forward-looking statements, which are generally not historical in nature. The forward-looking statements are based on the Company’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company’s control. For example, the Company’s review of strategic alternatives may not result in a sale of the Company, a recommendation that a transaction occur or result in a completed transaction, and any transaction that occurs may not increase shareholder value, in each case as a result of such risks and uncertainties.

    These risks and uncertainties include, among other things, the results of the strategic review being undertaken by the Company’s Board and the interest of prospective counterparties, the Company’s ability to realize the results contemplated by its 2024 guidance, volatility of commodity prices, product supply and demand, the impact of a widespread outbreak of an illness, such as the coronavirus disease pandemic, on global and U.S. economic activity, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to perform the Company’s drilling and operating activities, access to and availability of transportation, processing, fractionation, refining and storage facilities, HighPeak Energy’s ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to any credit facility and derivative contracts entered into by HighPeak Energy, if any, and purchasers of HighPeak Energy’s oil, natural gas liquids and natural gas production, uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future, the assumptions underlying forecasts, including forecasts of production, expenses, cash flow from sales of oil and gas and tax rates, quality of technical data, environmental and weather risks, including the possible impacts of climate change, cybersecurity risks and acts of war or terrorism. These and other risks are described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and other filings with the SEC. The Company undertakes no duty to publicly update these statements except as required by law.

    Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. Reserves estimates included herein may not be indicative of the level of reserves or PV-10 value of oil and natural gas production in the future. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could impact HighPeak’s strategy and change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered.

    Use of Projections

    The financial, operational, industry and market projections, estimates and targets in this press release and in the Company’s guidance (including production, operating expenses and capital expenditures in future periods) are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond the Company’s control. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial, operational, industry and market projections, estimates and targets, including assumptions, risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” above. These projections are speculative by their nature and, accordingly, are subject to significant risk of not being actually realized by the Company. Projected results of the Company for 2024 are particularly speculative and subject to change. Actual results may vary materially from the current projections, including for reasons beyond the Company’s control. The projections are based on current expectations and available information as of the date of this release. The Company undertakes no duty to publicly update these projections except as required by law.

    Drilling Locations

    The Company has estimated its drilling locations based on well spacing assumptions and upon the evaluation of its drilling results and those of other operators in its area, combined with its interpretation of available geologic and engineering data. The drilling locations actually drilled on the Company’s properties will depend on the availability of capital, regulatory approvals, commodity prices, costs, actual drilling results and other factors. Any drilling activities conducted on these identified locations may not be successful and may not result in additional proved reserves. Further, to the extent the drilling locations are associated with acreage that expires, the Company would lose its right to develop the related locations.

           
    HighPeak Energy, Inc.
    Unaudited Condensed Consolidated Balance Sheet Data
    (In thousands)
           
      September 30, 2024   December 31, 2023
    Current assets:          
    Cash and cash equivalents $ 135,573     $ 194,515  
    Accounts receivable   76,444       94,589  
    Derivative instruments   24,843       31,480  
    Inventory   7,966       7,254  
    Prepaid expenses   3,921       995  
    Total current assets   248,747       328,833  
    Crude oil and natural gas properties, using the successful efforts method of accounting:          
    Proved properties   3,798,128       3,338,107  
    Unproved properties   75,088       72,715  
    Accumulated depletion, depreciation and amortization   (1,079,113 )     (684,179 )
    Total crude oil and natural gas properties, net   2,794,103       2,726,643  
    Other property and equipment, net   3,483       3,572  
    Derivative instruments   —       16,059  
    Other noncurrent assets   15,133       5,684  
    Total assets $ 3,061,466     $ 3,080,791  
               
    Current liabilities:          
    Current portion of long-term debt, net $ 120,000     $ 120,000  
    Accounts payable – trade   52,557       63,583  
    Accrued capital expenditures   30,388       39,231  
    Revenues and royalties payable   28,532       29,724  
    Other accrued liabilities   25,499       19,613  
    Derivative instruments   1,937       13,054  
    Advances from joint interest owners   425       262  
    Operating leases   290       528  
    Accrued interest   —       1,398  
    Total current liabilities   259,628       287,393  
    Noncurrent liabilities:          
    Long-term debt, net   953,825       1,030,299  
    Deferred income taxes   227,966       197,068  
    Asset retirement obligations   14,231       13,245  
    Operating leases   126       —  
    Derivative instruments   —       65  
    Commitments and contingencies          
               
    Stockholders’ equity          
    Common stock   13       13  
    Additional paid-in capital   1,173,231       1,189,424  
    Retained earnings   432,446       363,284  
    Total stockholders’ equity   1,605,690       1,552,721  
    Total liabilities and stockholders’ equity $ 3,061,466     $ 3,080,791  
               
    HighPeak Energy, Inc.
    Unaudited Condensed Consolidated Statements of Operations
    (in thousands, except per share data)
                 
      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
    Operating revenues:                      
    Crude oil sales $ 270,636     $ 338,372     $ 827,595     $ 790,458  
    NGL and natural gas sales   942       7,214       7,013       19,682  
    Total operating revenues   271,578       345,586       834,608       810,140  
    Operating costs and expenses:                      
    Crude oil and natural gas production   35,413       39,820       98,482       107,696  
    Production and ad valorem taxes   15,412       18,839       46,410       44,395  
    Exploration and abandonments   362       1,728       1,027       4,372  
    Depletion, depreciation and amortization   136,578       117,420       395,121       291,562  
    Accretion of discount   241       122       722       360  
    General and administrative   4,971       6,934       14,391       11,952  
    Stock-based compensation   3,753       14,057       11,326       22,095  
    Total operating costs and expenses   196,730       198,920       567,479       482,432  
    Other expense   1,404       540       3,405       8,042  
    Income from operations   73,444       146,126       263,724       319,666  
    Interest income   2,172       730       6,964       923  
    Interest expense   (42,579 )     (37,022 )     (129,204 )     (103,278 )
    Loss on derivative instruments, net   32,334       (29,655 )     (23,411 )     (30,898 )
    Loss on extinguishment of debt   —       (27,300 )     —       (27,300 )
    Income before income taxes   65,371       52,879       118,073       159,113  
    Income tax expense   15,438       14,100       31,985       38,251  
    Net income $ 49,933     $ 38,779     $ 86,088     $ 120,862  
                           
    Earnings per share:                      
    Basic net income $ 0.36     $ 0.28     $ 0.62     $ 0.94  
    Diluted net income $ 0.35     $ 0.28     $ 0.60     $ 0.90  
                           
    Weighted average shares outstanding:                      
    Basic   124,988       123,159       125,595       115,164  
    Diluted   129,094       127,006       129,581       120,531  
                           
    Dividends declared per share $ 0.04     $ 0.025     $ 0.12     $ 0.075  
                                   

     

    HighPeak Energy, Inc.
    Unaudited Condensed Consolidated Statements of Cash Flows
    (in thousands)
               
      Nine Months Ended September 30,
      2024   2023
    CASH FLOWS FROM OPERATING ACTIVITIES:          
    Net income $ 86,088     $ 120,862  
    Adjustments to reconcile net income to net cash provided by operations:          
    Provision for deferred income taxes   30,898       38,251  
    Loss on extinguishment of debt   —       27,300  
    Loss on derivative instruments   23,411       30,898  
    Cash paid on settlement of derivative instruments   (11,897 )     (21,032 )
    Amortization of debt issuance costs   6,199       9,352  
    Amortization of original issue discounts on long-term debt   7,385       12,660  
    Stock-based compensation expense   11,326       22,095  
    Accretion expense   722       360  
    Depletion, depreciation and amortization expense   395,121       291,562  
    Exploration and abandonment expense   386       3,747  
    Changes in operating assets and liabilities:          
    Accounts receivable   18,145       (29,385 )
    Prepaid expenses, inventory and other assets   (12,387 )     (1,628 )
    Accounts payable, accrued liabilities and other current liabilities   (4,524 )     16,700  
    Net cash provided by operating activities   550,873       521,742  
    CASH FLOWS FROM INVESTING ACTIVITIES:          
    Additions to crude oil and natural gas properties   (452,148 )     (840,663 )
    Changes in working capital associated with crude oil and natural gas property additions   (13,214 )     (86,468 )
    Acquisitions of crude oil and natural gas properties   (10,367 )     (9,602 )
    Proceeds from sales of properties   118       —  
    Deposit and other costs related to pending acquisitions   —       (409 )
    Other property additions   (216 )     (103 )
    Net cash used in investing activities   (475,827 )     (937,245 )
    CASH FLOWS FROM FINANCING ACTIVITIES:          
    Repayments under Term Loan Credit Agreement   (90,000 )     —  
    Repurchased shares under buyback program   (27,247 )     —  
    Dividends paid   (15,082 )     (8,706 )
    Dividend equivalents paid   (1,602 )     (903 )
    Debt issuance costs   (58 )     (26,401 )
    Proceeds from exercises of warrants   1       1,728  
    Borrowings under Term Loan Credit Agreement   —       1,170,000  
    Repayments under Prior Credit Agreement   —       (525,000 )
    Repayments of 10.000% Senior Notes and 10.625% Senior Notes   —       (475,000 )
    Borrowings under Prior Credit Agreement   —       255,000  
    Proceeds from issuance of common stock   —       155,768  
    Stock offering costs   —       (5,371 )
    Premium on extinguishment of debt   —       (4,457 )
    Proceeds from exercises of stock options   —       148  
    Net cash (used in) provided by financing activities   (133,988 )     536,806  
    Net (decrease) increase in cash and cash equivalents   (58,942 )     121,303  
    Cash and cash equivalents, beginning of period   194,515       30,504  
    Cash and cash equivalents, end of period $ 135,573     $ 151,807  
               
    HighPeak Energy, Inc.
    Unaudited Summary Operating Highlights
                           
      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
    Average Daily Sales Volumes:                      
    Crude oil (Bbls)   38,710       44,381       38,581       37,171  
    NGLs (Bbls)   6,497       4,708       5,890       3,895  
    Natural gas (Mcf)   36,831       21,716       32,418       18,221  
    Total (Boe)   51,346       52,708       49,874       44,102  
                           
    Average Realized Prices (excluding effects of derivatives):                      
    Crude oil per Bbl $ 75.99     $ 82.87     $ 78.29     $ 77.90  
    NGL per Bbl $ 21.14     $ 20.08     $ 21.96     $ 22.23  
    Natural gas per Mcf $ 0.42     $ 1.89     $ 0.58     $ 1.58  
    Total per Boe $ 57.49     $ 71.27     $ 61.07     $ 67.29  
                           
    Margin Data ($ per Boe):                      
    Average price, excluding effects of derivatives $ 57.49     $ 71.27     $ 61.07     $ 67.29  
    Lease operating expenses   (7.12 )     (7.87 )     (6.74 )     (8.23 )
    Expense workovers   (0.38 )     (0.34 )     (0.47 )     (0.71 )
    Production and ad valorem taxes   (3.26 )     (3.89 )     (3.40 )     (3.69 )
    General and administrative expenses   (1.05 )     (1.43 )     (1.05 )     (0.99 )
      $ 45.68     $ 57.74     $ 49.41     $ 53.67  
                           
    HighPeak Energy, Inc.
    Unaudited Earnings Per Share Details
                           
      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
    Net income as reported $ 49,933     $ 38,779     $ 86,088     $ 120,862  
    Participating basic earnings   (4,835 )     (3,771 )     (8,280 )     (12,413 )
    Basic earnings attributable to common shareholders   45,098       35,008       77,808       108,449  
    Reallocation of participating earnings   66       54       102       192  
    Diluted net income attributable to common shareholders $ 45,164     $ 35,062     $ 77,910     $ 108,641  
                           
    Basic weighted average shares outstanding   124,988       123,159       125,595       115,164  
    Dilutive warrants and unvested stock options   1,952       1,688       1,832       3,208  
    Dilutive unvested restricted stock   2,154       2,159       2,154       2,159  
    Diluted weighted average shares outstanding   129,094       127,006       129,581       120,531  
                           
    Net income per share attributable to common shareholders:                      
    Basic $ 0.36     $ 0.28     $ 0.62     $ 0.94  
    Diluted $ 0.35     $ 0.28     $ 0.60     $ 0.90  
                           
    HighPeak Energy, Inc.
    Unaudited Reconciliation of Net Income to EBITDAX, Discretionary Cash Flow and Net Cash Provided by Operations
    (in thousands)
                 
      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
    Net income $ 49,933     $ 38,779     $ 86,088     $ 120,862  
    Interest expense   42,579       37,022       129,204       103,278  
    Interest income   (2,172 )     (730 )     (6,964 )     (923 )
    Income tax expense   15,438       14,100       31,985       38,251  
    Depletion, depreciation and amortization   136,578       117,420       395,121       291,562  
    Accretion of discount   241       122       722       360  
    Exploration and abandonment expense   362       1,728       1,027       4,372  
    Stock based compensation   3,753       14,057       11,326       22,095  
    Derivative related noncash activity   (33,775 )     15,883       11,514       9,866  
    Loss on extinguishment of debt   —       27,300       —       27,300  
    Other expense   1,404       540       3,405       8,042  
    EBITDAX   214,341       266,221       663,428       625,065  
    Cash interest expense   (38,020 )     (33,798 )     (115,620 )     (85,723 )
    Other (a)   53       4,480       1,831       (3,287 )
    Discretionary cash flow   176,374       236,903       549,639       536,055  
    Changes in operating assets and liabilities   729       (78,837 )     1,234       (14,313 )
    Net cash provided by operating activities $ 177,103     $ 158,066     $ 550,873     $ 521,742  
                           
    (a) includes interest and other income net of current tax expense, other expense and operating portion of exploration and abandonment expenses.
     
    HighPeak Energy, Inc.
    Unaudited Free Cash Flow Reconciliation
    (in thousands)
               
      Three Months Ended September 30, 2024   Nine Months Ended September 30, 2024
               
    Net cash provided by operating activities $ 177,103     $ 550,873  
    Changes in operating assets and liabilities   (729 )     (1,234 )
    Discretionary cash flow   176,374       549,639  
    Less: Additions to crude oil and natural gas properties (excluding acquisitions)   (140,251 )     (452,148 )
    Free cash flow $ 36,123     $ 97,491  
               

    Investor Contact:

    Ryan Hightower
    Vice President, Business Development
    817.850.9204
    rhightower@highpeakenergy.com

    Source: HighPeak Energy, Inc.

    The MIL Network –

  • MIL-OSI: Tactile Systems Technology, Inc. Reports Third Quarter 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    MINNEAPOLIS, Nov. 04, 2024 (GLOBE NEWSWIRE) — Tactile Systems Technology, Inc. (“Tactile Medical”; the “Company”) (Nasdaq: TCMD), a medical technology company providing therapies for people with chronic disorders, today reported financial results for the third quarter ended September 30, 2024 and announced the adoption of a share repurchase program.

    Third Quarter 2024 Summary & Recent Business Highlights:

    • Total revenue increased 5% year-over-year to $73.1 million
      • Lymphedema product revenue increased 4% over Q3 2023
      • Airway clearance product revenue increased 10% over Q3 2023
    • Net income of $5.2 million versus $22.3 million in Q3 2023
    • Adjusted EBITDA of $10.7 million versus $7.7 million in Q3 2023
    • Operating cashflow of $24.3 million year-to-date, compared to $17.5 million in the prior year period
    • Ended Q3 2024 with $82.1 million in cash and cash equivalents
    • Launched Nimbl, our next-generation lymphedema therapy platform for upper extremity conditions
    • Announced publication of positive clinical trial results in VA lymphedema patients using Flexitouch therapy
    • Authorized a program to repurchase up to $30.0 million of the Company’s common stock

    “In the third quarter, we delivered solid gross margin expansion, drove continued improvements in profitability, and achieved double-digit growth in both our commercial and VA lymphedema channels,” said Sheri Dodd, President and Chief Executive Officer of Tactile Medical. “Operationally, we advanced key pillars of our commercial strategy, including launching our next-generation lymphedema therapy platform and announcing the publication of a positive new data set among Veterans.”

    Ms. Dodd continued, “While pleased with this performance, our revenue was impacted by changes in policy interpretation from Medicare administrators and DME buying patterns within our airway clearance business. However, we continue to see strong patient and clinician demand for our products, aided by improving CMS coverage conditions on the near horizon. We are taking a concerted approach to fortify our sales channels, simplify our front and back-office work through technology modernization, and amplify the voice of our patients and providers through product and service innovation.”

    Ms. Dodd concluded, “Finally, we are increasingly benefiting from generating free cash flow, a trend we expect to continue. This provides us the luxury of continuing to evaluate various investment opportunities to drive growth and increase shareholder value, while also initiating a share repurchase program. We believe this strategic near-term use of cash aligns with our conviction in the trajectory of our business and our ability to execute our financial and operational initiatives.”

    Share Repurchase Program

    The Company also announced today that the Board of Directors of the Company authorized a program to repurchase up to $30.0 million of common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both. The timing and number of shares to be purchased will be based on the price of the Company’s common stock, general business and market conditions and other investment considerations and factors. The share repurchase program expires on October 31, 2026. The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice. The Company intends to finance the share repurchase program with cash on hand.

    Third Quarter 2024 Financial Results

    Total revenue in the third quarter of 2024 increased $3.5 million, or 5%, to $73.1 million, compared to $69.6 million in the third quarter of 2023. The increase in total revenue was attributable to an increase of $2.8 million, or 4%, in sales and rentals of the lymphedema product line and an increase of $0.7 million, or 10%, in sales of the airway clearance product line in the quarter ended September 30, 2024, compared to the third quarter of 2023.

    Gross profit in the third quarter of 2024 increased $5.4 million, or 11%, to $54.8 million, compared to $49.4 million in the third quarter of 2023. Gross margin was 75.0% of revenue, compared to 70.9% of revenue in the third quarter of 2023. Non-GAAP gross margin was 75.4% of revenue, compared to 71.4% of revenue in the third quarter of 2023.

    Operating expenses in the third quarter of 2024 increased $6.6 million, or 16%, to $48.0 million, compared to $41.4 million in the third quarter of 2023.

    Operating income was $6.8 million in the third quarter of 2024, compared to $8.0 million in the third quarter of 2023. Non-GAAP operating income in the third quarter of 2024 was $7.9 million, compared to $5.2 million in the third quarter of 2023.

    Other income was $0.5 million in the third quarter of 2024, compared to other expense of $0.4 million in the third quarter of 2023.

    Income tax expense was $2.1 million in the third quarter of 2024, compared to an income tax benefit of $14.7 million in the third quarter of 2023.

    Net income in the third quarter of 2024 was $5.2 million, or $0.21 per diluted share, compared to $22.3 million, or $0.94 per diluted share, in the third quarter of 2023. Non-GAAP net income in the third quarter of 2024 was $6.0 million, compared to $20.2 million in the third quarter of 2023. The change in both net income and non-GAAP net income was driven by the impact last year’s valuation allowance release had on prior-year income tax.

    Weighted average shares used to compute diluted net income per share were 24.3 million and 23.8 million for the third quarters of 2024 and 2023, respectively.

    Adjusted EBITDA was $10.7 million in the third quarter of 2024, compared to $7.7 million in the third quarter of 2023.

    First Nine Months 2024 Financial Results

    Total revenue for the nine months ended September 30, 2024, increased $10.6 million, or 5%, to $207.4 million, compared to $196.8 million for the nine months ended September 30, 2023. The increase in total revenue was attributable to an increase of $10.0 million, or 6%, in sales and rentals of the lymphedema product line and an increase of $0.6 million, or 2%, in sales of the airway clearance product line for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

    Net income for the nine months ended September 30, 2024, was $7.2 million, or $0.30 per diluted share, compared to $20.3 million, or $0.88 per diluted share, for the nine months ended September 30, 2023. Non-GAAP net income for the nine months ended September 30, 2024, was $9.5 million, compared to $20.6 million for the nine months ended September 30, 2023.

    Weighted average shares used to compute diluted net income per share were 24.1 million and 23.0 million for the nine months ended September 30, 2024 and 2023, respectively.

    Adjusted EBITDA was $20.8 million in the nine months ended September 30, 2024, compared to $14.3 million in the nine months ended September 30, 2023.

    Balance Sheet Summary

    As of September 30, 2024, the Company had $82.1 million in cash and cash equivalents and $27.0 million of outstanding borrowings under its credit agreement, compared to $61.0 million in cash and cash equivalents and $29.3 million of outstanding borrowings under its credit agreement as of December 31, 2023.

    2024 Financial Outlook

    The Company is updating its 2024 financial outlook and now expects full year 2024 total revenue in the range of $292 million to $295 million, representing growth of approximately 6% to 8% year-over-year, compared to total revenue of $274.4 million in 2023. The Company’s prior 2024 guidance expectation was total revenue in the range of $293 million to $298 million, representing growth of approximately 7% to 9%.

    Conference Call

    Management will host a conference call with a question-and-answer session at 5:00 p.m. Eastern Time on November 4, 2024, to discuss the results of the quarter. Those who would like to participate may dial 877-407-3088 (201-389-0927 for international callers) and provide access code 13748661. A live webcast of the call will also be provided on the investor relations section of the Company’s website at investors.tactilemedical.com.

    For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13748661. The webcast will be archived at investors.tactilemedical.com.

    About Tactile Systems Technology, Inc. (DBA Tactile Medical)

    Tactile Medical is a leader in developing and marketing at-home therapies for people suffering from underserved, chronic conditions including lymphedema, lipedema, chronic venous insufficiency and chronic pulmonary disease by helping them live better and care for themselves at home. Tactile Medical collaborates with clinicians to expand clinical evidence, raise awareness, increase access to care, reduce overall healthcare costs and improve the quality of life for tens of thousands of patients each year.

    Legal Notice Regarding Forward-Looking Statements

    This release contains forward-looking statements. Forward-looking statements are generally identifiable by the use of words like “may,” “will,” “should,” “could,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “continue,” “confident,” “outlook,” “guidance,” “project,” “goals,” “look forward,” “poised,” “designed,” “plan,” “return,” “focused,” “prospects” or “remain” or the negative of these words or other variations on these words or comparable terminology. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties outside of the Company’s control that can make such statements untrue, including, but not limited to, the Company’s ability to obtain reimbursement from third-party payers for its products; the impacts of inflation, rising interest rates or a recession; the adequacy of the Company’s liquidity to pursue its business objectives; adverse economic conditions or intense competition; price increases for supplies and components; wage and component price inflation; loss of a key supplier; entry of new competitors and products; compliance with and changes in federal, state and local government regulation; loss or retirement of key executives, including transition matters related to the Company’s recent Chief Executive Officer change; technological obsolescence of the Company’s products; technical problems with the Company’s research and products; the Company’s ability to expand its business through strategic acquisitions; the Company’s ability to integrate acquisitions and related businesses; the effects of current and future U.S. and foreign trade policy and tariff actions; or the inability to carry out research, development and commercialization plans. In addition, other factors that could cause actual results to differ materially are discussed in the Company’s filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company undertakes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

    Use of Non-GAAP Financial Measures

    This press release includes the non-GAAP financial measures of Adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).

    Adjusted EBITDA in this release represents net income or loss, plus interest expense, net, or less interest income, net, less income tax benefit or plus income tax expense, plus depreciation and amortization, plus stock-based compensation expense, plus or minus the change in fair value of earn-out and plus executive transition costs. Non-GAAP gross profit in this release represents gross profit plus non-cash intangible asset amortization expense. Non-GAAP gross margin in this release represents non-GAAP gross profit divided by revenue. Non-GAAP operating income in this release represents operating income adjusted for non-cash intangible asset amortization expense, change in fair value of earn-out and executive transition expenses. Non-GAAP net income represents net income adjusted for non-cash intangible asset amortization expense, change in fair value of earn-out and executive transition expenses, and adjusted for the income tax effect on reconciling items. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in this press release.

    These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses these measures principally as measures of the Company’s operating performance and for planning purposes, including the preparation of the Company’s annual operating plan and financial projections. The Company believes these measures are useful to investors as supplemental information and because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company also believes these non-GAAP financial measures are useful to its management and investors as a measure of comparative operating performance from period to period. In addition, Adjusted EBITDA is used as a performance metric in the Company’s compensation program.

    The non-GAAP financial measures presented in this release should not be considered as an alternative to, or superior to, their respective GAAP financial measures, as measures of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating non-GAAP financial measures, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company’s presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using non-GAAP financial measures on a supplemental basis. The Company’s definition of these non-GAAP financial measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

                     
    Tactile Systems Technology, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited)
        September 30,   December 31,
    (In thousands, except share and per share data)   2024   2023
    Assets            
    Current assets                
    Cash and cash equivalents   $ 82,146     $ 61,033  
    Accounts receivable     39,970       43,173  
    Net investment in leases     13,953       14,195  
    Inventories     21,176       22,527  
    Prepaid expenses and other current assets     5,127       4,366  
    Total current assets     162,372       145,294  
    Non-current assets                
    Property and equipment, net     5,878       6,195  
    Right of use operating lease assets     17,553       19,128  
    Intangible assets, net     43,708       46,724  
    Goodwill     31,063       31,063  
    Accounts receivable, non-current     3,628       10,936  
    Deferred income taxes     19,719       19,378  
    Other non-current assets     3,803       2,720  
    Total non-current assets     125,352       136,144  
    Total assets   $ 287,724     $ 281,438  
    Liabilities and Stockholders’ Equity                
    Current liabilities                
    Accounts payable   $ 7,290     $ 6,659  
    Note payable     2,956       2,956  
    Accrued payroll and related taxes     13,086       16,789  
    Accrued expenses     7,088       5,904  
    Income taxes payable     611       1,467  
    Operating lease liabilities     2,883       2,807  
    Other current liabilities     3,240       4,475  
    Total current liabilities     37,154       41,057  
    Non-current liabilities                
    Note payable, non-current     23,959       26,176  
    Accrued warranty reserve, non-current     1,448       1,681  
    Income taxes payable, non-current     495       446  
    Operating lease liabilities, non-current     16,767       18,436  
    Total non-current liabilities     42,669       46,739  
    Total liabilities     79,823       87,796  
                     
    Stockholders’ equity:                
    Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of September 30, 2024 and December 31, 2023     —       —  
    Common stock, $0.001 par value, 300,000,000 shares authorized; 23,997,089 shares issued and outstanding as of September 30, 2024; 23,600,584 shares issued and outstanding as of December 31, 2023     24       24  
    Additional paid-in capital     181,739       174,724  
    Retained earnings     26,138       18,894  
    Total stockholders’ equity     207,901       193,642  
    Total liabilities and stockholders’ equity   $ 287,724     $ 281,438  
                     
                                 
    Tactile Systems Technology, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)
                                 
                                 
        Three Months Ended   Nine Months Ended
        September 30,   September 30,
    (In thousands, except share and per share data)   2024   2023   2024   2023
    Revenue                            
    Sales revenue   $ 63,168     $ 58,866     $ 180,742     $ 171,459  
    Rental revenue     9,925       10,720       26,657       25,312  
    Total revenue     73,093       69,586       207,399       196,771  
    Cost of revenue                            
    Cost of sales revenue     15,603       17,016       46,810       48,523  
    Cost of rental revenue     2,703       3,211       8,270       9,122  
    Total cost of revenue     18,306       20,227       55,080       57,645  
    Gross profit                            
    Gross profit – sales revenue     47,565       41,850       133,932       122,936  
    Gross profit – rental revenue     7,222       7,509       18,387       16,190  
    Gross profit     54,787       49,359       152,319       139,126  
    Operating expenses                            
    Sales and marketing     26,838       26,030       82,803       80,538  
    Research and development     2,417       1,964       6,794       6,030  
    Reimbursement, general and administrative     18,118       16,449       51,158       46,874  
    Intangible asset amortization and earn-out     633       (3,073 )     1,898       (557 )
    Total operating expenses     48,006       41,370       142,653       132,885  
    Income from operations     6,781       7,989       9,666       6,241  
    Other income (expense)     452       (404 )     832       (2,235 )
    Income before income taxes     7,233       7,585       10,498       4,006  
    Income tax expense (benefit)     2,078       (14,714 )     3,254       (16,307 )
    Net income   $ 5,155     $ 22,299     $ 7,244     $ 20,313  
    Net income per common share                            
    Basic   $ 0.21     $ 0.95     $ 0.30     $ 0.89  
    Diluted   $ 0.21     $ 0.94     $ 0.30     $ 0.88  
    Weighted-average common shares used to compute net income per common share                            
    Basic     23,985,364       23,483,269       23,842,049       22,714,574  
    Diluted     24,254,176       23,848,729       24,070,084       22,987,667  
                                     
                 
    Tactile Systems Technology, Inc.
    Condensed Consolidated Statements of Cash Flows
    (Unaudited)
         
        Nine Months Ended September 30,
    (In thousands)   2024   2023
    Cash flows from operating activities            
    Net income   $ 7,244     $ 20,313  
    Adjustments to reconcile net income to net cash provided by operating activities:            
    Depreciation and amortization     5,079       4,916  
    Deferred income taxes     (341 )     (20,717 )
    Stock-based compensation expense     5,969       5,597  
    Loss on disposal of property and equipment and intangibles     308       3  
    Change in fair value of earn-out liability     —       (2,475 )
    Changes in assets and liabilities, net of acquisition:            
    Accounts receivable     3,203       10,947  
    Net investment in leases     242       2,527  
    Inventories     1,351       (374 )
    Income taxes     (807 )     (99 )
    Prepaid expenses and other assets     (1,844 )     (369 )
    Right of use operating lease assets     (18 )     292  
    Accounts receivable, non-current     7,308       8,425  
    Accounts payable     582       (3,622 )
    Accrued payroll and related taxes     (3,703 )     (2,316 )
    Accrued expenses and other liabilities     (251 )     (5,545 )
    Net cash provided by operating activities     24,322       17,503  
    Cash flows from investing activities            
    Purchases of property and equipment     (1,932 )     (1,424 )
    Proceeds from sale of property and equipment     12       —  
    Intangible assets expenditures     (85 )     (117 )
    Net cash used in investing activities     (2,005 )     (1,541 )
    Cash flows from financing activities            
    Proceeds from issuance of note payable     —       8,250  
    Payments on earn-out     —       (5,000 )
    Payments on note payable     (2,250 )     (2,250 )
    Payments on revolving line of credit     —       (8,250 )
    Payments of deferred debt issuance costs     —       (125 )
    Proceeds from exercise of common stock options     2       13  
    Proceeds from the issuance of common stock from the employee stock purchase plan     1,044       882  
    Proceeds from issuance of common stock at market     —       34,625  
    Net cash (used in) provided by financing activities     (1,204 )     28,145  
    Net increase in cash and cash equivalents     21,113       44,107  
    Cash and cash equivalents – beginning of period     61,033       21,929  
    Cash and cash equivalents – end of period   $ 82,146     $ 66,036  
                 
    Supplemental cash flow disclosure            
    Cash paid for interest   $ 1,612     $ 2,810  
    Cash paid for taxes   $ 4,428     $ 3,006  
    Capital expenditures incurred but not yet paid   $ 49     $ 40  
                     

    The following table summarizes revenue by product line for the three and nine months ended September 30, 2024 and 2023:

        Three Months Ended   Nine Months Ended
        September 30,   September 30,
    (In thousands)   2024   2023   2024   2023
    Revenue                        
    Lymphedema products   $ 65,282     $ 62,506     $ 182,278     $ 172,257  
    Airway clearance products     7,811       7,080       25,121       24,514  
    Total   $ 73,093     $ 69,586     $ 207,399     $ 196,771  
                             
    Percentage of total revenue                        
    Lymphedema products     89 %     90 %     88 %     88 %
    Airway clearance products     11 %     10 %     12 %     12 %
    Total     100 %     100 %     100 %     100 %
                                     

    The following table contains a reconciliation of GAAP gross profit and margin to non-GAAP gross profit and margin:

    Tactile Systems Technology, Inc.
    Reconciliation of Gross Profit and Margin to Non-GAAP Gross Profit and Margin
    (Unaudited)
                                     
        Three Months Ended   Nine Months Ended
        September 30, September 30,
    (Dollars in thousands)   2024   2023   2024   2023
    Gross profit, as reported   $ 54,787     $ 49,359     $ 152,319     $ 139,126  
    Gross margin, as reported     75.0 %     70.9 %     73.4 %     70.7 %
    Reconciling items:                                
    Non-cash intangible asset amortization expense   $ 317     $ 316     $ 950     $ 945  
    Non-GAAP gross profit   $ 55,104     $ 49,675     $ 153,269     $ 140,071  
    Non-GAAP gross margin     75.4 %     71.4 %     73.9 %     71.2 %
                                     

    The following table contains a reconciliation of GAAP operating income to non-GAAP operating income:

    Tactile Systems Technology, Inc.
    Reconciliation of GAAP Operating Income to Non-GAAP Operating Income
    (Unaudited)
                                 
        Three Months Ended   Nine Months Ended
        September 30, September 30,
    (Dollars in thousands)   2024   2023   2024   2023
    GAAP operating income   $ 6,781     $ 7,989     $ 9,666     $ 6,241  
    Reconciling items:                            
    Non-cash intangible asset amortization expense impacting gross profit   $ 317     $ 316     $ 950     $ 945  
    Non-cash intangible asset amortization expense impacting operating expenses     633       633       1,898       1,919  
    Change in fair value of earn-out     —       (3,705 )     —       (2,475 )
    Executive transition expenses     136       —       111       —  
    Non-GAAP operating income:   $ 7,867     $ 5,233     $ 12,625     $ 6,630  
                                     

    The following table contains a reconciliation of GAAP net income to non-GAAP net income:

    Tactile Systems Technology, Inc.
    Reconciliation of GAAP Net Income to Non-GAAP Net Income
    (Unaudited)
                             
        Three Months Ended   Nine Months Ended
        September 30, September 30,
    (Dollars in thousands)   2024   2023   2024   2023
    GAAP net income   $ 5,155     $ 22,299     $ 7,244     $ 20,313  
    Reconciling items:                        
    Non-cash intangible asset amortization expense impacting gross profit   $ 317     $ 316     $ 950     $ 945  
    Non-cash intangible asset amortization expense impacting operating expenses     633       633       1,898       1,919  
    Change in fair value of earn-out     —       (3,705 )     —       (2,475 )
    Executive transition expenses     136       —       111       —  
    Income tax expense on reconciling items*     (272 )     689       (740 )     (97 )
    Non-GAAP net income   $ 5,969     $ 20,232     $ 9,463     $ 20,605  
    * The effect of income tax on the reconciling items is estimated using the Company’s effective statutory tax rate.
     

    The following table contains a reconciliation of net income to Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023, as well as the dollar and percentage change between the comparable periods:

    Tactile Systems Technology, Inc.
    Reconciliation of Net Income to Non-GAAP Adjusted EBITDA
    (Unaudited)
                                                     
        Three Months Ended   Increase   Nine Months Ended   Increase
        September 30,   (Decrease)   September 30,   (Decrease)
    (Dollars in thousands)   2024   2023   $   %   2024   2023   $   %
    Net income   $ 5,155     $ 22,299     $ (17,144 )   (77 ) %   $ 7,244     $ 20,313     $ (13,069 )   64   %
    Interest (income) expense, net     (452 )     404       (856 )   N.M. %     (823 )     2,235       (3,058 )   (137 ) %
    Income tax expense (benefit)     2,078       (14,714 )     16,792     (114 ) %     3,254       (16,307 )     19,561     (120 )  
    Depreciation and amortization     1,734       1,646       88     5   %     5,079       4,915       164     3   %
    Stock-based compensation     2,070       1,766       304     17   %     5,969       5,597       372     7   %
    Change in fair value of earn-out     —       (3,705 )     3,705     (100 ) %     —       (2,475 )     2,475     (100 ) %
    Executive transition costs     136       —       136     —   %     111       —       111     —   %
    Adjusted EBITDA   $ 10,721     $ 7,696     $ 3,025     39   %   $ 20,834     $ 14,278     $ 6,556     46   %
                                                                     

    Investor Inquiries:
    Sam Bentzinger
    Gilmartin Group
    investorrelations@tactilemedical.com

    The MIL Network –

  • MIL-OSI: Intapp Announces First Quarter Fiscal Year 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    • First quarter SaaS revenue of $76.9 million, up 30% year-over-year
    • Cloud annual recurring revenue (ARR) of $309.1 million, up 27% year-over-year
    • Trailing twelve months’ cloud net revenue retention rate as of September 30, 2024 was 119%

    PALO ALTO, Calif., Nov. 04, 2024 (GLOBE NEWSWIRE) — Intapp, Inc. (NASDAQ: INTA), a leading global provider of AI-powered solutions for professionals at advisory, capital markets, and legal firms, announced financial results for its fiscal first quarter ended September 30, 2024. Intapp also provided its outlook for the second quarter and updated outlook for the full fiscal year 2025.

    “We’re pleased to start the fiscal year––our fourth as a public company––with the launch of a new vertical AI solution aimed directly at the needs of our target market,” said John Hall, CEO of Intapp. “We are excited by the interest in our new product releases and the ability to support our clients as they move towards digitization and look to innovate through the use of advanced technology.”

    First Quarter of Fiscal Year 2025 Financial Highlights

    • SaaS revenue was $76.9 million, a 30% year-over-year increase compared to the first quarter of fiscal year 2024.
    • Total revenue was $118.8 million, a 17% year-over-year increase compared to the first quarter of fiscal year 2024.
    • Cloud ARR was $309.1 million as of September 30, 2024, a 27% year-over-year increase compared to Cloud ARR as of September 30, 2023. Cloud ARR represented 74% of total ARR as of September 30, 2024, compared to 69% as of September 30, 2023.
    • Total ARR was $417.2 million as of September 30, 2024, a 19% year-over-year increase compared to total ARR as of September 30, 2023.
    • GAAP operating loss was $(7.3) million, compared to a GAAP operating loss of $(14.0) million in the first quarter of fiscal year 2024.
    • Non-GAAP operating income was $15.1 million, compared to a non-GAAP operating income of $6.4 million in the first quarter of fiscal year 2024.
    • GAAP net loss was $(4.5) million, compared to a GAAP net loss of $(15.3) million in the first quarter of fiscal year 2024.
    • Non-GAAP net income was $16.8 million, compared to a non-GAAP net income of $4.6 million in the first quarter of fiscal year 2024.
    • GAAP net loss per share was $(0.06), compared to a GAAP net loss per share of $(0.22) in the first quarter of fiscal year 2024.
    • Non-GAAP diluted net income per share was $0.21, compared to a non-GAAP diluted net income per share of $0.06 in the first quarter of fiscal year 2024.

    Balance Sheet and Cash Flow Highlights

    • Cash and cash equivalents were $253.8 million as of September 30, 2024, compared to $208.4 million as of June 30, 2024.
    • For the three months ended September 30, 2024, net cash provided by operating activities was $24.4 million, compared to net cash provided by operating activities of $11.6 million for the three months ended September 30, 2023.

    Business Highlights

    • As of September 30, 2024, we served more than 2,600 clients, 707 of which each with contracts greater than $100,000 of ARR.
    • We upsold and cross-sold our existing clients such that our trailing twelve months’ cloud net revenue retention rate as of September 30, 2024 was 119%.
    • We continued to add new clients and expand existing accounts including Crete Professionals Alliance, an alliance of accounting and professional services firms, and private equity firms Alpaca Real Estate and NORD Holding.
    • We announced the availability of Intapp Assist for Terms, which expands generative AI functionality to Intapp’s compliance solutions.
    • Intapp DealCloud was named Deal Origination Solution of the Year at the 2024 Private Equity Wire U.S. Credit Awards.

    Second Quarter and Full Fiscal Year 2025 Outlook

      Fiscal 2025 Outlook
      Second Quarter Fiscal Year
      (in millions, except per share data)
    SaaS revenue $79.5 – $80.5 $327.6 – $331.6
    Total revenue $120.5 – $121.5 $495.5 – $499.5
    Non-GAAP operating income $14.0 – $15.0 $61.5 – $65.5
    Non-GAAP diluted net income per share $0.15 – $0.17 $0.73 – $0.77
     

    The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
    The information presented in this press release includes non-GAAP financial measures such as “non-GAAP operating income,” “non-GAAP net income,” and “non-GAAP diluted net income per share.” Refer to “Non-GAAP Financial Measures and Other Metrics” for a discussion of these measures and the financial tables below for reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

    The guidance regarding non-GAAP operating income excludes known pre-tax charges related to estimated stock-based compensation of $23.3 million for the second quarter of fiscal year 2025 and $85.4 million for fiscal year 2025 and amortization of intangible assets of $2.9 million for the second quarter of fiscal year 2025 and $11.2 million for fiscal year 2025. The guidance regarding non-GAAP diluted net income per share excludes known pre-tax charges related to estimated stock-based compensation of $0.28 per share for the second quarter of fiscal year 2025 and $1.02 per share for fiscal year 2025 and amortization of intangible assets of $0.04 per share for the second quarter of fiscal year 2025 and $0.13 per share for fiscal year 2025. The Company has not included a quantitative reconciliation of its guidance for non-GAAP operating income and non-GAAP diluted net income per share to their most directly comparable GAAP financial measures, other than stock-based compensation and amortization of intangible assets, because certain of these reconciling items, including change in fair value of contingent consideration, transaction costs, restructuring and other costs and income tax effect of non-GAAP adjustments, could be highly variable and cannot be reasonably predicted without unreasonable effort. This is due to the inherent difficulty of forecasting the timing of certain events that have not yet occurred and are out of the Company’s control and the amounts of associated reconciling items. Please note that the unavailable reconciling items could significantly impact the Company’s GAAP operating results.

    Corporate Presentation

    A supplemental financial presentation and other information will be accessible through Intapp’s investor relations website at https://investors.intapp.com/.

    Webcast
    Intapp will host a conference call for analysts and investors on Monday, November 4, 2024, beginning at 2:00 p.m. PT (5:00 p.m. ET). The call will be webcast live via the “Investors” section of the Intapp company website at https://investors.intapp.com/. A replay of the call will be available through the Intapp website for 90 days.

    About Intapp

    Intapp software helps professionals unlock their teams’ knowledge, relationships, and operational insights to increase value for their firms. Using the power of Applied AI, we make firm and market intelligence easy to find, understand, and use. With Intapp’s portfolio of vertical SaaS solutions, professionals can apply their collective expertise to make smarter decisions, manage risk, and increase competitive advantage. The world’s top firms — across accounting, consulting, investment banking, legal, private capital, and real assets — trust Intapp’s industry-specific platform and solutions to modernize and drive new growth.

    Forward-Looking Statements

    This press release contains express and implied “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the second quarter and full fiscal year 2025, growth strategy, business plans and market position. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “would,” “should,” “could,” “can,” “predict,” “potential,” “target,” “explore,” “continue,” “expand,” “outlook” or the negative of these terms, and similar expressions intended to identify forward-looking statements. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance, or achievement to differ materially and adversely from those anticipated or implied in the statements, including: our ability to continue our growth at or near historical rates; our future financial performance and ability to be profitable; the effect of global events on the U.S. and global economies, our business, our employees, our results of operations, our financial condition, demand for our products, sales and implementation cycles, and the health of our clients’ and partners’ businesses; our ability to prevent and respond to data breaches, unauthorized access to client data or other disruptions of our solutions; our ability to effectively manage U.S. and global market and economic conditions, including inflationary pressures, economic and market downturns and volatility in the financial services industry, particularly adverse to our targeted industries; the length and variability of our sales cycle; our ability to attract and retain clients; our ability to attract and retain talent; our ability to compete in highly competitive markets, including AI products; our ability to manage additional complexity, burdens, and volatility in connection with our international sales and operations; the successful assimilation or integration of the businesses, technologies, services, products, personnel or operations of acquired companies; our ability to incur indebtedness in the future and the effect of conditions in credit markets; the sufficiency of our cash and cash equivalents to meet our liquidity needs; and our ability to maintain, protect, and enhance our intellectual property rights. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and any subsequent public filings. Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management’s good faith belief as of that time with respect to future events. We assume no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

    Presentation Changes Related to SaaS and License Revenue

    Effective July 1, 2024, the Company adjusted the classification of support services related to subscription license to be included within “license” on the unaudited condensed consolidated statements of operations. Prior to July 1, 2024, support services related to subscription license were included in a line item entitled “SaaS and Support.” Accordingly, effective July 1, 2024, SaaS revenues include subscription fees from clients accessing our SaaS solutions, premium support services related to SaaS, and updates, if any, to the subscribed service during the subscription term. There was no change to the Company’s revenue recognition policy, except for the change in classification noted herein.

    The presentation of cost of revenues has been conformed to reflect the changes related to the presentation of revenues. Such reclassifications related to the presentation of revenues and cost of revenues did not affect total revenues, operating income, or net income.

    Non-GAAP Financial Measures and Other Metrics

    This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP diluted net income per share. These non-GAAP measures exclude the impact of stock-based compensation, amortization of intangible assets, change in fair value of contingent consideration, transaction costs, restructuring and other costs and the income tax effect of non-GAAP adjustments. See below for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

    Free cash flow is a non-GAAP financial measure, and a supplemental liquidity measure that management uses to evaluate our core operating business and our ability to meet our current and future financing and investing needs. It consists of net cash provided by operating activities less cash paid for purchases of property and equipment. See below for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

    Other metrics include total ARR, Cloud ARR and cloud net revenue retention rate. Total ARR represents the annualized recurring value of all active SaaS and on-premise subscription license contracts at the end of a reporting period. Cloud ARR is the portion of the annualized recurring value of our active SaaS contracts at the end of a reporting period. Contracts with a term other than one year are annualized by taking the committed contract value for the current period divided by number of days in that period, then multiplying by 365. Cloud net revenue retention rate is the portion of our net revenue retention rate, which represents the net revenue retention of our SaaS contracts. We calculate Cloud net revenue retention by starting with the Cloud ARR from the cohort of all clients as of the twelve months prior to the applicable fiscal period, or prior period Cloud ARR. We then calculate the Cloud ARR from these same clients as of the current fiscal period, or current period Cloud ARR. We then divide the current period Cloud ARR by the prior period Cloud ARR to calculate the Cloud net revenue retention.

    We believe these non-GAAP financial measures and metrics provide useful information to investors as they are used by management to manage the business, make planning decisions, evaluate our performance, and allocate resources and provide useful information regarding certain financial and business trends relating to our financial condition and results of operations. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

    Guidance for non-GAAP financial measures excludes stock-based compensation expense and amortization of intangible assets. Non-GAAP diluted net income per share is calculated by dividing non-GAAP net income by the estimated diluted weighted average shares outstanding for the period.

    Investor Contact

    David Trone
    Senior Vice President, Investor Relations
    Intapp, Inc.
    ir@intapp.com

    Media Contact

    Ali Robinson
    Global Media Relations Director
    Intapp, Inc.
    press@intapp.com

    INTAPP, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited, in thousands, except per share data and percentages)
     
        Three Months Ended
    September 30,    		  
        2024     2023  
    Revenues            
    SaaS   $ 76,876     $ 58,913  
    License     28,492       28,051  
    Professional services     13,437       14,611  
    Total revenues     118,805       101,575  
    Cost of revenues            
    SaaS     15,318       12,711  
    License     1,752       1,702  
    Professional services     14,864       17,160  
    Total cost of revenues     31,934       31,573  
    Gross profit     86,871       70,002  
    Gross margin     73.1 %     68.9 %
    Operating expenses:            
    Research and development     32,427       28,496  
    Sales and marketing     37,760       34,419  
    General and administrative     23,938       21,052  
    Total operating expenses     94,125       83,967  
    Operating loss     (7,254 )     (13,965 )
    Interest and other income (expense), net     3,422       (943 )
    Net loss before income taxes     (3,832 )     (14,908 )
    Income tax expense     (688 )     (413 )
    Net loss   $ (4,520 )   $ (15,321 )
    Net loss per share, basic and diluted   $ (0.06 )   $ (0.22 )
    Weighted-average shares used to compute net loss per share, basic and diluted     75,604       68,937  
    INTAPP, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited, in thousands)
     
        September 30,
    2024    		     June 30,
    2024    		  
    Assets            
    Current assets:            
    Cash and cash equivalents   $ 253,847     $ 208,370  
    Restricted cash     200       200  
    Accounts receivable, net     62,053       95,103  
    Unbilled receivables, net     12,777       13,300  
    Other receivables, net     2,732       2,743  
    Prepaid expenses     11,294       9,031  
    Deferred commissions, current     13,678       13,907  
    Total current assets     356,581       342,654  
    Property and equipment, net     19,441       18,944  
    Operating lease right-of-use assets     20,030       21,382  
    Goodwill     286,472       285,969  
    Intangible assets, net     37,291       40,293  
    Deferred commissions, noncurrent     17,057       18,495  
    Other assets     5,550       5,262  
    Total assets   $ 742,422     $ 732,999  
    Liabilities and Stockholders’ Equity            
    Current liabilities:            
    Accounts payable   $ 16,013     $ 13,348  
    Accrued compensation     33,958       42,066  
    Accrued expenses     8,600       12,040  
    Deferred revenue, net     203,114       218,923  
    Other current liabilities     11,575       14,270  
    Total current liabilities     273,260       300,647  
    Deferred tax liabilities     1,298       1,336  
    Deferred revenue, noncurrent     2,097       3,563  
    Operating lease liabilities, noncurrent     18,626       19,605  
    Other liabilities     5,021       4,610  
    Total liabilities     300,302       329,761  
    Stockholders’ equity:            
    Common stock     78       75  
    Additional paid-in capital     934,585       891,681  
    Accumulated other comprehensive loss     (841 )     (1,336 )
    Accumulated deficit     (491,702 )     (487,182 )
    Total stockholders’ equity     442,120       403,238  
    Total liabilities and stockholders’ equity   $ 742,422     $ 732,999  
    INTAPP, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited, in thousands)
     
        Three Months Ended
    September 30,    		  
        2024     2023  
    Cash Flows from Operating Activities:            
    Net loss   $ (4,520 )   $ (15,321 )
    Adjustments to reconcile net loss to net cash provided by operating activities:            
    Depreciation and amortization     4,467       4,009  
    Amortization of operating lease right-of-use assets     1,280       1,130  
    Accounts receivable allowances     550       425  
    Stock-based compensation     19,989       18,757  
    Change in fair value of contingent consideration     (1,004 )     (1,431 )
    Deferred income taxes     (48 )     (113 )
    Other     38       38  
    Changes in operating assets and liabilities:            
    Accounts receivable     30,207       23,472  
    Unbilled receivables, current     523       (3,886 )
    Prepaid expenses and other assets     (2,568 )     (1,342 )
    Deferred commissions     1,667       121  
    Accounts payable and accrued liabilities     (8,060 )     (11,277 )
    Deferred revenue, net     (17,275 )     222  
    Operating lease liabilities     (1,331 )     (1,571 )
    Other liabilities     531       (1,621 )
       Net cash provided by operating activities     24,446       11,612  
    Cash Flows from Investing Activities:            
    Purchases of property and equipment     (354 )     (1,141 )
    Capitalized internal-use software costs     (1,534 )     (1,861 )
    Business combinations, net of cash acquired     (897 )     —  
       Net cash used in investing activities     (2,785 )     (3,002 )
    Cash Flows from Financing Activities:            
    Payments for deferred offering costs     —       (633 )
    Proceeds from stock option exercises     22,918       2,324  
    Payments of deferred contingent consideration and holdback associated with acquisitions     (1,387 )     —  
       Net cash provided by financing activities     21,531       1,691  
    Effect of foreign currency exchange rate changes on cash and cash equivalents     2,285       261  
       Net increase in cash, cash equivalents and restricted cash     45,477       10,562  
    Cash, cash equivalents and restricted cash – beginning of period     208,570       131,185  
    Cash, cash equivalents and restricted cash – end of period   $ 254,047     $ 141,747  
    INTAPP, INC.
    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
    (Unaudited, in thousands, except per share data and percentages)
     
    The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:
     
    Non-GAAP Gross Profit
        Three Months Ended
    September 30,    		  
        2024     2023  
    GAAP gross profit   $ 86,871     $ 70,002  
    Adjusted to exclude the following:            
    Stock-based compensation     2,232       1,874  
    Amortization of intangible assets     1,571       1,055  
    Restructuring and other costs     10       —  
    Non-GAAP gross profit   $ 90,684     $ 72,931  
    Non-GAAP gross margin     76.3 %     71.8 %
    Non-GAAP Operating Expenses
        Three Months Ended
    September 30,    		  
        2024     2023  
    GAAP research and development   $ 32,427     $ 28,496  
    Stock-based compensation     (4,624 )     (4,646 )
    Restructuring and other costs     (48 )     —  
    Non-GAAP research and development   $ 27,755     $ 23,850  
                 
    GAAP sales and marketing   $ 37,760     $ 34,419  
    Stock-based compensation     (5,738 )     (5,339 )
    Amortization of intangible assets     (1,268 )     (1,487 )
    Non-GAAP sales and marketing   $ 30,754     $ 27,593  
                 
                 
    GAAP general and administrative   $ 23,938     $ 21,052  
    Stock-based compensation     (7,395 )     (6,898 )
    Amortization of intangible assets     (163 )     (163 )
    Change in fair value of contingent consideration     1,004       1,431  
    Transaction costs (1)     (134 )     (328 )
    Restructuring and other costs     (172 )     —  
    Non-GAAP general and administrative   $ 17,078     $ 15,094  
    Non-GAAP Operating Income
        Three Months Ended
    September 30,    		  
        2024     2023  
    GAAP operating loss   $ (7,254 )   $ (13,965 )
    Adjusted to exclude the following:            
    Stock-based compensation     19,989       18,757  
    Amortization of intangible assets     3,002       2,705  
    Change in fair value of contingent consideration     (1,004 )     (1,431 )
    Transaction costs (1)     134       328  
    Restructuring and other costs     230       —  
    Non-GAAP operating income   $ 15,097     $ 6,394  
    Non-GAAP Net Income
        Three Months Ended
    September 30,    		  
        2024     2023  
    GAAP net loss   $ (4,520 )   $ (15,321 )
    Adjusted to exclude the following:            
    Stock-based compensation     19,989       18,757  
    Amortization of intangible assets     3,002       2,705  
    Change in fair value of contingent consideration     (1,004 )     (1,431 )
    Transaction costs (1)     134       328  
    Restructuring and other costs     230       —  
    Income tax effect of non-GAAP adjustments     (1,024 )     (415 )
    Non-GAAP net income   $ 16,807     $ 4,623  
                 
    GAAP net loss per share, basic and diluted   $ (0.06 )   $ (0.22 )
    Non-GAAP net income per share, diluted   $ 0.21     $ 0.06  
                 
    Weighted-average shares used to compute GAAP net loss per share, basic and diluted     75,604       68,937  
    Weighted-average shares used to compute non-GAAP net income per share, diluted     81,538       79,567  
    Free Cash Flow
        Three Months Ended
    September 30,    		  
        2024     2023  
    Net cash provided by operating activities   $ 24,446     $ 11,612  
    Adjusted for the following cash outlay:            
    Purchases of property and equipment     (354 )     (1,141 )
    Free cash flow (2)   $ 24,092     $ 10,471  
     
    (1) Consists of acquisition-related transaction costs and costs related to certain non-capitalized offering-related expenses.
     
    (2) Beginning with the second quarter ended December 31, 2023, we have excluded capitalized internal-use software costs and cash paid for interest from the calculation of our free cash flow, which we believe better aligns with industry standard. Our free cash flow for prior period presented were recast to conform to the updated methodology and are reflected herein for comparison purposes.

    The MIL Network –

  • MIL-OSI: EverQuote Announces Record Third Quarter 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    • Revenue Exceeds 150% Year-Over-Year Growth to $144.5 million
    • Variable Marketing Margin Increases Over 125% Year-Over-Year to $43.9 million
    • Delivers Net Income of $11.6 million and Adjusted EBITDA of $18.8 million

    CAMBRIDGE, Mass., Nov. 04, 2024 (GLOBE NEWSWIRE) — EverQuote, Inc. (Nasdaq: EVER), a leading online insurance marketplace, today announced financial results for the third quarter ended September 30, 2024.

    “We delivered record third quarter results for revenue, Variable Marketing Margin, or VMM, and Adjusted EBITDA that once again exceeded the high-end of our guidance range,” said Jayme Mendal, CEO of EverQuote. “We continue to benefit from the auto industry recovery and strong execution.  We are strategically investing into this strengthening demand environment, as we continue to effectively optimize our traffic operations, improve our AI-powered bidding solutions, and roll-out our next generation agent technology platform.”

    “Our record third quarter financial results and cash flow are evidence that we are emerging from the auto insurance downturn as a stronger company due to our ability to efficiently scale, drive strong operational leverage, and maintain disciplined expense management,” said Joseph Sanborn, CFO of EverQuote.  “Looking ahead, we expect to build upon our strong performance this year, while judiciously investing to position ourselves as the leader in our industry.”

    Third Quarter 2024 Highlights:
    (Unless otherwise noted, all comparisons are relative to the third quarter of 2023).

    • Total revenue of $144.5 million, an increase of 163%.
    • Automotive insurance vertical revenue of $130.0 million, up 202%, and representing 90% of revenue.
    • Home and renters insurance vertical revenue of $14.1 million, up 30% compared to $10.9 million.
    • VMM increased to $43.9 million, compared to VMM of $19.4 million.
    • GAAP net income improved to $11.6 million, compared to a GAAP net loss of $29.2 million.
    • Adjusted EBITDA increased to $18.8 million, compared to an Adjusted EBITDA loss of $1.9 million.
    • Cash flow from operations of $23.6 million, compared to cash flow from operations of ($4.1) million.
    • Ended the quarter with $82.8 million in cash and cash equivalents, an increase of 36% from $60.9 million at the end of the second quarter of 2024.

    Fourth Quarter 2024 Outlook:

    • Revenue of $131.0 – $136.0 million, representing 140% year-over-year growth at the midpoint.
    • Variable Marketing Margin of $38.0 – $40.0 million, representing 89% year-over-year growth at the midpoint.
    • Adjusted EBITDA of $14.0 – $16.0 million, versus a loss of ($0.9) million in the prior year’s period.

    With respect to the Company’s expectations under “Fourth Quarter 2024 Outlook” above, the Company has not reconciled the non-GAAP measure Adjusted EBITDA to the GAAP measure net income (loss) in this press release because the Company does not provide guidance for stock-based compensation expense, depreciation and amortization expense, restructuring and other charges, acquisition-related costs, interest income, and income taxes on a consistent basis as the Company is unable to quantify these amounts without unreasonable efforts, which would be required to include a reconciliation of Adjusted EBITDA to GAAP net income (loss). In addition, the Company believes such a reconciliation would imply a degree of precision that could be confusing or misleading to investors.

    Conference Call and Webcast Information

    EverQuote will host a conference call and live webcast to discuss its third quarter 2024 financial results at 4:30 p.m. Eastern Time today, November 4, 2024. To access the conference call, dial Toll Free: +1 (800) 715-9871 for the US, or +1 (646) 307-1963 for international callers, and provide conference ID 4210704. The live webcast and replay will be available on the Investors section of the Company’s website at https://investors.everquote.com.

    Safe Harbor Statement

    This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “might,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “seek,” “would” or “continue,” or the negative of these terms or other similar expressions. The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, liquidity and results of operations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions described in our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K as filed with the Securities and Exchange Commission (“SEC”) from time to time. Additional information will also be set forth in the Company’s quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2024, which will be filed with the SEC. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law. Some of the key factors that could cause actual results to differ include: (1) our dependence on revenue from the property and casualty insurance industries, and specifically automotive insurance, and exposure to risks related to those industries; (2) our dependence on our relationships with insurance providers with no long-term minimum financial commitments; (3) our reliance on a small number of insurance providers for a significant portion of our revenue; (4) our dependence on third-party media sources for a significant portion of visitors to our websites and marketplace; (5) our ability to attract consumers searching for insurance to our websites and marketplace through Internet search engines, display advertising, social media, content-based online advertising and other online sources; (6) any limitations restricting our ability to market to users or collect and use data derived from user activities; (7)  risks related to cybersecurity incidents or other network disruptions; (8) risks related to the use of artificial intelligence; (9) our ability to develop new and enhanced products and services to attract and retain consumers and insurance providers, and to successfully monetize them; (10) the impact of competition in our industry and innovation by our competitors; (11) our ability to hire and retain necessary qualified employees to expand our operations; (12) our ability to stay abreast of and comply with new or modified laws and regulations that currently apply or become applicable to our business, including with respect to the insurance industry, telemarketing restrictions and data privacy requirements; (13) our ability to protect our intellectual property rights and maintain and build our brand; (14) our future financial performance, including our expectations regarding our revenue, cost of revenue, variable marketing margin, operating expenses, cash flows and ability to achieve, and maintain, future profitability; (15) our ability to properly collect, process, store, share, disclose and use consumer information and other data; and (16) the future trading prices of our Class A common stock.

    About EverQuote

    EverQuote operates a leading online insurance marketplace, connecting consumers with insurance providers. Our vision is to become the largest online source of insurance policies by using data, technology, and knowledgeable advisors to make insurance simpler, more affordable, and personalized.

    For more information, visit https://investors.everquote.com and follow on LinkedIn.

    Investor Relations Contact

    Brinlea Johnson
    The Blueshirt Group
    (415) 489-2193

    EVERQUOTE, INC.
    STATEMENTS OF OPERATIONS
     
      Three Months Ended
    September 30,    		     Nine Months Ended
    September 30,    		  
      2024     2023     2024     2023  
      (in thousands except per share)  
    Revenue $ 144,530     $ 55,011     $ 352,735     $ 232,216  
    Cost and operating expenses(1):                              
    Cost of revenue   5,450       6,150       15,502       17,467  
    Sales and marketing   111,794       46,505       273,491       195,537  
    Research and development   8,026       6,270       21,913       21,647  
    General and administrative   7,594       5,741       22,105       19,339  
    Restructuring and other charges   —       19,757       —       23,589  
    Acquisition-related costs   —       —       —       (150 )
    Total cost and operating expenses   132,864       84,423       333,011       277,429  
    Income (loss) from operations   11,666       (29,412 )     19,724       (45,213 )
    Other income:                              
    Interest income   554       411       1,396       869  
    Other income, net   53       20       154       5  
    Total other income, net   607       431       1,550       874  
    Income (loss) before income taxes   12,273       (28,981 )     21,274       (44,339 )
    Income tax expense   (719 )     (236 )     (1,411 )     (600 )
    Net income (loss) $ 11,554     $ (29,217 )   $ 19,863     $ (44,939 )
    Net income (loss) per share:                              
    Basic $ 0.33     $ (0.87 )   $ 0.57     $ (1.36 )
    Diluted $ 0.31     $ (0.87 )   $ 0.54     $ (1.36 )
    Weighted average common shares outstanding:                              
    Basic   35,234       33,549       34,845       33,146  
    Diluted   37,214       33,549       36,509       33,146  
                                   
    (1) Amounts include stock-based compensation expense, as follows:          
      Three Months Ended
    September 30,    		     Nine Months Ended
    September 30,    		  
      2024     2023     2024     2023  
      (in thousands)  
    Cost of revenue $ 51     $ 57     $ 129     $ 170  
    Sales and marketing   1,837       2,216       5,083       6,761  
    Research and development   1,342       1,820       4,080       6,479  
    General and administrative   2,216       1,386       6,012       4,585  
    Restructuring and other charges   —       165       —       1,288  
      $ 5,446     $ 5,644     $ 15,304     $ 19,283  
                                   
    EVERQUOTE, INC.
    BALANCE SHEET DATA
     
      September 30,     December 31,  
      2024     2023  
      (in thousands)  
    Cash and cash equivalents $ 82,841     $ 37,956  
    Working capital   79,913       39,293  
    Total assets   180,539       110,925  
    Total liabilities   62,837       30,018  
    Total stockholders’ equity   117,702       80,907  
                   
    EVERQUOTE, INC.
    STATEMENTS OF CASH FLOWS
     
      Three Months Ended
    September 30,    		     Nine Months Ended
    September 30,    		  
      2024     2023     2024     2023  
      (in thousands)  
    Cash flows from operating activities:                              
    Net income (loss) $ 11,554     $ (29,217 )   $ 19,863       (44,939 )
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                              
    Depreciation and amortization expense   1,618       2,251       4,117       5,121  
    Stock-based compensation expense   5,446       5,644       15,304       19,283  
    Loss on sale of health assets   —       19,388       —       19,388  
    Impairment of right-of-use asset   —       384       —       384  
    Change in fair value of contingent consideration liabilities   —       —       —       (150 )
    Provision for bad debt   8       (38 )     16       186  
    Unrealized foreign currency transaction (gains) losses   59       (17 )     56       (1 )
    Changes in operating assets and liabilities:                              
    Accounts receivable   (219 )     (63 )     (27,079 )     7,267  
    Prepaid expenses and other current assets   (1,002 )     770       312       2,637  
    Commissions receivable, current and non-current   1,078       2,740       3,722       2,611  
    Operating lease right-of-use assets   590       632       1,842       2,006  
    Other assets   —       —       (291 )     36  
    Accounts payable   5,220       (2,217 )     29,703       (10,029 )
    Accrued expenses and other current liabilities   75       (3,791 )     1,113       (3,522 )
    Deferred revenue   (120 )     92       (93 )     34  
    Operating lease liabilities   (693 )     (705 )     (2,153 )     (2,348 )
    Net cash provided by (used in) operating activities   23,614       (4,147 )     46,432       (2,036 )
    Cash flows from investing activities:                              
    Acquisition of property and equipment, including costs capitalized for development of internal-use software   (1,489 )     (966 )     (3,111 )     (2,988 )
    Proceeds from sale of health assets   —       13,194       —       13,194  
    Net cash provided by (used in) investing activities   (1,489 )     12,228       (3,111 )     10,206  
    Cash flows from financing activities:                              
    Proceeds from exercise of stock options   288       —       2,902       340  
    Tax withholding payments related to net share settlement   (507 )     (67 )     (1,350 )     (299 )
    Net cash provided by (used in) financing activities   (219 )     (67 )     1,552       41  
    Effect of exchange rate changes on cash, cash equivalents and restricted cash   16       (13 )     12       3  
    Net increase in cash, cash equivalentsand restricted cash   21,922       8,001       44,885       8,214  
    Cash, cash equivalents and restricted cash at beginning of period   60,919       31,048       37,956       30,835  
    Cash, cash equivalents and restricted cash at end of period $ 82,841     $ 39,049     $ 82,841     $ 39,049  
                                   
    EVERQUOTE, INC.
    FINANCIAL AND OPERATING METRICS
     
    Revenue by vertical:
     
      Three Months Ended September 30,     Change  
      2024     2023     %  
      (in thousands)          
    Automotive $ 130,005     $ 43,077       201.8 %
    Home and renters   14,142       10,889       29.9 %
    Other   383       1,045       -63.3 %
    Total revenue $ 144,530     $ 55,011       162.7 %
                           
      Nine Months Ended September 30,     Change  
      2024     2023     %  
      (in thousands)          
    Automotive $ 310,165     $ 182,520       69.9 %
    Home and renters   40,715       31,068       31.1 %
    Other   1,855       18,628       -90.0 %
    Total revenue $ 352,735     $ 232,216       51.9 %
                           

    Other financial and non-financial metrics:

      Three Months Ended September 30,     Change  
      2024     2023     %  
      (in thousands)          
    Income (loss) from operations $ 11,666     $ (29,412 )     -139.7 %
    Net income (loss) $ 11,554     $ (29,217 )     -139.5 %
    Variable marketing margin $ 43,931     $ 19,368       126.8 %
    Adjusted EBITDA(1) $ 18,783     $ (1,905 )   NM  
                         
      Nine Months Ended September 30,     Change  
      2024     2023     %  
      (in thousands)          
    Income (loss) from operations $ 19,724     $ (45,213 )     -143.6 %
    Net income (loss) $ 19,863     $ (44,939 )     -144.2 %
    Variable marketing margin $ 111,204     $ 79,614       39.7 %
    Adjusted EBITDA(1) $ 39,299     $ 1,347     NM  
                         
    (1) Adjusted EBITDA is a non-GAAP measure. Please see “EverQuote, Inc. Reconciliation of Non-GAAP Measures to GAAP” below for more information.
     

    To supplement the Company’s financial statements presented in accordance with GAAP and to provide investors with additional information regarding EverQuote’s financial results, the Company has presented Adjusted EBITDA as a non-GAAP financial measure. This non-GAAP financial measure is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies.

    The Company defines Adjusted EBITDA as net income (loss), excluding the impact of stock-based compensation expense; depreciation and amortization expense; restructuring and other charges; acquisition-related costs; interest income; and income taxes. The most directly comparable GAAP measure is net income (loss). The Company monitors and presents Adjusted EBITDA because it is a key measure used by management and the board of directors to understand and evaluate operating performance, to establish budgets and to develop operational goals for managing EverQuote’s business. In particular, the Company believes that excluding the impact of these items in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of EverQuote’s core operating performance.

    The Company uses Adjusted EBITDA to evaluate EverQuote’s operating performance and trends and make planning decisions. The Company believes that this non-GAAP financial measure helps identify underlying trends in EverQuote’s business that could otherwise be masked by the effect of the items that the Company excludes in the calculations of Adjusted EBITDA. Accordingly, the Company believes that this financial measure provides useful information to investors and others in understanding and evaluating EverQuote’s operating results, enhancing the overall understanding of the Company’s past performance and future prospects.

    The Company’s non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the most directly comparable financial measure calculated and presented in accordance with GAAP. In addition, other companies may use other measures to evaluate their performance, which could reduce the usefulness of the Company’s non-GAAP financial measures as tools for comparison.

    The following table reconciles Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.

    EVERQUOTE, INC.
    RECONCILIATION OF NON-GAAP MEASURES TO GAAP
     
      Three Months Ended
    September 30,    		     Nine Months Ended
    September 30,    		  
      2024     2023     2024     2023  
      (in thousands)  
    Net income (loss) $ 11,554     $ (29,217 )   $ 19,863     $ (44,939 )
    Stock-based compensation   5,446       5,479       15,304       17,995  
    Depreciation and amortization   1,618       2,251       4,117       5,121  
    Restructuring and other charges   —       19,757       —       23,589  
    Acquisition-related costs   —       —       —       (150 )
    Interest income   (554 )     (411 )     (1,396 )     (869 )
    Income tax expense   719       236       1,411       600  
    Adjusted EBITDA $ 18,783     $ (1,905 )   $ 39,299     $ 1,347  

    The MIL Network –

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

    Source: GlobeNewswire (MIL-OSI)

    LA JOLLA, Calif., Nov. 04, 2024 (GLOBE NEWSWIRE) — Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $30.5 million, or $1.15 per diluted share, for the third quarter of 2024 compared to net income of $18.4 million, or $0.73 per diluted share, for the third quarter of 2023. Adjusted net income(1) was $32.4 million, or $1.23 per diluted share, for the third quarter of 2024 as compared to $23.3 million, or $0.92 per diluted share, for the third quarter of 2023.

    Third Quarter 2024 Highlights

    • Gross written premiums increased by 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023
    • Net income of $30.5 million compared to $18.4 million in the third quarter of 2023
    • Adjusted net income(1) increased 39.3% to $32.4 million compared to $23.3 million in the third quarter of 2023
    • Total loss ratio of 29.7% compared to 18.8% in the third quarter of 2023
    • Catastrophe loss ratio(1) of 9.5% compared to -0.6% in the third quarter of 2023
    • Combined ratio of 80.5% compared to 75.8% in the third quarter of 2023
    • Adjusted combined ratio(1) of 77.1% compared to 70.9%, in the third quarter of 2023
    • Adjusted combined ratio excluding catastrophe losses(1) of 67.6% compared to 71.5%, in the third quarter of 2023
    • Annualized return on equity of 19.7% compared to 17.7% in the third quarter of 2023
    • Annualized adjusted return on equity(1) of 21.0% compared to 22.3% in the third quarter of 2023

    (1) See discussion of “Non-GAAP and Key Performance Indicators” below.

    Mac Armstrong, Chairman and Chief Executive Officer, commented, “I am very pleased with our third quarter results as they clearly demonstrate our successful efforts to deliver consistent earnings and returns. In a quarter that experienced a heightened level of cat activity, we delivered 39% adjusted net income growth, a 77% adjusted combined ratio, and a 21% adjusted ROE. Our results further validate the concerted efforts that we have undertaken to diversify the business, reduce the volatility in our earnings base and profitably grow. We continued to generate robust top line growth achieving 32% gross written premium growth, driven by strength in our Earthquake and Casualty products as well as strong growth from our burgeoning Crop business. Importantly, our same-store(2) premium growth rate was 38%, demonstrating the strong underlying momentum that exists across our portfolio of specialty insurance products.

    Mr. Armstrong continued, “We have numerous energizing opportunities and initiatives associated with our Palomar 2X strategy. To capitalize on them, we successfully raised $116 million in August. A portion of the proceeds will fund our acquisition of First Indemnity of America Insurance Company and our entry into the surety market. We will use the remaining proceeds for organic growth and selected increases in risk participation in product categories including Crop and Earthquake. Our diversification into attractive lines with limited correlation to the P&C cycle such as Crop and Surety will further position Palomar to deliver consistent earnings growth over time.”

    (2) Excludes the impact of lines of business exited or discontinued during the quarter.

    Underwriting Results
    Gross written premiums increased 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023, while net earned premiums increased 58.1% compared to the prior year’s third quarter. 

    Losses and loss adjustment expenses for the third quarter were $40.3 million, comprised of $27.4 million of attritional losses and $12.9 million of catastrophe losses from Hurricanes Beryl, Debby, and Helene. The loss ratio for the quarter was 29.7%, comprised of an attritional loss ratio of 20.2% and a catastrophe loss ratio(1) of 9.5% compared to a loss ratio of 18.8% during the same period last year comprised of an attritional loss ratio of 19.4% and a catastrophe loss ratio(1) of -0.6%.

    Underwriting income(1) for the third quarter was $26.4 million resulting in a combined ratio of 80.5% compared to underwriting income of $20.7 million resulting in a combined ratio of 75.8% during the same period last year. The Company’s adjusted underwriting income(1) was $31.0 million resulting in an adjusted combined ratio(1) of 77.1% in the third quarter compared to adjusted underwriting income(1) of $25.0 million and an adjusted combined ratio(1) of 70.9% during the same period last year. The Company’s adjusted combined ratio excluding catastrophe losses(1) was 67.6% compared to 71.5% during the same period last year.

    Investment Results
    Net investment income increased by 56.0% to $9.4 million compared to $6.0 million in the prior year’s third quarter. The increase was primarily due to higher yields on invested assets and a higher average balance of investments held during the three months ended September 30, 2024 due to proceeds from our August 2024 secondary offering and cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.86 years at September 30, 2024. Cash and invested assets totaled $1,017.5 million at September 30, 2024. During the third quarter, the Company recorded $2.7 net realized and unrealized gains related to its investment portfolio as compared to net realized and unrealized losses of $1.4 million during the same period last year.

    Tax Rate
    The effective tax rate for the three months ended September 30, 2024 was 20.8% compared to 24.9% for the three months ended September 30, 2023. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the tax impact of the permanent component of employee stock options.

    Stockholders’ Equity and Returns
    Stockholders’ equity was $703.3 million at September 30, 2024, compared to $421.3 million at September 30, 2023. For the three months ended September 30, 2024, the Company’s annualized return on equity was 19.7% compared to 17.7% for the same period in the prior year while adjusted return on equity(1) was 21.0% compared to 22.3% for the same period in the prior year. There were no share repurchases during the three months ended September 30, 2024.

    Full Year 2024 Outlook
    For the full year 2024, the Company expects to achieve adjusted net income of $124 million to $128 million. This range includes additional catastrophe losses incurred during the fourth quarter of 2024 of approximately $8 million related to Hurricane Milton. 

    Conference Call
    As previously announced, Palomar will host a conference call Tuesday, November 5, 2024, to discuss its third quarter 2024 results at 12:00 p.m. (Eastern Time). The conference call can be accessed live by dialing 1-877-423-9813 or for international callers, 1-201-689-8573, and requesting to be joined to the Palomar Third Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on November 5, 2024, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13747528. The replay will be available until 11:59 p.m. (Eastern Time) on November 12, 2024.

    Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company’s website at http://ir.palomarspecialty.com/. The online replay will remain available for a limited time beginning immediately following the call.

    About Palomar Holdings, Inc.
    Palomar Holdings, Inc. is the holding company of subsidiaries Palomar Specialty Insurance Company (“PSIC”), Palomar Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance Agency, Inc.,  Palomar Excess and Surplus Insurance Company (“PESIC”), and Palomar Underwriters Exchange Organization, Inc. Palomar’s consolidated results also include Laulima Reciprocal Exchange, a variable interest entity for which the Company is the primary beneficiary. Palomar is an innovative specialty insurer serving residential and commercial clients in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. Palomar’s insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of “A” (Excellent) from A.M. Best. 

    To learn more, visit PLMR.com.

    Non-GAAP and Key Performance Indicators

    Palomar discusses certain key performance indicators, described below, which provide useful information about the Company’s business and the operational factors underlying the Company’s financial performance.

    Underwriting revenue is a non-GAAP financial measure defined as total revenue, excluding net investment income and net realized and unrealized gains and losses on investments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of total revenue calculated in accordance with GAAP to underwriting revenue.

    Underwriting income is a non-GAAP financial measure defined as income before income taxes excluding net investment income, net realized and unrealized gains and losses on investments, and interest expense. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to underwriting income.

    Adjusted net income is a non-GAAP financial measure defined as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. Palomar calculates the tax impact only on adjustments which would be included in calculating the Company’s income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of net income calculated in accordance with GAAP to adjusted net income.

    Annualized Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.

    Annualized adjusted return on equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of return on equity calculated using unadjusted GAAP numbers to adjusted return on equity.

    Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses, to net earned premiums.

    Expense ratio, expressed as a percentage, is the ratio of acquisition and other underwriting expenses, net of commission and other income to net earned premiums.

    Combined ratio is defined as the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

    Adjusted combined ratio is a non-GAAP financial measure defined as the sum of the loss ratio and the expense ratio calculated excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio.

    Diluted adjusted earnings per share is a non-GAAP financial measure defined as adjusted net income divided by the weighted-average common shares outstanding for the period, reflecting the dilution which could occur if equity-based awards are converted into common share equivalents as calculated using the treasury stock method. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of diluted earnings per share calculated in accordance with GAAP to diluted adjusted earnings per share.

    Catastrophe loss ratio is a non-GAAP financial measure defined as the ratio of catastrophe losses to net earned premiums. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of loss ratio calculated using unadjusted GAAP numbers to catastrophe loss ratio.

    Adjusted combined ratio excluding catastrophe losses is a non-GAAP financial measure defined as adjusted combined ratio excluding the impact of catastrophe losses.  See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio excluding catastrophe losses.

    Adjusted underwriting income is a non-GAAP financial measure defined as underwriting income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to adjusted underwriting income.

    Tangible stockholders’ equity is a non-GAAP financial measure defined as stockholders’ equity less goodwill and intangible assets. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of stockholders’ equity calculated in accordance with GAAP to tangible stockholders’ equity.

    Safe Harbor Statement
    Palomar cautions you that statements contained in this press release may regard matters that are not historical facts but are forward-looking statements. These statements are based on the company’s current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by Palomar that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business. The forward-looking statements are typically, but not always, identified through use of the words “believe,” “expect,” “enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,” “continue,” and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected results or delays in development and regulatory review, regulatory approval requirements, the frequency and severity of adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company’s filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

    Contact
    Media Inquiries 
    Lindsay Conner 
    1-551-206-6217 
    lconner@plmr.com 

    Investor Relations
    Jamie Lillis
    1-203-428-3223
    investors@plmr.com
    Source: Palomar Holdings, Inc.

    Summary of Operating Results:

    The following tables summarize the Company’s results for the three and nine months ended September 30, 2024 and 2023:

      Three Months Ended
    		                
      September 30,
    		                
      2024
    		   2023
    		   Change
    		   % Change
      ($ in thousands, except per share data)
    Gross written premiums $ 414,977     $ 313,998     $ 100,979       32.2 %
    Ceded written premiums   (255,267 )     (203,336 )     (51,931 )     25.5 %
    Net written premiums   159,710       110,662       49,048       44.3 %
    Net earned premiums   135,646       85,817       49,829       58.1 %
    Commission and other income   715       465       250       53.8 %
    Total underwriting revenue (1)   136,361       86,282       50,079       58.0 %
    Losses and loss adjustment expenses   40,315       16,139       24,176       149.8 %
    Acquisition expenses, net of ceding commissions and fronting fees   41,469       27,004       14,465       53.6 %
    Other underwriting expenses   28,129       22,390       5,739       25.6 %
    Underwriting income (1)   26,448       20,749       5,699       27.5 %
    Interest expense   (87 )     (867 )     780       (90.0 )%
    Net investment income   9,408       6,029       3,379       56.0 %
    Net realized and unrealized gains (losses) on investments   2,734       (1,376 )     4,110       (298.7 )%
    Income before income taxes   38,503       24,535       13,968       56.9 %
    Income tax expense   8,006       6,103       1,903       31.2 %
    Net income $ 30,497     $ 18,432     $ 12,065       65.5 %
    Adjustments:                              
    Net realized and unrealized (gains) losses on investments   (2,734 )     1,376       (4,110 )     (298.7 )%
    Expenses associated with transactions   84       229       (145 )     (63.3 )%
    Stock-based compensation expense   4,117       3,589       528       14.7 %
    Amortization of intangibles   389       390       (1 )     (0.3 )%
    Tax impact   91       (725 )     816       (112.6 )%
    Adjusted net income (1) $ 32,444     $ 23,291     $ 9,153       39.3 %
    Key Financial and Operating Metrics                              
    Annualized return on equity   19.7 %     17.7 %                
    Annualized adjusted return on equity (1)   21.0 %     22.3 %                
    Loss ratio   29.7 %     18.8 %                
    Expense ratio   50.8 %     57.0 %                
    Combined ratio   80.5 %     75.8 %                
    Adjusted combined ratio (1)   77.1 %     70.9 %                
    Diluted earnings per share $ 1.15     $ 0.73                  
    Diluted adjusted earnings per share (1) $ 1.23     $ 0.92                  
    Catastrophe losses $ 12,924     $ (533 )                
    Catastrophe loss ratio (1)   9.5 %     (0.6 )%                
    Adjusted combined ratio excluding catastrophe losses (1)   67.6 %     71.5 %                
    Adjusted underwriting income (1) $ 31,038     $ 24,957     $ 6,081       24.4 %

    (1)- Indicates Non-GAAP financial measure- see above for definition of Non-GAAP financial measures and see below for reconciliation of Non-GAAP financial measures to their most directly comparable measures prepared in accordance with GAAP.

      Nine Months Ended                
      September 30,                
      2024   2023   Change   % Change
      ($ in thousands, except per share data)  
    Gross written premiums $ 1,168,239     $ 838,406     $ 329,833       39.3 %
    Ceded written premiums   (692,620 )     (542,789 )     (149,831 )     27.6 %
    Net written premiums   475,619       295,617       180,002       60.9 %
    Net earned premiums   365,796       252,164       113,632       45.1 %
    Commission and other income   2,035       1,781       254       14.3 %
    Total underwriting revenue (1)   367,831       253,945       113,886       44.8 %
    Losses and loss adjustment expenses   97,583       54,696       42,887       78.4 %
    Acquisition expenses, net of ceding commissions and fronting fees   109,072       78,740       30,332       38.5 %
    Other underwriting expenses   84,165       63,962       20,203       31.6 %
    Underwriting income (1)   77,011       56,547       20,464       36.2 %
    Interest expense   (1,052 )     (2,952 )     1,900       (64.4 )%
    Net investment income   24,506       16,690       7,816       46.8 %
    Net realized and unrealized gains (losses) on investments   5,768       (103 )     5,871       NM  
    Income before income taxes   106,233       70,182       36,051       51.4 %
    Income tax expense   23,625       16,877       6,748       40.0 %
    Net income $ 82,608     $ 53,305     $ 29,303       55.0 %
    Adjustments:                              
    Net realized and unrealized (gains) losses on investments   (5,768 )     103       (5,871 )     NM  
    Expenses associated with transactions   557       229       328       143.2 %
    Stock-based compensation expense   11,905       10,737       1,168       10.9 %
    Amortization of intangibles   1,168       1,092       76       7.0 %
    Expenses associated with catastrophe bond   2,483       1,640       843       51.4 %
    Tax impact   (734 )     (1,582 )     848       (53.6 )%
    Adjusted net income (1) $ 92,219     $ 65,524     $ 26,695       40.7 %
    Key Financial and Operating Metrics                              
    Annualized return on equity   18.8 %     17.6 %                
    Annualized adjusted return on equity (1)   20.9 %     21.7 %                
    Loss ratio   26.7 %     21.7 %                
    Expense ratio   52.3 %     55.9 %                
    Combined ratio   78.9 %     77.6 %                
    Adjusted combined ratio (1)   74.5 %     72.1 %                
    Diluted earnings per share $ 3.19     $ 2.10                  
    Diluted adjusted earnings per share (1) $ 3.56     $ 2.59                  
    Catastrophe losses $ 19,724     $ 3,432                  
    Catastrophe loss ratio (1)   5.4 %     1.4 %                
    Adjusted combined ratio excluding catastrophe losses (1)   69.2 %     70.8 %                
    Adjusted underwriting income (1) $ 93,124     $ 70,245     $ 22,879       32.6 %
    NM – not meaningful                              

    (1)- Indicates Non-GAAP financial measure- see above for definition of Non-GAAP financial measures and see below for reconciliation of Non-GAAP financial measures to their most directly comparable measures prepared in accordance with GAAP.

    Condensed Consolidated Balance sheets

    Palomar Holdings, Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets (unaudited)
    (in thousands, except shares and par value data)
               
      September 30,   December 31,
      2024   2023
      (Unaudited)        
    Assets              
    Investments:              
    Fixed maturity securities available for sale, at fair value (amortized cost: $896,775 in 2024; $675,130 in 2023) $ 882,980     $ 643,799  
    Equity securities, at fair value (cost: $32,987 in 2024; $43,003 in 2023)   40,196       43,160  
    Equity method investment   2,499       2,617  
    Other investments   5,207       —  
    Total investments   930,882       689,576  
    Cash and cash equivalents   86,479       51,546  
    Restricted cash   105       306  
    Accrued investment income   7,495       5,282  
    Premiums receivable   326,674       261,972  
    Deferred policy acquisition costs, net of ceding commissions and fronting fees   86,408       60,990  
    Reinsurance recoverable on paid losses and loss adjustment expenses   58,889       32,172  
    Reinsurance recoverable on unpaid losses and loss adjustment expenses   360,164       244,622  
    Ceded unearned premiums   298,509       265,808  
    Prepaid expenses and other assets   104,831       72,941  
    Deferred tax assets, net   4,019       10,119  
    Property and equipment, net   409       373  
    Goodwill and intangible assets, net   11,147       12,315  
    Total assets $ 2,276,011     $ 1,708,022  
    Liabilities and stockholders’ equity              
    Liabilities:              
    Accounts payable and other accrued liabilities $ 75,424     $ 42,376  
    Reserve for losses and loss adjustment expenses   497,438       342,275  
    Unearned premiums   739,623       597,103  
    Ceded premium payable   235,157       181,742  
    Funds held under reinsurance treaty   25,056       13,419  
    Income taxes payable   —       7,255  
    Borrowings from credit agreements   —       52,600  
    Total liabilities   1,572,698       1,236,770  
    Stockholders’ equity:              
    Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023   —       —  
    Common stock, $0.0001 par value, 500,000,000 shares authorized, 26,452,242 and 24,772,987 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively   3       3  
    Additional paid-in capital   486,198       350,597  
    Accumulated other comprehensive loss   (10,139 )     (23,991 )
    Retained earnings   227,251       144,643  
    Total stockholders’ equity   703,313       471,252  
    Total liabilities and stockholders’ equity $ 2,276,011     $ 1,708,022  
                   

    Condensed Consolidated Income Statement

    Palomar Holdings, Inc. and Subsidiaries
    Condensed Consolidated Statements of Income and Comprehensive Income (loss) (Unaudited)
    (in thousands, except shares and per share data)
           
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
    Revenues:                              
    Gross written premiums $ 414,977     $ 313,998     $ 1,168,239     $ 838,406  
    Ceded written premiums   (255,267 )     (203,336 )     (692,620 )     (542,789 )
    Net written premiums   159,710       110,662       475,619       295,617  
    Change in unearned premiums   (24,064 )     (24,845 )     (109,823 )     (43,453 )
    Net earned premiums   135,646       85,817       365,796       252,164  
    Net investment income   9,408       6,029       24,506       16,690  
    Net realized and unrealized gains (losses) on investments   2,734       (1,376 )     5,768       (103 )
    Commission and other income   715       465       2,035       1,781  
    Total revenues   148,503       90,935       398,105       270,532  
    Expenses:                              
    Losses and loss adjustment expenses   40,315       16,139       97,583       54,696  
    Acquisition expenses, net of ceding commissions and fronting fees   41,469       27,004       109,072       78,740  
    Other underwriting expenses   28,129       22,390       84,165       63,962  
    Interest expense   87       867       1,052       2,952  
    Total expenses   110,000       66,400       291,872       200,350  
    Income before income taxes   38,503       24,535       106,233       70,182  
    Income tax expense   8,006       6,103       23,625       16,877  
    Net income $ 30,497     $ 18,432     $ 82,608     $ 53,305  
    Other comprehensive income, net:                              
    Net unrealized gains (losses) on securities available for sale   17,917       (8,494 )     13,852       (6,706 )
    Net comprehensive income $ 48,414     $ 9,938     $ 96,460     $ 46,599  
    Per Share Data:                              
    Basic earnings per share $ 1.18     $ 0.75     $ 3.28     $ 2.15  
    Diluted earnings per share $ 1.15     $ 0.73     $ 3.19     $ 2.10  
                                   
    Weighted-average common shares outstanding:                              
    Basic   25,766,697       24,740,455       25,194,114       24,847,164  
    Diluted   26,479,566       25,244,828       25,877,257       25,340,602  
                                   

    Underwriting Segment Data

    The Company has a single reportable segment and offers specialty insurance products. Gross written premiums (GWP) by product, location and company are presented below:

      Three Months Ended September 30,
    		                
      2024
    		   2023
    		                
      ($ in thousands)
    		                
          % of
    		       % of
    		       %
      Amount
    		   GWP
    		   Amount
    		   GWP
    		   Change
    		   Change
    Product (1)                                              
    Earthquake $ 135,329       32.6 %   $ 113,386       36.1 %   $ 21,943       19.4 %
    Fronting   84,945       20.5 %     94,954       30.2 %     (10,009 )     (10.5 )%
    Inland Marine and Other Property   78,734       19.0 %     64,499       20.5 %     14,235       22.1 %
    Crop   59,662       14.4 %     11,627       3.7 %     48,035       NM  
    Casualty   56,307       13.5 %     29,532       9.5 %     26,775       90.7 %
    Total Gross Written Premiums $ 414,977       100.0 %   $ 313,998       100.0 %   $ 100,979       32.2 %
    NM – not meaningful                                              
                                                   
      Nine Months Ended September 30,                
      2024   2023                
      ($ in thousands)
    		            
          % of       % of        %
      Amount   GWP   Amount   GWP   Change   Change
    Product (1)                                              
    Earthquake $ 376,088       32.2 %   $ 314,810       37.6 %   $ 61,278       19.5 %
    Fronting   275,671       23.6 %     266,433       31.8 %     9,238       3.5 %
    Inland Marine and Other Property   249,147       21.3 %     186,983       22.3 %     62,164       33.2 %
    Casualty   166,762       14.3 %     58,065       6.9 %     108,697       187.2 %
    Crop   100,571       8.6 %     12,115       1.4 %     88,456       NM  
    Total Gross Written Premiums $ 1,168,239       100.0 %   $ 838,406       100.0 %   $ 329,833       39.3 %
    NM – not meaningful                                              

    (1) – Beginning in 2024, the Company has updated the categorization of its products to align with management’s current strategy and view of the business. Prior year amounts have been reclassified for comparability purposes. The recategorization is for presentation purposes only and does not impact overall gross written premiums.

      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
      ($ in thousands)   ($ in thousands)  
          % of       % of       % of       % of
      Amount   GWP   Amount   GWP   Amount   GWP   Amount   GWP
    State                                                              
    California $ 170,265       41.0 %   $ 163,806       52.2 %   $ 510,879       43.7 %   $ 450,752       53.8 %
    Texas   27,019       6.5 %     24,336       7.7 %     96,414       8.3 %     72,777       8.7 %
    Hawaii   23,171       5.6 %     13,490       4.3 %     53,922       4.6 %     35,824       4.3 %
    North Dakota   18,716       4.5 %     2,898       0.9 %     19,893       1.7 %     3,326       0.4 %
    Washington   16,828       4.1 %     17,792       5.7 %     41,893       3.6 %     43,409       5.2 %
    Wisconsin   15,519       3.7 %     1,211       0.4 %     17,374       1.5 %     3,095       0.4 %
    Florida   14,433       3.5 %     11,549       3.7 %     58,153       5.0 %     36,309       4.3 %
    Oregon   8,402       2.0 %     8,536       2.7 %     21,253       1.8 %     21,223       2.5 %
    Other   120,624       29.1 %     70,380       22.4 %     348,458       29.8 %     171,691       20.4 %
    Total Gross Written Premiums $ 414,977       100.0 %   $ 313,998       100.0 %   $ 1,168,239       100.0 %   $ 838,406       100.0 %
                                                                   
      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
      ($ in thousands)   ($ in thousands)
          % of       % of       % of       % of
      Amount   GWP   Amount   GWP   Amount   GWP   Amount   GWP
    Subsidiary                                                              
    PSIC $ 236,624       57.0 %   $ 186,693       59.5 %   $ 652,988       55.9 %   $ 497,216       59.3 %
    PESIC   159,305       38.4 %     127,305       40.5 %     472,909       40.5 %     341,190       40.7 %
    Laulima   19,048       4.6 %     —       — %     42,342       3.6 %     —       — %
    Total Gross Written Premiums $ 414,977       100.0 %   $ 313,998       100.0 %   $ 1,168,239       100.0 %   $ 838,406       100.0 %
                                                                   

    Gross and net earned premiums

    The table below shows the amount of premiums the Company earned on a gross and net basis and the Company’s net earned premiums as a percentage of gross earned premiums for each period presented:

      Three Months Ended                   Nine Months Ended                
      September 30,                   September 30,                
      2024   2023   Change   %
    Change    		   2024   2023   Change   %
    Change
      ($ in thousands)     ($ in thousands)  
    Gross earned premiums $ 395,881     $ 271,786     $ 124,095       45.7 %   $ 1,025,716     $ 739,219     $ 286,497       38.8 %
    Ceded earned premiums   (260,235 )     (185,969 )     (74,266 )     39.9 %     (659,920 )     (487,055 )     (172,865 )     35.5 %
    Net earned premiums $ 135,646     $ 85,817     $ 49,829       58.1 %   $ 365,796     $ 252,164     $ 113,632       45.1 %
                                                                   
    Net earned premium ratio   34.3 %     31.6 %                     35.7 %     34.1 %                
                                                                   

    Loss detail

      Three Months Ended                   Nine Months Ended                
      September 30,                   September 30,                
      2024   2023   Change   %
    Change    		   2024   2023   Change   %
    Change
      ($ in thousands)   ($ in thousands)
    Catastrophe losses $ 12,924     $ (533 )   $ 13,457       NM     $ 19,724     $ 3,432     $ 16,292       NM  
    Non-catastrophe losses   27,391       16,672       10,719       64.3 %     77,859       51,264       26,595       51.9 %
    Total losses and loss adjustment expenses $ 40,315     $ 16,139     $ 24,176       149.8 %   $ 97,583     $ 54,696     $ 42,887       78.4 %
                                                                   
    Catastrophe loss ratio   9.5 %     (0.6 )%                     5.4 %     1.4 %                
    Non-catastrophe loss ratio   20.2 %     19.4 %                     21.3 %     20.3 %                
    Total loss ratio   29.7 %     18.8 %                     26.7 %     21.7 %                
    NM – not meaningful                                                              
                                                                   

    The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses:

      Three Months Ended September 30,   Nine Months Ended September 30,
      2024   2023   2024   2023
      (in thousands)     (in thousands)  
    Reserve for losses and LAE net of reinsurance recoverables at beginning of period $ 118,761     $ 81,300     $ 97,653     $ 77,520  
    Add: Incurred losses and LAE, net of reinsurance, related to:                              
    Current year   40,536       15,116       100,225       50,954  
    Prior years   (221 )     1,023       (2,642 )     3,742  
    Total incurred   40,315       16,139       97,583       54,696  
    Deduct: Loss and LAE payments, net of reinsurance, related to:                              
    Current year   16,153       6,646       27,909       14,215  
    Prior years   5,649       (1,385 )     30,053       25,823  
    Total payments   21,802       5,261       57,962       40,038  
    Reserve for losses and LAE net of reinsurance recoverables at end of period   137,274       92,178       137,274       92,178  
    Add: Reinsurance recoverables on unpaid losses and LAE at end of period   360,164       232,170       360,164       232,170  
    Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $ 497,438     $ 324,348     $ 497,438     $ 324,348  
                                   

    Reconciliation of Non-GAAP Financial Measures

    For the three and nine months ended September 30, 2024 and 2023, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

    Underwriting revenue

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
    Total revenue $ 148,503     $ 90,935     $ 398,105     $ 270,532  
    Net investment income   (9,408 )     (6,029 )     (24,506 )     (16,690 )
    Net realized and unrealized (gains) losses on investments   (2,734 )     1,376       (5,768 )     103  
    Underwriting revenue $ 136,361     $ 86,282     $ 367,831     $ 253,945  
                                   

    Underwriting income and adjusted underwriting income

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
    Income before income taxes $ 38,503     $ 24,535     $ 106,233     $ 70,182  
    Net investment income   (9,408 )     (6,029 )     (24,506 )     (16,690 )
    Net realized and unrealized (gains) losses on investments   (2,734 )     1,376       (5,768 )     103  
    Interest expense   87       867       1,052       2,952  
    Underwriting income $ 26,448     $ 20,749     $ 77,011     $ 56,547  
    Expenses associated with transactions   84       229       557       229  
    Stock-based compensation expense   4,117       3,589       11,905       10,737  
    Amortization of intangibles   389       390       1,168       1,092  
    Expenses associated with catastrophe bond   —       —       2,483       1,640  
    Adjusted underwriting income $ 31,038     $ 24,957     $ 93,124     $ 70,245  
                                   

    Adjusted net income

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
    Net income $ 30,497     $ 18,432     $ 82,608     $ 53,305  
    Adjustments:                              
    Net realized and unrealized (gains) losses on investments   (2,734 )     1,376       (5,768 )     103  
    Expenses associated with transactions   84       229       557       229  
    Stock-based compensation expense   4,117       3,589       11,905       10,737  
    Amortization of intangibles   389       390       1,168       1,092  
    Expenses associated with catastrophe bond   —       —       2,483       1,640  
    Tax impact   91       (725 )     (734 )     (1,582 )
    Adjusted net income $ 32,444     $ 23,291     $ 92,219     $ 65,524  
                                   

    Annualized adjusted return on equity

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
                                   
    Annualized adjusted net income $ 129,776     $ 93,164     $ 122,959     $ 87,365  
    Average stockholders’ equity $ 617,959     $ 417,521     $ 587,282     $ 403,044  
    Annualized adjusted return on equity   21.0 %     22.3 %     20.9 %     21.7 %
                                   

    Adjusted combined ratio

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $ 109,198     $ 65,068     $ 288,785     $ 195,617  
    Denominator: Net earned premiums $ 135,646     $ 85,817     $ 365,796     $ 252,164  
    Combined ratio   80.5 %     75.8 %     78.9 %     77.6 %
    Adjustments to numerator:                              
    Expenses associated with transactions $ (84 )   $ (229 )   $ (557 )   $ (229 )
    Stock-based compensation expense   (4,117 )     (3,589 )     (11,905 )     (10,737 )
    Amortization of intangibles   (389 )     (390 )     (1,168 )     (1,092 )
    Expenses associated with catastrophe bond   —       —       (2,483 )     (1,640 )
    Adjusted combined ratio   77.1 %     70.9 %     74.5 %     72.1 %
                                   

    Diluted adjusted earnings per share

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands, except per share data)   (in thousands, except per share data)
                                   
    Adjusted net income $ 32,444     $ 23,291     $ 92,219     $ 65,524  
    Weighted-average common shares outstanding, diluted   26,479,566       25,244,828       25,877,257       25,340,602  
    Diluted adjusted earnings per share $ 1.23     $ 0.92     $ 3.56     $ 2.59  
                                   

    Catastrophe loss ratio

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
    Numerator: Losses and loss adjustment expenses $ 40,315     $ 16,139     $ 97,583     $ 54,696  
    Denominator: Net earned premiums $ 135,646     $ 85,817     $ 365,796     $ 252,164  
    Loss ratio   29.7 %     18.8 %     26.7 %     21.7 %
                                   
    Numerator: Catastrophe losses $ 12,924     $ (533 )   $ 19,724     $ 3,432  
    Denominator: Net earned premiums $ 135,646     $ 85,817     $ 365,796     $ 252,164  
    Catastrophe loss ratio   9.5 %     (0.6 )%     5.4 %     1.4 %
                                   

    Adjusted combined ratio excluding catastrophe losses

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      (in thousands)   (in thousands)
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $ 109,198     $ 65,068     $ 288,785     $ 195,617  
    Denominator: Net earned premiums $ 135,646     $ 85,817     $ 365,796     $ 252,164  
    Combined ratio   80.5 %     75.8 %     78.9 %     77.6 %
    Adjustments to numerator:                              
    Expenses associated with transactions $ (84 )   $ (229 )   $ (557 )   $ (229 )
    Stock-based compensation expense   (4,117 )     (3,589 )     (11,905 )     (10,737 )
    Amortization of intangibles   (389 )     (390 )     (1,168 )     (1,092 )
    Expenses associated with catastrophe bond   —       —       (2,483 )     (1,640 )
    Catastrophe losses   (12,924 )     533       (19,724 )     (3,432 )
    Adjusted combined ratio excluding catastrophe losses   67.6 %     71.5 %     69.2 %     70.8 %
                                   

    Tangible Stockholders’ equity

      September 30,   December 31,
      2024   2023
      (in thousands)
    Stockholders’ equity $ 703,313     $ 471,252  
    Goodwill and intangible assets   (11,147 )     (12,315 )
    Tangible stockholders’ equity $ 692,166     $ 458,937  
                   

    The MIL Network –

  • MIL-OSI: NXP Semiconductors Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    EINDHOVEN, The Netherlands, Nov. 04, 2024 (GLOBE NEWSWIRE) — NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the third quarter, which ended September 29, 2024. “NXP delivered quarterly revenue of $3.25 billion, in-line with our overall guidance. While we experienced some strength against our expectations in the Communication Infrastructure, Mobile and Automotive end markets, we were confronted with increasing macro related weakness in the Industrial & IoT market. Our guidance for the fourth quarter reflects broader macro weakness especially in Europe and the Americas. We focus on managing what is in our control enabling NXP to drive resilient profitability and earnings in an uncertain demand environment,” said Kurt Sievers, NXP President and Chief Executive Officer.

    Key Highlights for the Third Quarter 2024:

    • Revenue was $3.25 billion, down 5 percent year-on-year;
    • GAAP gross margin was 57.4 percent, GAAP operating margin was 30.5 percent and GAAP diluted Net Income per Share was $2.79;
    • Non-GAAP gross margin was 58.2 percent, non-GAAP operating margin was 35.5 percent, and non-GAAP diluted Net Income per Share was $3.45;
    • Cash flow from operations was $779 million, with net capex investments of $186 million, resulting in non-GAAP free cash flow of $593 million;
    • During the third quarter of 2024, NXP continued to execute its capital return policy with the payment of $259 million in cash dividends, and the repurchase of $305 million of its common shares. The total capital return of $564 million in the quarter represented 95 percent of third quarter non-GAAP free cash flow. On a trailing twelve month basis, capital return to shareholders represented $2.4 billion or 87 percent of non-GAAP free cash flow. The interim dividend for the third quarter 2024 was paid in cash on October 9, 2024 to shareholders of record as of September 12, 2024. On August 29th, the NXP board of directors authorized an additional $2.0 billion for share repurchases, resulting in a $2.64 billion share repurchase balance at the end of the third quarter. Subsequent to the end of the third quarter, between September 30, 2024 and November 1, 2024, NXP executed via a 10b5-1 program additional share repurchases totaling $117 million;
    • On August 20, 2024, ESMC, the previously announced manufacturing joint venture between TSMC, Robert Bosch GmbH, Infineon Technologies AG and NXP Semiconductors N.V. held a groundbreaking ceremony to mark the initial phase of construction of its first semiconductor fab in Dresden, Germany;
    • On September 4, 2024, Vanguard International Semiconductor Corporation and NXP Semiconductors N.V. announced the receipt of all necessary governmental approvals from relevant authorities and injected capital to officially establish the previously announced VisionPower Semiconductor Manufacturing Company Pte Ltd (VSMC) manufacturing joint venture. The company will now proceed with the planned construction of VSMC’s first 300mm wafer manufacturing facility;
    • On September 10, 2024, NXP announced the Trimension® SR250, the industry’s first single-chip, UWB solution to enable Industrial and IoT applications that integrates on-chip processing capabilities with both short-range UWB-based radar and secure ranging;
    • On September 17, 2024, NXP announced the MC33777, the world’s first electric vehicle battery junction box IC that consolidates essential BMS functions into a single device; and
    • On September 24, 2024, NXP announced the new i.MX RT700 crossover MCU family, designed to power smart AI-enabled edge devices, such as wearables, consumer medical devices, smart home devices and HMI platforms.

    Summary of Reported Third Quarter 2024 ($ millions, unaudited) (1)

      Q3 2024
    		   Q2 2024
    		   Q3 2023    Q – Q   Y – Y
    Total Revenue $ 3,250     $ 3,127     $ 3,434     4%   -5%
    GAAP Gross Profit $ 1,866     $ 1,792     $ 1,965     4%   -5%
    Gross Profit Adjustments(i) $ (26 )   $ (41 )   $ (45 )        
    Non-GAAP Gross Profit $ 1,892     $ 1,833     $ 2,010     3%   -6%
    GAAP Gross Margin   57.4 %     57.3 %     57.2 %        
    Non-GAAP Gross Margin   58.2 %     58.6 %     58.5 %        
    GAAP Operating Income (Loss) $ 990     $ 896     $ 992     10%   —%
    Operating Income Adjustments(i) $ (163 )   $ (175 )   $ (211 )        
    Non-GAAP Operating Income $ 1,153     $ 1,071     $ 1,203     8%   -4%
    GAAP Operating Margin   30.5 %     28.7 %     28.9 %        
    Non-GAAP Operating Margin   35.5 %     34.3 %     35.0 %        
    GAAP Net Income (Loss) attributable to Stockholders $ 718     $ 658     $ 787          
    Net Income Adjustments(i) $ (172 )   $ (171 )   $ (178 )        
    Non-GAAP Net Income (Loss) Attributable to Stockholders $ 890     $ 829     $ 965          
    GAAP diluted Net Income (Loss) per Share(ii) $ 2.79     $ 2.54     $ 3.01          
    Non-GAAP diluted Net Income (Loss) per Share(ii) $ 3.45     $ 3.20     $ 3.70          
    Additional information
      Q3 2024
    		   Q2 2024
    		   Q3 2023
    		   Q – Q   Y – Y
    Automotive $ 1,829     $ 1,728     $ 1,891     6%   -3%
    Industrial & IoT $ 563     $ 616     $ 607     -9%   -7%
    Mobile $ 407     $ 345     $ 377     18%   8%
    Comm. Infra. & Other $ 451     $ 438     $ 559     3%   -19%
    DIO   149       148       134          
    DPO   60       64       60          
    DSO   30       27       25          
    Cash Conversion Cycle   119       111       99          
    Channel Inventory (weeks / months)   8 / 1.9       7 / 1.7       7 / 1.5          
    Gross Financial Leverage(iii)   1.9x       1.9x       2.1x          
    Net Financial Leverage(iv)   1.3x       1.3x       1.3x          
                                   
    1. Additional Information for the Third Quarter 2024:
      1. For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures”.
      2. Refer to Table 1 below for the weighted average number of diluted shares for the presented periods.
      3. Gross financial leverage is defined as gross debt divided by trailing twelve months adjusted EBITDA.
      4. Net financial leverage is defined as net debt divided by trailing twelve months adjusted EBITDA.

    Guidance for the Fourth Quarter 2024: ($ millions, except Per Share data) (1)

                  Guidance Range              
      GAAP   Reconciliation   non-GAAP
      Low   Mid   High       Low   Mid   High
    Total Revenue $3,000   $3,100   $3,200       $3,000   $3,100     $3,200
    Q-Q -8%   -5%   -2%       -8%   -5     -2%
    Y-Y -12%   -9%   -6%       -12%   -9     -6%
    Gross Profit $1,674   $1,746   $1,820   $(35)   $1,709   $1,781     $1,855
    Gross Margin 55.8%   56.3%   56.9%       57.0%   57.5%     58.0%
    Operating Income (loss) $810   $872   $936   $(184)   $994   $1,056     $1,120
    Operating Margin 27.0%   28.1%   29.3%       33.1%   34.1%     35.0%
    Financial Income (expense) $(87)   $(87)   $(87)   $(10)   $(77)   $(77)     $(77)
    Tax rate 17.2%-18.2%       16.3%-17.3%
    NCI & Other $(14)   $(14)   $(14)   $(3)   $(11)   $(11)     $(11)
    Shares – diluted 257.0   257.0   257.0       257.0   257.0     257.0
    Earnings Per Share – diluted $2.26   $2.46   $2.66       $2.93   $3.13     $3.33
                                 

    Note (1) Additional Information:

    1. GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, $(10) million; Share-based Compensation, $(15) million; Other Incidentals, $(10) million;
    2. GAAP Operating Income (loss) is expected to include PPA effects, $(39) million; Share-based Compensation, $(118) million; Restructuring and Other Incidentals, $(27) million;
    3. GAAP Financial Income (expense) is expected to include Other financial expense $(10) million;
    4. GAAP Non-Controlling Interest (NCI) and Other is expected to include results relating to non-foundry equity-accounted investees $(3) million;
    5. GAAP diluted EPS is expected to include the adjustments noted above for PPA effects, Share-based Compensation, Restructuring and Other Incidentals in GAAP Operating Income (loss), the adjustment for Other financial expense, the adjustment for Non-controlling interest & Other and the adjustment on Tax due to the earlier mentioned adjustments.

    NXP has based the guidance included in this release on judgments and estimates that management believes are reasonable given its assessment of historical trends and other information reasonably available as of the date of this release. Please note, the guidance included in this release consists of predictions only, and is subject to a wide range of known and unknown risks and uncertainties, many of which are beyond NXP’s control. The guidance included in this release should not be regarded as representations by NXP that the estimated results will be achieved. Actual results may vary materially from the guidance we provide today. In relation to the use of non-GAAP financial information see the note regarding “Non-GAAP Financial Measures” below. For the factors, risks, and uncertainties to which judgments, estimates and forward-looking statements generally are subject see the note regarding “Forward-looking Statements.” We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances.

    Non-GAAP Financial Measures

    In managing NXP’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures, that are not in accordance with, nor an alternative to, U.S. generally accepted accounting principles (“GAAP”). In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company’s results of operations and the factors and trends affecting NXP’s business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to core operating performance, certain non-cash expenses and share-based compensation expense, which may obscure trends in NXP’s underlying performance. This information also enables investors to compare financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management.

    These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The presentation of these and other similar items in NXP’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. Reconciliations of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP are provided in the financial statements portion of this release in a schedule entitled “Financial Reconciliation of GAAP to non-GAAP Results (unaudited).” Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at https://investors.nxp.com for additional information related to our rationale for using these non-GAAP financial measures, as well as the impact of these measures on the presentation of NXP’s operations.

    In addition to providing financial information on a basis consistent with GAAP, NXP also provides the following selected financial measures on a non-GAAP basis: (i) Gross profit, (ii) Gross margin, (iii) Research and development, (iv) Selling, general and administrative, (v) Amortization of acquisition-related intangible assets, (vi) Other income, (vii) Operating income (loss), (viii) Operating margin, (ix) Financial Income (expense), (x) Income tax benefit (provision), (xi) Results relating to non-foundry equity-accounted investees, (xii) Net income (loss) attributable to stockholders, (xiii) Earnings per Share – Diluted, (xiv) EBITDA, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xv) free cash flow, trailing 12 month free cash flow and trailing 12 month free cash flow as a percent of Revenue. The non-GAAP information excludes, where applicable, the amortization of acquisition related intangible assets, the purchase accounting effect on inventory and property, plant and equipment, merger related costs (including integration costs), certain items related to divestitures, share-based compensation expense, restructuring and asset impairment charges, extinguishment of debt, foreign exchange gains and losses, income tax effect on adjustments described above and results from non-foundry equity-accounted investments.

    The difference in the benefit (provision) for income taxes between our GAAP and non-GAAP results relates to the income tax effects of the GAAP to non-GAAP adjustments that we make and the income tax effect of any discrete items that occur in the interim period. Discrete items primarily relate to unexpected tax events that may occur as these amounts cannot be forecasted (e.g., the impact of changes in tax law and/or rates, changes in estimates or resolved tax audits relating to prior year tax provisions, the excess or deficit tax effects on share-based compensation, etc.).

    Conference Call and Webcast Information

    The company will host a conference call with the financial community on Tuesday, November 5, 2024 at 8:00 a.m. U.S. Eastern Standard Time (EST) to review the third quarter 2024 results in detail.

    Interested parties may preregister to obtain a user-specific access code for the call here.

    The call will be webcast and can be accessed from the NXP Investor Relations website at www.nxp.com. A replay of the call will be available on the NXP Investor Relations website within 24 hours of the actual call.

    About NXP Semiconductors

    NXP Semiconductors N.V. (NASDAQ: NXPI) is the trusted partner for innovative solutions in the automotive, industrial & IoT, mobile, and communications infrastructure markets. NXP’s “Brighter Together” approach combines leading-edge technology with pioneering people to develop system solutions that make the connected world better, safer, and more secure. The company has operations in more than 30 countries and posted revenue of $13.28 billion in 2023. Find out more at www.nxp.com.

    Forward-looking Statements

    This document includes forward-looking statements which include statements regarding NXP’s business strategy, financial condition, results of operations, market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; our ability to successfully introduce new technologies and products; the demand for the goods into which NXP’s products are incorporated; trade disputes between the U.S. and China, potential increase of barriers to international trade and resulting disruptions to NXP’s established supply chains; the impact of government actions and regulations, including restrictions on the export of US-regulated products and technology; increasing and evolving cybersecurity threats and privacy risks, including theft of sensitive or confidential data; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity to meet both NXP’s debt service and research and development and capital investment requirements; our ability to accurately estimate demand and match our production capacity accordingly or obtain supplies from third-party producers to meet demand; our access to production capacity from third-party outsourcing partners, and any events that might affect their business or NXP’s relationship with them; our ability to secure adequate and timely supply of equipment and materials from suppliers; our ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly; our ability to form strategic partnerships and joint ventures and to successfully cooperate with our alliance partners; our ability to win competitive bid selection processes; our ability to develop products for use in customers’ equipment and products; the ability to successfully hire and retain key management and senior product engineers; global hostilities, including the invasion of Ukraine by Russia and resulting regional instability, sanctions and any other retaliatory measures taken against Russia and the continued hostilities and the armed conflict in the Middle East, which could adversely impact the global supply chain, disrupt our operations or negatively impact the demand for our products in our primary end markets; the ability to maintain good relationships with NXP’s suppliers; and a change in tax laws could have an effect on our estimated effective tax rate. In addition, this document contains information concerning the semiconductor industry, our end markets and business generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, our end markets and business will develop. NXP has based these assumptions on information currently available, if any one or more of these assumptions turn out to be incorrect, actual results may differ from those predicted. While NXP does not know what impact any such differences may have on its business, if there are such differences, its future results of operations and its financial condition could be materially adversely affected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made. Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, NXP does not have any intention or obligation to publicly update or revise any forward-looking statements after we distribute this document, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our SEC filings are available on our Investor Relations website, www.nxp.com/investor or from the SEC website, www.sec.gov.

    For further information, please contact:
       
    Investors: Media:
    Jeff Palmer Paige Iven
    jeff.palmer@nxp.com paige.iven@nxp.com
    +1 408 205 0687  +1 817 975 0602

    NXP-CORP

    NXP Semiconductors
    Table 1: Condensed consolidated statement of operations (unaudited)

    ($ in millions except share data) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
               
    Revenue $ 3,250     $ 3,127     $ 3,434  
    Cost of revenue   (1,384 )     (1,335 )     (1,469 )
    Gross profit   1,866       1,792       1,965  
    Research and development   (577 )     (594 )     (601 )
    Selling, general and administrative   (265 )     (270 )     (294 )
    Amortization of acquisition-related intangible assets   (29 )     (28 )     (71 )
    Total operating expenses   (871 )     (892 )     (966 )
    Other income (expense)   (5 )     (4 )     (7 )
    Operating income (loss)   990       896       992  
    Financial income (expense):          
    Extinguishment of debt   —       —       —  
    Other financial income (expense)   (82 )     (75 )     (75 )
    Income (loss) before income taxes   908       821       917  
    Benefit (provision) for income taxes   (173 )     (154 )     (123 )
    Results relating to equity-accounted investees   (6 )     (3 )     (2 )
    Net income (loss)   729       664       792  
    Less: Net income (loss) attributable to non-controlling interests   11       6       5  
    Net income (loss) attributable to stockholders   718       658       787  
               
    Earnings per share data:          
    Net income (loss) per common share attributable to stockholders in $
    Basic $ 2.82     $ 2.58     $ 3.06  
    Diluted $ 2.79     $ 2.54     $ 3.01  
               
    Weighted average number of shares of common stock outstanding during the period (in thousands):
    Basic   254,458       255,478       257,488  
    Diluted   257,717       258,732       261,095  
               

    NXP Semiconductors
    Table 2: Condensed consolidated balance sheet (unaudited)

    ($ in millions) As of
      September 29, 2024   June 30, 2024   October 1, 2023
    ASSETS          
    Current assets:          
    Cash and cash equivalents $ 2,748     $ 2,859     $ 4,042  
    Short-term deposits   400       400       —  
    Accounts receivable, net   1,070       927       939  
    Inventories, net   2,234       2,148       2,140  
    Other current assets   574       546       495  
    Total current assets   7,026       6,880       7,616  
               
    Non-current assets:          
    Other non-current assets   2,641       2,290       2,236  
    Property, plant and equipment, net   3,309       3,289       3,197  
    Identified intangible assets, net   735       796       1,010  
    Goodwill   9,958       9,941       9,937  
    Total non-current assets   16,643       16,316       16,380  
               
    Total assets   23,669       23,196       23,996  
               
    LIABILITIES AND EQUITY          
    Current liabilities:          
    Accounts payable   899       929       959  
    Restructuring liabilities-current   52       62       16  
    Other current liabilities   1,542       1,622       1,990  
    Short-term debt   499       499       999  
    Total current liabilities   2,992       3,112       3,964  
               
    Non-current liabilities:          
    Long-term debt   9,683       9,681       10,173  
    Restructuring liabilities   4       7       3  
    Deferred tax liabilities   57       48       44  
    Other non-current liabilities   1,189       1,003       1,014  
    Total non-current liabilities   10,933       10,739       11,234  
               
    Non-controlling interests   338       327       310  
    Stockholders’ equity   9,406       9,018       8,488  
    Total equity   9,744       9,345       8,798  
               
    Total liabilities and equity   23,669       23,196       23,996  
               

    NXP Semiconductors
    Table 3: Condensed consolidated statement of cash flows (unaudited)

    ($ in millions) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    Cash flows from operating activities:          
    Net income (loss) $ 729     $ 664     $ 792  
    Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:          
    Depreciation and amortization   218       213       273  
    Share-based compensation   115       114       103  
    Amortization of discount (premium) on debt, net   —       1       1  
    Amortization of debt issuance costs   2       1       2  
    Results relating to equity-accounted investees   6       3       2  
    (Gain) loss on equity securities, net   7       3       4  
    Deferred tax expense (benefit)   (40 )     (23 )     (33 )
    Changes in operating assets and liabilities:          
    (Increase) decrease in receivables and other current assets   (167 )     10       40  
    (Increase) decrease in inventories   (86 )     (46 )     (34 )
    Increase (decrease) in accounts payable and other liabilities   118       (220 )     (128 )
    (Increase) decrease in other non-current assets   (134 )     40       (49 )
    Exchange differences   7       5       5  
    Other items   4       (4 )     10  
    Net cash provided by (used for) operating activities   779       761       988  
    Cash flows from investing activities:          
    Purchase of identified intangible assets   (26 )     (55 )     (42 )
    Capital expenditures on property, plant and equipment   (186 )     (185 )     (200 )
    Proceeds from the disposals of property, plant and equipment   —       1       —  
    Purchase of investments   (159 )     —       (31 )
    Net cash provided by (used for) investing activities   (371 )     (239 )     (273 )
    Cash flows from financing activities:          
    Dividends paid to common stockholders   (259 )     (260 )     (262 )
    Proceeds from issuance of common stock through stock plans   39       3       36  
    Purchase of treasury shares and restricted stock unit
    withholdings    		   (305 )     (310 )     (306 )
    Other, net   (1 )     —       (1 )
    Net cash provided by (used for) financing activities   (526 )     (567 )     (533 )
    Effect of changes in exchange rates on cash positions   7       (4 )     (3 )
    Increase (decrease) in cash and cash equivalents   (111 )     (49 )     179  
    Cash and cash equivalents at beginning of period   2,859       2,908       3,863  
    Cash and cash equivalents at end of period   2,748       2,859       4,042  
               
    Net cash paid during the period for:          
    Interest   27       86       38  
    Income taxes, net of refunds   196       193       165  
    Net gain (loss) on sale of assets:          
    Cash proceeds from the sale of assets   —       1       —  
    Book value of these assets   —       (1 )     —  
    Non-cash investing activities:          
    Non-cash capital expenditures   125       166       167  
               

    NXP Semiconductors
    Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)

    ($ in millions except share data) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    GAAP Gross Profit $ 1,866     $ 1,792     $ 1,965  
    PPA Effects   (12 )     (12 )     (13 )
    Restructuring   —       (4 )     —  
    Share-based compensation   (14 )     (15 )     (14 )
    Other incidentals   —       (10 )     (18 )
    Non-GAAP Gross Profit $ 1,892     $ 1,833     $ 2,010  
    GAAP Gross margin   57.4 %     57.3 %     57.2 %
    Non-GAAP Gross margin   58.2 %     58.6 %     58.5 %
    GAAP Research and development $ (577 )   $ (594 )   $ (601 )
    Restructuring   —       (4 )     4  
    Share-based compensation   (58 )     (58 )     (53 )
    Other incidentals   —       —       (2 )
    Non-GAAP Research and development $ (519 )   $ (532 )   $ (550 )
    GAAP Selling, general and administrative $ (265 )   $ (270 )   $ (294 )
    PPA effects   (1 )     (1 )     (1 )
    Restructuring   —       2       —  
    Share-based compensation   (43 )     (41 )     (36 )
    Other incidentals   (2 )     (2 )     (4 )
    Non-GAAP Selling, general and administrative $ (219 )   $ (228 )   $ (253 )
    GAAP Operating income (loss) $ 990     $ 896     $ 992  
    PPA effects   (42 )     (41 )     (85 )
    Restructuring   —       (6 )     4  
    Share-based compensation   (115 )     (114 )     (103 )
    Other incidentals   (6 )     (14 )     (27 )
    Non-GAAP Operating income (loss) $ 1,153     $ 1,071     $ 1,203  
    GAAP Operating margin   30.5 %     28.7 %     28.9 %
    Non-GAAP Operating margin   35.5 %     34.3 %     35.0 %
    GAAP Income tax benefit (provision) $ (173 )   $ (154 )   $ (123 )
    Income tax effect   9       15       45  
    Non-GAAP Income tax benefit (provision) $ (182 )   $ (169 )   $ (168 )
    GAAP Net income (loss) attributable to stockholders $ 718     $ 658     $ 787  
    PPA Effects   (42 )     (41 )     (85 )
    Restructuring   —       (6 )     4  
    Share-based compensation   (115 )     (114 )     (103 )
    Other incidentals   (6 )     (14 )     (27 )
    Other adjustments:          
    Adjustments to financial income (expense)   (12 )     (8 )     (10 )
    Income tax effect   9       15       45  
    Results relating to equity-accounted investees, excluding Foundry investees1   (6 )     (3 )     (2 )
    Non-GAAP Net income (loss) attributable to stockholders $ 890     $ 829     $ 965  
               
               
    Additional Information:          
    1. Refer to Table 7 below for further information regarding the results relating to equity-accounted investees.
               
    GAAP net income (loss) per common share attributable to stockholders – diluted $ 2.79     $ 2.54     $ 3.01  
    PPA Effects   (0.16 )     (0.16 )     (0.33 )
    Restructuring   —       (0.02 )     0.01  
    Share-based compensation   (0.45 )     (0.44 )     (0.40 )
    Other incidentals   (0.02 )     (0.06 )     (0.10 )
    Other adjustments:          
    Adjustments to financial income (expense)   (0.05 )     (0.03 )     (0.03 )
    Income tax effect   0.04       0.06       0.17  
    Results relating to equity-accounted investees, excluding Foundry investees1   (0.02 )     (0.01 )     (0.01 )
    Non-GAAP net income (loss) per common share attributable to stockholders – diluted $ 3.45     $ 3.20     $ 3.70  
               
               
    Additional Information:          
    1. Refer to Table 7 below for further information regarding the results relating to equity-accounted investees.

    NXP Semiconductors
    Table 5: Financial Reconciliation of GAAP to non-GAAP Financial income (expense) (unaudited)

    ($ in millions) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    GAAP Financial income (expense) $ (82 )   $ (75 )   $ (75 )
    Foreign exchange loss   (3 )     (2 )     (3 )
    Other financial expense   (9 )     (6 )     (7 )
    Non-GAAP Financial income (expense) $ (70 )   $ (67 )   $ (65 )
               

    NXP Semiconductors
    Table 6: Financial Reconciliation of GAAP to non-GAAP Other income (expense) (unaudited)

    ($ in millions) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    GAAP Other income (expense) $ (5 )   $ (4 )   $ (7 )
    Other incidentals   (4 )     (2 )     (3 )
    Non-GAAP Other income (expense) $ (1 )   $ (2 )   $ (4 )
               

    NXP Semiconductors
    Table 7: Financial Reconciliation of GAAP to non-GAAP Results relating to equity-accounted investees (unaudited)

    ($ in millions) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    GAAP Results relating to equity-accounted investees $ (6 )   $ (3 )   $ (2 )
    Results of equity-accounted investees, excluding Foundry investees1   (6 )     (3 )     (2 )
    Non-GAAP Results relating to equity-accounted investees $ —     $ —     $ —  
               
    Additional Information:
    1. We adjust our results relating to equity-accounted investees for those results from investments over which NXP has significant influence, but not control, and whose business activities are not related to the core operating performance of NXP. Our equity-investments in foundry partners are part of our long-term core operating performance and accordingly those results comprise the Non-GAAP Results relating to equity-accounted investees.

    NXP Semiconductors
    Table 8: Adjusted EBITDA and Free Cash Flow (unaudited)

    ($ in millions) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    GAAP Net income (loss) $ 729     $ 664     $ 792  
    Reconciling items to EBITDA (Non-GAAP)          
    Financial (income) expense   82       75       75  
    (Benefit) provision for income taxes   173       154       123  
    Depreciation   149       146       163  
    Amortization   69       67       110  
    EBITDA (Non-GAAP) $ 1,202     $ 1,106     $ 1,263  
    Reconciling items to adjusted EBITDA (Non-GAAP)          
    Results of equity-accounted investees, excluding Foundry investees1   6       3       2  
    Restructuring   —       6       (4 )
    Share-based compensation   115       114       103  
    Other incidental items   6       14       27  
    Adjusted EBITDA (Non-GAAP) $ 1,329     $ 1,243     $ 1,391  
    Trailing twelve month adjusted EBITDA (Non-GAAP)   5,235       5,297       5,384  
               
               
    Additional Information:          
    1. Refer to Table 7 above for further information regarding the results relating to equity-accounted investees.
               
               
    ($ in millions) Three months ended
      September 29, 2024   June 30, 2024   October 1, 2023
    Net cash provided by (used for) operating activities $ 779     $ 761     $ 988  
    Net capital expenditures on property, plant and equipment   (186 )     (184 )     (200 )
    Non-GAAP free cash flow $ 593     $ 577     $ 788  
    Trailing twelve month non-GAAP free cash flow $ 2,759     $ 2,954     $ 2,568  
    Trailing twelve month non-GAAP free cash flow as percent of Revenue   21 %     23 %     20 %
               

    The MIL Network –

  • MIL-OSI: Par Pacific Holdings Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    HOUSTON, Nov. 04, 2024 (GLOBE NEWSWIRE) — Par Pacific Holdings, Inc. (NYSE: PARR) (“Par Pacific” or the “Company”) today reported its financial results for the quarter ended September 30, 2024.

    • Net Income of $7.5 million, or $0.13 per diluted share
    • Adjusted Net Loss of $(5.5) million, or $(0.10) per diluted share
    • Adjusted EBITDA of $51.4 million
    • Record logistics financial results driven by record refining throughput
    • Liquidity increased by $112.1 million while repurchasing $21.9 million of common stock

    Par Pacific reported net income of $7.5 million, or $0.13 per diluted share, for the quarter ended September 30, 2024, compared to $171.4 million, or $2.79 per diluted share, for the same quarter in 2023. Third quarter 2024 Adjusted Net Loss was $(5.5) million, compared to Adjusted Net Income of $193.4 million in the third quarter of 2023. Third quarter 2024 Adjusted EBITDA was $51.4 million, compared to $255.7 million in the third quarter of 2023. A reconciliation of reported non-GAAP financial measures to their most directly comparable GAAP financial measures can be found in the tables accompanying this news release.

    “Our third quarter financial results reflect a challenging summer refining margin environment,” said Will Monteleone, President and Chief Executive Officer. “Despite the cyclical downturn, refining system throughput set a quarterly record, our retail and logistics segments delivered consistently strong financial results, and our Hawaii SAF project has entered the construction phase. We are focused on improving operating and capital efficiency while prioritizing safe and reliable operations.”

    Refining

    The Refining segment reported operating income of $19.0 million in the third quarter of 2024, compared to $194.8 million in the third quarter of 2023. Adjusted Gross Margin for the Refining segment was $142.2 million in the third quarter of 2024, compared to $350.6 million in the third quarter of 2023.

    Refining segment Adjusted EBITDA was $20.1 million in the third quarter of 2024, compared to $233.6 million in the third quarter of 2023.

    Hawaii
    The 3-1-2 Singapore Crack Spread was $11.00 per barrel in the third quarter of 2024, compared to $23.39 per barrel in the third quarter of 2023. Throughput in the third quarter of 2024 was 81 thousand barrels per day (Mbpd), compared to 82 Mbpd for the same quarter in 2023. Production costs were $4.58 per throughput barrel in the third quarter of 2024, compared to $4.50 per throughput barrel in the same period of 2023.

    The Hawaii refinery’s Adjusted Gross Margin was $6.10 per barrel during the third quarter of 2024, including a net price lag impact of approximately $5.1 million, or $0.68 per barrel, compared to $13.47 per barrel during the third quarter of 2023.

    Montana
    The RVO Adjusted USGC 3-2-1 Index averaged $14.14 per barrel in the third quarter of 2024, compared to $29.65 in the third quarter of 2023. The Montana refinery’s throughput in the third quarter of 2024 was 57 Mbpd, compared to 55 Mbpd for the same quarter in 2023. Production costs were $11.61 per throughput barrel, compared to $10.83 per throughput barrel in the same period of 2023.

    The Montana refinery’s Adjusted Gross Margin was $12.42 per barrel during the third quarter of 2024, compared to $26.49 per barrel during the third quarter of 2023.

    Washington
    The RVO Adjusted Pacific Northwest 3-1-1-1 Index averaged $15.48 per barrel in the third quarter of 2024, compared to $35.00 per barrel in the third quarter of 2023. The Washington refinery’s throughput was 41 Mbpd in the third quarter of 2024, compared to 41 Mbpd in the third quarter of 2023. Production costs were $3.50 per throughput barrel in the third quarter of 2024, compared to $3.77 per throughput barrel in the same period of 2023.

    The Washington refinery’s Adjusted Gross Margin was $1.76 per barrel during the third quarter of 2024, compared to $12.30 per barrel during the third quarter of 2023.

    Wyoming
    The RVO Adjusted USGC 3-2-1 Index averaged $14.14 per barrel in the third quarter of 2024, compared to $29.65 per barrel in the third quarter of 2023. The Wyoming refinery’s throughput was 19 Mbpd in the third quarter of 2024, compared to 20 Mbpd in the third quarter of 2023. Production costs were $7.00 per throughput barrel in the third quarter of 2024, compared to $6.46 per throughput barrel in the same period of 2023.

    The Wyoming refinery’s Adjusted Gross Margin was $13.65 per barrel during the third quarter of 2024, including a FIFO impact of approximately $(4.7) million, or $(2.63) per barrel, compared to $37.01 per barrel during the third quarter of 2023.

    Retail

    The Retail segment reported operating income of $18.3 million in the third quarter of 2024, compared to $13.3 million in the third quarter of 2023. Adjusted Gross Margin for the Retail segment was $42.6 million in the third quarter of 2024, compared to $38.2 million in the same quarter of 2023.

    Retail segment Adjusted EBITDA was $21.0 million in the third quarter of 2024, compared to $16.7 million in the third quarter of 2023. The Retail segment reported sales volumes of 31.2 million gallons in the third quarter of 2024, compared to 31.1 million gallons in the same quarter of 2023. Third quarter 2024 same store sales fuel volumes decreased by (1.4)% while merchandise revenue increased by 3.8%, compared to third quarter of 2023.

    Logistics

    The Logistics segment reported operating income of $26.2 million in the third quarter of 2024, compared to $20.7 million in the third quarter of 2023. Adjusted Gross Margin for the Logistics segment was $36.3 million in the third quarter of 2024, compared to $35.3 million in the same quarter of 2023.

    Logistics segment Adjusted EBITDA was $33.0 million in the third quarter of 2024, compared to $29.1 million in the third quarter of 2023.

    Liquidity

    Net cash provided by operations totaled $78.5 million for the three months ended September 30, 2024, including working capital inflows of $67.2 million and deferred turnaround expenditures of $(15.6) million. Excluding these items, net cash provided by operations was $26.9 million for the three months ended September 30, 2024. Net cash provided by operations was $269.2 million for the three months ended September 30, 2023. Net cash used in investing activities totaled $(28.3) million for the three months ended September 30, 2024, consisting primarily of capital expenditures, compared to $(5.7) million for the three months ended September 30, 2023. Net cash used in financing activities totaled $(46.8) million for the three months ended September 30, 2024, compared to $(92.9) million for the three months ended September 30, 2023.

    At September 30, 2024, Par Pacific’s cash balance totaled $183.0 million, gross term debt was $546.0 million, and total liquidity was $632.5 million. Net term debt was $363.0 million at September 30, 2024. In the third quarter of 2024, the Company repurchased $21.9 million of common stock.

    Laramie Energy

    In conjunction with Laramie Energy LLC’s (“Laramie’s”) refinancing and subsequent cash distribution to Par Pacific during the first quarter of 2023, we resumed the application of equity method accounting for our investment in Laramie effective February 21, 2023. During the third quarter of 2024, we recorded $(0.3) million of equity losses. Laramie’s total net loss was $(4.2) million in the third quarter of 2024, including unrealized losses on derivatives of $(0.4) million, compared to $(4.7) million in the third quarter of 2023. Laramie’s total Adjusted EBITDAX was $9.9 million in the third quarter of 2024, compared to $15.4 million in the third quarter of 2023.

    Conference Call Information

    A conference call is scheduled for Tuesday, November 5, 2024 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). To access the call, please dial 1-833-974-2377 inside the U.S. or 1-412-317-5782 outside of the U.S. and ask for the Par Pacific call. Please dial in at least 10 minutes early to register. The webcast may be accessed online through the Company’s website at http://www.parpacific.com on the Investors page. A telephone replay will be available until November 19, 2024 and may be accessed by calling 1-877-344-7529 inside the U.S. or 1-412-317-0088 outside the U.S. and using the conference ID 4223997.

    About Par Pacific

    Par Pacific Holdings, Inc. (NYSE: PARR), headquartered in Houston, Texas, is a growing energy company providing both renewable and conventional fuels to the western United States. Par Pacific owns and operates 219,000 bpd of combined refining capacity across four locations in Hawaii, the Pacific Northwest and the Rockies, and an extensive energy infrastructure network, including 13 million barrels of storage, and marine, rail, rack, and pipeline assets. In addition, Par Pacific operates the Hele retail brand in Hawaii and the “nomnom” convenience store chain in the Pacific Northwest. Par Pacific also owns 46% of Laramie Energy, LLC, a natural gas production company with operations and assets concentrated in Western Colorado. More information is available at www.parpacific.com.

    Forward-Looking Statements

    This news release (and oral statements regarding the subject matter of this news release, including those made on the conference call and webcast announced herein) includes certain “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, which are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, without limitation, statements about: expected market conditions; anticipated free cash flows; anticipated refinery throughput; anticipated cost savings; anticipated capital expenditures, including major maintenance costs, and their effect on our financial and operating results, including earnings per share and free cash flow; anticipated retail sales volumes and on-island sales; the anticipated financial and operational results of Laramie Energy, LLC; the amount of our discounted net cash flows and the impact of our NOL carryforwards thereon; our ability to identify, acquire, and develop energy, related retailing, and infrastructure businesses; the timing and expected results of certain development projects, as well as the impact of such investments on our product mix and sales; the anticipated synergies and other benefits of the Billings refinery and associated marketing and logistics assets (“Billings Acquisition”), including renewable growth opportunities, the anticipated financial and operating results of the Billings Acquisition and the effect on Par Pacific’s cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income and Free Cash Flow per share); and other risks and uncertainties detailed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any other documents that we file with the Securities and Exchange Commission. Additionally, forward-looking statements are subject to certain risks, trends, and uncertainties, such as changes to our financial condition and liquidity; the volatility of crude oil and refined product prices; the Russia-Ukraine war, Israel-Palestine conflict, Houthi attacks in the Red Sea, Iranian activities in the Strait of Hormuz and their potential impacts on global crude oil markets and our business; operating disruptions at our refineries resulting from unplanned maintenance events or natural disasters; environmental risks; changes in the labor market; and risks of political or regulatory changes. We cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. We do not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events, or otherwise. We further expressly disclaim any written or oral statements made by a third party regarding the subject matter of this news release.

    Contact:
    Ashimi Patel
    VP, Investor Relations & Sustainability
    (832) 916-3355
    apatel@parpacific.com

     
    Condensed Consolidated Statements of Operations
    (Unaudited)
    (in thousands, except per share data)
     
      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Revenues $ 2,143,933     $ 2,579,308     $ 6,142,236     $ 6,048,444  
    Operating expenses              
    Cost of revenues (excluding depreciation)   1,905,200       2,174,385       5,422,875       5,038,211  
    Operating expense (excluding depreciation)   147,049       145,183       444,389       330,146  
    Depreciation and amortization   31,879       35,311       96,679       87,887  
    General and administrative expense (excluding depreciation)   22,399       23,694       87,322       66,148  
    Equity earnings from refining and logistics investments   (3,008 )     (3,934 )     (12,846 )     (4,359 )
    Acquisition and integration costs   (23 )     4,669       68       17,213  
    Par West redevelopment and other costs   4,006       3,127       9,048       8,490  
    Loss on sale of assets, net   —       —       114       —  
    Total operating expenses   2,107,502       2,382,435       6,047,649       5,543,736  
    Operating income   36,431       196,873       94,587       504,708  
    Other income (expense)              
    Interest expense and financing costs, net   (23,402 )     (20,815 )     (61,720 )     (51,974 )
    Debt extinguishment and commitment costs   —       —       (1,418 )     (17,682 )
    Other income (loss), net   1,253       (43 )     (1,447 )     301  
    Equity earnings (losses) from Laramie Energy, LLC   (336 )     —       2,867       10,706  
    Total other expense, net   (22,485 )     (20,858 )     (61,718 )     (58,649 )
    Income before income taxes   13,946       176,015       32,869       446,059  
    Income tax expense   (6,460 )     (4,600 )     (10,496 )     (6,741 )
    Net income $ 7,486     $ 171,415     $ 22,373     $ 439,318  
    Weighted-average shares outstanding              
    Basic   55,729       60,223       57,283       60,241  
    Diluted   56,224       61,404       58,070       61,144  
                   
    Income per share              
    Basic $ 0.13     $ 2.85     $ 0.39     $ 7.29  
    Diluted $ 0.13     $ 2.79     $ 0.39     $ 7.18  
     
    Balance Sheet Data
    (Unaudited)
    (in thousands)
     
      September 30, 2024   December 31, 2023
    Balance Sheet Data      
    Cash and cash equivalents $ 182,977   $ 279,107
    Working capital (1)   542,690     190,042
    ABL Credit Facility   511,000     115,000
    Term debt (2)   546,021     550,621
    Total debt, including current portion   1,043,706     650,858
    Total stockholders’ equity   1,254,026     1,335,424

    ______________________________
    (1)   Working capital is calculated as (i) total current assets excluding cash and cash equivalents less (ii) total current liabilities excluding current portion of long-term debt. Total current assets include inventories stated at the lower of cost or net realizable value.
    (2)   Term debt includes the Term Loan Credit Agreement and other long-term debt.


    Operating Statistics

    The following table summarizes key operational data:

      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Total Refining Segment              
    Feedstocks throughput (Mbpd) (1)   198.4       198.2       186.3       164.6  
    Refined product sales volume (Mbpd) (1)   216.2       217.3       200.2       178.7  
                   
    Hawaii Refinery              
    Feedstocks throughput (Mbpd)   80.7       82.3       80.4       80.9  
                   
    Yield (% of total throughput)              
    Gasoline and gasoline blendstocks   25.6 %     26.5 %     26.0 %     26.7 %
    Distillates   38.3 %     42.1 %     38.1 %     40.8 %
    Fuel oils   32.0 %     26.5 %     32.0 %     28.0 %
    Other products   0.7 %     2.1 %     0.3 %     1.5 %
    Total yield   96.6 %     97.2 %     96.4 %     97.0 %
                   
    Refined product sales volume (Mbpd)   93.5       90.0       87.8       89.2  
                   
    Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 6.10     $ 13.47     $ 10.06     $ 14.74  
    Production costs per bbl ($/throughput bbl) (3)   4.58       4.50       4.66       4.46  
    D&A per bbl ($/throughput bbl)   0.25       0.65       0.47       0.68  
                   
    Montana Refinery              
    Feedstocks Throughput (Mbpd) (1)   57.2       55.4       49.2       57.1  
                   
    Yield (% of total throughput)              
    Gasoline and gasoline blendstocks   46.5 %     50.5 %     49.5 %     49.6 %
    Distillates   34.7 %     27.7 %     31.7 %     28.2 %
    Asphalt   11.0 %     14.7 %     9.3 %     14.4 %
    Other products   4.0 %     3.4 %     4.4 %     3.5 %
    Total yield   96.2 %     96.3 %     94.9 %     95.7 %
                   
    Refined product sales volume (Mbpd) (1)   60.3       63.5       53.4       62.5  
                   
    Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 12.42     $ 26.49     $ 14.15     $ 27.74  
    Production costs per bbl ($/throughput bbl) (3)   11.61       10.83       13.16       10.10  
    D&A per bbl ($/throughput bbl)   1.82       1.63       1.69       1.69  
                   
      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Washington Refinery              
    Feedstocks throughput (Mbpd)   41.1       41.0       37.9       40.5  
                   
    Yield (% of total throughput)              
    Gasoline and gasoline blendstocks   23.6 %     22.8 %     24.0 %     23.4 %
    Distillate   35.3 %     34.6 %     34.5 %     34.6 %
    Asphalt   17.4 %     20.1 %     18.6 %     19.4 %
    Other products   19.7 %     18.8 %     19.3 %     18.8 %
    Total yield   96.0 %     96.3 %     96.4 %     96.2 %
                   
    Refined product sales volume (Mbpd)   42.4       44.2       39.6       43.3  
                   
    Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 1.76     $ 12.30     $ 4.03     $ 9.91  
    Production costs per bbl ($/throughput bbl) (3)   3.50       3.77       4.28       4.00  
    D&A per bbl ($/throughput bbl)   1.81       1.79       2.00       1.81  
                   
    Wyoming Refinery              
    Feedstocks throughput (Mbpd)   19.4       19.5       18.8       17.7  
                   
    Yield (% of total throughput)              
    Gasoline and gasoline blendstocks   43.7 %     46.7 %     45.7 %     46.0 %
    Distillate   49.0 %     47.1 %     48.1 %     47.3 %
    Fuel oils   3.4 %     2.5 %     2.5 %     2.5 %
    Other products   2.3 %     1.7 %     2.2 %     1.7 %
    Total yield   98.4 %     98.0 %     98.5 %     97.5 %
                   
    Refined product sales volume (Mbpd)   20.0       19.6       19.4       18.3  
                   
    Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 13.65     $ 37.01     $ 14.42     $ 28.88  
    Production costs per bbl ($/throughput bbl) (3)   7.00       6.46       7.30       7.34  
    D&A per bbl ($/throughput bbl)   2.43       2.41       2.51       2.69  
                   
    Market Indices ($ per barrel)              
    3-1-2 Singapore Crack Spread (4) $ 11.00     $ 23.39     $ 14.04     $ 19.45  
    RVO Adj. Pacific Northwest 3-1-1-1 Index (5)   15.48       35.00       19.49       28.51  
    RVO Adj. USGC 3-2-1 Index (6)   14.14       29.65       17.79       25.96  
                   
    Crude Oil Prices ($ per barrel)              
    Brent $ 78.71     $ 85.92     $ 81.82     $ 81.93  
    WTI   75.27       82.22       77.61       77.28  
    ANS (7)   80.26       89.25       83.49       82.57  
    Bakken Clearbrook   74.41       83.58       76.22       79.38  
    WCS Hardisty   59.98       65.42       62.20       60.75  
    Brent M1-M3   1.31       1.27       1.22       0.74  
                   
    Retail Segment              
    Retail sales volumes (thousands of gallons)   31,232       31,137       91,186       87,710  

    ______________________________
    (1)   Feedstocks throughput and sales volumes per day for the Montana refinery for the three and nine months ended September 30, 2023 are calculated based on the 92 and 122-day periods for which we owned the Montana refinery during the three and nine months ended September 30, 2023, respectively. As such, the amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the periods from July 1, 2023 to September 30, 2023 and June 1, 2023 to September 30, 2023, respectively. The 2024 amounts for the total refining segment represent the sum of the Hawaii, Montana, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2024.
    (2)   We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method.
    (3)   Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated statements of operations, which also includes costs related to our bulk marketing operations and severance costs.
    (4)   We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in Hawaii.
    (5)   We believe the RVO Adjusted Pacific Northwest 3-1-1-1 Index (or three barrels of WTI crude oil converted into one barrel of Pacific Northwest gasoline, one barrel of Pacific Northwest ULSD and one barrel of USGC VGO, less 100% of the RVO cost for gasoline and ULSD) is the most representative market indicator for our operations in Washington.
    (6)   We believe the RVO Adjusted USGC 3-2-1 Index (or three barrels of WTI crude oil converted into two barrels of USGC gasoline and one barrel of USGC ULSD, less 100% of the RVO cost) is the most representative market indicator for our operations in Montana and Wyoming.
    (7)   ANS crude price influences the Hawaii Refinery’s financial performance. Beginning in September 2024, the ANS index has been updated from a Platts marker to an Argus marker to better reflect the prompt ANS market.


    Non-GAAP Performance Measures

    Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently.

    We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation and amortization. Management uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. We believe Adjusted EBITDA by segment (as defined below) is a useful supplemental financial measure to evaluate the economic performance of our segments without regard to financing methods, capital structure, or historical cost basis.

    Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition.

    Beginning with financial results reported for the fourth quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA excludes all hedge losses (gains) associated with our Washington ending inventory and LIFO layer increment impacts associated with our Washington inventory. In addition, we have modified our environmental obligation mark-to-market adjustment to include only the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington Climate Commitment Act (“Washington CCA”) and Clean Fuel Standard. This modification was made as part of our change in how we estimate our environmental obligation liabilities.

    Beginning with financial results reported for the fourth quarter of 2023, Adjusted Net Income (loss) excludes unrealized interest rate derivative losses (gains) and all Laramie Energy related impacts with the exception of cash distributions. We have recast Adjusted Net Income (Loss) for prior periods when reported to conform to the modified presentation.

    Beginning with financial results reported for the first quarter of 2024, Adjusted Net Income (loss) also excludes other non-operating income and expenses. This modification improves comparability between periods by excluding income and expenses resulting from non-operating activities.

    Adjusted Gross Margin

    Adjusted Gross Margin is defined as operating income (loss) excluding:

    •   operating expense (excluding depreciation);
    •   depreciation and amortization (“D&A”);
    •   Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments;
    •   impairment expense;
    •   loss (gain) on sale of assets, net;
    •   inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
    •   Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard); and
    •   unrealized loss (gain) on derivatives.

    The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):

    Three months ended September 30, 2024 Refining   Logistics   Retail
    Operating income $ 19,005     $ 26,164   $ 18,274
    Operating expense (excluding depreciation)   122,054       3,334     21,661
    Depreciation and amortization   22,623       5,925     2,680
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   658       861     —
    Inventory valuation adjustment   14,057       —     —
    Environmental obligation mark-to-market adjustments   (4,432 )     —     —
    Unrealized gain on commodity derivatives   (31,772 )     —     —
    Gain on sale of assets, net   —       —     —
    Adjusted Gross Margin (1) $ 142,193     $ 36,284   $ 42,615
    Three months ended September 30, 2023 Refining   Logistics   Retail
    Operating income $ 194,847     $ 20,736   $ 13,315
    Operating expense (excluding depreciation)   116,949       6,135     22,099
    Depreciation and amortization   24,278       7,708     2,766
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   821       698     —
    Inventory valuation adjustment   72,823       —     —
    Environmental obligation mark-to-market adjustments   (50,153 )     —     —
    Unrealized gain on commodity derivatives   (8,995 )     —     —
    Adjusted Gross Margin (1) $ 350,570     $ 35,277   $ 38,180
    Nine Months Ended September 30, 2024 Refining   Logistics   Retail
    Operating income $ 82,811     $ 64,579   $ 45,323  
    Operating expense (excluding depreciation)   365,031       11,847     67,511  
    Depreciation and amortization   66,584       19,893     8,471  
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   2,037       2,550     —  
    Inventory valuation adjustment   (6,419 )     —     —  
    Environmental obligation mark-to-market adjustments   (18,199 )     —     —  
    Unrealized loss on commodity derivatives   34,061       —     —  
    Loss (gain) on sale of assets, net   —       124     (10 )
    Adjusted Gross Margin (1) $ 525,906     $ 98,993   $ 121,295  
    Nine Months Ended September 30, 2023 Refining   Logistics   Retail
    Operating income $ 502,123     $ 54,035   $ 42,009
    Operating expense (excluding depreciation)   252,802       13,178     64,166
    Depreciation and amortization   59,827       17,801     8,577
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   821       905     —
    Inventory valuation adjustment   126,799       —     —
    Environmental obligation mark-to-market adjustments   (174,111 )     —     —
    Unrealized gain on commodity derivatives   (487 )     —     —
    Adjusted Gross Margin (1) $ 767,774     $ 85,919   $ 114,752

    ______________________________
    (1)   For the three and nine months ended September 30, 2024 and 2023, there was no impairment expense in Operating income. For the three months ended September 30, 2024 and the three and nine months ended September 30, 2023, there was no (gain) loss on sale of assets recorded in Operating income.


    Adjusted Net Income (Loss) and Adjusted EBITDA

    Adjusted Net Income (Loss) is defined as Net income (loss) excluding:

    •   inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
    •   Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard);
    •   unrealized (gain) loss on derivatives;
    •   acquisition and integration costs;
    •   redevelopment and other costs related to Par West;
    •   debt extinguishment and commitment costs;
    •   increase in (release of) tax valuation allowance and other deferred tax items;
    •   changes in the value of contingent consideration and common stock warrants;
    •   severance costs and other non-operating expense (income);
    •   (gain) loss on sale of assets;
    •   impairment expense;
    •   impairment expense associated with our investment in Laramie Energy; and
    •   Par’s share of equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions.

    Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding:

    •   D&A;
    •   interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain);
    •   cash distributions from Laramie Energy, LLC to Par;
    •   Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments; and
    •   income tax expense (benefit) excluding the increase in (release of) tax valuation allowance.

    The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), on a historical basis for the periods indicated (in thousands):        

      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Net income $ 7,486     $ 171,415     $ 22,373     $ 439,318  
    Inventory valuation adjustment   14,057       72,823       (6,419 )     126,799  
    Environmental obligation mark-to-market adjustments   (4,432 )     (50,153 )     (18,199 )     (174,111 )
    Unrealized loss (gain) on derivatives   (31,196 )     (9,116 )     33,756       (1,151 )
    Acquisition and integration costs   (23 )     4,669       68       17,213  
    Par West redevelopment and other costs   4,006       3,127       9,048       8,490  
    Debt extinguishment and commitment costs   —       —       1,418       17,682  
    Changes in valuation allowance and other deferred tax items (1)   5,707       —       9,238       —  
    Severance costs and other non-operating expense (2)   (1,490 )     615       14,648       1,685  
    Loss on sale of assets, net   —       —       114       —  
    Equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions   336       —       (1,382 )     —  
    Adjusted Net Income (Loss) (3)   (5,549 )     193,380       64,663       435,925  
    Depreciation and amortization   31,879       35,311       96,679       87,887  
    Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)   22,826       20,936       62,025       52,638  
    Laramie Energy, LLC cash distributions to Par   —       —       (1,485 )     (10,706 )
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   1,519       1,519       4,587       1,726  
    Income tax expense (benefit)   753       4,600       1,258       6,741  
    Adjusted EBITDA (3) $ 51,428     $ 255,746     $ 227,727     $ 574,211  

    ______________________________
    (1)   For the three and nine months ended September 30, 2024, we recognized a non-cash deferred tax expense of $5.7 million and $9.2 million, respectively, related to deferred state and federal tax liabilities. This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations. For the three and nine months ended September 30, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items.
    (2)   For the nine months ended September 30, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition and $2.3 million for an estimated legal settlement unrelated to current operating activities.
    (3)   For the three and nine months ended September 30, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairment losses in excess of our basis difference. Please read the Non-GAAP Performance Measures discussion above for information regarding changes to the components of Adjusted Net Income (Loss) and Adjusted EBITDA made during the reporting periods.

    The following table sets forth the computation of basic and diluted Adjusted Net Income (Loss) per share (in thousands, except per share amounts):

      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023     2024     2023
    Adjusted Net Income (Loss) $ (5,549 )   $ 193,380   $ 64,663   $ 435,925
    Plus: effect of convertible securities   —       —     —     —
    Numerator for diluted income (loss) per common share $ (5,549 )   $ 193,380   $ 64,663   $ 435,925
                   
    Basic weighted-average common stock shares outstanding   55,729       60,223     57,283     60,241
    Add dilutive effects of common stock equivalents (1)   —       1,181     787     903
    Diluted weighted-average common stock shares outstanding   55,729       61,404     58,070     61,144
                   
    Basic Adjusted Net Income (Loss) per common share $ (0.10 )   $ 3.21   $ 1.13   $ 7.24
    Diluted Adjusted Net Income (Loss) per common share $ (0.10 )   $ 3.15   $ 1.11   $ 7.13

    ______________________________
    (1)   Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts. We have utilized the basic shares outstanding to calculate both basic and diluted Adjusted Net Loss per common share for the three months ended September 30, 2024.


    Adjusted EBITDA by Segment

    Adjusted EBITDA by segment is defined as Operating income (loss) excluding:

    •   D&A;
    •   inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
    •   Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard);
    •   unrealized (gain) loss on derivatives;
    •   acquisition and integration costs;
    •   redevelopment and other costs related to Par West;
    •   severance costs and other non-operating expense (income);
    •   (gain) loss on sale of assets;
    •   impairment expense; and
    •   Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments.

    Adjusted EBITDA by segment also includes Gain on curtailment of pension obligation and Other income (loss), net, which are presented below operating income (loss) on our condensed consolidated statements of operations.

    The following table presents a reconciliation of Adjusted EBITDA by segment to the most directly comparable GAAP financial measure, operating income (loss) by segment, on a historical basis, for selected segments, for the periods indicated (in thousands):

      Three Months Ended September 30, 2024
      Refining   Logistics   Retail   Corporate and Other
    Operating income (loss) by segment $ 19,005     $ 26,164   $ 18,274   $ (27,012 )
    Depreciation and amortization   22,623       5,925     2,680     651  
    Inventory valuation adjustment   14,057       —     —     —  
    Environmental obligation mark-to-market adjustments   (4,432 )     —     —     —  
    Unrealized gain on commodity derivatives   (31,772 )     —     —     —  
    Acquisition and integration costs   —       —     —     (23 )
    Par West redevelopment and other costs   —       —     —     4,006  
    Severance costs and other non-operating expense   —       —     —     (1,490 )
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   658       861     —     —  
    Other income, net   —       —     —     1,253  
    Adjusted EBITDA (1) $ 20,139     $ 32,950   $ 20,954   $ (22,615 )
      Three Months Ended September 30, 2023
      Refining   Logistics   Retail   Corporate and Other
    Operating income (loss) by segment $ 194,847     $ 20,736   $ 13,315   $ (32,025 )
    Depreciation and amortization   24,278       7,708     2,766     559  
    Inventory valuation adjustment   72,823       —     —     —  
    Environmental obligation mark-to-market adjustments   (50,153 )     —     —     —  
    Unrealized gain on commodity derivatives   (8,995 )     —     —     —  
    Acquisition and integration costs   —       —     —     4,669  
    Par West redevelopment and other costs   —       —     —     3,127  
    Severance costs and other non-operating expenses   —       —     580     35  
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   821       698     —     —  
    Other loss, net   —       —     —     (43 )
    Adjusted EBITDA (1) $ 233,621     $ 29,142   $ 16,661   $ (23,678 )
      Nine Months Ended September 30, 2024
      Refining   Logistics   Retail   Corporate and Other
    Operating income (loss) by segment $ 82,811     $ 64,579   $ 45,323     $ (98,126 )
    Depreciation and amortization   66,584       19,893     8,471       1,731  
    Inventory valuation adjustment   (6,419 )     —     —       —  
    Environmental obligation mark-to-market adjustments   (18,199 )     —     —       —  
    Unrealized loss on commodity derivatives   34,061       —     —       —  
    Acquisition and integration costs   —       —     —       68  
    Severance costs and other non-operating expenses   642       —     —       14,006  
    Par West redevelopment and other costs   —       —     —       9,048  
    Loss (gain) on sale of assets, net   —       124     (10 )     —  
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   2,037       2,550     —       —  
    Other loss, net   —       —     —       (1,447 )
    Adjusted EBITDA (1) $ 161,517     $ 87,146   $ 53,784     $ (74,720 )
      Nine Months Ended September 30, 2023
      Refining   Logistics   Retail   Corporate and Other
    Operating income (loss) by segment $ 502,123     $ 54,035   $ 42,009   $ (93,459 )
    Depreciation and amortization   59,827       17,801     8,577     1,682  
    Inventory valuation adjustment   126,799       —     —     —  
    Environmental obligation mark-to-market adjustments   (174,111 )     —     —     —  
    Unrealized gain on commodity derivatives   (487 )     —     —     —  
    Acquisition and integration costs   —       —     —     17,213  
    Severance costs and other non-operating expenses   —       —     580     1,105  
    Par West redevelopment and other costs   —       —     —     8,490  
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments   821       905     —     —  
    Other income, net   —       —     —     301  
    Adjusted EBITDA (1) $ 514,972     $ 72,741   $ 51,166   $ (64,668 )

    ________________________________________
    (1)   For the three and nine months ended September 30, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, or impairments associated with our investment in Laramie Energy. For three months ended September 30, 2024 and for the three and nine months ended September 30, 2023, there was no loss (gain) on sale of assets.


    Laramie Energy Adjusted EBITDAX

    Adjusted EBITDAX is defined as net income (loss) excluding commodity derivative loss (gain), loss (gain) on settled derivative instruments, interest expense, gain on extinguishment of debt, non-cash preferred dividend, depreciation, depletion, amortization, and accretion, exploration and geological and geographical expense, bonus accrual, equity-based compensation expense, loss (gain) on disposal of assets, phantom units, and expired acreage (non-cash). We believe Adjusted EBITDAX is a useful supplemental financial measure to evaluate the economic and operational performance of exploration and production companies such as Laramie Energy.

    The following table presents a reconciliation of Laramie Energy’s Adjusted EBITDAX to the most directly comparable GAAP financial measure, net income (loss) for the periods indicated (in thousands):

      Three Months Ended September 30,   Nine Months Ended September 30,
        2024       2023       2024       2023  
    Net income (loss) $ (4,239 )   $ (3,479 )   $ (4,296 )   $ 54,048  
    Commodity derivative (income) loss   (5,234 )     1,889       (15,821 )     (32,951 )
    Gain (loss) on settled derivative instruments   5,584       2,775       14,220       (1,433 )
    Interest expense and loan fees   5,745       5,783       15,783       14,742  
    Gain on extinguishment of debt   —       (3,454 )     —       6,644  
    Non-cash preferred dividend   —       —       —       2,910  
    Depreciation, depletion, amortization, and accretion   8,128       9,248       24,683       22,465  
    Phantom units   (217 )     2,425       (503 )     3,171  
    Loss (gain) on sale of assets, net   (8 )     239       (8 )     307  
    Expired acreage (non-cash)   157       —       722       112  
    Total Adjusted EBITDAX (1) $ 9,916     $ 15,426     $ 34,780     $ 70,015  

    ______________________________
    (1)   For the three and nine months ended September 30, 2024 and 2023, there was no exploration and geological and geographical expense, bonus accrual, or equity-based compensation expense.

    The MIL Network –

  • MIL-OSI Australia: Publicly available data to help understand tax compliance

    Source: Australian Department of Revenue

    Understand tax compliance in Australia

    An important feature of the Australian tax system is that the details of income earned and taxes paid by taxpayers are kept confidential. This applies for both people and entities. We believe this confidentiality supports full and honest disclosure to us.

    However, an interested person can use a range of tools to better understand a company’s tax position. New data sources are available to help the community understand more about the tax compliance of large corporate groups.

    We encourage community enquiries. These support an informed debate about tax compliance in Australia. Informed debate can balance speculation about low or no tax paid by some corporate groups. It can also address concern about non-compliance by the large corporate groups population in general.

    Sources of information

    Relevant sources of information about a company’s tax position include:

    • reports prepared by the corporate group itself, especially reports written under the voluntary tax transparency code
    • financial reports prepared by the corporate group and lodged, directly or indirectly, with the corporate regulator, ASIC
    • our annual publication of key financial and tax data relevant to large corporate groups under the corporate tax transparency measure
    • informed analysis and media commentary of particular corporate groups or industries including    
      • analysis of annual reports prepared by a corporate group in Australia
      • reports filed by the overseas headquarters of a multinational with operations in Australia.

    How large corporate groups are taxed

    In looking at the tax paid by a particular large corporate group, it is important to remember:

    • income tax isn’t paid on gross income, it’s paid on taxable income, meaning they may pay less or no tax in subsequent years
    • even very large corporate groups sometimes make losses that may mean they don’t pay tax in that year and, subject to integrity provisions in the law, they can carry forward and claim these as a tax deduction in future years
    • Australia generally doesn’t tax the offshore profits of corporate groups where they are comparably taxed overseas
    • the profits of businesses run through trusts are usually taxed at the investor level, not the trust level.

    Voluntary tax transparency code

    We encourage large corporate groups to adopt the voluntary tax transparency code (the Code). This includes entities treated as companies for Australian tax purposes and foreign multinationals with operations in Australia.

    The Code was developed by the Board of Taxation and endorsed by the Australian Government in the 2015–16 federal Budget. It’s designed to encourage greater transparency within the corporate sector, particularly by multinationals. It will improve the community’s understanding of the corporate sector’s compliance with Australia’s tax laws.

    We’re encouraged by the number of corporates volunteering to produce tax performance reports. By 31 August 2023:

    • over 140 corporates published reports for 2021–22
    • over 120 corporates published to date for 2022–23
    • over 20 corporates published to date for 2023–24.

    We believe this will support more informed community debate about the tax system.

    The first Voluntary Tax Transparency Code reportExternal Link for 2015–16 was published on data.gov.au in September 2016. It is updated as we receive more reports from businesses and currently includes 8 years of data. Over 210 corporates have become signatories to the Code.

    Requirement to lodge general purpose financial statements

    Most large corporates file detailed accounts with ASIC. These general purpose financial statements (GPFS) provide some tax payment details, including:

    • the amount they expect to pay as tax liabilities
    • a tax note explaining material tax adjustments, for example, profits and dividends or both from a foreign subsidiary may be exempt for income tax purposes, but treated as income in the accounts
    • any amended assessment received, subject to principles of materiality
    • information on substantial tax disputes, where the reporting entity has to disclose contingent liabilities under the Corporations Act 2001.

    Some large global entities with Australian operations may not have been required to provide full GPFS to ASIC. Sometimes they’ve been able to lodge special purpose financial statements. Separately, grandfathering provisions provided exemptions from filing GPFS with ASIC for some Australian large private companies.

    However, recent changes made to legislation means these companies will no longer be exempt from lodging financial statements with ASIC. The exemption now only applies to financial years ending on or before 9 August 2022 when the Act received royal assent.

    For income years beginning on or after 1 July 2016, legislation now requires significant global entities to lodge GPFS with us if they don’t already provide them to ASIC. We pass these to ASICExternal Link and they make them public in their document register.

    This measure increases the transparency of large multinational companies operating in Australia. Since its introduction, we’ve sent over 15,000 GPFS to ASIC.

    Corporate transparency report

    We publish limited tax details of certain large corporate taxpayers in accordance with tax returns as lodged. This is part of a global push to improve transparency and inform public debate about tax policy.

    The law requires us to publish this information each year. We also provide supporting commentary to give context to the data and help users understand the tax adjustments that may be relevant in arriving at the taxable income. Importantly, this data doesn’t get updated for subsequent ATO-initiated amendments to the returns lodged.

    The information published is drawn from tax return labels and covers:

    • name
    • ABN
    • total income
    • taxable income
    • tax payable
    • petroleum resource rent tax (PRRT) payable.

    Many companies prepare additional information available to the public that provides context to the data we publish.

    We released the 2022–23 Report of entity tax information in November 2024, published on data.gov.au.

    For more information, see:

    Other sources of information

    Some media and professional analysts study corporations and/or industries. These reports sometimes draw on detailed financial updates filed by multinational enterprises in their home jurisdiction. They can indicate taxes paid globally and sometimes taxes paid here in Australia.

    Other analyses of a corporate group’s financial and tax position might arise upon a significant or material event. This may include a merger, acquisition or takeover proposal, or a major change in their financial position following receipt of an amended tax assessment.

    MIL OSI News –

  • MIL-OSI Australia: The OECD four pillars of compliance

    Source: Australian Department of Revenue

    Large corporate group registration

    As significant contributors to the Australian tax system, we’re confident large corporate groups who should be registered in the system are registered. With sophisticated business operations of $250 million or more in revenue annually, these groups are well aware of their tax obligations.

    Large corporate group lodgment

    Large corporate groups predominantly lodge on time. These businesses have significant internal capacity and capability to lodge. Failure to lodge is likely to be symptomatic of broader issues within the business.

    Of those that don’t lodge on time, many are late by less than one month and most are late by less than 3 months. We have specific engagement strategies for these entities. There are also higher penalties for significant global entities that fail to lodge on time.

    Occasionally we may find individual entities within a large corporate group not meeting their lodgment obligations. Often this is due to the entities being dormant or non-trading, which is not a revenue risk under ordinary circumstances.

    Figure 1: Large corporate groups lodgment performance, 2022–23

    Correct reporting

    Measuring assurance and confidence in tax consequences

    Tax assured helps us demonstrate our confidence in the tax system. We consider amounts of tax to be assured where we have evidence they have been reported correctly. We collect evidence from a range of sources including directly from taxpayers.

    Where we can’t gather evidence to assure tax, we rely on our broader risk management approaches to provide us with confidence in tax reporting.

    Tax assured complements other measures, including tax gaps and total revenue effects. Together they provide insight into how well the tax and super systems are performing. We use this insight to assist Treasury with shaping the future design of the systems and our strategies for addressing potential non-compliance.

    We have assured $36.9 billion of income tax reported by large corporate groups for 2021–22 and $39.2 billion for 2020–21.

    You can also find out about How we gain confidence the right amount of tax is being paid.

    Preventative action

    We undertake a range of activities aimed at preventing non-compliance. We do this:

    • across the large corporate groups population generally
    • through direct action with the largest taxpayers in this population.

    You can find out more in Population wide approaches to preventing non-compliance and how we engage with specific taxpayers in Active prevention: one-to-one.

    Corrective action

    Corrective action targets those cases where taxpayers seek to push the boundary of acceptable tax planning. We identify these cases based on:

    • intelligence
    • data analysis
    • risk assessments.

    Where we suspect a particular arrangement is being used by multiple large corporate groups we address the potential non-compliance in a targeted and coordinated way. This includes investigating both taxpayers and advisers we suspect are involved. We also provide early warning to the market of our concerns, often in the form of a taxpayer alert.

    Results from our compliance activities

    Our compliance activities and the results we obtain act as a visible deterrent against large corporate groups choosing not to comply with their Australian tax obligations.

    The significant fluctuation in the outcomes of our corrective action each year reflects the characteristics of the large corporate groups population:

    • There are low levels of systemic tax avoidance, so we don’t have a regular program of audits on the same fact pattern leading to similar audit results across years.
    • The size of the taxpayers and their transactions is such that a single audit case may amount to significant sums in additional tax payable.
    • Complex transactions may be subject to multi-year investigations and subsequent litigation before the taxpayer pays additional taxes and penalties.
    Table 1: Corrective action targeting large corporate groups income tax, 2018–19 to 2023–24

    Corrective action targeting large corporate groups income tax

    2018–19
    $m

    2019–20
    $m

    2020–21
    $m

    2021–22
    $m

    2022–23
    $m

    2023–24
    $m

    Total debits (liabilities) (see Note 1)

    1,876

    2,053

    2,818

    2,666

    1,974

    2,824

    Audit yield (cash) (see Note 2)

    1,136

    1,373

    1,051

    1,428

    1,276

    1,669

    Note 1: Liabilities raised in a given year may relate to multiple years of assessments and include additional tax, penalties and interest.

    Note 2: Audit yield is actual cash collected (or estimated to have been collected) against liabilities raised (in the year and prior) and includes collections on tax, penalties and interest.

    The complexity inherent in the law and the business affairs of large corporate groups can lead to significant differences in interpretation of how the law applies in a given circumstance. Taxpayers can and do dispute amended assessments made by us, sometimes all the way to the courts. The result is not always in our favour.

    Sometimes we settle disputes for a lesser amount than originally assessed. This means the additional cash we collect from an audit doesn’t always equal the amount of additional tax liabilities we raised under the amended assessment.

    Observed behaviours

    Some large corporate groups may engage in tax minimisation or avoidance. But typically, they are not reckless and do not evade tax.

    Where we see an incorrect application of the law and reasonable care hasn’t been taken, we can apply a range of administrative penalties. These vary, depending on the behaviour involved.

    Our analysis of culpability penalty rates imposed confirms a strong compliance culture among large corporate groups. We have not raised a penalty in cases where the taxpayer made a voluntary disclosure or, in our view, had a reasonably arguable position and it is otherwise appropriate to not impose a penalty.

    Even where we have applied penalties, in most cases we considered there was, at most, a lack of reasonable care and not recklessness or intentional disregard. We may reduce a penalty where appropriate based on the facts and circumstances of the case.

    Figure 2: Culpability penalty rates applied to large corporate groups, 2018–19 to 2023–24

    You can also view data for Culpability penalty rates applied to large corporate groups, 2018–19 to 2023–24 in table format.

    On-time payments

    Most large corporate groups generally pay their tax obligations on time and almost all tax is paid within 365 days or within agreed upon timetables.

    As with lodgment obligations, our work managing debts of large corporate groups focuses on cooperative relationships. We also emphasise:

    • transparency
    • prevention before correction
    • early assurance
    • certainty for all parties.

    This is our starting position for working with all businesses. Most businesses work this way with us.

    Figure 3: Large corporate groups payment times, 2022–23

    Large corporate groups income tax debt is relatively small compared to the total corporate income tax reported. Similarly, the income tax value of debt owed by these groups represents only a small percentage of their total tax paid on time, and the majority of this debt is disputed.

    Disputed debt covers tax outstanding that is subject to:

    • an objection with us
    • a review via the Administrative Review Tribunal
    • appeal to the Federal Court.

    We expect that in such a large and complex system we will have disputes. Our intention is to resolve disputes as early as possible, in a way that is fair and respectful.

    A very small amount of debt is owed by former large corporate groups that are now under some form of insolvency administration.

    Figure 4: Large corporate groups debt as a proportion of corporate income tax, 2022–23

    MIL OSI News –

  • MIL-OSI Australia: Tax and Corporate Australia

    Source: Australian Department of Revenue

    An effective tax system supports the social benefits we all enjoy. The key to an effective tax system is a high level of willing participation. This is built on the community having confidence:

    • that all taxpayers are paying the right amount of tax
    • in us as administrators.

    We share our tax system insights with you to improve awareness and encourage voluntary compliance.

    The community is especially concerned with the income tax compliance of large corporate groups. This population is made up of 2,081 groups. Each has a turnover of more than $250 million and makes a significant contribution to our tax system and the Australian economy.

    Based on our detailed knowledge of the system, most large corporate groups pay the right amount of tax. There will always be some who deliberately avoid their tax obligations. Our message to businesses operating in Australia is clear: you must pay the right amount of tax on the profits you earn here.

    We take our responsibility to the Australian community seriously. Here you can find out how we are:

    • improving the system for those who want to comply
    • taking firm action against those who choose not to.

    We hope it provides you with an increased understanding of how Australia’s tax system is operating for the largest corporations.

    MIL OSI News –

  • MIL-OSI New Zealand: Public servants should use cheaper taxi options

    Source: ACT Party

    ACT’s Finance spokesperson Todd Stephenson has written to Public Service Commissioner Sir Brian Roche, congratulating him on his appointment and suggesting that he allow public servants to use rideshare services like Uber as a more taxpayer-friendly alternative to traditional taxis.

    “There seems to be a widespread rule that public service employees are not able to claim back or expense a rideshare service used in the course of their employment, and this is unnecessarily costing taxpayers money,” says Mr Stephenson.

    “Rideshare services are typically more affordable than traditional taxi services, and there is no justification for a blanket ban on their use.

    “A 2017 report from the Taxpayers’ Union estimated savings of upwards of $3 million a year if public servants used rideshare services instead of taxis. The savings are likely to be even greater today.

    “There could be other benefits. Rideshare apps offer live location tracking and number plate verification, enhancing safety for public servants. Digital receipts that show journey start and end points add another layer of accountability that ensures travel privileges are used appropriately.

    “While ACT hopes the new Commissioner will be looking far more widely for ways to improve value for money in the public service, I hope he’ll take my suggestion on board as a ‘small, but easy’ change.”

    MIL OSI New Zealand News –

  • MIL-OSI Australia: Tables – Tax compliance of Australian corporations

    Source: Australian Department of Revenue

    Demographics of large corporate groups – data table

    The table details the data used in figure, the contribution to tax revenue from 2017–18 to 2022–23 for large corporate groups.

    Table: the contribution to tax revenue from 2017–18 to 2022–23 for large corporate groups

    $b Income tax payable

    2017–18

    2018–19

    2019–20

    2020–21

    2021–22

    2022–23

    Large Diversified Miners

    8.0

    10.2

    11.5

    14.9

    23.1

    21.0

    Oil & Gas

    1.2

    1.9

    1.3

    0.6

    1.4

    12.0

    Other Mining, Energy and Water

    6.9

    10.8

    12.1

    16.6

    18.0

    22.3

    Major Banks

    11.4

    10.1

    9.2

    8.4

    8.4

    9.9

    Other Financial Services

    6.5

    6.8

    6.4

    7.4

    8.7

    7.3

    Wholesale, Retail and Services

    13.6

    12.6

    12.5

    15.1

    17.3

    18.4

    Manufacturing, Construction and Agriculture

    3.9

    3.8

    3.7

    4.0

    5.6

    4.8

    Total large corporate groups income tax reported

    51.4

    56.2

    56.6

    67.1

    82.6

    95.6

    Macro-level analysis is giving us confidence – data tables

    The table below details the data used in figure, indexed income tax payable and pre-tax profits of ASX-listed companies.

    Table: Indexed income tax payable and pre-tax profits of ASX-listed companies

    Year

    Income tax payable ($m)

    Pre-tax profit ($m)

    Indexed income tax payable

    Indexed pre-tax profit

    2018

    28,549

    157,674

    100.0

    100.0

    2019

    29,938

    164,157

    104.9

    104.1

    2020

    31,080

    146,335

    108.9

    92.8

    2021

    37,877

    190,778

    132.7

    121.0

    2022

    43,353

    246,988

    151.9

    156.6

    The table below details the data used in figure, tax-to-income ratios of Australian public and majority foreign-owned large corporate groups.

    Table: Tax-to-income ratios of Australian public and majority foreign-owned large corporate groups from 2017 to 2023

    Year

    Majority Foreign-owned

    Australian – Public

    Australian – Public (excluding largest 10)

    Private

    2017

    1.57%

    3.19%

    1.80%

    1.44%

    2018

    1.82%

    3.25%

    1.92%

    1.81%

    2019

    1.90%

    3.44%

    1.91%

    1.44%

    2020

    1.72%

    3.47%

    1.72%

    1.51%

    2021

    1.63%

    4.13%

    1.76%

    1.79%

    2022

    2.32%

    4.29%

    2.15%

    1.72%

    2023

    3.00%

    3.72%

    2.37%

    1.48%

    The OECD four pillars of compliance – data table

    The table details the data used in figure 2, culpability penalty rates applied to large corporate groups, 2018–19 to 2023–24.

    Table: Culpability penalty rates applied to large corporate groups from 2018–19 to 2023–24

    Culpability penalty

    2018–19

    2019–20

    2020–21

    2021–22

    2022–23

    2023–24

    0 rate

    0.4

    0.7

    0.3

    0.3

    0.7

    0.4

    10% rate

    0.1

    0.1

    0.3

    0.3

    0.0

    0.3

    25% rate

    0.3

    0.1

    0.4

    0.3

    0.2

    0.3

    50% rate

    0.2

    0.1

    0.1

    0.1

    0.1

    0.0

    75% rate

    0.0

    0.0

    0.0

    0.0

    0.0

    0.0

    MIL OSI News –

  • MIL-OSI Australia: We assist and assure the tax compliance of large corporate groups

    Source: Australian Department of Revenue

    How we engage with large corporate groups

    One of our strategic aims is to sustainably reduce the tax gap. We know old approaches centred on active compliance programs of reviews and audits will not achieve that aim. Instead, our first focus is on active prevention.

    We believe the majority of taxpayers prefer to avoid tax risk where possible. To do so, they need to know where our concerns lie and our compliance stance on various aspects of the law or areas of the economy. Our goal is to only have taxpayers entering into disputes with us where they know what our position is and have made a conscious decision to operate contrary to it.

    To achieve this goal, we’re more explicit about where we have concerns. We communicate our thinking across all aspects of our compliance activities. We’re more creative and flexible in the type and form of guidance we produce. This means we now have tailored guidance products for specific purposes as well as our traditional public rulings.

    Public guidance also supports community confidence in the system by letting the public know we are identifying and dealing with matters of concern.

    Through early engagement and private advice, we also work directly with large corporate groups. This helps to identify higher risk transactions and reduce disputes. It allows us to work with the taxpayer to agree on the appropriate tax treatment before they lodge their tax return.

    Sometimes we can’t avoid disputes, and we’ll pursue matters through audit and to litigation where necessary. The community expects us to take strong action against deliberate non-compliance where we find it. A credible compliance presence also deters others from pushing the bounds of acceptable behaviour.

    Population-wide approaches to preventing non-compliance

    Large corporate groups have multiple tax obligations. The complexity in fulfilling these obligations can be costly. We’re improving the system to give more certainty and reduce corporate administrative costs. This includes continuing our focus on public guidance.

    We’ll continue to monitor the environment to understand what’s happening in the economy, tax system and business. This will ensure we provide relevant and timely guidance.

    We’ll also consult with stakeholders on their needs, so our advice is practical and contemporary. This consultation has already resulted in us developing new guidance products.

    Law companion rulings

    Law companion rulings (LCRs) provide practical certainty, in the form of a public ruling, on how we will apply significant new law. LCRs cover income tax, super and GST measures.

    Recent LCRs include:

    • LCR 2021/1 OECD hybrid mismatch rules – targeted integrity rule
    • LCR 2021/3 Temporary full expensing.

    Practical compliance guidelines

    Practical compliance guidelines (PCGs) are designed to provide a practical compliance solution where there is uncertainty, impracticality or discord between the law and current commercial practices. They may also provide our view of what constitutes a low or high-risk activity or arrangement in relation to a specific area of the law. PCGs issued cover income tax, excise and GST matters.

    Recent PCGs include:

    • PCG 2021/1 Application of market value substitution rules when there is a buy-back or redemption of hybrid securities – methodologies for determining market value for investors holding their securities on capital account
    • PCG 2021/5 Imported hybrid mismatch rule – ATO’s compliance approach
    • PCG 2024/1 Intangibles migration arrangements.

    Taxpayer alerts

    We use taxpayer alerts to flag arrangements of concern with the community, taxpayers and advisers.

    Each taxpayer alert describes an arrangement and our concerns about it. Taxpayer alerts don’t provide our interpretation of the law but outline where we currently have concerns and what we’re doing to address them. They also invite taxpayers to seek advice from independent advisers or us. We encourage this if they have or are considering entering into a similar arrangement as described in an alert.

    Taxpayer alerts help taxpayers and their advisers make more informed decisions. They stop the proliferation of tax schemes. They also support community confidence in the tax system.

    Recent taxpayer alerts include:

    • TA 2020/1 Non-arm’s length arrangements and schemes connected with the development, enhancement, maintenance, protection and exploitation of intangible assets
    • TA 2020/2 Mischaracterised arrangements and schemes connected with foreign investment into Australian entities
    • TA 2020/3 Arrangements involving interposed offshore entities to avoid interest withholding tax
    • TA 2020/4 Multiple entry consolidated groups avoiding capital gains tax through the transfer of assets to an eligible tier-1 company prior to divestment
    • TA 2020/5 Structured arrangements that provide imputation benefits on shares acquired where economic exposure is offset through use of derivative instruments
    • TA 2022/2 Treaty shopping arrangements to obtain reduced withholding tax rates.

    Working with the tax profession

    Advisers play an important role helping taxpayers meet their tax and super obligations. Because the laws are complex, we encourage taxpayers to seek high quality tax advice.

    Most tax professionals provide support for the integrity of the tax system. We work with the tax profession and explain our concerns to them at the earliest opportunity. In this way, we support them to provide appropriate advice to their clients. We also use our strong relationships with tax professionals and their representative bodies to develop our approaches.

    The Large Market Tax Advisor Principles (published August 2022) are a voluntary framework developed by the 4 largest tax advisory firms with input from the ATO and Tax Practitioners BoardExternal Link (TPB). All firms offering tax advisory services may choose to adopt the principles.

    The 4 firms have each published the principles and explanatory information on their websites, see:

    Firms that adopt and follow the principles provide added confidence to their clients, the community and the ATO about the quality of their tax advice. Adopting the framework provides confidence the firm has processes in place aimed at preventing it from being involved in proscribed engagements and particular governance arrangements for when it is advising on higher risk engagements.

    We do not regulate the framework, but we will work closely with the firms to understand how the principles are operating in practice.

    The design and publication of the framework is a positive innovation for the Australian tax profession. Increasing transparency of the role of advisers further strengthens the integrity of the tax system.

    We also seek to positively influence ethical and professional standards in a range of areas relevant to tax advisers.

    We’ll act quickly with advisers who undermine the integrity of the tax system or facilitate non-compliance. In addition to the regulatory work of the TPB, we collaborate with professional associations to uphold the reputation of the tax profession. In serious cases, promoter penalty laws may apply to promoters of tax avoidance schemes.

    The types of behaviour that cause us concern include:

    • engaging in conduct designed to frustrate and prevent the collection of facts and information and the proper administration of tax laws
    • the promotion of tax avoidance schemes.

    On 6 August 2023, the Government announced a range of reform measures to strengthen the regulatory framework to combat advisor misconduct, focused on deterring the promotion of tax exploitation schemes to large market taxpayers. We will act quickly and decisively to ensure the tax system is protected from abuse.

    Using our formal information gathering powers

    We issue formal notices to advisers and their firms known to be associated with arrangements covered by our taxpayer alerts. The notices ask for information and documents for taxpayers to whom they provided advice.

    We issue the notices to identify:

    • information about the involvement of certain known taxpayers in the schemes
    • any other taxpayers who may have been involved in the schemes
    • who designed the schemes, why they were designed and the processes involved in their design
    • what promotion of these schemes has taken place.

    We pursue a range of cases to obtain documents, including testing claims for legal professional privilege, and for the consequences of breaching information notices, which include criminal sanctions.

    Legal professional privilege

    Legal professional privilege (LPP) protects confidential communications between a lawyer and their client for the dominant purpose of providing or seeking legal advice. LPP also protects confidential communications prepared for the dominant purpose of actual or reasonably anticipated legal proceedings.

    LPP is an important common law right, as it:

    • protects a client’s privacy
    • encourages full disclosure between the client and their lawyer when obtaining and providing legal advice or services.

    We want taxpayers to get high quality advice, as this underpins the self-assessment system. Most advisers, whether at accounting or law firms, provide this and support the tax system.

    We had been concerned that in some instances, taxpayers and their advisers were incorrectly claiming LPP in an attempt to withhold material facts and evidence from us.

    In some cases, it appeared that non-legal services or services provided by non-lawyers had been artificially packaged under a purported legal services engagement to support a subsequent LPP claim.  In other cases, we saw:

    • blanket claims of privilege being made over thousands or tens of thousands of documents
    • the over-claiming of privilege
    • a lack of transparency in claims.

    This risked constraining the application of the law for the provision of information to us and hindering our audit function.

    These issues largely arose in large business privilege claims where we had issued a notice requiring them to produce information as part of an audit. In most of our engagements with large businesses, they provide us with information we need and we do not experience difficulties with managing LPP claims.

    In recognition of the need for greater coverage in education and better practices to improve its use and understanding, we developed the Compliance with formal notices – claiming legal professional privilege in response to formal notices – Legal professional privilege protocol (LPP Protocol).

    This protocol:

    • helps taxpayers and advisers making LPP claims in response to requests for information and documents we make under our formal information gathering powers
    • contains our recommended approach for identifying communications covered by LPP and making LPP claims to us
    • will result in a more efficient resolution of LPP claims for taxpayers and the ATO if steps are followed and properly embedded in a firm’s engagement and legal services practices.

    Businesses that choose not to follow the protocol and do not provide sufficient information to support their LPP claims can expect further enquiries from us.

    One-to-one engagement with large corporate groups

    We engage one-to-one with large corporate groups. This gives us assurance over approximately two-thirds of all corporate income tax.

    Differentiated engagement

    We assess the risk of each corporate group in the entire population based on our professional judgment of the:

    • transparency of their engagement with us
    • choices and behaviours evidenced in their tax affairs
    • level of risk they exhibit.

    We use the outcomes of our assessment to tailor our engagement with each large corporate group.

    Given Australia’s highly concentrated corporate tax base and the significant impact the Top 100 public and multination businesses can have on the health of our tax system, we engage with them on an ongoing basis to manage their compliance and assure their tax performance.

    We seek to clarify issues and risks as they arise. Being transparent about issues that concern us provides a catalyst to resolve them early.

    For more information about our differentiated engagement, see:

    How we gain confidence the right amount of tax is being paid

    We’re focusing on whole-of-taxpayer profiling and risk assessment using our justified trust methodology. This helps us understand the taxpayer’s business model and any tax planning motivation and opportunities they may have.

    The profile and risks involved tell us what we need to do to gain confidence each taxpayer is paying the right amount of tax.

    We’re taking a structured approach to gain this confidence by considering:

    • the taxpayer’s tax risk management and governance framework
    • whether the taxpayer is involved in any arrangements we’ve indicated we’re concerned about or consider high risk
    • understanding the tax impacts of current business activities, particularly any significant and new transactions the taxpayer has entered into
    • if the taxpayer’s accounting and tax or GST results vary, understanding why this is the case.

    Our effective tax borne (ETB) methodology provides an approach to analyse the income tax and economic performance of corporate groups. It identifies an economic group’s worldwide profit from Australian-linked business activities and the Australian and offshore tax paid on that profit.

    Essentially, the ETB determines the weighted average of the cash tax paid ratios (cash tax paid over Australian-linked profits) for each jurisdiction. Analysing and understanding a taxpayer’s ETB provides evidence of the absence of risk and assists in identifying risk.

    For more information see Appendix 3External Link – Senate Economics References Committee report on corporate tax avoidance.

    Helping corporates strengthen their tax governance

    We developed the Tax risk management and governance review guide primarily for large public businesses. It articulates better practices that boards and management can adopt to enhance governance and manage tax risk.

    The guide is designed to help businesses self-evaluate their governance framework and manage their strategic and operational tax risks. It sets out what we believe to be better tax corporate governance practices. We also provide guidance for privately owned groups to help them develop or improve the effectiveness of their tax governance framework.

    Both guides are what we recommend, rather than mandate.

    Where we are satisfied that companies have strong and lived governance, we can have increased confidence in their financial and tax reporting.

    For more information, see Tax governance for privately owned groups.

    Active prevention: one-to-one

    We recognise that willing participation supports a healthy and strong tax system. Approaches that prevent tax risks support willing participation better than corrective approaches. Our one-to-one active prevention approach seeks to influence taxpayer behaviour. We get involved before the taxpayer reports the tax outcomes of their business transactions to us.

    We apply active prevention approaches to the largest corporate taxpayers. This is important because their compliance influences not only the revenue base but also the willing participation of other taxpayers. Our one-to-one prevention includes our:

    • pre-lodgment compliance reviews
    • private rulings
    • advance pricing arrangements.

    It may also include informal guidance and interactions.

    The key is that taxpayers have openly and transparently discussed their plans and their view of the tax implications. Active prevention succeeds when clients modify their behaviour based on the concerns we raise.

    We estimate the wider revenue effects of these strategies wherever possible. Most techniques are evidence-based. We use information supplied by clients to estimate the difference in tax paid due to engaging early. This allows us to understand their proposed tax position and the impact of shifting that position, where necessary.

    Private rulings

    Early engagement discussions are a key tool we use to assist large corporate groups seeking advice on complex transactions they are considering or have already implemented. These discussions allow for timely identification and management of tax risks. It enables businesses to enter into transactions with confidence.

    Taxpayers also have the option to provide a draft ruling for review and endorsement by us. We’ll still review the arrangement proposed and ensure the appropriate application of the law before any ruling is issued. This will deliver a more streamlined process and improve the client experience.

    We recognise taxpayers are not obliged to follow our advice under our self-assessment system. Where our risk identification processes have identified a concern, we may engage in compliance activities to test if the transaction is implemented in materially the same manner as described in the private ruling request.

    As part of our assurance reviews of the largest taxpayers, we seek confirmation of facts where we provided advice to ensure it has been followed.

    Pre-lodgment compliance reviews

    Pre-lodgment compliance reviews (PCRs) are a key approach to ensuring prevention before correction. Through early engagement and a transparent relationship, we are able to work with large corporate groups to identify and resolve potential compliance concerns as they arise and before tax returns are lodged.

    Advance pricing arrangements

    Advance pricing arrangements (APAs) lock in compliant outcomes by agreeing on the criteria for transfer prices in advance of transactions occurring. They can eliminate the need for costly post-lodgment reviews and audits. They also give the community more confidence in the compliance of multinational enterprises.

    Before we agree to an APA, we need to understand the entire value chain and allocation of profits globally. We apply the same structured approach we use to gain confidence in the tax paid by large corporate groups to our analysis to determine the basis for any APA we enter into. We don’t simply look at the immediate transaction between the Australian entity and the related party.

    Under an APA, taxpayers provide us with an annual compliance report. This demonstrates how they have complied with the terms of their APA.

    The APA and our review of the annual compliance reports assure us the taxpayer is reporting the appropriate revenue on these related party transactions in their tax returns.

    MIL OSI News –