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  • MIL-OSI Australia: Sequel to Sweet Country, among 19 projects supported by Screen Australia’s First Nations Department

    Source: Australia Government Statements 4

    24 10 2024 – Media release

    Warwick Thornton, director of Wolfram: A sequel to Sweet Country
    Screen Australia’s First Nations Department is thrilled to announce its latest funding slate, including Warwick Thornton’s sequel to Sweet Country titled Wolfram, alongside two powerful documentaries for NITV spanning sport and politics.
    In total, 19 new projects, including 16 funded for development, will receive over $3 million in funding. This investment reflects the agency’s ongoing commitment to amplify First Nations voices and stories, aligned with the Federal Government’s National Cultural Policy Revive and its First Nations First pillar – recognising and respecting the crucial place of First Nations stories at the centre of Australia’s arts and culture.
    Screen Australia’s Head of First Nations Angela Bates said, “Our First Nations creatives are at the forefront of Australian storytelling, with many incredible projects being celebrated on the world stage and even more in development. The demand for our funding has never been higher, which is a positive sign for the industry. Across the 23/24FY, our Department invested over $7.1 million of funding including 105 opportunities across development, production, initiatives, attachments and market support – highlighting the incredible talent and rich narratives within Indigenous communities. With films like Wolfram and documentaries Dreaming Big and One Mind, One Heart, I’m inspired by the depth of powerful screen stories authored by First Nations Australians.”
    “It’s an exciting time for First Nations content creators, and we’re witnessing a new wave of talent. Looking ahead, we will continue to create pathways for these storytellers to thrive and expand their careers in the competitive global marketplace, collaborating with industry to enhance project visibility and impact,” said Bates. 
    This funding announcement follows a year of significant achievements for First Nations stories and creatives. Feature films The New Boy and The Moogai have garnered international acclaim. The third series of the landmark drama Total Control captivated local audiences with it being the most watched First Nations series in 23/24. Additionally, the ground-breaking children’s show Little J & Big Cuz returned for its fourth series on NITV and ABC, featuring 17 language groups and providing a powerful voice for children across Australia. The feature length documentary Kindred premiered on NITV in June, further highlighting the power of cultural connection.
    In the past year, the Department has also invested $1 million into the Enterprise program, supporting four First Nations businesses and three practitioners. Collaborating with Instagram Australia, it launched the fourth iteration of the First Nations Creators Program, supporting emerging talent in the content creator economy to build their skills in the digital space. The Department also supported six projects for production through the First Facts: First Nations Factual Showcase initiative, providing emerging and mid-career Aboriginal and Torres Strait Islander filmmakers with opportunities to create 10-minute documentaries for Network 10.
    Warwick Thornton, director of Wolfram: A sequel to Sweet Country said, “This is my family’s story. My great grandmother and her daughters worked the Hatches Creek mines for whitefellas. Now a truth will come out and it’s called Wolfram.”
    The projects funded for production are:

    Wolfram: A sequel to Sweet Country: Set three years after Sweet Country, Wolfram continues the story of Philomac, now 17 and still living under the watchful eye of his ill-tempered master Mick Kennedy. After meeting Max and Kid, Philomac decides to free himself and the siblings from the white men’s brutality by running away into desert country. Along the way they are assisted by a pioneering family of Chinese Australian miners Jimmi and Wang Wei, who help reunite the children with their estranged mother Pansy. Wolfram is directed by Warwick Thornton and written by Steven McGregor and David Tranter, whose credits include Sweet Country. Also producing alongside Tranter is David Jowsey and Greer Simpkin of Sweet Country and Cecilia Ritchie (Limbo). It is financed with support from Screen NSW and the Adelaide Film Festival Investment Fund. Distributing is Dark Matter Distribution, with international sales managed by Memento.
    Dreaming Big: This six-part series for NITV takes an intimate look into the lives of gifted Aboriginal and Torres Strait Islander Australian youths on the cusp of becoming the nation’s next generation of sports stars. Each episode highlights two young elite athletes, showcasing their relentless pursuit to reach the pinnacle of their chosen field as they navigate family and cultural obligations while remaining focused on their goals. The series will be directed by Andrew Dillon (Le Champion) and Abraham Byrne Jameson (One by One), with writer/producer Richard Jameson (Strait to the Plate season 2) and producer Veronica Fury (And We Danced) also attached. It is financed in association with Screen Queensland.
    One Mind, One Heart: In this feature-length documentary for NITV, a historic political Yirrkala bark petition is discovered and makes its way home to Yolgnu country, evoking the spirit of decades of activism for change. The repatriation provides the opportunity to track the long political campaign – through petition, song, dance, campaigning – to keep culture strong and to have a voice for country. One Mind, One Heart is from writer/director Larissa Behrendt (The First Inventors) and producer Michaela Perske (Larapinta). It is financed in association with Screen NSW, with support from the Adelaide Film Festival Investment Fund, Spectrum Entertainment, Documentary Australia and Philanthropy via the Shark Island Institute.

    Also announced today are three television dramas, 11 feature films and two documentaries that will share in over $540,000 of development funding. The projects include feature film Native Gods from 2024 Enterprise Business recipient Djali House; comedy series Long Story Short from writer/director Tanith Glynn-Maloney (Windcatcher); documentary Fire Country, a transformative exploration of Indigenous fire knowledge and wisdom; and feature film RED, about eight Western Australian First Nations women who share the ugly secret of being surrounded by the missing.
    Click here for the full list of projects funded for Production and Development by the First Nations Department throughout the 2023/24 financial year.
    ABOUT SCREEN AUSTRALIA’S FIRST NATIONS DEPARTMENT
    Entirely led and staffed by First Nations Australians, the Department funds drama, documentary and children’s content across all platforms. The Department also identifies emerging First Nations talent, advocates for representation and funds skills development and career escalation opportunities. For more information on the First Nations Department and funding available, click here.
    Screen Australia is expanding the First Nations Department and is recruiting for the new position of Director of First Nations. This is to align with the Agency’s commitment to supporting authentic First Nations screen stories, to further champion industry practitioners and build opportunities for growth and visibility. For more information about the role, click here.
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    MIL OSI News –

  • MIL-OSI USA: October 23rd, 2024 Heinrich Cosponsors Legislation to Protect Medicare and Social Security for New Mexico’s Seniors

    US Senate News:

    Source: United States Senator for New Mexico Martin Heinrich
    WASHINGTON — U.S. Senator Martin Heinrich (D-N.M.) cosponsored the Medicare and Social Security Fair Share Act, legislation that will ensure the long-term solvency of Medicare and Social Security by reversing inequities in the tax system so that high earners contribute a fairer share. 
    “Medicare and Social Security are benefits that New Mexicans have earned over a lifetime of hard work. I’m proud to support this legislation to protect these bedrock programs for New Mexicans by making the ultrawealthy pay their fair share,” said Heinrich.
    Nearly 40% of seniors rely on Social Security for the majority of their incomes – benefits they have earned that let them retire with dignity. Medicare protects its over 60 million beneficiaries, one in five of whom have less than $15,000 in savings, from potentially catastrophic health care costs.
    Despite their bedrock importance, these programs are both at risk of not being able to fully pay out benefits within the next 15 years. Without new revenue, the Hospital Insurance Trust Fund and the Old Age and Survivors Insurance Trust Fund are expected to become insolvent in 2028 and 2033, respectively.
    The Medicare and Social Security Fair Share Act will increase funding for the Social Security and Medicare trust funds by extending the payroll tax on wages, self-employment income, and investment income to taxpayers making over $400,000. The legislation also applies a payroll tax on the pass-through business income, like hedge funds and private equity firms, of taxpayers earning more than $400,000, which will eliminate the classification of earned income as distributed business profits that is currently a major loophole. By applying these two provisions, we can extend Social Security solvency indefinitely and extend Medicare solvency by an estimated 20 years.
    The Medicare and Social Security Fair Share Act is led by U.S. Senator Sheldon Whitehouse (D-R.I.). Alongside Heinrich, the legislation is cosponsored by U.S. Senators Kirsten Gillibrand (D-N.Y.), Chris Van Hollen (D-Md.), and Amy Klobuchar (D-Minn). The bill is led in the House by U.S. Representative Brendan F. Boyle (D-Pa.).
    The bill is endorsed by the Alliance for Retired Americans; American Federation of Government Employees; American Federation of Labor and Congress of Industrial Organizations; American Federation of State, County and Municipal Employees; American Federation of Teachers; Americans for Tax Fairness; Center for Medicare Advocacy; Committee for a Responsible Federal Budget; Communications Workers of America; Doctors for America; Families USA; Groundwork Collaborative; International Federation of Professional and Technical Engineers; Main Street Alliance; Mary’s Center; National Committee to Preserve Social Security and Medicare; National Council on Aging; National Education Association; NETWORK Lobby for Catholic Social Justice; People’s Action; Public Citizen; Revolving Door Project; Social Security Works; and the Teamsters.
    A one-page summary is here.
    The text of the bill is here. 
    Background
    Heinrich fought hard to pass the Inflation Reduction Act, historic legislation that lowers health care and prescription drug costs for working families. 
    This year, the Inflation Reduction Act began capping out-of-pocket costs for prescription drugs at an estimated $3,300, providing substantial relief for individuals facing high medication expenses. This new Medicare drug cap comes in tandem with several other major healthcare provisions Heinrich helped secure, including free vaccines for seniors and a $35 insulin cap for those on Medicare.
    Last year, the White House announced 48 Medicare Part B drugs that raised their prices faster than inflation, and some drug companies raised prices of certain medications faster than inflation for every quarter in 2023. The IRA provisions Heinrich helped deliver will now require these companies to pay rebates back to Medicare, saving seniors who take these drugs between $1 and $2,786 per dose, depending on their medication. 
    The IRA also reduced the cost of marketplace health insurance premiums by an average of hundreds of dollars per person, for roughly 40,000 New Mexicans.
    A longer list of provisions Heinrich helped to secure in the Inflation Reduction Act can be found here.
    Heinrich introduced the Strengthening Medicare and Reducing Taxpayer (SMART) Prices Act, legislation that builds on a provision that was included in the Inflation Reduction Act to empower Medicare to negotiate prescription drug prices for the first time. Specifically, the bill would allow prescription drugs and biologics to be eligible for negotiation five years after approval by the Food and Drug Administration (FDA) — increasing the overall amount by which Medicare can lower prices through negotiation. Additionally, the SMART Prices Act would lower Medicare Part B drug prices through negotiation two years earlier than under current law, and increase the overall number of drugs that the Department of Health & Human Services (HHS) can negotiate starting in 2026.
    Additionally, Heinrich is a cosponsor of the Pharmacy Benefit Manager Transparency Act, legislation that bans deceptive unfair pricing schemes, prohibits arbitrary clawbacks of payments made to pharmacies, and requires Pharmacy Benefit Managers (PBMs) to report to the Federal Trade Commission (FTC) how much money they make through spread pricing and pharmacy fees. 
    Heinrich also cosponsored the COLAs Don’t Count Act, legislation to exempt annual cost-of-living adjustments (COLA) from impacting the benefits of those who utilize the Supplemental Nutrition Assistance Program (SNAP) for food assistance. This would help ensure participants of SNAP are not losing benefits due to the added costs of inflation and allow families to keep food on the table.
    Heinrich recently secured committee passage of his Fiscal Year 2025 Agriculture Appropriations Bill, legislation that delivers critical new resources to fully fund WIC and ensure all eligible women, infants, and children can get the nutrition they need. It also protects vital nutrition assistance programs for families across the country.

    MIL OSI USA News –

  • MIL-OSI Security: Wilsonville Woman Sentenced to Federal Prison for Laundering More than $4.6 Million in Drug Proceeds

    Source: Office of United States Attorneys

    PORTLAND, Ore.—A Wilsonville, Oregon woman was sentenced to federal prison today for laundering millions of dollars in drug proceeds as the chief money launderer for a drug trafficking organization operating in the Pacific Northwest and California.

    Jacqueline Paola Rodriguez Barrientos, 44, was sentenced to 57 months in federal prison and three years’ supervised release.

    “We thank the coordinated efforts of our federal, state, and local law enforcement partners actively combatting these drug trafficking organizations and the damage they inflict on our communities,” said Natalie Wight, U.S. Attorney for the District of Oregon.

    “While people like Ms. Rodriguez Barrientos conceal the profits of drug enterprises, the losses fall on far too many Americans and their families,” said Adam Jobes, Special Agent in Charge of IRS Criminal Investigation’s Seattle Field Office. “We will continue doing our part to expose the finances of criminal organizations.”

    According to court documents, beginning in fall 2021, special agents from the U.S. Drug Enforcement Administration (DEA) in Portland began investigating a drug trafficking organization suspected of transporting counterfeit oxycodone pills containing fentanyl and heroin from California into Oregon and Washington State for distribution.

    A parallel financial investigation led by IRS Criminal Investigation (IRS:CI) revealed that Barrientos laundered money generated by the drug trafficking organization through the Mazatlán Beauty Salon in Tualatin, Oregon and by buying real estate that she converted into income-generating rentals. The real estate purchases were made with cashier’s checks funded by large cash deposits. Currency Transaction Reports generated by several banks showed that Barrientos made frequent cash deposits ranging from $10,000 to more than $373,000 into accounts held in her name or the name of her salon. These deposits totaled more than $3.5 million during a 9-month period in 2021.

    Since February 2021, members of the drug trafficking organization also purchased a total of nine residential properties in Oregon, Washington and Nevada with an estimated total value of more than $4.6 million. All nine properties were purchased outright with no mortgages. Barrientos used laundered funds to purchase eight of these properties. She then used third-party property management companies to rent these properties and received approximately $10,000 per month in rental income.

    On February 17, 2022, DEA agents arrested Barrientos and an associate at their Las Vegas residence. Agents found and seized two luxury vehicles, several loose receipts documenting high-end retail purchases, credit card statements documenting more than $16,000 spent on tickets to attend a professional boxing match, and other evidence memorializing the couple’s high-end lifestyle.

    On February 9, 2022, a federal grand jury in Portland returned an indictment charging Barrientos with conspiracy to launder drug proceeds. She pleaded guilty on July 31, 2024.

    Barrientos has agreed to forfeiture of the properties purchased with criminal proceeds as part of the resolution of her case. Some of the properties have been sold by the government; others are pending forfeiture and sale. The proceeds of forfeited assets are deposited in the Justice Department’s Assets Forfeiture Fund (AFF) and used to restore funds to crime victims and for a variety of other law enforcement purposes. To learn more about the AFF, please visit: https://www.justice.gov/afp/assets-forfeiture-fund-aff.

    This case was investigated by DEA with assistance from the FBI, Homeland Security Investigations (HSI), IRS:CI, Tigard Police Department, and Oregon State Police. It is being prosecuted by Peter D. Sax, Assistant U.S. Attorney for the District of Oregon. Forfeiture proceedings are being handled by AUSA Katie De Villiers, also of the District of Oregon.

    This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

    MIL Security OSI –

  • MIL-OSI Economics: My Vision for ADB: Strive Together to Attain Sustainable and Inclusive Growth in the Region with Innovative and Tailored Solutions – Masato Kanda

    Source: Asia Development Bank

    ADB has played a vital role in the development of the Asia and Pacific region not only helping it become the engine room of global growth today but ensuring the region is resilient and inclusive. The many crises and challenges currently confronting us, from climate change to digitalization and gender equality, require continually striving for ADB to remain the most trusted partner for all members. Throughout my nearly four decades as a government official, I have had the tremendous opportunity to work with many dedicated professionals in the region committed to a shared vision of economic stability and prosperity, and poverty eradication.

    If I am afforded the immense privilege of being the next President of ADB, I will steadfastly commit to ensuring ADB can achieve its vision of delivering sustainable and inclusive growth to the region with innovative and tailored solutions, in alignment with the updated Strategy 2030. I can only do this by working with each and every member and delivering the New Operating Model so the ADB remains a client-first bank that maximizes its development impact, underpinned by talented and diverse staff.

    1. Background

    Since its inception in 1966, ADB has played a vital role in supporting developing member countries (DMCs) in Asia and the Pacific. Throughout its history, it has worked unflinchingly on the arduous tasks, including, most notably, facilitation of the recovery after the 1997 Asian financial crisis. Each time it faces a crisis, ADB has provided innovative solutions. The launch of the ADF (Asian Development Fund) and the bond issuance to enhance its support to DMCs after the oil shock in 1970s is a case in point. ADB also helped DMCs achieve a solid track record of growth through its financial and non-financial instruments. The real growth rate of Emerging and Developing Asia over the past 10 years was 5.6 percent, 2.5 percentage points higher than global growth.

    However, despite the clear progress toward sustainable and inclusive growth, significant challenges remain. The ongoing climate crisis and the risk of another pandemic as serious as COVID 19, indicate that ADB should be even bolder to address global public goods (GPGs) and regional public goods (RPGs). Moreover, while ADB needs to tackle these emerging tasks at a regional and global scale, it remains responsible for supporting DMCs address country-specific challenges, including not least poverty reduction. It is paramount that ADB remains the most trusted partner in the region.

    Over more than 60 years, Japan has been working with all member countries. As a former official at the Japanese Ministry of Finance, in particular during my time as Vice-Minister of Finance for International Affairs, I have had the privilege to work with inspiring leaders, dedicated professionals, and wonderful friends across Asia and the Pacific. Nothing could make me happier than the opportunity to continue to work with all of them to establish a clear pathway toward the ADB’s vision: to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.

    The rest of this Vision Statement is organized as follows. In the next section, I describe the challenges and unique opportunities for the region. In section 3, I elaborate on my suggested direction that ADB should head toward. Section 4 concludes with my unwavering commitment to help champion sustainable growth in the region.

    2. Challenges and opportunities

    Climate change. The DMCs, in particular Small Island Developing States (SIDS) in the Pacific, are prone to natural disasters stemming from climate change, such as typhoons, cyclones, and rising sea levels. Moreover, Asia and the Pacific emits almost half of the world’s greenhouse gases, partly reflecting its high energy demand. However, its coal plants are relatively young, and its grid coverage is limited, complicating the transition to net-zero. Against this backdrop, ADB has spearheaded innovative climate change initiatives as the region’s climate bank. Nevertheless, bolder actions are still warranted, both on the mitigation and adaptation fronts.

    Infrastructure gap. Infrastructure lays a fundamental basis to eradicate poverty, boost potential growth and enhance regional connectivity. The region still faces a glaring gap in infrastructure. ADB has estimated that developing Asia will need $1.7 trillion annually to close the gap in infrastructure, and this figure could be larger given the modest growth over the past several years. At the same time, more actions are needed for boosting the quality of infrastructure investment, strengthening climate resilience, achieving high environmental and social standards, preserving biodiversity, and creating jobs. 

    Poverty. The number of people who are below the poverty line rose significantly after the COVID-19 crisis, setting back the fight against poverty in Asia and the Pacific by at least two years. Income poverty is often associated with poor health and lack of education, hampering human capital development and restraining growth. Rapid economic growth and a stable macroeconomic environment in the region would help address poverty across the region but this can only be achieved with certain policy actions such as those outlined below.

    Inequality. Economic growth in the region has come with widening inequality, in particular after the COVID-19 crisis. Inequality could damage social stability and cohesion and undermine economic dynamism. Also, while rapid urbanization has provided an increasing number of citizens with access to better public services (education, water and sanitary services, transportation), it can widen the gap with vulnerable people that do not have access to such basic services and the social safety net.

    Diversity. Asia and the Pacific boasts a wide variety of cultures and ethnicities. This has required, and will continue to require, ADB to tailor its supporting tools to country-specific circumstances, with due regard to size, income distribution, population dynamics, and social norms of each DMC. On procurement, while ADB remains committed to maintaining high environmental and social standards, it also needs to take country systems into account.

    Gender. ADB needs to further pursue gender equality in line with its vision. Our journey is yet to be completed: according to the United Nations, the participation of women in the labor force in Asia and the Pacific is below the global average, as is the promotion of women in leadership positions. ADB should continue to be the thought leader to transform the lives of women, by helping DMCs take decisive steps toward gender equality, while recognizing country-specific cultural and social circumstances.

    Private capital mobilization. One of the ADB’s New Operating Model (NOM)’s priorities is a shift toward the private sector. Yet, the amount of private capital mobilization has been significantly below the aspiration of various development agendas, including the Paris Agreement. Mobilizing private capital is easier said than done. The upcoming discussion on the ADB’s Private Sector Development Action Plan will lay a foundation for the ADB’s medium-term efforts to boost private capital mobilization and enable a stronger private sector in line with the ADB’s vision.

    Domestic resource mobilization. In many DMCs, tax revenues are still short of supporting their own sustainable development. The Asia Pacific Tax Hub, established in May 2021 under President Asakawa’s leadership, has helped DMCs modernize their tax systems through strategic policy dialogues, institutional capacity building, knowledge sharing, and collaboration with development partners. The potential benefits of domestic resource mobilization include more private capital mobilization through blended finance.

    Digitalization. Digital technologies can be an enabler that brings transformational impacts, allowing DMCs to leapfrog the development process that advanced economies took much longer to go through. At the same time, rapid progress in digitalization comes with costs and risks, including a digital divide and cyber threats. With the approval of its Strategy 2030 Midterm Review, ADB is pursuing a more active role on digital transformation as one of the new strategic focus areas.

    3. Ways forward

    I will now elaborate how I would work toward achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific if I were elected as President of ADB. I will maintain the “client-first” principle as the organization’s highest priority by tailoring the role of ADB to specific challenges faced by all DMCs. Moreover, ADB should fully utilize its well-established collaboration between the sovereign and non-sovereign sectors, which is one of the ADB’s great strengths. My vision below is also crafted with a clear purpose to augment the updated Strategy 2030 with the organizational vision statement and the new strategic focus areas (climate action; private sector development; regional cooperation and public goods; digital transformation; and resilience and empowerment). For this purpose, I would ensure that the Capital Utilization Plan will be ambitious and fully utilize different financial resources.

    Providing innovative financial climate solutions to DMCs. ADB has established its reputation as an innovator in climate and development finance, exemplified by IF-CAP (Innovative Finance Facility for Climate in Asia and the Pacific), which is expected to be officially launched soon. By focusing squarely on the development-climate nexus under the Climate Change Action Plan, ADB should continue to be the region’s climate bank, in line with climate as the first enhanced focus area. In the context of the ongoing MDB Evolution and the CAF (Capital Adequacy Framework) Review, ADB must be a role-model for other MDBs (Multilateral Development Banks) to foster climate mitigation and adaptation.

    Promoting private capital mobilization. With the new quantitative targets under Strategy 2030, ADB should pursue ambitious goals of mobilizing and enabling private capital, by taking concrete actions under the upcoming Private Sector Development Action Plan. Closer engagement with global and regional market participants and industry experts, as well as deepening of domestic capital markets, would help bring much needed private financial flows for sustainable growth.

    Supporting domestic resource mobilization. ADB should remain committed to helping DMCs strengthen their revenue base, paving the way for the achievement of self-sustained development over time. ADB should also make sure that this effort serves as a key ingredient for policy discussion in the context of policy-based loans (PBLs). The Asia Pacific Tax Hub should continue to play an instrumental role in this regard, by providing comprehensive diagnoses on and solutions to the underlying structural problems of revenue shortfalls.

    Fostering regional cooperation and integration. Trade and investment flows are increasingly interconnected within the region, and hence fostering regional cooperation will help garner needed development financial flows and create a favorable macroeconomic environment in the region. ADB should further promote cross-border connectivity, trade integration, and financial links, all of which are regional public goods. Regional procurement, which is being considered in line with the ADF14 agreement, is of particular importance.

    Striking the balance between GPG/RPG and country-specific demand. ADB must strategically calibrate its resource allocation so that it can help deliver GPGs/RPGs, such as air quality management, biodiversity, food and nutrition security, pandemic prevention, preparedness and response, and pollution prevention, while still paying due regard to country-specific circumstances. Enhanced policy dialogue with DMCs, along with in-house analyses on externalities in the region, should be made a priority. Staff incentive structures could be also fine-tuned in line with such an organization-wide ambition.

    Prioritizing digital transformation in a cross-cutting manner. ADB should be responsive to high client demand for digital solutions, including digital connectivity and digital literacy, among others. ADB should actively pursue policies to bring the maximum benefits from digitalization across all different sectors and pursue synergies with other development priorities, such as private capital mobilization, infrastructure development, and regional connectivity. Strengthening its support to social start-up companies with cutting-edge digital technologies could complement these efforts.

    Mainstreaming gender in overall ADB operations. A pathway to gender equality is not uniform, differing from one country to another. The new commitment following the Midterm Review of Strategy 2030 must be attained with all possible measures. ADB should continue to be a champion of gender equality in its operations to empower women in DMCs. To lead by example, ADB should also continue to promote gender equality across the organization.

    Maximizing development impact by tailoring ADB solutions to country-specific development and climate needs. The ADB’s clients widely differ in their size, level of development, development needs, and risks of vulnerabilities and fragility. ADB should fully employ its diagnosis provided by regional VPs/Departments, while ensuring that Country Partnership Strategies benefit from various analytical works by the Sector Group, Governance Thematic Group, Economic Research and Development Impact Department, and other departments. Also, outcome orientation remains a necessary condition to better achieve the organizational vision. The new window to address fragility under ADF14 could be a successful example to address immense challenges faced by fragile and conflict-affected situations (FCAS), as well as SIDS.

    Utilizing knowledge products for operations on the ground. As a regional knowledge bank, ADB has produced a wealth of analytical and knowledge products. While they are undoubtedly used by research institutes in the regions, ADB needs to be more aggressive in disseminating its analytical expertise to country and sector operations on the ground, including lending activities and policy dialogue.

    Fully operationalizing the NOM. Implementing the NOM requires continuous efforts on a multi-year basis. ADB needs to accelerate the transition to a more climate-focused and private sector-oriented business model, particularly to address global and regional challenges at scale. Staff incentive structures should be designed to establish a critical link with organization-wide priorities, such as GPGs/PRGs as well as decentralization. Also, diversity of the staff should remain one of the ADB’s core values.

    Enhancing partnerships with MDBs and DFIs. The development challenges in front of us cannot be solved by ADB alone. ADB should enhance its collaboration with other MDBs and venture into new types of cooperation, such as exposure exchange, beyond traditional co-financing and knowledge sharing. ADB could also strengthen ties with bilateral DFIs (Development Finance Institutions) in the region to create synergies and improve administrative efficiencies while maintaining high environmental and social standards.

    4. Closing remarks

    The socio-economic environment surrounding Asia and the Pacific has drastically changed since the ADB’s inception: now, the region is suffering from chronic natural disasters more often, with severer magnitude; inequality is widening despite increased national income per capita; and uncertainty is looming in the global economy and financial markets. Worse, all these complex problems are inter-connected. ADB is the only organization in the region that helps tackle these challenges, with its unparalleled financial firepower, highly motivated and dedicated staff, and regional convening power.

    More recently, ADB performed immensely in the context of the MDB Evolution over the past two years. The international community is striving hard to redefine the roles of MDBs and update their financial and operational models. Undoubtedly, ADB is, and will continue to be, a frontrunner in this global goal: it has created lending headroom of US$100 billion over the next ten years through its rigorous CAF review, launched innovative financial instruments, and aligned its tools and environmental and social standards with its peers. I am confident that the ADB’s support to DMCs in the region can be a role-model for other MDBs.

    I would also like to emphasize that throughout its history, ADB has built trust among all stakeholders inside and outside the region, including DMCs, donors, civil society, development partners, staff, and management. It is this trust that has enabled ADB to shine as a long-standing home doctor, provide the highest value-add to its clients, and connect leaders and professionals in the region.

    With these strengths, ADB has positioned itself as the most trusted and dedicated organization in Asia and the Pacific. I would like to devote all my expertise and knowledge to this great organization and work toward its vision, together with colleagues and friends from the region and beyond. I am more than ready to serve to all members.

    MIL OSI Economics –

  • MIL-OSI Security: U.S. Attorney’s Office Recognizes Exceptional Law Enforcement Work at the 2024 Law Enforcement Awards Ceremony

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

    Burlington, Vermont – On October 23, 2024, the U.S. Attorney’s Office for the District of Vermont honored a number of individuals from a variety of law enforcement agencies at the U.S. Attorney’s Office’s Law Enforcement Awards Ceremony. Individual investigators and officers from federal, state, and local agencies were nominated by U.S. Attorney’s Office staff in a variety of categories for their outstanding work supporting the mission of this office and promoting public safety. The specific categories and individuals recognized today are as follows:

    Investigative Achievement Award: This award criteria are established for those individuals, both sworn and non-sworn who have significantly contributed to the mission of the U.S. Attorney’s Office.  

    • Special Agent Samuel Brown, Bureau of Alcohol, Tobacco, Firearms and Explosives – nominated for United States v. Carl Martin.
    • Special Agent Brian Wood, Bureau of Alcohol, Tobacco, Firearms and Explosives – nominated for United States v. Carl Martin.
    • Special Agent Nicholas Call, Food and Drug Administration-Office of Criminal Investigations – nominated for United States v. Paul Bateman, Samir Doshi, and Rebecca Buckley.
    • Resident Agent in Charge Derek Roy, Food and Drug Administration-Office of Criminal Investigations – nominated for United States v. Paul Bateman, Samir Doshi, and Rebecca Buckley.
    • Special Agent Jason Tilley, Food and Drug Administration-Office of Criminal Investigations – nominated for United States v. Paul Bateman, Samir Doshi, and Rebecca Buckley.
    • Financial Investigator Joel Garland, Food and Drug Administration-Office of Criminal Investigations – nominated for United States v. Paul Bateman, Samir Doshi, and Rebecca Buckley.
    • Special Agent Erin Nelligan, Homeland Security Investigations – nominated for United States v. Michael Burton.
    • Special Agent Colin Simons, Federal Bureau of Investigation – nominated for United States v. Eric Colson, Gage Colson, and Antonio Vergara.
    • Detective Sergeant Karl Gardner, Vermont State Police – nominated for United States v. Eric Colson, Gage Colson, and Antonio Vergara.
    • Detective Trooper Steven Fauteux, Vermont State Police – nominated for United States v. Eric Colson, Gage Colson, and Antonio Vergara.
    • Detective Sergeant Aaron Lefebvre, St. Albans Police Department, former Detective with the Vermont Drug Task Force and the Newport Police Department – nominated for United States v. Eric Colson, Gage Colson, and Antonio Vergara.

    Outstanding Collaborative Investigation Award: This category is limited to those who have demonstrated outstanding efforts to overcome significant challenges in collaboration with multiple agencies in order to meet the mission of the U.S. Attorney’s Office.

    • Special Agent Brian Wood, Bureau of Alcohol, Tobacco, Firearms and Explosives
    • Special Agent Samuel Brown, Bureau of Alcohol, Tobacco, Firearms and Explosives
    • Detective Sergeant Philip Tremblay, Burlington Police Department
    • Drug Enforcement Administration Task Force Officer Durwin Ellerman, Burlington Police Department
    • Sergeant Chase Vivori, Burlington Police Department
    • Special Agent Erin Nelligan, Homeland Security Investigations
      • All nominated for outstanding collaborative investigation in United States v. Ronald Harris, et al.
    • Special Agent Paul Altenburg, Homeland Security Investigations
    • Special Agent Anders Ostrum, Internal Revenue Service-Criminal Investigation
    • Criminal Analyst Nancy Woods, Homeland Security Investigations
    • Resident in Charge Alex Zuchman, Homeland Security Investigations
    • Special Agent Michael DeFiore, U.S. Army Criminal Investigation Division, former Detective Corporal with the Vermont Drug Task Force and the South Burlington Police Department
    • Detective Sergeant Dustin Robinson, Vermont State Police
    • Detective Sergeant Philip Tremblay, Burlington Police Department
    • Special Agent Aaron Dince, Homeland Security Investigations
    • Special Agent Colin Simons, Federal Bureau of Investigation
    • Postal Inspector Jonathan Dunham, U.S. Postal Inspection Service
    • Special Agent Brandon Hope, Drug Enforcement Administration
      • All nominated as their agency representatives for outstanding collaborative investigation for United States v. Dajuan Williams, et al.

    Award recipients gathered today at the U.S. Attorney’s Office, joined by colleagues and family. Each recipient received an engraved award commemorating their outstanding efforts. U.S. Attorney Kerest stated: “This is one of the best days of the year when we have the chance to recognize law enforcement officers like today’s awardees in the presence of their families. Today’s awardees make the work of the U.S. Attorney’s Office possible, and they do that work with the necessary support of their family and loved ones. We applaud their tireless work and the daily sacrifices they all make.”

    MIL Security OSI –

  • MIL-OSI: Euronet Worldwide Reports Third Quarter 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    LEAWOOD, Kan., Oct. 23, 2024 (GLOBE NEWSWIRE) — Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ: EEFT), a leading global financial technology solutions and payments provider, reports third quarter 2024 financial results.

    Euronet reports the following consolidated results for the third quarter 2024 compared with the same period of 2023:

    • Revenues of $1,099.3 million, a 9% increase from $1,004.0 million (9% increase on a constant currency1 basis).
    • Operating income of $182.2 million, a 9% increase from $167.0 million (9% increase on a constant currency basis).
    • Adjusted EBITDA2 of $225.7 million, a 6% increase from $212.5 million (6% increase on a constant currency basis).
    • Net income attributable to Euronet of $151.5 million, or $3.21 diluted earnings per share, compared with $104.2 million, or $2.05 diluted earnings per share.
    • Adjusted earnings per share3 of $3.03, an 11% increase from $2.72.
    • Euronet’s cash and cash equivalents were $1,524.1 million and ATM cash was $805.4 million, totaling $2,329.5 million as of September 30, 2024, and availability under its revolving credit facilities was approximately $669.8 million.

    See the reconciliation of non-GAAP items in the attached financial schedules.  

    “I am pleased that we achieved a third quarter adjusted EPS of $3.03, an 11% increase over the prior year’s $2.72. I also point out that we did not include in our adjusted EPS approximately $0.28 per share related to an investment gain. Had we done so, adjusted EPS would have been $3.31. This year’s third quarter is a great reminder of how our product and geographic diversity helps to provide consistency in our earnings. Moreover, with our 17% nine months year to date adjusted EPS growth, we are well on track to be at the top end of the range with good prospects to exceed the range,” stated Michael J. Brown, Euronet’s Chairman and Chief Executive Officer. 

    “Money Transfer produced strong third quarter results compared to the prior year across all financial metrics. EFT produced solid results across all metrics with double digit growth in operating income and adjusted EBITDA. epay delivered double-digit revenue and transaction growth.”

    Taking into consideration recent trends in the business and the global economy, continued double-digit quarterly earnings growth, and historical seasonal patterns, the Company remains confident in its previously announced expectations that its 2024 adjusted EPS will grow 10-15% year-over-year, consistent with its 10 and 20 year compounded annualized growth rates. Moreover, the Company expects that in 2025 it will again produce adjusted EPS growth in the 10-15% range. This outlook does not include any changes that may develop in foreign exchange rates, interest rates or other unforeseen factors.

    Segment and Other Results

    The EFT Processing Segment reports the following results for the third quarter 2024 compared with the same period or date in 2023:

    • Revenues of $373.0 million, an 8% increase from $345.8 million (7% increase on a constant currency basis).
    • Operating income of $117.3 million, a 12% increase from $104.8 million (12% increase on a constant currency basis).
    • Adjusted EBITDA of $142.1 million, a 10% increase from $128.7 million (10% increase on a constant currency basis).
    • Transactions of 2,982 million, a 34% increase from 2,231 million.
    • Total of 55,292 installed ATMs as of September 30, 2024, a 4% increase from 53,272. We operated 54,020 active ATMs as of September 30, 2024, a 5% increase from 51,496 as of September 30, 2023.

    Constant currency revenue, operating income, and adjusted EBITDA growth in the third quarter 2024 was driven by travel, growth in the merchant services business and growth within recent market expansion. Operating margins benefited from transactions driven by continued travel recovery together with effective expense management.

    The increase in active ATMs includes the acquisition of 800 ATMs in Malaysia together with the addition of approximately 800 outsourcing ATMs, and the impact of winterizing 500 more ATMs in the prior year at September 30, 2023, compared to September 30, 2024.

    Transaction growth outpaced revenue growth due to continued growth in high-volume low-value transactions in India. 

    The epay Segment reports the following results for the third quarter 2024 compared with the same period or date in 2023:

    • Revenues of $290.3 million, a 10% increase from $264.5 million (10% increase on a constant currency basis).
    • Operating income of $29.1 million, a 3% increase from $28.3 million (2%  increase on a constant currency basis).
    • Adjusted EBITDA of $31.0 million, a 3% increase from $30.1 million (3% increase on a constant currency basis).
    • Transactions of 1,126 million, a 22% increase from 925 million.
    • POS terminals of approximately 766,000 as of September 30, 2024, a 5% decrease from approximately 810,000.
    • Retailer locations of approximately 348,000 as of September 30, 2024, unchanged from prior year.

    Double-digit revenue and transaction growth was driven by continued digital media and mobile growth. Operating income and adjusted EBITDA growth did not keep pace with the overall growth in revenue due to inflationary pressures in the business and expenses incurred to launch new proprietary product offerings.

    The Money Transfer Segment reports the following results for the third quarter 2024 compared with the same period or date in 2023:

    • Revenues of $438.2 million, an 11% increase from $395.9 million (10% increase on a constant currency basis).
    • Operating income of $58.1 million, an 8% increase from $53.7 million (7% increase on a constant currency basis).
    • Adjusted EBITDA of $64.1 million, a 6% increase from $60.7 million (4% increase on a constant currency basis).
    • Total transactions of 45.1 million, an 11% increase from 40.6 million.
    • Network locations of approximately 595,000 as of September 30, 2024, a 10% increase from approximately 540,000.

    Constant currency revenue growth was primarily driven by near double-digit growth in cross-border transactions, offset by a decrease in intra-US transactions. Direct-to-consumer digital transactions grew by 30%, reflecting strong consumer demand for digital products, which represents 19% of total digital transactions. The constant currency operating income increase of 7% was influenced by an additional $2 million year-over-year digital customer marketing spend during the quarter versus last year. Excluding the incremental digital customer marketing spend, constant currency operating income growth would have exceeded 10%, producing operating margins consistent with prior year. Money Transfer’s revenue and gross profit per transaction were consistent with the prior year.

    Corporate and Other reports $22.3 million of expense for the third quarter 2024 compared with $19.8 million for the third quarter 2023. The increase in corporate expenses is largely from increased salaries, performance-based compensation and other management expenses.

    Balance Sheet and Financial Position
    Unrestricted cash and cash equivalents on hand was $1,524.1 million as of September 30, 2024, compared to $1,271.8 million as of June 30, 2024.  The net increase in unrestricted cash and cash equivalents is the net result of the generation of cash from operations and working capital fluctuations partially offset by share repurchases.

    Total indebtedness was $2,278.8 million as of September 30, 2024, compared to $2,270.2 million as of June 30, 2024. Availability under the Company’s revolving credit facilities was approximately $669.8 million as of September 30, 2024.

    The Company repurchased 1 million shares for $101.3 million during the third quarter, which will improve earnings per share by 2% for future periods.

    Non-GAAP Measures
    In addition to the results presented in accordance with U.S. GAAP, the Company presents non-GAAP financial measures, such as constant currency financial measures, operating income, adjusted EBITDA, and adjusted earnings per share. These measures should be used in addition to, and not a substitute for, revenues, operating income, net income and earnings per share computed in accordance with U.S. GAAP. We believe that these non-GAAP measures provide useful information to investors regarding the Company’s performance and overall results of operations. These non-GAAP measures are also an integral part of the Company’s internal reporting and performance assessment for executives and senior management. The non-GAAP measures used by the Company may not be comparable to similarly titled non-GAAP measures used by other companies. The attached schedules provide a full reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure.

    The Company does not provide a reconciliation of its forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for GAAP and the related GAAP and non-GAAP reconciliation, including adjustments that would be necessary for foreign currency exchange rate fluctuations and other charges reflected in the Company’s reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.  

    (1) Constant currency financial measures are computed as if foreign currency exchange rates did not change from the prior period. This information is provided to illustrate the impact of changes in foreign currency exchange rates on the Company’s results when compared to the prior period.

    (2) Adjusted EBITDA is defined as net income excluding, to the extent incurred in the period, interest expense, income tax expense, depreciation, amortization, share-based compensation and other non-operating or non-recurring items that are considered expenses or income under U.S. GAAP. Adjusted EBITDA represents a performance measure and is not intended to represent a liquidity measure.

    (3) Adjusted earnings per share is defined as diluted U.S. GAAP earnings per share excluding, to the extent incurred in the period, the tax-effected impacts of: a) foreign currency exchange gains or losses, b) share-based compensation, c) acquired intangible asset amortization, d) non-cash income tax expense, e) non-cash investment gain f) other non-operating or non-recurring items and g) dilutive shares relate to the Company’s convertible bonds. Adjusted earnings per share represents a performance measure and is not intended to represent a liquidity measure. 

    Conference Call and Slide Presentation
    Euronet Worldwide will host an analyst conference call on October 24, 2024, at 9:00 a.m. Eastern Time to discuss these results. The call may also include discussion of Company developments on the Company’s operations, forward-looking information, and other material information about business and financial matters. To listen to the call via telephone please register at Euronet Worldwide Third Quarter 2024 Earnings Call. The conference call will also be available via webcast at http://ir.euronetworldwide.com. Participants should register at least five minutes prior to the scheduled start time of the event. A slideshow will be included in the webcast. 

    A webcast replay will be available beginning approximately one hour after the event at  http://ir.euronetworldwide.com and will remain available for one year.

    About Euronet Worldwide, Inc.
    Starting in Central Europe in 1994 and growing to a global real-time digital and cash payments network with millions of touchpoints today, Euronet now moves money in all the ways consumers and businesses depend upon. This includes money transfers, credit/debit card processing, ATMs, POS services, branded payments, foreign currency exchange and more. With products and services in more than 200 countries and territories provided through its own brand and branded business segments, Euronet and its financial technologies and networks make participation in the global economy easier, faster and more secure for everyone. 

    A leading global financial technology solutions and payments provider, Euronet has developed an extensive global payments network that includes 55,292 installed ATMs, approximately 949,000 EFT POS terminals and a growing portfolio of outsourced debit and credit card services which are under management in 113 countries; card software solutions; a prepaid processing network of approximately 766,000 POS terminals at approximately 348,000 retailer locations in 64 countries; and a global money transfer network of approximately 595,000 locations serving 205 countries and territories. Euronet serves clients from its corporate headquarters in Leawood, Kansas, USA, and 67 worldwide offices. For more information, please visit the Company’s website at www.euronetworldwide.com.

    Statements contained in this news release that concern Euronet’s or its management’s intentions, expectations, or predictions of future performance, are forward-looking statements. Euronet’s actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including: conditions in world financial markets and general economic conditions, including impacts from the COVID-19 or other pandemics; inflation; the war in the Ukraine and the related economic sanctions; military conflicts in the Middle East; our ability to successfully integrate any acquired operations; economic conditions in specific countries and regions; technological developments affecting the market for our products and services; our ability to successfully introduce new products and services; foreign currency exchange rate fluctuations; the effects of any breach of our computer systems or those of our customers or vendors, including our financial processing networks or those of other third parties; interruptions in any of our systems or those of our vendors or other third parties; our ability to renew existing contracts at profitable rates; changes in fees payable for transactions performed for cards bearing international logos or over switching networks such as card transactions on ATMs; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection and privacy; changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including dynamic currency conversion transactions; changes in our relationships with, or in fees charged by, our business partners; competition; the outcome of claims and other loss contingencies affecting Euronet; the cost of borrowing (including fluctuations in interest rates), availability of credit and terms of and compliance with debt covenants; and renewal of sources of funding as they expire and the availability of replacement funding. These risks and other risks are described in the Company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Copies of these filings may be obtained via the SEC’s Edgar website or by contacting the Company. Any forward-looking statements made in this release speak only as of the date of this release. Except as may be required by law, Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. The Company regularly posts important information to the investor relations section of its website.  

     EURONET WORLDWIDE, INC.
     Condensed Consolidated Balance Sheets
     (in millions)
           
      As of    
      September 30,   As of
      2024   December 31,
      (unaudited)   2023
    ASSETS      
    Current assets:      
    Cash and cash equivalents $ 1,524.1   $ 1,254.2
    ATM cash 805.4   525.2
    Restricted cash 18.9   15.2
    Settlement assets 1,461.0   1,681.5
    Trade accounts receivable, net 273.2   370.6
    Prepaid expenses and other current assets 303.2   316.0
    Total current assets 4,385.8   4,162.7
           
    Property and equipment, net 340.3   332.1
    Right of use lease asset, net 142.9   142.6
    Goodwill and acquired intangible assets, net 1,118.9   1,015.1
    Other assets, net 301.2   241.9
    Total assets $ 6,289.1   $ 5,894.4
           
    LIABILITIES AND EQUITY      
    Current liabilities:      
    Settlement obligations $ 1,461.0   $ 1,681.5
    Accounts payable and other current liabilities 877.4   816.9
    Current portion of operating lease liabilities 51.4   50.3
    Short-term debt obligations 1,081.4   151.9
    Total current liabilities 3,471.2   2,700.6
           
    Debt obligations, net of current portion 1,195.5   1,715.4
    Operating lease liabilities, net of current portion 95.4   95.8
    Capital lease obligations, net of current portion 1.9   2.3
    Deferred income taxes 77.6   47.0
    Other long-term liabilities 85.5   83.6
    Total liabilities 4,927.1   4,644.7
    Equity 1,362.0   1,249.7
    Total liabilities and equity $ 6,289.1   $ 5,894.4
     EURONET WORLDWIDE, INC.
     Consolidated Statements of Operations
     (unaudited – in millions, except share and per share data)
           
      Three Months Ended
      September 30,
      2024   2023
           
    Revenues $ 1,099.3     $ 1,004.0  
           
    Operating expenses:      
    Direct operating costs 634.0     576.7  
    Salaries and benefits 169.6     153.6  
    Selling, general and administrative 80.6     73.9  
    Depreciation and amortization 32.9     32.8  
    Total operating expenses 917.1     837.0  
    Operating income 182.2     167.0  
           
    Other income (expense):      
    Interest income 6.5     4.0  
    Interest expense (24.2 )   (15.0 )
    Foreign currency exchange gain (loss) 27.4     (8.8 )
    Other income 16.5     —  
    Total other income (expense), net 26.2     (19.8 )
    Income before income taxes 208.4     147.2  
           
    Income tax expense (56.8 )   (43.0 )
           
    Net income 151.6     104.2  
    Net loss attributable to non-controlling interests (0.1 )   —  
    Net income attributable to Euronet Worldwide, Inc. $ 151.5     $ 104.2  
    Add: Interest expense from assumed conversion of convertible notes, net of tax   1.1       1.1  
    Net income for diluted earnings per share calculation $ 152.6     $ 105.3  
    Earnings per share attributable to Euronet Worldwide, Inc. stockholders – diluted $ 3.21     $ 2.05  
           
    Diluted weighted average shares outstanding 47,554,606     51,470,603  
           
     EURONET WORLDWIDE, INC.
    Reconciliation of Net Income to Operating Income (Expense) and Adjusted EBITDA
     (unaudited – in millions)
                       
      Three months ended September 30, 2024
                       
      EFT Processing   epay   Money Transfer   Corporate Services   Consolidated
                       
    Net income                 $ 151.6  
                       
    Add: Income tax expense                 56.8  
    Less: Total other income, net                 (26.2 )
                       
    Operating income (expense) $ 117.3     $ 29.1     $ 58.1     $ (22.3 )   $ 182.2  
    Add: Depreciation and amortization 24.8     1.9     6.0     0.2     32.9  
    Add: Share-based compensation —     —     —     10.6     10.6  
    Earnings before interest, taxes, depreciation, amortization, share-based compensation (Adjusted EBITDA) (1) $ 142.1     $ 31.0     $ 64.1     $ (11.5 )   $ 225.7  
                       
      Three months ended September 30, 2023
                       
      EFT Processing   epay   Money Transfer   Corporate Services   Consolidated
                       
    Net income                 $ 104.2  
                       
    Add: Income tax expense                 43.0  
    Add: Total other expense, net                 19.8  
                       
    Operating income (expense) $ 104.8     $ 28.3     $ 53.7     $ (19.8 )   $ 167.0  
    Add: Depreciation and amortization 23.9     1.8     7.0     0.1     32.8  
    Add: Share-based compensation —     —     —     12.7     12.7  
    Earnings before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) $ 128.7     $ 30.1     $ 60.7     $ (7.0 )   $ 212.5  
    EURONET WORLDWIDE, INC.
    Reconciliation of Adjusted Earnings per Share
    (unaudited – in millions, except share and per share data)
           
      Three Months Ended
      September 30,
      2024   2023
           
    Net income attributable to Euronet Worldwide, Inc. $ 151.5     $ 104.2  
           
    Foreign currency exchange (loss) gain (27.4 )   8.8  
    Intangible asset amortization(1) 5.1     5.5  
    Share-based compensation(2) 10.6     12.7  
    Income tax effect of above adjustments(3) 4.9     (4.7 )
    Non-cash investment gain(4) (16.9 )   —  
    Non-cash GAAP tax expense(5) 8.8     6.2  
           
    Adjusted earnings(6) $ 136.6     $ 132.7  
           
    Adjusted earnings per share – diluted(6) $ 3.03     $ 2.72  
           
    Diluted weighted average shares outstanding (GAAP)   47,554,606     51,470,603  
    Effect of adjusted EPS dilution of convertible notes   (2,781,818 )     (2,781,818 )
    Effect of unrecognized share-based compensation on diluted shares outstanding   320,885     185,073  
    Adjusted diluted weighted average shares outstanding   45,093,673     48,873,858  
     

    (1) Intangible asset amortization of $5.1 million and $5.5 million are included in depreciation and amortization expense of $32.9 million and $32.8 million for both the three months ended September 30, 2024, and September 30, 2023, in the consolidated statements of operations.

    (2) Share-based compensation of $10.6 million and $12.7 million are included in salaries and benefits expense of $169.6 million and $153.6 million for the three months ended September 30, 2024, and September 30, 2023, respectively, in the consolidated statements of operations.

    (3) Adjustment is the aggregate U.S. GAAP income tax effect on the preceding adjustments determined by applying the applicable statutory U.S. federal, state and/or foreign income tax rates. 

    (4) Non-cash investment gain of $16.9 million is included in other income in the consolidated statement of operations.

    (5) Adjustment is the non-cash GAAP tax impact recognized on certain items such as the utilization of certain material net deferred tax assets and amortization of indefinite-lived intangible assets.

    (6) Adjusted earnings and adjusted earnings per share are non-GAAP measures that should be considered in addition to, and not as a substitute for, net income and earnings per share computed in accordance with U.S. GAAP. 

    The MIL Network –

  • MIL-OSI: Dassault Systèmes: Third quarter results in-line – Anticipating top line acceleration in 4Q – Confirming full year EPS objective

    Source: GlobeNewswire (MIL-OSI)

    Press Release

    VELIZY-VILLACOUBLAY, France — October 24, 2024

    Dassault Systèmes: Third quarter results in-line

    Anticipating top line acceleration in 4Q

    Confirming full year EPS objective

    Dassault Systèmes (Euronext Paris: FR0014003TT8, DSY.PA) today reports its IFRS unaudited estimated financial results for the third quarter 2024 and nine months ended September 30, 2024. The Group’s Board of Directors approved these estimated results on October 23, 2024. This press release also includes financial information on a non-IFRS basis and reconciliations with IFRS figures in the Appendix.

    Summary Highlights1  

    (unaudited, non-IFRS unless otherwise noted,
    all growth rates in constant currencies)

    • 3Q24: total revenue rose 4% to €1.46 billion driven by subscription revenue up 8%;
    • 3Q24: sequential improvement of MEDIDATA revenue;
    • 3Q24: operating margin of 29.6% and EPS at €0.29, in line with guidance;
    • YTD24: IFRS cash flow from operations up 6% as reported;
    • FY24: confirming diluted EPS objectives of €1.27 – €1.30, while updating total revenue growth from 6 – 8% to 5 – 7% to reflect the continued scrutiny and contraction of the automotive market. Anticipating total revenue growth acceleration at 8% mid-point in 4Q24.

    Dassault Systèmes’ Chief Executive Officer Commentary

    Pascal Daloz, Dassault Systèmes’ Chief Executive Officer, commented:

    “As we enter the second half of the year, we have seen several end-markets gaining momentum. In Life Sciences, MEDIDATA is back to sequential growth improvement. At the same time, we had excellent performance in Consumer industries driven by CENTRIC PLM. SOLIDWORKS accelerated growth in revenue and seats. Importantly, Aerospace & Defense was resilient and delivered a solid performance this quarter.

    However, since late summer, automotive customers in Europe and the US have been impacted by a contraction in volumes. This accelerates the need for transformative decisions, while elongating decision-making in the short term. Momentum in Asia, and China in particular, remains strong.

    We are well-positioned to continue gaining market share in the industrial sector. We are confident that our data-centric platform will serve as a catalyst for transformation. In the age of AI, virtualizing industrial processes from design to manufacturing will be a prerequisite for OEMs and suppliers to compete successfully in this next decade.”  

      

    Dassault Systèmes’ Chief Financial Officer Commentary

    (revenue, operating margin and diluted EPS growth rates in constant currencies,
    data on a non-IFRS basis)

    Rouven Bergmann, Dassault Systèmes’ Chief Financial Officer, commented:

    “In the third quarter, our total revenue grew by 4%, while the operating margin remained resilient at 29.6% and EPS stood at €0.29, highlighting the operating efficiency of the company.

    For the full year, we are reconfirming our EPS target range of €1.27 – €1.30 while remaining disciplined to offset the effects of ongoing deal delays and contraction in automotive volumes. Accordingly, we are adjusting our total revenue growth expectations from 6 – 8% to 5 – 7%.

    This updated guidance reflects expected growth acceleration in the fourth quarter, driven by continued improvements at MEDIDATA and a robust 3DEXPERIENCE pipeline.”

    Financial Summary

    In millions of Euros,
    except per share data and percentages    		   IFRS   IFRS
      Q3 2024 Q3 2023 Change Change in constant currencies   YTD 2024 YTD 2023 Change Change in constant currencies
    Total Revenue   1,463.9 1,424.7 3% 4%   4,459.3 4,308.0 4% 4%
    Software Revenue   1,312.4 1,286.7 2% 3%   4,011.8 3,883.9 3% 4%
    Operating Margin   18.9% 21.2% (2.4)pts     19.6% 20.0% (0.3)pt  
    Diluted EPS   0.18 0.18 0%     0.61 0.54 12%  
    In millions of Euros,
    except per share data and percentages    		   Non-IFRS   Non-IFRS
      Q3 2024 Q3 2023 Change Change in constant currencies   YTD 2024 YTD 2023 Change Change in constant currencies
    Total Revenue   1,463.9 1,424.7 3% 4%   4,459.3 4,308.0 4% 4%
    Software Revenue   1,312.4 1,286.7 2% 3%   4,011.8 3,883.9 3% 4%
    Operating Margin   29.6% 31.0% (1.5)pt     30.2% 31.0% (0.8)pt  
    Diluted EPS   0.29 0.28 3% 4%   0.89 0.84 6% 8%

    Third Quarter 2024 Versus 2023 Financial Comparisons

    (unaudited, IFRS and non-IFRS unless otherwise noted,
    all revenue growth rates in constant currencies)

    • Total Revenue: Total revenue in the third quarter grew by 4% to €1.46 billion, and software revenue increased by 3% to €1.31 billion, both at the low end of the Company’s objectives. Subscription & support revenue rose 5%; recurring revenue represented 83% of software revenue, up 2 percentage points compared to last year. Licenses and other software revenue declined by 7% to €229 million. Services revenue increased by 10% to €151 million, during the quarter.
    • Software Revenue by Geography: Revenue in the Americas increased by 6% to represent 41% of software revenue, led by Home & Lifestyle from an Industry standpoint. Europe (36% of software revenue) declined by 4%, largely impacted by a strong comparison basis after a large transformation deal signed in the third quarter of 2023. In Asia, revenue increased by 9% with continued momentum across countries led by improvement in China, up double digits. Asia represented 23% of software revenue at the end of the third quarter.
    • Software Revenue by Product Line:
      • Industrial Innovation software revenue declined by 1% to €685 million, against a high comparison basis. The strong baseline effect combined with a weaker automotive market in Europe and the US weighed on the performance. Industrial Innovation software represented 52% of software revenue, during the period.
      • Life Sciences software revenue was flat, at €280 million, accounting for 21% of software revenue. Sequential growth improvement confirms MEDIDATA progressive recovery.
      • Mainstream Innovation software revenue increased by 15% to €348 million and represented 26% of software revenue. SOLIDWORKS had a good start in the second half of 2024, up mid-single digits in the quarter. CENTRIC PLM delivered another excellent quarter, due to competitive displacements and strong renewals.
    • Software Revenue by Industry: Home & Lifestyle, High-Tech, Aerospace & Defense and Marine & Offshore were among the best performers during the quarter.
    • Key Strategic Drivers: 3DEXPERIENCE software revenue was impacted by a tough comparison base due to the anniversary of a mega deal. Hence, we saw a temporary decline of 10%. However, the performance on a year-to-date basis was in line with objectives and, looking at the subscription growth, the trend was very strong at 41%. 3DEXPERIENCE software revenue represented 37% of 3DEXPERIENCE eligible software revenue. Cloud software revenue grew by 7% and represented 25% of software revenue during the period. Excluding MEDIDATA, Cloud software revenue increased by a strong 38%.
    • Operating Income and Margin: IFRS operating income declined by 9% at €276 million, as reported. Non-IFRS operating income declined by 1% in constant currencies at €433 million (2% as reported). The IFRS operating margin stood at 18.9% compared to 21.2% in the third quarter of 2023. The non-IFRS operating margin totaled 29.6% versus 31.0% during the same period last year.
    • Earnings per Share: IFRS diluted EPS was €0.18, flat as reported. Non-IFRS diluted EPS grew to €0.29, up 3% as reported, or 4% in constant currencies.

    Nine months ended 2024 Versus 2023 Financial Comparisons

    (unaudited, IFRS and non-IFRS unless otherwise noted,
    all revenue growth rates in constant currencies)

    • Total Revenue: Total revenue grew by 4% to €4.46 billion. Software revenue increased by 4% to €4.01 billion. Subscription and support revenue rose 5% to €3.29 billion; recurring revenue represented 82% of total software revenue. Licenses and other software revenue declined by 1% to €720 million. Services revenue rose 6% to €448 million.
    • Software Revenue by Geography: The Americas grew 3% and represented 40% of software revenue. Europe rose by 2% and represented 37% of software revenue. Asia increased by 9%, representing 23% of software revenue.
    • Software Revenue by Product Line:
      • Industrial Innovation software revenue rose by 4% to €2.12 billion and represented 53% of software revenue. ENOVIA, SIMULIA and DELMIA exhibited the strongest performance.
      • Life Sciences software revenue decreased by 2% to €847 million, representing 21% of software revenue.
      • Mainstream Innovation software revenue increased by 11% to €1.05 billion. Mainstream Innovation represented 26% of software revenue. SOLIDWORKS delivered mid-single digit growth while CENTRIC PLM continued to perform well with strong, double-digit growth.
    • Software Revenue by Industry: Home & Lifestyle, Aerospace and Defense, High-Tech and Consumer Packaged Good & Retail displayed some of the strongest performance.
    • Key Strategic Drivers: 3DEXPERIENCE software revenue increased by 10%, representing 37% of 3DEXPERIENCE eligible software revenue. Cloud software revenue grew by 7% and represented 25% of software revenue. Excluding MEDIDATA, Cloud software revenue increased by more than 50% versus the same period last year.
    • Operating Income and Margin: IFRS operating income increased by 2%, to €876 million, as reported. Non-IFRS operating income increased by 1% as reported (2% in constant currencies) to €1.35 billion. IFRS operating margin totaled 19.6% compared to 20.0% for the same period in 2023. The non-IFRS operating margin was preserved, standing at 30.2% in the first nine months of 2024 compared to 31.0% in the same period last year, thanks to cost containment measures.
    • Earnings per Share: IFRS diluted EPS was €0.61 increasing 12% as reported. Non-IFRS diluted EPS grew by 6% to €0.89, as reported, up 8% in constant currencies.
    • Cash Flow from Operations (IFRS): Cash flow from operations totaled €1.35 billion, up 6% year over year, thanks to the increase in net income adjusted for non-cash items and positive cash tax effects in 2024.
    • Balance Sheet (IFRS): Dassault Systèmes’ net financial position totaled €1.07 billion as of September 30, 2024, an increase of €0.49 billion, compared to €0.58 billion for the year ending December 31, 2023. Cash and cash equivalents totaled €3.66 billion as of September 30, 2024. The movements of the quarter on cash and cash equivalents include the reimbursement for €700 million of the second Tranche of the Bond issued by the company in 2019.

    Financial Objectives for 2024

    Dassault Systèmes’ fourth quarter and 2024 financial objectives presented below are given on a non-IFRS basis and reflect the principal 2024 currency exchange rate assumptions for the US dollar and Japanese yen as well as the potential impact from additional non-Euro currencies:

               
          Q4 2024 FY 2024  
      Total Revenue (billion) €1.696 – €1.816 €6.155 – €6.275  
      Growth 3 – 10% 3 – 5%  
      Growth ex FX 5 – 12% 5 – 7%  
               
      Software revenue growth * 5 – 13% 5 – 7%  
        Of which licenses and other software revenue growth * 0 – 20% (1) – 6%  
        Of which recurring revenue growth * 7 – 11% 6 – 7%  
     

    Services revenue growth *

    0 – 5%

    		 4 – 6%  
               
      Operating Margin 35.9% – 36.9% 31.8% – 32.2%  
               
      EPS Diluted €0.38 – €0.41 €1.27 – €1.30  
      Growth 4 – 12% 5 – 8%  
      Growth ex FX 5 – 13% 7 – 10%  
               
      US dollar $1.10 per Euro $1.09 per Euro  
      Japanese yen (before hedging) JPY 155.0 per Euro JPY 162.0 per Euro  
      * Growth in Constant Currencies      

    These objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.

    The 2024 non-IFRS financial objectives set forth above do not take into account the following accounting elements below and are estimated based upon the 2024 principal currency exchange rates above: no significant contract liabilities write-downs; share-based compensation expenses, including related social charges, estimated at approximately €232 million (these estimates do not include any new stock option or share grants issued after September 30, 2024); amortization of acquired intangibles and of tangibles reevaluation, estimated at approximately €360 million, largely impacted by the acquisition of MEDIDATA; and lease incentives of acquired companies at approximately €2 million.

    The above objectives also do not include any impact from other operating income and expenses, a net principally comprised of acquisition, integration and restructuring expenses, and impairment of goodwill and acquired intangible assets; from one-time items included in financial revenue; from one-time tax effects; and from the income tax effects of these non-IFRS adjustments. Finally, these estimates do not include any new acquisitions or restructuring completed after September 30, 2024.

    Corporate Announcements

    Today’s Webcast and Conference Call Information

    Today, Thursday, October 24, 2024, Dassault Systèmes will host, from London, a webcasted presentation at 9:00 AM London Time / 10:00 AM Paris time, and will then host a conference call at 8:30 AM New York time / 1:30 PM London time / 2:30 PM Paris time. The webcasted presentation and conference calls will be available online by accessing investor.3ds.com.

    Additional investor information is available at investor.3ds.com or by calling Dassault Systèmes’ Investor Relations at +33.1.61.62.69.24.

    Investor Relations Events

    • Fourth Quarter 2024 Earnings Release: February 4, 2025
    • First Quarter 2025 Earnings Release: April 24, 2025
    • Second Quarter 2025 Earnings Release: July 24, 2025

    Forward-looking Information

    Statements herein that are not historical facts but express expectations or objectives for the future, including but not limited to statements regarding the Group’s non-IFRS financial performance objectives are forward-looking statements. Such forward-looking statements are based on Dassault Systèmes management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results or performances may differ materially from those in such statements due to a range of factors.

    The Group’s actual results or performance may be materially negatively affected by numerous risks and uncertainties, as described in the “Risk Factors” section 1.9 of the 2023 Universal Registration Document (‘Document d’enregistrement universel’) filed with the AMF (French Financial Markets Authority) on March 18, 2024, available on the Group’s website www.3ds.com.

    In particular, please refer to the risk factor “Uncertain Global Economic Environment” in section 1.9.1.1 of the 2023 Universal Registration Document set out below for ease of reference:

    “In light of the uncertainties regarding economic, business, social, health and geopolitical conditions at the global level, Dassault Systèmes’ revenue, net earnings and cash flows may grow more slowly, whether on an annual or quarterly basis, mainly due to the following factors:

    • the deployment of Dassault Systèmes’ solutions may represent a large portion of a customer’s investments in software technology. Decisions to make such an investment are impacted by the economic environment in which the customers operate. Uncertain global geopolitical, economic and health conditions and the lack of visibility or the lack of financial resources may cause some customers, e.g. within the automotive, aerospace, energy or natural resources industries, to reduce, postpone or terminate their investments, or to reduce or not renew ongoing paid maintenance for their installed base, which impact larger customers’ revenue with their respective sub-contractors;
    • the political, economic and monetary situation in certain geographic regions where Dassault Systèmes operates could become more volatile and impact Dassault Systèmes’ business, for example, due to stricter export compliance rules or the introduction of new customs tariffs;
    • continued pressure or volatility on raw materials and energy prices could also slow down Dassault Systèmes’ diversification efforts in new industries;
    • uncertainties regarding the extent and duration of inflation could adversely affect the financial position of Dassault Systèmes; and
    • the sales cycle of Dassault Systèmes’ products – already relatively long due to the strategic nature of such investments for customers – could further lengthen.

    The occurrence of crises – health and political in particular – could have consequences both for the health and safety of Dassault Systèmes’ employees and for the Company. It could also adversely impact the financial situation or financing and supply capabilities of Dassault Systèmes’ existing and potential customers, commercial and technology partners, some of whom may be forced to temporarily close sites or cease operations. A deteriorating economic environment could generate increased price pressure and affect the collection of receivables, which would negatively impact Dassault Systèmes’ revenue, financial performance and market position.

    Dassault Systèmes makes every effort to take into consideration this uncertain macroeconomic outlook. Dassault Systèmes’ business results, however, may not develop as anticipated. Furthermore, due to factors affecting sales of Dassault Systèmes’ products and services, there may be a substantial time lag between an improvement in global economic and business conditions and an upswing in the Company’s business results.

    In preparing such forward-looking statements, the Group has in particular assumed an average US dollar to euro exchange rate of US$1.10 per €1.00 as well as an average Japanese yen to euro exchange rate of JPY155.0 to €1.00, before hedging for the fourth quarter 2024. The Group has assumed an average US dollar to euro exchange rate of US$1.09 per €1.00 as well as an average Japanese yen to euro exchange rate of JPY162.0 to €1.00, before hedging for the full year 2024. However, currency values fluctuate, and the Group’s results may be significantly affected by changes in exchange rates.   

    Non-IFRS Financial Information

    Readers are cautioned that the supplemental non-IFRS financial information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered in isolation from or as a substitute for IFRS measurements. The supplemental non-IFRS financial information should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS. Furthermore, the Group’s supplemental non-IFRS financial information may not be comparable to similarly titled “non-IFRS” measures used by other companies. Specific limitations for individual non-IFRS measures are set forth in the Company’s 2023 Universal Registration Document filed with the AMF on March 18, 2024.

    In the tables accompanying this press release the Group sets forth its supplemental non-IFRS figures for revenue, operating income, operating margin, net income and diluted earnings per share, which exclude the effect of adjusting the carrying value of acquired companies’ deferred revenue, share-based compensation expense and related social charges, the amortization of acquired intangible assets and of tangibles reevaluation, certain other operating income and expense, net, including impairment of goodwill and acquired intangibles, the effect of adjusting lease incentives of acquired companies, certain one-time items included in financial revenue and other, net, and the income tax effect of the non-IFRS adjustments and certain one-time tax effects. The tables also set forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information.

    FOR MORE INFORMATION

    Dassault Systèmes’ 3DEXPERIENCE platform, 3D design software, 3D Digital Mock Up and Product Lifecycle Management (PLM) solutions: http://www.3ds.com

    ABOUT DASSAULT SYSTÈMES

    Dassault Systèmes is a catalyst for human progress. We provide business and people with collaborative virtual environments to imagine sustainable innovations. By creating virtual twin experiences of the real world with our 3DEXPERIENCE platform and applications, our customers can redefine the creation, production and life-cycle-management processes of their offer and thus have a meaningful impact to make the world more sustainable. The beauty of the Experience Economy is that it is a human-centered economy for the benefit of all – consumers, patients and citizens. Dassault Systèmes brings value to more than 350,000 customers of all sizes, in all industries, in more than 150 countries. For more information, visit www.3ds.com

    Dassault Systèmes Investor Relations Team                        FTI Consulting

    Beatrix Martinez: +33 1 61 62 40 73                                Arnaud de Cheffontaines: +33 1 47 03 69 48

                                                                    Jamie Ricketts : +44 20 3727 1600

    investors@3ds.com

    Dassault Systèmes Press Contacts

    Corporate / France        Arnaud MALHERBE        

    arnaud.malherbe@3ds.com        

    +33 (0)1 61 62 87 73

    © Dassault Systèmes. All rights reserved. 3DEXPERIENCE, the 3DS logo, the Compass icon, IFWE, 3DEXCITE, 3DVIA, BIOVIA, CATIA, CENTRIC PLM, DELMIA, ENOVIA, GEOVIA, MEDIDATA, NETVIBES, OUTSCALE, SIMULIA and SOLIDWORKS are commercial trademarks or registered trademarks of Dassault Systèmes, a European company (Societas Europaea) incorporated under French law, and registered with the Versailles trade and companies registry under number 322 306 440, or its subsidiaries in the United States and/or other countries. All other trademarks are owned by their respective owners. Use of any Dassault Systèmes or its subsidiaries trademarks is subject to their express written approval.

    APPENDIX TABLE OF CONTENTS

    Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.    

    Glossary of Definitions

    Non-IFRS Financial Information

    Acquisitions and Foreign Exchange Impact

    Condensed consolidated statements of income

    Condensed consolidated balance sheet

    Condensed consolidated cash flow statement

    IFRS – non-IFRS reconciliation

    DASSAULT SYSTÈMES – Glossary of Definitions

    Information in Constant Currencies

    Dassault Systèmes has followed a long-standing policy of measuring its revenue performance and setting its revenue objectives exclusive of currency in order to measure in a transparent manner the underlying level of improvement in its total revenue and software revenue by activity, industry, geography and product lines. The Group believes it is helpful to evaluate its growth exclusive of currency impacts, particularly to help understand revenue trends in its business. Therefore, the Group provides percentage increases or decreases in its revenue and expenses (in both IFRS as well as non-IFRS) to eliminate the effect of changes in currency values, particularly the U.S. dollar and the Japanese yen, relative to the euro. When trend information is expressed “in constant currencies”, the results of the “prior” period have first been recalculated using the average exchange rates of the comparable period in the current year, and then compared with the results of the comparable period in the current year.

    While constant currency calculations are not considered to be an IFRS measure, the Group believes these measures are critical to understanding its global revenue results and to compare with many of its competitors who report their financial results in U.S. dollars. Therefore, Dassault Systèmes includes this calculation for comparing IFRS revenue figures as well non-IFRS revenue figures for comparable periods. All information at constant exchange rates is expressed as a rounded percentage and therefore may not precisely reflect the absolute figures.

    Information on Growth excluding acquisitions (“organic growth”)

    In addition to financial indicators on the entire Group’s scope, Dassault Systèmes provides growth excluding acquisitions effect, also named organic growth. In order to do so, the data relating to the scope is restated excluding acquisitions, from the date of the transaction, over a period of 12 months.

    Information on Industrial Sectors

    The Group provides broad end-to-end software solutions and services: its platform-based virtual twin experiences combine modeling, simulation, data science and collaborative innovation to support companies in the three sectors it serves, namely Manufacturing Industries, Life Sciences & Healthcare, and Infrastructure & Cities.

    These three sectors comprise twelve industries:

    • Manufacturing Industries: Transportation & Mobility; Aerospace & Defense; Marine & Offshore; Industrial Equipment; High-Tech; Home & Lifestyle; Consumer Packaged Goods – Retail. In Manufacturing Industries, Dassault Systèmes helps customers virtualize their operations, improve data sharing and collaboration across their organization, reduce costs and time-to-market, and become more sustainable;
    • Life Sciences & Healthcare: Life Sciences & Healthcare. In this sector, the Group aims to address the entire cycle of the patient journey to lead the way toward precision medicine. To reach the broader healthcare ecosystem from research to commercial, the Group’s solutions connect all elements from molecule development to prevention to care, and combine new therapeutics, med practices, and Medtech;
    • Infrastructure & Cities: Infrastructure, Energy & Materials; Architecture, Engineering & Construction; Business Services; Cities & Public Services. In Infrastructure & Cities, the Group supports the virtualization of the sector in making its industries more efficient and sustainable, and creating desirable living environments.

    Information on Product Lines

    The Group’s product lines financial reporting include the following financial information:

    • Industrial Innovation software revenue, which includes CATIA, ENOVIA, SIMULIA, DELMIA, GEOVIA, NETVIBES, and 3DEXCITE brands;
    • Life Sciences software revenue, which includes MEDIDATA and BIOVIA brands;
    • Mainstream Innovation software revenue which includes its CENTRIC PLM and 3DVIA brands, as well as its 3DEXPERIENCE WORKS family which includes the SOLIDWORKS brand.

    Starting from 2022, 3DS OUTSCALE became a brand of Dassault Systèmes. As the first sovereign and sustainable operator on the cloud, 3DS OUTSCALE enables governments and corporations from all sectors to achieve digital autonomy through a Cloud experience and with a world-class cyber governance.

    GEO’s

    Eleven GEOs are responsible for driving development of the Company’s business and implementing its customer‑centric engagement model. Teams leverage strong networks of local customers, users, partners, and influencers.

    These GEOs are structured into three groups:

    • the “Americas” group, made of two GEO’s;
    • the “Europe” group, comprising Europe, Middle East and Africa (EMEA) and made of four GEO’s;
    • the “Asia” group, comprising Asia and Oceania and made of five GEO’s.  

    3DEXPERIENCE Software Contribution

    To measure the relative share of 3DEXPERIENCE software in its revenues, Dassault Systèmes uses the following ratio: for software revenue, the Group calculates the percentage contribution by comparing total 3DEXPERIENCE software revenue to software revenue for all product lines except SOLIDWORKS, MEDIDATA, CENTRIC PLM and other acquisitions (defined as “3DEXPERIENCE Eligible software revenue”).

    Cloud revenue

    Cloud revenues correspond to revenue generated through a catalog of cloud-based solutions, infrastructure as a service, cloud solution development and cloud managed services. They are delivered by Dassault Systèmes via a cloud infrastructure hosted by Dassault Systèmes, or by third party providers of cloud computing infrastructure services. These offerings are available through different deployment methods: Dedicated cloud, Sovereign cloud and International cloud. Cloud solutions are generally offered through subscriptions models or perpetual licenses with support and hosting services.

    DASSAULT SYSTÈMES

    NON-IFRS FINANCIAL INFORMATION

    (unaudited; in millions of Euros, except per share data, percentages, headcount and exchange rates)

    Non-IFRS key figures exclude the effects of adjusting the carrying value of acquired companies’ contract liabilities (deferred revenue), share-based compensation expense, including related social charges, amortization of acquired intangible assets and of tangible assets revaluation, lease incentives of acquired companies, other operating income and expense, net, including the acquisition, integration and restructuring expenses, and impairment of goodwill and acquired intangible assets, certain one-time items included in financial loss, net, certain one-time tax effects and the income tax effects of these non-IFRS adjustments.

    Comparable IFRS financial information and a reconciliation of the IFRS and non-IFRS measures are set forth in the separate tables within this Attachment.

    In millions of Euros, except per share data, percentages, headcount and exchange rates Non-IFRS reported
    Three months ended Nine months ended
    September 30,

    2024

    		 September 30,

    2023

    		 Change Change in constant currencies September 30,

    2024

    		 September 30,

    2023

    		 Change Change in constant currencies
    Total Revenue € 1,463.9 € 1,424.7 3% 4% € 4,459.3 € 4,308.0 4% 4%
                     
    Revenue breakdown by activity                
    Software revenue 1,312.4 1,286.7 2% 3% 4,011.8 3,883.9 3% 4%
    Of which licenses and other software revenue 229.5 246.0 (7)% (7)% 719.8 735.8 (2)% (1)%
    Of which subscription and support revenue 1,082.9 1,040.8 4% 5% 3,292.0 3,148.1 5% 5%
    Services revenue 151.5 138.0 10% 10% 447.6 424.1 6% 6%
                     
    Software revenue breakdown by product line                
    Industrial Innovation 684.6 698.8 (2)% (1)% 2,117.9 2,070.7 2% 4%
    Life Sciences 280.1 283.6 (1)% (0)% 846.6 863.8 (2)% (2)%
    Mainstream Innovation 347.7 304.2 14% 15% 1,047.4 949.5 10% 11%
                     
    Software Revenue breakdown by geography                
    Americas 540.6 513.6 5% 6% 1,619.7 1,575.2 3% 3%
    Europe 470.3 490.5 (4)% (4)% 1,465.4 1,426.3 3% 2%
    Asia 301.5 282.7 7% 9% 926.6 882.4 5% 9%
                     
    Operating income € 432.6 € 442.0 (2)%   € 1,347.0 € 1,335.7 1%  
    Operating margin 29.6% 31.0%     30.2% 31.0%    
                     
    Net income attributable to shareholders € 380.1 € 371.3 2%   € 1,174.4 € 1,110.7 6%  
    Diluted earnings per share € 0.29 € 0.28 3% 4% € 0.89 € 0.84 6% 8%
                     
    Closing headcount 25,996 25,377 2%   25,996 25,377 2%  
                     
    Average Rate USD per Euro 1.10 1.09 1%   1.09 1.08 0%  
    Average Rate JPY per Euro 163.95 157.25 4%   164.29 149.65 10%  

    DASSAULT SYSTÈMES

    ACQUISITIONS AND FOREIGN EXCHANGE IMPACT

    (unaudited; in millions of Euros)

    In millions of Euros Non-IFRS reported o/w growth at constant rate and scope o/w change of scope impact at current year rate o/w FX impact on previous year figures
    September 30,

    2024

    		 September 30,

    2023

    		 Change
    Revenue QTD 1,463.9 1,424.7 39.2 49.8 1.3 (11.8)
    Revenue YTD 4,459.3 4,308.0 151.3 190.2 1.6 (40.4)

    DASSAULT SYSTÈMES

    CONDENSED CONSOLIDATED STATEMENTS OF INCOME

    (unaudited; in millions of Euros, except per share data and percentages)

    In millions of Euros, except per share data and percentages IFRS reported
    Three months ended Nine months ended
    September 30, September 30, September 30, September 30,
    2024 2023 2024 2023
    Licenses and other software revenue 229.5 246.0 719.8 735.8
    Subscription and Support revenue 1,082.9 1,040.8 3,292.0 3,148.1
    Software revenue 1,312.4 1,286.7 4,011.8 3,883.9
    Services revenue 151.5 138.0 447.6 424.1
    Total Revenue € 1,463.9 € 1,424.7 € 4,459.3 € 4,308.0
    Cost of software revenue (1) (127.6) (105.2) (364.4) (329.0)
    Cost of services revenue (125.3) (133.1) (385.0) (386.1)
    Research and development expenses (321.0) (299.2) (958.5) (910.8)
    Marketing and sales expenses (403.7) (381.0) (1,247.7) (1,195.2)
    General and administrative expenses (117.5) (103.2) (334.1) (325.9)
    Amortization of acquired intangible assets and of tangible assets revaluation (88.5) (93.4) (274.1) (284.0)
    Other operating income and expense, net (4.2) (7.1) (19.2) (16.7)
    Total Operating Expenses (1,187.7) (1,122.2) (3,583.1) (3,447.7)
    Operating Income € 276.2 € 302.5 € 876.2 € 860.3
    Financial income (loss), net 32.1 (4.3) 95.5 31.1
    Income before income taxes € 308.2 € 298.2 € 971.7 € 891.5
    Income tax expense (68.5) (54.9) (184.4) (171.5)
    Net Income € 239.8 € 243.3 € 787.2 € 719.9
    Non-controlling interest (0.0) 0.1 0.9 1.0
    Net Income attributable to equity holders of the parent € 239.7 € 243.5 € 788.2 € 720.9
    Basic earnings per share 0.18 0.18 0.60 0.55
    Diluted earnings per share € 0.18 € 0.18 € 0.61 € 0.54
    Basic weighted average shares outstanding (in millions) 1,313.3 1,316.1 1,313.4 1,315.2
    Diluted weighted average shares outstanding (in millions) 1,323.1 1,326.1 1,327.0 1,326.8

    (1) Excluding amortization of acquired intangible assets and of tangible assets revaluation.

    IFRS reported

     

    		 Three months ended September 30, 2024 Nine months ended September 30, 2024
    Change (2) Change in constant currencies Change (2) Change in constant currencies
    Total Revenue 3% 4% 4% 4%
    Revenue by activity        
    Software revenue 2% 3% 3% 4%
    Services revenue 10% 10% 6% 6%
    Software Revenue by product line        
    Industrial Innovation (2)% (1)% 2% 4%
    Life Sciences (1)% (0)% (2)% (2)%
    Mainstream Innovation 14% 15% 10% 11%
    Software Revenue by geography        
    Americas 5% 6% 3% 3%
    Europe (4)% (4)% 3% 2%
    Asia 7% 9% 5% 9%

    (2) Variation compared to the same period in the prior year.

    DASSAULT SYSTÈMES

    CONDENSED CONSOLIDATED BALANCE SHEET

    (unaudited; in millions of Euros)

    In millions of Euros IFRS reported
    September 30, December 31,
    2024 2023
    ASSETS    
    Cash and cash equivalents 3,657.7 3,568.3
    Trade accounts receivable, net 1,359.8 1,707.9
    Contract assets 45.1 26.8
    Other current assets 495.1 477.1
    Total current assets 5,557.7 5,780.1
    Property and equipment, net 946.2 882.8
    Goodwill and Intangible assets, net 7,301.4 7,647.0
    Other non-current assets 253.2 312.5
    Total non-current assets 8,500.7 8,842.3
    Total Assets € 14,058.4 € 14,622.5
    LIABILITIES    
    Trade accounts payable 181.2 230.5
    Contract liabilities 1,376.7 1,479.3
    Borrowings, current 548.8 950.1
    Other current liabilities 768.6 901.0
    Total current liabilities 2,875.4 3,561.0
    Borrowings, non-current 2,042.8 2,040.6
    Other non-current liabilities 1,137.7 1,174.8
    Total non-current liabilities 3,180.5 3,215.4
    Non-controlling interests 13.8 11.9
    Parent shareholders’ equity 7,988.7 7,834.1
    Total Liabilities € 14,058.4 € 14,622.5

    DASSAULT SYSTÈMES

    CONDENSED CONSOLIDATED CASH FLOW STATEMENT

    (unaudited; in millions of Euros)

    In millions of Euros IFRS reported
    Three months ended Nine months ended
    September 30, September 30, Change September 30, September 30, Change
    2024 2023 2024 2023
    Net income attributable to equity holders of the parent 239.7 243.5 (3.7) 788.2 720.9 67.3
    Non-controlling interest 0.0 (0.1) 0.1 (0.9) (1.0) 0.0
    Net income 239.8 243.3 (3.6) 787.2 719.9 67.3
    Depreciation of property and equipment 49.4 47.3 2.1 142.1 138.4 3.7
    Amortization of intangible assets 90.3 95.2 (5.0) 279.7 290.3 (10.6)
    Adjustments for other non-cash items 39.3 65.4 (26.1) 113.6 123.5 (10.0)
    Changes in working capital (201.1) (205.3) 4.2 25.2 (0.4) 25.6
    Net Cash From Operating Activities € 217.6 € 246.0 € (28.4) € 1,347.8 € 1,271.7 € 76.0
                 
    Additions to property, equipment and intangibles assets (36.5) (35.1) (1.4) (144.3) (102.8) (41.5)
    Payment for acquisition of businesses, net of cash acquired (2.6) (14.8) 12.2 (18.3) (15.6) (2.6)
    Other 0.7 4.5 (3.8) 23.9 (0.4) 24.2
    Net Cash Provided by (Used in) Investing Activities € (38.3) € (45.3) €7.0 € (138.7) € (118.8) € (19.9)
                 
    Proceeds from exercise of stock options 8.8 11.6 (2.7) 44.0 38.5 5.5
    Cash dividends paid – (0.0) 0.0 (302.7) (276.3) (26.4)
    Repurchase and sale of treasury stock (65.8) (218.6) 152.8 (373.5) (386.0) 12.5
    Capital increase (0.0) 0.0 (0.0) – 146.1 (146.1)
    Acquisition of non-controlling interests (0.7) 0.0 (0.7) (3.3) (0.8) (2.5)
    Proceeds from borrowings 300.0 (0.3) 300.3 300.0 20.3 279.7
    Repayment of borrowings (700.5) (0.9) (699.6) (700.7) (28.2) (672.5)
    Repayment of lease liabilities (18.7) (21.1) 2.4 (61.0) (63.0) 2.1
    Net Cash Provided by (Used in) Financing Activities € (476.9) € (229.4) € (247.5) € (1,097.1) € (549.4) €( 547.7)
                 
    Effect of exchange rate changes on cash and cash equivalents (76.2) 51.7 (127.9) (22.6) (4.4) (18.2)
                 
    Increase (decrease) in cash and cash equivalents € (373.8) €22.7 € (396.5) € 89.4 € 599.2 € (509.8)
                 
    Cash and cash equivalents at beginning of period € 4,031.5 € 3,345.4   € 3,568.3 € 2,769.0  
    Cash and cash equivalents at end of period € 3,657.7 € 3,368.1   € 3,657.7 € 3,368.1  

    DASSAULT SYSTÈMES
    SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
    IFRS – NON-IFRS RECONCILIATION
    (unaudited; in millions of Euros, except per share data and percentages)

    Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Group’s supplemental non-IFRS financial information may not be comparable to similarly titled “non-IFRS” measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Group’s Document d’Enregistrement Universel for the year ended December 31, 2023 filed with the AMF on March 18, 2024. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Group’s consolidated financial statements prepared in accordance with IFRS.

    In millions of Euros, except per share data and percentages Three months ended September 30, Change
    2024 Adjustment(1) 2024 2023 Adjustment(1) 2023 IFRS Non-IFRS(2)
    IFRS Non-IFRS IFRS Non-IFRS
    Total Revenue € 1,463.9 – € 1,463.9 € 1,424.7 – € 1,424.7 3% 3%
    Revenue breakdown by activity                
    Software revenue 1,312.4 – 1,312.4 1,286.7 – 1,286.7 2% 2%
    Licenses and other software revenue 229.5 – 229.5 246.0 – 246.0 (7)% (7)%
    Subscription and Support revenue 1,082.9 – 1,082.9 1,040.8 – 1,040.8 4% 4%
    Recurring portion of Software revenue 83%   83% 81%   81%    
    Services revenue 151.5 – 151.5 138.0 – 138.0 10% 10%
    Software Revenue breakdown by product line                
    Industrial Innovation 684.6 – 684.6 698.8 – 698.8 (2)% (2)%
    Life Sciences 280.1 – 280.1 283.6 – 283.6 (1)% (1)%
    Mainstream Innovation 347.7 – 347.7 304.2 – 304.2 14% 14%
    Software Revenue breakdown by geography                
    Americas 540.6 – 540.6 513.6 – 513.6 5% 5%
    Europe 470.3 – 470.3 490.5 – 490.5 (4)% (4)%
    Asia 301.5 – 301.5 282.7 – 282.7 7% 7%
    Total Operating Expenses € (1,187.7) € 156.5 € (1,031.2) € (1,122.2) € 139.5 € (982.7) 6% 5%
    Share-based compensation expense and related social charges (63.4) 63.4 – (38.4) 38.4 –    
    Amortization of acquired intangible assets and of tangible assets revaluation (88.5) 88.5 – (93.4) 93.4 –    
    Lease incentives of acquired companies (0.4) 0.4 – (0.7) 0.7 –    
    Other operating income and expense, net (4.2) 4.2 – (7.1) 7.1 –    
    Operating Income € 276.2 € 156.5 € 432.6 € 302.5 € 139.5 € 442.0 (9)% (2)%
    Operating Margin 18.9%   29.6% 21.2%   31.0%    
    Financial income (loss), net 32.1 0.6 32.6 (4.3) 26.8 22.5 N/A 45%
    Income tax expense (68.5) (15.8) (84.3) (54.9) (38.1) (93.0) 25% (9)%
    Non-controlling interest (0.0) (0.9) (0.9) 0.1 (0.4) (0.3) (117)% 229%
    Net Income attributable to shareholders € 239.7 € 140.3 € 380.1 € 243.5 € 127.8 € 371.3 (2)% 2%
    Diluted Earnings Per Share (3) € 0.18 € 0.10 € 0.29 € 0.18 € 0.10 € 0.28 0% 3%

    (1) In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the effect of adjusting the carrying value of acquired companies’ contract liabilities (deferred revenue); (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangible assets and of tangible assets revaluation, share-based compensation expense, including related social charges, lease incentives of acquired companies, as detailed below, and other operating income and expense, net including acquisition, integration and restructuring expenses, and impairment of goodwill and acquired intangible assets; (iii) adjustments to IFRS financial loss, net reflect the exclusion of certain one-time items included in financial loss, net, and; (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus with respect to net income and diluted earnings per share, certain one-time tax effects and the income tax effect of the non-IFRS adjustments.

    In millions of Euros, except percentages Three months ended September 30, Change
    2024

    IFRS

    		 Share-based compensation expense and related social charges Lease incentives of acquired companies 2024

    Non-IFRS

    		 2023

    IFRS

    		 Share-based compensation expense and related social charges Lease incentives of acquired companies 2023

    Non-IFRS

    		 IFRS Non-

    IFRS
    Cost of revenue (252.9) 3.3 0.1 (249.5) (238.2) 2.1 0.2 (236.0) 6% 6%
    Research and development expenses (321.0) 20.4 0.2 (300.4) (299.2) 14.9 0.3 (284.1) 7% 6%
    Marketing and sales expenses (403.7) 18.9 0.0 (384.8) (381.0) 11.1 0.1 (369.8) 6% 4%
    General and administrative expenses (117.5) 20.8 0.0 (96.6) (103.2) 10.3 0.0 (92.9) 14% 4%
    Total   € 63.4 € 0.4     € 38.4 € 0.7      

    (2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.
    (3) Based on a weighted average 1,323.1 million diluted shares for Q3 2024 and 1,326.1 million diluted shares for Q3 2023, and, for IFRS only, a diluted net income attributable to the sharehorlders of € 243.2 million for Q3 2024 (€ 243.5 million for Q3 2023). The Diluted net income attributable to equity holders of the Group corresponds to the Net Income attributable to equity holders of the Group adjusted by the impact of the share-based compensation plans to be settled either in cash or in shares at the option of the Group.

    DASSAULT SYSTÈMES
    SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
    IFRS – NON-IFRS RECONCILIATION
    (unaudited; in millions of Euros, except per share data and percentages)

    Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Group’s supplemental non-IFRS financial information may not be comparable to similarly titled “non-IFRS” measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Group’s Document d’Enregistrement Universel for the year ended December 31, 2023 filed with the AMF on March 18, 2024. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Group’s consolidated financial statements prepared in accordance with IFRS.

    In millions of Euros, except per share data and percentages Nine months ended September 30, Change
    2024 Adjustment(1) 2024 2023 Adjustment(1) 2023 IFRS Non-IFRS(2)
    IFRS Non-IFRS IFRS Non-IFRS
    Total Revenue € 4,459.3   € 4,459.3 € 4,308.0 – € 4,308.0 4% 4%
    Revenue breakdown by activity                
    Software revenue 4,011.8   4,011.8 3,883.9 – 3,883.9 3% 3%
    Licenses and other software revenue 719.8 – 719.8 735.8 – 735.8 (2)% (2)%
    Subscription and Support revenue 3,292.0   3,292.0 3,148.1 – 3,148.1 5% 5%
    Recurring portion of Software revenue 82%   82% 81%   81%    
    Services revenue 447.6 – 447.6 424.1 – 424.1 6% 6%
    Software Revenue breakdown by product line                
    Industrial Innovation 2,117.9 – 2,117.9 2,070.7 – 2,070.7 2% 2%
    Life Sciences 846.6 – 846.6 863.8 – 863.8 (2)% (2)%
    Mainstream Innovation 1,047.4 – 1,047.4 949.5 – 949.5 10% 10%
    Software Revenue breakdown by geography                
    Americas 1,619.7   1,619.7 1,575.2 – 1,575.2 3% 3%
    Europe 1,465.4 – 1,465.4 1,426.3 – 1,426.3 3% 3%
    Asia 926.6 – 926.6 882.4 – 882.4 5% 5%
    Total Operating Expenses € (3,583.1) € 470.8 € (3,112.4) € (3,447.7) € 475.4 € (2,972.3) 4% 5%
    Share-based compensation expense and related social charges (175.9) 175.9 – (172.6) 172.6 –    
    Amortization of acquired intangible assets and of tangible assets revaluation (274.1) 274.1 – (284.0) 284.0 –    
    Lease incentives of acquired companies (1.5) 1.5 – (2.1) 2.1 –    
    Other operating income and expense, net (19.2) 19.2 – (16.7) 16.7 –    
    Operating Income € 876.2 € 470.8 € 1,347.0 € 860.3 € 475.4 € 1,335.7 2% 1%
    Operating Margin 19.6%   30.2% 20.0%   31.0%    
    Financial income (loss), net 95.5 2.1 97.6 31.1 28.3 59.4 207% 64%
    Income tax expense (184.4) (83.8) (268.2) (171.5) (112.8) (284.3) 8% (6)%
    Non-controlling interest 0.9 (2.8) (1.9) 1.0 (1.2) (0.2) (3)% N/A
    Net Income attributable to shareholders € 788.2 € 386.2 € 1,174.4 € 720.9 € 389.7 € 1,110.7 9% 6%
    Diluted Earnings Per Share (3) € 0.61 € 0.28 € 0.89 € 0.54 € 0.29 € 0.84 12% 6%

    (1) In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the effect of adjusting the carrying value of acquired companies’ contract liabilities (deferred revenue); (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangible assets and of tangible assets revaluation, share-based compensation expense, including related social charges, lease incentives of acquired companies, as detailed below, and other operating income and expense, net including acquisition, integration and restructuring expenses, and impairment of goodwill and acquired intangible assets; (iii) adjustments to IFRS financial loss, net reflect the exclusion of certain one-time items included in financial loss, net, and; (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus with respect to net income and diluted earnings per share, certain one-time tax effects and the income tax effect of the non-IFRS adjustments.

    In millions of Euros, except percentages Nine months ended September 30, Change
    2024

    IFRS

    		 Share-based compensation expense and related social charges Lease incentives of acquired companies 2024

    Non-IFRS

    		 2023

    IFRS

    		 Share-based compensation expense and related social charges Lease incentives of acquired companies 2023

    Non-IFRS

    		 IFRS Non-

    IFRS
    Cost of revenue (749.4) 11.2 0.4 (737.8) (715.1) 12.1 0.6 (702.3) 5% 5%
    Research and development expenses (958.5) 58.7 0.7 (899.1) (910.8) 65.9 0.9 (844.0) 5% 7%
    Marketing and sales expenses (1,247.7) 55.7 0.2 (1,191.8) (1,195.2) 52.7 0.4 (1,142.2) 4% 4%
    General and administrative expenses (334.1) 50.3 0.1 (283.7) (325.9) 42.0 0.1 (283.8) 3% (0)%
    Total   € 175.9 € 1.5     € 172.6 € 2.1      

    (2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.
    (3) Based on a weighted average 1,327.0 million diluted shares for YTD 2024 and 1,326.8 million diluted shares for YTD 2023, and, for IFRS only, a diluted net income attributable to the shareholders of € 805.5 million for YTD 2024 (€ 720.9 million for YTD 2023). The Diluted net income attributable to equity holders of the Group corresponds to the Net Income attributable to equity holders of the Group adjusted by the impact of the share-based compensation plans to be settled either in cash or in shares at the option of the Group.

    1 IFRS figures for 3Q24: total revenue at €1.46 billion, operating margin of 18.9% and diluted EPS at €0.18; IFRS figures for YTD24: total revenue at €4.46 billion, operating margin of 19.6% and diluted EPS at €0.61.  

    Attachment

    The MIL Network –

  • MIL-OSI: EfTEN Real Estate Fund AS unaudited results for 3rd quarter and nine months of 2024

    Source: GlobeNewswire (MIL-OSI)

    The decrease in euro interest rates is quietly increasing transaction activity on the Baltic real estate market and has a positive effect on the financial results of EfTEN Real Estate Fund AS. Thus, in the third quarter of 2024, the fund’s consolidated interest expense decreased by more than 60 thousand euros compared to the previous quarter. From the transactions perspective, the third quarter was the most active in recent years – the Fund’s subsidiary EfTEN Tähesaju tee OÜ sold the Tähesaju Hortes property, and the fund established two new 100% subsidiaries to acquire the logistics centers Paemurru and Härgmäe respectively in Tallinn and Harjumaa. The acquisition cost of the two new properties will be almost 15 million euros upon their final completion. In the third quarter of this year, the construction work was completed and the ERM elderly care home was also opened next to Tartu.

    A further decline in interest rates is expected. This has already had a positive effect on listed share and bond prices of real estate sector companies on the Scandinavian stock exchange. In the wake of these developments, banks with Nordic owners operating in the Baltics are again looking more positively at financing the real estate sector. According to the fund manager, this creates a good basis for overcoming the decline of the past few years in the Baltic commercial real estate market. However, since local major real estate investors lack capital at the moment and there is no sign of foreign investors entering the local market, the recovery will not be quick. The market still remains a so-called buyer’s market, where it is possible to acquire high-quality property at a good price level. For this reason, the fund announced its intention to launch a new share issue in the fall of 2024, with the aim of raising additional equity of up to a maximum of EUR 30 million. At the extraordinary general meeting held on 16 October 2024, the shareholders granted the supervisory board and management the necessary authorizations to organize the share issue.

    Financial overview

    The consolidated sales revenue of EfTEN Real Estate Fund AS for the third quarter of 2024 was 8.006 million euros (2023 third quarter: 7.965 million euros). The consolidated sales revenue of EfTEN Real Estate Fund AS for the 9 months of 2024 was 23.924 million euros (2023: 23.714 million euros). The Group’s net rental income in the 9 months of 2024 was a total of 22.203 million euros (2023: 22.201 million euros). The group’s net profit in the same period was 10.104 million euros (2023: 6.880 million euros).

    The consolidated net rental income margin was 93% (2023: 94%) in the 9 months of 2024, so costs directly related to property management (including land tax, insurance, maintenance and improvement costs) and distribution costs constituted 7% (2023: 6%) of sales revenue.

    The volume of the Group’s assets as of 30.09.2024 was 377,723 million euros (31.12.2023: 380.944 million euros), of what the fair value of investment properties made up 96% (31.12.2023: 94%). 

    Investment portfolio

    As of the end of September 2024, the Group owns 34 (31 December 2023: 35) commercial investment properties, with a fair value of EUR 358.577 million as of the balance sheet date (31 December 2023: EUR 357.916 million) and an acquisition cost of EUR 356.156 million (31 December 2023: EUR 354.408 million). In addition, in September 2024, the Group entered into purchase agreements for the Härgmäe and Paemurru logistics centers, making advance payments under the agreements totaling EUR 2.173 million. After the balance sheet date, in October 2024, the Group’s subsidiary signed a real rights contract for the Härgmäe property, paying an additional EUR 8.3 million for the investment property on top of the previously made advance payment (a total of EUR 8.8 million).

    In September 2024, the Group sold the Tähesaju Hortese property for EUR 4.675 million.

    In addition to the investment properties held by the subsidiaries of the fund, the Group also holds a 50% stake in the joint venture that owns the Palace Hotel in Tallinn, with a fair value of EUR 8.543 million as of 30 September 2024 (31 December 2023: EUR 9.0 million).

    In the 9 months of 2024, the group earned a total of 23.043 million euros in rental income, which is 1% more than at the same time in 2023. Rental income increased the most in shopping centers. In the office segment, rental income decreased mainly due to the expiration of the lease agreement with the anchor tenant in the Menulio 11 office building in Vilnius.

    As of 30.09.2024, the vacancy of investment properties belonging to the Group was 3.2% (31.12.2023: 2.6%). The largest vacancy is in the office segment (13.1%), where it takes longer than before to fill vacant rental premises.

    Financing

    During the 9 months of 2024, the Fund’s subsidiaries EfTEN Autokeskus OÜ and EfTEN Jurkalne SIA extended their loan agreements. In the next 12 months, the loan agreements of two subsidiaries of the Group will expire, the balance of which as of 30.09.2024 is 8,025 thousand euros in total. The LTV of the expiring loan agreements is 28.3% and 46.5%, and both investment property have a stable rental cash flow, therefore, according to the management of the Group, there are no obstacles to the extension of the loan agreements.

    The weighted average interest rate of the Group’s loan agreements is 5.35% as of 30.09.2024 (31.12.2023: 5.91%) and the LTV (Loan to Value) is 41% (31.12.2023: 42%). All loan agreements of the Fund’s subsidiaries are linked to a floating interest rate.

    After the balance sheet date, in October 2024, the Group entered into two loan agreements related to the purchase of the Härgmäe logistics center, with a total amount of EUR 7.3 million. This includes a loan agreement for EUR 2.8 million with an interest rate of 2.5% + 6-month EURIBOR, maturing on 31 December 2024, and a loan agreement for EUR 4.5 million with an interest rate of 1.8% + 6-month EURIBOR, maturing on 27 September 2029.

    Information on shares

    The net value of the share of EfTEN Real Estate Fund AS as of 30.09.2024 was 20.15 euros (31.12.2023: 20.21 euros). The net value of the share of EfTEN Real Estate Fund AS decreased by 0.3% in the 9 months of 2024. In April 2024, the Fund paid dividends in the total amount of 10.82 million euros. Without profit distribution, the net value of EfTEN Real Estate AS shares would have increased by 4.6% during the nine months of the year.

    As of 30.09.2024, the Fund has 10,819,796 shares.

    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

      III quarter 9 months
      2024 2023 2024 2023
    € thousands        
    Revenue 8,006 7,965 23,924 23,714
    Cost of services sold -473 -363 -1,232 -1,120
    Gross profit 7,533 7,602 22,692 22,594
             
    Marketing costs -111 -105 -489 -393
    General and administrative expenses -860 -841 -2,679 -2,568
    Profit / loss from the change in the fair value of investment property -415 0 -1,869 -6,182
    Other operating income and expense -41 10 45 23
    Operating profit 6,106 6,666 17,700 13,474
             
    Profit / loss from joint ventures 83 84 -171 -25
    Interest income 51 77 216 97
    Other finance income and expense -2,171 -2,156 -6,644 -5,693
    Profit before income tax 4,069 4,671 11,101 7,853
             
    Income tax expense -215 -236 -997 -973
    Net profit for the reporting period 3,854 4,435 10,104 6,880
    Total consolidated profit for the reporting period 3,854 4,435 10,104 6,880
    Earnings per share        
    – basic 0.36 0.41 0.93 0.64
    – diluted 0.36 0.41 0.93 0.64

    CONSOLIDATED STATEMENT OF FINANCIAL POSITION

      30.09.2024 31.12.2023
    € thousands    
    ASSETS    
    Cash and cash equivalents 10,637 14,712
    Current deposits 2,142 3,400
    Receivables and accrued income 1,603 2,360
    Prepaid expenses 200 106
    Total current assets 14,582 20,578
         
    Non-current receivables 355 214
    Shares in joint ventures 1,907 2,078
    Investment property 360,750 357,916
    Property, plant, and equipment 129 158
    Total non-current assets 363,141 360,366
    TOTAL ASSETS 377,723 380,944
         
    LIABILITIES AND EQUITY    
    Borrowings 13,809 16,907
    Payables and prepayments 3,110 3,417
    Total current liabilities 16,919 20,324
         
    Borrowings 132,094 130,849
    Other non-current liabilities 1,832 1,790
    Deferred income tax liability 8,896 9,283
    Total non-current liabilities 142,822 141,922
    Total liabilities 159,741 162,246
         
    Share capital 108,198 108,198
    Share premium 84,721 84,721
    Statutory reserve capital 2,799 2,749
    Retained earnings 22,264 23,030
    TOTAL EQUITY 217,982 218,698
    TOTAL LIABILITIES AND EQUITY 377,723 380,944

    Marilin Hein
    CFO
    Phone +372 6559 515
    E-mail: marilin.hein@eften.ee

    Attachment

    The MIL Network –

  • MIL-OSI Asia-Pac: Opening keynote address by Permanent Secretary for Financial Services and the Treasury (Financial Services) at AIMA APAC Annual Forum 2024 (English only) (with photos)

    Source: Hong Kong Government special administrative region

         Following is the opening keynote address by the Permanent Secretary for Financial Services and the Treasury (Financial Services), Ms Salina Yan, at the AIMA (Alternative Investment Management Association) APAC (Asia-Pacific) Annual Forum 2024 today (October 24):
     
    Jack (Chief Executive Officer of AIMA, Mr Jack Inglis), JiÅ™í (Deputy Chief Executive Officer and Global Head of Government Affairs, AIMA, Mr JiÅ™í Król), Murray (Chairman of AIMA Hong Kong Executive Committee, Mr Murray Steel), Michael (Managing Director and Co-Head of APAC, AIMA, Mr Michael Bugel), distinguished guests, ladies and gentlemen,
     
         Good morning. It gives me great pleasure to address you all today at the 2024 APAC Annual Forum of the Alternative Investment Management Association (AIMA).
     
         With more than 2 000 corporate members from over 60 locations over the world and significantly in the Asia-Pacific region, AIMA is a strong global voice of the alternative investment industry. The impressive congregation of the bright minds of alternative asset managers, financial regulators, legal and accounting professionals, fintech experts and many more here today speaks volumes about the keen interest of industry players to share views on the continued growth of the global financial markets. I can see that AIMA Hong Kong has done a fantastic job in organising the Forum and putting together a very rich agenda for us to ponder the challenges and opportunities in the evolving global environment.
     
         For now, as a precursor to the discussions at the various panels later today, allow me to share with you how we see Hong Kong’s capital market landscape through the lens of “resilience”, “reform”, and “responsibility”.
     
    Resilient market
     
         The Hong Kong stock market as measured by the Hang Seng Index has registered a growth of over 20 per cent year-to-date. This puts us among the top performing international markets. Trading has been vibrant, with long-term institutional investors including fund managers and investment banks from the region and both sides of the Atlantic making up the majority of the buy side value over the recent period. And in September, the Hong Kong Exchanges and Clearing Limited (HKEX) welcomed in the second-largest initial public offering (IPO) globally this year so far, raising over US$4.5 billion. The derivatives market is equally active. An average of 1.5 million futures and option contracts were traded daily in the first nine months of 2024, an increase of 12 per cent year-on-year and a record high.
     
         On the asset and wealth management front, Hong Kong managed about US$4 trillion of assets last year, over 10 times our GDP (Gross Domestic Product). Net fund inflows jumped 3.4 times year-on-year. With over 650 private equity and venture capital firms, Hong Kong hosts a fund pool of private equity capital under management of over US$230 billion, putting us at Asia’s second place following the Mainland. It is no coincidence that we are also Asia’s largest hedge fund hub and cross-boundary wealth management centre. Added to these, we are home to some 2 700 single family offices.
     
         On fixed income, Hong Kong maintains its position as the primary location for arranging international bond issuances from Asian entities. Last year, close to US$90 billion worth of international bond issuances from the region were arranged in Hong Kong, equivalent to around a quarter of the market.
     
         The strong economic support measures recently announced by the Mainland central authorities has no doubt played a key role in the market’s ongoing improvement. Weaving into the market resilience is the awareness and hard work to keep up the robustness of our trading and clearing systems buttressed with sound risk-management measures. Going hand-in-hand with such discipline is the focus on diversifying our financial platform so that market participants can play out their best and capture the opportunities when they arise.
     
         In the public market, for example, we have introduced new listing avenues for pre-revenue biotech companies, innovative enterprises with weighted voting rights structures, and specialist tech companies, as well as a new concessionary route to secondary listings for overseas issuers. Overall, more than 300 new-economy companies have listed on the HKEX. They include 66 pre-revenue biotech companies, making Hong Kong one of the top fundraising hubs for healthcare companies.
     
         To further attract listings of international and Mainland enterprises, the Securities and Futures Commission (SFC) and HKEX announced last week specific timelines in the vetting procedures of listing applications to provide greater certainty over the listing timeframe.
     
         Turning to the private market, we introduced the limited partnership fund (LPF) structure in August 2020 to allow private funds to be registered in the form of limited partnerships. Since its introduction, the number of LPFs established in Hong Kong has seen an average 40 per cent annual growth and will soon hit the 1 000 mark.
     
         Hong Kong has over 4 000 start-ups. In addition, as a result of the good work of the Office for Attracting Strategic Enterprises (OASES), over 100 strategic innovation and technology international enterprises will set up or expand their businesses here, bringing in a total investment of more than HK$52 billion so far. Next month, OASES will announce a new batch of strategic enterprises including artificial intelligence and big data analytics companies from different parts of the world to have a presence in Hong Kong. All these will offer investment possibilities for the alternative investment industry.

    Continuous strategic reform
     
         To seek continuous improvements, harness change and deliver results is the driving principle in furthering the development of our capital markets. Continuous strategic reform is indeed a key theme of the Policy Address delivered by the Chief Executive of the Hong Kong Special Administrative Region last Wednesday.
     
         To enhance our international financial centre status and investment environment, the Policy Address has announced a number of reform proposals and I would like to highlight some of them here.
     
         Notably, to support the development of the asset and wealth management industry, particularly privately offered funds, private equities and family offices, we will soon consult the industry on proposals to enhance the tax exemption arrangements for related entities through three main areas, first, expanding the definition of “fund” to cover pension funds and endowment funds so as to strengthen the development of “patient capital”; second, increasing the types of transactions eligible for tax concessions for funds and single family offices to cover emission derivatives or emission allowances, insurance-linked securities, loans and private credit investments, virtual assets, etc; and thirdly, removing the requirements for certification and hurdle rate for carried interest in seeking such tax exemption arrangements. We look forward to hearing your views when the details are available, which should be very soon.
     
         On market infrastructure, we will upgrade the Central Moneymarkets Unit (CMU) to facilitate the settlement of assets denominated in different currencies by international investors. The fixed income market infrastructure will be enhanced by exploring the set-up of a central clearing system for RMB (Renminbi)-denominated bond repurchase (repo) transactions, making RMB sovereign bonds issued in Hong Kong a more popular choice of collateral in offshore markets.
     
         We will also make good use of the currency swap agreement, and the Hong Kong Monetary Authority (HKMA) will expand the night-time, cross-boundary service capability of Hong Kong’s RMB Real Time Gross Settlement System to facilitate global settlement in offshore RMB markets, and explore the provision of more diversified channels for obtaining offshore RMB financing.
     
         We will continue to enhance our market infrastructure to enrich the offshore RMB business ecosystem in Hong Kong. As you know, Hong Kong currently processes about 80 per cent of global offshore RMB payments and has the largest offshore RMB pool, reaching RMB1.1 trillion in end-August this year.
     
         Looking beyond the Asia-Pacific region, we seek to establish connections with new and emerging markets, including the Middle East, to open up new capital sources and enable international investors to bolster their portfolio management through Hong Kong’s capital markets. Following the listing of Asia’s first ETF (exchange traded fund) tracking the Saudi Arabia market in Hong Kong in November 2023, we are glad to see the listing of two ETFs in the Middle East that track Hong Kong stock indices soon.
     
         The Chief Executive’s Policy Address also announced that we will build an international gold trading market and commodity trading ecosystem, leveraging on our advantages as one of the world’s largest import and export markets for gold by volume, and foster the development of the related industry chain, ranging from investment transactions, financial trading, derivatives, insurance, storage, to trade and logistic services. We will set up a working group comprising experts and market players to work out the details.
     
         One cannot actually leave the reform agenda without touching on the changes brought about by technology. Last year, we took the lead in introducing a virtual asset (VA) service provider regulatory regime that allow the operation of licensed VA exchanges. We will introduce a dedicated piece of legislation on the regulation of fiat-referenced stablecoins before year end. Then we will have another look at the VA over-the-counter landscape followed by public consultation, while hammering out a licensing regime for VA custodian service providers.
     
    Renewed responsibility
     
         This leads naturally to my third “R”, “Responsibility”. Introducing regulatory regimes for a digitally enabled financial medium to fulfil the twin objectives of fostering market development while protecting investor interests and managing risks is a responsible policy move.
     
         We have, however, a heavier responsibility towards the Earth, our planet. Hong Kong takes our carbon emission net zero commitment seriously and we leverage our financial services platform to contribute to the green and sustainability global efforts. We are in a very good position to channel international capital to sustainable causes. This is best exemplified by over 230 ESG funds authorised by the SFC as of June this year, almost quadrupling the number of funds three years ago. Together, these funds manage close to US$170 billion of assets.
     
         For the third year in a row, Hong Kong topped the Asian market in terms of the volume of green and sustainable bonds being arranged. In 2023 alone, the total green and sustainable debt issued in Hong Kong exceeded US$50 billion.
     
         We will continue to incubate green and sustainable investment by fostering a conducive environment with transparent information. As the Policy Address makes clear, we will launch a roadmap on the full adoption of the ISSB (International Sustainability Standards Board) Standards (International Financial Reporting Standards – Sustainability Disclosure Standards) within this year, leading Hong Kong to be among the first jurisdictions to align its local requirements with ISSB Standards. On this, we have been making good progress, including the introduction of new climate-related disclosures requirements for listed companies by HKEX for implementation under a phased approach from 2025; as well as the development of the Exposure Drafts for Hong Kong’s sustainability reporting standards (Hong Kong Standards) in full alignment with ISSB Standards by the Hong Kong Institute of Certified Public Accountants (HKICPA). A public consultation on the Exposure Drafts is now underway. The roadmap will provide a transparent and well-defined pathway on sustainability reporting for listed companies and different sectors in the financial services industry, and support and assist businesses in making preparations for the implementation of the Hong Kong Standards.
     
         A first edition of the Hong Kong Taxonomy for Sustainable Finance is already in the toolbox since May this year. It is now undergoing revision, and is in the next phase of development where the scope of sectors and economic activities to be covered will be expanded to include transition activities, etc.
     
         As another piece of market infrastructure to connect capital with climate-related products and opportunities in Hong Kong, the Mainland, Asia and beyond, Core Climate, launched by HKEX, serves to facilitate effective and transparent trading of carbon credits and instruments to support the global transition to net zero. It offers quality carbon credits from internationally certified projects, covering forestry, solar, wind and biomass initiatives. It is currently the only carbon marketplace that offers Hong Kong dollar and RMB settlement for the trading of international voluntary carbon credits.
     
    Closing
     
         The IMF (International Monetary Fund) has just reconfirmed its forecast of world economic growth for 2024 to be 3.2 per cent. The same growth rate is forecast for 2025, slightly revised downward from its earlier forecast of 3.3 per cent but with a loud warning of instability and uncertainty in the horizon. As policy makers, we all have the responsibility to provide an enabling environment for businesses and individuals to thrive.
     
         The Asia-Pacific region can provide a source of growth amidst the evolving global landscape despite the uncertainties. Hong Kong, with our unique combination of the China advantage and global strengths, will continue to sharpen our financial platform and capital markets through strategic reform and responsible development. On this note, I would like to exercise my privilege of being on the podium to add a fourth “R” and wish you a most rewarding day of discussions and networking at the Forum. Thank you.
           

    MIL OSI Asia Pacific News –

  • MIL-OSI USA: Court Finds Three Miami-Area Tax Return Preparers in Contempt and Orders Disgorgement of Ill-Gotten Fees as a Sanction

    Source: US State of North Dakota

    A federal court in Miami today issued an order holding Gerald Vito, James Eleby and Kwame Thomas in contempt for violating a permanent injunction that prohibited Vito and Eleby from preparing, filing or assisting in the preparation or filing of federal tax returns for others.

    According to the complaint filed against Vito and Eleby in March 2021, the defendants prepared tax returns that significantly understated their customers’ tax liabilities by claiming deductions for fabricated or inflated charitable deductions, medical expenses, and employee business expenses. The complaint further alleged that the defendants significantly understated their customers’ tax liabilities by reporting false or inflated business losses. On Dec. 27, 2021, the court issued a default judgment of permanent injunction that barred Gerald Vito and James Eleby from preparing tax returns for others.

    Following a hearing in September, the court found that the United States demonstrated by clear and convincing evidence that Vito and Eleby violated the permanent injunction by continuing to prepare tax returns for others. The court further found that Thomas, who was not a defendant in the original complaint, violated the injunction by working alongside Eleby to prepare returns in violation of the injunction.

    For these violations, the court held Vito, Eleby and Thomas in civil contempt and ordered that they disgorge, in the aggregate, $988,789.56 in fees they earned while violating the injunction. Vito and Eleby were further ordered to disclose to the government the names of all taxpayers for whom they prepared returns after Dec. 27, 2021, notify those taxpayers of the injunction against them, vacate the premises at which they prepare returns and file an affidavit of compliance with these terms.

    Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

    Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers 10 tips to avoid tax season fraud and ways to safeguard their personal information.

    In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

    MIL OSI USA News –

  • MIL-OSI Security: Court Finds Three Miami-Area Tax Return Preparers in Contempt and Orders Disgorgement of Ill-Gotten Fees as a Sanction

    Source: United States Attorneys General 7

    A federal court in Miami today issued an order holding Gerald Vito, James Eleby and Kwame Thomas in contempt for violating a permanent injunction that prohibited Vito and Eleby from preparing, filing or assisting in the preparation or filing of federal tax returns for others.

    According to the complaint filed against Vito and Eleby in March 2021, the defendants prepared tax returns that significantly understated their customers’ tax liabilities by claiming deductions for fabricated or inflated charitable deductions, medical expenses, and employee business expenses. The complaint further alleged that the defendants significantly understated their customers’ tax liabilities by reporting false or inflated business losses. On Dec. 27, 2021, the court issued a default judgment of permanent injunction that barred Gerald Vito and James Eleby from preparing tax returns for others.

    Following a hearing in September, the court found that the United States demonstrated by clear and convincing evidence that Vito and Eleby violated the permanent injunction by continuing to prepare tax returns for others. The court further found that Thomas, who was not a defendant in the original complaint, violated the injunction by working alongside Eleby to prepare returns in violation of the injunction.

    For these violations, the court held Vito, Eleby and Thomas in civil contempt and ordered that they disgorge, in the aggregate, $988,789.56 in fees they earned while violating the injunction. Vito and Eleby were further ordered to disclose to the government the names of all taxpayers for whom they prepared returns after Dec. 27, 2021, notify those taxpayers of the injunction against them, vacate the premises at which they prepare returns and file an affidavit of compliance with these terms.

    Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

    Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers 10 tips to avoid tax season fraud and ways to safeguard their personal information.

    In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

    MIL Security OSI –

  • MIL-OSI: Atos reports third quarter 2024 revenue

    Source: GlobeNewswire (MIL-OSI)

    Press Release

    Third quarter 2024 revenue in line with September 2ndBusiness Plan

    Cash position in line with September 2ndbusiness plan & FY2024 outlook

    Q3 2024 revenue of €2,305m, down -4.4% organically, consistent with September 2ndbusiness plan communicated on September 2nd, 2024

    • Eviden down -6.4% organically due to continued market softness in the Americas and Central Europe and previously-established contract scope reductions
    • Tech Foundations down -2.6% organically, reflecting lower scope of work and previously-established contract completions and terminations
    • Q4 and FY2024 outlook in line with September 2nd business plan1

    Q3 order entry of €1.5bn, with stronger commercial activity and improved order entry expected in Q4

    • Eviden book-to-bill at 73%, compared with 80% in prior year. Solid commercial activity in BDS with several High-Performance Computing contracts signed. Eviden Q4 book-to-bill expected to be close to Q4 20232
    • Tech Foundations book-to-bill at 60%, consistent with previous years3. Q4 book-to-bill expected to be close to historical average4 thanks to anticipated return of multi-year contracts with existing customers
    • Group Q3 book-to-bill at 66% (84% in prior year), in line with Q3 2023 book-to-bill excluding large exceptional deals5. Group Q4 2024 book-to-bill expected in line with prior year6

    Cash position of €1.1bn as at September 30, 2024

    • Net debt position of €4.6bn, including a €1.6bn reduction of working capital optimization compared with December 2023
    • Q3 cash consumption of €-3m excluding change in working capital optimization for €232m
    • Full year free cash flow before normalization of working capital optimization expected in line with September 2nd business plan

    Atos focused on its industrial turnaround and growth:

    • Decision from the Court on pre-arranged financial restructuring plan expected today
    • Financial restructuring plan expected to close in December 2024 or early January 2025
    • New governance in place with Philippe Salle named chairman and becoming CEO on February 1st.

    Paris, France – October 24, 2024 – Atos, a global leader in digital transformation, high-performance computing and information technology infrastructure, today announces its revenue for the third quarter of 2024.

    Jean Pierre Mustier, Atos Chief Executive Officer, declared:

    “With our financial restructuring plan and our new governance in place, Atos can confidently focus on its industrial turnaround and growth under the leadership of Philippe Salle. He is the best person to lead our transformation journey and restore confidence in Atos.

    I have seen a positive change of perception with our clients, who have taken note of our restructuring, and are looking to resume a normalized interaction with us. I expect stronger commercial activity in the coming months, with the anticipated return of multi-year strategic contracts with existing customers.

    I would like to take this opportunity to sincerely thank our employees for their ongoing commitment, and our customers and partners for their continued support.”

    Revenue by Businesses

    In € million Q3 2024
    Revenue    		 Q3 2023
    revenue    		 Q3 2023
    revenue*    		 Organic variation*
    Eviden 1,093 1,202 1,167 -6.4%
    Tech Foundations 1,212 1,373 1,244 -2.6%
    Total 2,305 2,575 2,412 -4.4%
    *at constant scope and average exchange rates    

    Group revenue was €2,305 million in Q3 2024, down -4.4% organically compared with Q3 2023 as expected. Overall, Group revenue in the third quarter reflects softer market conditions and is consistent with the business plan communicated on Sept 2nd.

    Eviden revenue was €1,093 million, down -6.4% organically.

    • Digital activities decreased high single-digit. The business was impacted by the general market slowdown in Americas and Central Europe and previously-established contract scope reductions.
    • Big Data & Security (BDS) revenue was roughly stable organically. In Advanced Computing, stronger activity in Denmark and France was offset by a high comparison basis in the prior year. Revenue in Digital Security slightly decreased, despite the growth of Mission Critical Systems, notably in Central Europe.

    Tech Foundations revenue was €1,212 million, down -2.6% organically.

    • Core revenue (excluding BPO and value-added resale (“VAR”)) decreased low single-digit. Stronger contributions related to the Paris Olympic & Paralympic games were offset by contract terminations in Americas and previously-established contract scope and volume reduction in Northern Europe & APAC.
    • Non-core revenue declined high single-digit during the quarter as expected, reflecting contract completion in BPO activities in the UK.

    Revenue by Regional Business Unit

    In € million Q3 2024
    Revenue    		 Q3 2023
    revenue    		 Q3 2023
    revenue*    		 Organic variation*
    Americas 500 606 558 -10.5%
    Northern Europe & APAC 707 769 757 -6.6%
    Central Europe 544 627 546 -0.4%
    Southern Europe 477 501 480 -0.7%
    Others & Global Structures 76 73 69 +10.1%
    Total 2,305 2,575 2,412 -4.4%
    *at constant scope and average exchange rates    

    Americas revenue decreased by -10.5% on an organic basis, reflecting the current general slowdown in market conditions and previously-established contract terminations and completions.

    • Eviden was down double-digit, impacted by contract terminations and volume decline in Healthcare, Finance, and Transport & Logistics. BDS declined high single-digit due to volume reductions.
    • Tech Foundations revenue declined mid single-digit due to contract completions and terminations as well as scope reductions with select customers.

    Northern Europe & Asia-Pacific revenue decreased by -6.6% on an organic basis.

    • Eviden revenue declined mid-single-digit. A revenue increase at BDS due to new business in Advanced Computing with an innovation center in Denmark was offset by the decline of Digital revenue, reflecting a lower demand from Public Sector customers in the UK.
    • Revenue in Tech Foundations was down high single-digit, with contract completions and volume decline in Public Sector BPO.

    Central Europe revenue was nearly stable at -0.4% on an organic basis.

    • Eviden revenue declined low single-digit, impacted by volume reductions in Digital from Manufacturing and Public Sector customers.
    • Tech Foundations revenue grew mid-single-digit, with strong demand for hardware products.

    Southern Europe revenue was down -0.7% organically.

    • Eviden revenue was roughly flat. Growth in Digital, which benefitting from a contract win with a major European utility company, was offset by lower revenue in BDS compared to Q3 2023, when a supercomputer project was delivered in Spain.
    • Tech Foundations revenue declined low single-digit due to volume reductions with select customers.

    Revenue in Others and Global Structures, which encompass Middle East, Africa, Major Events as well as the Group’s global delivery centers and global structures, grew double-digit reflecting stronger contributions from the Paris Olympic & Paralympic Games and the positive performance of Africa.

    Commercial activity

    Order entry for the Group was €1,526 million. Eviden order entry was €794 million and Tech Foundations order entry was €733 million.

    Book-to-bill ratio for the Group was 66% in Q3 2024, down from 84% in Q3 2023, reflecting softer market conditions and delays in contract awards as clients await the final resolution of the Group’s refinancing plan. This ratio is in line with the book-to-bill ratio for Q3 2023, excluding exceptionally large contract7.

    Book-to-bill ratio at Eviden was 73%. Main contracts signatures during the third quarter included the supply of an HPC to a leading player in the Aerospace sector, another HPC contract signed with a major French utility provider, together with control room utility solutions.

    Book-to-bill ratio at Tech Foundations was 60%, consistent with the seasonality observed in previous years, in particular in Q3 2021 (54%) and in Q3 2022 (58%). Main contracts signatures in the third quarter included several renewals to provide Hybrid Cloud & Infrastructure services in Financial Services, Public Sector, and Manufacturing industries.

    Stronger commercial activity is expected in the coming months in both Eviden and Tech Foundation, which would lead to a significant improvement of the Group book-to-bill ratio in the fourth quarter, as confidence in the Group’s financial sustainability has been restored.

    At the end of September 2024, the full backlog was €14.7 billion representing 1.4 years of revenue. The full qualified pipeline amounted to €5.7 billion at the end of September 2024.

    Human resources

    The total headcount was 82,211 at the end of September 2024, decreasing by -10.3% since the end of June 2024. Following contract completions in Americas and the UK, the Group transferred circa 4,900 employees to the new providers. Excluding these transfers, headcount has decreased by circa -5%.

    During the third quarter, the Group hired 1,839 staff (of which 91% were Direct employees), while attrition rate increased compared with Q2. The attrition rate over the past 9 months is in line with normal historical levels.

    Q3 cash position

    As of September 30, 2024, cash & cash equivalents was €1.1 billion, down €1.2 billion compared with December 31, 2023 primarily reflecting €1.6 billion lower working capital actions compared with the end of fiscal 2023 and €1.1 billion of new borrowings.

    As of September 30, 2024, net debt was €4.6 billion compared with €2.2 billion at the end of last year, reflecting primarily the reduction of working capital optimization down to €265 million.

    Cash consumption was €-3 million in the third quarter, excluding change in working capital optimization of €232 million.

    Full year 2024 outlook

    The Group expects for the full year 2024:

    • Mid-single-digit organic revenue decrease, corresponding to revenue of circa €9.7 billion
    • Operating margin of circa €238 million excluding additional provisions to be booked for some underperforming contracts8
    • Change in cash before debt repayment of circa €-783 million excluding the full unwind of the working capital optimization of circa €1.8 billion as of December 31, 2023.

    Financial restructuring process

    Atos expected to receive today the decision from the Court on its pre-arranged financial restructuring plan.

    Assuming the plan is accepted by the court, the next steps of the financial restructuring process would be as follows:

    November 12 – 22:
    • €233 million rights issue with preferred subscription rights
    Mid to end December:
    • Execution of concomitant reserved capital increases
    End of December 2024 or early 2025
    • Receipt of €1.5bn to €1.7bn of new money debt
    • Closing of the restructuring process

    Asset disposal processes

    The discussions with Alten regarding the sale of the Worldgrid business are progressing well and are on track.

    Following the communication issued on October 7, discussions related to the potential acquisition by the French state of the Advanced Computing, Mission-Critical Systems and Cybersecurity Products businesses of BDS are continuing based on a new proposal compatible with the financial restructuring plan of the Company.

    Governance

    As communicated on October 15, 2024, Philippe Salle has been appointed as Chairman of the Board of Directors of the Company with immediate effect and as Chairman and Chief Executive Officer with effect from February 1, 2025.

    Conference call

    Atos’ Management invites you to a conference call on the Group revenue for the third quarter of 2024, on Thursday, October 24, 2024 at 08:00 am (CET – Paris).

    You can join the webcast of the conference:

    • via the following link: https://edge.media-server.com/mmc/p/bkriazto
    • by telephone by dial-in, 10 minutes prior the starting time. Please note that if you want to join the webcast by telephone, you must register in advance of the conference using the following link:

    https://register.vevent.com/register/BI8dc47a058ab84cb88b1ba638c295b440

    Upon registration, you will be provided with Participant Dial In Numbers, a Direct Event Passcode and a unique Registrant ID. Call reminders will also be sent via email the day prior to the event.
    During the 10 minutes prior to the beginning of the call, you will need to use the conference access information provided in the email received upon registration.

    After the conference, a replay of the webcast will be available on atos.net, in the Investors section.

    APPENDIX

    9-month organic revenue evolution by RBUs and business lines

    In € million 9-month 2024
    Revenue    		 9 month 2023
    revenue*    		   Organic variation*
    Americas 1,608 1,748   -8.0%
    Northern Europe & APAC 2,249 2,320   -3.0%
    Central Europe 1,621 1,673   -3.1%
    Southern Europe 1,561 1,564   -0.2%
    Others & Global Structures 230 211   +9.1%
    Total 7,268 7,516   -3.3%
    *at constant scope and average exchange rates        
             
             
             
       
    In € million 9-month 2024
    Revenue    		 9-month2023
    revenue*    		   Organic variation*
    Eviden 3,478 3,658   -4.9%
    Tech Foundations 3,790 3,858   -1.8%
    Total 7,268 7,516   -3.3%
    *at constant scope and average exchange rates        

    Q3 2023 Revenue at constant scope and exchange rates reconciliation

    For the analysis of the Group’s performance, revenue is compared with Q3 2023 revenue at constant scope and foreign exchange rates. Reconciliation between the Q3 2023 reported revenue and the Q3 2023 revenue at constant scope and foreign exchange rates is presented below.

    In 2023, the Group reviewed the accounting treatment of certain third-party standard software resale transactions following the decision published by ESMA in October 2023 that illustrated the IFRS IC decision and enacted a restrictive position on the assessment of Principal vs. Agent under IFRS 15 for such transactions. The Q3 2023 revenue is therefore restated by €-15 million. The restatement impacted Eviden in the Americas RBU without impacting the operating margin.

    Q3 2023 revenue
    In € million    		 Q3 2023 published Restatement Q3 2023 restated Internal transfers Scope effects Exchange rates effects Q3 2023*
    Eviden 1,217 -15 1,202 -3 -31 -1 1,167
    Tech Foundations 1,373 0 1,373 3 -122 -9 1,244
    Total 2,590 -15 2,575 0 -154 -10 2,412
                   
                   
    Q3 2023 revenue
    In € million    		 Q3 2023 published Restatement Q3 2023 restated Internal transfers Scope effects Exchange rates effects Q3 2023*
    Americas 621 -15 606 0 -34 -13 558
    Norther Europe & APAC 769 0 769 0 -18 7 757
    Central Europe 627 0 627 0 -81 0 546
    Southern Europe 501 0 501 0 -21 0 480
    Others & Global structures 73 0 73 0 0 -3 69
    Total 2,590 -15 2,575 0 -154 -10 2,412

    *: At constant scope and foreign exchange rates

    Scope effects on revenue amounted to €-154 million. They mainly related to the divesture of UCC across all regions, EcoAct in Americas, Southern Europe and Northern Europe & Asia-Pacific, State Street JV in Americas and Elexo in Southern Europe.

    Currency effects negatively contributed to revenue for €-10 million. They mostly came from the depreciation of the American dollar, Argentinian peso, Brazilian real, and Turkish lira, not offset by the appreciation of the British pound.

    ***

    Disclaimer

    This document contains forward-looking statements that involve risks and uncertainties, including references, concerning the Group’s expected growth and profitability in the future which may significantly impact the expected performance indicated in the forward-looking statements. These risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as market conditions or competitors’ behaviors. Any forward-looking statements made in this document are statements about Atos’s beliefs and expectations and should be evaluated as such. Forward-looking statements include statements that may relate to Atos’s plans, objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historical information. Actual events or results may differ from those described in this document due to a number of risks and uncertainties that are described within the 2023 Universal Registration Document filed with the Autorité des Marchés Financiers (AMF) on May 24, 2024 under the registration number D.24-0429 and the half-year report filed with the Autorité des Marchés Financiers (AMF) on August 6, 2024. Atos does not undertake, and specifically disclaims, any obligation or responsibility to update or amend any of the information above except as otherwise required by law.
    This document does not contain or constitute an offer of Atos’s shares for sale or an invitation or inducement to invest in Atos’s shares in France, the United States of America or any other jurisdiction. This document includes information on specific transactions that shall be considered as projects only. In particular, any decision relating to the information or projects mentioned in this document and their terms and conditions will only be made after the ongoing in-depth analysis considering tax, legal, operational, finance, HR and all other relevant aspects have been completed and will be subject to general market conditions and other customary conditions, including governance bodies and shareholders’ approval as well as appropriate processes with the relevant employee representative bodies in accordance with applicable laws .

    About Atos

    Atos is a global leader in digital transformation with circa 82,000 employees and annual revenue of circa €10 billion. European number one in cybersecurity, cloud and high-performance computing, the Group provides tailored end-to-end solutions for all industries in 69 countries. A pioneer in decarbonization services and products, Atos is committed to a secure and decarbonized digital for its clients. Atos is a SE (Societas Europaea) and listed on Euronext Paris.

    The purpose of Atos is to help design the future of the information space. Its expertise and services support the development of knowledge, education and research in a multicultural approach and contribute to the development of scientific and technological excellence. Across the world, the Group enables its customers and employees, and members of societies at large to live, work and develop sustainably, in a safe and secure information space.

    Contacts

    Investor relations:
    David Pierre-Kahn | investors@atos.net | +33 6 28 51 45 96
    Sofiane El Amri      | investors@atos.net | +33 6 29 34 85 67

    Individual shareholders: 0805 65 00 75

    Press contact: globalprteam@atos.net

    1 Eviden Q4 organic revenue evolution expected slightly negative and Tech Foundations Q4 revenue expected to decrease double digit on previously established contract completions and terminations
    2 Q4 2023 Eviden book-to-bill of 100%
    3 2021 (54%), 2022 (58%) and 2023 (84% including one large exceptional deal)
    4 Q4 2021-2023 book-to-bill average of 98%
    5 Q3 2023 book-to-bill of 65% excluding one large exceptional deal in Eviden and another one in Tech Foundations
    6 108%
    7 Book-to-bill ratio of 65% in Q3 2023, excluding an exceptionally large contract at Eviden and another at Tech Foundations.
    8 Negotiations are in progress with customers, which could lead to a low double digit % reduction of the operating margin

    Attachment

    The MIL Network –

  • MIL-OSI: BE Semiconductor Industries N.V. Announces Q3-24 Results

    Source: GlobeNewswire (MIL-OSI)

    Q3-24 Revenue of € 156.6 Million and Net Income of € 46.8 Million Up 27.0% and 33.7%, Respectively, vs. Q3-23
    Orders of € 151.8 Million Up 19.2% vs. Q3-23. Hybrid Bonding Adoption Continues

    YTD-24 Revenue of € 454.1 Million and Net Income of € 122.7 Million
    Orders of € 464.8 Million Up 21.7% vs. YTD-23

    DUIVEN, the Netherlands, Oct. 24, 2024 (GLOBE NEWSWIRE) — BE Semiconductor Industries N.V. (the “Company” or “Besi”) (Euronext Amsterdam: BESI; OTC markets: BESIY), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the third quarter and nine months ended September 30, 2024.

    Key Highlights Q3-24

    • Revenue of € 156.6 million up 3.6% vs. Q2-24 and 27.0% vs. Q3-23 due to increased demand by computing end user markets for hybrid bonding, photonics and other AI applications partially offset by ongoing weakness in automotive and Chinese end user markets
    • Orders of € 151.8 million up 19.2% vs. Q3-23 due to increased hybrid bonding orders. Down 18.0% vs. Q2-24 due primarily to fluctuations in hybrid bonding order patterns by customers
    • Gross margin of 64.7% decreased by 0.3 points vs. Q2-24 but was up 0.1 point vs. Q3-23. Gross margin development in the comparable periods was adversely affected by net forex influences
    • Net income of € 46.8 million increased 11.7% vs. Q2-24 and 33.7% vs. Q3-23 primarily due to higher revenue levels and cost control efforts which limited baseline operating expense growth. Q3-24 net margin rose to 29.9% vs. 27.7% in Q2-24 and 28.4% reported in Q3-23
    • Net cash of € 110.7 million at quarter-end increased by € 36.3 million (48.8%) vs. Q2-24 and € 20.5 million (22.7%) vs. Q3-23

    Key Highlights YTD-24

    • Revenue of € 454.1 million increased 8.3% vs. YTD-23 principally due to higher demand by computing end user markets, particularly for hybrid bonding and photonics applications and by Taiwanese and Korean subcontractors partially offset by weakness in mobile and automotive markets
    • Orders of € 464.8 million increased 21.7% vs. YTD-23 due to increased demand for hybrid bonding and photonics applications partially offset by lower bookings for automotive and, to a lesser extent, mobile applications and ongoing weakness in Chinese end user markets
    • Gross margin of 65.6% increased by 0.8 points vs. YTD-23 due to more favorable AI advanced packaging product mix
    • Net income of € 122.7 million was approximately equal to YTD-23 as higher revenue and gross margins were offset by higher R&D spending and share-based compensation expense. Besi’s net margin decreased to 27.0% vs. 29.1% in YTD-23

    Q4-24 Outlook

    • Revenue expected to be flat plus or minus 10% vs. the € 156.6 million reported in Q3-24 partially due to shipment delays by a customer for certain hybrid bonding systems scheduled for delivery in Q4-24
    • Gross margin expected to range between 63-65% vs. the 64.7% realized in Q3-24
    • Operating expenses expected to be flat to up 5% vs. the € 46.2 million reported in Q3-24
    (€ millions, except EPS) Q3-
    2024    		 Q2-
    2024    		 Δ Q3-
    2023    		 Δ YTD-
    2024    		 YTD-
    2023    		 Δ
    Revenue 156.6 151.2 +3.6% 123.3 +27.0% 454.1 419.2 +8.3%
    Orders 151.8 185.2 -18.0% 127.3 +19.2% 464.8 381.9 +21.7%
    Gross Margin 64.7% 65.0% -0.3 64.6% +0.1 65.6% 64.8% +0.8
    Operating Income 55.1 49.3 +11.8% 42.7 +29.0% 145.0 147.3 -1.6%
    EBITDA 62.4 56.2 +11.0% 48.9 +27.6% 166.2 166.4 -0.1%
    Net Income* 46.8 41.9 +11.7% 35.0 +33.7% 122.7 122.2 +0.4%
    Net Margin* 29.9% 27.7% +2.2 28.4% +1.5 27.0% 29.1% -2.1
    EPS (basic) 0.59 0.53 +11.3% 0.45 +31.1% 1.56 1.57 -0.6%
    EPS (diluted) 0.59 0.53 +11.3% 0.45 +31.1% 1.55 1.54 +0.6%
    Net Cash and Deposits 110.7 74.4 +48.8% 90.2 +22.7% 110.7 90.2 +22.7%

    * Excluding share-based compensation expense, net income (net margin) would have been € 50.2 million (32.1%), € 48.5 million (32.1%) and € 36.6 million (29.7%) in Q3-24, Q2-24 and Q3-23, respectively and € 148.8 million (32.8%) in YTD-24 vs. € 137.6 million (32.8%) in YTD-23

    Richard W. Blickman, President and Chief Executive Officer of Besi, commented:

    “Besi reported significant growth in revenue, orders and net income in Q3-24 versus the comparable quarter of last year as we continue to benefit from strength in our advanced packaging product portfolio for AI applications despite continued headwinds in mainstream and Chinese assembly equipment markets. For the quarter, revenue of € 156.6 million and orders of € 151.8 million grew by 27.0% and 19.2%, respectively, versus Q3-23 due primarily to strong growth by computing end user markets including hybrid bonding, photonics and other AI applications. Such growth was partially offset by weakness in automotive and Chinese end user markets continuing trends we have experienced this year. Net income of € 46.8 million grew by € 11.8 million, or 33.7%, reflecting a number of favorable trends including increased advanced packaging system revenue, increased gross margins related thereto and better than forecast operating expense levels despite continued growth in R&D spending for next generation hybrid bonding and TCB systems.

    For the first nine months of 2024, revenue of € 454.1 million and orders of € 464.8 million increased by 8.3% and 21.7%, respectively. Growth was due to significantly higher demand by computing end user markets, particularly for AI-related hybrid bonding and photonics applications and from Taiwanese and Korean subcontractors. Net income of € 122.7 million was approximately equal to YTD-23 as higher revenue and gross margins this year were offset by higher R&D spending in support of wafer level assembly development and share-based compensation expense.

    Our financial position improved as well in Q3-24 with net cash increasing to € 110.7 million at quarter-end, an improvement of € 36.3 million (+48.8%) versus Q2-24 and € 20.5 million (+22.7%) versus Q3-23 despite increased share buy-back activity. Total cash and deposits at quarter end grew to € 637.4 million including net proceeds from our Senior Note offering in July 2024 which positions us favorably for anticipated growth in the next market upcycle.

    During Q3-24, Besi continued to receive substantial orders for hybrid bonding systems from existing and new customers. At quarter-end, total revenue producing hybrid bonding orders since 2021 exceeded 100 systems highlighting the importance of this new technology for 3-D AI-related assembly applications. We anticipate additional orders in Q4-24 from a variety of customers as adoption continues to expand globally. We have also received increased interest for Besi’s TCB Next system from leading logic and memory customers which positions us favorably for anticipated growth in next generation 2.5D and HBM applications.

    As such, we have taken steps recently to expand our advanced packaging production capacity in anticipation of future growth. In 2025, we intend to approximately double the cleanroom capacity of our Malaysian production facilities and increase R&D and process development for our hybrid bonding and thermo compression bonding capabilities and customer support at our Singapore facility.

    Looking forward to Q4-24, we expect expanded adoption for hybrid bonding applications to be mitigated by ongoing weakness in mainstream assembly markets. For Q4-24, we forecast that revenue will be flat plus or minus 10% versus Q3-24 partially due to shipment delays by a customer for certain hybrid bonding systems scheduled for delivery in Q4-24. In addition, gross margins are anticipated to range between 63-65% based on our projected product mix. Aggregate operating expenses are forecast to be flat to up 5% versus Q3-24.”

    Share Repurchase Activity

    During the quarter, Besi repurchased approximately 230,000 of its ordinary shares at an average price of € 120.45 per share or a total of € 27.8 million. In August 2024, Besi completed its prior € 60 million share repurchase program and initiated a new € 100 million share repurchase program with an anticipated completion date of October 2025. Cumulatively, as of September 30, 2024, a total of € 7.0 million has been purchased under the new share repurchase program at an average price of € 110.55 per share. As of September 30, 2024, Besi held approximately 1.6 million shares in treasury equal to 2.0% of its shares outstanding.

    Investor and media conference call
    A conference call and webcast for investors and media will be held today at 4:00 pm CET (10:00 am EDT). To register for the conference call and/or to access the audio webcast and webinar slides, please visit www.besi.com.
       
    Important Dates  
    •  Publication Q4/Full year 2024 results February 20, 2025
    •  Publication Q1-2025 results April 23, 2025
    •  Besi’s 2025 AGM April 23, 2025
       

    Basis of Presentation

    The accompanying Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Reference is made to the Summary of Significant Accounting Policies to the Notes to the Consolidated Financial Statements as included in our 2023 Annual Report, which is available on www.besi.com.

    Contacts:

    Richard W. Blickman, President & CEO
    Andrea Kopp-Battaglia, Senior Vice President Finance        
    Claudia Vissers, Executive Secretary/IR coordinator
    Edmond Franco, VP Corporate Development/US IR coordinator

    Tel. (31) 26 319 4500                
    investor.relations@besi.com   

    About Besi

    Besi is a leading supplier of semiconductor assembly equipment for the global semiconductor and electronics industries offering high levels of accuracy, productivity and reliability at a low cost of ownership. The Company develops leading edge assembly processes and equipment for leadframe, substrate and wafer level packaging applications in a wide range of end-user markets including electronics, mobile internet, cloud server, computing, automotive, industrial, LED and solar energy. Customers are primarily leading semiconductor manufacturers, assembly subcontractors and electronics and industrial companies. Besi’s ordinary shares are listed on Euronext Amsterdam (symbol: BESI). Its Level 1 ADRs are listed on the OTC markets (symbol: BESIY) and its headquarters are located in Duiven, the Netherlands. For more information, please visit our website at www.besi.com.

    Caution Concerning Forward-Looking Statements

    This press release contains statements about management’s future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to expectations of orders, net sales, product shipments, expenses, timing of purchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The use of words such as “anticipate”, “estimate”, “expect”, “can”, “intend”, “believes”, “may”, “plan”, “predict”, “project”, “forecast”, “will”, “would”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The financial guidance set forth under the heading “Outlook” contains such forward-looking statements. While these forward-looking statements represent our judgments and expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from those contained in forward-looking statements, including any inability to maintain continued demand for our products; failure of anticipated orders to materialize or postponement or cancellation of orders, generally without charges; the volatility in the demand for semiconductors and our products and services; the extent and duration of the COVID-19 and other global pandemics and the associated adverse impacts on the global economy, financial markets, global supply chains and our operations as well as those of our customers and suppliers; failure to develop new and enhanced products and introduce them at competitive price levels; failure to adequately decrease costs and expenses as revenues decline; loss of significant customers, including through industry consolidation or the emergence of industry alliances; lengthening of the sales cycle; acts of terrorism and violence; disruption or failure of our information technology systems; consolidation activity and industry alliances in the semiconductor industry that may result in further increased customer concentration, inability to forecast demand and inventory levels for our products; the integrity of product pricing and protection of our intellectual property in foreign jurisdictions; risks, such as changes in trade regulations, conflict minerals regulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers and foreign manufacturing operations, particularly to the extent occurring in the Asia Pacific region where we have a substantial portion of our production facilities; potential instability in foreign capital markets; the risk of failure to successfully manage our diverse operations; any inability to attract and retain skilled personnel, including as a result of restrictions on immigration, travel or the availability of visas for skilled technology workers; those additional risk factors set forth in Besi’s annual report for the year ended December 31, 2023 and other key factors that could adversely affect our businesses and financial performance contained in our filings and reports, including our statutory consolidated statements. We expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.

    Consolidated Statements of Operations

    (€ thousands, except share and per share data) Three Months Ended
    September 30,
    (unaudited)    		 Nine Months Ended
    September 30,
    (unaudited)
      2024 2023 2024 2023
             
    Revenue 156,570 123,320 454,060 419,227
    Cost of sales 55,325 43,709 156,276 147,374
             
    Gross profit 101,245 79,611 297,784 271,853
             
    Selling, general and administrative expenses 27,318 23,310 97,473 81,679
    Research and development expenses 18,874 13,614 55,296 42,907
             
    Total operating expenses 46,192 36,924 152,769 124,586
             
    Operating income 55,053 42,687 145,015 147,267
             
    Financial expense, net 1,560 1,758 3,194 4,974
             
    Income before taxes 53,493 40,929 141,821 142,293
             
    Income tax expense 6,719 5,889 19,123 20,104
             
    Net income 46,774 35,040 122,698 122,189
             
    Net income per share – basic 0.59 0.45 1.56 1.57
    Net income per share – diluted 0.59 0.45 1.55 1.54
             
    Number of shares used in computing per share amounts:        
    – basic 79,630,787 77,374,933 78,701,287 77,656,542
    – diluted1 81,876,505 82,444,358 81,978,112 83,038,212

    ______________________
    1) The calculation of diluted income per share assumes the exercise of equity settled share based payments and the conversion of all Convertible Notes outstanding

    Consolidated Balance Sheets

    (€ thousands) September
    30, 2024
    (unaudited)    		 June
    30, 2024
    (unaudited)    		 March
    31, 2024
    (unaudited)    		 December
    31, 2023
    (audited)
    ASSETS        
             
    Cash and cash equivalents 307,448 127,234 232,053 188,477
    Deposits 330,000 130,000 215,000 225,000
    Trade receivables 169,266 174,601 150,192 143,218
    Inventories 104,103 99,291 99,384 92,505
    Other current assets 44,731 36,346 34,756 39,092
             
    Total current assets 955,548 567,472 731,385 688,292
             
    Property, plant and equipment 44,220 43,571 41,328 37,516
    Right of use assets 16,419 16,821 16,901 18,242
    Goodwill 45,278 45,710 45,613 45,402
    Other intangible assets 94,855 92,627 90,241 93,668
    Deferred tax assets 8,610 9,517 11,444 12,217
    Other non-current assets 1,316 1,239 1,252 1,216
             
    Total non-current assets 210,698 209,485 206,779 208,261
             
    Total assets 1,166,246 776,957 938,164 896,553
             
             
    Current portion of long-term debt 2,241 3,033 984 3,144
    Trade payables 49,211 51,620 52,382 46,889
    Other current liabilities 87,739 73,023 100,606 87,200
             
    Total current liabilities 139,191 127,676 153,972 137,233
             
    Long-term debt 524,527 179,801 265,142 297,353
    Lease liabilities 13,033 13,448 13,625 14,924
    Deferred tax liabilities 11,619 10,396 12,136 12,959
    Other non-current liabilities 12,449 11,352 12,914 12,671
             
    Total non-current liabilities 561,628 214,997 303,817 337,907
             
    Total equity 465,427 434,284 480,375 421,413
             
    Total liabilities and equity 1,166,246 776,957 938,164 896,553

     

    Consolidated Cash Flow Statements

    (€ thousands) Three Months Ended
    September 30,
    (unaudited)    		 Nine Months Ended
    September 30,
    (unaudited)
      2024 2023 2024 2023
             
    Cash flows from operating activities:        
    Income before income tax 53,493 40,929 141,821 142,293
             
    Depreciation and amortization 7,388 6,248 21,181 19,155
    Share based payment expense 3,400 1,575 27,216 16,300
    Financial expense, net 1,560 1,758 3,194 4,974
             
    Changes in working capital 6,031 15,697 (43,914) (2,581)
    Interest (paid) received (1,996) (2,649) (19,513) (27,948)
    Income tax paid 2,156 1,582 7,218 3,075
             
    Net cash provided by operating activities 72,032 65,140 137,203 155,268
             
    Cash flows from investing activities:        
    Capital expenditures (2,099) (1,990) (10,965) (5,448)
    Capitalized development expenses (4,415) (4,700) (13,990) (15,341)
    Repayments of (investments in) deposits (200,000) – (105,000) (5,268)
             
    Net cash provided by (used in) investing activities (206,514) (6,690) (129,955) (26,057)
             
    Cash flows from financing activities:        
    Proceeds from notes 350,000 – 350,000 –
    Transaction costs related to notes (6,395) – (6,395) –
    Payments of lease liabilities (1,080) (995) (3,186) (3,207)
    Purchase of treasury shares (27,829) (45,537) (57,418) (190,264)
    Dividends paid to shareholders – – (171,534) (222,109)
             
    Net cash used in financing activities 314,696 (46,532) 111,467 (415,580)
             
    Net increase (decrease) in cash and cash equivalents 180,214 11,918 118,715 (286,369)
    Effect of changes in exchange rates on cash and
    cash equivalents    		 – 130 256 (292)
    Cash and cash equivalents at beginning of the
    period    		 127,234 192,977 188,477 491,686
             
    Cash and cash equivalents at end of the period 307,448 205,025 307,448 205,025

      

    Supplemental Information (unaudited)
    (€ millions, unless stated otherwise)

    REVENUE Q3-2024 Q2-2024 Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                                 
    Per geography:                            
    China 45.5 29% 57.5 38% 58.5 40% 62.0 39% 40.8 33% 64.9 40% 37.6 28%
    Asia Pacific (excl. China) 51.6 33% 54.1 36% 43.6 30% 57.9 36% 42.3 34% 59.2 36% 58.2 44%
    EU / USA / Other 59.5 38% 39.6 26% 44.2 30% 39.7 25% 40.2 33% 38.4 24% 37.6 28%
                                 
    Total 156.6 100% 151.2 100% 146.3 100% 159.6 100% 123.3 100% 162.5 100% 133.4 100%
                                 
    ORDERS Q3-2024 Q2-2024 Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                                 
    Per geography:                            
    China 45.4 30% 43.3 23% 51.1 40% 71.1 43% 46.0 36% 51.4 46% 35.5 25%
    Asia Pacific (excl. China) 69.3 46% 72.0 39% 45.0 35% 36.6 22% 40.9 32% 33.2 29% 71.3 50%
    EU / USA / Other 37.1 24% 69.9 38% 31.6 25% 58.7 35% 40.4 32% 28.0 25% 35.2 25%
                                 
    Total 151.8 100% 185.2 100% 127.7 100% 166.4 100% 127.3 100% 112.6 100% 142.0 100%
                                 
    Per customer type:                            
    IDM 84.5 56% 122.4 66% 53.5 42% 82.7 50% 70.5 55% 60.5 54% 74.0 52%
    Subcontractors 67.3 44% 62.8 34% 74.2 58% 83.7 50% 56.8 45% 52.1 46% 68.0 48%
                                 
    Total 151.8 100% 185.2 100% 127.7 100% 166.4 100% 127.3 100% 112.6 100% 142.0 100%
                                 
    HEADCOUNT Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023
                                 
    Fixed staff (FTE) 1,807 87% 1,783 86% 1,760 88% 1,736 93% 1,725 87% 1,689 86% 1,682 84%
    Temporary staff (FTE) 271 13% 279 14% 236 12% 134 7% 248 13% 279 14% 312 16%
                                 
    Total 2,078 100% 2,062 100% 1,996 100% 1,870 100% 1,973 100% 1,968 100% 1,994 100%
                                 
    OTHER FINANCIAL DATA Q3-2024 Q2-2024 Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                                 
    Gross profit 101.2 64.7% 98.3 65.0% 98.3 67.2% 103.9 65.1% 79.6 64.6% 106.6 65.6% 85.7 64.2%
                                 
                                 
    Selling, general and admin expenses:                            
    As reported 27.3 17.4% 30.5 20.2% 39.6 27.1% 24.3 15.2% 23.3 18.9% 29.4 18.1% 29.0 21.7%
    Share-based compensation expense (3.4) -2.1% (6.9) -4.6% (16.9) -11.6% (2.8) -1.7% (1.6) -1.3% (5.5) -3.4% (9.3) -7.0%
                                 
    SG&A expenses as adjusted 23.9 15.3% 23.6 15.6% 22.7 15.5% 21.5 13.5% 21.7 17.6% 23.9 14.7% 19.7 14.8%
                                 
                                 
    Research and development expenses:                            
    As reported 18.9 12.1% 18.5 12.2% 17.9 12.2% 13.5 8.5% 13.6 11.0% 14.3 8.8% 15.0 11.2%
    Capitalization of R&D charges 4.4 2.8% 4.9 3.2% 4.7 3.2% 5.7 3.6% 4.7 3.8% 5.3 3.3% 5.4 4.0%
    Amortization of intangibles (3.9) -2.5% (3.6) -2.3% (3.6) -2.4% (3.3) -2.1% (3.3) -2.6% (3.5) -2.2% (3.5) -2.6%
                                 
    R&D expenses as adjusted 19.4 12.4% 19.8 13.1% 19.0 13.0% 15.9 10.0% 15.0 12.2% 16.1 9.9% 16.9 12.7%
                                 
                                 
    Financial expense (income), net:                            
    Interest income (5.2)   (3.0)   (4.0)   (3.6)   (2.9)   (3.1)   (2.6)  
    Interest expense 5.7   2.1   2.8   3.0   2.8   2.9   2.9  
    Net cost of hedging 1.9   1.4   1.6   1.7   1.7   2.0   1.6  
    Foreign exchange effects, net (0.8)   0.5   0.2   (0.4)   0.2   (0.1)   (0.4)  
                                 
    Total 1.6   1.0   0.6   0.7   1.8   1.7   1.5  
                                 
    Gross cash 637.4   257.2   447.1   413.5   391.2   378.3   644.9  
                                 
                                 
    Operating income (as % of net sales) 55.1 35.2% 49.3 32.6% 40.7 27.8% 66.1 41.4% 42.7 34.6% 62.9 38.7% 41.7 31.3%
                                 
    EBITDA (as % of net sales) 62.4 39.8% 56.2 37.2% 47.5 32.5% 72.7 45.6% 48.9 39.7% 69.3 42.6% 48.2 36.1%
                                 
    Net income (as % of net sales) 46.8 29.9% 41.9 27.7% 34.0 23.2% 54.9 34.4% 35.0 28.4% 52.6 32.4% 34.5 25.9%
                                 
    Effective tax rate 12.6%   13.0%   15.3%   16.1%   14.4%   14.0%   14.0%  
                                 
                                 
    Income per share                            
    Basic 0.59   0.53   0.44   0.71   0.45   0.68   0.44  
    Diluted 0.59   0.53   0.44   0.68   0.45   0.66   0.44  
                                 
    Average shares outstanding (basic) 79,630,787 79,281,533 77,181,326 77,070,082 77,374,933 77,634,197 77,946,873
                                 
    Shares repurchased                            
    Amount 27.8   14.8   14.8   23.1   45.5   66.9   77.7  
    Number of shares 230,807 105,042 101,049 226,572 447,829 761,937 1,120,327
                                 

    The MIL Network –

  • MIL-OSI: Prospera Energy Inc. Corporate Update: Three Years of Strategic Restructuring, Recovery, and Future Growth

    Source: GlobeNewswire (MIL-OSI)

    CALGARY, Alberta, Oct. 24, 2024 (GLOBE NEWSWIRE) — Prospera Energy Inc. (“PEI”) (TSX.V: PEI, OTC: GXRFF, FRA: OF6B)

    The 2024 Prospera corporate update outlines the company’s restructuring efforts since 2021, highlighting key milestones achieved, challenges faced, and the strategic path forward to achieve production stability and profitability.

    Preamble:
    By the end of 2020 Prospera faced a litany of financial challenges, including low production, high operating costs, and the global impacts of the Covid pandemic. The company’s liability was in excess of $24MM ($12MM ARO, $11MM AP arrears, & $1.5MM in Credit Facilities) mainly towards secured mezzanine capital, CRA, mineral royalties, municipality property tax, landowners lease payments, numerous local service providers, and high asset retirement obligations. Adding to the problems, Prospera had in excess of 400+ non-compliance infractions with spills, dysfunctional monitoring devices, and facilities that had been neglected and orphaned. Consequently, Prospera Energy Inc. was in a terminal position. In Q1 2021, the municipality and secured debt holder exercised their rights, taking control of payments from the limited revenue and production that remained. The then-CEO and directors were fleeing from the company’s obligations, especially to the CRA.

    Towards the end of 2020, PEI’s continuing operations had become difficult due to high and long-term liabilities, a situation further amplified by the pandemic and drastic reduction in produced volumes (less than 200 bpd Gross).

    At the time, Mr. Samuel David was leading a private company developing medium-light oil around the Brooks area and as a result of his association with the late Burkhart Franz, founder of Prospera Energy Inc. (formerly Georox Resources), Mr. David accepted a role as an advisor to help rescue the company from entering into CCA.

    Prospera Energy Restructure:
    Prospera Energy Inc’s restructuring commenced in Q1, 2021, with the appointment of Mr. David as President, CEO & Director. Mr. David observed legacy heavy (13-17API) oil fields were developed with numerous vertical wells on reduced spacing. These wells were in primary depletion without any patterned pressure support. Produced water was randomly disposed resulting in water recycling. Reserves were estimated on the decline of the small number of low producing wells and their economies were burdened by high surface lease costs and their high number of standing wells. Unprocessed 3-D seismic coverage was available over the entire reservoir of each asset, each of which has a facility processing capacity to handle large volumes of produced fluid, and the wells were tied into these central facilities. Clean oils were trucked out to a nearby terminal. Produced water was reinjected by central pumps at the facility to injectors throughout the field. These infrastructures had previously been neglected and not maintained.

    Mr. David recognized the recovery to date was low with respect to volumetric estimation of oil in place, and a significant amount of oil remains within adequate infrastructure. The recovery has been from an under pressured solution gas drive reservoir with low active edge water and exploited by vertical well technology only. However, high AP arrears, ARO and neglected infrastructure were significant obstacles. Overcoming poor technical conduct and neglect required sufficient capital to exploit the remaining reserves effectively and profitably. To rectify these issues, Samuel devised a development plan in phases to capture the significant remaining reserves.

    The Prospera development plan is comprised of three phases:

    1. Phase one was to bring operations to safe operating conditions and optimize low hanging opportunities to increase production.
    2. Phase two was to transition to horizontal wells and abandon depleted vertical wells along the path. This reduces the environmental footprint and the corresponding fixed operating cost. It would also diversify product mix by adding higher API oil assets.
    3. The third and final phase is to implement improved and enhanced recovery methods tailored to the reservoir conditions, aiming to reduce decline for sustained long-term production. This approach, combined with a reduced footprint and lower operating costs, is designed to yield higher margins.

    At the time, the minimum allowed for a private placement was five cents, while PEI stock was trading at one cent and at risk of being halted. Fortunately, a one-time, two-cents private placement offering opportunity, that was only offered during extraordinary circumstances such as the pandemic, was permitted. Utilizing this opportunity and the proposed engineering solutions, capital was raised with the assistance of Kurt Soost, who played a key role in connecting credible investors such as Peter Lacey, Dave Richardson, and others to the seed capital provided by the management group, which included Mr. David and Jaz Dhaliwal. They participated in the initial and subsequent private placement offerings, helping Prospera secure a financial lifeline.

    This realigned the PEI board, which requested Mr. David amalgamate his private company assets into Prospera at an equal interest, to avoid any perception of bias towards his assets and to ensure focus on Prospera’s asset development going forward. As a result, Prospera acquired a 50% working interest in a medium-light oil property with operatorship from Mr. David on favorable terms, with no upfront cash consideration and delayed consideration on a success basis. These terms were released on December 7th, 2022, and the transaction consideration was based on third-party evaluations, TSX approval, and independent scrutiny and approval resolution by the directors.

    Restructuring Efforts Resulted In:
    Oil in Place Validated – Prospera Oil in place and remaining reserves were authenticated by geological delineation, well control & production performance, 3D seismic confirmation, and by 3rd party evaluation

    • Total OOIP = 396.7 MMbbl
    • Produced = 34.2 MMbbl
    • Recovered = 8.6%

    NPV Appreciation – Net Present value of the reserves was steadily substantiated by PEI’s optimization and development. As a result:

    • Before Tax PDP reserves increased 508% from $4.4MM$ to $27.1MM$ in 2023 at a 10% discount rate
    • Before tax 2P reserves increased by $60.8m from $72.5m to $133.3MM$ in 2023 at a 10% discount rate
    • Total proved and probable reserves increased by 25% from 4,306 to 5,403 Mboe
    • Reserve life index increased by 6% from 28.4 to 30.0 years

    Increased Ownership – In the three core heavy oil properties from an average of 35% to 95% by settling out joint venture receivables.

    Regulator License Liability Rating – Asset to liability ratio was elevated by PEI restructured efforts

    • The Saskatchewan regulator assessed the company’s asset value 18MM$ higher due to the changes implemented
    • The asset to liability ratio has increased from 0.47 to 1.44 in Saskatchewan
    • The asset to liability ratio has increased from 0.90 to 2.60 in Alberta

    Diversify Production Mix – Acquired a 50% interest in Medium-oil development play and successfully perforated two existing wells with favorable results. In 2023, the first well was drilled, with initial production (IP) rates exceeding expectations. This led to attractive investment returns, with a payout achieved in just seven months.

    In 2024, four development wells were drilled, encountering pay, structure, and oil shows as anticipated. The first medium-oil horizontal well encountered 800 meters of porous reservoirs with oil shown in the lateral section. The well test demonstrated strong inflow, producing over 50 m³/d of fluid at 50% oil cuts. The oil quality is 26–30-degrees API. This well is now online and delivering consistent rates as it is stabilizing.

    Financial Position Appreciation – Netbook value (Total assets) has increased from $5.5 million in 2020 to approximately $59.0 million by the end of Q3 2024. This growth was driven by capital raised ($35MM) and cash flow from operations ($7MM), both of which were deployed for optimization and development. Additional value appreciation resulted from an impairment reversal, supported by the substantiation of remaining reserve value ($8 million) and the capitalization of a working interest acquisition ($3 million). Since 2021, the total asset value has been appreciated by $53+ million. 

    Due to capital deployed for optimization, non-compliance elimination, infrastructure upgrades and development aimed at increasing production and recoveries, the company is beginning to see operational profitability. 2022 saw production increased and, if not for the lower commodity prices in 2023, the company would have been profitable in 2022. Nonetheless, 2022 was a rebound year, generating $2.3 million in operating income compared to a substantial loss the previous year. With ongoing production optimization and development, Prospera has achieved approximately $2.6 million in cash operating income as of Q3, 2024.

    The restructuring efforts have transformed the company into cash-flow-positive operation. Prospera’s bare bones break-even operating expenses are $1.1 million per month (500 boe/d @ $75/boe CAD). Any cash flow above this break-even amount is allocated to servicing debt, addressing legacy arrears and further funding, optimization and development initiatives.

    With current production levels around 900 boe/d, the company has generated $2.6 million year to date Q3, 2024.

    Production Appreciation & Challenges – PEI’s restructuring efforts successfully optimized production from 80 boepd to 800 boepd during the phase one execution. By the end of 2023, peak production rates reach 1,800 boepd driven by horizontal development and medium oil development.

    While the restructuring yielded positive results, Prospera production progress and forecast were impacted by operational set-back and by severe cold weather conditions. These issues hindered expected production rates, preventing the company from achieving its short-term production and financial targets.

    PEI has continually implemented measures to address operational constraints, and restore and maintain peak production rates. These include failure analysis, calibrated equipment, revised operational procedures, and accountability for accurate and timely data to maximize run time with experienced personnel. As a result, Cuthbert operations are starting to stabilize while challenges are being addressed. Approximately 70+ m3/d of production is currently behind pipe at Cuthbert, and PEI is focused on capturing this additional volume.

    Revised 2024 Prospera Forecast
    Following a challenging recalibration, Prospera has expressed optimism going forward, however, PEI has faced a series of challenges including cold weather conditions, infrastructure breakdown, water recycling issues, legacy arrears, non-participating JV partners, and lower commodity prices. These factors have unexpectedly delayed the company’s timeline for attaining the initially projected targets.

    The legacy reservoirs are now in the final stages of primary pressure depletion and require additional energy in-situ to increase the mobility of the viscous oil. Enhanced recovery methods suited to the specific reservoir conditions must be applied gradually and methodically to maximize oil recovery, which will take time. PEI has initiated horizontal transformation while testing the recovery methods to be applied to the future horizontal wells while modifying necessary infrastructure adjustments. With the benefit of new information, extensive data, and a revised plan, Prospera has reassessed and incorporated the challenges and setback into the company’s updated forecast moving forward.

    Prospera has achieved many technical and financial successes, these accomplishments have been overshadowed by production shortfalls set out by optimistic early targets. Moving forward, PEI’s primary focus is on efficient operations to ensure sustained, stable production and production growth.  

    Conclusion
    Prospera Energy Inc. has come a long way since the brink of bankruptcy in Q1, 2021. Through a successful restructuring, PEI has eliminated the risk of insolvency, addressed critical regulatory non-compliances, and raised regulator license liability ratings by increasing production through optimization and development. The company has also substantiated the large amount of remaining reserves and substantially increased the proven asset value of the company. By improving cash flow from operations well above break-even, PEI has remained operational while deploying capital to address legacy accounts payable arrears and implement proven technical applications. Additionally, the acquisition of medium-oil assets has reduced dependency on heavy-oil differentials.

    In short, Prospera have made significant progress in positioning the company for future growth. However, PEI achievements have been overshadowed by production short fall set out by optimistic targets by optimization and drilling success. Prospera acknowledges these challenges encountered and has incorporated them into the revised 2024 forecast, to allocate sufficient time and resources to improve operational efficiencies, optimize well run times, and implement reservoir management applications while adhering to safety & regulatory guidelines. These proactive measures are being implemented in Q4 2024 and Q1 2025 to stabilize and support robust, sustained growth throughout Q2 and Q3 of 2025.

    While the company is revising the year-end production target down to 1,250 barrels, it is important to emphasize that the fundamentals of Prospera Energy’s assets remain strong. The significant recovery potential remains within reach, and PEI continues to execute on our long-term development plan to capitalize on these opportunities. The reduction in short-term targets does not diminish the company’s confidence in the strategic path forward. Prospera remains focused on optimizing production, improving efficiency, and unlocking the full value of PEI’s resources. As Prospera moves ahead, the company is committed to increasing production through optimization, horizontal transformation, and enhanced oil recovery.

    About Prospera
    Prospera is a publicly traded energy company based in Western Canada, specializing in the exploration, development, and production of crude oil and natural gas. Prospera is primarily focused on optimizing hydrocarbon recovery from legacy fields through environmentally safe and efficient reservoir development methods and production practices. Prospera was restructured in the first quarter of 2021 to become profitable and in compliance with regulatory, environmental, municipal, landowner, and service stakeholders.

    The company is in the midst of a three-stage restructuring process aimed at prioritizing cost effective operations while appreciating production capacity and reducing liabilities. Prospera has completed the first phase by optimizing low hanging opportunities, attaining free cash flow, while bringing operation to safe operating condition, all while remaining compliant. Currently, Prospera is executing phase II of the restructuring process, the horizontal transformation intended to accelerate growth and capture the significant oil in place (400 million bbls). These horizontal wells allow PEI to reduce its environmental and surface footprint by eliminating the numerous vertical well leases along the lateral path. Phase III of Prospera’s corporate redevelopment strategy is to optimize recovery through EOR applications. Furthermore, Prospera will pursue its acquisition strategy to diversify its product mix and expand its core area. Its goal is to attain 50% light oil, 40% heavy oil and 10% gas.

    The Corporation continues to apply efforts to minimize its environmental footprint. Also, efforts to reduce and eventually eliminate emissions, alongside pursuing innovative ESG methods to enhance API quality, thereby achieving higher margins and eliminating the need for diluents.

    For Further Information:
    Shawn Mehler, PR
    Email: investors@prosperaenergy.com
    Website: www.prosperaenergy.com

    FORWARD-LOOKING STATEMENTS
    This news release contains forward-looking statements relating to the future operations of the Corporation and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will,” “may,” “should,” “anticipate,” “expects” and similar expressions. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding future plans and objectives of the Corporation, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

    Although Prospera believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Prospera can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.

    The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Prospera. As a result, Prospera cannot guarantee that any forward-looking statement will materialize, and the reader is cautioned not to place undue reliance on any forward- looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and Prospera does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.

    Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

    Photos accompanying this announcement are available at:
    https://www.globenewswire.com/NewsRoom/AttachmentNg/0b193b58-7798-4139-b69d-1f8aec58a8f7
    https://www.globenewswire.com/NewsRoom/AttachmentNg/46e266dc-9f3f-43b1-a3f7-1f71bb526cce
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    https://www.globenewswire.com/NewsRoom/AttachmentNg/b0ac6d1d-5ea5-4c86-b5b4-d49a72936f7b
    https://www.globenewswire.com/NewsRoom/AttachmentNg/e14fb81b-462a-456d-99fa-e4a54a549e7d
    https://www.globenewswire.com/NewsRoom/AttachmentNg/100176cb-60ba-45e8-9311-e94604dcd117
    https://www.globenewswire.com/NewsRoom/AttachmentNg/8fc83e60-6686-4b8f-93e8-84598ec586a0
    https://www.globenewswire.com/NewsRoom/AttachmentNg/6c20cd2d-ef07-41b7-9149-5d80f7288b16
    https://www.globenewswire.com/NewsRoom/AttachmentNg/fb37dc99-2c7f-4db1-bcab-a3807af55016

    The MIL Network –

  • MIL-OSI Economics: Alwyn Jordan: Monitoring and assessing risks to financial stability in the Caribbean

    Source: Bank for International Settlements

    On behalf of the Central Bank of Barbados, it is my great pleasure to welcome you to this peer-to-peer exchange seminar. I’d like to extend a special welcome to Dr. Petr Jakubik from CARTAC, whose initiative has brought us together for this important event.

    This is not just another training seminar – it is a dynamic platform for the exchange of ideas, the sharing of expertise and the building of frameworks for future collaboration. In today’s rapidly evolving global landscape, where financial stability and economic resilience are increasingly intertwined with central bank regulation, peer exchanges like this are vital. They help us remain agile, informed and equip us with the latest knowledge and best practices to meet the challenges we face as central bankers and regulators.

    It is therefore a pleasure to be here today to discuss this issue with you, which is at the heart of economic development in the Caribbean. We all know that at first glance, financial stability may seem like a dry, technical topic, but for us in the Caribbean, it is central to safeguarding our economic well-being. As the global financial system becomes more interconnected, our economies are exposed to a variety of risks – both natural and man-made. Today, I want to highlight why financial stability is crucial for our region, with particular emphasis on challenges such as climate change, external shocks, and the evolving financial landscape. I will also shed some light on the difficulties faced by Caribbean central banks and other regulators in preparing comprehensive Financial Stability Reports.

    We all know that financial stability is about ensuring that various entities such as banks, insurance companies, financial markets, and payment systems operate smoothly without triggering major disruptions. When financial stability is maintained, businesses can secure credit, households can borrow and save, and governments can finance development. It is therefore the backbone of economic resilience.

    For the Caribbean, the stakes are particularly high. We are a region of small, open economies that are highly dependent on external trade, tourism, and foreign investment. Our economic structure makes us extremely vulnerable to external shocks, whether they are related to global financial conditions, natural disasters, or geopolitical events. Any significant disruption to the financial system, whether from internal weaknesses or external shocks can therefore quickly lead to a financial crisis. The resulting economic hardship can take years, or even decades, from which to recover. A very good example of this phenomenon was seen during and after the Global Financial Crisis. 

    Vulnerability to Climate Change

    But let me start by addressing one of the major external risks to Caribbean economies, namely the climate crisis. Our region is one of the most vulnerable to the impact of climate change. Indeed, when we refer to climate vulnerable economies, Caribbean countries are always the highest ranked by any measure. Rising sea levels, more intense storms such as hurricane Beryl, which caused significant damage to a number of Caribbean islands in late June, prolonged droughts, and flooding have become our unfortunate reality. These climate-related risks have a direct bearing on financial stability, as these systems don’t just devastate homes and infrastructure, they can also have adverse effects on the financial system.

    For example, the destruction of infrastructure can lead to loans becoming non-performing, as businesses and households may default on their debt. Banks and other large financial entities in turn, may face liquidity problems, which can trigger a systemic crisis. Furthermore, as governments attempt to rebuild after the event, this often leads to an increase in public debt, which puts further strain on their ability to finance essential services and infrastructure. Imagine the strain on our resources that would have occurred had any of our islands been hit by the back-to-back hurricanes that recently devastated Florida and other states along the US South coast. 

    Climate-related risks are particularly challenging to manage because of their unpredictable nature and the difficulty in quantifying their economic impact. Caribbean regulators must therefore continuously monitor these risks and implement forward-looking policies to mitigate their effects on the financial system.

    The Impact of Global Economic Shocks

    In addition to climate change, external economic shocks pose another serious risk to financial stability in the Caribbean. Our economies are heavily reliant on global trade, tourism, and remittances. Any disturbance in the global economy such as a recessions in our major trading partners or sudden changes in commodity prices can ripple through our financial systems. Take, for instance, the fallout from the COVID-19 pandemic, which brought the world to a standstill in 2020. It was an economic shock of unprecedented proportions for the Caribbean. Indeed, our tourism sector, a lifeline for many economies, came to a grinding halt, leaving governments and businesses scrambling to stay afloat.

    Central banks in the region had to take swift action to ensure liquidity in the financial system, lower interest rates, and support government stimulus efforts. But the pandemic highlighted an ongoing challenge: our financial systems are vulnerable to global crises, and the lack of diversified economies in the region makes recovery more difficult. Regulators must therefore constantly balance the need to maintain stability, while responding to these shocks in an agile and effective manner.

    Navigating the New Financial Landscape

    But this is not the only challenge facing us as regulators, as the financial landscape is also evolving rapidly. The rise of fintech, digital currencies, and shadow banking, has created new opportunities for financial inclusion and innovation. However, it also presents new risks. Digital currencies, while offering the potential for greater financial inclusion, bring concerns about regulatory oversight, cybersecurity, and monetary policy transmission. Caribbean countries have been the pioneers in developing digital currency frameworks, but it still requires careful consideration of the impact on financial stability.

    Shadow banks – non-bank financial intermediaries that provide similar services as traditional banks – such as payday lenders or firms offering “buy now, pay later” options for buyers, are another concern. Given that these entities generally operate outside the regular regulatory framework, they are often opaque, and central banks may lack the tools to properly oversee their activities. They can, therefore, pose systemic risks without the safeguards that apply to the formal financial sector. If these institutions fail, the resulting financial contagion could spread quickly throughout the economy. Developing effective regulatory frameworks for shadow banks is therefore critical to ensuring financial stability in our region. 

    The Value of Financial Stability Reports

    It is against this backdrop that Caribbean central banks face the herculean task of monitoring, assessing, and mitigating these risks. One of the key tools at their disposal is macroprudential policy, which is still in its initial stage of implementation in most Caribbean economies. However, central banks have made significant improvements in communicating the risks to the public via their Financial Stability Reports (FSR). These FSRs, as you all know, provide a comprehensive assessment of the financial system’s health and highlight any emerging vulnerabilities. However, preparing a comprehensive FSR is a very challenging exercise, especially in the Caribbean context.

    One of the most significant challenges is the lack of comprehensive and timely data. Many countries in the region struggle with collecting and analysing the necessary data to fully assess financial risks. Without high-quality data, it is difficult for central banks to make accurate forecasts or take pre-emptive action. Improving data collection and our analytical capabilities must therefore be a priority for the region, if we are to produce meaningful and effective reports.

    Moreover, we know that preparing a high-quality FSR requires specialised knowledge in areas such as macroprudential policy, risk modelling, and scenario analysis. Given the complexity of financial systems and the fast-paced evolution of risks, Caribbean regulators must therefore invest in training and development, to ensure that they have the expertise required to produce comprehensive reports. 

    In our context, the Financial Stability Report of Barbados has evolved over the years, reflecting the growing complexity of the financial landscape in the country. I’d like to highlight some of the key milestones that have shaped this journey, all of which have been implemented as a result of our partnership with our sister regulator, the Financial Services Commission (FSC) and our collaboration with CARTAC (Caribbean Regional Technical Assistance Centre).

    A major accomplishment was the introduction of stress testing in 2016, as this allowed us to simulate how our banking sector would perform under adverse shocks. This tool gave the Bank, as a policymaker and regulator, a clearer understanding of the vulnerabilities that might emerge during a financial crisis, helping us better prepare for potential disruptions. This was a crucial step in ensuring that our banks and financial institutions remain resilient, even in the face of global uncertainties.

    As our financial system grew more diverse, it became essential to extend our focus beyond traditional banks. In 2018, the FSR began to include a detailed analysis of non-bank financial institutions (NBFIs) such as insurance companies, pension funds, and credit unions, though our collaboration with the FSC. This was a key milestone because non-bank financial institutions are integral to our economy, and their health is equally as important as that of the banking sector. By broadening the scope of the FSR, we now have a more comprehensive picture of the overall financial system.

    The next significant development occurred four years later in 2020, when we made an important breakthrough in acknowledging the significant risk that climate change poses to our financial system. With the inclusion of climate-related financial risk analysis, the Central Bank aligned Barbados with the global efforts to manage climate-related financial risks, underscoring our commitment to resilience.

    The results of this work, led by Dr. Saida Teleu and her team, were incorporated in Barbados’ 2023 FSR. With the invaluable assistance of the Coastal Zone Management Unit, we’ve implemented a climate stress test, focusing on projecting damage to the accommodation sector, which is deeply intertwined with our tourism industry. This collaboration has allowed us to assess the potential impacts of climate-related risks on financial stability in a more data-driven and precise manner.

    In the most recent FSR, the Bank has also successfully undertaken a significant revamp of its publication, with improvements that underscore our commitment to both innovation and comprehensive risk management. One of the key upgrades has been the introduction of a dynamic balance sheet approach to stress testing. Unlike traditional methods, this approach allows us to incorporate explicit macroeconomic scenarios and extend our stress testing over a longer horizon. This dynamic perspective offers us deeper insights into how our financial system would respond to shocks in a changing economic environment. Additionally, we’ve developed a non-performing loan satellite model, giving us a more accurate assessment of credit risk in our financial system. 

    We also recognised the growing importance of the real estate sector, and so we’ve enhanced our analysis of this sector. Real estate is not only a critical component of household wealth, but also a significant driver of lending and investment activity, making it essential to the stability of our financial system. 

    As the financial landscape changes, so too must our approach to assessing risks. In this regard, the 2023 FSR also incorporated the risks posed by digital financial services, fintech, and cybersecurity and issued a survey to the industry to gather vital data. This addition was particularly important given the rapid rise of cyber-crime and the increasing use of online financial services, and the recent publicised cyber-related breaches at the Barbados Revenue Authority and one of our credit unions give testament to this fact. As a country, we are keen to embrace innovation, but it is equally important that we understand and manage the risks that come with these technological advancements.

    These most recent advancements significantly upgraded our report. Indeed, the Bank’s FSR has now become, in our humble opinion, the regional benchmark for integrating climate change into financial stability assessments. However, we are keen to share our insights with our regional colleagues and we thank CARTAC for sponsoring two peer-to-peer missions, including this one, which serve to further strengthen financial stability efforts throughout the Caribbean. 

    Each of these milestones reflects our Bank’s commitment to ensuring a resilient financial system. From stress testing and climate risk analysis to the inclusion of cyber risks and more robust data analytics, we are continuously improving the tools and strategies we use to safeguard financial stability.

    But our work doesn’t end here. The financial system is always evolving, and we must stay ahead of the curve. By building on these achievements and addressing new challenges, we will continue to protect the financial well-being of Barbados, ensuring that we are resilient in the face of both local and global uncertainties.

    I am honoured to also explore some of the significant milestones achieved by two of our regional counterparts – the Financial Services Commission of Turks and Caicos and the Central Bank of Aruba – in their efforts to enhance their financial stability reporting. 

    Let me begin with Turks and Caicos. Your financial system plays a vital role in your country’s economy, particularly in your banking and offshore sectors. In collaboration with CARTAC, the FSC made great strides in developing its stress testing framework, which is very similar to the one we recently implemented, as a multi-factor and multi-period macroeconomic-stress test that can account for both domestic economic shocks such as a downturn in tourism and external shocks like global financial market volatility. By extending the horizon and refining the scenarios, the FSC is now better equipped to gauge the potential vulnerabilities within its financial system.

    We know that the Central Bank of Aruba does not currently publish a Financial Stability Report. However, the Bank does perform stress tests on its banking sector, the results of which are usually discussed with the banks individually via bilateral meetings. In 2023, the Bank conducted a stress test on the banking sector, with a key focus on concentration risk. This scenario analysis was driven by the developments in the US banking system that took place that year. 

    We will hear directly from these two institutions about their journey to enhance and assess financial stability in their respective jurisdictions. Over the next few days, you will participate in a diverse and robust line-up of sessions that promise to deepen our understanding and sharpen our capabilities. 

    I encourage all of you to actively participate in these discussions, as the true power of peer-to-peer learning lies in the collective wisdom and shared experiences of those in this room. Each of us brings a wealth of knowledge and experience, and together, we have the opportunity to generate innovative solutions that can strengthen the financial stability of our institutions and economies.

    I commend CARTAC, and Petr specifically, for hosting these peer-to-peer exchanges, which provide unique value to our professional growth. While we are all experts in our respective areas, there is tremendous strength in collaboration. This seminar is therefore a perfect opportunity to foster connections, engage in thought-provoking discussions, and together, to drive the innovation and progress that our institutions and economies need to thrive.

    I would like to take a moment to recognise and thank the organising team, especially the Financial Stability Unit led by Saida, who have worked tirelessly to put together this exceptional event, as well as Karen, who has done an excellent job in coordinating this event. Your dedication and efforts are deeply appreciated.

    I would also like to extend a special thank you to our speakers, including those from our sister regulator, the FSC, and our colleagues from the Turks & Caicos and Aruba, who have prepared valuable content for us. We look forward to the knowledge and insights you will bring to the table.

    In closing, I urge each of you to take full advantage of the opportunities this seminar provides. Whether through the formal sessions or during informal conversations during the coffee breaks, I encourage you to use this time to build stronger networks, exchange ideas, and learn from one another. Once again, thank you all for being here. I look forward to the meaningful discussions and practical takeaways that will undoubtedly emerge over the next few days and I wish everyone a productive and successful seminar.

    Thank you.

    MIL OSI Economics –

  • MIL-OSI: Southside Bancshares, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2024

    Source: GlobeNewswire (MIL-OSI)

    • Third quarter net income of $20.5 million;
    • Third quarter earnings per diluted common share of $0.68;
    • Annualized return on third quarter average assets of 0.98%;
    • Annualized return on third quarter average tangible common equity of 13.69%(1); and
    • Nonperforming assets remain low at 0.09% of total assets. 

    TYLER, Texas, Oct. 24, 2024 (GLOBE NEWSWIRE) — Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended September 30, 2024. Southside reported net income of $20.5 million for the three months ended September 30, 2024, an increase of $2.1 million, or 11.2%, compared to $18.4 million for the same period in 2023. Earnings per diluted common share increased $0.08, or 13.3%, to $0.68 for the three months ended September 30, 2024, from $0.60 for the same period in 2023. The annualized return on average shareholders’ equity for the three months ended September 30, 2024, was 10.13%, compared to 9.50% for the same period in 2023. The annualized return on average assets was 0.98% for the three months ended September 30, 2024, compared to 0.93% for the same period in 2023. 

    “Third quarter financial results were highlighted by a linked quarter $1.86 million increase in net interest income, a linked quarter eight basis point increase in our net interest margin to 2.95%, earnings per share of $0.68, a 13.69% return on average tangible equity(1), and continued strong asset quality,” stated Lee R. Gibson, Chief Executive Officer of Southside. “During the quarter we sold $28 million of lower yielding municipal securities, unwound the related fair value swaps and recorded a loss of $1.9 million. The proceeds were reinvested in higher yielding agency mortgage-backed securities. In addition, we recorded an impairment charge of $868,000 on the sale of approximately $10 million of available for sale (“AFS”) municipal securities and the unwind of the related fair value swaps on October 1.” 

    Operating Results for the Three Months Ended September 30, 2024 

    Net income was $20.5 million for the three months ended September 30, 2024, compared to $18.4 million for the same period in 2023, an increase of $2.1 million, or 11.2%. Earnings per diluted common share were $0.68 and $0.60 for the three months ended September 30, 2024 and 2023, respectively. The increase in net income was a result of the increase in net interest income and the decrease in provision for credit losses, partially offset by the decrease in noninterest income and increases in noninterest expense and income tax expense. Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2024 were 0.98% and 10.13%, respectively, compared to 0.93% and 9.50%, respectively, for the three months ended September 30, 2023. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 53.94% and 51.90%, respectively, for the three months ended September 30, 2024, compared to 54.86% and 52.29%, respectively, for the three months ended September 30, 2023, and 54.90% and 52.71%, respectively, for the three months ended June 30, 2024. 

    Net interest income for the three months ended September 30, 2024 was $55.5 million, an increase of $2.2 million, or 4.1%, from the same period in 2023. The increase in net interest income was due to the increases in the average balance and the average yield of interest earning assets, partially offset by increases in the average rate paid on our interest bearing liabilities and average balance of our interest bearing liabilities. Linked quarter, net interest income increased $1.9 million, or 3.5%, compared to $53.6 million during the three months ended June 30, 2024, largely due to the increase in the average yield on our interest earning assets and the decrease in the average rate paid on our interest bearing liabilities, partially offset by the decrease in the average balance of interest earning assets. 

    Our net interest margin and tax-equivalent net interest margin(1) decreased to 2.82% and 2.95%, respectively, for the three months ended September 30, 2024, compared to 2.85% and 3.02%, respectively, for the same period in 2023. Linked quarter, net interest margin and tax-equivalent net interest margin(1) increased from 2.74% and 2.87%, respectively for the three months ended June 30, 2024. 

    Noninterest income was $8.2 million for the three months ended September 30, 2024, a decrease of $2.7 million, or 24.6%, compared to $10.8 million for the same period in 2023. The decrease was due to a net loss on sale of securities AFS and decreases in other noninterest income and deposit services income, partially offset by an increase in brokerage services income. On a linked quarter basis, noninterest income decreased $3.4 million, or 29.3%, compared to the three months ended June 30, 2024. The decrease was primarily due to an increase in net loss on sale of securities AFS and decreases in other noninterest income and bank owned life insurance income related to a $1.0 million death benefit realized in the second quarter of 2024. The decrease in other noninterest income for both periods was primarily due to an impairment charge of $868,000 on the sale of approximately $10 million of AFS municipal securities and the unwind of the related fair value swaps on October 1. 

    Noninterest expense increased $0.8 million, or 2.2%, to $36.3 million for the three months ended September 30, 2024, compared to $35.6 million for the same period in 2023, due to increases in salaries and employee benefits and software and data processing expense, partially offset by decreases in advertising, travel and entertainment expense, professional fees, net occupancy expense and amortization of intangibles. On a linked quarter basis, noninterest expense increased by $0.6 million, or 1.6%, compared to the three months ended June 30, 2024, due to increases in other noninterest expense, salaries and employee benefits expense and professional fees. 

    Income tax expense increased $1.3 million, or 40.7%, for the three months ended September 30, 2024, compared to the same period in 2023. On a linked quarter basis, income tax expense decreased $0.8 million, or 15.8%. Our effective tax rate (“ETR”) increased to 17.6% for the three months ended September 30, 2024, compared to 14.5% for the three months ended September 30, 2023, and increased slightly from 17.4% for the three months ended June 30, 2024. The higher ETR for the three months ended September 30, 2024 compared to the same period in 2023, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income. 

    Operating Results for the Nine Months Ended September 30, 2024 

    Net income was $66.7 million for the nine months ended September 30, 2024, compared to $69.4 million for the same period in 2023, a decrease of $2.7 million, or 3.8%. Earnings per diluted common share were $2.20 for the nine months ended September 30, 2024, compared to $2.24 for the same period in 2023, a decrease of 1.8%. The decrease in net income was primarily a result of the decrease in noninterest income and increases in noninterest expense and income tax expense, partially offset by the decrease in provision for credit losses and the increase in net interest income. Returns on average assets and average shareholders’ equity for the nine months ended September 30, 2024 were 1.06% and 11.19%, respectively, compared to 1.20% and 12.21%, respectively, for the nine months ended September 30, 2023. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 55.56% and 53.35%, respectively, for the nine months ended September 30, 2024, compared to 53.99% and 51.44%, respectively, for the nine months ended September 30, 2023. 

    Net interest income was $162.4 million for the nine months ended September 30, 2024, compared to $160.5 million for the same period in 2023, an increase of $1.9 million, or 1.2%, due to increases in the average balance and the average yield of interest earning assets, partially offset by increases in the average rate paid on our interest bearing liabilities and average balance of our interest bearing liabilities. 

    Our net interest margin and tax-equivalent net interest margin(1) were 2.76% and 2.90%, respectively, for the nine months ended September 30, 2024, compared to 2.95% and 3.13%, respectively, for the same period in 2023. 

    Noninterest income was $29.5 million for the nine months ended September 30, 2024, a decrease of $3.9 million, or 11.6%, compared to $33.3 million for the same period in 2023. The decrease was due to decreases in the net gain on sale of equity securities, other noninterest income and deposit services income and a loss on sale of loans, partially offset by a decrease in net loss on sale of securities AFS and an increase in brokerage services income. The decrease in other noninterest income was primarily due to an impairment charge of $868,000 on the sale of approximately $10 million of AFS municipal securities and the unwind of the related fair value swaps on October 1. 

    Noninterest expense was $109.0 million for the nine months ended September 30, 2024, compared to $105.4 million for the same period in 2023, an increase of $3.6 million, or 3.4%. The increase was primarily due to increases in salaries and employee benefits and software and data processing expense, partially offset by decreases in professional fees, net occupancy expense, advertising, travel and entertainment expense, and amortization of intangibles. 

    Income tax expense increased $2.0 million, or 16.3%, for the nine months ended September 30, 2024, compared to the same period in 2023. Our ETR was approximately 17.6% and 15.0% for the nine months ended September 30, 2024 and 2023, respectively. The higher ETR for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income. 

    Balance Sheet Data 

    At September 30, 2024, Southside had $8.36 billion in total assets, compared to $8.28 billion at December 31, 2023 and $7.97 billion at September 30, 2023. 

    Loans at September 30, 2024 were $4.58 billion, an increase of $157.4 million, or 3.6%, compared to $4.42 billion at September 30, 2023. Linked quarter, loans decreased $11.3 million, or 0.2%, due to decreases of $50.2 million in commercial real estate loans, $14.9 million in municipal loans, $2.4 million in loans to individuals and $1.0 million in commercial loans. These decreases were partially offset by increases of $39.8 million in construction loans and $17.4 million in 1-4 family residential loans. 

    Securities at September 30, 2024 were $2.70 billion, an increase of $53.4 million, or 2.0%, compared to $2.64 billion at September 30, 2023. Linked quarter, securities decreased $15.1 million, or 0.6%, from $2.71 billion at June 30, 2024. 

    Deposits at September 30, 2024 were $6.44 billion, an increase of $86.1 million, or 1.4%, compared to $6.35 billion at September 30, 2023. Linked quarter, deposits decreased $60.2 million, or 0.9%, from $6.50 billion at June 30, 2024. 

    At September 30, 2024, we had 179,214 total deposit accounts with an average balance of $32,000. Our estimated uninsured deposits were 35.9% as of September 30, 2024. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 19.2% as of September 30, 2024. Our noninterest bearing deposits represent approximately 21.4% of total deposits. Linked quarter, our cost of interest bearing deposits remained consistent at 3.01%. Linked quarter, our cost of total deposits decreased one basis point from 2.39% in the prior quarter to 2.38%. 

    Our cost of interest bearing deposits increased 83 basis points, from 2.16% for the nine months ended September 30, 2023, to 2.99% for the nine months ended September 30, 2024. Our cost of total deposits increased 75 basis points, from 1.62% for the nine months ended September 30, 2023, to 2.37% for the nine months ended September 30, 2024. 

    Capital Resources and Liquidity 

    Our capital ratios and contingent liquidity sources remain solid. During the third quarter ended September 30, 2024, we did not purchase any common stock pursuant to our Stock Repurchase Plan. Under this plan, repurchases of our outstanding common stock may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of The Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may modify, suspend or discontinue the plan at any time. We have not purchased any common stock pursuant to the Stock Repurchase Plan subsequent to September 30, 2024. 

    As of September 30, 2024, our total available contingent liquidity, net of current outstanding borrowings, was $2.23 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit. 

    Asset Quality 

    Nonperforming assets at September 30, 2024 were $7.7 million, or 0.09% of total assets, an increase of $3.3 million, or 74.8%, compared to $4.4 million, or 0.05% of total assets, at September 30, 2023. Linked quarter, nonperforming assets increased $0.7 million, or 10.7%, from $6.9 million at June 30, 2024 due primarily to an increase of $1.1 million, or 18.7%, in nonaccrual loans, partially offset by decreases of $0.1 million in restructured loans and $0.3 million in other real estate owned. 

    The allowance for loan losses totaled $44.3 million, or 0.97% of total loans, at September 30, 2024, compared to $42.4 million, or 0.92% of total loans, at June 30, 2024. The increase in the allowance as a percentage of total assets was primarily due to the increased economic concerns forecasted in the CECL model specific to office and multifamily markets in metro areas. The allowance for loan losses was $41.8 million, or 0.94% of total loans, at September 30, 2023. 

    For the three months ended September 30, 2024, we recorded a provision for credit losses for loans of $2.3 million, compared to a provision of $6.3 million for the three months ended September 30, 2023, and a reversal of provision of $0.9 million for the three months ended June 30, 2024. Net charge-offs were $0.4 million for the three months ended September 30, 2024, compared to net charge-offs of $0.9 million and $0.3 million for the three months ended September 30, 2023 and June 30, 2024, respectively. Net charge-offs were $1.0 million for the nine months ended September 30, 2024, compared to net charge-offs of $1.5 million for the nine months ended September 30, 2023. 

    We recorded a provision for credit losses on off-balance-sheet credit exposures of $0.1 million for the three months ended September 30, 2024, compared to $0.6 million and $0.4 million for the three months ended September 30, 2023 and June 30, 2024, respectively. We recorded a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.6 million for the nine months ended September 30, 2024, compared to a provision for credit losses on off-balance-sheet credit exposures of $0.2 million for the nine months ended September 30, 2023. The balance of the allowance for off-balance-sheet credit exposures was $3.3 million and $3.9 million at September 30, 2024 and 2023, respectively, and is included in other liabilities. 

    Dividend 

    Southside Bancshares, Inc. declared a third quarter cash dividend of $0.36 per share on August 8, 2024, which was paid on September 5, 2024, to all shareholders of record as of August 22, 2024. 

    _______________ 

    (1) Refer to “Non-GAAP Financial Measures” below and to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure. 

    Conference Call 

    Southside’s management team will host a conference call to discuss its third quarter ended September 30, 2024 financial results on Thursday, October 24, 2024 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com, under Events. 

    Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register.vevent.com/register/BIe280e5ecbf444a68a5836f1e27caa8a9 to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate, register 10 minutes prior to the conference call to ensure a more efficient registration process. 

    For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call. 

    Non-GAAP Financial Measures 

    Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully taxable-equivalent measures (“FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. 

    Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread. 

    Efficiency ratio (FTE). The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio. 

    These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure. 

    Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the “Average Balances with Average Yields and Rates” tables. 

    A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables. 

    About Southside Bancshares, Inc. 

    Southside Bancshares, Inc. is a bank holding company with approximately $8.36 billion in assets as of September 30, 2024, that owns 100% of Southside Bank. Southside Bank currently has 54 branches in Texas and operates a network of 73 ATMs/ITMs. 

    To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or lindsey.bailes@southside.com. 

    Forward-Looking Statements 

    Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “might,” “will,” “would,” “seek,” “intend,” “probability,” “risk,” “goal,” “target,” “objective,” “plans,” “potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. For example, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company’s ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates and our expectations regarding rate increases, tax reform, inflation, the impacts related to or resulting from other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, interest rate fluctuations and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, labor shortages and changes in interest rates by the Federal Reserve. 

    Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, under “Part I – Item 1. Forward Looking Information” and “Part I – Item 1A. Risk Factors” and in the Company’s other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments. 

     
    Southside Bancshares, Inc.
    Consolidated Financial Summary (Unaudited)
    (Dollars in thousands)
     
      As of
        2024       2023  
      Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
    ASSETS                  
    Cash and due from banks $ 130,147     $ 114,283     $ 96,744     $ 122,021     $ 105,601  
    Interest earning deposits   333,825       272,469       307,257       391,719       106,094  
    Federal funds sold   22,325       65,244       65,372       46,770       114,128  
    Securities available for sale, at estimated fair value   1,408,437       1,405,944       1,405,221       1,296,294       1,335,560  
    Securities held to maturity, at net carrying value   1,288,403       1,305,975       1,306,898       1,307,053       1,307,886  
    Total securities   2,696,840       2,711,919       2,712,119       2,603,347       2,643,446  
    Federal Home Loan Bank stock, at cost   40,291       32,991       27,958       11,936       12,778  
    Loans held for sale   768       1,352       756       10,894       1,382  
    Loans   4,578,048       4,589,365       4,577,368       4,524,510       4,420,633  
    Less: Allowance for loan losses   (44,276 )     (42,407 )     (43,557 )     (42,674 )     (41,760 )
    Net loans   4,533,772       4,546,958       4,533,811       4,481,836       4,378,873  
    Premises & equipment, net   138,811       138,489       139,491       138,950       139,473  
    Goodwill   201,116       201,116       201,116       201,116       201,116  
    Other intangible assets, net   2,003       2,281       2,588       2,925       3,295  
    Bank owned life insurance   137,489       136,903       136,604       136,330       135,737  
    Other assets   124,876       133,697       130,047       137,070       130,545  
    Total assets $ 8,362,263     $ 8,357,702     $ 8,353,863     $ 8,284,914     $ 7,972,468  
                       
    LIABILITIES AND SHAREHOLDERS’ EQUITY                  
    Noninterest bearing deposits $ 1,377,022     $ 1,366,924     $ 1,358,827     $ 1,390,407     $ 1,431,285  
    Interest bearing deposits   5,058,680       5,129,008       5,186,933       5,159,274       4,918,286  
    Total deposits   6,435,702       6,495,932       6,545,760       6,549,681       6,349,571  
    Other borrowings and Federal Home Loan Bank borrowings   865,856       763,700       770,151       722,468       608,038  
    Subordinated notes, net of unamortized debt
    issuance costs    		   92,006       91,970       93,913       93,877       93,838  
    Trust preferred subordinated debentures, net of unamortized debt issuance costs   60,273       60,272       60,271       60,270       60,269  
    Other liabilities   103,172       144,858       95,846       85,330       132,157  
    Total liabilities   7,557,009       7,556,732       7,565,941       7,511,626       7,243,873  
    Shareholders’ equity   805,254       800,970       787,922       773,288       728,595  
    Total liabilities and shareholders’ equity $ 8,362,263     $ 8,357,702     $ 8,353,863     $ 8,284,914     $ 7,972,468  
     
    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars and shares in thousands, except per share data)
     
      Three Months Ended
        2024       2023  
      Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
    Income Statement:                  
    Total interest income $ 105,703     $ 104,186     $ 102,758     $ 98,939     $ 93,078  
    Total interest expense   50,239       50,578       49,410       44,454       39,805  
    Net interest income   55,464       53,608       53,348       54,485       53,273  
    Provision for (reversal of) credit losses   2,389       (485 )     58       2,281       6,987  
    Net interest income after provision for (reversal of) credit losses   53,075       54,093       53,290       52,204       46,286  
    Noninterest income                  
    Deposit services   6,199       6,157       5,985       6,305       6,479  
    Net gain (loss) on sale of securities available for sale   (1,929 )     (563 )     (18 )     (10,386 )     11  
    Gain (loss) on sale of loans   115       220       (436 )     178       96  
    Trust fees   1,628       1,456       1,336       1,431       1,522  
    Bank owned life insurance   857       1,767       784       2,602       790  
    Brokerage services   1,068       1,081       1,014       944       760  
    Other   233       1,439       1,059       1,427       1,178  
    Total noninterest income   8,171       11,557       9,724       2,501       10,836  
    Noninterest expense                  
    Salaries and employee benefits   22,233       21,984       23,113       21,152       21,241  
    Net occupancy   3,613       3,750       3,362       3,474       3,796  
    Advertising, travel & entertainment   734       795       950       1,127       1,062  
    ATM expense   412       368       325       318       358  
    Professional fees   1,206       1,075       1,154       1,315       1,472  
    Software and data processing   2,951       2,860       2,856       2,644       2,432  
    Communications   423       410       449       435       359  
    FDIC insurance   939       977       943       892       902  
    Amortization of intangibles   278       307       337       370       407  
    Other   3,543       3,239       3,392       3,456       3,524  
    Total noninterest expense   36,332       35,765       36,881       35,183       35,553  
    Income before income tax expense   24,914       29,885       26,133       19,522       21,569  
    Income tax expense   4,390       5,212       4,622       2,206       3,120  
    Net income $ 20,524     $ 24,673     $ 21,511     $ 17,316     $ 18,449  
                       
    Common Share Data:      
    Weighted-average basic shares outstanding   30,286       30,280       30,262       30,235       30,502  
    Weighted-average diluted shares outstanding   30,370       30,312       30,305       30,276       30,543  
    Common shares outstanding end of period   30,308       30,261       30,284       30,249       30,338  
    Earnings per common share                  
    Basic $ 0.68     $ 0.81     $ 0.71     $ 0.57     $ 0.60  
    Diluted   0.68       0.81       0.71       0.57       0.60  
    Book value per common share   26.57       26.47       26.02       25.56       24.02  
    Tangible book value per common share   19.87       19.75       19.29       18.82       17.28  
    Cash dividends paid per common share   0.36       0.36       0.36       0.37       0.35  
                       
    Selected Performance Ratios:                  
    Return on average assets   0.98 %     1.19 %     1.03 %     0.85 %     0.93 %
    Return on average shareholders’ equity   10.13       12.46       11.02       9.31       9.50  
    Return on average tangible common equity (1)   13.69       16.90       15.07       13.10       13.17  
    Average yield on earning assets (FTE) (1)   5.51       5.45       5.38       5.30       5.15  
    Average rate on interest bearing liabilities   3.28       3.32       3.22       3.04       2.84  
    Net interest margin (FTE) (1)   2.95       2.87       2.86       2.99       3.02  
    Net interest spread (FTE) (1)   2.23       2.13       2.16       2.26       2.31  
    Average earning assets to average interest bearing liabilities   128.51       128.62       127.71       131.65       133.24  
    Noninterest expense to average total assets   1.73       1.72       1.77       1.73       1.79  
    Efficiency ratio (FTE) (1)   51.90       52.71       55.54       50.86       52.29  

    (1)  Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure. 

     
    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)
     
      Three Months Ended
        2024       2023  
      Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
    Nonperforming Assets: $ 7,656     $ 6,918     $ 7,979     $ 4,001     $ 4,381  
    Nonaccrual loans   7,254       6,110       7,709       3,889       4,316  
    Accruing loans past due more than 90 days   —       —       —       —       —  
    Restructured loans   —       145       151       13       15  
    Other real estate owned   388       648       119       99       50  
    Repossessed assets   14       15       —       —       —  
                       
    Asset Quality Ratios:                  
    Ratio of nonaccruing loans to:                  
    Total loans   0.16 %     0.13 %     0.17 %     0.09 %     0.10 %
    Ratio of nonperforming assets to:                  
    Total assets   0.09       0.08       0.10       0.05       0.05  
    Total loans   0.17       0.15       0.17       0.09       0.10  
    Total loans and OREO   0.17       0.15       0.17       0.09       0.10  
    Ratio of allowance for loan losses to:                  
    Nonaccruing loans   610.37       694.06       565.01       1,097.30       967.56  
    Nonperforming assets   578.32       613.00       545.90       1,066.58       953.21  
    Total loans   0.97       0.92       0.95       0.94       0.94  
    Net charge-offs (recoveries) to average loans outstanding   0.04       0.02       0.03       0.11       0.08  
                       
    Capital Ratios:                  
    Shareholders’ equity to total assets   9.63       9.58       9.43       9.33       9.14  
    Common equity tier 1 capital   13.07       12.72       12.43       12.28       12.27  
    Tier 1 risk-based capital   14.12       13.76       13.47       13.32       13.31  
    Total risk-based capital   16.59       16.16       15.92       15.73       15.71  
    Tier 1 leverage capital   9.61       9.40       9.22       9.39       9.61  
    Period end tangible equity to period end tangible assets (1)   7.38       7.33       7.17       7.04       6.75  
    Average shareholders’ equity to average total assets   9.67       9.52       9.35       9.13       9.76  

    (1)  Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure. 

     
    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)
     
      Three Months Ended
        2024       2023  
    Loan Portfolio Composition Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
    Real Estate Loans:                  
    Construction $ 585,817     $ 546,040     $ 599,464     $ 789,744     $ 720,515  
    1-4 Family Residential   755,406       738,037       720,508       696,738       689,492  
    Commercial   2,422,612       2,472,771       2,413,345       2,168,451       2,117,306  
    Commercial Loans   358,854       359,807       358,053       366,893       385,816  
    Municipal Loans   402,041       416,986       427,225       441,168       441,512  
    Loans to Individuals   53,318       55,724       58,773       61,516       65,992  
    Total Loans $ 4,578,048     $ 4,589,365     $ 4,577,368     $ 4,524,510     $ 4,420,633  
                       
    Summary of Changes in Allowances:                  
    Allowance for Loan Losses                  
    Balance at beginning of period $ 42,407     $ 43,557     $ 42,674     $ 41,760     $ 36,303  
    Loans charged-off   (773 )     (721 )     (634 )     (1,572 )     (1,262 )
    Recoveries of loans charged-off   365       444       347       284       378  
    Net loans (charged-off) recovered   (408 )     (277 )     (287 )     (1,288 )     (884 )
    Provision for (reversal of) loan losses   2,277       (873 )     1,170       2,202       6,341  
    Balance at end of period $ 44,276     $ 42,407     $ 43,557     $ 42,674     $ 41,760  
                       
    Allowance for Off-Balance-Sheet Credit Exposures                  
    Balance at beginning of period $ 3,208     $ 2,820     $ 3,932     $ 3,853     $ 3,207  
    Provision for (reversal of) off-balance-sheet credit exposures   112       388       (1,112 )     79       646  
    Balance at end of period $ 3,320     $ 3,208     $ 2,820     $ 3,932     $ 3,853  
    Total Allowance for Credit Losses $ 47,596     $ 45,615     $ 46,377     $ 46,606     $ 45,613  
     
    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)
     
      Nine Months Ended
      September 30,
        2024       2023  
    Income Statement:      
    Total interest income $ 312,647     $ 260,802  
    Total interest expense   150,227       100,260  
    Net interest income   162,420       160,542  
    Provision for (reversal of) credit losses   1,962       6,873  
    Net interest income after provision for (reversal of) credit losses   160,458       153,669  
    Noninterest income      
    Deposit services   18,341       19,192  
    Net gain (loss) on sale of securities available for sale   (2,510 )     (5,590 )
    Net gain on sale of equity securities   —       5,058  
    Gain (loss) on sale of loans   (101 )     385  
    Trust fees   4,420       4,479  
    Bank owned life insurance   3,408       3,221  
    Brokerage services   3,163       2,361  
    Other   2,731       4,227  
    Total noninterest income   29,452       33,333  
    Noninterest expense      
    Salaries and employee benefits   67,330       64,473  
    Net occupancy   10,725       11,220  
    Advertising, travel & entertainment   2,479       2,966  
    ATM expense   1,105       1,033  
    Professional fees   3,435       4,036  
    Software and data processing   8,667       6,751  
    Communications   1,282       1,034  
    FDIC insurance   2,859       2,666  
    Amortization of intangibles   922       1,327  
    Other   10,174       9,889  
    Total noninterest expense   108,978       105,395  
    Income before income tax expense   80,932       81,607  
    Income tax expense   14,224       12,231  
    Net income $ 66,708     $ 69,376  
    Common Share Data:      
    Weighted-average basic shares outstanding   30,276       30,862  
    Weighted-average diluted shares outstanding   30,332       30,916  
    Common shares outstanding end of period   30,308       30,338  
    Earnings per common share      
    Basic $ 2.20     $ 2.25  
    Diluted   2.20       2.24  
    Book value per common share   26.57       24.02  
    Tangible book value per common share   19.87       17.28  
    Cash dividends paid per common share   1.08       1.05  
           
    Selected Performance Ratios:      
    Return on average assets   1.06 %     1.20 %
    Return on average shareholders’ equity   11.19       12.21  
    Return on average tangible common equity (1)   15.20       16.98  
    Average yield on earning assets (FTE) (1)   5.45       4.97  
    Average rate on interest bearing liabilities   3.27       2.49  
    Net interest margin (FTE) (1)   2.90       3.13  
    Net interest spread (FTE) (1)   2.18       2.48  
    Average earning assets to average interest bearing liabilities   128.28       134.94  
    Noninterest expense to average total assets   1.74       1.84  
    Efficiency ratio (FTE) (1)   53.35       51.44  

    (1)  Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure. 

     
    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)
     
      Nine Months Ended
      September 30,
        2024       2023  
    Nonperforming Assets: $ 7,656     $ 4,381  
    Nonaccrual loans   7,254       4,316  
    Accruing loans past due more than 90 days   —       —  
    Restructured loans   —       15  
    Other real estate owned   388       50  
    Repossessed assets   14       —  
           
    Asset Quality Ratios:      
    Ratio of nonaccruing loans to:      
    Total loans   0.16 %     0.10 %
    Ratio of nonperforming assets to:      
    Total assets   0.09       0.05  
    Total loans   0.17       0.10  
    Total loans and OREO   0.17       0.10  
    Ratio of allowance for loan losses to:      
    Nonaccruing loans   610.37       967.56  
    Nonperforming assets   578.32       953.21  
    Total loans   0.97       0.94  
    Net charge-offs (recoveries) to average loans outstanding   0.03       0.05  
           
    Capital Ratios:      
    Shareholders’ equity to total assets   9.63       9.14  
    Common equity tier 1 capital   13.07       12.27  
    Tier 1 risk-based capital   14.12       13.31  
    Total risk-based capital   16.59       15.71  
    Tier 1 leverage capital   9.61       9.61  
    Period end tangible equity to period end tangible assets (1)   7.38       6.75  
    Average shareholders’ equity to average total assets   9.51       9.81  

    (1) Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure. 

     
    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)
     
      Nine Months Ended
      September 30,
    Loan Portfolio Composition   2024       2023  
    Real Estate Loans:      
    Construction $ 585,817     $ 720,515  
    1-4 Family Residential   755,406       689,492  
    Commercial   2,422,612       2,117,306  
    Commercial Loans   358,854       385,816  
    Municipal Loans   402,041       441,512  
    Loans to Individuals   53,318       65,992  
    Total Loans $ 4,578,048     $ 4,420,633  
           
    Summary of Changes in Allowances:      
    Allowance for Loan Losses      
    Balance at beginning of period $ 42,674     $ 36,515  
    Loans charged-off   (2,128 )     (2,632 )
    Recoveries of loans charged-off   1,156       1,170  
    Net loans (charged-off) recovered   (972 )     (1,462 )
    Provision for (reversal of) loan losses   2,574       6,707  
    Balance at end of period $ 44,276     $ 41,760  
           
    Allowance for Off-Balance-Sheet Credit Exposures      
    Balance at beginning of period $ 3,932     $ 3,687  
    Provision for (reversal of) off-balance-sheet credit exposures   (612 )     166  
    Balance at end of period $ 3,320     $ 3,853  
    Total Allowance for Credit Losses $ 47,596     $ 45,613  

    The tables that follow show average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities for the periods presented. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliation” for more information.  

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)
     
      Three Months Ended
      September 30, 2024   June 30, 2024
      Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
    ASSETS                      
    Loans (1) $ 4,613,028     $ 72,493   6.25 %   $ 4,595,980     $ 70,293   6.15 %
    Loans held for sale   871       11   5.02 %     1,489       24   6.48 %
    Securities:                      
    Taxable investment securities (2)   791,914       7,150   3.59 %     783,856       7,009   3.60 %
    Tax-exempt investment securities (2)   1,174,445       11,825   4.01 %     1,254,097       12,761   4.09 %
    Mortgage-backed and related securities (2)   886,325       11,976   5.38 %     830,504       11,084   5.37 %
    Total securities   2,852,684       30,951   4.32 %     2,868,457       30,854   4.33 %
    Federal Home Loan Bank stock, at cost, and equity investments   41,159       582   5.63 %     40,467       573   5.69 %
    Interest earning deposits   281,313       3,798   5.37 %     300,047       4,105   5.50 %
    Federal funds sold   33,971       488   5.71 %     75,479       1,021   5.44 %
    Total earning assets   7,823,026       108,323   5.51 %     7,881,919       106,870   5.45 %
    Cash and due from banks   100,578               110,102          
    Accrued interest and other assets   455,091               424,323          
    Less: Allowance for loan losses   (42,581 )             (43,738 )        
    Total assets $ 8,336,114             $ 8,372,606          
    LIABILITIES AND SHAREHOLDERS’ EQUITY                      
    Savings accounts $ 598,116       1,490   0.99 %   $ 604,753       1,454   0.97 %
    Certificates of deposit   1,087,613       12,647   4.63 %     1,020,099       11,630   4.59 %
    Interest bearing demand accounts   3,409,911       24,395   2.85 %     3,513,068       25,382   2.91 %
    Total interest bearing deposits   5,095,640       38,532   3.01 %     5,137,920       38,466   3.01 %
    Federal Home Loan Bank borrowings   618,708       6,488   4.17 %     606,851       6,455   4.28 %
    Subordinated notes, net of unamortized debt issuance costs   91,988       937   4.05 %     92,017       936   4.09 %
    Trust preferred subordinated debentures, net of unamortized debt issuance costs   60,273       1,180   7.79 %     60,271       1,171   7.81 %
    Repurchase agreements   83,297       899   4.29 %     88,007       955   4.36 %
    Other borrowings   137,482       2,203   6.37 %     143,169       2,595   7.29 %
    Total interest bearing liabilities   6,087,388       50,239   3.28 %     6,128,235       50,578   3.32 %
    Noninterest bearing deposits   1,344,165               1,346,274          
    Accrued expenses and other liabilities   98,331               101,399          
    Total liabilities   7,529,884               7,575,908          
    Shareholders’ equity   806,230               796,698          
    Total liabilities and shareholders’ equity $ 8,336,114             $ 8,372,606          
    Net interest income (FTE)     $ 58,084           $ 56,292    
    Net interest margin (FTE)         2.95 %           2.87 %
    Net interest spread (FTE)         2.23 %           2.13 %

    (1)  Interest on loans includes net fees on loans that are not material in amount.
    (2)  For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. 

    Note: As of September 30, 2024 and June 30, 2024, loans totaling $7.3 million and $6.1 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate. 

     
    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)
     
      Three Months Ended
      March 31, 2024   December 31, 2023
      Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
    ASSETS                      
    Loans (1) $ 4,559,602     $ 68,849   6.07 %   $ 4,473,618     $ 67,886   6.02 %
    Loans held for sale   8,834       18   0.82 %     1,858       27   5.77 %
    Securities:                      
    Taxable investment securities (2)   780,423       6,967   3.59 %     852,023       7,970   3.71 %
    Tax-exempt investment securities (2)   1,285,922       13,168   4.12 %     1,456,187       15,688   4.27 %
    Mortgage-backed and related securities (2)   764,713       10,119   5.32 %     581,548       6,865   4.68 %
    Total securities   2,831,058       30,254   4.30 %     2,889,758       30,523   4.19 %
    Federal Home Loan Bank stock, at cost, and equity investments   40,063       333   3.34 %     24,674       296   4.76 %
    Interest earning deposits   380,181       5,202   5.50 %     150,763       2,054   5.41 %
    Federal funds sold   62,599       838   5.38 %     93,149       1,286   5.48 %
    Total earning assets   7,882,337       105,494   5.38 %     7,633,820       102,072   5.30 %
    Cash and due from banks   114,379               110,380          
    Accrued interest and other assets   441,783               374,120          
    Less: Allowance for loan losses   (42,973 )             (41,822 )        
    Total assets $ 8,395,526             $ 8,076,498          
    LIABILITIES AND SHAREHOLDERS’ EQUITY                      
    Savings accounts $ 604,529       1,424   0.95 %   $ 610,453       1,432   0.93 %
    Certificates of deposit   941,947       10,341   4.42 %     910,759       9,691   4.22 %
    Interest bearing demand accounts   3,634,936       26,433   2.92 %     3,469,120       24,498   2.80 %
    Total interest bearing deposits   5,181,412       38,198   2.97 %     4,990,332       35,621   2.83 %
    Federal Home Loan Bank borrowings   607,033       5,950   3.94 %     262,709       1,430   2.16 %
    Subordinated notes, net of unamortized debt issuance costs   93,895       956   4.10 %     93,859       965   4.08 %
    Trust preferred subordinated debentures, net of unamortized debt issuance costs   60,270       1,175   7.84 %     60,269       1,195   7.87 %
    Repurchase agreements   92,177       967   4.22 %     96,622       1,008   4.14 %
    Other borrowings   137,287       2,164   6.34 %     294,683       4,235   5.70 %
    Total interest bearing liabilities   6,172,074       49,410   3.22 %     5,798,474       44,454   3.04 %
    Noninterest bearing deposits   1,338,384               1,424,961          
    Accrued expenses and other liabilities   100,014               115,388          
    Total liabilities   7,610,472               7,338,823          
    Shareholders’ equity   785,054               737,675          
    Total liabilities and shareholders’ equity $ 8,395,526             $ 8,076,498          
    Net interest income (FTE)     $ 56,084           $ 57,618    
    Net interest margin (FTE)         2.86 %           2.99 %
    Net interest spread (FTE)         2.16 %           2.26 %

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. 

    Note: As of March 31, 2024 and December 31, 2023, loans totaling $7.7 million and $3.9 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate. 

     
    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)
     
      Three Months Ended
      September 30, 2023
      Average Balance   Interest   Average Yield/Rate
    ASSETS          
    Loans (1) $ 4,396,184     $ 64,758   5.84 %
    Loans held for sale   1,537       26   6.71 %
    Securities:          
    Taxable investment securities (2)   912,789       8,731   3.79 %
    Tax-exempt investment securities (2)   1,510,044       16,232   4.26 %
    Mortgage-backed and related securities (2)   442,908       4,426   3.96 %
    Total securities   2,865,741       29,389   4.07 %
    Federal Home Loan Bank stock, at cost, and equity investments   22,363       265   4.70 %
    Interest earning deposits   37,891       535   5.60 %
    Federal funds sold   94,441       1,253   5.26 %
    Total earning assets   7,418,157       96,226   5.15 %
    Cash and due from banks   106,348          
    Accrued interest and other assets   400,850          
    Less: Allowance for loan losses   (36,493 )        
    Total assets $ 7,888,862          
    LIABILITIES AND SHAREHOLDERS’ EQUITY          
    Savings accounts $ 622,246       1,458   0.93 %
    Certificates of deposit   949,894       9,443   3.94 %
    Interest bearing demand accounts   3,189,048       20,050   2.49 %
    Total interest bearing deposits   4,761,188       30,951   2.58 %
    Federal Home Loan Bank borrowings   230,184       1,174   2.02 %
    Subordinated notes, net of unamortized debt issuance costs   93,817       962   4.07 %
    Trust preferred subordinated debentures, net of unamortized debt issuance costs   60,268       1,178   7.75 %
    Repurchase agreements   104,070       1,048   4.00 %
    Other borrowings   317,913       4,492   5.61 %
    Total interest bearing liabilities   5,567,440       39,805   2.84 %
    Noninterest bearing deposits   1,441,738          
    Accrued expenses and other liabilities   109,490          
    Total liabilities   7,118,668          
    Shareholders’ equity   770,194          
    Total liabilities and shareholders’ equity $ 7,888,862          
    Net interest income (FTE)     $ 56,421    
    Net interest margin (FTE)         3.02 %
    Net interest spread (FTE)         2.31 %

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. 

    Note: As of September 30, 2023, loans totaling $4.3 million were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate. 

     
    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)
     
      Nine Months Ended
      September 30, 2024   September 30, 2023
      Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
    ASSETS                      
    Loans (1) $ 4,589,621     $ 211,635   6.16 %   $ 4,241,676     $ 179,545   5.66 %
    Loans held for sale   3,721       53   1.90 %     1,620       69   5.69 %
    Securities:                      
    Taxable investment securities (2)   785,422       21,126   3.59 %     843,846       23,216   3.68 %
    Tax-exempt investment securities (2)   1,237,884       37,754   4.07 %     1,587,656       48,880   4.12 %
    Mortgage-backed and related securities (2)   827,396       33,179   5.36 %     433,335       12,585   3.88 %
    Total securities   2,850,702       92,059   4.31 %     2,864,837       84,681   3.95 %
    Federal Home Loan Bank stock, at cost, and equity investments   40,565       1,488   4.90 %     25,071       889   4.74 %
    Interest earning deposits   320,371       13,105   5.46 %     60,623       2,310   5.09 %
    Federal funds sold   57,265       2,347   5.47 %     75,499       2,838   5.03 %
    Total earning assets   7,862,245       320,687   5.45 %     7,269,326       270,332   4.97 %
    Cash and due from banks   108,325               105,885          
    Accrued interest and other assets   440,340               406,160          
    Less: Allowance for loan losses   (43,096 )             (36,564 )        
    Total assets $ 8,367,814             $ 7,744,807          
    LIABILITIES AND SHAREHOLDERS’ EQUITY                      
    Savings accounts $ 602,450       4,368   0.97 %   $ 645,415       4,201   0.87 %
    Certificates of deposit   1,016,812       34,618   4.55 %     845,851       21,215   3.35 %
    Interest bearing demand accounts   3,518,906       76,210   2.89 %     3,005,449       47,120   2.10 %
    Total interest bearing deposits   5,138,168       115,196   2.99 %     4,496,715       72,536   2.16 %
    Federal Home Loan Bank borrowings   610,893       18,893   4.13 %     281,260       5,347   2.54 %
    Subordinated notes, net of unamortized debt issuance costs   92,631       2,829   4.08 %     96,753       2,955   4.08 %
    Trust preferred subordinated debentures, net of unamortized debt issuance costs   60,271       3,526   7.81 %     60,266       3,309   7.34 %
    Repurchase agreements   87,811       2,821   4.29 %     89,282       2,423   3.63 %
    Other borrowings   139,306       6,962   6.68 %     362,684       13,690   5.05 %
    Total interest bearing liabilities   6,129,080       150,227   3.27 %     5,386,960       100,260   2.49 %
    Noninterest bearing deposits   1,342,945               1,506,431          
    Accrued expenses and other liabilities   99,758               91,784          
    Total liabilities   7,571,783               6,985,175          
    Shareholders’ equity   796,031               759,632          
    Total liabilities and shareholders’ equity $ 8,367,814             $ 7,744,807          
    Net interest income (FTE)     $ 170,460           $ 170,072    
    Net interest margin (FTE)         2.90 %           3.13 %
    Net interest spread (FTE)         2.18 %           2.48 %

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. 

    Note: As of September 30, 2024 and 2023, loans totaling $7.3 million and $4.3 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate. 

    The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented. 

     
    Southside Bancshares, Inc.
    Non-GAAP Reconciliation (Unaudited)
    (Dollars and shares in thousands, except per share data)
     
        Three Months Ended   Nine Months Ended
          2024       2023       2024       2023  
        Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,   Sep 30,   Sep 30,
    Reconciliation of return on average common equity to return on average tangible common equity:                            
    Net income   $ 20,524     $ 24,673     $ 21,511     $ 17,316     $ 18,449     $ 66,708     $ 69,376  
    After-tax amortization expense     220       243       266       292       322       728       1,048  
    Adjusted net income available to common shareholders   $ 20,744     $ 24,916     $ 21,777     $ 17,608     $ 18,771     $ 67,436     $ 70,424  
                                 
    Average shareholders’ equity   $ 806,230     $ 796,698     $ 785,054     $ 737,675     $ 770,194     $ 796,031     $ 759,632  
    Less: Average intangibles for the period     (203,288 )     (203,581 )     (203,910 )     (204,267 )     (204,658 )     (203,592 )     (205,096 )
    Average tangible shareholders’ equity   $ 602,942     $ 593,117     $ 581,144     $ 533,408     $ 565,536     $ 592,439     $ 554,536  
                                 
    Return on average tangible common equity     13.69 %     16.90 %     15.07 %     13.10 %     13.17 %     15.20 %     16.98 %
                                 
    Reconciliation of book value per share to tangible book value per share:                            
    Common equity at end of period   $ 805,254     $ 800,970     $ 787,922     $ 773,288     $ 728,595     $ 805,254     $ 728,595  
    Less: Intangible assets at end of period     (203,119 )     (203,397 )     (203,704 )     (204,041 )     (204,411 )     (203,119 )     (204,411 )
    Tangible common shareholders’ equity at end of period   $ 602,135     $ 597,573     $ 584,218     $ 569,247     $ 524,184     $ 602,135     $ 524,184  
                                 
    Total assets at end of period   $ 8,362,263     $ 8,357,702     $ 8,353,863     $ 8,284,914     $ 7,972,468     $ 8,362,263     $ 7,972,468  
    Less: Intangible assets at end of period     (203,119 )     (203,397 )     (203,704 )     (204,041 )     (204,411 )     (203,119 )     (204,411 )
    Tangible assets at end of period   $ 8,159,144     $ 8,154,305     $ 8,150,159     $ 8,080,873     $ 7,768,057     $ 8,159,144     $ 7,768,057  
                                 
    Period end tangible equity to period end tangible assets     7.38 %     7.33 %     7.17 %     7.04 %     6.75 %     7.38 %     6.75 %
                                 
    Common shares outstanding end of period     30,308       30,261       30,284       30,249       30,338       30,308       30,338  
    Tangible book value per common share   $ 19.87     $ 19.75     $ 19.29     $ 18.82     $ 17.28     $ 19.87     $ 17.28  
                                 
    Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE):                            
    Net interest income (GAAP)   $ 55,464     $ 53,608     $ 53,348     $ 54,485     $ 53,273     $ 162,420     $ 160,542  
    Tax-equivalent adjustments:                            
    Loans     608       633       656       680       674       1,897       2,044  
    Tax-exempt investment securities     2,012       2,051       2,080       2,453       2,474       6,143       7,486  
    Net interest income (FTE) (1)     58,084       56,292       56,084       57,618       56,421       170,460       170,072  
    Noninterest income     8,171       11,557       9,724       2,501       10,836       29,452       33,333  
    Nonrecurring income (2)     2,797       (576 )     18       8,376       (11 )     2,239       (1,006 )
    Total revenue   $ 69,052     $ 67,273     $ 65,826     $ 68,495     $ 67,246     $ 202,151     $ 202,399  
                                                             
    Noninterest expense   $ 36,332     $ 35,765     $ 36,881     $ 35,183     $ 35,553     $ 108,978     $ 105,395  
    Pre-tax amortization expense     (278 )     (307 )     (337 )     (370 )     (407 )     (922 )     (1,327 )
    Nonrecurring expense (3)     (219 )     2       17       22       17       (200 )     56  
    Adjusted noninterest expense   $ 35,835     $ 35,460     $ 36,561     $ 34,835     $ 35,163     $ 107,856     $ 104,124  
                                                             
    Efficiency ratio     53.94 %     54.90 %     57.95 %     53.30 %     54.86 %     55.56 %     53.99 %
    Efficiency ratio (FTE) (1)     51.90 %     52.71 %     55.54 %     50.86 %     52.29 %     53.35 %     51.44 %
                                                             
    Average earning assets   $ 7,823,026     $ 7,881,919     $ 7,882,337     $ 7,633,820     $ 7,418,157     $ 7,862,245     $ 7,269,326  
                                                             
    Net interest margin     2.82 %     2.74 %     2.72 %     2.83 %     2.85 %     2.76 %     2.95 %
    Net interest margin (FTE) (1)     2.95 %     2.87 %     2.86 %     2.99 %     3.02 %     2.90 %     3.13 %
                                                             
    Net interest spread     2.10 %     2.00 %     2.02 %     2.10 %     2.14 %     2.04 %     2.31 %
    Net interest spread (FTE) (1)     2.23 %     2.13 %     2.16 %     2.26 %     2.31 %     2.18 %     2.48 %

    (1)   These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
    (2)   These adjustments may include net gain or loss on sale of securities available for sale, net gain on sale of equity securities, BOLI income related to death benefits realized and other investment income or loss in the periods where applicable.
    (3)   These adjustments may include foreclosure expenses and branch closure expenses, in the periods where applicable.

    The MIL Network –

  • MIL-OSI USA: Governor Pillen Proclaims Mentorship in Nebraska Month, Recognizes Top Public Servant Mentors

    Source: US State of Nebraska

    . Organizations in attendance included 100 Black Men of Omaha, Big Brothers Big Sisters of Lincoln, Big Brothers Big Sisters of the Midlands, Kids Can, MentorNebraska, Partnership for Kids, TeamMates and Visionary Youth.

    After signing the proclamation, Gov. Pillen awarded specially designed mentorship challenge coins to 25 of the State of Nebraska’s top public servant youth mentors. Following the awarding of the challenge coin, each honoree received a photo with Gov. Jim Pillen, First Lady Suzanne Pillen and Miss Nebraska Raechel Warren.

    “One of the best things we can do for kids is ensure that they have a mentor in their life who will listen to them and provide guidance,“ said Gov. Pillen. “I am pleased to proclaim January as Mentoring Month in Nebraska and I am proud of the public servants being recognized today for their service as youth mentors.”

    Melissa Mayo, executive director of MENTORNebraska, emphasized that more than 2,500 Nebraska kids still need mentors. She encouraged Nebraskans to get involved with mentoring youth across the state.

    “National Mentoring Month is an opportunity to celebrate the powerful impact of mentoring and raise awareness about the critical need for mentors,” Mayo said. “The Governor’s Public Servant Youth Mentoring Program stands as a prime example of how dedicating just one hour a week of paid time off to mentor a young person can create lasting positive change throughout communities in Nebraska.”

    TeamMates Mentoring is one of the organizations participating in the public servant youth mentoring program. CEO DeMoine Adams of TeamMates spoke on the importance of expanding mentoring. “Life’s most persistent and urgent question is ‘what are you doing for others?’” he said.

    “We’re excited to celebrate Mentoring Month in Nebraska collectively with other mentoring organizations by celebrating the power of relationships, raising awareness around the importance of mentoring, and expanding the mentoring movement across the state of Nebraska,” said Adams. “We appreciate the state for supporting mentoring by allowing their employees to volunteer their time.”

    Christopher McCoy, executive director of 100 Black Men of Omaha, emphasized the importance of mentorship programs rooted in cultural sensitivity and community engagement. These programs help young people see their potential reflected in mentors who share their experience.

    “As we navigate an increasingly complex and polarizing world, the role of mentorship in shaping the future of our youth has never been more critical,” said McCoy. “National Mentoring Month provides a meaningful opportunity to unite in celebration of the powerful impact mentoring has on the lives of young people. When mentors actively engage with youth in their communities, they foster a sense of belonging, cultural pride, and a vision of what is possible. Mentoring is more than just guidance — it is a lifeline.”

    The State of Nebraska Public Servant Youth Mentoring program provides one hour of paid leave to public servants participating in an approved mentoring program. Public servants being recognized today mentored through 100 Black Men of Omaha, Big Brothers Big Sisters of the Midlands, Kids Can and TeamMates Mentoring.

    “The State of Nebraska is pleased to contribute to our local communities by offering this opportunity for public servants to mentor Nebraska youth,” said State Personnel Director Sean Davis. “We are working to expand the number of mentors in the program and look for even more to be recognized for their efforts next year.”

    The 25 public servants recognized with challenge coins, and their respective agencies:

    Courtney Brewer, Department of Health and Human Services

    Alison Kortefay, Department of Education

    Karen Krull Robart, Department of Health and Human Services

    Nicole Mercer, Nebraska Probation System

    Daniell Moore, Department of Health and Human Services

    Anissa Rasmussen, Department of Economic Development

    Leticia Torres, Department of Health and Human Services

    Jamie Adkins, Department of Health and Human Services

    Lucas Atkinson, Department of Health and Human Services

    Tiffany Bui, Department of Health and Human Services

    Trudy Clark, Department of Education

    Ami Dorant, Department of Health and Human Services

    Jadyn Gentleman, Department of Corrections

    Michele Janky, Department of Health and Human Services

    Crystal L’Heureux, Department of Health and Human Services

    Nicole Miller, Board of Parole

    Kayleigh Monzon, Department of Health and Human Services

    Kerrin Packard, Department of Health and Human Services

    Michelle Schmit Zwingman, Department of Education

    Macey Van Ackeren, Department of Corrections

    Ruth Walla, Department of Revenue

    Tylor Watts, Department of Health and Human Services

    Caitlyn Wensel, Nebraska State Patrol

    Brennan Young, Department of Corrections

    Paige Zamora, Nebraska Probation System

    MIL OSI USA News –

  • MIL-OSI Security: Former Eastern Kentucky Pharamacist Sentenced for Healthcare Fraud

    Source: Office of United States Attorneys

    LONDON, Ky. – A Corbin, Ky., woman and former pharmacist, Stephanie Collins, 57, has been sentenced to 20 months, by U.S. District Judge Claria Horn Boom, for her role in a scheme to defraud Medicare and Medicaid, by billing for medications that she never dispensed to her customers.  

    According to her plea agreement, Collins operated as a registered pharmacist and operated Stephanie’s Down Home Pharmacy, a retail pharmacy located in Corbin.  The pharmacy sought reimbursement from Medicare and Kentucky Medicaid for the drugs and other medical products it dispensed to its customers.  As part of the scheme to defraud these taxpayer-funded health care benefit programs, Collins used the pharmacy’s computer system to submit claims for payment for prescription drugs that patients never picked up or otherwise received.  Collins also submitted fraudulent claims for diabetic test strips, billing Kentucky Medicaid for more expensive test strips when she was actually giving her customers lower-cost test strips.  In total, her false and fraudulent claims caused Kentucky Medicaid and Medicare to reimburse Collins’ pharmacy $730,055.78.

    Under federal law, Collins must serve 85 percent of her prison sentence.  Upon her release from prison, she will be under the supervision of the U.S. Probation Office for two years. The Court also ordered Collins to pay $730,055.78 in restitution.

    Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Erek Davodowich, Acting Special Agent in Charge, DEA, Louisville Field Division; Karen Wingerd, Special Agent in Charge, Internal Revenue Service – Criminal Investigation; and Tamala E. Miles, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), jointly announced the sentence.

    The case was investigated by the DEA, IRS, HHS-OIG; the Kentucky Cabinet for Health and Family Services, Office of Inspector General, Drug Enforcement and Professional Practices Branch; and the Kentucky Board of Pharmacy.  Assistant U.S. Attorney Andy Smith prosecuted the case on behalf of the United States. 

    — END —

    MIL Security OSI –

  • MIL-OSI USA: REP. HOYLE TOURS 2 TOWNS CIDERHOUSE IN CORVALLIS; COSPONSORS BUBBLE TAX MODERNIZATION ACT

    Source: United States House of Representatives – Representative Val Hoyle (OR-04)

    October 22, 2024

    For Immediate Release: Oct. 22, 2024

    CORVALLIS, OR – On Monday, U.S. Representative Val Hoyle toured the 2 Towns Ciderhouse production facility in Corvallis and announced her support for U.S. Representative Earl Blumenauer’s Bubble Tax Modernization Act of 2024.  

    This bill will provide tax and carbonation parity for craft cider producers, simplify the tax code, and make craft producers more competitive within the industry at large.

    “Oregon is powerhouse of innovation when it comes to craft beverages,” U.S. Representative Val Hoyle said. “I am supporting this legislation because our cider makers deserve a level playing field to create new products, grow their business, create jobs and support our local economies.” 

    Representative Hoyle heard from 2 Towns owners Lee Larsen, Aaron Sarnoff-Wood and Head Cider-Maker and Owner Dave Takush about the production and distribution of their ciders as well as demands from customers for fully carbonated cider products. The owners sat down with Representative Hoyle to detail how outdated, overcomplicated, and punitive tax measures mean certain cider products cannot be fully carbonated to meet customer preferences.

    “It’s crucial to understand that this isn’t a tax break—it’s about removing the barriers that stifle creativity in the craft cider industry,” says Dave Takush, head cidermaker at 2 Towns Ciderhouse. “The ‘champagne’ or ‘bubble’ tax pushes hard ciders and perries into higher tax brackets when additional fruit beyond apples or pears are added, especially as carbonation levels rise. These tax implications significantly limit cidermakers’ ability to innovate and simply meet consumer demands. This bill will bring desperately needed changes to the cider industry.”

    2 Towns is one of the largest craft cider producers in the nation with 130 employees and growing. The company uses 100% fresh-pressed Pacific apples in all their varieties.

    ###

    MIL OSI USA News –

  • MIL-OSI Security: Orange County Supervisor Agrees to Plead Guilty to Bribery Conspiracy Involving $10 Million in COVID Relief Funds

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

    OC Supervisor Andrew Do Admits Receiving More Than $550,000 in Bribe Payments from Funds Meant to Be Used to Provide Meals to Elderly

    SANTA ANA, California – The District One Supervisor on the Orange County Board of Supervisors has agreed to plead guilty to a felony federal charge for accepting more than $550,000 in bribes for directing and voting in favor of more than $10 million in COVID funds to a charity affiliated with one of his daughters, Rhiannon Do, the Justice Department announced today. 

    Andrew Hoang Do, 62, agreed to plead guilty to one count of conspiracy to commit bribery concerning programs receiving federal funds. His plea agreement and information were filed today. He is expected to make his initial appearance in United States District Court in Santa Ana later this month.

    Do is one of five supervisors on the Orange County Board of Supervisors, which is responsible for the county’s $9 billion annual budget. As a county supervisor, Do represents the cities of Cypress, Fountain Valley, Garden Grove, Huntington Beach, La Palma, Los Alamitos, Midway City, Rossmoor, Seal Beach, and Westminster. He has served as a county supervisor since February 2015.

    As part of his plea agreement, Do admitted that in exchange for more than $550,000 in bribes, beginning in 2020, he voted in favor of and directed millions of dollars in COVID-related funds to Viet America Society (VAS), a charity affiliated with his daughter. Do directed and worked together with other county employees to approve contracts with – and payments to – VAS. Do further admitted he acted corruptly and abused his position of trust as a county supervisor.

    “By putting his own interests over those of his constituents, the defendant sold his high office and betrayed the public’s trust,” said United States Attorney Martin Estrada.  “Even worse, the money he misappropriated and accepted as bribe payments was taken from those most in need – older adults and disabled residents. Our community deserved much better. Corruption has no place in our politics and my office will continue to hold accountable officials who cheat the public.”

    “While millions of Americans were dying from COVID-19, Orange County Supervisor Andrew Do was the fox in the hen house personified, raiding millions in federal pandemic relief funds and orchestrating the money intended to feed elderly and ailing residents to instead fill the pockets of insiders, himself and his loved ones all while portraying a public persona of a hometown hero guiding his constituents through the uncertainty and fear of a global pandemic,” said Orange County District Attorney Todd Spitzer. “No one is above the law in Orange County and these charges should serve as a powerful warning to elected officials everywhere that actions have consequences and justice will be swift and it will be decisive.”  

    “Elected officials have a responsibility to implement programs and policy that will benefit all the people they serve.  Their role is not to squander money, solicit bribes, or to steer funds to organizations or persons, wherein a coordinated effort allows those funds to make their way to family members or friends,” said Akil Davis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Today’s plea is another exclamation point to the FBI’s commitment to ensuring that all local, state, or federal elected and appointed public officials perform their duties with honesty, integrity, and commitment to all the constituents they serve.”

    Shortly after receiving the COVID-related public funds from the county government – funds that were intended to provide meals to the elderly – VAS from April 2021 to February 2024 paid a business identified in court documents as “Company #1” $100,000 or more per month, which totaled approximately $3,804,000. In September 2021, VAS increased its payments to Company #1 from $100,000 to $108,000 per month. Company #1 then began paying Rhiannon Do – Do’s daughter – $8,000 per month, totaling by February 2024 approximately $224,000.

    In his plea agreement, Do admitted that in addition to the $8,000 monthly payments that Company #1 had made to Do’s daughter, in July 2023, Company #1 also transferred a total of $381,500 from the funds it had received from VAS to an escrow company. In July 2023, Do’s daughter used the escrow account funds to purchase a home, in her name, in Tustin for $1,035,000. As part of that transaction, a mortgage for more than $600,000 was obtained by a loan application that contained false information and with fabricated documents. In her related diversion agreement attached as an exhibit to Do’s plea agreement, Do’s daughter admitted her conduct was criminal and violated federal and state law.

    Do also admitted that the $381,500 from Company #1 that his daughter had used to purchase the Tustin house in 2023 was a disguised bribe to him. He also admitted that an additional $100,000 in payments sent to his other daughter, including three $25,000 checks from Company #2 – an air conditioning company that had been paid by VAS – also were bribes to him.

    Some of the bribe funds that had been funneled to his daughters were spent for his direct benefit. For example, during 2022, a total of $14,849 of funds that had been funneled to Do’s daughters was used to make property tax payments for properties in Orange County owned by Do and his wife. Approximately $15,000 was used to pay for one of Do’s credit card bills.

    Do knew that VAS was not providing all the meals for which the county had paid VAS. Instead, much of the funds were used for the benefit of insiders, including to buy real estate in the name of both Do’s daughter and Company #1, bribe payments to both of Do’s daughters, payments to other conspirators, payments to other companies affiliated with VAS’s listed officers, and through hundreds of thousands of dollars in cash withdrawals.

    “Mr. Do had a duty to act in the best interest of the citizens of Orange County. He neglected that duty and misused the financial system to enrich himself,” said Special Agent in Charge Ryan Korner with the Federal Deposit Insurance Corp. Office of Inspector General. “Public corruption degrades the public’s confidence in our political system, and FDIC OIG is proud to work alongside our law enforcement partners to identify and hold accountable individuals who abuse public service for private gain.”

    “Andrew Do was entrusted to ensure taxpayer dollars were used responsibly and for the purposes intended,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Instead, when his constituents depended on COVID relief programs, Mr. Do exploited his position on the Orange County Board of Supervisors not only to influence channeling of funds to the Viet America Society, but also to accept bribes that were used to purchase a home, pay property taxes, and even to pay fictitious incomes to family members. Combating public corruption is one of the most important roles federal law enforcement agencies play in our local communities, and we are proud to be a partner during this investigation.” 

    “Today’s actions shows that this elected official used his position of trust for personal gain. He didn’t think he would get caught. He was wrong,” said Adam Shanedling, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Western Regional Office. “The OIG is proud to have been a part of the task force that investigated this matter and we’ll continue to work with our law enforcement partners to help safeguard the integrity of federal funds.” 

    The plea agreement requires Do to forfeit any assets connected to the bribery scheme, including the Tustin property his daughter purchased in 2023. As part of his daughter’s related diversion agreement, she also agreed to forfeit the Tustin property. The plea agreement requires Do to pay full restitution by paying back the bribe money he and his daughters received, which he has agreed to pay in full before he is sentenced. In August 2022, the government seized more than $2.4 million from VAS’s and Company #1’s bank accounts.

    In a related agreement with the Orange County District Attorney’s Office (OCDA), attached as an exhibit to Do’s plea agreement, Do has agreed to immediately resign from the Orange County Board of Supervisors and to forfeit any pension credit for the time where he participated in the bribery conspiracy.

    Once Do enters his guilty plea, he will face a statutory maximum sentence of five years in federal prison.

    The FBI; the Orange County District Attorney’s Office Bureau of Investigation; the Federal Deposit Insurance Corp. Office of the Inspector General; IRS Criminal Investigation; and the United States Department of Education Office of the Inspector General investigated this matter.

    This matter is being jointly prosecuted by the United States Attorney’s Office and OCDA. The prosecution is being led by Assistant United States Attorneys Charles E. Pell, Bradley E. Marrett, and Tara Vavere of the United States Attorney’s Office and Senior Deputy District Attorney Avery T. Harrison and Deputy District Attorneys Anthony J. Schlehner and L.J. Berger of the OCDA.  

    Any member of the public who has information related to this or any other public corruption matter in Orange County is encouraged to send information to the FBI’s email tip line at https://tips.fbi.gov and/or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.

    MIL Security OSI –

  • MIL-OSI Security: New York Doctor Charged with Health Care Fraud

    Source: Office of United States Attorneys

    Doctor allegedly received kickbacks for ordering medically unnecessary brain scans

    BOSTON – A New York doctor was charged today in federal court in Boston for allegedly receiving kickbacks in exchange for ordering medically unnecessary brain scans.

    Dr. Kenneth Fishberger, 75, of East Setauket, N.Y. was charged and has agreed to plead guilty to one count of conspiracy to commit health care fraud. A plea hearing has not yet been scheduled by the Court.

    According to the charging documents, Fishberger, an internist in Long Island, N.Y., was a licensed medical doctor in the State of New York for approximately 47 years. It is alleged that from approximately June 2013 through December 2019, Fishberger conspired with others, including a principal for a mobile medical diagnostics company that performed transcranial doppler (TCD) scans, and a salesperson for the company, to order hundreds of medically unnecessary TCD scans in exchange for kickbacks. TCD scans are brain scans that measure blood flow in parts of the brain – It is further alleged that Fishberger and his co-conspirators used false diagnoses to order the unnecessary brain scans, for which a co-conspirator would submit claims to Medicare and other insurance companies, including private insurance companies, on behalf of the medical diagnostic company for payment. In exchange, Fishberger was paid cash kickbacks of approximately $100 per test. According to the charging documents, the scheme resulted in fraudulent bills of approximately $891,978 to Medicare and private insurance companies.

    The charge of conspiracy to commit health care fraud provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

    Acting United States Attorney Joshua S. Levy; Roberto Coviello, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation Division, Boston Field Office; Jonathan Mellone, Special Agent in Charge of the U.S. Department of Labor, Employee Benefits Security Administration, Boston Regional Office, Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; and Christopher Algieri, Special Agent in Charge of the U.S. Department of Veterans Affairs Office of Inspector General, Northeast Field Office. Assistant U.S. Attorneys Howard Locker and Mackenzie Queenin of the Health Care Fraud Unit are prosecuting the case.

    The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

    MIL Security OSI –

  • MIL-OSI USA News: On-the-Record Press Call on the G7’s Extraordinary Revenue Acceleration Loans  Effort

    Source: The White House

    Via Teleconference

    9:09 A.M. EDT

    MODERATOR:  Good morning, everyone.  Thanks so much for joining today’s call to discuss the G7’s Extraordinary Revenue Acceleration loans effort for Ukraine. 

    As a reminder, this call is going to be on the record, and it is embargoed until its conclusion. 

    The speaker on today’s call is Daleep Singh, who’s the White House Deputy National Security Advisor for International Economics.  He’ll have a few words at the top, and then we’ll take some of your questions.

    With that, Daleep, I’ll turn it over to you. 

    MR. SINGH:  Thanks, Eduardo.  Thanks, everybody, for joining. 

    Since Russia’s invasion began over two years ago, the United States has rallied the world to defend Ukraine’s freedom, leading a coalition of allies and partners to surge security, economic, and humanitarian assistance, while spearheading unprecedented efforts to impose costs on Russia for its senseless aggression. 

    At the G7 Leaders’ Summit in Apulia this June, the United States proposed an idea to ensure Putin pays for the damage he’s caused in Ukraine by committing we issue $50 billion in loans to Ukraine, backed by the interest earned on the Russian sovereign assets we collectively immobilized just after the invasion began.  We call these Extraordinary Revenue Acceleration loans. 

    Today, we’re announcing that of the $50 billion G7 commitment, the United States plans to provide a loan of $20 billion.  The other $30 billion in loans will come from a combination of our G7 partners, including the European Union, the United Kingdom, Canada, and Japan. 

    To be clear, nothing like this has ever been done before.  Never before has a multilateral coalition frozen the assets of an aggressor country and then harnessed the value of those assets to fund the defense of the aggrieved party, all while respecting the rule of law and maintaining solidarity.  And as a result, Ukraine will receive the assistance it needs now without burdening our taxpayers.

    As we committed in June, the G7 will begin disbursing assistance for the benefit of Ukraine by the end of this year so that we can meet Ukraine’s urgent needs as we approach the winter, while sending an unmistakable signal: The United States and its G7 partners will not fatigue.  We will continue to use our creativity and collaboration to support Ukraine’s fight for independence and sovereignty.  And tyrants are responsible for the damages they cause, not U.S. taxpayers. 

    It’s also a testament to this administration’s belief that multilateralism is a force multiplier.  We couldn’t have done this by ourselves.  The income used to repay these loans will be generated from frozen Russian assets held in the European Union.  This is another example of how Putin’s war of aggression has unified and strengthened the resolve of G7 countries and our partners to defend shared values.  It’s also a model for how we can rally our closest allies towards a shared purpose while ensuring that each country contributes its fair share. 

    Let me give you a few more details, and then I’ll be happy to take your questions. 

    So, the United States will provide at least $10 billion of our loan via economic support.  The World Bank recently established what’s called a financial intermediary fund for Ukraine, which will be the vehicle through which we will disburse U.S. loan proceeds for economic support to Ukraine. 

    The financial intermediary fund, or FIF, will be subject to robust accountability and transparency measures, much like those used for existing U.S. economic assistance to Ukraine. 

    The United States also hopes to provide up to $10 billion

    of our loan as U.S. military support, but our ability to do that relies on Congress taking action before mid-December on certain legislative changes that allow us to make loans for military support under the contours of this broader G7 initiative. 

    To be clear, either way, the U.S. will provide $20 billion in support for Ukraine through this effort, whether it’s split between economic and military support or provided entirely via economic assistance. 

    In terms of next steps, the United States will now work with Ukraine to sign loan agreements in order to execute the loan and begin disbursing funds for the benefit of Ukraine before the end of this year.  More details will be available at the conclusion of the G7 finance ministers meeting later this week or early next.

    Let me stop there and take your questions.

    MODERATOR:  Thanks.  If folks have questions, please use the “raise your hand” function on Zoom and we’ll turn to you. 

    First up, we’ll go to Alan Rappeport.  You should be able to unmute yourself.

    Q    Hi.  Thanks very much, Daleep.  A couple things.  One, can we expect a G7 statement today saying that this is fully done?  Because I know, yesterday, Secretary Yellen said it was 99 percent done. 

    And then, second of all, can you explain how the U.S. has gotten around the need to appropriate any funds to account for the risk associated with the loan?  I know there were concerns about the EU needing to extend its sanctions renewal period, or something like that, to minimize the risk.

    MR. SINGH:  (Inaudible.)  (Audio muted) — from partners, if we had sufficiently strong repayment assurances from the immobilized assets.  And since the Leaders’ Summit, we’ve engaged in intensive diplomacy and technical negotiations every day with our partners to secure the strongest possible repayment assurances. 

    Let me just mention a few.  Number one, the EU Council released a statement at the end of June, and again in October, from all 27 EU heads of state to keep Russia’s central bank assets immobilized until there’s a just peace with a free and sovereign Ukraine and until Russia pays for the damages it’s caused.  This represents an expansion of the G7 leaders’ commitment to the entire EU, including Hungary.

    Number two, equal burden sharing.  So, the EU committed to provide at least $20 billion in loans alongside the United States, which means the Europeans have equal skin in the game and, therefore, fully aligned incentives to keep the assets immobilized until we get fully repaid. 

    Number three, we’ve worked with Ukraine on loan agreements under which, at the conclusion of this war, Ukraine would use settlement proceeds it receives from Russia towards repayment of these loans.

    Number four, we’ve negotiated loan terms with our partners that further reduces any fiscal risks to the U.S. taxpayer. 

    And number five, history.  You know, the EU has had sanctions in place against Russia for almost 10 years now.  Every six months, those sanctions need EU unanimity to get rolled over for another six months.  And, yes, there’s grandstanding and drama, but the EU has built a track record of staying the course, and that adds to our confidence that Russia’s sovereign assets will remain immobilized until Russia ends its war and pays for the damages it’s caused. 

    One last point, Alan.  I’m sorry to belabor this, but it’s a really important question.  While we have found a way to move forward without legal changes to the EU sanctions regime, we will keep pushing for those changes to get made.

    MODERATOR:  Alan, I think we had a little bit of trouble hearing the first part of your question, if you could ask that again.

    Q    Oh, sorry.  Yeah.  I think maybe — or maybe you were muted in the first part of your response.  I was trying to understand if there was going to be a G7 statement today and if this is fully done now.  I know Secretary Yellen said it was 99 percent done yesterday.

    MR. SINGH:  Oh, I’m sorry if you didn’t hear me.  You should expect further statements today, both from the United States and from the G7.

    MODERATOR:  Next up we’ll go to Victoria.  You should be able to unmute yourself.

    Q    Hi.  Thank you.  I just had a couple of questions.  First, I was wondering if you could explain a bit the part you talked in the beginning on the Congress contribution side of things.  What needs to happen from Congress exactly for the $10 billion, the second half, to come through the military aid part?  Is it a matter of using appropriations that have happened already, different appropriations?  If you could just explain that.  And just to clarify that if that doesn’t happen, you could give the other ten through economic support.

    And then, just a second question on the timing of things.  I’m just wondering if you could talk us through how frontloaded you expect this load to be, as in, you know, do you think over the next couple of months we’re going to get a big chunk of it over to Ukraine?  Just the timeline of the disbursements.  Thank you.

    MR. SINGH:  Sure.  So, on the second part of your question, we expect to disburse at least half of our $20 billion loan to the World Bank Trust Fund this December, and possibly the entire amount. 

    And this kind of gets to your first question: We do need authority from Congress to raise the amount of foreign military financing we can provide to Ukraine and also to make certain technical changes that would allow us to split the loan in half between economic assistance and security assistance.  And we’ll be having conversations with Congress between now and December to assess those odds.

    MODERATOR:  Next up, we’ll go to Colby Smith.

    Q    Hi.  Thank you so much.  I just wanted — a couple questions just to follow up on — in terms of assessing the odds.  Did you have, kind of, an initial assessment as it stands today?  And how do you kind of — do you expect that support to come through?

    And then, just more specifically on the economic support side of things, can you just mention a couple of specifics there in terms of how you expect this money to be used?

    MR. SINGH:  Sure.  Thanks, Colby.  So, I just want to be clear: The only question we’re talking about here is the split between economic assistance and security assistance.  We’re going to provide $20 billion either way.

    But, you know, we’ll work with Congress over the next few months to assess whether we can get sufficient authority through foreign military financing loan guarantee authorities to provide half of our assistance through military support. 

    In terms of your question, Colby, on what kinds of projects could the economic assistance support, you know, I would highlight a couple:  Energy assistance.  So, we all know Ukraine is at risk of being plunged into cold and darkness this winter.  Helping to fund the rapid repairs that will be needed to stabilize the grid and also to provide passive protection against drone attacks for substations and transformers.  That’s an urgent priority that we hope this assistance can help meet.

    There are a number of other initiatives that relate to Ukraine’s infrastructure that can create the conditions for an eventual economic recovery that we expect this fund can also support through World Bank project support. 

    And there are many other projects that we can assess, but those are just a couple of examples.

    MODERATOR:  And our last question will go to Daniel.  You should be able to unmute yourself.

    Q    Hi.  How are you doing?  Thank you for taking my question.  I wanted to ask about any potential Russian reprisals.  I know that was a large consideration when you guys were determining the mechanism for these loans.  Are you guys expecting any kind of retaliation?  And do you guys have any preparations for that, whether it be European assets or American?  Thank you very much.

    MR. SINGH:  Well, Russia has been expropriating assets, seizing assets, really, from close to the beginning of its invasion.  So, nothing — nothing new would change on that front if they continue to do so.

    I would just make clear, though, that the revenues that we are using to repay these loans, under European law, these revenues don’t belong to Russia.  It’s actually contractual law. The interest earned doesn’t belong to Russia but rather the custody in Belgium.  And so, we don’t view this as a seizure of Russia’s assets, per se.

    MODERATOR:  Thanks, everyone.  Thanks for joining.  If there are any follow-up questions, do reach out to us, and we’ll get back to you. 

    As a reminder, this call was on the record, and the person you heard from was Daleep Singh, Deputy National Security Advisor for International Economics.  The embargo on this call is now lifted.  Thanks again.

    9:23 A.M. EDT

    MIL OSI USA News –

  • MIL-OSI Security: New Rochelle Physician Pleads Guilty to Selling Thousands of Oxycodone Pills for Cash

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

    Damian Williams, the United States Attorney for the Southern District of New York; Frank A. Tarentino III, the Special Agent in Charge of the New York Division of the Drug Enforcement Agency (“DEA”); and Naomi Gruchacz, the Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”), announced that MORDECHAI BAR pled guilty today to one count of illicitly distributing and dispensing oxycodone and other controlled substances.  BAR pled guilty before U.S. District Judge Cathy Seibel, to whom his case is assigned.

    U.S. Attorney Damian Williams said: “Dr. Mordechai Bar hid behind his medical license while he prescribed oxycodone without a legitimate medical need.  Like any drug dealer, he pumped highly addictive substances into the streets for profit, with no regard for the impact on the community.  Along with our law enforcement partners, we will continue to aggresively prosecute physicians who help fuel the opioid crisis.”

    DEA Special Agent in Charge Frank A. Tarentino III said: “This guilty plea from Doctor Mordechai Bar is the result of the hard work of our DEA New York’s Westchester Office and our law enforcement partners in pursuing those individuals who put profit and greed over the health and safety of their patients.  The DEA remains committed in pursuing those individuals who exacerbate the ongoing opioid crisis.”

    HHS-OIG Special Agent in Charge Naomi Gruchacz said: “This physician accepts responsibility for illegally prescribing controlled substances, an action that is especially egregious given the ongoing opioid epidemic. HHS-OIG will continue to work with our law enforcement partners to ensure individuals involved in fraud schemes that exploit federal health care programs and threaten patient safety are held accountable.”

    According to documents filed in this case including the Complaint, the Information, BAR’s plea agreement, and statements made in Court:

    Between in or about January 2023 and in or about June 2024, BAR, a physician, repeatedly prescribed oxycodone without a legitimate medical purpose and outside of the usual course of professional practice.  Oxycodone, a Schedule II narcotic, is a highly addictive opioid that is used to treat severe and chronic pain, as well as pain associated with certain forms of cancer and other terminal illnesses.  Oxycodone prescriptions command high prices in the black market because of demand by drug abusers.  BAR often prescribed oxycodone in combination with amphetamines and/or alprazolam, controlled substances that are themselves frequently abused and resold illicitly.  BAR sold these prescriptions for cash, and he did so without performing physical examinations or medical tests on the patients in whose names the prescriptions were issued. 

    *                 *                 *

    BAR, 71, of Larchmont, New York, pled guilty to one count of distributing oxycodone and other controlled substances, which carries a maximum sentence of 20 years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing will be determined by a judge.  BAR is scheduled to be sentenced by Judge Seibel on February 18, 2025.

    Mr. Williams praised the outstanding efforts of the DEA New York’s Westchester Office, HHS-OIG, the FBI, IRS-CI, and the Organized Crime Drug Enforcement Task Force.  Mr. Williams also thanked the New York State Department of Health Bureau of Narcotic Enforcement for their assistance in this case.

    The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Jorja N. Knauer, David A. Markewitz, and Kathryn Wheelock are in charge of the prosecution. 

    MIL Security OSI –

  • MIL-OSI: Hybrid Software delivers consistent performance in third quarter

    Source: GlobeNewswire (MIL-OSI)

    PRESS RELEASE – REGULATED INFORMATION

    HYBRID SOFTWARE DELIVERS CONSISTENT PERFORMANCE IN THIRD QUARTER
               
    Cambridge (UK) 23 October 2024 (18.00 CEST) – Hybrid Software Group PLC (Euronext: HYSG) provides a trading update for the nine months ended 30 September 2024.

    CEO Mike Rottenborn comments, “Our operating performance for the third quarter was consistent with our performance in the third quarter of last year, with revenue for the period of €11.57 million versus €11.64 million in 2023 and an adjusted operating result for the period of €0.70 million or 6% of revenue versus €0.66 million in 2023.  Q3 is normally our weakest quarter in end-user sales because of the summer holiday period, and this year was no exception.  However, all of our business segments have experienced year-over-year sales growth for the first nine months of 2024, with consolidated revenues 5.3% higher than the first nine months of 2023. The cost optimizations completed last year contributed to more than €5 million in adjusted operating profit for the first nine months of the year, up 133% from last year.  With a busy fourth quarter of trade shows and industry events, as well as continuing momentum from the Drupa show, we anticipate continued good results for the remainder of 2024.”

    Sales in the Printhead Solutions segment for the third quarter grew 6.7% over the third quarter of 2023 and 8.3% over the first nine months, continuing the recovery which began last year after the component shortages of 2022 and against a backdrop of industrial sectors experiencing cyclical headwinds, increasing the breadth of its customer base in the process.

    The Enterprise Software segment quarterly revenues were in line last year with revenues for the first nine months up 6.1%, with increased sales in the largest regions of DACH and North America to power further growth in the future.

    The Printing Software segment saw its third quarter sales decline with 11.5% compared to 2023 but for the first nine months of the year saw its income increase with 2%, as sales of its new Digital Front End, SmartDFE, continues to gain traction. Printing Software has contributed to more than €3 million in adjusted operating profit for the first nine months of the year, up 624% from last year. 

    Increased sales coupled with continued vigilance on expenses resulted in an EBITDA growth of 50% year-over-year, from 15% of revenue to 22% of revenue.

    Financial highlights for the nine months ended 30 September 2024

    The following information is unaudited.

    For the quarter ended 30 September 2024:

    • Revenue for the period was €11.57 million (2023: €11.64 million)
    • EBITDA for the period was €2.01 million, or 17% of revenue (2023: €1.95 million, 17% of revenue)
    • Operating result for the period was €0.75 million, or 6% of revenue (2023: €0.99 million, 8% of revenue)
    • Adjusted operating result for the period was €0.70 million, or 6% of revenue (2023: €0.66 million, 6% of revenue)

    For the nine months ended 30 September 2024:

    • Revenue for the period was €38.49 million (2023: €36.54 million)
    • EBITDA for the period was €8.50 million, or 22% of revenue (2023: €5.66 million, 15% of revenue)
    • Operating result for the period was €4.87 million, or 13% of revenue (2023: €2.69 million, 7% of revenue)
    • Adjusted operating result for the period was €5.08 million, or 13% of revenue (2023: €2.18 million, 6% of revenue)

    Segment analysis

    The following tables provide unaudited information about revenue from external customers, EBITDA, operating result and adjusted operating result for the Group’s operating segments for the current and previous financial years.

    For the quarter ended 30 September 2024:

    In millions of euros (unaudited) Enterprise Software Printhead Solutions Printing Software Group Total
               
    Revenue from external customers 5.62 3.17 2.78 – 11.57
               
    Segment EBITDA 1.02 0.71 0.69 (0.41) 2.01
    as a % of revenue 18% 22% 25% – 17%
               
    Segment Operating result 0.58 0.56 0.02 (0.41) 0.75
    as a % of revenue 10% 18% 0% – 6%
               
    Segment Adjusted operating result 0.58 0.52 (0.15) (0.25) 0.70
    as a % of revenue 10% 16% (1%) – 6%

    For the quarter ended 30 September 2023:

    In millions of euros (unaudited) Enterprise Software Printhead Solutions Printing Software Group Total
               
    Revenue from external customers 5.53 2.97 3.14 – 11.64
               
    Segment EBITDA 1.16 0.62 0.30 (0.13) 1.95
    as a % of revenue 21% 21% 10% – 17%
               
    Segment Operating result 0.90 0.39 (0.17) (0.13) 0.99
    as a % of revenue 16% 13% (5%) – 8%
               
    Segment Adjusted operating result 0.69 0.40 (0.30) (0.13) 0.66
    as a % of revenue 12% 13% (10%) – 6%

    For the nine months ended 30 September 2024:

    In millions of euros (unaudited) Enterprise Software Printhead Solutions Printing Software Group Total
               
    Revenue from external customers 17.40 9.13 11.96 – 38.49
               
    Segment EBITDA 3.36 1.70 4.34 (0.90) 8.50
    as a % of revenue 19% 19% 36% – 22%
               
    Segment Operating result 2.03 1.21 2.53 (0.90) 4.87
    as a % of revenue 12% 13% 21% – 13%
               
    Segment Adjusted operating result 1.96 1.00 3.04 (0.92) 5.08
    as a % of revenue 11% 11% 25% – 13%

    For the nine months ended 30 September 2023:

    In millions of euros (unaudited) Enterprise Software Printhead Solutions Printing Software Group Total
               
    Revenue from external customers 16.40 8.43 11.72 – 36.54
               
    Segment EBITDA 3.16 1.22 1.95 (0.67) 5.66
    as a % of revenue 19% 15% 17% – 15%
               
    Segment Operating result 2.29 0.78 0.29 (0.67) 2.69
    as a % of revenue 14% 9% 2% – 7%
               
    Segment Adjusted operating result 1.78 0.64 0.42 (0.66) 2.18
    as a % of revenue 11% 8% 4% – 6%

    For more information about the Group’s operating segments, refer to the annual report for the year ended 31 December 2023, which is available from: https://www.hybridsoftware.group/investors/financial-reports.

    EBITDA is calculated by adding back interest, tax, depreciation and amortisation to net profit.

    Adjusted operating result is calculated starting from IFRS reported operating (loss)/profit from continuing operations and deducting other expenses and capitalised development expenses, and adding back other income, amortisation of acquired intangibles and capitalised development expenses and other non-recurring items in nature.

    About Hybrid Software Group
    Through its operating subsidiaries, Hybrid Software Group PLC (Euronext: HYSG) is a leading developer of enterprise software for industrial print manufacturing. Customers include press manufacturers such as HP, Canon, Durst, Roland, Hymmen, and hundreds of packaging printers, trade shops, and converters worldwide.

    Hybrid Software Group PLC is headquartered in Cambridge UK. Its subsidiary companies are colour technology experts ColorLogic, printing software developers Global Graphics Software, enterprise software developer HYBRID Software, 3D design and modelling software developers iC3D, the industrial printhead driver solutions specialists Meteor Inkjet, and pre-press workflow developer Xitron.

    Contacts

    Attachment

    The MIL Network –

  • MIL-OSI USA: Senator Stabenow Statement on Treasury Department Actions on the 48D Advanced Manufacturing Investment Tax Credit

    US Senate News:

    Source: United States Senator for Michigan Debbie Stabenow

    Wednesday, October 23, 2024
    LANSING – Senator Stabenow, senior member of the Senate Finance Committee and leader on clean energy manufacturing policy, released the following statement on the U.S. Department of Treasury’s final rules for the 48D Advanced Manufacturing Investment Tax Credit. Stabenow authored this credit in the CHIPS and Science Act to support domestic solar and semiconductor manufacturing.
    “When I authored this investment tax credit, I knew this would be important for Michigan manufacturers and workers. They are already leading America’s clean energy future and this will incentivize more jobs in Michigan. This is another exciting announcement from The CHIPS and Science Act that will continue to revitalize America’s semiconductor industry and strengthen our domestic solar supply chain.”
    Authored by Senator Stabenow, the 48D Advanced Manufacturing Investment Tax Credit will provide a 25% tax credit and allow for a wide range of qualified investments necessary to create equipment for and manufacture semiconductors. The final rules announced by the Treasury Department will protect our national security, create good-paying jobs, and ensure the technologies of the future are made in America. This builds on the investments being made in Michigan from the CHIPS and Science Act, including up to $325 million in federal funding for Hemlock Semiconductor to build a new manufacturing facility to expand production of hyper-pure polysilicon needed to manufacture semiconductor chips. 

    MIL OSI USA News –

  • MIL-OSI USA: Statement from President Joe  Biden on Historic Decision to Leverage Russian Sovereign Assets to Support  Ukraine

    US Senate News:

    Source: The White House
    This summer, I led an effort to bring the G7 together to commit $50 billion in Extraordinary Revenue Acceleration loans to Ukraine backed by the profits of immobilized Russian sovereign assets.  After Russia’s brutal invasion of Ukraine, the G7 took bold action to immobilize Russia’s sovereign assets in our jurisdictions, and committed that these assets will remain immobilized until Russia ends its aggression and pays for the damage it has caused to Ukraine—paving the way for Extraordinary Revenue Acceleration loans.
    As part of the G7 package, the United States is announcing today that we will provide $20 billion in loans to Ukraine that will be paid back by the interest earned from immobilized Russian sovereign assets. In other words, Ukraine can receive the assistance it needs now, without burdening taxpayers. These loans will support the people of Ukraine as they defend and rebuild their country. And our efforts make it clear: tyrants will be responsible for the damages they cause.
    Make no mistake: Russia will not prevail in this conflict. The people of Ukraine will prevail. This is another reminder to Vladimir Putin that the world has rallied behind Ukraine—and the United States and our G7 partners will continue to stand with them every step of the way. 

    MIL OSI USA News –

  • MIL-OSI Canada: Deputy Prime Minister to attend G7 and G20 Finance Ministers’ Meetings and Annual Meetings of the IMF and World Bank

    Source: Government of Canada News

    News release

    October 23, 2024 – Ottawa, Canada – Department of Finance Canada

    This week, from October 23 to 25, the Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, will attend the Fall Meetings of G7 and G20 Finance Ministers and the Annual Meetings of the International Monetary Fund (IMF) and World Bank in Washington D.C.

    At these meetings, the Deputy Prime Minister will advance work with Canada’s allies to strengthen supply chains with trusted trading partners to create jobs and economic growth that is shared by all Canadians.

    While in Washington, the Deputy Prime Minister will discuss with allies further efforts to support Ukraine through to victory and into reconstruction. Canada was an early champion of G7 efforts to make full use of frozen Russian sovereign assets, and provided a CA$5 billion (US$3.7 billion) contribution to the G7’s CA$68 billion (US$50 billion) Extraordinary Revenue Acceleration Loans for Ukraine. 

    The Deputy Prime Minister will further Canada’s work to build resilient economies and reduce economic inequalities—as demonstrated by the government’s historic investments in early learning and child care, national dental care coverage, and free contraception and diabetes medication. The Deputy Prime Minister will also advance Canada’s work on international tax cooperation.

    An itinerary of events will be released in advance of the meetings.

    Quotes

    “Canada is leading the G7 in cutting interest rates four times this year and reducing inflation to target for all of this year. The wages of Canadian workers have outpaced inflation for 20 months. And, the IMF expects Canada’s economic growth to be the best in the G7 next year. Together, Canada and our allies are working to ensure recent economic gains are not unwound, but rather built upon, so we can create more good-paying jobs, help people get ahead, and build a fairer future for every generation.”

    – The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

    Quick facts

    • Canada is leading the G7 in:

      • Cutting interest rates; the first to cut rates twice, the first to cut rates a third time, and now the first to cut rates a fourth time;
      • Economic growth expectations, with the IMF predicting that Canada’s GDP will be the fastest growing in 2025;
      • Maintaining the lowest net debt-to-GDP ratio—by a significant margin—in the G7; and,
      • Securing AAA credit ratings from at least two of the world’s three major credit rating agencies, along with only Germany.

    • Inflation has been within the target range of 1 per cent to 3 per cent for all of 2024, with inflation in Canada falling to 1.6 per cent in September—a 43 month low. 

    • Wages in Canada have outpaced inflation for 20 months in a row, which means Canadian workers today on average have larger pay cheques, even accounting for inflation, than they did before the pandemic.

    • The Annual Meetings of the IMF and World Bank, which generally take place in October, have customarily been held in Washington for two consecutive years and in another member country in the third year.

    Contacts

    Media may contact:

    Katherine Cuplinskas
    Deputy Director of Communications
    Office of the Deputy Prime Minister and Minister of Finance
    Katherine.Cuplinskas@fin.gc.ca

    Media Relations
    Department of Finance Canada
    mediare@fin.gc.ca
    613-369-4000

    General enquiries

    Phone: 1-833-712-2292
    TTY: 613-369-3230
    E-mail: financepublic-financepublique@fin.gc.ca

    Stay Connected

    MIL OSI Canada News –

  • MIL-OSI USA: Ernst Prevents Tax Dollars from Funding Anti-Second Amendment Groups

    US Senate News:

    Source: United States Senator Joni Ernst (R-IA)
    WASHINGTON – To combat discrimination against gun owners, U.S. Senator Joni Ernst (R-Iowa) is supporting theFirearm Industry Non-Discrimination (FIND) Act to stop the federal government from entering into contracts with entities that promote anti-Second Amendment policies.
    Because of her tireless commitment to protecting the rights of law-abiding gun owners, Senator Ernst recentlyearned an “A+” rating from the National Shooting Sports Foundation (NSSF). 
    This summer, Ernst crushed some clays at Ingawanis Adventure Base in Bremer County.
    “Taxpayers should not be funding groups that are actively working to erode and eliminate their God-given right to protect themselves and their families,” said Ernst. “The Second Amendment is foundational to this country and under no circumstance should the federal government be doing businesses with those looking to infringe upon the Constitution. I will always stand up for gun owners and protect their rights from gun grabbers in Washington.”
    “We’re thankful for Senator Ernst’s focus on protecting the rights of lawful citizens practicing their Second Amendment. Her support of the FIND Act will halt discriminatory practices against the firearm industry in their tracks. We look forward to continuing our work with Senator Ernst to expose and correct the infringement of our Constitutional rights,” said John B. McLaughlin, Iowa Firearms Coalition Chairman.
    “Under the Firearm Industry Non-Discrimination (FIND) Act, ‘woke’ corporations that choose to use their financial might to deny essential services to members of the firearm industry would no longer benefit from taxpayer-funded federal contracts. We thank Senator Ernst for supporting the FIND Act and for her commitment to preserving and protecting the Second Amendment rights of her constituents and the industry that makes the exercise of those rights possible. It is because of her efforts that Senator Ernst earned an A+ on the 2024 NSSF Congressional Report Card, which is a comprehensive analysis of our elected representatives’ positions on firearm and ammunition industry priorities in the 118th Congress,” said Lawrence G. Keane, NSSF Senior Vice President and General Counsel.
    “It’s been a joy to work with Sen. Ernst and her office to protect the 2nd Amendment and to know that we woman have such a strong supporter in her,” said Jeanelle Westrom, Iowa Director of Women for Gun Rights.
    Click here to read the bill.
    Background:
    Senator Ernst has fought back against numerous attempts by the Biden-Harris administration to infringe upon the Second Amendment.
    She led the FIREARM Act to protect gun dealers’ Second Amendment rights in the face of the Biden Bureau of Alcohol, Tobacco, Firearms, and Explosives’ (ATF) “zero tolerance” crackdown.
    Ernst worked to hold the ATF accountable by standing up against ATF agents knocking on the doors of private residences, where many law-abiding gun owners live, and asking them to display a recently purchased firearm.
    She has also exposed the ATF’s routine misclassification of administrative positions as law enforcement jobs, improperly costing the federal agency millions in pay and enhanced benefits over a five-year span.

    MIL OSI USA News –

  • MIL-OSI Asia-Pac: Ministry of Heavy Industries Embarks on Special Campaign 4.0 to Enhance Swachhata and Reduce Pendency

    Source: Government of India

    Posted On: 23 OCT 2024 5:29PM by PIB Delhi

    Drawing inspiration from Hon’ble Prime Minister Shri Narendra Modi’s vision to institutionalize Swachhata and enhance workplace efficiency, the Ministry of Heavy Industries (MHI), along with its Central Public Sector Enterprises (CPSEs) and Autonomous Bodies (ABs), is actively participating in the main phase of Special Campaign 4.0. This campaign, which commenced on 2nd October and will continue through 31st October 2024, aims to make impactful improvements in public sector workplaces nationwide.

    Union Minister of Heavy Industries & Steel, Shri H.D. Kumaraswamy, actively participated in a cleanliness drive alongside workers at the HMT Campus in Bengaluru. He emphasized Hon’ble Prime Minister Shri Narendra Modi’s vision for a Swachh Bharat and called for continued efforts toward a “Swachh, Sundar, and Samarth Bharat” for future generations.

    During the Preparatory Phase of Special Campaign 4.0, MHI Secretary Shri Kamran Rizvi conducted inspections across identified cleanliness sites within MHI offices. He directed senior officers to contribute their best efforts to meet the targets set for the campaign, underscoring MHI’s commitment to a cleaner, more organized workplace environment.

     

    Significant Achievements in Special Campaign 4.0

    As a result of ongoing efforts, the campaign has already achieved substantial milestones:

    * Over 12.53 lakh sq. ft. of space has been cleared.

    * 24,997 physical files have been reviewed, with 7,428 files weeded out, and more than 3801 digital files closed.

    * Revenue of Rs. 1.59 crore has been generated through scrap disposal.

     

     

    On social media, more than 402 posts have been shared on X by official handles of CPSEs and ABs, highlighting the key activities and achievements under Special Campaign 4.0.

     

    Cleanliness and transformative drive at Nepa limited, a CPSE under MHI

     

    Cleanliness and transformative drive at BHEL’s Bhopal Unit

     

    Nationwide Engagement Across CPSEs/ABs

    CPSEs and ABs under MHI are actively carrying out cleanliness initiatives across their corporate offices, regional offices, manufacturing units, and project sites. Special cleanliness drives have been organized at over 923 sites across India, achieving 100% of the planned activities under the campaign.

    Cleanliness and transformative drive at HMT Machine Tools Bengaluru Complex

     

    Best Practices Adopted by CPSEs/ABs

    MHI and its affiliated bodies have adopted several best practices during Special Campaign 4.0, focusing on creating long-term value and setting benchmarks in workplace cleanliness and efficiency. These efforts underscore the Ministry’s commitment to contribute meaningfully to the Hon’ble Prime Minister’s vision for a cleaner and more efficient India.

    Cleanliness and transformative drive at ICAT, an Autonomous Body Under MHI

    ********

    MG

    (Release ID: 2067379) Visitor Counter : 36

    MIL OSI Asia Pacific News –

  • MIL-OSI: Goosehead Insurance, Inc. Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    –   Total Revenue Increased 10% and Core Revenue* Grew 16% over the Prior-Year Period –

    –   Total Written Premium increased 28% to $1.03 billion over the Prior-Year Period –

    –   Net Income of $12.6 million versus Net Income of $11.3 million a year ago –

    –   Adjusted EBITDA* of $26.1 million versus $22.4 million in the Prior-Year Period –

    WESTLAKE, Texas, Oct. 23, 2024 (GLOBE NEWSWIRE) — Goosehead Insurance, Inc. (“Goosehead” or the “Company”) (NASDAQ: GSHD), a rapidly growing independent personal lines insurance agency, today announced results for the third quarter ended September 30, 2024.

    Third Quarter 2024 Highlights

    • Total Revenues grew 10% over the prior-year period to $78.0 million in the third quarter of 2024
    • Third quarter Core Revenues* of $73.5 million increased 16% over the prior-year period
    • Third quarter net income of $12.6 million improved from net income of $11.3 million a year ago
    • EPS of $0.31 per share increased from $0.29 in the prior-year period, and Adjusted EPS* of $0.50 per share increased 10% over the prior-year period
    • Net Income Margin for the third quarter was 16%
    • Adjusted EBITDA* of $26.1 million increased from $22.4 million in the prior-year period
    • Adjusted EBITDA Margin* increased versus the prior-year period to 34%
    • Total Written Premiums placed for the third quarter increased 28% over the prior-year period to $1.03 billion
    • Policies in Force increased 12% from the prior-year period to approximately 1,636,000
    • Corporate agent headcount of 458 was up 45% compared to the prior-year period
    • Total franchise producers of 2,093 increased 4% from the prior-year period and 5% compared to second quarter 2024

    *Core Revenue, Adjusted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. Reconciliations of Core Revenue to total revenues, Adjusted EPS to basic earnings per share and Adjusted EBITDA to net income, the most directly comparable financial measures presented in accordance with GAAP, are set forth in the reconciliation table accompanying this release.

    “We delivered an outstanding third quarter result in the face of continued macro headwinds related to product availability and real estate as well as severe weather events which temporarily impacted production across several large states,” stated Mark Miller, President and CEO. “For the quarter, total revenue grew 10%, core revenue grew 16%, net income margin was 16% and adjusted EBITDA margin expanded to 34%, up from 32% in the year ago quarter. This marked the first time we have generated over $1 billion of premium in a single quarter, with 28% growth over the prior year, a great milestone for the company. We are seeing strong momentum in a number of our key performance indicators that we expect will drive future growth, including franchise productivity, total producer headcount and policy in force growth rates. We have also stabilized our client retention levels in the quarter at 84%, despite continued market challenges. I’m extremely pleased with the tremendous accomplishments of the organization over the past 2 years driven by our exceptional people and industry leading technology. We are well positioned for a strong finish to 2024 and faster growth in 2025 and beyond as we progress to our goal of being the largest distributor of personal lines in the US.”

    Third Quarter 2024 Results
    For the third quarter of 2024, revenues were $78.0 million, an increase of 10% compared to the corresponding period in 2023. Core Revenues, a non-GAAP measure which excludes contingent commissions, initial franchise fees, interest income, and other income, were $73.5 million, a 16% increase from $63.1 million in the prior-year period. Core Revenues are the most reliable revenue stream for the Company, consisting of New Business Commissions, Agency Fees, New Business Royalty Fees, Renewal Commissions, and Renewal Royalty Fees. Core Revenue growth was driven by improved franchise productivity, increased corporate agent headcount, client retention of 84%, and rising premium rates. The Company grew total written premiums, which we consider to be the leading indicator of future revenue growth, by 28% in the third quarter.

    Total operating expenses, excluding equity-based compensation, depreciation and amortization, and impairment expenses for the third quarter of 2024 were $51.9 million, up 7% from $48.6 million in the prior-year period. The increase from the prior period was due to increased employee compensation and benefits expenses related to investments in corporate producers, partnership, technology, and service functions. General and administrative expenses, excluding impairment, increased to $15.2 million from $14.8 million primarily due to investments in technology and systems to drive growth and continue to improve the client experience. Equity-based compensation increased to $7.1 million for the period, compared to $6.5 million a year ago. Bad debt expense of $0.6 million decreased from $0.8 million a year ago.

    Net income in the third quarter of 2024 was $12.6 million versus net income of $11.3 million a year ago. Earnings per share and Net Income Margin for the third quarter of 2024 were $0.31 and 16%, respectively. Adjusted EPS for the third quarter of 2024, which excludes equity-based compensation and impairment expense, was $0.50 per share. Total Adjusted EBITDA was $26.1 million for the third quarter of 2024 compared to $22.4 million in the prior-year period. Adjusted EBITDA Margin of 34% increased compared to the prior-year period.

    Liquidity and Capital Resources
    As of September 30, 2024, the Company had cash and cash equivalents of $47.5 million. We had an unused line of credit of $74.8 million as of September 30, 2024. Total outstanding term note payable balance was $95.6 million as of September 30, 2024. During the quarter ended September 30, 2024, the Company did not repurchase any shares of Class A common stock. As of September 30, 2024, $36.8 million remains available under the share repurchase authorization.

    2024 Outlook
    The Company is raising its guidance for full year 2024 as follows:

    • Total written premiums placed for 2024 are expected to be between $3.70 billion and $3.82 billion, representing growth of 25% on the low end of the range to 29% on the high end of the range.
    • Total revenues for 2024 are expected to be between $295 million and $310 million, representing growth of 13% on the low end of the range to 19% on the high end of the range.
    • Adjusted EBITDA Margin is expected to expand for the full year 2024.

    Conference Call Information
    Goosehead will host a conference call and webcast today at 4:30 PM ET to discuss these results.

    To access the call by phone, participants should go to this link (registration link), and you will be provided with the dial in details.

    In addition, a live webcast of the conference call will also be available on Goosehead’s investor relations website at http://ir.goosehead.com.

    A webcast replay of the call will be available at http://ir.goosehead.com for one year following the call.

    About Goosehead

    Goosehead (NASDAQ: GSHD) is a rapidly growing and innovative independent personal lines insurance agency that distributes its products and services through corporate and franchise locations throughout the United States. Goosehead was founded on the premise that the consumer should be at the center of our universe and that everything we do should be directed at providing extraordinary value by offering broad product choice and a world-class service experience. Goosehead represents over 150 insurance companies that underwrite personal and commercial lines. For more information, please visit goosehead.com or goosehead.com/become-a-franchisee.

    Forward-Looking Statements

    This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Goosehead’s expectations or beliefs concerning future events. Forward-looking statements are statements other than historical facts and may include statements that address future operating, financial or business performance or Goosehead’s strategies or expectations. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, “outlook” or “continue”, or the negative of these terms or other comparable terminology. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements.

    Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, conditions impacting insurance carriers or other parties with which Goosehead does business, the loss of one or more key executives or an inability to attract and retain qualified personnel and the failure to attract and retain highly qualified franchisees. These risks and uncertainties also include, but are not limited to, those described under the captions “1A. Risk Factors” in Goosehead’s Annual Report on Form 10-K for the year ended December 31, 2023 and in Goosehead’s other filings with the SEC, which are available free of charge on the Securities Exchange Commission’s website at: www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All forward-looking statements and all subsequent written and oral forward-looking statements attributable to Goosehead or to persons acting on behalf of Goosehead are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and Goosehead does not undertake any obligation to update them in light of new information, future developments or otherwise, except as may be required under applicable law.

    Contacts
    Investor Contact:
    Dan Farrell
    Goosehead Insurance – VP Capital Markets
    Phone: (214) 838-5290
    Email: dan.farrell@goosehead.com; IR@goosehead.com;

    PR Contact:
    Mission North for Goosehead Insurance
    Email: goosehead@missionnorth.com; PR@goosehead.com

     
    Goosehead Insurance, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)
    (In thousands, except per share amounts)
             
        Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024   2023   2024   2023
    Revenues:                
    Commissions and agency fees   $ 30,942     $ 31,980     $ 88,782     $ 88,637  
    Franchise revenues     46,862       38,729       131,076       108,490  
    Interest income     231       321       725       1,135  
    Total revenues     78,035       71,030       220,583       198,262  
    Operating Expenses:                
    Employee compensation and benefits     43,217       39,436       127,898       113,801  
    General and administrative expenses     15,201       14,831       49,236       48,019  
    Bad debts     565       797       2,345       3,352  
    Depreciation and amortization     2,614       2,352       7,814       6,817  
    Total operating expenses     61,597       57,416       187,293       171,989  
    Income from operations     16,438       13,614       33,290       26,273  
    Other Income:                
    Interest expense     (2,060 )     (1,617 )     (5,529 )     (5,057 )
    Other income (expense)     544       —       (5,742 )     —  
    Income before taxes     14,922       11,997       22,019       21,216  
    Tax (benefit) expense     2,315       724       (3,272 )     2,944  
    Net income     12,607       11,273       25,291       18,272  
    Less: net income attributable to non-controlling interests     5,048       4,339       9,720       7,753  
    Net income attributable to Goosehead Insurance, Inc.   $ 7,559     $ 6,934     $ 15,571     $ 10,519  
    Earnings per share:                
    Basic   $ 0.31     $ 0.29     $ 0.63     $ 0.44  
    Diluted   $ 0.29     $ 0.28     $ 0.58     $ 0.43  
    Weighted average shares of Class A common stock outstanding                
    Basic     24,293       24,124       24,689       23,674  
    Diluted     37,942       24,891       38,269       24,274  
                                     
     
    Goosehead Insurance, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)
    (In thousands, except per share amounts)
             
        Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024   2023   2024   2023
    Revenues:                
    Core Revenue:                
    Renewal Commissions(1)   $ 20,215     $ 19,036     $ 56,767     $ 53,395  
    Renewal Royalty Fees(2)     38,070       30,040       103,951       80,344  
    New Business Commissions(1)     6,249       6,125       18,612       17,899  
    New Business Royalty Fees(2)     6,994       5,910       20,396       17,819  
    Agency Fees(1)     1,989       2,008       6,036       6,642  
    Total Core Revenue     73,516       63,119       205,762       176,099  
    Cost Recovery Revenue:                
    Initial Franchise Fees(2)     1,413       2,430       5,288       8,780  
    Interest Income     231       321       725       1,135  
    Total Cost Recovery Revenue     1,644       2,751       6,013       9,915  
    Ancillary Revenue:                
    Contingent Commissions(1)     2,490       4,811       7,367       10,701  
    Other Franchise Revenues(2)     385       349       1,440       1,547  
    Total Ancillary Revenue     2,875       5,160       8,808       12,248  
    Total Revenues     78,035       71,030       220,583       198,262  
    Operating Expenses:                
    Employee compensation and benefits, excluding equity-based compensation     36,124       32,977       106,816       94,850  
    General and administrative expenses, excluding impairment     15,201       14,831       48,889       44,391  
    Bad debts     565       797       2,345       3,352  
    Total     51,890       48,605       158,050       142,593  
    Adjusted EBITDA     26,145       22,425       62,533       55,669  
    Adjusted EBITDA Margin     34 %     32 %     28 %     28 %
                     
    Interest expense     (2,060 )     (1,617 )     (5,529 )     (5,057 )
    Depreciation and amortization     (2,614 )     (2,352 )     (7,814 )     (6,817 )
    Tax benefit (expense)     (2,315 )     (724 )     3,272       (2,944 )
    Equity-based compensation     (7,093 )     (6,459 )     (21,082 )     (18,951 )
    Impairment expense     —       —       (347 )     (3,628 )
    Other income (expense)     544       —       (5,742 )     —  
    Net Income   $ 12,607     $ 11,273     $ 25,291     $ 18,272  
    Net Income Margin     16 %     16 %     11 %     9 %
                                     

    (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in “Commissions and agency fees” as shown on the Condensed Consolidated Statements of Operations within Goosehead’s Form 10-Q for the three and nine months ended September 30, 2024 and 2023.
    (2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in “Franchise revenues” as shown on the Condensed Consolidated Statements of Operations within Goosehead’s Form 10-Q for the three and nine months ended September 30, 2024 and 2023.

     
    Goosehead Insurance, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited)
    (In thousands, except per share amounts)
             
        September 30,   December 31,
        2024   2023
    Assets        
    Current Assets:        
    Cash and cash equivalents   $ 47,544     $ 41,956  
    Restricted cash     2,568       2,091  
    Commissions and agency fees receivable, net     9,679       12,903  
    Receivable from franchisees, net     11,261       9,720  
    Prepaid expenses     5,701       7,889  
    Total current assets     76,753       74,559  
    Receivable from franchisees, net of current portion     3,644       9,269  
    Property and equipment, net of accumulated depreciation     25,369       30,316  
    Right-of-use asset     34,134       38,406  
    Intangible assets, net of accumulated amortization     23,230       17,266  
    Deferred income taxes, net     190,368       181,209  
    Other assets     4,565       3,867  
    Total assets   $ 358,063     $ 354,892  
    Liabilities and Stockholders’ Equity        
    Current Liabilities:        
    Accounts payable and accrued expenses   $ 19,259     $ 16,398  
    Premiums payable     2,568       2,091  
    Lease liability     9,297       8,897  
    Contract liabilities     3,337       4,129  
    Note payable     10,063       9,375  
    Liabilities under tax receivable agreement     4,948       —  
    Total current liabilities     49,472       40,890  
    Lease liability, net of current portion     50,249       57,382  
    Note payable, net of current portion     84,639       67,562  
    Contract liabilities, net of current portion     15,710       22,970  
    Liabilities under tax receivable agreement, net of current portion     155,748       149,302  
    Total liabilities     355,818       338,106  
    Class A common stock, $0.01 par value per share – 300,000 shares authorized, 24,369 shares issued and outstanding as of September 30, 2024, 24,966 shares issued and outstanding as of December 31, 2023     244       250  
    Class B common stock, $0.01 par value per share – 50,000 shares authorized, 12,722 issued and outstanding as of September 30, 2024, 12,954 shares issued and outstanding as of December 31, 2023     127       130  
    Additional paid in capital     89,005       103,228  
    Accumulated deficit     (31,029 )     (47,056 )
    Total stockholders’ equity     58,347       56,552  
    Non-controlling interests     (56,102 )     (39,766 )
    Total equity     2,245       16,786  
    Total liabilities and equity   $ 358,063     $ 354,892  
                     

    Goosehead Insurance, Inc.
    Reconciliation Non-GAAP Measures to GAAP

    This release includes Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS that are not required by, nor presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). The Company refers to these measures as “non-GAAP financial measures.” The Company uses these non-GAAP financial measures when planning, monitoring and evaluating its performance and considers these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax position, depreciation, amortization and certain other items that the Company believes are not representative of its core business. The Company uses Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS for business planning purposes and in measuring its performance relative to that of its competitors.

    These non-GAAP financial measures are defined by the Company as follows:

    • “Core Revenue” is a supplemental measure of our performance and includes Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies.
    • “Cost Recovery Revenue” is a supplemental measure of our performance and includes Initial Franchise Fees and Interest Income. We believe that Cost Recovery Revenue is an appropriate measure of operating performance because it summarizes revenues that are viewed by management as cost recovery mechanisms.
    • “Ancillary Revenue” is a supplemental measure of our performance and includes Contingent Commissions and Other Income. We believe that Ancillary Revenue is an appropriate measure of operating performance because it summarizes revenues that are ancillary to our core business.
    • “Adjusted EBITDA” is a supplemental measure of the Company’s performance. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of items that do not relate to business performance. Adjusted EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation, impairment expense, and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses.
    • “Adjusted EBITDA Margin” is Adjusted EBITDA as defined above, divided by total revenue excluding other non-operating items. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.
    • “Adjusted EPS” is a supplemental measure of our performance, defined as earnings per share (the most directly comparable GAAP measure) before non-recurring or non-operating income and expenses. Adjusted EPS is a useful measure to management because it eliminates the impact of items that do not relate to business performance and helps measure our profitability on a consolidated level.

    While the Company believes that these non-GAAP financial measures are useful in evaluating its business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues, net income, or earnings per share, in each case as recognized in accordance with GAAP. In addition, other companies, including companies in the Company’s industry, may calculate such measures differently, which reduces their usefulness as comparative measures.

    The following tables show a reconciliation from total revenues to Core Revenue, Cost Recovery Revenue, and Ancillary Revenue (non-GAAP basis) for the three and nine months ended September 30, 2024 and 2023 (in thousands):

      Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
      2024
    		   2023
    		   2024
    		   2023
    Total Revenues $ 78,035     $ 71,030     $ 220,583     $ 198,262  
                   
    Core Revenue:              
    Renewal Commissions(1) $ 20,215     $ 19,036     $ 56,767     $ 53,395  
    Renewal Royalty Fees(2)   38,070       30,040       103,951       80,344  
    New Business Commissions(1)   6,249       6,125       18,612       17,899  
    New Business Royalty Fees(2)   6,994       5,910       20,396       17,819  
    Agency Fees(1)   1,989       2,008       6,036       6,642  
    Total Core Revenue   73,516       63,119       205,762       176,099  
    Cost Recovery Revenue:              
    Initial Franchise Fees(2)   1,413       2,430       5,288       8,780  
    Interest Income   231       321       725       1,135  
    Total Cost Recovery Revenue   1,644       2,751       6,013       9,915  
    Ancillary Revenue:              
    Contingent Commissions(1)   2,490       4,811       7,367       10,701  
    Other Franchise Revenues(2)   385       349       1,440       1,547  
    Total Ancillary Revenue   2,875       5,160       8,808       12,248  
    Total Revenues $ 78,035     $ 71,030     $ 220,583     $ 198,262  
                                   

    (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in “Commissions and agency fees” as shown on the Condensed Consolidated Statements of Operations.
    (2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in “Franchise revenues” as shown on the Condensed Consolidated Statements of Operations.

    The following tables show a reconciliation from net income to Adjusted EBITDA and Adjusted EBITDA Margin (non-GAAP basis) for the three and nine months ended September 30, 2024 and 2023 (in thousands):

        Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024   2023   2024   2023
    Net Income   $ 12,607     $ 11,273     $ 25,291     $ 18,272  
    Interest expense     2,060       1,617       5,529       5,057  
    Depreciation and amortization     2,614       2,352       7,814       6,817  
    Tax (benefit) expense     2,315       724       (3,272 )     2,944  
    Equity-based compensation     7,093       6,459       21,082       18,951  
    Impairment expense     —       —       347       3,628  
    Other (income) expense     (544 )     —       5,742       —  
    Adjusted EBITDA   $ 26,145     $ 22,425     $ 62,533     $ 55,669  
    Net Income Margin(1)     16 %     16 %     11 %     9 %
    Adjusted EBITDA Margin(2)     34 %     32 %     28 %     28 %
                                     

    (1) Net Income Margin is calculated as Net Income divided by Total Revenue ($12,607/$78,035) and ($11,273/$71,030) for the three months ended September 30, 2024 and 2023. Net Income Margin is calculated as Net Income divided by Total Revenue ($25,291/$220,583) and ($18,272/$198,262) for the nine months ended September 30, 2024 and 2023.
    (2) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($26,145/$78,035), and ($22,425/$71,030) for the three months ended September 30, 2024 and 2023, respectively. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($62,533/$220,583), and ($55,669/$198,262) for the nine months ended September 30, 2024 and 2023.

    The following tables show a reconciliation from basic earnings per share to Adjusted EPS (non-GAAP basis) for the three and nine months ended September 30, 2024 and 2023. Note that totals may not sum due to rounding:

        Three Months Ended
    September 30,    		   Nine Months Ended
    September 30,
        2024
    		   2023
    		   2024
    		   2023
    Earnings per share – basic (GAAP)   $ 0.31     $ 0.29     $ 0.63     $ 0.44  
    Add: equity-based compensation(1)     0.19       0.17       0.56       0.50  
    Add: impairment expense(2)     —       —       0.01       0.10  
    Adjusted EPS (non-GAAP)   $ 0.50     $ 0.46     $ 1.20     $ 1.04  
                                     

    (1) Calculated as equity-based compensation divided by sum of weighted average Class A and Class B shares [$7.1 million/(24.3 million + 12.7 million)] for the three months ended September 30, 2024 and [$6.5 million/ (24.1 million + 13.6 million)] for the three months ended September 30, 2023. Calculated as equity-based compensation divided by sum of weighted average Class A and Class B shares [$21.1 million/(24.7 million + 12.8 million)] for the nine months ended September 30, 2024 and [$19.0 million/ (23.7 million + 14.0 million)] for the nine months ended September 30, 2023.
    (2) Calculated as impairment expense divided by sum of weighted average Class A and Class B shares [$0.3 million/(24.7 million + 12.8 million)] for the nine months ended September 30, 2024. Calculated as impairment expense divided by sum of weighted average Class A and Class B shares [$3.6 million/(23.7 million + 14.0 million)] for the nine months ended September 30, 2023. No impairment was recorded for the three months ended September 30, 2024 and three months ended September 30, 2023.

     
    Goosehead Insurance, Inc.
    Key Performance Indicators
                 
        September 30, 2024   December 31, 2023   September 30, 2023
    Corporate sales agents < 1 year tenured     277       135       132  
    Corporate sales agents > 1 year tenured     181       165       184  
    Operating franchises < 1 year tenured     93       183       254  
    Operating franchises > 1 year tenured     1,023       1,043       1,031  
    Total Franchise Producers     2,093       1,957       2,008  
    QTD Corporate Agent Productivity < 1 Year(1)   $ 15,570     $ 13,789     $ 16,266  
    QTD Corporate Agent Productivity > 1 Year(1)   $ 28,887     $ 25,738     $ 28,963  
    QTD Franchise Productivity < 1 Year(2)   $ 22,303     $ 10,975     $ 9,583  
    QTD Franchise Productivity > 1 Year(2)   $ 29,950     $ 21,103     $ 22,305  
    Policies in Force     1,636,000       1,486,000       1,456,000  
    Client Retention     84 %     86 %     87 %
    Premium Retention     99 %     101 %     102 %
    QTD Written Premium (in thousands)   $ 1,028,736     $ 756,082     $ 802,939  
    Net Promoter Score (“NPS”)     90       92       92  
                             

    (1) – Corporate Productivity is New Business Production per Agent (Corporate): The New Business Revenue collected related to corporate sales, divided by the average number of full-time corporate sales agents for the same period. This calculation excludes interns, part-time sales agents and partial full-time equivalent sales managers.
    (2) – Franchise Productivity is New Business Production per Franchise: The gross commissions paid by Carriers and Agency Fees received related to policies in their first term sold by franchise sales agents, divided by the average number of franchises for the same period, prior to paying Royalty Fees to the Company.

    The MIL Network –