AMD CEO Lisa Su: No 'One Size Fits All' In $500B AI Computing Future
Lisa Su, CEO of Advanced Micro Devices Inc. AMD, provided an optimistic outlook for the company’s position in the burgeoning artificial intelligence market.
What Happened: Su emphasized the potential for AI compute technology to evolve, in a recent interview with CNBC’s Squawk on the Street, stating, “We really do believe that AI compute will enable the models to get even better, smarter…there is no one size fits all for compute.”
When asked about the changing landscape of AI, particularly regarding inference and the computing power required for various applications, Su acknowledged the complexities of the evolving technology.
“As you are really going through multiple steps, I mean these models are amazing. We made excellent progress when you think about where we are today with some of the OpenAI models or some of the Llama models; they’re great, but they can get better,” she noted.
Furthermore, Su shared an ambitious forecast regarding the total addressable market for data center AI, projecting it to reach $500 billion by 2028. This figure will encompass a variety of computing needs, including both training and inference processes.
Why It Matters: As AMD positions itself against major competitors like NVIDIA Corp (NASDAQ: NVDA), analysts are optimistic about the company’s potential to capture market share in several sectors. This sentiment is supported by AMD’s recent third-quarter results, which indicate a strong trajectory for its AI business.
Meta Platforms Inc. META CEO Mark Zuckerberg recently revealed that Meta is developing its next-generation AI model, Llama 4, using an unprecedented computing infrastructure of over 100,000 Nvidia H100 GPUs.
AMD’s progress in the AI space has been acknowledged by industry experts, including CNBC’s Jim Cramer, who believes that AMD will continue to see significant growth in the AI space, challenging Nvidia’s dominance.
Price Action: AMD’s stock closed at $148.60 on Wednesday, down 10.62%, for the day. In after-hours trading, the stock fell further 0.98%. Despite the recent declines, AMD’s stock has seen a year-to-date increase of 7.23%, according to data from Benzinga Pro.
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Ball Reports Third Quarter 2024 Results
Highlights
- Third quarter U.S. GAAP total diluted earnings per share of 65 cents vs. 64 cents in 2023
- Third quarter comparable diluted earnings per share of 91 cents vs. 83 cents in 2023
- Returned $1.25 billion to shareholders via share repurchases and dividends in the first nine months of 2024; on track to return in excess of $1.6 billion to shareholders by year-end
- In late-October, completed acquisition of Alucan Entec, S.A., a European impact extruded aluminum packaging business
- In 2024 and beyond, positioned to advance the use of sustainable aluminum packaging, grow comparable diluted earnings per share and EVA, generate strong free cash flow and expand long-term return of value to shareholders
WESTMINSTER, Colo., Oct. 31, 2024 /PRNewswire/ — Ball Corporation BALL today reported third quarter results. References to net sales and comparable operating earnings in today’s release do not include the company’s former aerospace business. Year-over-year net earnings attributable to the corporation and comparable net earnings do include the performance of the company’s former aerospace business through the sale date of February 16, 2024. On a U.S. GAAP basis, the company reported, third quarter 2024 net earnings attributable to the corporation of $197 million (including a net after-tax loss of $81 million, or 26 cents per diluted share for business consolidation and other non-comparable items) or total diluted earnings per share of 65 cents, on sales of $3.08 billion, compared to $203 million net earnings attributable to the corporation, or total diluted earnings per share of 64 cents (including a net after-tax loss of $60 million, or 19 cents per diluted share for business consolidation and other non-comparable items) on sales of $3.11 billion in 2023. Results for the first nine months of 2024 were net earnings attributable to the corporation of $4.04 billion (including a net after-tax gain of $3.31 billion for the aerospace business sale, business consolidation and other non-comparable items), or total diluted earnings per share of $12.96, on sales of $8.92 billion compared to $553 million, or total diluted earnings per share of $1.74, on sales of $9.16 billion for the first nine months of 2023.
Ball’s third quarter and year-to-date 2024 comparable earnings per diluted share were 91 cents and $2.33, respectively, versus third quarter and year-to-date 2023 comparable earnings per diluted share of 83 cents and $2.13, respectively.
“We delivered strong third quarter results and have returned $1.25 billion to shareholders in the first nine months of 2024. Leveraging our strong financial position and leaner operating model, the company remains uniquely positioned to enable our purpose of advancing the greater use of sustainable aluminum packaging, despite the current end consumer environment in certain geographies. We continue to complement our purpose by driving innovation and sustainability on a global scale, unlocking additional manufacturing efficiencies and enabling consistent delivery of high-quality, long-term shareholder value creation,” said Daniel W. Fisher, chairman and chief executive officer.
Details of reportable segment comparable operating earnings, business consolidation and other activities, business segment descriptions and other non-comparable items can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release. References to volume data represent units shipped.
Beverage Packaging, North and Central America
Beverage packaging, North and Central America, segment comparable operating earnings for third quarter 2024 were $203 million on sales of $1.46 billion compared to $196 million on sales of $1.54 billion during the same period in 2023. The decrease in third quarter sales reflects lower year-over-year volumes and price/mix.
Third quarter segment comparable operating earnings increased year-over-year primarily due to price/mix partially offset by lower volumes of 3.1 percent. Aluminum beverage cans continue to outperform other substrates despite continued economic pressure on the end consumer. Going forward, benefits from fixed and variable cost-out initiatives and improved operational efficiencies are expected to improve results throughout the remainder of 2024 and beyond.
Beverage Packaging, EMEA
Beverage packaging, EMEA, segment comparable operating earnings for third quarter 2024 were $128 million on sales of $950 million compared to $103 million on sales of $902 million during the same period in 2023. Third quarter sales primarily reflect higher volumes.
Third quarter comparable operating earnings reflect 6.7 percent higher volumes. Packaging mix shift to aluminum cans supported by ongoing packaging legislation in certain countries continues to be a driver of aluminum beverage packaging growth. Going forward, sustainability tailwinds and improved operational efficiencies are expected to improve results.
Beverage Packaging, South America
Beverage packaging, South America, segment comparable operating earnings for third quarter 2024 were $78 million on sales of $484 million compared to $61 million on sales of $489 million during the same period in 2023. Third quarter sales reflect lower volumes partially offset by price/mix.
Third quarter segment comparable operating earnings increased year-over-year driven by favorable price/mix partially offset by 10.0 percent lower volumes during the quarter. Volumes were driven by the ongoing impact of disruptive economic and operating conditions in Argentina and demand outstripping supply in Brazil late in the quarter. In Argentina, the company continues to serve customers and assess risks given the dynamic economic and policy environment. Across South America multi-year customer initiatives to increase the use of sustainable aluminum packaging are expected to continue.
Non-reportable
Non-reportable is comprised of undistributed corporate expenses, net of corporate interest income, the results of the company’s global aluminum aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and the company’s aluminum cup business.
Third quarter 2024 improved results reflect higher comparable operating earnings for the aluminum packaging businesses partially offset by increased year-over-year undistributed corporate expenses. The company’s global aluminum aerosol, aluminum bottle and cups customers continue to collaborate with Ball to activate growth opportunities and tailored offerings for personal and home care brands, refill and reuse packaging for water, other beverages and venue specific needs to advance the circular economy.
In late-October, the company completed the acquisition of Alucan Entec, S.A., a European impact extruded aluminum packaging business, for the purchase price of €82 million (or $88 million using an exchange rate as of the date of close), subject to customary closing adjustments, which reflects an attractive EBITDA multiple of approximately 7.4x. The acquisition complements Ball’s existing global extruded aluminum aerosol and bottle business with the addition of two manufacturing facilities near Lummen, Belgium, and Llinars del Vallés, Spain, along with associated contracts and other related assets.
Outlook
“Our company is performing well and on track to deliver or exceed against our stated comparable earnings growth goal and on target to return in excess of $1.6 billion to shareholders in 2024. By consistently executing on our plans to drive continuous improvement and operational excellence, our resulting strong free cash flow will allow us to return significant value to shareholders while also prudently investing in our business over the years to come,” said Howard Yu, executive vice president and chief financial officer.
“Our global team is focused on executing our enterprise-wide strategy with purpose and pace to advance aluminum packaging and to consistently deliver high-quality results, products and returns. In 2024, we are positioned to achieve mid-single digit plus comparable diluted earnings per share growth, generate strong free cash flow and EVA while also returning significant value to shareholders through a combination of share repurchases and dividends. We will continue to leverage the strengths of our best-in-class footprint, product portfolio and operational talent. I want to thank our employees for their hard work to consistently deliver comparable diluted earnings per share growth greater than 10 percent per annum in 2025 and beyond,” Fisher said.
About Ball Corporation
Ball Corporation supplies innovative, sustainable aluminum packaging solutions for beverage, personal care and household products customers. Ball Corporation employs 16,000 people worldwide and reported 2023 net sales of $12.06 billion, which excludes the divested aerospace business. For more information, visit www.ball.com, or connect with us on Facebook or X (Twitter).
Conference Call Details
Ball Corporation BALL will hold its third quarter 2024 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is +1 877-497-9071. International callers should dial +1 201-689-8727. Please use the following URL for a webcast of the live call:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=0McTrGVD
For those unable to listen to the live call, a webcast replay and written transcript of the call will be posted within 48 hours of the call’s conclusion to Ball’s website at www.ball.com/investors under “news and presentations.”
Forward-Looking Statement
This release contains “forward-looking” statements concerning future events and financial performance. Words such as “expects,” “anticipates,” “estimates,” “believes,” and similar expressions typically identify forward looking statements, which are generally any statements other than statements of historical fact. Such statements are based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual results or events to differ materially from those expressed or implied. You should therefore not place undue reliance upon any forward-looking statements, and they should be read in conjunction with, and qualified in their entirety by, the cautionary statements referenced below. Ball undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Key factors, risks and uncertainties that could cause actual outcomes and results to be different are summarized in filings with the Securities and Exchange Commission, including Exhibit 99 in Ball’s Form 10-K, which are available on Ball’s website and at www.sec.gov. Additional factors that might affect: a) Ball’s packaging segments include product capacity, supply, and demand constraints and fluctuations and changes in consumption patterns; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather and related events such as drought, wildfires, storms, hurricanes, tornadoes and floods; footprint adjustments and other manufacturing changes, including the opening and closing of facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; unfavorable mandatory deposit or packaging laws; customer and supplier consolidation; power and supply chain interruptions; changes in major customer or supplier contracts or loss of a major customer or supplier; inability to pass through increased costs; war, political instability and sanctions, including relating to the situation in Russia and Ukraine and its impact on Ball’s supply chain and its ability to operate in Europe, the Middle East and Africa regions generally; changes in foreign exchange or tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and orders affecting goods produced by Ball or in its supply chain, including imported raw materials; and b) Ball as a whole include those listed above plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management, succession, and the ability to attract and retain skilled labor; regulatory actions or issues including those related to tax, environmental, social and governance reporting, competition, environmental, health and workplace safety, including U.S. Federal Drug Administration and other actions or public concerns affecting products filled in Ball’s containers, or chemicals or substances used in raw materials or in the manufacturing process; technological developments and innovations; the ability to manage cyber threats; litigation; strikes; disease; pandemic; labor cost changes; inflation; rates of return on assets of Ball’s defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies; reduced cash flow; interest rates affecting Ball’s debt; successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on Ball’s operating results and business generally.
|
Ball Corporation |
||||||||||||
|
Condensed Financial Statements (Third Quarter 2024) |
||||||||||||
|
Unaudited Condensed Consolidated Statements of Earnings |
||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
September 30, |
September 30, |
|||||||||||
|
($ in millions, except per share amounts) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
Net sales |
$ |
3,082 |
$ |
3,111 |
$ |
8,915 |
$ |
9,159 |
||||
|
Cost of sales (excluding depreciation and amortization) |
(2,425) |
(2,512) |
(7,065) |
(7,450) |
||||||||
|
Depreciation and amortization |
(150) |
(152) |
(460) |
(449) |
||||||||
|
Selling, general and administrative |
(142) |
(133) |
(518) |
(409) |
||||||||
|
Business consolidation and other activities |
(85) |
(29) |
(171) |
(43) |
||||||||
|
Interest income |
14 |
12 |
58 |
23 |
||||||||
|
Interest expense |
(67) |
(122) |
(228) |
(351) |
||||||||
|
Debt refinancing and other costs |
— |
— |
(3) |
— |
||||||||
|
Earnings before taxes |
227 |
175 |
528 |
480 |
||||||||
|
Tax (provision) benefit |
(42) |
(45) |
(118) |
(107) |
||||||||
|
Equity in results of affiliates, net of tax |
8 |
3 |
21 |
13 |
||||||||
|
Earnings from continuing operations |
193 |
133 |
431 |
386 |
||||||||
|
Discontinued operations, net of tax |
6 |
71 |
3,613 |
171 |
||||||||
|
Net earnings |
199 |
204 |
4,044 |
557 |
||||||||
|
Net earnings attributable to noncontrolling interests, net of tax |
2 |
1 |
4 |
4 |
||||||||
|
Net earnings attributable to Ball Corporation |
$ |
197 |
$ |
203 |
$ |
4,040 |
$ |
553 |
||||
|
Earnings per share: |
||||||||||||
|
Basic – continuing operations |
$ |
0.63 |
$ |
0.42 |
$ |
1.38 |
$ |
1.22 |
||||
|
Basic – discontinued operations |
0.02 |
0.22 |
11.70 |
0.54 |
||||||||
|
Total basic earnings per share |
$ |
0.65 |
$ |
0.64 |
$ |
13.08 |
$ |
1.76 |
||||
|
Diluted – continuing operations |
$ |
0.63 |
$ |
0.42 |
$ |
1.37 |
$ |
1.20 |
||||
|
Diluted – discontinued operations |
0.02 |
0.22 |
11.59 |
0.54 |
||||||||
|
Total diluted earnings per share |
$ |
0.65 |
$ |
0.64 |
$ |
12.96 |
$ |
1.74 |
||||
|
Weighted average shares outstanding (000s): |
||||||||||||
|
Basic |
302,406 |
314,983 |
308,851 |
314,596 |
||||||||
|
Diluted |
305,219 |
317,296 |
311,674 |
316,938 |
||||||||
|
Ball Corporation |
||||||
|
Condensed Financial Statements (Third Quarter 2024) |
||||||
|
Unaudited Condensed Consolidated Statements of Cash Flows |
||||||
|
Nine Months Ended |
||||||
|
September 30, |
||||||
|
($ in millions) |
2024 |
2023 |
||||
|
Cash Flows from Operating Activities: |
||||||
|
Net earnings |
$ |
4,044 |
$ |
557 |
||
|
Depreciation and amortization |
469 |
509 |
||||
|
Business consolidation and other activities |
171 |
43 |
||||
|
Deferred tax provision (benefit) |
201 |
(87) |
||||
|
Gain on Aerospace disposal |
(4,694) |
18 |
||||
|
Pension contributions |
(24) |
(13) |
||||
|
Other, net |
78 |
71 |
||||
|
Changes in working capital components, net of dispositions |
(630) |
29 |
||||
|
Cash provided by (used in) operating activities |
(385) |
1,127 |
||||
|
Cash Flows from Investing Activities: |
||||||
|
Capital expenditures |
(377) |
(830) |
||||
|
Business dispositions, net of cash sold |
5,422 |
— |
||||
|
Other, net |
136 |
4 |
||||
|
Cash provided by (used in) investing activities |
5,181 |
(826) |
||||
|
Cash Flows from Financing Activities: |
||||||
|
Changes in borrowings, net |
(2,778) |
652 |
||||
|
Acquisitions of treasury stock |
(1,061) |
(3) |
||||
|
Dividends |
(185) |
(189) |
||||
|
Other, net |
26 |
30 |
||||
|
Cash provided by (used in) financing activities |
(3,998) |
490 |
||||
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash |
(64) |
— |
||||
|
Change in cash, cash equivalents and restricted cash |
734 |
791 |
||||
|
Cash, cash equivalents and restricted cash – beginning of period |
710 |
558 |
||||
|
Cash, cash equivalents and restricted cash – end of period |
$ |
1,444 |
$ |
1,349 |
||
|
Ball Corporation |
||||||
|
Condensed Financial Statements (Third Quarter 2024) |
||||||
|
Unaudited Condensed Consolidated Balance Sheets |
||||||
|
September 30, |
||||||
|
($ in millions) |
2024 |
2023 |
||||
|
Assets |
||||||
|
Current assets |
||||||
|
Cash and cash equivalents |
$ |
1,440 |
$ |
1,335 |
||
|
Receivables, net |
2,655 |
1,785 |
||||
|
Inventories, net |
1,385 |
1,660 |
||||
|
Other current assets |
113 |
263 |
||||
|
Current assets held for sale |
14 |
365 |
||||
|
Total current assets |
5,607 |
5,408 |
||||
|
Property, plant and equipment, net |
6,550 |
6,606 |
||||
|
Goodwill |
4,244 |
4,182 |
||||
|
Intangible assets, net |
1,138 |
1,262 |
||||
|
Other assets |
1,285 |
1,635 |
||||
|
Noncurrent assets held for sale |
— |
839 |
||||
|
Total assets |
$ |
18,824 |
$ |
19,932 |
||
|
Liabilities and Equity |
||||||
|
Current liabilities |
||||||
|
Short-term debt and current portion of long-term debt |
$ |
452 |
$ |
2,108 |
||
|
Payables and other accrued liabilities |
4,672 |
4,212 |
||||
|
Current liabilities held for sale |
— |
395 |
||||
|
Total current liabilities |
5,124 |
6,715 |
||||
|
Long-term debt |
5,353 |
7,483 |
||||
|
Other long-term liabilities |
1,592 |
1,513 |
||||
|
Noncurrent liabilities held for sale |
— |
213 |
||||
|
Equity |
6,755 |
4,008 |
||||
|
Total liabilities and equity |
$ |
18,824 |
$ |
19,932 |
||
Ball Corporation
Notes to the Condensed Financial Statements (Third Quarter 2024)
1. U.S. GAAP Measures
Business Segment Information
Ball’s operations are organized and reviewed by management along its product lines and geographical areas.
On February 16, 2024, the company completed the divestiture of its aerospace business. The transaction represents a strategic shift; therefore, the company’s consolidated financial statements reflect the aerospace business’ financial results as discontinued operations for all periods presented. The aerospace business was historically presented as a reportable segment. Effective as of the first quarter of 2024, the company reports its financial performance in the three reportable segments outlined below: (1) beverage packaging, North and Central America; (2) beverage packaging, Europe, Middle East and Africa (beverage packaging, EMEA) and (3) beverage packaging, South America.
Beverage packaging, North and Central America: Consists of operations in the U.S., Canada and Mexico that manufacture and sell aluminum beverage containers throughout those countries.
Beverage packaging, EMEA: Consists of operations in numerous countries throughout Europe, as well as Egypt and Turkey, that manufacture and sell aluminum beverage containers throughout those countries.
Beverage packaging, South America: Consists of operations in Brazil, Argentina, Paraguay and Chile that manufacture and sell aluminum beverage containers throughout most of South America.
Other consists of a non-reportable operating segment (beverage packaging, other) that manufactures and sells aluminum beverage containers in India, Saudi Arabia and Myanmar; a non-reportable operating segment that manufactures and sells extruded aluminum aerosol containers and recloseable aluminum bottles across multiple consumer categories as well as aluminum slugs (aerosol packaging) throughout North America, South America, Europe, and Asia; a non-reportable operating segment that manufactures and sells aluminum cups (aluminum cups); undistributed corporate expenses; and intercompany eliminations and other business activities.
The company also has investments in operations in Guatemala, Panama, the U.S. and Vietnam that are accounted for under the equity method of accounting and, accordingly, those results are not included in segment sales or earnings.
In the third quarter of 2023, Ball entered into a Stock Purchase Agreement (Agreement) with BAE Systems, Inc. (BAE) and, for the limited purposes set forth therein, BAE Systems plc, to sell all outstanding equity interests in Ball’s aerospace business. On February 16, 2024, the company completed the divestiture of the aerospace business for a purchase price of $5.6 billion, subject to working capital adjustments and other customary closing adjustments under the terms of the Agreement. The company is in the process of finalizing the working capital adjustments and other customary closing adjustments with BAE, which is currently expected to be completed in 2024 and may adjust the final cash proceeds and gain on sale amounts. The divestiture resulted in a pre-tax gain of $4.67 billion, which is net of $20 million of costs to sell incurred and paid in 2023 related to the disposal. Cash proceeds received at close from the sale of $5.42 billion, net of the cash disposed, are presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2024. The company expects to pay approximately $950 million in income taxes related to the transaction throughout 2024, of which $484 million has been paid as of September 30, 2024. The remaining amount of income taxes related to the transaction is recorded in payables and other accrued liabilities in the unaudited condensed consolidated balance sheet. Additionally, the completion of the divestiture resulted in the removal of the aerospace business from the company’s obligor group, as the business no longer guarantees the company’s senior notes and senior credit facilities.
|
Three Months Ended |
Nine Months Ended |
||||||||||
|
September 30, |
September 30, |
||||||||||
|
($ in millions) |
2024 |
2023 |
2024 |
2023 |
|||||||
|
Net sales |
|||||||||||
|
Beverage packaging, North and Central America |
$ |
1,456 |
$ |
1,541 |
$ |
4,328 |
$ |
4,582 |
|||
|
Beverage packaging, EMEA |
950 |
902 |
2,640 |
2,656 |
|||||||
|
Beverage packaging, South America |
484 |
489 |
1,388 |
1,344 |
|||||||
|
Reportable segment sales |
2,890 |
2,932 |
8,356 |
8,582 |
|||||||
|
Other |
192 |
179 |
559 |
577 |
|||||||
|
Net sales |
$ |
3,082 |
$ |
3,111 |
$ |
8,915 |
$ |
9,159 |
|||
|
Comparable segment operating earnings |
|||||||||||
|
Beverage packaging, North and Central America |
$ |
203 |
$ |
196 |
$ |
605 |
$ |
554 |
|||
|
Beverage packaging, EMEA |
128 |
103 |
326 |
274 |
|||||||
|
Beverage packaging, South America |
78 |
61 |
170 |
141 |
|||||||
|
Reportable segment comparable operating earnings |
409 |
360 |
1,101 |
969 |
|||||||
|
Reconciling items |
|||||||||||
|
Other (a) |
4 |
— |
(66) |
7 |
|||||||
|
Business consolidation and other activities |
(85) |
(29) |
(171) |
(43) |
|||||||
|
Amortization of acquired Rexam intangibles |
(34) |
(34) |
(105) |
(102) |
|||||||
|
Interest expense |
(67) |
(122) |
(228) |
(351) |
|||||||
|
Debt refinancing and other costs |
— |
— |
(3) |
— |
|||||||
|
Earnings before taxes |
$ |
227 |
$ |
175 |
$ |
528 |
$ |
480 |
|||
|
____________ |
|
|
(a) |
Includes undistributed corporate expenses, net, of $32 million and $18 million for the three months ended September 30, 2024 and 2023, respectively, and $149 million and $60 million for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, undistributed corporate expenses, net, includes $82 million of incremental compensation cost from the successful sale of the aerospace business consisting of cash bonuses and stock based compensation. For the three and nine months ended September 30, 2024, undistributed corporate expenses, net, include $7 million and $36 million of corporate interest income, respectively. |
Discontinued Operations
The following table presents components of discontinued operations, net of tax for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
Net sales |
$ |
— |
$ |
460 |
$ |
261 |
$ |
1,467 |
||||
|
Cost of sales (excluding depreciation and amortization) |
— |
(382) |
(214) |
(1,205) |
||||||||
|
Depreciation and amortization |
— |
(21) |
(9) |
(60) |
||||||||
|
Selling, general and administrative |
— |
(11) |
(11) |
(42) |
||||||||
|
Interest expense |
— |
— |
— |
1 |
||||||||
|
Gain (loss) on disposition |
(1) |
(18) |
4,694 |
(18) |
||||||||
|
Tax (provision) benefit |
7 |
43 |
(1,108) |
28 |
||||||||
|
Discontinued operations, net of tax |
$ |
6 |
$ |
71 |
$ |
3,613 |
$ |
171 |
||||
2. Non-U.S. GAAP Measures
Non-U.S. GAAP Measures – Non-U.S. GAAP measures should not be considered in isolation. They should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP and may not be comparable to similarly titled measures of other companies. Presentations of earnings and cash flows presented in accordance with U.S. GAAP are available in the company’s earnings releases and quarterly and annual regulatory filings. Information reconciling forward-looking U.S. GAAP measures to non-U.S. GAAP measures is not available without unreasonable effort. We have not provided guidance for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity and low visibility with respect to certain special items, including restructuring charges, business consolidation and other activities, gains and losses related to acquisition and divestiture of businesses, the ultimate outcome of certain legal or tax proceedings and other non-comparable items. These items are uncertain, depend on various factors and could be material to our results computed in accordance with U.S. GAAP.
Comparable Earnings Before Interest, Taxes, Depreciation and Amortization (Comparable EBITDA) – Comparable EBITDA is earnings before interest expense, taxes, depreciation and amortization, business consolidation and other non-comparable items.
Comparable Operating Earnings – Comparable Operating Earnings is earnings before interest expense, taxes, business consolidation and other non-comparable items.
Comparable Net Earnings – Comparable Net Earnings is net earnings attributable to Ball Corporation before business consolidation and other non-comparable items after tax.
Comparable Diluted Earnings Per Share – Comparable Diluted Earnings Per Share is Comparable Net Earnings divided by diluted weighted average shares outstanding.
Net Debt – Net Debt is total debt less cash and cash equivalents, which are derived directly from the company’s financial statements.
Free Cash Flow – Free Cash Flow is typically derived directly from the company’s cash flow statements and is defined as cash flows from operating activities less capital expenditures; and, it may be adjusted for additional items that affect comparability between periods. Free Cash Flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
Adjusted Free Cash Flow – Adjusted Free Cash Flow is defined as Free Cash Flow adjusted for payments made for income tax liabilities related to the Aerospace disposition and other material dispositions. Adjusted Free Cash Flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire Adjusted Free Cash Flow amount is available for discretionary expenditures.
We use Comparable EBITDA, Comparable Operating Earnings, Comparable Net Earnings, and Comparable Diluted Earnings Per Share internally to evaluate the company’s operating performance. Ball management uses Interest Coverage (Comparable EBITDA to interest expense) and Leverage (Net Debt to Comparable EBITDA) as metrics to monitor the credit quality of Ball Corporation. Management internally uses free cash flow measures to: (1) evaluate the company’s liquidity, (2) evaluate strategic investments, (3) plan stock buyback and dividend levels and (4) evaluate the company’s ability to incur and service debt. Note that when non-U.S. GAAP measures exclude amortization of acquired Rexam intangibles, the measures include the revenue of the acquired entities and all other expenses unless otherwise stated and the acquired assets contribute to revenue generation.
Please see the company’s website for further details of the company’s non-U.S. GAAP financial measures at www.ball.com/investors under the “Financials” tab.
A summary of the effects of non-comparable items on after tax earnings is as follows:
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
September 30, |
September 30, |
|||||||||||
|
($ in millions, except per share amounts) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
Net earnings attributable to Ball Corporation |
$ |
197 |
$ |
203 |
$ |
4,040 |
$ |
553 |
||||
|
Facility closure costs and other items (1) |
85 |
29 |
171 |
43 |
||||||||
|
Amortization of acquired Rexam intangibles |
34 |
34 |
105 |
102 |
||||||||
|
Debt refinancing and other costs |
— |
— |
3 |
— |
||||||||
|
Non-comparable tax items |
(39) |
(21) |
1,020 |
(42) |
||||||||
|
Gain on Aerospace disposal (2) |
1 |
18 |
(4,694) |
18 |
||||||||
|
Aerospace disposition compensation (3) |
— |
— |
82 |
— |
||||||||
|
Comparable Net Earnings |
$ |
278 |
$ |
263 |
$ |
727 |
$ |
674 |
||||
|
Comparable Diluted Earnings Per Share |
$ |
0.91 |
$ |
0.83 |
$ |
2.33 |
$ |
2.13 |
||||
|
(1) |
The charges for the three and nine months ended September 30, 2024, were primarily composed of costs related to plant closures in beverage packaging, South America and beverage packaging, North and Central America, and the company’s activities to establish its new operating model. For the three and nine months ended September 30, 2024, $94 million and $147 million, respectively, of costs were recorded for plant closures, primarily for employee severance and benefits, costs to scrap assets or write them down to their sellable value, accelerated depreciation and other shutdown costs. Additionally, for the three and nine months ended September 30, 2024, $6 million and $26 million, respectively, of costs were recorded to establish the new operating model, primarily related to employee severance, employee benefits and other related items. The charges for the three and nine months ended September 30, 2024, were partially offset by income of $16 million and $27 million, respectively, from the receipt of insurance proceeds for replacement costs related to the 2023 fire at the company’s Verona, Virginia extruded aluminum slug manufacturing facility. |
|
In the first quarter of 2023, Ball announced the planned closure of its aluminum beverage can manufacturing facility in Wallkill, New York. Production permanently ceased at this facility in the third quarter of 2023. The charges for the three and nine months ended September 30, 2023, primarily were composed of costs for employee severance and benefits, accelerated depreciation and other shutdown costs related to this closure. |
|
|
(2) |
In the first quarter of 2024, the company recorded a pre-tax gain for the sale of the aerospace business. In the third quarter of 2023, the company recorded costs to sell the business. |
|
(3) |
The charge for the nine months ended September 30, 2024, was composed of incremental compensation costs from the successful sale of the aerospace business, which consisted of cash bonuses and stock based compensation. This amount was recorded in selling, general and administrative in the unaudited condensed consolidated statement of earnings. |
A summary of the effects of non-comparable items on earnings before taxes is as follows:
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
September 30, |
September 30, |
|||||||||||
|
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
Net earnings attributable to Ball Corporation |
$ |
197 |
$ |
203 |
$ |
4,040 |
$ |
553 |
||||
|
Net earnings attributable to noncontrolling interests, net of tax |
2 |
1 |
4 |
4 |
||||||||
|
Discontinued operations, net of tax |
(6) |
(71) |
(3,613) |
(171) |
||||||||
|
Earnings from continuing operations |
193 |
133 |
431 |
386 |
||||||||
|
Equity in results of affiliates, net of tax |
(8) |
(3) |
(21) |
(13) |
||||||||
|
Tax provision (benefit) |
42 |
45 |
118 |
107 |
||||||||
|
Earnings before taxes |
227 |
175 |
528 |
480 |
||||||||
|
Interest expense |
67 |
122 |
228 |
351 |
||||||||
|
Debt refinancing and other costs |
— |
— |
3 |
— |
||||||||
|
Business consolidation and other activities |
85 |
29 |
171 |
43 |
||||||||
|
Aerospace disposition compensation |
— |
— |
82 |
— |
||||||||
|
Amortization of acquired Rexam intangibles |
34 |
34 |
105 |
102 |
||||||||
|
Comparable Operating Earnings |
$ |
413 |
$ |
360 |
$ |
1,117 |
$ |
976 |
||||
A summary of Comparable EBITDA, Net Debt, Interest Coverage and Leverage is as follows:
|
Twelve |
Less: Nine |
Add: Nine |
|||||||||||
|
Months Ended |
Months Ended |
Months Ended |
Year Ended |
||||||||||
|
December 31, |
September 30, |
September 30, |
September 30, |
||||||||||
|
($ in millions, except ratios) |
2023 |
2023 |
2024 |
2024 |
|||||||||
|
Net earnings attributable to Ball Corporation |
$ |
707 |
$ |
553 |
$ |
4,040 |
$ |
4,194 |
|||||
|
Net earnings attributable to noncontrolling interests, net of tax |
4 |
4 |
4 |
4 |
|||||||||
|
Discontinued operations, net of tax |
(223) |
(171) |
(3,613) |
(3,665) |
|||||||||
|
Earnings from continuing operations |
488 |
386 |
431 |
533 |
|||||||||
|
Equity in results of affiliates, net of tax |
(20) |
(13) |
(21) |
(28) |
|||||||||
|
Tax provision (benefit) |
146 |
107 |
118 |
157 |
|||||||||
|
Earnings before taxes |
614 |
480 |
528 |
662 |
|||||||||
|
Interest expense |
460 |
351 |
228 |
337 |
|||||||||
|
Debt refinancing and other costs |
— |
— |
3 |
3 |
|||||||||
|
Business consolidation and other activities |
133 |
43 |
171 |
261 |
|||||||||
|
Aerospace disposition compensation |
— |
— |
82 |
82 |
|||||||||
|
Amortization of acquired Rexam intangibles |
135 |
102 |
105 |
138 |
|||||||||
|
Comparable Operating Earnings |
1,342 |
976 |
1,117 |
1,483 |
|||||||||
|
Depreciation and amortization |
605 |
449 |
460 |
616 |
|||||||||
|
Amortization of acquired Rexam intangibles |
(135) |
(102) |
(105) |
(138) |
|||||||||
|
Comparable EBITDA |
$ |
1,812 |
$ |
1,323 |
$ |
1,472 |
$ |
1,961 |
|||||
|
Interest expense |
$ |
(460) |
$ |
(351) |
$ |
(228) |
$ |
(337) |
|||||
|
Total debt at period end |
$ |
5,805 |
|||||||||||
|
Cash and cash equivalents |
(1,440) |
||||||||||||
|
Net Debt |
$ |
4,365 |
|||||||||||
|
Interest Coverage (Comparable EBITDA/Interest Expense) |
5.8 |
x |
|||||||||||
|
Leverage (Net Debt/Comparable EBITDA) |
2.2 |
x |
|||||||||||
A summary of free cash flow and adjusted free cash flow is as follows:
|
Nine Months Ended |
|||
|
September 30, |
|||
|
($ in millions) |
2024 |
||
|
Total cash provided by (used in) operating activities |
$ |
(385) |
|
|
Less: Capital expenditures |
(377) |
||
|
Free Cash Flow |
(762) |
||
|
Add: Cash taxes paid for Aerospace disposition |
484 |
||
|
Adjusted Free Cash Flow |
$ |
(278) |
|
View original content to download multimedia:https://www.prnewswire.com/news-releases/ball-reports-third-quarter-2024-results-302292238.html
SOURCE Ball Corporation
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Meta's Core Business 'Doing Great' With 19% Growth, AI Push Signals Search Monetization Ambitions, Says Gene Munster
Deepwater Asset Management‘s Managing Partner Gene Munster offered a detailed analysis of Meta Platforms Inc‘s META third-quarter performance, highlighting the company’s strong core business and ambitious AI investments.
What Happened: “Following the Meta call, the key takeaway is the core business is doing great and they’re aggressively investing in AI to become the next big thing,” Munster wrote on X. “My guess is that big thing is related to monetizing search.”
In his analysis, Munster emphasized several key points:
- Revenue Growth: Meta achieved 19% year-over-year growth in the September quarter, slightly exceeding expectations of 18%. The company’s guidance suggests further acceleration to 20% growth in December.
- User Engagement: Daily active users reached 3.29 billion, growing at 5% year-over-year. While slightly below estimates of 3.31 billion, Munster noted this growth is impressive given Meta’s already massive user base, with approximately half of the world’s population using a Meta property daily.
- Capital Expenditure: Meta’s aggressive infrastructure investment could see an 87% increase in the December quarter, significantly higher than competitor Alphabet Inc GOOGL GOOG owned Google‘s projected 19% increase. Munster supported this strategy, calling it “absolutely the right thing for the company to do.”
- Competitive Position: Meta’s growth outpaces its tech peers, with Munster comparing the company’s projected 20% December growth to Microsoft Corp.‘s MSFT 14% and Google’s search business at 12%.
See Also: AMD CEO Lisa Su: No ‘One Size Fits All’ In $500B AI Computing Future
Why It Matters: Despite positive fundamentals, Meta’s stock declined 3% in after-hours trading, which Munster attributed to high pre-earnings expectations. He noted the stock had already risen 20% in the previous three months, compared to the NASDAQ’s rise of just over 5%.
Looking ahead, Munster believes Meta’s massive user base positions the company well for AI implementation, potentially leading to “growth rates that are higher than what most people think for the next couple years.”
The analysis also touched on Meta’s AI ambitions, with the company reporting a 7% improvement in advertising conversion rates through AI-powered targeting tools. According to Munster, Meta aims to have the most widely used generative AI chat service by year-end.
Price Action: Meta stock closed at $591.80, down 0.25% on Wednesday. In after-hours trading, the stock declined further, dropping 3.18%. Year to date, Meta has shown substantial growth, surging by 70.90%, according to data from Benzinga Pro.
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Elon Musk Slams Zoox Co-Founder Over FSD Criticism: Your Company 'Would Be Dead Already' If Not For Amazon
Zoox co-founder Jesse Levinson on Wednesday dismissed the possibility of Tesla Inc TSLA deploying autonomous vehicles without safety drivers in California next year, alleging that the EV giant lacks a technology that works.
What Happened: Tesla is faced with a lot of regulatory hurdles that they haven’t even started trying to climb yet, Levinson said at TechCrunch Disrupt 2024 event in San Francisco. But the fundamental problem, he said, is that Tesla doesn’t have a “technology that worked.”
“By works, I want to differentiate between a driver assistance system that drives most the time except when it doesn’t and then you have to take over versus a system that’s so reliable and robust that you don’t need a person in it,” Levinson said.
Levinson said that he drives a Tesla and uses its full self-driving (FSD) driver assistance system “every couple of weeks.” While the system is “impressive,” it is also a bit “stressful”, he said.
“…usually it does the right thing and then it sort of lulls you into this false sense of complacency and then it does the wrong thing. You’re like “oh my god.” They are about 100 times less safe than a human,” Levinson said while also pinning it down to the company’s use of just cameras and AI to enable self-driving.
“…you really do need significantly more hardware than Tesla is putting in the vehicles to build a robotaxi that’s not just as safe but especially safer than a human,” he opined while adding that there is a need for sensor data despite advancements in AI to protect against camera malfunctions and ensure fully safe rides.
Musk Responds: Tesla CEO Elon Musk, however, is optimistic that FSD technology can ensure full vehicle autonomy with future versions of the software.
Musk hit back at Levinson on Wednesday for his comments on the company’s capability to deploy autonomous vehicles.
“If he hadn’t gotten bailed out by Amazon, his company would be dead already,” Musk wrote on social media platform X, referring to Amazon.com‘s AMZN acquisition of the robotaxi company in 2020 for over $1.2 billion.
Why It Matters: During Tesla’s third-quarter earnings call earlier this month, Musk said that the company expects to start a ride-hail service in Texas and California starting next year, subject to regulatory approval.
However, the vehicles might not all operate as driverless robotaxis but with a driver as some states demand it until the company touches certain milestones in terms of miles and hours driven, the company then said.
However, Musk expressed confidence about the company operating driverless paid rides sometime next year.
Tesla also unveiled a no-pedal, no-steering wheel dedicated robotaxi product earlier this month called the Cybercab. Cybercab, Musk then said, will enter production ‘before 2027′ and will be priced below $30,000. Until then, Tesla’s ride-hail fleet will be composed of the company’s Model 3 and Model Y.
Zoox, meanwhile, will launch its custom-built robotaxi with no pedals or steering wheel in San Francisco and Las Vegas in the coming weeks, Levinson said on Wednesday. The company will start taking members of the public for rides in the vehicle starting next year, he added.
Image via Shutterstock
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New York Mortgage Trust Reports Third Quarter 2024 Results
NEW YORK, Oct. 30, 2024 (GLOBE NEWSWIRE) — New York Mortgage Trust, Inc. NYMT (“NYMT,” the “Company,” “we,” “our” or “us”) today reported results for the three and nine months ended September 30, 2024.
Summary of Third Quarter 2024:
(dollar amounts in thousands, except per share data)
| Net income attributable to Company’s common stockholders | $ | 32,410 | |
| Net income attributable to Company’s common stockholders per share (basic) | $ | 0.36 | |
| Undepreciated earnings(1) | $ | 34,941 | |
| Undepreciated earnings per common share(1) | $ | 0.39 | |
| Comprehensive income attributable to Company’s common stockholders | $ | 32,410 | |
| Comprehensive income attributable to Company’s common stockholders per share (basic) | $ | 0.36 | |
| Yield on average interest earning assets(1) (2) | 6.69 | % | |
| Interest income | $ | 108,361 | |
| Interest expense | $ | 88,124 | |
| Net interest income | $ | 20,237 | |
| Net interest spread(1) (3) | 1.32 | % | |
| Book value per common share at the end of the period | $ | 9.83 | |
| Adjusted book value per common share at the end of the period(1) | $ | 10.87 | |
| Economic return on book value(4) | 3.51 | % | |
| Economic return on adjusted book value(5) | 0.45 | % | |
| Dividends per common share | $ | 0.20 |
| (1) | Represents a non-GAAP financial measure. A reconciliation of the Company’s non-GAAP financial measures to their most directly comparable GAAP measure is included below in “Reconciliation of Financial Information.” |
| (2) | Calculated as the quotient of our adjusted interest income and our average interest earning assets and excludes all Consolidated SLST assets other than those securities owned by the Company. |
| (3) | Our calculation of net interest spread may not be comparable to similarly-titled measures of other companies who may use a different calculation. |
| (4) | Economic return on book value is based on the periodic change in GAAP book value per common share plus dividends declared per common share, if any, during the period. |
| (5) | Economic return on adjusted book value is based on the periodic change in adjusted book value per common share, a non-GAAP financial measure, plus dividends declared per common share, if any, during the period. |
Key Developments:
Investing Activities
- A joint venture in which we held a common equity investment sold its multi-family apartment community for approximately $56.4 million. The sale generated a net gain attributable to the Company’s common stockholders of approximately $8.7 million.
- A joint venture in which we hold a combined preferred equity and common equity investment sold a multi-family apartment community for approximately $43.5 million. The sale generated a net gain attributable to the Company’s common stockholders of approximately $1.5 million.
- Purchased approximately $372.2 million of Agency RMBS with an average coupon of 5.33%.
- Purchased approximately $624.2 million in residential loans with an average gross coupon of 9.72%.
Financing Activities
- Completed a securitization of business purpose loans, resulting in approximately $235.8 million in net proceeds to us after deducting expenses associated with the transaction. We utilized a portion of the net proceeds to repay approximately $184.6 million on outstanding repurchase agreements related to residential loans.
- Completed a re-securitization of our investment in certain subordinated securities issued by Consolidated SLST, resulting in approximately $73.0 million in net proceeds to us after deducting expenses associated with the transaction. We utilized a portion of the net proceeds to repay approximately $48.8 million on outstanding repurchase agreement financing related to our investment in Consolidated SLST.
Management Overview
Jason Serrano, Chief Executive Officer, commented: “The Company reported sharply higher earnings per share of $0.36 in the third quarter. The improved earnings were the result of a portfolio rotation which began over a year ago. As part of the plan, we focused on acquisitions that can deliver high recurring interest income by rotating from under-performing, total return opportunities. Consequently, the Company reported Total Adjusted Net Interest Income of $29 million in the third quarter, up 39% year-over-year.
Over the year, we maintained a deliberate approach to balance sheet growth by prioritizing investments containing fundamentally stable income and did not veer from our objective. Going forward, we intend to unlock the Company’s excess liquidity for continued portfolio growth to further enhance Company earnings, particularly without any corporate debt maturity until 2026. We believe a patient approach for earnings growth is prudent in this market environment to increase stockholder value.”
Capital Allocation
The following table sets forth, by investment category, our allocated capital at September 30, 2024 (dollar amounts in thousands):
| Single-Family(1) | Multi- Family |
Corporate/ Other |
Total | ||||||||||||
| Residential loans | $ | 3,777,144 | $ | — | $ | — | $ | 3,777,144 | |||||||
| Consolidated SLST CDOs | (845,811 | ) | — | — | (845,811 | ) | |||||||||
| Investment securities available for sale | 3,036,182 | — | 349,088 | 3,385,270 | |||||||||||
| Multi-family loans | — | 87,614 | — | 87,614 | |||||||||||
| Equity investments | — | 100,378 | 46,455 | 146,833 | |||||||||||
| Equity investments in consolidated multi-family properties(2) | — | 154,462 | — | 154,462 | |||||||||||
| Equity investments in disposal group held for sale(3) | — | 17,831 | — | 17,831 | |||||||||||
| Single-family rental properties | 144,736 | — | — | 144,736 | |||||||||||
| Total investment portfolio carrying value | 6,112,251 | 360,285 | 395,543 | 6,868,079 | |||||||||||
| Liabilities: | |||||||||||||||
| Repurchase agreements | (3,258,175 | ) | — | (352,940 | ) | (3,611,115 | ) | ||||||||
| Collateralized debt obligations | |||||||||||||||
| Residential loan securitization CDOs | (1,883,817 | ) | — | — | (1,883,817 | ) | |||||||||
| Non-Agency RMBS re-securitization | (72,638 | ) | — | — | (72,638 | ) | |||||||||
| Senior unsecured notes | — | — | (159,587 | ) | (159,587 | ) | |||||||||
| Subordinated debentures | — | — | (45,000 | ) | (45,000 | ) | |||||||||
| Cash, cash equivalents and restricted cash(4) | 104,220 | — | 221,582 | 325,802 | |||||||||||
| Cumulative adjustment of redeemable non-controlling interest to estimated redemption value | — | (48,282 | ) | — | (48,282 | ) | |||||||||
| Other | 111,504 | (1,306 | ) | (39,493 | ) | 70,705 | |||||||||
| Net Company capital allocated | $ | 1,113,345 | $ | 310,697 | $ | 20,105 | $ | 1,444,147 | |||||||
| Company Recourse Leverage Ratio(5) | 2.6x | ||||||||||||||
| Portfolio Recourse Leverage Ratio(6) | 2.5x | ||||||||||||||
| (1) | The Company, through its ownership of certain securities, has determined it is the primary beneficiary of Consolidated SLST and has consolidated the assets and liabilities of Consolidated SLST in the Company’s condensed consolidated financial statements. Consolidated SLST is primarily presented on our condensed consolidated balance sheets as residential loans, at fair value and collateralized debt obligations, at fair value. Our investment in Consolidated SLST as of September 30, 2024 was limited to the RMBS comprised of first loss subordinated securities and certain IOs issued by the respective securitizations with an aggregate net carrying value of $157.5 million. |
| (2) | Represents the Company’s equity investments in consolidated multi-family properties that are not in disposal group held for sale. See “Reconciliation of Financial Information” section below for a reconciliation of equity investments in consolidated multi-family properties and disposal group held for sale to the Company’s condensed consolidated financial statements. |
| (3) | Represents the Company’s equity investments in consolidated multi-family properties that are held for sale in disposal group. See “Reconciliation of Financial Information” section below for a reconciliation of equity investments in consolidated multi-family properties and disposal group held for sale to the Company’s condensed consolidated financial statements. |
| (4) | Excludes cash in the amount of $9.2 million held in the Company’s equity investments in consolidated multi-family properties and equity investments in consolidated multi-family properties in disposal group held for sale. Restricted cash of $136.9 million is included in the Company’s accompanying condensed consolidated balance sheets in other assets. |
| (5) | Represents the Company’s total outstanding recourse repurchase agreement financing, subordinated debentures and senior unsecured notes divided by the Company’s total stockholders’ equity. Does not include non-recourse repurchase agreement financing amounting to $34.6 million, Consolidated SLST CDOs amounting to $845.8 million, residential loan securitization CDOs amounting to $1.9 billion, non-Agency RMBS re-securitization CDOs amounting to $72.6 million and mortgages payable on real estate, including mortgages payable on real estate of disposal group held for sale, totaling $662.6 million as they are non-recourse debt. |
| (6) | Represents the Company’s outstanding recourse repurchase agreement financing divided by the Company’s total stockholders’ equity. |
The following table sets forth certain information about our interest earning assets by category and their related adjusted interest income, adjusted interest expense, adjusted net interest income (loss), yield on average interest earning assets, average financing cost and net interest spread for the three months ended September 30, 2024 (dollar amounts in thousands):
Three Months Ended September 30, 2024
| Single-Family(8) | Multi- Family |
Corporate/Other | Total | ||||||||||||
| Adjusted Interest Income(1) (2) | $ | 97,233 | $ | 2,699 | $ | 1,054 | $ | 100,986 | |||||||
| Adjusted Interest Expense(1) | (66,297 | ) | — | (5,999 | ) | (72,296 | ) | ||||||||
| Adjusted Net Interest Income (Loss)(1) | $ | 30,936 | $ | 2,699 | $ | (4,945 | ) | $ | 28,690 | ||||||
| Average Interest Earning Assets(3) | $ | 5,841,444 | $ | 91,164 | $ | 103,275 | $ | 6,035,883 | |||||||
| Average Interest Bearing Liabilities(4) | $ | 4,976,522 | $ | — | $ | 379,590 | $ | 5,356,112 | |||||||
| Yield on Average Interest Earning Assets(1) (5) | 6.66 | % | 11.84 | % | 4.08 | % | 6.69 | % | |||||||
| Average Financing Cost(1) (6) | (5.30 | )% | — | (6.29 | )% | (5.37 | )% | ||||||||
| Net Interest Spread(1) (7) | 1.36 | % | 11.84 | % | (2.21 | )% | 1.32 | % | |||||||
| (1) | Represents a non-GAAP financial measure. A reconciliation of the Company’s non-GAAP financial measures to their most directly comparable GAAP measure is included below in “Reconciliation of Financial Information.” |
| (2) | Includes interest income earned on cash accounts held by the Company. |
| (3) | Average Interest Earning Assets for the period include residential loans, multi-family loans and investment securities and exclude all Consolidated SLST assets other than those securities owned by the Company. Average Interest Earning Assets is calculated based on the daily average amortized cost for the period. |
| (4) | Average Interest Bearing Liabilities for the period include repurchase agreements, residential loan securitization and non-Agency RMBS re-securitization CDOs, senior unsecured notes and subordinated debentures and exclude Consolidated SLST CDOs and mortgages payable on real estate as the Company does not directly incur interest expense on these liabilities that are consolidated for GAAP purposes. Average Interest Bearing Liabilities is calculated based on the daily average outstanding balance for the period. |
| (5) | Yield on Average Interest Earning Assets is calculated by dividing our annualized adjusted interest income relating to our portfolio of interest earning assets by our Average Interest Earning Assets for the period. |
| (6) | Average Financing Cost is calculated by dividing our annualized adjusted interest expense by our Average Interest Bearing Liabilities. |
| (7) | Net Interest Spread is the difference between our Yield on Average Interest Earning Assets and our Average Financing Cost. |
| (8) | The Company has determined it is the primary beneficiary of Consolidated SLST and has consolidated Consolidated SLST into the Company’s condensed consolidated financial statements. Our GAAP interest income includes interest income recognized on the underlying seasoned re-performing and non-performing residential loans held in Consolidated SLST. Our GAAP interest expense includes interest expense recognized on the Consolidated SLST CDOs that permanently finance the residential loans in Consolidated SLST and are not owned by the Company. We calculate adjusted interest income by reducing our GAAP interest income by the interest expense recognized on the Consolidated SLST CDOs and adjusted interest expense by excluding, among other things, the interest expense recognized on the Consolidated SLST CDOs, thus only including the interest income earned by the SLST securities that are actually owned by the Company in adjusted net interest income. |
Conference Call
On Thursday, October 31, 2024 at 9:00 a.m., Eastern Time, New York Mortgage Trust’s executive management is scheduled to host a conference call and audio webcast to discuss the Company’s financial results for the three and nine months ended September 30, 2024. To access the conference call, please pre-register using this link. Registrants will receive confirmation with dial-in details. A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis, at the Investor Relations section of the Company’s website at http://www.nymtrust.com or using this link. Please allow extra time, prior to the call, to visit the site and download the necessary software to listen to the Internet broadcast. A webcast replay link of the conference call will be available on the Investor Relations section of the Company’s website approximately two hours after the call and will be available for 12 months.
In connection with the release of these financial results, the Company will also post a supplemental financial presentation that will accompany the conference call on its website at http://www.nymtrust.com under the “Investors — Events and Presentations” section. Third quarter 2024 financial and operating data can be viewed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, which is expected to be filed with the Securities and Exchange Commission on or about November 1, 2024. A copy of the Form 10-Q will be posted at the Company’s website as soon as reasonably practicable following its filing with the Securities and Exchange Commission.
About New York Mortgage Trust
New York Mortgage Trust, Inc. is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes. NYMT is an internally-managed REIT in the business of acquiring, investing in, financing and managing primarily mortgage-related single-family and multi-family residential assets. For a list of defined terms used from time to time in this press release, see “Defined Terms” below.
Defined Terms
The following defines certain of the commonly used terms that may appear in this press release: “RMBS” refers to residential mortgage-backed securities backed by adjustable-rate, hybrid adjustable-rate, or fixed-rate residential loans; “Agency RMBS” refers to RMBS representing interests in or obligations backed by pools of residential loans guaranteed by a government sponsored enterprise (“GSE”), such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”), or an agency of the U.S. government, such as the Government National Mortgage Association (“Ginnie Mae”); “ABS” refers to debt and/or equity tranches of securitizations backed by various asset classes including, but not limited to, automobiles, aircraft, credit cards, equipment, franchises, recreational vehicles and student loans; “non-Agency RMBS” refers to RMBS that are not guaranteed by any agency of the U.S. Government or any GSE; “IOs” refers collectively to interest only and inverse interest only mortgage-backed securities that represent the right to the interest component of the cash flow from a pool of mortgage loans; “POs” refers to mortgage-backed securities that represent the right to the principal component of the cash flow from a pool of mortgage loans; “CMBS” refers to commercial mortgage-backed securities comprised of commercial mortgage pass-through securities issued by a GSE, as well as PO, IO or mezzanine securities that represent the right to a specific component of the cash flow from a pool of commercial mortgage loans; “multi-family CMBS” refers to CMBS backed by commercial mortgage loans on multi-family properties; “CDO” refers to collateralized debt obligation and includes debt that permanently finances the residential loans held in Consolidated SLST, the Company’s residential loans held in securitization trusts and a non-Agency RMBS re-securitization that we consolidate or consolidated in our financial statements in accordance with GAAP; “Consolidated SLST” refers to Freddie Mac-sponsored residential loan securitizations, comprised of seasoned re-performing and non-performing residential loans, of which we own the first loss subordinated securities and certain IOs, that we consolidate in our financial statements in accordance with GAAP; “Consolidated VIEs” refers to variable interest entities (“VIE”) where the Company is the primary beneficiary, as it has both the power to direct the activities that most significantly impact the economic performance of the VIE and a right to receive benefits or absorb losses of the entity that could be potentially significant to the VIE and that we consolidate in our financial statements in accordance with GAAP; “Consolidated Real Estate VIEs” refers to Consolidated VIEs that own multi-family properties; “business purpose loans” refers to (i) short-term loans that are collateralized by residential properties and are made to investors who intend to rehabilitate and sell the residential property for a profit or (ii) loans that finance (or refinance) non-owner occupied residential properties that are rented to one or more tenants; “Mezzanine Lending” refers, collectively, to preferred equity and mezzanine loan investments; “Multi-Family” portfolio includes multi-family CMBS, Mezzanine Lending and certain equity investments in multi-family assets, including joint venture equity investments; “Single-Family” portfolio includes residential loans, Agency RMBS, non-Agency RMBS and single-family rental properties; and “Other” portfolio includes other investment securities and an equity investment in an entity that originates residential loans.
Cautionary Statement Regarding Forward-Looking Statements
When used in this press release, in future filings with the Securities and Exchange Commission (the “SEC”) or in other written or oral communications, statements which are not historical in nature, including those containing words such as “will,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “could,” “would,” “should,” “may” or similar expressions, are intended to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, as such, may involve known and unknown risks, uncertainties and assumptions.
Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results and outcomes could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation: changes in the Company’s business and investment strategy; inflation and changes in interest rates and the fair market value of the Company’s assets, including negative changes resulting in margin calls relating to the financing of the Company’s assets; changes in credit spreads; changes in the long-term credit ratings of the U.S., Fannie Mae, Freddie Mac, and Ginnie Mae; general volatility of the markets in which the Company invests; changes in prepayment rates on the loans the Company owns or that underlie the Company’s investment securities; increased rates of default, delinquency or vacancy and/or decreased recovery rates on or at the Company’s assets; the Company’s ability to identify and acquire targeted assets, including assets in its investment pipeline; the Company’s ability to dispose of assets from time to time on terms favorable to it, including the disposition over time of its joint venture equity investments; changes in relationships with the Company’s financing counterparties and the Company’s ability to borrow to finance its assets and the terms thereof; changes in the Company’s relationships with and/or the performance of its operating partners; the Company’s ability to predict and control costs; changes in laws, regulations or policies affecting the Company’s business; the Company’s ability to make distributions to its stockholders in the future; the Company’s ability to maintain its qualification as a REIT for federal tax purposes; the Company’s ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended; impairments in the value of the collateral underlying the Company’s investments; the Company’s ability to manage or hedge credit risk, interest rate risk, and other financial and operational risks; the Company’s exposure to liquidity risk, risks associated with the use of leverage, and market risks; and risks associated with investing in real estate assets, including changes in business conditions and the general economy, the availability of investment opportunities and the conditions in the market for investment securities, residential loans, structured multi-family investments and other mortgage-, residential housing- and credit-related assets.
These and other risks, uncertainties and factors, including the risk factors and other information described in the Company’s reports filed with the SEC pursuant to the Exchange Act, could cause the Company’s actual results to differ materially from those projected in any forward-looking statements the Company makes. All forward-looking statements speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect the Company. Except as required by law, the Company is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For Further Information
FINANCIAL TABLES FOLLOW
| NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except share data) |
|||||||
| September 30, 2024 |
December 31, 2023 |
||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Residential loans, at fair value | $ | 3,777,144 | $ | 3,084,303 | |||
| Investment securities available for sale, at fair value | 3,385,270 | 2,013,817 | |||||
| Multi-family loans, at fair value | 87,614 | 95,792 | |||||
| Equity investments, at fair value | 146,833 | 147,116 | |||||
| Cash and cash equivalents | 195,066 | 187,107 | |||||
| Real estate, net | 755,702 | 1,131,819 | |||||
| Assets of disposal group held for sale | 197,665 | 426,017 | |||||
| Other assets | 360,620 | 315,357 | |||||
| Total Assets(1) | $ | 8,905,914 | $ | 7,401,328 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Repurchase agreements | $ | 3,611,115 | $ | 2,471,113 | |||
| Collateralized debt obligations ($1,900,228 at fair value and $902,038 at amortized cost, net as of September 30, 2024 and $593,737 at fair value and $1,276,780 at amortized cost, net as of December 31, 2023) | 2,802,266 | 1,870,517 | |||||
| Senior unsecured notes ($60,900 at fair value and $98,687 at amortized cost, net as of September 30, 2024 and $98,111 at amortized cost, net as of December 31, 2023) | 159,587 | 98,111 | |||||
| Subordinated debentures | 45,000 | 45,000 | |||||
| Mortgages payable on real estate, net | 492,321 | 784,421 | |||||
| Liabilities of disposal group held for sale | 177,869 | 386,024 | |||||
| Other liabilities | 145,794 | 118,016 | |||||
| Total liabilities(1) | 7,433,952 | 5,773,202 | |||||
| Commitments and Contingencies | |||||||
| Redeemable Non-Controlling Interest in Consolidated Variable Interest Entities | 21,826 | 28,061 | |||||
| Stockholders’ Equity: | |||||||
| Preferred stock, par value $0.01 per share, 31,500,000 shares authorized, 22,164,414 shares issued and outstanding ($554,110 aggregate liquidation preference) | 535,445 | 535,445 | |||||
| Common stock, par value $0.01 per share, 200,000,000 shares authorized, 90,579,449 and 90,675,403 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 906 | 907 | |||||
| Additional paid-in capital | 2,278,869 | 2,297,081 | |||||
| Accumulated other comprehensive loss | — | (4 | ) | ||||
| Accumulated deficit | (1,371,073 | ) | (1,253,817 | ) | |||
| Company’s stockholders’ equity | 1,444,147 | 1,579,612 | |||||
| Non-controlling interests | 5,989 | 20,453 | |||||
| Total equity | 1,450,136 | 1,600,065 | |||||
| Total Liabilities and Equity | $ | 8,905,914 | $ | 7,401,328 | |||
| (1) | Our condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”) as the Company is the primary beneficiary of these VIEs. As of September 30, 2024 and December 31, 2023, assets of consolidated VIEs totaled $4,051,406 and $3,816,777, respectively, and the liabilities of consolidated VIEs totaled $3,517,298 and $3,076,818, respectively. |
| NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (unaudited) |
|||||||||||||||
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| NET INTEREST INCOME: | |||||||||||||||
| Interest income | $ | 108,361 | $ | 65,195 | $ | 283,027 | $ | 179,871 | |||||||
| Interest expense | 88,124 | 48,406 | 225,883 | 130,145 | |||||||||||
| Total net interest income | 20,237 | 16,789 | 57,144 | 49,726 | |||||||||||
| NET LOSS FROM REAL ESTATE: | |||||||||||||||
| Rental income | 26,382 | 34,176 | 90,353 | 107,427 | |||||||||||
| Other real estate income | 5,521 | 8,215 | 16,093 | 21,486 | |||||||||||
| Total income from real estate | 31,903 | 42,391 | 106,446 | 128,913 | |||||||||||
| Interest expense, mortgages payable on real estate | 12,676 | 21,604 | 49,996 | 68,158 | |||||||||||
| Depreciation and amortization | 8,131 | 6,204 | 32,942 | 18,371 | |||||||||||
| Other real estate expenses | 18,591 | 22,371 | 60,476 | 66,878 | |||||||||||
| Total expenses related to real estate | 39,398 | 50,179 | 143,414 | 153,407 | |||||||||||
| Total net loss from real estate | (7,495 | ) | (7,788 | ) | (36,968 | ) | (24,494 | ) | |||||||
| OTHER INCOME (LOSS): | |||||||||||||||
| Realized losses, net | (1,380 | ) | (3,679 | ) | (19,404 | ) | (2,220 | ) | |||||||
| Unrealized gains (losses), net | 96,949 | (61,295 | ) | 41,046 | (55,738 | ) | |||||||||
| (Losses) gains on derivative instruments, net | (60,640 | ) | 20,993 | 4,042 | 38,204 | ||||||||||
| Income from equity investments | 6,054 | 2,056 | 10,026 | 9,223 | |||||||||||
| Impairment of real estate | (7,823 | ) | (44,157 | ) | (48,142 | ) | (71,296 | ) | |||||||
| Loss on reclassification of disposal group | — | — | (14,636 | ) | — | ||||||||||
| Other income | 19,715 | 139 | 16,541 | 1,712 | |||||||||||
| Total other income (loss) | 52,875 | (85,943 | ) | (10,527 | ) | (80,115 | ) | ||||||||
| GENERAL, ADMINISTRATIVE AND OPERATING EXPENSES: | |||||||||||||||
| General and administrative expenses | 11,941 | 11,826 | 36,643 | 37,824 | |||||||||||
| Portfolio operating expenses | 8,531 | 5,161 | 23,672 | 17,882 | |||||||||||
| Debt issuance costs | 2,354 | — | 10,452 | — | |||||||||||
| Total general, administrative and operating expenses | 22,826 | 16,987 | 70,767 | 55,706 | |||||||||||
| INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES | 42,791 | (93,929 | ) | (61,118 | ) | (110,589 | ) | ||||||||
| Income tax expense (benefit) | 2,325 | (56 | ) | 2,556 | (59 | ) | |||||||||
| NET INCOME (LOSS) | 40,466 | (93,873 | ) | (63,674 | ) | (110,530 | ) | ||||||||
| Net loss attributable to non-controlling interests | 2,383 | 9,364 | 33,034 | 19,957 | |||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMPANY | 42,849 | (84,509 | ) | (30,640 | ) | (90,573 | ) | ||||||||
| Preferred stock dividends | (10,439 | ) | (10,435 | ) | (31,317 | ) | (31,394 | ) | |||||||
| Gain on repurchase of preferred stock | — | 125 | — | 467 | |||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMPANY’S COMMON STOCKHOLDERS | $ | 32,410 | $ | (94,819 | ) | $ | (61,957 | ) | $ | (121,500 | ) | ||||
| Basic earnings (loss) per common share | $ | 0.36 | $ | (1.04 | ) | $ | (0.68 | ) | $ | (1.33 | ) | ||||
| Diluted earnings (loss) per common share | $ | 0.36 | $ | (1.04 | ) | $ | (0.68 | ) | $ | (1.33 | ) | ||||
| Weighted average shares outstanding-basic | 90,582 | 90,984 | 90,895 | 91,163 | |||||||||||
| Weighted average shares outstanding-diluted | 90,586 | 90,984 | 90,895 | 91,163 | |||||||||||
| NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES SUMMARY OF QUARTERLY EARNINGS (LOSS) (Dollar amounts in thousands, except per share data) (unaudited) |
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| For the Three Months Ended | |||||||||||||||||||
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | |||||||||||||||
| Interest income | $ | 108,361 | $ | 90,775 | $ | 83,892 | $ | 78,789 | $ | 65,195 | |||||||||
| Interest expense | 88,124 | 71,731 | 66,029 | 61,989 | 48,406 | ||||||||||||||
| Total net interest income | 20,237 | 19,044 | 17,863 | 16,800 | 16,789 | ||||||||||||||
| Total net loss from real estate | (7,495 | ) | (13,106 | ) | (16,369 | ) | (6,807 | ) | (7,788 | ) | |||||||||
| Total other income (loss) | 52,875 | (6,080 | ) | (57,323 | ) | 40,685 | (85,943 | ) | |||||||||||
| Total general, administrative and operating expenses | 22,826 | 23,599 | 24,341 | 17,813 | 16,987 | ||||||||||||||
| Income (loss) from operations before income taxes | 42,791 | (23,741 | ) | (80,170 | ) | 32,865 | (93,929 | ) | |||||||||||
| Income tax expense (benefit) | 2,325 | 342 | (111 | ) | 134 | (56 | ) | ||||||||||||
| Net income (loss) | 40,466 | (24,083 | ) | (80,059 | ) | 32,731 | (93,873 | ) | |||||||||||
| Net loss attributable to non-controlling interests | 2,383 | 8,494 | 22,158 | 9,177 | 9,364 | ||||||||||||||
| Net income (loss) attributable to Company | 42,849 | (15,589 | ) | (57,901 | ) | 41,908 | (84,509 | ) | |||||||||||
| Preferred stock dividends | (10,439 | ) | (10,439 | ) | (10,439 | ) | (10,443 | ) | (10,435 | ) | |||||||||
| Gain on repurchase of preferred stock | — | — | — | — | 125 | ||||||||||||||
| Net income (loss) attributable to Company’s common stockholders | 32,410 | (26,028 | ) | (68,340 | ) | 31,465 | (94,819 | ) | |||||||||||
| Basic earnings (loss) per common share | $ | 0.36 | $ | (0.29 | ) | $ | (0.75 | ) | $ | 0.35 | $ | (1.04 | ) | ||||||
| Diluted earnings (loss) per common share | $ | 0.36 | $ | (0.29 | ) | $ | (0.75 | ) | $ | 0.35 | $ | (1.04 | ) | ||||||
| Weighted average shares outstanding – basic | 90,582 | 90,989 | 91,117 | 90,683 | 90,984 | ||||||||||||||
| Weighted average shares outstanding – diluted | 90,586 | 90,989 | 91,117 | 91,189 | 90,984 | ||||||||||||||
| Yield on average interest earning assets(1) | 6.69 | % | 6.46 | % | 6.38 | % | 6.21 | % | 6.03 | % | |||||||||
| Net interest spread(1) | 1.32 | % | 1.33 | % | 1.31 | % | 1.02 | % | 0.90 | % | |||||||||
| Undepreciated earnings (loss)(1) | $ | 34,941 | $ | (22,330 | ) | $ | (62,014 | ) | $ | 33,697 | $ | (92,637 | ) | ||||||
| Undepreciated earnings (loss) per common share(1) | $ | 0.39 | $ | (0.25 | ) | $ | (0.68 | ) | $ | 0.37 | $ | (1.02 | ) | ||||||
| Book value per common share | $ | 9.83 | $ | 9.69 | $ | 10.21 | $ | 11.31 | $ | 11.26 | |||||||||
| Adjusted book value per common share(1) | $ | 10.87 | $ | 11.02 | $ | 11.51 | $ | 12.66 | $ | 12.93 | |||||||||
| Dividends declared per common share | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.30 | |||||||||
| Dividends declared per preferred share on Series D Preferred Stock | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | |||||||||
| Dividends declared per preferred share on Series E Preferred Stock | $ | 0.49 | $ | 0.49 | $ | 0.49 | $ | 0.49 | $ | 0.49 | |||||||||
| Dividends declared per preferred share on Series F Preferred Stock | $ | 0.43 | $ | 0.43 | $ | 0.43 | $ | 0.43 | $ | 0.43 | |||||||||
| Dividends declared per preferred share on Series G Preferred Stock | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.44 | |||||||||
| (1) | Represents a non-GAAP financial measure. A reconciliation of the Company’s non-GAAP financial measures to their most directly comparable GAAP measure is included below in “Reconciliation of Financial Information.” |
Reconciliation of Financial Information
Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP, this press release includes certain non-GAAP financial measures, including adjusted interest income, adjusted interest expense, adjusted net interest income (loss), yield on average interest earning assets, average financing cost, net interest spread, undepreciated earnings (loss) and adjusted book value per common share. Our management team believes that these non-GAAP financial measures, when considered with our GAAP financial statements, provide supplemental information useful for investors as it enables them to evaluate our current performance and trends using the metrics that management uses to operate our business. Our presentation of non-GAAP financial measures may not be comparable to similarly-titled measures of other companies, who may use different calculations. Because these measures are not calculated in accordance with GAAP, they should not be considered a substitute for, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with GAAP should be carefully evaluated.
Adjusted Net Interest Income (Loss) and Net Interest Spread
Financial results for the Company during a given period include the net interest income earned on our investment portfolio of residential loans, investment securities and preferred equity investments and mezzanine loans, where the risks and payment characteristics are equivalent to and accounted for as loans (collectively, our “interest earning assets”). Adjusted net interest income (loss) and net interest spread (both supplemental non-GAAP financial measures) are impacted by factors such as our cost of financing, including our hedging costs, and the interest rate that our investments bear. Furthermore, the amount of premium or discount paid on purchased investments and the prepayment rates on investments will impact adjusted net interest income (loss) as such factors will be amortized over the expected term of such investments.
We provide the following non-GAAP financial measures, in total and by investment category, for the respective periods:
- adjusted interest income – calculated as our GAAP interest income reduced by the interest expense recognized on Consolidated SLST CDOs,
- adjusted interest expense – calculated as our GAAP interest expense reduced by the interest expense recognized on Consolidated SLST CDOs and adjusted to include the net interest component of interest rate swaps,
- adjusted net interest income (loss) – calculated by subtracting adjusted interest expense from adjusted interest income,
- yield on average interest earning assets – calculated as the quotient of our adjusted interest income and our average interest earning assets and excludes all Consolidated SLST assets other than those securities owned by the Company,
- average financing cost – calculated as the quotient of our adjusted interest expense and the average outstanding balance of our interest bearing liabilities, excluding Consolidated SLST CDOs and mortgages payable on real estate, and
- net interest spread – calculated as the difference between our yield on average interest earning assets and our average financing cost.
These measures remove the impact of Consolidated SLST that we consolidate in accordance with GAAP and include the net interest component of interest rate swaps utilized to hedge the variable cash flows associated with our variable-rate borrowings, which is included in (losses) gains on derivative instruments, net in the Company’s condensed consolidated statements of operations. With respect to Consolidated SLST, we only include the interest income earned by the Consolidated SLST securities that are actually owned by the Company as the Company only receives income or absorbs losses related to the Consolidated SLST securities actually owned by the Company. We include the net interest component of interest rate swaps in these measures to more fully represent the cost of our financing strategy.
We provide the non-GAAP financial measures listed above because we believe these non-GAAP financial measures provide investors and management with additional detail and enhance their understanding of our interest earning asset yields, in total and by investment category, relative to the cost of our financing and the underlying trends within our portfolio of interest earning assets. In addition to the foregoing, our management team uses these measures to assess, among other things, the performance of our interest earning assets in total and by asset, possible cash flows from our interest earning assets in total and by asset, our ability to finance or borrow against the asset and the terms of such financing and the composition of our portfolio of interest earning assets, including acquisition and disposition determinations.
A reconciliation of GAAP interest income to adjusted interest income, GAAP interest expense to adjusted interest expense and GAAP total net interest income (loss) to adjusted net interest income (loss) for the three months ended as of the dates indicated is presented below (dollar amounts in thousands):
| September 30, 2024 | ||||||||||||||
| Single-Family | Multi-Family | Corporate/Other | Total | |||||||||||
| GAAP interest income | $ | 104,608 | $ | 2,699 | $ | 1,054 | $ | 108,361 | ||||||
| GAAP interest expense | (81,214 | ) | — | (6,910 | ) | (88,124 | ) | |||||||
| GAAP total net interest income (loss) | $ | 23,394 | $ | 2,699 | $ | (5,856 | ) | $ | 20,237 | |||||
| GAAP interest income | $ | 104,608 | $ | 2,699 | $ | 1,054 | $ | 108,361 | ||||||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | (7,375 | ) | — | — | (7,375 | ) | ||||||||
| Adjusted interest income | $ | 97,233 | $ | 2,699 | $ | 1,054 | $ | 100,986 | ||||||
| GAAP interest expense | $ | (81,214 | ) | $ | — | $ | (6,910 | ) | $ | (88,124 | ) | |||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | 7,375 | — | — | 7,375 | ||||||||||
| Net interest benefit of interest rate swaps | 7,542 | — | 911 | 8,453 | ||||||||||
| Adjusted interest expense | $ | (66,297 | ) | $ | — | $ | (5,999 | ) | $ | (72,296 | ) | |||
| Adjusted net interest income (loss)(1) | $ | 30,936 | $ | 2,699 | $ | (4,945 | ) | $ | 28,690 | |||||
| June 30, 2024 | ||||||||||||||
| Single-Family | Multi-Family | Corporate/Other | Total | |||||||||||
| GAAP interest income | $ | 88,067 | $ | 2,708 | $ | — | $ | 90,775 | ||||||
| GAAP interest expense | (67,434 | ) | — | (4,297 | ) | (71,731 | ) | |||||||
| GAAP total net interest income (loss) | $ | 20,633 | $ | 2,708 | $ | (4,297 | ) | $ | 19,044 | |||||
| GAAP interest income | $ | 88,067 | $ | 2,708 | $ | — | $ | 90,775 | ||||||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | (6,752 | ) | — | — | (6,752 | ) | ||||||||
| Adjusted interest income | $ | 81,315 | $ | 2,708 | $ | — | $ | 84,023 | ||||||
| GAAP interest expense | $ | (67,434 | ) | $ | — | $ | (4,297 | ) | $ | (71,731 | ) | |||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | 6,752 | — | — | 6,752 | ||||||||||
| Net interest benefit of interest rate swaps | 7,631 | — | 659 | 8,290 | ||||||||||
| Adjusted interest expense | $ | (53,051 | ) | $ | — | $ | (3,638 | ) | $ | (56,689 | ) | |||
| Adjusted net interest income (loss)(1) | $ | 28,264 | $ | 2,708 | $ | (3,638 | ) | $ | 27,334 | |||||
| March 31, 2024 | ||||||||||||||
| Single-Family | Multi-Family | Corporate/Other | Total | |||||||||||
| GAAP interest income | $ | 81,227 | $ | 2,665 | $ | — | $ | 83,892 | ||||||
| GAAP interest expense | (61,740 | ) | — | (4,289 | ) | (66,029 | ) | |||||||
| GAAP total net interest income (loss) | $ | 19,487 | $ | 2,665 | $ | (4,289 | ) | $ | 17,863 | |||||
| GAAP interest income | $ | 81,227 | $ | 2,665 | $ | — | $ | 83,892 | ||||||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | (5,801 | ) | — | — | (5,801 | ) | ||||||||
| Adjusted interest income | $ | 75,426 | $ | 2,665 | $ | — | $ | 78,091 | ||||||
| GAAP interest expense | $ | (61,740 | ) | $ | — | $ | (4,289 | ) | $ | (66,029 | ) | |||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | 5,801 | — | — | 5,801 | ||||||||||
| Net interest benefit of interest rate swaps | 7,177 | — | 1,155 | 8,332 | ||||||||||
| Adjusted interest expense | $ | (48,762 | ) | $ | — | $ | (3,134 | ) | $ | (51,896 | ) | |||
| Adjusted net interest income (loss)(1) | $ | 26,664 | $ | 2,665 | $ | (3,134 | ) | $ | 26,195 | |||||
| December 31, 2023 | ||||||||||||||
| Single-Family | Multi-Family | Corporate/Other | Total | |||||||||||
| GAAP interest income | $ | 76,119 | $ | 2,670 | $ | — | $ | 78,789 | ||||||
| GAAP interest expense | (57,489 | ) | — | (4,500 | ) | (61,989 | ) | |||||||
| GAAP total net interest income (loss) | $ | 18,630 | $ | 2,670 | $ | (4,500 | ) | $ | 16,800 | |||||
| GAAP interest income | $ | 76,119 | $ | 2,670 | $ | — | $ | 78,789 | ||||||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | (6,268 | ) | — | — | (6,268 | ) | ||||||||
| Adjusted interest income | $ | 69,851 | $ | 2,670 | $ | — | $ | 72,521 | ||||||
| GAAP interest expense | $ | (57,489 | ) | $ | — | $ | (4,500 | ) | $ | (61,989 | ) | |||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | 6,268 | — | — | 6,268 | ||||||||||
| Net interest benefit of interest rate swaps | 5,703 | — | 988 | 6,691 | ||||||||||
| Adjusted interest expense | $ | (45,518 | ) | $ | — | $ | (3,512 | ) | $ | (49,030 | ) | |||
| Adjusted net interest income (loss)(1) | $ | 24,333 | $ | 2,670 | $ | (3,512 | ) | $ | 23,491 | |||||
| September 30, 2023 | ||||||||||||||
| Single-Family | Multi-Family | Corporate/Other | Total | |||||||||||
| GAAP interest income | $ | 61,346 | $ | 3,849 | $ | — | $ | 65,195 | ||||||
| GAAP interest expense | (44,101 | ) | — | (4,305 | ) | (48,406 | ) | |||||||
| GAAP total net interest income (loss) | $ | 17,245 | $ | 3,849 | $ | (4,305 | ) | $ | 16,789 | |||||
| GAAP interest income | $ | 61,346 | $ | 3,849 | $ | — | $ | 65,195 | ||||||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | (5,957 | ) | — | — | (5,957 | ) | ||||||||
| Adjusted interest income | $ | 55,389 | $ | 3,849 | $ | — | $ | 59,238 | ||||||
| GAAP interest expense | $ | (44,101 | ) | $ | — | $ | (4,305 | ) | $ | (48,406 | ) | |||
| Adjusted for: | ||||||||||||||
| Consolidated SLST CDO interest expense | 5,957 | — | — | 5,957 | ||||||||||
| Net interest benefit of interest rate swaps | 2,994 | — | 872 | 3,866 | ||||||||||
| Adjusted interest expense | $ | (35,150 | ) | $ | — | $ | (3,433 | ) | $ | (38,583 | ) | |||
| Adjusted net interest income (loss)(1) | $ | 20,239 | $ | 3,849 | $ | (3,433 | ) | $ | 20,655 | |||||
| (1) | Adjusted net interest income (loss) is calculated by subtracting adjusted interest expense from adjusted interest income. |
Undepreciated Earnings (Loss)
Undepreciated earnings (loss) is a supplemental non-GAAP financial measure defined as GAAP net income (loss) attributable to Company’s common stockholders excluding the Company’s share in depreciation expense and lease intangible amortization expense, if any, related to operating real estate, net for which an impairment has not been recognized. By excluding these non-cash adjustments from our operating results, we believe that the presentation of undepreciated earnings (loss) provides a consistent measure of our operating performance and useful information to investors to evaluate the effective net return on our portfolio. In addition, we believe that presenting undepreciated earnings (loss) enables our investors to measure, evaluate, and compare our operating performance to that of our peers.
A reconciliation of net income (loss) attributable to Company’s common stockholders to undepreciated earnings (loss) for the respective periods ended is presented below (amounts in thousands, except per share data):
| For the Three Months Ended | |||||||||||||||||
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | |||||||||||||
| Net income (loss) attributable to Company’s common stockholders | $ | 32,410 | $ | (26,028 | ) | $ | (68,340 | ) | $ | 31,465 | $ | (94,819 | ) | ||||
| Add: | |||||||||||||||||
| Depreciation expense on operating real estate | 2,531 | 3,698 | 6,326 | 2,232 | 2,182 | ||||||||||||
| Undepreciated earnings (loss) | $ | 34,941 | $ | (22,330 | ) | $ | (62,014 | ) | $ | 33,697 | $ | (92,637 | ) | ||||
| Weighted average shares outstanding – basic | 90,582 | 90,989 | 91,117 | 90,683 | 90,984 | ||||||||||||
| Undepreciated earnings (loss) per common share | $ | 0.39 | $ | (0.25 | ) | $ | (0.68 | ) | $ | 0.37 | $ | (1.02 | ) | ||||
Adjusted Book Value Per Common Share
Adjusted book value per common share is a supplemental non-GAAP financial measure calculated by making the following adjustments to GAAP book value: (i) exclude the Company’s share of cumulative depreciation and lease intangible amortization expenses related to real estate held at the end of the period for which an impairment has not been recognized, (ii) exclude the cumulative adjustment of redeemable non-controlling interests to estimated redemption value and (iii) adjust our amortized cost liabilities that finance our investment portfolio to fair value.
Our rental property portfolio includes fee simple interests in single-family rental homes and joint venture equity interests in multi-family properties owned by Consolidated Real Estate VIEs. By excluding our share of cumulative non-cash depreciation and amortization expenses related to real estate held at the end of the period for which an impairment has not been recognized, adjusted book value reflects the value, at their undepreciated basis, of our single-family rental properties and joint venture equity investments that the Company has determined to be recoverable at the end of the period.
Additionally, in connection with third party ownership of certain of the non-controlling interests in certain of the Consolidated Real Estate VIEs, we record redeemable non-controlling interests as mezzanine equity on our condensed consolidated balance sheets. The holders of the redeemable non-controlling interests may elect to sell their ownership interests to us at fair value once a year, subject to annual minimum and maximum amount limitations, resulting in an adjustment of the redeemable non-controlling interests to fair value that is accounted for by us as an equity transaction in accordance with GAAP. A key component of the estimation of fair value of the redeemable non-controlling interests is the estimated fair value of the multi-family apartment properties held by the applicable Consolidated Real Estate VIEs. However, because the corresponding real estate assets are not reported at fair value and thus not adjusted to reflect unrealized gains or losses in our condensed consolidated financial statements, the cumulative adjustment of the redeemable non-controlling interests to fair value directly affects our GAAP book value. By excluding the cumulative adjustment of redeemable non-controlling interests to estimated redemption value, adjusted book value more closely aligns the accounting treatment applied to these real estate assets and reflects our joint venture equity investment at its undepreciated basis.
The substantial majority of our remaining assets are financial or similar instruments that are carried at fair value in accordance with the fair value option in our condensed consolidated financial statements. However, unlike our use of the fair value option for the assets in our investment portfolio, certain CDOs issued by our residential loan securitizations, certain senior unsecured notes and subordinated debentures that finance our investment portfolio assets are carried at amortized cost in our condensed consolidated financial statements. By adjusting these financing instruments to fair value, adjusted book value reflects the Company’s net equity in investments on a comparable fair value basis.
We believe that the presentation of adjusted book value per common share provides a useful measure for investors and us as it provides a consistent measure of our value, allows management to effectively consider our financial position and facilitates the comparison of our financial performance to that of our peers.
A reconciliation of GAAP book value to adjusted book value and calculation of adjusted book value per common share as of the dates indicated is presented below (amounts in thousands, except per share data):
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | |||||||||||||||
| Company’s stockholders’ equity | $ | 1,444,147 | $ | 1,431,910 | $ | 1,485,256 | $ | 1,579,612 | $ | 1,575,228 | |||||||||
| Preferred stock liquidation preference | (554,110 | ) | (554,110 | ) | (554,110 | ) | (554,110 | ) | (554,110 | ) | |||||||||
| GAAP book value | 890,037 | 877,800 | 931,146 | 1,025,502 | 1,021,118 | ||||||||||||||
| Add: | |||||||||||||||||||
| Cumulative depreciation expense on real estate(1) | 19,180 | 21,692 | 24,451 | 21,801 | 21,817 | ||||||||||||||
| Cumulative amortization of lease intangibles related to real estate(1) | 4,903 | 11,078 | 13,000 | 14,897 | 21,356 | ||||||||||||||
| Cumulative adjustment of redeemable non-controlling interest to estimated redemption value | 48,282 | 44,053 | 36,489 | 30,062 | 17,043 | ||||||||||||||
| Adjustment of amortized cost liabilities to fair value | 21,961 | 43,475 | 44,590 | 55,271 | 90,929 | ||||||||||||||
| Adjusted book value | $ | 984,363 | $ | 998,098 | $ | 1,049,676 | $ | 1,147,533 | $ | 1,172,263 | |||||||||
| Common shares outstanding | 90,579 | 90,592 | 91,231 | 90,675 | 90,684 | ||||||||||||||
| GAAP book value per common share(2) | $ | 9.83 | $ | 9.69 | $ | 10.21 | $ | 11.31 | $ | 11.26 | |||||||||
| Adjusted book value per common share(3) | $ | 10.87 | $ | 11.02 | $ | 11.51 | $ | 12.66 | $ | 12.93 | |||||||||
| (1) | Represents cumulative adjustments for the Company’s share of depreciation expense and amortization of lease intangibles related to real estate held as of the end of the period presented for which an impairment has not been recognized. |
| (2) | GAAP book value per common share is calculated using the GAAP book value and the common shares outstanding for the periods indicated. |
| (3) | Adjusted book value per common share is calculated using the adjusted book value and the common shares outstanding for the periods indicated. |
Equity Investments in Multi-Family Entities
We own joint venture equity investments in entities that own multi-family properties. We determined that these joint venture entities are VIEs and that we are the primary beneficiary of all but two of these VIEs, resulting in consolidation of the VIEs where we are the primary beneficiary, including their assets, liabilities, income and expenses, in our condensed consolidated financial statements with non-controlling interests for the third-party ownership of the joint ventures’ membership interests. With respect to the two additional joint venture equity investments for which we determined that we are not the primary beneficiary, we record our equity investments at fair value.
In September 2022, the Company announced a repositioning of its business through the opportunistic disposition over time of the Company’s joint venture equity investments in multi-family properties and reallocation of its capital away from such assets to its targeted assets. Accordingly, as of September 30, 2024, the Company determined that certain joint venture equity investments meet the criteria to be classified as held for sale and the assets and liabilities of the respective Consolidated VIEs are reported in assets and liabilities of disposal group held for sale.
We also own a preferred equity investment in a VIE that owns a multi-family property and for which, as of September 30, 2024, the Company is the primary beneficiary, resulting in consolidation of the assets, liabilities, income and expenses of the VIE in our condensed consolidated financial statements with a non-controlling interest for the third-party ownership of the VIE’s membership interests.
A reconciliation of our net equity investments in consolidated multi-family properties and disposal group held for sale to our condensed consolidated financial statements as of September 30, 2024 is shown below (dollar amounts in thousands):
| Cash and cash equivalents | $ | 6,194 | ||
| Real estate, net(1) | 610,967 | |||
| Assets of disposal group held for sale | 197,665 | |||
| Other assets | 21,981 | |||
| Total assets | $ | 836,807 | ||
| Mortgages payable on real estate, net | $ | 492,321 | ||
| Liabilities of disposal group held for sale | 177,869 | |||
| Other liabilities | 14,917 | |||
| Total liabilities | $ | 685,107 | ||
| Redeemable non-controlling interest in Consolidated VIEs | $ | 21,826 | ||
| Less: Cumulative adjustment of redeemable non-controlling interest to estimated redemption value | (48,282 | ) | ||
| Non-controlling interest in Consolidated VIEs | 3,899 | |||
| Non-controlling interest in disposal group held for sale | 1,964 | |||
| Net equity investment(2) | $ | 172,293 | ||
| (1) | Includes real estate held for sale in the amount of $23.6 million. |
| (2) | The Company’s net equity investment as of September 30, 2024 consists of $154.5 million of net equity investments in consolidated multi-family properties and $17.8 million of net equity investments in disposal group held for sale. |
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Clear Channel Outdoor Holdings, Inc. Reports Results for the Third Quarter of 2024
SAN ANTONIO, Oct. 31, 2024 /PRNewswire/ — Clear Channel Outdoor Holdings, Inc. CCO (the “Company”) today reported financial results for the quarter ended September 30, 2024.
“Our third quarter consolidated revenue of $559 million increased 6.1%, or 5.7% excluding movements in foreign exchange rates, with growth across all of our business segments,” said Scott Wells, Chief Executive Officer of Clear Channel Outdoor Holdings, Inc. “Our America segment delivered a revenue increase of 5.0% during the period, reflecting improved national advertising sales and growth across all regions.
“We continue to pursue a range of initiatives aimed at leveraging our technology investments and enhanced sales teams to maximize our performance in the U.S. Utilizing our digital expertise and RADAR data analytics resources, we are making inroads into verticals that have traditionally not relied on out-of-home to reach their target audiences. We have also secured, effective November 1, 2024, a large 15-year contract for roadside advertising assets controlled by the New York MTA. These initiatives have broadened our revenue base as we pursue growth opportunities.
“Our business is performing well, and we remain on track to deliver on our full year 2024 consolidated financial guidance. We are committed to executing our strategic plan, including continuing the sales processes related to our international businesses. Our ultimate goals include organically growing cash flow and reducing leverage on our balance sheet.”
Financial Highlights:
Financial highlights for the third quarter of 2024 as compared to the same period of 2023, including financial highlights excluding movements in foreign exchange rates (“FX”)1:
|
(In millions) |
Three Months Ended |
% Change |
|
|
Revenue: |
|||
|
Consolidated Revenue2 |
$ 559.0 |
6.1 % |
|
|
Excluding movements in FX1,2 |
556.7 |
5.7 % |
|
|
America Revenue |
292.8 |
5.0 % |
|
|
Airports Revenue |
82.3 |
9.0 % |
|
|
Europe-North Revenue |
166.4 |
11.4 % |
|
|
Excluding movements in FX1 |
162.2 |
8.6 % |
|
|
Net Loss: |
|||
|
Loss from Continuing Operations |
(31.5) |
(38.3) % |
|
|
Adjusted EBITDA1: |
|||
|
Adjusted EBITDA1,2 |
142.8 |
2.6 % |
|
|
Excluding movements in FX1,2 |
141.9 |
1.9 % |
|
|
America Segment Adjusted EBITDA3 |
128.4 |
5.8 % |
|
|
Airports Segment Adjusted EBITDA3 |
16.9 |
9.0 % |
|
|
Europe-North Segment Adjusted EBITDA3 |
28.3 |
(0.5) % |
|
|
Excluding movements in FX1 |
27.2 |
(4.5) % |
|
1 |
This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
|
2 |
Financial highlights exclude results of discontinued operations. See “Supplemental Disclosures” section herein for more information. |
|
3 |
Segment Adjusted EBITDA is a GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
Guidance:
Our expectations for the fourth quarter of 2024 are as follows:
|
Fourth Quarter of 2024 |
% change from prior year |
||||||
|
(in millions) |
Low |
High |
Low |
High |
|||
|
Consolidated Revenue1,2 |
$ 628 |
$ 653 |
(1) % |
3 % |
|||
|
America |
308 |
318 |
3 % |
7 % |
|||
|
Airports |
111 |
116 |
— % |
4 % |
|||
|
Europe-North1 |
185 |
195 |
(4) % |
2 % |
|||
|
1 |
Excludes movements in FX |
|
2 |
Excludes results of discontinued operations |
We have updated our full year 2024 guidance from the guidance previously provided in our earnings release issued on August 7, 2024, as follows:
|
Full Year of 2024 |
% change from prior year |
||||||
|
(in millions) |
Low |
High |
Low |
High |
|||
|
Consolidated Revenue1,2 |
$ 2,222 |
$ 2,247 |
4 % |
6 % |
|||
|
America |
1,141 |
1,151 |
4 % |
5 % |
|||
|
Airports |
356 |
361 |
14 % |
16 % |
|||
|
Europe-North1 |
648 |
658 |
5 % |
6 % |
|||
|
Loss from Continuing Operations1 |
(165) |
(150) |
5 % |
(5) % |
|||
|
Adjusted EBITDA1,2,3 |
560 |
580 |
5 % |
8 % |
|||
|
AFFO1,2,3 |
90 |
105 |
8 % |
26 % |
|||
|
Capital Expenditures2 |
130 |
140 |
(10) % |
(3) % |
|||
|
1 |
Excludes movements in FX |
|
2 |
Excludes results of discontinued operations |
|
3 |
This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
Expected results and estimates may be impacted by factors outside of the Company’s control, and actual results may be materially different from this guidance. See “Cautionary Statement Concerning Forward-Looking Statements” herein.
Results:
Results provided herein exclude amounts related to discontinued operations for all periods presented.
Revenue:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
Revenue: |
|||||||||||
|
America |
$ 292,821 |
$ 278,760 |
5.0 % |
$ 832,805 |
$ 802,326 |
3.8 % |
|||||
|
Airports |
82,331 |
75,558 |
9.0 % |
245,476 |
200,392 |
22.5 % |
|||||
|
Europe-North |
166,361 |
149,366 |
11.4 % |
470,489 |
427,778 |
10.0 % |
|||||
|
Other |
17,475 |
23,102 |
(24.4) % |
50,511 |
64,530 |
(21.7) % |
|||||
|
Consolidated Revenue |
$ 558,988 |
$ 526,786 |
6.1 % |
$ 1,599,281 |
$ 1,495,026 |
7.0 % |
|||||
|
Revenue excluding movements in FX1: |
|||||||||||
|
America |
$ 292,821 |
$ 278,760 |
5.0 % |
$ 832,805 |
$ 802,326 |
3.8 % |
|||||
|
Airports |
82,331 |
75,558 |
9.0 % |
245,476 |
200,392 |
22.5 % |
|||||
|
Europe-North |
162,209 |
149,366 |
8.6 % |
463,374 |
427,778 |
8.3 % |
|||||
|
Other |
19,299 |
23,102 |
(16.5) % |
52,624 |
64,530 |
(18.5) % |
|||||
|
Consolidated Revenue excluding movements in FX |
$ 556,660 |
$ 526,786 |
5.7 % |
$ 1,594,279 |
$ 1,495,026 |
6.6 % |
|||||
|
1 This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
Revenue for the third quarter of 2024, as compared to the same period of 2023:
America: Revenue up 5.0%:
- Revenue up in all regions driven by increased demand for both digital and printed billboards and the deployment of new digital billboards
- Digital revenue up 8.4% to $105.8 million from $97.6 million
- National sales comprised 36.3% of America revenue
Airports: Revenue up 9.0%:
- Strong advertising demand, with growth led by the Port Authority of New York and New Jersey airports
- Digital revenue up 0.8% to $42.1 million from $41.8 million
- National sales comprised 58.6% of Airports revenue
Europe-North: Revenue up 11.4%; excluding movements in FX, up 8.6%:
- Revenue up in most countries due to increased demand, most significantly in Sweden; partially offset by loss of transit contract in Norway
- Digital revenue up 15.4% to $96.7 million from $83.8 million; digital revenue, excluding movements in FX, up 12.4% to $94.2 million
Other: Revenue down 24.4%; excluding movements in FX, down 16.5%:
- Loss of contract in Singapore
Direct Operating and SG&A Expenses1:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
Direct operating and SG&A expenses: |
|||||||||||
|
America |
$ 164,553 |
$ 157,456 |
4.5 % |
$ 482,571 |
$ 470,158 |
2.6 % |
|||||
|
Airports |
65,406 |
60,038 |
8.9 % |
190,485 |
162,274 |
17.4 % |
|||||
|
Europe-North |
138,679 |
121,154 |
14.5 % |
394,942 |
366,706 |
7.7 % |
|||||
|
Other |
15,808 |
19,812 |
(20.2) % |
50,475 |
57,360 |
(12.0) % |
|||||
|
Consolidated Direct operating and |
$ 384,446 |
$ 358,460 |
7.2 % |
$ 1,118,473 |
$ 1,056,498 |
5.9 % |
|||||
|
Direct operating and SG&A expenses excluding movements in FX3: |
|||||||||||
|
America |
$ 164,553 |
$ 157,456 |
4.5 % |
$ 482,571 |
$ 470,158 |
2.6 % |
|||||
|
Airports |
65,406 |
60,038 |
8.9 % |
190,485 |
162,274 |
17.4 % |
|||||
|
Europe-North |
135,663 |
121,154 |
12.0 % |
389,426 |
366,706 |
6.2 % |
|||||
|
Other |
17,394 |
19,812 |
(12.2) % |
52,650 |
57,360 |
(8.2) % |
|||||
|
Consolidated Direct operating and |
$ 383,016 |
$ 358,460 |
6.9 % |
$ 1,115,132 |
$ 1,056,498 |
5.5 % |
|||||
|
1 |
“Direct operating and SG&A expenses” as presented throughout this earnings release refers to the sum of direct operating expenses (excluding depreciation and amortization) and selling, general and administrative expenses (excluding depreciation and amortization). |
|
2 |
Includes restructuring and other costs of $1.0 million and $0.3 million during the three months ended September 30, 2024 and 2023, respectively, and $2.5 million and $0.8 million during the nine months ended September 30, 2024 and 2023, respectively. |
|
3 |
This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
Direct operating and SG&A expenses for the third quarter of 2024, as compared to the same period of 2023:
America: Direct operating and SG&A expenses up 4.5%:
- Lower property taxes in prior year related to a legal settlement
- Higher compensation costs driven by higher variable-incentive compensation, increased headcount and pay increases
- Higher production, installation and maintenance costs associated with revenue growth
- Site lease expense down 4.7%, to $85.9 million from $90.1 million, driven by the renegotiation of an existing contract and a decrease in estimated lessor property taxes in certain lease arrangements
Airports: Direct operating and SG&A expenses up 8.9%:
- Site lease expense up 9.1%, to $51.5 million from $47.2 million, driven by higher revenue and lower rent abatements
Europe-North: Direct operating and SG&A expenses up 14.5%; excluding movements in FX, up 12.0%:
- Site lease expense up 8.4%, to $60.3 million from $55.6 million; site lease expense, excluding movements in FX, up 6.2% to $59.0 million driven by higher revenue and new contracts, partially offset by contract loss in Norway
- Higher property taxes and higher rental costs for additional digital displays
- Higher compensation costs driven by pay increases and variable-incentive compensation
Other: Direct operating and SG&A expenses down 20.2%; excluding movements in FX, down 12.2%
- Loss of contract in Singapore
Corporate Expenses:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
Corporate expenses1 |
$ 40,948 |
$ 34,931 |
17.2 % |
$ 125,778 |
$ 129,427 |
(2.8) % |
|||||
|
Corporate expenses excluding movements in FX2 |
40,925 |
34,931 |
17.2 % |
125,401 |
129,427 |
(3.1) % |
|||||
|
1 |
Includes restructuring and other costs of $1.4 million and $0.6 million during the three months ended September 30, 2024 and 2023, respectively, and $5.2 million and $20.2 million during the nine months ended September 30, 2024 and 2023, respectively. Restructuring and other costs for the nine months ended September 30, 2023 include an expense of $19.0 million recorded for the resolution of the investigation of the Company’s former indirect, non-wholly-owned subsidiary, Clear Media Limited. |
|
2 |
This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
Corporate expenses for the third quarter of 2024, as compared to the same period of 2023, up 17.2%:
- Higher employee compensation costs, mainly driven by insurance benefits and share-based compensation
- Higher legal costs associated with property and casualty settlements
Loss from Continuing Operations:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
Loss from continuing operations |
$ (31,543) |
$ (51,082) |
(38.3) % |
$ (168,519) |
$ (182,493) |
(7.7) % |
|||||
Adjusted EBITDA1:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
Segment Adjusted EBITDA2: |
|||||||||||
|
America |
$ 128,372 |
$ 121,335 |
5.8 % |
$ 350,816 |
$ 332,213 |
5.6 % |
|||||
|
Airports |
16,925 |
15,522 |
9.0 % |
55,089 |
38,120 |
44.5 % |
|||||
|
Europe-North |
28,314 |
28,444 |
(0.5) % |
75,288 |
61,850 |
21.7 % |
|||||
|
Other |
1,950 |
3,290 |
(40.7) % |
2,156 |
7,170 |
(69.9) % |
|||||
|
Total Segment Adjusted EBITDA |
175,561 |
168,591 |
4.1 % |
483,349 |
439,353 |
10.0 % |
|||||
|
Adjusted Corporate expenses1 |
(32,787) |
(29,375) |
11.6 % |
(100,949) |
(94,124) |
7.3 % |
|||||
|
Adjusted EBITDA1 |
$ 142,774 |
$ 139,216 |
2.6 % |
$ 382,400 |
$ 345,229 |
10.8 % |
|||||
|
Segment Adjusted EBITDA excluding movements in FX1: |
|||||||||||
|
America |
$ 128,372 |
$ 121,335 |
5.8 % |
$ 350,816 |
$ 332,213 |
5.6 % |
|||||
|
Airports |
16,925 |
15,522 |
9.0 % |
55,089 |
38,120 |
44.5 % |
|||||
|
Europe-North |
27,152 |
28,444 |
(4.5) % |
73,674 |
61,850 |
19.1 % |
|||||
|
Other |
2,182 |
3,290 |
(33.7) % |
2,102 |
7,170 |
(70.7) % |
|||||
|
Total Segment Adjusted EBITDA |
174,631 |
168,591 |
3.6 % |
481,681 |
439,353 |
9.6 % |
|||||
|
Adjusted Corporate expenses excluding movements in FX1 |
(32,765) |
(29,375) |
11.5 % |
(100,599) |
(94,124) |
6.9 % |
|||||
|
Adjusted EBITDA excluding movements in FX1 |
$ 141,866 |
$ 139,216 |
1.9 % |
$ 381,082 |
$ 345,229 |
10.4 % |
|||||
|
1 |
This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
|
2 |
Segment Adjusted EBITDA is a GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
AFFO1:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
AFFO1,2 |
$ 26,850 |
$ 24,612 |
9.1 % |
$ 35,864 |
$ 9,807 |
NM |
|||||
|
AFFO excluding movements in FX1,2 |
25,968 |
24,612 |
5.5 % |
34,482 |
9,807 |
NM |
|||||
|
1 |
This is a non-GAAP financial measure. See “Supplemental Disclosures” section herein for more information. |
|
2 |
Percentage changes that are so large as to not be meaningful have been designated as “NM.” |
Capital Expenditures:
|
(In thousands) |
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
America |
$ 13,406 |
$ 16,148 |
(17.0) % |
$ 35,679 |
$ 51,844 |
(31.2) % |
|||||
|
Airports |
3,188 |
3,072 |
3.8 % |
6,634 |
10,382 |
(36.1) % |
|||||
|
Europe-North |
9,707 |
7,851 |
23.6 % |
23,835 |
18,998 |
25.5 % |
|||||
|
Other |
1,123 |
1,577 |
(28.8) % |
3,217 |
4,534 |
(29.0) % |
|||||
|
Corporate |
3,101 |
4,022 |
(22.9) % |
8,029 |
10,678 |
(24.8) % |
|||||
|
Consolidated capital expenditures |
$ 30,525 |
$ 32,670 |
(6.6) % |
$ 77,394 |
$ 96,436 |
(19.7) % |
|||||
Markets and Displays:
As of September 30, 2024, we operated more than 311,000 print and digital out-of-home advertising displays in 19 countries as part of our continuing operations, with the majority of our revenue generated by operations in the U.S. and Europe. As of September 30, 2024, we had presence in 81 Designated Market Areas (“DMAs”) in the U.S., including 43 of the top 50 U.S. markets, and in 12 countries throughout Europe, excluding markets that are considered discontinued operations.
|
Number of digital |
Total number of displays as of September 30, 2024 |
||||||
|
Digital |
Printed |
Total |
|||||
|
America1: |
|||||||
|
Billboards2 |
18 |
1,897 |
32,995 |
34,892 |
|||
|
Other displays3 |
(2) |
609 |
13,781 |
14,390 |
|||
|
Airports4 |
108 |
2,650 |
10,513 |
13,163 |
|||
|
Europe-North |
534 |
16,659 |
227,321 |
243,980 |
|||
|
Other |
55 |
1,132 |
3,930 |
5,062 |
|||
|
Total displays |
713 |
22,947 |
288,540 |
311,487 |
|||
|
1 |
As of September 30, 2024, our America segment had presence in 28 U.S. DMAs. |
|
2 |
Billboards includes bulletins, posters, spectaculars and wallscapes. |
|
3 |
Other displays includes street furniture and transit displays. |
|
4 |
As of September 30, 2024, our Airports segment had displays across nearly 200 commercial and private airports in the U.S. and the Caribbean. |
Clear Channel International B.V.
Clear Channel International B.V. (“CCIBV”), an indirect wholly-owned subsidiary of the Company and the borrower under the CCIBV Term Loan Facility, includes the operations of our Europe-North and Europe-South segments and, prior to September 17, 2024, also included Singapore, which is included in “Other.” The financial results of Singapore have historically been immaterial to the results of CCIBV, and revenue and expenses for the Singapore business were further reduced in the first quarter of 2024 due to the loss of a contract. On September 17, 2024, CCIBV sold its equity interest in the Singapore business to another indirect foreign wholly-owned subsidiary of the Company.
As the current and former businesses in the Europe-South segment are considered discontinued operations, results of these businesses are reported as a separate component of Consolidated net income (loss) in the CCIBV Consolidated Statements of Income (Loss) for all periods presented and are excluded from the discussion below.
CCIBV results from continuing operations for the third quarter of 2024 as compared to the same period of 2023 are as follows:
- CCIBV revenue increased 8.1% to $166.4 million from $154.0 million. Excluding the $4.2 million impact of movements in FX, CCIBV revenue increased 5.4% as higher revenue from our Europe-North segment, as described in the above “Results” section of this earnings release, was partially offset by the loss of a contract in Singapore.
- CCIBV operating income was $5.0 million compared to $8.6 million in the same period of 2023.
Liquidity and Financial Position:
Cash and Cash Equivalents:
As of September 30, 2024, we had $201.1 million of cash on our balance sheet, including $56.0 million of cash held outside the U.S. by our subsidiaries (excluding cash held by our business in Spain, which is a discontinued operation).
The following table summarizes our cash flows for the nine months ended September 30, 2024 on a consolidated basis, including both continuing and discontinued operations:
|
(In thousands) |
Nine Months Ended September 30, 2024 |
|
Net cash provided by operating activities |
$ 50,480 |
|
Net cash used for investing activities1 |
(92,230) |
|
Net cash used for financing activities |
(7,542) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(750) |
|
Net decrease in cash, cash equivalents and restricted cash |
$ (50,042) |
|
Cash paid for interest |
$ 297,118 |
|
Cash paid for income taxes, net of refunds |
$ 11,349 |
|
1 |
Includes capital expenditures for discontinued operations of $7.9 million. |
Debt:
We anticipate having cash interest payment obligations of approximately $137 million during the remainder of 2024, including the first semi-annual interest payment on the 7.875% Senior Secured Notes Due 2030 (the “CCOH 7.875% Senior Secured Notes”), which was paid in October, and $420 million in 2025, assuming that we do not refinance or incur additional debt.
Our next debt maturities are in 2027 when the $1.25 billion aggregate principal amount of 5.125% Senior Secured Notes Due 2027 and the $375.0 million principal amount outstanding under the CCIBV Term Loan Facility become due.
Please refer to Table 3 in this earnings release for additional detail regarding our outstanding debt balance.
|
TABLE 1 – Financial Highlights of Clear Channel Outdoor Holdings, Inc. and its Subsidiaries: |
|||||||
|
(In thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Revenue |
$ 558,988 |
$ 526,786 |
$ 1,599,281 |
$ 1,495,026 |
|||
|
Operating expenses: |
|||||||
|
Direct operating expenses1 |
284,601 |
271,377 |
827,063 |
790,206 |
|||
|
Selling, general and administrative expenses1 |
99,845 |
87,083 |
291,410 |
266,292 |
|||
|
Corporate expenses1 |
40,948 |
34,931 |
125,778 |
129,427 |
|||
|
Depreciation and amortization |
57,582 |
57,699 |
165,755 |
186,409 |
|||
|
Impairment charges2 |
— |
— |
18,073 |
— |
|||
|
Other operating expense, net |
3,684 |
6,179 |
9,745 |
10,122 |
|||
|
Operating income |
72,328 |
69,517 |
161,457 |
112,570 |
|||
|
Interest expense, net |
(106,995) |
(107,391) |
(322,060) |
(314,624) |
|||
|
Gain (loss) on extinguishment of debt |
— |
3,817 |
(4,787) |
3,817 |
|||
|
Other income (expense), net3 |
(676) |
(17,269) |
(9,120) |
3,722 |
|||
|
Loss from continuing operations before income taxes |
(35,343) |
(51,326) |
(174,510) |
(194,515) |
|||
|
Income tax benefit attributable to continuing operations |
3,800 |
244 |
5,991 |
12,022 |
|||
|
Loss from continuing operations |
(31,543) |
(51,082) |
(168,519) |
(182,493) |
|||
|
Income (loss) from discontinued operations4 |
(13) |
(211,736) |
9,246 |
(152,326) |
|||
|
Consolidated net loss |
(31,556) |
(262,818) |
(159,273) |
(334,819) |
|||
|
Less: Net income attributable to noncontrolling interests |
984 |
672 |
2,104 |
880 |
|||
|
Net loss attributable to the Company |
$ (32,540) |
$ (263,490) |
$ (161,377) |
$ (335,699) |
|||
|
1 |
Excludes depreciation and amortization. |
|
2 |
Impairment charges for the nine months ended September 30, 2024 relate to the impairment of long-lived assets in certain of the Company’s Latin American businesses. |
|
3 |
Other income (expense), net, includes debt modification expense of $12.0 million for the nine months ended September 30, 2024 and $4.4 million for the three and nine months ended September 30, 2023 related to the debt transactions the Company completed in March 2024 and August 2023, respectively. |
|
4 |
Income (loss) from discontinued operations for the three and nine months ended September 30, 2024 reflects the net income (loss) generated during these periods by operations in Spain. Loss from discontinued operations for the three and nine months ended September 30, 2023 reflects a loss of $200.6 million recognized upon classification of our former business in France as held for sale, which, during the nine months ended September 30, 2023, was partially offset by gains of $96.4 million and $11.2 million from the sales of our former businesses in Switzerland and Italy, respectively. The remaining loss from discontinued operations for the three and nine months ended September 30, 2023 reflects the net loss generated by operations of our Europe-South segment (through the sale date of each business) during the respective period and income tax expense driven by the sale of these businesses. |
|
Weighted Average Shares Outstanding |
|||||||
|
(In thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Weighted average common shares outstanding – Basic and Diluted |
488,947 |
482,945 |
487,155 |
481,289 |
|||
|
TABLE 2 – Selected Balance Sheet Information: |
|||
|
(In thousands) |
September 30, |
December 31, |
|
|
Cash and cash equivalents |
$ 201,111 |
$ 251,652 |
|
|
Total current assets1 |
906,164 |
957,401 |
|
|
Property, plant and equipment, net |
638,680 |
666,344 |
|
|
Total assets1 |
4,644,526 |
4,722,475 |
|
|
Current liabilities (excluding current portion of long-term debt)2 |
903,792 |
883,116 |
|
|
Long-term debt (including current portion of long-term debt) |
5,657,391 |
5,631,903 |
|
|
Stockholders’ deficit |
(3,598,242) |
(3,450,743) |
|
|
1 |
Total current assets and total assets include assets of discontinued operations of $134.8 million and $131.3 million as of September 30, 2024 and December 31, 2023, respectively. |
|
2 |
Current liabilities includes liabilities of discontinued operations of $74.0 million and $68.8 million as of September 30, 2024 and December 31, 2023, respectively. |
|
TABLE 3 – Total Debt: |
|||||
|
(In thousands) |
Maturity |
September 30, |
December 31, |
||
|
Debt: |
|||||
|
Receivables-Based Credit Facility1 |
August 2026 |
$ — |
$ — |
||
|
Revolving Credit Facility2 |
August 2026 |
— |
— |
||
|
Term Loan Facility3 |
August 2028 |
425,000 |
1,260,000 |
||
|
Clear Channel Outdoor Holdings 5.125% Senior Secured Notes |
August 2027 |
1,250,000 |
1,250,000 |
||
|
Clear Channel Outdoor Holdings 9.000% Senior Secured Notes |
September 2028 |
750,000 |
750,000 |
||
|
Clear Channel Outdoor Holdings 7.875% Senior Secured Notes3 |
April 2030 |
865,000 |
— |
||
|
Clear Channel Outdoor Holdings 7.750% Senior Notes |
April 2028 |
995,000 |
995,000 |
||
|
Clear Channel Outdoor Holdings 7.500% Senior Notes |
June 2029 |
1,040,000 |
1,040,000 |
||
|
Clear Channel International B.V. 6.625% Senior Secured Notes4 |
August 2025 |
— |
375,000 |
||
|
Clear Channel International B.V. Term Loan Facility4 |
April 2027 |
375,000 |
— |
||
|
Finance leases |
3,870 |
4,202 |
|||
|
Original issue discount |
(7,856) |
(2,690) |
|||
|
Long-term debt fees |
(38,623) |
(39,609) |
|||
|
Total debt |
5,657,391 |
5,631,903 |
|||
|
Less: Cash and cash equivalents |
(201,111) |
(251,652) |
|||
|
Net debt |
$ 5,456,280 |
$ 5,380,251 |
|||
|
1 |
As of September 30, 2024, we had $54.9 million of letters of credit outstanding and $101.9 million of excess availability under the Receivables-Based Credit Facility. |
|
2 |
Effective August 23, 2024, the borrowing limit of the Revolving Credit Facility decreased from $150.0 million to $115.8 million, in accordance with the terms of the Senior Secured Credit Agreement. As of September 30, 2024, we had $43.2 million of letters of credit outstanding and $72.6 million of excess availability under the Revolving Credit Facility. |
|
3 |
In March 2024, we issued $865.0 million aggregate principal amount of CCOH 7.875% Senior Secured Notes and used a portion of the proceeds therefrom to prepay $835.0 million of borrowings outstanding under our Term Loan Facility. At the same time, we amended our Senior Secured Credit Agreement to, among other things, refinance the $425.0 million remaining principal balance on the Term Loan Facility and to extend its maturity date from 2026 to 2028, subject to certain conditions. |
|
4 |
In March 2024, CCIBV entered into the CCIBV Term Loan Facility, totaling an aggregate principal amount of $375.0 million, and used the proceeds therefrom to redeem all of the outstanding $375.0 million aggregate principal amount of CCIBV Senior Secured Notes. |
Supplemental Disclosures:
Reportable Segments and Segment Adjusted EBITDA
The Company has four reportable segments, which it believes best reflect how the Company is currently managed: America, which consists of the Company’s U.S. operations excluding airports; Airports, which includes revenue from U.S. and Caribbean airports; Europe-North, which consists of operations in the U.K., the Nordics and several other countries throughout northern and central Europe; and Europe-South, which consists of operations in Spain, and prior to their sales on March 31, 2023, May 31, 2023 and October 31, 2023, respectively, also consisted of operations in Switzerland, Italy and France. The Company’s remaining operations in Latin America and Singapore are disclosed as “Other.” The Company’s Europe-South segment met the criteria to be reported as discontinued operations during the third quarter of 2023. As such, results of this segment are excluded from this earnings release, which only reflects continuing operations, for all periods presented.
Segment Adjusted EBITDA is the profitability metric reported to the Company’s chief operating decision maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment Adjusted EBITDA is a GAAP financial measure that is calculated as Revenue less Direct operating expenses and SG&A expenses, excluding restructuring and other costs. Restructuring and other costs include costs associated with cost savings initiatives such as severance, consulting and termination costs and other special costs.
Non-GAAP Financial Information
This earnings release includes information that does not conform to U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA, Adjusted Corporate expenses, Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”). The Company presents this information because the Company believes these non-GAAP measures help investors better understand the Company’s operating performance as compared to other out-of-home advertisers, and these metrics are widely used by such companies in practice. Please refer to the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures below.
The Company defines, and uses, these non-GAAP financial measures as follows:
- Adjusted EBITDA is defined as income (loss) from continuing operations, plus: income tax expense (benefit) attributable to continuing operations; all non-operating expenses (income), including other expense (income), loss (gain) on extinguishment of debt and interest expense, net; other operating expense (income), net; depreciation, amortization and impairment charges; share-based compensation expense included within corporate expenses; and restructuring and other costs included within operating expenses. Restructuring and other costs include costs associated with cost savings initiatives such as severance, consulting and termination costs and other special costs.
The Company uses Adjusted EBITDA as one of the primary measures for the planning and forecasting of future periods, as well as for measuring performance for compensation of Company executives and other members of Company management. The Company believes Adjusted EBITDA is useful for investors because it allows investors to view performance in a manner similar to the method used by Company management and helps improve investors’ ability to understand the Company’s operating performance, making it easier to compare the Company’s results with other companies that have different capital structures or tax rates. In addition, the Company believes Adjusted EBITDA is among the primary measures used externally by the Company’s investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry.
- As part of the calculation of Adjusted EBITDA, the Company also presents the non-GAAP financial measure of “Adjusted Corporate expenses,” which the Company defines as corporate expenses excluding share-based compensation expense and restructuring and other costs.
- The Company uses the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO, which is consolidated net income (loss) before: depreciation, amortization and impairment of real estate; gains or losses from the disposition of real estate; and adjustments to eliminate unconsolidated affiliates and noncontrolling interests. The Company defines AFFO as FFO excluding discontinued operations and before the following adjustments for continuing operations: maintenance capital expenditures; straight-line rent effects; depreciation, amortization and impairment of non-real estate; loss on extinguishment of debt and debt modification expense; amortization of deferred financing costs and discounts; share-based compensation expense; deferred taxes; restructuring and other costs; transaction costs; foreign exchange transaction gain or loss; and other items, including adjustment for unconsolidated affiliates and noncontrolling interest and nonrecurring infrequent or unusual gains or losses.
The Company is not a Real Estate Investment Trust (“REIT”). However, the Company competes directly with REITs that present the non-GAAP measures of FFO and AFFO and, accordingly, believes that presenting such measures will be helpful to investors in evaluating the Company’s operations with the same terms used by the Company’s direct competitors. The Company calculates FFO in accordance with the definition adopted by Nareit. Nareit does not restrict presentation of non-GAAP measures traditionally presented by REITs by entities that are not REITs. In addition, the Company believes FFO and AFFO are already among the primary measures used externally by the Company’s investors, analysts and competitors in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry. The Company does not use, and you should not use, FFO and AFFO as an indication of the Company’s ability to fund its cash needs or pay dividends or make other distributions. Because the Company is not a REIT, the Company does not have an obligation to pay dividends or make distributions to stockholders and does not intend to pay dividends for the foreseeable future. Moreover, the presentation of these measures should not be construed as an indication that the Company is currently in a position to convert into a REIT.
A significant portion of the Company’s advertising operations is conducted in foreign markets, principally Europe, and Company management reviews the results from its foreign operations on a constant dollar basis. The Company presents the GAAP measures of revenue, direct operating and SG&A expenses, corporate expenses and Segment Adjusted EBITDA, as well as the non-GAAP financial measures of Adjusted EBITDA, Adjusted Corporate expenses, FFO and AFFO, excluding movements in foreign exchange rates because Company management believes that viewing certain financial results without the impact of fluctuations in foreign currency rates facilitates period-to-period comparisons of business performance and provides useful information to investors. These measures, which exclude the effects of foreign exchange rates, are calculated by converting the current period’s amounts in local currency to U.S. dollars using average monthly foreign exchange rates for the same period of the prior year.
Since these non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, the most directly comparable GAAP financial measures as an indicator of operating performance or, in the case of Adjusted EBITDA, FFO and AFFO, the Company’s ability to fund its cash needs. In addition, these measures may not be comparable to similar measures provided by other companies. See reconciliations of loss from continuing operations to Adjusted EBITDA, corporate expenses to Adjusted Corporate expenses, and consolidated net loss to FFO and AFFO in the tables set forth below. This data should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, Form 10-Qs and Form 8-Ks, which are available on the Investor Relations page of the Company’s website at investor.clearchannel.com.
|
Reconciliation of Loss from Continuing Operations to Adjusted EBITDA |
|||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
|
(in thousands) |
2024 |
2023 |
2024 |
2023 |
|||
|
Loss from continuing operations |
$ (31,543) |
$ (51,082) |
$ (168,519) |
$ (182,493) |
|||
|
Adjustments: |
|||||||
|
Income tax benefit attributable to continuing operations |
(3,800) |
(244) |
(5,991) |
(12,022) |
|||
|
Other (income) expense, net |
676 |
17,269 |
9,120 |
(3,722) |
|||
|
(Gain) loss on extinguishment of debt |
— |
(3,817) |
4,787 |
(3,817) |
|||
|
Interest expense, net |
106,995 |
107,391 |
322,060 |
314,624 |
|||
|
Other operating expense, net |
3,684 |
6,179 |
9,745 |
10,122 |
|||
|
Impairment charges |
— |
— |
18,073 |
— |
|||
|
Depreciation and amortization |
57,582 |
57,699 |
165,755 |
186,409 |
|||
|
Share-based compensation |
6,810 |
4,987 |
19,612 |
15,134 |
|||
|
Restructuring and other costs1 |
2,370 |
834 |
7,758 |
20,994 |
|||
|
Adjusted EBITDA |
$ 142,774 |
$ 139,216 |
$ 382,400 |
$ 345,229 |
|||
|
1 |
Restructuring and other costs for the nine months ended September 30, 2023 include an expense of $19.0 million recorded for the resolution of the investigation of the Company’s former indirect, non-wholly-owned subsidiary, Clear Media Limited. |
|
Reconciliation of Corporate Expenses to Adjusted Corporate Expenses |
|||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
|
(in thousands) |
2024 |
2023 |
2024 |
2023 |
|||
|
Corporate expenses |
$ (40,948) |
$ (34,931) |
$ (125,778) |
$ (129,427) |
|||
|
Share-based compensation |
6,810 |
4,987 |
19,612 |
15,134 |
|||
|
Restructuring and other costs1 |
1,351 |
569 |
5,217 |
20,169 |
|||
|
Adjusted Corporate expenses |
$ (32,787) |
$ (29,375) |
$ (100,949) |
$ (94,124) |
|||
|
1 |
Restructuring and other costs for the nine months ended September 30, 2023 include an expense of $19.0 million recorded for the resolution of the investigation of the Company’s former indirect, non-wholly-owned subsidiary, Clear Media Limited. |
|
Reconciliation of Consolidated Net Loss to FFO and AFFO |
|||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
|
(in thousands) |
2024 |
2023 |
2024 |
2023 |
|||
|
Consolidated net loss |
$ (31,556) |
$ (262,818) |
$ (159,273) |
$ (334,819) |
|||
|
Depreciation and amortization of real estate |
50,754 |
50,352 |
144,069 |
177,986 |
|||
|
Net loss (gain) on disposition of real estate (excludes condemnation proceeds)1 |
1,085 |
202,572 |
(2,573) |
98,093 |
|||
|
Impairment of real estate2 |
— |
— |
16,808 |
— |
|||
|
Adjustment for unconsolidated affiliates and non-controlling interests |
(1,328) |
(819) |
(3,601) |
(1,991) |
|||
|
Funds From Operations (FFO) |
18,955 |
(10,713) |
(4,570) |
(60,731) |
|||
|
Less: FFO from discontinued operations |
40 |
(10,337) |
9,427 |
(47,672) |
|||
|
FFO from continuing operations |
18,915 |
(376) |
(13,997) |
(13,059) |
|||
|
Capital expenditures–maintenance |
(8,449) |
(10,638) |
(24,829) |
(32,867) |
|||
|
Straight-line rent effect |
(2,540) |
1,902 |
(5,446) |
4,113 |
|||
|
Depreciation and amortization of non-real estate |
6,828 |
7,574 |
21,686 |
22,085 |
|||
|
Impairment of non-real estate2 |
— |
— |
1,265 |
— |
|||
|
Loss or gain on extinguishment of debt and debt modification expense, net |
— |
551 |
16,785 |
551 |
|||
|
Amortization of deferred financing costs and note discounts |
2,877 |
2,994 |
8,715 |
8,788 |
|||
|
Share-based compensation |
6,810 |
4,987 |
19,612 |
15,134 |
|||
|
Deferred taxes |
(6,307) |
(3,074) |
(12,102) |
(18,464) |
|||
|
Restructuring and other costs3 |
2,370 |
834 |
7,758 |
20,994 |
|||
|
Transaction costs |
3,909 |
5,311 |
15,776 |
6,707 |
|||
|
Foreign exchange transaction loss (gain) |
(267) |
13,735 |
(4,293) |
(7,445) |
|||
|
Other items |
2,704 |
812 |
4,934 |
3,270 |
|||
|
Adjusted Funds From Operations (AFFO) |
$ 26,850 |
$ 24,612 |
$ 35,864 |
$ 9,807 |
|||
|
1 |
Net loss on disposition of real estate for the three and nine months ended September 30, 2023 includes a loss of $200.6 million recognized upon classification of our former business in France as held for sale. During the nine months ended September 30, 2023, this was partially offset by gains of $96.4 million and $11.2 million from the sales of our former businesses in Switzerland and Italy, respectively. |
|
2 |
Impairment charges for the nine months ended September 30, 2024 relate to the impairment of long-lived assets in certain of the Company’s Latin American businesses. |
|
3 |
Restructuring and other costs for the nine months ended September 30, 2023 include an expense of $19.0 million recorded for the resolution of the investigation of the Company’s former indirect, non-wholly-owned subsidiary, Clear Media Limited. |
|
Reconciliation of Loss from Continuing Operations Guidance1 to Adjusted EBITDA Guidance1 |
|||
|
Full Year of 2024 |
|||
|
(in millions) |
Low |
High |
|
|
Loss from continuing operations |
$ (165) |
$ (150) |
|
|
Adjustments: |
|||
|
Income tax benefit attributable to continuing operations |
(4) |
(4) |
|
|
Other expense, net |
9 |
10 |
|
|
Loss on extinguishment of debt |
5 |
5 |
|
|
Interest expense, net |
428 |
430 |
|
|
Other operating expense, net |
13 |
15 |
|
|
Impairment charges |
20 |
20 |
|
|
Depreciation and amortization |
219 |
219 |
|
|
Share-based compensation |
26 |
26 |
|
|
Restructuring and other costs |
9 |
9 |
|
|
Adjusted EBITDA |
$ 560 |
$ 580 |
|
|
1 |
Guidance excludes movements in FX |
|
Reconciliation of Loss from Continuing Operations Guidance1 to AFFO Guidance1 |
|||
|
Full Year of 2024 |
|||
|
(in millions) |
Low |
High |
|
|
Loss from continuing operations |
$ (165) |
$ (150) |
|
|
Depreciation and amortization of real estate |
189 |
189 |
|
|
Net gain on disposition of real estate (excludes condemnation proceeds) |
(2) |
(2) |
|
|
Impairment of real estate |
19 |
19 |
|
|
Adjustment for unconsolidated affiliates and non-controlling interests |
(5) |
(5) |
|
|
FFO from continuing operations |
36 |
51 |
|
|
Capital expenditures–maintenance |
(39) |
(42) |
|
|
Straight-line rent effect |
(8) |
(8) |
|
|
Depreciation and amortization of non-real estate |
30 |
30 |
|
|
Loss on extinguishment of debt and debt modification expense |
17 |
17 |
|
|
Amortization of deferred financing costs and discounts |
12 |
12 |
|
|
Share-based compensation |
26 |
26 |
|
|
Deferred taxes |
(15) |
(15) |
|
|
Restructuring and other costs |
9 |
9 |
|
|
Foreign exchange transaction gain |
(4) |
(4) |
|
|
Other items |
26 |
29 |
|
|
Adjusted Funds From Operations (AFFO) |
$ 90 |
$ 105 |
|
|
1 |
Guidance excludes movements in FX. |
Conference Call
The Company will host a conference call to discuss these results on October 31, 2024 at 8:30 a.m. Eastern Time. The conference call number is 866-424-3432 (U.S. callers) or +1 215-268-9862 (international callers). A live audio webcast of the conference call will be available on the “Events and Presentations” section of the Company’s investor website (investor.clearchannel.com). A replay of the webcast will be available after the live conference call on the “Events and Presentations” section of the Company’s investor website.
About Clear Channel Outdoor Holdings, Inc.
Clear Channel Outdoor Holdings, Inc. CCO is at the forefront of driving innovation in the out-of-home advertising industry. Our dynamic advertising platform is broadening the pool of advertisers using our medium through the expansion of digital billboards and displays and the integration of data analytics and programmatic capabilities that deliver measurable campaigns that are simpler to buy. By leveraging the scale, reach and flexibility of our diverse portfolio of assets, we connect advertisers with millions of consumers every month.
For further information, please contact:
Investors:
Eileen McLaughlin
Vice President – Investor Relations
(646) 355-2399
InvestorRelations@clearchannel.com
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this earnings release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Clear Channel Outdoor Holdings, Inc. and its subsidiaries (the “Company”) to be materially different from any future results, performance, achievements, guidance, goals and/or targets expressed or implied by such forward-looking statements. The words “guidance,” “believe,” “expect,” “anticipate,” “estimate,” “forecast,” “goals,” “targets” and similar words and expressions are intended to identify such forward-looking statements. In addition, any statements that refer to expectations or other characterizations of future events or circumstances, such as statements about our guidance, outlook, long-term forecast, goals or targets; our business plans and strategies; the benefits of the sales of our European businesses; the termination of the agreement to sell our business in Spain and the consequences thereof; expectations about certain markets; the conduct of, and expectations about, international business sales processes; industry and market trends; and our liquidity, are forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this earnings release include, but are not limited to: continued economic uncertainty, an economic slowdown or a recession; our ability to service our debt obligations and to fund our operations, business strategy and capital expenditures; the impact of our substantial indebtedness, including the effect of our leverage on our financial position and earnings; the difficulty, cost and time required to implement our strategy, including optimizing our portfolio, and the fact that we may not realize the anticipated benefits therefrom; our ability to obtain and renew key contracts with municipalities, transit authorities and private landlords; competition; regulations and consumer concerns regarding privacy, digital services, data protection and the use of artificial intelligence; a breach of our information security measures; legislative or regulatory requirements; restrictions on out-of-home advertising of certain products; environmental, health, safety and land use laws and regulations, as well as various actual and proposed environmental, social and governance policies, regulations and disclosure standards; the impact of the processes to sell our businesses comprising our Europe-North segment and our businesses in Latin America and any process to sell our business in Spain; the impact of the recent dispositions or agreements to dispose of the businesses in our Europe-South segment, including the impact of the termination of the agreement to sell our business in Spain, as well as other strategic transactions or acquisitions; third-party claims of intellectual property infringement, misappropriation or other violation against us or our suppliers; risks of doing business in foreign countries; fluctuations in exchange rates and currency values; volatility of our stock price; the impacts on our stock price as a result of future sales of common stock, or the perception thereof, and dilution resulting from additional capital raised through the sale of common stock or other equity-linked instruments; our ability to continue to comply with the applicable listing standards of the New York Stock Exchange; the restrictions contained in the agreements governing our indebtedness limiting our flexibility in operating our business; the effect of analyst or credit ratings downgrades; our dependence on our management team and other key individuals; continued scrutiny and changing expectations from investors, lenders, customers, government regulators, municipalities, activists and other stakeholders; and certain other factors set forth in our filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this earnings release. Other key risks are described in the section entitled “Item 1A. Risk Factors” of the Company’s reports filed with the SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
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SOURCE Clear Channel Outdoor Holdings, Inc.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Shytoshi Kusama Schools X User Who Said SHIB Will Remain 'Chump Change Meme' Unless It Can Rise Above A Penny: 'Those Who Are Wise Give Us Respect'
Shytoshi Kusama, the leader of the Shiba Inu SHIB/USD ecosystem, expressed frustration over the coin not getting due respect despite impressive gains over the years.
What Happened: Kusama was responding to an X post by Nick Tomaino, founder of cryptocurrency-focused fund 1confirmation, who didn’t include Shiba Inu on his list of most impactful cryptocurrency projects to date.
“Again, the disrespect… smh #SHIB,” an irritated Kusama said.
When pointed out by a fellow SHIB community member that unless the coin rises above $0.01, it won’t garner any respect and will remain a “chump change meme.”
Kusama strongly disagreed, stating that SHIB is one of the top cryptocurrencies by market capitalization and is far from a chump change.
“Those who are wise give us respect. “Crypto Twitter” just hasn’t DYOR,” Kusama argued.
See Also: Why Clearer Regulations Are ‘Unlocking’ Wall Street’s Move Into Digital Assets
Why It Matters: Kusama’s rebuke comes shortly after they highlighted SHIB’s meteoric lifetime growth, which stood at a staggering 33,774,726.7% from its all-time low.
The mysterious personality added that the team was working hard to further enhance the ecosystem and gain broader recognition.
“So, don’t ignore Shib. Or do, until you can no longer,” Kusama said, pointing toward critics.
The $11 billion capitalization cryptocurrency has jumped 80% year-to-date, trailing Dogecoin DOGE/USD—the most valuable meme coin— which was up 92%.
Price Action: At the time of writing, Shiba Inu was exchanging hands at $0.00001872, down 2.23% in the last 24 hours, according to data from Benzinga Pro.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ecovyst Reports Third Quarter 2024 Results
MALVERN, Pa., Oct. 31, 2024 /PRNewswire/ — Ecovyst Inc. ECVT (“Ecovyst” or the “Company”), a leading integrated and innovative global provider of advanced materials, specialty catalysts and services, today reported results for the third quarter ended September 30, 2024.
Third Quarter 2024 Results & Highlights
- Sales of $179.2 million, compared to $173.3 million in the third quarter of 2023
- Net Income of $14.3 million, compared to $16.6 million in the year-ago quarter, with a net income margin of 8.0% and diluted net income per share of $0.12. Adjusted Net Income was $16.5 million with Adjusted Diluted Income per share of $0.14
- Adjusted EBITDA of $59.8 million, down 12% compared to the third quarter of 2023, with an Adjusted EBITDA margin of 28.5%
- Cash flows from operating activities was $106.4 million for the nine months ended September 30, 2024, compared to $73.4 million for the nine months ended September 30, 2023. Adjusted Free Cash Flow was $59.3 million for the nine months ended September 30, 2024, compared to $19.8 million for the nine months ended September 30, 2023
“Ecovyst’s third-quarter results met our expectations, showcasing the resilience of our Ecoservices segment. This was driven by favorable pricing in regeneration services and increased sales volumes for virgin sulfuric acid. In our Advanced Materials & Catalysts segment, growth in polyethylene catalysts was offset by the shift of certain hydrocracking and custom catalyst orders into the fourth quarter of 2024,” said Kurt J. Bitting, Ecovyst’s Chief Executive Officer.
“Ecovyst is steadfast in pursuing our strategic goals of operational excellence, increasing industrial segment volumes, and diversifying products through emerging technologies. I am pleased with the strides we’ve made in enhancing reliability within Ecoservices, which has already led to gains in operational efficiency. Additionally, we have made notable progress in Advanced Materials & Catalysts through investments in the Kansas City expansion and collaborations with customers in biocatalysis and advanced recycling technologies,” Bitting added.
Review of Segment Results and Business Trends
Ecoservices
Third quarter 2024 sales were $153.9 million, compared to $147.6 million in the third quarter of 2023. The increase in sales reflects higher sales volume in virgin sulfuric acid and favorable contractual pricing in regeneration services. Third quarter 2024 Adjusted EBITDA was $55.1 million, compared to $54.7 million in the third quarter of 2023. The modest increase reflects favorable net pricing and higher sales volume, partially offset by higher manufacturing costs associated with inflation, increased planned maintenance costs and costs associated with the manufacturing plant reliability improvement program.
Advanced Materials & Catalysts
During the third quarter of 2024, Advanced Silicas sales were $25.3 million, compared to $25.7 million in the third quarter of 2023. The modest decrease in sales reflects the timing of niche custom catalyst sales, partially offset by higher sales of advanced silicas used for the production of polyethylene. Our proportionate 50% share of third quarter sales for the Zeolyst Joint Venture was $30.9 million, compared to $37.0 million in the third quarter of 2023. The change in Zeolyst Joint Venture sales was due primarily to lower sales of catalysts used in the production of sustainable fuels and emission control applications, partially offset by higher sales of hydrocracking catalysts and custom catalysts. Third quarter 2024 Adjusted EBITDA for Advanced Materials & Catalysts, which includes our proportionate 50% share of the Zeolyst Joint Venture, was $10.9 million, compared to $16.4 million in the third quarter of 2023, with the change reflecting lower sales volume within the Zeolyst Joint Venture associated with catalysts used in the production of sustainable fuels and emission control applications, partially offset by favorable mix and increased sales of advanced silicas used for the production of polyethylene in Advanced Silicas.
Cash Flows and Balance Sheet
Cash flows from operating activities was $106.4 million for the nine months ended September 30, 2024, compared to $73.4 million for the nine months ended September 30, 2023. The increase was primarily driven by the timing of dividends received from the Zeolyst Joint Venture and favorable working capital changes. At September 30, 2024, the Company had cash and cash equivalents of $123.5 million, total gross debt of $873.0 million and availability under the ABL facility of $64.5 million, after giving effect to $3.3 million of outstanding letters of credit and no revolving credit facility borrowings outstanding, for total available liquidity of $188.0 million. The net debt to net income ratio was 13.9x as of September 30, 2024 and the net debt leverage ratio was 3.2x as of September 30, 2024.
2024 Financial Outlook
Ecovyst expects demand trends for our Ecoservices segment to remain positive for the balance of 2024. The company expects high refinery utilization to provide continued support for our regeneration services business. Ecovyst remains cautious about the possibility of further contraction in industrial demand, but we anticipate sales of virgin sulfuric acid to be up in 2024, compared to 2023. For Advanced Silicas, Ecovyst expects sales of polyethylene catalysts and supports to be up in 2024, compared to 2023. However, the magnitude of the increase remains a function of overall industrial activity and related customer demand. Ecovyst remains cautious of the potential for timing shifts to impact sales of event-driven, niche custom catalysts in our Advanced Silicas business. The Company expects the current supply and demand imbalance in the renewable fuels industry will continue to challenge the near-term demand outlook for Ecovyst’s sales of catalyst materials used in sustainable fuel production. Subdued economic conditions and high interest rates are also anticipated to continue to weigh on the near-term sales of emission control catalyst materials which are used on heavy duty diesel vehicles.
“I am pleased with the focus and performance of my Ecovyst colleagues in the face of the near-term challenges in some of our product groups. Based upon our current expectations for the remainder of the year, which include continued positive momentum in our Ecoservices business, and an expectation for higher polyethylene catalyst sales and anticipated timing associated with hydrocracking and niche custom catalyst sales, we are maintaining our guidance for full-year 2024 Adjusted EBITDA of $230 million $245 million. While we remain cautious about the uncertainty in the global macroeconomic environment and its potential impact on industrial activity over the balance of the year, we believe the continued resilience and cash generation of our core businesses will allow Ecovyst to remain intently focused on achieving our long-term growth objectives and on value creation for our shareholders,” Bitting said.
The Company’s current guidance for full year 2024 is as follows:
- Sales of $700 million to $740 million
- Sales of $115 million to $135 million for proportionate 50% share of Zeolyst Joint Venture, which is excluded from GAAP Sales
- Full year 2024 Adjusted EBITDA1 of $230 million to $245 million
- Free Cash Flow1 of $75 million to $85 million
- Capital expenditures of $70 million to $80 million
- Interest expense of $48 million to $52 million
- Depreciation & Amortization
- Ecovyst – $88 million to $92 million
- Zeolyst J.V. – $12 million to $14 million
- Effective tax rate in the mid 20% range
- Full year 2024 Adjusted Net Income1 of $53 million to $74 million, with Adjusted Diluted Income per share of $0.45 to $0.63.
1In reliance upon the unreasonable efforts exemption provided under Item 10(e)(1)(i)(B) of Regulation S-K, the Company is not able to provide a reconciliation of its non-GAAP financial guidance to the corresponding GAAP measures without unreasonable effort because of the inherent difficulty in forecasting and quantifying certain amounts necessary for such a reconciliation such as certain non-cash, nonrecurring or other items that are included in net income as well as the related tax impacts of these items and asset dispositions / acquisitions and changes in foreign currency exchange rates that are included in cash flow, due to the uncertainty and variability of the nature and amount of these future charges and costs. Because this information is uncertain, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.
Stock Repurchase Authorization
In April 2022, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to $450 million of the Company’s outstanding common stock over the next four years. As of September 30, 2024, $229.6 million was available for share repurchases under the program.
During the third quarter of 2024, the Company did not repurchase any shares of its common stock pursuant to the stock repurchase program. During the third quarter of 2023, the Company repurchased 541,494 shares of its common stock on the open market at an average price of $9.85 per share, for a total cost of $5.3 million, excluding brokerage commissions and accrued excise tax.
For possible future repurchases, the actual timing, number, and nature of shares repurchased will depend on a variety of factors, including stock price, trading volume, and general business and market conditions and may be conducted through negotiated transactions, open market repurchases or other means, including through Rule 10b-18 trading plans or accelerated share repurchases. The repurchase program does not obligate the Company to acquire any number of shares in any specific period, or at all, and the repurchase program may be amended, suspended or discontinued at any time at the Company’s discretion.
Conference Call and Webcast Details
On Thursday, October 31, 2024, Ecovyst management will review the third quarter results during a conference call and audio-only webcast scheduled for 11:00 a.m. Eastern Time.
Conference Call: Investors may listen to the conference call live via telephone by dialing 1 (800) 267-6316 (domestic) or 1 (203) 518-9783 (international) and use the participant code ECVTQ324.
Webcast: An audio-only live webcast of the conference call and presentation materials can be accessed at https://investor.ecovyst.com. A replay of the conference call/webcast will be made available at https://investor.ecovyst.com/events-presentations.
Investor Contact:
Gene Shiels
(484) 617-1225
gene.shiels@ecovyst.com
About Ecovyst Inc.
Ecovyst Inc. and subsidiaries is a leading integrated and innovative global provider of advanced materials, specialty catalysts and services. We support customers globally through our strategically located network of manufacturing facilities. We believe that our products and services contribute to improving the sustainability of the environment.
We have two uniquely positioned specialty businesses: Ecoservices provides sulfuric acid recycling to the North American refining industry for the production of alkylate and provides high quality and high strength virgin sulfuric acid for industrial and mining applications. Ecoservices also provides chemical waste handling and treatment services, as well as ex-situ catalyst activation services for the refining and petrochemical industry. Advanced Materials & Catalysts, through its Advanced Silicas business, provides finished silica catalysts, catalyst supports and functionalized silicas necessary to produce high performing plastics and to enable sustainable chemistry, and through its Zeolyst Joint Venture, innovates and supplies specialty zeolites used in catalysts that support the production of sustainable fuels, remove nitrogen oxides from diesel engine emissions and that are broadly applied in refining and petrochemical process. For more information, see our website at https://www.ecovyst.com.
Presentation of Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S. generally accepted accounting principles (“GAAP”) throughout this press release, the Company has provided non-GAAP financial measures — Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Free Cash Flow, Adjusted Free Cash Flow, Adjusted Diluted Income per share, Net Debt to Net Income ratio and Net Debt Leverage Ratio (collectively, “Non-GAAP Financial Measures”) — which present results on a basis adjusted for certain items. The Company uses these Non-GAAP Financial Measures for business planning purposes and in measuring its performance relative to that of its competitors. The Company believes that these Non-GAAP Financial Measures are useful financial metrics to assess its operating performance from period-to-period by excluding certain items that the Company believes are not representative of its core business. These Non-GAAP Financial Measures are not intended to replace, and should not be considered superior to, the presentation of the Company’s financial results in accordance with GAAP. The use of the Non-GAAP Financial Measures terms may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. These Non-GAAP Financial Measures are reconciled from the respective measures under GAAP in the attached appendix.
Zeolyst Joint Venture
The Company’s zeolite catalysts product group operates through its Zeolyst Joint Venture, which is accounted for as an equity method investment in accordance with GAAP. The presentation of the Zeolyst Joint Venture’s sales represents 50% of the sales of the Zeolyst Joint Venture. The Company does not record sales by the Zeolyst Joint Venture as revenue and such sales are not consolidated within the Company’s results of operations. However, the Company’s Adjusted EBITDA reflects the share of earnings of the Zeolyst Joint Venture that have been recorded as equity in net income from affiliated companies in the Company’s consolidated statements of income for such periods and includes Zeolyst Joint Venture adjustments on a proportionate basis based on the Company’s 50% ownership interest. Accordingly, the Company’s Adjusted EBITDA margins are calculated including 50% of the sales of the Zeolyst Joint Venture for the relevant periods in the denominator.
Note on Forward-Looking Statements
Some of the information contained in this press release constitutes “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Examples of forward-looking statements include, but are not limited to, statements regarding our future results of operations, financial condition, capital expenditure projects, liquidity, prospects, growth, strategies, capital allocation program (including the stock repurchase program), product and service offerings, expected demand trends and our 2024 financial outlook. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, regional, national or global political, economic, business, competitive, market and regulatory conditions, including tariffs and trade disputes, currency exchange rates, the effects of inflation and other factors, including those described in the sections titled “Risk Factors” and “Management’s Discussion & Analysis of Financial Condition and Results of Operations” in our filings with the SEC, which are available on the SEC’s website at www.sec.gov. These forward-looking statements speak only as of the date of this release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.
|
ECOVYST INC. AND SUBSIDIARIES |
||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
|
(in millions, except share and per share amounts) |
||||||||||||
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
|
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
|||||||
|
Sales |
$ 179.2 |
$ 173.3 |
3.4 % |
$ 522.5 |
$ 518.3 |
0.8 % |
||||||
|
Cost of goods sold |
124.5 |
120.1 |
3.7 % |
374.9 |
367.7 |
2.0 % |
||||||
|
Gross profit |
54.7 |
53.2 |
2.8 % |
147.6 |
150.6 |
(2.0) % |
||||||
|
Selling, general and administrative expenses |
20.0 |
16.9 |
18.3 % |
64.3 |
59.5 |
8.1 % |
||||||
|
Other operating expense, net |
3.1 |
4.3 |
(27.9) % |
9.9 |
17.2 |
(42.4) % |
||||||
|
Operating income |
31.6 |
32.0 |
(1.3) % |
73.4 |
73.9 |
(0.7) % |
||||||
|
Equity in net (income) from affiliated companies |
0.9 |
(4.7) |
(119.1) % |
(2.5) |
(16.3) |
(84.7) % |
||||||
|
Interest expense, net |
11.3 |
11.8 |
(4.2) % |
37.6 |
30.8 |
22.1 % |
||||||
|
Debt extinguishment costs |
— |
— |
— % |
4.6 |
— |
NM |
||||||
|
Other expense, net |
0.6 |
0.4 |
50.0 % |
1.1 |
0.6 |
83.3 % |
||||||
|
Income before income taxes |
18.8 |
24.5 |
(23.3) % |
32.6 |
58.8 |
(44.6) % |
||||||
|
Provision for income taxes |
4.5 |
7.9 |
(43.0) % |
8.8 |
17.6 |
(50.0) % |
||||||
|
Effective tax rate |
24.0 % |
32.3 % |
26.9 % |
29.9 % |
||||||||
|
Net income |
$ 14.3 |
$ 16.6 |
(13.9) % |
$ 23.8 |
$ 41.2 |
(42.2) % |
||||||
|
Earnings per share: |
||||||||||||
|
Basic earnings per share |
$ 0.12 |
$ 0.14 |
$ 0.20 |
$ 0.35 |
||||||||
|
Diluted earnings per share |
$ 0.12 |
$ 0.14 |
$ 0.20 |
$ 0.34 |
||||||||
|
Weighted average shares outstanding: |
||||||||||||
|
Basic |
116,490,634 |
116,446,085 |
116,786,759 |
119,042,161 |
||||||||
|
Diluted |
117,187,054 |
117,374,347 |
117,425,254 |
120,417,132 |
||||||||
|
ECOVYST INC. AND SUBSIDIARIES |
|||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
|
(in millions, except share and per share amounts) |
|||
|
September 30, |
December 31, |
||
|
ASSETS |
|||
|
Cash and cash equivalents |
$ 123.5 |
$ 88.4 |
|
|
Accounts receivable, net |
74.0 |
81.3 |
|
|
Inventories, net |
53.7 |
45.1 |
|
|
Derivative assets |
6.2 |
13.4 |
|
|
Prepaid and other current assets |
26.1 |
17.8 |
|
|
Total current assets |
283.5 |
246.0 |
|
|
Investments in affiliated companies |
410.4 |
440.2 |
|
|
Property, plant and equipment, net |
571.7 |
576.9 |
|
|
Goodwill |
405.8 |
404.5 |
|
|
Other intangible assets, net |
106.6 |
116.6 |
|
|
Right-of-use lease assets |
25.7 |
24.3 |
|
|
Other long-term assets |
36.3 |
29.4 |
|
|
Total assets |
$ 1,840.0 |
$ 1,837.8 |
|
|
LIABILITIES |
|||
|
Current maturities of long-term debt |
$ 8.7 |
$ 9.0 |
|
|
Accounts payable |
33.4 |
40.2 |
|
|
Operating lease liabilities—current |
8.0 |
8.2 |
|
|
Accrued liabilities |
61.7 |
61.7 |
|
|
Total current liabilities |
111.8 |
119.1 |
|
|
Long-term debt, excluding current portion |
853.9 |
858.9 |
|
|
Deferred income taxes |
108.5 |
115.8 |
|
|
Operating lease liabilities—noncurrent |
17.6 |
16.0 |
|
|
Other long-term liabilities |
18.9 |
22.5 |
|
|
Total liabilities |
1,110.7 |
1,132.3 |
|
|
Commitments and contingencies |
|||
|
EQUITY |
|||
|
Common stock ($0.01 par); authorized shares 450,000,000; issued shares 140,872,846 and 140,744,045 on September 30, 2024 and December 31, 2023, respectively; outstanding shares 116,509,803 and 116,116,895 on September 30, 2024 and December 31, 2023, respectively |
1.4 |
1.4 |
|
|
Preferred stock ($0.01 par); authorized shares 50,000,000; no shares issued or outstanding on September 30, 2024 and December 31, 2023 |
— |
— |
|
|
Additional paid-in capital |
1,103.4 |
1,102.6 |
|
|
Accumulated deficit |
(147.1) |
(170.9) |
|
|
Treasury stock, at cost; shares 24,363,043 and 24,627,150 on September 30, 2024 and December 31, 2023, respectively |
(223.1) |
(226.7) |
|
|
Accumulated other comprehensive loss |
(5.3) |
(0.9) |
|
|
Total equity |
729.3 |
705.5 |
|
|
Total liabilities and equity |
$ 1,840.0 |
$ 1,837.8 |
|
|
ECOVYST INC. AND SUBSIDIARIES |
|||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
|
Nine months ended September 30, |
|||
|
2024 |
2023 |
||
|
Cash flows from operating activities: |
(in millions) |
||
|
Net income |
$ 23.8 |
$ 41.2 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
|
Depreciation |
56.2 |
51.9 |
|
|
Amortization |
10.6 |
10.5 |
|
|
Amortization of deferred financing costs and original issue discount |
1.3 |
1.5 |
|
|
Deferred income tax benefit |
(4.5) |
(1.0) |
|
|
Net loss on asset disposals |
0.8 |
3.3 |
|
|
Stock compensation |
10.5 |
12.5 |
|
|
Equity in net income from affiliated companies |
(2.5) |
(16.3) |
|
|
Dividends received from affiliated companies |
33.0 |
10.0 |
|
|
Other, net |
(7.3) |
(5.2) |
|
|
Working capital changes that provided (used) cash: |
|||
|
Receivables |
7.6 |
(8.9) |
|
|
Inventories |
(7.4) |
(3.9) |
|
|
Prepaids and other current assets |
(8.3) |
0.9 |
|
|
Accounts payable |
(5.8) |
(3.7) |
|
|
Accrued liabilities |
(1.6) |
(19.4) |
|
|
Net cash provided by operating activities |
106.4 |
73.4 |
|
|
Cash flows from investing activities: |
|||
|
Purchases of property, plant and equipment |
(51.7) |
(53.6) |
|
|
Investment in non-marketable equity securities |
(4.5) |
— |
|
|
Net cash used in investing activities |
(56.2) |
(53.6) |
|
|
Cash flows from financing activities: |
|||
|
Draw down of revolving credit facilities |
— |
14.5 |
|
|
Repayments of revolving credit facilities |
— |
(14.5) |
|
|
Issuance of long-term debt, net of original issue discount and financing fees |
870.8 |
— |
|
|
Repayments of long-term debt |
(877.5) |
(6.8) |
|
|
Repurchases of common shares |
(5.0) |
(78.7) |
|
|
Tax withholdings on equity award vesting |
(1.2) |
(3.4) |
|
|
Repayment of financing obligation |
(2.4) |
(2.1) |
|
|
Other, net |
0.2 |
0.5 |
|
|
Net cash used in financing activities |
(15.1) |
(90.5) |
|
|
Effect of exchange rate changes on cash and cash equivalents |
— |
(1.9) |
|
|
Net change in cash and cash equivalents |
35.1 |
(72.6) |
|
|
Cash and cash equivalents at beginning of period |
88.4 |
110.9 |
|
|
Cash and cash equivalents at end of period |
$ 123.5 |
$ 38.3 |
|
|
Appendix Table A-1: Reconciliation of Net Income to Adjusted EBITDA |
||||||||
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||
|
2024 |
2023 |
2024 |
2023 |
|||||
|
(in millions) |
||||||||
|
Reconciliation of net income to Adjusted EBITDA |
||||||||
|
Net income |
$ 14.3 |
$ 16.6 |
$ 23.8 |
$ 41.2 |
||||
|
Provision for income taxes |
4.5 |
7.9 |
8.8 |
17.6 |
||||
|
Interest expense, net |
11.3 |
11.8 |
37.6 |
30.8 |
||||
|
Depreciation and amortization |
23.2 |
21.3 |
66.8 |
62.5 |
||||
|
EBITDA |
53.3 |
57.6 |
137.0 |
152.1 |
||||
|
Joint venture depreciation, amortization and interest(a) |
3.6 |
3.3 |
10.1 |
10.1 |
||||
|
Amortization of investment in affiliate step-up(b) |
0.6 |
1.6 |
3.2 |
4.8 |
||||
|
Debt extinguishment costs |
— |
— |
4.6 |
— |
||||
|
Net loss on asset disposals(c) |
0.2 |
1.0 |
0.8 |
3.3 |
||||
|
Foreign currency exchange loss (gain)(d) |
— |
0.8 |
0.1 |
(0.4) |
||||
|
LIFO (benefit) expense(e) |
(0.6) |
— |
(3.2) |
2.5 |
||||
|
Transaction and other related costs(f) |
— |
0.2 |
0.2 |
2.8 |
||||
|
Equity-based compensation |
3.0 |
3.5 |
10.5 |
12.6 |
||||
|
Restructuring, integration and business optimization expenses(g) |
0.5 |
0.3 |
0.9 |
2.4 |
||||
|
Other(h) |
(0.8) |
(0.4) |
(1.9) |
(0.1) |
||||
|
Adjusted EBITDA |
$ 59.8 |
$ 67.9 |
$ 162.3 |
$ 190.1 |
||||
|
Descriptions to Ecovyst Non-GAAP Reconciliations |
|
|
(a) |
We use Adjusted EBITDA as a performance measure to evaluate our financial results. Because our Advanced Materials & Catalysts segment includes our 50% interest in the Zeolyst Joint Venture, we include an adjustment for our 50% proportionate share of depreciation, amortization and interest expense of the Zeolyst Joint Venture. |
|
(b) |
Represents the amortization of the fair value adjustments associated with the equity affiliate investment in the Zeolyst Joint Venture as a result of the combination of the businesses of PQ Holdings Inc. and Eco Services Operations LLC in May 2016. We determined the fair value of the equity affiliate investment and the fair value step-up was then attributed to the underlying assets of the Zeolyst Joint Venture. Amortization is primarily related to the fair value adjustments associated with intangible assets, including customer relationships and technical know-how. |
|
(c) |
When asset disposals occur, we remove the impact of net gain/loss of the disposed asset because such impact primarily reflects the non-cash write-off of long-lived assets no longer in use. |
|
(d) |
Reflects the exclusion of the foreign currency transaction gains and losses in the statements of income related to the remeasurement effects of monetary assets and liabilities, including non-permanent intercompany debt, denominated in foreign currency. |
|
(e) |
Represents non-cash adjustments to the Company’s LIFO reserves for certain inventories in the U.S. that are valued using the LIFO method, effectively reflecting the results as if these inventories were valued using the FIFO method, which we believe provides a means of comparison to other companies that may not use the same basis of accounting for inventories. |
|
(f) |
Relates to certain transaction costs, including debt financing, due diligence and other costs related to transactions that are completed, pending or abandoned, that we believe are not representative of our ongoing business operations. |
|
(g) |
Includes the impact of restructuring, integration and business optimization expenses, which are incremental costs that are not representative of our ongoing business operations. |
|
(h) |
Other consists of adjustments for items that are not core to our ongoing business operations. These adjustments include environmental remediation and other legal costs, expenses for capital and franchise taxes, and defined benefit pension and postretirement plan (benefits) costs, for which our obligations are under plans that are frozen. Also included in this amount are adjustments to eliminate the benefit realized in cost of goods sold of the allocation of a portion of the contract manufacturing payments under the five-year agreement with the buyer of the Performance Chemicals business to the financing obligation under the failed sale-leaseback. Included in this line-item are rounding discrepancies that may arise from rounding from dollars (in thousands) to dollars (in millions). |
|
Appendix Table A-2: Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS(1) |
|||||||||||
|
Three months ended September 30, |
|||||||||||
|
2024 |
2023 |
||||||||||
|
Pre-tax |
Tax |
After-tax |
Per share, |
Per share, |
Pre-tax |
Tax |
After-tax |
Per share, |
Per share, |
||
|
(in millions, except share and per share amounts) |
|||||||||||
|
Net income |
$ 18.8 |
$ 4.5 |
$ 14.3 |
$ 0.12 |
$ 0.12 |
$ 24.5 |
$ 7.9 |
$ 16.6 |
$ 0.14 |
$ 0.14 |
|
|
Amortization of investment in affiliate step-up(b) |
0.6 |
0.1 |
0.5 |
— |
— |
1.6 |
0.5 |
1.1 |
0.01 |
0.01 |
|
|
Net loss on asset disposals(c) |
0.2 |
0.1 |
0.1 |
— |
— |
1.0 |
0.3 |
0.7 |
0.01 |
0.01 |
|
|
Foreign currency exchange loss(d) |
— |
— |
— |
— |
— |
0.8 |
0.2 |
0.6 |
0.01 |
0.01 |
|
|
LIFO benefit(e) |
(0.6) |
(0.2) |
(0.4) |
— |
— |
— |
— |
— |
— |
— |
|
|
Transaction and other related costs(f) |
— |
— |
— |
— |
— |
0.2 |
0.1 |
0.1 |
— |
— |
|
|
Equity-based compensation |
3.0 |
0.7 |
2.3 |
0.02 |
0.02 |
3.5 |
0.3 |
3.2 |
0.03 |
0.03 |
|
|
Restructuring, integration and business optimization expenses(g) |
0.5 |
0.1 |
0.4 |
— |
— |
0.3 |
0.1 |
0.2 |
— |
— |
|
|
Other(h) |
(0.8) |
(0.1) |
(0.7) |
— |
— |
(0.4) |
(0.1) |
(0.3) |
(0.01) |
(0.01) |
|
|
Adjusted Net Income(1) |
$ 21.7 |
$ 5.2 |
$ 16.5 |
$ 0.14 |
$ 0.14 |
$ 31.5 |
$ 9.3 |
$ 22.2 |
$ 0.19 |
$ 0.19 |
|
|
Weighted average shares outstanding |
116,490,634 |
117,187,054 |
116,446,085 |
117,374,347 |
|||||||
|
Nine months ended September 30, |
|||||||||||
|
2024 |
2023 |
||||||||||
|
Pre-tax |
Tax |
After-tax |
Per share, |
Per share, |
Pre-tax |
Tax |
After-tax |
Per share, |
Per share, |
||
|
(in millions, except share and per share amounts) |
|||||||||||
|
Net income |
$ 32.6 |
$ 8.8 |
$ 23.8 |
$ 0.20 |
$ 0.20 |
$ 58.8 |
$ 17.6 |
$ 41.2 |
$ 0.35 |
$ 0.34 |
|
|
Amortization of investment in affiliate step-up(b) |
3.2 |
0.8 |
2.4 |
0.02 |
0.02 |
4.8 |
1.3 |
3.5 |
0.03 |
0.03 |
|
|
Debt extinguishment costs |
4.6 |
1.2 |
3.4 |
0.03 |
0.03 |
— |
— |
— |
— |
— |
|
|
Net loss on asset disposals(c) |
0.8 |
0.2 |
0.6 |
0.01 |
0.01 |
3.3 |
0.9 |
2.4 |
0.02 |
0.02 |
|
|
Foreign currency exchange loss (gain)(d) |
0.1 |
— |
0.1 |
— |
— |
(0.4) |
(0.1) |
(0.3) |
— |
— |
|
|
LIFO (benefit) expense(e) |
(3.2) |
(0.8) |
(2.4) |
(0.02) |
(0.02) |
2.5 |
0.7 |
1.8 |
0.02 |
0.01 |
|
|
Transaction and other related costs(f) |
0.2 |
0.1 |
0.1 |
— |
— |
2.8 |
0.8 |
2.0 |
0.02 |
0.02 |
|
|
Equity-based compensation |
10.5 |
2.1 |
8.4 |
0.07 |
0.07 |
12.6 |
1.1 |
11.5 |
0.10 |
0.10 |
|
|
Restructuring, integration and business optimization expenses(g) |
0.9 |
0.2 |
0.7 |
0.01 |
0.01 |
2.4 |
0.7 |
1.7 |
0.01 |
0.01 |
|
|
Other(h) |
(1.9) |
(0.6) |
(1.3) |
(0.01) |
(0.02) |
(0.1) |
— |
(0.1) |
(0.01) |
— |
|
|
Adjusted Net Income(1) |
$ 47.8 |
$ 12.0 |
$ 35.8 |
$ 0.31 |
$ 0.30 |
$ 86.7 |
$ 23.0 |
$ 63.7 |
$ 0.54 |
$ 0.53 |
|
|
Weighted average shares outstanding |
116,786,759 |
117,425,254 |
119,042,161 |
120,417,132 |
|||||||
|
See Appendix Table A-1 for Descriptions to Ecovyst Non-GAAP Reconciliations in the table above. |
|
|
(1) |
We define Adjusted Net Income as net income adjusted for non-operating income or expense and the impact of certain non-cash or other items that are included in net income that we do not consider indicative of our ongoing operating performance. Adjusted Net Income is presented as a key performance indicator as we believe it will enhance a prospective investor’s understanding of our results of operations and financial condition. Adjusted Net Income may not be comparable with net income or Adjusted Net Income as defined by other companies. |
The adjustments to net income are shown net of applicable tax rates of 25.1% and 27.4% for the nine months ended September 30, 2024 and 2023, respectively, except for equity-based compensation. The tax effect on equity-based compensation is derived by removing the tax effect of any equity-based compensation expense disallowed as a result of its inclusion within IRC Sec. 162(m), and adding the tax effect of equity-based stock compensation shortfall recorded as a discrete item.
|
Appendix Table A-3: Sales and Adjusted EBITDA by Business Segment |
||||||||||||
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
|
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
|||||||
|
Sales: |
||||||||||||
|
Ecoservices |
$ 153.9 |
$ 147.6 |
4.3 % |
$ 449.4 |
$ 443.4 |
1.4 % |
||||||
|
Advanced Silicas |
25.3 |
25.7 |
(1.6) % |
73.1 |
74.9 |
(2.4) % |
||||||
|
Total sales |
$ 179.2 |
$ 173.3 |
3.4 % |
$ 522.5 |
$ 518.3 |
0.8 % |
||||||
|
Zeolyst Joint Venture sales |
$ 30.9 |
$ 37.0 |
(16.5) % |
$ 83.4 |
$ 103.7 |
(19.6) % |
||||||
|
Adjusted EBITDA: |
||||||||||||
|
Ecoservices |
$ 55.1 |
$ 54.7 |
0.7 % |
$ 146.3 |
$ 151.6 |
(3.5) % |
||||||
|
Advanced Materials & Catalysts |
10.9 |
16.4 |
(33.5) % |
36.8 |
54.7 |
(32.7) % |
||||||
|
Unallocated corporate expenses |
(6.2) |
(3.2) |
(93.8) % |
(20.8) |
(16.2) |
(28.4) % |
||||||
|
Total Adjusted EBITDA |
$ 59.8 |
$ 67.9 |
(11.9) % |
$ 162.3 |
$ 190.1 |
(14.6) % |
||||||
|
Adjusted EBITDA Margin: |
||||||||||||
|
Ecoservices |
35.8 % |
37.1 % |
32.6 % |
34.2 % |
||||||||
|
Advanced Materials & Catalysts(1) |
19.4 % |
26.2 % |
23.5 % |
30.6 % |
||||||||
|
Total Adjusted EBITDA Margin(1) |
28.5 % |
32.3 % |
26.8 % |
30.6 % |
||||||||
|
(1) |
Adjusted EBITDA Margin calculation includes proportionate 50% share of sales from the Zeolyst Joint Venture. |
|
Appendix Table A-4: Adjusted Free Cash Flow |
||||
|
Nine months ended September 30, |
||||
|
2024 |
2023 |
|||
|
(in millions) |
||||
|
Net cash provided by operating activities |
$ 106.4 |
$ 73.4 |
||
|
Less: |
||||
|
Purchases of property, plant and equipment(1) |
(51.7) |
(53.6) |
||
|
Free Cash Flow(2) |
$ 54.7 |
$ 19.8 |
||
|
Adjustments to free cash flow: |
||||
|
Cash paid for debt financing costs included in cash from operating activities |
4.6 |
— |
||
|
Adjusted Free Cash Flow(2) |
$ 59.3 |
$ 19.8 |
||
|
Net cash used in investing activities(3) |
$ (56.2) |
$ (53.6) |
||
|
Net cash used in financing activities |
$ (15.1) |
$ (90.5) |
||
|
(1) |
Excludes the Company’s proportionate 50% share of capital expenditures from the Zeolyst Joint Venture. |
|
(2) |
We define Adjusted Free Cash Flow as net cash provided by operating activities less purchases of property, plant and equipment, adjusted for cash flows that are unusual in nature and/or infrequent in occurrence that neither relate to our core business nor reflect the liquidity of our underlying business. Historically these adjustments include proceeds from the sale of assets, net interest proceeds on swaps designated as net investment hedges, the cash paid for segment disposals and cash paid for debt financing costs included in cash from operating activities. Adjusted Free Cash Flow is a non-GAAP financial measure that we believe will enhance a prospective investor’s understanding of our ability to generate additional cash from operations, and is an important financial measure for use in evaluating our financial performance. Our presentation of Adjusted Free Cash Flow is not intended to replace, and should not be considered superior to, the presentation of our net cash provided by operating activities determined in accordance with GAAP. Additionally, our definition of Adjusted Free Cash Flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view Adjusted Free Cash Flow as a measure that provides supplemental information to our consolidated statements of cash flows. You should not consider Adjusted Free Cash Flow in isolation or as an alternative to the presentation of our financial results in accordance with GAAP. The presentation of Adjusted Free Cash Flow may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. |
|
(3) |
Net cash used in investing activities includes purchases of property, plant and equipment, which is also included in our computation of Adjusted Free Cash Flow. |
|
Appendix Table A-5: Net Debt Leverage Ratio |
|||
|
September 30, 2024 |
September 30, 2023 |
||
|
(in millions, except ratios) |
|||
|
Total debt |
$ 873.0 |
$ 879.8 |
|
|
Less: |
|||
|
Cash and cash equivalents |
123.5 |
38.3 |
|
|
Net debt |
$ 749.5 |
$ 841.5 |
|
|
Trailing twelve months: |
|||
|
Net income |
$ 53.8 |
$ 62.7 |
|
|
Adjusted EBITDA(1) |
$ 232.0 |
$ 259.3 |
|
|
Net Debt to Net Income ratio |
13.9x |
13.4x |
|
|
Net Debt Leverage ratio |
3.2x |
3.2x |
|
___________
|
(1) |
Refer to Appendix Table A-1: Reconciliation of Net Income to Adjusted EBITDA for the reconciliation to the most comparable GAAP financial measure. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/ecovyst-reports-third-quarter-2024-results-302292408.html
SOURCE Ecovyst Inc.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Samsung Profits Soar, But Company's Nvidia AI Chip Race Lag Allows SK Hynix, Micron To Take The Lead In High-Bandwidth Memory
Samsung Electronics SSNLF, South Korea’s largest company, reported a net income of 9.78 trillion won ($7.1 billion) for the September quarter, with its chip division earning 3.86 trillion won ($2.8 billion) in operating profit.
Artificial intelligence and data center server demand remained strong, though mobile chip sales dipped due to inventory adjustments.
Samsung’s delays in NVIDIA Corp‘s NVDA certification for AI memory chips have allowed competitors SK Hynix HXSCF and Micron Technology Inc MU to lead in high-bandwidth memory.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Tamarack Valley Energy Announces Q3 2024 Financial Results, Updated Corporate Guidance and Dividend Increase
TSX: TVE
CALGARY, AB, Oct. 31, 2024 /CNW/ – Tamarack Valley Energy Ltd. (“Tamarack” or the “Company“) TVE is pleased to announce its unaudited financial and operating results for the three and nine months ended September 30, 2024. Selected financial and operating information should be read with Tamarack’s unaudited consolidated financial statements and related management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2024, and 2023, which are available on SEDAR+ at www.sedarplus.ca and on Tamarack’s website at www.tamarackvalley.ca.
Q3 2024 Financial and Operational Highlights
- Quarterly Production Growth – Production averaged 65,024 boe/d(1), exceeding the high end of prior guidance, reflecting ongoing strength in corporate performance driven by the Clearwater and Charlie Lake drilling programs and waterflood initiatives. Q3/24 Clearwater production increased to 43,300 boe/d(2) reflecting a 15% (19% per share) increase YoY as Tamarack continues to expand its heavy oil operations.
- Increasing Funds Flow(3) – Delivered Adjusted Funds Flow(3) of $220.4MM ($0.41 per share), and Free Funds Flow(3) of $108.7MM. YTD Tamarack has generated $297.7MM of Free Funds Flow(3) which, on a per share basis, represents a 72% increase YoY(4).
- Margin Enhancement – Continued cost reductions and better wellhead realizations are driving stronger margins across the business. Per boe transportation expense demonstrated a 43% improvement YoY. Higher pipeline flows, reduced trucking and a one-time royalty cost recovery all contributed to the improvement. Wellhead price realizations continue to improve due to enhanced blending, sales of CWH oil (Clearwater Heavy) and strong trading differentials driven by the TMX pipeline.
- Delivering Returns to Shareholders – Total shareholder return value for first nine months of 2024, was $144.7MM, or ~$0.26/share(5), including base dividends of $61.4MM and share buybacks.
- Continued Debt Reduction – Exit net debt of $807.4MM reflected a further strengthening of the balance sheet. Net debt has been reduced by $176.2MM YTD.
- Increased Share Buybacks – During Q3/24, Tamarack repurchased 12.3MM common shares. During the first nine months of 2024, the Company bought back and cancelled 4.0% of the year-end 2023 shares outstanding.
- Dividend Increase – Tamarack’s per share monthly dividend will increase by 2% for the November dividend, payable in December, to $0.01275 from $0.0125 previously, which equates to $0.1530 annually.
- Expanded Clearwater Infrastructure Partnership – Added a 13th Indigenous community to the Clearwater Infrastructure Limited Partnership (the “CIP”) arrangement. Tamarack transferred an additional $50.8MM of Clearwater assets to the partnership for $43.2MM in cash and retained 15% operated working interest in the assets.
Achieving Success: Plan, Execute & Deliver
Brian Schmidt, President and CEO of Tamarack stated:
“Tamarack’s Q3/24 results continue to highlight the quality of the Clearwater and Charlie Lake asset base that has been built over the past three years, and the operational excellence of the team that is driving this performance. Growth in Clearwater production of 15%, relative to the same period in 2023, was achieved while at the same time debt has been materially reduced and enhanced returns to shareholders have been increasing. By demonstrating improved efficiencies, the Company continues to deliver more while spending less.”
Q3 2024 Financial & Operating Results
|
Three months ended |
Nine months ended |
|||||
|
September 30 |
2024 |
2023 |
% |
2024 |
2023 |
% |
|
($ thousands, except per share amounts) |
||||||
|
Oil and natural gas sales, before blending |
$ 439,435 |
$ 506,365 |
(13) |
$ 1,294,250 |
$ 1,284,066 |
1 |
|
Cash provided by operating activities |
240,843 |
199,756 |
21 |
631,414 |
415,645 |
52 |
|
Per share – basic(3) |
0.45 |
0.36 |
25 |
1.15 |
0.75 |
53 |
|
Per share – diluted(3) |
0.44 |
0.36 |
22 |
1.15 |
0.74 |
55 |
|
Adjusted funds flow(3) |
220,419 |
255,199 |
(14) |
627,529 |
569,723 |
10 |
|
Per share – basic(3) |
0.41 |
0.46 |
(11) |
1.15 |
1.02 |
13 |
|
Per share – diluted(3) |
0.40 |
0.46 |
(13) |
1.14 |
1.02 |
12 |
|
Free funds flow(3) |
108,688 |
128,857 |
(16) |
297,693 |
176,203 |
69 |
|
Per share – basic(3) |
0.20 |
0.23 |
(13) |
0.54 |
0.32 |
72 |
|
Per share – diluted(3) |
0.20 |
0.23 |
(14) |
0.54 |
0.31 |
72 |
|
Net income |
93,694 |
8,634 |
985 |
155,837 |
36,874 |
323 |
|
Per share – basic |
0.17 |
0.02 |
750 |
0.28 |
0.07 |
300 |
|
Per share – diluted |
0.17 |
0.02 |
750 |
0.28 |
0.07 |
300 |
|
Net debt(3) |
807,401 |
1,128,030 |
(28) |
807,401 |
1,128,030 |
(28) |
|
Investments in oil and natural gas assets |
109,032 |
122,759 |
(11) |
323,594 |
388,752 |
(17) |
|
Weighted average shares outstanding |
||||||
|
Basic |
540,990 |
556,708 |
(3) |
547,074 |
556,399 |
(2) |
|
Diluted |
545,266 |
558,569 |
(2) |
551,091 |
559,958 |
(2) |
|
Average daily production |
||||||
|
Heavy oil (bbls/d) |
39,047 |
35,900 |
9 |
37,659 |
35,229 |
7 |
|
Light oil (bbls/d) |
13,203 |
16,974 |
(22) |
14,422 |
16,797 |
(14) |
|
NGL (bbls/d) |
2,915 |
3,623 |
(20) |
2,460 |
3,795 |
(35) |
|
Natural gas (mcf/d) |
59,154 |
72,597 |
(19) |
55,162 |
71,633 |
(23) |
|
Total (boe/d) |
65,024 |
68,597 |
(5) |
63,735 |
67,760 |
(6) |
|
Average sale prices |
||||||
|
Heavy oil, net of blending expense ($/bbl)(3) |
$ 85.25 |
$ 92.85 |
(8) |
$ 83.19 |
$ 76.15 |
9 |
|
Light oil ($/bbl) |
97.79 |
107.83 |
(9) |
96.71 |
98.30 |
(2) |
|
NGL ($/bbl) |
39.58 |
41.46 |
(5) |
39.32 |
41.51 |
(5) |
|
Natural gas ($/mcf) |
0.87 |
2.60 |
(67) |
1.72 |
2.84 |
(39) |
|
Total ($/boe) |
73.62 |
80.22 |
(8) |
74.05 |
69.29 |
7 |
|
Benchmark pricing |
||||||
|
West Texas Intermediate (US$/bbl) |
75.09 |
82.26 |
(9) |
77.54 |
77.39 |
0 |
|
Western Canadian Select (WCS) (C$/bbl) |
83.95 |
93.09 |
(10) |
84.45 |
80.38 |
5 |
|
WCS differential (US$/bbl) |
13.55 |
12.88 |
5 |
15.49 |
17.63 |
(12) |
|
Edmonton Par (Cdn$/bbl) |
97.85 |
107.90 |
(9) |
98.43 |
100.63 |
(2) |
|
Edmonton Par differential (US$/bbl) |
3.35 |
1.85 |
81 |
5.21 |
2.61 |
100 |
|
Foreign Exchange (USD to CAD) |
1.36 |
1.34 |
1 |
1.36 |
1.35 |
1 |
|
Operating netback ($/Boe) |
||||||
|
Realized sales price, net of blending(3) |
73.62 |
80.22 |
(8) |
74.05 |
69.29 |
7 |
|
Royalty expenses |
(15.74) |
(13.38) |
18 |
(14.65) |
(12.70) |
15 |
|
Net production expenses(3) |
(8.62) |
(8.47) |
2 |
(9.12) |
(9.72) |
(6) |
|
Transportation expenses |
(2.36) |
(4.13) |
(43) |
(3.47) |
(4.00) |
(13) |
|
Carbon tax |
(0.08) |
– |
nm |
(0.40) |
– |
nm |
|
Operating field netback ($/Boe)(3) |
46.82 |
54.24 |
(14) |
46.41 |
42.87 |
8 |
|
Realized commodity hedging gain (loss) |
0.03 |
(2.52) |
(101) |
(0.09) |
(1.89) |
(95) |
|
Operating netback ($/Boe)(3) |
$ 46.85 |
$ 51.72 |
(9) |
$ 46.32 |
$ 40.98 |
13 |
|
Adjusted funds flow ($/Boe)(3) |
$ 36.85 |
$ 40.44 |
(9) |
$ 35.93 |
$ 30.80 |
17 |
2024 Production Guidance Update
In response to the continued strong well performance and benefits from infrastructure optimization during the year, the Company has increased the full-year production guidance range to 63,000 to 64,000 boe/d(6).
The 2024 capital program, which is delivering higher production than originally budgeted, is forecasted to be achieved at a lower cost, benefitting from drilling and facilities efficiencies. Utilizing a portion of the CIP expansion proceeds, Tamarack will drill 4 (4.0 net) Charlie Lake wells in Q4/24, expand regional pipeline capacity in advance of the third-party plant commissioning in early 2025, and expand its waterflood investment program in the Clearwater. Tamarack anticipates spending for the year to be approximately $440MM(7), consistent with prior guidance, which is inclusive of the incremental Charlie Lake wells and waterflood investment as the Company continues to out deliver against the capital deployed.
Tamarack is also updating its 2024 corporate costs guidance on the back of a continued focus on reducing costs and enhancing margins. Transportation cost guidance is reduced in response to improved oil transportation contracts and lower trucking costs. Guidance regarding carbon tax is updated to reflect savings related to anticipated taxable emissions reductions in 2024, resulting from ongoing Clearwater carbon abatement initiatives. Interest expense guidance was reduced primarily due to lower net debt and lower interest rates. The change to income tax guidance reflects Tamarack’s profitability outperformance and the impact of the CIP expansion.
2024 Guidance Summary(8)
|
Units |
Prior (May 2024) Guidance |
Guidance Change |
Updated (October 2024) Guidance |
|
|
2024 Capital Budget(7) |
$MM |
$390– $440 |
– |
$440 |
|
Annual Average Production(6,9) |
boe/d |
61,000 – 63,000 |
+2,000 & +1,000 |
63,000 – 64,000 |
|
Average Oil & NGL Weighting |
% |
84% – 86% |
– |
84% – 86% |
|
Expenses: |
||||
|
Royalty Rate (%) |
% |
20% – 22% |
– |
20% – 22% |
|
Wellhead price differential – Oil(10) |
$/boe |
$2.00 – $3.00 |
– |
$2.00 – $3.00 |
|
Net Production |
$/boe |
$8.75 – $9.25 |
– |
$8.75 – $9.25 |
|
Transportation |
$/boe |
$3.75 – $4.10 |
($0.30) & ($0.35) |
$3.45 – $3.75 |
|
Carbon Tax(11) |
$/boe |
$0.50 – $1.00 |
($0.25) & ($0.50) |
$0.25 – $0.50 |
|
General and Administrative (12) |
$/boe |
$1.35 – $1.50 |
– |
$1.35 – $1.50 |
|
Interest |
$/boe |
$3.80 – $4.20 |
($0.55) & ($0.45) |
$3.25 – $3.75 |
|
Income Taxes(13) |
% |
9% – 11% |
2% & 2% |
11% – 13% |
Returns to Shareholders
The Company will raise its monthly dividend to $0.01275 per share, or $0.1530 per share annually, starting with the November dividend that is payable in December. This will represent the fourth increase, and a 53% uplift, since announcing the inaugural dividend in December 2021.
2024 Operations Update
Clearwater
Total Clearwater production averaged 43,300 boe/d(14) (91% oil) in Q3/24, representing a 15% increase YoY (19% per share growth). This result was driven by the Nipisi and West Marten assets which averaged ~20,800 bbl/d of heavy oil Q3/24, demonstrating an increase of approximately 10% year-to-date. The strong growth reflects de-bottlenecking efforts, base optimization, better than forecast new well performance, and West Nipisi waterflood response. Investment in gas conservation has seen total sales gas from Tamarack’s Clearwater assets more than double YoY.
At West Marten, the Company continues to see positive results from the C sand delineation program with an IP30 rate of ~200 bbl/d observed at 02/13-30-076-04W5/0. Stacked sand development continues in the area, where the Company rig released six B sand and two C sand wells in Q3/24 from its 14-23-076-05/W5 pad. Initial productivity is strong, and the Company plans to pursue waterflood in both sands.
The continued refinement of drilling designs, coupled with program optimizations, are driving efficiency enhancements and lower overall capital costs throughout the Clearwater asset base. This has resulted in a 5% reduction in per meter drilling costs across the Clearwater, highlighted by a 15% reduction in Marten Hills.
The application of fan well designs in the Clearwater is illustrative of this progression, where results have improved efficiencies through lower costs and increased recoveries in areas where economic secondary recovery potential has not yet been established. Success of the fan design is demonstrated through results in the South Clearwater. The two Newbrook 13-30-062-20/W4 pad wells brought onstream in 2024, continue to exhibit strong production, with average daily oil rates exceeding 235 bbl/d per well after seven months on production. This pad represents the best wells drilled by industry, across the trend to date, and Tamarack’s overall South Clearwater fan production has grown to 1,650 bbl/d. Results to date have demonstrated the fan design contributes to shallower declines and higher per well estimated ultimate recoveries (EUR), compared to the conventional design historically applied in the area. This provides positive implications for future development by reducing long-term sustaining capital while optimizing project economics.
Waterflood – Production Response to Increased Injection at Nipisi and Marten Hills
Clearwater secondary recovery initiatives are exhibiting strong early results across multiple areas and sands in the play. Pilots initiated by Tamarack continue to demonstrate strong performance from secondary recoveries with wells trending ahead of expectations, indicating the potential to more than double the primary EUR of the well. Total water injection across the Clearwater is currently ~8,650 bbl/d and forecasted to grow to 14,000 bbl/d by year end, representing >60% growth through Q4/24. Waterflood activity to date has resulted in an estimated 1,500 bbl/d of incremental oil production, and the Company expects to have >9% of its Clearwater production supported by waterflood by year-end 2024.
Year-to-date the company has drilled seven total injectors in Nipisi. Based on the strong results from waterflood in the area, the Company plans to drill five additional injectors from the 12-14-076-08/W5 pad in Q4/24. Tamarack’s first C sand injector at West Marten commenced water injection in August 2024, and currently is injecting at a rate of 400 bbl/d.
At Marten Hills, the Company is now seeing oil response from all its implemented waterflood patterns. Oil production from Tamarack’s first “W” pattern at 102/01-11-074-25/W4 is currently 25 bbl/d above its primary baseline and ramping up. The 100/16-02-075-25/W4 pattern, offsetting the highly successful 102/15-02-075-25/W4 pattern, is also seeing a strong initial response that is 25 bbl/d above its primary baseline. Based on these results, Tamarack plans to drill two water source wells in Q4/24 to accelerate further conversions in the area, which are designed to maximize per well injectivity, promoting quicker response times and delivering shorter payout periods. Total water injection at Marten Hills is currently at approximately 4,750 bbl/d.
At Canal, Tamarack implemented a pilot waterflood at the 100/16-16-70-23W4/0 well which has demonstrated strong initial injectivity greater than 800 bbl/d.
Charlie Lake
During the quarter, Tamarack achieved production of 16,200 boe/d(15) from its Charlie Lake assets, which continued to benefit from sustained outperformance related to wells brought online during H1/24 in the Wembley area. Tamarack resumed drilling in the Charlie Lake play in July, rig releasing 4 (4.0 net) horizontal wells in Q3/24.
Late in Q3/24, Tamarack brought two wells online in the Pipestone area that were drilled from the 14-34-071-08/W6 pad. These two wells achieved average IP30 rates of 1,320 boe/d(16) (86% oil & liquids) per well, which compare to outperforming wells brought on-stream by Tamarack in H1/24. Also, in Q3/24 the Company has brought online two Wembley area wells from the 11-11-074-08/W6 pad that have exhibited encouraging tests rates similar to the prior two Q4/23 drills from this location.
Risk Management
The Company takes a systematic approach to manage commodity price risk and volatility to ensure sustaining capital, debt servicing requirements and the base dividend are protected through a prudent hedging management program. For the reminder of 2024 and the first half of 2025, approximately ~50% of net after royalty oil production is hedged against WTI with an average floor price of ~US$67/bbl in Q4/24 and ~US$65/bbl in H1/25, with structures that allow for upside price participation at an average ceiling price of ~US$85/bbl. Our strategy provides protection to the downside while maximizing upside exposure. Additional details of the current hedges in place can be found in the corporate presentation on the Company website (www.tamarackvalley.ca).
|
Quarterly Investor Call 9:30 AM MDT (11:30 AM EDT) |
|
Tamarack will host a webcast at 9:30 AM MDT (11:30 AM EDT) on Thursday October 31, 2024, to discuss the Q3/24 financial results and provide an operational update. Participants can access the live webcast via this link or through links provided on the Company’s website. A recorded archive of the webcast will be available on the Company’s website following the live webcast. |
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company committed to creating long-term value for its shareholders through sustainable free funds flow(3) generation, financial stability and the return of capital. The Company has an extensive inventory of low-risk, oil development drilling locations focused primarily on Clearwater and Charlie Lake plays in Alberta while also pursuing EOR upside in these core areas. For more information, please visit the Company’s website at www.tamarackvalley.ca.
Abbreviations
|
AECO |
the natural gas storage facility located at Suffield, Alberta connected to TC Energy’s Alberta System |
|
ARO |
asset retirement obligation; may also be referred to as decommissioning obligation |
|
bbls |
barrels |
|
bbls/d |
barrels per day |
|
boe |
barrels of oil equivalent |
|
boe/d |
barrels of oil equivalent per day |
|
bopd |
barrels of oil per day |
|
EOR |
enhanced oil recovery |
|
GJ |
gigajoule |
|
IFRS |
International Financial Reporting Standards as issued by the International Accounting Standards Board |
|
IP30 |
average peak production rate for the 30 days after the well is brought onstream |
|
Mcf |
thousand cubic feet |
|
mcf/d |
thousand cubic feet per day |
|
MM |
Million |
|
MMcf/d |
million cubic feet per day |
|
MSW |
Mixed sweet blend, the benchmark for conventionally produced light sweet crude oil in Western Canada |
|
NGL |
Natural gas liquids |
|
WTI |
West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for the crude oil standard grade |
|
YoY |
Year-over-year |
|
YTD |
Year-to-date |
Reader Advisories
Notes to Press Release
|
1) |
Production of 65,024 boe/d: 39,047 bbl/day heavy oil, 13,203 bbl/d light and medium oil, 2,915 bbl/d NGL and 59,154 mcf/d natural gas. |
|
2) |
Q3 2023 Clearwater production of 37,600 boe/d is comprised of approximately 35,700 bbl/d heavy oil, 186 bbl/d NGL and 10,375 mcf/d natural gas. |
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3) |
See “Specified Financial Measures”. |
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4) |
Return per share calculated based on the weighted average basic shares outstanding for the relevant periods. |
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5) |
Q1/24-Q3/24 dividends of $61.4MM and share buybacks of $83.3MM. |
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6) |
Production of 63,000 – 64,000 boe/d: 37,900-38,600 bbl/d heavy oil, 13,600-13,750 bbl/d light and medium oil, 2,300-2,400 bbl/d NGL and 55,000-55,500 mcf/d natural gas. |
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7) |
Capital budget includes exploration and development capital, ESG initiatives, facilities land and seismic but excludes ARO, capital associated with the CIP and asset acquisitions and dispositions. |
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8) |
Annual guidance numbers are based on 2024 average pricing assumptions of: |
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2024 Budget Pricing |
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Crude Oil – WTI ($US/bbl) |
$75.00 |
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Crude Oil – MSW Differential ($US/bbl) |
($4.00) |
|
Crude Oil – WCS Differential ($US/bbl) |
($17.00) |
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Natural Gas – AECO ($CAD/GJ) |
$2.50 |
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Foreign Exchange – CAD/USD |
1.3450 |
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9) |
Production of 61,000 – 63,000 boe/d: 12,800-13,200 bbl/d light and medium oil, 36,600-37,800 bbl/d heavy oil, 2,400-2,500 bbl/d NGL and 54,900-56,700 mcf/d natural gas. |
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10) |
Wellhead price differential for oil shown in the guidance table. |
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11) |
The Company’s acquisitions in 2022 and a more stringent emissions regulatory framework increased taxable emissions in 2023 and 2024. Carbon tax of $0.50-$1.00/boe is anticipated in 2024, a significant increase from 2023 as the price of carbon escalates 23% to $80/tonne and the emissions intensity benchmark tightens. Carbon tax was previously included in net production costs but will be reported separately going forward. Tamarack’s gas conservation initiatives that continue into 2024 are expected to substantively decrease the carbon tax burden in 2025 and subsequent years. |
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12) |
G&A noted excludes the effect of cash settled stock-based compensation. |
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13) |
Tamarack estimates a tax rate as a percentage of funds flow |
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14) |
Production of 43,300 boe/d: 39,100 bbl/d heavy oil, 300 bbl/d light and medium oil, 360 bbl/d NGL and 21,500 mcf/d natural gas. |
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15) |
Production of 16,200 boe/d: 8,300 bbl/d light and medium oil, 2,500 bbl/d NGL and 32,400 mcf/d natural gas |
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16) |
Production of 1,320 boe/d: 1,030 bbl/d light and medium oil, 108 bbl/d NGL and 1,090 mcf/d natural gas |
Disclosure of Oil and Gas Information
Unit Cost Calculation. For the purpose of calculating unit costs, natural gas volumes have been converted to a boe using six thousand cubic feet equal to one barrel unless otherwise stated. A boe conversion ratio of 6:1 is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms with Canadian Securities Administrators’ National Instrument 51 101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Boe may be misleading, particularly if used in isolation.
Product Types. References in this press release to “crude oil” or “oil” refers to light, medium and heavy crude oil product types as defined by NI 51-101. References to “NGL” throughout this press release comprise pentane, butane, propane, and ethane, being all NGL as defined by NI 51-101. References to “natural gas” throughout this press release refers to conventional natural gas as defined by NI 51-101.
Short-Term Production Rates. References in this press release to peak rates, initial production rates, IP30 and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production of Tamarack. The Company cautions that such results should be considered to be preliminary.
Forward Looking Information
This press release contains certain forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “guidance”, “outlook”, “anticipate”, “target”, “plan”, “continue”, “intend”, “consider”, “estimate”, “expect”, “may”, “will”, “should”, “could” or similar words suggesting future outcomes. More particularly, this press release contains statements concerning: Tamarack’s business strategy, objectives, strength and focus; the Company’s exploration and development plans and strategies; improved efficiencies and margin enhancements; future intentions with respect to debt repayment and reduction and the Company’s ROC framework, including share buybacks and an increased monthly dividend; oil and natural gas production levels, adjusted funds flow and free funds flow; anticipated operational results for 2024 including, but not limited to, estimated or anticipated production levels (including in respect of Tamarack’s updated 2024 production guidance, which is increased to the 63,000 to 64,000 boe/d range), capital expenditures, drilling plans and infrastructure initiatives (including use of proceeds from the CIP expansion), the Company’s capital program, guidance and budget for 2024 and the funding thereof; expectations regarding commodity prices; the performance characteristics of the Company’s oil and natural gas properties; decline rates and EOR, including waterflood initiatives; the continued successful integration of acquired assets; the ability of the Company to achieve drilling success consistent with management’s expectations, including leveraging the “Fan” well design; ARO reduction; and risk management activities, including hedging positions and targets. Future dividend payments and share buybacks, if any, and the level thereof, are uncertain, as the Company’s return of capital framework and the funds available for such activities from time to time is dependent upon, among other things, free funds flow financial requirements for the Company’s operations and the execution of its growth strategy, fluctuations in working capital and the timing and amount of capital expenditures, debt service requirements and other factors beyond the Company’s control. Further, the ability of Tamarack to pay dividends and buyback shares will be subject to applicable laws (including the satisfaction of the solvency test contained in applicable corporate legislation) and contractual restrictions contained in the instruments governing its indebtedness, including its credit facility.
The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Tamarack, including those relating to: the business plan of Tamarack; the timing of and success of future drilling, development and completion activities; the geological characteristics of Tamarack’s properties; the continued successful integration of acquired assets into Tamarack’s operations; prevailing commodity prices, price volatility, price differentials and the actual prices received for the Company’s products; the availability and performance of drilling rigs, facilities, pipelines and other oilfield services; the timing of past operations and activities in the planned areas of focus; the drilling, completion and tie-in of wells being completed as planned; the performance of new and existing wells; the application of existing drilling and fracturing techniques; prevailing weather and break-up conditions; royalty regimes and exchange rates; impact of inflation on costs; the application of regulatory and licensing requirements; the continued availability of capital and skilled personnel; the ability to maintain or grow the banking facilities; the accuracy of Tamarack’s geological interpretation of its drilling and land opportunities, including the ability of seismic activity to enhance such interpretation; and Tamarack’s ability to execute its plans and strategies.
Although management considers these assumptions to be reasonable based on information currently available, undue reliance should not be placed on the forward-looking statements because Tamarack can give no assurances that they may prove to be correct. By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks with respect to unplanned third party pipeline outages and risks relating to inclement and severe weather events and natural disasters, such as fire, drought and flooding, including in respect of safety, asset integrity and shutting-in production, delivering on 2024 guidance; the risk that future dividend payments thereunder are reduced, suspended or cancelled; unforeseen difficulties in integrating of recently acquired assets into Tamarack’s operations; incorrect assessments of the value of benefits to be obtained from acquisitions and exploration and development programs; risks associated with the oil and gas industry in general (e.g. operational risks in development, exploration and production; and delays or changes in plans with respect to exploration or development projects or capital expenditures); commodity prices, including the impact of the actions of OPEC and OPEC+ members; the uncertainty of estimates and projections relating to production, cash generation, costs and expenses, including increased operating and capital costs due to inflationary pressures; health, safety, litigation and environmental risks; access to capital; and pandemics. In addition, ongoing military actions between Russia and Ukraine and the recent crisis in Israel and Gaza have the potential to threaten the supply of oil and gas from those regions. The long-term impacts of the actions between these nations remains uncertain. Due to the nature of the oil and natural gas industry, drilling plans and operational activities may be delayed or modified to respond to market conditions, results of past operations, regulatory approvals or availability of services causing results to be delayed. Please refer to the Company’s annual information form for the year ended December 31, 2023 and the MD&A for the period ended September 30, 2024, for additional risk factors relating to Tamarack, which can be accessed either on Tamarack’s website at www.tamarackvalley.ca or under the Company’s profile on www.sedarplus.ca. The forward-looking statements contained in this press release are made as of the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about generating sustainable long-term growth in free funds flow, dividends and share buybacks, prospective results of operations and production (including annual average production, average oil & NGL weighting), oil weightings, hedging, operating costs, 2024 capital budget, guidance and expenditures, decline rates, 2024 carbon tax, balance sheet strength, adjusted funds flow and free funds flow, net debt, debt repayments, total returns and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about Tamarack’s future business operations. Tamarack and its management believe that FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments, and represent, to the best of management’s knowledge and opinion, the Company’s expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. Tamarack disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. Changes in forecast commodity prices, differences in the timing of capital expenditures, and variances in average production estimates can have a significant impact on the key performance measures included in Tamarack’s guidance. The Company’s actual results may differ materially from these estimates.
Specified Financial Measures
This press release includes various specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios, capital management measures and supplemental financial measures as further described herein. These measures do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and, therefore, may not be comparable with the calculation of similar measures by other companies.
“Adjusted funds flow (capital management measure)” is calculated by taking cash-flow from operating activities, on a periodic basis, deducting current income tax expense and interest expense (excluding fees) and adding back income tax paid, interest paid, changes in non-cash working capital, expenditures on decommissioning obligations and transaction costs settled during the applicable period. since Tamarack believes the timing of collection, payment or incurrence of these items is variable. Management believes adjusting for estimated current income taxes and interest in the period expensed is a better indication of the adjusted funds generated by the Company. Expenditures on decommissioning obligations may vary from period to period depending on capital programs and the maturity of the Company’s operating areas. Expenditures on decommissioning obligations are managed through the capital budgeting process which considers available adjusted funds flow. Tamarack uses adjusted funds flow as a key measure to demonstrate the Company’s ability to generate funds to repay debt, pay dividends and fund future capital investment. Adjusted funds flow per share is calculated using the same weighted average basic and diluted shares that are used in calculating income per share, which results in the measure being considered a supplemental financial measure. Adjusted funds flow can also be calculated on a per boe basis, which results in the measure being considered a supplemental financial measure.
“Differential including transportation expense” The calculation of the Company’s heavy oil differential including transportation expenses is presented in the “Petroleum and natural gas sales” section of the Company’s Q1 2024 MD&A and is determined by comparing the Company’s realized price to the published benchmark price, plus transportation expenses. The Company and others utilize these performance measures to assess the value of net revenue received by Tamarack for each barrel sold relative to the published market price during that period. These performance measures are presented on a per boe basis as a non-GAAP financial ratio.
“Free funds flow (capital management measure)” is calculated by taking adjusted funds flow and subtracting capital expenditures, excluding acquisitions and dispositions. Management believes that free funds flow provides a useful measure to determine Tamarack’s ability to improve returns and to manage the long-term value of the business.
“Free funds flow breakeven (capital management measure)” (previously referred to as “free adjusted funds flow breakeven”) is determined by calculating the minimum WTI price in US/bbl required to generate free funds flow equal to zero, sustaining current production levels and all other variables held constant. Management believes that free funds flow breakeven provides a useful measure to establish corporate financial sustainability.
“Net debt (capital management measure)” is calculated as credit facilities plus senior unsecured notes, plus deferred acquisition payment notes, plus working capital surplus or deficiency, plus other liability, including the fair value of cross-currency swaps, plus government loans, plus facilities acquisition payments, less notes receivable and excluding the current portion of fair value of financial instruments, decommissioning obligations, lease liabilities and the cash award incentive plan liability.
“Net Production Expenses, Revenue, net of blending expense, Operating Netback and Operating Field Netback (Non-IFRS Financial Measures, and Non-IFRS Financial Ratios if calculated on a per boe basis)” – Management uses certain industry benchmarks, such as net production expenses, revenue, net of blending expense, operating netback and operating field netback, to analyze financial and operating performance. Net production expenses are determined by deducting processing income primarily generated by processing third party volumes at processing facilities where the Company has an ownership interest. Under IFRS this source of funds is required to be reported as income. Where the Company has excess capacity at one of its facilities, it will process third party volumes as a means to reduce the cost of operating/owning the facility, and as such third-party processing revenue is netted against production expenses in the MD&A. Blending expense includes the cost of blending diluent purchased to reduce the viscosity of our heavy oil transported through pipelines to meet pipeline specifications. The blending expense represents the difference between the cost of purchasing and transporting the diluent and the realized price of the blended product sold. In the MD&A, blending expense is recognized as a reduction to heavy oil revenues, whereas blending expense is reported as an expense in the financial statements. Operating netback equals total petroleum and natural gas sales (net of blending), including realized gains and losses on commodity and foreign exchange derivative contracts, less royalties, net production expenses and transportation expense. Operating field netback equals total petroleum and natural gas sales, less royalties, net production expenses and transportation expense. These metrics can also be calculated on a per boe basis, which results in them being considered a non-IFRS financial ratio. Management considers operating netback and operating field netback important measures to evaluate Tamarack’s operational performance, as it demonstrates field level profitability relative to current commodity prices.
Please refer to the MD&A for additional information relating to specified financial measures including non-IFRS financial measures, non-IFRS financial ratios and capital management measures. The MD&A can be accessed either on Tamarack’s website at www.tamarackvalley.ca or under the Company’s profile on www.sedarplus.ca.
SOURCE Tamarack Valley Energy Ltd.
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