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VANCOUVER, Oct. 31, 2024 /PRNewswire/ — City Office REIT, Inc. CIO (the “Company,” “City Office,” “we” or “our”) today announced its results for the quarter ended September 30, 2024.

Third Quarter Highlights

• Rental and other revenues were $42.4 million.  GAAP net loss attributable to common stockholders was approximately $4.5 million, or ($0.11) per fully diluted share;
• Core FFO was approximately $11.1 million, or $0.27 per fully diluted share;
• AFFO was approximately $4.8 million, or $0.12 per fully diluted share;
• In-place occupancy was 83.4% as of quarter end, or 87.0% including signed leases not yet occupied;
• Executed approximately 141,000 square feet of new and renewal leases during the quarter;  
• Completed the loan repayment on maturity of the Company’s $50.0 million term loan;
• Declared a third quarter dividend of $0.10 per share of common stock, paid on October 24, 2024; and
• Declared a third quarter dividend of $0.4140625 per share of Series A Preferred Stock, paid on October 24, 2024.

“We continue to experience a progression of office real estate fundamentals across our markets,” commented James Farrar, the Company’s Chief Executive Officer.  “During the first nine months of 2024, we executed 601,000 square feet of new and renewal leases.  As a result of the healthy leasing activity year to date, we increased our guidance expectations for year-end occupancy and same store cash NOI change.”

“Our strategy of renovating and enhancing properties has aligned with leasing demand.  Over the next two quarters, we expect to complete renovations at four of our properties.  We believe these investments will drive future occupancy gains and build on the leasing momentum that we achieved in recent quarters.”

A reconciliation of certain non-GAAP financial measures, including FFO, Core FFO, AFFO, NOI, Same Store NOI, Same Store Cash NOI and their equivalent per share measures, to the most directly comparable financial measure under U.S. generally accepted accounting principles (“GAAP”) can be found at the end of this release.

Portfolio Operations

The Company reported that its total portfolio as of September 30, 2024 contained 5.6 million net rentable square feet and was 83.4% occupied, or 87.0% including signed leases not yet occupied.

Same Store Cash NOI increased 0.2% for the three months ended September 30, 2024 as compared to the same period in the prior year. Same Store Cash NOI decreased 0.9% for the nine months ended September 30, 2024 as compared to the same period in the prior year.

Leasing Activity

The Company’s total leasing activity during the third quarter of 2024 was approximately 141,000 square feet, which included 78,000 square feet of new leasing and 63,000 square feet of renewals. Approximately 131,000 square feet of leases signed within the quarter are expected to take occupancy subsequent to quarter end.

New Leasing – New leases were signed with a weighted average lease term of 5.0 years at a weighted average effective annual rent of $33.91 per square foot and at a weighted average cost of $10.43 per square foot per year.

Renewal Leasing – Renewal leases were signed with a weighted average lease term of 4.5 years at a weighted average effective annual rent of $32.87 per square foot and at a weighted average cost of $3.64 per square foot per year. After quarter end, the Company completed a renewal for a 28,000 square foot space at Bloc 83 in Raleigh that was previously expected to be vacated by WeWork on November 1, 2024.  The lease extension with WeWork was completed to accommodate a prominent user that desired to continue their occupancy until December 31, 2026.

Capital Structure

As of September 30, 2024, the Company had total principal outstanding debt of approximately $651.0 million. Approximately 82.3% of the Company’s debt was fixed rate or effectively fixed rate due to interest rate swaps. City Office’s total principal outstanding debt had a weighted average maturity of approximately 2.1 years and a weighted average interest rate of 5.2%.

During the quarter, the Company’s $50.0 million term loan matured and was repaid with proceeds from the Company’s Unsecured Credit Facility.

Dividends

On September 13, 2024, the Company’s Board of Directors approved and the Company declared a cash dividend of $0.10 per share of the Company’s common stock for the three months ended September 30, 2024. The dividend was paid on October 24, 2024 to common stockholders and unitholders of record as of October 10, 2024.

On September 13, 2024, the Company’s Board of Directors approved and the Company declared a cash dividend of $0.4140625 per share of the Company’s 6.625% Series A Preferred Stock for the three months ended September 30, 2024. The dividend was paid on October 24, 2024 to preferred stockholders of record as of October 10, 2024.

2024 Outlook 

Following City Office’s performance for the third quarter of 2024, the Company is updating its outlook for full year 2024 guidance. The updates include the expected impact of healthy leasing activity year-to-date driving expected occupancy increases in the fourth quarter of 2024. 

The outlook includes the following assumptions:

Material Considerations:  

1. Dispositions reflects the disposition of the Cascade Station property in Portland that occurred earlier in 2024.
2. The General & Administrative Expenses guidance includes approximately $4.3 million for stock-based compensation. Our Core FFO definition excludes stock-based compensation. Excluding stock-based compensation, General & Administrative Expenses guidance for Full Year 2024 would have been $10.2 million – $11.2 million.
3. Annual weighted average fully diluted shares of common stock outstanding are assumed to be approximately 41.4 million.
4. 2024 guidance assumes no share issuances, no acquisitions and no share repurchase activity.

The Company’s guidance is based on current plans and assumptions and subject to the risks and uncertainties more fully described in the Company’s filings with the United States Securities and Exchange Commission. This outlook reflects management’s view of current and future market conditions, including assumptions such as timing and magnitude of future acquisitions and dispositions, if any, rental rates, occupancy levels, leasing activity, our ability to renew expiring leases, uncollectible rents, operating and general administrative expenses, weighted average diluted shares outstanding and rising interest rates.  The Company reminds investors that the impacts of the work-from-home trend, inflation and general market conditions are uncertain and impossible to predict.  See “Forward-looking Statements” below.

Webcast and Conference Call Details

City Office’s management will hold a conference call at 11:00 am Eastern Time on October 31, 2024.  

The webcast will be available under the “Investor Relations” section of the Company’s website at www.cioreit.com.  The conference call can be accessed by dialing 1-833-470-1428 for domestic callers and 1-404-975-4839 for international callers.  The passcode for the conference call is 102833.

A replay of the call will be available later in the day on October 31, 2024, continuing through January 29, 2025 and can be accessed by dialing 1-866-813-9403 for domestic callers and 1-929-458-6194 for international callers.  The passcode for the replay is 801819.  A replay will also be available for twelve months following the call at “Webcasts & Events” in the “Investor Relations” section of the Company’s website.

A supplemental financial information package to accompany the discussion of the results will be posted on www.cioreit.com under the “Investor Relations” section.

Non-GAAP Financial Measures 

Funds from Operations (“FFO”) – The National Association of Real Estate Investment Trusts (“NAREIT”) states FFO should represent net income or loss (computed in accordance with GAAP) plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments of unconsolidated partnerships and joint ventures, gains or losses on the sale of property and impairments to real estate. 

The Company uses FFO as a supplemental performance measure because the Company believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance.  We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited.  In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO.  Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.

Core Funds from Operations (“Core FFO”) – We calculate Core FFO by using FFO as defined by NAREIT and adjusting for certain other non-core items.  We also exclude from our Core FFO calculation acquisition costs, loss on early extinguishment of debt, changes in the fair value of earn-outs, changes in fair value of contingent consideration and the amortization of stock based compensation.

We believe Core FFO provides a useful metric in comparing operations between reporting periods and in assessing the sustainability of our ongoing operating performance. Other equity REITs may calculate Core FFO differently or not at all, and, accordingly, the Company’s Core FFO may not be comparable to such other REITs’ Core FFO.

Adjusted Funds from Operations (“AFFO”) – We compute AFFO by adding to Core FFO the non-cash amortization of deferred financing fees and non-real estate depreciation, and then subtracting cash paid for recurring tenant improvements, leasing commissions, and capital expenditures, and eliminating the net effect of straight-line rent / expense, deferred market rent and debt fair value amortization.  Recurring capital expenditures exclude development / redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property.  We exclude certain first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned at acquisition.  We have further excluded all costs associated with tenant improvements, leasing commissions and capital expenditures which were funded by the entity contributing the properties at closing.

Along with FFO and Core FFO, we believe AFFO provides investors with appropriate supplemental information to evaluate the ongoing operations of the Company. Other equity REITs may calculate AFFO differently, and, accordingly, the Company’s AFFO may not be comparable to such other REITs’ AFFO.

Net Operating Income (“NOI”) – We define NOI as rental and other revenues less property operating expenses. 

We consider NOI to be an appropriate supplemental performance measure to net income because we believe it provides information useful in understanding the core operations and operating performance of our portfolio.

Same Store Net Operating Income (“Same Store NOI”) and Same Store Cash Net Operating Income (“Same Store Cash NOI”) – Same Store NOI is calculated as the NOI attributable to the properties continuously owned and operated for the entirety of the reporting periods presented, and Same Store Cash NOI is calculated as Same Store NOI less non-recurring other income, termination fee income, straight-line rent / expense, deferred market rent and the non-controlling interest’s share of cash NOI. The Company’s definitions of Same Store NOI and Same Store Cash NOI exclude properties that were not stabilized during both of the applicable reporting periods. These exclusions may include, but are not limited to, acquisitions, dispositions and properties undergoing repositioning or significant renovations. 

We believe Same Store NOI and Same Store Cash NOI are important measures of comparison because each allows for comparison of operating results of stabilized properties owned and operated for the entirety of both applicable periods and therefore eliminates variations caused by acquisitions, dispositions or repositionings during such periods. Other REITs may calculate Same Store NOI and Same Store Cash NOI differently and our calculation should not be compared to that of other REITs.

Forward-looking Statements

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company’s current beliefs as to the outcome and timing of future events. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “approximately,” “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “hypothetical,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will”  or other similar words or expressions. There can be no assurance that actual results of forward-looking statements, including projected capital resources, projected profitability and portfolio performance, estimates or developments affecting the Company will be those anticipated by the Company. Examples of forward-looking statements include those pertaining to expectations regarding our financial performance, including under metrics such as NOI and FFO, market rental rates, national or local economic growth, including the impact of inflation, estimated replacement costs of our properties, the Company’s expectations regarding tenant occupancy, re-leasing periods, the Company’s ability to renew expiring leases, tenant compliance with contractual lease obligations, projected capital improvements, expected sources of financing and ability to service existing financing, expectations as to the likelihood and timing of closing of acquisitions, dispositions, or other transactions, the expected operating performance of the Company’s current properties, anticipated near-term acquisitions and descriptions relating to these expectations, including, without limitation, the anticipated net operating income yield and cap rates, lower than expected yields, increased interest rates, operating costs and costs of capital, and changes in local, regional, national and international economic conditions, including as a result of the systemic and structural changes in the demand for commercial office space. Forward-looking statements presented in this press release are based on management’s beliefs and assumptions made by, and information currently available to, management.

The forward-looking statements contained in this press release are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described above, changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors described in our news releases and filings with the SEC, including but not limited to those described in our Annual Report on Form 10-K for the year ended December 31, 2023 under the heading “Risk Factors” and in our subsequent reports filed with the SEC, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date of this press 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. The Company does not guarantee that the assumptions underlying such forward-looking statements contained in this press release are free from errors. Unless otherwise stated, historical financial information and per share and other data are as of September 30, 2024 or relate to the quarter ended September 30, 2024. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

Contact
City Office REIT, Inc.
Anthony Maretic, CFO
+1-604-806-3366
investorrelations@cityofficereit.com 

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SOURCE City Office REIT, Inc.

WAUKESHA, Wis., Oct. 31, 2024 (GLOBE NEWSWIRE) — Generac Holdings Inc. GNRC (“Generac” or the “Company”), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its third quarter ended September 30, 2024 and provided an update on its outlook for the full-year 2024.

Third Quarter 2024 Highlights

• Net sales were $1.17 billion during the third quarter of 2024 as compared to $1.07 billion in the prior-year third quarter, an increase of approximately 10%. Core sales, which excludes both the impact of acquisitions and foreign currency, increased approximately 9% from the prior year period.
  • Residential product sales increased approximately 28% to $723 million as compared to $565 million last year.
  • Commercial & Industrial (“C&I”) product sales decreased approximately 15% to $328 million as compared to $385 million in the prior year.
• Net income attributable to the Company during the third quarter was $114 million, or $1.89 per share, as compared to $60 million, or $0.97 per share, for the same period of 2023.
• Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was $136 million, or $2.25 per share, as compared to $102 million, or $1.64 per share, in the third quarter of 2023.
• Adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was $232 million, or 19.8% of net sales, as compared to $189 million, or 17.6% of net sales, in the prior year.
• Cash flow from operations was $212 million during the third quarter, as compared to $140 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $184 million as compared to $117 million in the third quarter of 2023.
• The Company repurchased 690,711 shares of its common stock during the third quarter for approximately $102 million. There is approximately $347 million remaining under the current repurchase program as of September 30, 2024.
• The Company is updating its overall net sales growth guidance for the full-year 2024 to be 5 to 9% compared to the prior year on an as-reported basis, an increase from the previous guidance range of 4 to 8%. Adjusted EBITDA margin, before deducting for non-controlling interests, is now expected to be 17.5 to 18.5% as compared to the previous expectation of 17.0 to 18.0%.

“Our third quarter results outperformed our expectations as elevated power outage activity drove increased shipments of our residential products and strong execution helped to deliver significant margin expansion,” said Aaron Jagdfeld, President and Chief Executive Officer. “Shipments of home standby and portable generators increased at a very strong rate from the prior year period, more than offsetting expected softness in C&I product sales. As a result, we are updating our full year 2024 guidance to include higher residential product sales with further improvements in adjusted EBITDA margins.”

Jagdfeld continued, “The vulnerability of our nation’s electrical grid has never been more evident with the U.S. experiencing the highest level of power outage hours through the first nine months of the year since we began tracking outage data in 2010. In addition to more volatile weather, the rapid adoption of renewable, intermittent power generation sources and accelerating demand for electricity will likely lead to additional stresses on our aging grid. The elevated outage activity and growing grid related supply-demand imbalances are expected to drive both continued near-term demand as well as long-term awareness of the growing need for backup power products.”

Additional Third Quarter 2024 Consolidated Highlights

Gross profit margin was 40.2% as compared to 35.1% in the prior-year third quarter. The increase in gross margin was primarily driven by favorable sales mix and lower input costs.

Operating expenses increased $32.6 million, or 12.0%, as compared to the third quarter of 2023. The growth in operating expenses was primarily driven by increased employee costs to support future growth, additional marketing spend to drive incremental awareness for our products, and higher variable expenses and incentive compensation given higher shipment volumes and profitability. This was partially offset by a $22.1 million provision for certain legal matters that was recorded in the prior year which did not repeat in the current year period.

Provision for income taxes for the current year quarter was $33.5 million, or an effective tax rate of 22.7%, as compared to $19.4 million, or a 24.3% effective tax rate, for the prior year. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year quarter that did not repeat in the current year.

Cash flow from operations was $212.3 million during the third quarter, as compared to $140.1 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $183.7 million as compared to $117.4 million in the third quarter of 2023. The increase was primarily due to higher operating earnings and a greater reduction in primary working capital as compared to the prior year.
Business Segment Results

Domestic Segment

Domestic segment total sales (including inter-segment sales) increased 14% to $1.02 billion as compared to $894.0 million in the prior year, including a slight benefit from acquisitions. This was primarily driven by strong shipments of home standby and portable generators, as well as continued growth in C&I product sales to industrial distributors, partially offset by lower C&I product shipments for telecom, rental, and “beyond standby” applications.

Adjusted EBITDA for the segment was $211.6 million, or 20.7% of domestic segment total sales, as compared to $160.3 million, or 17.9% of total sales, in the prior year. This margin improvement was primarily due to favorable sales mix and lower input costs, partially offset by higher operating expense investments to support future growth initiatives.

International Segment

International segment total sales (including inter-segment sales) decreased 20% to $166.7 million as compared to $207.6 million in the prior year quarter, including a slight unfavorable impact from foreign currency. The core total sales decline was primarily due to lower inter-segment sales related to softness in the telecom market and a decline in shipments of portable generators and C&I products in Europe due to weaker market conditions.

Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $20.3 million, or 12.2% of international segment total sales, as compared to $28.3 million, or 13.6% of total sales, in the prior year. This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter.

2024 Outlook

As a result of higher than previously expected power outage activity, including the impact of Hurricane Helene and Hurricane Milton, the Company is increasing its full-year 2024 net sales guidance. The Company now expects full-year 2024 net sales growth between 5 to 9% as compared to the prior year, an increase from the previous outlook of 4 to 8%. By product class, this updated net sales guidance considers an outsized increase in Residential product sales, partially offset by softer market conditions for C&I and Other product sales in certain end markets and geographies.

Additionally, the Company now expects net income margin, before deducting for non-controlling interests, to be approximately 7.0 to 8.0% for the full-year 2024 as compared to the prior expectation of 6.5 to 7.5%. The corresponding adjusted EBITDA margin is now expected to be approximately 17.5 to 18.5% as compared to the previous guidance range of 17.0 to 18.0%.

The Company continues to expect strong operating and free cash flow generation for the full year, with free cash flow conversion from adjusted net income well above 100%.

Conference Call and Webcast

Generac management will hold a conference call at 10:00 a.m. EDT on Thursday, October 31, 2024 to discuss third quarter 2024 operating results. The conference call can be accessed at the following link: https://register.vevent.com/register/BIabec574e36cc43abb7ea58d0150702c4. Individuals who wish to listen via telephone will be given dial-in information.

The conference call will also be webcast simultaneously on Generac’s website (http://www.generac.com), accessed under the Investor Relations link. The webcast link will be made available on the Company’s website prior to the start of the call within the Events section of the Investor Relations website.
Following the live webcast, a replay will be available on the Company’s website for 12 months.

About Generac

Founded in 1959, Generac is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products serving the residential, light commercial, and industrial markets. Generac introduced the first affordable backup generator and later created the automatic home standby generator category. The Company has continued to expand its energy technology offerings in its mission to lead the evolution to more resilient, efficient, and sustainable energy solutions.

Forward-looking Information

Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements give Generac’s current expectations and projections relating to the Company’s financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future,” “optimistic” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

Any such forward-looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac’s actual financial results and cause them to differ materially from those anticipated in any forward-looking statements, including:

• fluctuations in cost, availability, and quality of raw materials, key components and labor required to manufacture our products;
• our dependence on a small number of contract manufacturers and component suppliers, including single-source suppliers;
• our ability to protect our intellectual property rights or successfully defend against third party infringement claims;
• increase in product and other liability claims, warranty costs, recalls, or other claims;
• significant legal proceedings, claims, fines, penalties, tax assessments, lawsuits or government investigations;
• our ability to consummate our share repurchase programs;
• our failure or inability to adapt to, or comply with, current or future changes in applicable laws and regulations;
• scrutiny regarding our ESG practices;
• our ability to develop and enhance products and gain customer acceptance for our products;
• frequency and duration of power outages impacting demand for our products;
• changes in durable goods spending by consumers and businesses or other macroeconomic conditions, impacting demand for our products;
• our ability to accurately forecast demand for our products and effectively manage inventory levels relative to such forecast;
• our ability to remain competitive;
• our dependence on our dealer and distribution network;
• market reaction to changes in selling prices or mix of products;
• loss of our key management and employees;
• disruptions from labor disputes or organized labor activities;
• our ability to attract and retain employees;
• disruptions in our manufacturing operations;
• changes in U.S. trade policy;
• the possibility that the expected synergies, efficiencies and cost savings of our acquisitions, divestitures, restructurings, or realignments will not be realized, or will not be realized within the expected time period;
• risks related to sourcing components in foreign countries;
• compliance with environmental, health and safety laws and regulations;
• government regulation of our products;
• failures or security breaches of our networks, information technology systems, or connected products;
• our ability to make payments on our indebtedness;
• terms of our credit facilities that may restrict our operations;
• our potential need for additional capital to finance our growth or refinancing our existing credit facilities;
• risks of impairment of the value of our goodwill and other indefinite-lived assets;
• volatility of our stock price; and
• potential tax liabilities.

Should one or more of these risks or uncertainties materialize, Generac’s actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in Generac’s filings with the U.S. Securities and Exchange Commission (“SEC”), particularly in the Risk Factors section of the 2023 Annual Report on Form 10-K and in its periodic reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made. Generac undertakes 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 law.

Non-GAAP Financial Metrics

Core Sales

The Company references core sales to further supplement Generac’s condensed consolidated financial statements presented in accordance with U.S. GAAP. Core sales excludes the impact of acquisitions and fluctuations in foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparison of net sales performance with prior and future periods.

Adjusted EBITDA

To supplement Generac’s condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides the computation of Adjusted EBITDA attributable to the Company, which is defined as net income before noncontrolling interests adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense, certain non-cash gains and losses including certain purchase accounting adjustments and contingent consideration adjustments, share-based compensation expense, certain transaction costs and credit facility fees, business optimization expenses, provision for certain legal and regulatory charges, certain specific provisions, mark-to-market gains and losses on a minority investment, and Adjusted EBITDA attributable to noncontrolling interests, as set forth in the reconciliation table below. The computation of Adjusted EBITDA is based primarily on the definition included in our Credit Agreement.

Adjusted Net Income

To further supplement Generac’s condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides a summary to show the computation of adjusted net income attributable to the Company. Adjusted net income attributable to the Company is defined as net income before noncontrolling interests adjusted for the following items: amortization of intangible assets, amortization of deferred financing costs and original issue discount related to the Company’s debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, business optimization expenses, provision for certain legal and regulatory charges, certain specific provisions, mark-to-market gains and losses on a minority investment, other non-cash gains and losses, and adjusted net income attributable to non-controlling interests.

Free Cash Flow

In addition, the Company references free cash flow to further supplement Generac’s condensed consolidated financial statements presented in accordance with U.S. GAAP. Free cash flow is defined as net cash provided by operating activities, plus proceeds from beneficial interests in securitization transactions, less expenditures for property and equipment, and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business.

The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with U.S. GAAP. Please see the accompanying Reconciliation Schedules and our SEC filings for additional discussion of the basis for Generac’s reporting of Non-GAAP financial measures, which includes why the Company believes these measures provide useful information to investors and the additional purposes for which management uses the non-GAAP financial information.

SOURCE: Generac Holdings Inc.
CONTACT:
Kris Rosemann
Director – Corporate Development & Investor Relations
(262) 506-6064
InvestorRelations@generac.com

Third Quarter 2024 Financial Results and Highlights

• Revenue of $69.5 million, an increase of 13% year–over–year
• Cloud ARR of $71.6 million, an increase of 15% year-over-year
• Non-GAAP diluted EPS of $0.23 vs. $0.07 in Q3 2023; GAAP diluted EPS of $0.07 vs. $(0.16) in Q3 2023
• Cash flow from operations of $14.7 million and $58.9 million year-to-date

TEL AVIV, Israel, Oct. 31, 2024 (GLOBE NEWSWIRE) — Radware^® RDWR, a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the third quarter ended September 30, 2024.

“We are pleased to report solid third-quarter results, highlighted by 13% year-over-year revenue growth and a significant improvement in profitability and cash flow from operations,” said Roy Zisapel, Radware’s President and CEO. “Our results reflect double-digit growth in subscription revenue, strong sales of software subscriptions, and the ongoing success of DefensePro X, which carries with it more subscription revenue. We are excited about the momentum we’ve built and our future growth prospects.”

Financial Highlights for the Third Quarter 2024
Revenue for the third quarter of 2024 totaled $69.5 million:

• Revenue in the Americas region was $27.7 million for the third quarter of 2024, an increase of 11% from $24.9 million in the third quarter of 2023.
• Revenue in the Europe, Middle East, and Africa (“EMEA”) region was $25.2 million for the third quarter of 2024, an increase of 30% from $19.3 million in the third quarter of 2023.
• Revenue in the Asia-Pacific (“APAC”) region was $16.6 million for the third quarter of 2024, a decrease of 5% from $17.4 million in the third quarter of 2023.

GAAP net income for the third quarter of 2024 was $3.1 million, or $0.07 per diluted share, compared to GAAP net loss of $6.9 million, or $(0.16) per diluted share, for the third quarter of 2023.

Non-GAAP net income for the third quarter of 2024 was $10.2 million, or $0.23 per diluted share, compared to non-GAAP net income of $2.9 million, or $0.07 per diluted share, for the third quarter of 2023.

As of September 30, 2024, the Company had cash, cash equivalents, short-term and long-term bank deposits, and marketable securities of $411.7 million. Cash flow from operations was $14.7 million in the third quarter of 2024.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, and tax-related adjustments. A reconciliation of each of the Company’s non-GAAP measures to the most directly comparable GAAP measure is included at the end of this press release.

Conference Call
Radware management will host a call today, October 31, 2024, at 8:30 a.m. EDT to discuss its third quarter 2024 results and fourth quarter 2024 outlook. To participate on the call, please use the following numbers:
U.S. participants call toll free: 888-510-2008
International participants call: 1 646-960-0306
Conference ID: 1864701

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-609-800-9099 or (US toll-free) 800-770-2030. Passcode 1864701.

The call will be webcast live on the Company’s website at: http://www.radware.com/IR/. The webcast will remain available for replay during the next 12 months.

Use of Non-GAAP Financial Information and Key Performance Indicators
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Radware uses non-GAAP measures of gross profit, research and development expense, selling and marketing expense, general and administrative expense, total operating expenses, operating income, financial income, net, income before taxes on income, taxes on income, net income and diluted earnings per share, which are adjustments from results based on GAAP to exclude, as applicable, stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, and tax–related adjustments. Management believes that exclusion of these charges allows for meaningful comparisons of operating results across past, present, and future periods. Radware’s management believes the non-GAAP financial measures provided in this release are useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is included with the financial information contained in this press release. Management uses both GAAP and non-GAAP financial measures in evaluating and operating the business and, as such, has determined that it is important to provide this information to investors.

Annual recurring revenue (“ARR”) is a key performance indicator defined as the annualized value of booked orders for term-based cloud services, subscription licenses, and maintenance contracts that are in effect at the end of a reporting period. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations. We consider ARR a key performance indicator of the value of the recurring components of our business.

Safe Harbor Statement

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made herein that are not statements of historical fact, including statements about Radware’s plans, outlook, beliefs, or opinions, are forward-looking statements. Generally, forward-looking statements may be identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could.” Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results, expressed or implied by such forward-looking statements, could differ materially from Radware’s current forecasts and estimates. Factors that could cause or contribute to such differences include, but are not limited to: the impact of global economic conditions, including as a result of the state of war declared in Israel in October 2023 and instability in the Middle East, the war in Ukraine, and the tensions between China and Taiwan; our dependence on independent distributors to sell our products; our ability to manage our anticipated growth effectively; a shortage of components or manufacturing capacity could cause a delay in our ability to fulfill orders or increase our manufacturing costs; our business may be affected by sanctions, export controls, and similar measures, targeting Russia and other countries and territories, as well as other responses to Russia’s military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings with Russian entities by many multi-national businesses across a variety of industries; the ability of vendors to provide our hardware platforms and components for the manufacture of our products; our ability to attract, train, and retain highly qualified personnel; intense competition in the market for cyber security and application delivery solutions and in our industry in general, and changes in the competitive landscape; our ability to develop new solutions and enhance existing solutions; the impact to our reputation and business in the event of real or perceived shortcomings, defects, or vulnerabilities in our solutions, if our end-users experience security breaches, if our information technology systems and data, or those of our service providers and other contractors, are compromised by cyber-attackers or other malicious actors, or by a critical system failure; outages, interruptions, or delays in hosting services; the risks associated with our global operations, such as difficulties and costs of staffing and managing foreign operations, compliance costs arising from host country laws or regulations, partial or total expropriation, export duties and quotas, local tax exposure, economic or political instability, including as a result of insurrection, war, natural disasters, and major environmental, climate, or public health concerns, such as the COVID-19 pandemic; our net losses in the past two years and possibility we may incur losses in the future; a slowdown in the growth of the cyber security and application delivery solutions market or in the development of the market for our cloud-based solutions; long sales cycles for our solutions; risks and uncertainties relating to acquisitions or other investments; risks associated with doing business in countries with a history of corruption or with foreign governments; changes in foreign currency exchange rates; risks associated with undetected defects or errors in our products; our ability to protect our proprietary technology; intellectual property infringement claims made by third parties; laws, regulations, and industry standards affecting our business; compliance with open source and third-party licenses; and other factors and risks over which we may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting Radware, refer to Radware’s Annual Report on Form 20-F, filed with the Securities and Exchange Commission (SEC), and the other risk factors discussed from time to time by Radware in reports filed with, or furnished to, the SEC. Forward-looking statements speak only as of the date on which they are made and, except as required by applicable law, Radware undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made. Radware’s public filings are available from the SEC’s website at www.sec.gov or may be obtained on Radware’s website at www.radware.com.

About Radware
Radware® RDWR is a global leader in application security and delivery solutions for multi-cloud environments. The company’s cloud application, infrastructure, and API security solutions use AI-driven algorithms for precise, hands-free, real-time protection from the most sophisticated web, application, and DDoS attacks, API abuse, and bad bots. Enterprises and carriers worldwide rely on Radware’s solutions to address evolving cybersecurity challenges and protect their brands and business operations while reducing costs. For more information, please visit the Radware website.

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©2024 Radware Ltd. All rights reserved. Any Radware products and solutions mentioned in this press release are protected by trademarks, patents, and pending patent applications of Radware in the U.S. and other countries. For more details, please see: https://www.radware.com/LegalNotice/. All other trademarks and names are property of their respective owners.

Radware believes the information in this document is accurate in all material respects as of its publication date. However, the information is provided without any express, statutory, or implied warranties and is subject to change without notice.

The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

CONTACTS
Investor Relations:
Yisca Erez, +972-72-3917211, ir@radware.com

Media Contact:
Gerri Dyrek, gerri.dyrek@radware.com