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Edgewell Personal Care Announces Fourth Quarter and Fiscal 2020 Results and Provides 2021 Outlook

Sequential Improvement in Organic Net Sales Trends in Fiscal Fourth Quarter; Gross Margin Increase of 180 Basis Points and Cash from Operating Activities increases 22% to $233 million for Fiscal 2020; Initiates Net Sales, Organic Sales and Adjusted EBITDA Growth Outlook for Fiscal 2021

PR Newswire

SHELTON, Conn., Nov. 12, 2020 /PRNewswire/ — Edgewell Personal Care Company (NYSE: EPC) today announced results for its fourth fiscal quarter 2020 and full fiscal year ended September 30, 2020 and provided its financial outlook for fiscal 2021. 


Executive Summary

  • Net sales were $488.8 million in the fourth quarter of fiscal 2020, a decrease of 7.4% when compared to the prior year quarter, and $1,949.7 million for the full year, a decrease of 8.9% compared to the prior year. Organic net sales were down 3.5% for the quarter and 4.4% for the full year. (Organic basis excludes the impact from the sale of the Infant and Pet Care business, the acquisition of Cremo Holding Company, LLC, and the translational impact from currency.)
  • GAAP Diluted Earnings Per Share (“EPS”) were $0.38 for the fourth quarter and $1.24 for the full year fiscal 2020. Adjusted EPS were $0.59 for the fourth quarter and $2.73 for the full year.
  • Gross cost savings associated with the Company’s Project Fuel program were $17 million in the fourth quarter and $74 million for the full fiscal year, and net cash from operating activities was $233 million.
  • The Company ended the fiscal fourth quarter with $365 million in cash on hand, access to an undrawn $425 million credit facility and a net debt leverage ratio of 2.6 times.

The Company reports and forecasts results on a GAAP and Non-GAAP basis and has reconciled Non-GAAP results and outlook to the most directly comparable GAAP measures later in this release.  See Non-GAAP Financial Measures for a more detailed explanation, including definitions of various Non-GAAP terms used in this release.  All comparisons used in this release are with the same period in the prior fiscal year unless otherwise stated.

“We are pleased to close out fiscal 2020 with a fourth quarter that demonstrated a clear return to more stable underlying top line and bottom line performance, underpinned by healthy gross margin results. North American Wet Shave and Sun Care, and continued expansion of our Wet Ones brand, were all areas of strength. Our strong focus on execution and disciplined approach to commercial investment and brand activation, all helped fuel this performance,” said Rod Little, Edgewell’s President and Chief Executive Officer.

Mr. Little continued, “Amid the challenges presented by this global pandemic, I could not be prouder of the entire Edgewell team across the world and all that they accomplished this fiscal year. The efforts of this highly dedicated team allowed us to remain operational and meet the needs of our customers as we remained committed to the safety and well-being of all of our team members. Over the course of this challenging year, we successfully stabilized our top line, returned to gross margin accretion, over-delivered on our cost savings program and generated $190 million in free cash flow, while successfully closing on the Cremo acquisition. As we enter fiscal 2021, we are confident in our positioning and excited to execute on the next chapter of growth for Edgewell. We look forward to sharing our plans for sustainable value creation in more detail at our investor meeting on November 20th.”


Fiscal 4Q 2020 Operating Results (Unaudited)

Net sales were $488.8 million in the quarter, a decrease of 7.4%, as compared to the prior year period, and continued to be negatively impacted across most categories due to the effects of COVID-19.  Excluding a $29.4 million negative impact from the sale of the Infant and Pet Care business, a $4.5 million positive impact from the acquisition of Cremo and a $4.2 million positive impact from currency movements, organic net sales decreased 3.5% compared to the prior year period.  North America organic net sales returned to growth, increasing 3.0% compared to the prior year period, driven by growth in Sun Care, Wet Ones and Women’s Shave.  International organic net sales decreased 12% compared to the prior year period, driven by significant declines in Sun Care, softness in Wet Shave and cycling the impact of the prior year consumption tax pre-buy in Japan. 

Gross profit decreased $7.9 million compared to the prior year period, largely driven by a $5.3 million net impact from divestitures and acquisitions as well as the impact of lower net sales.  Gross margin rate increased 180 basis points to 45.4%, as compared to the prior year period.  Excluding the impact of divestitures and acquisitions and foreign exchange translation, adjusted gross margin increased 90 basis points compared to the prior year period. The increase in margin was a result of lower trade promotional spending in North America, the impact of price increases, most notably in the sun care category and the positive effect on cost of goods sold from the Company’s cost savings program.

Advertising and sales promotion expense (“A&P”) was $60.6 million, or 12.4% of net sales, as compared to $59.6 million, or 11.3% of net sales in the prior year period.  Excluding the impact of divestitures and acquisition, spending increased $3.1 million compared to the prior year.  The increase in A&P was largely focused on the funding of several key initiatives, including; the activation of the new Hydro Silk and Intuition campaigns, driving awareness and customer acquisitions, activating the new Wilkinson-Sword master brand campaign in the International business, increased focus on Bulldog and support of the extended Sun Care season in North America. 

Selling, general and administrative expense (“SG&A”) was $101.0 million, or 20.7% of net sales, as compared to $91.8 million, or 17.4% of net sales in the prior year period.  Excluding SG&A associated with Project Fuel, acquisition and integration costs, and business development evaluation costs, SG&A was approximately 18.5% of net sales, $6.6 million higher than the same period last year, driven mostly by increased compensation and incentive costs and higher bad debt provisions largely related to COVID-19.

The Company recorded pre-tax restructuring and other non-recurring expenses of $7.3 million in the quarter in support of Project Fuel, consisting largely of severance and outplacement, IT enablement and consulting costs.

Other (income) expense, net was $0.4 million of income during the quarter compared to $0.2 million of expense in the prior year period.  The increase in income in the fourth quarter compared to the prior year period was largely a result of $0.4 million income from the transition service agreement related to the divestiture of the Infant and Pet Care business and lower accounts receivable factoring expense, offset by $0.2 million of pension expense in the quarter compared to pension benefit of $0.6 million in the prior year period. 

Earnings (loss) before income taxes was $24.2 million during the quarter compared to $41.1 million in the prior year period.  Adjusted operating income was $56.8 million in the quarter compared to $74.4 million in the prior year period.  Excluding the $1.5 million negative impact from the Infant and Pet Care business divestiture and the $1.1 million positive impact from the acquisition of Cremo, adjusted operating income declined by $17.2 million.

The effective tax rate for fiscal 2020 was 22.6% as compared to 4.6% in the prior year.  The fiscal 2019 effective tax rate reflects a small benefit on a net loss, due to the impairment of goodwill and intangible assets, apportion of which are non-deductible.  Excluding the tax impact of impairment charges, restructuring charges, cost of early debt retirement, the gain on the disposition of the Infant and Pet Care business, incremental COVID-19 pandemic expenses, Feminine and Infant Care evaluation costs, and investor settlement expense, the adjusted effective tax rate for fiscal 2020 was 22.5%, down from the prior year period adjusted tax rate of 23.8%.

GAAP net earnings for the quarter were $21.0 million or $0.38 per share compared to $40.7 million or $0.75 per share in the fourth quarter of fiscal 2019. Adjusted net earnings in the quarter were $32.6 million or $0.59 per share, as compared to $46.6 million or $0.86 per share in the prior year period.

Project Fuel

As previously outlined, Project Fuel is an enterprise-wide transformational initiative that was launched in the second fiscal quarter of 2018, to address all aspects of Edgewell’s business and cost structure, simplifying and transforming the organization, structure and key processes.  Project Fuel is facilitating further re-investment in the Company’s growth strategy while enabling Edgewell to achieve its desired future state operations.  As a result of the strong progress of the program, and in response to the significant impact that COVID-19 has had on the operational performance of the Company in fiscal 2020, the Company was able to accelerate certain aspects of the program across the second and third fiscal quarters, resulting in higher gross savings and additional one-time costs in fiscal 2020 than originally expected. 

The Company expects Project Fuel will generate $265 to $275 million in total annual gross savings by the end of the 2021 fiscal year.  The savings generated will be used to fuel investments and brand building in strategic growth initiatives, offset anticipated operational cost headwinds from inflation and other rising input costs and improve the overall profitability and cash flow of the Company.

To implement the restructuring element of Project Fuel, the Company expects to incur one-time pre-tax charges of approximately $160 to $165 million through the end of the 2021 fiscal year.

Fiscal fourth quarter 2020 Project Fuel related gross savings were approximately $17 million and full year fiscal 2020 gross savings were approximately $74 million, bringing cumulative gross savings to approximately $212 million. Fiscal fourth quarter 2020 Project Fuel related restructuring charges were $7 million. 

For fiscal 2021, Project Fuel is expected to generate approximately $50 to $60 million in incremental gross savings, with related restructuring charges expected to be approximately $29 million. 


Fiscal 4Q 2020 Operating Segment Results (Unaudited)

In the first quarter of fiscal 2020, the Company completed the sale of the Infant and Pet Care business that made up the majority of the All Other segment.  Products related to the Company’s manicure kits were not included within the sale and the results were reclassified to the Sun and Skin Care segment for both the current and prior year period.  The following is a summary of fourth quarter results by segment:

Wet Shave (Men’s Systems, Women’s Systems, Disposables, and Shave Preps)

Wet Shave net sales decreased $13.5 million, or 4.0%, as compared to the prior year period. Excluding the impact of currency movements, organic net sales decreased $17.3 million or 5.1%, as organic net sales were negatively impacted by COVID-19 related category declines, particularly in Men’s Systems and Disposables. This was partly offset by net sales growth globally in Women’s Systems.  By region, North America organic net sales decreased 1.3% while International markets decreased 8%. Wet Shave segment profit decreased $17.5 million, or 21.4%, driven by higher spending and the impact of lower volumes on gross profit.  Gross Margin increased 30 basis points compared to the prior year period.

Sun and Skin Care (Sun Care, Wipes, Bulldog, and Jack Black)

Sun and Skin Care net sales increased $12.1 million, or 15.0%, as compared to the prior year period.  Excluding the impact of the acquisition of Cremo and currency movements, organic net sales increased $7.1 million, or 8.8%, driven by strong demand for Wet Ones, which increased 83%, and North America Sun Care, which increased 37%.  This was partly offset by International Sun Care, which decreased 65% as COVID-19 continued to severely impact travel to global tourist destinations. Sun and Skin Care segment profit increased $3.5 million, or 152.2%, driven by increased volumes and higher gross margin. 

Feminine Care (Tampons, Pads, and Liners)

Feminine Care net sales decreased $8.4 million, or 10.8%, as compared to the prior year period.  The decline in net sales was largely driven by distribution losses at Walmart, category softness due to COVID-19 related pantry loading in the fiscal second quarter, and the impact of increased competitive pressure.  Feminine Care segment profit decreased $2.7 million, or 23.3% as compared to the prior year period, driven by lower volumes and higher compensation expense.


Fiscal 2020 Operating Results (Unaudited)

Net sales were $1,949.7 million in fiscal 2020, a decrease of 8.9% when compared to fiscal 2019. Excluding the impact of the Cremo acquisition, the divestiture of the Infant and Pet Care business and currency movements, organic net sales decreased 4.4% versus the prior year. The decline in organic net sales in fiscal 2020 was largely due to the ongoing COVID-19 pandemic and the related stay at home orders and travel restrictions which resulted in lower consumer demand and decreases in net sales for our Wet Shave and Sun Care products. Organic net sales declined in North America by 2.4% while International organic net sales fell 7.6%. Management estimates that the negative impact to net sales due to COVID-19 was approximately $102 million, and when excluding this impact, organic net sales increased 0.5% compared to the prior year. Management estimated the impact of the COVID-19 pandemic on net sales at the product and category level, through a detailed analysis of many factors, including rolling weekly and monthly net sales trends prior to COVID-19, historical and current order patterns by customer compared to the prior year period and segment performance in the context of overall category trends. This is the Company’s best estimate and there can be no assurance that our estimate reflects the actual COVID-19 impact to net sales.

Gross Margin was $880.9 million, or 45.2% of net sales. Excluding the impact of acquisitions, divestitures, and non-recurring charges such as COVID-19 pandemic expenses and  Project Fuel obsolescence, gross margin as a percent of sales increased by 10 basis points compared to fiscal 2019, as Project Fuel related savings, higher pricing in Sun Care and lower input costs helped to offset the impact of lower volumes and unfavorable mix in Wet Shave.

A&P was $216.2 million or 11.1% of net sales, down $34.7 million from the prior year. A&P as a percent of net sales was 11.7% for the prior year. The reduction in A&P was primarily driven by the Company’s response to the COVID-19 pandemic, resulting in reduced spend across multiple categories and markets. The decrease included the impact of the divestiture of the Infant and Pet Care business which represented A&P of $7.5 million in fiscal 2019. 

SG&A was $408.8 million, or 21.0% of net sales, including $17.3 million of intangibles amortization.  Excluding the impact of Cremo and the related acquisition and integration costs, the divestiture of the Infant and Pet Care business, Project Fuel, and Feminine and Infant Care evaluation costs from both periods, SG&A as a percent of net sales increased 150 basis points compared to fiscal 2019. The increase in SG&A was driven by higher bad debt expense driven by the COVID-19 pandemic and increased compensation expense.

GAAP Net earnings in fiscal 2020 were $67.6 million or $1.24 per share, compared to a loss of $372.2 million or $6.88 per share in fiscal 2019. Adjusted net earnings were $148.8 million or $2.73 per share, compared to $188.8 million or $3.48 per share in fiscal 2019.

Net cash from operating activities was $232.6 million for fiscal 2020, as compared to $190.6 million during the prior year. The increase in fiscal 2020 was primarily a result of net cash inflow from working capital compared to a net increase in working capital in the prior year period.


Full Fiscal Year 2021 Financial Outlook

The Company is providing the following outlook assumptions for fiscal 2021:

  • Reported net sales to increase mid-single digits
    • Includes: 160 basis-point net benefit from the Cremo acquisition and the Infant and Pet Care divestiture and a 90 basis-point benefit from currency translation
  • Organic sales to increase low-single digits
  • Adjusted operating profit margin expected to be consistent with fiscal 2020
    • Project Fuel one-time costs of $25 to $30 million
    • Project Fuel Gross Savings of $50 to $60 million
  • GAAP EPS in the range of $2.18 to $2.38
    • Includes: Project Fuel restructuring charges, IT enablement costs, acquisition and integration costs, the gain on sale of the Infant and Pet Care business and Sun Care Monograph costs
  • Adjusted EPS in the range of $2.62 to $2.82
  • Adjusted EBITDA in the range of $345 to $360 million
  • Adjusted effective tax rate in the range of 22.5% to 23.5%
  • Capital expenditures approximately 3.0% of net sales
  • Free cash flow expected to be approximately 100% of non-GAAP net earnings

Webcast Information

In conjunction with this announcement, the Company will hold an investor conference call beginning at 8:00 a.m. Eastern Time today.  All interested parties may access a live webcast of this conference call at www.edgewell.com, under the “Investors,” and “News and Events” tabs or by using the following link:  http://ir.edgewell.com/news-and-events/events

For those unable to participate during the live webcast, a replay will be available on www.edgewell.com, under the “Investors,” “Financial Reports,” and “Quarterly Earnings” tabs. 

About Edgewell

Edgewell is a leading pure-play consumer products company with an attractive, diversified portfolio of established brand names such as Schick® and Wilkinson Sword® men’s and women’s shaving systems and disposable razors; Edge® and Skintimate® shave preparations; Playtex®, Stayfree®, Carefree® and o.b.® feminine care products; Banana Boat®, Hawaiian Tropic®, Bulldog®,  Jack Black®, and CREMO® sun and skin care products; and Wet Ones® moist wipes.  The Company has a broad global footprint and operates in more than 50 markets, including the U.S., Canada, Mexico, Germany, Japan, the U.K. and Australia, with approximately 5,800 employees worldwide.

Forward-Looking Statements.  This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  You should not place undue reliance on these statements.  Forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “expect,” “expectation,” “anticipate,” “may,” “could,” “intend,” “belief,” “estimate,” “plan,” “target,” “predict,” “likely,” “will,” “should,” “forecast,” “outlook,” or other similar words or phrases.  These statements are not based on historical facts, but instead reflect the Company’s expectations, estimates or projections concerning future results or events, including, without limitation, the future earnings and performance of Edgewell or any of its businesses.  Many factors outside our control (including the ongoing COVID-19 outbreak), could affect the realization of these estimates.  These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause the Company’s actual results to differ materially from those indicated by those statements.  The Company cannot assure you that any of its expectations, estimates or projections will be achieved.  The forward-looking statements included in this document are only made as of the date of this document and the Company disclaims any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law.

In addition, other risks and uncertainties not presently known to the Company or that it presently considers immaterial could significantly affect the accuracy of any such forward-looking statements.  Risks and uncertainties include those detailed from time to time in the Company’s publicly filed documents, including in Item 1A. Risk Factors of Part I of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on November 26, 2019 and in Item 1A. Risk Factors of Part II of the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 4, 2020.

Non-GAAP Financial Measures.  While the Company reports financial results in accordance with generally accepted accounting principles (“GAAP”) in the U.S., this discussion also includes non-GAAP measures.  These non-GAAP measures are referred to as “adjusted” or “organic” and exclude items such as impairment charges,  restructuring charges, COVID-19 pandemic expenses, cost of early debt retirement, acquisition and integration costs, and expenses associated with the sale of the Infant and Pet Care business. Reconciliations of non-GAAP measures, including reconciliations of measures related to the Company’s fiscal 2021 financial outlook, are included within the Notes to Condensed Consolidated Financial Statements included with this release.

This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.  The Company uses this non-GAAP information internally to make operating decisions and believes it is helpful to investors because it allows more meaningful period-to-period comparisons of ongoing operating results.  The information can also be used to perform analysis and to better identify operating trends that may otherwise be masked or distorted by the types of items that are excluded.  This non-GAAP information is a component in determining management’s incentive compensation.  Finally, the Company believes this information provides a higher degree of transparency.  The following provides additional detail on the Company’s non-GAAP measures.

  • The Company analyzes its net sales and segment profit on an organic basis to better measure the comparability of results between periods. Organic net sales exclude the impact of changes in foreign currency, acquisitions and dispositions. This information is provided because these fluctuations can distort the underlying change in net sales either positively or negatively. For the quarter and year ended September 30, 2020, the impact of dispositions includes net sales and segment profit activity for the Infant and Pet Care business, which was sold in December 2019. For the quarter and year ended September 30, 2020, the impact of acquisitions includes net sales and segment profit activity for the Cremo acquisition, which was acquired on September 2, 2020.
  • Adjusted EBITDA is defined as earnings before income taxes, interest expense, net, depreciation and amortization and excludes items such as impairment charges, restructuring charges, acquisition and integration costs, cost of early debt retirement, COVID-19 pandemic expenses, the gain or loss on the disposal of a businesses, advisory expenses in connection with the evaluation of the Feminine and Infant Care businesses, investor settlement expenses, and Sun Care reformulation charges.
  • Adjusted operating income is defined as earnings before income taxes, interest expense associated with debt, other income, net, and excludes items such as impairment charges, restructuring charges, acquisition and integration costs, cost of early debt retirement, COVID-19 pandemic expenses, the gain or loss on the disposal of a businesses, advisory expenses in connection with the evaluation of the Feminine and Infant Care businesses, investor settlement expenses, and Sun Care reformulation charges.
  • Adjusted net earnings and adjusted earnings per share are defined as net earnings and diluted earnings per share excluding items such as impairment charges, restructuring charges, acquisition and integration costs, cost of early debt retirement, COVID-19 pandemic expenses, the gain or loss on the disposal of a businesses, advisory expenses in connection with the evaluation of the Feminine and Infant Care businesses, investor settlement expenses, and Sun Care reformulation charges.
  • Adjusted effective tax rate is defined as the effective tax rate excluding items such as impairment charges, restructuring charges, acquisition and integration costs, cost of early debt retirement, COVID-19 pandemic expenses, the gain or loss on the disposal of a businesses, advisory expenses in connection with the evaluation of the Feminine and Infant Care businesses, investor settlement expenses, Sun Care reformulation charges, and the related tax effects of these items from the income tax provision and earnings before income taxes.
  • Adjusted working capital is defined as receivables, less trade allowances in accrued liabilities, plus inventories, less accounts payable, and is calculated using an average of the trailing four-quarter end balances.
  • Free cash flow is defined as net cash from operating activities less capital expenditures plus collections of deferred purchase price of accounts receivable sold and proceeds from sales of fixed assets. Free cash flow conversion is defined as free cash flow as a percentage of net earnings adjusted for the net impact of non-cash impairments.
  • Net debt leverage ratio is defined as total debt less cash divided by adjusted EBITDA.

 


EDGEWELL PERSONAL CARE COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited, in millions, except per share data)


Quarter Ended September 30,


Year Ended September 30,


2020


2019


2020


2019

Net sales

$

488.8

$

528.0

$

1,949.7

$

2,141.0

Cost of products sold

266.7

298.0

1,068.8

1,174.4

Gross profit

222.1

230.0

880.9

966.6

Selling, general and administrative expense

101.0

91.8

408.8

372.0

Advertising and sales promotion expense

60.6

59.6

216.2

250.9

Research and development expense

15.2

14.0

55.3

53.5

Restructuring charges

4.0

8.7

24.6

46.4

Impairment charges

—

—

—

570.0

Gain on sale of Infant and Pet Care business

—

—

(4.1)

—

Interest expense associated with debt

17.5

14.6

61.2

62.6

Cost of early retirement of long-term debt

—

—

26.2

—

Other (income) expense, net

(0.4)

0.2

5.4

1.5

Earnings (loss) before income taxes

24.2

41.1

87.3

(390.3)

Income tax provision (benefit)

3.2

0.4

19.7

(18.1)

Net earnings (loss)

$

21.0

$

40.7

$

67.6

$

(372.2)


Earnings per share:

    Basic net earnings (loss) per share

$

0.39

$

0.75

$

1.25

(6.88)

    Diluted net earnings (loss) per diluted share

0.38

0.75

1.24

(6.88)


Weighted-average shares outstanding:

     Basic

54.4

54.2

54.3

54.1

     Diluted

54.8

54.3

54.6

54.1

See Accompanying Notes.

 


EDGEWELL PERSONAL CARE COMPANY


CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)  


September 30,
2020


September 30,
2019


Assets

Current assets

Cash and cash equivalents

$

364.7

$

341.6

Trade receivables, less allowance for doubtful accounts

158.8

205.6

Inventories

314.1

357.2

Other current assets

146.0

140.0

Total current assets

983.6

1,044.4

Property, plant and equipment, net

370.9

396.0

Goodwill

1,159.7

1,032.8

Other intangible assets, net

928.1

912.9

Other assets

98.6

34.8

Total assets

$

3,540.9

$

3,420.9


Liabilities and Shareholders’ Equity

Current liabilities

Current maturities of long-term debt

$

—

$

117.0

Notes payable

21.1

14.4

Accounts payable

181.9

222.8

Other current liabilities

307.5

305.4

Total current liabilities

510.5

659.6

Long-term debt

1,237.9

1,097.8

Deferred income tax liabilities

102.5

101.1

Other liabilities

257.1

258.9

Total liabilities

2,108.0

2,117.4

Shareholders’ equity

Common shares

0.7

0.7

Additional paid-in capital

1,631.8

1,627.7

Retained earnings

782.4

714.8

Common shares in treasury at cost

(790.4)

(803.8)

Accumulated other comprehensive loss

(191.6)

(235.9)


Total shareholders’ equity

1,432.9

1,303.5


Total liabilities and shareholders’ equity

$

3,540.9

$

3,420.9

See Accompanying Notes.

 


EDGEWELL PERSONAL CARE COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)  


Year Ended September 30,


2020


2019


Cash Flow from Operating Activities

Net earnings (loss)

$

67.6

$

(372.2)

Depreciation and amortization

88.8

93.8

Share-based compensation expense

19.2

17.8

Deferred income taxes

(2.9)

(59.6)

Deferred compensation payments

(8.7)

(7.5)

Loss on sale of assets

2.3

1.5

Gain on sale of Infant and Pet Care business

(4.1)

—

Cost of early retirement of long-term debt

26.2

—

Impairment charges

—

570.0

Other, net

1.0

(5.7)

Changes in current assets and liabilities used in operations

43.2

(47.5)

Net cash from operating activities

232.6

190.6


Cash Flow from Investing Activities

Capital expenditures

(47.7)

(58.0)

Acquisitions, net of cash acquired

(233.6)

—

Proceeds from sale of Infant and Pet Care business

95.8

—

Cost method investment

(13.8)

—

Proceeds from sale of assets

—

4.1

Collection of deferred purchase price from accounts receivable sold

4.3

9.7

Other, net

(1.4)

(1.3)

Net cash used by investing activities

(196.4)

(45.5)


Cash Flow from Financing Activities

Cash proceeds from the issuance of Senior Notes due 2028

750.0

—

Cash payments on Senior Notes due 2021

(600.0)

—

Cash proceeds from debt with original maturities greater than 90 days

50.0

434.0

Cash payments on debt with original maturities greater than 90 days

(167.0)

(324.0)

Term Loan repayment

—

(185.0)

Net increase in debt with original maturities of 90 days or less

3.0

5.8

Debit issuance costs for Revolving Credit Facility

(3.6)

—

Debt issuance costs for Senior Notes due 2028

(11.7)

—

Cost of early retirement of long-term debt

(26.2)

—

Employee shares withheld for taxes

(2.0)

(3.0)

Net financing (outflow) inflow from the Accounts Receivable Facility

(11.2)

8.4

Net cash used by financing activities

(18.7)

(63.8)

Effect of exchange rate changes on cash

5.6

(6.1)

Net increase in cash and cash equivalents

23.1

75.2

Cash and cash equivalents, beginning of period

341.6

266.4

Cash and cash equivalents, end of period

$

364.7

$

341.6

See Accompanying Notes.

 

EDGEWELL PERSONAL CARE COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)

Note 1 —  Segments

The Company conducts its business in the following three segments: Wet Shave, Sun and Skin Care, and Feminine Care (collectively, the “Segments”, and each individually, a “Segment”).  Segment performance is evaluated based on segment profit, exclusive of general corporate expenses, share-based compensation costs, impairment charges, other non-recurring charges including restructuring and integration costs, and the amortization of intangible assets.  Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion of such charges from segment results reflects management’s view on how it evaluates segment performance.

The Company completed the sale of its Infant and Pet Care business in December 2019. As a result, no additional Net Sales or Segment Profit will be reported for the All Other segment in subsequent periods.  Remaining operations from the All Other segment consisted of manicure kits.  The net sales and operating expenses for these items were reclassified to the Sun and Skin Care segment for both the current and prior year periods.

Segment net sales and profitability are presented below:


Quarter Ended September 30,


Year Ended September 30,


2020


2019


2020


2019

Net Sales

Wet Shave

$

326.8

$

340.3

$

1,162.3

$

1,250.1

Sun and Skin Care

92.5

80.4

462.0

463.1

Feminine Care

69.5

77.9

298.6

308.1

All Other

—

29.4

26.8

119.7

Total net sales

$

488.8

$

528.0

$

1,949.7

$

2,141.0

Segment Profit

Wet Shave

$

64.2

$

81.7

$

206.2

$

246.5

Sun and Skin Care

1.2

(2.3)

69.1

80.4

Feminine Care

8.9

11.6

52.3

48.3

All Other

—

1.5

3.1

11.7

Total segment profit

74.3

92.5

330.7

386.9

General corporate and other expenses

(13.0)

(13.8)

(54.9)

(57.3)

Impairment charges

—

—

—

(570.0)

Restructuring and related costs (1)

(7.3)

(12.8)

(38.1)

(55.6)

Acquisition and integration planning costs (2)

(7.8)

(3.8)

(39.8)

(6.7)

Cost of early retirement of long-term debt

—

—

(26.2)

—

Gain on sale of Infant and Pet Care business

—

—

4.1

—

COVID-19 expenses (3)

(0.4)

—

(4.3)

—

Feminine and Infant Care evaluation costs (4)

—

(0.6)

(0.3)

(2.1)

Sun Care reformulation costs (5)

—

(1.3)

—

(2.8)

Investor settlement expense (6)

—

—

—

(0.9)

Amortization of intangibles

(4.6)

(4.3)

(17.3)

(17.7)

Interest and other expense, net

(17.0)

(14.8)

(66.6)

(64.1)

Total earnings (loss) before income taxes

$

24.2

$

41.1

$

87.3

$

(390.3)

(1)

Includes pre-tax SG&A of $3.3 and $13.3 for the quarter and year ended September 30, 2020, respectively, and $3.5 and
$8.6 for the quarter and year ended September 30, 2019, respectively, associated with certain information technology
enablement expenses and incentive and retention compensation expenses for Project Fuel. Additionally, includes pre-tax
Cost of products sold (“COGS”) of $0.2 for the year ended September 30, 2020, and $0.6 for the quarter and year ended
September 30, 2019 related to inventory write-offs associated with Project Fuel.

(2)

Includes pre-tax SG&A of $7.2 and $39.2 for the quarter and year ended September 30, 2020, respectively, and $3.8 and
$6.7 for the quarter and year ended September 30, 2019, respectively, related to acquisition and integration costs.
Additionally, includes pre-tax COGS of $0.6 for the quarter and year ended September 30, 2020 related to the valuation of
acquired inventory.

(3)

Includes pre-tax COGS of $0.4 and $4.3 for the quarter and year ended September 30, 2020 which included incremental
costs incurred by the Company related to higher benefit and emergency payments, supplies and freight, net of government
credits received as a result of the CARES Act.

(4)

Includes pre-tax SG&A of $0.3 for the year ended September 30, 2020, and $0.6 and $2.1 for the quarter and year ended
September 30, 2019, respectively.

(5)

Includes pre-tax COGS of $1.3 and $2.8 for the quarter and year ended September 30, 2019, respectively.

(6)

Includes pre-tax SG&A of $0.9 for the year ended September 30, 2019.

 

Note 2 — GAAP to Non-GAAP Reconciliations

Basic earnings per share is based on the average number of common shares outstanding during the period.  Diluted earnings per share is based on the weighted-average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of share options and restricted stock equivalent awards.

The following table provides a reconciliation of Net earnings and Net earnings per diluted share (“EPS”) to Adjusted net earnings and Adjusted EPS, which are Non-GAAP measures.


Quarter Ended September 30,


Net Earnings


Diluted EPS


2020


2019


2020


2019


Net Earnings and Diluted EPS — GAAP

$

21.0

$

40.7

$

0.38

$

0.75

Restructuring and related costs, net

7.3

12.8

0.13

0.24

Acquisition and integration costs

7.8

3.8

0.14

0.07

COVID-19 expenses

0.4

—

0.01

—

Feminine and Infant Care evaluation costs

—

0.6

—

0.01

Sun Care reformulation costs

—

1.3

—

0.02

Income taxes (1)

(3.9)

(12.6)

(0.07)

(0.23)


Adjusted Net Earnings and Adjusted Diluted EPS —
Non-GAAP

$

32.6

$

46.6

$

0.59

$

0.86

Weighted-average shares outstanding — Diluted

54.8

54.3


Year Ended September 30,


Net Earnings


Diluted EPS


2020


2019


2020


2019


Net Earnings (Loss)  and Diluted EPS — GAAP (Unaudited)

$

67.6

$

(372.2)

$

1.24

$

(6.88)

Impairment charges

—

570.0

—

10.54

Restructuring and related costs

38.1

55.6

0.70

1.03

Acquisition and integration costs

39.8

6.7

0.73

0.12

Cost of early retirement of long-term debt

26.2

—

0.48

—

Gain on sale of Infant and Pet Care business

(4.1)

—

(0.08)

—

COVID-19 expenses

4.3

—

0.08

—

Feminine and Infant Care evaluation costs

0.3

2.1

0.01

0.04

Investor settlement expense

—

0.9

—

0.02

Sun Care reformulation costs

—

2.8

—

0.05

Impact of dilutive shares

—

—

—

(0.01)

Income taxes (1)

(23.4)

(77.1)

(0.43)

(1.43)


Adjusted Net Earnings and Adjusted Diluted EPS —
Non-GAAP

$

148.8

$

188.8

$

2.73

$

3.48

Weighted-average shares — Diluted

54.6

54.1

(1)

Includes Income tax expense for adjustments to Net Earnings and Diluted EPS — GAAP for fiscal 2020 and 2019. Includes Income tax
expense of $3.6 for the year ended September 30, 2019 related to the fiscal 2018 one-time transition tax from the Tax Act.

 

The following tables provide a GAAP to Non-GAAP reconciliation of certain line items from the Condensed Consolidated Statement of Earnings:


Quarter Ended September 30, 2020


Gross Profit


SG&A


EBIT (1)


Net Earnings


Diluted EPS

GAAP — Reported

$

222.1

$

101.0

$

24.2

$

21.0

$

0.38


% of net sales


45.4


%


20.7


%

Restructuring and related charges

—

3.3

7.3

5.5

0.10

Acquisition and integration costs

0.6

7.2

7.8

5.9

0.11

COVID-19 expenses

0.4

—

0.4

0.2

—

Total Adjusted Non-GAAP

$

223.1

$

90.5

$

39.7

$

32.6

$

0.59


% of net sales


45.6


%


18.5


%


Year Ended September 30, 2020


Gross Profit


SG&A


EBIT (1)


Net Earnings


Diluted EPS

GAAP — Reported

$

880.9

$

408.8

$

87.3

$

67.6

$

1.24


% of net sales


45.2


%


21.0


%

Restructuring and related charges

0.2

13.3

38.1

29.4

0.54

Acquisition and integration costs

0.6

39.2

39.8

30.1

0.56

COVID-19 expenses

4.3

—

4.3

3.2

0.06

Feminine and Infant Care evaluation costs

—

0.3

0.3

0.2

—

Cost of early debt retirement

—

—

26.2

19.8

0.36

Gain on sale of Infant and Pet Care business

—

—

(4.1)

(1.5)

(0.03)

Total Adjusted Non-GAAP

$

886.0

$

356.0

$

191.9

$

148.8

$

2.73


% of net sales


45.4


%


18.3


%


Quarter Ended September 30, 2019


Gross Profit


SG&A


EBIT (1)


Net Earnings


Diluted EPS

GAAP — Reported

$

230.0

$

91.8

$

41.1

$

40.7

0.75


% of net sales


43.6


%


17.4


%

Restructuring and related charges

0.6

3.5

12.8

9.8

0.17

Acquisition and integration costs

—

3.8

3.8

2.9

0.06

Sun Care reformulation costs

1.3

—

1.3

1.0

0.02

Feminine and Infant Care evaluation costs

—

0.6

0.6

0.5

0.01

Income taxes

—

—

—

(8.3)

(0.15)

Total Adjusted Non-GAAP

$

231.9

$

83.9

$

59.6

$

46.6

$

0.86


% of net sales


43.9


%


15.9


%


Year Ended September 30, 2019


Gross Profit


SG&A


EBIT (1)


Net Earnings


Diluted EPS

GAAP — Reported

$

966.6

$

372.0

$

(390.3)

$

(372.2)

$

(6.88)


% of net sales


45.1


%


17.4


%

Impairment charges

—

—

570.0

504.7

9.33

Restructuring and related charges

0.6

8.6

55.6

43.2

0.80

Acquisition and integration costs

—

6.7

6.7

5.1

0.09

Sun Care reformulation costs

2.8

—

2.8

2.1

0.04

Feminine and Infant Care evaluation costs

—

2.1

2.1

1.6

0.03

Investor settlement expense

—

0.9

0.9

0.7

0.01

Impact of dilutive shares

—

—

—

—

(0.01)

Income tax reform

—

—

—

3.6

0.07

Total Adjusted Non-GAAP

$

970.0

$

353.7

$

247.8

$

188.8

$

3.48


% of net sales


45.3


%


16.5


%

(1)

EBIT is defined as Earnings (loss) before income taxes.

 

The following table provides a reconciliation of Earnings before income taxes to adjusted operating income, which is a Non-GAAP measure, for the quarters and years ended September 30, 2020 and 2019:


Quarter Ended September 30,


Year Ended September 30,


2020


2019


2020


2019

Earnings (loss) before income taxes

24.2

41.1

87.3

(390.3)

Impairment charges

—

—

—

570.0

Restructuring and related charges

7.3

12.8

38.1

55.6

Acquisition and integration planning costs

7.8

3.8

39.8

6.7

Cost of early retirement of long-term debt

—

—

26.2

—

Gain on sale of Infant and Pet Care business

—

—

(4.1)

—

COVID-19 expenses

0.4

—

4.3

—

Feminine and Infant Care evaluation costs

—

0.6

0.3

2.1

Sun Care reformulation costs

—

1.3

—

2.8

Investor settlement expense

—

—

—

0.9

Interest expense associated with debt

17.5

14.6

61.2

62.6

Other (income) expense, net

(0.4)

0.2

5.4

1.5

Adjusted operating income

$

56.8

$

74.4

$

258.5

$

311.9


% of net sales


11.6


%


14.1


%


13.3


%


14.6


%

 

The following table provides a reconciliation of the effective tax rate to the adjusted effective tax rate, which is a Non-GAAP measure:


Year Ended September 30, 2020


Year Ended September 30, 2019


Reported


Adjustments (1)


Adjusted
(Non-GAAP)


Reported


Adjustments (1)


Adjusted
(Non-GAAP)

Earnings (loss) before income taxes

87.3

$

104.6

$

191.9

(390.3)

$

638.1

$

247.8

Income tax provision

19.7

23.4

43.1

(18.1)

77.1

59.0

Net earnings (loss)

$

67.6

$

81.2

$

148.8

$

(372.2)

$

561.0

$

188.8

Effective tax rate

22.6

%

4.6

%

Adjusted effective tax rate

22.5

%

23.8

%


(1)

Includes adjustments for the impairment charges, restructuring charges, acquisition and integration costs, cost of early debt retirement, COVID-19 pandemic expenses, the gain or loss on the disposal of a businesses, advisory expenses in connection with the evaluation of the Feminine and Infant Care businesses, investor settlement expenses, Sun Care reformulation charges, the related tax effects of these items from the income tax provision, and the impact of the transition tax related to the Tax Act.

 

Note 3 – Net Sales and Profit by Segment

Operations for the Company are reported via three Segments with impact of the sale of the Infant and Pet Care business included in All Other.  The impact of acquisitions includes the operations of Cremo which was acquired in September 2020. The following tables present changes in net sales and segment profit for the quarter and year ended September 30, 2020, as compared to the corresponding period in fiscal 2019, and provide a reconciliation of organic net sales and organic segment profit to reported amounts.


Net Sales (In millions – Unaudited)


Quarter Ended September 30, 2020


Wet Shave


Sun and Skin Care


Feminine Care


All Other


Total

Net Sales – Q4 ’19

$

340.3

$

80.4

$

77.9

$

29.4

$

528.0

Organic

(17.3)

(5.1)

%

7.1

8.8

%

(8.3)

(10.7)

%

—

—

%

(18.5)

(3.5)

%

Impact of acquisition

—

—

%

4.5

5.6

%

—

—

%

—

—

%

4.5

0.9

%

Impact of disposition

—

—

%

—

—

%

—

—

%

(29.4)

(100.0)

%

(29.4)

(5.6)

%

Impact of currency

3.8

1.1

%

0.5

0.6

%

(0.1)

(0.1)

%

—

—

%

4.2

0.8

%

Net Sales – Q4 ’20

$

326.8

(4.0)

%

$

92.5

15.0

%

$

69.5

(10.8)

%

$

—

(100.0)

%

$

488.8

(7.4)

%


Net Sales (In millions – Unaudited)


Year Ended September 30, 2020


Wet Shave


Sun and Skin Care


Feminine Care


All Other


Total

Net Sales – FY ’19

$

1,250.1

$

463.1

$

308.1

$

119.7

$

2,141.0

Organic

(83.2)

(6.7)

%

(3.1)

(0.7)

%

(9.1)

(3.0)

%

0.5

0.4

%

(94.9)

(4.4)

%

Impact of acquisition

—

—

%

4.5

1.0

%

—

—

%

—

—

%

4.5

0.2

%

Impact of disposition

—

—

%

—

—

%

—

—

%

(93.4)

(78.0)

%

(93.4)

(4.4)

%

Impact of currency

(4.6)

(0.3)

%

(2.5)

(0.5)

%

(0.4)

(0.1)

%

—

—

%

(7.5)

(0.3)

%

Net Sales – FY ’20

$

1,162.3

(7.0)

%

$

462.0

(0.2)

%

$

298.6

(3.1)

%

$

26.8

(77.6)

%

$

1,949.7

(8.9)

%


Segment Profit (In millions – Unaudited)


Quarter Ended September 30, 2020


Wet Shave


Sun and Skin Care


Feminine Care


All Other


Total

Segment Profit – Q4 ’19

$

81.7

$

(2.3)

$

11.6

$

1.5

$

92.5

Organic

(17.6)

(21.5)

%

2.2

95.7

%

(2.6)

(22.4)

%

—

—

%

(18.0)

(19.5)

%

Impact of acquisition

—

—

%

1.1

47.8

%

—

—

%

—

—

%

1.1

1.2

%

Impact of disposition

—

—

%

—

—

%

—

—

%

(1.5)

(100.0)

%

(1.5)

(1.6)

%

Impact of currency

0.1

0.1

%

0.2

8.7

%

(0.1)

(0.9)

%

—

—

%

0.2

0.2

%

Segment Profit – Q4 ’20

$

64.2

(21.4)

%

$

1.2

152.2

%

$

8.9

(23.3)

%

$

—

(100.0)

%

$

74.3

(19.7)

%


Segment Profit (In millions – Unaudited)


Year Ended September 30, 2020


Wet Shave


Sun and Skin Care


Feminine Care


All Other


Total

Segment Profit – FY ’19

$

246.5

$

80.4

$

48.3

$

11.7

$

386.9

Organic

(37.9)

(15.4)

%

(11.7)

(14.6)

%

4.1

8.5

%

0.5

4.3

%

(45.0)

(11.6)

%

Impact of acquisition

—

—

%

1.1

1.4

%

—

—

%

—

—

%

1.1

0.3

%

Impact of disposition

—

—

%

—

—

%

—

—

%

(9.1)

(77.8)

%

(9.1)

(2.4)

%

Impact of currency

(2.4)

(1.0)

%

(0.7)

(0.8)

%

(0.1)

(0.2)

%

—

—

%

(3.2)

(0.8)

%

Segment Profit – FY ’20

$

206.2

(16.3)

%

$

69.1

(14.0)

%

$

52.3

8.3

%

$

3.1

(73.5)

%

$

330.7

(14.5)

%

 

Note 4 – EBITDA

The Company reports financial results on a GAAP and adjusted basis.  The table below is used to reconcile Net earnings to EBITDA and Adjusted EBITDA, which are Non-GAAP measures, to improve comparability of results between periods.   


Quarter Ended September 30,


Year Ended September 30,


2020


2019


2020


2019


Net earnings (loss)

$

21.0

$

40.7

$

67.6

$

(372.2)

Income tax provision (benefit)

3.2

0.4

19.7

(18.1)

Interest expense, net

17.3

14.6

60.7

62.3

Depreciation and amortization

23.3

24.6

88.8

93.8


EBITDA

$

64.8

$

80.3

$

236.8

$

(234.2)

Impairment charges

—

—

—

570.0

Restructuring and related costs

7.3

11.9

38.1

53.7

Acquisition and integration costs

7.8

3.8

39.8

6.7

Cost of early retirement of long-term debt

—

—

26.2

—

Gain on sale of Infant and Pet Care business

—

—

(4.1)

—

COVID-19 expenses

0.4

—

4.3

—

Feminine and Infant Care evaluation costs

—

0.5

0.3

2.1

Sun Care reformulation costs

—

1.3

—

2.8

Investor settlement expense

—

—

—

0.9


Adjusted EBITDA

$

80.3

$

97.8

$

341.4

$

402.0

 

Note 5 – Outlook

The following tables provide reconciliations of Adjusted EPS and Adjusted EBITDA, Non-GAAP measures, included within the Company’s outlook for projected fiscal 2021 results:


Adjusted EPS Outlook

Fiscal 2021 GAAP EPS

$2.18 – $2.38

Restructuring and related costs

approx.

0.52

Acquisition and integration costs

approx.

0.06

Income taxes(1)

approx.

(0.14)

Fiscal 2021Adjusted EPS Outlook (Non-GAAP)

$2.62 – $2.82

     (1)     
Income tax effect of the adjustments to Fiscal 2021 GAAP EPS noted above.


Adjusted EBITDA Outlook

Fiscal 2021 GAAP Net Income

approx.

$120 – $135

Income tax provision

approx.

35

Interest expense, net

approx.

70

Depreciation and amortization

approx.

90

EBITDA

approx.

$315 – $330

Restructuring and related costs

approx.

27

Acquisition and planning costs

approx.

3

Fiscal 2021 Adjusted EBITDA

approx.

$345 – $360

 

Note 6 – Adjusted Working Capital

Adjusted working capital metrics for the fourth and third quarters of fiscal 2020 and the fourth quarter of fiscal 2019 are presented below.


Q4 2020


Days (1)


Q3 2020


Days (1)


Q4 2019


Days (1)

Receivables, as reported

$

182.5

$

194.2

$

215.4

Less: Trade allowance in accrued liabilities (2)

(26.4)

(25.3)

(24.6)

Receivables, adjusted

156.1

29

168.9

31

190.8

33

Inventories, as reported

336.2

115

346.9

115

371.4

115

Accounts payable, as reported

187.2

64

197.4

66

218.8

68

Average adjusted working capital (3)

$

305.1

$

318.4

$

343.4


% of net sales (4)


15.6


%


16.0


%


16.0


%

(1)

Days sales outstanding is calculated using net sales for the trailing four-quarter period.  Days in inventory and days payable outstanding are calculated using cost of products sold for the trailing four-quarter period.

(2)

Trade allowances are recorded as a reduction of net sales per GAAP and reported in accrued expenses on the Condensed Consolidated Balance Sheets.

(3)

Adjusted working capital is defined as receivables (less trade allowance in accrued liabilities), plus inventories, less accounts payable. Average adjusted working capital is calculated using an average of the four-quarter end balances for each working capital component as of September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

(4)

Average adjusted working capital divided by trailing four-quarter net sales.

 

Note 7 – Infant and Pet Care Divestiture

The sale of the Infant and Pet Care business was completed in December 2019. The historical results of the Infant and Pet Care business are included in the consolidated statements of earnings through December 31, 2019. Reflected below are the net sales and segment profit for the Infant and Pet Care business for fiscal 2019. The Infant and Pet Care business was included in the All Other Segment through the date of sale.


Q1 FY19


Q2 FY19


Q3 FY19


Q4 FY19


FY19

Net sales

$

27.3

$

31.7

$

31.3

$

29.4

119.7

Cost of products sold

20.8

19.7

21.7

22.0

84.2

Gross profit

6.5

12.0

9.6

7.4

35.5

Selling, general and administrative expense

3.0

3.3

3.3

3.0

12.6

Advertising and sales promotion expense

1.9

2.2

2.3

2.6

9.0

Research and development expense

0.6

0.7

0.6

0.7

2.6

Operating Profit

1.0

5.8

3.4

1.1

11.3

 

 

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Morneau Shepell’s Mental Health Index™ for October continues to trend well below the pre-pandemic benchmark with a decline in work productivity

CHICAGO, Nov. 12, 2020 /PRNewswire/ – Morneau Shepell, a leading provider of total wellbeing, mental health and digital mental health services, today released its monthly Mental Health Index™ report, revealing a consistent trend of negative mental health among Americans at the seven-month mark of the pandemic. The Mental Health Index™ for October is -6.2, showing that Americans’ mental health continues to be at risk, with concerns related to the presidential election adding to the continuing emotional strain of the pandemic.

The Mental Health Index™ score, which measures the improvement or decline in mental health from the pre-2020 benchmark of 75, remains essentially unchanged from September (-6.3). This trend is displayed across the majority of sub-scores tracked in The Mental Health Index™, including financial risk (7.4), psychological health (2.1), isolation (-6.2), depression (-7.5), optimism (-7.5) and anxiety (-8.0).

Despite a high level of need, Americans are largely unwilling to seek mental health support. Almost half (43 percent) of respondents report the need for additional mental health support. Seven percent of respondents indicate they need support but have not sought it. This group has an extremely low mental health score (-31.9).

Work productivity has declined
Workplace productivity declined in October to -8.3, compared to -7.8 in September, which was lower than the -5.3 in August. At this point, work productivity is similar to the lowest point of -8.7 in April 2020. Another negative trend is evident in financial risk where scores also declined for the second month in a row, reflecting a reversal of the increase in savings from April to July.

“We have now been dealing with the physical, social, financial and mental impacts of COVID-19 for more than half of a year, with no clear end in sight,” said Stephen Liptrap, president and chief executive officer. “This strain is negatively impacting the productivity of Americans as well as their quality of life and potentially their longer-term health. The new normal is no longer new and it’s a critical time for businesses and governments to prioritize the serious mental health threat this poses.”

Stress of presidential election detrimental to Americans’ mental health
The particularly divisive lead-up to the 2020 presidential election had a significant impact on the mental health of Americans in October. Nearly half of respondents (43 percent) indicated that the election has negatively impacted their mental health, while only 16 percent stated the election had a positive impact on their mental health. Those experiencing a negative impact also had the lowest mental health score (-11.5), which is a stark difference when compared to those who indicated they are undecided (-2.3) or those that felt the election has impacted their mental health positively (-1.5).

“Americans have been faced with significant stress-inducing change in these past seven months and the election is taking this stress to the next level,” said Paula Allen, senior vice president of research, analytics and innovation. “Uncertainty, whether driven by the election or ongoing pandemic-related concerns, continues to put the mental wellbeing of Americans at risk. A major concern is that many are starting to accept this as normal. We may see the distress around us and may not take action for ourselves since we feel that is just the way it is. This view is as dangerous as the risk situation that we are in.”

The perceived handling of the health and safety risk of the pandemic by government is also divided. While the majority of respondents (60 percent) felt that their local government is handling the pandemic’s risks well, 38 percent felt the federal government has handled COVID-19’s health and safety risks poorly, and 25 percent feel that it has been handled inconsistently. Those who believe it has been handled inconsistently have a lower mental health score (-8.2) than either of the other groups.

About the Mental Health Index™
The monthly survey by Morneau Shepell was conducted through an online survey in English from September 28 to October 19, 2020, with 5,000 respondents in the United States. All respondents reside in the United States and were employed within the last six months. The data has been statistically weighted to ensure the regional and gender composition of the sample reflect this population. The Mental Health Index™ is published monthly, beginning April 2020, and compares against benchmark data collected in 2017, 2018 and 2019. The full U.S. report can be found at https://www.morneaushepell.com/permafiles/93110/mental-health-index-report-united-states-october-2020.pdf.

About Morneau Shepell

Morneau Shepell is a leading provider of technology-enabled HR services that deliver an integrated approach to employee wellbeing through our cloud-based platform. Our focus is providing world-class solutions to our clients to support the mental, physical, social and financial wellbeing of their people. By improving lives, we improve business. Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement consulting, actuarial and investment services. Morneau Shepell employs approximately 6,000 employees who work with some 24,000 client organizations that use our services in 162 countries. For more information, visit morneaushepell.com.

Cision View original content:http://www.prnewswire.com/news-releases/uncertainty-in-lead-up-to-2020-presidential-election-takes-toll-on-mental-health-of-americans-301171656.html

SOURCE Morneau Shepell Inc.

Posted on

GBT Tokenize Commencing Open Public Research in Kirlian Electrophotography Technique

SAN DIEGO, Nov. 12, 2020 (GLOBE NEWSWIRE) — GBT Technologies Inc. (OTC PINK: GTCH) (“GBT”, or the “Company”), announced that GBT Tokenize (“GBT/Tokenize”) started research in the Kirlian Electrophotography imaging technique potentially aimed for inclusion within its qTerm device. GBT/Tokenize’s qTerm, is a human vitals device powered by AI and is aimed to measure human vitals with a touch of a finger. 

GBT/Tokenize encourages public participation in its research. Scientists and researchers that are interested to participate in our research are welcome to send us their material for evaluation at [email protected]

The human body emits various radiations such as infrared, electromagnetic radiation, low level visible light and ultraviolet radiation. This human biofield carries unique information which can potentially be useful for diagnosing and predicting diseases. The various aspects of this biofield can be measured in order to identify organ and/or tissue dysfunctions and therefore potentially detect early stages of possible diseases. Early detection is essential to ensure proper treatment and care.

Kirlian Electrophotography technique is a photographic method to capture the phenomenon of electrical coronal discharges which can be used to produce a human’s organ biofield. The technique is based on shooting a high voltage charge through an object that is connected to a photographic plate. The resulting image typically includes a colored aura around the object. When performed on a human organ the aura is its biofield. The research will be focusing on using Kirlian imaging techniques for early disease diagnostics. GBT/Tokenize’s Machine Learning system is aimed to analyze the biofield data and possible detection of onset disease. Based on Kirlian images and patterns, GBT/Tokenize’s AI seeks to observe, study, analyze and ultimately alert physicians about possible underlying illnesses or symptoms. If developed and commercialized, such a system can be efficient for remote telemedicine diagnostics and medical advice.

“We are excited to start new research for our qTerm device” stated Danny Rittman, GBT’s CTO. “This research is about the analysis of Kirlian electrophotography data in order to detect an onset of possible illnesses. Kirlian imaging can produce a bio-energy of human’s organs and can perform as a diagnostic tool. Using Kirlian imaging, we believe it is possible to produce a measure of human energy levels and examine changes in the energy distribution throughout the organ(s). We are attempting to determine if we can implement Kirlian imaging for qTerm by means of producing a human’s finger aura (i.e. its biofield). Along with qTerm vitals measurement, the goal is to potentially provide a Kirilian image. In turn, using our Machine learning technology, we are seeking to develop an analysis of the biofield and, in turn, provide a diagnostic and potential medical issues classification. We believe this type of system, if fully developed and commercialized, could be very efficient as additional diagnostic system. We commenced our research and we encourage public participation in this research and we will share our findings on our website qterm.me” continued Dr. Rittman.

Illustration of Kirlian photograph of a fingertip, 1989:

https://www.globenewswire.com/NewsRoom/AttachmentNg/c55add1f-ab66-46c8-a221-7abc238bebea

Actual Test imaging (for presentation purposes only):

https://www.globenewswire.com/NewsRoom/AttachmentNg/4107d872-4784-4d8f-87ff-e294f4127476

Forward-Looking Statements

Certain statements contained in this press release may constitute “forward-looking statements”. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors as disclosed in our filings with the Securities and Exchange Commission located at their website (http://www.sec.gov). In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, governmental and public policy changes, the Company’s ability to raise capital on acceptable terms, if at all, the Company’s successful development of its products and the integration into its existing products and the commercial acceptance of the Company’s products. The forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of the press release.

Contact:

Dr. Danny Rittman, CTO
GBT Technologies Inc.
Media: [email protected]

Posted on

All-New Styleisure™ Brand at JCPenney Promotes Equal Parts Style and Comfort as Company Continues to Innovate Ahead of the Holiday Season

All-New Styleisure™ Brand at JCPenney Promotes Equal Parts Style and Comfort as Company Continues to Innovate Ahead of the Holiday Season

Styleisure™ apparel line is designed to comfortably elevate your everyday

Launching Stylus™ women’s apparel brand Nov. 12 with size-inclusive assortment

PLANO, Texas–(BUSINESS WIRE)–
JCPenney today announced an additional installment of their New and Wow! brands with the introduction of Stylus™ apparel brand. This brand is part of an all-new styleisure™ apparel line which is designed to comfortably elevate your everyday. Only at JCPenney, the Stylus brand is the leader in this new fashion mindset that enables customers to dress effortlessly with both comfort and style. Not to be confused with athleisure, our Stylus brand provides the style and comfort our customers are craving in their multifaceted daily lives, creating a solution that reaches beyond the activewear category.

The Stylus brand’s all-day comfort plus style versatility reflects how JCPenney customers live, whether working from home or in the office, shopping, preparing for the holiday season, or virtually getting together with friends and family. The sophisticated combination of fabric and design, woven into a variety of pieces – including cardigans, easy pants, jumpsuits and tees – can be mixed and matched to seamlessly transition for whatever the day or night may bring. Importantly, the Stylus brand doesn’t ask shoppers to sacrifice fashion for comfort, or vice versa, as ultra-soft fabrics offer unrestricted movement and a relaxed fit. Modern color palettes are paired together based on thoughtfully designed details – including tapered legs, curved hems, and twist-front tops. The Stylus brand allows our customers to be comfortable and look and feel put together to elevate their every day.

“We are excited to launch the Stylus brand right now and in time for the 2020 holiday season for our customers – including our All-In Shopping Enthusiast – who are looking for comfortable yet stylish pieces that fit all aspects of their lives,” said Michelle Wlazlo, EVP, chief merchandising officer. “We began developing the concept of our styleisure™ line, which is exclusive to JCPenney, nearly a year ago to fill this unmet need as customers dress for their day. The Stylus collection is a curated array of neutrals that make it easy to layer and swap pieces for a virtually endless combination of looks, representing true modern comfort and style.”

“Everything we do is with our customers at the forefront – we want our customers to feel and know they’re represented,” Wlazlo continued. “Our inclusive sizing is a philosophy, not an afterthought. Size should never be a deterrent to style or the ability to feel empowered, confident, and comfortable.”

The Stylus brand size assortment ranges from XS to 3X, with consistent pricing from $26 to $89 across all sizes. The introduction of the Stylus brand follows the repositioning and launch of several exclusive JCPenney brands in 2020, including a.n.a a new approach® and Linden Street™, which are offered alongside a wide array of national brands including Nike®, adidas®, Champion®, Levi’s®, Puma®, Clarks®, Cuisinart®, Sharper Image®, Disney®, Lego®, Mattel® and more.

As JCPenney continues implementing its Plan for Renewal transformation strategy, the Stylus brand is a true testament to the Company’s continuous innovative commitment to offer compelling merchandise for today’s shoppers. The brand is now available in 363 stores nationwide and on the JCPenney app and flagship store, jcp.com, offering inclusive sizing and can’t-miss value.

About JCPenney

J. C. Penney Company, Inc. (OTCMKTS: JCPNQ), one of the nation’s largest apparel and home retailers, combines an expansive footprint of stores across the United States and Puerto Rico with a powerful eCommerce site, jcp.com, to deliver style and value for all hard-working American families. At every touchpoint, customers will discover stylish merchandise at incredible value from an extensive portfolio of private, exclusive and national brands. Reinforcing this shopping experience is the customer service and warrior spirit of JCPenney associates across the globe, all driving toward the Company’s mission to help customers find what they love for less time, money, and effort. For additional information, please visit jcp.com.

JCPenney Corporate Communications and Public Relations:

Kristen Bennett

(972) 431-3400 or [email protected]

Follow @jcpnews on Twitter for the latest announcements and Company information.

Investor Relations:

(972) 431-5500 or [email protected]

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Other Retail Specialty Online Retail Consumer Fashion Other Consumer Retail Department Stores

MEDIA:

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Posted on

New York City REIT Announces Third Quarter 2020 Results

New York City REIT Announces Third Quarter 2020 Results

NEW YORK–(BUSINESS WIRE)–
New York City REIT, Inc. (NYSE: NYC) (“NYC” or the “Company”), a real estate investment trust that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, announced today its financial and operating results for the third quarter ended September 30, 2020.

Third Quarter 2020 and Subsequent Event Highlights

  • Revenue was $17.0 million as compared to $18.6 million for the third quarter 2019
  • Net loss attributable to common stockholders was $12.3 million as compared to $4.8 million for the third quarter 2019
  • Cash net operating income (“NOI”) was $6.1 million compared to $8.8 million for the third quarter 2019
  • Funds from Operations (“FFO”) of $(3.6) million, compared to $3.0 million for the third quarter 2019
  • Core Funds from Operations (“Core FFO”) of $0.5 million compared to $3.0 million in the prior year third quarter
  • Collected 85% of cash rent due in third quarter 20201, including 85% among the top 10 tenants2
  • High quality 1.2 million square foot, $860.2 million3 portfolio composed of eight office and retail condominium assets primarily located in Manhattan
  • 68% of the top 10 tenants portfolio-wide rated as investment grade or implied investment grade4
  • Portfolio occupancy of 88.6% as of September 30, 2020
  • Executed occupancy of 90% and $1 million of additional annual cash rent based on new leases that as of November 1, 2020 that have been signed where the tenant has yet to take possession or commenced paying rent
  • Early 10-year5 lease extension with City National Bank, the largest tenant at 1140 Avenue of the Americas, adding $44 million of gross rent from an investment-grade tenant
  • Executed one lease extension that provided approximately seven months of rent relief in the form of a deferral and rent credit in exchange for a five-year lease extension, providing a net increase of $16.0 million of cash rent
  • Increased weighted-average lease term6 to 7.5 years from 6.6 years at the end of the second quarter 2020
  • Strong balance sheet with net leverage of 36.2%, no debt maturities in the next three years and a weighted average debt maturity of 6.4 years
  • Listed shares of Class A common stock on the New York Stock Exchange on August 18, 2020

“New York City REIT completed a successful third quarter, highlighted by listing our Class A shares on the NYSE, collecting over 85% of the cash rent due in the quarter, and significantly increasing our weighted-average remaining lease term to over 7.5 years, despite the ongoing challenges of the COVID-19 pandemic,” Michael Weil, Chief Executive Officer, commented. “We signed an early, 10-year lease extension with City National Bank, our largest tenant at 1140 Avenue of the Americas worth $44 million of additional cash rent to our future revenue and negotiated a short-term rent deferral in exchange for a five-year lease extension worth $16.0 million. We have built a stable, high-quality pure-play New York City portfolio with occupancy of over 88%, and we remain highly confident in the long-term trends of New York City real estate, our business model, and the opportunities to grow our portfolio while building shareholder value.”

Financial Results

 

 

Three Months Ended September 30,

(In thousands, except per share data)

 

2020

 

2019

Revenue from tenants

 

$

16,997

 

 

$

18,643

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(12,288)

 

 

$

(4,809)

 

Net loss per common share (a)

 

$

(0.96)

 

 

$

(0.38)

 

 

 

 

 

 

FFO attributable to common stockholders

 

(3,649)

 

 

2,995

 

FFO per common share (a)

 

$

(0.29)

 

 

$

0.23

 

 

 

 

 

 

Core FFO attributable to common stockholders

 

$

514

 

 

$

3,019

 

Core FFO per common share (a)

 

$

0.04

 

 

$

0.24

 

(a) All per share data based on 12,772,176 and 12,749,456 diluted weighted-average shares outstanding for the three months ended September 30, 2020 and 2019, respectively. 2019 values are retroactively adjusted for the effects of the reverse stock split in August 2020.

Real Estate Portfolio

The Company’s portfolio consisted of eight properties comprised 1.2 million rentable square feet as of September 30, 2020. Portfolio metrics include:

  • 88.6% leased, compared to 92.4% at the end of third quarter 2019, with 7.5 years remaining weighted-average lease term
  • 68% of annualized straight-line rent7 from top 10 tenants derived from investment grade or implied investment grade tenants
  • 76% office (based on an annualized straight-line rent)

Capital Structure and Liquidity Resources

As of September 30, 2020, the Company had $39.1 million of cash and cash equivalents. The Company’s net debt8 to gross asset value9 was 36.2%, with net debt of $365.9 million.

All of the Company’s debt was fixed-rate as of September 30, 2020. The Company’s total combined debt had a weighted-average interest rate of 4.4%10, resulting in an interest coverage ratio of 1.2 times11.

Rent Collection Update

Third Quarter of 2020

For the third quarter of 2020, NYC collected 85% of the cash rents that were due across the portfolio, including 85% of the cash rent payable from the top 10 tenants in the portfolio (based on annualized straight-line rent) and 91% of the cash rent payable from office tenants and 61% of the cash rent payable from retail tenants.

Of the third quarter 2020 cash rent remaining, lease amendments providing for either a rent deferral or a rent credit have been approved for 8% of the unpaid cash rent, while another 6% of rents are currently in negotiation for similar lease amendments. The remaining 1% generally consists of tenants who have made partial payment and/or tenants without active communication on a potential approved agreement.

Footnotes/Definitions

1 This information may not be indicative of any future period. The impact of the COVID-19 pandemic on the Company’s rental revenue for the fourth quarter of 2020 and thereafter cannot be determined at present. The ultimate impact on our future results of operations and liquidity will depend on the overall length and severity of the COVID-19 pandemic, which management is unable to predict. With respect to ongoing negotiations of rent deferrals or credits, there can be no assurance that these negotiations will be successful and will lead to formal agreements on favorable terms, or at all. With respect to the other remaining unpaid amounts, there can be no assurance the Company will be successful in its efforts to collect or defer these amounts on a timely basis, or at all.

2 Top 10 tenants based on annualized straight-line rent as of September 30, 2020.

3 Total real estate investments at cost.

4 As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. Ratings information is as of September 30, 2020. Top 10 tenants are 56% actual investment grade rated and 12% implied investment grade rated.

5 Assumes tenant does not exercise option to terminate extension term after five years (in 2028) upon payment of termination fee.

6 The weighted-average remaining lease term (years) is based on annualized straight-line rent as of September 30, 2020.

7 Annualized straight-line rent is calculated using the most recent available lease terms as of September 30, 2020.

8 Total debt of $405.0 million less cash and cash equivalents of $39.1 million as of September 30, 2020. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.

9 Defined as the carrying value of total assets of $878.0 million plus accumulated depreciation and amortization of $132.4 million as of September 30, 2020.

10 Weighted based on the outstanding principal balance of the debt.

11The interest coverage ratio is calculated by dividing adjusted EBITDA by cash paid for interest (interest expense less amortization of deferred financing costs, net, and change in accrued interest and amortization of mortgage premiums on borrowings) for the quarter ended September 30, 2020.

Webcast and Conference Call

NYC will host a webcast and call on November 12, 2020 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the NYC website, www.newyorkcityreit.com, in the “Investor Relations” section.

Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to NYC’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the NYC website at www.newyorkcityreit.com.

Live Call

Dial-In (Toll Free): 1-888-317-6003

International Dial-In: 1-412-317-6061

Canada Dial-In (Toll Free): 1-866-284-3684

Participant Elite Entry Number: 3532909

Conference Replay*

Domestic Dial-In (Toll Free): 1-877-344-7529

International Dial-In: 1-412-317-0088

Canada Dial-In (Toll Free): 1-855-669-9658

Conference Number: 10148253

*Available one hour after the end of the conference call through February 12, 2021

About New York City REIT, Inc.

New York City REIT, Inc. (NYSE: NYC) is a publicly traded real estate investment trust listed on the NYSE that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City. Additional information about NYC can be found on its website at www.newyorkcityreit.com.

Supplemental Schedules

The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of NYC’s website at www.newyorkcityreit.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements, including those set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of NYC’s most recent Annual Report on Form 10-K and NYC’s most recent Form 10-Q, as such Risk Factors may be updated from time to time in subsequent reports. Further, forward-looking statements speak only as of the date they are made, and NYC undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

New York City REIT, Inc.

Consolidated Balance Sheets

(In thousands. except share and per share data)

 

 

September 30,

2020

 

December 31,

2019

ASSETS

 

(Unaudited)

 

 

Real estate investments, at cost:

 

 

 

 

Land

 

$

193,658

 

 

$

193,658

 

Buildings and improvements

 

568,134

 

 

565,829

 

Acquired intangible assets

 

98,412

 

 

103,121

 

Total real estate investments, at cost

 

860,204

 

 

862,608

 

Less accumulated depreciation and amortization

 

(132,418)

 

 

(114,322)

 

Total real estate investments, net

 

727,786

 

 

748,286

 

Cash and cash equivalents

 

39,088

 

 

51,199

 

Restricted cash

 

9,700

 

 

7,098

 

Operating lease right-of-use asset

 

55,427

 

 

55,579

 

Prepaid expenses and other assets (includes amounts due from related parties of $407 and $0 at September 30, 2020 and December 31, 2019, respectively)

 

11,080

 

 

8,602

 

Straight-line rent receivable

 

25,231

 

 

21,649

 

Deferred leasing costs, net

 

9,643

 

 

8,943

 

Total assets

 

$

877,955

 

 

$

901,356

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Mortgage notes payable, net

 

$

396,188

 

 

$

395,031

 

Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $167 and $222 at September 30, 2020 and December 31, 2019, respectively)

 

6,831

 

 

7,033

 

Operating lease liability

 

54,832

 

 

54,866

 

Below-market lease liabilities, net

 

14,517

 

 

18,300

 

Derivative liability, at fair value

 

3,722

 

 

1,327

 

Deferred revenue

 

5,490

 

 

4,250

 

Total liabilities

 

481,580

 

 

480,807

 

 

 

 

 

 

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019

 

—

 

 

—

 

Common stock, $0.01 par value, 300,000,000 shares authorized,12,802,690 and 12,755,099 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

 

129

 

 

128

 

Additional paid-in capital

 

686,690

 

 

686,026

 

Accumulated other comprehensive loss

 

(3,722)

 

 

(1,327)

 

Distributions in excess of accumulated earnings

 

(288,640)

 

 

(264,278)

 

Total stockholders’ equity

 

394,457

 

 

420,549

 

Non-controlling interests

 

1,918

 

 

—

 

Total equity

 

396,375

 

 

420,549

 

Total liabilities and equity

 

$

877,955

 

 

$

901,356

 

New York City REIT, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands, except share and per share data)

 

 

Three Months Ended

September 30,

 

 

2020

 

2019

Revenue from tenants

 

$

16,997

 

 

$

18,643

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Asset and property management fees to related parties

 

1,879

 

 

1,962

 

Property operating

 

8,300

 

 

8,026

 

Listing expenses

 

1,299

 

 

—

 

Vesting and conversion of Class B Units

 

1,153

 

 

—

 

Equity-based compensation

 

1,711

 

 

24

 

General and administrative

 

1,234

 

 

1,176

 

Depreciation and amortization

 

8,639

 

 

7,804

 

Total operating expenses

 

24,215

 

 

18,992

 

Operating loss

 

(7,218)

 

 

(349)

 

Other income (expense):

 

 

 

 

Interest expense

 

(5,089)

 

 

(4,681)

 

Other income

 

19

 

 

221

 

Total other expense

 

(5,070)

 

 

(4,460)

 

Net loss attributable to common stockholders

 

$

(12,288)

 

 

$

(4,809)

 

 

 

 

 

 

Weighted-average shares outstanding — Basic and Diluted

 

12,772,176

 

 

12,749,456

 

Net loss per share attributable to common stockholders — Basic and Diluted

 

$

(0.96)

 

 

$

(0.38)

 

New York City REIT, Inc.

Quarterly Reconciliation of Non-GAAP Measures (Unaudited)

(In thousands)

 

 

Three Months Ended September 30,

 

 

2020

 

2019

Adjusted EBITDA

 

 

 

 

Net loss

 

$

(12,288)

 

 

$

(4,809)

 

Depreciation and amortization

 

8,639

 

 

7,804

 

Interest expense

 

5,089

 

 

4,681

 

Listing expenses

 

1,299

 

 

—

 

Vesting and conversion of Class B Units

 

1,153

 

 

—

 

Equity-based compensation

 

1,711

 

 

24

 

Other income

 

(19)

 

 

(221)

 

Adjusted EBITDA

 

5,584

 

 

7,479

 

Asset and property management fees to related parties

 

1,879

 

 

1,962

 

General and administrative

 

1,234

 

 

1,176

 

NOI

 

8,697

 

 

10,617

 

Accretion of below- and amortization of above-market lease liabilities and assets, net

 

(555)

 

 

(566)

 

Straight-line rent (revenue as a lessor)

 

(2,107)

 

 

(1,267)

 

Straight-line ground rent (expense as lessee)

 

28

 

 

28

 

Cash NOI

 

$

6,063

 

 

$

8,812

 

 

 

 

 

 

Cash Paid for Interest:

 

 

 

 

Interest expense

 

$

5,089

 

 

$

4,681

 

Amortization of deferred financing costs

 

(386)

 

 

(380)

 

Total cash paid for interest

 

$

4,703

 

 

$

4,301

 

New York City REIT, Inc.

Quarterly Reconciliation of Non-GAAP Measures (Unaudited)

(In thousands)

 

 

Three Months Ended September 30,

 

 

2020

 

2019

Net loss attributable to common stockholders

 

$

(12,288)

 

 

$

(4,809)

 

Depreciation and amortization

 

8,639

 

 

7,804

 

FFO attributable to common stockholders

 

(3,649)

 

 

2,995

 

Listing expenses

 

1,299

 

 

—

 

Vesting and conversion of Class B Units

 

1,153

 

 

—

 

Equity-based compensation

 

1,711

 

 

24

 

Core FFO attributable to common stockholders

 

$

514

 

 

$

3,019

 

Non-GAAP Financial Measures

This release discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”) and Cash Net Operating Income (“Cash NOI”). While NOI is a property-level measure, Core FFO is based on our total performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, Core FFO and NOI attributable to stockholders.

Caution on Use of Non-GAAP Measures

FFO, Core FFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.

Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO differently than we do. Consequently, our presentation of FFO and Core FFO may not be comparable to other similarly titled measures presented by other REITs.

We consider FFO and Core FFO useful indicators of our performance. Because FFO and Core FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO and Core FFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.

As a result, we believe that the use of FFO and Core FFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and Core FFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and Core FFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our Operating Partnership) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Core Funds from Operations

In calculating Core FFO, we start with FFO, then we exclude the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating items include acquisition and transaction related costs for dead deals, debt extinguishment costs, listing related costs and expenses (including the vesting and conversion of Class B units and cash expenses and fees which are non-recurring in nature incurred in connection with the listing of Class A common stock on the NYSE and related transactions), and non-cash equity-based compensation. We add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition and transaction dead deal costs as well as non-operating costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.

We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, fees related to the listing related costs and expenses, other non-cash items such as the vesting and conversion of the Class B Units, equity-based compensation expense and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.

Cash NOI, is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs present Cash NOI.

Investors and Media:

Email: [email protected]

Phone: (866) 902-0063

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Professional Services Commercial Building & Real Estate Finance Construction & Property REIT Banking

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Stratasys Reports Third Quarter 2020 Financial Results

Stratasys Reports Third Quarter 2020 Financial Results

  • Revenue of $127.9 million
  • GAAP net loss of $405.1 million, or ($7.35) per diluted share, and non-GAAP net loss of $3.0 million, or ($0.05) per diluted share; Included in the GAAP net loss was a $386.2 million ($7.01 per share) non-cash goodwill impairment charge.
  • Generated $2.6 million in cash from operations – $308.2 million net cash position with no debt

MINNEAPOLIS & REHOVOT, Israel–(BUSINESS WIRE)–Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the third quarter of 2020.

Q3 2020 Financial Results Summary:

  • Revenue for the third quarter of 2020 was $127.9 million, compared to $157.5 million for the same period last year. The 18.8% reduction was primarily driven by the adverse impact of COVID-19 on the company’s customers throughout the industries into which the company sells its products and services.
  • GAAP gross margin was 38.9% for the quarter, compared to 49.2% for the same period last year. Non-GAAP gross margin was 46.8% for the quarter, compared to 52.4% for the same period last year. GAAP and non-GAAP gross margin improved sequentially from Q2 by 170bp and 140bp, respectively. The company believes that gross margins will continue to recover as and when our customers return to their pre-COVID utilization levels.
  • GAAP operating loss for the quarter was $404.3 million, compared to GAAP operating loss of $6.0 million for the same period last year, mainly due to the non-cash goodwill impairment charge of $386.2 million. Non-GAAP operating loss for the quarter was $1.0 million, compared to non-GAAP operating income of $8.1 million for the same period last year.
  • GAAP net loss for the quarter was $405.1 million, or ($7.35) per diluted share, compared to GAAP net loss of $6.9 million, or ($0.13) per diluted share, for the same period last year, mainly due to the non-cash goodwill impairment charge of $386.2 million. Non-GAAP net loss for the quarter was $3.0 million, or ($0.05) per diluted share, compared to non-GAAP net income of $6.3 million, or $0.12 per diluted share, for the same period last year.
  • Non-GAAP EBITDA was $5.2 million for the quarter, compared to $14.5 million for the same period last year. Non-GAAP EBITDA improved sequentially from Q2 by $6.8 million.
  • The Company recorded a non-cash goodwill impairment charge of $386.2 million, or $7.01 per share, related to the Company’s FDM and PolyJet technologies, primarily as a result of the COVID-19 impact on the Company’s business.
  • The Company generated $2.6 million of cash from operations and ended the period with $308.2 million in cash, cash equivalents and short-term deposits. The Company has no debt.

“We were pleased to see sequential improvements in both our top and bottom lines for this quarter, reflecting the beginning of a potential recovery from the pandemic,” said Yoav Zeif, CEO of Stratasys. “We are laser-focused on leading the polymer 3D printing market by delivering the most innovative, next-gen technologies to address the fastest-growing and most transformative manufacturing applications, while leveraging the strongest go-to-market infrastructure in our industry. We believe that our innovations of today will drive competitive production advantages for the factories of tomorrow, resulting in growth and value creation for our customers and shareholders.”

Stratasys Ltd. Q3 2020 Conference Call Details

The Company plans to hold the conference call to discuss its third quarter 2020 financial results on Thursday, November 12, 2020 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Website at investors.stratasys.com, or directly at the following web address: https://78449.themediaframe.com/dataconf/productusers/ssys/mediaframe/41658/indexl.html

To participate by telephone, the U.S. toll-free number is 877-407-0619 and the international dial-in is +1-412-902-1012. Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for 6 months at investors.stratasys.com, or by accessing the above-provided web address.

Stratasys (Nasdaq: SSYS) is a global leader in additive manufacturing or 3D printing technology and is the manufacturer of FDM®, PolyJet™, and stereolithography 3D printers. The company’s technologies are used to create prototypes, manufacturing tools, and production parts for industries, including aerospace, automotive, healthcare, consumer products and education. For more than 30 years, Stratasys products have helped manufacturers reduce product-development time, cost, and time-to-market, as well as reduce or eliminate tooling costs and improve product quality. The Stratasys 3D printing ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.

To learn more about Stratasys, visit www.stratasys.com, the Stratasys blog, Twitter, LinkedIn, or Facebook. Stratasys reserves the right to utilize any of the foregoing social media platforms, including the company’s websites, to share material, non-public information pursuant to the SEC’s Regulation FD. To the extent necessary and mandated by applicable law, Stratasys will also include such information in its public disclosure filings.

Stratasys is a registered trademark and the Stratasys signet is a trademark of Stratasys Ltd. and/or its subsidiaries or affiliates. All other trademarks are the property of their respective owners.

Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys’ strategy, and the statements regarding its projected future financial performance, are forward-looking statements reflecting management’s current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with Stratasys’ business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the degree of our success at introducing new or improved products and solutions that gain market share; the degree of growth of the 3D printing market generally; the duration of the global COVID-19 pandemic, which, if extending for a further significant period of time, may continue to impact, in a material adverse manner, our operations, financial position and cash flows, and those of our customers and suppliers; the impact of potential shifts in the prices or margins of the products that we sell or services that we provide, including due to a shift towards lower-margin products or services; the impact of competition and new technologies; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; the extent of our success at successfully consummating acquisitions or investments in new businesses, technologies, products or services; potential changes in our management and board of directors; global market, political and economic conditions, and in the countries in which we operate in particular (including risks related to the impact of coronavirus on our operations, supply chain, liquidity, cash flow and customer orders); costs and potential liability relating to litigation and regulatory proceedings; risks related to infringement of our intellectual property rights by others or infringement of others’ intellectual property rights by us; the extent of our success at maintaining our liquidity and financing our operations and capital needs; the impact of tax regulations on our results of operations and financial condition; and those additional factors referred to in Item 3.D “Key Information – Risk Factors”, Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects,” and all other parts of our Annual Report on Form 20-F for the year ended December 31, 2019 (the “2019 Annual Report”), which we filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2020. Readers are urged to carefully review and consider the various disclosures made throughout our 2019 Annual Report and the Report of Foreign Private Issuer on Form 6-K that attaches Stratasys’ unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition, for the quarterly period ended September 30, 2020, which we are furnishing to the SEC on or about the date hereof, and our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Any guidance provided, and other forward-looking statements made, in this press release are made as of the date hereof, and Stratasys undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Use of non-GAAP financial measures

The non-GAAP data included herein, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our Company in gauging our results of operations on an ongoing basis after (i) excluding mergers, acquisitions and divestments related expense or gains and restructuring-related charges or gains, and (ii) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of goodwill and long-lived assets, and the corresponding tax effect of those items. These non-GAAP adjustments either do not reflect actual cash outlays that impact our liquidity and our financial condition or have a non-recurring impact on the statement of operations, as assessed by management. These non-GAAP financial measures are presented to permit investors to more fully understand how management assesses our performance for internal planning and forecasting purposes. The limitations of using these non-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all items indicated above during a period, which may not provide a comparable view of our performance to other companies in our industry. Investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with GAAP. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table below.

Stratasys Ltd.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)

September 30,

December 31,

2020

2019
 
 
ASSETS
 
Current assets
Cash and cash equivalents

$

252,906

 

$

293,484

 

Short-term deposits

$

55,300

 

$

28,300

 

Accounts receivable, net

 

103,693

 

 

132,558

 

Inventories

 

152,685

 

 

168,504

 

Prepaid expenses

 

7,568

 

 

6,567

 

Other current assets

 

19,209

 

 

29,659

 

 
Total current assets

 

591,361

 

 

659,072

 

 
Non-current assets
Property, plant and equipment, net

 

198,521

 

 

189,706

 

Goodwill

 

–

 

 

385,658

 

Other intangible assets, net

 

65,083

 

 

87,328

 

Operating lease right-of-use assets

 

18,905

 

 

20,936

 

Other non-current assets

 

35,238

 

 

38,819

 

 
Total non-current assets

 

317,747

 

 

722,447

 

 
Total assets

$

909,108

 

$

1,381,519

 

 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable

$

23,478

 

$

35,818

 

Accrued expenses and other current liabilities

 

26,462

 

 

28,528

 

Accrued compensation and related benefits

 

28,536

 

 

34,013

 

Deferred revenues

 

47,288

 

 

52,268

 

Operating lease liabilities – short term

 

8,675

 

 

9,292

 

 
Total current liabilities

 

134,439

 

 

159,919

 

 
Non-current liabilities
Deferred revenues – long-term

 

13,436

 

 

16,039

 

Operating lease liabilities – long term

 

10,600

 

 

12,445

 

Other non-current liabilities

 

33,291

 

 

35,343

 

 
Total non-current liabilities

 

57,327

 

 

63,827

 

 
Total liabilities

 

191,766

 

 

223,746

 

 
Redeemable non-controlling interests

 

568

 

 

622

 

 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 55,112 thousands shares and 54,441 thousands shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

150

 

 

148

 

Additional paid-in capital

 

2,722,839

 

 

2,706,894

 

Accumulated other comprehensive loss

 

(9,289

)

 

(7,716

)

Accumulated deficit

 

(1,996,926

)

 

(1,542,175

)

Total equity

 

716,774

 

 

1,157,151

 

 
Total liabilities and equity

$

909,108

 

$

1,381,519

 

 
Stratasys Ltd.
Consolidated Statements of Operations
(in thousands, except per share data)
 
Three Months Ended September 30, Nine Months Ended September 30,

2020

2019

2020

2019
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales
Products

$

83,548

 

$

106,346

 

$

240,597

 

$

321,778

 

Services

 

44,344

 

 

51,114

 

 

137,825

 

 

154,145

 

 

127,892

 

 

157,460

 

 

378,422

 

 

475,923

 

 
Cost of sales
Products

 

47,339

 

 

44,341

 

 

126,556

 

 

135,605

 

Services

 

30,784

 

 

35,710

 

 

98,491

 

 

105,285

 

 

78,123

 

 

80,051

 

 

225,047

 

 

240,890

 

 
Gross profit

 

49,769

 

 

77,409

 

 

153,375

 

 

235,033

 

 
Operating expenses
Research and development, net

 

19,562

 

 

23,620

 

 

65,059

 

 

70,234

 

Selling, general and administrative

 

48,343

 

 

59,741

 

 

155,630

 

 

173,217

 

Goodwill impairment

 

386,154

 

 

–

 

 

386,154

 

 

–

 

 

454,059

 

 

83,361

 

 

606,843

 

 

243,451

 

 
Operating loss

 

(404,290

)

 

(5,952

)

 

(453,468

)

 

(8,418

)

 
Financial income (expense), net

 

(167

)

 

289

 

 

(847

)

 

2,796

 

 
Loss before income taxes

 

(404,457

)

 

(5,663

)

 

(454,315

)

 

(5,622

)

 
Income tax expenses (benefit)

 

(343

)

 

586

 

 

(2,250

)

 

3,084

 

 
Share in profits (losses) of associated companies

 

(952

)

 

(733

)

 

(2,740

)

 

495

 

 
Net Loss

 

(405,066

)

 

(6,982

)

 

(454,805

)

 

(8,211

)

 
Net loss attributable to non-controlling interests

 

(4

)

 

(41

)

 

(54

)

 

(152

)

 
Net loss attributable to Stratasys Ltd.

$

(405,062

)

$

(6,941

)

$

(454,751

)

$

(8,059

)

 
Net loss per ordinary share attributable to Stratasys Ltd.
Basic

$

(7.35

)

$

(0.13

)

$

(8.29

)

$

(0.15

)

Diluted

$

(7.35

)

$

(0.13

)

$

(8.29

)

$

(0.15

)

 
 
Basic

 

55,086

 

 

54,394

 

 

54,851

 

 

54,201

 

Diluted

 

55,086

 

 

54,394

 

 

54,851

 

 

54,201

 

 
     
   

Three Months Ended September 30,
   

2020

 

Non-GAAP

 

2020

 

2019

 

Non-GAAP

 

2019
   

GAAP

 

Adjustments

 

Non-GAAP

 

GAAP

 

Adjustments

 

Non-GAAP
   

U.S. dollars and shares in thousands (except per share amounts)
     
  Gross profit (1)  

$

49,769

 

$

10,036

 

$

59,805

 

$

77,409

 

$

5,087

 

$

82,496

  Operating income (loss) (1,2)  

 

(404,290

)

 

403,268

 

 

(1,022

)

 

(5,952

)

 

14,055

 

 

8,103

  Net income (loss) attributable to Stratasys Ltd. (1,2,3)  

 

(405,062

)

 

402,050

 

 

(3,012

)

 

(6,941

)

 

13,275

 

 

6,334

  Net income (loss) per diluted share attributable to Stratasys Ltd. (4)  

$

(7.35

)

$

7.30

 

$

(0.05

)

$

(0.13

)

$

0.25

 

$

0.12

     
     

(1)

  Acquired intangible assets amortization expense  

 

4,065

 

 

3,916

 

  Non-cash stock-based compensation expense  

 

524

 

 

475

 

  Restructuring and other related costs  

 

191

 

 

696

 

  Impairment charges of intangible assets  

 

5,256

 

 

–

 

   

 

10,036

 

 

5,087

 

     

(2)

  Acquired intangible assets amortization expense  

 

2,162

 

 

2,016

 

  Non-cash stock-based compensation expense  

 

4,352

 

 

4,960

 

  Goodwill impairment  

 

386,154

 

 

–

 

  Restructuring and other related costs  

 

34

 

 

1,992

 

  Other expenses  

 

530

 

 

–

 

   

 

393,232

 

 

8,968

 

   

 

403,268

 

 

14,055

 

     

(3)

  Corresponding tax effect  

 

(1,296

)

 

(780

)

  Equity method related amortization, divestments and impairments  

 

78

 

 

–

 

   

$

402,050

 

$

13,275

 

(4)

  Weighted average number of ordinary shares outstanding- Diluted  

 

55,086

 

 

55,086

 

 

54,394

 

 

54,940

     
   

Nine Months Ended September 30,
   

2020

 

Non-GAAP

 

2020

 

2019

 

Non-GAAP

 

2019
   

GAAP

 

Adjustments

 

Non-GAAP

 

GAAP

 

Adjustments

 

Non-GAAP
   

U.S. dollars and shares in thousands (except per share amounts)
     
  Gross profit (1)  

$

153,375

 

$

24,062

 

$

177,437

 

$

235,033

 

$

13,780

 

$

248,813

  Operating income (loss) (1,2)  

 

(453,468

)

 

435,987

 

 

(17,481

)

 

(8,418

)

 

32,376

 

 

23,958

  Net income (loss) attributable to Stratasys Ltd. (1,2,3)  

 

(454,751

)

 

433,821

 

 

(20,930

)

 

(8,059

)

 

28,574

 

 

20,515

  Net income (loss) per diluted share attributable to Stratasys Ltd. (4)  

$

(8.29

)

$

7.91

 

$

(0.38

)

$

(0.15

)

$

0.53

 

$

0.38

     
     

(1)

  Acquired intangible assets amortization expense  

 

12,196

 

 

11,714

 

  Non-cash stock-based compensation expense  

 

1,424

 

 

1,370

 

  Restructuring and other related costs  

 

5,187

 

 

696

 

  Impairment charges of intangible assets  

 

5,256

 

 

–

 

   

 

24,062

 

 

13,780

 

     

(2)

  Acquired intangible assets amortization expense  

 

6,430

 

 

5,688

 

  Non-cash stock-based compensation expense  

 

14,470

 

 

14,387

 

  Goodwill impairment  

 

386,154

 

 

–

 

  Restructuring and other related costs  

 

3,863

 

 

(1,479

)

  Other expenses  

 

1,007

 

 

–

 

   

 

411,925

 

 

18,596

 

   

 

435,987

 

 

32,376

 

     

(3)

  Corresponding tax effect  

 

(2,396

)

 

(2,198

)

  Equity method related amortization, divestments and impairments  

 

230

 

 

(1,604

)

   

$

433,821

 

$

28,574

 

     

(4)

  Weighted average number of ordinary shares outstanding- Diluted  

 

54,851

 

 

54,851

 

 

54,201

 

 

54,705

 

Stratasys Investor Relations

Yonah Lloyd

Vice President – Investor Relations

[email protected]

KEYWORDS: United States North America Israel Middle East Minnesota

INDUSTRY KEYWORDS: Automotive Manufacturing Aerospace Technology Manufacturing Other Technology Other Manufacturing Software Packaging Engineering Hardware Chemicals/Plastics

MEDIA:

Posted on

Vecima Reports Q1 Fiscal 2021 Results

Vecima Reports Q1 Fiscal 2021 Results

  • Revenue – $27.8M, Gross Margin – 47%, Cash Balance – $27.3M
  • Grew Q1 Adjusted EBITDA 24% year-over-year to $2.2M
  • Achieved record Q1 Entra sales of $5.2M, increasing $4.9M year-over-year and $3.1M (147%) sequentially
  • Completed acquisition of Nokia’s cable access portfolio of DAA and EPON/DPoE solutions, creating industry’s most comprehensive next generation access ecosystem and significantly accelerating Vecima’s 10G technology timeline

VICTORIA, British Columbia–(BUSINESS WIRE)–
Vecima Networks Inc. (TSX:VCM) today reported financial results for the three months ended September 30, 2020.

FINANCIAL HIGHLIGHTS

(Canadian dollars in millions except percentages, employees, and per share data)

Q1FY21

Q4FY20

 

Q1FY20

Revenue

$27.8

$26.1

 

$20.1

Gross Margin

47%

49%

 

52%

Net Loss

$(0.8)

$(1.0)

 

$(1.4)

Loss Per Share1

$(0.04)

$(0.05)

 

$(0.06)

Adjusted Loss Per Share1, 2, 3

$(0.04)

$(0.06)

 

$(0.06)

Adjusted EBITDA2

$2.2

$3.8

 

$1.8

Cash and Short-term Investments

$27.3

$34.5

 

$41.3

Employees4

456

377

 

366

1Based on weighted average number of shares outstanding.

2Adjusted Earnings/(Loss) Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See “Adjusted EBITDA and Adjusted Earnings/(Loss) Per Share” below.

3Starting in Q4 fiscal 2019, we have changed our definition and calculation of Adjusted Earnings Per Share. For a reconciliation of Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2021.

4Includes employees and contractors from recently acquired business

“In a year in which we anticipate significant growth, we set the stage by increasing first quarter revenue by 38% to $27.8 million, our best quarterly result in over four years,” said Sumit Kumar, Vecima’s President and CEO. “Our strong topline results were accompanied by gross profit of $13.0 million and adjusted EBITDA of $2.2 million, which were both up 24% as compared to Q1 fiscal 2020.”

“In the Video and Broadband Solutions segment, sales of $13.5 million increased by a very significant 81% year-over-year. This was led by strong sales growth for our new Entra products as the distributed access architecture market kicked off. I am delighted to report that Entra revenues rose sharply to $5.2 million during the quarter, coming close to matching in just three months what we achieved in all of fiscal 2020. The Entra growth was driven by production deployments of our industry-leading Entra Remote PHY Node to our lead Tier 1 customer, as well as initial deployment-related Remote PHY Node purchases made by multiple additional operators. Sales of the Entra Interactive Video Controller (IVC) product also grew significantly, and our newly acquired DAA portfolio, which includes Remote MAC-PHY and EPON/DPoE technologies, contributed approximately $1 million to first quarter Entra sales. Video and Broadband Solutions sales were further bolstered by a significant year-over-year increase in TerraceQAM commercial video sales during the period.”

“In our Content Delivery and Storage segment, we achieved solid revenue of $13.0 million in what is traditionally the seasonally slowest quarter for this segment,” added Mr. Kumar. “CDS sales were up 15% year-over-year as we consolidated the major new business wins of fiscal 2020. We also added two new customer wins during the quarter, securing an additional two IPTV conversions. Our MediaScaleX solutions are now in use by over 100 cable companies, telcos and broadcasters worldwide, translating into a vast base for the future given that most of these customers are just starting their migration to IPTV and scale subscriber uptake remains ahead of Vecima and our customers.”

BUSINESS HIGHLIGHTS

Video and Broadband Solutions (VBS)

  • The VBS segment delivered exceptional growth as anticipated with first quarter revenue growing 81% year-over-year and 29% quarter-over-quarter as customers began the transition to next generation networks using platforms across Vecima’s portfolio.

Entra Family

  • Deployments of next generation Entra DAA products, tied to the earliest stages of the DAA market, contributed sales of $5.2 million, increasing $4.9 million year-over-year and $3.1 million (147%) sequentially. In the first quarter of fiscal 2021 alone, Vecima achieved 98% of the Entra sales we realized in the full fiscal 2020 period.
  • Production deployments of the industry-leading, multi-core interoperable Entra Remote PHY Node increased at the lead Tier 1 customer and deployment-related purchases were initiated at multiple additional MSOs in the first quarter. Combined with the Entra Remote MAC-PHY Node and 10G EPON solutions, Entra DAA platforms have now been sold to over a dozen operators in five continents.
  • Vecima’s global engagements for the broader Entra portfolio have widened to include 46 MSOs, including operators in the US, Canada, CALA, EMEA, and APAC. This includes over 40 operators that are either in lab trial, field trial, or live deployment phases across the globe.
  • On August 7, 2020, Vecima significantly expanded and accelerated its Entra offering with the acquisition of Nokia’s cable access business. The acquired portfolio includes market-deployed Remote MAC-PHY, access controller and 10G EPON products, and has positioned Vecima as the industry’s leading provider of DAA technologies. Today, Vecima’s Entra offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally. In addition to a powerful suite of platforms and technology, the transaction brought Vecima new facilities in the US and China, and a talented team of over 80 employees that have joined the Company.
  • Subsequent to quarter-end, Vecima was awarded the prestigious Chairman’s Advanced Technology Award in the Network Hardware category at the 2020 SCTE-ISBE Cable-Tec Expo. The awards were presented to an elite group of technology partners who are helping the cable industry bring the 10G platform to life by paving the way for cable to deliver residential internet speeds up to 10X faster than today’s network. The SCTE-ISBE chose to honour recipient companies that are laying the foundation for a host of applications that will change the ways we interact with one another and the world around us.
  • On October 14, 2020, Vecima was honored with a BTR Diamond Technology Review Award for the Entra EN 2112 Access Node, one of the most compact and feature-rich nodes available today.

Commercial Video (Terrace) Family

  • TerraceQAM sales grew to $4.2 million, up 120% from $1.9 million in Q1 fiscal 2020 and 25% from $3.3 million in Q4 fiscal 2020. The lead Tier 1 MSO continued to widen its extensive hospitality service platform, while preparing for migration to the next generation Terrace IQ system.
  • Terrace family sales of $3.5 million provided ongoing contribution as Tier 1 customers neared full coverage leading up to the migration to next generation platforms.
  • Subsequent to the quarter-end, Vecima was honored with a BTR Diamond Technology Review Award for the Terrace IQ Commercial Video Gateway. Terrace IQ enables seamless migration to next generation IP video delivery technologies with minimal hardware investments when migrating away from traditional architectures.

Content Delivery and Storage (CDS)

  • CDS segment sales increased to $13.0 million in Q1, a 15% increase from Q1 fiscal 2020.
  • Vecima won two new customers for its MediaScaleX IPTV solutions, securing an additional two IPTV conversions during the quarter.
  • The migration to IPTV technologies, including IP Linear broadcast , “over the top”, Video on Demand, start-over/catch-up TV, & cloud DVR, continued in full force across Vecima’s global customer base, driving increased capacity and network utilization. Record-high IPTV streaming levels were delivered by MediaScaleX networks across nearly all customers.
  • Vecima provided the IP streaming solution for a Tier 2 operator’s 8K Ultra HD resolution delivery, a first-of-its-kind service in North America.
  • Major feature enhancements were rolled out across the customer base in the first quarter including advances in DRM, Dynamic Ad Insertion, resiliency to external network issues, and virtualization.

Telematics

  • The Telematics segment increased engagement with municipal government customers, with two expansions totaling over 300 subscribers.
  • Vecima continued to penetrate the moveable assets market, securing four new customers and approximately 100 additional subscribers in the restoration industry, where vehicles are monitored using GPS beacons and valuable moveable assets are monitored through Bluetooth Low Energy (BLE) tags.

“We believe the momentum achieved in the first quarter is just the start of what’s in store for fiscal 2021,” added Mr. Kumar. “We anticipate continued ramp in Entra DAA sales, particularly in the second half as our lead customers transition to scale deployment and a broader set of MSOs initiate field deployments of DAA to respond to network capacity pressures being seen globally. Our newly acquired Remote MAC-PHY and EPON/DPoE solutions are already performing well and the build-up of overall market activity we see with the combined portfolio is very exciting and fully in line with our expectations after having created the industry’s best access network product lineup. We will continue to leverage the strong opportunities provided by these leading products in the once-in-a-lifetime network upgrade they cover. In our Content Delivery and Storage segment, we continue to anticipate measured sales growth in FY2021 as we consolidate the record-setting customer wins of last year and IPTV usage continues to increase rapidly in households globally.”

“As we move forward, we remain highly confident in our view that fiscal 2021 will be a breakthrough year for Vecima. The move to DAA and IPTV is underway and we are ideally positioned with an unmatched portfolio of industry-leading, next generation solutions and platforms,” said Mr. Kumar.

As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on December 21, 2020 to shareholders of record as at November 27, 2020.

CONFERENCE CALL

A conference call and live audio webcast will be held today, November 12, 2020 at 1 p.m. ET to discuss the Company’s first quarter results. Vecima’s unaudited condensed interim consolidated financial statements and management’s discussion and analysis for the three months ended September 30, 2020 are available under the Company’s profile at www.SEDAR.com, and at www.vecima.com/financials/.

To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at http://services.choruscall.ca/links/vecima20201112.htmland will bearchived on the Vecima website athttps://vecima.com/investor-relations/earnings-call-archive/.

About Vecima Networks

Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world’s leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high‑capacity broadband network access, and streamline data analytics. For more information, please visit our website at www.vecima.com.

Adjusted EBITDA and Adjusted Earnings / (Loss) Per Share

Adjusted EBITDA and Adjusted Earnings / (Loss) Per Share do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Accordingly, investors are cautioned that Adjusted EBITDA or Adjusted Earnings / (Loss) Per Share should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company’s financial performance or as a measure of its liquidity and cash flows. For a reconciliation of Adjusted EBITDA or Adjusted Earnings / (Loss) Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2021.

Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words “believes”, “may”, “plans”, “will”, “anticipates”, “intends”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such expressions. Forward-looking information in this news release includes the following statements: We set the stage for a year where we plan significant growth; our MediaScaleX solutions are now in use by over 100 cable companies, telcos and broadcasters worldwide, translating into a vast base for the future given that most of these customers are just starting their migration to IPTV and scale subscriber uptake remains ahead of Vecima and our customers; the VBS segment delivered exceptional growth as anticipated; the acquired portfolio has positioned Vecima as the industry’s leading provider of DAA technologies; Vecima’s Entra offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally; we believe the momentum achieved in the first quarter is just the start of what’s in store for fiscal 2021; we anticipate continued ramp in Entra DAA sales, particularly in the second half as our lead customers transition to scale deployment and a broader set of MSOs initiate field deployments of DAA to respond to network capacity pressures being seen globally; our newly acquired Remote MAC-PHY and EPON/DPoE solutions are already performing well and the build-up of overall market activity we see with the combined portfolio is very exciting and fully in line with our expectations after having created the industry’s best access network product lineup; we will continue to leverage the strong opportunities provided by these leading products in the once-in-a-lifetime network upgrade they cover; in our Content Delivery and Storage segment, we continue to anticipate measured sales growth in FY2021 as we consolidate the record-setting customer wins of last year and IPTV usage continues to increase rapidly in households globally; as we move forward, we remain highly confident in our view that fiscal 2021 will be a breakthrough year for Vecima; the move to DAA and IPTV is underway and we are ideally positioned with an unmatched portfolio of industry-leading, next generation solutions and platforms.

A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading “Risk Factors” in the Company’s Annual Information Form dated September 24, 2020, as well as the Company’s continuous disclosure filings with Canadian securities regulatory authorities available at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

 

VECIMA NETWORKS INC.

Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

As at

 

 

September 30, 2020

  

 

June 30, 2020

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

10,432

  

$

17,350

Short-term investments

 

 

 

16,910

  

 

17,165

Accounts receivable

 

 

 

23,058

  

 

24,908

Income tax receivable

 

 

 

362

  

 

333

Inventories

 

 

 

21,337

  

 

17,212

Prepaid expenses

 

 

 

1,707

  

 

2,051

Contract assets

 

 

 

704

  

 

646

Total current assets

 

 

 

74,510

  

 

79,665

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

14,539

  

 

11,801

Right-of-use assets

 

 

 

3,620

  

 

4,010

Goodwill

 

 

 

15,594

  

 

15,487

Intangible assets

 

 

 

70,189

  

 

69,200

Other long-term assets

 

 

 

1,246

  

 

1,301

Investment tax credits

 

 

 

24,732

  

 

24,374

Deferred tax assets

 

 

 

4,870

  

 

4,460

Total assets

 

 

$

209,300

  

$

210,298

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

$

17,391

  

$

17,105

Provisions

 

 

 

1,285

  

 

492

Income tax payable

 

 

 

3

  

 

130

Deferred revenue

 

 

 

4,776

  

 

4,960

Other current liabilities

 

 

 

1,245

  

 

–

Current portion of long-term debt

 

 

 

1,752

  

 

1,698

Total current liabilities

 

 

 

26,452

  

 

24,385

Non-current liabilities

 

 

 

 

 

 

 

Provisions

 

 

 

412

  

 

400

Deferred revenue

 

 

 

698

  

 

602

Deferred tax liability

 

 

 

7

  

 

536

Long-term debt

 

 

 

4,132

  

 

4,613

Total liabilities

 

 

 

31,701

  

 

30,536

Shareholders’ equity

 

 

 

 

 

 

 

Share capital

 

 

 

3,556

  

 

3,161

Reserves

 

 

 

3,975

  

 

3,838

Retained earnings

 

 

 

168,582

  

 

170,665

Accumulated other comprehensive income

 

 

 

1,486

  

 

2,098

Total shareholders’ equity

 

 

 

177,599

  

 

179,762

Total liabilities and shareholders’ equity

 

 

$

209,300

  

$

210,298

 

 

 

 

 

 

 

 

VECIMA NETWORKS INC.

Consolidated Statements of Comprehensive Loss

(in thousands of Canadian dollars, except per share amounts)

 

 

Three months ended September 30,

 

 

 

 

 

 

 

2020

  

 

2019

Sales

 

 

 

 

 

$

27,844

  

$

20,112

Cost of Sales

 

 

 

 

 

 

14,836

  

 

9,638

Gross Profit

 

 

 

 

 

 

13,008

  

 

10,474

Operating expenses

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

 

 

 

6,343

  

 

5,068

Sales and marketing

 

 

 

 

 

 

3,209

  

 

3,746

General and administrative

 

 

 

 

 

 

4,791

  

 

3,981

Share-based compensation

 

 

 

 

 

 

239

  

 

17

Other (income) expense

 

 

 

 

 

 

(3)

  

 

(10)

Total operating expenses

 

 

 

 

 

 

14,579

  

 

12,802

Operating loss

 

 

 

 

 

 

(1,571)

  

 

(2,328)

Finance income

 

 

 

 

 

 

161

  

 

208

Foreign exchange (loss) gain

 

 

 

 

 

 

(225)

  

 

298

Loss before income taxes

 

 

 

 

 

 

(1,635)

  

 

(1,822)

Income tax recovery

 

 

 

 

 

 

(797)

  

 

(438)

Net loss

 

 

 

 

 

$

(838)

  

$

(1,384)

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

Item that may be subsequently reclassed to net income

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

 

(612)

  

 

223

Comprehensive loss

 

 

 

 

 

$

(1,450)

  

$

(1,161)

Net loss per share

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

$

(0.04)

  

$

(0.06)

Diluted

 

 

 

 

 

$

(0.04)

  

$

(0.06)

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

Shares outstanding – basic

 

 

 

22,482,015

  

22,370,087

Shares outstanding – diluted

 

 

 

 

22,482,015

  

22,370,087

 

VECIMA NETWORKS INC.

Consolidated Statements of Change in Equity

(in thousands of Canadian dollars)

 

 

 

Share

capital

  

 

Reserves

  

 

Retained

earnings

  

 

Accumulated

other

comprehensive

income

  

 

Total

 

Balance as at June 30, 2019

 

$

1,916

 

$

4,104

 

$

173,898

 

$

1,010

 

$

180,928

Net loss

 

 

–

 

 

–

 

 

(1,384)

 

 

–

 

 

(1,384)

Other comprehensive income

 

 

–

 

 

–

 

 

–

 

 

223

 

 

223

Dividends

 

 

–

 

 

–

 

 

(1,231)

 

 

–

 

 

(1,231)

Share-based payment expense

 

 

–

 

 

17

 

 

–

 

 

–

 

 

17

Balance as at September 30, 2019

 

$

1,916

 

$

4,121

 

$

171,283

 

$

1,233

 

$

178,553

Balance as at June 30, 2020

  

$

3,161

  

$

3,838

  

$

170,665

  

$

2,098

  

$

179,762

Net loss

 

 

–

 

 

–

 

 

(838)

 

 

–

 

 

(838)

Other comprehensive loss

 

 

–

 

 

–

 

 

–

 

 

(612)

 

 

(612)

Dividends

 

 

–

 

 

–

 

 

(1,245)

 

 

–

 

 

(1,245)

Shares issued by exercising options

 

 

395

 

 

(102)

 

 

–

 

 

–

 

 

293

Share-based payment expense

 

 

–

 

 

239

 

 

–

 

 

–

 

 

239

Balance as at September 30, 2020

  

$

3,556

  

$

3,975

  

$

168,582

  

$

1,486

  

$

177,599
           

VECIMA NETWORKS INC.

Consolidated Statements of Cash Flows

(in thousands of Canadian dollars)

 

Three months ended September 30,

 

 

 

 

 

 

2020

  

 

2019

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

$

(838)

  

$

(1,384)

Adjustments for non-cash items:

 

 

 

 

 

 

 

 

 

Loss on sale of property, plant and equipment

 

 

 

 

 

2

  

 

14

Depreciation and amortization

 

 

 

 

 

3,542

  

 

3,496

Share-based compensation

 

 

 

 

 

239

  

 

17

Income tax (recovery) expense

 

 

 

 

 

(577)

  

 

526

Deferred income tax recovery

 

 

 

 

 

(220)

  

 

(964)

Interest expense

 

 

 

 

 

59

  

 

80

Interest income

 

 

 

 

 

(88)

  

 

(222)

Net change in working capital

 

 

 

 

 

1,348

  

 

(1,193)

Decrease in other long-term assets

 

 

 

 

 

43

  

 

6

Increase in provisions

 

 

 

 

 

11

  

 

–

Increase in investment tax credits

 

 

 

 

 

(41)

  

 

(38)

Income tax paid

 

 

 

 

 

(125)

  

 

(22)

Interest received

 

 

 

 

 

88

  

 

222

Interest paid

 

 

 

 

 

(10)

  

 

(80)

Cash provided by operating activities

 

 

 

 

 

3,433

  

 

458

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Capital expenditures, net

 

 

 

 

 

(449)

  

 

(444)

Purchase of short-term investments

 

 

 

 

 

(84)

  

 

(200)

Proceeds from sale of short-term investments

 

 

 

 

 

339

  

 

1,400

Deferred development costs

 

 

 

 

 

(3,448)

  

 

(2,650)

Business acquisition

 

 

 

 

 

(6,401)

  

 

–

Cash used in investing activities

 

 

 

 

 

(10,043)

  

 

(1,894)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Proceeds from government grants

 

 

 

 

 

–

  

 

31

Principal payments of lease liabilities

 

 

 

 

 

(375)

  

 

(332)

Repayment of long-term debt

 

 

 

 

 

(63)

  

 

(83)

Issuance of shares through exercised options

 

 

 

 

 

293

  

 

–

Cash used in financing activities

 

 

 

 

 

(145)

  

 

(384)

Net decrease in cash and cash equivalents

 

 

 

 

 

(6,755)

  

 

(1,820)

Effect of change in exchange rates on cash

 

 

 

 

 

(163)

  

 

(51)

Cash and cash equivalents, beginning of period

 

 

 

 

 

17,350

  

 

19,834

Cash and cash equivalents, end of period

 

 

 

 

$

10,432

  

$

17,963

 

Vecima Networks

Investor Relations – 250-881-1982

[email protected]

KEYWORDS: North America Canada

INDUSTRY KEYWORDS: Telecommunications Software Audio/Video Hardware TV and Radio Technology VoIP Entertainment

MEDIA:

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Posted on

Radware Reports Results of 2020 Annual General Meeting

TEL AVIV, Israel, Nov. 12, 2020 (GLOBE NEWSWIRE) — Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced the results of its Annual General Meeting of Shareholders held November 10, 2020. The Company presented six proposals for the shareholders to vote on at the meeting. All six proposals voted on at the Annual General Meeting were adopted by the requisite shareholder vote.

About Radware


Radware
® (NASDAQ: RDWR), is a global leader of cyber security and application delivery solutions for physical, cloud, and software defined data centers. Its award-winning solutions portfolio secures the digital experience by providing infrastructure, application, and corporate IT protection and availability services to enterprises globally. Radware’s solutions empower enterprise and carrier customers worldwide to adapt to market challenges quickly, maintain business continuity and achieve maximum productivity while keeping costs down. For more information, please visit www.radware.com.

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.

Media Contacts:

Deborah Szajngarten
Radware
201-785-3206
[email protected]

Investor Relations:

Anat Earon-Heilborn
+972 723917548
[email protected]

Posted on

COVID-19 has led to an increased awareness of Financial Wellness

Equifax Survey finds that over 70 per cent of surveyed consumers have checked their credit report within the last year

TORONTO, Nov. 12, 2020 (GLOBE NEWSWIRE) — People are checking their credit reports and scores more frequently and are taking identity theft more seriously as compared to previous years, according to a recent consumer survey conducted by Equifax Canada.

COVID-19 has caused many people to take a closer look at their financial situation, which is resulting in an increased understanding about their relationship with credit. Within the last 12 months, 71 per cent of survey respondents have checked their credit report, including 57 per cent in the last month. Younger adults (under age 55) and Quebecers were significantly more likely to have checked their credit reports on a regular basis. This is a significant shift for consumers when considering 67 per cent of survey respondents ‘rarely or never checked their credit reports’ according to a similar survey conducted by Equifax in 2016.

“The pandemic has clearly impacted everyone so much that more people feel the need to assess their financial situation,” said Rebecca Oakes, Equifax Canada’s AVP of Advanced Analytics. “Checking your credit reports and obtaining credit scores is a good place to start. It’s actually encouraging to see a higher percentage of people checking their credit reports and scores now compared to a few years ago.”

Equifax Canada data indicates that payment deferrals have been utilized with over 3 million consumers taking a payment deferral since the pandemic started. Thus far, 14 per cent of open mortgages have had at least one month of payment deferral (approximately 900,000 deferred mortgages) and two per cent of open credit cards have had at least one month of payment deferral (approximately 1.2 million deferred credit cards). About half of deferred mortgages have had continued deferred payments for the past four months, while credit cards have had a shorter deferral duration of one or two months.

CREDIT SCORES ALSO CHECKED MORE FREQUENTLY

In addition to checking their credit reports, survey respondents indicated they are obtaining their credit scores more frequently. More than half (54 per cent) said they obtain their score at least annually, as compared to 48 per cent a year ago. Younger adults (those aged 18-34) are significantly more likely to check their credit scores monthly versus those over the age of 35 (37 per cent in 2020 vs. 27 per cent in 2019).

“COVID-19 has caused many Canadian households to develop a better understanding of their finances on the fly,” said Keith Emery, Co-CEO of Credit Canada. “Knowing what’s in your credit reports and how credit scores are calculated are important steps towards improved financial wellness. We always caution people to avoid anyone offering to ‘fix’ your credit score. The best road to a healthy credit score is making bill payments on time. It’s as simple as that.”

STEPS TO PREVENTING IDENTITY THEFT

Equifax data collected and analyzed from its consortium of lenders and industry partners also indicates that fraudsters and identity thieves are more active and looking to take advantage of the COVID-19 crisis. Since the pandemic began, the application fraud rate has increased by 43 per cent and the deposit account fraud rate rose by 53 per cent peaking in April and May respectively.

Fortunately, survey results indicate that Canadians continue to take the threat of fraud and identity theft seriously. When comparing survey results to four years ago the numbers are trending in the right direction. More people are taking precautionary steps to help protect against fraud and identity theft.

2020 Steps Taken by Consumers 2016
83% Review credit card statements on receipt for fraudulent activity 79%
65% Check my credit report 28%
59% Avoid using public Wi-Fi 47%
54% Update security passwords 43%

“Identity thieves and fraudsters are quick to take advantage of any crisis,” said Oakes. “COVID-19 has forced many people to work online from home, buy their groceries online, and in a lot of cases stay socially connected to friends and family online. Spending more time online safely requires making sure you are taking steps to help protect yourself. Checking your credit report regularly remains one of the best ways to recognize and help protect against fraud and identity theft.”

To learn more about fraud prevention and how credit works, consumers are encouraged to visit Equifax Canada’s education hub. The site offers insights on how different actions may affect their credit scores and provides resources to help improve their financial wellness.

*An online survey of 1,539 Canadians was completed between September 11-13, 2020, using Leger’s online panel. The margin of error for this study was +/-2.5%, 19 times out of 20.

About Equifax
At Equifax (NYSE: EFX), we believe knowledge drives progress. As a global data, analytics, and technology company, we play an essential role in the global economy by helping financial institutions, companies, employees, and government agencies make critical decisions with greater confidence. Our unique blend of differentiated data, analytics, and cloud technology drives insights to power decisions to move people forward. Headquartered in Atlanta and supported by more than 11,000 employees worldwide, Equifax operates or has investments in 25 countries in North America, Central and South America, Europe, and the Asia Pacific region. For more information, visit Equifax.ca.

About Credit Canada
Credit Canada is a not-for-profit credit counselling agency providing free and confidential debt and credit counselling, personal debt management, debt consolidation and resolutions, as well as preventative counselling, educational seminars, and free tips and tools in the areas of budgeting, money management, and financial goal-setting. Credit Canada is Canada’s first and longest-standing credit counselling agency and a leader in financial wellness, helping Canadians successfully manage their debt since 1966. Please visit www.creditcanada.com for more information and follow us on Facebook and Twitter.

Media Contact:

Andrew Findlater
SELECT Public Relations
[email protected]
(647) 444-1197

Posted on

Pandemic-driven demand for cloud may be stymied by migration challenges

iland research reveals hidden pitfalls of hyperscale cloud and low confidence in key features of cloud services, while a lack of resources is holding back cloud migration projects for 83%

HOUSTON, Nov. 12, 2020 (GLOBE NEWSWIRE) — iland, a leading VMware-based cloud services provider for application hosting, data protection and disaster recovery, today released the findings of its research into customer confidence in cloud services. It found that despite the increase in cloud adoption due to the pandemic, three quarters of organisations surveyed say hyperscaler IaaS instance types may not meet their cost and performance needs for mission-critical applications, while more than one in five are not satisfied with key features of cloud provision such as security, performance, availability and support.

The research also found that a lack of migration resources is delaying or preventing cloud projects for more than 80% of organisations surveyed.

The research: The Hidden Pitfalls of Working with Hyperscale Clouds was conducted among 501 senior IT executives, including CIOs, CISOs and CTOs, in the UK and US by independent research organisation, Opinion Matters, in June 2020. Participants were asked for their views on security, performance, compliance and their overall level of confidence in the cloud services they have invested in.

Key research findings include:

  • 83% say lack of migration resources and/or time has delayed cloud migration. Among those, 12% say it has entirely prevented migration.
  • 75% say a T Shirt size or hyperscaler instance type does not meet all their performance and cost requirements.
  • 24% are not confident that hyperscale clouds can meet performance and availability requirements for specific applications.
  • 23% are not confident that production data is protected via backup or disaster recovery in the event of data loss with their cloud service provider.
  • 24% are not confident they can get the support they need from their cloud service provider.
  • 53% say security is the top factor in cloud supplier selection.
  • 76% agree CSPs should assist or actively manage customer data compliance.

Commenting on the research findings, Researcher Charles Moore said: “While cloud adoption has seen a significant uptick due to the pandemic, the lack of migration resources for many customers has delayed or prevented deployment. Customers need to choose a cloud vendor that can fill the internal resource gaps that can hinder success.”

Justin Giardina, iland Chief Technology Officer, added: “The business benefits of moving to the cloud are indisputable, but with 83% of those surveyed saying that migration resources are necessary to achieve those benefits it’s clear that customers need to look beyond just the cloud platform and ensure their vendor can offer the supporting services that can reduce risk and improve time to value.”

“Hyperscale cloud services are missing the mark for a significant proportion of the organisations surveyed,” continues Giardina. “Having trust in critical cloud features is fundamental to realising its benefits, so with more than one in five respondents lacking confidence in aspects such as performance, availability, backup and support points to the hidden pitfalls of hyperscale clouds.”

Security, management, visibility, and control are priority customer requirements for cloud solutions

The study also found that key requirements for cloud service provision include common or unified management across all services; this is a priority for 73% of those adopting multi-cloud solutions. Similarly, infrastructure visibility and control are must-have features for 71% of respondents. Many were looking to the future, with 89% saying it was important or critical that they can write to their CSP’s API for future software development and deployment.

Security is a primary criterion for cloud provider selection, with 53% saying it is the leading consideration and a further 43% saying it is a major factor. Three quarters of customers also want to see cloud service providers helping manage data compliance.

The survey found that the majority (74%) of respondents felt it was important that CSPs preserve their company’s existing networking environment when they move to the cloud. This reflects the current landscape, where many organisations are being forced to accelerate their cloud adoption programmes due to the pressures of supporting large-scale remote working. Giardina notes: “When organisations are being rapidly pushed out of their comfort zones and forced to shrink deployment schedules to the absolute minimum, being able to maintain the familiar networking environment in the cloud is an advantage that is appealing to under-pressure IT departments.”

Read the full iland research report here.

About iland

iland is a global cloud service provider of secure and compliant hosting for infrastructure (IaaS), disaster recovery (DRaaS), and backup as a service (BaaS). They are recognized by industry analysts as a leader in disaster recovery. The award-winning iland Secure Cloud Console natively combines deep layered security, predictive analytics, and compliance to deliver unmatched visibility and ease of management for all of iland’s cloud services. Headquartered in Houston, Texas and London, UK, iland delivers cloud services from its data centers throughout North America, Europe, Australia, and Asia. Learn more at www.iland.com.

James Costanzo
iland
6315535860
[email protected]