Market Newsdesk

November 19, 2020 4:18 pm

McKesson Appoints Dr. Kelvin A. Baggett to Chief Impact Officer

McKesson Appoints Dr. Kelvin A. Baggett to Chief Impact Officer

IRVING, Texas–(BUSINESS WIRE)–
McKesson Corporation (NYSE:MCK) today announced that the company has appointed Dr. Kelvin A. Baggett to the newly created role of chief impact officer, effective November 30, 2020.

“We are delighted to welcome Kelvin to our executive leadership team,” said Brian Tyler, CEO, McKesson Corporation. “He has been recognized nationally for his leadership work to address many of the key healthcare challenges and related societal causes that are of critical importance for McKesson. His deeply informed perspective on inclusion, diversity, equity, sustainability and social impact will help us deliver on our company goals and help drive meaningful change for our employees, our customers, our investors and our communities.”

As chief impact officer, Dr. Baggett will have global responsibility for McKesson’s strategy and execution related to Diversity, Equity and Inclusion (DEI), sustainability and Environmental, Social, and Governance (ESG) strategy, community relations, social impact and philanthropy through the McKesson Foundation.

Dr. Baggett currently serves as managing director at Posterity Capital Group and as senior advisor at Pharos Capital Group, where he is responsible for advising the firms’ investment strategies, fundraising efforts and due diligence matters. Most recently, he served as the chief operating officer for Health Care Navigator (HCN), where he was responsible for improving the performance of privately held, domestic, multistate operating companies, including skilled nursing facilities, long term care facilities, hospice and palliative care, residential care, physical therapy, speech therapy, occupational therapy and rehabilitation. Previously, Dr. Baggett served as senior vice president, chief clinical officer and chief medical officer at Tenet Healthcare, where he transformed a process-oriented culture into an inclusive, outcomes-focused one — setting clear expectations, leveraging the best talent, and improving the quality, safety and effectiveness of care. Dr. Baggett also served as chief operating officer and vice president, Clinical Strategies at HCA, where he led a team that implemented strategies to improve care delivery and outcomes. Dr. Baggett holds a BS from the University of North Carolina, an MD from East Carolina University, a Master in Public Health from Johns Hopkins University, and an MBA from Duke University.

About McKesson Corporation

McKesson Corporation is a global leader in healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information solutions. McKesson partners with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare to help provide the right medicines, medical products and healthcare services to the right patients at the right time, safely and cost-effectively. United by our ICARE shared principles, our employees work every day to innovate and deliver opportunities that make our customers and partners more successful — all for the better health of patients. McKesson has been named a “Most Admired Company” in the healthcare wholesaler category by FORTUNE, a “Best Place to Work” by the Human Rights Campaign Foundation, and a top military-friendly company by Military Friendly. For more information, visit www.mckesson.com.

Contacts:

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119006148/en/

Holly Weiss, 972-969-9174 (Investors)

[email protected]

David Matthews, 214-952-0833 (Media)

[email protected]

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: General Health Pharmaceutical Health Medical Supplies

MEDIA:

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November 19, 2020 4:18 pm

LCI Industries Declares Quarterly Cash Dividend

LCI Industries Declares Quarterly Cash Dividend

ELKHART, Ind.–(BUSINESS WIRE)–
LCI Industries (NYSE: LCII), which, through its wholly-owned subsidiary, Lippert Components, Inc. (“LCI”), supplies, domestically and internationally, a broad array of highly engineered components for the leading original equipment manufacturers (“OEMs”) in the recreation and transportation product markets, and the related aftermarkets of those industries, today announced that its Board of Directors approved a regular quarterly cash dividend of $0.75 per share of common stock.

The dividend is payable on December 18, 2020, to stockholders of record at the close of business on December 4, 2020.

About LCI Industries

From over 90 manufacturing and distribution facilities located throughout North America and Europe, LCI Industries, through its wholly-owned subsidiary, LCI, supplies, domestically and internationally, a broad array of highly engineered components for the leading OEMs in the recreation and transportation product markets, consisting primarily of recreational vehicles and adjacent industries, including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; boats; trains; manufactured homes; and modular housing. The Company also supplies engineered components to the related aftermarkets of these industries primarily by selling to retail dealers, wholesale distributors, and service centers. LCI’s products include steel chassis and related components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen, and other products; vinyl, aluminum, and frameless windows; manual, electric, and hydraulic stabilizer and leveling systems; entry, luggage, patio, and ramp doors; furniture and mattresses; electric and manual entry steps; awnings and awning accessories; towing products; truck accessories; electronic components; and other accessories. Additional information about LCI and its products can be found at www.lci1.com.

Forward-Looking Statements

This press release contains certain “forward-looking statements” with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management, markets for the Company’s common stock, the impact of legal proceedings, and other matters. Statements in this press release that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

Forward-looking statements, including, without limitation, those relating to our future business prospects, net sales, expenses and income (loss), capital expenditures, tax rate, cash flow, financial condition, liquidity, consumer demand, integration of acquisitions, R&D investments, and resumption or suspension of normal operations, whenever they occur in this press release are necessarily estimates reflecting the best judgment of the Company’s senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, in addition to other matters described in this press release, the impacts of COVID-19, or other future pandemics, on the global economy and on the Company’s customers, suppliers, employees, business and cash flows, pricing pressures due to domestic and foreign competition, costs and availability of, and tariffs on, raw materials (particularly steel and aluminum) and other components, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we sell our components, retention and concentration of significant customers, the costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of production facilities and labor, team member benefits, team member retention, realization and impact of expansion plans, efficiency improvements and cost reductions, the disruption of business resulting from natural disasters or other unforeseen events, the successful entry into new markets, the costs of compliance with environmental laws, laws of foreign jurisdictions in which we operate, other operational and financial risks related to conducting business internationally, and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, warranty and product liability claims or product recalls, interest rates, oil and gasoline prices and availability, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which we sell our components, and other risks and uncertainties discussed more fully under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and in the Company’s subsequent filings with the Securities and Exchange Commission. Readers of this press release are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119006134/en/

Brian M. Hall, CFO

(574) 535-1125

[email protected]

KEYWORDS: Indiana United States North America

INDUSTRY KEYWORDS: Automotive Manufacturing Other Transport Powerboating Trucking Manufacturing Rail Motor Sports Aftermarket Transport Automotive Other Construction & Property Residential Building & Real Estate Construction & Property Agriculture Sports Natural Resources Other Automotive General Automotive Recreational Vehicles

MEDIA:

November 19, 2020 4:18 pm

Helmerich & Payne, Inc. Announces Fiscal Fourth Quarter & Fiscal Year Results

Helmerich & Payne, Inc. Announces Fiscal Fourth Quarter & Fiscal Year Results

The Company ended the quarter with $577 million in cash and short-term investments and no amounts drawn on its $750 million revolving credit facility culminating in over $1.3 billion in liquidity

H&P expects its first quarter of fiscal 2021 North America Solutions rig count to exit at approximately 90 rigs up over 30% during the quarter

Reported a fiscal fourth quarter net loss of $(0.55) per diluted share; including select items⁽¹⁾ of $0.19 per diluted share

Quarterly North America Solutions operating gross margins⁽²⁾ decreased $63 million to $39 million sequentially, as revenues decreased by $105 million to $149 million and expenses decreased by $43 million to $110 million

H&P’s leadership position in automated directional drilling technology continues as AutoSlide^®commercial deployments accelerated despite a significantly declining rig market with some notable operators implementing this technology on 100% of their wells in multiple basins

On September 9, 2020, Directors of the Company declared a quarterly cash dividend of $0.25 per share payable on December 1, 2020 to stockholders of record at the close of business on November 13, 2020

TULSA, Okla.–(BUSINESS WIRE)–
Helmerich & Payne, Inc. (NYSE: HP) reported a net loss of $59 million, or $(0.55) per diluted share, from operating revenues of $208 million for the quarter ended September 30, 2020, compared to a net loss of $46 million, or $(0.43) per diluted share, on revenues of $317 million for the quarter ended June 30, 2020. The net losses per diluted share for the fourth and third quarters of fiscal year 2020 include $0.19 and $(0.09) of after-tax gains and losses, respectively, comprised of select items⁽¹⁾. For the fourth quarter of fiscal year 2020, select items⁽¹⁾ were comprised of:

$0.20 of after-tax gains pertaining to the sale of industrial real estate property
$(0.01) of after-tax losses pertaining to a non-cash fair market adjustment to our equity investment and restructuring charges

Net cash provided by operating activities was $93 million for the fourth quarter of fiscal year 2020 compared to $214 million for the third quarter of fiscal year 2020.

For fiscal year 2020, the Company reported a net loss of $494 million, or $(4.60) per diluted share, from operating revenues of $1.8 billion. The net loss per diluted share includes $(3.74) of after-tax losses comprised of select items⁽¹⁾, the most significant of which are non-cash losses of $563 million related to impairments of goodwill, less capable rigs, predominantly consisting of U.S. non-super-spec rigs, and excess related drilling equipment, and inventory and $16 million related to restructuring charges. Net cash provided by operating activities was $539 million in fiscal year 2020 compared to $856 million in fiscal year 2019.

President and CEO John Lindsay commented, “In terms of activity, this past fourth fiscal quarter was one of the most challenging in the Company’s history. Our strong financial position together with our long-term vision for the future of the business enabled us to focus on introducing new commercial models and expanding our drilling and digital technology solutions to customers. These efforts are making good progress in this difficult environment and will serve as the foundation from which the Company will build as the market begins to recover.

“Our embedded customer centric approach is one that focuses on providing customized solutions, employing a combination of people, rigs and automation technology to provide more value and lower risk. This approach is distinctive in the industry, resonating well across our customer base, and is a driver for the recent increased activity levels with further improvements on the horizon. We expect our contracted rigs to increase by one-third during the first fiscal quarter of 2021, exiting at approximately 90 rigs, almost doubling the number of rigs turning to the right compared to our fourth fiscal quarter trough rig count.

“Concurrent with the expected increase in near-term activity, we are also experiencing increased customer utilization of our performance-based contracts and rig automation software, AutoSlide, and we expect adoption to increase and become more prevalent in the industry. H&P’s ‘touch of a button’ autonomous drilling approach optimizes every major facet of the operation, from real-time automated geosteering, to rotary and sliding execution, to wellbore quality and placement. The uniqueness of our automated solutions is backed by a patented economic-driven approach where the software not only makes optimal cost/benefit decisions, but also directs the rig to execute those decisions without the need of an on-site directional driller, which improves reliability, enhances value and reduces risk for our customers.

“While we are encouraged by these developments, we are also cognizant that there remains a substantial amount of uncertainty in the market and that it may take several quarters to realize what the ‘new normal’ activity environment will look like given the uncertain timeline and lasting impacts of the COVID-19 pandemic.”

Senior Vice President and CFO Mark Smith also commented, “The Company’s financial strength continues to be a bright spot in this very challenging environment. Our strong capital stewardship continues looking out into fiscal 2021 as well with our anticipated capex spend to range between $85 and $105 million.

“Additionally during the fourth fiscal quarter, we completed the sale of the Company’s industrial real estate assets. The decision to divest these legacy, non-core assets was considered as we entered 2020, but the close of the sale was delayed by several months due to the COVID-19 pandemic. The proceeds from the sale serve to further bolster our cash position, which together with short-term investments was $577 million at our fiscal year-end, resulting in cash in excess of debt of $90 million.”

John Lindsay concluded, “Looking back at an unprecedented and demanding 2020 fiscal year, we remain steadfast in our commitment to reshape our business and the industry during this challenging time. Our teams are doing great work to accelerate long-term strategic priorities, including driving efficiency across the company and evolving our digital technology and data platforms to deliver value-added solutions and services to our customers and partners.”

Operating Segment Results for the Fourth Quarter of Fiscal Year 2020

North America Solutions:

This segment had an operating loss of $78 million compared to an operating loss of $25 million during the previous quarter. The increase in the operating loss was driven by the continued decline in rig activity due to significantly lower crude oil prices resulting from a global supply and demand imbalance caused by the pandemic.

Operating gross margins⁽²⁾ declined by $62.5 million to $39.3 million as both revenues and expenses declined sequentially. Revenues during the current quarter benefited from $11.7 million in early contract termination revenue compared to $50.2 million in the prior quarter. Expenses during the quarter were adversely impacted by higher than expected self-insurance expenses. Our technology solutions were in-line with expectations and had a positive, albeit small, contribution to the total North America Solutions operating gross margins⁽²⁾.

International Solutions:

This segment had an operating loss of $3.5 million compared to an operating loss of $9.5 million during the previous quarter. Despite a decline in revenue days, operating gross margins⁽²⁾ improved $4.0 million to a negative $1.2 million due to certain revenue reimbursements received during the quarter. This segment continues to carry a higher level of expenses relative to activity levels resulting from compliance with local jurisdictional requirements surrounding COVID-19. The Company continues to explore opportunities to mitigate these expenses, while maintaining strict adherence to local regulations. Current quarter results included a $2.6 million foreign currency loss related to our South American operations compared to an approximate $3.2 million foreign currency loss in the third quarter of fiscal year 2020.

Offshore Gulf of Mexico:

This segment had operating income of $1.5 million compared to operating income of $3.0 million during the previous quarter. Operating gross margins⁽²⁾ declined by $3.9 million to $4.6 million due to unfavorable adjustments to self-insurance expenses related to a prior period claim. Segment operating income from management contracts on customer-owned platform rigs contributed approximately $1.1 million of the total, compared to approximately $1.7 million during the prior quarter.

Operational Outlook for the First Quarter of Fiscal Year 2021

North America Solutions:

We expect North America Solutions operating gross margins⁽²⁾ to be between $40-$50 million, inclusive of approximately $1 million of contract early termination compensation
We expect to exit the quarter at between 88-93 contracted rigs, inclusive of approximately 0-2 contracted rigs generating revenue that could remain idle

International Solutions:

We expect International Solutions operating gross margins⁽²⁾ to be between $(5)-$(7) million, exclusive of any foreign exchange gains or loses

Offshore Gulf of Mexico:

We expect Offshore Gulf of Mexico rig operating gross margins⁽²⁾ to be between $5-$7 million
Management contracts are also expected to generate approximately $1-2 million in operating income

Other Estimates for Fiscal Year 2021

Gross capital expenditures are expected to be approximately $85 to $105 million; roughly one-third expected for maintenance, roughly one-third expected for skidding to walking conversions and roughly one-third for corporate and information technology. Asset sales include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are expected to total approximately $20 million in fiscal year 2021.
Depreciation is expected to be approximately $430 million
Research and development expenses for fiscal year 2021 are expected to be roughly $30 million
General and administrative expenses for fiscal year 2021 are expected to be approximately $160 million

COVID-19 Update

The COVID-19 pandemic continues to have a significant impact around the world and on our Company. After falling dramatically, crude oil prices and industry activity appear to have stabilized, albeit at much lower levels. The environment in which we operate is still uncertain; however, upon the onset of COVID-19’s rapid spread across the United States in early March 2020, we responded quickly and took several actions to maintain the health and safety of H&P employees, customers and stakeholders and to preserve our financial strength. We discussed these actions in our press releases dated April 30, 2020 and July 28, 2020 and in our quarterly reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and will provide updates in our annual report on Form 10-K for the fiscal year ended September 30, 2020 when filed.

Select Items Included in Net Income per Diluted Share

Fourth quarter of fiscal year 2020 net loss of $(0.55) per diluted share included $0.19 in after-tax gains comprised of the following:

$0.20 of after-tax gains pertaining to the sale of industrial real estate property
$(0.00) of after-tax losses related to restructuring charges
$(0.01) of non-cash after-tax losses related to fair market value adjustments to equity investments

Third quarter of fiscal year 2020 net loss of $(0.43) per diluted share included $(0.09) in after-tax losses comprised of the following:

$0.02 of non-cash after-tax gains related to fair market value adjustments to equity investments
$(0.11) of after-tax losses related to restructuring charges

Fiscal year 2020 net loss of $(4.60) per diluted share included $(3.74) in after-tax losses comprised of the following:

$0.03 of after-tax gains related to the change in fair value of a contingent liability
$0.10 of after-tax gains related to the sale of a subsidiary
$0.13 of after-tax benefits from the reversal of accrued compensation
$0.20 of after-tax gains pertaining to the sale of industrial real estate property
$(0.06) of non-cash after-tax losses related to fair market value adjustments to equity investments
$(0.11) of after-tax losses related to restructuring charges
$(4.03) of non-cash after-tax losses related to the impairment of goodwill, less capable rigs, predominantly consisting of U.S. non-super-spec rigs, and excess related equipment and inventory

Conference Call

A conference call will be held on Friday, November 20, 2020 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Director of Investor Relations to discuss the Company’s fourth quarter fiscal year 2020 results. Dial-in information for the conference call is (866) 342-8591 for domestic callers or (203) 518-9713 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the Internet by logging on to the Company’s website at http://www.hpinc.com and accessing the corresponding link through the Investor Relations section by clicking on “INVESTORS” and then clicking on “Event Calendar” to find the event and the link to the webcast.

About Helmerich & Payne, Inc.

Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. At September 30, 2020, H&P’s fleet included 262 land rigs in the United States, 32 international land rigs and eight offshore platform rigs. For more information, see H&P online at www.hpinc.com.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant’s future financial position, operations outlook, business strategy, dividends, budgets, projected costs and plans and objectives of management for future operations, and the impact or duration of the COVID-19 pandemic and any subsequent recovery, are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s SEC filings, including but not limited to its annual report on Form 10-K and quarterly reports on Form 10-Q. As a result of these factors, Helmerich & Payne, Inc.’s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.

We use our Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on our Investor Relations website at www.hpinc.com.

Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig and AutoSlide, which may be registered or trademarked in the United States and other jurisdictions.

(1) See the corresponding section of this release for details regarding the select items. The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside of the Company’s core business operations.

(2) Operating gross margin is defined as operating revenues less direct operating expenses.


HELMERICH & PAYNE, INC. (Unaudited) (in thousands, except per share data)

	Three Months Ended									Year Ended
	September 30,			June 30,			September 30,			September 30,
CONSOLIDATED STATEMENTS OF OPERATIONS	2020			2020			2019			2020			2019
Operating revenues
Drilling services	$	205,621		$	314,405		$	645,759		$	1,761,714		$	2,785,557
Other	2,646			2,959			3,291			12,213			12,933
	208,267			317,364			649,050			1,773,927			2,798,490
Operating costs and expenses
Drilling services operating expenses, excluding depreciation and amortization	162,518			205,198			430,778			1,184,788			1,803,204
Other operating expenses	1,491			1,549			1,072			5,777			5,382
Depreciation and amortization	109,587			110,161			134,887			481,885			562,803
Research and development	4,915			3,638			6,121			21,645			27,467
Selling, general and administrative	32,619			43,108			49,812			167,513			194,416
Asset impairment charge	—			—			—			563,234			224,327
Restructuring charges	552			15,495			—			16,047			—
Gain on sale of assets	(27,985		)	(4,201		)	(12,641		)	(46,775		)	(39,691		)
	283,697			374,948			610,029			2,394,114			2,777,908
Operating income (loss) from continuing operations	(75,430		)	(57,584		)	39,021			(620,187		)	20,582
Other income (expense)
Interest and dividend income	753			771			2,607			7,304			9,468
Interest expense	(6,154		)	(6,125		)	(8,043		)	(24,474		)	(25,188		)
Gain (loss) on investment securities	(1,395		)	2,267			(4,260		)	(8,720		)	(54,488		)
Gain on sale of subsidiary	—			—			—			14,963			—
Other	(1,673		)	(2,914		)	(546		)	(5,384		)	(1,596		)
	(8,469		)	(6,001		)	(10,242		)	(16,311		)	(71,804		)
Income (loss) from continuing operations before income taxes	(83,899		)	(63,585		)	28,779			(636,498		)	(51,222		)
Income tax benefit	(23,253		)	(17,578		)	(13,110		)	(140,106		)	(18,712		)
Income (loss) from continuing operations	(60,646		)	(46,007		)	41,889			(496,392		)	(32,510		)
Income from discontinued operations before income taxes	7,905			9,151			10,050			30,580			32,848
Income tax provision	6,222			8,743			10,763			28,685			33,994
Income (loss) from discontinued operations	1,683			408			(713		)	1,895			(1,146		)
Net income (loss)	$	(58,963	)	$	(45,599	)	$	41,176		$	(494,497	)	$	(33,656	)

Basic earnings (loss) per common share:
Income (loss) from continuing operations	$	(0.57	)	$	(0.43	)	$	0.38		$	(4.62	)	$	(0.33	)
Income (loss) from discontinued operations	0.02			—			(0.01		)	0.02			(0.01		)
Net income (loss)	$	(0.55	)	$	(0.43	)	$	0.37		$	(4.60	)	$	(0.34	)

Diluted earnings (loss) per common share:
Income (loss) from continuing operations	$	(0.57	)	$	(0.43	)	$	0.38		$	(4.62	)	$	(0.33	)
Income (loss) from discontinued operations	0.02			—			(0.01		)	0.02			(0.01		)
Net income (loss)	$	(0.55	)	$	(0.43	)	$	0.37		$	(4.60	)	$	(0.34	)

Weighted average shares outstanding (in thousands):
Basic	107,484			107,439			108,896			108,009			109,216
Diluted	107,484			107,439			108,950			108,009			109,216


HELMERICH & PAYNE, INC. (Unaudited) (in thousands)

	September 30,		September 30,
CONSOLIDATED BALANCE SHEETS	2020		2019
Assets
Cash and cash equivalents	$	487,884	$	347,943
Short-term investments	89,335		52,960
Other current assets	386,108		714,183
Total current assets	963,327		1,115,086
Investments	31,585		31,991
Property, plant and equipment, net	3,646,341		4,502,084
Other noncurrent assets	188,368		190,354
Total Assets	$	4,829,621	$	5,839,515

Liabilities and Shareholders’ Equity
Current liabilities	$	219,136	$	410,238
Long-term debt, net	480,727		479,356
Other noncurrent liabilities	797,855		922,357
Noncurrent liabilities – discontinued operations	13,389		15,341
Total shareholders’ equity	3,318,514		4,012,223
Total Liabilities and Shareholders’ Equity	$	4,829,621	$	5,839,515


HELMERICH & PAYNE, INC. (Unaudited) (in thousands)

	Year Ended September 30,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	2020			2019
OPERATING ACTIVITIES:
Net loss	$	(494,497	)	$	(33,656	)
Adjustment for (income) loss from discontinued operations	(1,895		)	1,146
Loss from continuing operations	(496,392		)	(32,510		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	481,885			562,803
Asset impairment charge	563,234			224,327
Restructuring charges		—		—
Amortization of debt discount and debt issuance costs	1,817			1,732
Provision for bad debt	2,203			2,321
Stock-based compensation	36,329			34,292
Loss on investment securities	8,720			54,488
Gain on sale of assets	(46,775		)	(39,691		)
Gain on sale of subsidiary	(14,963		)	—
Deferred income tax benefit	(157,555		)	(44,554		)
Other	(200		)	(3,295		)
Changes in assets and liabilities	160,625			95,900
Net cash provided by operating activities from continuing operations	538,928			855,813
Net cash used in operating activities from discontinued operations	(47		)	(62		)
Net cash provided by operating activities	538,881			855,751

INVESTING ACTIVITIES:
Capital expenditures	(140,795		)	(458,402		)
Purchase of short-term investments	(134,641		)	(97,652		)
Payment for acquisition of business, net of cash acquired	—			(16,163		)
Proceeds from sale of short-term investments	94,646			86,765
Proceeds from sale of subsidiary	15,056			—
Proceeds from sale of marketable securities	—			11,999
Proceeds from asset sales	78,399			50,817
Other	(550		)	—
Net cash used in investing activities	(87,885		)	(422,636		)

FINANCING ACTIVITIES:
Dividends paid	(260,335		)	(313,421		)
Debt issuance costs paid	—			(3,912		)
Proceeds from stock option exercises	4,100			3,053
Payments for employee taxes on net settlement of equity awards	(3,784		)	(6,418		)
Payment of contingent consideration from acquisition of business	(8,250		)	—
Payments for early extinguishment of long term debt	—			(12,852		)
Share repurchase	(28,505		)	(42,779		)
Other	(446		)	—
Net cash used in financing activities	(297,220		)	(376,329		)
Net increase in cash and cash equivalents and restricted cash	153,776			56,786
Cash and cash equivalents and restricted cash, beginning of period	382,971			326,185
Cash and cash equivalents and restricted cash, end of period	$	536,747		$	382,971

	Three Months Ended									Year Ended
SEGMENT REPORTING (in thousands, except operating statistics)	September 30,			June 30,			September 30,			September 30,
	2020			2020			2019 ₍₁₎			2020			2019 ₍₁₎
NORTH AMERICA SOLUTIONS
Operating revenues	$	149,304		$	254,434		$	558,938		$	1,474,380		$	2,426,191
Direct operating expenses	110,048			152,663			355,830			942,277			1,532,576
Research and development	4,828			3,459			5,918			20,699			25,164
Selling, general and administrative expense	10,916			13,533			15,818			53,714			66,179
Depreciation	101,941			102,699			120,988			438,039			504,466
Asset impairment charge	—			—			—			406,548			216,908
Restructuring charges	(232		)	7,237			—			7,005			—
Segment operating income (loss)	$	(78,197	)	$	(25,157	)	$	60,384		$	(393,902	)	$	80,898

Revenue days	5,945			8,101			18,765			49,003			81,805
Average rig revenue per day	$	23,951		$	27,975		$	26,218		$	26,589		$	26,167
Average rig expense per day	17,348			15,412			15,394			15,730			15,243
Average rig margin per day	$	6,603		$	12,563		$	10,824		$	10,859		$	10,924
Rig utilization	25		%	32		%	68		%	47		%	67		%

INTERNATIONAL SOLUTIONS
Operating revenues	$	23,996		$	22,477		$	48,353		$	144,185		$	211,731
Direct operating expenses	25,157			27,595			43,119			124,791			157,856
Selling, general and administrative expense	733			1,129			1,399			4,565			5,624
Depreciation	897			996			8,042			17,531			35,466
Asset impairment charge	—			—			—			156,686			7,419
Restructuring charges	683			2,297			—			2,980			—
Segment operating income (loss)	$	(3,474	)	$	(9,540	)	$	(4,207	)	$	(162,368	)	$	5,366

Revenue days	452			988			1,598			4,605			6,426
Average rig revenue per day	$	45,986		$	19,642		$	28,199		$	29,116		$	31,269
Average rig expense per day	42,816			21,589			22,722			23,066			21,626
Average rig margin per day	$	3,170		$	(1,947	)	$	5,477		$	6,050		$	9,643
Rig utilization	15		%	34		%	56		%	40		%	55		%

OFFSHORE GULF OF MEXICO
Operating revenues	$	32,321		$	37,494		$	38,468		$	143,149		$	147,635
Direct operating expenses	27,711			28,967			32,148			119,371			114,306
Selling, general and administrative expense	72			1,248			1,004			3,365			3,725
Depreciation	3,090			3,004			2,499			11,681			10,010
Restructuring charges	(8		)	1,262			—			1,254			—
Segment operating income	$	1,456		$	3,013		$	2,817		$	7,478		$	19,594

Revenue days	460			455			552			1,922			2,163
Average rig revenue per day	$	45,254		$	49,654		$	43,072		$	45,145		$	37,478
Average rig expense per day	37,591			34,702			35,612			37,410			28,663
Average rig margin per day	$	7,663		$	14,952		$	7,460		$	7,735		$	8,815
Rig utilization	63		%	63		%	75		%	66		%	74		%

(1) Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment. All prior period segment disclosures have been recast for these segment changes.

Note 1: Per revenue day metrics and segment operating income/loss are used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate. These measures highlight operating trends and aid analytical comparisons. However, per revenue day metrics and segment operating income/loss have limitations and should not be used as alternatives to revenues, expenses, or operating income/loss, which are performance measures determined in accordance with GAAP.

Note 2: Operating statistics exclude the effects of offshore platform management contracts and gains and losses from translation of foreign currency transactions and do not include reimbursements of “out-of-pocket” expenses in revenue per day, expense per day and margin per day calculations.

Reimbursed amounts were as follows:

	Three Months Ended						Year Ended
	September 30,		June 30,		September 30,		September 30,
(in thousands)	2020		2020		2019		2020		2019
North America Solutions	$	6,915	$	27,807	$	66,966	$	171,455	$	285,614
International Solutions	3,224		3,079		3,291		10,099		10,797
Offshore Gulf of Mexico	5,548		8,223		7,899		30,436		26,433

Segment reconciliation amounts were as follows:

	Three Months Ended September 30, 2020
(in thousands)	North America Solutions		Offshore Gulf of Mexico		International Solutions		Other		Eliminations			Total
Operating revenue	$	149,304	$	32,321	$	23,996	$	2,646	$	—		$	208,267
Intersegment	—		—		—		7,974		(7,974		)	—
Total operating revenue	$	149,304	$	32,321	$	23,996	$	10,620	$	(7,974	)	$	208,267

Direct operating expenses	104,742		25,567		24,760		8,940		—			164,009
Intersegment	5,306		2,144		397		127		(7,974		)	—
Total contract drilling services & other operating expenses	$	110,048	$	27,711	$	25,157	$	9,067	$	(7,974	)	$	164,009


	Year Ended September 30, 2020
(in thousands)	North America Solutions		Offshore Gulf of Mexico		International Solutions		Other		Eliminations			Total
Operating revenue	$	1,474,380	$	143,149	$	144,185	$	12,213	$	—		$	1,773,927
Intersegment	—		—		—		36,901		(36,901		)	—
Total operating revenue	$	1,474,380	$	143,149	$	144,185	$	49,114	$	(36,901	)	$	1,773,927

Direct operating expenses	913,162		112,852		123,651		40,900		—			1,190,565
Intersegment	29,115		6,519		1,140		127		(36,901		)	—
Total contract drilling services & other operating expenses	$	942,277	$	119,371	$	124,791	$	41,027	$	(36,901	)	$	1,190,565

Segment operating income (loss) for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses, corporate restructuring charges, and corporate depreciation. The Company considers segment operating income (loss) to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income (loss) is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.

The following table reconciles operating income (loss) per the information above to income (loss) from continuing operations before income taxes as reported on the Consolidated Statements of Operations:

	Three Months Ended									Year Ended
	September 30,			June 30,			September 30,			September 30,
(in thousands)	2020			2020			2019 ₍₁₎			2020			2019 ₍₁₎
Operating income (loss)
North America Solutions	$	(78,197	)	$	(25,157	)	$	60,384		$	(393,902	)	$	80,898
International Solutions	(3,474		)	(9,540		)	(4,207		)	(162,368		)	5,366
Offshore Gulf of Mexico	1,456			3,013			2,817			7,478			19,594
Other	699			4,389			1,388			4,403			3,375
Segment operating income (loss)	$	(79,516	)	$	(27,295	)	$	60,382		$	(544,389	)	$	109,233
Gain on sale of assets	27,985			4,201			12,641			46,775			39,691
Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges	(23,899		)	(34,490		)	(34,002		)	(122,573		)	(128,342		)
Operating income (loss)	$	(75,430	)	$	(57,584	)	$	39,021		$	(620,187	)	$	20,582
Other income (expense):
Interest and dividend income	753			771			2,607			7,304			9,468
Interest expense	(6,154		)	(6,125		)	(8,043		)	(24,474		)	(25,188		)
Gain (loss) on investment securities	(1,395		)	2,267			(4,260		)	(8,720		)	(54,488		)
Gain on sale of subsidiary	—			—			—			14,963			—
Other	(1,673		)	(2,914		)	(546		)	(5,384		)	(1,596		)
Total unallocated amounts	(8,469		)	(6,001		)	(10,242		)	(16,311		)	(71,804		)
Income (loss) from continuing operations before income taxes	$	(83,899	)	$	(63,585	)	$	28,779		$	(636,498	)	$	(51,222	)


SUPPLEMENTARY STATISTICAL INFORMATION Unaudited U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS

	November 19,	September 30,	June 30,	Q4FY20
	2020*	2020*	2020*	Average
U.S. Land Operations
Term Contract Rigs	57	54	53	54
Spot Contract Rigs	25	15	15	11
Total Contracted Rigs	82	69	68	65
Idle or Other Rigs	180	193	194	197
Total Marketable Fleet	262	262	262	262

(*) As of November 19, 2020, September 30, 2020 and June 30, 2020, the Company had 2, 11, and 20, respectively, contracted rigs generating revenue that were idle.


H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS Number of Rigs Already Under Long-Term Contracts^()** (Estimated Quarterly Average — as of 9/30/20)

	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Segment	FY21	FY21	FY21	FY21	FY22	FY22	FY22
U.S. Land Operations	57.1	54.3	37.2	28.3	21.2	14.2	10.3
International Land Operations	1.0	1.0	1.0	1.0	1.0	1.0	1.0
Offshore Operations	—	—	—	—	—	—	—
Total	58.1	55.3	38.2	29.3	22.2	15.2	11.3

(**) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees.


SELECT ITEMS^()*

	Three Months Ended September 30, 2020
(in thousands, except per share data)	Pretax			Tax			Net			EPS
Net loss (GAAP basis)							$	(58,963	)	$	(0.55	)
Fair market adjustment to equity investments	$	(1,395	)	$	(307	)	$	(1,088	)	$	(0.01	)
Restructuring charges	$	(552	)	$	(122	)	$	(430	)	$	—
Gain on the sale of real estate property	$	27,200		$	5,989		$	21,211		$	0.20
Adjusted net loss							$	(78,656	)	$	(0.74	)

	Three Months Ended June 30, 2020
(in thousands, except per share data)	Pretax			Tax			Net			EPS
Net loss (GAAP basis)							$	(45,599	)	$	(0.43	)
Restructuring charges	$	(15,495	)	$	(3,254	)	$	(12,241	)	$	(0.11	)
Fair market adjustment to equity investments	$	2,267		$	652		$	1,615		$	0.02
Adjusted net loss							$	(34,973	)	$	(0.34	)


	Fiscal Year Ended September 30, 2020
(in thousands, except per share data)	Pretax			Tax			Net			EPS
Net loss (GAAP basis)							$	(494,497	)	$	(4.60	)
Impairment of goodwill, rigs and related equipment	$	(563,234	)	$	(125,770	)	$	(437,464	)	$	(4.03	)
Restructuring charges	$	(16,047	)	$	(3,534	)	$	(12,513	)	$	(0.11	)
Fair market adjustment to equity investments	$	(8,720	)	$	(1,920	)	$	(6,800	)	$	(0.06	)
Gain on the sale of real estate property	$	27,200		$	5,989		$	21,211		$	0.20
Reversal of accrued compensation	$	17,681		$	4,038		$	13,643		$	0.13
Gain on the sale of a subsidiary	$	14,963		$	4,205		$	10,758		$	0.10
Change in fair value of contingent liability	$	3,100		$	683		$	2,417		$	0.03
Adjusted net loss							$	(85,749	)	$	(0.86	)

Note: Excluded from the select items above are revenues recognized due to early contract terminations in the amount (pretax) of $11.7 million and $50.2 million for the three months ended September 30, 2020 and June 30, 2020, respectively, and $72.2 million for the fiscal year ended September 30, 2020.

^(***)The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future period results. Select items are excluded as they are deemed to be outside of the Company’s core business operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119006236/en/

Dave Wilson, Director of Investor Relations

[email protected]
(918) 588‑5190

KEYWORDS: United States North America Oklahoma

INDUSTRY KEYWORDS: Oil/Gas Energy

MEDIA:

Logo

November 19, 2020 4:18 pm

Caleres Reports Third Quarter 2020 Results

Caleres Reports Third Quarter 2020 Results

Generated $34.2 million of cash from operations

Paid down $50 million of debt during the third quarter

Announces strategic exit of Naturalizer stores to drive digital growth

ST. LOUIS–(BUSINESS WIRE)–
Caleres (NYSE: CAL, caleres.com) a diverse portfolio of consumer-driven footwear brands, today reported financial results for the third quarter ended October 31, 2020. Caleres continued its steady progress – recording sequential top-line growth, a return to profitability, stronger gross margins and a further improved working capital position – despite the still uncertain economic environment. For the second straight quarter the company used free cash to markedly reduce its overall debt levels, paying down $50 million during the period and bringing total debt reduction since the end of the first quarter of 2020 to approximately $139 million.

“Caleres furthered its recovery during the third quarter delivering results significantly better than anticipated in nearly all major financial metrics,” said Diane Sullivan, Chairman, president and chief executive officer. “At the same time, the team has continued to overcome the ongoing COVID-related pressures in an impressive manner, further advancing the company’s key strategic objectives. During the quarter, we:

Maintained rigorous cost discipline leading to an approximately $38 million decline in expenses year-over-year – attributable to improved store productivity and prior actions to align our resources with the current market environment;
Adjusted effectively to and capitalized on the extended back-to-school season achieving a strong sequential increase in sales at Famous Footwear;
Gained momentum in the Brand Portfolio with an approximately 45 percent sequential increase in sales – led by positive consumer reaction to our casual, sport and athletic-inspired assortment across the portfolio; and
Used free cash to further strengthen the balance sheet and reduce overall indebtedness, which is now approaching pre-COVID levels.”

Third Quarter 2020 Highlights

(13-weeks ended October 31, 2020 compared to 13-weeks ended November 2, 2019)

Net sales were $647.5 million, down 18.3 percent from the third quarter of fiscal 2019

Direct-to-consumer sales represented 71.4 percent of total net sales;

A 12.3 percent sales decline in the Famous Footwear segment;

A 25.6 percent sales decline in the Brand Portfolio segment;

Total company owned ecommerce website sales increased 24.6 percent, with ecommerce penetration rising to 25.4 percent of net sales;

Gross profit was $257.0 million, while gross margin was 39.7 percent;

SG&A expense of $236.9 million, down $38.4 million compared to the third quarter of 2019;

Net income of $14.4 million, or earnings of $0.38 per diluted share, compared to net income of $28.0 million, or $0.69 per diluted share, in the third quarter of fiscal 2019. Earnings of $0.38 per share includes $0.10 of adjustments related to the fair value adjustment to the Blowfish purchase obligation;

Adjusted net income was $18.2 million, or adjusted earnings of $0.48 per diluted share compared to adjusted net income of $31.6 million, or adjusted earnings of $0.78 per diluted share, in the third quarter of fiscal 2019;

Generated $34.2 million in cash from operations and ended the third quarter with $124.3 million of cash on hand;

Reduced inventory levels approximately 21 percent year-over-year, reflecting ongoing actions taken to liquidate seasonal orders;

Reduced credit facility borrowings by $50 million from the second quarter of 2020 to end the third quarter at $300 million;

Returned $2.7 million to shareholders during the quarter through its long-standing quarterly dividend.

Strategic Realignment to Drive Digital Growth

In an effort to continue to improve future profitability and allow greater focus on high-growth, digital channels, the company has commenced a strategic realignment of the Naturalizer retail locations in the U.S. and Canada. In addition to the store closures, Caleres will right-size the back-office infrastructure to better align with the reduced store footprint, shift talent to amplify our digital presence, capture consumers where they want to shop and reallocate capital to further enhance our ecommerce platform and capabilities.

“Like the rest of the industry we have seen a structural shift in the shopping behavior of the consumer – a change that has been further accelerated by the global health crisis,” said Sullivan. “With a larger percentage of Naturalizer’s sales originating online, now is the opportune time to shed the legacy stores and evolve it to be more profitable. We are confident this step will better align the brand with the Naturalizer consumer of the future and position the brand for growth and further success.”

The company plans to close approximately 133 Naturalizer stores by the end of fiscal year 2020. The company expects pre-tax charges in the fourth quarter of 2020 of between $20 million and $25 million. Once complete, Caleres expects an annual pre-tax benefit of between $10 million and $12 million.

“Caleres is adjusting rapidly to the current and evolving market environment and I am excited about the value-creating potential of the business going forward,” said Sullivan. “The actions we have taken in recent months to fortify our financial position; leverage our digital investments to capitalize on shifting consumer behaviors; further align our merchandise mix to reflect ever-changing consumer desires; and right-size our cost structure and capital budget provide a strong and durable foundation upon which to build and grow. Moving forward, we plan to drive innovation in our brands, lean into our consumer insights, enhance our already significant digital capabilities still further, and continuously strengthen and hone our portfolio to expand greater cash generation and value creation in the future.”

Investor Conference Call

Caleres will host an investor conference call at 5:00 p.m. ET today, Thursday, November 19. The webcast and associated slides will be available at investor.caleres.com/news/events. A live conference call will be available at (877) 217-9089 for analysts in North America or (706) 679-1723 for international analysts by using the conference ID 7391019. A replay will be available at investor.caleres.com/news/events/archive for a limited period. Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 7391019 through Wednesday, December 2.

Definitions

All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings (loss) attributable to Caleres, Inc. and diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders, are presented as net earnings (loss) and earnings (loss) per diluted share, respectively.

Non-GAAP Financial Measures

In this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the company provides historic and estimated future gross profit, operating earnings (loss), net earnings (loss) and earnings (loss) per diluted share adjusted to exclude certain gains, charges and recoveries, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) the coronavirus outbreak and its adverse impact on our business operations, store traffic and financial condition (ii) changing consumer demands, which may be influenced by consumers’ disposable income, which in turn can be influenced by general economic conditions and other factors; (iii) impairment charges resulting from a long-term decline in our stock price; (iv) rapidly changing fashion trends and consumer preferences and purchasing patterns; (v) intense competition within the footwear industry; (vi) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (vii) imposition of tariffs; (viii) the ability to accurately forecast sales and manage inventory levels; (ix) cybersecurity threats or other major disruption to the company’s information technology systems; (x) customer concentration and increased consolidation in the retail industry; (xi) transitional challenges with acquisitions; (xii) a disruption in the company’s distribution centers; (xiii) foreign currency fluctuations; (xiv) changes to tax laws, policies and treaties; (xv) the ability to recruit and retain senior management and other key associates; (xvi) compliance with applicable laws and standards with respect to labor, trade and product safety issues; (xvii) the ability to maintain relationships with current suppliers; (xviii) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights; and (xix) the ability to secure/exit leases on favorable terms. The company’s reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended February 1, 2020, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

About Caleres

Caleres is a diverse portfolio of global footwear brands. Our products are available virtually everywhere – in the more than 1,100 retail stores we operate, in hundreds of major department and specialty stores, on our branded e-commerce sites, and on many additional third-party retail websites. Famous Footwear offers great casual and athletic brands for the entire family with convenient, curated, affordable collections. Sam Edelman keeps expressive women in step with the latest trends in a playful, whimsical way. Naturalizer shoes are beautiful from the inside out, with elegant simplicity and legendary fit re-imagined for today’s consumer. Allen Edmonds combines old world craft with new world technology to create luxe footwear for the discerning man who wants sophisticated, modern classics. Rounding out our family of brands are Vionic, Vince, Franco Sarto, Dr. Scholl’s Shoes, LifeStride, Blowfish Malibu, Bzees, Circus by Sam Edelman and Ryka. Combined, these brands make Caleres a company with both a legacy and a mission. Our legacy is our more than 140 years of craftsmanship and our passion for fit, while our mission is to continue to inspire people to feel great… feet first. Visit caleres.com to learn more about us.

SCHEDULE 1

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Unaudited)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

(Thousands, except per share data)

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

Net sales

$

647,480

$

792,375

$

1,546,111

$

2,222,614

Cost of goods sold

390,508

472,605

984,621

1,317,064

Gross profit

256,972

319,770

561,490

905,550

Selling and administrative expenses

236,901

275,330

663,425

804,972

Impairment of goodwill and intangible assets

—

—

262,719

—

Restructuring and other special charges, net

—

969

65,625

2,434

Operating earnings (loss)

20,071

43,471

(430,279

)

98,144

Interest expense, net

(10,881

)

(10,559

)

(33,747

)

(25,288

)

Other income, net

5,461

2,633

12,718

7,902

Earnings (loss) before income taxes

14,651

35,545

(451,308

)

80,758

Income tax benefit (provision)

275

(7,784

)

89,393

(18,685

)

Net earnings (loss)

14,926

27,761

(361,915

)

62,073

Net earnings (loss) attributable to noncontrolling interests

509

(226

)

223

(338

)

Net earnings (loss) attributable to Caleres, Inc.

$

14,417

$

27,987

$

(362,138

)

$

62,411

Basic earnings (loss) per common share attributable to Caleres, Inc. shareholders

$

0.38

$

0.69

$

(9.67

)

$

1.51

Diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders

$

0.38

$

0.69

$

(9.67

)

$

1.51

SCHEDULE 2

CALERES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

October 31, 2020

November 2, 2019

February 1, 2020

(Thousands)

ASSETS

Cash and cash equivalents

$

124,330

$

52,502

$

45,218

Receivables, net

141,059

156,253

162,181

Inventories, net

507,365

644,646

618,406

Prepaid expenses and other current assets

99,401

48,245

56,494

Total current assets

872,155

901,646

882,299

Lease right-of-use assets

601,574

704,244

695,594

Property and equipment, net

189,207

230,261

224,846

Goodwill and intangible assets, net

267,074

542,845

539,579

Other assets

97,050

92,214

89,389

Total assets

$

2,027,060

$

2,471,210

$

2,431,707

LIABILITIES AND EQUITY

Borrowings under revolving credit agreement

$

300,000

$

295,000

$

275,000

Mandatory purchase obligation

30,146

—

—

Trade accounts payable

285,582

275,699

267,018

Lease obligations

156,200

144,501

127,869

Other accrued expenses

187,980

179,030

181,063

Total current liabilities

959,908

894,230

850,950

Noncurrent lease obligations

556,343

629,731

629,032

Long-term debt

198,736

198,276

198,391

Other liabilities

50,418

95,623

104,204

Total other liabilities

805,497

923,630

931,627

Total Caleres, Inc. shareholders’ equity

256,671

650,840

645,950

Noncontrolling interests

4,984

2,510

3,180

Total equity

261,655

653,350

649,130

Total liabilities and equity

$

2,027,060

$

2,471,210

$

2,431,707

SCHEDULE 3

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Thirty-Nine Weeks Ended

(Thousands)

October 31, 2020

November 2, 2019

OPERATING ACTIVITIES:

Net cash provided by operating activities

$

101,766

$

145,737

INVESTING ACTIVITIES:

Purchases of property and equipment

(12,016

)

(37,354

)

Disposals of property and equipment

—

636

Capitalized software

(3,525

)

(4,893

)

Net cash used for investing activities

(15,541

)

(41,611

)

FINANCING ACTIVITIES:

Borrowings under revolving credit agreement

340,500

237,000

Repayments under revolving credit agreement

(315,500

)

(277,000

)

Dividends paid

(8,148

)

(8,631

)

Acquisition of treasury stock

(23,348

)

(31,168

)

Issuance of common stock under share-based plans, net

(1,078

)

(2,605

)

Contributions by noncontrolling interests

1,500

1,500

Other

(980

)

(1,022

)

Net cash used for financing activities

(7,054

)

(81,926

)

Effect of exchange rate changes on cash and cash equivalents

(59

)

102

Increase in cash and cash equivalents

79,112

22,302

Cash and cash equivalents at beginning of period

45,218

30,200

Cash and cash equivalents at end of period

$

124,330

$

52,502

SCHEDULE 4

CALERES, INC.

RECONCILIATION OF NET EARNINGS (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE (GAAP BASIS) TO ADJUSTED NET EARNINGS (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE (NON-GAAP BASIS)

(Unaudited)

Thirteen Weeks Ended

October 31, 2020

November 2, 2019

Net

Net

Pre-Tax

Earnings

Pre-Tax

Earnings

Impact of

Attributable

Diluted

Impact of

Attributable

Diluted

Charges/Other

to Caleres,

Earnings

Charges/Other

to Caleres,

Earnings

(Thousands, except per share data)

Items

Inc.

Per Share

Items

Inc.

Per Share

GAAP earnings

$

14,417

$

0.38

$

27,987

$

0.69

Charges/other items:

Fair value adjustment to Blowfish purchase obligation

$

5,124

3,805

0.10

3,883

$

2,884

0.07

Vionic integration-related costs

—

—

—

969

719

0.02

Total charges/other items

$

5,124

$

3,805

$

0.10

$

4,852

$

3,603

$

0.09

Adjusted earnings

$

18,222

$

0.48

$

31,590

$

0.78

(Unaudited)

Thirty-Nine Weeks Ended

October 31, 2020

November 2, 2019

Net (Loss)

Net

Pre-Tax

Earnings

Diluted

Pre-Tax

Earnings

Impact of

Attributable

(Loss)

Impact of

Attributable

Diluted

Charges/Other

to Caleres,

Earnings

Charges/Other

to Caleres,

Earnings

(Thousands, except per share data)

Items

Inc.

Per Share

Items

Inc.

Per Share

GAAP (loss) earnings

$

(362,138

)

$

(9.67

)

$

62,411

$

1.51

Charges/other items:

Goodwill and intangible asset impairment charges

$

262,719

218,506

5.84

$

—

—

—

COVID-19-related expenses ⁽¹⁾

99,040

78,047

2.08

—

—

—

Fair value adjustment to Blowfish purchase obligation

14,946

11,098

0.30

3,883

2,884

0.07

Brand Portfolio – business exits

1,598

1,187

0.03

1,905

1,415

0.03

Vionic acquisition and integration-related costs

—

—

—

7,696

5,714

0.14

Total charges/other items

$

378,303

$

308,838

$

8.25

$

13,484

$

10,013

$

0.24

Adjusted (loss) earnings

$

(53,300

)

$

(1.42

)

$

72,424

$

1.75

__________________________________

⁽¹⁾

Represents costs associated with the economic impact of the COVID‑19 pandemic, primarily consisting of impairment charges associated with property and equipment and lease right of use assets, inventory markdowns, expenses associated with factory order cancellations, provision for expected credit losses and severance.

SCHEDULE 5

CALERES, INC.

SUMMARY FINANCIAL RESULTS BY SEGMENT

SUMMARY FINANCIAL RESULTS

(Unaudited)

Thirteen Weeks Ended

Famous Footwear

Brand Portfolio

Eliminations and Other

Consolidated

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

(Thousands)

2020

2019

2020

2019

2020

2019

2020

2019

Net sales

$

391,706

$

446,583

$

267,587

$

359,863

$

(11,813

)

$

(14,071

)

$

647,480

$

792,375

Gross profit

160,019

183,267

94,312

133,761

2,641

2,742

256,972

319,770

Adjusted gross profit

160,019

183,267

94,312

133,761

2,641

2,742

256,972

319,770

Gross profit rate

40.9

%

41.0

%

35.2

%

37.2

%

(22.4

)%

(19.5

)%

39.7

%

40.4

%

Adjusted gross profit rate

40.9

%

41.0

%

35.2

%

37.2

%

(22.4

)%

(19.5

)%

39.7

%

40.4

%

Operating earnings (loss)

27,845

27,681

7,304

19,398

(15,078

)

(3,608

)

20,071

43,471

Adjusted operating earnings (loss)

27,845

27,681

7,304

19,398

(15,078

)

(2,639

)

20,071

44,440

Operating earnings %

7.1

%

6.2

%

2.7

%

5.4

%

127.6

%

25.6

%

3.1

%

5.5

%

Adjusted operating earnings %

7.1

%

6.2

%

2.7

%

5.4

%

127.6

%

18.8

%

3.1

%

5.6

%

Same-store sales % (on a 13-week basis)

(9.1

)%

2.5

%

(41.0

)%

(5.1

)%

—

%

—

%

—

%

—

%

Number of stores

925

960

197

232

—

—

1,122

1,192

RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)

(Unaudited)

Thirteen Weeks Ended

Famous Footwear

Brand Portfolio

Eliminations and Other

Consolidated

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

(Thousands)

2020

2019

2020

2019

2020

2019

2020

2019

Gross profit

$

160,019

$

183,267

$

94,312

$

133,761

$

2,641

$

2,742

$

256,972

$

319,770

Charges/Other Items:

Vionic integration-related costs

—

—

—

—

—

—

—

—

Total charges/other items

—

—

—

—

—

—

—

—

Adjusted gross profit

$

160,019

$

183,267

$

94,312

$

133,761

$

2,641

$

2,742

$

256,972

$

319,770

Operating earnings (loss)

$

27,845

$

27,681

$

7,304

$

19,398

$

(15,078

)

$

(3,608

)

$

20,071

$

43,471

Charges/Other Items:

Vionic integration-related costs

—

—

—

—

—

969

—

969

Total charges/other items

—

—

—

—

—

969

—

969

Adjusted operating (loss) earnings

$

27,845

$

27,681

$

7,304

$

19,398

$

(15,078

)

$

(2,639

)

$

20,071

$

44,440

SCHEDULE 5

CALERES, INC.

SUMMARY FINANCIAL RESULTS BY SEGMENT

SUMMARY FINANCIAL RESULTS

(Unaudited)

Thirty-Nine Weeks Ended

Famous Footwear

Brand Portfolio

Eliminations and Other

Consolidated

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

(Thousands)

2020

2019

2020

2019

2020

2019

2020

2019

Net sales

$

916,893

$

1,218,589

$

668,447

$

1,060,488

$

(39,229

)

$

(56,463

)

$

1,546,111

$

2,222,614

Gross profit

348,267

518,261

211,707

385,461

1,516

1,828

561,490

905,550

Adjusted gross profit

354,225

518,261

240,763

392,628

1,516

1,828

596,504

912,717

Gross profit rate

38.0

%

42.5

%

31.7

%

36.3

%

(3.9

)%

(3.2

)%

36.3

%

40.7

%

Adjusted gross profit rate

38.6

%

42.5

%

36.0

%

37.0

%

(3.9

)%

(3.2

)%

38.6

%

41.1

%

Operating (loss) earnings

(38,651

)

70,036

(352,556

)

46,225

(39,072

)

(18,117

)

(430,279

)

98,144

Adjusted (loss) operating earnings

(16,100

)

70,036

(12,386

)

54,019

(38,436

)

(16,310

)

(66,922

)

107,745

Operating (loss) earnings%

(4.2

)%

5.7

%

(52.7

)%

4.4

%

99.6

%

32.1

%

(27.8

)%

4.4

%

Adjusted (loss) operating earnings%

(1.8

)%

5.7

%

(1.9

)%

5.1

%

98.0

%

28.9

%

(4.3

)%

4.8

%

Same-store sales % (on a 39-week basis)

3.0

%

1.1

%

(32.3

)%

(7.6

)%

—

%

—

%

—

%

—

%

Number of stores

925

960

197

232

—

—

1,122

1,192

RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)

(Unaudited)

Thirty-Nine Weeks Ended

Famous Footwear

Brand Portfolio

Eliminations and Other

Consolidated

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

October 31,

November 2,

(Thousands)

2020

2019

2020

2019

2020

2019

2020

2019

Gross profit

$

348,267

$

518,261

$

211,707

$

385,461

$

1,516

$

1,828

$

561,490

$

905,550

Charges/Other Items:

COVID-19-related expenses

5,958

—

27,458

—

—

—

33,416

—

Brand Portfolio – brand exits

—

—

1,598

1,355

—

—

1,598

1,355

Vionic integration-related costs

—

—

—

5,812

—

—

—

5,812

Brand Portfolio – brand exits

—

—

—

—

—

—

—

—

Total charges/other items

5,958

—

29,056

7,167

—

—

35,014

7,167

Adjusted gross profit

$

354,225

$

518,261

$

240,763

$

392,628

$

1,516

$

1,828

$

596,504

$

912,717

Operating (loss) earnings

$

(38,651

)

$

70,036

$

(352,556

)

$

46,225

$

(39,072

)

$

(18,117

)

$

(430,279

)

$

98,144

Charges/Other Items:

Goodwill and intangible asset impairment charges

—

—

262,719

—

—

—

262,719

—

COVID-19-related expenses

22,551

—

75,853

—

636

—

99,040

—

Brand Portfolio – brand exits

—

—

1,598

1,905

—

—

1,598

1,905

Vionic acquisition and integration-related costs

—

—

—

5,889

—

1,807

—

7,696

Total charges/other items

22,551

—

340,170

7,794

636

1,807

363,357

9,601

Adjusted operating (loss) earnings

$

(16,100

)

$

70,036

$

(12,386

)

$

54,019

$

(38,436

)

$

(16,310

)

$

(66,922

)

$

107,745

SCHEDULE 6

CALERES, INC.

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE RECONCILIATION

(Unaudited)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 31,

November 2,

October 31,

November 2,

(Thousands, except per share data)

2020

2019

2020

2019

Net earnings (loss) attributable to Caleres, Inc.:

Net earnings (loss)

$

14,926

$

27,761

$

(361,915

)

$

62,073

Net (earnings) loss attributable to noncontrolling interests

(509

)

226

(223

)

338

Net earnings (loss) attributable to Caleres, Inc.

14,417

27,987

(362,138

)

62,411

Net earnings allocated to participating securities

(512

)

(946

)

—

(2,042

)

Net earnings (loss) attributable to Caleres, Inc. after allocation of earnings to participating securities

$

13,905

$

27,041

$

(362,138

)

$

60,369

Basic and diluted common shares attributable to Caleres, Inc.:

Basic common shares

36,554

39,258

37,439

39,983

Dilutive effect of share-based awards

176

55

—

57

Diluted common shares attributable to Caleres, Inc.

36,730

39,313

37,439

40,040

Basic earnings (loss) per common share attributable to Caleres, Inc. shareholders

$

0.38

$

0.69

$

(9.67

)

$

1.51

Diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders

$

0.38

$

0.69

$

(9.67

)

$

1.51

SCHEDULE 7

CALERES, INC.

BASIC AND DILUTED ADJUSTED EARNINGS (LOSS) PER SHARE RECONCILIATION

(Unaudited)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 31,

November 2,

October 31,

November 2,

(Thousands, except per share data)

2020

2019

2020

2019

Adjusted net earnings (loss) attributable to Caleres, Inc.:

Adjusted net earnings (loss)

$

18,731

$

31,364

$

(53,077

)

$

72,086

Net (earnings) loss attributable to noncontrolling interests

(509

)

226

(223

)

338

Adjusted net earnings (loss) attributable to Caleres, Inc.

18,222

31,590

(53,300

)

72,424

Net earnings allocated to participating securities

(647

)

(1,070

)

—

(2,376

)

Adjusted net earnings (loss) attributable to Caleres, Inc. after allocation of earnings to participating securities

$

17,575

$

30,520

$

(53,300

)

$

70,048

Basic and diluted common shares attributable to Caleres, Inc.:

Basic common shares

36,554

39,258

37,439

39,983

Dilutive effect of share-based awards

176

55

—

57

Diluted common shares attributable to Caleres, Inc.

36,730

39,313

37,439

40,040

Basic adjusted earnings (loss) per common share attributable to Caleres, Inc. shareholders

$

0.48

$

0.78

$

(1.42

)

$

1.75

Diluted adjusted earnings (loss) per common share attributable to Caleres, Inc. shareholders

$

0.48

$

0.78

$

(1.42

)

$

1.75

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119006235/en/

Investor Contact:

Logan Bonacorsi

[email protected]

KEYWORDS: United States North America Missouri

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

MEDIA:

Logo

Posted on November 19, 2020 4:18 pm
James Corl Resigns from Equity Commonwealth’s Board of Trustees

James Corl Resigns from Equity Commonwealth’s Board of Trustees

CHICAGO–(BUSINESS WIRE)–
Equity Commonwealth (NYSE: EQC) announced today that James Corl, who has served as a Trustee since May 2014, resigned from the company’s Board of Trustees effective November 19, 2020.

“Jim has been a valued board member, and we thank him for his contributions,” said Sam Zell, Equity Commonwealth’s Chairman. “We wish him the very best.”

About Equity Commonwealth

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s same property portfolio is comprised of 4 properties and 1.5 million square feet.

Regulation FD Disclosures

We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119006128/en/

Investor Contact

Sarah Byrnes, Equity Commonwealth, (312) 646-2801

KEYWORDS: United States North America Illinois

INDUSTRY KEYWORDS: Construction & Property REIT

MEDIA:

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Posted on November 19, 2020 4:18 pm
ACM Research Enters 3D TSV Copper Plating Market with Ultra ECP 3d Platform

Novel Pre-Wet Process and Pulse Partial Plating Achieve Conformally Filled, Void-Free, High Aspect Ratio Through-Silicon Vias

FREMONT, Calif., Nov. 19, 2020 (GLOBE NEWSWIRE) — ACM Research, Inc. (ACM) (NASDAQ: ACMR), a leading supplier of wafer processing solutions for semiconductor and advanced wafer-level packaging (WLP) applications, today introduced its Ultra ECP 3d platform for conformally filled 3D through-silicon via (TSV) applications. Leveraging ACM’s Ultra ECP ap and map platforms, the Ultra ECP 3d platform delivers high-performance copper (Cu) electroplating for high aspect ratio (HAR) Cu applications, with no voids or seams.

According to industry research firm Mordor Intelligence, “The 3D TSV Devices Market was valued at USD $2.8 billion in 2019 and is expected to reach USD $4.0 billion by 2025, at a CAGR of 6.2% over the forecast period 2020 – 2025.”¹ Key markets for devices using TSVs include imaging, memory, MEMS and optoelectronics, among others.

“Many factors are driving the growth of the 3D TSV market, from device miniaturization to AI and edge computing,” said David Wang, CEO of ACM. “These applications demand more processing power in ever higher density packages and are leading to rapid industry adoption of TSV technologies.”

“In working with customers, we’ve successfully demonstrated our ability to fill HAR vias using the Ultra ECP 3d platform. In addition to delivering higher throughput with a stacked chamber design, the platform is designed to use fewer consumables, have a lower total cost of ownership, and save valuable fab floor space,” he added.

During bottom-up filling for HAR TSVs, the Cu electrolyte must be able to completely fill the vias without any trapped air bubbles when immersed in the plating solution. To accelerate this process, an integrated pre-wet step is used.

This advanced technology solution can deliver better yields, greater plating efficiency and higher throughput during the fabrication process. The Ultra ECP 3d platform for 3D TSV is a 10-chamber, 300mm tool with integrated pre-wet, Cu plating and post-clean modules in a footprint of only 2.20m × 3.60m × 2.90m (W/L/H).

ACM recently delivered its first Ultra ECP 3d tool to a key customer in China to begin formal qualification for its 3D TSV and 2.5D interposer Cu plating applications. For more information, please call the ACM regional company contact listed below.

About ACM Research, Inc.

ACM develops, manufactures and sells semiconductor process equipment for single-wafer or batch wet cleaning, electroplating, stress-free polishing and thermal processes that are critical to advanced semiconductor device manufacturing as well as wafer-level packaging. The company is committed to delivering customized, high-performance, cost-effective process solutions that semiconductor manufacturers can use in numerous manufacturing steps to improve productivity and product yield.

The ACM Research logo is a trademark of ACM Research, Inc. For convenience, this trademark appears in this press release without a ™ symbol, but that practice does not mean that ACM will not assert, to the fullest extent under applicable law, its rights to the trademark.

^{__________________________
1}
https://www.mordorintelligence.com/industry-reports/3d-tsv-devices-market

Media Contact:

Eric Lawson
Kiterocket
+1 480.276.9572
[email protected] Company Contacts:

U.S.
Robert Metter
ACM Research, Inc.
+1-503-367-9753

Europe
Sally-Ann Henry
ACM Research, Inc.
+43 660 7769721

China
Xi Wang
ACM Research (Shanghai), Inc.
+86 21 50808868

Korea
YY Kim
ACM Research (Korea), Inc.
+821041415171

Singapore
Adrian Ong
ACM Research (Singapore), Inc.
+65 8813-1107

Taiwan
David Chang
ACM Research (Taiwan), Inc.
+866 921-999-884

Posted on November 19, 2020 4:18 pm
Williams-Sonoma, Inc. announces third quarter 2020 results

Williams-Sonoma, Inc. announces third quarter 2020 results

Net comparable brand revenue growth accelerates to 24.4%

GAAP operating margin of 15.6%; Non-GAAP operating margin expansion of 810bps to 15.7%

GAAP diluted EPS of $2.54; Non-GAAP diluted EPS of $2.56, growing over 150%

SAN FRANCISCO–(BUSINESS WIRE)–
Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the third fiscal quarter ended November 1, 2020 (“Q3 20”) versus the third fiscal quarter ended November 3, 2019 (“Q3 19”).

“In the third quarter, sales again outperformed expectations with demand comp up nearly 31% compared to a net comp of 24%, driven by strength across all brands. E-commerce accelerated sequentially to a record net comp of over 49% and we were pleased to see our store performance improve throughout the quarter to a net comp of negative 11%. Even more encouraging is the retail demand comp at negative 4%. And, we delivered these sales more profitably, with operating margins reaching record levels at 15.7%,” said Laura Alber, President and Chief Executive Officer.

“Our company’s mission is to enhance the quality of people’s lives at home. We have built our business with this mission at the forefront, investing in areas that matter most to our customers. These include:

High quality, well-designed, sustainable products at a great value because of our scale and vertical supply chain;

Inspiring marketing, and;

The convenience of our high-touch digital-first omnichannel experience.

And this, combined with our loved brands that serve a wide range of customers across aesthetics and price points, is our distinctive positioning and our competitive advantage,” Alber continued.

Alber concluded, “Our vision is to own the home. And, with our distinctive positioning we will only become more relevant. We have the strategies, the team and the world-class platform to maximize the industry trends that favor our business and successfully execute on our growth opportunities. We are confident that we will continue to drive accelerating sales growth with increasing profitability and evolve into an even more attractive business for our stakeholders during and post pandemic.”

THIRD QUARTER 2020

Net revenue growth of 22.4% to $1.765 billion, driven by acceleration across all brands

Demand comparable brand revenue growth accelerated to 31%, which includes orders placed but not yet filled or charged to the customer in the quarter

Net comparable brand revenue growth of 24.4%, with sequential and year-over-year acceleration in all brands, including Williams Sonoma at a record 30.4%, Pottery Barn at 24.1%, Pottery Barn Kids and Teen at 23.8% and West Elm at 21.8%

E-commerce net comparable brand revenue growth accelerated to 49.3% with e-commerce penetration holding at almost 70% of total net revenues

GAAP and non-GAAP gross margin of 40.0%, expanding approximately 400bps and driven by higher year-over-year merchandise margins and occupancy leverage

GAAP and non-GAAP occupancy costs were $174 million, leveraging approximately 250bps

GAAP SG&A rate of 24.4%; non-GAAP SG&A rate of 24.3%, leveraging approximately 410bps and reflecting substantially higher advertising ROI and the strength of our topline performance

GAAP operating margin of 15.6%; non-GAAP operating margin of 15.7%, more than double that of last year and the highest quarterly operating margin performance outside of a holiday fourth quarter

GAAP diluted EPS of $2.54; non-GAAP diluted EPS of $2.56, over 150% higher than last year

Maintained strong liquidity position of $773 million in cash, including approximately $727 million in operating cash flow resulting from our strong performance year to date, enabling the company to repay in full all short-term borrowings under its $500 million revolver, reinstate its share repurchase program and repurchase $109 million in shares in the third quarter, and commit to increasing its next quarterly dividend payment by 10% to $0.53 per share

GUIDANCE

Given the dynamic nature of the COVID-19 crisis and the continuing macroeconomic uncertainty that could impact its performance, the company is not providing guidance for fiscal year 2020.

Long-Term Financial Guidance

Total net revenues growth of mid to high single digits

Non-GAAP operating margin expansion

Above-industry average ROIC (See Exhibit 1)

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, November 19, 2020, at 2:00 P.M. (PT). The call, hosted by Laura Alber, President and Chief Executive Officer, will be open to the general public via live webcast and can be accessed at http://ir.williams-sonomainc.com/events. A replay of the webcast will be available at http://ir.williams-sonomainc.com/events.

SEC REGULATION G — NON-GAAP INFORMATION

This press release includes non-GAAP financial measures. Exhibit 1 provides reconciliations of these non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We have not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential variability and limited visibility of excluded items; these excluded items include expenses related to the acquisition of Outward, Inc., severance-related reorganization expenses, inventory-related charges and store asset impairments due to the impact of COVID-19, and net income tax expense (benefit) associated with tax legislation changes and non-recurring tax adjustments. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of current period performance on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to the GAAP financial measures presented in this press release and our financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements relating to: our ability to capture significant opportunities in the home furnishings industry and increase our market share; our ability to continue to improve performance; the sustainability of our online growth; our ability to fill all of the orders placed in the quarter; the quality of our product pipeline, marketing efforts and omnichannel experience; the impact of COVID-19 on our business, including the impact on our supply chain and ability to deliver product timely and the potential for decreased demand for our products once the pandemic lessens and consumers return to normal purchasing patterns; our competitive advantages; our focus on operational excellence; our ability to improve customers’ experience; industry trends; our optimism about the future; our ability to maximize growth and maintain high profitability; our commitment to increase quarterly dividend payments; and our long-term financial targets.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; the impact of the coronavirus on our global supply chain, retail store operations and customer demand and our ability to respond to such impact, new interpretations of or changes to current accounting rules; our ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of our merchandise; changes in consumer spending based on weather, political, competitive and other conditions beyond our control; delays in store openings; competition from companies with concepts or products similar to ours; timely and effective sourcing of merchandise from our foreign and domestic vendors and delivery of merchandise through our supply chain to our stores and customers; effective inventory management; our ability to manage customer returns; successful catalog management, including timing, sizing and merchandising; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce new brands and brand extensions; challenges associated with our increasing global presence; dependence on external funding sources for operating capital; disruptions in the financial markets; our ability to control employment, occupancy and other operating costs; our ability to improve our systems and processes; changes to our information technology infrastructure; general political, economic and market conditions and events, including war, conflict or acts of terrorism and the impact of the results of the U.S. presidential election; the impact of current and potential future tariffs and our ability to mitigate impacts; and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the SEC, including our Annual Report on Form 10-K for the fiscal year ended February 2, 2020 and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. We have not filed our Form 10-Q for the quarter ended November 1, 2020. As a result, all financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates that are identified prior to the time we file the Form 10-Q. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

ABOUT WILLIAMS-SONOMA, INC.

Williams-Sonoma, Inc. is a specialty retailer of high-quality products for the home. These products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, Pottery Barn Teen, Williams Sonoma Home, Rejuvenation, and Mark and Graham — are marketed through e-commerce websites, direct-mail catalogs and retail stores. These brands are also part of The Key Rewards, our free-to-join loyalty program that offers members exclusive benefits across the Williams-Sonoma family of brands. We operate in the U.S., Puerto Rico, Canada, Australia and the United Kingdom, offer international shipping to customers worldwide, and have unaffiliated franchisees that operate stores in the Middle East, the Philippines, Mexico and South Korea, as well as e-commerce websites in certain locations.

Condensed Consolidated Statements of Earnings (unaudited)

Thirteen Weeks Ended

Thirty-nine Weeks Ended

November 1, 2020

November 3, 2019

November 1, 2020

November 3, 2019

In thousands, except per share amounts

$

% of

Revenues

$

% of

Revenues

$

% of

Revenues

$

% of

Revenues

Net revenues

1,764,536

100

%

1,442,472

100

%

4,490,516

100

%

4,054,418

100

%

Cost of goods sold

1,058,953

60.0

%

924,300

64.1

%

2,819,471

62.8

%

2,608,054

64.3

%

Gross profit

705,583

40.0

%

518,172

35.9

%

1,671,045

37.2

%

1,446,364

35.7

%

Selling, general and administrative expenses

430,979

24.4

%

416,281

28.9

%

1,162,435

25.9

%

1,184,176

29.2

%

Operating income

274,604

15.6

%

101,891

7.1

%

508,610

11.3

%

262,188

6.5

%

Interest expense, net

5,344

0.3

%

2,564

0.2

%

13,967

0.3

%

7,486

0.2

%

Earnings before income taxes

269,260

15.3

%

99,327

6.9

%

494,643

11.0

%

254,702

6.3

%

Income taxes

67,488

3.8

%

24,614

1.7

%

122,884

2.7

%

64,685

1.6

%

Net earnings

201,772

11.4

%

74,713

5.2

%

371,759

8.3

%

190,017

4.7

%

Earnings per share (EPS):

Basic

$2.60

$0.96

$4.80

$2.43

Diluted

$2.54

$0.94

$4.71

$2.39

Shares used in calculation of EPS:

Basic

77,487

77,897

77,511

78,356

Diluted

79,332

79,191

79,012

79,465

3^rd Quarter Net Revenues and Comparable Brand Revenue Growth (Decline) by Concept*

Net Revenues

(Millions)

Comparable Brand Revenue

Growth (Decline)

Q3 20

Q3 19

Q3 20

Q3 19

Pottery Barn

$

684

$

557

24.1

%

3.4

%

West Elm

$

475

$

390

21.8

%

14.1

%

Williams Sonoma

$

260

$

205

30.4

%

(2.1

%)

Pottery Barn Kids and Teen

$

278

$

228

23.8

%

4.0

%

Other

$

68

$

62

N/A

N/A

Total

$

1,765

$

1,442

24.4

%

5.5

%

*See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue, which is calculated on a 13-week to 13-week basis for both Q3 2019 and Q3 2020. Comparable stores that were temporarily closed due to COVID-19 were not excluded from the comparable stores calculation for Q3 2020.

Condensed Consolidated Balance Sheets (unaudited)

In thousands, except per share amounts

November 1, 2020

February 2, 2020

November 3, 2019

ASSETS

Current assets

Cash and cash equivalents

$

773,170

$

432,162

$

155,025

Accounts receivable, net

129,782

111,737

110,131

Merchandise inventories, net

1,125,475

1,100,544

1,258,541

Prepaid expenses

84,974

90,426

115,288

Other current assets

23,556

20,766

20,260

Total current assets

2,136,957

1,755,635

1,659,245

Property and equipment, net

869,092

929,038

915,740

Operating lease right-of-use assets

1,091,649

1,166,383

1,194,061

Deferred income taxes, net

42,185

47,977

41,763

Goodwill

85,402

85,343

85,355

Other long-term assets, net

85,394

69,666

67,660

Total assets

$

4,310,679

$

4,054,042

$

3,963,824

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

$

562,294

$

521,235

$

444,279

Accrued expenses

194,985

175,003

140,789

Gift card and other deferred revenue

349,671

289,613

296,157

Income taxes payable

36,037

22,501

13,182

Current debt

—

299,818

—

Borrowings under revolving line of credit

—

—

100,000

Operating lease liabilities

217,448

227,923

225,530

Other current liabilities

99,691

73,462

68,973

Total current liabilities

1,460,126

1,609,555

1,288,910

Deferred rent and lease incentives

21,858

27,659

29,388

Long-term debt

299,173

—

299,769

Long-term operating lease liabilities

1,027,142

1,094,579

1,127,403

Other long-term liabilities

100,478

86,389

86,461

Total liabilities

2,908,777

2,818,182

2,831,931

Stockholders’ equity

Preferred stock: $.01 par value; 7,500 shares authorized; none issued

—

—

—

Common stock: $.01 par value; 253,125 shares authorized; 76,697, 77,137 and 77,612 shares issued and outstanding at November 1, 2020, February 2, 2020 and November 3, 2019, respectively

768

772

777

Additional paid-in capital

623,379

605,822

594,991

Retained earnings

792,196

644,794

550,774

Accumulated other comprehensive loss

(13,843

)

(14,587

)

(13,708

)

Treasury stock, at cost

(598

)

(941

)

(941

)

Total stockholders’ equity

1,401,902

1,235,860

1,131,893

Total liabilities and stockholders’ equity

$

4,310,679

$

4,054,042

$

3,963,824

Retail Store Data (unaudited)

August 2, 2020

Openings

Closings

November 1, 2020

November 3, 2019

Williams Sonoma

210

1

(1)

210

218

Pottery Barn

201

1

(1)

201

205

West Elm

121

2

(1)

122

114

Pottery Barn Kids

72

—

(1)

71

79

Rejuvenation

10

—

—

10

10

Total

614

4

(4)

614

626

Condensed Consolidated Statements of Cash Flows (unaudited)

Thirty-nine Weeks Ended

In thousands

November 1,

2020

November 3,

2019

Cash flows from operating activities:

Net earnings

$

371,759

$

190,017

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

Depreciation and amortization

140,340

140,495

(Gain) loss on disposal/impairment of assets

26,220

682

Amortization of deferred lease incentives

(4,538

)

(5,985

)

Non-cash lease expense

162,767

160,138

Deferred income taxes

(6,969

)

(10,937

)

Tax benefit related to stock-based awards

13,143

13,648

Stock-based compensation expense

54,671

49,516

Other

(9

)

14

Changes in:

Accounts receivable

(18,017

)

(2,842

)

Merchandise inventories

(22,990

)

(133,637

)

Prepaid expenses and other assets

(4,807

)

(24,157

)

Accounts payable

54,279

(92,101

)

Accrued expenses and other liabilities

58,539

(24,148

)

Gift card and other deferred revenue

59,953

5,848

Operating lease liabilities

(171,245

)

(168,308

)

Income taxes payable

13,532

(8,293

)

Net cash provided by operating activities

726,628

89,950

Cash flows from investing activities:

Purchases of property and equipment

(124,885

)

(121,154

)

Other

506

470

Net cash used in investing activities

(124,379

)

(120,684

)

Cash flows from financing activities:

Borrowings under revolving line of credit

487,823

100,000

Repayments under the revolving line of credit

(487,823

)

—

Payment of dividends

(116,761

)

(113,159

)

Repurchases of common stock

(109,048

)

(112,714

)

Tax withholdings related to stock-based awards

(30,555

)

(26,623

)

Debt issuance costs

(3,645

)

—

Net cash used in financing activities

(260,009

)

(152,496

)

Effect of exchange rates on cash and cash equivalents

(1,232

)

(699

)

Net increase (decrease) in cash and cash equivalents

341,008

(183,929

)

Cash and cash equivalents at beginning of period

432,162

338,954

Cash and cash equivalents at end of period

$

773,170

$

155,025

Exhibit 1

3rd Quarter GAAP to Non-GAAP Reconciliation

(unaudited)

(Dollars in thousands, except per share data)

Thirteen Weeks Ended Thirty-nine Weeks Ended

November 1, 2020 November 3, 2019 November 1, 2020 November 3, 2019

$ % of
revenues $ % of
revenues $ % of
revenues $ % of
revenues

Gross profit
$

705,583

40.0

%

$

518,172

35.9

%

$

1,671,045

37.2

%

$

1,446,364

35.7

%

Outward-related¹

–

726

–

2,140

Employment-related expense²

–

–

–

30

Inventory write-off³

–

–

11,378

–

Non-GAAP gross profit
$

705,583

40.0

%

$

518,898

36.0

%

$

1,682,423

37.5

%

$

1,448,534

35.7

%

Selling, general and administrative expenses
$

430,979

24.4

%

$

416,281

28.9

%

$

1,162,435

25.9

%

$

1,184,176

29.2

%

Outward-related¹

(2,219

)

(6,636

)

(8,918

)

(18,864

)

Employment-related expense²

–

(623

)

–

(7,742

)

Asset impairment⁴

–

–

(21,975

)

–

Non-GAAP selling, general and administrative expenses
$

428,760

24.3

%

$

409,022

28.4

%

$

1,131,542

25.2

%

$

1,157,570

28.6

%

Operating income
$

274,604

15.6

%

$

101,891

7.1

%

$

508,610

11.3

%

$

262,188

6.5

%

Outward-related¹

2,219

7,362

8,918

21,004

Employment-related expense²

–

623

–

7,772

Inventory write-off³

–

–

11,378

–

Asset impairment⁴

–

–

21,975

–

Non-GAAP operating income
$

276,823

15.7

%

$

109,876

7.6

%

$

550,881

12.3

%

$

290,964

7.2

%

$
Tax rate
$
Tax rate
$
Tax rate
$
Tax rate

Income taxes
$

67,488

25.1

%

$

24,614

24.8

%

$

122,884

24.8

%

$

64,685

25.4

%

Outward-related¹

473

1,511

1,665

4,475

Employment-related expense²

–

480

–

(302

)

Inventory write-off³

–

–

2,940

–

Asset impairment⁴

–

–

5,324

–

Deferred tax liability adjustment⁵

647

–

647

–

Tax legislation⁶

–

(98

)

–

(98

)

Non-GAAP income taxes
$

68,608

25.3

%

$

26,507

24.7

%

$

133,460

24.9

%

$

68,760

24.3

%

Diluted EPS
$

2.54

$

0.94

$

4.71

$

2.39

Outward-related¹

0.02

0.07

0.09

0.21

Employment-related expense²

–

–

–

0.10

Inventory write-off³

–

–

0.11

–

Asset impairment⁴

–

–

0.21

–

Deferred tax liability adjustment⁵

(0.01

)

–

(0.01

)

–

Non-GAAP Diluted EPS*
$

2.56

$

1.02

$

5.11

$

2.70

* Per share amounts may not sum due to rounding to the nearest cent per diluted share

SEC Regulation G – Non-GAAP Information

These tables include non-GAAP gross profit, gross margin, selling, general and administrative expense, operating income, operating margin, income taxes, effective tax rate and diluted EPS. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our quarterly actual results on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Notes to Exhibit 1:

During Q3 and year-to-date 2020, we incurred approximately $2.2 million and $8.9 million, respectively, associated with acquisition-related compensation expense and the amortization of acquired intangibles for Outward, Inc. and, during Q3 and year-to-date 2019, we incurred approximately $7.4 million and $21.0 million associated with acquisition-related compensation expense and the amortization of acquired intangibles, as well as the operations of Outward, Inc.

During Q3 and year-to-date 2019, we incurred approximately $0.6 million and $7.8 million, respectively, of employment-related expense that was primarily associated with severance-related reorganization expenses.

During year-to-date 2020, we incurred approximately $11.4 million of inventory write-offs for inventory with minor damage that we could not liquidate through our outlets due to store closures resulting from COVID-19.

During year-to-date 2020, we incurred approximately $22.0 million of expense associated with store asset impairments due to the impact that COVID-19 had on our retail stores.

During Q3 and year-to-date 2020, we recorded an approximate $0.6 million tax benefit resulting from a non-recurring adjustment to a deferred tax liability.

During Q3 and year-to-date 2019, we recorded a net income tax expense of approximately $0.1 million, associated with tax legislation changes.

Return on Invested Capital (“ROIC”)

We believe ROIC is a useful financial measure for investors in evaluating the efficient and effective use of capital, and is an important component of long-term shareholder return. We define ROIC as non-GAAP net operating profit after tax (NOPAT), divided by our average invested capital. NOPAT is defined as non-GAAP operating income, plus rent expense, less estimated taxes at the company’s effective tax rate. Average invested capital is defined as the two-year average of total assets less current liabilities, plus capitalized leases, less cash in excess of $200 million.

ROIC is not a measure of financial performance under GAAP, and should be considered in addition to, and not as a substitute for other financial measures prepared in accordance with GAAP. Our method of determining ROIC may differ from other companies’ methods and therefore may not be comparable.

WSM-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119005483/en/

Julie Whalen EVP, Chief Financial Officer – (415) 616 8524

Elise Wang VP, Investor Relations – (415) 616 8571

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Retail Home Goods Specialty Luxury

MEDIA:

Posted on November 19, 2020 4:18 pm
Getting Paid and Managing Customers Now Easier for Small Businesses with Integrated CRM Solution

Getting Paid and Managing Customers Now Easier for Small Businesses with Integrated CRM Solution

HubSpot for QuickBooks connects critical business functions for a 360 degree view of financial health

MOUNTAIN VIEW, Calif.–(BUSINESS WIRE)–
Today, Intuit launched HubSpot for QuickBooks, an integrated CRM and financial management solution to help growing businesses speed up sales cycles and to allow sales and finance teams to work together more efficiently. Businesses get a clear and more accurate view into their financial health, which helps eliminate potential blind spots. HubSpot for QuickBooks addresses a critical step in propelling businesses through their digital transformation journey as they shift to cloud.

HubSpot for QuickBooks helps solve the cumbersome process of manually transferring information from a CRM into a financial management system when a sale is closed. Typically, this requires coordination between the sales and finance teams and involves manual input into email, a spreadsheet, or an online documentation program. Now, that information is connected — so a customer’s intent to purchase (the front-end customer relationship management) is automatically captured and then integrated with a company’s recognition of revenue once the purchase is completed (in the back-end financial or ERP system).

HubSpot for QuickBooks

Improves cash flow: Significantly shortens the time from customer quote/proposal to when payment is received and allocated.

Ensures better accuracy: Sends sales entries from HubSpot to your books conveniently and reliably. Centralized information provides a single source of truth.

Saves time: Eliminates dual data entry and time spent correcting errors.

Provides confidence: Gives peace of mind that invoices are processed timely and accurately.

QuickBooks, a top small business financial management platform with more than seven million customers, and HubSpot, a leading CRM platform, will continue to collaborate on solutions that meet the demands of businesses as they grow. The first enhanced integration is specifically for QuickBooks Online Advanced customers.

“By teaming up with HubSpot, we are helping small businesses digitally transform and address their top two pain points — getting paid and managing customers,” said Bobby Morrison, chief sales officer at Intuit. “The combination of our product portfolios will create tremendous value for small businesses around the world. This is the first step in a multi-pronged relationship that will only grow over time.”

Together, Intuit and HubSpot will also pursue joint activities that raise awareness of HubSpot for QuickBooks. These efforts are expected to attract new customers seeking a well-integrated set of solutions to address their combined CRM and financial management needs.

“Businesses have become more aware of the importance of creating a great customer experience, and their efforts must include both front and back office functions. Unfortunately, a great front office experience alone can’t make up for back office friction,” said Andrew Lindsay, senior vice president of corporate development and business development for HubSpot. “HubSpot and QuickBooks are collaborating to solve this through our integrated products and shared go-to-market efforts. Customers will enjoy a seamless customer experience and be able to connect their front and back office data to gain deeper insights.”

A small business must be a QuickBooks Online customer and have a HubSpot account to take advantage of the free HubSpot for QuickBooks integration.

Visit our site for more information on HubSpot for QuickBooks and to get the app.

About Intuit

Intuit’s mission is to power prosperity around the world. We are a mission-driven, global financial platform company with products including TurboTax, QuickBooks, Mint and Turbo, designed to empower consumers, self-employed and small businesses to improve their financial lives. Our platform and products help customers get more money with the least amount of work, while giving them complete confidence in their actions and decisions. Our innovative ecosystem of financial management solutions serves more than 50 million customers worldwide. Please visit us for the latest news and in-depth information about Intuit and its brands and find us on social.

About HubSpot

HubSpot is a leading customer relationship management (CRM) platform that provides software and support to help businesses grow better. The platform includes marketing, sales, service, and website management products that start free and scale to meet our customers’ needs at any stage of growth. Learn more at www.hubspot.com.

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(408) 603-9592

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KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Software Internet Finance Data Management Small Business Accounting Professional Services Technology

MEDIA:

Posted on November 19, 2020 4:18 pm
Assurant Announces Closing of Public Offering of Subordinated Notes

Assurant Announces Closing of Public Offering of Subordinated Notes

NEW YORK–(BUSINESS WIRE)–
Assurant, Inc. (NYSE: AIZ) (“Assurant”), a leading global provider of lifestyle and housing solutions that support, protect and connect major consumer purchases, today announced the closing of a public offering of $250 million aggregate principal amount of its 5.25% Subordinated Notes due 2061 (the “Notes”).

The Notes were sold at par, resulting in net proceeds of approximately $244 million, after deducting underwriting discounts and estimated offering expenses payable by Assurant. Assurant intends to use the net proceeds from the offering, along with cash on hand, to finance its pending acquisition of HYLA Mobile. Any remaining net proceeds will be used for general corporate purposes.

The offering of the Notes was registered under the Securities Act of 1933, as amended. Wells Fargo Securities, LLC, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC acted as joint book-running managers for the offering.

An effective shelf registration statement, under which the Notes were issued, was filed previously with the U.S. Securities and Exchange Commission. The offering and sale of the Notes was made only by means of a prospectus and an accompanying prospectus supplement related to the offering. You can get copies of these documents for free by visiting EDGAR at the SEC website at www.sec.gov. Alternatively, copies of the prospectus and prospectus supplement may be obtained by contacting Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attention: WFS Customer Service, or by emailing [email protected] or by calling at (800) 645-3751; Morgan Stanley & Co. LLC, 180 Varick Street, New York, NY 10014, Attention: Prospectus Department, or by emailing [email protected] or by calling at (866) 718-1649; and J.P. Morgan Securities LLC, 383 Madison Avenue, New York, NY 10179, Attention: Investment Grade Syndicate Desk, or by calling at (212) 834-4533.

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, nor does it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Assurant

Assurant, Inc. (NYSE: AIZ) is a leading global provider of lifestyle and housing solutions that support, protect and connect major consumer purchases. Anticipating the evolving needs of consumers, Assurant partners with the world’s leading brands to develop innovative products and services and to deliver an enhanced customer experience. A Fortune 500 company with a presence in 21 countries, Assurant offers mobile device solutions; extended service contracts; vehicle protection services; pre-funded funeral insurance; renters insurance; lender-placed insurance products; and other specialty products. The Assurant Foundation strengthens communities by supporting charitable partners that help protect where people live and can thrive, connect with local resources, inspire inclusion and prepare leaders of the future.

Learn more at assurant.com or on Twitter @AssurantNews.

Cautionary Statement

Some of the statements included in this press release, particularly those with respect to the proposed HYLA Mobile acquisition, may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained in this press release are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that our future plans, estimates or expectations will be achieved. Our actual results might differ materially from those projected in the forward-looking statements. We undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments. For additional information on factors that could affect our actual results, please refer to the factors identified in the reports we file with the U.S. Securities and Exchange Commission (the “SEC”), including but not limited to the risk factors identified in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, each as filed with the SEC.

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Media Contact:

Linda Recupero

Senior Vice President, Enterprise Communication

Phone: 201.519.9773

[email protected]

Investor Relations Contacts:

Suzanne Shepherd

Senior Vice President, Investor Relations

Phone: 201.788.4324

[email protected]

Sean Moshier

Assistant Vice President, Investor Relations

Phone: 914.204.2253

[email protected]

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Professional Services Insurance Finance

MEDIA:

Logo

Posted on November 19, 2020 4:18 pm
Matthews International Reports Results for Fourth Quarter and Fiscal Year Ended September 30, 2020

Financial Highlights – Fiscal 2020

:

Operating cash flow of $180.4 million, representing new annual Company record

Debt reduction of $106.2 million for fiscal 2020; net debt reduction of $112.2 million

Financial Highlights – 4

^th

Quarter

:

Sales increased to $399.1 million vs. $392.4 million a year ago

Adjusted EBITDA increased to $64.1 million vs. $59.2 million last year

Fourth quarter GAAP EPS of $0.24; Non-GAAP adjusted EPS of $1.11

Debt reduction of $26.4 million during fiscal 2020 4

^th

quarter

PITTSBURGH, Nov. 19, 2020 (GLOBE NEWSWIRE) — Matthews I nternational Corporation (NASDAQ GSM: MATW) today announced financial results for its fiscal 2020 fourth quarter and fiscal year ended September 30, 2020.

In discussing the Company’s results for the quarter, Joseph C. Bartolacci, President and Chief Executive Officer, stated: “We had a strong finish to fiscal 2020 and we believe the Company performed very well on a consolidated basis in this difficult environment. For the current quarter, the Company reported growth in consolidated sales, adjusted EBITDA and adjusted earnings per share compared to the same quarter last year. In addition, for the fiscal year ended September 30, 2020, we generated record operating cash flow for the Company, despite the challenges of the pandemic, which allowed us to repay over $100 million of debt in fiscal 2020.

“Sales and adjusted EBITDA for the Memorialization segment were higher during the fiscal 2020 fourth quarter compared to a year ago driven by strong sales of caskets, cemetery memorial products and cremation equipment. An increase in deaths, primarily resulting from the impact of COVID-19, was the principal factor in the year-over-year sales growth. Sales for the Industrial Technologies segment were lower than a year ago, primarily reflecting lower warehouse automation sales. However, order rates for these solutions remained strong and, while COVID-19 unfavorably impacted access to customer sites to deliver these solutions during the current quarter, we are beginning fiscal 2021 with a record backlog level.

“Although fourth quarter sales for the SGK Brand Solutions segment were lower than a year ago, we believe the segment performed well under challenging conditions. While the pandemic continued to unfavorably impact this segment, particularly in Europe and our retail-focused businesses, the U.S. brand packaging and European engineered solutions businesses reported sales growth. Many of our U.S. brand clients are in the essential food and household goods markets and energy storage opportunities continued to drive growth for our engineered solutions business. The segment also realized significant benefits from our ongoing cost reduction program.”

Fourth Quarter Fiscal 2020 Consolidated Results (Unaudited)

($ in millions, except per share data) Q4
FY2020 Q4
FY2019 Change % Change

Sales $ 399.1 $ 392.4 $ 6.7 1.7 %

Net income (loss) attributable to Matthews $ 7.4 $ (71.1 ) $ 78.5 110.4 %

Diluted EPS $ 0.24 $ (2.28 ) $ 2.52 110.5 %

Non-GAAP adjusted net income $ 34.8 $ 31.6 $ 3.2 10.1 %

Non-GAAP adjusted EPS $ 1.11 $ 1.01 $ 0.10 9.9 %

Adjusted EBITDA $ 64.1 $ 59.2 $ 4.9 8.3 %

Note: See the attached tables for additional important disclosures regarding Matthews’ use of non-GAAP measures as well as reconciliations of non-GAAP measures to corresponding GAAP measures. Organic sales represent changes in sales excluding the impact of acquisitions, divestitures, and changes in foreign currency exchange rates.

Consolidated sales for the quarter ended September 30, 2020 were $399.1 million, compared to $392.4 million for the same quarter a year ago. The Company reported an increase in sales for its Memorialization segment reflecting increased sales of caskets, cemetery memorials and cremation equipment. These increases were partially offset by lower sales in the SGK Brand Solutions and Industrial Technologies segments. All segments experienced some level of impact from the global outbreak of COVID-19. Changes in foreign currency exchange rates had a favorable impact of $3.5 million on consolidated sales compared to a year ago.

Net income attributable to the Company for the quarter ended September 30, 2020 was $7.4 million, or $0.24 earnings per share, compared to net loss of $71.1 million, or $2.28 loss per share, for the same quarter last year. The fourth quarter a year ago reflected a goodwill write-down within the SGK Brand Solutions segment. On a non-GAAP adjusted basis, earnings for the fiscal 2020 fourth quarter were $1.11 per share, compared to $1.01 per share a year ago. Adjusted EBITDA (net income before interest expense, income taxes, depreciation and amortization, and other adjustments) for the fiscal 2020 fourth quarter was $64.1 million, compared to $59.2 million a year ago. These increases from the fiscal 2019 fourth quarter primarily reflected the impacts of higher consolidated sales. See reconciliation of adjusted EBITDA below.

Fiscal 2020 Consolidated Results (Unaudited)

($ in millions, except per share data) YTD
FY2020 YTD FY2019 Change % Change

Sales $ 1,498.3 $ 1,537.3 $ (39.0 ) (2.5 ) %

Net loss attributable to Matthews $ (87.2 ) $ (38.0 ) $ (49.2 ) (129.4 ) %

Diluted EPS $ (2.79 ) $ (1.21 ) $ (1.58 ) (130.6 ) %

Non-GAAP adjusted net income $ 93.9 $ 104.4 $ (10.5 ) (10.1 ) %

Non-GAAP adjusted EPS $ 3.01 $ 3.31 $ (0.30 ) (9.1 ) %

Adjusted EBITDA $ 203.1 $ 220.9 $ (17.8 ) (8.1 ) %

Note: See the attached tables for additional important disclosures regarding Matthews’ use of non-GAAP measures as well as reconciliations of non-GAAP measures to corresponding GAAP measures. Organic sales represent changes in sales excluding the impact of acquisitions, divestitures, and changes in foreign currency exchange rates.

Consolidated sales for the year ended September 30, 2020 were $1.50 billion, compared to $1.54 billion a year ago, representing a decrease of $39.0 million from the prior year. Fiscal 2020 reflected increased sales in the Memorialization segment offset by lower sales in the SGK Brand Solutions and Industrial Technologies segments. Changes in foreign currency rates were estimated to have an unfavorable impact of $6.9 million on fiscal 2020 consolidated sales compared to a year ago. Fiscal 2020 sales were unfavorably impacted by the global outbreak of COVID-19, which has caused some commercial impact and business disruptions in certain of the Company’s segments and geographic locations.

Net loss attributable to the Company for the year ended September 30, 2020 was $87.2 million ($2.79 loss per share), compared to $38.0 million ($1.21 loss per share) for fiscal 2019. The decrease resulted from the accelerated amortization of certain discontinued trade names in the SGK Brand Solutions segment, and charges related to the Company’s cost reduction program. Net loss for the current year also reflected the gain on the divestiture of the Company’s ownership interest in a pet cremation business and the unfavorable impact of a reserve for a letter of credit in connection with the incineration equipment project in Saudi Arabia. In addition, net loss for both fiscal years reflected write-downs of goodwill.

On a non-GAAP adjusted basis, earnings for the year ended September 30, 2020 were $3.01 per share, compared to $3.31 per share last year. Adjusted EBITDA for the year ended September 30, 2020 was $203.1 million, compared to $220.9 million a year ago. Changes in foreign currency rates were estimated to have an unfavorable impact of $2.3 million on adjusted EBITDA compared to last year. See reconciliation of adjusted EBITDA below.

The Company purchased approximately 174,000 shares under its repurchase program during fiscal 2020.

Outlook

Mr. Bartolacci further stated: “The uncertainties surrounding COVID-19 remain as we begin fiscal 2021 and are expected to continue to impact our operating results. However, as evidenced by our fiscal 2020 operating results, the impact of the pandemic to date has been relatively limited on a consolidated basis due to the nature of our largest businesses.

“In the Memorialization segment, the pandemic is expected to continue to impact demand for caskets and cemetery memorial products, particularly in the first half of fiscal 2021 compared to the pre-pandemic first half of fiscal 2020. For the SGK Brand Solutions segment, sales volumes for the U.S. brand packaging portion of the business have continued to remain relatively steady, particularly for packaging of consumer products such as food, cleaning products, household goods, and pharmaceuticals. European sales, particularly cylinders, continue to be unfavorably impacted by the current economic conditions, but sales of engineered solutions into the energy storage market are expected to significantly grow. Our Industrial Technologies segment has a strong backlog for our warehouse automation business, but our ability to complete projects is dependent on access to customer sites and the economy. In addition, our cost reduction program remains on track and is expected to generate additional benefits in fiscal 2021, with related implementation costs anticipated to begin to subside during the year.

“Due to COVID-19, we are continuing to suspend earnings guidance for the near future. However, due to the nature and stability of our largest businesses, we expect fiscal 2021 to be relatively steady on a consolidated basis with fiscal 2020. In addition, we will continue to emphasize operating cash flow generation in fiscal 2021.”

Webcast

The Company will host a conference call and webcast on Friday, November 20, 2020 at 9:00 a.m. Eastern Time to review its financial and operating results and discuss its corporate strategies and outlook. A question-and-answer session will follow. The conference call can be accessed by calling (201) 689-8471. The audio webcast can be monitored at www.matw.com. A telephonic replay will be available from 12:00 p.m. ET on the day of the teleconference call until Friday, December 4, 2020. To listen to the archived call, dial (412) 317-6671 and enter the conference ID number 13712763. The webcast replay will be available on the Company’s website at www.matw.com, where a transcript will also be posted once available.

About Matthews International Corporation

Matthews International Corporation is a global provider of brand solutions, memorialization products and industrial technologies. The SGK Brand Solutions segment is a leading provider of packaging solutions and brand experiences, helping companies simplify their marketing, amplify their brands and provide value. The Memorialization segment is a leading provider of memorialization products, including memorials, caskets and cremation and incineration equipment, primarily to cemetery and funeral home customers that help families move from grief to remembrance. The Industrial Technologies segment designs, manufactures and distributes marking, coding and industrial automation technologies and solutions. The Company has approximately 11,000 employees in more than 25 countries on six continents that are committed to delivering the highest quality products and services.

Forward-looking Information

Any forward-looking statements contained in this release are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company’s actual results in future periods to be materially different from management’s expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company’s results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in the cost of materials used in the manufacture of the Company’s products, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company’s acquisitions, cybersecurity concerns, effectiveness of the Company’s internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company’s control, impact of pandemics or similar outbreaks, such as coronavirus disease 2019 (“COVID-19”) or other disruptions to our industries, customers, or supply chains, and other factors described in the Company’s Annual Report on Form 10-K and other periodic filings with the U.S. Securities and Exchange Commission.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)

Three Months Ended
September 30, Year Ended

September 30,

2020 2019 % Change 2020 2019 % Change

Sales $ 399,140 $ 392,405 1.7 % $ 1,498,306 $ 1,537,276 (2.5 ) %

Cost of sales (262,815 ) (249,809 ) 5.2 % (1,000,537 ) (994,810 ) 0.6 %

Gross profit 136,325 142,596 (4.4 ) % 497,769 542,466 (8.2 ) %

Gross margin 34.2 % 36.3 % 33.2 % 35.3 %

Selling and administrative expenses (97,849 ) (106,251 ) (7.9 ) % (400,040 ) (408,835 ) (2.2 ) %

Intangible amortization (17,875 ) (18,591 ) (3.9 ) % (71,514 ) (45,756 ) 56.3 %

Goodwill write-downs — (77,572 ) (100.0 ) % (90,408 ) (77,572 ) 16.5 %

Operating profit (loss) 20,601 (59,818 ) (134.4 ) % (64,193 ) 10,303 (723.1 ) %

Operating margin 5.2 % (15.2 ) % (4.3 ) % 0.7 %

Interest and other, net (9,214 ) (15,296 ) (39.8 ) % (42,144 ) (48,386 ) (12.9 ) %

Income (loss) before income taxes 11,387 (75,114 ) 115.2 % (106,337 ) (38,083 ) (179.2 ) %

Income taxes (3,987 ) 3,623 (210.0 ) % 18,685 (806 ) (2,418.2 ) %

Net income (loss) 7,400 (71,491 ) 110.4 % (87,652 ) (38,889 ) (125.4 ) %

Non-controlling interests 6 360 (98.3 ) % 497 901 (44.8 ) %

Net income (loss) attributable to Matthews $ 7,406 $ (71,131 ) 110.4 % $ (87,155 ) $ (37,988 ) (129.4 ) %

Earnings (loss) per share — diluted $ 0.24 $ (2.28 ) 110.5 % $ (2.79 ) $ (1.21 ) (130.6 ) %

Earnings per share — non-
GAAP
⁽
¹⁾ $ 1.11 $ 1.01 9.9 % $ 3.01 $ 3.31 (9.1 ) %

Dividends declared per share $ 0.21 $ 0.20 5.0 % $ 0.84 $ 0.80 5.0 %

⁽¹⁾
See reconciliation of non-GAAP financial information provided in tables at the end of this release

SEGMENT INFORMATION (Unaudited)

(In thousands)

Three Months Ended
September 30, Year Ended September 30,

2020 2019 2020 2019

Sales:

SGK Brand Solutions $ 179,578 $ 185,988 $ 693,093 $ 743,869

Memorialization 177,693 162,613 656,035 636,892

Industrial Technologies 41,869 43,804 149,178 156,515

$ 399,140 $ 392,405 $ 1,498,306 $ 1,537,276

Adjusted EBITDA:

SGK Brand Solutions $ 28,836 $ 32,881 $ 90,644 $ 119,493

Memorialization 43,265 32,925 146,285 134,286

Industrial Technologies 7,548 8,417 22,753 24,082

Corporate and Non-Operating (15,593 ) (14,974 ) (56,602 ) (56,989 )

Total Adjusted EBITDA⁽¹⁾ $ 64,056 $ 59,249 $ 203,080 $ 220,872

⁽¹⁾
See reconciliation of non-GAAP financial information provided in tables at the end of this release

CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (Unaudited)

(In thousands)

September 30, 2020 September 30, 2019

ASSETS

Cash and cash equivalents $ 41,334 $ 35,302

Accounts receivable, net 295,185 318,756

Inventories, net 175,100 180,274

Other current assets 63,954 49,384

Total current assets 575,573 583,716

Property, plant and equipment, net 236,788 237,442

Goodwill 765,388 846,807

Other intangible assets, net 333,498 400,650

Other long-term assets 161,386 121,988

Total assets $ 2,072,633 $ 2,190,603

LIABILITIES

Long-term debt, current maturities $ 26,824 $ 42,503

Other current liabilities 290,044 237,376

Total current liabilities 316,868 279,879

Long-term debt 807,710 898,194

Other long-term liabilities 336,622 293,294

Total liabilities 1,461,200 1,471,367

SHAREHOLDERS’ EQUITY

Total shareholders’ equity 611,433 719,236

Total liabilities and shareholders’ equity $ 2,072,633 $ 2,190,603

CONDENSED CONSOLIDATED CASH FLOWS INFORMATION (Unaudited)

(In thousands)

Year Ended September 30,

2020 2019

Cash flows from operating activities:

Net loss $ (87,652 ) (38,889 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 119,058 90,793

Changes in working capital items 46,367 (12,482 )

Goodwill write-downs 90,408 77,572

Other operating activities 12,266 14,089

Net cash provided by operating activities 180,447 131,083

Cash flows from investing activities:

Capital expenditures (34,849 ) (37,688 )

Acquisitions, net of cash acquired (1,000 ) (11,504 )

Other investing activities 33,131 (11,567 )

Net cash used in investing activities (2,718 ) (60,759 )

Cash flows from financing activities:

Net (payments) proceeds from long-term debt (126,283 ) (16,038 )

Purchases of treasury stock (4,428 ) (26,127 )

Dividends (26,437 ) (25,620 )

Other financing activities (15,104 ) (7,257 )

Net cash used in financing activities (172,252 ) (75,042 )

Effect of exchange rate changes on cash 555 (1,552 )

Net change in cash and cash equivalents $ 6,032 (6,270 )

Reconciliations of Non-GAAP Financial Measures

Included in this report are measures of financial performance that are not defined by GAAP. The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company’s core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provide investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.

ADJUSTED EBITDA RECONCILIATION (Unaudited)

(In thousands)

Three Months Ended
September 30, Year Ended

September 30,

2020 2019 2020 2019

Net income (loss) $ 7,400 $ (71,491 ) $ (87,652 ) $ (38,889 )

Income tax provision (benefit) 3,987 (3,623 ) (18,685 ) 806

Income (loss) before income taxes $ 11,387 $ (75,114 ) (106,337 ) (38,083 )

Net loss attributable to noncontrolling interests 6 360 497 901

Interest expense 7,950 9,894 34,885 40,962

Depreciation and amortization ^* 30,640 30,034 119,058 90,793

Acquisition costs ⁽^1)*^* 932 2,486 3,844 10,872

ERP integration costs ⁽^2)*^* 136 1,171 2,296 7,508

Strategic initiatives and other charges ⁽^3)*^* 8,759 10,300 33,799 13,449

Legal matter reserve ⁽⁴⁾ — — 10,566 —

Non-recurring / incremental COVID-19 costs ⁽⁵⁾ 2,121 — 4,655 —

Goodwill write-downs ⁽⁶⁾ — 77,572 90,408 77,572

Net realized (gains) losses on divestitures and asset dispositions ⁽⁷⁾ — (612 ) (11,208 ) 3,853

Joint Venture depreciation, amortization and interest expense ⁽⁸⁾ — 648 4,732 1,514

Stock-based compensation 1,018 1,560 8,096 7,729

Non-service pension and postretirement expense ⁽⁹⁾ 1,107 950 7,789 3,802

Total Adjusted EBITDA $ 64,056 $ 59,249 $ 203,080 $ 220,872

Adjusted EBITDA margin 16.0 % 15.1 % 13.6 % 14.4 %

⁽¹⁾
Includes certain non-recurring costs associated with recent acquisition activities.

⁽²⁾
Represents costs associated with global ERP system integration efforts.

⁽³⁾
Includes certain non-recurring costs primarily associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.

⁽⁴⁾
Represents a reserve established for a legal matter involving a letter of credit for a customer in Saudi Arabia within the Memorialization segment.

⁽⁵⁾
Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.

⁽⁶⁾
Represents goodwill write-downs within the SGK Brand Solutions segment.

⁽⁷⁾
Includes gain on divestiture of $11,208 within the Memorialization segment for the year ended September 30, 2020. Includes loss on divestiture of $2,004 and $6,469 within the Memorialization segment for the three months and fiscal year ended September 30, 2019, respectively; net gains from sale of buildings and vacant properties of $7,347 for the three months and fiscal year ended September 30, 2019; and realized loss of $4,731 for the three months and fiscal year ended September 30, 2019, respectively

⁽⁸⁾
Represents the Company’s portion of depreciation, intangible amortization, interest expense, and other non-recurring charges incurred by non-consolidated subsidiaries accounted for as equity-method investments within the Memorialization segment.

⁽⁹⁾
Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they
are considered to be
a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

* Depreciation and amortization
was
$22,323 and $22,320 for the SGK Brand Solutions segment, $5,503 and $4,833 for the Memorialization segment, $1,451 and $1,565 for the Industrial Technologies segment, and $1,363 and $1,316 for Corporate and Non-Operating, for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization
was
$87,597 and $59,684 for the SGK Brand Solutions segment, $20,527 and $19,731 for the Memorialization segment, $5,771 and $6,195 for the Industrial Technologies segment, and $5,163 and $5,183 for Corporate and Non-Operating, for the fiscal years ended September 30, 2020 and 2019, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $4,931 and $5,045 for the SGK Brand Solutions segment, and $3,953 and $5,839 for Corporate and Non-Operating, for the three months ended September 30, 2020 and 2019, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $943 for the Memorialization segment for the three months ended September 30, 2020. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $3,073 for the Industrial Technologies segment for the three months ended September 30, 2019. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $13,990 and $8,903 for the SGK Brand Solutions segment, $268 and $3,073 for the Industrial Technologies segment, and $22,985 and $
19,853,for
Corporate and Non-Operating, for the fiscal years ended September 30, 2020 and 2019, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $2,696 for the Memorialization segment for the fiscal year ended September 30, 2020.

ADJUSTED NET INCOME AND EPS RECONCILIATION (Unaudited)

(In thousands, except per share data)

Three Months Ended September 30, Year Ended September 30,

2020 2019 2020 2019

per share

per share

per share

per share

Net income (loss) attributable to Matthews $ 7,406 $ 0.24 $ (71,131 ) $ (2.28 ) $ (87,155 ) $ (2.79 ) $ (37,988 ) $ (1.21 )

Acquisition costs ⁽¹⁾ 699 0.02 1,998 0.07 2,883 0.09 8,371 0.27

ERP integration costs ⁽^2)*^* 101 0.01 965 0.03 1,721 0.06 5,781 0.18

Strategic initiatives and other charges ⁽³⁾ 6,570 0.20 8,198 0.28 25,485 0.81 10,591 0.34

Legal matter reserve ⁽⁴⁾ — — — — 7,924 0.25 — —

Non-recurring / incremental COVID-19 costs ⁽⁵⁾ 1,591 0.05 — — 3,491 0.11 — —

Goodwill write-downs ⁽⁶⁾ — — 76,316 2.42 81,861 2.63 76,316 2.42

Net realized (gains) losses on divestitures and asset dispositions ⁽⁷⁾ — — (162 ) — (8,406 ) (0.27 ) 3,232 0.10

Joint Venture depreciation, amortization and interest expense ⁽⁸⁾ — — 56 — 2,433 0.08 266 0.01

Non-service pension and postretirement expense ⁽⁹⁾ 830 0.03 760 0.02 5,842 0.19 2,927 0.09

Intangible amortization expense 13,407 0.43 14,586 0.47 53,636 1.72 35,232 1.12

Tax-related ⁽¹⁰⁾ 4,175 0.13 — — 4,175 0.13 (300 ) (0.01 )

Adjusted net income $ 34,779 $ 1.11 $ 31,586 $ 1.01 $ 93,890 $ 3.01 $ 104,428 $ 3.31

Note: Adjustments to net income for non-GAAP reconciling items were calculated using an income tax rate of 25% and 21.5%, for the three months ended September 30, 2020 and 2019, respectively, and 25% and 23% for the fiscal year ended September 30, 2020 and 2019, respectively.

⁽¹⁾
Includes certain non-recurring costs associated with recent acquisition activities.

⁽²⁾
Represents costs associated with global ERP system integration efforts.

⁽³⁾
Includes certain non-recurring costs primarily associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.

⁽⁴⁾
Represents a reserve established for a legal matter involving a letter of credit for a customer in Saudi Arabia within the Memorialization segment.

⁽⁵⁾
Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.

⁽⁶⁾
Represents goodwill write-downs within the SGK Brand Solutions segment.

⁽⁷⁾
Includes pre-tax gain on divestiture of $11,208 within the Memorialization segment for the year ended September 30, 2020. Includes pre-tax loss on divestiture of $2,004 and $6,469 within the Memorialization segment for the three months and fiscal year ended September 30, 2019, respectively; pre-tax net gains from sale of buildings and vacant properties of $7,347 for the three months and fiscal year ended September 30, 2019; and pre-tax realized loss of $4,731 for the three months and fiscal year ended September 30, 2019, respectively

⁽⁸⁾
Represents the Company’s portion of depreciation, intangible amortization, interest expense, and other non-recurring charges incurred by non-consolidated subsidiaries accounted for as equity-method investments within the Memorialization segment.

⁽⁹⁾
Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they
are considered to be
a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

⁽¹⁰⁾
Fiscal 2020 balance represents tax-related items incurred in connection with goodwill write-downs.

NET DEBT RECONCILIATION (Unaudited)

(In thousands)

September 30, 2020 September 30, 2019

Long-term debt, current maturities $ 26,824 $ 42,503

Long-term debt 807,710 898,194

Total long-term debt 834,534 940,697

Less: Cash and cash equivalents (41,334 ) (35,302 )

Net Debt $ 793,200 $ 905,395

Matthews International Corporation
Corporate Office
Two NorthShore Center
Pittsburgh, PA 15212-5851
Phone: (412) 442-8200

Contact: Steven F. Nicola William D. Wilson

Chief Financial Officer Senior Director,

and Secretary Corporate Development

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