Market Newsdesk

Karora will host a call/webcast on November 12, 2020 at 10:00 a.m. (Eastern Time) to discuss the third quarter results. North American callers please dial: 1-888-231-8191, international callers please dial: (+1) 647-427-7450. For the



webcast of this event click [here]



 (replay access information below).

TORONTO, Nov. 12, 2020 /CNW/ – Karora Resources Inc. (TSX: KRR) (“Karora” or the “Corporation”) is pleased to announce its financial results and review of activities for the three and nine months ended September 30, 2020. All amounts are expressed in Canadian dollars, unless otherwise noted. For additional information please refer to Karora’s Management’s Discussion & Analysis (“MD&A”) and unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2020 and 2019.

Highlights

• Third quarter 2020 consolidated gold production was 24,717 ounces. During the first nine months of 2020 gold production was 73,612 ounces, or 80% of the mid-point of annual guidance of 90,000 to 95,000 ounces, which is maintained (assuming no significant interruption in operations as a result of the COVID-19 virus)
• Third quarter gold sales of 22,912 ounces were 1,805 ounces lower than ounces produced due to timing of sales which is expected to be captured in the fourth quarter
• Record low consolidated all-in-sustaining-costs (“AISC”)¹ of US$1,044 per ounce since acquiring the Higginsville mill. AISC continued to trend lower despite unfavourable foreign exchange impacts compared to the second quarter which accounted for an additional US$84 per ounce due to an 8% swing in the AUD:USD exchange rate
• Karora maintains its 2020 cost guidance of US$1,050–US$1,200 per ounce and continues to target AISC costs of approximately US$1,000 per ounce by the end of 2020
• Net earnings of $34.9 million, or $0.24 per share for the third quarter of 2020, up $25.1 million from $9.8 million in the second quarter of 2020
• Record adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”)¹ of $23.1 million or $0.16 per share for the third quarter of 2020, up $5.8 million from $17.3 million in the second quarter of 2020
• Significantly strengthened cash position and balance sheet: Karora ended the third quarter of 2020 with a strong cash position of $67.3 million, an improvement of $17.1 million from June 30, 2020, and working capital was flat at $43.7 million
• In the third quarter of 2020 the Corporation’s Beta Hunt mine reversed an impairment on its mineral property of $36.1 million based on an impairment assessment conducted in the third quarter of 2020. The after tax amount was $25.3 million. The initial impairment was recognized in the fourth quarter of 2017.
• Announced new high grade gold discoveries (Larkin Gold Zone, new Footwall Zone in Western Flanks North) and first new nickel discovery in 13 years (30C Nickel Trough) at the Beta Hunt Mine. The discoveries are in close proximity to existing mine infrastructure
• New coarse gold occurrence: On November 2, 2020, Karora announced that underground development at the Beta Hunt Mine intersected an estimated 2,000 ounces of coarse gold. The coarse gold was found in the same geological environment as previously announced coarse gold occurrences and proximal to the 2018 Father’s Day Vein discovery
• Increased Exploration Budget: As a result of drilling success year to date and the multiple high quality exploration targets across the Western Australian operations, the 2020 exploration budget was increased by approximately 50% to A$15 million from the previous A$9.5–A$10 million budget, with the majority to be spent on HGO drill targets
• Spargos Reward acquisition completed on August 7, 2020: Spargos Reward is a high-grade open pit gold project in Western Australia that is expected to begin generating positive cash flow for Karora in 2021
• Royalty reductions: An agreement to reduce the Beta Hunt gold royalty by 2.75% (from 7.5% to 4.75%) effective July 1, 2020 was completed on September 3, 2020. During the second quarter of 2020 the Corporation eliminated the Morgan Stanley Capital Group Inc. (“Morgan Stanley”) NSR (“Net smelter royalty”) gold royalty on the Higginsville properties. The 110,000 ounce participation payment arrangement with Morgan Stanley remains in place.
• On November 9, 2020, Karora completed a re-purchase of the 3% gross gold royalty held by Ramelius Resources Limited in respect of the Spargos Reward Gold Project (acquired by Karora in August 2020) via payment of A$3 million, satisfied with A$2 million in cash and 264,187 Karora Shares.
• Sale of remaining interest in Dumont Nickel Project: on July 27, 2020, Karora closed the sale of its 28% interest in the Dumont Nickel Project for proceeds of up to $47.6 million. Karora immediately received $10.7 million in cash, comprised of $7.4 million from Waterton for its interest and a $3.3 million refund of Karora’s share of the cash held within the Dumont Joint Venture. On a future sale or other monetization event, the Corporation will be entitled to receive 15% of the net proceeds from the transaction (net of certain agreed costs and deductions) up to a maximum of an additional US$30 million.
• Effective July 31, 2020, the Corporation completed a consolidation of its outstanding common shares on the basis of one (1) post-consolidation common share for every four point five (4.5) pre-consolidation common shares. The exercise price and the number of common shares issuable under any of the Corporation’s outstanding share-based securities such as warrants, stock options and restricted share units, as applicable, have been proportionately adjusted.

1. Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section 14 of Karora’s MD&A dated November 12, 2020.

Paul Andre Huet, Chairman & CEO, commented: “I am very pleased with our strong operational and financial performance for the third quarter. We continued to deliver operationally robust gold production and continued our trend of reducing costs, despite challenges associated with COVID-19 and the impact of a stronger Australian dollar during the quarter, which negatively affected our US dollar cost reporting. The negative foreign exchange impact added approximately US$78 per ounce and US$84 per ounce to our cash operating costs and AISC, respectively.

Our record adjusted EBITDA of over $23 million demonstrates our cash generating power now that we have full exposure to market gold prices and significantly reduced royalties across our properties in a strong gold price environment.

We have established a strong track record over the last five quarters with our consistent production results and declining costs since we acquired the Higginsville mine and mill in 2019. During the third quarter, we produced 24,717 ounces, for total production during the first nine months of 2020 of 73,612 ounces, representing 82% of the lower end of our 2020 guidance. We did sell 1,805 fewer ounces than we produced due to the timing of sales which we expect to make up in the fourth quarter.

Our downward trend in AISC continued despite the elevated costs associated with important COVID-19 precautions we have in place at our operations and a stronger Australian dollar. AISC of US$1,044 per ounce sold during the quarter was a US$21 per ounce improvement over the second quarter of 2020 and we continue to target reaching our goal of US$1,000 per ounce by the end of 2020.

Following the 50% increase in our 2020 drilling budget to A$15 million announced in September, we are well underway with an aggressive campaign of approximately 50,000 metres to be completed in the fourth quarter. We are beginning to see some impressive results already, including three new discoveries at our Beta Hunt Mine, made up of a gold discovery in a footwall zone in the Western Flanks shear and the new Larkin Gold Zone and 30C Nickel Trough in the interpreted southern extension of the Western Flanks shear. Additionally, an ore drive in the A Zone shear recently intersected an estimated 2,000 ounces of coarse gold in the same geological environment as the Father’s Day Vein discovery. At Higginsville we recently announced positive near surface drilling results at our Aquarius Project which could potentially lead to an economic starter pit, offsetting costs associated with accessing higher grade material underground.

By the end of the year, we expect to provide an updated resource and reserve estimate for our Australian operations that will incorporate this year’s drilling as well as reflect the improved economics of our deposits given our work in reducing royalties across the portfolio.

With Karora’s record cash balance of over $67 million, our consistent gold production with full exposure to market gold prices and an aggressive drill program ongoing, I believe we are well positioned for a very exciting fourth quarter. We have built a solid platform from which we are well positioned to grow the business to the next level as we prioritize our numerous organic growth opportunities.”

COVID-19 Preparedness

Karora’s strict COVID-19 control measures at its operations remain in effect. The measures are in place to ensure operating sites remain as prepared and responsive to the situation as possible. While the situation in Western Australia with respect to COVID-19 continues to be stable, Karora continues to actively monitor the advice of local health authorities and has continued to employ a full-time nurse and supporting medical staff to monitor the status of individuals entering and leaving site. Furthermore, the Corporation’s adjusted rotations for personnel on site, use of chartered Karora-only flights where prudent, remain in place to help ensure the health and safety of its employees and stakeholders, which remains the Corporation’s top priority.

Results of Operations

Table 1 – Highlights of operational results for the periods ended September 30, 2020 and 2019

Higginsville (“HGO”)

During the third quarter of 2020, 200 kt was mined and 163 kt of HGO material was milled at a grade of 1.91 g/t for production of 9,192 ounces of gold. Cash costs for the quarter were US$863 per ounce.

Production from the Baloo open pit contributed 128 kt in the quarter. A re-optimization of the pit was completed and additional mineralization identified in the northern portion of the pit which has driven the development of a new ramp from the south. Further exploration drilling will be conducted during the fourth quarter to test the eastern margins of the main mineralized zone. Drilling during the third quarter at Baloo was limited to grade control holes.

At Hidden Secret, a staged pre-stripping program to access the near surface mineralization commenced in August 2020. At Mousehollow, an open pit optimization has been completed and a mining proposal submitted to the appropriate authorities. Mining approval is expected in the fourth quarter of 2020. Once online, these combined pits will provide Karora with additional operational flexibility and mill feed optimization in addition to existing production from Baloo and Fairplay North.

Beta Hunt

During the third quarter of 2020, 191 kt of Beta Hunt material was milled at a grade of 2.75 g/t for production of 15,525 ounces of gold. Mined production from Beta Hunt was 199 kt during the quarter, a 16% increase compared to the prior quarter. The ramp up in production is a direct reflection of improved mining techniques and the addition of a CAT R2900 underground loader into the mining fleet.

Nickel production at Beta Hunt is currently restricted to remnant nickel resources south of the Alpha Fault, however, recent drilling has identified a number of new areas including the 30C Nickel Trough, where production can potentially be increased. A revised nickel production strategy, which is expected to provide a by-product credit towards gold production costs, will be based on an updated nickel mineral resource, which is expected to be completed in the fourth quarter of 2020.

Subsequent to the end of the third quarter, as announced on November 2, 2020, underground development at the Beta Hunt Mine intersected an estimated 2,000 ounces of coarse gold. The coarse gold occurrence was found in the same geological environment as previously announced coarse gold occurrences and proximal to the 2018 Father’s Day Vein discovery. The new gold occurrence provides further support of Karora’s existing Coarse Gold Geological Model at Beta Hunt which could potentially apply to other areas in the mine.

Consolidated Milling

On a consolidated basis, 354 kt were milled in the third quarter of 2020 at an average gold grade of 2.36 g/t, to produce a total of 24,717 ounces of gold, increases of 9%, 4% and 3%, respectively over the prior quarter. Milling operations had another quarter of very strong cost performance with processing costs of A$21 per tonne which was in line with the second quarter and a marked improvement compared to A$27 per tonne in the first quarter of 2020. For the third quarter, the HGO mill feed was approximately 54% Beta Hunt material and approximately 46% HGO open pit material.

Overall, Western Australia’s operational performance met or exceeded targets throughout the quarter despite the additional cost and business disruption associated with the COVID-19 pandemic which included both restricted access to certain equipment and higher cost skilled labour experienced across the State of Western Australia.

Cash Operating Costs and AISC

Cash operating costs¹ and AISC¹ were US$972 and US$1,044 per ounce sold respectively on a consolidated basis for the third quarter of 2020.

During the third quarter the US dollar weakened by approximately 8% against the Australian dollar when compared to the second quarter. This negatively impacted US dollar cash operating costs and all-in sustaining costs for the third quarter by approximately US$78 per ounce and US$84 per ounce, respectively. Despite this, cash operating costs¹ were only 4% higher compared to the second quarter and AISC¹ was 2% lower compared to the second quarter.

Outlook and New Regional Mining Strategy

Following a strong operating performance over the first three quarters of 2020 with total gold production of 73,612 ounces at an AISC¹ of US$1,071 per ounce, Karora is maintaining its consolidated production and cost guidance for its Australian operations (Beta Hunt and HGO) of 90,000 to 95,000 ounces of gold at an average AISC¹ of US$1,050 to US$1,200 per ounce sold. Karora continues to target AISC¹ costs of approximately US$1,000 per ounce sold by the end of 2020.

As announced on November 9, 2020, a new regional mining strategy aimed at optimizing mine-to-mill feed is being developed for Karora’s 1.4 Mtpa HGO treatment plant. With the increasing number of current and planned production sources from Higginsville, Beta Hunt and Spargos, all competing for a share of the feedstock, the new strategy divides Karora’s regional operating and near-term mining areas into four main mining centres:

1. Higginsville Central – This area is the main focus for resource definition and conversion of resources to reserve drilling and includes multiple existing and potential future open pits and underground mines (including the Aquarius deposit) contained within an approximate 10 kilometre radius of the HGO treatment plant. 
2. Higginsville Greater – This area covers all remaining projects and deposits outside Higginsville Central. However, given its vast tenement area and large number of existing and potential resource targets, this area may be further sub-divided over time. Deposits such as Baloo and the Lake Cowan prospects fall within Higginsville Greater.
3. Beta Hunt – The Beta Hunt underground mine.
4. Spargos – Acquired in August 2020 and a potential source of short term, high grade mill feed to HGO.

Karora will provide further details on the new regional mining strategy following the updated resource and reserve estimate expected later in the fourth quarter.

HGO Exploration

At Aquarius, a successful near surface drilling program completed during the third quarter outlined the potential for an economic starter pit which could offset costs associated with accessing the higher grade material underground. The near surface drilling identified high grade supergene gold mineralization, including 43.5 g/t over 3.0 metres and 5.7 g/t over 6.0 metres (which included 14.6 g/t over 2.0 metres). For further details on the results, see Karora news release dated November 9, 2020. Development of the Aquarius starter pit could commence as early as mid-2021.

The existing Aquarius historical mineral resource ^{2 3} is 20 kt @ 19.5 g/t (Measured and Indicated) and 43 kt @ 4.2g/t (Inferred).

Beyond Aquarius, limited exploration drilling was undertaken during the third quarter at HGO owing to the utilization of the drill rigs primarily for infill and grade control drilling at Baloo, Fairplay North, Hidden Secret and Mousehollow. Exploration drilling is scheduled to ramp up in the fourth quarter of 2020 with the mobilization of additional drill rigs. Figure 1 below shows some of the areas where Karora is either actively advancing or evaluating high-priority exploration targets at HGO during the fourth quarter following the announcement in September of an expanded 2020 exploration budget to A$15 million.

Beta Hunt Exploration

Drilling at Beta Hunt during the third quarter was focused on upgrading and extending the northern margin of the Western Flanks mineral resource and testing nickel trough targets on the basalt/ultramafic contact south of the Alpha Island Fault. The drilling was successful in discovering new footwall mineralization associated with the Western Flanks mineral resource, while the nickel targeted drilling made the first new nickel discovery in 13 years (30C Nickel Trough) and, concurrently, also delineated a new gold system – the Larkin Gold Zone – directly below the 30C Nickel Trough. Please see Karora’s news releases dated September 8 and 10, 2020 for further details on the strong new discoveries made at Beta Hunt.

Exploration and resource definition drilling in the fourth quarter is directed at testing the northern, up-plunge extent of the A Zone, from both underground and surface positions, extending the southern margin of Western Flanks, testing additional nickel targets south of the Alpha Island Fault and testing the potential along strike and down-dip potential of the newly discovered Larkin Gold Zone.

Results from drilling completed will be incorporated into an updated Beta Hunt Mineral Resource and Reserve statement aimed to be released in later in the fourth quarter.

Spargos Reward Gold Project

The Spargos Reward acquisition was completed on August 7, 2020. Spargos is a historic high-grade open pit and underground gold project located approximately 50 kilometres north of Higginsville.

Karora recently negotiated the acquisition and elimination of a 3% gold royalty covering the Spargos Reward tenement for consideration of A$3 million, satisfied with A$2 million in cash and 264,187 common shares of the Corporation. Much like the elimination of the Morgan Stanley NSR previously negotiated at Higginsville, the Corporation anticipates that this will both further improve the expected strong pit economics, as well as drive further exploration successes across the Spargos land package.

An infill and extensional drilling program to convert historical mineral resources to mineral reserves is underway. A revised resource and reserve statement is expected to be completed in the fourth quarter and will form the basis of an initial mine plan. The Corporation expects to begin mining activities at Spargos in the second quarter 2021.

Financial Highlights

Table 2 – Highlights of Third Quarter Financial Results
(in thousands of dollars except per share amounts)

During the third quarter, Karora reversed an impairment on its Beta Hunt mineral property totaling $36.1 million based on an impairment assessment conducted during the quarter. After tax, the amount totaled $25.3 million based on the Australian corporate tax rate of 30%. The initial impairment was originally recognized in the fourth quarter of 2017.

Record adjusted EBITDA of $23.1 million was up 47% over the second quarter (and by $21.4 million over the corresponding 2019 period). Consolidated gold sales were 1,805 ounces less than gold produced during the third quarter (22,912 ounce sold versus 24,717 ounces produced) due to the timing of deliveries to the Perth Mint. The Corporation expects to sell these ounces during the fourth quarter.

Table 3 – Highlights of Karora’s Financial Position
(in thousands of dollars):

Karora finished the third quarter of 2020 with a strong cash position of $67.3 million, an increase of $17.1 million compared to June 30, 2020. As at September 30, 2020, Karora had a working capital surplus of $43.7 million.

For a complete discussion of financial results, please refer to Karora’s MD&A and unaudited condensed interim financial statements for the three and nine months ended September 30, 2020 and 2019.

Conference Call / Webcast

Karora will be hosting a conference call and webcast today beginning at 10:00 a.m. (Eastern time). A copy of the accompanying presentation can be found on Karora’s website at www.karoraresources.com.

Live Conference Call and Webcast Access Information:

North American callers please dial: 1-888-231-8191
Local and international callers please dial: 647-427-7450

A live webcast of the call will be available through Cision’s website at:
Webcast Link
(https://produceredition.webcasts.com/starthere.jsp?ei=1394286&tp_key=363b46ced6)

A recording of the conference call will be available for replay through the webcast link, or for a one-week period beginning at approximately 1:00 p.m. (Eastern Time) on November 12, 2020, through the following dial in numbers:

North American callers please dial: 1-855-859-2056; Pass Code: 6191855
Local and international callers please dial: 416-849-0833; Pass Code: 6191855

Compliance Statement (JORC 2012 and NI 43-101)

The disclosure of scientific and technical information contained in this news release has been reviewed and approved by Stephen Devlin, FAusIMM, Group Geologist, Karora Resources Inc., a Qualified Person for the purposes of NI 43-101.

About Karora Resources

Karora is focused on growing gold production and reducing costs at its integrated Beta Hunt Gold Mine and Higginsville Gold Operations (“HGO”) in Western Australia. The Higginsville treatment facility is a low-cost 1.4 Mtpa processing plant which is fed at capacity from Karora’s underground Beta Hunt mine and open pit Higginsville mine. At Beta Hunt, a robust gold mineral resource and reserve is hosted in multiple gold shears, with gold intersections along a 4 km strike length remaining open in multiple directions. HGO has a substantial historical gold resource and prospective land package totaling approximately 1,800 square kilometers. Karora has a strong Board and management team focused on delivering shareholder value. Karora’s common shares trade on the TSX under the symbol KRR. Karora shares also trade on the OTCQX market under the symbol KRRGF.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains “forward-looking information” including without limitation statements relating to the liquidity and capital resources of Karora, production guidance and the potential of the Beta Hunt Mine, Higginsville Gold Operation, the Aquarius Project and the Spargos Gold Project.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Karora to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could affect the outcome include, among others: future prices and the supply of metals; the results of drilling; inability to raise the money necessary to incur the expenditures required to retain and advance the properties; environmental liabilities (known and unknown); general business, economic, competitive, political and social uncertainties; results of exploration programs; accidents, labour disputes and other risks of the mining industry; political instability, terrorism, insurrection or war; or delays in obtaining governmental approvals, projected cash operating costs, failure to obtain regulatory or shareholder approvals. For a more detailed discussion of such risks and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, refer to Karora ‘s filings with Canadian securities regulators, including the most recent Annual Information Form, available on SEDAR at www.sedar.com.

Although Karora has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and Karora disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.

Cautionary Statement Regarding the Higginsville Mining Operations

A production decision at the Higginsville gold operations was made by previous operators of the mine, prior to the completion of the acquisition of the Higginsville gold operations by Karora and Karora made a decision to continue production subsequent to the acquisition. This decision by Karora to continue production and, to the knowledge of Karora, the prior production decision were not based on a feasibility study of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, which include increased risks associated with developing a commercially mineable deposit. Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that anticipated production costs will be achieved. Failure to achieve the anticipated production costs would have a material adverse impact on the Corporation’s cash flow and future profitability. Readers are cautioned that there is increased uncertainty and higher risk of economic and technical failure associated with such production decisions.

SOURCE Karora Resources Inc.

CHATTANOOGA, Tenn., Nov. 12, 2020 /PRNewswire/ — Unum (NYSE: UNM) today announced that Mark Till will oversee Unum International’s business as Executive Vice President. Mr. Till will join Unum on February 1, 2021, and will be officially appointed to the role on April 1, 2021, subject to regulatory approval. Peter O’Donnell will be transitioning from his role as Executive Vice President of Unum International, but will remain with Unum through the first quarter of 2021 to ensure a seamless transition. Mr. O’Donnell has decided to make this change in order to pursue a portfolio career and has been an integral part of the hiring process for Mr. Till.

“Unum is pleased to welcome Mark Till, who we are confident will continue to build upon the momentum that Peter has established for Unum’s business in Europe,” said Unum President & Chief Executive Officer, Rick McKenney. “Peter has been an instrumental part of Unum for the past decade and will truly be missed. He has kept our company focused on unmatched customer service and has grown our business into the trusted brand it is today in both the UK and Poland. I want to thank Peter for his dedication and wish him the best in his future endeavors.”

“It has been a privilege over the past ten years to work at Unum and have the support of our great people across the organization,” said Mr. O’Donnell. “I’m proud of what we have accomplished to support our customers and grow the business. While this was a difficult decision, I am confident in the future direction of the business and that I’m leaving Unum International in great hands.”

“I’m excited to join the great team at Unum International and build off Peter’s many accomplishments,” said Mr. Till. “Helping the working world thrive has never been more important, and I’m confident we can continue to advance the customer experience and grow Unum’s International’s business in the region.”

Mr. Till has served Aegon as Managing Director, Platform Solutions, responsible for all aspects of the Aegon UK business revenue and proposition for intermediaries and their customers. Additionally, Mr. Till previously served as Head of Personal Investing & UK Marketing Director for Fidelity International, where he managed over 275,000 customers and £12 billion of customer investments. Mr. Till has also held positions with Standard Life, HomeServe PLC and Barclays Bank.

Mr. O’Donnell joined Unum’s UK subsidiary, Unum Limited, in June 2010 as the Chief Financial Officer. He has served as Chief Executive Officer of Unum’s UK business since September 2012, and as Executive Vice President of Unum International since October 2018. Mr. O’Donnell has also served as a member of Unum Limited’s Board of Directors. During his time with Unum, Mr. O’Donnell made significant contributions to the growth of Unum’s brand in the UK and oversaw Unum’s expansion into Poland.

Unum International is comprised of both Unum UK and Unum Poland and serves as the European arm of Unum Group. Unum UK is the leading provider of group income protection and critical illness coverage in the United Kingdom, as well as a provider of life and dental benefits. Additionally, Unum Poland has been providing group and individual life insurance in the Polish market for more than twenty years. Following the acquisition of Unum Poland in 2018, both companies fell under the Unum International business unit.

About Unum
Unum Group (www.unum.com) provides a broad portfolio of financial protection benefits and services through the workplace and is a leading provider of disability income protection worldwide. Through its Unum US, Unum UK, Unum Poland, and Colonial Life businesses, the company provides disability, life, accident, critical illness, dental and vision benefits that protect millions of working people and their families.  Unum also provides leave and absence management services that streamline the leave experience for employers and employees and stop-loss coverage to help self-insured employers protect against medical costs.  Unum reported revenues of $12.0 billion in 2019 and provided $7.5 billion in benefits. 

For more information, connect with us on Facebook, Twitter and LinkedIn.

View original content to download multimedia:http://www.prnewswire.com/news-releases/unum-group-announces-leadership-transition-for-unum-international-business-301171860.html

SOURCE Unum Group

CLEVELAND, Nov. 12, 2020 /PRNewswire/ — TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the fourth quarter ended September 30, 2020, which were significantly impacted by the COVID-19 pandemic.

Fourth quarter highlights include:

• Net sales of $1,173 million, down 23.9% from $1,541 million in the prior year’s quarter;
• Income from continuing operations of $101 million;
• Earnings per share from continuing operations of $1.76;
• EBITDA As Defined margin of 42.4%;
• EBITDA As Defined of $498 million is down 29.6% from $707 million in the prior year’s quarter;
• Adjusted earnings per share of $2.89, down 48.6% from $5.62; and
• Strong operating cash flow generation of $222 million.

Fiscal 2020 highlights include:

• Net sales of $5,103 million, down 2.3% from $5,223 million in the prior year;
• Income from continuing operations of $653 million;
• Earnings per share from continuing operations of $8.14;
• EBITDA As Defined margin of 44.6%;
• EBITDA As Defined of $2,278 million is down 5.8% from $2,419 million in the prior year; and
• Adjusted earnings per share of $14.47, down 20.8% from $18.27.

Fiscal 2021 financial guidance will not be issued at this time.

Quarter-to-Date Results

Net sales for the quarter declined 23.9%, or $368 million, to $1,173 million from $1,541 million in the comparable quarter a year ago. In the current quarter, all sales represent organic sales.

Income from continuing operations for the quarter was $101 million, a decrease of 68.1% compared to $317 million in the comparable quarter a year ago. The decrease in income from continuing operations primarily reflects the decline in net sales described above. This decline in income from continuing operations was partially offset by a lower effective tax rate.

Adjusted net income for the quarter decreased 47.5% to $166 million, or $2.89 per share, from $316 million, or $5.62 per share, in the comparable quarter a year ago.

EBITDA for the quarter decreased 40.9% to $414 million from $700 million for the comparable quarter a year ago. EBITDA As Defined for the period decreased 29.6% to $498 million compared with $707 million in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 42.4%.

“Throughout our fourth fiscal quarter, both passenger demand and air traffic remained depressed due to the COVID-19 pandemic. The pandemic has resulted in governments around the world implementing measures to control the spread of the virus, including quarantines, travel restrictions and other measures. Certain markets have reopened, while others, particularly international markets, remained closed or are enforcing extended quarantines. Despite these headwinds, I am pleased that we were able to sequentially expand our EBITDA As Defined margin to about forty-two and a half percent as a result of careful management of our cost structure,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer.

Year-to-Date Results

Fiscal 2020 net sales declined 2.3%, or $120 million, to $5,103 million from $5,223 million in the comparable period last year. Organic sales declined 13.8%. Acquisition sales growth was $603 million, all of which are attributable to Esterline.  

Fiscal 2020 income from continuing operations declined 22.4% to $653 million compared to $841 million in the comparable period a year ago. This decrease in income from continuing operations primarily reflects the decline in net sales described above, along with higher interest expense, higher operating costs and amortization expense attributable to Esterline and COVID-19 restructuring costs. The decline in income from continuing operations was offset partially by lower acquisition related expenses and a lower effective tax rate. The effective tax rate for fiscal 2020 was positively impacted by a one-time provisional benefit from dividend and dividend equivalent payments made in the period, as well as the enactment of the CARES Act which included favorable modifications to the interest deduction limitation. The effective tax rate for full-year fiscal 2020 was 11.7% compared to 20.9% for fiscal 2019.

GAAP earnings per share were reduced in fiscal 2020 and 2019 by $3.22 per share and $1.97 per share, respectively, as a result of dividend and dividend equivalent payments made during each year.

Fiscal 2020 adjusted net income decreased 19.3% to $829 million, or $14.47 per share, from $1,028 million, or $18.27 per share, in the comparable period a year ago.

Fiscal 2020 EBITDA decreased 4.4% to $2,052 million from $2,148 million for the comparable period a year ago. EBITDA As Defined for the period decreased 5.8% to $2,278 million compared with $2,419 million in the comparable period a year ago. EBITDA As Defined as a percentage of net sales for the current period was 44.6%.

Mr. Stein continued, “Fiscal 2020 has been a challenging year given the unprecedented COVID-19 pandemic and ensuing disruption of the commercial aerospace industry. These circumstances required actions that were necessary, but difficult to implement. The purposeful management of our cost structure, along with tight management of our balance sheet, better positions us as a Company to emerge strongly from the ongoing weakness in our primary commercial end markets. With the recent uptick in global COVID-19 cases as well as renewed lockdowns in certain countries, much uncertainty remains about the duration of the pandemic and pace of recovery. We will continue to be focused in our management of the details and look forward to the opportunity to create value for our stakeholders in fiscal 2021.”

Please see the attached tables for a reconciliation of income from continuing operations to EBITDA, EBITDA As Defined, and adjusted net income; a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined, and a reconciliation of earnings per share to adjusted earnings per share for the periods discussed in this press release.

Fiscal 2021 Outlook

Given the considerable uncertainty around the extent and duration of business disruptions related to the COVID-19 pandemic, and how that will impact operations, the Company will not provide fiscal year 2021 guidance at this time.

Earnings Conference Call

TransDigm Group will host a conference call for investors and security analysts on November 12, 2020, beginning at 11:00 a.m., Eastern Time. To join the call, dial (833) 397-0943 and enter the passcode 8789968.  International callers should dial (720) 405-3217 and use the same passcode. A live audio webcast can be accessed online at http://www.transdigm.com. A slide presentation will also be available for reference during the conference call; go to the investor relations page of our website and click on “Presentations.”

The call will be archived on the website and available for replay at approximately 2:00 p.m., Eastern Time. A telephone replay will be available for one week by dialing (855) 859-2056 and entering the passcode 8789968. International callers should dial (404) 537-3406 and use the same passcode.

About TransDigm Group

TransDigm Group, through its wholly-owned subsidiaries, is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. Major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, databus and power controls, cockpit security components and systems, specialized and advanced cockpit displays, aircraft audio systems, specialized lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, advanced sensor products, switches and relay panels, thermal protection and insulation, lighting and control technology, parachutes, high performance hoists, winches and lifting devices, and cargo loading, handling and delivery systems.

Non-GAAP Supplemental Information

EBITDA, EBITDA As Defined, EBITDA As Defined Margin, adjusted net income and adjusted earnings per share are non-GAAP financial measures presented in this press release as supplemental disclosures to net income and reported results. TransDigm Group defines EBITDA as earnings before interest, taxes, depreciation and amortization and defines EBITDA As Defined as EBITDA plus certain non-operating items, refinancing costs, acquisition-related costs, transaction-related costs and non-cash charges incurred in connection with certain employee benefit plans. TransDigm Group defines adjusted net income as net income plus purchase accounting backlog amortization expense, effects from the sale on businesses, refinancing costs, acquisition-related costs, transaction-related costs and non-cash charges incurred in connection with certain employee benefit plans. EBITDA As Defined Margin represents EBITDA As Defined as a percentage of net sales. TransDigm Group defines adjusted diluted earnings per share as adjusted net income divided by the total shares for basic and diluted earnings per share. For more information regarding the computation of EBITDA, EBITDA As Defined and adjusted net income and adjusted earnings per share, please see the attached financial tables.

TransDigm Group presents these non-GAAP financial measures because it believes that they are useful indicators of its operating performance. TransDigm Group believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes, capitalized asset values and employee compensation structures, all of which can vary substantially from company to company. In addition, analysts, rating agencies and others use EBITDA to evaluate a company’s ability to incur and service debt. EBITDA As Defined is used to measure TransDigm Inc.’s compliance with the financial covenant contained in its credit facility. TransDigm Group’s management also uses EBITDA As Defined to review and assess its operating performance, to prepare its annual budget and financial projections and to review and evaluate its management team in connection with employee incentive programs. Moreover, TransDigm Group’s management uses EBITDA As Defined to evaluate acquisitions and as a liquidity measure. In addition, TransDigm Group’s management uses adjusted net income as a measure of comparable operating performance between time periods and among companies as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance.

None of EBITDA, EBITDA As Defined, EBITDA As Defined Margin, adjusted net income or adjusted earnings per share is a measurement of financial performance under GAAP and such financial measures should not be considered as an alternative to net income, operating income, earnings per share, cash flows from operating activities or other measures of performance determined in accordance with GAAP. In addition, TransDigm Group’s calculation of these non-GAAP financial measures may not be comparable to the calculation of similarly titled measures reported by other companies.

Although we use EBITDA and EBITDA As Defined as measures to assess the performance of our business and for the other purposes set forth above, the use of these non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with GAAP. Some of these limitations are:

• neither EBITDA nor EBITDA As Defined reflects the significant interest expense, or the cash requirements necessary to service interest payments, on our indebtedness;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor EBITDA As Defined reflects any cash requirements for such replacements;
• the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA and EBITDA As Defined;
• neither EBITDA nor EBITDA As Defined includes the payment of taxes, which is a necessary element of our operations; and
• EBITDA As Defined excludes the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions.

Forward-Looking Statements

Statements in this press release that are not historical facts, including statements under the heading “Fiscal 2021 Outlook,” are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “may,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” or “continue” and other words and terms of similar meaning may identify forward-looking statements.

All forward-looking statements involve risks and uncertainties that could cause TransDigm Group’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, TransDigm Group. These risks and uncertainties include but are not limited to: the impact that the COVID-19 pandemic has on the TransDigm Group’s business, results of operations, financial condition and liquidity; the sensitivity of TransDigm Group’s business to the number of flight hours that its customers’ planes spend aloft and its customers’ profitability, both of which are affected by general economic conditions; future geopolitical or other worldwide events; cyber-security threats and natural disasters; TransDigm Group’s reliance on certain customers; the U.S. defense budget and risks associated with being a government supplier including government audits and investigations; failure to maintain government or industry approvals; failure to complete or successfully integrate acquisitions, including TransDigm Group’s acquisition of Esterline; TransDigm Group’s indebtedness; potential environmental liabilities; liabilities arising in connection with litigation; increases in raw material costs, taxes and labor costs that cannot be recovered in product pricing; risks and costs associated with TransDigm Group’s international sales and operations; and other risk factors. Further information regarding the important factors that could cause actual results to differ materially from projected results can be found in TransDigm Group’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 and other reports that TransDigm Group or its subsidiaries have filed with the Securities and Exchange Commission. Except as required by law, TransDigm Group undertakes no obligation to revise or update the forward-looking statements contained in this press release.

 

 

 

 

 

 

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SOURCE TransDigm Group Inc.