Market Newsdesk

November 12, 2020 6:03 am

Cano Health, a Leading Value-Based Care Delivery Platform for Seniors, to Become Publicly Traded via Merger with Jaws Acquisition Corp.

– Cano Health is a primary care-centric, technology-powered healthcare delivery and population health platform that delivers superior clinical results at lower costs for its Medicare Advantage members

– The transaction will further accelerate Cano Health’s growth and enable expansion of value-based care in current and new geographies

– Transaction values Cano Health at an enterprise value of $4.4 billion and is expected to provide up to $1.49 billion in cash proceeds, including a fully committed PIPE of $800 million

– PIPE led by $50 million investment from Barry Sternlicht, Chairman of Jaws, as well as commitments from funds affiliated with Fidelity Management & Research Company, funds and accounts managed by BlackRock, Third Point and Maverick Capital

PR Newswire

MIAMI, Nov. 12, 2020 /PRNewswire/ — Cano Health, LLC (“Cano Health” or the “Company”), a leading value-based care delivery platform for seniors, and Jaws Acquisition Corp. (NYSE: JWS), a special purpose acquisition company, announced today they have entered into a definitive merger agreement that will support Cano Health’s vision of becoming America’s leader in primary care for seniors. Upon completion of the transaction, the combined company will operate as Cano Health, and will be listed on the New York Stock Exchange (NYSE) under the new ticker symbol “CANO.”

Founded in 2009, Cano Health provides value-based care for more than 103,000 members through its network of 564 primary care physicians across 14 markets in Florida, Texas, Nevada and Puerto Rico. The Company focuses on providing high-touch population health and wellness services to Medicare Advantage members, particularly in underserved communities where it can make the greatest impact. Cano Health’s proprietary CanoPanorama technology platform enables the delivery of high-quality health care services to its members, resulting in superior clinical outcomes at lower costs. Cano Health partners with leading health plans, including Humana, UnitedHealthcare, Anthem, Aetna, Centene and Devoted, to improve health outcomes and member experience.

Cano Health is one of the fastest growing providers of value-based care to Medicare Advantage populations in the nation, which is expected to be a $590 billion market in 2025. The Company has executed on a multi-pronged strategy of organic growth through existing centers, de novo clinics, and MSO affiliate practices, as well as growth through acquisitions to drive a historical revenue compound annual growth rate of over 70% since 2017. In addition, Cano Health was selected to participate as a Direct Contracting Entity by the Centers for Medicare and Medicaid Services (CMS) under the “American Choice Healthcare, LLC” brand that is scheduled to commence in April 2021 and has the potential to significantly expand the Company’s addressable market.

The transaction will further accelerate Cano Health’s growth and enable the expansion of its value-based care into new geographies. The Company is expected to receive up to $935 million in transaction proceeds to pay down debt and provide growth capital, and a substantial majority of up to $465 million of proceeds is expected to be allocated to Cano Health’s financial sponsor.

Cano Health’s management team, led by Founder and CEO Dr. Marlow Hernandez, will continue to lead the Company following the transaction. Barry Sternlicht, Co-Founder and Chairman of Jaws Acquisition Corp., will serve on the Company’s Board of Directors.

Management Comments

“The team at Jaws Acquisition Corp. recognizes our dedication to clinical and operational excellence and we are incredibly excited to partner with them to pursue numerous growth opportunities,” said Dr. Hernandez. “We have fulfilled and will always remain faithful to our mission – to improve patient health and quality of life by delivering superior primary care medical services, while forging life-long bonds with our members. We truly believe our model is transformative and can lead to fundamental improvements in America’s healthcare system, while helping Americans who need our help the most. In the process, we are revitalizing entire communities. Over the last ten years, we have watched our platform deliver results that benefit patients, providers and payors. At Cano Health, we understand the fundamental problems with traditional healthcare payment models. That’s why we continue to align incentives and help providers achieve profitability while providing superior medical care. Today, we take a big step in our effort to make healthcare in America more accessible, coordinated and affordable.”

“Cano Health’s mission of providing high-quality healthcare to a largely underserved population resonates with the principles of Jaws Acquisition Corp., which include doing well by doing good” said Mr. Sternlicht. “Cano Health has an exceptional, highly experienced management team led by Dr. Hernandez, and is incredibly well positioned to capitalize on the large and growing opportunity being driven by the government’s shift to Medicare Advantage and demographic tailwinds in the market. We are pleased to partner with Cano Health and provide the Company with the capital needed to accelerate the next phases of its growth to become one of the leading primary care providers in the country.”

“We are thrilled with how Cano Health has grown to become the leader in value-based healthcare for underserved seniors and look forward to watching it continue to expand nationwide,” said Elliot Cooperstone, Managing Partner of InTandem Capital Partners, Cano Health’s financial sponsor since 2016.

Key Transaction Terms

The transaction values the combined company at an enterprise value of approximately $4.4 billion and implies a multiple of 3.1x estimated 2021 revenues of $1.45 billion.

The business combination is expected to deliver up to $1.49 billion of gross proceeds, including the contribution of up to $690 million of cash held in Jaws Acquisition Corp.’s trust account and an $800 million concurrent private placement (PIPE) of common stock of the combined company, priced at $10.00 per share. The PIPE includes $50 million from Barry Sternlicht and the remainder from leading institutional investors, including funds affiliated with Fidelity Management & Research Company, funds and accounts and accounts managed by BlackRock, Third Point and Maverick Capital. Existing Cano Health shareholders will roll over approximately 90% of their equity stake into the new company.

Assuming no public shareholders of Jaws Acquisition Corp. exercise their redemption rights and after $465 million in cash consideration to Cano Health’s existing shareholders, Cano Health shareholders will own approximately 65%, Jaws Acquisition Corp. shareholders will own approximately 15%, PIPE investors will own approximately 17% and Jaws’ sponsor will own approximately 4% of the issued and outstanding shares of common stock, respectively, of the combined company at closing. Furthermore, the combined company will be capitalized with up to $535 million in cash, including proceeds received from the transaction and after paydown of approximately $400 million in debt.

The transaction, which has been unanimously approved by Cano Health and Jaws Acquisition Corp., is subject to approval by Jaws Acquisition Corp.’s shareholders and other customary closing conditions. The transaction is expected to close at the end of the first quarter or the beginning of the second quarter of 2021.

A more detailed description of the transaction terms and a copy of the Business Combination Agreement will be included in a current report on Form 8-K to be filed by Jaws Acquisition Corp. with the United States Securities and Exchange Commission (the “SEC”). Jaws Acquisition Corp. will file a registration statement (which will contain a proxy statement prospectus) with the SEC in connection with the transaction.

Advisors

Moelis & Company is acting as financial advisor to Cano Health.

Credit Suisse is serving as financial advisor and exclusive capital markets advisor to Cano Health. Credit Suisse is also serving as exclusive placement agent on the private offering.

Goodwin Procter LLP is serving as legal counsel to Cano Health and Cravath Swaine & Moore LLP is serving as counsel to certain shareholders, including members of Company management.

Kirkland & Ellis LLP is serving as legal counsel to Jaws Acquisition Corp.

Management Presentation

A presentation made by the management of Cano Health and Jaws Acquisition Corp. regarding the transaction will be available on Jaws Acquisition Corp.’s website https://www.jawsholdings.com/ and Cano Health’s website https://canohealth.com/. In connection with this event, Jaws Acquisition Corp. will file an investor presentation with the SEC, which can be viewed at www.sec.gov.

About Cano Health, LLC

Cano Health operates primary care centers and supports affiliated medical practices in Florida, Texas, Nevada, and Puerto Rico that specialize in value-based care for seniors. As part of its care coordination strategy, Cano Health provides high-touch population health management programs such as wellness activities, pharmacy services, home visits, telehealth, transition of care, and high-risk and complex care management.

The Company’s personalized patient care and proactive approach to wellness and preventive care is what sets it apart from competitors. In August 2020, Cano Health was ranked the 6^th fastest growing healthcare company in the country on the Inc. 5000 list.

About
Jaws Acquisition Corp.

Jaws Acquisition Corp., led by Chairman Barry S. Sternlicht and Chief Executive Officer Joseph L. Dowling, is a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities.

Additional Information

In connection with the proposed business combination, Jaws intends to file with the SEC a registration statement on Form S-4, which will include a preliminary proxy prospectus and preliminary proxy statement. Jaws will mail a definitive proxy statement/final prospectus and other relevant documents relating to the proposed business combination to its shareholders. This press release is not a substitute for the registration statement, the definitive proxy statement/final prospectus or any other document that Jaws will send to its shareholders in connection with the business combination. Investors and security holders of Jaws are advised to read, when available, the proxy statement/prospectus in connection with Jaws’ solicitation of proxies for its extraordinary general meeting of shareholders to be held to approve the business combination (and related matters) because the proxy statement/prospectus will contain important information about the business combination and the parties to the business combination. The definitive proxy statement/final prospectus will be mailed to shareholders of Jaws as of a record date to be established for voting on the business combination. Shareholders will also be able to obtain copies of the proxy statement/prospectus without charge, once available, at the SEC’s website at www.sec.gov, or by directing a request to: 1601 Washington Avenue, Suite 800, Miami Beach, Florida, 33139.

Participants in the Solicitation

Jaws, the Company and their respective directors, executive officers, other members of management, and employees, under SEC rules, may be deemed participants in the solicitation of proxies of Jaws’ shareholders in connection with the business combination. Investors and security holders may obtain more detailed information regarding the names and interests in the business combination of Jaws’ directors and officers in Jaws’ filings with the SEC, including the registration statement to be filed with the SEC by Jaws, which will include the proxy statement of Jaws for the business combination, and such information and names of the Company’s managers and executive officers will also be in the registration statement to be filed with the SEC by Jaws, which will include the proxy statement of Jaws for the business combination.

No Offer of Solicitation

This press release is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any vote in any jurisdiction pursuant to the business combination or otherwise, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

Forward-Looking Statements

Certain statements made herein are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding future events, the business combination between Jaws and the Company, the estimated or anticipated future results and benefits of the combined company following the business combination, including the likelihood and ability of the parties to successfully consummate the business combination, future opportunities for the combined company, and other statements that are not historical facts.

These statements are based on the current expectations of Jaws’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Jaws and the Company. These statements are subject to a number of risks and uncertainties regarding Jaws’ businesses and the business combination, and actual results may differ materially. These risks and uncertainties include, but are not limited to, general economic, political and business conditions; the inability of the parties to consummate the business combination or the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement; the outcome of any legal proceedings that may be instituted against the parties following the announcement of the business combination; the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the business combination; the risk that the approval of the shareholders of Jaws or the Company for the potential transaction is not obtained; failure to realize the anticipated benefits of the business combination, including as a result of a delay in consummating the potential transaction or difficulty in integrating the businesses of Jaws and the Company; the risk that the business combination disrupts current plans and operations as a result of the announcement and consummation of the business combination; the ability of the combined company to grow and manage growth profitably and retain its key employees; the amount of redemption requests made by Jaws’ shareholders; the inability to obtain or maintain the listing of the post-acquisition company’s securities on NYSE following the business combination; costs related to the business combination; and those factors discussed in Jaws’ final prospectus relating to its initial public offering, dated May 13, 2020, and other filings with the SEC. There may be additional risks that Jaws presently does not know or that Jaws currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements provide Jaws’ expectations, plans or forecasts of future events and views as of the date of this communication. Jaws anticipates that subsequent events and developments will cause Jaws’ assessments to change. However, while Jaws may elect to update these forward-looking statements at some point in the future, Jaws specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Jaws’ assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements.

This press release contains certain financial forecast information of Cano Health. Such financial forecast information constitutes forward-looking information, and is for illustrative purposes only and should not be relied upon as necessarily being indicative of future results. The assumptions and estimates underlying such financial forecast information are inherently uncertain and are subject to a wide variety of significant business, economic, competitive and other risks and uncertainties. See “Forward-Looking Statements” above. Actual results may differ materially from the results contemplated by the financial forecast information contained in this press release, and the inclusion of such information in this press release should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved.

View original content:http://www.prnewswire.com/news-releases/cano-health-a-leading-value-based-care-delivery-platform-for-seniors-to-become-publicly-traded-via-merger-with-jaws-acquisition-corp-301171741.html

SOURCE Jaws Acquisition Corp.; Cano Health, LLC

November 12, 2020 6:03 am

Cascades Reports Results for the Third Quarter of 2020

PR Newswire

Positive outlook supported by favourable containerboard industry dynamics

KINGSEY FALLS, QC, Nov. 12, 2020 /PRNewswire/ – Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended September 30, 2020.

Q3 2020 Highlights

Sales of $1,275 million (compared with $1,285 million in Q2 2020 (-1%) and $1,264 million in Q3 2019 (+1%))
As reported (including specific items)

Operating income of $73 million (compared with $94 million in Q2 2020 (-22%) and $108 million in Q3 2019² (-32%))
Operating income before depreciation and amortization (OIBD)¹ of $154 million (compared with $169 million in Q2 2020 (-9%) and $181 million in Q3 2019² (-15%))
Net earnings per share of $0.51 (compared with $0.57 in Q2 2020 and $0.45 in Q3 2019²)

Adjusted (excluding specific items)¹

Operating income of $81 million (compared with $111 million in Q2 2020 (-27%) and $88 million in Q3 2019 (-8%))
OIBD of $162 million (compared with $186 million in Q2 2020 (-13%) and $161 million in Q3 2019 (+1%))
Net earnings per share of $0.50 (compared with $0.61 in Q2 2020 and $0.30 in Q3 2019)

Added US$300 million of Senior Notes due in 2028; Redeemed US$200 million of remaining 2023 Senior Notes.
Net debt¹ of $1,982 million as at September 30, 2020 (compared with $2,077 million as at June 30, 2020) reflecting solid cash flow from operations. Net debt to adjusted OIBD ratio¹ at 3.0x down from 3.1x as at June 30, 2020.
European Boxboard business announced the acquisition of Papelera del Principado S.A. (“Paprinsa”).
Announced plans for the Bear Island containerboard conversion project in Virginia, USA in October and concurrently completed a bought deal equity issue of 7,441,000 shares priced at $16.80, generating gross proceed of $125 million to finance a portion of the project.
Announced the closure of two tissue production and converting operations in Pennsylvania.

1 For further details, please refer to the “Supplemental Information on non-IFRS Measures” section.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Mario Plourde, President and CEO, commented: “We are pleased with our consolidated third quarter results. Within an ever-evolving business environment, demand levels for containerboard remained robust. This strength drove higher sequential quarterly sales volume in this business, offsetting higher energy costs and an approximate $3 million impact from unplanned operational shutdowns at our Niagara Falls, NY complex. Similarly, our Specialty Products segment generated solid results, benefiting from strong demand for our sustainable food packaging product offerings. Results in our Tissue business were mixed. As expected, demand remained strong for consumer tissue, while the reverse was true for Away-from-Home products given the impact that Covid-19 is having on businesses, restaurants, hotels and schools. This segment, which accounts for approximately 40% of our annual tissue sales, experienced sharp decreases in demand for some products. We have taken steps to adjust production capacity by temporarily closing several facilities that serve this market, and continue to evaluate opportunities to adapt some capacity for different products. Lastly, results in the European Boxboard segment reflected the usual softer seasonal third quarter volumes, the effects of which were partially offset by favourable raw material pricing and lower energy costs.

On the strategic side, we are very pleased to have announced the launch of our Bear Island project in mid-October. This is an important strategic investment for our containerboard business, one which we are confident will benefit operational performance, enhance our product offering in lightweight recycled containerboard and position our containerboard platform for long-term profitable growth within this competitive industry. We are equally pleased to have completed the $125 million equity issuance (offering) that was announced concurrently with the Bear Island project. The proceeds of this offering will be primarily dedicated to financing Bear Island, but may also be used for other ongoing capital projects. The European Boxboard segment also announced the strategic acquisition of one of the main European coated chipboard players, Papelera del Principado S.A. (“Paprinsa”), and three smaller adjoining companies, that will strengthen and consolidate Reno de Medici’s position as the number two manufacturer of recycled boxboard in Europe, while strengthening its competitive position in Spain and the surrounding markets.”

Discussing near-term outlook, Mr. Plourde commented, “In light of ongoing ambiguity related to the pandemic, we are cautiously optimistic regarding our performance in the near-term. Demand dynamics in containerboard remain strong, with results expected to also benefit from the announced US$50/st price increase beginning in the fourth quarter. In Tissue, usual seasonal softness in the fourth quarter and Covid-19 driven demand contraction in the Away-from-Home product categories are expected to translate into weaker sequential performance. Ongoing modernization initiatives in this business, which include the integration of the Orchids assets and final investments in state-of-the-art converting equipment, are delivering targeted returns and will generate increasing benefits as implementation costs trend down. Near-term performance in Specialty Products is forecasted to remain solid, supported by continued strong demand trends for consumer food packaging, while sequential results in European Boxboard are expected to decrease slightly as a result of lack of certainty regarding volume and less favourable mix of products. On a consolidated basis, raw material costs are expected to continue to be favourable for our businesses. Looking ahead, results are projected to benefit from a margin improvement initiative started earlier this year that is expected to generate a 1% annual increase in our consolidated OIBD margin for the next two years. Given persistent uncertainty around Covid-19, we remain focused on the health and safety of our employees and working with our customers to ensure that their needs and expectations for our essential packaging and tissue products are not only met but surpassed. Cash flow management supported by operational flexibility, resilience and execution remain the top priorities for Cascades’ management team, and will continue to be essential to successfully navigate the current unusual and less predictable environment.”

Financial Summary

Selected consolidated information


(in millions of Canadian dollars, except amounts per share) (unaudited)	Q3 2020		Q2 2020		Q3 2019

Sales	1,275		1,285		1,264
As Reported
Operating income before depreciation and amortization (OIBD)^{1 2}	154		169		181
Operating income²	73		94		108
Net earnings²	49		54		43
per share²	$	0.51	$	0.57	$	0.45
Adjusted¹
Operating income before depreciation and amortization (OIBD)	162		186		161
Operating income	81		111		88
Net earnings	48		58		28
per share	$	0.50	$	0.61	0.30
Margin (OIBD)	12.7%		14.5%		12.7%

Segmented OIBD as reported


(in millions of Canadian dollars) (unaudited)	Q3 2020	Q2 2020	Q3 2019

Packaging Products
Containerboard	101	83	120
Boxboard Europe	31	42	25
Specialty Products	16	16	14

Tissue Papers ²	25	48	49

Corporate Activities	(19)	(20)	(27)
OIBD as reported	154	169	181

1 Please refer to the “Supplemental Information on Non-IFRS Measures” section for reconciliation of these figures.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Segmented adjusted OIBD¹


(in millions of Canadian dollars) (unaudited)	Q3 2020	Q2 2020	Q3 2019

Packaging Products
Containerboard	100	94	118
Boxboard Europe	29	43	25
Specialty Products	16	17	16

Tissue Papers	36	54	24

Corporate Activities	(19)	(22)	(22)
Adjusted OIBD	162	186	161
1 – Refer to the “Supplemental Information on Non-IFRS Measures” section.

Analysis of results for the three-month period ended September 30, 2020 (compared to the same period last year)

Sales of $1,275 million grew by $11 million, or 1%, compared with the same period last year. This was largely a reflection of the volume-driven 7% increase in the Containerboard segment and favourable foreign exchange rate for all business segments. These benefits were offset by lower sales in the Tissue business driven by demand contraction in the Away-from-Home segment and lower average selling prices and/or less favourable sales mix in all packaging segments. While volumes grew in the Specialty Products segment, these benefits were largely offset by the mill closure and business divestiture completed in 2019.

The Corporation generated an operating income before depreciation and amortization (OIBD) of $154 million in the third quarter of 2020, down from $181 million in the third quarter of 2019². On an adjusted basis, third quarter OIBD totaled $162 million, an increase of $1 million, or 1% from the $161 million generated in the same period last year. The annual adjusted OIBD reflects increases of $12 million from Tissue and $4 million from Boxboard Europe and stable results in the Specialty Products segment. These benefits were offset by a decrease of $18 million from the Containerboard segment, as the benefits of increased volume were offset by higher year-over-year raw material costs and a less favourable selling price and sales mix. Research and development tax credits of $9 million were recorded in the current quarter.

On an adjusted basis¹, third quarter 2020 OIBD stood at $162 million, versus $161 million in the previous year. The main specific items, before income taxes, that impacted our third quarter 2020 OIBD and/or net earnings were:

$7 million of gains recorded in Containerboard and Tissue related to the sale of previously closed assets (OIBD and net earnings);
$3 million of restructuring charges recorded in Containerboard following the announced closure of a converting facility in Ontario by no later than August 31, 2021 (OIBD and net earnings);
$13 million of impairment charges recorded in Tissue related to changes in the valuation of certain assets due to the current economic and market demand conditions (OIBD and net earnings);
$1 million unrealized gain on financial instruments (OIBD and net earnings);
$11 million foreign exchange gain on long-term debt and financial instruments (net earnings);

For the 3-month periods ended September 30, 2020, the Corporation posted net earnings of $49 million, or $0.51 per share, compared to net earnings of $43 million, or $0.45 per share, in the same period of 2019². On an adjusted basis¹, the Corporation generated net earnings of $48 million in the third quarter of 2020, or $0.50 per share, compared to net earnings of $28 million, or $0.30 per share, in the same period of 2019.

1 For further details, please refer to the “Supplemental Information on non-IFRS Measures” section.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.08 per share to be paid on December 3, 2020 to shareholders of record at the close of business on November 20, 2020. This dividend is an “eligible dividend” as per the Income Tax Act (R.C.S. (1985), Canada). Cascades did not purchase any shares for cancellation during the third quarter of 2020.

2020 Third Quarter Results Conference Call Details

Management will discuss the 2020 third quarter financial results during a conference call today at 9:00 a.m. EDT. The call can be accessed by dialing 1-888-231-8191 (international dial-in 1-647-427-7450). The conference call, including the investor presentation, will be broadcast live on the Cascades website (www.cascades.com under the “Investors” section). A replay of the call will be available on the Cascades website and may also be accessed by phone until December 12, 2020 by dialing 1-855-859-2056 (international dial-in 1-416-849-0833), access code 4158758.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs 12,000 women and men across a network of 88 facilities in North America and Europe. Driven by its participative management, half a century of experience in recycling, and continuous research and development efforts, Cascades continues to provide innovative products that customers have come to rely on, while contributing to the well-being of people, communities and the entire planet. Cascades’ shares trade on the Toronto Stock Exchange under the ticker symbol CAS. Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation’s products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Corporation’s Securities and Exchange Commission filings.

CONSOLIDATED BALANCE SHEETS

(in millions of Canadian dollars) (unaudited)	September 30, 2020	December 31, 2019
Assets
Current assets
Cash and cash equivalents	227	155
Accounts receivable	661	606
Current income tax assets	23	32
Inventories	606	598
Current portion of financial assets	9	10
	1,526	1,401
Long-term assets
Investments in associates and joint ventures	86	80
Property, plant and equipment	2,785	2,770
Intangible assets with finite useful life	166	182
Financial assets	19	16
Other assets	48	55
Deferred income tax assets	179	153
Goodwill and other intangible assets with indefinite useful life	534	527
	5,343	5,184
Liabilities and Equity
Current liabilities
Bank loans and advances	9	11
Trade and other payables	800	788
Current income tax liabilities	19	17
Current portion of other debt without recourse to the Corporation to be refinanced	162	—
Current portion of long-term debt	91	85
Current portion of provisions for contingencies and charges	7	5
Current portion of financial liabilities and other liabilities	30	137
	1,118	1,043
Long-term liabilities
Long-term debt	1,947	2,022
Provisions for contingencies and charges	55	49
Financial liabilities	4	5
Other liabilities	212	198
Deferred income tax liabilities	210	198
	3,546	3,515
Equity
Capital stock	498	491
Contributed surplus	13	15
Retained earnings	1,089	1,003
Accumulated other comprehensive loss	(10)	(17)
Equity attributable to Shareholders	1,590	1,492
Non-controlling interests	207	177
Total equity	1,797	1,669
	5,343	5,184

CONSOLIDATED STATEMENTS OF EARNINGS

	For the 3-month periods ended September 30,				For the 9-month periods ended September 30,
(in millions of Canadian dollars, except per common share amounts and number of common shares) (unaudited)	2020		2019		2020		2019
Sales	1,275		1,264		3,873		3,769
Cost of sales and expenses
Cost of sales (including depreciation and amortization of $81 million for 3-month period (2019 — $73 million) and $227 million for 9-month period (2019 — $212 million))	1,086		1,071		3,243		3,210
Selling and administrative expenses	107		105		348		320
Gain on acquisitions, disposals and others	(7)		(22)		(5)		(29)
Impairment charges and restructuring costs	16		1		31		11
Foreign exchange loss (gain)	1		—		—		(1)
Loss (gain) on derivative financial instruments	(1)		1		(1)		(4)
	1,202		1,156		3,616		3,507
Operating income	73		108		257		262
Financing expense	25		24		79		74
Interest expense on employee future benefits and other liabilities	1		24		3		48
Loss on repurchase of long-term debt	6		—		6		—
Foreign exchange gain on long-term debt and financial instruments	(11)		—		(3)		(7)
Share of results of associates and joint ventures	(3)		(2)		(9)		(6)
Earnings before income taxes	55		62		181		153
Provision for (recovery of) income taxes	(3)		12		24		30
Net earnings including non-controlling interests for the period	58		50		157		123
Net earnings attributable to non-controlling interests	9		7		32		25
Net earnings attributable to Shareholders for the period	49		43		125		98
Net earnings per common share
Basic	$	0.51	$	0.45	$	1.32	$	1.04
Diluted	$	0.50	$	0.44	$	1.30	$	1.02
Weighted average basic number of common shares outstanding	95,019,694		93,860,367		94,577,538		93,886,909
Weighted average number of diluted common shares	96,077,440		95,519,226		95,735,264		95,437,252

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	For the 3-month periods ended September 30,		For the 9-month periods ended September 30,
(in millions of Canadian dollars) (unaudited)	2020	2019	2020	2019
Net earnings including non-controlling interests for the period	58	50	157	123
Other comprehensive income (loss)
Items that may be reclassified subsequently to earnings
Translation adjustments
Change in foreign currency translation of foreign subsidiaries	(14)	1	43	(57)
Change in foreign currency translation related to net investment hedging activities	7	(3)	(27)	32
Cash flow hedges
Change in fair value of foreign exchange forward contracts	—	—	—	1
Change in fair value of interest rate swaps	—	—	—	(1)
Change in fair value of commodity derivative financial instruments	2	1	2	(1)
	(5)	(1)	18	(26)
Items that are not released to earnings
Actuarial gain (loss) on employee future benefits	(4)	2	(19)	(13)
Recovery of income taxes	1	—	5	3
	(3)	2	(14)	(10)
Other comprehensive income (loss)	(8)	1	4	(36)
Comprehensive income including non-controlling interests for the period	50	51	161	87
Comprehensive income attributable to non-controlling interests for the period	12	4	43	13
Comprehensive income attributable to Shareholders for the period	38	47	118	74

CONSOLIDATED STATEMENTS OF EQUITY

	For the 9-month period ended September 30, 2020
(in millions of Canadian dollars) (unaudited)	CAPITAL STOCK	CONTRIBUTED SURPLUS	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE LOSS	TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS	NON- CONTROLLING INTERESTS	TOTAL EQUITY
Balance – End of previous period, as reported	491	15	1,000	(17)	1,489	177	1,666
Business combinations	—	—	3	—	3	—	3
Adjusted balance – Beginning of period	491	15	1,003	(17)	1,492	177	1,669
Comprehensive income (loss)
Net earnings	—	—	125	—	125	32	157
Other comprehensive income (loss)	—	—	(14)	7	(7)	11	4
	—	—	111	7	118	43	161
Dividends	—	—	(22)	—	(22)	(13)	(35)
Issuance of common shares upon exercise of stock options	9	(2)	—	—	7	—	7
Redemption of common shares	(2)	—	(3)	—	(5)	—	(5)
Balance – End of period	498	13	1,089	(10)	1,590	207	1,797


	For the 9-month period ended September 30, 2019
(in millions of Canadian dollars) (unaudited)	CAPITAL STOCK	CONTRIBUTED SURPLUS	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS	NON- CONTROLLING INTERESTS	TOTAL EQUITY
Adjusted balance – Beginning of period	490	16	989	2	1,497	180	1,677
Comprehensive income (loss)
Net earnings	—	—	98	—	98	25	123
Other comprehensive loss	—	—	(10)	(14)	(24)	(12)	(36)
	—	—	88	(14)	74	13	87
Dividends	—	—	(15)	—	(15)	(14)	(29)
Issuance of common shares upon exercise of stock options	5	(1)	—	—	4	—	4
Redemption of common shares	(5)	—	(3)	—	(8)	—	(8)
Disposal of a subsidiary	—	—	—	—	—	(1)	(1)
Capital contribution from a non-controlling interest	—	—	(3)	—	(3)	—	(3)
Balance – End of period	490	15	1,056	(12)	1,549	178	1,727

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the 3-month periods ended September 30,		For the 9-month periods ended September 30,
(in millions of Canadian dollars) (unaudited)	2020	2019	2020	2019
Operating activities
Net earnings attributable to Shareholders for the period	49	43	125	98
Adjustments for:
Financing expense and interest expense on employee future benefits and other liabilities	26	48	82	122
Loss on repurchase of long-term debt	6	—	6	—
Depreciation and amortization	81	73	227	212
Gain on acquisitions, disposals and others	(7)	(26)	(5)	(32)
Impairment charges and restructuring costs	16	1	31	6
Unrealized loss (gain) on derivative financial instruments	(1)	1	(1)	(4)
Foreign exchange gain on long-term debt and financial instruments	(11)	—	(3)	(7)
Provision for (recovery of) income taxes	(3)	12	24	30
Share of results of associates and joint ventures	(3)	(2)	(9)	(6)
Net earnings attributable to non-controlling interests	9	7	32	25
Net financing expense paid	(49)	(42)	(73)	(101)
Premium paid on repurchase of long-term debt	(4)	—	(4)	—
Net income taxes received (paid)	(1)	(12)	1	(14)
Dividends received	2	1	7	3
Employee future benefits and others	(4)	—	(19)	(22)
	106	104	421	310
Changes in non-cash working capital components	30	53	(38)	(13)
	136	157	383	297
Investing activities
Disposals of associates and joint ventures	4	—	3	1
Payments for property, plant and equipment	(52)	(66)	(165)	(185)
Proceeds from disposals of property, plant and equipment	7	19	9	21
Change in intangible and other assets	(3)	(1)	(8)	(3)
Cash paid for business combinations	—	(300)	—	(314)
Proceeds on disposals of a subsidiary, net of cash disposed	—	9	—	9
	(44)	(339)	(161)	(471)
Financing activities
Bank loans and advances	—	(2)	(2)	(2)
Change in credit facilities	(138)	252	(81)	317
Issuance of unsecured senior notes, net of related expenses	409	—	409	—
Repurchase of unsecured senior notes	(264)	—	(264)	—
Increase in other long-term debt	—	—	—	7
Payments of other long-term debt	(22)	(15)	(64)	(94)
Settlement of derivative financial instruments	—	—	1	—
Issuance of common shares upon exercise of stock options	—	4	7	4
Redemption of common shares	—	(3)	(5)	(8)
Partial disposal of a subsidiary to non-controlling interests	—	—	—	—
Payment of other liabilities	—	—	(121)	—
Dividends paid to non-controlling interests	(4)	(4)	(13)	(14)
Dividends paid to the Corporation’s Shareholders	(7)	(8)	(22)	(15)
	(26)	224	(155)	195
Change in cash and cash equivalents during the period	66	42	67	21
Currency translation on cash and cash equivalents	(1)	(2)	5	(6)
Cash and cash equivalents – Beginning of period	162	98	155	123
Cash and cash equivalents – End of period	227	138	227	138

SEGMENTED INFORMATION

The Corporation analyzes the performance of its operating segments based on their operating income before depreciation and amortization, which is not a measure of performance under International Financial Reporting Standards (IFRS). However, the chief operating decision-maker (CODM) uses this performance measure to assess the operating performance of each reportable segment. Earnings for each segment are prepared on the same basis as those of the Corporation. Intersegment operations are recorded on the same basis as sales to third parties, which are at fair market value. The accounting policies of the reportable segments are the same as the Corporation’s accounting policies described in its most recent audited consolidated financial statements for the year ended December 31, 2019.

The Corporation’s operating segments are reported in a manner consistent with the internal reporting provided to the CODM. The Chief Executive Officer has authority for resource allocation and management of the Corporation’s performance and is therefore the CODM.

The Corporation’s operations are managed in four segments: Containerboard, Boxboard Europe and Specialty Products (which constitutes the Corporation’s Packaging Products), and Tissue Papers.

	SALES
	For the 3-month periods ended September 30,
	Canada		United States		Italy		Other countries		Total
(in millions of Canadian dollars) (unaudited)	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
Packaging Products
Containerboard	307	289	199	184	—	—	—	—	506	473
Boxboard Europe	—	—	—	—	79	88	182	168	261	256
Specialty Products	42	35	75	74	—	—	—	14	117	123
Intersegment sales	(2)	(4)	(2)	—	—	—	—	—	(4)	(4)
	347	320	272	258	79	88	182	182	880	848
Tissue Papers	72	64	292	320	—	—	—	3	364	387
Intersegment sales and Corporate Activities	32	28	(1)	1	—	—	—	—	31	29
	451	412	563	579	79	88	182	185	1,275	1,264


	SALES
	For the 9-month periods ended September 30,
	Canada		United States		Italy		Other countries		Total
(in millions of Canadian dollars) (unaudited)	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
Packaging Products
Containerboard	835	824	582	550	—	—	1	2	1,418	1,376
Boxboard Europe	—	—	—	—	240	247	558	558	798	805
Specialty Products	119	104	229	233	—	1	2	49	350	387
Intersegment sales	(9)	(10)	(3)	(1)	—	—	—	—	(12)	(11)
	945	918	808	782	240	248	561	609	2,554	2,557
Tissue Papers	207	192	1,026	910	—	—	1	10	1,234	1,112
Intersegment sales and Corporate Activities	86	93	(1)	7	—	—	—	—	85	100
	1,238	1,203	1,833	1,699	240	248	562	619	3,873	3,769

	OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
	For the 3-month periods ended September 30,		For the 9-month periods ended September 30,
(in millions of Canadian dollars) (unaudited)	2020	2019	2020	2019
Packaging Products
Containerboard	101	120	286	345
Boxboard Europe	31	25	104	84
Specialty Products	16	14	43	43
	148	159	433	472
Tissue Papers	25	49	118	70
Corporate Activities	(19)	(27)	(67)	(68)
Operating income before depreciation and amortization	154	181	484	474
Depreciation and amortization	(81)	(73)	(227)	(212)
Financing expense and interest expense on employee future benefits and other liabilities	(26)	(48)	(82)	(122)
Loss on repurchase of long-term debt	(6)	—	(6)	—
Foreign exchange gain on long-term debt and financial instruments	11	—	3	7
Share of results of associates and joint ventures	3	2	9	6
Earnings before income taxes	55	62	181	153

	PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT
	For the 3-month periods ended September 30,		For the 9-month periods ended September 30,
(in millions of Canadian dollars) (unaudited)	2020	2019	2020	2019
Packaging Products
Containerboard	36	19	67	55
Boxboard Europe	14	13	23	41
Specialty Products	6	4	15	11
	56	36	105	107
Tissue Papers	23	27	62	74
Corporate Activities	5	19	16	40
Total acquisitions	84	82	183	221
Proceeds from disposals of property, plant and equipment	(7)	(19)	(9)	(21)
Right-of-use assets acquisitions and acquisitions included in other debts	(23)	(9)	(36)	(42)
	54	54	138	158
Acquisitions for property, plant and equipment included in “Trade and other payables”
Beginning of period	19	24	46	37
End of period	(28)	(31)	(28)	(31)
Payments for property, plant and equipment net of proceeds from disposals	45	47	156	164

SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

SPECIFIC ITEMS

The Corporation incurs some specific items that adversely or positively affect its operating results. We believe it is useful for readers to be aware of these items as they provide additional information to measure performance, compare the Corporation’s results between periods, and assess operating results and liquidity, notwithstanding these specific items. Management believes these specific items are not necessarily reflective of the Corporation’s underlying business operations in measuring and comparing its performance and analyzing future trends. Our definition of specific items may differ from those of other corporations and some of them may arise in the future and may reduce the Corporation’s available cash.

They include, but are not limited to, charges for (reversals of) impairment of assets, restructuring gains or costs, loss on refinancing and repurchase of long-term debt, some deferred tax asset provisions or reversals, premiums paid on repurchase of long-term debt, gains or losses on the acquisition or sale of a business unit, gains or losses on the share of results of associates and joint ventures, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, unrealized gains or losses on interest rate swaps, foreign exchange gains or losses on long-term debt and financial instruments, specific items of discontinued operations and other significant items of an unusual, non-cash or non-recurring nature.

RECONCILIATION OF NON-IFRS MEASURES

To provide more information for evaluating the Corporation’s performance, the financial information included in this analysis contains certain data that are not performance measures under IFRS (“non-IFRS measures”), which are also calculated on an adjusted basis to exclude specific items. We believe that providing certain key performance measures and non-IFRS measures is useful to both Management and investors, as they provide additional information to measure the performance and financial position of the Corporation. This also increases the transparency and clarity of the financial information. The following non-IFRS measures are used in our financial disclosures:

Operating income before depreciation and amortization (OIBD): Used to assess operating performance and the contribution of each segment when excluding depreciation and amortization. OIBD is widely used by investors as a measure of a corporation’s ability to incur and service debt and as an evaluation metric.
Adjusted OIBD: Used to assess operating performance and the contribution of each segment on a comparable basis.
Adjusted operating income: Used to assess operating performance of each segment on a comparable basis.
Adjusted net earnings: Used to assess the Corporation’s consolidated financial performance on a comparable basis.
Adjusted free cash flow: Used to assess the Corporation’s capacity to generate cash flows to meet financial obligations and/or discretionary items such as share repurchase, dividend increase and strategic investments.
Net debt to adjusted OIBD ratio: Used to measure the Corporation’s credit performance and evaluate financial leverage.
Net debt to adjusted OIBD ratio on a pro-forma basis: Used to measure the Corporation’s credit performance and evaluate the financial leverage on a comparable basis, including significant business acquisitions and excluding significant business disposals, if any.

Non-IFRS measures are mainly derived from the consolidated financial statements, but do not have meanings prescribed by IFRS. These measures have limitations as an analytical tool and should not be considered on their own or as a substitute for an analysis of our results as reported under IFRS. In addition, our definitions of non-IFRS measures may differ from those of other corporations. Any such modification or reformulation may be significant.

The reconciliation of operating income (loss) to OIBD, to adjusted operating income (loss) and to adjusted OIBD by business segment is as follows:

	Q3 2020
(in millions of Canadian dollars) (unaudited)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers	Corporate Activities	Consolidated
Operating income (loss)	71	19	11	3	(31)	73
Depreciation and amortization	30	12	5	22	12	81
Operating income (loss) before depreciation and amortization	101	31	16	25	(19)	154
Specific items:
Gain on acquisitions, disposals and others	(5)	—	—	(2)	—	(7)
Impairment charges	—	—	—	13	—	13
Restructuring costs	3	—	—	—	—	3
Unrealized loss (gain) on financial instruments	1	(2)	—	—	—	(1)
	(1)	(2)	—	11	—	8
Adjusted operating income (loss) before depreciation and amortization	100	29	16	36	(19)	162
Adjusted operating income (loss)	70	17	11	14	(31)	81

	Q2 2020
(in millions of Canadian dollars) (unaudited)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers	Corporate Activities	Consolidated
Operating income (loss)	54	30	11	31	(32)	94
Depreciation and amortization	29	12	5	17	12	75
Operating income (loss) before depreciation and amortization	83	42	16	48	(20)	169
Specific items :
Loss on acquisitions, disposals and others	—	—	1	—	—	1
Impairment charges	8	—	—	5	—	13
Restructuring costs	1	—	—	1	—	2
Unrealized loss (gain) on derivative financial instruments	2	1	—	—	(2)	1
	11	1	1	6	(2)	17
Adjusted operating income (loss) before depreciation and amortization	94	43	17	54	(22)	186
Adjusted operating income (loss)	65	31	12	37	(34)	111

	Q3 2019
(in millions of Canadian dollars) (unaudited)	Containerboard	Boxboard Europe	Specialty Products	Tissue Papers¹	Corporate Activities	Consolidated
Operating income (loss)	91	14	10	34	(41)	108
Depreciation and amortization	29	11	4	15	14	73
Operating income (loss) before depreciation and amortization	120	25	14	49	(27)	181
Specific items:
Loss (gain) on acquisitions, disposals and others	(2)	—	1	(25)	4	(22)
Impairment charges	—	—	1	—	—	1
Unrealized loss on financial instruments	—	—	—	—	1	1
	(2)	—	2	(25)	5	(20)
Adjusted operating income (loss) before depreciation and amortization	118	25	16	24	(22)	161
Adjusted operating income (loss)	89	14	12	9	(36)	88

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Net earnings, as per IFRS, is reconciled below with operating income, adjusted operating income and adjusted operating income before depreciation and amortization:


(in millions of Canadian dollars) (unaudited)	Q3 2020	Q2 2020	Q3 2019¹

Net earnings attributable to Shareholders for the period	49	54	43
Net earnings attributable to non-controlling interests	9	12	7
Provision for (recovery of) income taxes	(3)	12	12
Share of results of associates and joint ventures	(3)	(3)	(2)
Foreign exchange gain on long-term debt and financial instruments	(11)	(9)	—
Financing expense and interest expense on employee future benefits and other liabilities and other liabilities and loss on repurchase of long-term debt	32	28	48
Operating income	73	94	108
Specific items:
Loss (gain) on acquisitions, disposals and others	(7)	1	(22)
Impairment charges	13	13	1
Restructuring costs	3	2	—
Unrealized loss (gain) on derivative financial instruments	(1)	1	1
	8	17	(20)
Adjusted operating income	81	111	88
Depreciation and amortization	81	75	73
Adjusted operating income before depreciation and amortization	162	186	161

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles net earnings and net earnings per share, as per IFRS, with adjusted net earnings and adjusted net earnings per share:


(in millions of Canadian dollars, except amounts per share) (unaudited)	NET EARNINGS			NET EARNINGS PER SHARE ¹
	Q3 2020	Q2 2020	Q3 2019²	Q3 2020		Q2 2020		Q3 2019²

As per IFRS	49	54	43	$	0.51	$	0.57	$	0.45
Specific items:
Loss (gain) on acquisitions, disposals and others	(7)	1	(22)	$	(0.05)	—		$	(0.24)
Impairment charges	13	13	1	$	0.10	$	0.10	0.01
Restructuring costs	3	2	—	$	0.03	$	0.02	—
Unrealized loss (gain) on derivative financial instruments	(1)	1	1	—		$	0.01	$	0.01
Loss on repurchase of long-term debt	6	—	—	$	0.05	—		—
Unrealized loss on interest rate swaps and option fair value	—	—	7	—		—		$	0.07
Foreign exchange gain on long-term debt and financial instruments	(11)	(9)	—	$	(0.12)	$	(0.09)	—
Tax effect on specific items, other tax adjustments and attributable to non-controlling interest¹	(4)	(4)	(2)	$	(0.02)	—		—
	(1)	4	(15)	$	(0.01)	$	0.04	$	(0.15)
Adjusted	48	58	28	$	0.50	$	0.61	$	0.30

1 Specific amounts per share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interests. Per share amounts in line item ”Tax effect on specific items, other tax adjustments and attributable to non-controlling interests” only include the effect of tax adjustments.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles cash flow from operating activities with operating income and operating income before depreciation and amortization:


(in millions of Canadian dollars) (unaudited)	Q3 2020	Q2 2020	Q3 2019¹
Cash flow from operating activities	136	128	157
Changes in non-cash working capital components	(30)	34	(53)
Depreciation and amortization	(81)	(75)	(73)
Net income taxes paid	1	7	12
Net financing expense paid	49	7	42
Premium paid on long-term debt repurchase	4	—	—
Gain (loss) on acquisitions, disposals and others	7	(1)	26
Impairment charges and restructuring costs	(16)	(15)	(1)
Unrealized gain (loss) on derivative financial instruments	1	(1)	(1)
Dividend received, employee future benefits and others	2	10	(1)
Operating income	73	94	108
Depreciation and amortization	81	75	73
Operating income before depreciation and amortization	154	169	181

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles cash flow from operating activities with cash flow from operating activities (excluding changes in non-cash working capital components) and adjusted cash flow from operating activities. It also reconciles adjusted cash flow from operating activities to adjusted free cash flow, which is also calculated on a per share basis:


(in millions of Canadian dollars, except amount per share or otherwise mentioned) (unaudited)	Q3 2020		Q2 2020		Q3 2019
Cash flow from operating activities	136		128		157
Changes in non-cash working capital components	(30)		34		(53)
Cash flow from operating activities (excluding changes in non-cash working capital components)	106		162		104
Specific items paid	9		—		4
Adjusted cash flow from operating activities	115		162		108
Capital expenditures & other assets¹and right-of-use assets payments, net of disposals	(60)		(51)		(58)
Dividends paid to the Corporation’s Shareholders and to non-controlling interests	(11)		(14)		(12)
Adjusted free cash flow	44		97		38
Adjusted free cash flow per share	$	0.46	$	1.02	$	0.40
Weighted average basic number of shares outstanding	95,019,694		94,459,257		93,860,367

1 Excluding increase in investments

The following table reconciles total debt and net debt with the ratio of net debt to adjusted operating income before depreciation and amortization (adjusted OIBD):


(in millions of Canadian dollars)	September 30, 2020	June 30, 2020	September 30, 2019
Long-term debt	1,947	1,975	2,107
Current portion of long-term debt	253	255	87
Bank loans and advances	9	9	14
Total debt	2,209	2,239	2,208
Less: Cash and cash equivalents	227	162	138
Net debt	1,982	2,077	2,070
Adjusted OIBD (last twelve months)	661	660	565
Net debt / Adjusted OIBD ratio	3.0 x	3.1x	3.7x

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View original content:http://www.prnewswire.com/news-releases/cascades-reports-results-for-the-third-quarter-of-2020-301171350.html

SOURCE Cascades Inc.

November 12, 2020 6:03 am

China Automotive Systems Reports Unaudited 2020 Third Quarter Results

PR Newswire

WUHAN, China, Nov. 12, 2020 /PRNewswire/ — China Automotive Systems, Inc. (Nasdaq: CAAS) (“CAAS” or the “Company”), a leading power steering components and systems supplier in China, today announced its unaudited financial results for the third quarter and nine months ended September 30, 2020.

Third Quarter 2020 Highlights

Net sales increased 13.8% to $114.4 million compared with $100.5 million in the third quarter of 2019;
Gross profit decreased to $13.6 million and gross margin declined to 11.9% from 17.2% in the third quarter of 2019;
Income from operations was $0.1 million compared to income from operations of $4.4 million in the third quarter of 2019;
Net income attributable to parent company’s common shareholders was $2.4 million, or diluted earnings per share of $0.08, compared to net income attributable to parent company’s common shareholders of $4.3 million, or diluted earnings per share of $0.14, in the third quarter of 2019;
Approximately 322,000 shares of common stock were repurchased.

First Nine Months of 2020 Highlights

Net sales were $271.2 million compared to $315.5 million in the first nine months of 2019;
Gross margin was 12.0% compared with 14.8% in the same period last year;
Diluted loss per share attributable to parent company’s common shareholders was $0.06 compared to diluted earnings per share attributable to parent company’s common shareholders of $0.26 for the first nine months of 2019;
Net cash flow from operating activities was $52.7 million compared with $4.1 million for the first nine months of 2019;
Cash and cash equivalents and pledged cash deposits were $113.5 million as of September 30, 2020.

Mr. Qizhou Wu, the Chief Executive Officer of CAAS, commented, “Our sales regained growth momentum in the third quarter as the Chinese economy has quickly rebounded from the worst effects of the COVID-19 pandemic. According to statistics from the China Association of Automobile Manufacturers (“CAAM”), new passenger car sales rose by 8.5% year-over-year in the month of July, by 6.0% in August and by 8.0% in September. As a leading supplier of steering products for Chinese-branded vehicles, I am pleased that our sales growth outpaced the overall market. We still have work to do but we are encouraged by the positive signs on our way to a strong recovery.”

“With the worst behind us in China, we believe the government will continue to promote policies to ensure continued economic growth and to introduce incentives for domestic consumption which will benefit the automobile industry,” Mr. Wu concluded.

Mr. Jie Li, the Chief Financial Officer of CAAS, commented, “Our operations continued to generate positive operating cash flow and we purchased less capital production equipment in the third quarter of 2020 as our capacity remains sufficient. Maintaining our financial strength has been one of our highest priorities as we continue to strengthen our balance sheet by reducing bank borrowing and controlling inventory. During the 3^rd quarter, we also purchased approximately 322,000 shares of common stock in the open market that demonstrates our commitment to enhancing long-term shareholder value.”

Third Quarter of 20
20

In the third quarter of 2020, net sales rose 13.8% to $114.4 million compared to $100.5 million in the same quarter of 2019. The increase in net product sales was mainly due to a change in the product mix and higher domestic sales volume of the Company’s hydraulic products combined with increased sales to North American customers. Net product sales to North America grew by 9.8% to $37.0 million compared to $33.8 million for the same quarter in 2019. Net product sales for the Company’s electric power steering (“EPS”) products were $16.7 million, or 14.6% of net sales.

Gross profit was $13.6 million in the third quarter of 2020, compared to $17.3 million in the third quarter of 2019. Gross margin was 11.9% compared to 17.2% for the same period of 2019, mainly due to higher unit costs for EPS and export products compared to the third quarter last year.

Selling expenses were $3.8 million in the third quarter of 2020, compared to $3.6 million in the third quarter of 2019. Selling expenses represented 3.3% of net sales in the third quarter of 2020, compared to 3.6% in the third quarter of 2019.

General and administrative expenses (“G&A expenses”) were $5.1 million in the third quarter of 2020, compared to $4.4 million in the same quarter of 2019. The increase was primarily due to higher office expenses. G&A expenses represented 4.5% of net sales in both the third quarter of 2020 and the third quarter of 2019.

Research and development expenses (“R&D expenses”) were $6.1 million in the third quarter of 2020, compared to $6.0 million in the third quarter of 2019. R&D expenses represented 5.3% of net sales in the third quarter of 2020 compared with 6.0% in the third quarter last year. The lower R&D percentage was mainly due to more strict cost controls over R&D expenditures.

Net financial expense was $2.3 million in the third quarter of 2020 compared to net financial income of $1.6 million in the third quarter of 2019, which was mainly due to foreign exchange losses compared with foreign exchange gains in last year’s third quarter.

Income from operations was $0.1 million in the third quarter of 2020, compared to income from operations of $4.4 million in the same quarter of 2019. The lower income from operations was mainly due to reduced gross profit and lower gross margin in the third quarter of 2020.

Loss before income tax expenses and equity in earnings of affiliated companies was $2.3 million in the third quarter of 2020, compared to income before income tax expenses and equity in earnings of affiliated companies of $5.3 million in the third quarter of 2019. The loss before income tax expenses and equity in earnings of affiliated companies was mainly due to lower gross profit and the lower income from operations in the third quarter of 2020 compared with the third quarter of 2019.

Net income attributable to parent company’s common shareholders was $2.4 million in the third quarter of 2020, compared to net income attributable to parent company’s common shareholders of $4.3 million in the third quarter of 2019. Diluted earnings per share were $0.08 in the third quarter of 2020, compared to diluted earnings per share of $0.14 in the third quarter of 2019.

The weighted average number of diluted common shares outstanding was 31,113,374 in the third quarter of 2020, compared to 31,492,035 in the third quarter of 2019.

First Nine Months of 20
20

Net sales for the first nine months of 2019 were $271.2 million, compared to $315.5 million in the first nine months of 2019, reflecting the impact of the COVID-19 pandemic on the automobile industry in China and globally. Nine-month gross profit was $32.6 million, compared to $46.6 million in the corresponding period last year. Nine-month gross margin was 12.0%, compared to 14.8% for the corresponding period in 2019. For the nine months ended September 30, 2020, gain on other sales amounted to $2.9 million, compared to $4.9 million for the corresponding period in 2019. Loss from operations was $4.1 million compared to income from operations of $8.1 million in the first nine months of 2019.

Net loss attributable to parent company’s common shareholders was $1.8 million compared with net income attributable to parent company’s common shareholders of $8.2 million in the corresponding period last year. Diluted loss per share was $0.06 in the first nine months of 2020, compared to diluted earnings per share of $0.26 for the corresponding period in 2019.

As of September 30, 2020, total cash and cash equivalents and pledged cash deposits were $113.5 million. Total accounts receivable including notes receivable were $209.0 million. Accounts payable including notes payable were $201.4 million, and short-term loans were $44.6 million. Total parent company stockholders’ equity was $293.2 million as of September 30, 2020, compared to $289.3 million as of December 31, 2019.

Net cash provided by operating activities was $52.7 million in the first nine months of 2020 compared with net cash provided by operating activities of $4.1 million in the first nine months of 2019. Payments to acquire property, plant and equipment were $8.9 million compared with $23.6 million in the first nine months of 2019. Approximately 322,000 shares of common stock were repurchased during the third quarter of 2020, and the Company expects to repurchase more shares in the future, reflecting market conditions.

Business Outlook

Management has increased its revenue guidance from $360 million to $390 million for the full year 2020. This target is based on the Company’s current views on operating and market conditions, which are subject to change.

Conference Call

Management will conduct a conference call on November 12, 2020 at 8:00 A.M. EST/9:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management’s presentation. To participate, please call the following numbers 10 minutes before the call start time and ask to be connected to the “China Automotive Systems” conference call:

Phone Number: +1-877-407-8031 (North America)
Phone Number: +1-201-689-8031 (International)
Mainland China Toll Free: +86-400-120-2840

A replay of the call will be available on the Company’s website under investor relations section.

About China Automotive Systems, Inc.

Based in Hubei Province, the People’s Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through ten Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 6 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Chrysler Group LLC and Ford Motor Company in North America. For more information, please visit: http://www.caasauto.com.

Forward-Looking Statements

This press release contains statements that are “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. These forward-looking statements include statements regarding the qualitative and quantitative effects of the accounting errors, the periods involved, the nature of the Company’s review and any anticipated conclusions of the Company or its management and other statements that are not historical facts. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company’s actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading “Risk Factors” in the Company’s Form 10-K annual report filed with the Securities and Exchange Commission on March 28, 2019, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the deteriorating market outlook for automobile sales, the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control, could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increased costs and reduced revenue. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.

For further information, please contact:

Jie Li

Chief Financial Officer
China Automotive Systems, Inc.
Email: [email protected]

Kevin Theiss

Investor Relations
+1-212-521-4050
Email: [email protected]

– Tables Follow –

China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income
(In thousands of USD, except share and per share amounts)

	Three Months Ended September 30,
	2020		2019
Net product sales ($16,840 and $12,277 sold to related parties for the three months ended September 30, 2020 and 2019)	$	114,417	$	100,542
Cost of products sold ($7,012 and $6,474 purchased from related parties for the three months ended September 30, 2020 and 2019)		100,842		83,225
Gross profit		13,575		17,317
Gain on other sales		1,497		1,102
Less: Operating expenses
Selling expenses		3,800		3,563
General and administrative expenses		5,142		4,429
Research and development expenses		6,072		5,988
Total operating expenses		15,014		13,980
Income from operations		58		4,439
Other income		350		171
Interest expense		(403)		(787)
Financial (expense)/income, net		(2,313)		1,552
(Loss)/income before income tax expenses and equity in earnings/(loss) of affiliated companies		(2,308)		5,375
Less: Income tax (benefit)/expense		(189)		948
Equity in earnings/(loss) of affiliated companies		3,632		(226)
Net income		1,513		4,201
Net loss attributable to non-controlling interests		(848)		(113)
Accretion to redemption value of redeemable non-controlling interests		(3)		–
Net income attributable to parent company’s common shareholders	$	2,358	$	4,314
Comprehensive income:
Net income	$	1,513	$	4,201
Other comprehensive income:
Foreign currency translation income/(loss), net of tax		12,774		(9,703)
Comprehensive income/(loss)		14,287		(5,502)
Comprehensive income/(loss) attributable to non-controlling interests		80		(837)
Comprehensive income/(loss) attributable to parent company	$	14,207	$	(4,665)

Net income attributable to parent company’s common shareholders per share –

Basic	$	0.08	$	0.14

Diluted	$	0.08	$	0.14
Weighted average number of common shares outstanding –
Basic		31,112,076		31,492,035
Diluted		31,113,374		31,492,035

China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income
(In thousands of USD, except share and per share amounts)

		Nine Months Ended September 30,
	2020			2019
Net product sales ($40,439 and $39,458 sold to related parties for the nine months ended September 30, 2020 and 2019)	$		271,156	$	315,483
Cost of products sold ($16,298 and $18,108 purchased from related parties for the nine months ended September 30, 2020 and 2019)			238,598		268,936
Gross profit			32,558		46,547
Gain on other sales			2,935		4,856
Less: Operating expenses
Selling expenses			8,895		10,507
General and administrative expenses			13,330		13,453
Research and development expenses			17,390		19,343
Total operating expenses			39,615		43,303
(Loss)/income from operations			(4,122)		8,100
Other income, net			1,724		1,131
Interest expense			(1,214)		(2,086)
Financial (expense)/income, net			(2,903)		2,439
(Loss)/income before income tax expenses and equity in earnings/(loss) of affiliated companies			(6,515)		9,584
Less: Income taxes			294		1,820
Equity in earnings/(loss) of affiliated companies			3,454		(222)
Net (loss)/income			(3,355)		7,542
Net loss attributable to non-controlling interests			(1,590)		(688)
Accretion to redemption value of redeemable non-controlling interests			(3)		–
Net (loss)/income attributable to parent company’s common shareholders	$		(1,768)	$	8,230
Comprehensive income:
Net (loss)/income	$		(3,355)	$	7,542
Other comprehensive income:
Foreign currency translation income/(loss), net of tax			8,171		(10,221)
Comprehensive income/(loss)			4,816		(2,679)
Comprehensive loss attributable to non-controlling interests			(1,059)		(1,454)
Comprehensive income/(loss) attributable to parent company	$		5,875	$	(1,225)

Net (loss)/income attributable to parent company’s common shareholders per share –

Basic	$		(0.06)	$	0.26

Diluted	$		(0.06)	$	0.26
Weighted average number of common shares outstanding –
Basic			31,153,162		31,498,553
Diluted			31,153,619		31,501,108

China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Balance Sheets
(In thousands of USD unless otherwise indicated)

	September 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	81,767	$	76,715
Pledged cash		31,721		29,688
Accounts and notes receivable, net – unrelated parties		189,144		211,841
Accounts and notes receivable – related parties		19,881		21,164
Inventories		82,011		82,931
Other current assets		35,834		18,974
Total current assets		440,358		441,313
Non-current assets:
Property, plant and equipment, net		136,058		140,481
Land use rights, net		10,392		10,346
Long-term investments		49,754		39,642
Other non-current assets		30,859		28,374
Total assets	$	667,421	$	660,156

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term loans	$	44,588	$	46,636
Accounts and notes payable – unrelated parties		189,915		180,175
Accounts and notes payable – related parties		11,518		6,492
Accrued expenses and other payables		48,866		45,341
Other current liabilities		25,918		25,135
Total current liabilities		320,805		303,779
Long-term liabilities:
Long-term government loans		–		7,167
Other long-term payable		2,103		4,948
Long-term tax payable		23,884		26,693
Other non-current liabilities		8,013		8,010
Total liabilities	$	354,805	$	350,597

Mezzanine equity:
Redeemable non-controlling interests		517		–

Stockholders’ equity:
Common stock, $0.0001 par value – Authorized – 80,000,000 shares; Issued – 32,338,302 and 32,338,302 shares as of September 30, 2020 and December 31, 2019, respectively	$	3	$	3
Additional paid-in capital		64,273		64,466
Retained earnings-
Appropriated		11,265		11,265
Unappropriated		218,741		221,298
Accumulated other comprehensive income		4,181		(3,462)
Treasury stock – 1,486,526 and 1,164,257 shares as of September 30, 2020 and December 31, 2019, respectively		(5,261)		(4,261)
Total parent company stockholders’ equity		293,202		289,309
Non-controlling interests		18,897		20,250
Total stockholders’ equity		312,099		309,559
Total liabilities, mezzanine equity and shareholders’ equity	$	667,421	$	660,156

China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Statements of Cash Flows
(In thousands of USD unless otherwise indicated)

	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net (loss)/income	$	(3,356)	$	7,542
Adjustments to reconcile net (loss)/income from operations to net cash provided by operating activities:
Depreciation and amortization		15,935		13,052
Reversal of provision for doubtful accounts		(360)		(692)
Deferred income taxes		464		(601)
Equity in (earnings)/loss of affiliated companies		(3,454)		222
Loss/(gain) on fixed assets disposals		67		(692)
Government subsidy reclassified from government loans		287		–
(Increase)/decrease in:
Accounts and notes receivable		29,454		16,243
Inventories		2,644		(1,615)
Other current assets		1,214		4,725
Increase/(decrease) in:
Accounts and notes payable		10,493		(28,793)
Accrued expenses and other payables		2,451		(4,374)
Long-term taxes payable		(2,809)		(2,810)
Other current liabilities		(1,330)		1,882
Net cash provided by operating activities		52,741		4,089
Cash flows from investing activities:
Decrease in demand loans and employee housing loans included in other non-current assets		44		185
Cash received from property, plant and equipment sales		1,444		1,164
Payments to acquire property, plant and equipment (including $1,577 and $514 paid to related parties for the nine months ended September 30, 2020 and 2019, respectively)		(8,879)		(23,571)
Payments to acquire intangible assets		(422)		(1,435)
Investment under the equity method		(5,360)		(2,491)
Purchase of short-term investments and long-term time deposits		(42,716)		(19,647)
Government subsidy received for purchase of property, plant and equipment		–		1,898
Proceeds from maturities of short-term investments		21,626		27,040
Cash received from long-term investment		448		579
Net cash used in investing activities		(33,815)		(16,278)
Cash flows from financing activities:
Proceeds from bank loans		39,586		54,675
Repayments of bank loans		(50,550)		(52,486)
Repayments of the borrowing for sale and leaseback transaction		(3,078)		(3,143)
Dividends paid to non-controlling interest holders of non- wholly owned subsidiaries		–		(333)
Cash received from capital contributions by non-controlling interest holder		722		3,542
Deemed distribution to shareholders		(88)		–
Acquisition of non-controlling interest		(81)		–
Repurchase of common shares		(1,000)		(443)
Net cash (used in)/provided by financing activities		(14,489)		1,812
Effects of exchange rate on cash, cash equivalents and pledged cash		2,648		(3,284)
Net increase/(decrease) in cash, cash equivalents and pledged cash		7,085		(13,661)
Cash, cash equivalents and pledged cash at beginning of the period		106,403		115,977
Cash, cash equivalents and pledged cash at end of the period	$	113,488	$	102,316

View original content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-unaudited-2020-third-quarter-results-301171541.html

SOURCE China Automotive Systems, Inc.

November 12, 2020 6:03 am

Canadians spend cautiously, opt to save for emergency funds and investments, Scotiabank report reveals

Canada NewsWire

Scotiabank Money Readiness Poll finds 34% of Canadians adjusted their investment strategy as a result of the pandemic

TORONTO, Nov. 12, 2020 /CNW/ – According to a recent Scotiabank survey, Canadians are becoming better savers while keeping their spending down in light of the ongoing complexities surrounding COVID-19. Most Canadians are being cautious with their spending (79%) and have made saving for an emergency a priority since the COVID-19 pandemic started (53%). More than half of Canadians (58%) say they are putting extra money they are not spending while in lockdown into their savings accounts, and more than one-third (38%) are adding to their investments.

Scotiabank polled over 1,500 Canadians to learn more about their saving and spending habits since the pandemic began and found that one in four Canadians (25%) have been able to save more because of reduced spending in other areas of their lives. Canadians who are saving more say they are spending less on: eating out (75%), entertainment (81%), clothing and apparel (58%), and commuting costs (41%). Also, more than a third (37%) who are putting more money aside have made saving a priority since COVID-19.

“The pandemic has prompted many Canadians to reassess their personal finances and short-term priorities, shifting how they manage their money and planning for whatever uncertainties lay ahead,” said D’Arcy McDonald, SVP, Deposits, Investments, & Payments at Scotiabank. “Not only are Canadians making savings a priority, but with different spending patterns created by the pandemic, many are seeing their savings grow even faster. This is an important time to speak to your financial advisor to ensure you have the right plan in place that helps you invest and put your money to work.”

Canadians who find themselves saving more money are using the extra cash to build up an emergency fund (61%), invest (34%), pay down debt (29%) and save for a big purchase (26%).

This shift in how Canadians are managing their money is also contributing to how prepared they feel to manage the uncertainty caused by the pandemic. Approximately 41% of Canadians reported feeling financially prepared to manage through the pandemic, compared to 35% just 6 months ago.

Holiday Spending During COVID-19:

The strong majority of Canadians (88%) are expecting the holiday season will be very different this year. However, 39% of Canadians love to spend money on the holidays and won’t let the pandemic change that, while 43% of Canadians say finding extra money to spend this holiday season will be challenging. More than half (56%) of Canadians said they plan to pull back their holiday spending this year because of other financial priorities, while roughly 30% of Canadians said they plan on spending more than usual on the holidays because of the extra money they were able to save during the pandemic.

Investing in Uncertain Times Virtual Panel on November 24

On November 24, 2020, Scotiabank’s top financial experts will answer the most frequently asked questions they’ve received from Canadians during the COVID-19 pandemic. They will cover everything from the economy, saving, investing, and finding balance during these tough times. Visit Scotiabank.com/investing to learn more and register here for the virtual panel and get their expert advice.

Scotiabank’s Top Tips for Savings and Investing:

Determine how much you can save: With COVID-19, this number may be different than what you think. Start off by calculating your monthly expenses, including items like rent or mortgage, utilities, and an updated summary on transportation costs, groceries, child care, etc. Don’t forget to use unexpected windfalls, like tax refunds or bonuses, to help speed up the funding process. Contributing whatever you can to your fund, even $20 a month, will make a big difference over time.
Save automatically and pay yourself first: Make it easy on yourself by scheduling automatic deposits to your emergency fund. Setting up pre-authorized transactions will allow you to save without having to think about it.
Put your money to work: Whether you’re saving for retirement or building a nest egg, the right investment strategy is essential to growing your money and making your financial goals possible.
The value of advice. TFSAs, RRSP, RESPs. There is a lot you can do. Speaking with an advisor can help you choose which option is best for you and your goals. Canadians can visit the new ScotiaAdvice+ Centre or contact a Scotiabank advisor today to discover the power of a simple conversation.

Scotiabank’s Money Readiness also found:

58% of Canadians are putting extra money that they’re not spending while in lockdown into their saving accounts (chequing, high interest savings account etc.) and 38% are putting the extra money into their investments (RRSP, TFSA, etc.).
33% have had to draw money from their savings to pay for day-to-day expenses during the pandemic.
27% of Canadians are saving more money as a result of COVID-19, while 14% are saving less money. 18% are not able to save any money at all as a result of COVID-19.
41% of Canadians say COVID-19 has had no impact on their savings behaviour.

Methodology: The 2020 Scotiabank Money Readiness Poll was conducted by Maru Blue on October 7, 2020. A total of 1,511 surveys were collected from a random sample of panel members across Canada.

Advice+

The success of our customers is at the heart of our business at Scotiabank. Since the COVID-19 pandemic began, Scotiabank has helped more than 375,000 customers receive loan assistance plans and provided thousands of customers with advice to help them navigate through challenging times. Advice+ is championing our customers’ financial goals with a tailored plan, plus the resources and education, and professional support that will help them stay on track. Canadians can visit the new ScotiaAdvice+ Centre or contact a Scotiabank advisor today to discover the power of a simple conversation.

About Scotiabank

Scotiabank is a leading bank in the Americas. Guided by our purpose: “for every future”, we help our customers, their families and their communities achieve success through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of over 90,000 employees and assets of approximately $1.2 trillion (as at July 31, 2020), Scotiabank trades on the Toronto Stock Exchange (TSX: BNS) and New York Stock Exchange (NYSE: BNS). For more information, please visit our website and follow us on Twitter @ScotiabankViews.

SOURCE Scotiabank

November 12, 2020 6:03 am

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

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

PR Newswire

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

Executive Summary

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

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

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

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

Fiscal 4Q 2020 Operating Results (Unaudited)

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

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

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

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

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

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

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

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

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

Project Fuel

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

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

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

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

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

Fiscal 4Q 2020 Operating Segment Results (Unaudited)

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

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

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

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

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

Feminine Care (Tampons, Pads, and Liners)

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

Fiscal 2020 Operating Results (Unaudited)

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

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

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

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

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

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

Full Fiscal Year 2021 Financial Outlook

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

Reported net sales to increase mid-single digits

Includes: 160 basis-point net benefit from the Cremo acquisition and the Infant and Pet Care divestiture and a 90 basis-point benefit from currency translation

Organic sales to increase low-single digits
Adjusted operating profit margin expected to be consistent with fiscal 2020

Project Fuel one-time costs of $25 to $30 million
Project Fuel Gross Savings of $50 to $60 million

GAAP EPS in the range of $2.18 to $2.38

Includes: Project Fuel restructuring charges, IT enablement costs, acquisition and integration costs, the gain on sale of the Infant and Pet Care business and Sun Care Monograph costs

Adjusted EPS in the range of $2.62 to $2.82
Adjusted EBITDA in the range of $345 to $360 million
Adjusted effective tax rate in the range of 22.5% to 23.5%
Capital expenditures approximately 3.0% of net sales
Free cash flow expected to be approximately 100% of non-GAAP net earnings

Webcast Information

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

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

About Edgewell

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

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

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

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

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

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

EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in millions, except per share data)

	Quarter Ended September 30,				Year Ended September 30,
	2020		2019		2020		2019

Net sales	$	488.8	$	528.0	$	1,949.7	$	2,141.0
Cost of products sold	266.7		298.0		1,068.8		1,174.4
Gross profit	222.1		230.0		880.9		966.6

Selling, general and administrative expense	101.0		91.8		408.8		372.0
Advertising and sales promotion expense	60.6		59.6		216.2		250.9
Research and development expense	15.2		14.0		55.3		53.5
Restructuring charges	4.0		8.7		24.6		46.4
Impairment charges	—		—		—		570.0
Gain on sale of Infant and Pet Care business	—		—		(4.1)		—
Interest expense associated with debt	17.5		14.6		61.2		62.6
Cost of early retirement of long-term debt	—		—		26.2		—
Other (income) expense, net	(0.4)		0.2		5.4		1.5
Earnings (loss) before income taxes	24.2		41.1		87.3		(390.3)
Income tax provision (benefit)	3.2		0.4		19.7		(18.1)
Net earnings (loss)	$	21.0	$	40.7	$	67.6	$	(372.2)

Earnings per share:
Basic net earnings (loss) per share	$	0.39	$	0.75	$	1.25	(6.88)
Diluted net earnings (loss) per diluted share	0.38		0.75		1.24		(6.88)

Weighted-average shares outstanding:
Basic	54.4		54.2		54.3		54.1
Diluted	54.8		54.3		54.6		54.1

See Accompanying Notes.

EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)

	September 30, 2020		September 30, 2019
Assets
Current assets
Cash and cash equivalents	$	364.7	$	341.6
Trade receivables, less allowance for doubtful accounts	158.8		205.6
Inventories	314.1		357.2
Other current assets	146.0		140.0
Total current assets	983.6		1,044.4
Property, plant and equipment, net	370.9		396.0
Goodwill	1,159.7		1,032.8
Other intangible assets, net	928.1		912.9
Other assets	98.6		34.8
Total assets	$	3,540.9	$	3,420.9

Liabilities and Shareholders’ Equity
Current liabilities
Current maturities of long-term debt	$	—	$	117.0
Notes payable	21.1		14.4
Accounts payable	181.9		222.8
Other current liabilities	307.5		305.4
Total current liabilities	510.5		659.6
Long-term debt	1,237.9		1,097.8
Deferred income tax liabilities	102.5		101.1
Other liabilities	257.1		258.9
Total liabilities	2,108.0		2,117.4
Shareholders’ equity
Common shares	0.7		0.7
Additional paid-in capital	1,631.8		1,627.7
Retained earnings	782.4		714.8
Common shares in treasury at cost	(790.4)		(803.8)
Accumulated other comprehensive loss	(191.6)		(235.9)
Total shareholders’ equity	1,432.9		1,303.5
Total liabilities and shareholders’ equity	$	3,540.9	$	3,420.9

See Accompanying Notes.

EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)

	Year Ended September 30,
	2020		2019
Cash Flow from Operating Activities
Net earnings (loss)	$	67.6	$	(372.2)
Depreciation and amortization	88.8		93.8
Share-based compensation expense	19.2		17.8
Deferred income taxes	(2.9)		(59.6)
Deferred compensation payments	(8.7)		(7.5)
Loss on sale of assets	2.3		1.5
Gain on sale of Infant and Pet Care business	(4.1)		—
Cost of early retirement of long-term debt	26.2		—
Impairment charges	—		570.0
Other, net	1.0		(5.7)
Changes in current assets and liabilities used in operations	43.2		(47.5)
Net cash from operating activities	232.6		190.6

Cash Flow from Investing Activities
Capital expenditures	(47.7)		(58.0)
Acquisitions, net of cash acquired	(233.6)		—
Proceeds from sale of Infant and Pet Care business	95.8		—
Cost method investment	(13.8)		—
Proceeds from sale of assets	—		4.1
Collection of deferred purchase price from accounts receivable sold	4.3		9.7
Other, net	(1.4)		(1.3)
Net cash used by investing activities	(196.4)		(45.5)

Cash Flow from Financing Activities
Cash proceeds from the issuance of Senior Notes due 2028	750.0		—
Cash payments on Senior Notes due 2021	(600.0)		—
Cash proceeds from debt with original maturities greater than 90 days	50.0		434.0
Cash payments on debt with original maturities greater than 90 days	(167.0)		(324.0)
Term Loan repayment	—		(185.0)
Net increase in debt with original maturities of 90 days or less	3.0		5.8
Debit issuance costs for Revolving Credit Facility	(3.6)		—
Debt issuance costs for Senior Notes due 2028	(11.7)		—
Cost of early retirement of long-term debt	(26.2)		—
Employee shares withheld for taxes	(2.0)		(3.0)
Net financing (outflow) inflow from the Accounts Receivable Facility	(11.2)		8.4
Net cash used by financing activities	(18.7)		(63.8)

Effect of exchange rate changes on cash	5.6		(6.1)

Net increase in cash and cash equivalents	23.1		75.2
Cash and cash equivalents, beginning of period	341.6		266.4
Cash and cash equivalents, end of period	$	364.7	$	341.6

See Accompanying Notes.

EDGEWELL PERSONAL CARE COMPANY

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

Note 1 — Segments

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

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

Segment net sales and profitability are presented below:

	Quarter Ended September 30,				Year Ended September 30,
	2020		2019		2020		2019
Net Sales
Wet Shave	$	326.8	$	340.3	$	1,162.3	$	1,250.1
Sun and Skin Care	92.5		80.4		462.0		463.1
Feminine Care	69.5		77.9		298.6		308.1
All Other	—		29.4		26.8		119.7
Total net sales	$	488.8	$	528.0	$	1,949.7	$	2,141.0

Segment Profit
Wet Shave	$	64.2	$	81.7	$	206.2	$	246.5
Sun and Skin Care	1.2		(2.3)		69.1		80.4
Feminine Care	8.9		11.6		52.3		48.3
All Other	—		1.5		3.1		11.7
Total segment profit	74.3		92.5		330.7		386.9
General corporate and other expenses	(13.0)		(13.8)		(54.9)		(57.3)
Impairment charges	—		—		—		(570.0)
Restructuring and related costs ⁽¹⁾	(7.3)		(12.8)		(38.1)		(55.6)
Acquisition and integration planning costs ⁽²⁾	(7.8)		(3.8)		(39.8)		(6.7)
Cost of early retirement of long-term debt	—		—		(26.2)		—
Gain on sale of Infant and Pet Care business	—		—		4.1		—
COVID-19 expenses ⁽³⁾	(0.4)		—		(4.3)		—
Feminine and Infant Care evaluation costs ⁽⁴⁾	—		(0.6)		(0.3)		(2.1)
Sun Care reformulation costs ⁽⁵⁾	—		(1.3)		—		(2.8)
Investor settlement expense ⁽⁶⁾	—		—		—		(0.9)
Amortization of intangibles	(4.6)		(4.3)		(17.3)		(17.7)
Interest and other expense, net	(17.0)		(14.8)		(66.6)		(64.1)
Total earnings (loss) before income taxes	$	24.2	$	41.1	$	87.3	$	(390.3)


(1)	Includes pre-tax SG&A of $3.3 and $13.3 for the quarter and year ended September 30, 2020, respectively, and $3.5 and $8.6 for the quarter and year ended September 30, 2019, respectively, associated with certain information technology enablement expenses and incentive and retention compensation expenses for Project Fuel. Additionally, includes pre-tax Cost of products sold (“COGS”) of $0.2 for the year ended September 30, 2020, and $0.6 for the quarter and year ended September 30, 2019 related to inventory write-offs associated with Project Fuel.
(2)	Includes pre-tax SG&A of $7.2 and $39.2 for the quarter and year ended September 30, 2020, respectively, and $3.8 and $6.7 for the quarter and year ended September 30, 2019, respectively, related to acquisition and integration costs. Additionally, includes pre-tax COGS of $0.6 for the quarter and year ended September 30, 2020 related to the valuation of acquired inventory.
(3)	Includes pre-tax COGS of $0.4 and $4.3 for the quarter and year ended September 30, 2020 which included incremental costs incurred by the Company related to higher benefit and emergency payments, supplies and freight, net of government credits received as a result of the CARES Act.
(4)	Includes pre-tax SG&A of $0.3 for the year ended September 30, 2020, and $0.6 and $2.1 for the quarter and year ended September 30, 2019, respectively.
(5)	Includes pre-tax COGS of $1.3 and $2.8 for the quarter and year ended September 30, 2019, respectively.
(6)	Includes pre-tax SG&A of $0.9 for the year ended September 30, 2019.

Note 2 — GAAP to Non-GAAP Reconciliations

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

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

	Quarter Ended September 30,
	Net Earnings				Diluted EPS
	2020		2019		2020		2019
Net Earnings and Diluted EPS — GAAP	$	21.0	$	40.7	$	0.38	$	0.75
Restructuring and related costs, net	7.3		12.8		0.13		0.24
Acquisition and integration costs	7.8		3.8		0.14		0.07
COVID-19 expenses	0.4		—		0.01		—
Feminine and Infant Care evaluation costs	—		0.6		—		0.01
Sun Care reformulation costs	—		1.3		—		0.02
Income taxes ⁽¹⁾	(3.9)		(12.6)		(0.07)		(0.23)
Adjusted Net Earnings and Adjusted Diluted EPS — Non-GAAP	$	32.6	$	46.6	$	0.59	$	0.86

Weighted-average shares outstanding — Diluted					54.8		54.3


	Year Ended September 30,
	Net Earnings				Diluted EPS
	2020		2019		2020		2019
Net Earnings (Loss) and Diluted EPS — GAAP (Unaudited)	$	67.6	$	(372.2)	$	1.24	$	(6.88)
Impairment charges	—		570.0		—		10.54
Restructuring and related costs	38.1		55.6		0.70		1.03
Acquisition and integration costs	39.8		6.7		0.73		0.12
Cost of early retirement of long-term debt	26.2		—		0.48		—
Gain on sale of Infant and Pet Care business	(4.1)		—		(0.08)		—
COVID-19 expenses	4.3		—		0.08		—
Feminine and Infant Care evaluation costs	0.3		2.1		0.01		0.04
Investor settlement expense	—		0.9		—		0.02
Sun Care reformulation costs	—		2.8		—		0.05
Impact of dilutive shares	—		—		—		(0.01)
Income taxes ⁽¹⁾	(23.4)		(77.1)		(0.43)		(1.43)
Adjusted Net Earnings and Adjusted Diluted EPS — Non-GAAP	$	148.8	$	188.8	$	2.73	$	3.48

Weighted-average shares — Diluted					54.6		54.1


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

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

Quarter Ended September 30, 2020
	Gross Profit			SG&A			EBIT ⁽¹⁾		Net Earnings		Diluted EPS
GAAP — Reported	$	222.1		$	101.0		$	24.2	$	21.0	$	0.38
% of net sales	45.4		%	20.7		%
Restructuring and related charges	—			3.3			7.3		5.5		0.10
Acquisition and integration costs	0.6			7.2			7.8		5.9		0.11
COVID-19 expenses	0.4			—			0.4		0.2		—
Total Adjusted Non-GAAP	$	223.1		$	90.5		$	39.7	$	32.6	$	0.59
% of net sales	45.6		%	18.5		%


Year Ended September 30, 2020
	Gross Profit			SG&A			EBIT ⁽¹⁾		Net Earnings		Diluted EPS
GAAP — Reported	$	880.9		$	408.8		$	87.3	$	67.6	$	1.24
% of net sales	45.2		%	21.0		%
Restructuring and related charges	0.2			13.3			38.1		29.4		0.54
Acquisition and integration costs	0.6			39.2			39.8		30.1		0.56
COVID-19 expenses	4.3			—			4.3		3.2		0.06
Feminine and Infant Care evaluation costs	—			0.3			0.3		0.2		—
Cost of early debt retirement	—			—			26.2		19.8		0.36
Gain on sale of Infant and Pet Care business	—			—			(4.1)		(1.5)		(0.03)
Total Adjusted Non-GAAP	$	886.0		$	356.0		$	191.9	$	148.8	$	2.73
% of net sales	45.4		%	18.3		%


Quarter Ended September 30, 2019
	Gross Profit			SG&A			EBIT ⁽¹⁾		Net Earnings		Diluted EPS
GAAP — Reported	$	230.0		$	91.8		$	41.1	$	40.7	0.75
% of net sales	43.6		%	17.4		%
Restructuring and related charges	0.6			3.5			12.8		9.8		0.17
Acquisition and integration costs	—			3.8			3.8		2.9		0.06
Sun Care reformulation costs	1.3			—			1.3		1.0		0.02
Feminine and Infant Care evaluation costs	—			0.6			0.6		0.5		0.01
Income taxes	—			—			—		(8.3)		(0.15)
Total Adjusted Non-GAAP	$	231.9		$	83.9		$	59.6	$	46.6	$	0.86
% of net sales	43.9		%	15.9		%



Year Ended September 30, 2019
	Gross Profit			SG&A			EBIT (1)		Net Earnings		Diluted EPS
GAAP — Reported	$	966.6		$	372.0		$	(390.3)	$	(372.2)	$	(6.88)
% of net sales	45.1		%	17.4		%
Impairment charges	—			—			570.0		504.7		9.33
Restructuring and related charges	0.6			8.6			55.6		43.2		0.80
Acquisition and integration costs	—			6.7			6.7		5.1		0.09
Sun Care reformulation costs	2.8			—			2.8		2.1		0.04
Feminine and Infant Care evaluation costs	—			2.1			2.1		1.6		0.03
Investor settlement expense	—			0.9			0.9		0.7		0.01
Impact of dilutive shares	—			—			—		—		(0.01)
Income tax reform	—			—			—		3.6		0.07
Total Adjusted Non-GAAP	$	970.0		$	353.7		$	247.8	$	188.8	$	3.48
% of net sales	45.3		%	16.5		%


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

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

	Quarter Ended September 30,						Year Ended September 30,
	2020			2019			2020			2019
Earnings (loss) before income taxes	24.2			41.1			87.3			(390.3)
Impairment charges	—			—			—			570.0
Restructuring and related charges	7.3			12.8			38.1			55.6
Acquisition and integration planning costs	7.8			3.8			39.8			6.7
Cost of early retirement of long-term debt	—			—			26.2			—
Gain on sale of Infant and Pet Care business	—			—			(4.1)			—
COVID-19 expenses	0.4			—			4.3			—
Feminine and Infant Care evaluation costs	—			0.6			0.3			2.1
Sun Care reformulation costs	—			1.3			—			2.8
Investor settlement expense	—			—			—			0.9
Interest expense associated with debt	17.5			14.6			61.2			62.6
Other (income) expense, net	(0.4)			0.2			5.4			1.5
Adjusted operating income	$	56.8		$	74.4		$	258.5		$	311.9
% of net sales	11.6		%	14.1		%	13.3		%	14.6		%

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

	Year Ended September 30, 2020								Year Ended September 30, 2019
	Reported			Adjustments ⁽¹⁾		Adjusted (Non-GAAP)			Reported			Adjustments ⁽¹⁾		Adjusted (Non-GAAP)
Earnings (loss) before income taxes	87.3			$	104.6	$	191.9		(390.3)			$	638.1	$	247.8
Income tax provision	19.7			23.4		43.1			(18.1)			77.1		59.0
Net earnings (loss)	$	67.6		$	81.2	$	148.8		$	(372.2)		$	561.0	$	188.8

Effective tax rate	22.6		%						4.6		%
Adjusted effective tax rate						22.5		%						23.8		%

(1)

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

Note 3 – Net Sales and Profit by Segment

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

Net Sales (In millions – Unaudited)
Quarter Ended September 30, 2020

	Wet Shave				Sun and Skin Care				Feminine Care				All Other				Total
Net Sales – Q4 ’19	$	340.3			$	80.4			$	77.9			$	29.4			$	528.0
Organic	(17.3)		(5.1)	%	7.1		8.8	%	(8.3)		(10.7)	%	—		—	%	(18.5)		(3.5)	%
Impact of acquisition	—		—	%	4.5		5.6	%	—		—	%	—		—	%	4.5		0.9	%
Impact of disposition	—		—	%	—		—	%	—		—	%	(29.4)		(100.0)	%	(29.4)		(5.6)	%
Impact of currency	3.8		1.1	%	0.5		0.6	%	(0.1)		(0.1)	%	—		—	%	4.2		0.8	%
Net Sales – Q4 ’20	$	326.8	(4.0)	%	$	92.5	15.0	%	$	69.5	(10.8)	%	$	—	(100.0)	%	$	488.8	(7.4)	%


Net Sales (In millions – Unaudited)
Year Ended September 30, 2020

	Wet Shave				Sun and Skin Care				Feminine Care				All Other				Total
Net Sales – FY ’19	$	1,250.1			$	463.1			$	308.1			$	119.7			$	2,141.0
Organic	(83.2)		(6.7)	%	(3.1)		(0.7)	%	(9.1)		(3.0)	%	0.5		0.4	%	(94.9)		(4.4)	%
Impact of acquisition	—		—	%	4.5		1.0	%	—		—	%	—		—	%	4.5		0.2	%
Impact of disposition	—		—	%	—		—	%	—		—	%	(93.4)		(78.0)	%	(93.4)		(4.4)	%
Impact of currency	(4.6)		(0.3)	%	(2.5)		(0.5)	%	(0.4)		(0.1)	%	—		—	%	(7.5)		(0.3)	%
Net Sales – FY ’20	$	1,162.3	(7.0)	%	$	462.0	(0.2)	%	$	298.6	(3.1)	%	$	26.8	(77.6)	%	$	1,949.7	(8.9)	%


Segment Profit (In millions – Unaudited)
Quarter Ended September 30, 2020

	Wet Shave				Sun and Skin Care				Feminine Care				All Other				Total
Segment Profit – Q4 ’19	$	81.7			$	(2.3)			$	11.6			$	1.5			$	92.5
Organic	(17.6)		(21.5)	%	2.2		95.7	%	(2.6)		(22.4)	%	—		—	%	(18.0)		(19.5)	%
Impact of acquisition	—		—	%	1.1		47.8	%	—		—	%	—		—	%	1.1		1.2	%
Impact of disposition	—		—	%	—		—	%	—		—	%	(1.5)		(100.0)	%	(1.5)		(1.6)	%
Impact of currency	0.1		0.1	%	0.2		8.7	%	(0.1)		(0.9)	%	—		—	%	0.2		0.2	%
Segment Profit – Q4 ’20	$	64.2	(21.4)	%	$	1.2	152.2	%	$	8.9	(23.3)	%	$	—	(100.0)	%	$	74.3	(19.7)	%


Segment Profit (In millions – Unaudited)
Year Ended September 30, 2020

	Wet Shave				Sun and Skin Care				Feminine Care				All Other				Total
Segment Profit – FY ’19	$	246.5			$	80.4			$	48.3			$	11.7			$	386.9
Organic	(37.9)		(15.4)	%	(11.7)		(14.6)	%	4.1		8.5	%	0.5		4.3	%	(45.0)		(11.6)	%
Impact of acquisition	—		—	%	1.1		1.4	%	—		—	%	—		—	%	1.1		0.3	%
Impact of disposition	—		—	%	—		—	%	—		—	%	(9.1)		(77.8)	%	(9.1)		(2.4)	%
Impact of currency	(2.4)		(1.0)	%	(0.7)		(0.8)	%	(0.1)		(0.2)	%	—		—	%	(3.2)		(0.8)	%
Segment Profit – FY ’20	$	206.2	(16.3)	%	$	69.1	(14.0)	%	$	52.3	8.3	%	$	3.1	(73.5)	%	$	330.7	(14.5)	%

Note 4 – EBITDA

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

	Quarter Ended September 30,				Year Ended September 30,
	2020		2019		2020		2019
Net earnings (loss)	$	21.0	$	40.7	$	67.6	$	(372.2)
Income tax provision (benefit)	3.2		0.4		19.7		(18.1)
Interest expense, net	17.3		14.6		60.7		62.3
Depreciation and amortization	23.3		24.6		88.8		93.8
EBITDA	$	64.8	$	80.3	$	236.8	$	(234.2)

Impairment charges	—		—		—		570.0
Restructuring and related costs	7.3		11.9		38.1		53.7
Acquisition and integration costs	7.8		3.8		39.8		6.7
Cost of early retirement of long-term debt	—		—		26.2		—
Gain on sale of Infant and Pet Care business	—		—		(4.1)		—
COVID-19 expenses	0.4		—		4.3		—
Feminine and Infant Care evaluation costs	—		0.5		0.3		2.1
Sun Care reformulation costs	—		1.3		—		2.8
Investor settlement expense	—		—		—		0.9
Adjusted EBITDA	$	80.3	$	97.8	$	341.4	$	402.0

Note 5 – Outlook

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

Adjusted EPS Outlook
Fiscal 2021 GAAP EPS		$2.18 – $2.38

Restructuring and related costs	approx.	0.52
Acquisition and integration costs	approx.	0.06
Income taxes⁽¹⁾	approx.	(0.14)

Fiscal 2021Adjusted EPS Outlook (Non-GAAP)		$2.62 – $2.82

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

Adjusted EBITDA Outlook
Fiscal 2021 GAAP Net Income	approx.	$120 – $135
Income tax provision	approx.	35
Interest expense, net	approx.	70
Depreciation and amortization	approx.	90
EBITDA	approx.	$315 – $330

Restructuring and related costs	approx.	27
Acquisition and planning costs	approx.	3
Fiscal 2021 Adjusted EBITDA	approx.	$345 – $360

Note 6 – Adjusted Working Capital

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

	Q4 2020			Days ⁽¹⁾	Q3 2020			Days ⁽¹⁾	Q4 2019			Days ⁽¹⁾
Receivables, as reported	$	182.5			$	194.2			$	215.4
Less: Trade allowance in accrued liabilities ⁽²⁾	(26.4)				(25.3)				(24.6)
Receivables, adjusted	156.1			29	168.9			31	190.8			33

Inventories, as reported	336.2			115	346.9			115	371.4			115

Accounts payable, as reported	187.2			64	197.4			66	218.8			68

Average adjusted working capital ⁽³⁾	$	305.1			$	318.4			$	343.4
% of net sales ⁽⁴⁾	15.6		%		16.0		%		16.0		%


(1)	Days sales outstanding is calculated using net sales for the trailing four-quarter period. Days in inventory and days payable outstanding are calculated using cost of products sold for the trailing four-quarter period.
(2)	Trade allowances are recorded as a reduction of net sales per GAAP and reported in accrued expenses on the Condensed Consolidated Balance Sheets.
(3)	Adjusted working capital is defined as receivables (less trade allowance in accrued liabilities), plus inventories, less accounts payable. Average adjusted working capital is calculated using an average of the four-quarter end balances for each working capital component as of September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
(4)	Average adjusted working capital divided by trailing four-quarter net sales.

Note 7 – Infant and Pet Care Divestiture

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


	Q1 FY19		Q2 FY19		Q3 FY19		Q4 FY19		FY19
Net sales	$	27.3	$	31.7	$	31.3	$	29.4	119.7
Cost of products sold	20.8		19.7		21.7		22.0		84.2
Gross profit	6.5		12.0		9.6		7.4		35.5

Selling, general and administrative expense	3.0		3.3		3.3		3.0		12.6
Advertising and sales promotion expense	1.9		2.2		2.3		2.6		9.0
Research and development expense	0.6		0.7		0.6		0.7		2.6

Operating Profit	1.0		5.8		3.4		1.1		11.3

View original content to download multimedia:http://www.prnewswire.com/news-releases/edgewell-personal-care-announces-fourth-quarter-and-fiscal-2020-results-and-provides-2021-outlook-301171352.html

SOURCE Edgewell Personal Care Company

November 12, 2020 6:03 am

Uncertainty in lead-up to 2020 presidential election takes toll on mental health of Americans

PR Newswire

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

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

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

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

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

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

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

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

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

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

About Morneau Shepell

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

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

SOURCE Morneau Shepell Inc.

November 12, 2020 6:03 am

GBT Tokenize Commencing Open Public Research in Kirlian Electrophotography Technique

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

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

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

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

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

Illustration of Kirlian photograph of a fingertip, 1989:

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

Actual Test imaging (for presentation purposes only):

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

Forward-Looking Statements

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

Contact:

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

November 12, 2020 6:03 am

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

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

Styleisure™ apparel line is designed to comfortably elevate your everyday

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

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

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

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

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

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

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

About JCPenney

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005356/en/

JCPenney Corporate Communications and Public Relations:

Kristen Bennett

(972) 431-3400 or [email protected]

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

Investor Relations:

(972) 431-5500 or [email protected]

KEYWORDS: United States North America Texas

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

MEDIA:

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November 12, 2020 6:03 am

New York City REIT Announces Third Quarter 2020 Results

New York City REIT Announces Third Quarter 2020 Results

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

Third Quarter 2020 and Subsequent Event Highlights

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

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

Financial Results

	Three Months Ended September 30,
(In thousands, except per share data)	2020		2019
Revenue from tenants	$	16,997	$	18,643

Net loss attributable to common stockholders	$	(12,288)	$	(4,809)
Net loss per common share ^(a)	$	(0.96)	$	(0.38)

FFO attributable to common stockholders	(3,649)		2,995
FFO per common share ^(a)	$	(0.29)	$	0.23

Core FFO attributable to common stockholders	$	514	$	3,019
Core FFO per common share ^(a)	$	0.04	$	0.24

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

Real Estate Portfolio

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

88.6% leased, compared to 92.4% at the end of third quarter 2019, with 7.5 years remaining weighted-average lease term

68% of annualized straight-line rent⁷ from top 10 tenants derived from investment grade or implied investment grade tenants
76% office (based on an annualized straight-line rent)

Capital Structure and Liquidity Resources

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

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

Rent Collection Update

Third Quarter of 2020

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

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

Footnotes/Definitions

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

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

³Total real estate investments at cost.

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

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

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

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

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

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

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

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

Webcast and Conference Call

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

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

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

Live Call

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

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

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

Participant Elite Entry Number: 3532909

Conference Replay*

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

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

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

Conference Number: 10148253

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

About New York City REIT, Inc.

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

Supplemental Schedules

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

Important Notice

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

New York City REIT, Inc. Consolidated Balance Sheets (In thousands. except share and per share data)

	September 30, 2020		December 31, 2019
ASSETS	(Unaudited)
Real estate investments, at cost:
Land	$	193,658	$	193,658
Buildings and improvements	568,134		565,829
Acquired intangible assets	98,412		103,121
Total real estate investments, at cost	860,204		862,608
Less accumulated depreciation and amortization	(132,418)		(114,322)
Total real estate investments, net	727,786		748,286
Cash and cash equivalents	39,088		51,199
Restricted cash	9,700		7,098
Operating lease right-of-use asset	55,427		55,579
Prepaid expenses and other assets (includes amounts due from related parties of $407 and $0 at September 30, 2020 and December 31, 2019, respectively)	11,080		8,602
Straight-line rent receivable	25,231		21,649
Deferred leasing costs, net	9,643		8,943
Total assets	$	877,955	$	901,356

LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net	$	396,188	$	395,031
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $167 and $222 at September 30, 2020 and December 31, 2019, respectively)	6,831		7,033
Operating lease liability	54,832		54,866
Below-market lease liabilities, net	14,517		18,300
Derivative liability, at fair value	3,722		1,327
Deferred revenue	5,490		4,250
Total liabilities	481,580		480,807

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019	—		—
Common stock, $0.01 par value, 300,000,000 shares authorized,12,802,690 and 12,755,099 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	129		128
Additional paid-in capital	686,690		686,026
Accumulated other comprehensive loss	(3,722)		(1,327)
Distributions in excess of accumulated earnings	(288,640)		(264,278)
Total stockholders’ equity	394,457		420,549
Non-controlling interests	1,918		—
Total equity	396,375		420,549
Total liabilities and equity	$	877,955	$	901,356

New York City REIT, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data)

	Three Months Ended September 30,
	2020		2019
Revenue from tenants	$	16,997	$	18,643

Operating expenses:
Asset and property management fees to related parties	1,879		1,962
Property operating	8,300		8,026
Listing expenses	1,299		—
Vesting and conversion of Class B Units	1,153		—
Equity-based compensation	1,711		24
General and administrative	1,234		1,176
Depreciation and amortization	8,639		7,804
Total operating expenses	24,215		18,992
Operating loss	(7,218)		(349)
Other income (expense):
Interest expense	(5,089)		(4,681)
Other income	19		221
Total other expense	(5,070)		(4,460)
Net loss attributable to common stockholders	$	(12,288)	$	(4,809)

Weighted-average shares outstanding — Basic and Diluted	12,772,176		12,749,456
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.96)	$	(0.38)

New York City REIT, Inc. Quarterly Reconciliation of Non-GAAP Measures (Unaudited) (In thousands)

	Three Months Ended September 30,
	2020		2019
Adjusted EBITDA
Net loss	$	(12,288)	$	(4,809)
Depreciation and amortization	8,639		7,804
Interest expense	5,089		4,681
Listing expenses	1,299		—
Vesting and conversion of Class B Units	1,153		—
Equity-based compensation	1,711		24
Other income	(19)		(221)
Adjusted EBITDA	5,584		7,479
Asset and property management fees to related parties	1,879		1,962
General and administrative	1,234		1,176
NOI	8,697		10,617
Accretion of below- and amortization of above-market lease liabilities and assets, net	(555)		(566)
Straight-line rent (revenue as a lessor)	(2,107)		(1,267)
Straight-line ground rent (expense as lessee)	28		28
Cash NOI	$	6,063	$	8,812

Cash Paid for Interest:
Interest expense	$	5,089	$	4,681
Amortization of deferred financing costs	(386)		(380)
Total cash paid for interest	$	4,703	$	4,301

New York City REIT, Inc. Quarterly Reconciliation of Non-GAAP Measures (Unaudited) (In thousands)

	Three Months Ended September 30,
	2020		2019
Net loss attributable to common stockholders	$	(12,288)	$	(4,809)
Depreciation and amortization	8,639		7,804
FFO attributable to common stockholders	(3,649)		2,995
Listing expenses	1,299		—
Vesting and conversion of Class B Units	1,153		—
Equity-based compensation	1,711		24
Core FFO attributable to common stockholders	$	514	$	3,019

Non-GAAP Financial Measures

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

Caution on Use of Non-GAAP Measures

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

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

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

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

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

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

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

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

Core Funds from Operations

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

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

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

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

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005175/en/

Investors and Media:

Email: [email protected]

Phone: (866) 902-0063

KEYWORDS: New York United States North America

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

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November 12, 2020 6:03 am

Stratasys Reports Third Quarter 2020 Financial Results

Stratasys Reports Third Quarter 2020 Financial Results

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

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

Q3 2020 Financial Results Summary:

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

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

Stratasys Ltd. Q3 2020 Conference Call Details

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

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

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

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

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

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

Cautionary Statement Regarding Forward-Looking Statements

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

Use of non-GAAP financial measures

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

Stratasys Ltd.

Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
	September 30,			December 31,
	2020			2019


ASSETS

Current assets
Cash and cash equivalents	$	252,906		$	293,484
Short-term deposits	$	55,300		$	28,300
Accounts receivable, net		103,693			132,558
Inventories		152,685			168,504
Prepaid expenses		7,568			6,567
Other current assets		19,209			29,659

Total current assets		591,361			659,072

Non-current assets
Property, plant and equipment, net		198,521			189,706
Goodwill		–			385,658
Other intangible assets, net		65,083			87,328
Operating lease right-of-use assets		18,905			20,936
Other non-current assets		35,238			38,819

Total non-current assets		317,747			722,447

Total assets	$	909,108		$	1,381,519

LIABILITIES AND EQUITY

Current liabilities
Accounts payable	$	23,478		$	35,818
Accrued expenses and other current liabilities		26,462			28,528
Accrued compensation and related benefits		28,536			34,013
Deferred revenues		47,288			52,268
Operating lease liabilities – short term		8,675			9,292

Total current liabilities		134,439			159,919

Non-current liabilities
Deferred revenues – long-term		13,436			16,039
Operating lease liabilities – long term		10,600			12,445
Other non-current liabilities		33,291			35,343

Total non-current liabilities		57,327			63,827

Total liabilities		191,766			223,746

Redeemable non-controlling interests		568			622

Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 55,112 thousands shares and 54,441 thousands shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		150			148
Additional paid-in capital		2,722,839			2,706,894
Accumulated other comprehensive loss		(9,289	)		(7,716	)
Accumulated deficit		(1,996,926	)		(1,542,175	)
Total equity		716,774			1,157,151

Total liabilities and equity	$	909,108		$	1,381,519

Stratasys Ltd.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales
Products	$	83,548		$	106,346		$	240,597		$	321,778
Services		44,344			51,114			137,825			154,145
		127,892			157,460			378,422			475,923

Cost of sales
Products		47,339			44,341			126,556			135,605
Services		30,784			35,710			98,491			105,285
		78,123			80,051			225,047			240,890

Gross profit		49,769			77,409			153,375			235,033

Operating expenses
Research and development, net		19,562			23,620			65,059			70,234
Selling, general and administrative		48,343			59,741			155,630			173,217
Goodwill impairment		386,154			–			386,154			–
		454,059			83,361			606,843			243,451

Operating loss		(404,290	)		(5,952	)		(453,468	)		(8,418	)

Financial income (expense), net		(167	)		289			(847	)		2,796

Loss before income taxes		(404,457	)		(5,663	)		(454,315	)		(5,622	)

Income tax expenses (benefit)		(343	)		586			(2,250	)		3,084

Share in profits (losses) of associated companies		(952	)		(733	)		(2,740	)		495

Net Loss		(405,066	)		(6,982	)		(454,805	)		(8,211	)

Net loss attributable to non-controlling interests		(4	)		(41	)		(54	)		(152	)

Net loss attributable to Stratasys Ltd.	$	(405,062	)	$	(6,941	)	$	(454,751	)	$	(8,059	)

Net loss per ordinary share attributable to Stratasys Ltd.
Basic	$	(7.35	)	$	(0.13	)	$	(8.29	)	$	(0.15	)
Diluted	$	(7.35	)	$	(0.13	)	$	(8.29	)	$	(0.15	)


Basic		55,086			54,394			54,851			54,201
Diluted		55,086			54,394			54,851			54,201


		Three Months Ended September 30,
		2020			Non-GAAP			2020			2019			Non-GAAP			2019
		GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)

	Gross profit (1)	$	49,769		$	10,036		$	59,805		$	77,409		$	5,087		$	82,496
	Operating income (loss) (1,2)		(404,290	)		403,268			(1,022	)		(5,952	)		14,055			8,103
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)		(405,062	)		402,050			(3,012	)		(6,941	)		13,275			6,334
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	(7.35	)	$	7.30		$	(0.05	)	$	(0.13	)	$	0.25		$	0.12


(1)	Acquired intangible assets amortization expense					4,065									3,916
	Non-cash stock-based compensation expense					524									475
	Restructuring and other related costs					191									696
	Impairment charges of intangible assets					5,256									–
						10,036									5,087

(2)	Acquired intangible assets amortization expense					2,162									2,016
	Non-cash stock-based compensation expense					4,352									4,960
	Goodwill impairment					386,154									–
	Restructuring and other related costs					34									1,992
	Other expenses					530									–
						393,232									8,968
						403,268									14,055

(3)	Corresponding tax effect					(1,296	)								(780	)
	Equity method related amortization, divestments and impairments					78									–
					$	402,050								$	13,275
(4)	Weighted average number of ordinary shares outstanding- Diluted		55,086						55,086			54,394						54,940


		Nine Months Ended September 30,
		2020			Non-GAAP			2020			2019			Non-GAAP			2019
		GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)

	Gross profit (1)	$	153,375		$	24,062		$	177,437		$	235,033		$	13,780		$	248,813
	Operating income (loss) (1,2)		(453,468	)		435,987			(17,481	)		(8,418	)		32,376			23,958
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)		(454,751	)		433,821			(20,930	)		(8,059	)		28,574			20,515
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	(8.29	)	$	7.91		$	(0.38	)	$	(0.15	)	$	0.53		$	0.38


(1)	Acquired intangible assets amortization expense					12,196									11,714
	Non-cash stock-based compensation expense					1,424									1,370
	Restructuring and other related costs					5,187									696
	Impairment charges of intangible assets					5,256									–
						24,062									13,780

(2)	Acquired intangible assets amortization expense					6,430									5,688
	Non-cash stock-based compensation expense					14,470									14,387
	Goodwill impairment					386,154									–
	Restructuring and other related costs					3,863									(1,479	)
	Other expenses					1,007									–
						411,925									18,596
						435,987									32,376

(3)	Corresponding tax effect					(2,396	)								(2,198	)
	Equity method related amortization, divestments and impairments					230									(1,604	)
					$	433,821								$	28,574

(4)	Weighted average number of ordinary shares outstanding- Diluted		54,851						54,851			54,201						54,705

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Stratasys Investor Relations

Yonah Lloyd

Vice President – Investor Relations

[email protected]

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