Visa's (V) Q4 results reflect higher payments volume, processed transactions and cross-border volume on increased consumer spending. Visa Inc. V reported fourth-quarter fiscal 2021 earnings of $1.62 per share, which outpaced the Zacks Consensus Estimate by 5.88%. The bottom line improved 45% year over year.Net revenues rose 29% year over year to $6.6 billion in the quarter under review. The top line beat the consensus mark by 1.2%.Results were aided by solid growth in payments volume, processed transactions and cross-border volume, partly offset by elevated operating costs. Visa Inc. Price, Consensus and EPS Surprise  Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote Financial PerformancePayments volume of Visa climbed 17% year over year in the third quarter. The company’s processed transactions grew 21% year over year to 45.3 billion, courtesy of domestic transactions.Total cross-border volume improved 38% year over year in the quarter. Its cross-border volume excluding transactions within Europe usually bolsters the company’s international transaction revenues.Service revenues surged 41% year over year to $3.1 billion, driven by an improved payments volume recorded in the prior quarter. While data processing revenues climbed 20% from the prior-year quarter to $3.4 billion, international transaction revenues of $1.79 billion soared 41% year over year. Other revenues grew 36% year over year to $490 million.Client incentives increased 40% year over year to $2.4 billion in the quarter under review.Operating expenses of $2.2 billion escalated 15% year over year due to rise in marketing, personnel and professional fees.Interest expense declined 13.8% year over year to $125 million in the quarter.Balance Sheet (as of Sep 30, 2021)Visa exited the quarter with cash and cash equivalents of $16.5 billion, which increased 1.2% from the level at the fiscal-year end on Sep 30, 2020.Total assets were $82.9 billion, up 2.4% from the fiscal-year end level as of Sep 30, 2020.Long-term debt decreased 5.2% to $20 billion from the fiscal-year end reading on Sep 30, 2020.Share Buyback and Dividend UpdateIn the quarter under review, the company bought back shares worth $3.1 billion.The board of directors increased Visa's quarterly cash dividend by 17% to 37.5 cents per shareZacks RankVisa presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks hereOther Business Services Sector ReleasesSome other companies in the business services space that already released results are Equifax Inc. EFX, American Express Co. AXP and Discover Financial Services DFS, which beat earnings estimates by 7.6%, 27.53% and 3.51%, respectively. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Visa Inc. (V): Free Stock Analysis Report Discover Financial Services (DFS): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis Report Equifax, Inc. (EFX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Twitter's (TWTR) third-quarter 2021 results benefit from strength in advertising revenues, driven by solid brand advertiser demand in the global market. Twitter TWTR reported third-quarter 2021 adjusted loss of 54 cents per share in contrast to the Zacks Consensus Estimate of earnings of 17 cents per share. The company had reported earnings of 19 cents per share in the year-ago quarter.Revenues increased 37% year over year to $1.28 billion that missed the Zacks Consensus Estimate by 0.3%. The year-over-year top-line growth was driven by strong performance across all major products and geographies. Strength in brand advertising as well as accelerating year-over-year growth in Mobile App Promotion (MAP) revenues aided growth.Twitter’s stock price was up about 4% in extended trading on Oct 26. Per the company, the impact of Apple’s AAPL iOS 14.5 privacy change was less than expected in the third quarter and will be modest in the fourth quarter.Earlier this year, Apple introduced a major privacy feature called App Tracking Transparency (ATT) that allowed users to opt out of third-party app tracking. This means apps can no longer collect data about users from third parties and use that data to better target them with ads unless a user specifically gives the app permission to do so.Other tech giants including Snap Inc. SNAP and Facebook FB cited Apple’s new privacy features as the key factor that made ad-targeting difficult in the latest quarter.Twitter, Inc. Price, Consensus and EPS Surprise Twitter, Inc. price-consensus-eps-surprise-chart | Twitter, Inc. QuoteAdvertising Revenue DetailsAdvertising revenues increased 41% year over year to $1.14 billion driven by strong demand in the United States and continued momentum across key markets around the world, fueled by revenue product improvements, strong sales execution, and increased demand for digital ads in general.U.S. advertising revenues totaled $647.4 million, up 51% year over year. International ad revenues increased 30% to $493 million.This Zacks Rank #3 (Hold) company’s advertising revenues witnessed strong contributions from SMB customers, with revenues accelerating in double digits. This reflected increased investments across sales and products with higher spending per advertiser. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Twitter benefited from strong advertiser demand as it looked to launch products and services across a number of key verticals, including technology, retail, media & entertainment, and financial services.Total ad engagements increased 6%, driven by steady growth in ad impressions due to growing audience and increased demand for ads.Cost per engagement (CPE) increased 33%, primarily driven by the mix shift to lower funnel ad formats and like-for-like price increases across most ad formats.Twitter launched a new brand measurement service for third-party partners in the third quarter that provides real-time ad impressions, engagements, and viewability data to support Viewability Verification and Audience Verification for ads.The company also more than doubled the available language targeting options, making 25 new languages available for targeting in the Twitter Ads Manager and through Ads API.Besides, for Website Clicks, Twitter introduced Multi-Destination Carousels, enabling advertisers to market and drive traffic to multiple products inside the same ad.For MAP advertisers, Twitter released an updated Learning Period model in the third quarter. The model delivers more consistent campaign performance, leading to a 36% increase in the number of campaigns that achieved the minimum viable threshold for campaign performance and advertiser retention.User DetailsAverage monetizable daily active users (mDAU) grew 13% year over year to 211 million, driven by global conversation around current events and ongoing product improvements. Average mDAU grew 5 million sequentially.The average U.S. mDAU was 37 million, up 4% from the year-ago quarter and 2% from the previous quarter. The average international mDAU was 174 million, rising 15% year over year and 3% from the previous quarter.In the third quarter, Twitter launched more than 2,300 new Topics, bringing the total number of Topics that people can follow up to 11,800 across 11 languages. Markedly, 230 million accounts now follow at least one Topic.Twitter made it easier for new customers to sign up in the third quarter, with a single sign-on, allowing people to sign up or log into Twitter with their Google Account or Apple ID.The company launched three new monetization products for creators in the third quarter, including Tips, Super Follows, and Ticketed Spaces. Tip Jar enables people to directly support creators through tipping. Ticketed Spaces allows people to pay for access to exclusive live audio experiences and other exclusive content is available via monthly subscription through Super Follows. These features helped Twitter gain subscribers in the reported quarter.The company also started to roll out Communities, an easy way to find and connect with people who have similar interests.Twitter continued to enhance the global conversation on its platform with live and on-demand video content. The company extended its existing partnership with Dow Jones Corporation to include a renewal of the successful WSJ What’s Now series, as well as new Barrons, Investor’s Business Daily, and MarketWatch content on its platform.The company also signed a deal with Fox Sports to bring the best of college football content to its platform with real-time highlights.In the third quarter, Twitter also introduced Safety Mode to protect user privacy. This new feature aims to reduce disruptive interactions by temporarily blocking accounts for using potentially harmful language (such as insults or hateful remarks) or sending repetitive and uninvited replies or mentions.Revenue DetailsU.S. revenues (58% of revenues) surged 45% year over year to $741.8 million. International revenues (42% of revenues) increased 28% to $541.9 million.Japan remained the company’s second-largest market in the reported quarter. Revenues from the country (12% of total revenues) increased 20% to $159 million.Data licensing and other revenues increased 12% from the year-ago quarter to 43 million, driven by MoPub.Operating DetailsTwitter’s total costs and expenses were $2.03 billion, up 130% on a year-over-year basis, driven by a one-time litigation-related net charge of $766 million, as well as higher sales-related expenses, headcount growth, and infrastructure costs.Research and development expenses jumped 55% year over year to $324 million, primarily due to higher personnel-related costs. Sales and marketing expenses increased 40% to $301 million, primarily due to higher sales-related expenses. General and administrative expenses rose 60% to $151 million, primarily due to higher personnel-related costs offset by a decrease in supporting overhead expenses.Adjusted EBITDA loss was $444.8 million against the year-ago quarter’s adjusted EBITDA of $294 million.Twitter incurred operating loss of $743 million, which included a one-time litigation-related net charge of $766 million against the year-ago quarter’s operating income of $56 million. Adjusted operating income, which excludes the $766 million litigation-related net charge, was $23 million, reflecting an adjusted operating margin of 2%.Balance SheetAs of Sep 30, 2021, Twitter had $7.41 billion in cash, cash equivalents and marketable securities, reflecting the repayment of an aggregate principal amount of $954 million in senior convertible notes due in September 2021. The company had $8.61 billion in cash, cash equivalents and marketable securities as of Jun 30, 2021.Net cash provided by operating activities in the reported quarter was $389 million, up from $382 million in the previous quarter.In the third quarter, adjusted free cash flow was $20 million compared with $105.8 million in the previous quarter.The company repurchased $169 million of stock during the third quarter, bringing the total repurchase amount to $915 million to date.OutlookFor the fourth quarter of 2021, Twitter expects total revenues between $1.5 billion and $1.6 billion. GAAP operating income is expected between $130 million and $180 million.For 2021, Twitter expects headcount, along with total costs and expenses, to grow 30% or more with a focus on engineering and products. The company continues to expect total revenues to grow faster than expenses in 2021. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Facebook, Inc. (FB): Free Stock Analysis Report Twitter, Inc. (TWTR): Free Stock Analysis Report Snap Inc. (SNAP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

C.H. Robinson's (CHRW) Q3 results reflect significant improvement on a year-over-year basis owing to higher pricing and volumes across most of the company's service lines. C.H. Robinson Worldwide’s CHRW third-quarter 2021 earnings of $1.85 per share surpassed the Zacks Consensus Estimate of $1.41. The bottom line surged 85% year over year.Total revenues of $6,263.7 million also outperformed the Zacks Consensus Estimate of $5,377.9 million. The top line jumped 48.3% year over year owing to higher pricing and volumes across most of the company’s service lines.Total operating expenses increased 26.7% year over year to $533.4 million due to higher personnel expenses. Adjusted gross profit climbed 43.3% year over year to $844.2 million, primarily owing to higher volumes across most of the company’s services, as well as increased adjusted gross profit per transaction.The company returned $237.2 million to its shareholders in the third quarter through a combination of cash dividends ($69.2 million) and share repurchases ($168.1 million). Capital expenditures totaled $22.7 million in the quarter under review. The company expects capital expenditures in the band of $70 million-$80 million for 2021. Majority of the amount is aimed at technology investments.C.H. Robinson Worldwide, Inc. Price, Consensus and EPS Surprise C.H. Robinson Worldwide, Inc. price-consensus-eps-surprise-chart | C.H. Robinson Worldwide, Inc. QuoteSegmental ResultsAt North American Surface Transportation (“NAST”), total revenues were $3.81 billion (up 30.5%) in the third quarter. Segmental revenues benefited from higher truckload and less-than truckload ("LTL") pricing a as well as an increase in truckload shipments. Adjusted gross profit at the segment ascended 25.1%, driven by 36.5% increase in truckload adjusted gross profit, which in turn was helped by the rise in adjusted gross profit per load and an increase in shipments. NAST results include Robinson Fresh transportation, which was previously reported under a separate segment.Total revenues at Global Forwarding were $1.98 billion, up more than 100% year over year. With increased freight demand and capacity constraints, higher pricing and volumes in ocean and air services units boosted results. Adjusted gross profit at the segment surged 97.2% year over year.A historical presentation of the results on an enterprise basis is given below:Transportation: The unit (comprising Truckload, Intermodal, LTL, Ocean, Air, Customs and Other logistics services) delivered adjusted gross profit of $819.51 million in the quarter under consideration, up 44.7% from the prior-year figure.Adjusted gross profit at the Truckload segment climbed 32.7% year over year to $333.07 million. LTL adjusted gross profit increased 11.7% year over year to $132.48 million, with adjusted gross profit per order rising 10.5% and LTL volumes increasing 1%.Adjusted gross profit at the Ocean transportation segment jumped more than 100% year over year to $214.93 million. The same at the air transportation segment climbed 73.1% to $60.55 million. Customs-adjusted gross profit augmented 13.4% to $25.47 million.Other logistics services’ adjusted gross profit rose 5.3% to $53.02 million.Sourcing: Adjusted gross profit at the segment increased 7.6% to $24.68 million.LiquidityThis Zacks Rank #2 (Buy) company exited the third quarter with cash and cash equivalents of $202.65 million compared with $243.80 million at the end of December 2020. Long-term debt was $1.09 billion, nearly flat with the figure reported at the end of December 2020. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Sectorial SnapshotsLet’s take a look at some of the other earnings releases from companies within the Zacks Transportation sector.CSX Corporation CSX, carrying a Zacks Rank #2, reported third-quarter 2021 earnings of 43 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. Total revenues of $3,292 million outperformed the Zacks Consensus Estimate of $3030.9 million.Southwest Airlines LUV, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding 96 cents from non-recurring items) of 23 cents per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of 27 cents. Operating revenues of $4,679 million outperformed the Zacks Consensus Estimate of $4,581.5 million.United Airlines Holdings UAL, carrying a Zacks Rank #3 (Hold), incurred a loss (excluding $2.46 from non-recurring items) of $1.02 per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.65. Operating revenues of $7,750 million surpassed the Zacks Consensus Estimate of $7639.7 million. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CSX Corporation (CSX): Free Stock Analysis Report United Airlines Holdings Inc (UAL): Free Stock Analysis Report Southwest Airlines Co. (LUV): Free Stock Analysis Report C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Earnings growth is still strong but estimates have been retreating recently. While the title of this article is in fact a “Bear of the Day” it is a bit of a misnomer. Meaning, I am not bearish about the long-term prospects of this company. Rather, I am merely pointing out some bearish activity that has been happening in earnings estimates. This could be a warning sign that is flashing for long-term investors to consider. I’m here to help weigh the good versus the bad.Today’s Bear of the Day is DMC Global BOOM. DMC Global Inc. provides a suite of technical products for the energy, industrial, and infrastructure markets worldwide. The company operates in two segments, NobelClad and DynaEnergetics. The company sells its products through direct sales personnel, program managers, and independent sales representatives. The company was formerly known as Dynamic Materials Corporation and changed its name to DMC Global Inc. in November 2016.The stock is currently a Zacks Rank #5 (Strong Sell) because of earnings estimates coming from analysts all over Wall Street. Analysts have been slashing their numbers, expecting less from the company. At first glance, this is bearish. Take the current year EPS number for example. Ninety days ago, our Zacks Consensus Estimates called for 56 cents EPS for the year. That number has since dropped down to 22 cents. The trend continues in next year’s numbers as well as our Zacks Consensus Estimate is off from $1.57 to 99 cents. That’s the bearish news.DMC Global Price and Consensus DMC Global price-consensus-chart | DMC Global QuoteOn the flipside, these numbers still represent huge growth. Current year estimates call for 214% earnings growth, even at 22 cents per share, while next year’s 99-cent number is good for another 350% of growth. This is something the long-term investors in the stock should point to as a bullish point. That growth helps to partly justify the stock’s PE ratio. It is way up at 187x earnings though. Compare that to an industry average of 15.4x and the S&P 500’s 22.78x.Other stocks within the industrial services industry include Terminix Global TMX and IAC/InterActiveCorp IAC. Both are currently Zacks Rank #2 (Buy) stocks.  Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Terminix Global Holdings, Inc. (TMX): Free Stock Analysis Report DMC Global (BOOM): Free Stock Analysis Report IACInterActiveCorp (IAC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Biden's "Come On, Man" Defense Will Not Fly On Religious Freedom Authored by Jonathan Turley, Below is my column on the President’s dismissal of any objections to the Covid vaccine and his call for mass firings of first responders who remain defiant. The comments reflect a growing call for states and the federal government to reject any religious exemptions for vaccination. Here is the column: “Come on, man,” seems to be President Biden’s signature response to any uncomfortable question. The phrase is meant to be both dismissive and conclusive in ending inquiries, frequently used to counter reporters before often walking away. Indeed, it is so often repeated that it appears on T-Shirts or coffee mugs and in remixes. This week, however, it was not the pesky press but freedom itself that got hit with a version of the comeback. When asked during a CNN town hall program about those still objecting to taking COVID vaccines, Biden mocked them and their claimed rights with “Come on, ‘freedom.’ ” He then called for any police officers, firefighters, medical personnel or other first responders to be fired en masse if they refuse to be vaccinated. Biden’s response to the question was applauded by the CNN audience, as if to say “Freedomm Ptff, that is so last century.” And he reduced any vaccine refusals to claiming “I have the freedom to kill you with my COVID.” He is not alone in such rhetoric. Chicago’s Mayor Lori Lightfoot declared that police officers refusing to take vaccines are insurrectionists. The problem is that the courts already recognize some religious exemption arguments. Those arguments are based on both the constitutional protection of religious values but also laws like Title VII of the Civil Rights Act, 42 U.S.C. §2000e-2(a), which declares unlawful any “employment practice for an employer … to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual’s … religion.” The federal government also is subject to the Religious Freedom Restoration Act (RFRA), which prohibits the government and other covered entities like the District of Columbia from “substantially burden[ing]” a person’s exercise of religion. Under RFRA, there is no “Come on, man,” defense. Instead, the federal government must show that the burden imposed furthers a “compelling governmental interest” and is “the least restrictive means” of furthering that interest. There is a move in many states to refuse to allow such exemptions, but courts have pushed back. In New York, the state is appealing a preliminary injunction against its refusal to allow religious exemptions to its vaccine mandate. A lower court found the governor’s mandate “has effectively foreclosed the pathway to seeking a religious accommodation that is guaranteed under Title VII.” Likewise, the Sixth Circuit Court of Appeals this month affirmed such a preliminary injunction against Western Michigan University. The university allowed students to ask for individual exemptions but failed to grant religious exemptions under its discretionary policy. The issue reached the Supreme Court this week when health workers challenged a similar law in Maine allowing for medical but not religious exemptions. Justice Stephen Breyer rejected an emergency motion but too much has been made over that order, which was not based on the merits of the claim. The appellate court was already expediting review of the case, and the dismissal was “without prejudice.” The health care workers can refile if circumstances change or if the appellate court rules against them.  They also can refile if the lower court has not reached a decision by Oct. 29, when the vaccine requirement is scheduled to go into effect. Previously in the term, Justice Amy Coney Barrett similarly declined to grant a request for emergency relief on behalf of eight students at Indiana University against a vaccine mandate. That mandate previously was upheld by conservative judge Frank Easterbrook, who wrote for an unanimous Seventh Circuit panel that “each university may decide what is necessary to keep other students safe in a congregate setting.” He cited the Supreme Court’s 1905 ruling in Jacobson v. Massachusetts, upholding a state small pox vaccine mandate. However, there was one major difference in Klaassen v. Trustees of Indiana University: Indiana University allows for medical or religious exemptions. Various commentators and activists are pushing states to follow the lead of New York and refuse to recognize any religious objections to vaccines. This week, Jessica Levinson, a clinical professor of law at Loyola Marymount Law School in Los Angeles, wrote a column for MSNBC entitled “Covid Vaccine Religious Exemptions Should Not Exist.” Professor Levinson, however, refutes an argument not made in these cases. Courts have long rejected the notion that “each person would be in charge of which laws she wanted to comply with and when.” In 1990, it was Justice Antonin Scalia, a conservative icon, who wrote the opinion rejecting the use of peyote under religious claims. Levinson quotes the Supreme Court from an 1879 case, asking: “Suppose one believed that human sacrifices were a necessary part of religious worship; would it be seriously contended that the civil government under which he lived could not interfere to prevent a sacrifice?” It was a curious choice of support. The question was asked in Reynolds vs. United States, one of the most religiously intolerant opinions in Supreme Court history. Most people would recoil from the prejudice that comes out of the case, which denounces the Mormon church for adopting a practice “almost exclusively a feature of the life of Asiatic and of African people.” Ironically, Reynolds defended Western and Christian morality against non-Christian values. Professor Levinson is correct, of course, that religious claims are balanced against the interests of the state in public health cases. That, however, is precisely what these litigants are seeking to raise. Most states allow for such exemptions while many private employers impose alternative measures, like daily testing or remote-working conditions. States like Maine and New York offer no recognition, let alone accommodation, for religious objections to the Covid vaccine. Again, religious objections can be recognized as valid but still fail to overcome countervailing arguments or simple accommodations. In Boston, for example, a Muslim objected to the flu vaccine in 2011 due to the use of pork ingredients; the hospital prevailed because it offered a vaccine free of such ingredients. Moreover, even if there are exemptions to vaccines, it does not mean people cannot face other limitations, like remote learning or workplace conditions. The point is simple: Just as religious individuals do not have the absolute right to refuse any obligation as citizens, governments do not have an absolute right to impose any obligations on citizens. Vaccines seem to have become the latest battleground for our age of rage; there is little willingness to recognize countervailing arguments or values. People who object to vaccines are deemed “insurrectionists,” while raising religious freedoms is now likened to claiming “the freedom to kill you with my COVID.” It is the same dismissive response that is often given to objections under other rights like free speech: Those are just abstractions. As Biden said in an earlier call for greater censorship, free speech is “killing people,” so come on, man. The categorical rejection of any religious-exemption case runs against the grain of the Constitution as well as federal statutes. If the Justice Department goes into court with the president’s dismissive position, it could find itself on the wrong side of the next “Come on, man,” moment. Tyler Durden Tue, 10/26/2021 - 18:10.....»»

Israel Holds Largest-Ever Military Drill With Participation Of An Arab Gulf Nation For the first time in history, Israel and the United Arab Emirates (UAE) are conducting joint military drills this week which includes air force exercises, following the Abraham Accords Peace Agreement between the two countries brokered by the Trump administration in September 2020. Before the signing of the historic peace deal at the Trump White House, no Arab Gulf country had so much as diplomatic relations with Israel, but now an influential Gulf state within the GCC alliance is engaged in military exercises with the Jewish state. Image source: IDF The "Blue Flag" drills are being held over southern Israel's Ovda airbase, which is in the Negev Desert about 60km north of Eilat and also include multiple other countries, namely the United States, United Kingdom, France, and Germany. Some 70 fighter jets and 1,500 military personnel will participate in what the chief of Israeli air force operations Amir Lazar is calling the largest-ever international aerial drills held in Israel. Crucially it comes after weeks of Israeli leaders confirming that the country's military and intelligence have resumed "practicing" for war against Iran. Israeli media last week described "intense" drills aimed at conducting strikes on the Islamic Republic's nuclear facilities. However, given the participation of UAE and European allies, Israel has been quick to deny that this week's exercises in the Negev are focused on Iran: Amir Lazar, chief of Israeli air force operations, told reporters at the southern Ovda airbase the drills "don’t focus on Iran", but army officials have said Iran remains Israel’s top strategic threat and at the center of much of its military planning. The defense chief added this important caveat: Lazar said the visit, set for Tuesday, was "very significant" as "someday" the nations participating in the drill would be “working together” to counter the Iranian threat. Indeed the Saudi-UAE-Kuwait Gulf alliance has long quietly cooperated with Israel on intelligence operations especially connected with the decade-long war in Syria, where Assad was seen as a central power in the so-called Iran axis which includes Hezbollah. Yet more recently the Iranians and Saudis have held surprisingly positive talks in efforts at defusing proxy wars in places like Yemen, Iraq, and Syria. Tyler Durden Tue, 10/26/2021 - 19:10.....»»

OAKLAND, Md., Oct. 26, 2021 /PRNewswire/ -- First United Corporation (NASDAQ:FUNC), a bank holding company and the parent company of First United Bank & Trust (the "Bank"), today announced earnings results for the three- and nine-month periods ended September 30, 2021. Third Quarter Financial Highlights: Total assets at September 30, 2021 decreased by $24.9 million, or 1.4%, when compared to December 31, 2020. Deployed cash during the third quarter to repay $70.0 million of Federal Home Loan Bank ("FHLB") advances and purchase a $39.0 million mortgage pool Gross loans increased by $16.5 million in the third quarter, driven by the purchase of a $39.0 million mortgage pool to offset the decline in mortgage portfolio balances that were refinanced to lower fixed rates.  Core commercial growth of $12.7 million, offset by forgiveness of $83.7 of Paycheck Protection Program ("PPP") loans during the third quarter Deposits declined by $11.6 million during the third quarter; however, growth year to date was $22.1 million Declines in both non-interest bearing and interest bearing deposits as we allowed runoff in higher cost CDs, primarily municipalities The ratio of the allowance for loan losses ("ALL") to loans outstanding was 1.46% at September 30, 2021 as compared to 1.36% at September 30, 2020. The ALL to loans outstanding, excluding PPP loan balances of $30.3 million, was 1.49% at September 30, 2021, non-GAAP. Total provision expense was a credit of $0.6 million for the third quarter of 2021 as compared to expense of $0.2 million for the third quarter of 2020 Lower provision expense due primarily to continued strong asset quality, stable economic factors and stabilization of modified loans that have returned to principal and interest payments Net interest margin, on a non-GAAP, fully tax equivalent ("FTE") basis, increased to 3.38% for the third quarter of 2021 compared to 3.12% for the third quarter of 2020 and 3.13% for the second quarter of 2021. Non-interest income, excluding gains, increased 14%, or $0.6 million in the third quarter of 2021 compared to the third quarter of 2020. Increased trust department income of 16% Increased debit card income of 22% Non-interest expense increased 24%, or $2.5 million primarily due to the $2.4 million of penalties on the repayment of $70.0 million FHLB advances. According to Carissa Rodeheaver, President and CEO, "we experienced another strong quarter led by increased fee income from our Wealth department, other service charges, and recognition of Paycheck Protection Program fees as we continued to process forgiveness applications for our borrowers as well as reduced interest expense and operating costs.  We also acknowledged the strength of our loan portfolio, resulting in release of a portion of the allowance for loan losses that was provided in 2020 due to the uncertainties of the COVID environment and how it would impact our economy and borrowers.  The strong core income was offset by a penalty that we recognized on the prepayment of our Federal Home Loan Bank borrowings as we positioned the Bank for future interest expense savings.  The Bank remains strong, well-capitalized and poised for future growth." COVID-19 During the first nine months of 2021, we continued to assist our business customers with the PPP loan forgiveness process and to originate additional PPP loans through the third round of funding. We remained diligent in protecting our associates and customers from the lingering effects of the pandemic, delaying opening our lobbies until April 1, 2021.  During the third quarter, we made the decision to reclose our lobbies as COVID cases increased in most of our markets and staffing was at reduced levels.  Many of our sales and support employees continue to work remotely as we have adjusted to a hybrid work environment.  We have continued to monitor our market areas, maintaining travel protocols and utilizing safety precautions while continuing to provide full banking services to our customers. Paycheck Protection Program The Company continues to actively participate in the PPP administered by the Small Business Administration (the "SBA").  On January 19, 2021, the SBA implemented a third round of funding for PPP loans.   During 2020, a total of $148.5 million in PPP loans were originated under the initial round of funding, consisting of 1,174 loans with an average loan size of $162 thousand.  During 2021, a total of $66.1 million in PPP loans were originated under the third round of funding, consisting of 870 loans with an average loan size of $80 thousand. Net fees recognized in the first nine months of 2021 were $3.2 million due to amortization and forgiveness, compared to $2.4 million in 2020. During 2020, 290 loans, totaling $34.5 million were forgiven, resulting in 885 loans with a remaining balance of $114.0 million at December 31, 2020.   During the first nine months of 2021, an additional 1,384 loans under all three rounds, with an aggregate principal balance of $150.0 million, were forgiven, resulting in 371 loans with a total remaining balance of $30.3 million at September 30, 2021. Of the 2,046 PPP loans originated by the Bank since the PPP's inception, 1,675 loans, totaling $184.9 million, have been forgiven through the end of third quarter 2021, representing 86% of the number of loans originated and 82% of originated principal balances. COVID Modifications While the COVID-19 pandemic has had an impact on most industries, some have been more affected than others.  In accordance with Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act and related regulatory pronouncements, we have not accounted for modifications of loans affected by the pandemic as troubled debt restructurings nor have we designated them as past due or nonaccrual.  As of October 15, 2021, total loan modifications was $9.9 million.  There were eleven commercial loans related to real estate rental, food services and health care sectors and one mortgage loan.  These loans are scheduled to return to contractual payment terms within the next quarter. Balance Sheet Overview Total assets at September 30, 2021 decreased to $1.7 billion, representing a $24.9 million decrease since December 31, 2020.  During the first nine months of 2021, cash and interest-bearing deposits in other banks decreased by $14.5 million, the investment portfolio increased by $2.4 million and gross loans decreased by $5.9 million.  The decrease in cash was due primarily to the strategic decision to deploy $39.0 million to purchase a pool of mortgage loans for the purpose of offsetting the declining mortgage portfolio balances due to the continued refinancing activity.  Management also used $70.0 million to prepay FHLB advances.  Although the Bank recorded $2.4 million in penalties in connection with the FHLP prepayments, management anticipates that the resulting reduction in interest expense for the remainder of 2021 and in future years will offset the penalty and have a significant impact on the cost of funds.  Other Real Estate Owned ("OREO") balances decreased $2.7 million due to the sale of a parcel of real estate securing a large commercial participation loan in the first quarter of 2021 and the additional sales of undeveloped lots.  We anticipate further reduction to OREO balances over the next quarter as we consummate additional sales contracts. Total liabilities decreased by $27.6 million when compared to liabilities at December 31, 2020.  The decrease in the first nine months of 2021 was attributable to deposit growth of $22.1 million due to stimulus programs and to growth in core relationships, increased balances in short-term borrowings related to our Treasury Management product, offset by the prepayment of $70.0 million in FHLB long-term borrowings. Total shareholders' equity increased slightly during the first nine months of 2021, as net income of $12.2 million was offset by the repurchase of $7.2 million (400,000 shares) of First United Corporation common stock. Outstanding loans of $1.2 billion at September 30, 2021 reflected a decline of $5.9 million during the first nine months of 2021, which was primarily attributable to growth in our mortgage loan portfolio due to the purchase of a $39.0 million loan pool, offset by a decline of portfolio balances.  This loan pool consisted of individual  adjustable and fixed rate residential mortgage loans.  Core commercial loan growth was offset by PPP loan forgiveness.  Commercial real estate ("CRE") loans increased by $2.6 million, acquisition and development ("A&D") loans increased by $15.3 million and commercial and industrial ("C&I") loans decreased by $71.0 million, as growth in core portfolio loans of $12.7 million was offset by PPP loan forgiveness.  Residential mortgage loans increased $26.7 million due to the purchase of a pool of 1-4 family residential loans, offset by the continued refinancing activity. Given the current low interest rate environment, customers appear to be seeking longer-term, fixed-rate loans and we continued to use the secondary market rather than hold these longer-term fixed rate mortgage loans in the portfolio. The consumer loan portfolio increased by $20.4 million due to the purchase of a pool of consumer loans in the second quarter of 2021 as an effort to deploy excess cash into higher yielding, short-term assets.  Commercial loan production for the first nine months of 2021 was approximately $136.6 million, with $46.7 million originated during the third quarter, exclusive of PPP loan production. PPP loan production was approximately $64.3 million for the first nine months of 2021.   At September 30, 2021, unfunded, committed commercial construction loans totaled approximately $26.6 million. Commercial amortization and payoffs were approximately $106.0 million through September 30, 2021, exclusive of PPP.  Consumer mortgage loan production was approximately $89.6 million through September 30, 2021.  The production and pipeline mix of in-house, portfolio loans and investor loans remained strong as of September 30, 2021, with those loans totaling $20.0 million, consisting of $16.0 million in portfolio loans and $4.0 million in investor loans. At the end of the second quarter of 2021, management implemented special promotions for residential mortgage products to shift production towards portfolio loans and utilize excess cash balances. Total deposits at September 30, 2021 increased by $22.1 million when compared to deposits at December 31, 2020.  During the first nine months of 2021, non-interest-bearing deposits increased by $71.0 million, driven by retail and commercial account growth partially attributable to government stimulus programs. Traditional savings accounts increased by $37.4 million as we continued to see significant growth in our Prime Saver product, and total demand deposits increased by $10.8 million. Total money market accounts decreased by $43.0 million due primarily to management's decision to sweep approximately $70.0 million of wealth management money market funds off balance sheet in the first quarter of 2021. These funds can be readily shifted back to in-house money market accounts should liquidity needs arise in the future.  Time deposits decreased by $54.1 million, primarily in time deposits over $100,000, due to repayment of a $10.0 million brokered CD in May 2021 and as we continued to reduce pricing on single-service relationships and municipal bids. Book value per share of the Company's common stock was $20.22 at September 30, 2021, compared to $18.74 per share at December 31, 2020.  At September 30, 2021, there were 6,617,941 of basic outstanding shares and 6,625,014 of diluted outstanding shares of common stock.  Income Statement Overview Quarterly Results Consolidated net income was $4.4 million for the third quarter of 2021 compared to $5.0 million for the third quarter of 2020.  Basic and diluted net income per share for the third quarter of 2021 were both $0.66, a 5.7% decrease when compared to basic and diluted net income per share of $0.70 for the third quarter of 2020.  The decline in earnings in the third quarter of 2021 was due to an increase in net interest income, a credit to provision expense, and increased wealth management income, offset by increased non-interest expenses, including the prepayment penalty of $2.4 million on FHLB borrowings. Net interest income, on a non-GAAP, FTE basis, increased by $2.0 million (16.2%) for the third quarter 2021 when compared to the third quarter of 2020.  This increase resulted from an increase in interest income of $0.7 million and a decrease in interest expense of $1.3 million.  The increase in interest income on loans was a result of increased interest on the consumer loans related to the purchase of a loan pool in the second quarter as well as an increase in the unearned fees related to the PPP forgiveness during the quarter.  The reduction of interest expense resulted from the further reduction of deposit rates early in the third quarter and the declining balances in the higher cost CD portfolio.  The prepayment of the FHLB advances should positively impact interest expense for the remainder of 2021 and future years.  The weighted rate on the $70.0 million FHLB long-term borrowings was 1.90%.  The net interest margin for the third quarter of 2021 was 3.38%, compared to 3.12% for the third quarter of 2020.  The net interest margin for the third quarter of 2021 would have been 3.12%, excluding the average balance of PPP loans of $48.5 million and interest and fees of $1.4 million. Other operating income, including gains, for the third quarter of 2021 decreased by approximately $0.6 million when compared with the same period of 2020.  Service charge income remained stable during the third quarter of 2021 when compared to the third quarter of 2020.  Trust and brokerage income increased $0.3 million due to increased production and market values on assets under management.  Net gains decreased $1.1 million when comparing the third quarter of 2021 to the third quarter of 2020.  This decrease is due to the slowing of refinancing activity in the mortgage portfolio, which resulted in less gains on sales as well as no sales activity in the investment portfolio during the third quarter of 2021.  Bank Owned Life Insurance ("BOLI") income decreased by $0.1 million when comparing the third quarter of 2021 to the third quarter of 2020 due to the receipt of policy proceeds in the third quarter of 2020. Other operating expenses increased by $2.5 million when comparing the third quarter of 2021 to the third quarter of 2020.  This increase was driven by an increase in salaries and benefits of $0.3 million related to a reduction in deferred loan origination costs in 2021 (primarily related to PPP activities) and the $2.4 million prepayment penalties incurred in connection with the prepayment of the FHLB advances.  As noted above, the prepayment was a strategic decision to use $70.0 million of cash for the purpose of reducing the cost of funds for the remainder of 2021 and future years.  Occupancy, equipment and technology service expenses were stable during the third quarter of 2021 when compared to the third quarter of 2020.  Investor relations and professional services costs were also stable during the third quarter of 2021 when compared to the third quarter of 2020.  Other miscellaneous expenses, such as Visa processing fees, contract labor, schools and seminars, dues and licenses, in-house training, trust department expense, debit card expense and other personnel related expenses, declined.  The decreases were offset by increases in marketing, contributions and consulting expenses.  Year to Date Results Consolidated net income was $12.2 million, inclusive of litigation settlement expenses of $3.3 million and FHLB prepayment penalties of $2.4 million, for the nine months ended September 30, 2021 compared to $9.3 million for the nine months ended September 30, 2020.  Basic and diluted net income per share for the first nine months of 2021 were both $1.81, a 37.1% increase when compared to basic and diluted net income per share of $1.32 for the same period of 2020. The increase in earnings for the first nine months of 2021 was attributable to an increase in net interest income of $2.2 million, reduced provision expense of $4.9 million and an increase in other operating income, including gains of $1.3 million, consisting of gains on sales of mortgage loans and securities' gains.  These changes were partially offset by an increase in other operating expenses of $4.0 million, inclusive of the $3.3 million in litigation settlement expenses and the $2.4 million FHLB prepayment penalty.    Net interest income, on a non-GAAP, FTE basis, increased by $2.2 million (5.9%) during the nine months ended September 30, 2021 when compared to the nine months ended September 30, 2020 driven by a $2.7 million (36.5%) decrease in interest expense, partially offset by a decrease in interest income of $0.5 million.  The decrease in interest expense resulted from proactive efforts to reduce the cost of funds by further reductions to rates on deposit accounts throughout 2021, the runoff of balances in the time deposits of $100,000 or more, including brokered deposits, and the expiration of empowered rates on money market accounts.  The prepayment of the FHLB advances in the third quarter should significantly reduce interest expense in the fourth quarter and future years.  The net interest margin, on an FTE basis, declined to 3.21% for the nine months ended September 30, 2021 compared to 3.43% for the same period of 2020.  The net interest margin for the nine months ended September 2021 would have been 3.07%, excluding the average balance of PPP loans of $100.6 million and interest and fees of $4.0 million. Other operating income, including net gains on sales of mortgage loans and sales of investment securities, increased $1.3 million for the nine months ended September 30, 2021 when compared to the nine months ended September 30, 2020.  Gains on the sale of mortgage loans to the secondary market decreased $0.5 million due to refinancing activity occurring at a slower pace than the pace experienced in 2020. Trust and brokerage income increased $1.2 million year-over-year due to growth in new client relationships and assets under management.  Debit card income increased $0.6 million for the nine months ended September 30, 2021 when compared to the same period of 2020 due to growth in deposit relationships and increased customer usage of our electronic services. Other income increased $0.5 million, due primarily to the receipt of insurance proceeds related to litigation claims recorded in the first quarter of 2021. Service charge income remained stable when comparing the nine months of 2021 to the same time period of 2020. Other operating expenses increased $4.0 million for the nine months ended September 30, 2021 when compared to the same period of 2020.  This increase was driven by $3.3 million of litigation settlement expenses recorded in the first quarter of 2021 and a $2.4 million penalty on the repayment of $70.0 million FHLB advances in the third quarter of 2021.  Salaries and benefits remained stable when compared to the first nine months of 2020, as increases in salaries, incentive pay and stock compensation were offset by decreases in pension and life and health insurance costs, a $0.3 million offset in salary expense from deferred loan origination costs primarily attributable to PPP loans and $0.1 million of reduced executive equity compensation due to a timing difference in long-term incentive grants.  Federal Deposit Insurance Corporation premiums increased slightly by $0.2 million due to credits received on quarterly assessments in 2020. Equipment, occupancy and technology expenses decreased $0.9 million when compared to the first nine months of 2020 as we began to realize cost savings from our core processor related to a new contract negotiated in the fourth quarter of 2020. OREO expenses were a net credit in the first nine months of 2021 due to $0.8 million in gains attributable to the sale of OREO properties.  Professional services increased $0.8 million as a result of increased legal and professional fees related to shareholder litigation early in 2021, partially offset by decreased investor relations expenses. The effective income tax rates as a percentage of income for the nine-month periods ended September 30, 2021 and 2020 were 24.9% and 22.1%, respectively.  The increase in the tax rate for the first nine months of 2021 was primarily due to the reduction in tax exempt income as well as the reduction in tax credits related to the expiration of a low-income housing tax credit in June 2021.  A new 2021 investment in low-income housing is expected to provide tax benefits in 2022 and beyond. Asset Quality The ALL increased to $16.9 million at September 30, 2021 compared to $16.5 million at December 31, 2020.  The provision for loan losses was $0.1 million for the nine months ended September 30, 2021 and $5.0 million for the nine months ended September 30, 2020.  The higher provision expense recorded in the first nine months of 2020 was driven by an increase in the qualitative factors reflecting the uncertainty of the economic environment related to the COVID-19 pandemic. Net recoveries of $0.4 million were recorded for the nine months ended September 30, 2021, compared to net charge offs of $0.3 million for the same period of 2020. The ratio of the ALL to loans outstanding, including PPP loan balances, was 1.46% at September 30, 2021 compared to 1.36% at September 30, 2020 and 1.41% at December 31, 2020.  The ALL to loans outstanding, excluding PPP loan balances of $30.3 million and $148.9 million, was 1.49% at September 30, 2021 and 1.55% at September 30, 2020 and December 31, 2020, non-GAAP. The ratio of net recoveries to average loans for the nine months ended September 30, 2021 was an annualized 0.04%, compared to net charge offs to average loans of 0.16% for the nine months ended September 30, 2020.  Details of the ratio, by loan type are shown below.  Our special assets team continues to effectively collect on charged-off loans, resulting in ongoing overall low net charge-off ratios. Ratio of Net Recoveries/ (Charge Offs) to Average Loans 09/30/2021 09/30/2020 Loan Type (Charge Off) / Recovery (Charge Off) / Recovery Commercial Real Estate 0.00% 0.03% Acquisition & Development 0.09% (1.21%) Commercial & Industrial 0.29% (0.06%) Residential Mortgage (0.03%) (0.01%) Consumer (0.45%) (0.59%) Total Net Recoveries/(Charge Offs) 0.04% (0.16%) Non-accrual loans totaled $7.4 million at September 30, 2021 compared to $3.3 million at December 31, 2020.  The increase in non-accrual balances at September 30, 2021 was due to the movement of two hospitality loans, totaling approximately $4.0 million, to non-accrual status during the first quarter of 2021.  These loans suffered reduced cash flows due to the impact of the COVID-19 pandemic, received modifications and were classified as substandard at December 31, 2020.  These loans have returned to their contractual payment terms but will remain on non-accrual status until they pay full contractual payments for six months. Non-accrual loans that have been subject to partial charge-offs totaled $0.5 million at September 30, 2021 and $0.4 million at December 31, 2020.  Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $0.2 million at September 30, 2021 and $0.4 million at December 31, 2020.  Foreclosure and repossession activities were temporarily suspended as a result of COVID-19 but resumed during the third quarter 2021. Management continues to conform to federal and state mandates relative to the foreclosure processes for both Federal Backed and Non-Federal Backed mortgages.  As a percentage of the loan portfolio, accruing loans past due 30 days or more decreased to 0.20%, including PPP loans, or 0.21% excluding PPP loans, compared to 0.73% at September 30, 2020 and 0.20% at December 31, 2020.  ABOUT FIRST UNITED CORPORATION First United Corporation is the parent company of First United Bank & Trust, a Maryland trust company with commercial banking powers, and two statutory trusts that were used as financing vehicles.  The Bank has four wholly-owned subsidiaries: OakFirst Loan Center, Inc., a West Virginia finance company; OakFirst Loan Center, LLC, a Maryland finance company; First OREO Trust, a Maryland statutory trust that holds and services real estate acquired by the Bank through foreclosure or by deed in lieu of foreclosure; and FUBT OREO I, LLC, a Maryland company that likewise holds and services real estate acquired by the Bank through foreclosure or by deed in lieu of foreclosure.  The Bank also owns 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a Maryland limited partnership, and a 99.9% non-voting interest in MCC FUBT Fund, LLC, an Ohio limited liability company, both of which were formed for the purpose of acquiring, developing and operating low-income housing units.  The Corporation's website is www.mybank.com. FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements do not represent historical facts, but are statements about management's beliefs, plans and objectives about the future, as well as its assumptions and judgments concerning such beliefs, plans and objectives.  These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions.  Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  The beliefs, plans and objectives on which forward-looking statements are based involve risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements.  For a discussion of these risks and uncertainties, see the section of the periodic reports that First United Corporation files with the Securities and Exchange Commission entitled "Risk Factors," including among many others the risk factor set forth in First United's Annual Report on Form 10-K, as amended, for the year ended December 31, 2020 entitled, "The outbreak of the recent coronavirus ('COVID-19'), or an outbreak of another highly infectious or contagious disease, could adversely affect the Corporation's business, financial condition and results of operations." and any updates thereto that might be contained in subsequent reports filed by First United.  The risks and uncertainties associated with the COVID-19 pandemic and its impact on First United will depend on, among other things, the length of time that the pandemic continues; the duration of the potential imposition of further restrictions on travel in the future; the effect of the pandemic on the global, national, and local economies and on the businesses of our borrowers and their ability to make payments on their obligations; the remedial actions and stimulus measures adopted by federal, state, and local governments; and the inability of employees to work due to illness, quarantine, or government mandates. FIRST UNITED CORPORATION Oakland, MD Stock Symbol :  FUNC Financial Highlights - Unaudited (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended September 30,  September 30,  September 30,  September 30,  2021 2020 2021 2020 Results of Operations: Interest income  $                14,910 $                14,253 $                43,408 $                43,973 Interest expense  1,285 2,351 4,784 7,528 Net interest income 13,625 11,902 38,624 36,445 Provision for loan losses (597) 160 68 4,981 Other operating income 4,523 3,978 13,586 11,411 Net gains 82 1,176 1,112 2,011 Other operating expense 13,027 10,540 36,986 32,972 Income before taxes $                   5,800 $                   6,356 $                16,268 $                11,914 Income tax expense 1,412 1,396 4,047 2,629 Net income $                   4,388 $                   4,960 $                12,221 $                   9,285 Per share data: Basic/ Diluted net income  $                     0.66 $                     0.70 $                     1.81 $                     1.32 Adjusted Basic/Diluted net income (1) $                     0.93 $                     0.70 $                     2.45 $                     1.32 Dividends declared per share $                     0.15 $                     0.13 $                     0.45 $                     0.39 Book value $                   20.22 $                   17.82 Diluted book value $                   20.19 $                   17.81 Tangible book value per share $                   18.55 $                   16.25 Diluted Tangible book value per share $                   18.53 $                   16.01 Closing market value $                   18.60 $                   13.34 Market Range:     High $                   19.45 $                   15.95     Low $                   16.26 $                   11.00 Shares outstanding at period end: Basic 6,617,941 6,983,523 Shares outstanding at period end: Diluted 6,625,014 6,988,593 Performance ratios: (Year to Date Period End, annualized) Return on average assets 0.92% 0.57% Adjusted return on average assets (1) 1.26% 0.57% Return on average shareholders' equity 12.45% 6.97% Adjusted return on average shareholders' equity (1) 16.72% 6.97% Net interest margin (Non-GAAP), includes tax exempt income of $705 and $678 3.21% 3.43% Net interest margin GAAP 3.16% 3.37% Efficiency ratio 68.39% 70.26% Adjusted efficiency ratio (1) 57.97% 70.26% (1) See reconcilation of this non-GAAP financial measure provided elsewhere herein. September 30, December 31, 2021 2020 Financial Condition at period end: Assets $           1,708,556 $           1,733,414 Earning assets $           1,466,664 $           1,473,733 Gross loans $           1,161,868 $           1,167,812 Commercial Real Estate $              371,785 $              369,176 Acquisition and Development $              132,256 $              116,961 Commercial and Industrial $              195,758 $              266,745 Residential Mortgage $              405,885 $              379,170 Consumer $                56,184 $                35,760 Investment securities $              297,543 $              295,148 Total deposits $           1,444,494 $           1,422,366 Noninterest bearing $              491,441 $              420,427 Interest bearing $              953,053 $           1,001,939 Shareholders' equity $              133,787 $              131,047 Capital ratios: Tier 1 to risk weighted assets 14.26% 14.83% Common Equity Tier 1 to risk weighted assets 12.15% 12.61% Tier 1 Leverage 10.33% 10.36% Total risk based capital 15.51% 16.08% Asset quality: Net recoveries/(charge-offs) for the quarter $                      435 $                    (123) Nonperforming assets: (Period End) Nonaccrual loans $                   7,441 $                   3,339 Loans 90 days past due and accruing 189 724 Total nonperforming loans and 90 day past due $                   7,630 $                   4,063 Restructured loans.....»»

BEIJING, Oct. 26, 2021 /PRNewswire/ -- Pintec Technology Holdings Limited (NASDAQ:PT) ("PINTEC" or the "Company"), a leading independent technology platform enabling financial services in China, today announced its unaudited financial results for the six months ended June 30, 2021. First Half 2021 Financial Highlights Total revenues were RMB91.6 million (US$14.2 million) for the first half of 2021 compared to total revenues of RMB251.6 million for the same period of 2020. Gross profit decreased by 1.6% to RMB42.0 million (US$6.5 million) for the first half of 2021 from RMB42.7 million for the same period of 2020. Gross margin was 45.8% for the first half of 2021 compared to 17.0% for the same period of 2020. Operating loss decreased by 66.0% to RMB34.0 million (US$5.3 million) for the first half of 2021 from RMB100.0 million for the same period of 2020. Net loss decreased by 60.7% to RMB41.0 million (US$6.3 million) for the first half of 2021 from RMB104.2 million for the same period of 2020. Adjusted net loss[1] decreased by 60.0% to RMB38.8 million (US$6.0 million) for the first half of 2021 from RMB96.9 million for the same period of 2020. First Half 2021 Operating Highlights Total loans facilitated decreased by 66.7% to RMB 0.4 billion (US$77.4 million) for the first half of 2021 from RMB 1.2 billion for the same period of 2020. Loan outstanding balance decreased by 50.0% to RMB 0.3 billion (US$46.5 million) as of June 30, 2021 from RMB 0.6 billion as of December 31, 2020. The following table provides delinquency rates by balance for all loans facilitated by the Company as of the dates indicated: [1] Adjusted net income/(loss) is a non-GAAP financial measure, representing net income/(loss) before share-based compensation expenses. For more information on non-GAAP financial measures, please see the section of "Use of Non-GAAP Financial Measures Statement" and the tables captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this release. Delinquent for 16 - 30 days 31 - 60 days 61 - 90 days December 31, 2017 1.11% 1.02% 0.74% December 31, 2018 1.27% 2.35% 2.33% December 31, 2019 1.72% 2.98% 2.86% December 31, 2020 0.77% 0.97% 0.95% June 30, 2021 0.68% 0.85% 0.75% Mr. Victor Li, Chief Executive Officer of PINTEC, commented, "As we navigate through the short-term uncertainties into 2021, I am encouraged by our team's focus on executing our strategic business transformation initiatives and early signs of recovery in market demand. We continued to adjust insurance models, expand the strengths of our brands, deepen our partner channels, vigilantly manage risk profile while enhancing our asset quality. One of the key milestones I am excited to share is the recent new offering of the small and medium enterprise ("SME") technical services. Specifically, we plan to utilize our proven "SaaS + Fintech" model as a total solution in order to accelerate the digitization of SMEs, encompassing technology-based credit services and solutions to the manufacturing process and operations of these SMEs. As usual, we continue to deliver exceptional digitization services, and best-in-class solutions with innovative technology, thus to solidify our partnerships, satisfy our clients, and improve our overall delinquency rates. In addition, for the first half of 2021, we significantly narrowed our net loss despite the expected period-over-period revenue contraction, primarily by significantly enhancing our gross margin by almost 2,900 basis points from optimized product portfolio, as well as disciplined cost management. Every line item of our expenses has declined, resulting in a total operating expense reduction of 46.8% compared to the same period in 2020. We will continue to be prudent in reviewing our cost measures, financial leverage and liquidity position to ensure the smooth execution of our growth plan for the future. We are delighted of the progress so far in 2021, and we are committed in achieving the goals we have previously set for our business transformation." First Half 2021 Financial Results Total Revenues Total revenues decreased by 63.6% to RMB91.6 million (US$14.2 million) for the first half of 2021 from RMB251.6 million for the same period of 2020. This decrease was mainly due to the impact of Covid-19 resulting in industry downturn, as well as the Company's overall business transformation efforts.  Revenues from technical service fees decreased by 71.4% to RMB60.8 million (US$9.4 million) for the first half of 2021 from RMB212.1 million for the same period of 2020. This decrease was mainly due to the reduction of risk-sharing loan facilitation business, which in turn resulted in the decrease of off-balance sheet loans facilitated in the first half of 2021. Revenues from installment service fees decreased by 75.2% to RMB8.6 million (US$1.3 million) for the first half of 2021 from RMB34.8 million for the same period of 2020. This decrease was primarily due to the reduction in the Company's on-book installment loan volume during the first half of 2021. Revenues from wealth management service fees increased by 378.0% to RMB22.2 million (US$3.4 million) for the first half of 2021 from RMB4.7 million for the same period of 2020. This increase was mainly attributable to the successful adjustment of the Company's insurance brokerage business model, thus expanding revenue generation. Cost of Revenues Cost of revenues decreased by 76.2% to RMB49.6 million (US$7.7 million) for the first half of 2021 from RMB208.9 million for the same period of 2020. This decrease was mainly attributable to: (1) a decrease in funding cost from RMB14.8 million for the first half of 2020 to RMB2.0 million (US$0.3 million) for the same period of 2021, primarily due to maturity of the funding debts resulting in significant interest expense reduction; (2) a decrease from a provision for credit losses of RMB35.3 million for the first half of 2020 to a reversal of provision for credit losses of RMB7.5 million (US$1.2 million) for the same period of 2021, primarily due to the credit loss provision reversal from payment collection which was better than expected in the first half of 2021; (3) a decrease in servicing origination cost from RMB58.9 million for the first half of 2020 to RMB54.2 million (US$8.4 million) for the same period of 2021, primarily attributable to a reduction in collection expenses and user acquisition costs, partially offset by an increase in insurance brokerage operating expenses; (4) a decrease in cost on guarantee liability from RMB81.1 million for the first half of 2020 to a reversal of RMB0.6 million (US$0.1 million) for the same period of 2021, primarily because the Company's guaranteed liabilities gradually expired, and the cost associated with guaranteed liability recovered in the first half of 2021 were better than the actual cash outlays; (5) a decrease in price split cost to Jimu Holdings Limited and its subsidiaries and variable interest entities ("Jimu Group") from RMB18.9 million for the first half of 2020 to RMB1.5 million (US$0.2 million ) for the same period of 2021, primarily attributable to the termination of the risk-sharing model with Jimu Group. All of these efforts resulted in a significant improvement of the delinquency rates as compared to the first half of 2020.  Gross Profit Gross profit decreased slightly to RMB42.0 million (US$6.5 million) for the first half of 2021 from RMB42.7 million for the same period of 2020. Gross margin was 45.8% in the first half of 2021 compared to 17.0% in the same period of 2020. Operating Expenses Total operating expenses decreased by 46.8% to RMB76.0 million (US$11.8 million) for the first half of 2021 from RMB142.7 million for the same period of 2020. The Company has been continuously optimizing and refining its organizational structure, marketing strategies and product matrix since the beginning of 2020. Sales and marketing expenses in the first half of 2021 decreased by 20.1% to RMB19.9 million (US$3.1 million) from RMB24.9 million in the same period of 2020. This decrease was primarily driven by decreased promotion expenses. General and administrative expenses in the first half of 2021 decreased by 59.2% to RMB37.9 million (US$5.9 million) from RMB93.0 million in the same period of 2020. This decrease was primarily driven by strict overall cost control for the reduction of various items including, among other things, bad debt provision, and professional services fees. Research and development expenses in the first half of 2021 decreased by 34.8% to RMB16.2 million (US$2.5 million) from RMB24.8 million in the same period of 2020, primarily driven by personnel structure optimization as part of the business transformation. Intangible assets impairment in the first half of 2021 increased to RMB2.0 million (US$0.3 million) from nil in the same period of 2020, primarily due to the changing market environment and transformation of original business. Operating Loss Operating loss decreased by 66.0% to RMB34.0 million (US$5.3 million) for the first half of 2021 from RMB100.0 million for the same period of 2020. Net Loss Net loss decreased by 60.7% to RMB41.0 million (US$6.3 million) for the first half of 2021 from RMB104.2 million for the same period of 2020. Net loss attributable to ordinary shareholders decreased by 62.8% to RMB38.8million (US$6.0 million) for the first half of 2021 from RMB104.3million for the same period of 2020. Adjusted net loss decreased by 60.0% to RMB38.8 million (US$6.0 million) for the first half of 2021 from RMB96.9 million for the same period of 2020. Net Loss Per Share Basic and diluted net loss per ordinary share in the first half of 2021 were both RMB0.13(US$0.02). Basic and diluted net loss per American Depositary Share ("ADS") in the first half of 2021 were both RMB0.91 (US$0.14). Each ADS represents seven of the Company's Class A ordinary shares. Adjusted basic and diluted net loss per ordinary share in the first half of 2021 were both RMB0.12 (US$0.02). Adjusted basic and diluted net loss per ADS in the first half of 2021 were both RMB0.84 (US$0.14). Balance Sheet The Company had combined cash and cash equivalents, short-term and long-term restricted cash of RMB368.9 million (US$57.1 million) as of June 30, 2021, compared to RMB522.3 million as of December 31, 2020. The Company's total net financing receivables, including short-term and long-term receivables, increased by 9.6% to RMB80.7 million (US$12.5 million) as of June 30, 2021, compared to RMB73.6 million as of December 31, 2020, primarily due to the increase of the personal installment loans and the small and medium enterprise loans provided by our Ganzhou Aixin Network Micro Finance Co., Ltd.  Use of Non-GAAP Financial Measures In evaluating its business, the Company considers and uses adjusted net income/loss as a supplemental measure to review and assess its operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines adjusted net income/loss as net income/loss excluding share-based compensation expenses. The Company believes that this non-GAAP financial measure can help management evaluate the Company's operating performance and formulate business plans. Adjusted net income/loss enables management to assess operating results without considering the impact of share-based compensation expenses. The Company also believes that this non-GAAP financial measure provides useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by management in their financial and operational decision-making. This non-GAAP financial measure is not defined under U.S. GAAP and is not ...Full story available on Benzinga.com.....»»

It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. Q3 2021 hedge fund letters, conferences […] It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more If you choose a manager to whom you entrust your capital, in the words of Charlie Munger, choose a ‘business fanatic.’ Such individuals live, sleep and breathe their businesses. They’re not bound by the same restraints as most business people; constantly pushing boundaries, trialing new approaches, thinking outside the box, challenging conventional wisdom and always looking for business improvements. If you’re in business, these are the last type of people you want to compete with. One man that epitomized such fanaticism was the late Joe Coulombe, founder of the convenience store chain that carried his name, Trader Joe’s. “Edward H. Heller, a pioneer venture capitalist used the term ‘vivid spirit’ to describe the type of individual to whom he was ready to give significant financial backing. He said that behind every unusually successful corporation was this kind of determined entrepreneurial personality with the drive, the original ideas, and the skill to make such a company a truly worthwhile investment.” Phil Fisher Joe tells his story in the book, ‘Becoming Trader Joe - How I Did Business My Way and Still Beat the Big Guys.’ It contains a wealth of wisdom, particularly when it comes to thinking about running a successful retailer. Over more than a quarter of a century, Trader Joe’s sales grew at a compound rate of 19% per year and the company’s net worth grew at a compound rate of 26% per annum over the same period - no mean feat for a commodity business that’s hard to differentiate. Furthermore, the business never lost money in a year and incredibly each year was more profitable than the last. When the competitor 7-Eleven extended it’s footprint into California in the 1970’s, Pronto Markets, the precursor to Trader' Joe’s, already enjoyed the highest sales per store of any convenience operator in America by a factor of three. A high wage policy, strong locations, a few liquor licences, and the beginnings of a differentiated strategy through product knowledge was the core of their success. One of the mental models I particularly enjoyed in the book was Joe’s concept of ‘Double Entry Retailing.’ A form of second level thinking, Joe recognised that making changes to Demand Side factors had an influence on Supply Side factors which aren’t always obvious. A striking example was the introduction of orange juice freshly squeezed on the premises. While a great Demand Side success - customers embraced the product - it was a total nightmare to administer because of the Supply Side issues; the great variation in sweetness of oranges over the course of a year, difficulty in ensuring machines squeezed the right amount and disposal of the leftover rinds. As a result it was eventually phased out. You’ll recognise many of the characteristics that form a common link with the other great businesses we’ve studied. I’ve included some of my favourite extracts from the book below. Harnessing Demographic & Technological Change ‘The clue, the keystone of the arch of Trader Joe’s, was a small news item in Scientific American in 1965. When we left Stanford, my father-in-law, Bill Steere, a professor of botany, gave me a subscription to Scientific American. In terms of creating my fortune, it’s the most important magazine I’ve ever read. The news item said that, of all the people in the US who were qualified to go to college in 1932, in the pit of the Depression, only 2 percent did. By contrast, in 1964, of all the people qualified to go to college 60 percent in fact actually did. The big change, of course, was the GI Bill of Rights that went into effect in 1945. A second news item, one from the Wall Street Journal, told me that the Boeing 747 would go into service in 1970, and that it would slash the cost of international travel. In Pronto Markets we had noticed that people who travelled - even to San Francisco - were far more adventurous in what they were willing to put in their mouths. Travel is, after all, a form of education. Trader Joe’s was conceived from those two demographic news stories. What I saw here was a small but growing demographic opportunity in people who were well educated. 7-Eleven, and the whole convenience store genre, served the most basic needs of the most mindless demographics with cigarettes, Coca-Cola, milk, Budweiser, candy, bread, eggs. I saw an opportunity to differentiate ourselves radically from mainstream retailing to mainstream people.” Obliquity “I hope you’ll consider the following, my favourite quote from my favourite book on Management, ‘The Winning Performance’ by Clifford and Cavanaugh,’ ‘The fourth (general themes in winning corporations] is a view of profit and wealth-creation as inevitable byproducts of doing other things well. Money is a useful yardstick for measuring quantitative performance and profit and an obligation to investors. But … making money as an end in itself ranks low.’” A Bias to Action & Tenacity “In 1962, Barbara Tuchman published ‘The Guns of August’, an account of the first ninety days of WWI, It’s the best book on management - and, especially, mismanagement - I’ve ever read. The most basic conclusion I drew from from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you’ll probably succeed. Tenacity is as important as brilliance.” “Trying to find an optimum solution in business is a waste of time; the factors in the equation are changing all the time.” Value, Empower & Pay Employees Well “You’ve got to have something to hang your hat on. The one core value I chose was our high compensation policies, which I put in place from the very start in 1958… This is the most important single business decision I ever made: to pay people well. First Pronto Markets and then Trader Joe’s had the highest-paid, highest benefitted people in retail.” “Time and again I am asked why no one has successfully replicated Trader Joe’s. The answer is that no one has been willing to pay the wages and benefits, and thereby attract - and keep - the quality of people who work at Trader Joe’s.” “[I was asked,] ‘But how could you afford to pay so much more than your competition?’ The answer, of course, is that good people pay by their extra productivity. You can’t afford to have cheap employees.” “Equally important was our practice of giving every full-time employee an interview every six months. At Stanford I’d been taught that employees never organise (join unions) because of the money; they organise because of un-listened-to grievances.” “The [store] Captains had the salary plus a bonus that theoretically had no limit. The bonus was based on Trader Joe’s overall profit, allocated among the stores based on each store’s contribution. In 1988, several Captains made bonuses of more than 70 percent of their base pay. Unless a bonus system promises, and delivers big rewards, it should be abandoned.” “My idea, often stated to everybody, was that the [store] Captains should have the chance to make more than executives in the office. In a traditional chain store, managers aspire to become bureaucrats with cushy, high-paying jobs in the office. I wanted to kill such aspirations at the start.” “Part timers .. at a time when the minimum wage was $4.35, we often paid $13.00 per hour because these people were worth it.” “Productivity in part is a product of tenure. That’s why I believe that turnover is the most expensive form of labor expense.” “We instituted full health and dental insurance back in the 1960's when it was cheap. When I left, we were paying $6,000 per employee per year!” “Each full-timer was supposed to be able to perform every job in the store, including checking, balancing the books, ordering each department, stocking, opening, closing, going to the bank, etc. Everybody worked the check stands in the course of the day, including the [store] Captain.” “In thirty years we never had a layoff of full-time employees. Seasonal swings in business were handled with overtime pay to full-time employees, and by adjusting part-time hours. The stability of full-time employment at Trader Joe’s was due in part to caution opening new stores, and insisting on high volume stores.” “Cost of goods sold is the dominant expense. The funny thing is that grocers seem to spend more effort squeezing payroll than squeezing Cost of Goods Sold, though there is at least five times more opportunity in the latter.” Retail & Real Estate Decisions ‘First we upped the investment ante by taking only prime locations, which could generate the most sales, even though the rents were higher. A lease is an investment, perhaps the most serious and certainly the least changeable a retailer can make. Financially, a lease is simply a long-term loan… Most retail bankruptcies come from bad real estate leasing decisions… Early in my career I learned there are two kinds of decisions: the ones that are easily reversible and the ones that aren’t. Fifteen-year leases are the least-reversible decisions you can make. That’s why, throughout my career, I kept absolute control of real estate decisions.” “The keys to management are strong locations with good people.” “People often ask me, how many stores did we have at such-and-such time? It’s the wrong question to ask. What’s important is dollar sales. For example, from 1980 to 1988, we increased the number of stores by 50 percent but sales were up 340 percent.” “My preference is to have a few stores, as far apart as possible, and to make them as high volume as possible.” “Too many stores, to many irreversible leases, too much geographical saturation was a recurrent theme in the failure of American retail chains in the twentieth century.” “Ancient Mariner Retailers claim that ‘volume solves everything.’ If it’s profitable volume, they’re right. Things go most sour in the lowest-volume stores. It’s like riding a bicycle, the faster it goes, the more stable it is. The ‘normal distribution’ of most chains is 20% dogs, 60% okay stores, and 20% winners. I believe in ruthlessly dumping the dogs at whatever cost. Why? Because their real cost is in management energy. You always spend more time trying to make the dogs acceptable than in raising the okay stores into winners. And it’s in the dogs that you always have the most personnel problems." “I believe that the sine qua non for successful retailing is demographic coherence: all your locations should have the same demographics whether you are selling clothing or wine.” “I liked semi-decayed neighbourhoods, were the census tract income statistics looked terrible, but the mortgages were all paid-down, and the kids had left home. Housing and rental prices tend to be lower, and more suitable for those underpaid academics. Related to this, I was more interested in the number of households in a given area than the number of people in a ZIP code. Trader Joe’s is not a store for kids or big families. One or two adults is just fine.” “Computerisation has radically upgraded the statistics available: I’d probably do it more formally now. But there’s no substitute for ‘driving’ a location to ferret out traffic problems. And do it at night, too.” “I hardly need to mention that a trading area is rarely determined by a radius. It’s determined by geographical barriers, boulevard access, and where the demographics lie.” “Let’s go back to the question of number of stores. How do you space them? Here are some parameters: You need to have enough stores in a trading area to economically amortise the radio advertising. You need enough stores in an area to have a large enough pool of employees. My rule was that distance between stores should not be measured in miles but in driving time. I wanted no less than twenty minutes between stores. That pretty much avoided the dread word, cannibalisation. Could a given trading area support more Trader Joe’s? Almost certainly! I figured we could break even at ten thousand core residences. But I wanted super-volume stores. If the credo that super-volume stores have the fewest operating problems is valid, then the overall health of the chain, in the long run, is maximised.” “How many trading areas should you enter? As long as you can preserve the culture of the company, and as long as logistics don’t kill you, go ahead.” “Never, never, never sign a lease with a ‘continuous operation’ clause. That clause means you must stay open - you can’t ‘go dark’ and just pay the rent.” Product Knowledge “The buyers at the supermarket chains knew nothing about what they sold, and they don’t want to know. What they did know all about was extorting slotting allowances, cooperative ad revenue, failure allowances, and back-haul concessions from the manufacturers.” Four Tests “The advantage of hard liquor merchandise was that it met three tests: a) A high value per cubic inch, essential to a small store format b) A high rate of consumption c) It had to be easily handled If we could have added a fourth test, it would be that we had to be outstanding in the field. Still trying to maximise the use of a small store, I looked for categories that met the Four Tests; high value per cubic inch, high rate of consumption; easily handled; and something in which we could be outstanding in term of price or assortment. For example, diamonds met the first test but flunked the second. Fruits and vegetables met the first and second but flunked the third because produce requires constant reworking. Fresh meat flunked the third test even more.” Purpose “Most of my ideas about how to act as an entrepreneur are derived from ‘The Revolt of the Masses’ by Jose Ortega y Gasset, the greatest Spanish philosopher of the twentieth century. I believe it offers a master ‘plan of action’ for the would-be entrepreneur, who usually has no reputation and few resources. Ortega offers an explanation of how such a person can get an enterprise started. In the context of the career of Julius Caesar, an entrepreneur who started without power, Otega says of the state: ‘Human life, by its very nature, has to be dedicated to something, an enterprise glorious or humble, a destiny illustrious or trivial .. The State begins when groups, naturally divided, find themselves obliged to live in common. The obligation is not of brute force, but implies an impelling purpose, a common task which is set before the dispersed groups. Before all, the State is a plan of action and a Programme of Collaboration. The men are called upon so that together they may do something .. It is pure dynamism, the will to do something in common, and thanks to this the idea of the state, is bounded by no physical limits.” Most of my career has been spent selling ‘plans of action and programmes of collaboration.’ If you want to know what differentiates me from most manager’s that’s it. From the beginning, thanks to Ortega y Gasset, I’ve been aware of the need to sell everybody.” Radical Transparency “Throughout my career, my policy has been full disclosure to employees about the true state of affairs, almost to the point of imprudence. I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn the plans, but that his own troops would not.” Growth “Growth for the sake of growth still troubles me. It seems unnatural, even perverted. This helps explain why I went from 1974 to 1978 without opening another store. To keep sales increasing during the mid-1970s, we relied on new ideas implemented in existing stores. This was my favourite form of growth. I don’t think that any given store ever fully realises its potential.” Smallness & Empowerment “We developed a prototype [Trader Joe’s] store of 4,500 square feet. Here’s a good question: Given my need to get away from convenience stores, why did I stick with small stores? The answer was verbalised for us in ‘In Search of Excellence,’ Tom Peter’s best-selling book on management. He called it ‘The Power of Chunking’: ‘The essential building block of a company is the section [which] within its sphere does not await executive orders but takes initiatives. The key factor for success is getting one’s arms around almost any practical problem and knocking it off… The small group is the most visible of the chunking devices.’ The fundamental ‘chunk’ of Trader Joe’s is the individual store with its highly paid [store] Captain and staff; the people who are capable of exercising discretion. I admire Nordstrom’s fundamental instruction to its employees: use your judgement. Trader Joe’s finally settled down at an average of about eight thousand square feet in the 1980’s, but the concept of a relatively small store with a relatively small staff remains in force.” Marketing & Customers “At all times I wrote the Fearless Flyer [marketing newsletter] for over-educated, underpaid people. This requires two mindsets: Trader Joe’s Fearless Flyer Newsletter 1) There are no such things as consumers - dolts who are driven by drivel to buy stuff they don’t need or even want. There are only customers, people who are reasonably well informed, and very well focused in their buying habits. 2) We always looked up to the customers in the text of the Fearless Flyer. We assumed they knew more than they did, we never talked down to them. 3) Given the first two assumptions, we assumed that our readers had a thirst for knowledge, 180 degrees opposite from supermarket ads. We emphasised ‘informative advertising.’ Originally, we distributed the Fearless Flyer only in stores and to a small but growing list. [Later,] by mailing to addresses rather than to individuals - by blanketing entire ZIP codes - we were able to tremendously expand the distribution of the Fearless Flyer. The ZIPs to which we mailed, of course, were chosen on the basis of the likely concentration of over-educated and underpaid people.” Word of Mouth “Word of Mouth: The Power of True Believers. As everyone knows, word of mouth is the most effective advertising of all. I have been known to say that there’s no better business to run than a cult. Trader Joe’s became a cult of the over-educated and underpaid, partly because we deliberately tried to make it a cult and partly because we kept the implicit promises with our clientele.” “There aren’t many cult retailers who successfully retain their cult status over a long period of time. A couple in California are In-N-Out Burger and Fry’s Electronics. But across America, in every town, there’s a particular donut shop, pizza parlour, bakery, greengrocer, bar, etc. that has a cult following of True Believers.” Pricing “One of the fundamental tenets of Trader Joe’s is that retail prices don’t change unless costs change. There are no weekend ad prices, no in-and-out pricing… I have always believed that supermarkets pricing is a shell game and I wanted no part of it.” Retailing “The fundamental job of a retailer is to buy goods whole, cut them into pieces, and sell the pieces to the ultimate consumers. This is the most important mental construct I can impart on those of you who want to enter retailing. Most ‘retailers’ have no idea of the formal meaning of the word. Time and again, I had to remind myself just what my role in society was supposed to be.” “[We decided] no outsiders of any sort were permitted in the store. All the work was done by employees.]” “From 1958 through 1976, we tried to carry what the customer asked for, given the limits of our small stores and other operational parameters. Each store probably had access to ten thousand stock keeping units (SKUs), of which about three thousand were actually stocked in any given week. By the time I left in 1989, we were down to a band of 1,100 to 1,500 SKUs, all of which were delivered through a central distribution system.” “Along the way not only did we drop a lot of products that our customers would have liked us to sell, even at not-outstanding prices, but we stopped cashing checks in excess of the amount of purchase, we stopped full-case discounts, and we persistently shortened the hours. We violated every received wisdom of retailing except one: we delivered great value, which is where most retailers fall.” “[We were] willing to discontinue any product if we were are unable to offer the right deal to the customer.” “Instead of national brands, [we] focused on either Trader Joe’s label products or ‘no label’ products like nuts and dried fruits.” “We wouldn’t try to carry a whole line of spices, or bag candy, or vitamins. Each SKU had to justify itself as opposed to riding piggyback into the stores just so we had a ‘complete’ line. Depth of assortment was of no interest.” “Each SKU would stand on its own two feet as a profit centre. We would earn a gross profit on each SKU that was justified by the cost of handling that item. There would be no ‘loss leaders.’” “Above all we would not carry any item unless we could be outstanding in terms of price (and make a profit at that price) or uniqueness.” ‘I do not believe in keeping ‘spoils’ in the back room until some salesperson comes by to pick them up. I believe that products should move in only one direction, never back up the supply chain. When a bottle was broken, a can dented, or a ‘short fill’ was discovered, it went to the trash bin.” “A guideline: No private label product was introduced for the sake of having a private label. This is 100 percent contrary to the policy of most supermarkets… Each private label product had to have a reason, a point of differentiation.” “The willingness to do without any given product is one of the cornerstones of Trader Joe’s merchandising philosophy.” “No bulky products like paper towels or sugar, because the high-value-per-cubic inch rule still prevailed.. We simply went out of business on the ‘bulkers’ and did not replace them with private labels.” “I believe in the wisdom that you gain customers one by one, but you lose them in droves.” “Back in 1967, [we] made a bet that rising levels of education would fragment the masses, that a small but growing group of people would be dissatisfied with having to consume what everybody else consumed… This philosophical approach put us in conflict with the mainstream of American retailing, which emphasises continuous products. Thus when a supermarket promotes Coca-Cola it doesn’t have to explain that Coca-Cola is a secret formula for a soft drink created a century ago in Atlanta.. Wines have not been popular in America because, intrinsically, they are not continuous products. You can’t just order up some more sugar and chemicals and make another batch. In 1987, I outlined to the buyers where I thought we should go: 1) we want continuous products. Any sane person does. We want continuous products which are profitable without creating a high-price image. 2) to create such products, they needed to be differentiated at least in order to avoid direct price comparison. 3) products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. 4) I was willing to continue to indulge in the spectacular ‘closeout’ sales of branded products, but I wanted to do so in the context of much greater overall sales, principally generated by continuous products, most of them private label.” “I don’t think that the internet grocery store will successfully invade food retailing because you’re dealing with four different temperatures: dry grocery, refrigerated products, frozen products, and ice cream when you try to home-deliver foods.” “Showmanship is the sum total of all efforts to make contact with the customer. It’s the most ephemeral, the most difficult, and the most important of the Demand Side activities.” “All the research on whether people turn to the left or the right, or whether you can ‘force’ people to the rear of the store, is irrelevant if you’re a value retailer.” Win-Win “Honour thy vendors: After all, these are the guys you’re buying from. They should not be treated as adversaries. Five year plan 1977 said, ‘Buying, therefore, is not just a matter of trying to beat down suppliers on price. It is a creative exercise of developing alternatives.’ Many of our best product ideas and special buying opportunities came from our vendors.” “Vendors should be regarded as an extension of the retailer, a Marks and Spencer concept. Their employees should be regarded almost as employees of the retailer. Concern for their welfare should be shown, because employee turnover at vendors sometimes can be more costly than turnover of your own employees.” “Tenants who enter negotiations with the idea of beating the landlord at the objective future game usually get the kind of landlords they deserve. And vice versa.” “Other non-merchandise vendors are very much extensions of Trader Joe’s and should be treated as much. Since we owned no trucks, warehouses, etc., I asked our people to keep track of the outsourced drivers and do their best to see that our contractors were paid reasonable wages with reasonable working conditions. Turnover is the most expensive labour expense!’ Committees “I want to make it quite clear that I called all the shots. I reject management by committee.” Economies of Scale “The point where the ‘buying power’ and ‘selling power’ curves cross each other creates the magical physical thresholds. There are two magical physical thresholds that a retailer must achieve to be competitive: the truckload, and the ocean container load. These thresholds mark the limit of most economies of scale.” Focus & Outsource “We tried to stay out of all functions that were not central to our primary job in society: namely, buying and selling merchandise.. [We’d] been getting rid of all functions except those buying and selling. We got rid of our own maintenance people, we sold off almost all the real estate we had acquired during the 1970’s, we never took mainframe computing in-house, etc. Some choice quotes from Dr. Drucker: ‘In-house service activities have little incentive to improve their productivity .. The productivity is not likely to ramp up until it is possible to be promoted for doing a good job at it. And that will happen in support work only when such work is done by separate, free standing enterprises.’” Business Problems “All businesses have problems. It’s the problems that create the opportunities. If a business is easy, every simple bastard would enter it.” “This is one of the most important things I can impart; in any troubled company the people at lower levels know what ought to be done in terms of day-to-day operations. If you just ask them, you can find answers.” Adapt, Challenge the Status Quo “Believe me, you have to have a system for everything that has to happen in your business - you just may not be conscious of it. And you probably have still other systems that are not needed. That’s why The Winning Performance calls for a ‘continued contempt for business as usual.’ To practice ‘constitutional contempt,’ you have to arrive every day with the attitude, ‘Why do we do such-and-such that way?’ Better yet, why do we do it at all? Usually the answer is, ‘We’ve always done it that way,’ ‘That’s the way we did it at my last job,’ or ‘All our competitors are doing it.’ Mental Model - Double Entry Retailing “I hit on the idea of using double entry accounting as an analogy, what I call Double Entry Retailing. On the left side of the ledger is the business in terms of how its customers see it: I call this the Demand Side. On the right side of the ledger are the factors that limit or determine the retailer's ability to satisfy those demands: the Supply Side. All businesses, whether manufacturing, wholesaling, services, etc., have [the] fearful symmetry of both Demand and Supply sides. And all businesses are subject to the ultimate supply-side constraint of cash: you can do anything, no matter how stupid, within that fearful symmetry, as long as you don't run out of cash. From my view, the Demand Side of Retailers can be analysed in terms of five variables: The assortment of merchandise offered for sale. Pricing: stability and relative to competition. Convenience: geographical, in-store, and time. Credit: the accepted methods of payment. Showmanship: the sum of all activities that result in making contact with the customer, from advertising to store architecture to employee cleanliness. Here are factors on the Supply Side: Merchandise Vendors Employees  The way you do things: "habits" and "culture" Systems Non-merchandise vendors Landlords Governments Bankers and investment bankers Stockholders Crime As in double entry accounting, the change in any factor must be matched by a corresponding change in another factor. For example, a decision to increase geographical convenience (Demand Side) obviously involves some change of policy with landlords (Supply Side) including the amount of rent you're willing to pay. Consider how Barney's paid through the nose because they thought they had to offer the geographical convenience of being in Beverly Hills. How big a factor was this in Barney's subsequent bankruptcy? Was it Demand Side success at the price of Supply Side failure? The lists above aren't much different from other businesses. What distinguishes retailing is the asymmetry of the fearful symmetry: the huge number of customers (Demand Side) vs. the number of suppliers. This is the exact opposite of a government defence contractor. This lopsided butterfly may cause a retailer to act as if the only people they have to ‘sell’ to are customers: the Demand Side. That’s a major mistake. All the people on the supply side have to be sold, too.” “One of the smartest things we ever did was to cut the hours of Trader Joe’s. This is mostly a Supply Side question, but the quality and attitude of the employees handling our customers is a Demand Side factor.” Employee Ownership “From the beginning of Pronto Markets, one of my basic principles, one of my basic goals, was employee ownership of the business. Getting there, however, was complicated.” Summary I found the similarities between Trader Joe’s approach to retailing and the German retailer Aldi strikingly similar. Despite being on opposite sides of the world, both businesses evolved complementary retailing practices: a focus on private label, above market wages for employees, a win-win mentality and continuous innovation. It’s little wonder the Albrecht family were attracted to the business. Aldi acquired Trader Joe’s in 1979 and retained Joe as the independent manager for another ten years. Paying staff well, empowering and sharing information with them and maintaining smallness are consistent themes across many of the successful business stories we’ve studied. When it comes to the specifics of retailing, the analogy of super-volume stores better able to provide balance is a useful one. As are the insights into economies of scale, pricing strategy, jettisoning poorly performing stores, the power of word-of-mouth marketing and the means to abolish bureaucracy through the outsourcing of non-essential functions. Every business has its own quirks and idiosyncrasies. Identifying what they are and how they contribute to a firm’s success can provide clues in our own quest to find compounding machines; in the long run, it’s business success which determines share prices. The more businesses you study, the larger the toolkit of mental models you’ll have to apply in your investment endeavours. Source: 'Becoming Trader Joe - How I Did Business My Way & Still Beat the Big Guys,’ Joe Coulombe, Patty Civalleri. Harper Collins. 2021. Follow us on Twitter : @mastersinvest * NEW * Visit the Blog Archive Article by Investment Masters Class Updated on Oct 26, 2021, 1:11 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

PEMBROKE, Bermuda, Oct. 26, 2021 (GLOBE NEWSWIRE) -- James River Group Holdings, Ltd. (the "Company") (NASDAQ:JRVR) today announced preliminary financial results in advance of its full quarterly earnings to be released on November 2, 2021. The Company expects to report a Net Loss for the third quarter of 2021 of between $23 million and $26 million, and an Adjusted Net Operating Loss of between $25.5 million and $28.5 million. The Combined Ratio for the quarter is expected to be between 120-125%. The Combined Ratio for the Excess and Surplus Lines ("E&S") segment would have been in the low 80s for the third quarter of 2021, an improvement as compared to the prior year quarter, absent catastrophe losses, additional reinstatement premiums for casualty treaties, and the previously announced Loss Portfolio Transfer ("LPT"), all impacting the E&S segment and detailed further below. Growth in the E&S segment Gross Written Premium was approximately 20% as compared to the prior year quarter, and approximately 10% across the Company. The above results are inclusive of the pre-tax impacts of catastrophe losses of $5.0 million related to Hurricane Ida, net of reinsurance recoveries, additional reinstatement premiums of $8.1 million for casualty treaties in the E&S segment, $29.6 million associated with the previously announced LPT, and adverse development of $15.1 million related to the Casualty Reinsurance segment. Because the Company purchases significant property catastrophe reinsurance, it does not expect any additional net catastrophe losses related to recent events in excess of the $5.0 million included in the quarter. Non-GAAP Financial Measures In presenting James River Group Holdings, Ltd.'s results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States ("GAAP"). Such measures, including adjusted net operating income, are referred to as non-GAAP measures. This non-GAAP measure may be defined or calculated differently by other companies. This measure should not be viewed as a substitute for those measures determined in accordance with GAAP. A reconciliations of such measure to the most comparable GAAP figure is included at the end of this press release. Forward-Looking Statements This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, such forward-looking statements may be identified by terms such as believe, expect, seek, may, will, intend, project, anticipate, plan, estimate, guidance or similar words. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Although it is not possible to identify all of these risks and uncertainties, they include, among others, the following: the inherent uncertainty of estimating reserves and the possibility that incurred losses may be greater than our loss and loss adjustment expense reserves; inaccurate estimates and judgments in our risk management may expose us to greater risks than intended; the downgrade in the financial strength rating of our regulated insurance subsidiaries announced on May 7, 2021, or further downgrades, impacting our ability to attract and retain insurance and reinsurance business that our subsidiaries write, our competitive position, and our financial condition; the potential loss of key members of our management team or key employees and our ability to attract and retain personnel; adverse economic factors resulting in the sale of fewer policies than expected or an increase in the frequency or severity of claims, or both; reliance on a select group of brokers and agents for a significant portion of our business and the impact of our potential failure to maintain such relationships; reliance on a select group of customers for a significant portion of our business and the impact of our potential failure to maintain, or decision to terminate, such relationships; our ability to obtain reinsurance coverage at prices and on terms that allow us to transfer risk and adequately protect our company against financial loss; losses resulting from reinsurance counterparties failing to pay us on reinsurance claims, insurance companies with whom we have a fronting arrangement failing to pay us for claims, or a former customer with whom we have an indemnification arrangement failing to perform their reimbursement obligations; inadequacy of premiums we charge to compensate us for our losses incurred; changes in laws or government regulation, including tax or insurance law and regulations; the ongoing effect of Public Law No. 115-97, informally titled the Tax Cuts ...Full story available on Benzinga.com.....»»

Germany To Launch EU-Wide Military Force As Frustration Grows After Afghan Debacle Ideas for a European Army have long been debated within the EU, which has as its purpose a civilian alliance - thus many have long argued it doesn't need a military force - which would also be controversial as a parallel force to NATO.  But Germany along with four other European Union countries are now seeking to establish a new EU "rapid reaction force" in order to respond quickly to any future military crisis. The group including Finland, the Netherlands, Portugal and Slovenia is pursuing the initiative, citing the lessons learned from Afghanistan and the disastrous pullout which saw many European nationals get stranded in the Taliban-controlled country, with not enough flights or personnel available to evacuate them. Image: AFP German media outlet dpa days ago confirmed the plan after it obtained new internal documents, describing that the five countries are aiming "to expand the existing EU battle groups, which are multinational military units of 1,500 personnel each on standby to respond to crises." "The new force is expected to include space and cyber capabilities, along with special forces and air transport," the report indicated. Currently, German Defense Minister Annegret Kramp-Karrenbauer is in favor of the initiative, saying in a recent interview that EU forces within NATO are only able to conduct defensive operations within the context of United States support. Thus there's a desire for a more independent force that can deploy rapidly without seeking broader US and NATO approval first, or going through NATO hurdles. When rumors of the plan were circulating earlier this year, one EU official was quoted as explaining that "What we have in mind is… to be able to deploy quickly this response force if for instance you have a legitimate government in a specific country which is afraid of a possible takeover by a terrorist group." However, there's this interesting pushback by Germany's Left Party cited in Deutsche Welle: Meanwhile, Germany's far-left Left party immediately denounced the plan, saying that leaders were drawing the wrong conclusions from Afghanistan. "The EU does not need a new intervention force. The EU should be a civilian alliance," deputy party head Tobias Pflueger told dpa. The problem in Afghanistan was that nations had attempted to "democratize a country by military means," he said. In the end it sounds like an EU reaction force is an attempt to regain control of foreign policy among some European countries recently frustrated at being dragged along by US interventionism abroad within the context of NATO, with Libya being another foremost example. It seems the heart of the problem could be EU nations' inability to stand up to the United States or more powerful NATO states like France, when it comes to decision-making on situations such as toppling Libyan leader Muammar Gaddafi or far-flung battlefields in central Asia. Tyler Durden Tue, 10/26/2021 - 02:45.....»»

Revenue of € 208.3 Million and Net Income of € 84.2 Million Up 92.3% and 147.6%, Respectively, vs. Q3-20. Orders of € 209.2 Million Up 4.5% vs. Q2-21 and 120.4% vs. Q3-20. Strong YTD-21 Revenue, Orders and Net Income of € 577.6 Million, € 736.5 Million and € 215.3 Million, Respectively DUIVEN, The Netherlands, Oct. 26, 2021 (GLOBE NEWSWIRE) -- BE Semiconductor Industries N.V. (the "Company" or "Besi") (Euronext Amsterdam: BESI; OTC markets: BESIY, Nasdaq International Designation), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the third quarter and nine months ended September 30, 2021. Key Highlights Q3-21 Revenue of € 208.3 million declined 7.9% vs. Q2-21 and was in line with prior guidance. Decrease primarily due to lower shipments for mobile applications post H1-21 capacity build and supply chain constraints. Up 92.3% vs. Q3-20 due to increased demand for mobile and automotive applications and higher shipments to Asian subcontractors Orders of € 209.2 million grew 4.5% vs. Q2-21 and 120.4% vs. Q3-20 primarily as a result of increased bookings for hybrid bonding, high performance computing and automotive applications Gross margin of 60.4% declined by 1.7 points vs. Q2-21 principally due to a less favorable product mix. Down 0.4 points vs. Q3-20 primarily due to adverse forex influences Net income of € 84.2 million decreased € 9.3 million (-9.9%) vs. Q2-21 principally as a result of lower revenue and gross margin levels realized. Up € 50.2 million, or 147.6%, vs. Q3-20 Net margin of 40.4% declined slightly vs. the 41.3% achieved in Q2-21 but increased by 9.1 points vs. Q3-20 highlighting the significant operating leverage in Besi's business model Key Highlights YTD-21 Revenue of € 577.6 million rose 78.3% vs. YTD-20 reflecting strong demand across Besi's end-user markets, geographies and customers with particular strength in mobile applications Orders of € 736.5 million grew € 421.7 million, or 134.0%, primarily due to significant growth in each of Besi's principal end-user markets Gross margin reached 60.5%, up 0.4 points vs. YTD-20 principally related to a more favorable product mix and increased labor efficiencies despite adverse forex influences and additional costs to scale Besi's production capacity Net income of € 215.3 million grew € 127.7 million, or 145.8%, vs. YTD-20. Net margin expanded to 37.3% vs. 27.1% in YTD-20 Net cash of € 287.8 million at end of Q3-21 increased by € 129.1 million (+81.3%) vs. Q3-20 Outlook    Q4-21 revenue to decrease approximately 5-15% vs. Q3-21 as new products are introduced, capacity added in 2021 is deployed and typical H2 seasonal trends. Revenue expected to rise 60-80% vs. Q4-20 highlighting ongoing market strength. Gross margin of 59-61% at similar levels as reported in Q3-21. (€ millions, except EPS) Q3-2021 Q2-2021 Δ Q3-2020 Δ YTD-2021 YTD-2020 Δ Revenue 208.3 226.1 -7.9 % 108.3 +92.3 % 577.6 323.9 +78.3 % Orders 209.2 200.2 +4.5 % 94.9 +120.4 % 736.5 314.8 +134.0 % Operating Income 95.4 106.7 -10.6 % 42.0 +127.1 % 250.4 109.2 +129.3 % EBITDA 99.7 110.9 -10.1 % 46.5 +114.4 % 263.1 123.5 +113.0 % Net Income 84.2 93.5 -9.9 % 34.0 +147.6 % 215.3 87.6 +145.8 % EPS (basic) 1.08 1.23 -12.2 % 0.47 +129.8 % 2.84 1.21 +134.7 % EPS (diluted) 1.00 1.12 -10.7 % 0.43 +132.6 % 2.58 1.12 +130.4 % Net Cash & Deposits 287.8 206.7 +39.2 % 158.7 +81.3 % 287.8 158.7 +81.3 % Richard W. Blickman, President and Chief Executive Officer of Besi, commented: "Besi reported strong results for both the third quarter and first nine months of 2021 as we leveraged our leadership position in advanced packaging to expand revenue growth, executed strategic initiatives to drive profitability and refined our business model to take advantage of emerging opportunities in wafer level assembly. For the quarter, revenue of € 208.3 million and net income of € 84.2 million increased by 92.3% and 147.6% versus Q3-20. Results were slightly ahead of the midpoint of guidance despite ongoing supply chain disruptions which constrained the potential number of customer shipments. In addition, we maintained gross margins above 60% and limited operating expense development that aided profitability and resulted in a net margin above 40% for the second consecutive quarter. Q3-21 orders of € 209.2 million trended favorably relative to typical seasonal patterns, increasing by 4.5% sequentially versus Q2-21 and by 120.4% versus Q3-20. In general, order growth reflected continued strong customer demand for advanced packaging applications as customers increased their investment in AI, 5G, data center, vehicle electrification and cloud infrastructure applications. Versus Q2-21, growth was primarily due to follow-on orders for hybrid bonding systems as well as increased demand for high performance computing and automotive applications, continuing trends we saw in Q2-21. Growth for such end-user markets helped offset reduced demand by Asian subcontractors for mobile applications as incremental capacity ordered in the first half year was installed for new product introductions in H2-21. Results for the first nine months were also very strong with revenue and orders reaching € 577.6 million and € 736.5 million, respectively, increases of € 253.7 million (78.3%) and € 421.7 million (134.0%), versus the prior year period. Year to date revenue and order growth resulted from significantly increased demand across all Besi's end-user markets, geographies and customers with a particular focus in the first quarter on high-end mobile applications followed by strength in the second and third quarters for automotive and high performance computing applications. Net income also rose strongly, increasing by € 127.7 million, or 145.8%, versus YTD-20 to reach € 215.3 million due to substantial revenue growth combined with tight controls of overhead and personnel costs. As a result, Besi's net margins expanded to 37.3% in YTD-21 versus 27.1% in YTD-20 highlighting the significant operating leverage in our business model. Our liquidity position continued to grow with cash and deposits and net cash increasing by 15.5% and 39.2%, respectively, versus Q2-21 due to strong cash flow generated from operations post the significant working capital investment required in H1-21. In addition, our capital allocation policy continues to reward investors with total distributions of € 163.7 million in dividends and share repurchases year to date, highlighting our commitment to long-term value creation for shareholders. At present, we are completing a strategic review 2021-2025 with refinements to our organization and management planned for the next phase of Besi's development. As such, we hope to realize the potential of a new generation of.....»»

(All amounts in U.S. dollars.Per share information based on dilutedshares outstanding unless otherwise noted.) TORONTO, Oct. 25, 2021 (GLOBE NEWSWIRE) -- Celestica Inc. (TSX:CLS) (NYSE:CLS), a leader in design, manufacturing and supply chain solutions for the world's most innovative companies, today announced financial results for the quarter ended September 30, 2021 (Q3 2021)†. "Celestica's strong third quarter performance reflects our consistent execution and the resiliency of our business, as we continue to successfully navigate challenges related to the pandemic and the global supply chain. Our non-IFRS operating margin* of 4.2% marks our seventh consecutive quarter of year-to-year improvement, and represents the highest operating margin in Celestica's history as a publicly-traded company," said Rob Mionis, President and CEO, Celestica. "Our performance in recent quarters serves as a validation of our long-term strategy and transformation actions in the face of a challenging and constantly evolving business environment." "The fourth quarter of 2021 serves as an important inflection point in our business, as our focus now turns squarely to growth and maintaining the momentum we've built in recent quarters. We remain on track to complete our acquisition of PCI in November. Achievement of our revenue guidance for the fourth quarter of 2021 will represent a return to top-line growth, and achievement of our non-IFRS operating margin* mid-point guidance of 4.5% will set a new high-water mark for our business. As we approach the final months of 2021, we believe we are well positioned to continue building on our success, and we reaffirm our strong outlook for 2022." Q3 2021 Highlights Revenue: $1.47 billion, decreased 5% compared to $1.55 billion for the third quarter of 2020 (Q3 2020); Revenue of our non-Cisco business** increased 6% compared to Q3 2020. Operating margin (non-IFRS)*: 4.2%, compared to 3.9% for Q3 2020. ATS segment revenue: increased 12% compared to Q3 2020; ATS segment margin was 4.3%, compared to 3.7% for Q3 2020. CCS segment revenue: decreased 14% compared to Q3 2020; CCS segment margin was 4.1%, compared to 4.0% for Q3 2020; Non-Cisco CCS revenue*** increased 2% compared to Q3 2020. Lifecycle Solutions portfolio revenue (combined ATS segment and HPS revenue): increased 15% compared to Q3 2020, and represented 60% of total revenue, compared to 50% of total revenue for Q3 2020. IFRS earnings per share (EPS): $0.28, compared to $0.24 per share for Q3 2020. Adjusted EPS (non-IFRS)*: $0.35, compared to $0.32 for Q3 2020. Adjusted return on invested capital (non-IFRS)*: 15.2%, flat compared to Q3 2020. Free cash flow (non-IFRS)*: $27.1 million, compared to $15.8 million for Q3 2020. Repurchased and cancelled 2.1 million subordinate voting shares for $17.2 million under our normal course issuer bid (NCIB). Q4 2021 Guidance Our fourth quarter of 2021 (Q4 2021) guidance assumes consummation of the acquisition of PCI Private Limited (PCI) (described below) in November 2021, and incorporates our estimated impact of supply chain constraints. IFRS revenue: $1.425 billion to $1.575 billion Operating margin (non-IFRS)*: 4.5% at the mid-point of our revenue and non-IFRS adjusted EPS guidance ranges Adjusted SG&A (non-IFRS)*: $62 million to $64 million Adjusted EPS (non-IFRS)*: $0.35 to $0.41 For Q4 2021, we expect a negative $0.11 to $0.17 per share (pre-tax) aggregate impact on net earnings on an IFRS basis for employee SBC expense, amortization of intangible assets (excluding computer software), and restructuring charges, and an non-IFRS adjusted effective tax rate of approximately 19% (which does not account for foreign exchange impacts or any unanticipated tax settlements). Full-Year 2021 Commentary We believe that 2021 is on track to be a successful year for Celestica, and one where we make meaningful progress towards the achievement of our long-term strategic objectives. Achievement of the mid-point of our guidance ranges for Q4 2021 (see above), would represent the following financial accomplishments for 2021: Adjusted EPS (non-IFRS)* of $1.24, compared to $0.98 for 2020, a growth rate of 27% Operating margin (non-IFRS)* of 4.0%, compared to 3.5% for 2020, an improvement of 50 basis points Non-Cisco business revenue** growth of 7% compared to 2020 Lifecycle Solutions portfolio revenue concentration of approximately 60%, compared to 51% for 2020 The foregoing commentary represents operating measures that would result if the mid-point of our Q4 2021 guidance ranges are achieved, and are not intended to be projections or forecasts of future performance. Our future performance is subject to risks, uncertainties and other factors that could cause actual outcomes and results to differ materially those described in this section. 2022 Outlook As we look to 2022, we expect the markets to remain dynamic. However, we believe that secular tailwinds in several of our end markets, strong operational performance and the ramping of new programs bode well for Celestica. Assuming the severity of supply chain constraints expected for the remainder of 2021 do not significantly worsen, and consummation of the PCI acquisition (see below) in November 2021, we anticipate the following for 2022: IFRS revenue to grow to at least $6.3 billion Operating margin (non-IFRS)* in the range of 4.0% to 5.0% Adjusted EPS (non-IFRS)* to increase by at least 20% compared to 2021 We do not provide reconciliations for forward-looking non-IFRS financial measures, as we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various events that have not yet occurred, are out of our control and/or cannot be reasonably predicted, and that would impact the most directly comparable forward-looking IFRS financial measure. For these same reasons, we are unable to address the probable significance of the unavailable information. Forward-looking non-IFRS financial measures may vary materially from the corresponding IFRS financial measures. See Schedule 1 for the definitions of the foregoing non-IFRS financial measures, and a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures. Also see "Non-IFRS Supplementary Information" below. † Celestica has two operating and reportable segments - Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Our ATS segment consists of our ATS end market, and is comprised of our Aerospace and Defense (A&D), Industrial, Energy, HealthTech and Capital Equipment (semiconductor, display, and power & signal distribution equipment) businesses. Our CCS segment consists of our Communications and Enterprise (servers and storage) end markets. Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue). See note 26 to our 2020 audited consolidated financial statements, included in our Annual Report on Form 20-F for the year ended December 31, 2020 (2020 20-F), available at www.sec.gov and www.sedar.com, for further detail. * Non-International Financial Reporting Standards (IFRS) financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar financial measures presented by other public companies that use IFRS or U.S. generally accepted accounting principles (GAAP). See "Non-IFRS Supplementary Information" below for information on our rationale for the use of non-IFRS financial measures, and Schedule 1 for, among other items, non-IFRS financial measures included in this press release, as well as their definitions, uses, and a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures. We do not provide reconciliations for forward-looking non-IFRS financial measures, as we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. See the paragraph after "2022 Outlook." ** total revenue from programs with customers other than Cisco Systems, Inc. (Cisco). *** aggregate CCS segment revenue from programs with customers other than Cisco. Summary of Selected Q3 2021 Results For information on the impact of coronavirus disease 2019 and related mutations (COVID-19) on our business in Q3 2021, see "Segment Updates" below and footnote (1) to the following table. Also see the "Recent Developments" section of each of our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for Q3 2021, to be filed at www.sedar.com and www.sec.gov, and in Item 5 of our 2020 20-F.   Q3 2021 Actual (1)   Q3 2021 Guidance (2) IFRS revenue (in billions) $1.47   $1.40 to $1.55 IFRS EPS (1) $0.28   N/A IFRS earnings before income taxes as a % of revenue 3.0%   N/A Non-IFRS operating margin 4.2%   4.0% at the mid-point of ourrevenue and non-IFRS adjustedEPS guidance ranges IFRS SG&A (in millions) $62.0   N/A Non-IFRS adjusted SG&A (in millions) $56.5   $56 to $58 Non-IFRS adjusted EPS $0.35   $0.30 to $0.36 (1) IFRS EPS of $0.28 for Q3 2021 included an aggregate charge of $0.10 (pre-tax) per share for employee stock-based compensation (SBC) expense, amortization of intangible assets (excluding computer software), and restructuring charges. See the tables in Schedule 1 and note 8 to our September 30, 2021 unaudited interim condensed consolidated financial statements (Q3 2021 Interim Financial Statements) for per-item charges. This aggregate charge was within our Q3 2021 guidance range of between $0.09 and $0.15 per share for these items. IFRS EPS for Q3 2021 included a $0.04 per share positive impact attributable to a deferred tax recovery recorded in connection with the revaluation of certain temporary differences using the future effective tax rate of our Thailand subsidiary related to the forthcoming reduction of the income tax exemption rate in 2022 under an applicable tax incentive (Revaluation Impact) (see note 9 to our Q3 2021 Interim Financial Statements), and a $0.03 per share positive impact attributable to net other recoveries (consisting most significantly of a $0.07 per share positive impact attributable to legal recoveries, offset in part by a $0.05 per share negative impact attributable to Acquisition Costs, as described in note 8 to our Q3 2021 Interim Financial Statements), all offset in part by a $0.05 per share negative impact attributable to estimated COVID-19 Costs, net of $1 million of recognized COVID Subsidies (each defined below). IFRS EPS of $0.24 for Q3 2020 included a $0.06 per share negative impact attributable to estimated COVID-19 Costs and a $0.03 per share negative impact attributable to restructuring charges, more than offset by a $0.085 per share positive impact attributable to approximately $11 million of recognized COVID-19-related government subsidies, grants and credits (COVID Subsidies) and $0.3 million of customer recoveries related to COVID-19 (Customer Recoveries), and a $0.05 per share positive impact to reflect SBC expense reversals recorded in Q3 2020 to reflect a reduction in the estimated number of certain share-based awards that were expected to vest in January 2021 (SBC Reversal). IFRS EPS of $0.57 for the first three quarters of 2021 (YTD 2021) included a $0.17 per share negative impact attributable to estimated COVID-19 Costs, and a $0.02 per share negative impact attributable to net other charges (consisting most significantly of a $0.06 per share negative impact attributable to net restructuring charges and a $0.04 per share negative impact attributable to Acquisition Costs, offset in part by an $0.08 per share positive impact attributable to legal recoveries, as described in note 8 to our Q3 2021 Interim Financial Statements), all offset in part by a $0.09 per share positive impact attributable to approximately $11 million of recognized COVID Subsidies and $1 million of Customer Recoveries, as well as the $0.04 per share positive Revaluation Impact. IFRS EPS of $0.31 for the first three quarters of 2020 (YTD 2020) included a $0.22 per share negative impact attributable to estimated COVID-19 Costs, and a $0.15 per share negative impact attributable to restructuring charges, offset in part by a $0.21 per share positive impact attributable to approximately $26 million of recognized COVID Subsidies and $1 million in Customer Recoveries, as well as the $0.05 per share positive impact of the SBC Reversal. See Schedule 1 for the exclusions used to determine non-IFRS adjusted EPS for Q3 2021, Q3 2020, YTD 2021 and YTD 2020. COVID-19 Costs consist of both direct and indirect costs, including manufacturing inefficiencies related to lost revenue due to our inability to secure materials, idled labor costs, and incremental costs for labor, expedite fees and freight premiums, cleaning supplies, personal protective equipment, and/or IT-related services to support our work-from-home arrangements. (2) For Q3 2021, our revenue was at the mid-point of our guidance range, our non-IFRS adjusted EPS was towards the high end of our guidance range, and our non-IFRS operating margin exceeded the mid-point of our revenue and non-IFRS adjusted EPS guidance ranges. Non-IFRS adjusted SG&A for Q3 2021 was within our guidance range and our non-IFRS adjusted effective tax rate for Q3 2021 was 19% (compared to our anticipated estimate of approximately 20%). Q3 2021 non-IFRS operating margin and adjusted EPS benefited from strong performance in both of our segments, despite adverse revenue impacts attributable to materials shortages. See "Non-IFRS Supplementary Information" below for information on our rationale for the use of non-IFRS financial measures, and Schedule 1 for, among other items, non-IFRS financial measures included in this press release, as well as their definitions, uses, and a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures. Segment Updates ATS Segment: ATS segment revenue increased 12% in Q3 2021 compared to Q3 2020, driven by strong revenue growth in our Capital Equipment and HealthTech businesses, and the continuing recovery in our Industrial business. These increases more than offset continued softness in the commercial aerospace portion of our A&D business related to COVID-19. Also see "Supply Chain and Workforce Constraints" below for a description of the estimated adverse impact of such matters on ATS segment revenue in Q3 2021 and the prior year period. We remain on track to achieve our target of 10% revenue growth in our ATS segment in 2021 as compared to 2020. ATS segment margin increased to 4.3% in Q3 2021 compared to 3.7% in Q3 2020, primarily due to profitable growth in our Capital Equipment business, which more than offset the impact of lower revenues in our A&D business. This marks the sixth consecutive quarter of sequential ATS segment margin expansion. We anticipate our ATS segment margin will enter our target range of 5% to 6% in Q4 2021. Revenue from our semiconductor Capital Equipment customers increased in Q3 2021 compared to Q3 2020. The growth was driven by continued strong end market demand, in combination with new program wins and market share gains. We expect continued strength in our Capital Equipment business in Q4 2021 and into 2022, and anticipate that revenue from our Capital Equipment business for 2021 will exceed $700 million, which would represent at least 30% growth over 2020. While A&D revenue in Q3 2021 was lower than in Q3 2020, primarily due to soft demand driven by the ongoing impact of COVID-19, headwinds have stabilized, resulting in modest sequential growth. Although we do not expect our commercial aerospace business to return to pre-COVID-19 levels in the near term, we expect modest sequential growth to continue in Q4 2021 and into 2022, supported by new program wins. During Q3 2021, revenue from our Industrial business increased compared to Q3 2020. Demand in our Industrial business continues to recover after being significantly impacted by COVID-19 in 2020. We expect year-over-year revenue and sequential growth in Q4 2021 supported by strong bookings and a general recovery in demand, as well as the addition of PCI assuming consummation of the acquisition in November 2021 as anticipated (see "PCI Acquisition" below). We expect PCI's portfolio, as well as our existing Industrial business, to achieve solid organic growth in 2022. HealthTech revenue increased in Q3 2021 compared to Q3 2020. While we expect to see some moderation in revenue growth in Q4 2021 due to softening demand in our COVID-19-related programs, we continue to expect our overall HealthTech business to grow in 2022, supported by the ramping of new non-COVID-related programs. CCS Segment: CCS segment revenue decreased in Q3 2021 compared to Q3 2020, primarily due to our disengagement from programs with Cisco Systems, Inc. (Cisco Disengagement), completed in the fourth quarter of 2020, as well as program-specific demand softness from certain server customers in our Enterprise end market. Also see "Supply Chain and Workforce Constraints" below for a description of the estimated adverse impact of such matters on CCS segment revenue in Q3 2021 and the prior year period. These decreases were partially offset by strong demand from service provider customers, including in our HPS business, as well as strength in demand from certain storage customers in our Enterprise end market. We expect that year-to-year Enterprise revenue declines will begin to stabilize in Q4 2021. Our HPS business recorded strong revenue growth in Q3 2021, increasing 22% to approximately $300 million compared to Q3 2020. CCS segment revenue from programs with customers other than Cisco increased 2% in Q3 2021 compared to Q3 2020, and increased 5% YTD 2021 compared to YTD 2020. Although total CCS segment revenue for 2021 is anticipated to decline compared to 2020, we currently expect approximately 20% revenue growth in our HPS business in 2021 compared to 2020, as HPS revenue is expected to exceed $1 billion for 2021. We also expect HPS revenue to increase by at least 10% in 2022 compared to 2021. Despite lower revenue levels, CCS segment margin improved to 4.1% in Q3 2021 compared to 4.0% in Q3 2020, primarily due to a more favorable mix, driven by our portfolio reshaping activities, and an increased concentration of revenue from our HPS business. This represents our sixth consecutive quarter with CCS segment margin above our target range. We expect CCS segment margin to exceed our 2% to 3% target range in Q4 2021, and to be at the high end of the target range, or slightly higher, for 2022. Supply Chain and Workforce Constraints: Global supply chain constraints, including as a result of COVID-19, continued to impact both of our segments in Q3 2021, resulting in extended lead times for certain components, and impacting the availability of materials required to support customer programs. However, our advanced planning processes, supply chain management, and collaboration with our customers and suppliers helped to partially mitigate the impact of these constraints on our revenue. We expect this pressure to persist in Q4 2021 and throughout 2022, particularly in our CCS segment. While we have incorporated these dynamics into our Q4 2021 guidance and 2022 annual outlook to the best of our ability, their adverse impact (in terms of duration and severity) cannot be estimated with certainty, and may be materially in excess of our expectations. As a result of recent resurgences of COVID-19 outbreaks, the governments of various jurisdictions have mandated periodic lockdowns or workforce constraints. However, because Celestica's operations have been considered an essential service by relevant local government authorities to date, our manufacturing sites have generally continued to operate in impacted countries (including Malaysia, Mexico, Thailand and Laos in Q3 2021), albeit at reduced capacities (due to reduced attendance, shift reductions or temporary shutdowns). Although these lockdowns and workforce constraints present a challenge to our business performance when in force, due to effective resource management and planning, we have been able to largely mitigate the impact of these actions to date on our manufacturing capacity and our revenues. We estimate that we had an aggregate adverse revenue impact of approximately $30 million in Q3 2021 as a result of supply chain constraints and, to a lesser extent, lockdowns/workforce constraints, consistent with Q2 2021. Such constraints adversely impacted revenue in our ATS segment by approximately $21 million and our CCS segment by approximately $9 million in Q3 2021 (Q3 2020 — approximately $16 million (ATS segment — approximately $7 million; CCS segment — approximately $9 million)). We also incurred approximately $7 million of estimated COVID-19 Costs during Q3 2021 (Q3 2020 — $8 million), and recognized approximately $1 million of COVID Subsidies and no Customer Recoveries (Q3 2020 — approximately $11 million in COVID Subsidies and $0.3 million in Customer Recoveries), each as defined in footnote 1 to the "Summary of Selected Q3 2021 Results" above. PCI Acquisition On September 21, 2021, we entered into a definitive agreement to acquire PCI, a fully-integrated design, engineering and manufacturing solutions provider with five manufacturing and design facilities across Asia. The purchase price is estimated to be approximately $306 million (subject to a working capital adjustment). We expect to finance the acquisition with a combination of cash and borrowings of up to $220 million under our current credit facility (described below). The transaction is expected to close in November 2021, subject to satisfaction of customary closing conditions. There can be no assurance, however, that this transaction will be consummated, in a timely manner, or at all. We intend to use borrowings under our revolver to finance this portion of the PCI acquisition at closing. However, we are currently pursuing the addition of a new term loan under our credit facility with the Administrative Agent thereunder, which if obtained, will be used to repay the amounts borrowed under the revolver for the acquisition. Although we believe that such term loan will be provided on acceptable terms, there can be no assurance that this will be the case. Intention to Launch New NCIB We intend to file a notice of intention with the Toronto Stock Exchange (TSX) to commence a new NCIB in Q4 2021, after our current NCIB expires in November 2021. If this notice is accepted by the TSX, we expect to be permitted to repurchase for cancellation, at our discretion during the 12 months following such acceptance, up to 10% of the "public float" (calculated in accordance with the rules of the TSX) of our issued and outstanding subordinate voting shares. Purchases under the new NCIB, if accepted, will be conducted in the open market or as otherwise permitted, subject to applicable terms and limitations, and will be made through the facilities of the TSX and the New York Stock Exchange. We believe that a new NCIB is in the interest of the Company. Q3 2021 Webcast Management will host its Q3 2021 results conference call on October 26, 2021 at 8:00 a.m. Eastern Daylight Time (EDT). The webcast can be accessed at www.celestica.com. Non-IFRS Supplementary Information In addition to disclosing detailed operating results in accordance with IFRS, Celestica provides supplementary non-IFRS financial measures to consider in evaluating the company's operating performance. Management uses adjusted net earnings and other non-IFRS financial measures to assess operating performance and the effective use and allocation of resources; to provide more meaningful period-to-period comparisons of operating results; to enhance investors' understanding of the core operating results of Celestica's business; and to set management incentive targets. We believe investors use both IFRS and non-IFRS financial measures to assess management's past, current and future decisions associated with our priorities and our allocation of capital, as well as to analyze how our business operates in, or responds to, swings in economic cycles or to other events that impact our core operations. See Schedule 1 below. About Celestica Celestica enables the world's best brands. Through our recognized customer-centric approach, we partner with leading companies in Aerospace and Defense, Communications, Enterprise, HealthTech, Industrial, Capital Equipment, and Energy to deliver solutions for their most complex challenges. As a leader in design, manufacturing, hardware platform and supply chain solutions, Celestica brings global expertise and insight at every stage of product development - from the drawing board to full-scale production and after-market services. With talented teams across North America, Europe and Asia, we imagine, develop and deliver a better future with our customers. For more information on Celestica, visit www.celestica.com. Our securities filings can be accessed at www.sedar.com and www.sec.gov. Cautionary Note Regarding Forward-looking Statements This press release contains forward-looking statements, including, without limitation, those related to the impact of the COVID-19 pandemic on our business; our priorities, goals and strategies; trends in the electronics manufacturing services (EMS) industry and our segments (and/or constituent businesses), and their anticipated impact; the anticipated impact of current market conditions on each of our segments (and/or constituent businesses) and near term expectations (positive and negative); our anticipated financial and/or operational results and outlook, including our anticipated Q4 2021 non-IFRS adjusted effective tax rate; our anticipated acquisition of PCI, the expected timing, cost, and funding thereof, and the expected impact of such acquisition, if consummated, on our Q4 2021 and 2022 financial results; our intention to launch a new NCIB and anticipated terms; our pursuit of a new term loan under our credit facility; materials, components and supply chain constraints; our credit risk; our liquidity; anticipated charges and expenses, including restructuring charges; the potential impact of tax and litigation outcomes; mandatory prepayments under our credit facility; interest rates; and our financial statement estimates and assumptions. Such forward-looking statements may, without limitation, be preceded by, followed by, or include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "continues," "project," "target," "potential," "possible," "contemplate," "seek," or similar expressions, or may employ such future or conditional verbs as "may," "might," "will," "could," "should," or "would," or may otherwise be indicated as forward-looking statements by grammatical construction, phrasing or context. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, where applicable, and applicable Canadian securities laws. Forward-looking statements are provided to assist readers in understanding management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Forward-looking statements are not guarantees of future performance and are subject to risks that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including, among others, risks related to: customer and segment concentration; challenges of replacing revenue from completed, lost or non-renewed programs or customer disengagements; our customers' ability to compete and succeed using our products and services; price, margin pressures, and other competitive factors and adverse market conditions affecting, and the highly competitive nature of, the EMS industry in general and our segments in particular (including the risk that anticipated market improvements do not materialize); changes in our mix of customers and/or the types of products or services we provide, including negative impacts of higher concentrations of lower margin programs; the cyclical and volatile nature of our semiconductor business; delays in the delivery and availability of components, services and/or materials; managing changes in customer demand; rapidly evolving and changing technologies, and changes in our customers' business or outsourcing strategies; the expansion or consolidation of our operations; volatility in the commercial aerospace industry; the inability to maintain adequate utilization of our workforce; the nature of the display market; defects or deficiencies in our products, services or designs; integrating and achieving the anticipated benefits from acquisitions and "operate-in-place" arrangements; compliance with customer-driven policies and standards, and third-party certification requirements; challenges associated with new customers or programs, or the provision of new services; the impact of our restructuring actions, divestitures and/or productivity initiatives, including a failure to achieve anticipated benefits therefrom; the incurrence of future restructuring charges, impairment charges, other write-downs of assets or operating losses; managing our business during uncertain market, political and economic conditions, including among others, geopolitical and other risks associated with our international operations, including military actions, protectionism and reactive countermeasures, economic or other sanctions or trade barriers; disruptions to our operations, or those of our customers, component suppliers and/or logistics partners, including as a result of events outside of our control, including, among others: policies or legislation instituted by the former or current administration in the U.S., U.S. and global tax reform, the potential impact of significant tariffs on items imported into the U.S. and related countermeasures, and/or the impact of (in addition to COVID-19) other widespread illness or disease; the scope, duration and impact of the COVID-19 pandemic, including its continuing adverse impact on the commercial aerospace industry; changes to our operating model; changing commodity, materials and component costs as well as labor costs and conditions; execution and/or quality issues (including our ability to successfully resolve these challenges); non-performance by counterparties; maintaining sufficient financial resources to fund currently anticipated financial actions and obligations and to pursue desirable business opportunities; negative impacts on our business resulting from current outstanding third-party indebtedness; negative impacts on our business resulting from any significant uses of cash, securities issuances, and/or additional increases in third-party indebtedness (including increased third-party indebtedness for the acquisition of PCI, and/or as a result of an inability to sell desired amounts under our uncommitted accounts receivable sales program); the failure to obtain an additional term loan in connection with our acquisition of PCI on acceptable terms, in a timely manner, or at all, and if obtained, that such term loan includes additional restrictive financial or operational covenants, significantly increased interest rates and/or additional significant fees; the failure to satisfy the closing conditions required for our purchase of PCI; a material adverse change at PCI; operational impacts that may affect PCI's ability to achieve anticipated financial results; the purchase price for PCI varying from the expected amount; the inability to use cash on hand and/or borrowings under our credit facility to fund the acquisition as anticipated; the failure to consummate the purchase of PCI when anticipated, in a timely manner, or at all, and if the acquisition is consummated, a failure to successfully integrate the acquisition, further develop our capabilities and/or customer base in expected markets or otherwise expand our portfolio of solutions, and/or achieve the other expected synergies and benefits from the acquisition; foreign currency volatility; our global operations and supply chain; competitive bid selection processes; customer relationships with emerging companies; recruiting or retaining skilled talent; our dependence on industries affected by rapid technological change; our ability to adequately protect intellectual property and confidential information; increasing taxes, tax audits, and challenges of defending our tax positions; obtaining, renewing or meeting the conditions of tax incentives and credits; computer viruses, malware, ransomware, hacking attempts or outages that may disrupt our operations; the inability to prevent or detect all errors or fraud; the variability of revenue and operating results; unanticipated disruptions to our cash flows; compliance with applicable laws, regulations, and government subsidies, grants or credits; the management of our information technology systems; our pension and other benefit plan obligations; changes in accounting judgments, estimates and assumptions; our ability to maintain compliance with applicable (or any new) credit facility covenants; interest rate fluctuations and changes to LIBOR; deterioration in financial markets or the macro-economic environment; our credit rating; the interest of our controlling shareholder; current or future litigation, governmental actions, and/or changes in legislation or accounting standards; negative publicity; that the TSX will not accept a new NCIB; that we will not be permitted to, or do not, repurchase subordinate voting shares (SVS) under any NCIB; and our ability to achieve our environmental, social and governance (ESG) initiative goals, including with respect to climate change. The foregoing and other material risks and uncertainties are discussed in our public filings at www.sedar.com and www.sec.gov, including in our most recent MD&A, our 2020 Annual Report on Form 20-F filed with, and subsequent reports on Form 6-K furnished to, the U.S. Securities and Exchange Commission, and as applicable, the Canadian Securities Administrators. The forward-looking statements contained in this press release are based on various assumptions, many of which involve factors that are beyond our control. Our material assumptions include those related to the following: the scope and duration of materials constraints and the COVID-19 pandemic and its impact on our sites, customers and suppliers; fluctuation of production schedules from our customers in terms of volume and mix of products or services; the timing and execution of, and investments associated with, ramping new business; the success of our customers' products; our ability to retain programs and customers; the stability of general economic and market conditions and currency exchange rates; supplier performance, pricing and terms; compliance by third parties with their contractual obligations; the costs and availability of components, materials, services, equipment, labor, energy and transportation; that our customers will retain liability for product/component tariffs and countermeasures; global tax legislation changes; our ability to keep pace with rapidly changing technological developments; the timing, execution and effect of restructuring actions; the successful resolution of quality issues that arise from time to time; the components of our leverage ratio (as defined in our credit facility); our ability to successfully diversify our customer base and develop new capabilities; the availability of cash resources for, and the permissibility under our credit facility of, repurchases of outstanding SVS under NCIBs, acceptance of a new NCIB and compliance with applicable laws and regulations pertaining to NCIBs; receipt of an additional term loan under our credit facility on acceptable terms and in a timely manner; that we will maintain compliance with applicable (or any new) credit facility covenants; anticipated demand strength in certain of our businesses; anticipated demand weakness in, and/or the impact of anticipated adverse market conditions on, certain of our businesses; and that: the closing conditions to our purchase of PCI will be satisfied in a timely manner; no material adverse change will have occurred at PCI; anticipated financial results by PCI will be achieved; our purchase of PCI will be consummated in a timely manner and on anticipated terms; our ability to use available cash on hand and incur further indebtedness under our credit facility will be as expected in order to finance the PCI acquisition as anticipated; once acquired, we are able to successfully integrate PCI, further develop our ATS segment business, and achieve the other expected synergies and benefits from the acquisition; all financial information provided by PCI is accurate and complete, and all forecasts of PCI's operating results are reasonable and were provided to Celestica in good faith; and we will continue to have sufficient financial resources to fund currently anticipated financial actions and obligations and to pursue desirable business opportunities. Although management believes its assumptions to be reasonable under the current circumstances, they may prove to be inaccurate, which could cause actual results to differ materially (and adversely) from those that would have been achieved had such assumptions been accurate. Forward-looking statements speak only as of the date on which they are made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements. Schedule 1Supplementary Non-IFRS Financial Measures The non-IFRS financial measures included in this press release are: adjusted gross profit, adjusted gross margin (adjusted gross profit as a percentage of revenue), adjusted selling, general and administrative expenses (SG&A), adjusted SG&A as a percentage of revenue, operating earnings (or adjusted EBIAT), operating margin (operating earnings or adjusted EBIAT as a percentage of revenue), adjusted net earnings, adjusted EPS, adjusted return on invested capital (adjusted ROIC), free cash flow, adjusted tax expense and adjusted effective tax rate. Adjusted EBIAT, adjusted ROIC, free cash flow, adjusted tax expense and adjusted effective tax rate are further described in the tables below. In calculating our non-IFRS financial measures, management excludes the following items where indicated in the table below: employee stock-based compensation (SBC) expense, amortization of intangible assets (excluding computer software), Other Charges, net of recoveries (defined below), Finance Costs (defined below), and acquisition inventory fair value adjustments, all net of the associated tax adjustments (quantified in the table below), and non-core tax impacts (tax adjustments related to acquisitions, and certain other tax costs or recoveries related to restructuring actions or restructured sites). We believe the non-IFRS financial measures we present herein are useful to investors, as they enable investors to evaluate and compare our results from operations in a more consistent manner (by excluding specific items that we do not consider to be reflective of our core operations), to evaluate cash resources that we generate from our business each period, and to provide an analysis of operating results using the same measures our chief operating decision makers use to measure performance. In addition, management believes that the use of a non-IFRS adjusted tax expense and a non-IFRS adjusted effective tax rate provide improved insight into the tax effects of our core operations, and are useful to management and investors for historical comparisons and forecasting. These non-IFRS financial measures result largely from management's determination that the facts and circumstances surrounding the excluded charges or recoveries are not indicative of our core operations. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies that report under IFRS, or who report under U.S. GAAP and use non-GAAP financial measures to describe similar financial metrics. Non-IFRS financial measures are not measures of performance under IFRS and should not be considered in isolation or as a substitute for any IFRS financial measure. The most significant limitation to management's use of non-IFRS financial measures is that the charges or credits excluded from the non-IFRS financial measures are nonetheless recognized under IFRS and have an economic impact on us. Management compensates for these limitations primarily by issuing IFRS results to show a complete picture of our performance, and reconciling non-IFRS financial measures back to the most directly comparable IFRS financial measures. The economic substance of the exclusions described above (where applicable to the periods presented) and management's rationale for excluding them from non-IFRS financial measures is provided below: Employee SBC expense, which represents the estimated fair value of stock options, restricted share units and performance share units granted to employees, is excluded because grant activities vary significantly from quarter-to-quarter in both quantity and fair value. In addition, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude employee SBC expense in assessing operating performance, who may have different granting patterns and types of equity awards, and who may use different valuation assumptions than we do. Amortization charges (excluding computer software) consist of non-cash charges against intangible assets that are impacted by the timing and magnitude of acquired businesses. Amortization of intangible assets varies among our competitors, and we believe that excluding these charges permits a better comparison of core operating results with those of our competitors who also generally exclude amortization charges in assessing operating performance. Other Charges, net of recoveries, consist of, when applicable: Restructuring Charges, net of recoveries (defined below); Transition Costs (defined below); net Impairment charges (defined below); consulting, transaction and integration costs related to potential and completed acquisitions, and charges or releases related to the subsequent re-measurement of indemnification assets or the release of indemnification or other liabilities recorded in connection with our acquisition of Impakt Holdings, LLC (such releases were first recorded in the first quarter of 2021) (collectively, Acquisition Costs (Recoveries)); legal settlements (recoveries); credit facility-related charges; and post-employment benefit plan losses. We exclude these charges, net of recoveries, because we believe that they are not directly related to ongoing operating results and do not reflect expected future operating expenses after completion of these activities or incurrence of the relevant costs. Our competitors may record similar charges at different times, and we believe these exclusions permit a better comparison of our core operating results with those of our competitors who also generally exclude these types of charges, net of recoveries, in assessing operating performance. Restructuring Charges, net of recoveries, consist of costs relating to: employee severance, lease terminations, site closings and consolidations; write-downs of owned property and equipment which are no longer used and are available for sale; and reductions in infrastructure. Transition Costs consist of: (i) costs recorded in connection with the relocation of our Toronto manufacturing operations, and the move of our corporate headquarters into and out of a temporary location during, and upon completion, of the construction of space in a new office building at our former location (all in connection with the 2019 sale of our Toronto real property) and (ii) costs recorded in connection with the transfer of manufacturing lines from closed sites to other sites within our global network. Transition Costs consist of direct relocation and duplicate costs (such as rent expense, utility costs, depreciation charges, and personnel costs) incurred during the transition periods, as well as cease-use costs incurred in connection with idle or vacated portions of the relevant premises that we would not have incurred but for these relocations and transfers. We believe that excluding these costs permits a better comparison of our core operating results from period-to-period, as these costs will not reflect our ongoing operations once these relocations and manufacturing line transfers are complete. Impairment charges, which consist of non-cash charges against goodwill, intangible assets, property, plant and equipment, and right-of-use (ROU) assets, result primarily when the carrying value of these assets exceeds their recoverable amount. Finance Costs consist of interest expense and fees related to our credit facility (including debt issuance and related amortization costs), our interest rate swap agreements, our accounts receivable sales program and customers' supplier financing programs, and interest expense on our lease obligations, net of interest income earned. We believe that excluding these costs provides useful insight for assessing the performance of our core operations. Acquisition inventory fair value adjustments relate to the write-up of the inventory acquired in connection with our acquisitions, representing the difference between the cost and fair value of such inventory. We exclude the impact of the recognition of these adjustments, when incurred, because we believe such exclusion permits a better comparison of our core operating results from period-to-period, as their impact is not indicative of our ongoing operating performance. Non-core tax impacts are excluded, as we believe that these costs or recoveries do not reflect core operating performance and vary significantly among those of our competitors who also generally exclude these costs or recoveries in assessing operating performance. The following table sets forth, for the periods indicated, the various non-IFRS financial measures discussed above, and a reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures (in millions, except percentages and per share amounts):   Three months ended September 30   Nine months ended September 30   2020   2021   2020   2021     % ofrevenue     % ofrevenue     % ofrevenue     % ofrevenue IFRS revenue $ 1,550.5       $ 1,467.4       $ 4,361.5       $ 4,122.6                             IFRS gross profit $ 124.2   8.0 %   $ 125.4   8.5 %   $ 323.8   7.4 %   $ 344.9   8.4 % Employee SBC expense 1.1       3.1       8.9       9.4     Non-IFRS adjusted gross profit $ 125.3   8.1 %   $ 128.5   8.8 %   $ 332.7   7.6 %   $ 354.3   8.6 %                         IFRS SG&A $ 56.9   3.7 %   $ 62.0   4.2 %   $ 171.3   3.9 %   $ 179.6   4.4 % Employee SBC expense (0.6 )     (5.5 )     (11.8 )     (14.8 )   Non-IFRS adjusted SG&A $ 56.3   3.6 %   $ 56.5   3.9 %   $ 159.5   3.7 %   $ 164.8   4.0 %                         IFRS earnings before income taxes $ 40.3   2.6 %   $ 43.9   3.0 %   $ 63.8   1.5 %   $ 94.4   2.3 % Finance Costs 8.9       7.8       28.6       23.4     Employee SBC expense 1.7       8.6       20.7       24.2     Amortization of intangible assets (excluding computer software) 5.5       4.9       16.9       14.7     Other Charges (recoveries) 3.7       (3.9 )     19.0       2.9     Non-IFRS operating earnings (adjusted EBIAT) (1) $ 60.1   3.9 %   $ 61.3   4.2 %   $ 149.0   3.4 %   $ 159.6   3.9 %                         IFRS net earnings $ 30.4   2.0 %   $ 35.2   2.4 %   $ 40.5   0.9 %   $ 72.0   1.7 % Employee SBC expense 1.7       8.6       20.7       24.2     Amortization of intangible assets (excluding computer software) 5.5       4.9       16.9       14.7     Other Charges (recoveries) 3.7       (3.9 )     19.0       2.9     Adjustments for taxes (2) (0.4 )     (1.4 )     (3.8 )     (4.7 )   Non-IFRS adjusted net earnings $ 40.9       $ 43.4       $ 93.3       $ 109.1                             Diluted EPS                       Weighted average # of shares (in millions) 129.1       125.5       129.1       127.3     IFRS earnings per share $ 0.24       $ 0.28       $ 0.31       $ 0.57     Non-IFRS adjusted earnings per share $ 0.32       $ 0.35       $ 0.72       $ 0.86     # of shares outstanding at period end (in millions) 129.1       124.7       129.1       124.7                             IFRS cash provided by operations $ 42.0       $ 55.7       $ 189.9       $ 161.0     Purchase of property, plant and equipment, net of sales proceeds (9.9 )     (13.2 )     (32.2 )     (35.3 )   Lease payments (3) (9.9 )     (10.0 )     (27.9 )     (30.0 )   Finance Costs paid (excluding debt issuance costs paid) (3) (6.4 )     (5.4 )     (22.3 )     (16.5 )   Non-IFRS free cash flow (3) $ 15.8       $ 27.1       $ 107.5       $ 79.2                             IFRS ROIC % (4) 10.2 %     10.9 %     5.3 %     7.8 %   Non-IFRS adjusted ROIC % (4) 15.2 %     15.2 %     12.5 %     13.2 %   (1)   Management uses non-IFRS operating earnings (adjusted EBIAT) as a measure to assess performance related to our core operations. Non-IFRS adjusted EBIAT is defined as earnings (loss) before income taxes, Finance Costs (defined above), employee SBC expense, amortization of intangible assets (excluding computer software), Other Charges (recoveries) (defined above), and in applicable periods, acquisition inventory fair value adjustments. See note 8 to our Q3 2021 Interim Financial Statements for separate quantification and discussion of the components of Other Charges (recoveries). (2)   The adjustments for taxes, as applicable, represent the tax effects of our non-IFRS adjustments and non-core tax impacts (see below). The following table sets forth a reconciliation of our IFRS tax expense and IFRS effective tax rate to our non-IFRS adjusted tax expense and our non-IFRS adjusted effective tax rate for the periods indicated, in each case determined by excluding the tax benefits or costs associated with the listed items (in millions, except percentages) from our IFRS tax expense for such periods:   Three months ended   Nine months ended   September 30   September 30   2020 Effectivetax rate   2021 Effectivetax rate   2020 Effectivetax rate   2021 Effectivetax rate                     IFRS tax expense and IFRS effective tax rate $ 9.9   25 %   $ 8.7   20 %   $ 23.3   37 %   $ 22.4   24 %                         Tax costs (benefits) of the following items excluded from IFRS tax expense:                       Employee SBC expense 0.2       1.4       1.2       2.9     Other Charges (recoveries) 0.2       —       2.2       0.7     Non-core tax impacts related to tax uncertainties* —       —       0.4       —     Non-core tax impact related to restructured sites** —       —       —       1.1     Non-IFRS adjusted tax expense and non-IFRS adjusted effective tax rate $ 10.3   20 %   $ 10.1   19 %   $ 27.1   23 %   $ 27.1   20 % * Consists of the reversal of certain tax uncertainties related to a prior acquisition that became statute-barred in the first quarter of 2020. ** Consists of the reversals of tax uncertainties related to one of our Asian subsidiaries that completed its liquidation and dissolution during the first quarter of 2021. (3)   Management uses non-IFRS free cash flow as a measure, in addition to IFRS cash provided by (used in) operations, to assess our operational cash flow performance. We believe non-IFRS free cash flow provides another level of transparency to our liquidity. Non-IFRS free cash flow is defined as cash provided by (used in) operations after the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus equipment and property), lease payments and Finance Costs paid (excluding any debt issuance costs and when applicable, waiver fees related to our credit facility). We do not consider debt issuance costs (nil paid in Q3 2021 and YTD 2021; $0.3 million and $0.6 million paid in Q3 2020 and YTD 2020, respectively) or such waiver fees (when applicable) to be part of our ongoing financing expenses. As a result, these costs are excluded from total Finance Costs paid in our determination of non-IFRS free cash flow. Note, however, that non-IFRS free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures. (4)   Management uses non-IFRS adjusted ROIC as a measure to assess the effectiveness of the invested capital we use to build products or provide services to our customers, by quantifying how well we generate earnings relative to the capital we have invested in our business. Non-IFRS adjusted ROIC is calculated by dividing non-IFRS adjusted EBIAT by average net invested capital. Net invested capital (calculated in the table below) is defined as total assets less: cash, ROU assets, accounts payable, accrued and other current liabilities, provisions, and income taxes payable. We use a two-point average to calculate average net invested capital for the quarter and a four-point average to calculate average net invested capital for the nine-month period. A comparable measure under IFRS would be determined by dividing IFRS earnings (loss) before income taxes by average net invested capital (which we have set forth in the charts above and below), however, this measure (which we have called IFRS ROIC), is not a measure defined under IFRS. The following table sets forth, for the periods indicated, our calculation of IFRS ROIC % and non-IFRS adjusted ROIC % (in millions, except IFRS ROIC % and non-IFRS adjusted ROIC %).   Three months ended   Nine months ended   September 30   September 30   2020   2021   2020   2021                 IFRS earnings before income taxes $ 40.3     $ 43.9     $ 63.8     $ 94.4   Multiplier to annualize earnings 4     4     1.333     1.333   Annualized IFRS earnings before income taxes $ 161.2     $ 175.6     $ 85.0     $ 125.8                   Average net invested capital for the period.....»»

FARMINGTON, Conn., Oct. 25, 2021 /PRNewswire/ -- Otis Worldwide Corporation (NYSE:OTIS) reported third quarter 2021 net sales of $3.6 billion with 8.1% organic growth. GAAP operating profit of $542 million was up $88 million and margin expanded 110 basis points to 15.0%. Adjusted operating profit of $566 million was up $63 million and margin expanded 20 basis points to 15.6%. GAAP and adjusted diluted earnings per share (EPS) of $0.77 increased 26.2% and 11.6%, respectively. "Otis delivered another strong quarter with sales growth and margin expansion in both segments, a 3% increase in maintenance portfolio units and the third consecutive quarter of New Equipment orders growth. We also generated robust cash flow enabling us to buy back $725 million of shares year-to-date and announced a tender offer to acquire the remaining interest in Zardoya Otis, a decision that will streamline management and create value for shareholders," said President & CEO Judy Marks. "We continue to advance our strategy, progress on ESG initiatives and achieve strong results, despite the macro environment, reflecting the resiliency of the business and our ability to execute. This gives us the confidence to improve the 2021 outlook and positions us well to build on this momentum in 2022." Key Figures ($ millions, except per share amounts) Quarter Ended September 30, Nine Months Ended September 30, 2021 2020 Y/Y Y/Y (CFX) 2021 2020 Y/Y Y/Y (CFX) Net sales $ 3,620 $ 3,268 10.8 % 8.3 % $ 10,729 $ 9,263 15.8 % 11.4 % Organic sales 8.1 % 11.2 % GAAP Operating profit $ 542 $ 454 $ 88 $ 1,612 $ 1,199 $ 413 Operating profit margin 15.0 % 13.9 % 110 bps 15.0 % 12.9 % 210 bps Net income $ 331 $ 266 24.4 % $ 965 $ 655 47.3 % Earnings per share $ 0.77 $ 0.61 26.2 % $ 2.23 $ 1.51 47.7 % Adjusted non-GAAP comparison Operating profit $ 566 $ 503 $ 63 $ 52 $ 1,671 $ 1,410 $ 261 $ 189 Operating profit margin 15.6 % 15.4 % 20 bps 15.6 % 15.2 % 40 bps Net income $ 333 $ 302 10.3 % $ 987 $ 808 22.2 % Earnings per share $ 0.77 $ 0.69 11.6 % $ 2.28 $ 1.86 22.6 %   Third quarter net sales of $3.6 billion increased 10.8% versus the prior year, with an 8.1% increase in organic sales. Organic sales were up in both New Equipment and Service. Third quarter GAAP operating profit of $542 million increased $88 million driven by segment operating profit growth of $71 million and lower non-recurring separation costs. GAAP operating profit margin expanded 110 basis points to 15.0%. Adjusted operating profit of $566 million increased $63 million and $52 million at constant currency with segment operating profit growth of $49 million. Adjusted operating profit margin expanded 20 basis points to 15.6%, with margin expansion in both New Equipment and Service. GAAP and adjusted EPS of $0.77 increased $0.16 and $0.08, respectively, driven by operating profit growth, partially offset by a higher effective tax rate. Year-to-date net sales increased 15.8% driven by a 11.2% increase in organic sales and 4.4% benefit from foreign exchange. GAAP and adjusted operating profit increased $413 million and $261 million, respectively, driven by segment operating profit growth. GAAP operating profit also benefited from the absence of a fixed asset impairment charge taken in the prior year and lower non-recurring separation costs. GAAP and adjusted operating profit margin expanded 210 and 40 basis points, respectively. GAAP and adjusted EPS increased 47.7% and 22.6%, respectively, driven by operating profit growth and a reduction in the effective tax rate. New Equipment Quarter Ended September 30, Nine Months Ended September 30, ($ millions) 2021 2020 Y/Y Y/Y (CFX) 2021 2020 Y/Y Y/Y (CFX) Net sales $ 1,681 $ 1,423 18.1 % 14.2 % $ 4,866 $ 3,840 26.7 % 21.3 % Organic sales 14.1 % 21.1 % GAAP Operating profit $ 131 $ 95 $ 36 $ 382 $ 238 $ 144 Operating profit margin 7.8 % 6.7 % 110 bps 7.9 % 6.2 % 170 bps Adjusted non-GAAP comparison Operating profit $ 135 $ 102 $ 33 $ 25 $ 399 $ 258 $ 141 $ 116 Operating profit margin 8.0 % 7.2 % 80 bps 8.2 % 6.7 % 150 bps   In the third quarter, net sales of $1.7 billion increased 18.1% with a 14.1% increase in organic sales. Organic sales were up mid-teens in the Americas, up low single digits in EMEA and up high-teens in Asia with double digit growth in China. GAAP operating profit of $131 million increased $36 million and adjusted operating profit of $135 million increased $33 million driven by higher volume and installation productivity, partially offset by headwinds from commodities. GAAP and adjusted operating profit margin expanded 110 and 80 basis points to 7.8% and 8.0%, respectively.  New Equipment orders were up 3.8% at constant currency with mid-teens growth in Asia partially offset by declines in the Americas and EMEA. New Equipment orders in China were up approximately 12%. Year-to-date New Equipment orders were up 15.1% at constant currency with growth in all regions. New equipment backlog increased 4% with 1% growth at constant currency versus prior year. Year-to-date net sales increased 26.7% with a 21.1% increase in organic sales. GAAP operating profit increased $144 million and adjusted operating profit increased $116 million at constant currency primarily due to the benefit of higher volume. GAAP and adjusted operating profit margin expanded 170 and 150 basis points, respectively. Service Quarter Ended September 30, Nine Months Ended September 30, ($ millions) 2021 2020 Y/Y Y/Y (CFX) 2021 2020 Y/Y Y/Y (CFX) Net sales $ 1,939 $ 1,845 5.1 % 3.8 % $ 5,863 $ 5,423 8.1 % 4.5 % Organic sales 3.6 % 4.2 % GAAP Operating profit $ 444 $ 409 $ 35 $ 1,315 $ 1,190 $ 125 Operating profit margin 22.9 % 22.2 % 70 bps 22.4 % 21.9 % 50 bps Adjusted non-GAAP comparison Operating profit $ 449 $ 422 $ 27 $ 24 $ 1,333 $ 1,216 $ 117 $ 70 Operating profit margin 23.2 % 22.9 % 30 bps 22.7 % 22.4 % 30 bps   In the third quarter, net sales of $1.9 billion increased 5.1% with a 3.6% increase in organic sales. Organic maintenance and repair sales increased 4.7% and organic modernization sales decreased 1.2%. GAAP operating profit of $444 million increased $35 million and adjusted operating profit of $449 million increased $27 million as the benefits of higher volume and favorable pricing and mix were partially offset by headwinds from prior year field cost containment actions related to COVID-19. GAAP and adjusted operating profit margin expanded 70 and 30 basis points to 22.9% and 23.2%, respectively. Year-to-date net sales increased 8.1% with a 4.2% increase in organic sales. GAAP operating profit increased $125 million and adjusted operating profit increased $70 million primarily due to the benefit of higher volume. GAAP and adjusted operating profit margin expanded 50 and 30 basis points, respectively. Cash flow Quarter Ended September 30, Nine Months Ended September 30, ($ millions) 2021 2020 Y/Y 2021 2020 Y/Y Cash flow from operations $ 355 $ 348 $ 7 $ 1,473 $ 1,171 $ 302 Free cash flow $ 324 $ 311 $ 13 $ 1,358 $ 1,059 $ 299 Free cash flow conversion 98 % 117 % 141 % 162 %   Third quarter cash from operations of $355 million increased $7 million versus prior year driven by higher GAAP net income. Third quarter free cash flow of $324 million increased $13 million versus prior year. Year-to-date cash from operations of $1.5 billion increased $302 million and free cash flow increased $299 million to $1.4 billion. 2021 Outlook*Otis is improving its full year outlook: Net sales of ~$14.3 billion, up 11.8 to 12.3% Organic sales up 8.5 to 9.0% Organic New Equipment sales up 15.0 to 15.5% Organic Service sales up ~4.0% Adjusted operating profit of $2.18 to $2.19 billion, up $260 to $270 million at actual currency; up $195 to $205 million at constant currency Adjusted EPS of ~$2.95, up ~17%; adjusted effective tax rate in a range of 28.5 to 29.0% Free cash flow of $1.5 to $1.55 billion with conversion of approximately 125% of GAAP net income *Note: When we provide outlook for organic sales, adjusted operating profit, adjusted effective tax rate and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information. About OtisOtis is the world's leading elevator and escalator manufacturing, installation and service company. We move 2 billion people a day and maintain approximately 2.1 million customer units worldwide, the industry's largest maintenance portfolio. Headquartered in Connecticut, USA, Otis is 69,000 people strong, including 40,000 field professionals, all committed to meeting the diverse needs of our customers and passengers in more than 200 countries and territories worldwide. For more information, visit www.otis.com and follow us on LinkedIn, Instagram, Facebook and Twitter @OtisElevatorCo. Use and Definitions of Non-GAAP Financial MeasuresOtis Worldwide Corporation ("Otis") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures (referenced in this press release) to the corresponding amounts prepared in accordance with GAAP appears in the attached tables. These tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.  Organic sales, adjusted selling, general and administrative ("SG&A") expense, earnings before interest taxes and depreciation ("EBITDA"), adjusted EBITDA, adjusted operating profit, adjusted net income, adjusted diluted earnings per share ("EPS"), adjusted effective tax rate and free cash flow are non-GAAP financial measures. Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature ("other significant items"). Management believes organic sales is a useful measure in providing period-to-period comparisons of the results of the Company's ongoing operational performance. Adjusted SG&A expense represents SG&A expense (a GAAP measure), excluding restructuring costs, other significant items and allocated costs for certain functions and services previously performed by United Technologies Corporation ("UTC") prior to our separation ("UTC allocated costs") and including solely for fiscal years prior to 2020 estimated standalone public company costs, as though Otis' operations had been conducted independently from UTC ("standalone costs"). Standalone costs for fiscal years prior to 2020 are based on quarterly estimates determined during Otis' annual planning process for the 2020 fiscal year. Recurring standalone costs for 2021 and 2020 are not adjusted. Adjusted operating profit represents income from continuing operations (a GAAP measure), excluding restructuring costs, other non-recurring significant items, UTC allocated costs and including solely for fiscal years prior to 2020 estimated standalone public company costs. Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs and other non-recurring significant items and UTC allocated costs and including solely for fiscal years prior to 2020 estimated standalone public company costs, estimated adjustments to non-service pension expense, net interest expense and income tax expense as if Otis was a standalone public company ("standalone operating income adjustments"). Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), adjusted for the per share impact of restructuring, other significant items and solely for fiscal years prior to 2020 standalone operating income adjustments. The adjusted effective tax rate represents the effective tax rate (a GAAP measure) adjusted for the tax impact of restructuring costs, non-recurring significant items and solely for fiscal year prior to 2020 the tax impact of the additional adjustments (estimated standalone public company costs, interest expense and non-service pension expense). EBITDA represents net income from operations (a GAAP measure), adjusted for noncontrolling interests, income tax expense, net interest expense, non-service pension expense and depreciation and amortization. Adjusted EBITDA represents EBITDA, as calculated above, adjusted for the impact of restructuring, other significant items and UTC allocated costs, including solely for fiscal years prior to 2020 estimated standalone public company costs. Management believes that adjusted SG&A, EBITDA, adjusted EBITDA, adjusted operating profit, adjusted net income, adjusted EPS and the adjusted effective tax rate are useful measures in providing period-to-period comparisons of the results of the Company's ongoing operational performance and to the extent applicable as if it had been a standalone public company for fiscal years prior to 2020. Additionally, GAAP financial results include the impact of changes in foreign currency exchange rates ("AFX"). We use the non-GAAP measure "at constant currency" or "CFX" to show changes in our financial results without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, income statement results are translated in U.S. dollars at the average exchange rate for the period presented. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance. Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Otis' ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. When we provide our expectations for organic sales, adjusted operating profit, adjusted net income, adjusted effective tax rate, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, the effective tax rate, net sales and expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results. Cautionary StatementThis communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for Otis' future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "goals" and other words of similar meaning in connection with a discussion of future operating or financial performance or the proposed tender offer by Otis to acquire all of the issued and outstanding shares of Zardoya Otis, S.A (the "Tender Offer") or the separation and distribution. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, dividends, share repurchases, tax rates, research and development spend, credit ratings, net indebtedness and other measures of financial performance or potential future plans, strategies or transactions of Otis following its separation from United Technologies Corporation or in connection with the Tender Offer, including the estimated costs associated with the Tender Offer and the separation and distribution and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, Otis claims the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which Otis and its businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on global supply, demand, and distribution disruptions as the outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations), natural disasters and the financial condition of Otis' customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness, including as a result of the Tender Offer, and capital spending and research and development spending; (4) future availability of credit, including in connection with the financing of the Tender Offer, and factors that may affect such availability, including credit market conditions in the U.S. and other countries in which Otis and its businesses operate and Otis' capital structure; (5) the timing and scope of future repurchases of Otis' common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (6) fluctuations in prices of and delays and disruption in delivery of materials and services from suppliers; (7) cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) new business and investment opportunities; (9) the anticipated benefits of moving away from diversification and balance of operations across product lines, regions and industries; (10) the outcome of legal proceedings, investigations and other contingencies; (11) pension plan assumptions and future contributions; (12) the impact of the negotiation of collective bargaining agreements and labor disputes; (13) the effect of changes in political conditions in the U.S., including the new U.S. Administration, and other countries in which Otis and its businesses operate, including China's response to the new U.S. administration and the United Kingdom's recent withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (14) the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which Otis and its businesses operate, including changes as a result of the new U.S. Administration; (15) the ability of Otis to retain and hire key personnel; (16) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (17) the timing of closing, if any, of the Tender Offer and the expected benefits of the Tender Offer and separation and distribution and timing thereof; (18) the determination by the Internal Revenue Service and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions; (19) risks associated with indebtedness incurred as a result of financing transactions undertaken in connection with the separation; (20) the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the separation will exceed Otis' estimates; and (21) the impact of the separation on Otis' businesses and Otis' resources, systems, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary from those stated in forward-looking statements, see Otis' registration statements on Form 10 and Form S-3 and the reports of Otis on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Otis assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.       Otis Worldwide Corporation Condensed Consolidated Statements of Operations  .....»»

"Nine times out of 10, kidnapping is a business transaction," says Adam Gonzales, who runs a global security firm powered by military-trained personnel. Adam Gonzales Adam Gonzales Adam Gonzales is a private security specialist and CEO of Hyperion Services. His company consists of former military members who work as personal security guards and hostage rescuers. This is what his job is like, as told to freelance writer Jenny Powers. See more stories on Insider's business page. This as-told-to essay is based on a transcribed conversation with Adam Gonzales, a private hostage negotiator and security specialist. It has been edited for length and clarity.Whenever the national anthem played at a sporting event while I was growing up in Miller Beach, Indiana, I always felt proud to be an American. By the age of 20, I enlisted in the Army and was deployed to Iraq and Afghanistan. For four years, I trained as part of a six-man, long-range surveillance operative charged with parachuting onto enemy lines undetected for reconnaissance and surveillance purposes.In 2004, I transitioned to the private military sector and became what's known by former members of the military as a corporate warrior or silent professional, outsourcing myself to the government to help support and augment US war efforts.My first job as an independent contractor was with a military defense contracting firm that was relatively unknown at the time.It was the height of the Iraq War, and I was deployed to Baghdad for six months as security to Ambassador Paul Bremer, the US Presidential Envoy to Iraq.Our team, made up of approximately 50 contractors, provided a wide range of missions which included driving armored Suburbans, close protection, villa protection, and close air support with helicopters. Adam Gonzales in Iraq in 2009. Adam Gonzales I worked the night shift, from 7 p.m. to 7 a.m. When my shift was over, I slept when I could, at times doing double duty as a door gunner on the Little Bird helicopters that provided close air support for the ambassador. By 2013, I decided it was time to lead a more normal life and get a civilian job. I had no connections in America since I'd spent my adult life overseas, so I moved to Chicago taking a position as an electrical apprentice. Each morning I dreaded going to work. I'd sit in my truck at the job site, staring out the window thinking 'I don't belong here' and cry to myself. I lasted a year before deciding to take advantage of my military experience and make the shift to protect UHNW individuals. No longer part of a security operative, I became a one man show - the driver, the advance team, logistics manager, and protector. Nine times out of 10, kidnapping is a business transaction.For some it's a quick way to make money. A small percentage of cases, however, have nothing to do with money and are about honor or a vendetta. Those are the toughest because the clock is ticking before total loss of life.In 2015, I was called in on a case involving a woman in her late 20s who'd voluntarily joined a cult in Central America but now wanted out. She was being held against her will, and I was hired to rescue her. I knew the particular country well and had one man on the ground to gather local intelligence before I went in alone. With an aircraft on the ground waiting in the wings, I created an elaborate cover story feigning interest in joining the cult in order to get inside the compound.The cult leader bought my story, invited me in, and showed me the lay of the land. He even assigned me a room with access to a swimming pool and computer lab.On the computer, I downloaded information to share with my team on the outside, including the compound's floor plans. I also discreetly identified myself to the kidnapped woman by sharing details about her childhood I'd learned from her family.Under the guise that the woman was sick, I arranged for an outside source posing as an ambulance driver to arrive and whisk her out of the compound. From there, she boarded the private plane safely and headed home. The ordeal lasted three days from when I arrived until the rescue.I, on the other hand, had to remain in the compound a few more days so as not to raise any red flags. I crafted another story about having to leave due to an emergency with a promise to return, but instead headed straight to a hotel and spent a week decompressing in a hammock on the beach.It's hard to find meaning in your work after leaving the military, so I wanted to help fellow vets. In 2017, I launched Silent Professionals, a free job board for military and law enforcement veterans to find work in the private military and security industries. To date, the site has helped 10,000 veterans transition back into civilian life by using their background and skill set to make a living and discover a renewed sense of purpose.As our reputation grew, wealthy people with security needs began reaching out, so in 2019 the natural progression was to open Hyperion Services, a global solutions security firm powered by high-level military-trained personnel. The bulk of our business is in turnkey executive security which runs $2,000 a day and includes lodging, meals, labor, weapons, and equipment. Often clients sign a year-long contract and pay upfront in full. In addition, we offer hostage rescue starting at $30,000 a day with a month-long commitment, as well as kidnapping prevention and disaster response services.These days, I live south of DC, in the Quantico Area. I suffer from PTSD, but my wife of five years, who is also a veteran, helps me cope. It's hard to trust people and I question everything. If a new mailman shows up at our front door or the car behind me makes too many of the same turns as me, my spidey senses go off. After dealing with the most violent people on the planet and bearing witness to the types of atrocities I've seen, I view the world through a very different lens. Sometimes in bed I wonder how different my life would have been if I'd stuck with being an electrical apprentice, but before long my alarm clock goes off, and I'm back to work. Editor's note: Some details in this story were anonymized to protect the identities of the people and companies involved.Read the original article on Business Insider.....»»

Why Should American Soldiers Die For Taiwan? Authored by Daniel Davis via 19fortyfive.com, Calls by U.S. leaders to extend security guarantees to Taiwan against an aggressive China are on the rise. American pundits have likewise been eager and disturbingly casual about offering up U.S. service members to go and die for Taipei.  Before taking another step down this dangerous path, however, these leaders need to consider just how willing Taiwanese are to die for their own country. Until we have more concrete evidence that the Taiwanese are doing all they can for their own defense, all talk of America risking war with China for their benefit needs to come to a halt. There is no justification for sending American men and women to die on the seas and in the air around Taiwan when the citizens of Taiwan are themselves cool to the idea of dying for their own country. First is the classic “show me your checkbook and I’ll show you your priorities.” The United States places great value on protecting its citizens and global interests, as evidenced by the fact that we spend more on national defense than any nation on the planet, upwards of 3.5% GDP annually. As recently as 2016, Taiwan was spending an anemic 1.6% GDP on defense, and next year is expected to be only slightly better, at 2.1%. Evidence suggests that constant boasts by U.S. opinion leaders that the United States should give security guarantees to Taiwan leads the island’s leaders to conclude they don’t have to spend money on their own defense because they believe we will provide it for them. Second is the extent to which the citizens are willing to serve in the armed forces and risk their lives in defense of their country. In the United States, our all-volunteer force constantly produces sufficient numbers of service personnel to fully man the Army, Air Force, Navy, Marines, and Coast Guard. We don’t always meet the recruiting goals but we always have sufficient numbers of personnel. In Taiwan, by contrast, the armed services are significantly understaffed. So few Taiwanese are willing to sign up for military service, in fact, that earlier this year frontline combat units in the Taiwan military were assessed as being manned at a shockingly low 60%. The Taipei Times newspaper conducted research a few years ago into the attitudes of the recruitment-age youth in Taiwan, finding that large numbers were “(a)pathetic toward the military and averse to service.” One former Taiwanese Marine seemed to capture the reason for the apathy well: “I think it’s unlikely that we will go to war. If there’s no real enemy to fight against, I don’t know why military training is necessary.” Reuters reported in 2018 that 1,000 reservists over the previous three years had been charged for “dodging mandatory training.” It is clear that considerable numbers of Taiwanese people either do not believe the threat from China is real, don’t believe their country could defeat China if it did attack, or just don’t want to “waste time” serving. Such a dynamic harkens back to the recent situation in Afghanistan where large numbers of Afghan troops would rather make deals with their enemy than to fight to the death in a fight they don’t think they could win. It therefore made no difference to the outcome that American troops did fight for them over a 20 year period. Similarly, when the Russians annexed the Crimea in 2014, they did so without firing a shot because, like the Taliban did earlier this year, the Russians made deals with the defenders of The Crimea and likewise told them it would be pointless and futile to die fighting – when they could instead come to work for the victorious Russians. There is little reason to think some version of the same dynamic would not also exist in Taiwan if the Chinese were to attack. If the government of Taiwan is not willing to adequately fund its military, if the Taiwanese men and women whose lives would be on the line in a war with China aren’t willing to fight for their country, it would frankly be immoral to force American men and women to die in their place for Taiwan’s defense. It is time U.S. opinion leaders and government officials stopped being so eager to offer up American troops to go into harm’s way for the benefit of another country and start being concerned for the welfare of our troops’ lives. Tyler Durden Fri, 10/22/2021 - 23:40.....»»

First American (FAF) Q3 results reflect record commercial and agency revenues as well as continued growth in purchase. These together offset the decline in refinance activity. First American Financial Corporation FAF reported third-quarter 2021 operating income per share of $2.15, which outpaced the Zacks Consensus Estimate by 29.5%. The bottom line jumped 64.1% year over year.The results reflect record commercial and agency revenues as well as continued growth in purchase. These together offset the decline in refinance activity.First American Financial Corporation Price, Consensus and EPS Surprise First American Financial Corporation price-consensus-eps-surprise-chart | First American Financial Corporation QuoteBehind the HeadlinesOperating revenues of $2.6 billion increased 33.5% year over year on the back of higher direct premiums and escrow fees, agent premiums, information, and other. Moreover, the top-line figure beat the Zacks Consensus Estimate by 34.8%.Net investment income, however, decreased 3.4% to $50.7 million.Total expense of about $2 billion increased 16.9% year over year due to higher personnel costs, premiums retained by agents, provision for policy losses and other claims, interest, premium taxes, and other operating expenses.Segment ResultsTitle Insurance and Services: Total revenues increased 21% year over year to $2.1 billion. The upside came on the back of improved direct premiums and escrow fees, agent premiums, and higher information and other revenues.Pretax margin contracted 240 basis points (bps) year over year to 16.4%.Title open orders decreased 22.4% to 318,800, while Title closed orders decreased 13.3% year over year to 252,700.The average revenue per direct title order increased to $2,884, primarily attributable to an increase in the average deal size in commercial business and the impact of strong home price appreciation on residential purchase transactions. The shift in the order mix from lower-premium residential refinance transactions to higher-premium commercial and purchase transactions also impacted the average revenue per order.Specialty Insurance: Total revenues decreased 3% year over year to $132.2 million.Pretax margin was (1.4%) compared with (52.9%) in the year-ago quarter due to a pretax loss of $10.5 million in the company’s property and casualty business.Financial UpdateFirst American exited the quarter with cash and cash equivalents of $1.9 billion, up 53.2% from 2020 end.Notes and contracts payable were $1.6 billion, up 63.1% from 2020 end. The company raised $650 million in a public offering of 10-year senior notes at a coupon rate of 2.4%. The debt-to-capital ratio was 28.5 at quarter-end.Cash flow from operations was $399 million, up 27% year over year.Stockholders’ equity was $5.6 billion, up about 14% from 2020 end.The company bought back shares worth $14.1 million in the reported quarter. It had $463 million remaining under its authorization as of Sep30, 2021.Zacks RankFirst American currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other InsurersAmong other insurance industry players, which have reported third-quarter earnings so far, the bottom line of RLI Corp. RLI and The Travelers Companies, Inc. TRV beat the Zacks Consensus Estimate while that of The Progressive Corporation PGR missed the same. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RLI Corp. (RLI): Free Stock Analysis Report The Travelers Companies, Inc. (TRV): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis Report First American Financial Corporation (FAF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

In a personnel move with enormous implications for the parcel-delivery industry, regional carrier LaserShip said Friday it has named Mark H. Holifield, the architect of Home Depot Inc.'s modern-day supply chain operation, as its permanent CEO. read more.....»»

RUTHERFORD, N.J., Oct. 22, 2021 (GLOBE NEWSWIRE) -- Blue Foundry Bancorp (NASDAQ:BLFY) (the "Company"), the holding company for Blue Foundry Bank (the "Bank"), today reported a net loss of $14.97 million, or $0.68 per diluted common share, for the three months ended September 30, 2021 compared to a net loss of $1.7 million for the three months ended September 30, 2020, and a net loss of $16.7 million for the nine months ended September 30, 2021, compared to a net loss of $29.7 million for the nine months ended September 30, 2020. Third quarter results include one-time pre-tax expenses of $19.6 million related to a withdrawal from the Company's pension of $9.2 million, a contribution to the newly formed Blue Foundry Charitable Foundation, Inc. of $9.0 million, and the prepayment of Federal Home Loan Bank of New York borrowings of $1.4 million. Adjusted pre-provision net revenue for the three months ended September 30, 2021 was a loss of $647 thousand compared to a loss of $1.9 million for the three months ended September 30, 2020, and a loss of $4.7 million for the nine months ended September 30, 2021, compared to a net loss of $4.4 million for the nine months ended September 30, 2020. Total assets increased $81.8 million, or 4.2%, to $2.02 billion at September 30, 2021 from $1.94 billion at December 31, 2020. On July 15, 2021, the Company became the holding company for the Bank when Blue Foundry, MHC completed its conversion into the stock holding company form of organization. In connection with the conversion, the Company sold 27,772,500 shares of common stock at a price of $10 per share, for gross proceeds of $277.7 million. The Company also contributed 750,000 shares of common stock and $1.5 million in cash to Blue Foundry Charitable Foundation, Inc. Shares of the Company's common stock began trading on July 16, 2021 on the Nasdaq Global Select Market under the trading symbol "BLFY." James Nesci, President and Chief Executive Officer, commented: "During our first quarter as a public entity, Blue Foundry has executed initiatives to ensure the long term stability and eventual profitability of the Company. We are excited for our future as a public company and will continue to leverage our capital to grow our core businesses, invest in our infrastructure, and differentiate our brand." Balance Sheet Summary: Cash and cash equivalents. Cash and cash equivalents increased $7.9 million to $324.3 million at September 30, 2021 from $316.4 million at December 31, 2020. Gross Loans. Gross loans held for investment decreased $29.2 million, or 2.28%, to $1.25 billion at September 30, 2021 from $1.28 billion at December 31, 2020. The most significant drivers were net increases in Multifamily loans exceeded by net payoffs and amortization in Residential One-to-Four Family and construction loans as well as the ongoing forgiveness programs within the Commercial & Industrial portfolio attributable to loans made pursuant to the Paycheck Protection Program. For the nine months ended September 30, 2021, there were $161.5 million in originations of Multifamily loans partially offset by $77.5 million of payoffs and amortization, and $43.9 million of originations in Commercial & Industrial (PPP loans) more than offset by $53.7 million in payoffs/forgiveness and amortization. The decrease in One-to-Four Family loans was primarily driven by $139.0 million in payoffs and amortization, partially offset by $49.6 million of production, including $28.7 million in whole loan purchases. Summary of loans receivable, net at September 30, 2021 and December 31, 2020, is as follows:   September 30, 2021   December 31, 2020   (Dollars in thousands) Residential one-to-four family $ 522,213     $ 611,603   Multifamily 511,408     427,436   Non-residential 130,823     128,141   Construction and land 21,337     33,691   Junior liens 19,540     23,814   Commercial and Industrial (PPP) 44,262     54,053   Consumer and other 80     99   Total loans 1,249,663     1,278,837           Deferred fees, costs and discounts, net 4,560     5,236   Allowance for loan losses (15,248 )   (16,959 )   (10,688 )   (11,723 ) Loans receivable, net $ 1,238,975     $ 1,267,114   Securities Available-For-Sale. Securities available-for-sale increased $69.6 million, or 28.4%, to $314.1 million at September 30, 2021 from $244.6 million at December 31, 2020. During the nine months ended September 30, 2021, purchases of residential mortgage-backed securities, agency bonds, and corporate bonds were executed as interest rates rose. No securities were sold or liquidated during the nine months ended September 30, 2021. Total Deposits. Total deposits totaled $1.27 billion at September 30, 2021. Deposits decreased $90.6 million, or 7% from December 31, 2020. Checking and savings accounts increased $105.4 million, or 16%, to $744.1 million at September 30, 2021 from $638.8 million at December 31, 2020. This was offset by time deposit decreases of $195.9 million, or 27.3%, to $521.5 million at September 30, 2021 from $717.4 million at December 31, 2020. These changes resulted in the ratio of time deposits to total deposits decreasing from 52.9% at December 31, 2020 to 41.2% at September 30, 2021, and a decline in the blended deposit cost of funds to 0.46% at September 30, 2021 from 0.92% at December 31, 2020. Borrowings. The Company had $247.6 million of borrowings at September 30, 2021, compared to $329.4 million of borrowings at December 31, 2020. The Bank extinguished $49.3 million in borrowings from the Federal Home Loan Bank of New York, incurring a prepayment penalty of $1.4 million. These borrowings had a weighted average rate of 2.55% and a weighted average remaining life of 1.15 years. Additionally $32.5 million of borrowings matured during the nine months ended September 30, 2021. Total Equity. Shareholders' total equity increased by $242.6 million to $448.2 million at September 30, 2021 compared to $205.6 million at December 31, 2020 primarily due to the conversion to a fully stock company as of July 15, 2021. The Bank's capital ratios remain above the FDIC's "well capitalized" standards. Results of Operations: Net Interest Income and Margin. For the three months ended September 30, 2021 net interest income was $11.1 million, an increase of $1.5 million from the same period in 2020. For the nine months ended September 30, 2021 net interest income was $30.6 million, an increase of $0.9 million compared to $29.7 million for same period in 2020. Interest income declined $1.1 million and $5.6 million for the three and nine months ended September 30, 2021, respectively, driven by lower loan volume and to a lesser extent, the lower interest rate environment. This decline was offset by an improvement in interest expense of $2.5 million and $6.5 million for the three and nine months ended September 30, 2021, respectively, driven by the maturity of higher cost time deposits and the lower cost of funds on remaining deposits. Our net interest margin increased by 16 basis points to 2.15% for the quarter ended September 30, 2021, from 1.99% for the trailing quarter. The yield on interest earning assets and net interest margin benefited from the utilization of the Bank's cash position. The weighted average yield on interest-earning assets decreased 5 basis points to 2.73% for the quarter ended September 30, 2021, from 2.78% for the quarter ended June 30, 2021, while the weighted average cost of interest-bearing deposits decreased 19 basis points to 0.52% for the quarter ended September 30, 2021, compared to 0.71% for the trailing quarter. Our cost of total average deposits was 0.46% for the quarter ended September 30, 2021 as compared to 0.63% for the trailing quarter. Net interest margin for the three months ended September 30, 2021 increased by 9 basis points to 2.15%, from 2.06% for the three months ended September 30, 2020. The yield on average interest earning assets decreased by 51 basis points from the three months ended September 30, 2020 mostly due to higher cash balances with minimal yield. The overall cost of average interest bearing liabilities decreased 58 basis points to 0.77% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due to repricing of higher cost time deposits, a lower cost of funds on non-maturity deposits, as well as the prepayment and maturities of FHLB borrowings. Net interest margin for the nine months ended September 30, 2021 decreased by 7 basis points to 2.07% from 2.14% for the nine months ended September 30, 2020. The yield on average interest earning assets decreased by 58 basis points mostly due to higher cash balances with minimal yield. The yield on average loans decreased by 10 basis points and the overall cost of average interest bearing liabilities decreased 53 basis points. Non-interest Income. Non-interest income of $0.5 million for the three months ended September 30, 2021 decreased $0.1 million from $0.6 million for the three months ended September 30, 2020. Non-interest income of $1.8 million for the nine months ended September 30, 2021 increased $1.2 million from a non-interest loss of $0.5 million for the nine months ended September 30, 2020. Non-interest Expense. Non-interest expense increased $20.1 million to $33.1 million for the three months ended September 30, 2021 from $13.0 million for the three months ended September 30, 2020, and decreased $6.5 million to $57.3 million for the nine months ended September 30, 2021 from $63.8 million for the nine months ended September 30, 2020. During the three months ended September 30, 2021 the Company incurred a $9.0 million expense related to the establishment of the Blue Foundry Charitable Foundation, Inc., a $9.2 million expense related to the withdrawal from the defined benefit pension plan, and a $1.4 million expense related to the prepayment of Federal Home Loan Bank of New York borrowings. We expect the exit from the pension plan to occur prior to year end. The Company continues to focus on efficiency initiatives related to implementing scalable technology which will be accretive in future quarters. Asset Quality. The allowance for loan losses and letters of credit and commitments was $17.1 million at September 30, 2021 compared to $17.3 million at September 30, 2020, of which $1.85 million and $0, respectively, were related to the allowance for letters of credit and commitments. The allowance for loan losses to total loans was 1.22% at September 30, 2021 compared to 1.28% at September 30, 2020, while the allowance for loan losses to non-performing loans was 122% at September 30, 2021 compared to 166% at September 30, 2020. The Company recorded a recovery of provision for loan losses of $0.3 million and $1.7 million for the three and nine months ended September 30, 2021, respectively, compared with provisions of $1 thousand and $2.8 million for the three and nine months ended September 30, 2020, respectively. Non-performing loans totaled $12.5 million at September 30, 2021 compared to $12.9 million at December 31, 2020 and $10.4 million at September 30, 2020. Income Tax Expense. The Company recognized an income tax benefit of $6.2 million for the three months ended September 30, 2021 compared to an income tax benefit of $1.1 million for the three months ended September 30, 2020, and an income tax benefit of $6.5 million for the nine months ended September 30, 2021 compared to an income tax benefit of $6.5 million for the nine months ended September 30, 2020. About Blue Foundry Blue Foundry Bancorp is the holding company for Blue Foundry Bank, a place where things are made, purpose is formed, and ideas are crafted. Dedicated to individual support, Blue Foundry Bank offers a comprehensive line of products and services including personal and business banking and lending, to support clients' financial goals and investment for growth. With its Universal Bankers acting more as partners, the process will be less about banking and more about living. To learn more about Blue Foundry, go to www.bluefoundrybank.com or call our Customer Service Center at 1-888-931-BLUE. Forward Looking Statements Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: conditions related to the recent global coronavirus outbreak that has and will continue to pose risks and could harm our business and results of operations; general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums; changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; a failure or breach of our operational or security systems or infrastructure, including cyber-attacks; the inability of third party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related there to; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; the ability of the U.S. Government to manage federal debt limits; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events. BLUE FOUNDRY BANCORP AND SUBSIDIARYConsolidated Statements of Financial ConditionSeptember 30, 2021 (Unaudited) and December 31, 2020(Dollars in thousands)   September 30, 2021   December 31, 2020   (In thousands) ASSETS       Cash and cash equivalents $ 324,291     $ 316,445   Securities available for sale, at fair value 314,146     244,587   Assets held for sale 6,117     5,295   Securities held to maturity (fair value of $23,147 at September 30, 2021 and $6,979 at December 31, 2020) 23,325     7,005   Restricted stock, at cost 12,976     16,860   Loans receivable, net of allowance of $15,248 at September 30, 2021 and $16,959 at December 31, 2020 1,238,975     1,267,114   Real estate owned, net 624     624   Interest and dividends receivable 5,706     5,749   Premises and equipment, net 26,648     19,569   Right-of-use assets 26,101     24,878   Bank owned life insurance 21,547     21,186   Other assets 23,877     13,234   Total assets $ 2,024,333     $ 1,942,546           LIABILITIES AND SHAREHOLDERS' EQUITY       Liabilities       Deposits $ 1,265,617     $ 1,356,184   Advances from the Federal Home Loan Bank 247,600     329,400   Advances by borrowers for taxes and insurance 10,165     10,841   Lease liabilities 27,293     25,535   Other liabilities 25,423     14,986   Total liabilities 1,576,098     1,736,946           Shareholders' equity       Common stock $0.01 par value; 28,522,500 shares authorized; 28,522,500 shares issued and outstanding 285     10   Additional paid-in capital 281,786     822   Retained earnings 189,081     205,799   Unallocated common shares held by ESOP (22,405 )   —   Accumulated other comprehensive income (loss) (512 )   (1,031 ) Total shareholders' equity 448,235     205,600   Total liabilities and shareholders' equity $ 2,024,333     $ 1,942,546   BLUE FOUNDRY BANCORP AND SUBSIDIARYConsolidated Statements of Operations(Dollars in Thousands) (Unaudited)   Three Months Ended September 30,   Nine Months Ended September 30,   2021   2020   2021   2020   (In thousands) Interest income:               Loans $ 12,044     $ 13,412     $ 36,362     $ 41,577   Taxable investment income 1,901     1,578     5,064     5,385   Non-taxable investment income 128     147     392     487   Total interest income 14,073     15,137     41,818     47,449   Interest expense:              .....»»

Third Quarter Highlights Net income for the quarter was $5.1 million, compared to $4.3 million for Q2'21 Diluted earnings per share of $0.89, compared to $0.75 for Q2'21 Net interest margin of 4.39%, compared to 4.03% for Q2'21 Cost of funding sources was 0.22%, compared to 0.46% for Q2'21 Gross loans increased $43.3 million during the quarter, up 3.7%; excluding PPP loans, gross loans increased $79.8 million, up 7.4% Non-interest bearing demand deposits grew $42.3 million to $646.2 million, representing 49.2% of total deposits Proactively decreased corporate real estate footprint resulting in a pre-tax impairment charge of $670 thousand, which will result in future cost savings Tangible book value per share of $21.27, up $0.94 per share or 4.6% from Q2'21 Well capitalized Tier 1 risk-based capital ratio of 10.64% (preliminary) LA JOLLA, Calif., Oct. 22, 2021 (GLOBE NEWSWIRE) -- Private Bancorp of America, Inc. (OTCQX:PBAM), ("Company") and CalPrivate Bank ("Bank") announced unaudited financial results for the third quarter ending September 30, 2021. The Company reported net income of $5.1 million, or $0.89 per diluted share, for the third quarter of 2021 compared to $4.3 million, or $0.75 per diluted share for the second quarter of 2021. Net income for the nine months ending September 30, 2021, was $13.9 million, or $2.45 per diluted share, compared to $6.5 million or $1.16 per diluted share for the same period in 2020. Rick Sowers, President and CEO of the Company and the Bank stated, "Despite the global pandemic that continues to weigh on our Clients and the economy, our third quarter results demonstrate the progress we have made executing on our core business plan while continuing to provide Distinctly Different superior levels of service to our Clients. Our Team, including new hires, continues to focus on financial performance and the continued growth of the CalPrivate franchise in our core markets. The third quarter reflected strong organic loan production and continued gain on sale of SBA loans. We are pleased with the financial results and have tremendous confidence in our Team and their ability to execute on behalf of our Clients and Stakeholders." Sowers continued, "We continue to make progress in improving our operating leverage while strategically adding resources and technology to scale and grow our market share. We are excited about the implementation of new technologies including the nCino Bank Operating System that we expect will drive efficiencies. We are also funding fintech companies focusing on services and solutions for community banks through our investment in JAM FINTOP Banktech, LP." "PBAM's third quarter of 2021 demonstrated the resilience of our franchise, the continued dedication of our employees, and the tremendous success we have been able to achieve for our Clients and Stakeholders," said Selwyn Isakow, Chairman of the Board of the Company and the Bank. Isakow added, "These financial results attest to CalPrivate's ability to uniquely differentiate itself in the competitive Southern California landscape. The Bank continues to add tangible book value and is well-positioned for sustainable future growth." STATEMENT OF INCOME Net Interest Income Net interest income for the third quarter totaled $15.7 million, representing an increase of $2.1 million or 15.6% compared to the second quarter of 2021. The increase in net interest income for the quarter is due to a $1.4 million increase in interest income and a $688 thousand decrease in funding costs. The increase in interest income is due primarily to higher non-PPP loan balances as well as to a $509 thousand increase in PPP fees received compared to the second quarter. The third quarter decrease in funding costs is due to cost savings related to the second quarter prepayment of high cost FHLB borrowings which included a prepayment penalty of $535 thousand. Net interest income for the year-to-date period totaled $42.1 million representing an increase of $6.5 million, or 18.1% compared to the same period in 2020. The increase is due to increased average loan balances, increased SBA PPP loan income and lower cost of funds, partially offset by year-to-date prepayment penalties in 2021 totaling $1.2 million as a result of prepaying higher priced FHLB term advances. Net Interest Margin The net interest margin for the third quarter of 2021 was 4.39% (4.27% excluding PPP loans) compared to 4.03% (4.14% excluding PPP loans) for the second quarter and 3.94% (3.88% excluding PPP loans) for the same period in 2020. The 36bps increase in the net interest margin for the quarter was due to increased core loan yields and lower funding costs for the quarter. Average portfolio loan yields were 5.38%, compared to 5.21% for Q2'21. The yield on earning assets for the third quarter was 4.60% compared with 4.46% and 4.37% for the same period in 2020. The yield on loans for the quarter increased to 5.38% (5.32% excluding PPP loans) compared to 5.21% (5.50% excluding PPP loans) in the second quarter and 5.21% (5.27% excluding PPP loans) in the third quarter of 2020. The cost of total funding sources was 0.22% for the quarter compared with 0.46% in the second quarter and 0.47% for the same period in 2020. The net interest margin for the nine months ending September 30, 2021 was 4.10% (4.05% excluding PPP) compared with 4.01% (4.13% excluding PPP) for the same period in 2020. The increase in the net interest margin is due to lower yields on loans, federal funds and increased borrowing costs partially offset by lower deposits costs. In the first nine months of the year, the Company prepaid FHLB term advances and recorded $1.2 million in prepayment fees resulting in a negative 13 bp impact on the net interest margin. Provision for Loan Losses The provision for loan losses for the third quarter of 2021 was $433 thousand, a decrease of $713 thousand compared to $1.1 million for the second quarter of 2021. The driver for the third quarter provision was organic growth in the loan portfolio. While the economy continued to recover in the third quarter, the COVID-19 Delta variant continues to create uncertainty, and this is reflected in our total loan loss provision to total loans of 1.31% or 1.40% excluding PPP loans. Non-Interest Income Non-interest income was $2.4 million for the third quarter of 2021, representing a $416 thousand or a 14.8% decrease compared to the second quarter of 2021. The decrease in non-interest income for the quarter was primarily due to a similar size decrease in SBA loans sales during the quarter. SBA loan sales for the third quarter were $15.6 million with a 14.5% trade premium compared with $19.4 million with a 15.2% trade premium in the second quarter of 2021. Due to a change in our SBA loan servicing provider, sales of loans originated slowed during the quarter, resulting in $35.4 million of loans held for sale at September 30, 2021, up from $19.6 million at June 30, 2021. Non-Interest Expense Non-interest expense was $10.5 million for the third quarter of 2021 representing a $1.3 million or 14.3% increase compared to the second quarter of 2021. As a result of CalPrivate's decision to empower its employees by giving them the choice to work remotely, the Bank was able consolidate one of its administrative locations. The increase in occupancy expenses for the quarter was due in part to this decision to vacate, which resulted in an impairment charge of $662 thousand to the right-of-use asset along with a $8 thousand fixed asset write off. As a result of the impairment charges and expected cost savings, occupancy expenses for this location are expected to be reduced by approximately $67 thousand pre-tax per quarter through the second quarter of 2024. Additionally, salaries and benefits increased $629 thousand in the third quarter due to strategic additions to staff and prior period accrual adjustments. Professional services and other expenses continue to remain at elevated levels given on-going legal and related expenses associated with the ANI Development, LLC and Gina Champion-Cain fraud recovery cases. STATEMENT OF FINANCIAL CONDITION Balance Sheet At September 30, 2021, the Company reported total assets of $1.5 billion representing an increase of $91.9 million or 6.6% compared to the second quarter of 2021. The increase in assets for the quarter was due to increases in loans and customer deposits. Net loans held for investment increased $43.3 million or 3.7% in the quarter due to a $79.8 million increase in non-SBA PPP loans offset by a $36.5 million decrease in SBA-PPP loans. Total deposits were $1.3 billion representing an increase of $108 million, or 8.9%, compared to the second quarter of 2021 and an increase of $284.5 million, or 27.7%, compared to September 30, 2020. Total non-interest-bearing deposits represented 49.2% of total deposits at September 30, 2021. During the quarter, total FHLB advances decreased $20.0 million due to contractual maturities. Asset Quality and Loan Deferrals The Allowance for Loan Losses increased $433 thousand to $16.1 million in the quarter with a resulting coverage ratio of 1.31% of total loans outstanding, including PPP loans, compared to $15.7 million or 1.33% at the second quarter of 2021. The increase in the Allowance for Loan Losses was primarily due to non-PPP organic loan growth and qualitative factors related to the general economic outlook in the markets we serve. The coverage ratio at September 30, 2021, excluding the impact of PPP loans, decreased to 1.40% from 1.46% in the prior quarter. As of September 30, 2021, two PPP loans totaling $200 thousand were past due (30-89 days) with no potential loss exposure. Additionally, there were no doubtful credits or charge offs and Classified assets totaled $10.3 million. Ten classified assets include one 57% LTV real estate loan totaling $1.5 million that is on non-accrual and the remaining $8.8 million consisted of nine loans with six of those loans impacted by COVID-19. Five of the ten classified assets are secured by real estate at a favorable leverage position. At September 30, 2021, no new deferrals related to COVID-19 were granted during the quarter. The loans that were previously granted payment deferrals have resumed their contractual payments. Capital Ratios At September 30, 2021, the Company's capital ratios were in excess of the levels established for well capitalized institutions and are as follows:   September 30, 2021 (1) June 30, 2021 September 30, 2020 Tier I leverage ratio 8.19% 8.36% 7.92% Tier I risk-based capital ratio 10.64% 10.74% 11.35% Total risk-based capital ratio 13.48% 13.68% 14.63% (1)   Preliminary ratios for September 30, 2021 Stock Repurchase Program Since announcing the stock repurchase program in July 2021, the Company has not repurchased any shares of its common stock. The remaining number of shares authorized to be repurchased under this program at September 30, 2021, was 75,000 shares. About Private Bancorp of America, Inc. Private Bancorp of America, Inc. (OTCQX:PBAM), is the holding company for CalPrivate Bank. CalPrivate Bank provides a Distinctly Different banking experience through unparalleled service and creative funding solutions to high-net-worth individuals, professionals, locally owned businesses, and real estate entrepreneurs. Customers are serviced through offices in Coronado, San Diego, La Jolla, Newport Beach, El Segundo and Beverly Hills as well as efficient electronic banking offerings. The Bank also offers various portfolio and government guaranteed lending programs, including SBA and cross-border Export-Import Bank programs. CalPrivate Bank is an SBA Preferred Lender and a Bauer Financial 5-star rated bank. Investor Relations Contacts Rick SowersPresident and Chief Executive OfficerPrivate Bancorp of America, Inc., and CalPrivate Bank(424) 303-4894 Mag WangsuwanaExecutive Vice President and Chief Financial OfficerPrivate Bancorp of America, Inc., and CalPrivate Bank(424) 348-2145 Safe Harbor Paragraph This press release includes forward-looking statements that involve inherent risks and uncertainties. Private Bancorp of America, Inc. cautions readers that a number of important factors could cause actual results to differ materially from those in the forward‐looking statements. These factors include the effects of the COVID-19 pandemic and related government actions on the Bank and its customers, loan losses, economic conditions and competition in the geographic and business areas in which Private Bancorp of America, Inc. operates, our ability to successfully integrate and develop business through the addition of new personnel and facilities and merged banks, whether our efforts to expand loan, product and service offerings will prove profitable, the effects of the bank mergers and acquisitions in our markets, system failures and internet security, inflation, fluctuations in interest rates, legislation and governmental regulation. You should not place undue reliance on forward‐looking statements, and we undertake no obligation to update those statements whether as a result of changes in underlying factors, new information, future events or otherwise.   PRIVATE BANCORP OF AMERICA, INC. CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands)                       September 30,2021   June 30,2021   Dollar change Percentage change   September 30,2020   Dollar change Percentage change Assets                       Cash and due from banks $ 12,570     $ 12,783     $ (213 ) 1.7 %   $ 10,985     $ 1,585   14.4 % Interest-bearing deposits in other financial institutions   2,736       13,969       (11,233 ) -80.4 %     930       1,806   194.2 % Interest-bearing deposits at Federal Reserve Bank   123,247       65,356       57,891   88.6 %     143,431       (20,184 ) -14.1 % Total cash and due from banks   138,553       92,108       46,445   50.4 %     155,346       (16,793 ) -10.8 % Interest-bearing time deposits with other institutions   5,760       5,760       -   0.0 %     5,760       -   0.0 % Investment securities available for sale   93,099       88,755       4,344   4.9 %     26,525       66,574   251.0 % Loan held for sale   35,448       19,625       15,823   80.6 %     8,402       27,046   321.9 % Loans, net of deferred fees and costs   1,192,135       1,164,611       27,524   2.4 %     1,034,384       157,751   15.3 % Allowance for loan losses   (16,141 )     (15,708 )     (433 ) 2.8 %     (12,682 )     (3,459 ) 27.3 % Net loans   1,175,994       1,148,903       27,091   2.4 %     1,021,702       154,292   15.1 % Federal Home Loan Bank stock, at cost   4,909       4,909       -   0.0 %     4,602       307   6.7 % Right of use asset   4,115       5,185       (1,070 ) -20.6 %     5,186       (1,071 ) -20.7 % Premises and equipment, net   2,459       2,578       (119 ) -4.6 %     2,859       (400 ) -14.0 % Other intangible assets   2,374       2,123       251   11.8 %     1,364       1,010   74.0 % Deferred tax asset   6,256       7,012       (756 ) -10.8 %     4,141       2,115   51.1 % Accrued interest receivable   3,404       3,501       (97 ) -2.8 %     3,883       (479 ) -12.3 % Other assets   2,311       2,311       -   0.0 %     4,424       (2,113 ) -47.8 % Total assets $ 1,474,682     $ 1,382,770     $ 91,912   6.6 %   $ 1,244,194     $ 230,488   18.5 %                         Liabilities and Shareholders' Equity                                               Liabilities                       Noninterest bearing $ 646,233     $ 603,914     $ 42,319   7.0 %   $ 471,324     $ 174,909   37.1 % Interest Bearing   667,012       601,530       65,482   10.9 %     557,455       109,557   19.7 % Total deposits   1,313,245       1,205,444       107,801   8.9 %     1,028,779       284,466   27.7 % FHLB borrowings   10,000       30,000       (20,000 ) -66.7 %     80,000       (70,000 ) -87.5 % Other borrowings   17,945       17,943       2   0.0 %     17,938       7   0.0 % Accrued interest payable and other liabilities   11,613       13,059       (1,446 ) -11.1 %     14,227       (2,614 ) -18.4 % Total liabilities   1,352,803       1,266,446       86,357   6.8 %     1,140,944       211,859   18.6 %                         Shareholders' equity                       Common stock   70,470       70,405       65   0.1 %     69,540       930   1.3 % Additional paid-in capital   3,465       3,179       286   9.0 %     3,230       235   7.3 % Retained earnings   47,845       42,810       5,035   11.8 %     29,521       18,324   62.1 % Accumulated other comprehensive (loss) income   99       (70 )     169   -241.4 %     959       (860 ) -89.7 % Total stockholders' equity   121,879       116,324       5,555   4.8 %     103,250       18,629   18.0 %                         Total liabilities and stockholders' equity $ 1,474,682     $ 1,382,770     $ 91,912   6.6 %   $ 1,244,194     $ 230,488   18.5 %                         PRIVATE BANCORP OF AMERICA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts)                           For the three months ended     September 30,2021   June 30,2021   Dollar change Percentage change   September 30,2020   Dollar change Percentage change Interest Income                         Loans   $ 16,068   $ 14,637   $ 1,431   9.8 %   $ 13,578   $ 2,490   18.3 % Investment securities     330     351     (21 ) -6.0 %     231     99   42.9 % Deposits in other financial institutions     60     40     20   50.0 %     51     9   17.6 % Total interest income     16,458     15,028     1,430   9.5 %     13,860     2,598   18.7 %                           Interest Expense                         Deposits     409     409     -   0.0 %     707     (298 ) -42.1 % Borrowings     332     1,020     (688 ) -67.5 %     656     (324 ) -49.4 % Total interest expense     741     1,429     (688 ) -48.1 %     1,363     (622 ) -45.6 %                           Net interest income     15,717     13,599     2,118   15.6 %     12,497     3,220   25.8 % Provision for loan losses     433     1,146     (713 ) -62.2 %     1,582     (1,149 ) -72.6 % Net interest income after provision for loan losses     15,284     12,453     2,831   22.7 %     10,915     4,369   40.0 %                           Noninterest income:                         Service charges on deposit accounts     236     231     5   2.2 %     141     95   67.4 % Net gain on sale of loans     1,837     2,326     (489 ) -21.0 %     554     1,283   231.6 % Gain on sale of investment securities     -     -     -   NM     -     -   NM Other noninterest income     316     248     68   27.4 %     241     75   31.1 % Total noninterest income     2,389     2,805     (416 ) -14.8 %     1,871     518   27.7 %                           Noninterest expense:                         Salary and employee benefits     6,595     5,966     629   10.5 %     5,365     1,230   22.9 % Occupancy and equipment     1,484     820     664   81.0 %     864     620   71.8 % Data processing     799     690     109   15.8 %     643     156   24.3 % Professional services     552     791     (239 ) -30.2 %     514     38   7.4 % Other expenses     1,034     891     143   16.0 %     846     188   22.2 % Total noninterest expense     10,464     9,158     1,306   14.3 %     8,232     2,232   27.1 %                           Income before provision for income taxes     7,209     6,100     1,109   18.2 %     3,619     3,590   99.2 % Provision for income taxes    .....»»