Money Management – Investing News Wire http://investingnewswire.club/ Tue, 25 May 2021 12:27:50 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://investingnewswire.club/wp-content/uploads/2021/05/default1.png Money Management – Investing News Wire http://investingnewswire.club/ 32 32 Reggae’s reckoning: how 1970s stars were deprived of their fair share https://investingnewswire.club/reggaes-reckoning-how-1970s-stars-were-deprived-of-their-fair-share/ https://investingnewswire.club/reggaes-reckoning-how-1970s-stars-were-deprived-of-their-fair-share/#respond Wed, 12 May 2021 14:20:44 +0000 https://investingnewswire.club/?p=603 Sitting on a park bench in Dollis Hill, northwest London, Dave Barker watches his younger self on the screen of my smartphone. The Jamaican singer, 73, is viewing a clip of his appearance on BBC television chart show Top of the Pops in 1971. “I am the magnificent,” the figure on the screen cries in a […]]]>

Sitting on a park bench in Dollis Hill, northwest London, Dave Barker watches his younger self on the screen of my smartphone. The Jamaican singer, 73, is viewing a clip of his appearance on BBC television chart show Top of the Pops in 1971. “I am the magnificent,” the figure on the screen cries in a supple tenor, outfitted in a splendid purple suit and spotted scarf. The gleefully boastful vocal is the intro to Dave & Ansell Collins’s “Double Barrel”, one of the earliest reggae songs to reach number one in the UK.

A hit throughout Europe and the US, “Double Barrel” was a major step in Jamaica’s David-and-Goliath emergence as a global musical force. It capped the arrival of reggae as a mainstream genre in the UK, a sign of the nation’s changing identity and the powerful influence of Caribbean, Asian and African postwar immigrants. Five decades later, the song still sounds flush with optimism. A bass line lightly jaunts up and down the scale amid an offbeat, accented rhythm. A keyboard melody rings out, its emphatic punctuation matched by Barker’s proud exclamations.

Barker — the “Dave” in Dave & Ansell Collins — had flown from Jamaica to do Top of the Pops with keyboardist Collins and their backing band. “When we reached the BBC and we were shown our dressing room, which was a big, lovely room, I had to pinch myself,” he remembers. “‘Is this real?’ I said to myself. ‘Am I dreaming?’ One minute I am back home and the next I am here, appearing on the BBC.”

“Double Barrel” was followed by a Dave & Ansell Collins album and another hit, “Monkey Spanner”. The duo were the UK’s sixth best-selling singles act in 1971. While Collins returned to Jamaica after touring the UK, Barker remained. “Double Barrel” was his ticket to a new life in London. But the singer — today dressed sombrely, in contrast to the imperial finery of his Top of the Pops garb — is unable to discuss the song’s 50th anniversary without a rising tone of anger.

Barker with keyboardist Ansell Collins, c1970 © Michael Ochs Archives via Getty Images

“What is owed to me, what I should have gotten, has been taken away from me,” he says. “Which has caused a lot of hardship and suffering. Both me and my family, we have suffered. We have been through some rough times. And not only me. Right now, you have artists in Jamaica who have made wonderful music, which has been sold all over the globe, and they’re suffering.”

For its singer and co-author, “Double Barrel” has come to assume a bitter significance — a triumph whose rewards were snatched away from him in a song rights and royalties controversy that dogged reggae’s rise to international prominence and which is still being felt today.

“I cannot celebrate this 50th anniversary because I’m not pleased,” he says. “I am very unhappy. We have been treated very badly.”


Like Cuba, its larger neighbour to the north, Jamaica has had a cultural impact far out of proportion to its size. When Barker recorded his vocals for “Double Barrel” in the Jamaican capital Kingston in 1970, the island had a population of fewer than two million. Reggae took form in the late 1960s, emerging from a musical culture based around competing sound systems in which rival teams of DJs and engineers played records over sound rigs in dance halls and open-air venues. Deeply rooted in Jamaican life, this new style of music unexpectedly struck a chord overseas. It found a particularly welcoming home in the UK, Jamaica’s former colonial ruler.

Reggae’s radical effect on the course of British popular music rivals that of punk. Its singular syncopation and prominent bass can be heard in later genres such as grime and drum-and-bass. Indeed, the extent of its penetration into the textures of British life was clear early on. In 1970, Chelsea football club began using Harry J Allstars’ reggae instrumental “Liquidator” as an official club song. In 1969, Desmond Dekker & The Aces’ “Israelites” reached number one in the charts. “Double Barrel” was the next reggae hit to do so two years later. The music’s popularity was aided by rock’s increasing self-seriousness. In its early years, before socially conscious roots‑reggae emerged, reggae was music to dance to — an act of escapism. 

Barker was 22 when he recorded “Double Barrel”. An established singer who had worked with leading figures in Kingston’s music scene, including Coxsone Dodd and Lee “Scratch” Perry, he was recruited by the song’s producer, Winston Riley. The music had already been recorded, arranged by Ansell Collins and featuring a teenage drummer called Sly Dunbar, soon to become one of reggae’s most celebrated musicians. What it needed was vocals.

Struggling at first to get a feel for the song, Barker extemporised the opening line, and then the rest of the lyrics, which consist of James Brown-style barked utterances (“Work it on, baby”) and references to James Bond’s 007 code number — a surrealist collage of phrases. As we sit together, he sings some of it to me in a still-vibrant voice. “It wasn’t something I had to write down on a piece of paper. It just came to me spontaneously,” he explains.

‘Double Barrel’ vinyl record
Original ‘Double Barrel’ vinyl © BMG

‘Double Barrel’ record sleeve
‘Double Barrel’ record sleeve © BMG

As creator of the song’s vocal melody and lyrics, Barker should have received a co-songwriting credit. But standard practice in the Jamaican music industry at that point was for producers to hire singers and musicians, and keep the song rights for themselves. Barker says that he received about “30 to 40 Jamaican dollars” for “Double Barrel” — a standard rate at the time, equivalent to £15 to £20 in 1970 (perhaps £250 today). He received a similar amount for “Monkey Spanner”.

A hit in Jamaica, “Double Barrel” was licensed for distribution in the UK to the London-based label Trojan Records. Set up a few years earlier to cater for Caribbean people who had settled in the UK in the 1950s and 1960s, the label also promoted reggae to the type of mainstream audience that tuned into Top of the Pops. Without Trojan, the music may never have left Jamaica’s shores; its catalogue of up to 20,000 songs is celebrated as one of reggae’s finest troves of recordings. But the label’s habit of signing contracts with producers rather than artists replicated unfair practices that had been established in Jamaica. It was left up to the producers to decide whether to distribute royalties to singers and musicians.

Barker’s dealings with Trojan were likewise informal; he was not offered a contract when the song was released in the UK in 1971. While he was in the UK touring “Double Barrel” and “Monkey Spanner”, he remembers being called with Collins into Trojan’s office by the label’s founder, Lee Gopthal, who advised them to get a lawyer. “He also turned and said: ‘You guys never heard this from me. I’m just advising you to go and sort things out before it gets too late.’”

Good advice — but impractical. Barker was a young Jamaican musician newly arrived in a foreign country, whose legal system, moreover, was hardly known for its impartial attitude to people of colour. “We didn’t have a clue,” he says now. Trojan did give Barker more money, a cheque for £1,000 — intended to offset his touring costs after he complained about only having one stage outfit. Given that “Double Barrel” charted across Europe and reached number 22 in the US, likely selling well over a million copies, it is a fraction of what Barker believes he was owed.

He should have received a specified royalty rate from sales of the recording and publishing royalties as the song’s co-author. But for most of the song’s lifetime he has received neither. In the 1990s, when he came to realise the scale of his loss, he went to a lawyer. “Look,” he was told, “you have let this thing ride for quite a long while. I can’t help you because you don’t have the money to pay me.”


In 1975, Trojan Records went into liquidation, leaving royalties and debts unpaid. Its huge song catalogue was transferred to a complex sequence of incorporations. Later that year, it re-emerged through Trojan Recordings, which was purchased 10 years later by a company run by accountant and businessman Colin Newman. In 2001, Newman sold the Trojan catalogue to the London label Sanctuary Records for £10.25m; six years later, Sanctuary itself was purchased by Universal Music Group, which in turn sold Sanctuary’s catalogue, including Trojan’s songs, to the Berlin-based record label BMG in 2013.

Barker signed a recording contract with Trojan Recordings in 1988, prior to its sale to Sanctuary. He finally obtained his writer’s credit in 2003 when Riley made an agreement to recognise him and Collins as co-writers of “Double Barrel” and “Monkey Spanner”. A BMG spokesman says the label — which deals with Barker’s recording royalties not his publishing royalties as co-writer — is “pleased to have a good working relationship with Dave Barker and Ansell Collins”. But Barker is aggrieved at losing his stake in the song during its most valuable years, when it was a huge hit. He has also missed out on licensing revenue, he adds: “Double Barrel” has been sampled more than 100 times, including by Prince and Kanye West.

Notting Hill Carnival in the 1970s, where some of the UK’s most respected sound systems have played
Notting Hill Carnival in the 1970s, where some of the UK’s most respected sound systems have played © Universal Images Group via Getty

Complaints from musicians about getting ripped off have a long and difficult history in pop music. Black musicians have been particularly badly affected. But the situation in reggae has a postcolonial edge. For all that its popularity in the UK in the 1970s was the soundtrack to the country’s consolidation as a multicultural society, the music’s passage from Jamaica served only to magnify the problem of producers claiming sole credit for songs. Upon crossing the Atlantic, it entered a British legal maze.

In 2016, Barker’s revenue from “Double Barrel” was frozen by the royalty collection agency PRS for Music because another music publishing company put forward a claim for a share of the rights. Last December, the dispute was closed and Barker’s revenue was finally restored. PRS for Music will not comment on the matter, but state that it has “a process in place to resolve and identify dispute claims”.

“There is worry and stress, bills upon bills coming in,” Barker says. He and his wife live in Neasden, a northwest London suburb with a drab reputation. People can’t believe that a star of Jamaican reggae has not prospered more, he says. “Dave Barker, from Dave & Ansell Collins, living in Neasden? In just some ordinary lifestyle? Naah.”


Barker’s plight is echoed by another Jamaican singer who moved to London in the 1970s. Dennis Alcapone is a pioneer of the vocal style known as “toasting” — a form of sing-speak developed by sound system DJs as they talked over records in the late 1960s. In Alcapone’s heyday, he was among Jamaica’s leading toasters. “My Voice Is Insured For Half A Million Dollars” is the title of one of the many songs he recorded. (This was braggadocio: his vocal cords were not really insured.)

When we speak, Alcapone (born Dennis Smith) tells a similar story. His songs were mainly distributed in the UK by Trojan Records as well. “It’s been a lot of exploitation that’s been going on over the years,” the 73-year-old says, talking from his east London home. 

Pioneering ‘toaster’ Dennis Alcapone
Pioneering ‘toaster’ Dennis Alcapone © Amber Pinkerton

Contracts in Jamaica were often verbal, he explains. Producers frequently sold their music abroad and did not tell the artists, meaning that they could avoid paying them royalties. “We were just happy to sing because we loved the music so much,” he says. “We never knew we could get a reward from it . . . When I travelled to England I realised that there were a lot of things going on that I did not know.”

When Trojan’s song catalogue was sold in 2001, none of that money was shared among Trojan acts, Alcapone says: “If we hadn’t read in the paper that that company was sold, we wouldn’t know that it had been sold.” The man responsible for the sale, Colin Newman, tells the Financial Times that “the allegations that have been put forward have no merit”.

Alcapone remembers going to a concert once in Reading, where a small boy spotted him driving a Ford Cortina, a popular but prosaic British car in the 1970s. The boy was disbelieving that it could really be Alcapone, the sound system star.

“Because he’d heard my name over the years he thought I’d be driving a Rolls-Royce or a Bentley. He was convinced that I wasn’t Dennis Alcapone,” he laughs ruefully, then grows serious. “Right now, when a bill comes through the door I have to start worrying where I’m going to get the money to pay for it. Meanwhile, other people are living a big life off my work.”

British reggae has suffered similar difficulties. Pablo Gad, 65, is a British-Jamaican roots-reggae singer who released his best-known song “Hard Times” in 1979 on a UK label. It recounted a visit back to Kingston where he was shocked by the poverty he encountered. “Do you really wanna know what ’appen to our silver an’ gold?” he sings — a question that has rebounded on its writer.

The British-Jamaican roots-reggae singer Gad today
The British-Jamaican roots-reggae singer Gad today © Amber Pinkerton

“Hard Times” has been sampled almost 20 times, including by the UK rave act The Prodigy in 1992 for their hit single “Fire”. They were able to do so, entirely legally, without approaching Gad or paying him.

Following the 1981 liquidation of the label that released it, Burning Sounds, the song’s publishing rights were ultimately claimed by yet another company, New Town Sound, owned by Trojan Recordings’ former owner Colin Newman who, again, denies any impropriety.

When I speak to Gad, he is in north London. “I’m nomadic, I don’t live anywhere, I’m here, there and everywhere,” he says. “I didn’t get the money to buy the house.”


One of the people watching Top of the Pops that night in 1971 was Errol Michael Henry. Eight years old at the time and living in south London, he went on to become a music producer and songwriter. After recording a song with Barker in 1988, he learnt about the singer’s difficulties.

Based on his experiences recovering his own song rights from major music companies, Henry now represents Barker in his attempts to recover lost revenues and assets, along with Alcapone and Gad, on a no-win, no-fee basis. Last December, he persuaded PRS for Music to unfreeze the money owed to Barker and close the dispute for the revenues from “Double Barrel”.

The young Alcapone
The young Alcapone © Charlie Gillett Collection via Getty Images

A young Pablo Gad
A young Pablo Gad © @Beezer Photos

Henry doesn’t believe that blame lies with the Jamaican producers: in fact, the issue is with the deals that were done in the UK, he says. “They’re awful. They’re fundamentally unfair. The problem isn’t in Jamaica, the problem is here. There’s a systemic problem with companies not returning rights.”

Last year, in response to the Black Lives Matter movement, BMG, mindful of what it described as “the music industry’s record of shameful treatment of black artists”, pledged to review all historic record contracts. Trojan was not at first included, but the company now says that it will launch a standalone investigation. “If any issues are found, they will of course be addressed,” a BMG spokesperson tells the FT.

The 50th anniversary of “Double Barrel” is a tribute to reggae’s almost unparalleled success, the national music of a small Caribbean island that rose to global prominence. It transformed the sound of British pop, a powerful act of creativity exerted by a former colonial territory over its one-time ruler. But there is a historic injustice at its heart.

“The thing I would love to see happen is for the people who are in the position to make things right to stand up, step forward and do what’s right,” Barker says, in an emphatic voice — not unlike the way he once proclaimed his magnificence to millions of watching British households. “We are the people who created the music, so give us justice.”

Ludovic Hunter-Tilney is the FT’s pop music critic

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FRPH) Announces Results For The https://investingnewswire.club/frph-announces-results-for-the/ https://investingnewswire.club/frph-announces-results-for-the/#respond Wed, 12 May 2021 14:20:16 +0000 https://investingnewswire.club/?p=599 JACKSONVILLE, Fla., May 03, 2021 (GLOBE NEWSWIRE) — FRP Holdings, Inc. (NASDAQ-FRPH) First Quarter Operational Highlights Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C., reached stabilization meaning 90% of the individual apartments had been leased and occupied by third party tenants. The attainment of stabilization resulted in […]]]>

JACKSONVILLE, Fla., May 03, 2021 (GLOBE NEWSWIRE) — FRP Holdings, Inc. (NASDAQ-FRPH)

First Quarter Operational Highlights

  • Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C., reached stabilization meaning 90% of the individual apartments had been leased and occupied by third party tenants. The attainment of stabilization resulted in a change of control for accounting purposes as the veto rights of the minority shareholder lapsed and the Company became the primary beneficiary. As such, beginning March 31, 2021, the Company consolidated the assets (at current fair value), liabilities and operating results of the joint venture.

First Quarter Consolidated Results of Operations

Net income for the first quarter of 2021 was $28,373,000 or $3.03 per share versus $1,618,000 or $.16 per share in the same period last year. The first quarter of 2021 was impacted by the following items:

  • Gain of $51.1 million on the remeasurement of investment in The Maren real estate partnership, which is included in Income before income taxes. This gain on remeasurement is mitigated by a $10.3 million provision for taxes and $13.0 attributable to noncontrolling interest.
  • The prior year included $251,000 higher professional fees related to environmental claims on our Anacostia property which were settled late in 2020.
  • Corporate expense stock compensation of $202,000 compared to $601,000 in the same period last year due the timing of stock grants.
  • Loss on joint ventures increased $993,000. This is primarily due to $248,000 increased loss at the Maren and a $663,000 increased loss at Bryant Street. Included in this loss is:
    • $827,000 for our share depreciation and amortization at the Maren which was not in service during the same period last year
    • $599,000 loss on phase 1 of Bryant Street due to lease-up efforts on the first building during the quarter.

First Quarter Segment Operating Results

Asset Management Segment:

Most of the Asset Management Segment was reclassified to discontinued operations leaving two commercial properties as well as Cranberry Run, which we purchased in the first quarter of 2019, and 1801 62nd Street which joined this segment on April 1 of 2019, but was sold in July 2020. Cranberry Run is a five-building industrial park in Harford County, MD totaling 268,010 square feet of industrial/ flex space and at quarter end was 87.6% leased and occupied. Total revenues in this segment were $712,000, up $60,000 or 9.2%, over the same period last year. Operating profit was $17,000, up $148,000 from an operating loss of ($131,000) in the same quarter last year. This improvement is primarily due to improved leasing and occupancy at Cranberry compared to the same quarter last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $2,315,000 versus $2,185,000 in the same period last year. Total operating profit in this segment was $2,013,000, an increase of $109,000 versus $1,904,000 in the same period last year. This marks the highest total revenue in any first quarter in this segment’s history.
   
Development Segment:

The Development segment is responsible for (i) seeking out and identifying opportunistic purchases of income producing warehouse/office buildings, and (ii) developing our non-income producing properties into income production.

With respect to ongoing projects:

  • We are in the PUD entitlement process for our 118-acre tract in Hampstead, Maryland, now known as “Hampstead Overlook.”  Hampstead Overlook received Concept Plan approval from the Town of Hampstead for 164 single and 91 town home residential units in February 2020, and the project is currently under Preliminary Plan review with the governing agencies.
  • Third quarter of 2020 we received permit entitlements for two industrial buildings at Hollander Business Park totaling 145,750 square feet.  We have started construction and anticipate shell completion in the third quarter of 2021.
  • We finished shell building construction in December 2018 on the two office buildings in the first phase of our joint venture with St. John Properties.  Shell building construction of the two retail buildings was completed in January 2019. We are now in the process of leasing these four single-story buildings totaling 100,030 square feet of office and retail space.  At quarter end, Phase I was 46.9% leased and occupied.
  • We are the principal capital source of a residential development venture in Baltimore County, Maryland known as “Hyde Park.”  We have committed up to $3.5 million in exchange for an interest rate of 10%. Additional proceeds and interest payments above a 20% preferred return on capital determine a split of profits.  Entitlements for the development of the property are complete, and a homebuilder is under contract to purchase all the 126 recorded building lots.  The first phase of settlement occurred in May 2020, resulting in a $2.67 million principal and interest payment, with subsequent payments of $1.13 million in principal and interest payments in the third quarter of 2020. Currently all principal and $322,605 in accrued interest has been repaid.
  • We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.”  We have committed up to $18.5 million in exchange for an interest rate of 10%. Additional proceeds and interest payments above a 20% preferred return on capital determine a split of profits.  Amber Ridge will hold 187 town homes.  We are currently pursuing entitlements, mass grading the site, and have two homebuilders under contract to purchase all 187 units upon completion of development infrastructure.
  • In December 2018, the Company entered into a joint venture agreement with MidAtlantic Realty Partners (MRP) for the development of the first phase of a multifamily, mixed-use development in northeast Washington, DC known as “Bryant Street.”  The project is comprised of four buildings, with 487 units and 85,681 net leasable square feet of retail.  FRP contributed $32 million in common equity and another $23 million in preferred equity to the joint venture.  Construction began in February 2019 and as of the end of the quarter was 94% complete.  Bryant Street is currently on time, within budget, and expected to be complete in the fourth quarter of 2021. The Coda, the first of our four buildings at Bryant Street received a temporary certificate of occupancy in December 2020, final was received on April 1, 2021, and leasing efforts are under way. At quarter end, the Coda was 35.71% leased and 20.78% occupied.  This project is located in an opportunity zone and has allowed the Company to defer $14.9 million in taxes associated with the sale of our industrial assets.
  • In December 2019, the Company entered into a joint venture agreement with MRP for the development of a mixed-use project known as “1800 Half Street.”  The development is located in the Buzzard Point area of Washington, DC, less than half a mile downriver from Dock 79 and the Maren.  It lies directly between our two acres on the Anacostia, currently under lease by Vulcan, and Audi Field, the home stadium of the DC United. The 10-story structure will have 344 apartments and 11,246 square feet of ground floor retail.  FRP contributed $37.3 million in common equity.  The project is a qualified opportunity zone investment and will defer just over $10 million in taxes associated with the sale of our industrial assets.  In June 2020, we closed on a $74 million construction loan. We began construction at the end of August 2020 and expect the building to be complete in the third quarter of 2022. As of the end of the first quarter, the project was 16% complete.
  • In December 2019, the company entered into two joint ventures in Greenville, SC with a new partner, Woodfield Development.  Woodfield specializes in Class-A multi-family, mixed use developments primarily in the Carolinas and DC.  Our first joint venture with them is a 200-unit multifamily project known as “Riverside.”  FRP contributed $6.2 million in common equity for a 40% ownership interest.  Construction began in February 2020 and should be complete in the third quarter of 2021.  The second joint venture in Greenville with Woodfield is a 227-unit multifamily development known as “.408 Jackson.”  It will have 4,700 square feet of retail and is located across the street from Greenville’s minor league baseball stadium.  FRP contributed $9.7 million in common equity for a 40% ownership interest.  Construction began in May 2020 and should be complete in the third quarter of 2022.  Both projects are qualified opportunity investments and will defer a combined $4.3 million in taxes. At quarter end, Riverside and .408 Jackson are 73% and 37% complete, respectively.
  • In November 2020, the Company purchased 55 acres in Aberdeen, Maryland adjacent to our Cranberry Run Business Center for $10.5 million. The project is undergoing a 12-month annexation process into the Town of Aberdeen with annexation expected in 2022. Upon annexation, the project will be entitled for industrial development capable of supporting over 625,000 square feet of industrial product.  The acquisition was a part of 1031 exchange from the sale proceeds of 1801 62nd street which deferred $3.8 million in taxable gain. This will expand our land bank and allow the Company to continue its industrial development program after we finish developing our remaining inventory at Hollander Business Park.  

Stabilized Joint Venture Segment:

In March 2021, Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C., a 250,000-square-foot mixed-use development which supports 264 residential units and 6,937 square feet of retail developed by a joint venture between the Company and MRP, reached stabilization. Stabilization in this case means 90% of the individual apartments had been leased and occupied by third party tenants. Upon reaching stabilization, the Company has, for a period of one year, the exclusive right to (i) cause the joint venture to sell the property or (ii) cause the Company’s and MRP’s percentage interests in the joint venture to be adjusted so as to take into account the contractual payouts assuming a sale at the value of the development at the time of this “Conversion Election”. Reaching stabilization resulted in a change of control for accounting purposes as the veto rights of the minority shareholder lapsed and the Company became the primary beneficiary. As such, beginning March 31, 2021, the Company consolidated the assets (at current fair value based on appraisal), liabilities and operating results of the joint venture.   At the end of March, The Maren was 92.80% leased and 92.04% occupied. The Maren is reflected in Equity in loss of joint ventures on the Consolidated Statements of Income but all the revenue and expenses will be reflected like Dock 79 in the stabilized joint venture segment for periods commencing April 1, 2021.

Dock 79’s average residential occupancy for the quarter was 94.68%, and at the end of the quarter, Dock 79’s residential units were 94.10% leased and 94.10% occupied. This quarter, 60.00% of expiring leases renewed with no increase in rent due to the mandated rent freeze on renewals in DC. Net Operating Income this quarter for this segment was $1,534,000, down $278,000 or 15.34% compared to the same quarter last year. This decrease in NOI is the result of decreased traffic to our retail tenants as well the emergency measures that remain in place which legally prevent us from raising rent on lease renewals. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

In March, we completed a refinancing of Dock 79 as well as securing permanent financing for the Maren. This $180 million loan ($92 million for Dock 79, $88 million for The Maren) lowers the interest rate at Dock 79 from 4.125% to 3.03%, defers any principal payments for 12 years for both properties, and repays the $13.75 million in preferred equity along with $2.3 million in accrued interest.

In July 2019, the Company completed a like-kind exchange by reinvesting $6,000,000 into a Delaware Statutory Trust (DST) known as CS1031 Hickory Creek DST. The DST owns a 294-unit garden-style apartment community known as Hickory Creek consisting of 19 three-story apartment buildings containing 273,940 rentable square feet.  Hickory Creek was constructed in 1984 and substantially renovated in 2016 and is located in suburban Richmond, Virginia. The Company is 26.649% beneficial owner and receives monthly distributions. First quarter distributions were $84,000. The project is a qualified 1031 like-kind exchange investment and will defer $790,000 in taxes associated with the sales of 7030 Dorsey Road and 1502 Quarry Drive.

Impact of the COVID-19 Pandemic. 

The COVID-19 pandemic is having an extraordinary impact on the world economy and the markets in which we operate. As an essential business, we have continued to operate throughout the pandemic in accordance with White House guidance and orders issued by state and local authorities. We have implemented social distancing and other measures to protect the health of our employees and customers. Our Dock 79 and The Maren properties in Washington, D.C. suffered the principal impacts to our business from the pandemic during 2020 due to our retail tenants being unable to operate at capacity, the lack of attendance at the Washington Nationals baseball park and the rent freeze imposed by the District. It is possible that these same conditions may impact our ability to lease retail spaces at Bryant Street. We anticipate that these impacts will continue for at least the first half of 2021.  

Summary and Outlook

Now a full year into life in a pandemic, we find ourselves equal parts grateful, optimistic, and excited. We are grateful for the way in which our assets have responded to the pandemic; optimistic as the number of those vaccinated continues to increase and a path back to normalcy is starting to materialize; and excited for what the future holds for both the assets we have in place and those in our development pipeline.

Royalty revenue this quarter was up 5.93% over the same period last year—a quarter last year that was for the most part operating in a pre-covid environment and also the first quarter of the best revenue year in the segment’s history. Revenue for the last twelve months was $9,606,523, an increase of 2.26% over the same period last year and an increase of 1.37% over calendar year 2020. This is the first time this segment has surpassed $9.5 million in revenue in any twelve-month period and also happens to mark the best first quarter of revenue and the best twelve months of revenue in the segment’s history.     

This was a very important quarter for the Stabilized Joint Venture segment. For two straight quarters, Dock 79’s occupancy has been above 94% at the end of the quarter, which is higher than it has been since September of 2019.   As alluded to previously, in March, we completed a refinancing of Dock 79 as well as securing permanent financing for the Maren. This 12-year, interest-only loan will significantly lower our debt service both in terms of interest and by deferring any principal payments for the life of the loan. In paying off our preferred equity in The Maren, this loan also returns over $16 million to the Company in the form of $13.75 million in equity and $2.3 million in accrued interest. Most importantly, this quarter saw the stabilization and subsequent consolidation of The Maren as the joint venture achieved occupancy greater than 90%. Hitting this milestone less than three years after we began construction, and almost a year to the day after leasing commenced—to say it exceeded our expectations would stretch the definition of understatement. However obvious, it bears repeating that all of these things happened during a pandemic, which is a powerful testament to both the product at Riverfront on the Anacostia as well as its location. The fact that baseball has started back up with fans in attendance should only further interest in our properties and bolster revenues for our retail tenants.

We remain pleased with the current direction of our asset management segment, particularly the industrial assets. As mentioned previously, Cranberry Run is nearly 90% leased and occupied, the highest level of occupancy since we purchased it, and a sizeable increase from its 54% level of occupancy at this time last year. The speed with which we leased up and then sold our building at 1801 62nd Street last year strengthened our commitment to this shift in our approach to industrial development. We have two adjacent buildings under construction at Hollander and intend follow a similar course of action. Beyond that, we have bolstered our land bank with the $10.5 million purchase of 55 acres in Aberdeen, Maryland. Once entitled, this property will be capable of supporting over 625,000 square feet of industrial product and will be essential for future industrial development as we finish developing our remaining inventory at Hollander Business Park.
         
This will be a year of transition on both a micro and macro level for the Company. As we finish construction this year on the remaining buildings at Bryant Street and the first of our two developments in Greenville, we will transition into a company with a far more substantial multifamily footprint as we as a nation are transitioning beyond COVID. We remain optimistic regarding the long-term success of these projects and the Company, because we can afford to remain optimistic. Our more than $160 million in liquidity allows us that luxury. We will continue to be opportunistic in repurchasing stock. During the first quarter of 2021, the Company repurchased 6,004 shares at an average cost of $43.95 per share.  

Conference Call

The Company will host a conference call on Tuesday, May 4, 2021 at 10:00 a.m. (EDT). Analysts, stockholders and other interested parties may access the teleconference live by calling 1-877-271-1828 (passcode 54115857) within the United States.  International callers may dial 1-334-323-9871 (passcode 54115857).  Computer audio live streaming is available via the Internet through this link http://stream.conferenceamerica.com/frp050421. For the archived audio via the internet, click on the following link http://archive.conferenceamerica.com/archivestream/frp050421.mp3. An audio replay will be available for sixty days following the conference call. To listen to the audio replay, dial toll free 1-877-919-4059, international callers dial 1-334-323-0140.  The passcode of the audio replay is 53664510. Replay options: “1” begins playback, “4” rewind 30 seconds, “5” pause, “6” fast forward 30 seconds, “0” instructions, and “9” exits recording.  There may be a 30-40 minute delay until the archive is available following the conclusion of the conference call.

Investors are cautioned that any statements in this press release which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These include, but are not limited to: the impact of the Covid-19 Pandemic on our operations and financial results; the possibility that we may be unable to find appropriate reinvestment opportunities for the proceeds from the Sale Transaction; levels of construction activity in the markets served by our mining properties; demand for flexible warehouse/office facilities in the Baltimore-Washington-Northern Virginia area demand for apartments in Washington D.C. and Richmond, Virginia; our ability to obtain zoning and entitlements necessary for property development; the impact of lending and capital market conditions on our liquidity; our ability to finance projects or repay our debt; general real estate investment and development risks; vacancies in our properties; risks associated with developing and managing properties in partnership with others; competition; our ability to renew leases or re-lease spaces as leases expire; illiquidity of real estate investments; bankruptcy or defaults of tenants; the impact of restrictions imposed by our credit facility; the level and volatility of interest rates; environmental liabilities; inflation risks; cybersecurity risks; as well as other risks listed from time to time in our SEC filings; including but not limited to; our annual and quarterly reports. We have no obligation to revise or update any forward-looking statements, other than as imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements.

FRP Holdings, Inc. is a holding company engaged in the real estate business, namely (i) leasing and management of commercial properties owned by the Company, (ii) leasing and management of mining royalty land owned by the Company, (iii) real property acquisition, entitlement, development and construction primarily for apartment, retail, warehouse, and office, (iv) leasing and management of a residential apartment building.

FRP HOLDINGS, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)

    THREE MONTHS ENDED
    MARCH 31,
    2021   2020
Revenues:        
Lease revenue   $ 3,538       3,598  
Mining lands lease revenue     2,315       2,185  
Total revenues     5,853       5,783  
                 
Cost of operations:                
Depreciation, depletion and amortization     1,443       1,468  
Operating expenses     841       925  
Property taxes     778       737  
Management company indirect     570       672  
Corporate expenses     779       1,187  
Total cost of operations     4,411       4,989  
                 
Total operating profit     1,442       794  
                 
Net investment income, including realized gains of $0 and $108     1,375       1,991  
Interest expense     (925 )     (51 )
Equity in loss of joint ventures     (1,635 )     (642 )
Gain on remeasurement of investment in real estate partnership     51,139        
Gain on sale of real estate           8  
                 
Income before income taxes     51,396       2,100  
Provision for income taxes     10,521       601  
                 
Net income     40,875       1,499  
Gain (loss) attributable to noncontrolling interest     12,502       (119 )
Net income attributable to the Company   $ 28,373       1,618  
                 
Earnings per common share:                
Net income attributable to the Company-                
Basic   $ 3.04       0.17  
Diluted   $ 3.03       0.16  
                 
Number of shares (in thousands) used in computing:                
-basic earnings per common share     9,341       9,803  
-diluted earnings per common share     9,376       9,833  

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)

    March 31   December 31
Assets:   2021   2020
Real estate investments at cost:                
Land   $ 121,074       91,744  
Buildings and improvements     255,429       141,241  
Projects under construction     8,352       4,879  
Total investments in properties     384,855       237,864  
Less accumulated depreciation and depletion     39,528       34,724  
Net investments in properties     345,327       203,140  
                 
Real estate held for investment, at cost     9,309       9,151  
Investments in joint ventures     143,900       167,071  
Net real estate investments     498,536       379,362  
                 
Cash and cash equivalents     116,843       73,909  
Cash held in escrow     534       196  
Accounts receivable, net     1,531       923  
Investments available for sale at fair value     51,171       75,609  
Federal and state income taxes receivable     4,509       4,621  
Unrealized rents     532       531  
Deferred costs     5,866       707  
Other assets     509       502  
Total assets   $ 680,031       536,360  
                 
Liabilities:                
Secured notes payable   $ 178,321       89,964  
Accounts payable and accrued liabilities     3,478       3,635  
Other liabilities     1,886       1,886  
Deferred revenue     527       542  
Deferred income taxes     66,420       56,106  
Deferred compensation     1,244       1,242  
Tenant security deposits     520       332  
Total liabilities     252,396       153,707  
                 
Commitments and contingencies                
                 
Equity:                
Common stock, $.10 par value
25,000,000 shares authorized,
9,387,823 and 9,363,717 shares issued
and outstanding, respectively
    939       936  
Capital in excess of par value     56,474       56,279  
Retained earnings     337,910       309,764  
Accumulated other comprehensive income, net     433       675  
Total shareholders’ equity     395,756       367,654  
Noncontrolling interest MRP     31,879       14,999  
Total equity     427,635       382,653  
Total liabilities and shareholders’ equity   $ 680,031       536,360  
                 

Asset Management Segment:

    Three months ended March 31        
(dollars in thousands)   2021   %   2020   %   Change   %
                         
Lease revenue   $ 712       100.0 %     652       100.0 %     60       9.2 %
                                                 
Depreciation, depletion and amortization     137       19.2 %     192       29.5 %     (55 )     -28.6 %
Operating expenses     139       19.5 %     97       14.9 %     42       43.3 %
Property taxes     38       5.3 %     72       11.0 %     (34 )     -47.2 %
Management company indirect     167       23.5 %     114       17.5 %     53       46.5 %
Corporate expense     214       30.1 %     308       47.2 %     (94 )     -30.5 %
                                                 
Cost of operations     695       97.6 %     783       120.1 %     (88 )     -11.2 %
                                                 
Operating profit   $ 17       2.4 %     (131 )     -20.1 %     148       -113.0 %
                                                 

Mining Royalty Lands Segment:

    Three months ended March 31        
(dollars in thousands)   2021   %   2020   %   Change   %
                         
Mining lands lease revenue   $ 2,315       100.0 %     2,185       100.0 %     130       5.9 %
                                                 
Depreciation, depletion and amortization     65       2.8 %     38       1.8 %     27       71.1 %
Operating expenses     11       0.5 %     13       0.6 %     (2 )     -15.4 %
Property taxes     63       2.7 %     67       3.1 %     (4 )     -6.0 %
Management company indirect     82       3.5 %     66       3.0 %     16       24.2 %
Corporate expense     81       3.5 %     97       4.4 %     (16 )     -16.5 %
                                                 
Cost of operations     302       13.0 %     281       12.9 %     21       7.5 %
                                                 
Operating profit   $ 2,013       87.0 %     1,904       87.1 %     109       5.7 %
                                                 

Development Segment:

    Three months ended March 31
(dollars in thousands)   2021   2020   Change
             
Lease revenue   $ 317       293       24  
                         
Depreciation, depletion and amortization     53       54       (1 )
Operating expenses     26       209       (183 )
Property taxes     363       359       4  
Management company indirect     261       445       (184 )
Corporate expense     419       712       (293 )
                         
Cost of operations     1,122       1,779       (657 )
                         
Operating loss   $ (805 )     (1,486 )     681  
                         

Stabilized Joint Venture Segment:

    Three months ended March 31        
(dollars in thousands)   2021   %   2020   %   Change   %
                         
Lease revenue   $ 2,509       100.0 %     2,653       100.0 %     (144 )     -5.4 %
                                                 
Depreciation, depletion and amortization     1,188       47.4 %     1,184       44.6 %     4       0.3 %
Operating expenses     665       26.5 %     606       22.9 %     59       9.7 %
Property taxes     314       12.5 %     239       9.0 %     75       31.4 %
Management company indirect     60       2.4 %     47       1.8 %     13       27.7 %
Corporate expense     65       2.6 %     70       2.6 %     (5 )     -7.1 %
                                                 
Cost of operations     2,292       91.4 %     2,146       80.9 %     146       6.8 %
                                                 
Operating profit   $ 217       8.6 %     507       19.1 %     (290 )     -57.2 %
                                                 

Non-GAAP Financial Measures.

To supplement the financial results presented in accordance with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measure included in this quarterly report is net operating income (NOI). FRP uses this non-GAAP financial measure to analyze its operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.

Net Operating Income Reconciliation                      
Three months ended 03/31/21 (in thousands)                      
          Stabilized            
  Asset       Joint   Mining   Unallocated   FRP
  Management   Development   Venture   Royalties   Corporate   Holdings
  Segment   Segment   Segment   Segment   Expenses   Totals
Net Income (loss)   12       (643 )     39,775       1,460       271       40,875  
Income Tax Allocation   5       (238 )     10,112       542       100       10,521  
Income (loss) before income taxes   17       (881 )     49,887       2,002       371       51,396  
                                               
Less:                                              
Gain on remeasurement of real estate investment               51,139                   51,139  
Unrealized rents   6                   58             64  
Interest income         993                   382       1,375  
Plus:                                              
Unrealized rents               4                   4  
Equity in loss of Joint Venture         1,069       555       11             1,635  
Interest Expense               914             11       925  
Depreciation/Amortization   137       53       1,188       65             1,443  
Management Co. Indirect   167       316       60       82             625  
Allocated Corporate Expenses   214       419       65       81             779  
                                               
Net Operating Income (loss)   529       (17 )     1,534       2,183             4,229  
Net Operating Income Reconciliation                      
Three months ended 03/31/20 (in thousands)                      
          Stabilized            
  Asset       Joint   Mining   Unallocated   FRP
  Management   Development   Venture   Royalties   Corporate   Holdings
  Segment   Segment   Segment   Segment   Expenses   Totals
Net Income (loss)   (90 )     (954 )     370       1,380       793       1,499  
Income Tax Allocation   (33 )     (354 )     182       512       294       601  
Income (loss) before income taxes   (123 )     (1,308 )     552       1,892       1,087       2,100  
                                               
Less:                                              
Equity in profit of Joint Ventures               83                   83  
Gains on sale of buildings   8                               8  
Unrealized rents   110                   61             171  
Interest income         891                   1,100       1,991  
Plus:                                              
Unrealized rents               4                   4  
Equity in loss of Joint Venture         713             12             725  
Interest Expense               38             13       51  
Depreciation/Amortization   192       54       1,184       38             1,468  
Management Co. Indirect   114       445       47       66             672  
Allocated Corporate Expenses   308       712       70       97             1,187  
                                               
Net Operating Income (loss)   373       (275 )     1,812       2,044             3,954  

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8 dos and don’ts of debt consolidation https://investingnewswire.club/8-dos-and-donts-of-debt-consolidation/ https://investingnewswire.club/8-dos-and-donts-of-debt-consolidation/#respond Wed, 12 May 2021 14:15:39 +0000 https://investingnewswire.club/?p=577 Are your multiple debts getting too hard to manage and a little expensive?  A debt consolidation of payday loans may be what you need!  What’s that, you ask?  Well, a debt consolidation loan is a financial product that allows you to roll your personal debts into one and pay them off with one regular repayment over the […]]]>

Are your multiple debts getting too hard to manage and a little expensive? 

A debt consolidation of payday loans may be what you need! 

What’s that, you ask? 

Well, a debt consolidation loan is a financial product that allows you to roll your personal debts into one and pay them off with one regular repayment over the loan term. Commonly, customers consolidate high interest debt like credit cards, personal loans and car loans in order to receive a lower rate and pay less in interest over time.  

There are some tactics though when it comes to consolidating debt, to ensure you are actually saving money and in some cases, time as well. Because at the end of the day, there is no point taking out a consolidation loan if it’s going to end up costing more than paying off your debts separately.

Debt consolidation dos: 

  • Make sure you’re getting a lower rate: Rule number one when it comes to taking out a debt consolidation loan is that you need to opt for a product with a low interest rate. By reducing the amount of interest you are charged across your multiple debts, or even at least one of your debts, you are more likely to keep more money in your pocket. 
  • If you want repayment stability, fix that rate: A large number of debt consolidation loans come with a fixed interest rate, meaning it’ll stay the same over the life of the loan. This is beneficial if you want reliability when it comes to the amount you pay each regular repayment, because unlike a variable rate, a fixed rate doesn’t change with the market. The downfall here is, if you are on a fixed rate and your lender cuts rates, you won’t benefit, whereas variable rate customers might. 
  • Ensure you have flexible repayment options: Many lenders give borrowers the option of making weekly, fortnightly or monthly repayments, which means you can choose a schedule that lines up with pay day. Similarly, some loans allow you to make free extra repayments to help you pay down your debt sooner. In some cases you may also be able to make redraws on your additional contributions which can be handy if you’re strapped for cash. Just keep in mind, if you pay down your loan ahead of time, you may have to cough up an early repayment penalty cost, which can be hundreds of dollars. 
  • Check your credit score before applying: Before borrowing from the bank, it’s always a good idea to check your credit history to gauge where you’re at. It will give you an indication of how likely you are to be approved for a loan as well as give insights into what sort of rate you could be eligible for. Remember, some personal loan lenders offer tiered rates which reward customers with excellent credit by offering competitively low rates. However, if you fall on the other side of the fence and have bad credit you could be looking at a high interest, which may make consolidating debt not worth it. 

Debt consolidation don’ts: 

  • Fork out too much in fees: There are a range of fees to think about when applying for a debt consolidation loan, including upfront application costs, ongoing service fees and exit or early repayment penalties. If the cost of applying and having the loan outweighs the cost of keeping your debts separate, it’s likely not worth it. So, start with a low rate, then try and find a loan with minimal fees to avoid paying too much. 
  • Roll your mortgage into your consolidation loan: A big don’t of debt consolidation is including your home loan. Unlike a credit card or personal loan, mortgage terms are set for a longer period of time (usually around 20-30 years). So rolling in your home loan could stretch out the time it takes to pay down your other debts and end up costing you more in interest repayments over time … and who wants to do that? 
  • Opt for a lengthy loan term: Speaking of lengthening your debt, if you can, don’t go for a long loan term. Remember, the longer you take to pay down your loan the more you pay in interest. As long as it doesn’t impact your everyday finances, try and keep your repayments similar to what you pay at the moment and choose a shorter term. This way you’ll avoid paying too much in interest as well as shave time off paying your loan – win, win! 
  • Miss your repayments: Like any form of borrowing, it’s important not to miss your repayments on your debt consolidation loan. Not only might you have to face a late payment fee each time you miss a regular repayment, you could also damage your credit rating, which could impact your ability to borrow in the future. 

Want to compare debt consolidation loans today? Check out these top loan options below or head to our debt consolidation loan page for more.

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Infinera Corporation Reports First Quarter 2021 Financial https://investingnewswire.club/infinera-corporation-reports-first-quarter-2021-financial/ https://investingnewswire.club/infinera-corporation-reports-first-quarter-2021-financial/#respond Wed, 12 May 2021 14:03:43 +0000 https://investingnewswire.club/?p=456 SAN JOSE, Calif., May 04, 2021 (GLOBE NEWSWIRE) — Infinera Corporation (NASDAQ: INFN) today released financial results for its first quarter ended March 27, 2021. GAAP revenue for the quarter was $330.9 million compared to $353.5 million in the fourth quarter of 2020 and $330.3 million in the first quarter of 2020. GAAP gross margin for […]]]>

SAN JOSE, Calif., May 04, 2021 (GLOBE NEWSWIRE) — Infinera Corporation (NASDAQ: INFN) today released financial results for its first quarter ended March 27, 2021.

GAAP revenue for the quarter was $330.9 million compared to $353.5 million in the fourth quarter of 2020 and $330.3 million in the first quarter of 2020.

GAAP gross margin for the quarter was 35.4% compared to 35.7% in the fourth quarter of 2020 and 23.3% in the first quarter of 2020. GAAP operating margin for the quarter was (7.0)% compared to (1.9)% in the fourth quarter of 2020 and (23.3)% in the first quarter of 2020.

GAAP net loss for the quarter was $(48.3) million, or $(0.24) per share, compared to $(9.9) million, or $(0.05) per share, in the fourth quarter of 2020, and $(99.3) million, or $(0.55) per share, in the first quarter of 2020.

Non-GAAP revenue for the quarter was $331.9 million compared to $354.4 million in the fourth quarter of 2020 and $331.4 million in the first quarter of 2020.

Non-GAAP gross margin for the quarter was 37.6% compared to 37.6% in the fourth quarter of 2020 and 28.3% in the first quarter of 2020. Non-GAAP operating margin for the quarter was 0.4% compared to 6.6% in the fourth quarter of 2020 and (9.4)% in the first quarter of 2020.

Non-GAAP net loss for the quarter was $(5.5) million, or $(0.03) per share, compared to net income of $16.7 million, or $0.08 per share, in the fourth quarter of 2020, and a net loss of $(36.5) million, or $(0.20) per share, in the first quarter of 2020.

A further explanation of the use of non-GAAP financial information and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.

“The first quarter marked another quarter of strong performance. Non-GAAP revenue came in ahead of the mid-point of our outlook with both non-GAAP gross margin and non-GAAP operating margin above the high end of our outlook,” said David Heard, Infinera CEO. “I am encouraged by the positive start to 2021 with broad-based demand for our differentiated open optical solutions, and remain confident about the opportunities ahead of us as we continue to manage through the current industry-wide supply chain challenges and ongoing pandemic impact.”

Financial Outlook

Infinera’s outlook for the second quarter ending June 26, 2021 is as follows:

  • GAAP revenue is expected to be $344 million +/- $10 million. Non-GAAP revenue is expected to be $345 million +/- $10 million.
  • GAAP gross margin is expected to be 33.5% +/- 100 bps. Non-GAAP gross margin is expected to be 36.0% +/- 100 bps.
  • GAAP operating expenses are expected to be $147 million +/- $2 million. Non-GAAP operating expenses are expected to be $127 million +/- $2 million.
  • GAAP operating margin is expected to be (9.0)% +/- 200 bps. Non-GAAP operating margin is expected to be (1.0%) +/- 200 bps.

First Quarter 2021 Investor Slides Available Online

Investor slides reviewing Infinera’s first quarter of 2021 financial results will be furnished to the Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and published on Infinera’s Investor Relations website at investors.infinera.com prior to the first quarter of 2021 earnings conference call. Analysts and investors are encouraged to review these slides prior to participating in the conference call webcast.

Conference Call Information

Infinera will host a conference call for analysts and investors to discuss its results for the first quarter of 2021 and its outlook for the second quarter of 2021 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may join the conference call by dialing 1-866-373-6878 (toll free) or 1-412-317-5101 (international). A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.

Contacts:

Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.com

Investors:
Amitabh Passi, Head of Investor Relations
Tel. +1 (669) 295-1489
apassi@infinera.com

About Infinera

Infinera is a global supplier of innovative networking solutions that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. The Infinera end-to-end packet-optical portfolio delivers industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on Twitter @Infinera, and read Infinera’s latest blog posts at www.infinera.com/blog.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Infinera’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or the negative of these words or similar terms or expressions that concern Infinera’s expectations, strategy, priorities, plans or intentions. Such forward-looking statements in this press release include, without limitation, the presence of opportunities ahead of Infinera, including as it continues to manage industry-wide supply chain challenges and ongoing pandemic impact, and Infinera’s financial outlook for the second quarter of 2021. These forward-looking statements are based on estimates and information available to Infinera as of the date hereof and are not guarantees of future performance; actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include the effect of the COVID-19 pandemic on Infinera’s business, results of operations, financial condition, stock price and personnel; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to make anticipated capital expenditures; Infinera’s ability to service its debt obligations and pursue its strategic plan; delays in the development and introduction of new products or updates to existing products; market acceptance of Infinera’s end-to-end portfolio; Infinera’s reliance on single and limited source suppliers; fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures, as well as the timing of purchases by Infinera’s key customers; the effect that changes in product pricing or mix, and/or increases in component costs, could have on Infinera’s gross margin; Infinera’s ability to respond to rapid technological changes; aggressive business tactics by Infinera’s competitors; the effects of customer consolidation; our ability to identify, attract and retain qualified personnel; the impacts of foreign currency fluctuations; Infinera’s ability to protect its intellectual property; claims by others that Infinera infringes their intellectual property; impacts of the recent presidential administration change in the United States; war, terrorism, public health issues, natural disasters and other circumstances that could disrupt the supply, delivery or demand of Infinera’s products; and other risks and uncertainties detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in Infinera’s periodic reports filed with the SEC, including its Annual Report on Form 10-K for the year ended on December 26, 2020 as filed with the SEC on March 3, 2021, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.

Use of Non-GAAP Financial Information

In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude acquisition-related deferred revenue adjustment, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and related costs, COVID-19 related costs, amortization of debt discount on Infinera’s convertible senior notes, foreign exchange (gains) losses, net, and income tax effects. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the table titled “GAAP to Non-GAAP Reconciliations” and related footnotes.

Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the second quarter of 2021 that exclude acquisition-related deferred revenue adjustment, stock-based compensation expense, amortization of acquired intangible assets, acquisition and integration costs, and restructuring and related costs. Please see the section titled “GAAP to Non-GAAP Reconciliation of Financial Outlook” below on specific adjustments.

Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for revenue, gross margin, operating expenses, operating margin, and net income (loss) prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

A copy of this press release can be found on the Investor Relations page of Infinera’s website at investors.infinera.com.

Infinera and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.

Infinera Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited) 

  Three Months Ended
  March 27,
2021
  March 28,
2020
Revenue:      
Product $ 254,161     $ 255,192  
Services 76,746     75,081  
    Total revenue 330,907     330,273  
Cost of revenue:      
Cost of product 165,485     201,792  
Cost of services 43,260     40,695  
Amortization of intangible assets 4,616     8,628  
Acquisition and integration costs     1,035  
Restructuring and related 514     1,157  
    Total cost of revenue 213,875     253,307  
Gross profit 117,032     76,966  
Operating expenses:      
Research and development 73,529     68,180  
Sales and marketing 32,772     36,689  
General and administrative 26,506     29,620  
Amortization of intangible assets 4,405     4,555  
Acquisition and integration costs 614     9,222  
Restructuring and related 2,319     5,580  
    Total operating expenses 140,145     153,846  
Loss from operations (23,113 )   (76,880 )
Other income (expense), net:      
Interest income 40     24  
Interest expense (11,843 )   (8,794 )
Other gain (loss), net (12,395 )   (12,682 )
    Total other income (expense), net (24,198 )   (21,452 )
Loss before income taxes (47,311 )   (98,332 )
Provision for income taxes 1,011     936  
Net loss $ (48,322 )   $ (99,268 )
Net loss per common share:      
Basic $ (0.24 )   $ (0.55 )
Diluted $ (0.24 )   $ (0.55 )
Weighted average shares used in computing net loss per common share:      
Basic 202,638     182,024  
Diluted 202,638     182,024  

Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except percentages and per share data)
(Unaudited) 

  Three Months Ended
  March 27,
2021
    December 26,
2020
    March 28,
2020
 
Reconciliation of Revenue:                
U.S. GAAP as reported $ 330,907       $ 353,525       $ 330,273    
Acquisition-related deferred revenue adjustment(1) 978       892       1,110    
Non-GAAP as adjusted $ 331,885       $ 354,417       $ 331,383    
                 
Reconciliation of Gross Profit:                
U.S. GAAP as reported $ 117,032   35.4 %   $ 126,143   35.7 %   $ 76,966   23.3 %
Acquisition-related deferred revenue adjustment(1) 978       892       1,110    
Stock-based compensation expense(2) 1,796       1,742       2,102    
Amortization of acquired intangible assets(3) 4,616       4,611       8,628    
Acquisition and integration costs(4)             1,035    
Restructuring and related costs(5) 514       (106 )     1,157    
COVID-19 related costs(6)             2,880    
Non-GAAP as adjusted $ 124,936   37.6 %   $ 133,282   37.6 %   $ 93,878   28.3 %
                 
Reconciliation of Operating Expenses:                
U.S. GAAP as reported $ 140,145       $ 132,919       $ 153,846    
Stock-based compensation expense(2) 9,178       11,177       9,601    
Amortization of acquired intangible assets(3) 4,405       4,745       4,555    
Acquisition and integration costs(4) 614       (265 )     9,222    
Restructuring and related costs(5) 2,319       7,230       5,580    
Non-GAAP as adjusted $ 123,629       $ 110,032       $ 124,888    
                 
Reconciliation of Income/(Loss) from Operations:                
U.S. GAAP as reported $ (23,113 ) (7.0 )%   $ (6,776 ) (1.9 )%   $ (76,880 ) (23.3 )%
Acquisition-related deferred revenue adjustment(1) 978       892       1,110    
Stock-based compensation expense(2) 10,974       12,919       11,703    
Amortization of acquired intangible assets(3) 9,021       9,356       13,183    
Acquisition and integration costs(4) 614       (265 )     10,257    
Restructuring and related costs(5) 2,833       7,124       6,737    
COVID-19 related costs(6)             2,880    
Non-GAAP as adjusted $ 1,307   0.4 %   $ 23,250   6.6 %   $ (31,010 ) (9.4 )%
  Three Months Ended
  March 27,
2021
  December 26,
2020
  March 28,
2020

 
Reconciliation of Net Income/(Loss):                
U.S. GAAP as reported $ (48,322 )   $ (9,924 )   $ (99,268 )  
Acquisition-related deferred revenue adjustment(1) 978     892     1,110    
Stock-based compensation expense(2) 10,974     12,919     11,703    
Amortization of acquired intangible assets(3) 9,021     9,356     13,183    
Acquisition and integration costs(4) 614     (265 )   10,257    
Restructuring and related costs(5) 2,833     7,124     6,737    
COVID-19 related costs(6)         2,880    
Amortization of debt discount on Infinera’s convertible senior notes(7) 7,083     6,910     5,121    
Foreign exchange (gains) losses, net(8) 11,706     (9,671 )   12,905    
Income tax effects(9) (353 )   (691 )   (1,170 )  
Non-GAAP as adjusted $ (5,466 )   $ 16,650     $ (36,542 )  
                 
Net Income/(Loss) per Common Share – Basic and Diluted:          
U.S. GAAP as reported $ (0.24 )   $ (0.05 )   $ (0.55 )  
Non-GAAP as adjusted $ (0.03 )   $ 0.08     $ (0.20 )  
                 
Weighted Average Shares Used in Computing Net Income/(Loss) per Common Share:                
Basic 202,638     195,655     182,024    
Diluted(10) 202,638     203,259     182,024    
(1) Business combination accounting principles require Infinera to write down to fair value its maintenance support contracts assumed in Infinera’s acquisition of Coriant, which closed during the fourth quarter of 2018. The revenue for these support contracts is deferred and typically recognized over a period of time after the Coriant acquisition, so Infinera’s GAAP revenue for a period of time after the acquisition will not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustment eliminates the effect of the deferred revenue write-down. Management believes these adjustments to revenue from support contracts assumed in the Coriant acquisition are useful to investors as an additional means to reflect revenue trends in Infinera’s business.
(2) Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation effective January 1, 2006. The following table summarizes the effects of stock-based compensation related to employees and non-employees (in thousands):
  Three Months Ended
  March 27,
2021
  December 26,
2020
  March 28,
2020
Cost of revenue $ 1,796     $ 1,742     $ 2,102  
Total cost of revenue 1,796     1,742     2,102  
Research and development 4,297     4,501     3,774  
Sales and marketing 3,199     2,771     2,644  
General and administration 1,682     3,905     3,183  
Total operating expenses   9,178       11,177       9,601  
Total stock-based compensation expense $ 10,974     $ 12,919     $ 11,703  
(3) Amortization of acquired intangible assets consists of developed technology, trade names, customer relationships and backlog acquired in connection with the Coriant acquisition. Amortization of acquired intangible assets also consists of amortization of developed technology, trade names and customer relationships acquired in connection with Infinera’s acquisition of Transmode AB, which closed in 2015. U.S. GAAP accounting requires that acquired intangible assets are recorded at fair value and amortized over their useful lives. As this amortization is non-cash, Infinera has excluded it from its non-GAAP gross profit, operating expenses and net income measures. Management believes the amortization of acquired intangible assets is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera’s underlying business performance.
(4) Acquisition and integration costs consist of legal, financial, IT, manufacturing-related costs, employee-related costs and professional fees incurred in connection with the Coriant acquisition. These amounts have been adjusted in arriving at Infinera’s non-GAAP results because management believes that these expenses are non-recurring, not indicative of ongoing operating performance and their exclusion provides a better indication of Infinera’s underlying business performance.
(5) Restructuring and related costs are primarily associated with the reduction of operating costs, the closure of Infinera’s Berlin, Germany site, the reduction of headcount at Infinera’s Munich, Germany site and other sites, and Coriant’s historical restructuring plan associated with its early retirement plan. In addition, this includes accelerated amortization on operating lease right-of-use assets due to the cessation of use of certain facilities. Management has excluded the impact of these charges in arriving at Infinera’s non-GAAP results as they are non-recurring in nature and its exclusion provides a better indication of Infinera’s underlying business performance.
(6) COVID-19 related costs consist of higher replacement costs associated with certain warranty parts customers were unable to return for repair due to logistics issues and mobility issues related to COVID-19 public health mandates and restrictions. In addition, Infinera needed to source certain key components from an alternate supplier at substantially higher cost in order to fulfill delivery commitments in the normal course of business. Management has excluded these expenses from non-GAAP financial measures because they were caused by atypical circumstances during the COVID-19 pandemic, as their exclusion provides a better indication of Infinera’s underlying business performance.
(7) Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes, Infinera is required to amortize as debt discount an amount equal to the fair value of the conversion option that was recorded in equity as interest expense on the $402.5 million in aggregate principal amount of its 2.125% convertible debt issuance in September 2018 due September 2024 and $200 million in aggregate principal amount of 2.50% convertible debt issued in March 9, 2020 due March 2027. Interest expense has been excluded from Infinera’s non-GAAP results because management believes that this non-cash expense is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera’s underlying business performance.
(8) Foreign exchange gains and losses have been excluded from Infinera’s non-GAAP results because management believes that this expense is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera’s underlying business performance. Exclusion of foreign exchange gains and losses from non-GAAP results commenced in the first quarter of 2021 and prior periods have been adjusted for comparability.
(9) The difference between the GAAP and non-GAAP tax provision is due to the net tax effects of the purchase accounting adjustments, acquisition-related costs and amortization of acquired intangible assets. Management believes the exclusion of these tax effects provides a better indication of Infinera’s underlying business performance.
(10) The non-GAAP diluted shares include the potentially dilutive securities from Infinera’s stock-based benefit plans and convertible senior notes excluded from the computation of dilutive net loss per share attributable to common stockholders on a GAAP basis because the effect would have been anti-dilutive. These potentially dilutive securities are added for the computation of diluted net income per share on a non-GAAP basis in periods when Infinera has net income on a non-GAAP basis as its inclusion provides a better indication of Infinera’s underlying business performance.

Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited) 

Free Cash Flow

We define free cash flow as net cash provided by (used in) operating activities in the period minus the purchase of property and equipment, net made in the period.

Free cash flow is considered a non-GAAP financial measure under the SEC’s rules. Management believes that free cash flow is an important financial measure for use in evaluating the Company’s financial performance, as it measures our ability to generate additional cash from our business operations. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited and does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations. Therefore, we believe it is important to view free cash flow as supplemental to our entire statement of cash flows.

  Three Months Ended
  March 27, 2021   December 26, 2020   March 28, 2020
Net cash provided by (used in) operating activities $ 18,630     $ 52,216     $ (91,517 )
Purchase of property and equipment, net (11,721 )   (11,861 )   (8,464 )
Free cash flow $ 6,909     $ 40,355     $ (99,981 )

Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)

  March 27,
2021
  December 26,
2020
ASSETS      
Current assets:      
Cash $ 234,029     $ 298,014  
Short-term restricted cash 3,288     3,293  
Accounts receivable, net of allowance for doubtful accounts of $3,102 in 2021 and $2,912 in 2020 276,855     319,428  
Inventory 262,827     269,307  
Prepaid expenses and other current assets 139,245     171,831  
    Total current assets 916,244     1,061,873  
Property, plant and equipment, net 153,118     153,133  
Operating lease right-of-use assets 64,942     68,851  
Intangible assets 115,164     124,882  
Goodwill 265,216     273,426  
Long-term restricted cash 12,228     14,076  
Other non-current assets 40,043     36,256  
    Total assets $ 1,566,955     $ 1,732,497  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 151,984     $ 175,762  
Accrued expenses and other current liabilities 129,598     150,550  
Accrued compensation and related benefits 56,050     52,976  
Short-term debt, net 25,068     101,983  
Accrued warranty 18,943     19,369  
Deferred revenue 124,285     133,246  
    Total current liabilities 505,928     633,886  
Long-term debt, net 453,427     445,996  
Long-term financing lease obligations 1,964     1,383  
Long-term accrued warranty 19,944     21,339  
Long-term deferred revenue 28,960     29,810  
Long-term deferred tax liability 3,681     4,164  
Long-term operating lease liabilities 72,912     76,126  
Other long-term liabilities 86,791     93,509  
Stockholders’ equity:      
Preferred stock, $0.001 par value
Authorized shares – 25,000 and no shares issued and outstanding
     
Common stock, $0.001 par value
   Authorized shares – 500,000 as of March 27, 2021
   and December 26, 2020
   Issued and outstanding shares – 204,812 as of March 27, 2021 and
   201,397 as of December 26, 2020
205     201  
Additional paid-in capital 1,983,599     1,965,245  
Accumulated other comprehensive loss (14,870 )   (11,898 )
Accumulated deficit (1,575,586 )   (1,527,264 )
Total stockholders’ equity 393,348     426,284  
    Total liabilities and stockholders’ equity $ 1,566,955     $ 1,732,497  

Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

  Three Months Ended
  March 27,
2021
  March 28,
2020
Cash Flows from Operating Activities:      
Net loss $ (48,322 )   $ (99,268 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation and amortization 20,546     25,445  
Non-cash restructuring charges and related costs 1,410     1,760  
Amortization of debt discount and issuance costs 7,822     5,731  
Operating lease expense 5,228     5,204  
Stock-based compensation expense 10,974     11,703  
Other, net 2,065     1,153  
Changes in assets and liabilities:      
Accounts receivable 38,671     70,238  
Inventory 4,059     17,737  
Prepaid expenses and other assets 20,669     (18,744 )
Accounts payable (23,584 )   (72,355 )
Accrued liabilities and other expenses (11,964 )   (32,083 )
Deferred revenue (8,944 )   (8,038 )
    Net cash provided by (used in) operating activities 18,630     (91,517 )
Cash Flows from Investing Activities:      
Purchase of property and equipment, net (11,721 )   (8,464 )
    Net cash used in investing activities (11,721 )   (8,464 )
Cash Flows from Financing Activities:      
Proceeds from issuance of 2027 Notes     194,500  
Proceeds from revolving line of credit     55,000  
Repayment of revolving line of credit (77,000 )    
Payment of debt issuance cost     (1,775 )
Repayment of mortgage payable (22 )   (99 )
Payment of term license obligation (2,544 )    
Principal payments on financing lease obligations (309 )    
Proceeds from issuance of common stock 9,344     7,395  
Minimum tax withholding paid on behalf of employees for net share settlement (1,938 )    
    Net cash (used in) provided by financing activities (72,469 )   255,021  
Effect of exchange rate changes on cash and restricted cash (278 )   (4,369 )
Net change in cash and restricted cash (65,838 )   150,671  
Cash and restricted cash at beginning of period 315,383     132,797  
Cash and restricted cash at end of period(1) $ 249,545     $ 283,468  

Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

  Three Months Ended
  March 27,
2021
  March 28,
2020
Supplemental disclosures of cash flow information:      
Cash paid for income taxes, net $ 4,355     $ 1,072  
Cash paid for interest $ 7,654     $ 5,131  
Supplemental schedule of non-cash investing and financing activities:      
Unpaid debt issuance cost $     $ 1,793  
Property and equipment included in accounts payable and accrued liabilities $ 255     $ 3,370  
Transfer of inventory to fixed assets $ 1,041     $ 118  
Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities) $ 10,533     $  

(1)         Reconciliation of cash and restricted cash to the condensed consolidated balance sheets:

  March 27,
2021
  March 28,
2020
       
  (In thousands)
Cash $ 234,029     $ 261,534  
Short-term restricted cash 3,288     4,126  
Long-term restricted cash 12,228     17,808  
Total cash and restricted cash $ 249,545     $ 283,468  

Infinera Corporation
Supplemental Financial Information
(Unaudited)

  Q2’19   Q3’19   Q4’19   Q1’20   Q2’20   Q3’20   Q4’20   Q1’21
GAAP Revenue ($ Mil) $296.3     $325.3     $384.6     $330.3     $331.6     $340.2     $353.5     $330.9  
GAAP Gross Margin % 20.7 %   26.7 %   29.0 %   23.3 %   29.4 %   31.8 %   35.7 %   35.4 %
Non-GAAP Gross Margin %(1) 30.7 %   33.1 %   35.2 %   28.3 %   33.8 %   35.2 %   37.6 %   37.6 %
Revenue Composition:                                  
Domestic % 45 %   51 %   52 %   52 %   50 %   49 %   36 %   48 %
International % 55 %   49 %   48 %   48 %   50 %   51 %   64 %   52 %
Customers >10% of Revenue 1     1     1     1     1     1         1  
Cash Related Information:                                  
Cash from Operations ($ Mil) ($63.8 )   ($37.2 )   ($10.2 )   ($91.5 )   ($36.6 )   ($36.4 )   $52.2     $18.6  
Capital Expenditures ($ Mil) $9.2     $12.5     $2.7     $8.5     $10.5     $8.1     $11.9     $11.7  
Depreciation & Amortization ($ Mil) $31.2     $29.0     $28.6     $25.4     $25.9     $22.9     $25.9     $20.5  
DSOs 80     80     83     75     79     78     82     76  
Inventory Metrics:                                  
Raw Materials ($ Mil) $70.4     $47.2     $47.4     $50.0     $43.4     $39.3     $34.7     $31.8  
Work in Process ($ Mil) $59.5     $52.2     $48.8     $52.0     $50.9     $51.6     $55.8     $55.5  
Finished Goods ($ Mil) $208.9     $225.4     $244.1     $217.7     $193.9     $185.0     $178.8     $175.5  
Total Inventory ($ Mil) $338.8     $324.8     $340.3     $319.7     $288.2     $275.9     $269.3     $262.8  
Inventory Turns(2) 2.5     2.7     2.9     3.0     3.1     3.2     3.3     3.1  
Worldwide Headcount 3,632     3,557     3,261     3,302     3,209     3,074     3,050     3,041  
Weighted Average Shares Outstanding (in thousands):                              
Basic 178,677     179,988     180,864     182,024     185,596     189,589     195,655     202,638  
Diluted 179,343     182,073     186,349     189,246     190,127     195,868     203,259     217,970  
(1) Non-GAAP adjustments include acquisition-related deferred revenue and inventory adjustments, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and related costs, and COVID-19 related costs. For a description of this non-GAAP financial measure, please see the section titled, “GAAP to Non-GAAP Reconciliations” of this press release for a reconciliation to the most directly comparable GAAP financial measures.
(2) Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue before adjustments for restructuring and related costs, non-cash stock-based compensation expense, and certain purchase accounting adjustments, divided by the average inventory for the quarter.

Infinera Corporation
GAAP to Non-GAAP Reconciliation of Financial Outlook
(In millions, except percentages)
(Unaudited) 

The following amounts represent the midpoint of the expected range:

  Q2’21
  Outlook
Reconciliation of Revenue:  
U.S. GAAP $ 344.0    
Acquisition-related deferred revenue adjustment 1.0    
Non-GAAP $ 345.0    
   
Reconciliation of Gross Margin:  
U.S. GAAP 33.5   %
Acquisition-related deferred revenue adjustment 0.5   %
Stock-based compensation expense 0.5   %
Amortization of acquired intangible assets 1.0   %
Restructuring and related costs 0.5   %
Non-GAAP 36.0   %
   
Reconciliation of Operating Expenses:  
U.S. GAAP $ 147.0    
Stock-based compensation expense (12.0 )  
Amortization of acquired intangible assets (4.0 )  
Restructuring and related costs (4.0 )  
Non-GAAP $ 127.0    
   
Reconciliation of Operating Margin:  
U.S. GAAP (9.0 ) %
Acquisition-related deferred revenue adjustment 0.5   %
Stock-based compensation expense 4.0   %
Amortization of acquired intangible assets 2.0   %
Restructuring and related costs 1.5   %
Non-GAAP (1.0 ) %

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World’s Best Banks 2021: Asia-Pacific https://investingnewswire.club/worlds-best-banks-2021-asia-pacific/ https://investingnewswire.club/worlds-best-banks-2021-asia-pacific/#respond Wed, 12 May 2021 14:03:34 +0000 https://investingnewswire.club/?p=447 The Best Banks in Asia-Pacific sped up digital efforts to meet the crisis. For banks in the Asia-Pacific region (APAC), the onslaught of Covid-19 can perhaps best be characterized as an unprecedented externality that has served to expose—in stark relief—a twin-pronged dynamic of transformation and consolidation that had been in place before […]]]>

The Best Banks in Asia-Pacific sped up digital efforts to meet the crisis.



For banks in the Asia-Pacific region (APAC), the onslaught of Covid-19 can perhaps best be characterized as an unprecedented externality that has served to expose—in stark relief—a twin-pronged dynamic of transformation and consolidation that had been in place before the pandemic emerged.


That dynamic gained momentum thanks to brutal economic contraction, shrinking margins, savage competition and crimped return on equity (ROE). It represents a swift acceleration of forces that had been steadily building prior to the pandemic, characterized by rapidly shifting customer expectations and behavior and hammered home at great speed in the face of lockdowns, social distancing and work insecurity.


Banks in APAC must now work harder for ROE, prompting many to focus on areas that have been relatively ring-fenced from the effects of the pandemic, such as investment banking, wealth management, high-end advisory services and insurance. Many have sought positive carry by moving down the credit curve and into higher-yielding segments such as project finance and unsecured lending.


Traditional incumbent banks might stare with fear at the onslaught of fintech and the competition it presents to traditional business models. In response, their only viable option has been to embrace this technological revolution, in many cases by investing in the upstart competition.


China, Hong Kong, Macau, Taiwan


China’s banking system has continued to build on the juggernaut momentum it has established over the past two decades, as its economy weathered the pandemic better than any of its big-league peers. Its state-led business model begins to appear unimpeachable, for the time being at least.


Versus the precipitous drops in profitability seen in the banking sectors of a swath of developed and emerging countries, thanks to the effects of the pandemic, China’s banking industry saw net profits decline by just 2.7% according to the China Banking and Insurance Regulatory Commission—a remarkable data point.


China’s state-owned giant ICBC (Industrial and Commercial Bank of China) slotted into this script, weathering the pandemic impressively in 2020, and takes the title of Best Bank in Asia Pacific and also Best Bank in China.


ICBC managed to grow total assets 11.17% in the nine months to September, with a return on weighted average equity of 11.95% achieved for fiscal year 2020, compared with 13.05% in 2019, an above-trend performance versus its peer group in the country.


The breadth and range of services provided by ICBC cannot but impress: The bank services 660 million retail customers and 8.5 million corporate clients and strives, according to its own mission statement, to be “a craftsman in large banking.” International reach encompasses 49 countries, with a signal presence across Africa via its majority shareholding in the Standard Bank Group, and it boasts a vast array of correspondent banking relationships, totaling almost 1,500.


The bank enhanced its service capability last year, reporting the establishment of an “online, traceable and door-to-door” service model across the board; and the “ICBC e-Confirmation Service” product, to meet the demands of stay-at-home customers, all leveraged by cloud computing and a range of cutting-edge financial technologies within an “open, integrated crossover biosphere.”


ICBC’s corporate culture is highly attuned to environment, social and governance (ESG) demands, with the promotion of inclusive finance, poverty alleviation and the protection of the environment and natural resources underpinning its business activities. Last year, the “ICBC Charity Chain” was developed using blockchain technology, providing nearly 200 charitable organizations with integrated services. Covid-19-related financial assistance was provided via products such as the “Antiepidemic Loan” with the aim of alleviating the strain on small and midsize enterprises (SMEs).


In Hong Kong, many banks struggled to maintain profitability from their core commercial and retail franchises within the city state in the face of the pandemic.


The Bank of East Asia bested the competition, managing a full-year profit for 2020 of 3.6 billion Hong Kong dollars ($463 million), for an 11% increase on the previous year, when profits had slumped to their worst in a decade.


The family-run bank reorganized its operations in mainland China—where solid revenue and profitability balanced out the inauspicious business background within Hong Kong—and addressed lingering nonperforming loans (NPLs) last year, key to its solid turnaround in 2020.


Meanwhile, once again ICBC Macau demonstrated the fecundity of the former Portuguese colony as a place to do business, pulling in 10% profit growth, boosting assets by 15% and growing market share by 1% to 18% of Macau’s commercial and retail banking market, facilitated by the bank’s newly established dual-license operating structure.


CTBC remains a standout in Taiwan in terms of revenue, profitability and capital scale, having achieved a solid 8.8% ROE in 2020 and enjoying 13.5% growth, all in the face of challenging business conditions, not least the reduction in Taiwan’s short-term policy rates last year.


The bank has a diversified revenue base via its overseas presence in 14 countries and devised an innovative methodology it calls “power curve origination,” which uses a multiplicity of variables to assess financial risk. The bank led the way in terms of the Covid-19 response in Taiwan, approving more than 7,000 loans under the government’s pandemic relief program.


Australasia


Commonwealth Bank of Australia (CBA) can lay claim to the status of leading fintech-oriented bank in the country, with the CommBank app processing 1.2 billion of Australian dollar ($931 million) transactions daily and some 40% of payments made in Australia going through its systems. The bank managed to book a profit of 7.3 billion Aussie dollars last year, an impressive result under conditions that saw its peers booking sharp declines.


CBA was also a champion of sustainability in 2020, contributing $20 million to disaster relief for communities affected by calamitous bushfires and droughts through the year.


Meanwhile in New Zealand, ANZ New Zealand’s CEO Antonia Watson acknowledged “unprecedented challenges” to the bank’s business, pointing to the economic environment and credit losses attached to the bank’s sale of UDC Finance, completed in September 2020. Still, ANZ New Zealand’s 27% decline in profits was decent enough, considering the domestic banking sector’s Covid-19-induced lackluster performance.


The bank proved itself a good citizen in response to the pandemic, offering financial assistance to around 43,000 personal, home and business loan customers through various payment-deferral and interest-only schemes, covering lending of around 27 billion New Zealand dollars ($19.4 billion).


Northern Asia


After some beleaguered recent years, Japan’s banking industry managed to weather the pandemic in impressive form, with system balance sheets powering ahead by 10% and some banks enjoying healthy ROE.


Mizuho, our Best Bank in Japan, achieved an eye-watering 443% surge in profitability last year, bouncing back after weathering hefty restructuring-cost charges in 2019, with revenue boosted by cloud-based digital innovation drives incorporating device-location and facial-recognition technology.


Among Japan’s reams of banks, Mizuho is managing to establish a solid set of sustainable and ESG-focused credentials. Last May, the bank was the first financial services group in Japan to publish a report by the Task Force on Climate-related Financial Disclosures. To enhance diversity within the workforce, last year Mizuho established a diversity and inclusion promotion committee; the company made the Bloomberg Gender-Equality Index for the fifth consecutive year.


“We are working to transform outdated mindsets and are continually striving to improve the work environment to ensure that each individual can fully utilize their capabilities,” said Tatsufumi Sakai, group CEO of Mizuho Financial Group, in a statement announcing the bank’s inclusion in the index.


Another ESG box was ticked in the form of a €500 million ($599 million) green bond issued last year to meet the requirements of Mizuho’s environmentally focused customers and issued in line with the International Capital Market Association’s Green Bond Principles.


South Korea’s banking industry is often regarded as a poor relation versus the country’s chaebols, in terms of ambition, dynamism and reach. But international expansion is underway, led by Hana Bank, driven by its project finance franchise and underpinned by the “green industrial revolution.”


Among the four big Korean commercial banks, Hana has the most extensive overseas reach, through 160 overseas networks in 24 countries—including 135 networks within APAC. Hana demonstrated an ongoing commitment to ESG: providing financing to renewable energy projects such as solar, wind, hydro and biomass; the construction of green buildings; lending according to socioeconomic advancement; and making loans to financially alienated communities, social enterprises and sectors such as affordable housing and employment generation.


The Subcontinent


India’s HDFC (Housing Development Finance Corporation), the country’s largest privately owned bank by assets, bucked the coronavirus trend last year, registering a remarkable 24% growth in fiscal year 2019 profits and containing bad loans at 1.4% of gross advances—something of an achievement against a backdrop of ever-souring loans within the country’s banking system.


The bank aligns itself with the UN’s Sustainable Development Goals as core to its business strategy and reinforced the carbon-reducing mission statement by converting its business premises in accordance with green-building norms.


HDFC is keeping up to speed in the fintech stakes, having last December invested in Smallcase Technologies, a fintech firm that enables investors to acquire a basket of stocks and ETFs in line with compliance requirements.


The bank has in recent years been investing in a range of technologies: from public to private cloud, the Internet of Things and across mobile, social and analytic segments. Millennials are a key focus of HDFC’s business strategy, with the bank’s Millennia Debit Cards focused on conversational banking and utilizing zero interest capability for e-commerce transactions.


National Development Bank is one of Sri Lanka’s largest financial services group, with operations extending from retail to investment banking, securities trading, wealth management and private equity. The bank has placed emphasis on developing Sri Lanka’s micro, small and midsize enterprise (MSME) sector and maintained high levels of regulatory capital and low levels of NPLs. Net profits were up 8% in 2020.


State-owned National Bank of Pakistan (NBP), one of the top commercial banks, last year closed an impressive range of capital markets transactions worth over $40 billion. The bank places corporate social responsibility at the core of its mission statement and has active programs within education, health, culture and natural-disaster relief. NBP’s domestic and international reach is impressive: Domestic branches number more than 1,500 across the country; and the bank conducts business in the US, Europe, Hong Kong, Japan, South Korea and across Central Asia.


Bangladesh’s City Bank has established itself as the “thought leader” within the country’s banking industry, demonstrating eagerness to innovate and a willingness to challenge the status quo. Trade finance is its core business line, and in 2020 the bank financed almost $4 billion of trade. City Bank is the country’s leading credit card issuer, with a 32% market share and the biggest point-of-sale network in the country.


Government-owned, in part, Nepal’s Rastriya Banijya Bank has used its wide geographical spread—the bank’s branches serve the remotest parts of this mountainous country—with a continuous cognizance of corporate social responsibility and financial inclusion for marginalized individuals and the smallest SMEs.


Southeast Asia


DBS, Global Finance’s Best Bank in Singapore, managed to increase operating profit by 2% in 2020, with the 8.4 billion Singapore dollar ($6.3 billion) total a record for income, demonstrating the resilience of its franchise against a plethora of headwinds, including low interest rates. The bank reaped the rewards of more than eight years in digital investment, enabling it to transition to new business modus operandi thanks to a stack of modern technology including use of the cloud, deep data infrastructure, artificial intelligence and machine learning.


The bank continues to hit high scores in sustainability, featured on the Dow Jones Sustainability Index. DBS also ranks in the top global quartile on the Bloomberg Gender-Equality Index, both for the fourth consecutive year.


UAB Bank in Myanmar has achieved a lot in the 11-odd years since its founding. The bank has achieved a somewhat staggering 242% compound annual growth rate of its profit before tax over the past five years, kept a lid on NPLs of just 5% (some banks in Myanmar are sitting on a 50% NPL rate) and enjoyed a highly competitive cost-to-income ratio of just over 50%. UAB was the first bank in the country to step up during the start of the pandemic to offer relief packages to borrowers.


Indonesia’s BCA (Bank Central Asia) is positioned well ahead of its domestic competition in terms of sheer scale, asset quality and arguably corporate ambition. The bank registered an eye-popping 171% growth in assets in 2020 and grew its loan book by 12%, more than 30% above Indonesia’s banking system average.


BCA made younger customers the focus of its long-term growth strategy and keys into this largely urban demographic via its sophisticated payments ecosystem under the KlikBCA internet banking platform, the Sakuku e-wallet and the Flazz stored-value card.


The Philippines’ BDO Unibank came through 2020 in decent shape, managing to weather the pandemic storm thanks to solid capital adequacy (14.3%) and a rising customer base, within both corporate and consumer markets. Total loan growth and ROE each came in at 6%. BDO was quick to act in response to the impact of the pandemic on its customer base, providing loan restructuring and moratoria under the Bayanihan I and II programs.


Bangkok Bank excels in Thailand’s corporate banking field, serving a broad array of large domestic and multinational companies across a wide array of industries and via services ranging from corporate finance, transaction and investment banking to trade finance. Notable achievements last year were the provision of project finance advisory services and credit facilities for key infrastructure projects as well as in public debt market underwriting and within structured and asset-backed finance. In the consumer banking sphere, the bank offers a full suite of services through its extensive nationwide branch network and via applications such as Bangkok Bank Mobile Banking.


Vietnam’s MSB grew total loans by 25% in 2020, boosted its customer base by 13% and saw fee income surge 42%, all admirable data points amid challenging regional economic conditions—although the country was spared the worst effects of the pandemic, with relatively few cases of Covid-19 and only one national lockdown. MSB has a strong footprint within the state-owned enterprise sector and managed in 2020 to boost corporate banking net revenue by almost 40%, with profits in that business line soaring over 60% last year.


Once again, Cambodia’s ABA Bank continued its multiyear run of superlative achievements, managing against the onslaught of the pandemic to deliver some remarkable data points: a 21% rise in net profit, combined with a 67% surge in customers and a 40% rise in total assets. This is remarkable in an overbanked country—Cambodia houses 53 commercial banks serving 16 million people—and is testament to ABA’s cutting-edge services facilitated by digital banking solutions and platforms.


Public Bank commands a dominant position within Malaysia’s banking industry, accounting for almost 18% of domestic loans, 33% of the unit trust market, 35% of commercial property financing and 30% of auto financing. The bank survived the brutal business backdrop in Malaysia last year, thanks to the insulation provided by its broad footprint across Asia-Pacific, which stretches from mainland China and Hong Kong, through to Cambodia, Laos, Vietnam and Sri Lanka.


Operating profit for 2020 rose 1.6%, with pressure exerted by pandemic-related provisions and a one-off net modification loss.


Brunei Darussalam’s BIBD is the country’s highest-rated bank (A- S&P Global) thanks in part to its high capitalization, which at 19% sits substantially higher than the 10% regulatory capital adequacy ratio limit.


The bank remains the benchmark for conducting Shariah finance in the country—it operates the largest stand-alone Islamic treasury desk within Southeast Asia—and holds almost 60% of banking system deposits. Net profits fell 12% in 2020, but ROE was a comfortable 11%, shrinking by just 1.5% year on year.


Central Asia and the Caucasus


Pasha Bank is Azerbaijan’s largest privately owned bank by total equity and had an auspicious 2020: Net profits increased by 13% and assets by 15%, with the bank commanding 14% and 17% of the country’s banking system loans and deposits respectively; and that market share is set to rise thanks to Pasha’s broad suite of client offerings.


ForteBank bucked the banking sector trend in Kazakhstan last year, registering a 25% increase in profits and boosting total clients by 20%. The bank was the only Kazakh lender to enjoy a ratings upgrade in 2020 and distinguished its reputation by offering grace periods on debt for those affected economically by the pandemic.


AIB, founded in 2004, is the only privately owned bank in Afghanistan to enjoy US dollar clearing facilities within the international banking community, thanks to its adherence to best practice. This capability was made more significant in 2019 thanks to Standard Chartered’s withdrawal from the country. Its reputation as the country’s preeminent commercial bank is underlined by its close relationships with multilateral development banks and agencies and it is the largest, most profitable bank in Afghanistan.


Mongolia’s XacBank benefited from the country’s ongoing banking sector reform and retained a relatively subdued NPL book—at just 5.6% versus the 11% system average—despite the country’s Covid-19-induced 5% contraction last year, according to the World Bank. The customer deposit/total funding ratio was a healthy 59% last year, although net profits declined 35%.


Kyrgyzstan’s DemirBank grew its main financial health indicators in 2020, with assets increasing by 11.8% for a 9% market share. ROE was a respectable 14.7% and profitswere  up by 7.3% at the end of 2020. The bank has in recent years focused on developing internet and mobile banking services, offering Swift transfers and foreign exchange transaction capability to retail customers.


“More than just a bank,” is the marketing slogan of Uzbekistan’s Ziraat Bank, and this domestic subsidiary of Turkey’s Ziraat Bankasi has impressed with expansion into the country’s underdeveloped banking industry. Moody’s affirmed the bank’s B3 long-term local and foreign deposit ratings last year, citing implied support from the parent, a strong capital buffer and solid recurring income.


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Ecopetrol Group Announces First Quarter 2021 Results https://investingnewswire.club/ecopetrol-group-announces-first-quarter-2021-results/ https://investingnewswire.club/ecopetrol-group-announces-first-quarter-2021-results/#respond Wed, 12 May 2021 13:58:36 +0000 https://investingnewswire.club/?p=433 BOGOTÁ, May 4, 2021 /PRNewswire/ — Ecopetrol SA (BVC: ECOPETROL;NYSE: EC) announced today the Ecopetrol Group’s financial results for the first quarter of 2021, prepared in accordance with the International Financial Reporting Standards applicable to Colombia.  Table 1: Financial Summary Income Statement – Ecopetrol Group Billion (COP) 1Q 2021 1Q 2020 ∆ ($) ∆ (%) […]]]>

BOGOTÁ, May 4, 2021 /PRNewswire/ — Ecopetrol SA (BVC: ECOPETROL;NYSE: EC) announced today the Ecopetrol Group’s financial results for the first quarter of 2021, prepared in accordance with the International Financial Reporting Standards applicable to Colombia. 

Table 1: Financial Summary Income Statement – Ecopetrol Group

Billion (COP)


1Q 2021

1Q 2020

∆ ($)

∆ (%)

Total sales


17,206

15,072

2,134

14.2%

Depreciation and amortization


2,237

2,153

84

3.9%

Variable cost


6,238

6,696

(458)

(6.8%)

Fixed cost


2,037

2,438

(401)

(16.4%)

Cost of sales


10,512

11,287

(775)

(6.9%)

Gross income


6,694

3,785

2,909

76.9%

Operating and exploratory expenses


1,183

1,078

105

9.7%

Operating income


5,511

2,707

2,804

103.6%

Financial income (loss), net


(651)

(665)

14

(2.1%)

Share of profit of companies


53

(1)

54

(5,400.0%)

Income before income tax


4,913

2,041

2,872

140.7%

Income tax


(1,537)

(630)

(907)

144.0%

Net income consolidated


3,376

1,411

1,965

139.3%

Non-controlling interest


(292)

(347)

55

(15.9%)

Net income attributable to owners of Ecopetrol before impairment


3,084

1,064

2,020

189.8%

(Expense) recovery for impairment long-term assets


2

(1,209)

1,211

(100.2%)

Deferred tax of impairment


278

(278)

(100.0%)

Net income attributable to owners of Ecopetrol


3,086

133

2,953

2,220.3%







EBITDA


8,187

5,257

2,930

55.7%

EBITDA Margin


47.6%

34.9%

12.7%

The figures included in this report were extracted from the Company’s unaudited financial statements. The financial information is expressed in billions of Colombian pesos (COP), or US dollars (USD), or thousands of barrels of oil equivalent per day (mboed) or tons, as noted. For presentation purposes, certain figures in this report were rounded to the nearest decimal place.

In words of Felipe Bayón Pardo, CEO of Ecopetrol:

“Ecopetrol’s operating and financial results for the first quarter of the year reflect our ability to react to the COVID-19 crisis and overcome it in an effective manner. We have shown resilience and competitiveness in an environment where, despite the signs of recovery, there are still potential risks that require ongoing monitoring.

We have achieved solid results during 1Q21. We even surpassed pre-Covid levels in several indicators. We continued to take important steps on our diversification, decarbonization and climate change mitigation agendas – the aforementioned without losing focus on our strategy as an integrated O&G company. These pillars are key to surpass the challenges that energy transition implies.

We highlight the ongoing process for the potential acquisition of the Ministry of Finance’s controlling stake in ISA, which responds to Ecopetrol’s strategic interest of entering into new businesses aligned with the opportunities for electrification and decarbonization, dictated by the energy transition, and which in turn leverage the Group’s profitable growth. Also, we also remark the announcement of new decarbonization commitments which are aligned with a carbon-neutral future.

The financial results for the quarter reflect an extraordinary recovery. Ecopetrol Group achieved a net income of COP 3.1 trillion and an EBITDA of COP 8.2 trillion in 1Q21 – equivalent to a 48% EBITDA margin. These results almost double those achieved throughout 2020, and were accomplished mainly due to: i) a strengthened realization price of the crude oil export basket at 43% vis-à-vis 1Q20, from 40.3 USD/Bl to 57.8 USD/Bl, supported in better Brent levels, which went from 50.8 USD/Bl on average for 1Q20 to 61.3 USD/Bl for 1Q21; ii) active commercial strategy with our clients in the markets of China, Gulf of Mexico (USA) and Europe; and iii) lower operation costs leveraged by a solid efficiency agenda. This first quarter closed with a solid cash position (COP 8.1 trillion) and a 2.5-times Gross Debt/EBITDA indicator for the last twelve months, in line with our business plan.

Ecopetrol continues to undertake efforts and deploy strategies to achieve a more efficient operation. At the end of 1Q21, the Group realized efficiencies amounting to COP 263.7 billion. This was reflected in a 9% decrease vs. 1Q20 in operating costs and expenses. In turn, the total unit cost was USD $32.6 per barrel, slightly lower when compared to the total unit cost in the same period of 2020. The above is explained by the reduction in costs and expenses and a higher currency exchange rate, partially offset by the increase in the variable factors associated with purchases and imports resulting from a better Brent.

In exploration, Ecopetrol and its partners finished drilling 5 wells during 1Q21. Production from exploration assets increased 39% as compared to 1Q20, mainly due to contributions from Esox-1, Arrecife-1, Andina Norte-1, Boranda-3 and Boranda-2ST. Noteworthy are Ecopetrol-operated Flamencos-2 wells, and El Niño-1 – operated by Perenco in association with Ecopetrol – which were drilled in 2020 and declared successful in 1Q21 upon completion of relevant testing. At the international level, we continue to make progress in the commercial feasibility studies and development plan of Gato do Mato discovery in the Brazilian pre-salt.

Average production in 1Q21 was 675.7 mboed. Our production had an impact when compared to 4Q20 mainly due to operating restrictions in the Castilla field, an increase in Basic Sediment and Water contents in fields such as Chichimene, Akacias, Yariguí, Rubiales, and, in a lesser extent, the withdrawal of volumes related to the divestment of Savia in Peru. Given the effects of the first quarter, we currently estimate a production range between 690 – 700 mboed for the year 2021 and we are implementing a plan that will seek to restore the growth path.

On natural gas and LPG, we had a remarkable 12% increase in the production level, mainly as a result of local demand recovery and the rise in production of Hocol due to the acquisition of Chevron’s stake in the Guajira asset. The contribution of gas and LPG was of 23% of the total production, with a 53% EBITDA margin and a 11% contribution to the upstream EBITDA.

Our operations in the Permian basin continue their consolidation process, contributing 6.2 mboed on average as of 1Q21. By the end of the quarter, the Association had 44 wells in production, 20 new wells drilled and 28 wells completed. Expectations for 2021 remain aligned with the 2021-2023 Business Plan.

Regarding Kalé – the Comprehensive Research Pilot Project in Unconventional Reservoirs located in the Municipality of Puerto Wilches (Santander), activities for the environmental impact study began in February. Important progress was attained in the monitoring plan and baselines. Moreover, various dialogue meetings have been held with the communities and consultation spaces have been made available such as the Citizen Participation Office in the territory, seeking to address concerns of the different stakeholders in regard to the scope of the project and its environmental performance. 

The downstream segment had a remarkably positive performance across all business units, which was supported by improved price realization of products and a continuous recovery in demand, despite a marginally more expensive feedstock and the execution of scheduled maintenance. The refineries reached a consolidated throughput of 360 mbd in 1Q21, with an integrated gross margin of 10.1 USD/Bl, comparable to pre-pandemic levels. The segment reported an EBITDA of COP 0.65 trillion, equivalent to a 6.7% margin, showing a 97% growth as compared to 1Q20.

The Midstream segment remains a key and a stable cash generator and contributor to EBITDA for the Group. Transport of refined products increased mainly due to the country’s recovery in fuel demand and greater evacuation of refined products (mainly diesel and gasoline). Particularly noteworthy is the launch of the marine platform TLU-2 for loading crude oil in the Caribbean by Ocensa in April. This platform is located 12 kilometers offshore from the Coveñas Maritime Terminal. This new infrastructure allowed to almost double the monthly cargo capacity of ships (from 18 to 34), thus transferring heavier crude oils, and incorporating the highest technology to serve 2-million barrel tankers for the next 20 years, in harmony with the environment.

Ecopetrol Group continues to be committed to TESG, mitigating climate change and with moving towards an organized, disciplined, and technology-leveraged transition. In line with the above, on March 25, 2021 we announced our commitment to achieve net zero carbon emissions by 2050 (scope 1 and 2). In this regard, Ecopetrol became the first company in the Oil and Gas industry in Latin America to set this ambitious target. Besides, Ecopetrol seeks to reduce its CO2e emissions by 25% as compared to the 2019 baseline for Scopes 1 and 2 by 2030.

These goals are framed as part of Ecopetrol Group’s Corporate Strategy, its TESG agenda and the roadmap to promote energy transition, under a detailed decarbonization plan to ensure its competitiveness and resilience, and seeking portfolio diversification towards low emission business alternatives. The 2050 objective has intermediate goals and a short, mid and long-term portfolio, with some projects already implemented or in the research stage.

We highlight the following milestones in this front: i) we achieved a 52% reduction in routine natural gas flaring in our operations between 2017 and 2020; ii) we initiated wind energy potential measurements in areas close to the operations in Cartagena, aiming to assess feasibility of the construction of wind farms that will potentially allow us to partially cover the energy demand of the company’s operations in the future; iii) we signed the Pact for New Air for Bogotá, which seeks to improve the quality of fuels and the availability of natural gas for the city; iv) we made progress in preparing the assignment of solar energy projects for 45 MW throughout the country under PPA[1] strategies for self-consumption; v) we adopted and incorporated the standards of the Sustainability Accounting Standards Board (SASB), the Stakeholder Capitalism Metrics of the World Economic Forum (SCM), and the  Task Force on Climate-related Financial Disclosures (TCFD) recommendations in the Company’s annual reports; and vi) we deployed digital value capture strategies reaching benefits for USD 12 million as of the closing of 1Q21.

We remain committed with our social investment program “Apoyo País”, continuing the efforts we began in 2020 by allocating at least COP 60 billion in resources by 2021, in initiatives to strengthen education and public health and territorial economic reactivation. In addition, the company allocated resources for social investment amounting to COP 71 billion during 1Q21, as part of its Environment Strategy framework.

Regarding corporate governance, we would like to highlight three events that took place during the first quarter of the year: i) we held our General Shareholders’ Meeting under a 100% virtual format for the second time ensuring our shareholder’s rights and active participation; ii) the distribution of a dividend of $17 pesos per share for 2020, equivalent to a dividend payment of 41.41% (COP 0.7 trillion) of the net income of Ecopetrol S.A.; and iii) the appointment of Cecilia María Vélez White as a member of the Board of Directors at Ecopetrol, along with the inclusion of diversity and gender criteria in the Company’s bylaws under the principle of meritocracy.

In addition, on January 27, 2021, Ecopetrol submitted a non-binding offer expressing our interest in acquiring the 51.4% of the outstanding shares of ISA, currently owned by the Colombian Ministry of Finance and Public Credit. On February 12, 2021, Ecopetrol and the Ministry of Finance and Public Credit signed an exclusivity agreement, followed by a confidentiality agreement signed between the parties (Ecopetrol, the Ministry of Finance and Public Credit and ISA) on February 26, 2021 to move towards the validation of the interest initially expressed and a potential negotiation. Ecopetrol is currently carrying out the detailed Due Diligence process and negotiating the terms of the Inter-administrative Share Purchase Agreement.

We will maintain our focus on delivering on the 2021-2023 Business Plan during the rest of the year. The Plan seeks to restore our production growth path, increasing competitiveness, laying the foundations of energy transition and going deeper into the TESG agenda as one of the strategic pillars for value creation for our society.

To review the full report please visit the following link:

http://www.ecopetrol.com.co/wps/wcm/connect/202ac26c-2ee3-4489-9ed0-70150decd488/Reporte+1T21+INGL%C3%89S+FINAL.pdf?MOD=AJPERES&attachment=true&id=1620164204535

Ecopetrol is Colombia’s largest firm and is an integrated oil company that is among the 50 largest in the world and the four largest in Latin America. In addition to Colombia, where it generates over 60% of the country’s production, it is active in exploration and production in the United States (Permian basin and Gulf of Mexico), Brazil and Mexico. Ecopetrol operates the largest refinery in Colombia, most of the country’s oil-pipeline and polyduct network and is significantly increasing its share of bio-fuels. This press release contains statements relating to business prospects, estimates of operating and financial results, and Ecopetrol’s growth prospects. All are projections, and therefore are based solely on management’s expectations of the company’s future and its continuous access to capital to finance its sales plan. Achieving these estimates in the future depends on its performance under given market conditions, regulations, competition, the performance of the Colombian economy and industry, and other factors; therefore, they are subject to change without prior notice.

1 Power Purchase Agreements

For further details, please contact:
Head of Capital Markets
Tatiana Uribe Benninghoff
Phone: +571-234-5190
Email: [email protected]

Media Engagement (Colombia)
Jorge Mauricio Tellez
Phone: + 571-234-4329
Email: [email protected]

SOURCE Ecopetrol S.A.

Related Links

http://www.ecopetrol.com.co

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JELD-WEN Over Delivers First Quarter 2021 Growth and Margin Expansion and Raises Full Year Outlook | State https://investingnewswire.club/jeld-wen-over-delivers-first-quarter-2021-growth-and-margin-expansion-and-raises-full-year-outlook-state/ https://investingnewswire.club/jeld-wen-over-delivers-first-quarter-2021-growth-and-margin-expansion-and-raises-full-year-outlook-state/#respond Wed, 12 May 2021 13:58:22 +0000 https://investingnewswire.club/?p=422 CHARLOTTE, N.C., April 30, 2021 /PRNewswire/ — JELD-WEN Holding, Inc. (NYSE:JELD) today announced results for the three months ended March 27, 2021, including first quarter net revenue of $1,092.4 million, net income of $25.5 million, adjusted EBITDA of $97.9 million, earnings per share (“EPS”) of $0.25, and adjusted EPS of $0.27. Comparability is to the […]]]>

CHARLOTTE, N.C., April 30, 2021 /PRNewswire/ — JELD-WEN Holding, Inc. (NYSE:JELD) today announced results for the three months ended March 27, 2021, including first quarter net revenue of $1,092.4 million, net income of $25.5 million, adjusted EBITDA of $97.9 million, earnings per share (“EPS”) of $0.25, and adjusted EPS of $0.27. Comparability is to the same period in the prior year, unless otherwise noted. References to “core” financial results exclude the impact of foreign exchange and acquisitions completed in the last twelve months.

  • Net revenue increased by 11.6% to $1,092.4 million, including a 6% increase in core revenue 
  • Core revenue increased in all three reporting segments, driven by favorable price and volume/mix
  • Adjusted EBITDA increased by 31.4% to $97.9 million, while adjusted EBITDA margins expanded 140 basis points
  • Core adjusted EBITDA margin increased 160 basis points, including margin expansion in all three reporting segments
  • Repurchased 809,884 shares in the quarter for $23.1 million
  • Increased full year outlook for revenue and adjusted EBITDA

“JELD-WEN delivered a strong start to 2021, building on continued operating momentum and disciplined execution, generating significant improvement in revenue, margin, and cash flow,” said Gary S. Michel, president and chief executive officer. “The rigorous deployment of our business operating system, the JELD-WEN Excellence Model (“JEM”), throughout the organization is producing consistent growth and margin expansion, which in the first quarter included favorable price, volume/mix, and productivity in each of our geographic segments. Our multi-faceted growth platform is delivering revenue growth, improved earnings, and compounding cash flow. We remain optimistic on performance for the remainder of the year driven by the cadence and quality of operational initiatives currently underway and supportive market fundamentals for both residential new construction and repair and remodel activity.”

 First Quarter 2021 Results

  • Core revenue growth across all three segments, led by North America core revenue growth of 9%
  • North America core margin expanded 420 basis points, the fourth straight quarter of core margin expansion
  • Europe core margin expanded 30 basis points, the seventh consecutive quarter of core margin expansion
  • Australasia core margin expanded 200 basis points, an acceleration from the fourth quarter of 2020

Net revenue for the three months ended March 27, 2021 increased $113.2 million, or 11.6%, to $1,092.4 million, compared to $979.2 million for the same period last year. The increase in net revenue was primarily driven by 6% core revenue growth and a 5% positive impact from foreign exchange. Core revenue growth was driven by a 4% pricing benefit and a 2% positive contribution from volume/mix. The first quarter of 2021 had approximately 3% fewer shipping days than the first quarter of 2020. Normalizing for fewer shipping days, first quarter core revenue growth was approximately 9% to 10%.

Net income was $25.5 million during the first quarter, compared to a net loss of $0.2 million in the same quarter last year, an increase of $25.7 million. The increase in net income was primarily due to higher gross profit from improved price realization, operating leverage from volume/mix and operational improvements, partially offset by higher SG&A. The effective book income tax rate during the quarter was 28.9%. Adjusted net income for the first quarter increased $14.8 million, or 113.0%, to $27.9 million, compared to $13.1 million in the same quarter last year. 

EPS for the first quarter was $0.25, compared to $0.00 for the same quarter last year. Adjusted EPS was $0.27, compared to $0.13 a year ago. 

Adjusted EBITDA increased $23.4 million, or 31.4%, to $97.9 million, compared to the same quarter last year. Adjusted EBITDA margin of 9.0% increased by 140 basis points compared to the prior year.

On a segment basis for the first quarter of 2021, compared to the same period last year:

  • North America – Net revenue increased $52.9 million, or 9.0%, to $639.6 million, due to a 9% increase in core revenue. Core revenue increased due to a 6% pricing benefit and a 3% increase in volume/mix. Adjusted EBITDA margin expanded by 420 basis points to 12.5%.
  • Europe – Net revenue increased $39.0 million, or 13.9%, to $320.5 million, due to a 10% positive impact from foreign exchange and 4% increase in core revenue. Core revenue increased primarily due to a 2% pricing benefit and a 2% increase in volume/mix. Adjusted EBITDA margin expanded 70 basis points to 9.0%.
  • Australasia – Net revenue increased $21.3 million, or 19.2%, to $132.3 million, due to a 17% favorable impact from foreign exchange and a 2% increase in core revenue. Core revenue increased primarily due to a 2% increase in volume/mix. Adjusted EBITDA increased $4.5 million, while adjusted EBITDA margins increased 210 basis points to 10.0%. 

Cash Flow and Balance Sheet

  • Cash flow used in operations of $64.9 million in the first quarter of 2021, improved by $11.7 million
  • Free cash flow use of $85.9 million in the first quarter of 2021, improved by $20.8 million

Cash flow used in operations totaled $64.9 million in the first quarter of 2021, compared to cash flow used in operations of $76.5 million during the same period a year ago. The improvement in cash flow used in operations was primarily due to the increase in earnings. Free cash flow used in the first quarter of 2021 improved $20.8 million to $85.9 million, from $106.7 million a year ago, due to higher earnings and a reduction in capital expenditures.

Cash and cash equivalents as of March 27, 2021 were $612.8 million, compared to $735.8 million as of December 31, 2020. Total debt as of March 27, 2021 was $1.759 billion, compared to $1.768 billion as of December 31, 2020. The company repurchased 809,884 shares in the quarter for $23.1 million.

Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was $992.7 million as of March 27, 2021, compared to total liquidity of $1,121.5 million as of December 31, 2020.

  • Net revenue growth expected to be within a range of 8.0% to 11.0%, compared to 4.0% to 7.0% previously
  • Adjusted EBITDA anticipated to be within a range of $505 million to $535 million, up from $480 million to $520 million previously
  • Projected capital expenditures are expected to be within a range of $130 million to $140 million, down from $135 million to $145 million previously

Conference Call Information

JELD-WEN management will host a conference call on April 30, 2021, at 8 a.m. EDT, to discuss the company’s financial results. Interested investors and other parties can access the call either via webcast by visiting the Investor Relations section of the company’s website at http://investors.jeld-wen.com, or by dialing (833) 921-1640 and using ID 1561009.  A slide presentation highlighting the company’s results will also be available on the Investor Relations section of the company’s website.

For those unable to listen to the live event, a webcast replay will be available approximately two hours following completion of the call.

Headquartered in Charlotte, N.C., JELD-WEN is a leading global manufacturer of high-performance interior and exterior building products, offering one of the broadest selections of windows, interior and exterior doors, and wall systems. JELD-WEN delivers a differentiated customer experience, providing construction professionals with durable, energy-efficient products and labor-saving services that help them maximize productivity and create beautiful, secure spaces for all to enjoy. The JELD-WEN team is driven by innovation and committed to creating safe, sustainable environments for customers, associates, and local communities. The JELD-WEN family of brands includes JELD-WEN® worldwide; LaCantina™ and VPI™ in North America; Swedoor® and DANA® in Europe; and Corinthian®, Stegbar®, and Breezway® in Australia. Visit jeld-wen.com for more information.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements by our CEO and statements regarding our business strategies and ability to execute on our plans, market potential, future financial performance, customer demand, the potential of our categories, brands and innovations, the impact of our footprint rationalization and modernization program, our pipeline of productivity projects, the estimated impact of tax reform on our results, litigation outcomes, and our expectations, beliefs, plans, objectives, prospects, assumptions, or other future events. Forward-looking statements are generally identified by our use of forward-looking terminology such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “potential”, “predict”, “seek”, or “should”, or the negative thereof or other variations thereon or comparable terminology. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans, expectations, assumptions, estimates, and projections of our management. Although we believe that these statements are based on reasonable expectations, assumptions, estimates and projections, they are only predictions and involve known and unknown risks, many of which are beyond our control that could cause actual outcomes and results to be materially different from those indicated in such statements.

The assumptions underlying the guidance provided for 2021 include revenue growth from the acceleration in housing demand in our primary markets; improved product mix; increased pricing; a positive impact from foreign exchange; and margin expansion from volume, pricing, and productivity, partially offset by higher expenses related to material and freight inflation and SG&A. Additionally, the outlook assumes no new COVID-19 lockdowns or restrictions, which could unfavorably impact our operations, labor availability, and supply chain continuity.

Risks and uncertainties that could cause actual results to differ materially from such statements include risks associated with the impact of the COVID-19 pandemic on the company and our employees, customers, and suppliers, and other factors, including the factors discussed in our Annual Reports on Form 10-K and our other filings with the Securities and Exchange Commission.

The forward-looking statements included in this release are made as of the date hereof, and except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this release.

Non-GAAP Financial Information

This press release presents certain “non-GAAP” financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of non-GAAP financial measures used in this press release to their nearest comparable GAAP financial measures is included in the tables at the end of this press release. The company provides certain guidance solely on a non-GAAP basis because the company cannot predict certain elements that are included in certain reported GAAP results, including the variables and individual adjustments necessary for a reconciliation to GAAP. While management is not able to specifically quantify the reconciliation items for forward-looking non-GAAP measures without unreasonable effort, management bases the estimated ranges of non-GAAP measures for future periods on its reasonable estimates of such factors as assumed effective tax rate, assumed interest expense, and other assumptions about capital requirements for future periods. The variability of these items may have a significant impact on our future GAAP results.

We use adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted EPS because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes adjusted EBITDA and adjusted EBITDA margin are helpful in highlighting trends because they exclude the results of decisions that are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. We use adjusted EBITDA and adjusted EBITDA margin to measure our financial performance and also to report our results to our board of directors. Further, our executive incentive compensation is based in part on adjusted EBITDA. In addition, we use adjusted EBITDA for purposes of calculating compliance with our debt covenants in certain of our debt facilities. adjusted EBITDA should not be considered as an alternative to net income as a measure of financial performance or to cash flows from operations as a liquidity measure.

We define adjusted EBITDA as net income (loss), adjusted for the following items: loss from discontinued operations, net of tax; equity earnings of non-consolidated entities; income tax (benefit) expense; depreciation and amortization; interest expense, net; impairment and restructuring charges; gain on previously held shares of equity investment; (gain) loss on sale of property and equipment; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; other non-cash items; other items; and costs related to debt restructuring and debt refinancing. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenues.

We present several financial metrics in “core” terms, which exclude the impact of foreign exchange and acquisitions completed in the last twelve months. We use core adjusted EBITDA, which we define as adjusted EBITDA excluding the impact of foreign exchange and acquisitions completed in the last twelve months. We define core revenue as revenue excluding the impact of foreign exchange and acquisitions completed in the last twelve months. Our use of core margin is defined as core adjusted EBITDA divided by core revenue. These “core” metrics assist management, investors, and analysts in understanding the organic performance of the operations.

We present free cash flow because we believe it assists investors and analysts in determining the quality of our earnings. We also use free cash flow to measure our financial performance and to report to our board of directors. In addition, our executive incentive compensation is based in part on free cash flow. We define free cash flow as cash flow from operations less capital expenditures (including purchases of intangible assets). Free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure. We also present net debt leverage because it is a key financial metric that is used by management to assess the balance sheet risk of the company. We define net debt leverage as net debt (total principal debt outstanding less unrestricted cash) divided by adjusted EBITDA for the last twelve month period.

Adjusted net income represents net income adjusted for certain items as presented in our reconciliation of non-GAAP, including the after-tax impact of i) non-cash foreign currency (gains) losses, ii) impairment and restructuring charges, iii) one-time non-cash gains, and iv) other non-recurring expenses associated with mergers and acquisitions and litigation. Adjusted EPS represents net income per diluted share adjusted to exclude the estimated per share impact of the same specifically identified items used to calculate adjusted net income as described above. Where applicable, such items are tax-effected at our estimated annual adjusted effective tax rate.

Other companies may compute these measures differently. Non-GAAP metrics should not be considered as alternatives to any other measures derived in accordance with GAAP.

Due to rounding, numbers presented throughout this release may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures.

JELD-WEN Holding, Inc.

Consolidated Statements of Operations (Unaudited)

(In millions)

Three Months Ended

March 27, 2021

March 28, 2020

% Variance

Net revenues

$

1,092.4

$

979.2

11.6

%

Cost of sales

856.4

784.8

9.1

%

Gross margin

235.9

194.4

21.4

%

Selling, general and administrative

191.6

172.6

11.0

%

Impairment and restructuring charges

0.9

6.5

(85.8)

%

Operating income

43.5

15.2

185.2

%

Interest expense, net

18.5

16.6

11.1

%

Other income

(10.8)

(2.3)

365.1

%

Income before taxes

35.8

1.0

3,606.7

%

Income tax expense

10.4

1.2

765.4

%

Net income (loss)

$

25.5

$

(0.2)

NA

Other financial data:

Adjusted EBITDA(1)

$

97.9

$

74.5

31.4

%

Adjusted EBITDA Margin(1)

9.0

%

7.6

%

(1)           Adjusted EBITDA and Adjusted EBITDA margin are financial measures that are not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA and Adjusted EBITDA Margin, see above under the heading “Non-GAAP Financial Information.”

JELD-WEN Holding, Inc.

Selected Financial Data (Unaudited)

(In millions)

March 27,

2021

December 31,

2020

Consolidated balance sheet data:

Cash and cash equivalents

$

612.8

$

735.8

Accounts receivable, net

633.6

477.5

Inventories

531.5

512.2

Total current assets

1,823.3

1,760.7

Total assets

3,983.5

3,964.7

Accounts payable

326.1

269.9

Total current liabilities

903.0

867.6

Total debt

1,759.4

1,768.0

Total shareholders’ equity

977.2

1,004.5

Three Months Ended

Consolidated statement of cash flows data:

March 27,

2021

March 28,

2020

Net cash flow provided by (used in):

Operating activities

$

(64.9)

$

(76.5)

Investing activities

(18.3)

(22.4)

Financing activities

(30.5)

89.3

JELD-WEN Holding, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In millions)

Three Months Ended

(amounts in millions)

March 27,

2021

March 28,

2020

Net income (loss)

$

25.5

$

(0.2)

Income tax expense

10.4

1.2

Depreciation and amortization

34.2

33.5

Interest expense, net

18.5

16.6

Impairment and restructuring charges(1)

0.9

6.7

Gain on sale of property and equipment

(0.9)

(2.1)

Share-based compensation expense

6.9

3.7

Non-cash foreign exchange transaction/translation income

(11.5)

(1.2)

Other items (2)

14.0

16.3

Adjusted EBITDA

$

97.9

$

74.5

(1)           Impairment and restructuring charges consist of (i) impairment and restructuring charges that are included in our accompanying unaudited consolidated statements of operations plus (ii) additional charges relating to inventory and/or manufacturing of our products that are included in cost of sales in our accompanying unaudited consolidated statements of operations of $0.2 for the three months ended March 28, 2020.

(2)           Other non-recurring items not core to ongoing business activity include: (i) in the three months ended March 27, 2021 (1) $13.8 in legal costs and professional expenses relating primarily to litigation; (ii) in the three months ended March 28, 2020 (1) $11.7 in legal costs and professional expenses relating primarily to litigation, (2) $3.1 in facility closure, consolidation, and startup costs, and (3) $1.2 in one-time lease termination charges.

Three Months Ended

(amounts in millions, except share and per share data)

March 27,

2021

March 28,

2020

  Net income (loss)

$

25.5

$

(0.2)

Legal costs and professional expenses

13.8

11.7

Non-cash foreign exchange transactions/translation income

(11.5)

(1.2)

Impairment and restructuring charges

0.9

6.7

Facility closure, consolidation, and startup costs

0.1

3.1

Adjusted tax impact (1)

(0.9)

(7.0)

  Adjusted net income

$

27.9

$

13.1

  Diluted net income per share

$

0.25

$

Legal costs and professional expenses

0.13

0.12

Non-cash foreign exchange transactions/translation income

(0.11)

(0.01)

Impairment and restructuring charges

0.01

0.07

Facility closure, consolidation, and startup costs

0.02

Adjusted tax impact (1)

(0.01)

(0.07)

  Adjusted net income per share

$

0.27

$

0.13

Diluted shares used in adjusted EPS calculation represent the fully dilutive shares for the three months ended March 27, 2021 and March 28, 2020, respectively.

102,642,440

101,626,191

(1)           Except as otherwise noted, adjustments to net income and net income per share are tax-effected at an adjusted tax rate of 25.3% and 25.7% for the three months ended March 27, 2021 and March 28, 2020, respectively.

Three Months Ended

March 27,

2021

March 28,

2020

Net cash provided by operating activities

$

(64.9)

$

(76.5)

Less capital expenditures

21.0

30.2

Free cash flow (1)

$

(85.9)

$

(106.7)

(1)           Free cash flow is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of free cash flow, see above under the heading “Non-GAAP Financial Information”.

March 27,

2021

December 31,

2020

Total debt

$

1,759.4

$

1,768.0

Less cash and cash equivalents

612.8

735.8

Net debt

$

1,146.6

$

1,032.2

Divided by adjusted EBITDA

469.8

446.4

Net debt leverage(1)

2.4x

2.3x

(1)           Net debt leverage is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of net debt leverage, see above under the heading “Non-GAAP Financial Information”.

JELD-WEN Holding, Inc.

Segment Results (Unaudited)

(In millions)

Three Months Ended

March 27,

2021

March 28,

2020

Net revenues from external customers

% Variance

North America

$

639.6

$

586.7

9.0

%

Europe

$

320.5

$

281.5

13.9

%

Australasia

$

132.3

$

111.0

19.2

%

Total Consolidated

$

1,092.4

$

979.2

11.6

%

Adjusted EBITDA(1)

North America

$

79.8

$

49.0

62.9

%

Europe

$

28.8

$

23.3

23.4

%

Australasia

$

13.2

$

8.7

51.3

%

Corporate and unallocated costs

$

(23.9)

$

(6.5)

265.5

%

Total Consolidated

$

97.9

$

74.5

31.4

%

(1)           Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA, see above under the heading “Non-GAAP Financial Information.”

SOURCE JELD-WEN Holding, Inc.

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W&T Offshore Announces First Quarter 2021 Results https://investingnewswire.club/wt-offshore-announces-first-quarter-2021-results/ https://investingnewswire.club/wt-offshore-announces-first-quarter-2021-results/#respond Wed, 12 May 2021 13:58:03 +0000 https://investingnewswire.club/?p=415 Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here. HOUSTON, May 04, 2021 (GLOBE NEWSWIRE) — W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”) today reported operational and financial results for the first quarter 2021. Key highlights included: Produced 39,657 barrels of oil equivalent per day (“Boe/d”), or 3.6 million […]]]>

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HOUSTON, May 04, 2021 (GLOBE NEWSWIRE) — W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”) today reported operational and financial results for the first quarter 2021.

Key highlights included:

  • Produced 39,657 barrels of oil equivalent per day (“Boe/d”), or 3.6 million Boe (50% liquids), in the first quarter of 2021, above the midpoint of W&T’s guidance range and reflecting a 4% increase from the fourth quarter of 2020;
  • Reported net loss of $0.7 million or $0.01 per share and Adjusted Net Income of $15.9 million or $0.11 per share in the first quarter of 2021;
  • Generated significant Adjusted EBITDA of $57.6 million for the first quarter of 2021, up 63% from $35.3 million in the fourth quarter of 2020;
  • Recorded strong net cash provided by operating activities of $45.0 million in the first quarter;
  • Increased Free Cash Flow to $40.0 million in the first quarter of 2021, an increase of 182% from $14.2 million in the fourth quarter of 2020;
  • Remained focused on controlling expenses and reported first quarter 2021 lease operating expense (“LOE”) and general and administrative (“G&A”) costs at the low end or below W&T’s guidance ranges; and
  • Issued W&T’s inaugural Environmental, Social and Governance (“ESG”) report which is now available on the Company’s web site.

Tracy W. Krohn, W&T’s Chairman and Chief Executive Officer, stated, “We had a good first quarter with our operational and financial results and believe that the improved commodity price environment and our commitment to expanding margins will lead to a very good year for us in 2021. Operationally we exceeded guidance in several areas. We were above the midpoint in production, below the midpoint in LOE and below the low end of guidance for G&A. Our strong operational performance coupled with higher commodity pricing led to a 182% increase in Free Cash Flow and a 63% increase in Adjusted EBITDA compared to the fourth quarter of 2020. The efforts we made in 2020 to reduce costs, maintain production and pay down debt are paying off. Additionally, in the first quarter of 2021 we continued to pay down our debt and increase our liquidity position. We have remained true to our strategic vision that has guided us for nearly 40 years to maximize the value of our premier assets that have strong, stable production and generate solid free cash flow.”

“While I am pleased with our results, I am equally proud of our inaugural ESG report that we released in March. We founded W&T with core values centered around safely and sustainably operating our assets and this has guided our success and provided the foundation for W&T to grow into a trusted operator. We have empowered our management to allocate resources and tools necessary to create a working environment focused on accomplishing our ESG objectives and believe that it is every employee’s responsibility to ensure that we operate with the highest regards toward ESG.”

“As we look to the remainder of 2021, we will continue to prioritize operational excellence and free cash flow generation. We have grown W&T through the right combination of attractive property acquisitions, methodical integration and exploitation of those acquisitions, and successful development and exploratory drilling on our legacy fields. We believe that market conditions in the Gulf remain very favorable for accretive acquisitions. Our improved balance sheet and strong cash flow generation have positioned W&T to actively pursue these opportunities. We also have favorable drilling opportunities within our legacy fields that we plan to drill or complete in the second half of 2021. With our 34% equity stake in W&T, our management team’s interests are highly aligned with those of our shareholders, which ensures that we are doing what is best for the near-term and long-term profitability of W&T,” concluded Mr. Krohn.

For the first quarter of 2021, W&T reported a net loss of $0.7 million, or $0.01 per share. Primarily excluding a $16.3 million unrealized commodity derivative loss, the Company’s Adjusted Net Income was $15.9 million, or $0.11 per share. In the first quarter of 2020, W&T reported net income of $66.0 million, or $0.46 per share, which included a $52.5 million unrealized commodity derivative gain, an $18.5 million non-cash gain on debt transaction, and $6.5 million in non-cash deferred tax expense. Adjusted Net Income for the first quarter of 2020 was $5.8 million, or $0.04 per share. In the fourth quarter of 2020, net loss was $8.9 million, or $0.06 per share, which included an $11.5 million unrealized commodity derivative loss, a $6.9 million non-cash tax benefit, and a $2.7 million credit related to a settlement with the U.S. Bureau of Safety and Environmental Enforcement (“BSEE”). For that same period, Adjusted Net Loss was $6.7 million or $0.05 per share.

Adjusted EBITDA for the first quarter of 2021 totaled $57.6 million, an increase of 63% compared to $35.3 million in the fourth quarter of 2020 primarily due to higher commodity prices and increased production volumes. First quarter 2021 Adjusted EBITDA declined 7% from $62.1 million in the first quarter of 2020 primarily due to lower production volumes partially offset by higher prices and lower operating expenses, as well as the impact from derivatives that went from a realized gain in the first quarter of 2020 to a realized loss in the first quarter of 2021.

Free Cash Flow for the first quarter of 2021 totaled $40.0 million, an increase of 182% compared with $14.2 million in the fourth quarter of 2020, and an increase of 14% compared with $35.1 million in the first quarter of 2020.

Adjusted Net (Loss) Income, Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures, which are described in more detail and reconciled to the most comparable GAAP measures in the attached tables below under “Non-GAAP Information.”

Production, Prices and Revenues: Production for the first quarter of 2021 was 39,657 Boe/d or 3.6 MMBoe, an increase of 4% compared to 38,261 Boe/d in the fourth quarter of 2020 and down 26% versus 53,553 Boe/d in the first quarter of 2020. Production for the first quarter of 2021 was above the midpoint of guidance due to better runtime efficiency despite downtime in February associated with the winter storms. First quarter 2021 production was comprised of 1.4 million barrels (“MMBbls”) of oil, 0.4 MMBbls of natural gas liquids (“NGLs”) and 10.8 billion cubic feet (“Bcf”) of natural gas. Liquids production comprised 50% of total production in the first quarter of 2021.

For the first quarter of 2021, W&T’s average realized crude oil sales price was $56.73 per barrel. The Company’s realized NGL sales price was $23.88 per barrel and its realized natural gas sales price was $3.35 per Mcf. The Company’s combined average realized sales price for the quarter was $34.66 per Boe, which represents a 35% increase from $25.63 per Boe that was realized in the fourth quarter of 2020 and an increase of 40% compared to $24.71 per Boe in the first quarter of 2020.

Revenues for the first quarter of 2021 increased 33% to $125.6 million compared to $94.7 million in the fourth quarter of 2020, and increased slightly compared to $124.1 million in the first quarter of 2020. The quarter-over-quarter increase was driven primarily by increased realized commodity prices. The year-over-year increase was driven by improved commodity prices, but was significantly offset by lower production.

Lease Operating Expenses: LOE, which includes base lease operating expenses, insurance premiums, workovers and facilities maintenance was $42.4 million in the first quarter of 2021 compared to $43.3 million in the fourth quarter of 2020 and $54.8 million in the first quarter of 2020. On a component basis for the first quarter of 2021, base lease operating expenses plus insurance premiums were $37.1 million, workovers were $0.3 million and facilities maintenance and repairs expenses were $5.0 million. The large year-over-year decline was primarily related to successful proactive cost reduction measures, reduced expenses from certain fields no longer on production, the deferral of some facility projects, and a smaller number of workovers undertaken. On a unit of production basis, LOE was $11.87 per Boe in the first quarter of 2021, down 4% from $12.31 per Boe in the fourth quarter of 2020, and up 6% from $11.24 per Boe in the first quarter of 2020. Despite lower year-over-year expenses, LOE per Boe increased due to the decrease in production volumes.

Gathering, Transportation Costs and Production Taxes: Gathering, transportation costs and production taxes totaled $6.3 million, or $1.77 per Boe in the first quarter of 2021, compared to $5.3 million, or $1.51 per Boe in the fourth quarter of 2020, and $6.4 million, or $1.31 per Boe in the first quarter of 2020. Gathering and transportation costs declined from the year ago period due to lower production volumes, however first quarter 2021 production taxes increased compared to the fourth quarter and first quarter of 2020 due to higher realized natural gas prices.

Depreciation, Depletion, Amortization and Accretion (“DD&A”): DD&A, including accretion for asset retirement obligations, was $7.46 per Boe of production for the first quarter of 2021 compared to $7.54 per Boe for the fourth quarter of 2020 and $8.03 per Boe for the first quarter of 2020. DD&A per Boe in the first quarter of 2021 declined slightly from the fourth quarter of 2020 due to a modest reduction in net capital spending. The DD&A rate in the first quarter of 2021 declined $0.57 per Boe from the first quarter of 2020 primarily due to a decline in the depreciable base as a result of reduced capital spending over the past year compared to a relatively small change in proved reserves over the same period.

General and Administrative Expenses (“G&A”): G&A was $10.7 million for the first quarter of 2021, compared to $7.7 million in the fourth quarter of 2020 and $14.0 million for the first quarter of 2020. The fourth quarter of 2020 benefitted from a $2.7 million credit related to a settlement with BSEE that resolved certain pending civil penalties issued by BSEE. The decline in year-over-year G&A cost was driven primarily by lower incentive compensation and payroll expenses, and an employee retention credit. On a unit of production basis, G&A was $3.00 per Boe in the first quarter of 2021, $2.18 per Boe in the fourth quarter of 2020, and $2.87 per Boe in the first quarter of 2020.

Derivative (Gain) Loss: In the first quarter of 2021, W&T recorded a net loss of $24.6 million on its outstanding commodity derivative contracts, of which $16.3 million was an unrealized commodity derivative loss. This compared to a net loss of $11.5 million in the fourth quarter of 2020 substantially all of which was an unrealized commodity derivative loss and a net gain of $61.9 million in the first quarter of 2020 of which $52.5 million was an unrealized commodity derivative gain.

A listing of the Company’s current outstanding derivative positions is included in the tables below as well as in the Investor Relations section of W&T’s web site under the “Financial Info” tab.

Interest Expense: Interest expense, as reported in the income statement, in the first quarter of 2021 was $15.0 million compared with $15.4 million in the fourth quarter of 2020 and $17.1 million in the first quarter of 2020. The reduction in expense from the prior year relates primarily to reduced interest costs following the reduction of $72.5 million in principal of W&T’s 9.75% Senior Secured Second Lien Notes in early 2020.

Income Tax: W&T recorded an income tax benefit of $0.2 million in the first quarter of 2021 compared to an income tax benefit of $6.9 million in the fourth quarter of 2020 and an income tax expense of $6.5 million in the first quarter of 2020. For the three months ended March 31, 2021, W&T’s income tax benefit differed from the statutory Federal tax rate primarily by the impact of state income taxes. For the three months ended March 31, 2020, the Company’s effective tax rate primarily differed from the statutory Federal tax rate for adjustments recorded related to the enactment of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) on March 27, 2020. W&T’s effective tax rate was 21.4% for the three months ended March 31, 2021 and 9.0% for the three months ended March 31, 2020.

As of March 31, 2021, W&T’s deferred tax valuation allowance was $22.0 million. The Company continually evaluates the need to maintain a valuation allowance on its deferred tax assets. Any future reduction of a portion or all of the valuation allowance would result in a non-cash income tax benefit in the period the decision occurs. W&T is not currently forecasting any cash income tax expense for the near-term.

Balance Sheet, Cash Flow and Liquidity: Net cash provided by operating activities for the three months ended March 31, 2021 was $45.0 million. Total liquidity on March 31, 2021 was $191.0 million, consisting of cash and cash equivalents of $53.4 million and $137.6 million of availability under W&T’s revolving bank credit facility. In the first quarter 2021, W&T paid down its revolving credit facility by $32.0 million from $80 million with a portion of its free cash flow. Currently, total long-term debt, including $48.0 million in revolving credit facility borrowings, is $593.8 million net of unamortized debt issuance costs.

In January 2021, W&T’s bank group completed its regularly scheduled semi-annual borrowing base redetermination and the borrowing base was set at $190 million. The next regularly scheduled redetermination is in late spring of 2021. W&T is currently in compliance with all applicable covenants of the Credit Agreement and the Senior Secured Second Lien Notes indenture.

Capital Expenditures: Per the Statement of Cash Flows, capital expenditures in the first quarter of 2021, excluding changes in working capital associated with investing activities, were $1.6 million. As previously disclosed, W&T’s 2021 estimated capital budget of $30 million to $60 million (excluding potential acquisitions) is weighted toward the second half of 2021.

Environmental, Social and Governance (“ESG”) Commentary and COVID-19 Response

W&T issued its 2020 initial corporate ESG report in March 2021. The report has an in-depth review of W&T’s ESG initiatives as well as related key performance indicators. In the creation of its inaugural report, the Company consulted the Sustainability Accounting Standards Board’s (“SASB”) Oil and Gas Exploration and Production Sustainability Accounting Standard, the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), and other reporting guidance from industry frameworks and standards.

W&T is committed to the health and safety of all its employees and contractors and has taken steps to ensure their continued safety in its response to the COVID-19 pandemic. At its corporate office, W&T instituted 100% remote work on March 23, 2020, and subsequently reopened its offices and implemented actions to protect employees including temperature checks, mask wearing, and social distancing. 

For its field operations, the Company instituted screening, which includes a questionnaire and temperature check, of all personnel prior to entry into heliports and shorebases as well as its Alabama gas treatment plant. The Company conducts daily temperature screenings at all offshore facilities, implemented procedures for distancing and hygiene at its field locations, and provides COVID-19 testing for field project crews. 

W&T will continue to monitor the COVID-19 situation and follow the advice of government and health advisors. 

OPERATIONS UPDATE

W&T successfully drilled one well at East Cameron 338/349 in the first quarter of 2020, the Cota well, which is in over 290 feet of water and was drilled to a total depth of over 6,000 feet and encountered approximately 100 feet of net oil pay. The well remains in the development phase of the project, with initial production expected in the latter part of 2021. The Company has an initial 30% working interest in the Cota well but the interest will increase to 38.4% once the well is brought online and certain performance thresholds are met. W&T did not initiate new drilling activity in the first quarter of 2021 as it plans for its capital investment program to be weighted toward the second half of 2021.

Well Recompletions and Workovers: During the first quarter of 2021, the Company performed one recompletion and one workover that in total added approximately 400 net Boe/d to production. W&T currently plans to continue to perform recompletions and workovers that meet economic thresholds.

Consolidation of Onshore Natural Gas Treatment Plants Supporting Mobile Bay Assets: In January 2021, the Company completed the consolidation of its two onshore natural gas treatment facilities that service the Mobile Bay area into the Onshore Treating Facility (“OTF”) which was acquired in 2019 from ExxonMobil, and closed its Yellowhammer treatment facility. The OTF has more than sufficient capacity to meet W&T’s current and expected needs as it further develops its Mobile Bay and regional natural gas assets in the future. The consolidation of the facilities is expected to result in savings of approximately $5 million per year beginning in 2021.

Second Quarter and Full Year 2021 Production and Expense Guidance

The guidance for the second quarter and full year 2021 in the table below represents the Company’s current best estimate of the range of likely future results. Guidance could be affected by the factors described below in “Forward-Looking Statements”.

  Second Quarter Full Year
Production 2021 2021
     
Oil (MMBbls) 1.26 – 1.39 4.97 – 5.57
     
NGL’s (MMBbls) 0.37 – 0.41 1.47 – 1.63
     
Natural Gas (Bcf) 11.0 – 12.2 44.4 – 49.0
     
Total (MMBoe) 3.5 – 3.8 13.8 – 15.4
     
Total (Boe/d) 38,500 – 42,500 38,000 – 42,000
     
Operating Expenses Second Quarter Full Year
($ in millions) 2021 2021
     
Lease operating expenses $44 – $48 $158 – $174
     
Gathering, transportation &    
production taxes $5.4 – $5.9 $23 – $25
     
General & administrative $13.9 – $15.4 $49 – $54
     
Current income tax expense rate 0% 0%
     

Conference Call Information: W&T will hold a conference call to discuss its financial and operational results on Wednesday May 5, 2021, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). Interested parties may participate by dialing (844) 739-3797. International parties may dial (412) 317-5713. Participants should request to connect to the “W&T Offshore Conference Call.” This call will also be webcast and available on W&T’s website at www.wtoffshore.com under “Investors”. An audio replay will be available on the Company’s website following the call.

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration and development. The Company currently has working interests in 42 producing fields in federal and state waters and has under lease approximately 709,000 gross acres, including approximately 500,000 gross acres on the Gulf of Mexico Shelf and approximately 209,000 gross acres in the Gulf of Mexico deepwater. A majority of the Company’s daily production is derived from wells it operates. For more information on W&T, please visit the Company’s website at www.wtoffshore.com.

Forward-Looking and Cautionary Statements

This press release contains 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. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in W&T Offshore’s Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. Investors are urged to consider closely the disclosures and risk factors in these reports. We refer to feet of “pay” in our discussions concerning the evaluation of our recently drilled wells. This refers to geological indications, typically obtained from well logging, of the estimated thickness of sands which we believe are capable of producing hydrocarbons in commercial quantities. These indications of “pay” may not necessarily forecast the amount of future production or reserve quantities from the well, which can be dependent upon numerous other factors.

 

 

W&T OFFSHORE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                   
    Three Months Ended
      March 31,     December 31,     March 31,
      2021       2020       2020  
     
Revenues:                  
Oil   $ 78,140     $ 54,535     $ 84,650  
NGLs     9,359       6,267       6,452  
Natural gas     36,209       29,423       29,300  
Other     1,939       4,523       3,726  
Total revenues     125,647       94,748       124,128  
                   
Operating costs and expenses:                  
Lease operating expenses     42,357       43,332       54,775  
Gathering, transportation costs and production taxes     6,315       5,313       6,365  
Depreciation, depletion, amortization and accretion     26,637       26,547       39,126  
General and administrative expenses     10,712       7,678       13,963  
Derivative loss (gain)     24,578       11,529       (61,912 )
Total costs and expenses     110,599       94,399       52,317  
Operating income     15,048       349       71,811  
                   
Interest expense, net     15,034       15,402       17,110  
Gain on debt transactions                 (18,501 )
Other expense, net     963       752       723  
(Loss) income before income tax (benefit) expense     (949 )     (15,805 )     72,479  
Income tax (benefit) expense     (203 )     (6,858 )     6,499  
Net (loss) income   $ (746 )   $ (8,947 )   $ 65,980  
                   
                   
Basic and diluted (loss) earnings per common share   $ (0.01 )   $ (0.06 )   $ 0.46  
                   
Weighted average common shares outstanding     142,151       141,721       141,546  
                   

 

W&T OFFSHORE, INC. AND SUBSIDIARIES
Condensed Operating Data
(Unaudited)
                         
    Three Months Ended  
      March 31,       December 31,       March 31,  
      2021       2020       2020  
Net sales volumes:                        
Oil (MBbls)     1,377       1,273       1,827  
NGL (MBbls)     392       385       495  
Oil and NGLs (MBbls)     1,769       1,658       2,322  
Natural gas (MMcf)     10,799       11,174       15,307  
Total oil and natural gas (MBoe) (1)     3,569       3,520       4,873  
                         
Average daily equivalent sales (MBoe/d)     39.7       38.3       53.6  
                         
Average realized sales prices:                        
Oil ($/Bbl)   $ 56.73     $ 42.84     $ 46.33  
NGLs ($/Bbl)     23.88       16.30       13.03  
Oil and NGLs ($/Bbl)     49.45       36.68       39.23  
Natural gas ($/Mcf)     3.35       2.63       1.91  
Barrel of oil equivalent ($/Boe)     34.66       25.63       24.71  
                         
Average costs and expenses per Boe ($/Boe):                        
Lease operating expenses   $ 11.87     $ 12.31     $ 11.24  
Gathering, transportation costs and production taxes     1.77       1.51       1.31  
Depreciation, depletion, amortization and accretion     7.46       7.54       8.03  
General and administrative expenses     3.00       2.18       2.87  
                         

 

(1) MBoe is determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs (totals may not compute due to rounding). The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil, NGLs and natural gas may differ significantly.

W&T OFFSHORE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
             
    March 31,   December 31,
    2021   2020
             
Assets            
Current assets:            
Cash and cash equivalents   $ 53,359     $ 43,726  
Receivables:            
Oil and natural gas sales     49,931       38,830  
Joint interest, net     15,234       10,840  
Total receivables     65,165       49,670  
Prepaid expenses and other assets     15,350       13,832  
Total current assets     133,874       107,228  
             
Oil and natural gas properties and other, net – at cost     8,591,216       8,588,356  
Less accumulated depreciation, depletion, amortization and impairment     7,922,247       7,901,478  
Oil and natural gas properties and other, net     668,969       686,878  
Restricted deposits for asset retirement obligations     29,699       29,675  
Deferred income taxes     94,535       94,331  
Other assets     22,613       22,470  
Total assets   $ 949,690     $ 940,582  
             
Liabilities and Shareholders’ Deficit            
Current liabilities:            
Accounts payable   $ 37,429     $ 41,304  
Undistributed oil and natural gas proceeds     25,338       19,167  
Advances from joint interest partners     6,285       7,308  
Asset retirement obligations     26,402       17,188  
Accrued liabilities     64,573       30,033  
Total current liabilities     160,027       115,000  
             
Long-term debt, net     593,838       625,286  
Asset retirement obligations, less current portion     372,495       375,516  
Other liabilities     31,908       33,066  
Shareholders’ deficit:            
Common stock, $0.00001 par value; 200,000 shares authorized; 145,174 issued and 142,305            
outstanding at March 31, 2021 and at December 31, 2020            
      1       1  
Additional paid-in capital     550,793       550,339  
Retained deficit     (735,205 )     (734,459 )
Treasury stock, at cost; 2,869 shares for both dates presented     (24,167 )     (24,167 )
Total shareholders’ deficit     (208,578 )     (208,286 )
Total liabilities and shareholders’ deficit   $ 949,690     $ 940,582  

 

 

W&T OFFSHORE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                   
                   
      Three Months Ended
      March 31,     December 31,     March 31,
      2021      2020      2020 
Operating activities:                  
Net (loss) income   $ (746 )   $ (8,947 )   $ 65,980  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:                  
Depreciation, depletion, amortization and accretion     26,637       26,547       39,126  
Amortization of debt items and other items     2,019       1,583       1,625  
Share-based compensation     454       817       1,048  
Derivative loss (gain)     24,578       11,529       (61,912 )
Derivative cash (payments) receipts, net     (4,604 )     3,168       4,404  
Gain on debt transactions                 (18,501 )
Deferred income taxes     (203 )     (6,880 )     6,499  
Changes in operating assets and liabilities:                  
Oil and natural gas receivables     (11,101 )     (17,423 )     21,954  
Joint interest receivables     (4,394 )     (479 )     7,123  
Prepaid expenses and other assets     (7,575 )     1,612       11,011  
Income taxes           22        
Asset retirement obligation settlements     (962 )     (551 )     (249 )
Cash advances from JV partners     (1,023 )     (414 )     13,006  
Accounts payable, accrued liabilities and other     21,884       (16,813 )     (6,790 )
Net cash provided by (used in) operating activities     44,964       (6,229 )     84,324  
                   
Investing activities:                  
Investment in oil and natural gas properties and equipment     (1,575 )     (4,678 )     (9,542 )
Changes in operating assets and liabilities associated with investing activities     (1,758 )     1,694       (24,033 )
Acquisition of property interests           (2,463 )     (2,002 )
Purchases of furniture, fixtures and other     2       (460 )     (70 )
Net cash used in investing activities     (3,331 )     (5,907 )     (35,647 )
                   
Financing activities:                  
Repayments on credit facility     (32,000 )           (25,000 )
Purchase of Senior Second Lien Notes                 (8,536 )
Debt transactions costs and other           (670 )      
Net cash used in financing activities     (32,000 )     (670 )     (33,536 )
Increase (decrease) in cash and cash equivalents     9,633       (12,806 )     15,141  
Cash and cash equivalents, beginning of period     43,726       56,532       32,433  
Cash and cash equivalents, end of period   $ 53,359     $ 43,726     $ 47,574  

 

 

 

W&T OFFSHORE, INC. AND SUBSIDIARIES
Financial Commodity Derivative Positions
As of May 4, 2021
   
Production Period   Instrument   Avg. Daily Volumes Weighted AvgSwap Price Weighted AvgPut Price Weighted AvgCall Price
Crude Oil – WTI NYMEX:       (bbls) (per Bbl) (per Bbl) (per Bbl)
May 2021 – Dec 2021   Swaps   1,000 $41.00    
May 2021 – Dec 2021   Swaps   1,000 $42.05    
May 2021 – Dec 2021   Swaps   1,000 $42.18    
May 2021 – Dec 2021   Swaps   1,000 $43.00    
Jan 2022 – Feb 2022   Swaps   1,000 $42.75    
Jan 2022 – Feb 2022   Swaps   1,000 $42.80    
Jan 2022 – Feb 2022   Swaps   1,000 $43.40    
Mar 2022 – May 2022   Swaps   1,000 $41.90    
Mar – 2022   Swaps   1,076 $42.75    
Mar – 2022 1   Swaps   448 $54.53    
Apr – 2022 1   Swaps   670 $54.53    
Apr – 2022   Swaps   1,055 $42.75    
May – 2022   Swaps   1,000 $42.75    
May – 2022 1   Swaps   552 $54.53    
Jun – 2022 1   Swaps   2,583 $54.53    
Jul – 2022 1   Swaps   2,422 $54.53    
Aug – 2022 1   Swaps   2,335 $54.53    
Sep – 2022 1   Swaps   2,319 $54.53    
May 2021 – Dec 2021 1   Costless Collars   200   $40.00 $54.90
May – 2021   Costless Collars   1,944   $35.00 $50.00
May – 2021 1   Costless Collars   823   $45.00 $69.00
Jun – 2021   Costless Collars   1,924   $35.00 $50.00
Jun – 2021 1   Costless Collars   832   $45.00 $69.00
Jul – 2021   Costless Collars   1,525   $35.00 $50.00
Jul – 2021 1   Costless Collars   786   $45.00 $69.00
Aug – 2021   Costless Collars   1,346   $35.00 $50.00
Aug – 2021 1   Costless Collars   739   $45.00 $69.00
Sep – 2021   Costless Collars   1,350   $35.00 $50.00
Sep – 2021 1   Costless Collars   748   $45.00 $69.00
Oct – 2021   Costless Collars   1,012   $35.00 $50.00
Oct – 2021 1   Costless Collars   651   $45.00 $69.00
Nov – 2021   Costless Collars   948   $35.00 $50.00
Nov – 2021 1   Costless Collars   738   $45.00 $69.00
Dec – 2021   Costless Collars   625   $35.00 $50.00
Dec – 2021 1   Costless Collars   716   $45.00 $69.00
Jan – 2022   Costless Collars   1,473   $35.00 $50.00
Jan – 2022 1   Costless Collars   908   $45.00 $69.00
Feb – 2022   Costless Collars   1,790   $35.00 $50.00
Feb – 2022 1   Costless Collars   890   $45.00 $69.00
Mar 2022 – May 2022   Costless Collars   1,000   $35.00 $47.50
Mar 2022 – May 2022   Costless Collars   1,000   $35.00 $49.50
Mar – 2022 1   Costless Collars   448   $45.00 $62.50
Apr – 2022 1   Costless Collars   670   $45.00 $62.50
May – 2022 1   Costless Collars   552   $45.00 $62.50
Jun – 2022 1   Costless Collars   2,583   $45.00 $62.50
Jul – 2022 1   Costless Collars   2,422   $45.00 $62.50
Aug – 2022 1   Costless Collars   2,335   $45.00 $62.50
Sep – 2022 1   Costless Collars   2,319   $45.00 $62.50
               
Production Period   Instrument   Avg. Daily Volumes Weighted AvgSwap Price Weighted AvgPut Price Weighted AvgCall Price
Natural Gas – Henry Hub NYMEX:       (MMBTU) (per MMBTU) (per MMBTU) (per MMBTU)
May 2021 – Dec 2022   Calls (long)   40,000     $3.00
May 2021 – Dec 2022   Costless Collars   40,000   $1.83 $3.00
May 2021 – Dec 2021   Costless Collars   20,000   $2.17 $3.00
May 2021 – Dec 2021   Swaps   10,000 $2.62    
May 2021 – Dec 2021   Costless Collars   10,000   $2.20 $3.00
Jan 2022 – Feb 2022   Costless Collars   30,000   $2.20 $4.50
Mar 2022 – May 2022   Costless Collars   10,000   $2.25 $3.40
Jan – 2022   Swaps   20,000 $2.79    
Feb – 2022   Swaps   30,000 $2.79    
Mar – 2022   Swaps   10,095 $2.69    
Apr – 2022   Swaps   11,571 $2.69    
May – 2022 1   Swaps   278 $2.44    
May – 2022   Swaps   10,000 $2.69    
Jun – 2022 1   Swaps   21,026 $2.44    
Jul – 2022 1   Swaps   17,733 $2.44    
Aug – 2022 1   Swaps   17,138 $2.44    
Sep – 2022 1   Swaps   18,473 $2.44    
               
                 
(1) The Company entered into these derivative positions between January 1, 2021 and May 4, 2021.    

 

W&T OFFSHORE, INC. AND SUBSIDIARIESNon-GAAP Information

Certain financial information included in W&T’s financial results are not measures of financial performance recognized by accounting principles generally accepted in the United States, or GAAP. These non-GAAP financial measures are “Adjusted Net (Loss) Income”, “Adjusted EBITDA” and “Free Cash Flow”. Management uses these non-GAAP financial measures in its analysis of performance. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.

Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income

Adjusted Net (Loss) Income does not include the unrealized commodity derivative loss (gain), amortization of derivative premium, bad debt reserve, deferred tax benefit, gain on debt transactions, and litigation and other. Adjusted Net Income is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current periods to prior periods.

    Three Months Ended
      March 31,   December 31,   March 31,
     2021   2020   2020
    (In thousands, except per share amounts)
    (Unaudited)
                   
Net (loss) income   $ (746 )   $ (8,947 )   $ 65,980  
Unrealized commodity derivative loss (gain)     16,334       11,456       (52,520 )
Amortization of derivative premium     456       1,483       4,349  
Bad debt reserve           (1,063 )     36  
Deferred tax (benefit) expense     (203 )     (6,880 )     6,499  
Gain on debt transactions                 (18,501 )
Litigation and other     40       (2,708 )      
Adjusted Net Income (Loss)   $ 15,881     $ (6,659 )   $ 5,843  
                   
Basic and diluted adjusted (loss) earnings per common share   $ 0.11     $ (0.05 )   $ 0.04  
                   
                   
Weighted Average Shares Outstanding     142,151       141,721       141,546  

 

W&T OFFSHORE, INC. AND SUBSIDIARIESNon-GAAP Information

Adjusted EBITDA/ Free Cash Flow Reconciliations

The Company also presents the non-GAAP financial measures Adjusted EBITDA and Free Cash Flow. The Company defines Adjusted EBITDA as net (loss) income plus income tax (benefit) expense, net interest expense, and depreciation, depletion, amortization and accretion, excluding the unrealized commodity derivative gain or loss, amortization of derivative premium, bad debt reserve, gain on debt transactions, and litigation and other. Company management believes this presentation is relevant and useful because it helps investors understand W&T’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. Adjusted EBITDA, as W&T calculates it, may not be comparable to Adjusted EBITDA measures reported by other companies. In addition, Adjusted EBITDA does not represent funds available for discretionary use.

The Company defines Free Cash Flow as Adjusted EBITDA (defined above), less capital expenditures, plugging and abandonment costs and interest expense (all on an accrual basis). For this purpose, the Company’s definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and the lease maintenance costs) and equipment, furniture and fixtures, but excludes acquisition costs of oil and gas properties from third parties that are not included in the Company’s capital expenditures guidance provided to investors. Company management believes that Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of its current operating activities after the impact of accrued capital expenditures, plugging and abandonment costs and interest expense and without being impacted by items such as changes associated with working capital, which can vary substantially from one period to another. There is no commonly accepted definition Free Cash Flow within the industry. Accordingly, Free Cash Flow, as defined and calculated by the Company, may not be comparable to Free Cash Flow or other similarly named non-GAAP measures reported by other companies. While the Company includes interest expense in the calculation of Free Cash Flow, other mandatory debt service requirements of future payments of principal at maturity (if such debt is not refinanced) are excluded from the calculation of Free Cash Flow. These and other non-discretionary expenditures that are not deducted from Free Cash Flow would reduce cash available for other uses.

The following tables present (i) a reconciliation of cash flow from operating activities, a GAAP measure, to Free Cash Flow, as defined by the Company and (ii) a reconciliation of the Company’s net (loss) income, a GAAP measure, to Adjusted EBITDA and Free Cash Flow, as such terms are defined by the Company.

    Three Months Ended
      March 31,   December 31,   March 31,
      2021   2020   2020
    (In thousands)
    (Unaudited)
                   
Net (loss) income   $ (746 )   $ (8,947 )   $ 65,980  
Interest expense, net     15,034       15,402       17,110  
Income tax benefit     (203 )     (6,858 )     6,499  
Depreciation, depletion, amortization and accretion     26,637       26,547       39,126  
Unrealized commodity derivative loss (gain)     16,334       11,456       (52,520 )
Amortization of derivative premium     456       1,483       4,349  
Bad debt reserve           (1,063 )     36  
Gain on debt transactions                 (18,501 )
Litigation and other     40       (2,708 )      
Adjusted EBITDA   $ 57,552     $ 35,312     $ 62,079  
                   
                   
                   
Investment in oil and natural gas properties and equipment     (1,575 )     (4,678 )     (9,542 )
Purchases of furniture, fixtures and other     2       (460 )     (70 )
Asset retirement obligation settlements     (962 )     (551 )     (249 )
Interest expense, net     (15,034 )     (15,402 )     (17,110 )
                   
Free Cash Flow   $ 39,983     $ 14,221     $ 35,108  
  Three Months Ended
    March 31,     December 31,     March 31,
    2021      2020      2020 
    (In thousands)
    (Unaudited)
                 
Net cash provided by (used in) operating activities $ 44,964     $ (6,229 )   $ 84,324  
Bad debt reserve         (1,063 )     36  
Litigation and other   40       (2,708 )      
Amortization of debt items and other items   (2,019 )     (1,583 )     (1,625 )
Share-based compensation   (454 )     (817 )     (1,048 )
Current tax benefit (expense) (1)         22        
Changes in derivatives receivable (payable) (1)   (3,184 )     (1,758 )     9,337  
Changes in operating assets and liabilities, excluding asset retirement obligation settlements   2,209       33,495       (46,304 )
Investment in oil and natural gas properties and equipment   (1,575 )     (4,678 )     (9,542 )
Purchases of furniture, fixtures and other   2       (460 )     (70 )
                 
Free Cash Flow $ 39,983     $ 14,221     $ 35,108  
                 
                 
(1) A reconciliation of the adjustment used to calculate Free Cash Flow to the Condensed Consolidated Financial Statements is included below:  
   
Current tax benefit:                
Income tax (benefit) expense $ (203 )   $ (6,858 )   $ 6,499  
Less: Deferred income taxes   (203 )     (6,880 )     6,499  
Current tax benefit (expense) $     $ 22     $  
                 
Changes in derivatives receivable:                
Derivatives receivable (payable), end of period $ (3,465 )   $ (281 )   $ 9,682  
Derivatives receivable (payable), beginning of period   281       (1,477 )     (345 )
Change in derivatives receivable (payable) $ (3,184 )   $ (1,758 )   $ 9,337  

Source: W&T Offshore, Inc.

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“American capitalism” is the enemy https://investingnewswire.club/american-capitalism-is-the-enemy/ https://investingnewswire.club/american-capitalism-is-the-enemy/#respond Tue, 04 May 2021 23:55:00 +0000 https://investingnewswire.club/american-capitalism-is-the-enemy/ Triggered by the Black Lives Matter movement, cities across the United States caught fire last year, beset by looters, agitators and killers. As leaves and ashes gently fell last fall, homicide rates began to skyrocket across the country, reaching over $ 1 billion in claims recorded on the industry’s books. assurances, making these riots the […]]]>

Triggered by the Black Lives Matter movement, cities across the United States caught fire last year, beset by looters, agitators and killers. As leaves and ashes gently fell last fall, homicide rates began to skyrocket across the country, reaching over $ 1 billion in claims recorded on the industry’s books. assurances, making these riots the most destructive in American history.

Still, last week Norwegian MP Petter Eide nominated Black Lives Matter for the Nobel Peace Prize.

The most peculiar thing about last summer’s chaos was not the media coverage, with the bipartisan bowing down to the demands of the agitators, or even the scale of the destruction. Instead, it was the universal embrace of the movement behind the madness by industry leaders.

A week after a gunman shot and killed Federal Officer Patrick Underwood as a Black Lives Matter protest unfolded nearby, as riots escalated across the country, the Twitter CEO , Jack Dorsey, encouraged his subscribers to “Download Signal”, an encrypted messaging application. Signal served as an organizing tool for BLM activists to conspire away from prying eyes.

Three days after Dorsey tweeted this sound advice, looters killed a retired African-American police captain named David Dorn as he tried to protect a friend’s pawnshop in St. Louis, Missouri.

A not so free market

Dorsey is not alone. The number of companies that have supported the cause – and continue to support it – is staggering. IBM, Microsoft, Amazon, Target, Walmart, Home Depot, T-Mobile, Uber, Facebook, Apple, Intel, the list goes on and on. PayPal announced that it will allocate $ 530 million to “provide immediate financial assistance, sustained support and long-term investments to expand economic opportunities for under-represented black and minority businesses and communities.” Citigroup has published a study that puts the “cost of black inequality” in the United States at $ 16 trillion.

Many of those same companies have aligned themselves against right-wing populism in particular and against average Americans in general. A single lone January 6 riot by Trump supporters caused their internet purge, financial strangulation of allied lawmakers, denial of services to both, closure of bank accounts, and more. All, ironically, under the guise of fighting extremism, a justification that industry executives have recently used to quell a populist uprising online.

Retail traders using the Robinhood broker-dealer app succeeded in bringing Wall Street hedge funds to their knees trying to short-sell GameStop, a physical video game retailer. So far, populist short squeezers have cost Wall Street short sellers $ 20 billion. Businesses and their allies in the media have responded by reminding Americans that the free market is not free at all.

Discord and Facebook have moved to restrict groups used by retailers to communicate and organize, both under the pretext of unrelated terms of service violations. Robinhood itself has alternated between imposing bans and restrictions on trade, angering users who accused the company of giving in to pressure from Wall Street.

Laura Unger, the former commissioner of the Securities and Exchange Commission, compared the actions of retail traders to the riots by Trump supporters on Jan.6 on Capitol Hill. While the events at Capitol Hill have caused “personal and bodily injury”, retail traders have done “financial damage,” she told CNBC. The media have made connections between these traders and Trump’s voters, which is true as both revolted against the elites, but the implicit and more critical point she wants to make is that these people are filthy. , backward and probably racist.

The best activism that corporate money can buy

While the scale of it all is unprecedented, the fundamentals are nothing new. Businesses support and court social upheaval because it is a far more effective means than force to neutralize it. The agitators and their movements, as the Canadian philosopher George Grant wrote in a critique of the left, “are integrated into the system and trivialized. They are made to serve the interests of the system they are supposed to attack, by showing that free speech is allowed.

If so many leftists didn’t hate ordinary Americans more than they hated this system, they wouldn’t be so often and easily appeased. Black Lives Matter has finally increased the hand of the system tenfold, allowing it to rehabilitate its image while increasing its power and reach.

Virtually all issues that reduce American life to scrapping of booty follow this pattern.

The “dirty secret of affirmative action policy,” Richard Kahlenberg noted in 1996, “is that American businesses actually support affirmative action,” whether it is based on race, gender or nationality. An affirmative action culture, in reality, has little to do with merit, equality or justice, and more with an ever-growing base of consumers and producers who keep wages low and demand high. Many conservatives who spend their days denouncing the march of the left have internalized this pattern.

“Despite the feminist tendency of the third wave to confuse fleeting patriarchy with capitalism, the two could not be more incompatible,” writes conservative journalist Tiana Lowe in “Capitalism Crushed Patriarchy”. Free markets, she concludes, “have revolutionized the quality of human life for everyone, but perhaps none more than women.” In other words, she unwittingly agrees with Karl Marx that capitalism, not socialism, has dissolved the bonds of tradition, family and encouraged women to give up the cradle for the cabin – it’s just that ‘she insists it’s a reason to celebrate.

“Age and gender differences no longer have distinctive social validity for the working class,” wrote Marx in 1848 on the corrosive consequences of capitalism. “All of them are working tools, more or less expensive to use, depending on their age and sex. Contemporary conservatives make the same equally approving observations as Marx, they are just not honest or smart enough to understand this fact.

Specifically, companies support affirmative action for the same reason that they support mass immigration policy and are willing to pay agitators: profit and power and a broad consumer base that is essentially an uprooted and morally proletariat. slave to debt. In other words, people who cannot govern themselves will, and to buy, what they are told.

More manageable people

This system praises diversity, but its goal is homogeneity. Only a handful of billionaires own American newspapers, for example, while six companies control virtually all media. When ordinary conservatives speak out against socialism, what they really complain about is central planning in the hands of a few, but it is already a fact of American life. The American economy is defined by a consolidated corporate power that does just that.

‘Crony capitalism’ is therefore a misnomer because it suggests that what we are witnessing is an exception to an otherwise good rule when it is the rule itself – managerialism – that merges industry and government. . The active heads of government offices, wrote James Burnham, “are managers in government, the same, or almost, in training functions, skills, habits of thought as managers in industry.

None of this can be said out loud, so that a cosmopolitan myth of universalism is woven, with freedom, equality and opportunity as principles. All the claims of particularism, such as family, sex, religion, human nature and the nation-state become artificial at best; oppressive if he is white, heterosexual, male, Christian and western.

The traditions, symbols and heroes of historic America are naturally attacked because they are representations of differentiation; thus, obstacles to the creation of a homogenized mass society adapted to consumption and mass production. Indeed, companies have been the spearhead of the deconstruction of American civilization and the creation of a new, more easily “managed” one.

Thus, the myth of democratic capitalism, in reality, is the expression of the personal and collective interests of an oligarchy which presents itself and its actions as serving the public interest. But the mask slips whenever a not-so-veiled force or fraud is used to protect and consolidate its power, interests and ideology, whether it is openly engaging in market manipulation to protect Wall. Street or to remove entire social media networks from the web to silence protest.

The truth is that the political economy of the United States is no longer capitalism but managerialism, which slit the throat of capitalism during the 20th century after the Great Depression and the two world wars, replacing the bourgeois elite of yesteryear by managers presiding over a system that separates ownership and control.

Whatever its theoretical merits, to defend what we like to call today “American capitalism” is to put on the ideological chains of a ruling class hostile to private property, to real small businesses and to corporations. traditional institutions because all this constitutes a brake on growth. and control of the managerial class.

The movement that emerges from the ashes of the present must be turned away from a myth that only serves to deceive Americans into docility lest they disturb the not so invisible hand around their throats into believing that the climax of l humanity experience is the reverse of materialism. There is nothing to lose but the chains.

This article has been republished with permission from American Greatness.

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Change in economy: Covid brings fiscal policy back to the fore https://investingnewswire.club/change-in-economy-covid-brings-fiscal-policy-back-to-the-fore/ https://investingnewswire.club/change-in-economy-covid-brings-fiscal-policy-back-to-the-fore/#respond Tue, 04 May 2021 23:54:59 +0000 https://investingnewswire.club/change-in-economy-covid-brings-fiscal-policy-back-to-the-fore/ A rare regime change in economic policy is underway that takes central bankers away from the central role they have played for decades. Fiscal policy, which fell into disuse as an engine of economic growth during the inflationary 1970s, has been at the center of the fight against Covid-19. Governments subsidized wages, sent checks to […]]]>

A rare regime change in economic policy is underway that takes central bankers away from the central role they have played for decades.

Fiscal policy, which fell into disuse as an engine of economic growth during the inflationary 1970s, has been at the center of the fight against Covid-19. Governments subsidized wages, sent checks to households and guaranteed loans to businesses. They have racked up record budget deficits along the way – an approach economists have gradually supported, since the last great crash of 2008 ushered in a decade of lukewarm growth.

And government spending that has bottomed out the pandemic slump is increasingly seen as vital for a sustainable recovery as well. When it seems to dry up, as it did in the United States last week, investors start to worry.

How long to keep the taps open will be a key topic at this week’s International Monetary Fund meetings – and the biggest challenge for politicians in charge of national budgets, once they get out of crisis mode.

Right now, their own inhibitions about debt seem to be the main obstacle, as traditional barriers disappear. Financial markets, where bond vigilantes were once supposed to exercise powerful control over deficit governments, are ready to lend them money at very low interest rates.

The short-term concern for investors is that politicians will delay the recovery by spending too little. JP Morgan predicts that this year’s big fiscal boost to the global economy could turn into a 2.4 percentage point drag on growth in 2021, as virus programs expire.

The same concern weighs on the monetary authorities, whose autonomy vis-à-vis the rest of the government has been designed so that they can postpone an overly accommodative fiscal policy.

Short of their own tools to energize economies, with interest rates already at or below zero, central banks are now doing the opposite. They call for more deficit spending, buy back entire swathes of the resulting debt, and promise low borrowing costs in the future.

“Fiscal policy is the big game in town now,” said Stephen King, senior economic adviser at HSBC Holdings Plc. “As a central banker, you have to accept in the sense that you have lost some power to the benefit of the political process.”

What Bloomberg Economists Are Saying …

The economy’s basic forecast for global growth is a 4.5% contraction in 2020, followed by a 4.8% expansion in 2021, bringing production back to its pre-virus level. This basic view assumes that the increase in cases in Europe and the United States is slowing but not destroying the recovery, that the United States offers additional fiscal stimulus in 1Q21, and that a vaccine is widely distributed. by mid-2021.

Fiscal stimulus measures are more powerful than monetary measures because they can channel money directly to households or businesses, and are better suited to deliver targeted aid to those who need it most in times of crisis. , like the unemployed. Central bankers can only inject more purchasing power into the economy through an indirect channel: the price of loans from banks or financial markets.

But they can at least act quickly and decisively. Budget processes, on the other hand, can get messy, as illustrated in the United States. For months now, both sides have agreed that more spending is needed. Because they couldn’t agree on the quantity or type, the result was no further stimulus. Even if a deal is not reached until the November election, economists at Goldman Sachs and other banks expect budget support to resume afterwards.

Start the show

US President Donald Trump promises further tax cuts if he wins. Democratic challenger Joe Biden, who leads the opinion polls, laid out a $ 3.5 trillion spending program – and said he would not be bound by the idea that economies necessarily do better when governments are less involved. Milton Friedman is no longer directing the series, Biden told Politico in April.

In Europe, where fiscal prudence is deeply rooted in German debt and inflation fears, policymakers have taken a big step this year towards pooling their fiscal resources – an idea long seen as a no-go. starter, and which still faces hurdles – as the pandemic threatened to overtake the European Central Bank’s ability to support economies.

German officials say there will be no return to balanced budgets in their own country anytime soon. In the UK, ruling Tories who championed austerity after the 2008 crash are ruling out a repeat, although they have started talking about tax increases to fund pandemic relief efforts. Yoshihide Suga, the new Japanese prime minister, said debt consolidation will have to wait until growth returns – and suggested there is no hard limit on how much his government can borrow.

Become Japanese

Japan was the first major country in the modern era to drop interest rates to zero after a credit bubble burst some 30 years ago. Monetary policy has had no easy way of stimulating growth by making borrowing cheaper – and households and businesses were unwilling to take on more debt anyway, when the government could and did. did. It was a harbinger that the world’s central banks could run out of steam and bring fiscal policy back to the forefront.

After 2008, much of the developed world found itself in a similar situation. Unable to lower short-term rates, central banks have attempted to cap long-term borrowing costs by purchasing securities, mostly government debt, with governments being the main borrowers in depressed economies. This exposed them to further criticism.

“Buying assets has all kinds of political and distributive side effects,” said Charlie Bean, former deputy governor of the Bank of England. “We need to leave the world where central banks are seen as the solution, to a world where government and fiscal policy will often have to take the ball and run with it.”

Keynes to Volcker

Governments have also increased spending in response to the 2008 crash. Economists now agree they switched to austerity too soon, dampening growth in the decade before the coronavirus started.

Many proponents of taxation fear that history will repeat itself. The start-stop approach has helped discredit fiscal policy in the past, said Robert Skidelsky, an economic historian best known for his biography of British economist and champion of budget activism John Maynard Keynes.

After the Great Depression of the 1930s, Keynesian politics became orthodoxy for most Western governments, which used their budgets to stimulate demand and create jobs. But the edifice collapsed in the 1970s when unemployment and prices rose at the same time, and central banks targeting inflation became the main macroeconomic managers.

The turning point came with the interest rate hikes by Fed Chairman Paul Volcker in the early 1980s, according to Catherine Mann, chief global economist at Citigroup Inc, who was working on her doctorate at the time. She is not yet convinced that the political response to Covid-19 falls into the same game-changing category. For this to happen, governments should start using fiscal policy not only with the short-term goal of pulling the economy out of the doldrums, but in the pursuit of longer-term goals, such as reducing inequalities or reducing inequalities. carbon emissions, Mann said.

No more pretense

There are signs that they are heading in this direction. Some stimulus programs in Europe have made job creation and environmental sustainability central to their concerns, and Biden is promising a $ 2 trillion green energy overhaul in the United States.

And in the world of economics, the new school of modern monetary theory – which says governments usually have more room to spend in times of low inflation – has gained traction by advocating bold, budget-funded programs. like a Green New Deal.

Everything points to the overhaul of economic management that should have taken place after the financial crisis ten years ago, according to Paul McCulley, former chief economist of bond giant Pacific Investment Management Co.

At the time, politicians balked at the magnitude of deficits and debt, he told the Bloombergs Odd Lots podcast. Now he believes the coronavirus has completed the regime change. “Any pretext is over,” he said. “We clearly live in a world dominated by fiscal policy.”

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