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  • Revenue
    • $4.7 billion, up 5.0% versus prior year and 6.2% on an organic1 basis
  • Margins and earnings
    • Net income margin of 8.8%; adjusted earnings before interest and taxes (EBIT) margin3 of 18.6%
    • GAAP earnings per share from continuing operations (EPS) of $2.01, up 55%
    • Non-GAAP EPS3 of $3.26, up 15%
  • Cash flow and capital deployment
    • Operating cash flow of $720 million; adjusted free cash flow (FCF)3 of $685 million
    • Returned $1,057 million to shareholders through $850 million in share repurchases and $207 million in dividends
  • Raised 2021 adjusted EBIT margin guidance to ~18.5% and non-GAAP EPS guidance to $12.80 - $13.00
  • Signed definitive agreement to sell Electron Devices business for $185 million

MELBOURNE, Fla.--(BUSINESS WIRE)--L3Harris Technologies, Inc. (NYSE: LHX) reported second quarter 2021 revenue of $4.7 billion, up 5.0% versus prior year, and up 6.2% on an organic1 basis. GAAP net income was $413 million, up 49% versus prior year. Adjusted EBIT3 was $869 million, up 7.3% versus prior year, and adjusted EBIT margin3 expanded 40 basis points (bps) to 18.6%. GAAP EPS was $2.01, up 55%, and non-GAAP EPS3 was $3.26, up 15% versus prior year.


“We are now at the 2-year mark for L3Harris and our second quarter results demonstrate the merger's value creation and operating momentum. Our accomplishments to-date and a continued focus on execution give us confidence to raise guidance for the year,” said Christopher E. Kubasik, Vice Chair and Chief Executive Officer. "As we look forward, a commitment to our strategic priorities along with our differentiated capabilities position us for further value creation over the long term."

Summary Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Half

 

 

($ millions, except per share data)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(GAAP comparison)

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

4,668

 

 

$

4,445

 

 

5.0%

 

$

9,235

 

 

$

9,071

 

 

1.8%

 

 

Net income

$

413

 

 

$

278

 

 

49%

 

$

879

 

 

$

472

 

 

86%

 

 

Net income margin

8.8

%

 

6.3

%

 

250 bps

 

9.5

%

 

5.2

%

 

430 bps

 

 

EPS

$

2.01

 

 

$

1.30

 

 

55%

 

$

4.26

 

 

$

2.29

 

 

86%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Non-GAAP comparison)3

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

4,668

 

 

$

4,445

 

 

5.0%

 

$

9,235

 

 

$

9,071

 

 

1.8%

 

 

Adjusted EBIT

$

869

 

 

$

810

 

 

7.3%

 

$

1,731

 

 

$

1,618

 

 

7.0%

 

 

Adjusted EBIT margin

18.6

%

 

18.2

%

 

40 bps

 

18.7

%

 

17.8

%

 

90 bps

 

 

EPS

$

3.26

 

 

$

2.83

 

 

15%

 

$

6.44

 

 

$

5.63

 

 

14%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue1

$

4,668

 

 

$

4,396

 

 

6.2%

 

$

9,235

 

 

$

8,881

 

 

4.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second quarter revenue increased 5.0% versus prior year and 6.2% on an organic basis, with solid growth across key end-markets as well as growth in all four segments. At the segment level, organic revenue was driven by Integrated Mission Systems and Aviation Systems, up 12% and 4.7%, respectively, and 3.2% growth in both Communication Systems and Space and Airborne Systems. Funded book-to-bill2 was 1.00 for the quarter and 1.05 for the first half.

Second quarter net income margin expanded 250 bps and adjusted EBIT margin expanded 40 bps to 18.6% versus prior year. GAAP EPS increased 55% versus prior year driven by higher volume, operational excellence, integration benefits and a lower share count, along with net divestiture-related gains and lower acquisition-related amortization, partially offset by an increase in asset impairment charges and higher internal investments. Non-GAAP EPS increased 15% versus prior year driven by higher volume, operational excellence, integration benefits and a lower share count, more than offsetting the impact from higher internal investments.

Segment Results

Integrated Mission Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Half

 

 

($ millions)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

1,494

 

 

$

1,331

 

 

12%

 

$

2,945

 

 

$

2,701

 

 

9.0%

 

 

Operating income

$

229

 

 

$

224

 

 

2.2%

 

$

469

 

 

$

425

 

 

10%

 

 

Operating margin

15.3

%

 

16.8

%

 

(150) bps

 

15.9

%

 

15.7

%

 

20 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second quarter revenue increased 12% from strong growth in ISR, driven by aircraft missionization on a recently awarded NATO program, and in Maritime from a ramp on key platforms, partially offset by a decline in Electro Optical due to product delivery timing. Second quarter operating income increased 2.2% to $229 million, and operating margin contracted 150 bps to 15.3% versus prior year as cost management, operational excellence and integration benefits were more than offset by mix impacts, including a ramp on growth programs.

Segment funded book-to-bill was 0.81 and 1.06 for the quarter and first half, respectively.

ISR award activity continued with over $350 million in orders for advanced capabilities across incumbent platforms, including the Rivet Joint reconnaissance, National Command Authority and classified aircraft, further strengthening the company's position as a partner of choice with the U.S. Air Force.

In Maritime, the company received several key awards that strengthen its position as a leading provider of global maritime solutions, including:

  • More than $100 million in awards for sensors and shipboard systems on the U.S. Navy's Virginia and Columbia-class submarines, increasing inception-to-date awards on the platforms to more than $700 million
  • $60 million award to provide engineering support for the Medium Unmanned Surface Vehicle, a key platform in the U.S. Navy's distributed maritime operations strategy and with significant follow-on opportunity
  • More than $50 million contract to provide imaging systems on a submarine from a customer in Europe

Within Electro Optical, WESCAM sensor demand remained strong and included a sole-source IDIQ contract for up to $96 million in support of the U.S. Special Operations Command's Improved Rotary-wing Electro-optical/Infra-red Sensor program. The company also reinforced its international position with over $75 million in orders for airborne sensor systems from customers primarily in the European and Asia Pacific regions.

Space and Airborne Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Half

 

 

($ millions)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

1,287

 

 

$

1,249

 

 

3.0%

 

$

2,523

 

 

$

2,441

 

 

3.4%

 

 

Operating income

$

253

 

 

$

235

 

 

7.7%

 

$

493

 

 

$

456

 

 

8.1%

 

 

Operating margin

19.7

%

 

18.8

%

 

90 bps

 

19.5

%

 

18.7

%

 

80 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue1

$

1,287

 

 

$

1,247

 

 

3.2%

 

$

2,523

 

 

$

2,434

 

 

3.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second quarter revenue increased 3.0% versus prior year and 3.2% on an organic basis, primarily due to a ramp on missile defense and other responsive programs in Space, as well as classified growth in Intel & Cyber. Growth from these drivers was reduced by the transition towards Technology Refresh 3 (TR3) production on the F-35 platform in Mission Avionics and lower F-16 volume in Electronic Warfare. Second quarter operating income increased 7.7% to $253 million, and operating margin expanded 90 bps to 19.7% versus prior year from operational excellence, including program performance, increased pension income and integration benefits, net of higher R&D investments.

Segment funded book-to-bill was 1.02 and 1.09 for the quarter and first half, respectively.

In Space, the company received several key awards across its ground, responsive and exquisite franchises, including:

  • Multiple classified revenue synergy awards totaling more than $200 million, leading to new franchises with a total potential value of over $500 million
  • An award for a telescope system in support of the U.S. Missile Defense Agency's Next Generation Interceptor program, with a potential value exceeding $70 million
  • Multi-million-dollar initial award for concept formulation and design of next-generation weather imagers in support of the U.S. National Oceanic and Atmospheric Administration's future Geostationary and Extended Orbits satellite system, with significant follow-on opportunity

Within Mission Avionics and Electronic Warfare, L3Harris recorded more than $300 million in orders on long-term platforms (F-35, F/A-18 and F-16), increasing total orders for the year to approximately $650 million, which included contracts for the initial production lot of the Aircraft Memory System and Panoramic Cockpit Display Electronic Unit under the F-35 TR3 program. The company also received a $58 million contract from a customer in the Asia Pacific region for maritime electronic warfare payloads to counter advanced anti-ship missiles, bringing inception-to-date awards to more than $200 million.

In Intel & Cyber, the company recorded over $250 million in orders primarily for complex mission solutions and specialized communications systems for both domestic and international customers.

Communication Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Half

 

 

($ millions)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

1,127

 

 

$

1,112

 

 

1.3%

 

$

2,239

 

 

$

2,206

 

 

1.5%

 

 

Operating income

$

287

 

 

$

265

 

 

8.3%

 

$

568

 

 

$

515

 

 

10%

 

 

Operating margin

25.5

%

 

23.8

%

 

170 bps

 

25.4

%

 

23.3

%

 

210 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue1

$

1,127

 

 

$

1,092

 

 

3.2%

 

$

2,239

 

 

$

2,173

 

 

3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second quarter revenue increased 1.3% versus prior year and 3.2% on an organic basis driven by international demand in Tactical Communications, as well as strong growth in Global Communications Solutions and Integrated Vision Solutions, primarily from the continued ramp in U.S. DoD modernization. Growth from these drivers was partially offset by lower volume on legacy unmanned platforms in Broadband Communications and residual pandemic-related impacts within Public Safety. Second quarter operating income increased 8.3% to $287 million, and operating margin expanded 170 bps to 25.5% versus prior year from higher volume, operational excellence and integration benefits.

Segment funded book-to-bill was 1.28 and 1.10 for the quarter and first half, respectively.

Tactical Communications received several key orders that strengthen its global leadership, including:

  • $3.3 billion, five-year, single award IDIQ from the U.S. DoD to provide radio systems and communications equipment to international countries under the Foreign Military Sales process, with initial task orders totaling more than $80 million
  • $76 million in orders to provide a networked communications system and tactical radios for countries in the Middle East
  • $60 million for sustainment services and advanced multi-channel Falcon IV® handheld radios for a European country
  • $61 million in orders from the U.S. Marine Corps for vehicular C4I and radio systems, handheld full-motion video data link production and manpack upgrades
  • $19 million follow-on order for HF radios in support of the U.S. Army's network modernization program

In Public Safety, the company was awarded a $451 million, 15-year contract from the State of Florida to upgrade and continue operating the Statewide Law Enforcement Radio System for first responders.

Within Broadband Communications, L3Harris received a $57 million contract to provide depot and sustainment services for the Modernization of Enterprise Terminals program.

Aviation Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Half

 

 

($ millions)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(GAAP comparison)

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

809

 

 

$

800

 

 

1.1%

 

$

1,623

 

 

$

1,811

 

 

(10%)

 

 

Operating income (loss)

$

35

 

 

$

31

 

 

13%

 

$

163

 

 

$

(146)

 

 

212%

 

 

Operating margin

4.3

%

 

3.9

%

 

40 bps

 

10.0

%

 

(8.1)

%

 

1,810 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Non-GAAP comparison)4

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

809

 

 

$

800

 

 

1.1%

 

$

1,623

 

 

$

1,811

 

 

(10%)

 

 

Operating income

$

117

 

 

$

100

 

 

17%

 

$

245

 

 

$

247

 

 

(0.8%)

 

 

Operating margin

14.5

%

 

12.5

%

 

200 bps

 

15.1

%

 

13.6

%

 

150 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue1

$

809

 

 

$

773

 

 

4.7%

 

$

1,623

 

 

$

1,661

 

 

(2.3%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second quarter revenue increased 1.1% versus prior year and 4.7% on an organic basis driven by recovering training and avionics product sales within the commercial aerospace business, a ramp in fuzing and ordnance systems in Defense Aviation and higher FAA volume in Mission Networks. The second quarter increase in GAAP operating income was driven by operational excellence, integration benefits, higher volume and the absence of prior-year COVID-related restructuring impacts, net of higher asset impairment charges. Non-GAAP operating income increased 17% to $117 million, and operating margin expanded 200 bps to 14.5% versus prior year from operational excellence, integration benefits and higher volume.

Segment funded book-to-bill was 0.90 and 0.87 for the quarter and first half, respectively.

Mission Networks recorded more than $150 million in orders on long-term air traffic management contracts, including the FAA Telecommunications Infrastructure and Automatic Dependent Surveillance-Broadcast programs.

Defense Aviation received a $14 million initial production award to provide M-Code GPS receivers for a U.S. DoD weapon platform, with more than $500 million in total awards to-date, and also recorded approximately $50 million in orders for classified and advanced systems.

Cash and Capital Deployment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Half

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ millions)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flow

$

720

 

 

$

802

 

 

$

(82)

 

 

$

1,381

 

 

$

1,335

 

 

$

46

 

 

 

Adjusted free cash flow

$

685

 

 

$

785

 

 

$

(100)

 

 

$

1,315

 

 

$

1,318

 

 

$

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In the second quarter of fiscal 2021, L3Harris generated $685 million in adjusted free cash flow and returned $1,057 million to shareholders through $850 million in share repurchases and $207 million in dividends.

L3Harris also completed the divestitures of the Military Training and Combat Propulsion Systems businesses, with total gross proceeds in the quarter of $1.45 billion.

In addition, L3Harris signed a definitive agreement to sell its Electron Devices business for $185 million, bringing total gross proceeds from completed and announced divestitures since the merger to approximately $2.7 billion. The divestiture is subject to customary closing conditions, including receipt of regulatory approvals, and is expected to close in the second half of 2021.

Guidance

L3Harris revised 2021 guidance as follows:

 

 

 

 

 

 

 

 

Guidance (as revised)

 

Previous Guidance (April 2021)

 

 

 

 

 

 

 

 

Revenue5

$18.1 billion - $18.5 billion

 

$18.5 billion - $18.9 billion

 

 

Organic revenue growth

up 3.0% - 5.0%

 

up 3.0% - 5.0%

 

 

Adjusted EBIT margin

~18.5%

 

18.0% - 18.5%

 

 

Non-GAAP EPS

$12.80 - $13.00

 

$12.70 - $13.00

 

 

Adjusted free cash flow6

$2.8 billion - $2.9 billion

 

$2.8 billion - $2.9 billion

 

 

Share repurchases7

~$3.4 billion

 

~$2.3 billion

 

 

 

 

 

 

 

COVID

Attempts to contain and reduce the spread of COVID, such as mandatory closures, “shelter-in-place” orders and travel and quarantine restrictions, have caused significant disruptions and adverse effects on the U.S. and global economies, such as impacts to supply chains, customer demand, international trade and capital markets. L3Harris' response has involved increasing its focus on keeping its employees safe while striving to maintain continuity of operations, meet customer commitments and support suppliers. For example, the company instituted numerous types of precautions, protocols and other arrangements designed to protect employees from COVID infections and to comply with applicable regulations and has also maintained an active dialog, and in some cases developed plans, with key suppliers in an effort to mitigate supply chain risks or otherwise minimize the impacts from those risks. The U.S. Government response to COVID has included identifying the Defense Industrial Base as a Critical Infrastructure Sector and enhancing cash flow and liquidity for the Defense Industrial Base, such as by increasing progress payments and accelerating contract awards, which enabled the company to keep its U.S. production facilities largely operational in support of national security commitments to U.S. Government customers (as part of the Defense Industrial Base) and to accelerate payments to small business suppliers, which it expects to continue while the U.S. Government’s responsive actions remain in effect.

Although the company believes that a large percentage of its revenue, earnings and cash flow that is derived from sales to the U.S. Government, whether directly or through prime contractors, will be relatively predictable, in part due to the U.S. Government’s responsive actions described above, the company's commercial and international businesses are at a higher risk of adverse COVID-related impacts, and the company cannot eliminate all potential impacts to its business from supply chain risks, such as longer lead times and shortages of electronics and other components. For example, the severe decline in global air traffic from travel restrictions and the resulting downturn in the commercial aviation market and its impact on customer operations has significantly reduced demand for flight training, flight simulators and commercial avionics products in the company's Aviation Systems segment.

The company’s 2021 guidance reflects the company’s current expectations and assumptions regarding COVID-related impacts, including on the U.S. and global economies. These assumptions continue to include a measured assessment of the downturn in the commercial aerospace business and in demand for public safety solutions, as well as additional potential risks from facility shutdowns, supply chain disruptions and international activity weakness. The company’s current expectations and assumptions could change, which could negatively affect the company’s outlook. The extent of these disruptions and impacts, including on the company's ability to perform under U.S. Government and other contracts within agreed timeframes and ultimately on its results of operations and cash flows, will depend on future developments, including further COVID-related impacts and associated containment and mitigation actions taken by governmental authorities and consequences thereof, and global air traffic demand and governmental subsidies to airlines, and potential impacts to the company’s business from supply chain risks, all of which are uncertain and unpredictable, could exacerbate other risks described in the company’s filings with the SEC and could materially adversely impact the company’s financial condition, results of operations and cash flows.

Conference Call and Webcast

L3Harris will host a conference call today, August 3, 2021, at 8:30 a.m. Eastern Time (ET) to discuss second quarter 2021 financial results. The dial-in numbers for the teleconference are (U.S.) 877-407-6184 and (International) 201-389-0877, and participants will be directed to an operator. Please allow at least 10 minutes before the scheduled start time to connect to the teleconference. Participants are encouraged to listen via webcast, and view management’s supporting slide presentation, which will be broadcast live at L3Harris.com. A recording of the call will be available on the L3Harris website, beginning at approximately 12 p.m. ET on August 3, 2021.

About L3Harris Technologies

L3Harris Technologies is an agile global aerospace and defense technology innovator, delivering end-to-end solutions that meet customers’ mission-critical needs. The company provides advanced defense and commercial technologies across air, land, sea, space and cyber domains. L3Harris has approximately $18 billion in annual revenue and 47,000 employees, with customers in more than 100 countries. L3Harris.com.

Non-GAAP Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission (“SEC”), including earnings per diluted share from continuing operations (“EPS”), adjusted earnings before interest and taxes (“EBIT”), adjusted EBIT margin and adjusted free cash flow for the second quarters and first halves of 2021 and 2020; organic revenue growth for the company, and for its Space and Airborne Systems, Communication Systems and Aviation Systems segments for the second quarter and first half of 2021; and segment operating income and margin for the Aviation Systems segment for the second quarters and first halves of 2021 and 2020; in each case, adjusted for certain costs, charges, expenses, losses or other amounts as set forth in the reconciliations of non-GAAP financial measures included in the financial statement tables accompanying this press release. A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). L3Harris management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. L3Harris management also believes that these non-GAAP financial measures enhance the ability of investors to analyze L3Harris business trends and to understand L3Harris performance. In addition, L3Harris may utilize non-GAAP financial measures as guides in forecasting, budgeting and long-term planning processes and to measure operating performance for some management compensation purposes. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures presented in accordance with GAAP. This press release also contains forward-looking non-GAAP financial measures, including expected EPS, adjusted EBIT margin, adjusted free cash flow and organic revenue growth for full-year 2021, but a reconciliation of forward-looking non-GAAP financial measures to comparable GAAP measures is not available without unreasonable effort because of inherent difficulty in forecasting and quantifying the comparable GAAP measures and the applicable adjustments and other amounts that would be necessary for such a reconciliation, including due to potentially high variability, complexity and low visibility as to the applicable adjustments and other amounts, which may, or could, have a disproportionately positive or negative impact on the company's future GAAP results, such as business divestiture-related gains and losses, and other unusual gains and losses, or their probable significance and extent of tax deductibility. The variability of the applicable adjustments and other amounts is unpredictable, and it is possible for them to significantly adversely impact the company’s future GAAP results.

Attachments: Financial statements (9 tables)

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions and estimates of future performance and economic conditions. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this press release include but are not limited to: revenue, earnings per share, adjusted free cash flow, adjusted EBIT margin and share repurchase guidance for 2021; statements regarding value creation over the long term; statements regarding anticipated timing of closing of divestitures; statements regarding expected, potential or contingent impacts or actual, potential or contingent plans or expectations related to COVID; program, contract and order opportunities and awards and the value or potential value and timing thereof; and other statements regarding outlook or that are not historical facts.


Contacts

Investor Relations Contact:
Rajeev Lalwani, 321-727-9383
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Media Relations Contact:
Jim Burke, 321-727-9131
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Q2 Revenue Increases 37%, including 14% Organic and 23% Growth from Acquisitions

GAAP and Adjusted EPS Up 8% and 7%, Respectively, to $0.80

Record Order Backlog Exceeds $400 Million, Led by Renewables

Reaffirming Full Year Revenue and EPS Guidance

BUFFALO, N.Y.--(BUSINESS WIRE)--Gibraltar Industries, Inc. (Nasdaq: ROCK), a leading manufacturer and provider of products and services for the renewable energy, residential, agtech and infrastructure markets, today reported its financial results for the three-month period ended June 30, 2021.


“In the midst of a dynamic and inflationary market environment, we delivered solid performance with revenue growth of 37%, adjusted operating income growth of 8%, adjusted EPS growth of 7%, and order backlog increased 54%, or 32% on a proforma basis, to over $400 million, the highest level in the history of the company,” President and Chief Executive Officer Bill Bosway stated. “Material cost inflation continued to accelerate as we exited the first quarter, and labor, freight, and logistics inflation and availability began to surface as we entered the second quarter. Working closely with customers and suppliers starting during fourth quarter 2020 and implementing ongoing pricing and productivity initiatives has helped us manage these dynamics and deliver this quarter’s results. Additionally, the integrations of TerraSmart and Sunfig are on track, our Agtech business is recovering as planned, and overall demand is currently in line with expectations.”

Second Quarter 2021 Consolidated Results from Continuing Operations

Net sales from continuing operations increased 36.5% to $348.4 million, with organic growth contributing 14.0% and recent acquisitions 22.5%. Organic growth was driven by strong end market demand and participation gains in all four segments.

GAAP earnings increased 7.8% to $26.4 million, or $0.80 per share, and adjusted earnings increased 6.9% to $26.3 million, or $0.80 per share, the result of continued execution across the business segments, the TerraSmart acquisition, and 80/20 productivity initiatives, partially offset by timing and alignment of higher input costs and price increases, supply chain disruptions, and shifts in project timing in the Agtech and Renewables segments. Adjusted measures remove charges for restructuring initiatives, acquisition-related items, senior leadership transition costs, and other reclassifications, as further described in the appended reconciliation of adjusted financial measures.

Below are second quarter 2021 consolidated results from continuing operations:

 

Three Months Ended June 30,

$Millions, except EPS

GAAP

 

Adjusted

 

 

2021

 

 

2020

 

% Change

 

 

2021

 

 

2020

 

% Change

Net Sales

$

348.4

 

$

255.2

 

36.5

%

 

$

348.4

 

$

255.2

 

36.5

%

Net Income

$

26.4

 

$

24.5

 

7.8

%

 

$

26.3

 

$

24.6

 

6.9

%

Diluted EPS

$

0.80

 

$

0.74

 

8.1

%

 

$

0.80

 

$

0.75

 

6.7

%

Second Quarter Segment Results

Renewables

The headwinds impacting the solar industry in the first quarter, including steel inflation, supply chain challenges with panels, and the safe harbor ITC extension announced in December 2020, continued into the second quarter. Despite this, the Renewable business continued to accelerate, delivering year-over-year revenue growth of 92.5% through the combination of the legacy and TerraSmart businesses and pro forma organic growth of 25%. Growth was driven by strong demand across Gibraltar’s broad offering of fixed tilt, tracker, canopy, and eBos product solutions serving the community and commercial and industrial market segments. Order backlog exceeded $218 million at the end of the quarter, up 54% from last year on a proforma basis, its highest level in the company’s history. The integration of the legacy and TerraSmart businesses remains on track, and the combination of the two is resonating well in the market.

Adjusted operating income improved 45.2% while adjusted operating margin contracted 380 basis points, the majority of which was anticipated, and related to the integration of TerraSmart. The TerraSmart integration is delivering as expected with adjusted operating margins nearly doubling over the first quarter as demand continued to accelerate and 80/20 productivity initiatives were implemented, and TerraSmart’s full-year margin plan remains on track. Of the remaining shortfall, approximately half was related to a one-time tariff credit received in Q2 2020, with the remaining the result of timing and alignment of price actions with input cost inflation and project movement related to supply chain schedule and logistics challenges.

For the second quarter, the Renewables segment reported:

 

Three Months Ended June 30,

$Millions

GAAP

 

Adjusted

 

 

2021

 

 

 

2020

 

 

% Change

 

 

2021

 

 

 

2020

 

 

% Change

Net Sales

$

107.8

 

 

$

56.0

 

 

92.5

%

 

$

107.8

 

 

$

56.0

 

 

92.5

%

Operating Income

$

9.5

 

 

$

8.4

 

 

13.1

%

 

$

12.2

 

 

$

8.4

 

 

45.2

%

Operating Margin

 

8.8

%

 

 

15.1

%

 

(630) bps

 

 

11.3

%

 

 

15.1

%

 

(380) bps

Residential

Revenue increased 17.7% with strong organic growth of 12% driven by increased pricing and volume, despite supply chain dynamics related to material, labor and logistics availability; Architectural Mailboxes, acquired in 2020, contributed 6% of the quarter’s growth and integration remains on track.

The business delivered adjusted operating margin of 16.6%, a decrease versus last year, driven by the impact of accelerated inflation, material and labor availability, and the timing and alignment of price actions with input costs. Gibraltar has implemented multiple price increases, and will continue to do so until inflation subsides. In accordance with customer supply agreements, each price action will take time to align with accelerating inflation, with operating margin historically recovering within a one or two quarter period. In the near term, management will continue to maximize operating profit dollars with focus on execution and 80/20 productivity initiatives.

For the second quarter, the Residential segment reported:

 

Three Months Ended June 30,

$Millions

GAAP

 

Adjusted

 

 

2021

 

 

 

2020

 

 

% Change

 

 

2021

 

 

 

2020

 

 

% Change

Net Sales

$

164.2

 

 

$

139.5

 

 

17.7

%

 

$

164.2

 

 

$

139.5

 

 

17.7

%

Operating Income

$

27.2

 

 

$

28.0

 

 

(2.9

%)

 

$

27.2

 

 

$

28.2

 

 

(3.5

%)

Operating Margin

 

16.5

%

 

 

20.0

%

 

(350) bps

 

 

16.6

%

 

 

20.2

%

 

(360) bps

Agtech

Revenue increased 27.0% with solid activity across the produce, commercial, car wash, retail, and processing equipment segments. Although demand continued to improve, the business experienced project movement from the second quarter into the second half of 2021 as schedules have been impacted by permit delays, rescoping of projects, and supply chain disruptions. Order backlog experienced a slight and temporary contraction during the quarter due to rescoping of projects and the impact of supply chain disruptions. July customer order activity is accelerating backlog momentum, and the segment remains on track with expectations for the year.

Adjusted operating income was flat year-over-year and adjusted operating margin expanded 180 basis points on a sequential basis as the processing equipment business continued to improve along with continuing benefits of integration in the produce business. Adjusted operating margin contracted year-over-year due to business mix, the movement of certain abovementioned projects into the second half of the year, higher input costs and logistics challenges. These temporary headwinds were partially offset by improvements in legacy greenhouse structures, cannabis greenhouse structures, and cannabis and hemp processing equipment businesses.

For the second quarter, the Agtech segment reported:

 

Three Months Ended June 30,

$Millions

GAAP

 

Adjusted

 

 

2021

 

 

 

2020

 

 

% Change

 

 

2021

 

 

 

2020

 

 

% Change

Net Sales

$

53.7

 

 

$

42.3

 

 

27.0

%

 

$

53.7

 

 

$

42.3

 

 

27.0

%

Operating Income

$

1.0

 

 

$

0.8

 

 

25.0

%

 

$

2.3

 

 

$

2.3

 

 

--

 

Operating Margin

 

1.8

%

 

 

1.8

%

 

-- bps

 

 

4.2

%

 

 

5.5

%

 

(130) bps

Infrastructure

Revenue increased 29.7% as demand for fabricated and non-fabricated products increased as State D.O.T. project funding improved with the strengthening of the U.S. economy. Order backlog increased 11% to more than $46 million during the quarter indicating growing strength across the business.

Improvement in adjusted operating margin was driven by mix of higher-margin non-fabricated products and solutions, strong execution on higher volumes, and continued investment in 80/20 productivity initiatives.

For the second quarter, the Infrastructure segment reported:

 

Three Months Ended June 30,

$Millions

GAAP

 

Adjusted

 

 

2021

 

 

 

2020

 

 

% Change

 

 

2021

 

 

 

2020

 

 

% Change

Net Sales

$

22.7

 

 

$

17.5

 

 

29.7

%

 

$

22.7

 

 

$

17.5

 

 

29.7

%

Operating Income

$

4.2

 

 

$

2.8

 

 

50.0

%

 

$

4.2

 

 

$

2.8

 

 

50.0

%

Operating Margin

 

18.4

%

 

 

16.0

%

 

240 bps

 

 

18.4

%

 

 

16.0

%

 

240 bps

Business Outlook

“We expect today’s business environment, which has been very dynamic since the beginning of January, to remain so throughout the second half of 2021. We will continue to manage inflation, minimize supply chain disruptions, operate in a tight labor market, and continue with our COVID operating protocols. We are currently positioned well with solid end market demand, record order backlog, a very healthy balance sheet, and strong focus on daily execution, acquisition integrations, and further strengthening our organization and operating systems,“ commented Mr. Bosway. “We remain confident in our existing full year 2021 guidance for revenue and earnings. We base this on our performance to date in 2021, which is consistent with historical patterns, and our current outlook and initiatives for improving profitability across each business. Consolidated revenue is expected to range between $1.3 billion and $1.35 billion. GAAP EPS from continuing operations is expected to range between $2.78 and $2.95 compared to $2.53 in 2020, and adjusted EPS from continuing operations is expected to range between $3.30 and $3.47 compared to $2.73 in 2020.”

Second Quarter 2021 Conference Call Details

Gibraltar will host a conference call today starting at 9:00 a.m. ET to review its results for the second quarter of 2021. Interested parties may access the webcast through the Investors section of the Company’s website at www.gibraltar1.com or dial into the call at (877) 407-3088 or (201) 389-0927. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company’s website for one year.

About Gibraltar

Gibraltar Industries is a leading manufacturer and provider of products and services for the renewable energy, residential, agtech and infrastructure markets. With a three-pillar strategy focused on business systems, portfolio management, and organization and talent development, Gibraltar’s mission is to create compounding and sustainable value with strong leadership positions in higher growth, profitable end markets. Gibraltar serves customers primarily throughout North America. Comprehensive information about Gibraltar can be found on its website at www.gibraltar1.com.

Forward-Looking Statements

Certain information set forth in this news release, other than historical statements, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are based, in whole or in part, on current expectations, estimates, forecasts, and projections about the Company’s business, and management’s beliefs about future operations, results, and financial position. These statements are not guarantees of future performance and are subject to a number of risk factors, uncertainties, and assumptions. Actual events, performance, or results could differ materially from the anticipated events, performance, or results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, among other things, the impacts of COVID-19 on the global economy and on our customers, suppliers, employees, operations, business, liquidity and cash flows, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives, liquidity enhancing actions, and other cost reduction actions. Before making any investment decisions regarding our company, we strongly advise you to read the section entitled “Risk Factors” in our most recent annual report on Form 10-K which can be accessed under the “SEC Filings” link of the “Investor Info” page of our website at www.Gibraltar1.com. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law or regulation.

Adjusted Financial Measures

To supplement Gibraltar’s consolidated financial statements presented on a GAAP basis, Gibraltar also presented certain adjusted financial measures in this news release. Adjusted financial measures exclude special charges consisting of restructuring costs primarily associated with 80/20 simplification initiatives, senior leadership transition costs, acquisition related costs, and other reclassifications. These adjustments are shown in the reconciliation of adjusted financial measures excluding special charges provided in the supplemental financial schedules that accompany this news release. The Company believes that the presentation of results excluding special charges provides meaningful supplemental data to investors, as well as management, that are indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods as well as comparison with other companies. Special charges are excluded since they may not be considered directly related to the Company’s ongoing business operations. These adjusted measures should not be viewed as a substitute for the Company’s GAAP results and may be different than adjusted measures used by other companies.

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2021

 

2020

 

2021

 

2020

Net Sales

$

348,389

 

 

 

$

255,184

 

 

 

$

635,981

 

 

 

$

470,585

 

 

Cost of sales

267,458

 

 

 

189,623

 

 

 

495,032

 

 

 

355,163

 

 

Gross profit

80,931

 

 

 

65,561

 

 

 

140,949

 

 

 

115,422

 

 

Selling, general, and administrative expense

49,522

 

 

 

34,813

 

 

 

96,725

 

 

 

71,897

 

 

Income from operations

31,409

 

 

 

30,748

 

 

 

44,224

 

 

 

43,525

 

 

Interest expense

245

 

 

 

222

 

 

 

689

 

 

 

266

 

 

Other income

(4,666

)

 

 

(1,892

)

 

 

(4,351

)

 

 

(1,374

)

 

Income before taxes

35,830

 

 

 

32,418

 

 

 

47,886

 

 

 

44,633

 

 

Provision for income taxes

9,457

 

 

 

7,961

 

 

 

11,017

 

 

 

10,274

 

 

Income from continuing operations

26,373

 

 

 

24,457

 

 

 

36,869

 

 

 

34,359

 

 

Discontinued operations:

 

 

 

 

 

 

 

(Loss) income before taxes

(502

)

 

 

3,746

 

 

 

2,068

 

 

 

6,576

 

 

(Benefit of) provision for income taxes

(78

)

 

 

911

 

 

 

226

 

 

 

1,584

 

 

(Loss) income from discontinued operations

(424

)

 

 

2,835

 

 

 

1,842

 

 

 

4,992

 

 

Net income

$

25,949

 

 

 

$

27,292

 

 

 

$

38,711

 

 

 

$

39,351

 

 

Net earnings per share – Basic:

 

 

 

 

 

 

 

Income from continuing operations

$

0.80

 

 

 

$

0.75

 

 

 

$

1.12

 

 

 

$

1.05

 

 

(Loss) income from discontinued operations

(0.01

)

 

 

0.09

 

 

 

0.06

 

 

 

0.16

 

 

Net income

$

0.79

 

 

 

$

0.84

 

 

 

$

1.18

 

 

 

$

1.21

 

 

Weighted average shares outstanding -- Basic

32,790

 

 

 

32,605

 

 

 

32,791

 

 

 

32,596

 

 

Net earnings per share – Diluted:

 

 

 

 

 

 

 

Income from continuing operations

$

0.80

 

 

 

$

0.74

 

 

 

$

1.11

 

 

 

$

1.05

 

 

(Loss) income from discontinued operations

(0.01

)

 

 

0.09

 

 

 

0.06

 

 

 

0.15

 

 

Net income

$

0.79

 

 

 

$

0.83

 

 

 

$

1.17

 

 

 

$

1.20

 

 

Weighted average shares outstanding -- Diluted

33,056

 

 

 

32,860

 

 

 

33,071

 

 

 

32,868

 

 

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

June 30,
2021

 

December 31,
2020

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

16,963

 

 

 

$

32,054

 

 

Accounts receivable, net of allowance of $5,294 and $3,529

225,315

 

 

 

197,990

 

 

Inventories, net

133,625

 

 

 

98,307

 

 

Prepaid expenses and other current assets

23,641

 

 

 

19,671

 

 

Assets of discontinued operations

 

 

 

77,438

 

 

Total current assets

399,544

 

 

 

425,460

 

 

Property, plant, and equipment, net

95,837

 

 

 

89,562

 

 

Operating lease assets

21,651

 

 

 

25,229

 

 

Goodwill

508,857

 

 

 

514,279

 

 

Acquired intangibles

159,734

 

 

 

156,365

 

 

Other assets

510

 

 

 

1,599

 

 

 

$

1,186,133

 

 

 

$

1,212,494

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

168,917

 

 

 

$

134,738

 

 

Accrued expenses

68,677

 

 

 

83,505

 

 

Billings in excess of cost

49,215

 

 

 

34,702

 

 

Liabilities of discontinued operations

 

 

 

49,295

 

 

Total current liabilities

286,809

 

 

 

302,240

 

 

Long-term debt

32,309

 

 

 

85,636

 

 

Deferred income taxes

37,555

 

 

 

39,057

 

 

Non-current operating lease liabilities

14,391

 

 

 

17,730

 

 

Other non-current liabilities

27,461

 

 

 

24,026

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.01 par value; authorized 10,000 shares; none outstanding

 

 

 

 

 

Common stock, $0.01 par value; 100,000 and 50,000 shares authorized at June 30, 2021 and December 31, 2020, respectively; 33,718 shares and 33,568 shares issued and outstanding in 2021 and 2020

337

 

 

 

336

 

 

Additional paid-in capital

310,728

 

 

 

304,870

 

 

Retained earnings

508,654

 

 

 

469,943

 

 

Accumulated other comprehensive income (loss)

1,552

 

 

 

(2,461

)

 

Cost of 1,083 and 1,028 common shares held in treasury in 2021 and 2020

(33,663

)

 

 

(28,883

)

 

Total stockholders’ equity

787,608

 

 

 

743,805

 

 

 

$

1,186,133

 

 

 

$

1,212,494

 

 

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Six Months Ended
June 30,

 

2021

 

2020

Cash Flows from Operating Activities

 

 

 

Net income

$

38,711

 

 

 

$

39,351

 

 

Income from discontinued operations

1,842

 

 

 

4,992

 

 

Income from continuing operations

36,869

 

 

 

34,359

 

 

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

 

 

 

Depreciation and amortization

16,014

 

 

 

9,942

 

 

Stock compensation expense

4,935

 

 

 

4,171

 

 

Gain on sale of business

 

 

 

(1,881

)

 

Exit activity costs, non-cash

1,193

 

 

 

346

 

 

Benefit of deferred income taxes

(36

)

 

 

(195

)

 

Other, net

349

 

 

 

429

 

 

Changes in operating assets and liabilities, excluding the effects of acquisitions:

 

 

 

Accounts receivable

(29,150

)

 

 

(26,289

)

 

Inventories

(42,686

)

 

 

3,289

 

 

Other current assets and other assets

(611

)

 

 

1,893

 

 

Accounts payable

35,174

 

 

 

(989

)

 

Accrued expenses and other non-current liabilities

(9,274

)

 

 

(36,042

)

 

Net cash provided by (used in) operating activities of continuing operations

12,777

 

 

 

(10,967

)

 

Net cash (used in) provided by operating activities of discontinued operations

(2,002

)

 

 

3,712

 

 

Net cash provided by (used in) operating activities

10,775

 

 

 

(7,255

)

 

Cash Flows from Investing Activities

 

 

 

Acquisitions, net of cash acquired

(2

)

 

 

(54,385

)

 

Net proceeds from sale of property and equipment

 

 

 

59

 

 

Purchases of property, plant, and equipment

(9,474

)

 

 

(4,178

)

 

Net proceeds from sale of business

39,991

 

 

 

704

 

 

Net cash provided by (used in) investing activities of continuing operations

30,515

 

 

 

(57,800

)

 

Net cash used in investing activities of discontinued operations

(176

)

 

 

(1,053

)

 

Net cash provided by (used in) investing activities

30,339

 

 

 

(58,853

)

 

Cash Flows from Financing Activities

 

 

 

Proceeds from long-term debt

31,200

 

 

 

 

 

Long-term debt payments

(83,636

)

 

 

 

 

Purchase of treasury stock at market prices

(4,780

)

 

 

(4,462

)

 

Net proceeds from issuance of common stock

924

 

 

 

78

 

 

Net cash used in financing activities

(56,292

)

 

 

(4,384

)

 

Effect of exchange rate changes on cash

87

 

 

 

(12

)

 

Net decrease in cash and cash equivalents

(15,091

)

 

 

(70,504

)

 

Cash and cash equivalents at beginning of year

32,054

 

 

 

191,363

 

 

Cash and cash equivalents at end of period

$

16,963

 

 

 

$

120,859

 

 

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended
June 30,2021

 

 

 

As Reported
In GAAP
Statements

 

Restructuring
Charges

 

Senior
Leadership
Transition
Costs

 

Acquisition
Related
Items

 

Adjusted
Financial
Measures

Net Sales

 

 

 

 

 

 

 

 

 

 

Renewables

 

$

107,751

 

 

 

 

 

 

 

 

 

 

$

107,751

 

 

Residential

 

164,209

 

 

 

 

 

 

 

 

 

 

164,209

 

 

Agtech

 

53,696

 

 

 

 

 

 

 

 

 

 

53,696

 

 

Infrastructure

 

22,733

 

 

 

 

 

 

 

 

 

 

22,733

 

 

Consolidated sales

 

348,389

 

 

 

 

 

 

 

 

 

 

348,389

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

 

 

 

Renewables

 

9,510

 

 

 

786

 

 

 

 

1,858

 

 

 

12,154

 

 

Residential

 

27,155

 

 

 

29

 

 

 

 

 

 

 

27,184

 

 

Agtech

 

977

 

 

 

1,287

 

 

 

 

 

 

 

2,264

 

 

Infrastructure

 

4,186

 

 

 

 

 

 

 

 

 

 

4,186

 

 

Segments Income

 

41,828

 

 

 

2,102

 

 

 

 

1,858

 

 

 

45,788

 

 

Unallocated corporate expense

 

(10,419

)

 

 

59

 

 

18

 

 

32

 

 

 

(10,310

)

 

Consolidated income from operations

 

31,409

 

 

 

2,161

 

 

18

 

 

1,890

 

 

 

35,478

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

245

 

 

 

 

 

 

 

 

 

 

245

 

 

Other (income) expense

 

(4,666

)

 

 

 

 

 

 

4,747

 

 

 

81

 

 

Income before income taxes

 

35,830

 

 

 

2,161

 

 

18

 

 

(2,857

)

 

 

35,152

 

 

Provision for income taxes

 

9,457

 

 

 

507

 

 

5

 

 

(1,149

)

 

 

8,820

 

 

Income from continuing operations

 

$

26,373

 

 

 

$

1,654

 

 

$

13

 

 

$

(1,708

)

 

 

$

26,332

 

 

Income from continuing operations per share - diluted

 

$

0.80

 

 

 

$

0.05

 

 

$

 

 

$

(0.05

)

 

 

$

0.80

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

 

 

 

 

 

 

 

 

Renewables

 

8.8

 

%

 

0.7

%

 

%

 

1.7

 

%

 

11.3

 

%

Residential

 

16.5

 

%

 

%

 

%

 

 

%

 

16.6

 

%

Agtech

 

1.8

 

%

 

2.4

%

 

%

 

 

%

 

4.2

 

%

Infrastructure

 

18.4

 

%

 

%

 

%

 

 

%

 

18.4

 

%

Segments Margin

 

12.0

 

%

 

0.6

%

 

%

 

0.5

 

%

 

13.1

 

%

Consolidated

 

9.0

 

%

 

0.6

%

 

%

 

0.5

 

%

 

10.2

 

%

GIBRALTAR INDUSTRIES, INC.

Reconciliation of Adjusted Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended
June 30, 2020

 

 

 

As Reported In
GAAP
Statements

 

Restructuring &
Senior Leadership
Transition Costs

 

Acquisition
Costs

 

Gain on
Sale of
Business

 

Adjusted
Financial
Measures

Net Sales

 

 

 

 

 

 

 

 

 

 

Renewables

 

$

55,950

 

 

 

$

 

 

$

 

 

$

 

 

 

$

55,950

 

 

Residential

 

139,472

 

 

 

 

 

 

 

 

 

 

139,472

 

 

Agtech

 

42,309

 

 

 

 

 

 

 

 

 

 

42,309

 

 

Infrastructure

 

17,453

 

 

 

 

 

 

 

 

 

 

17,453

 

 

Consolidated sales

 

255,184

 

 

 

 

 

 

 

 

 

 

255,184

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

 

 

 

Renewables

 

8,422

 

 

 

 

 

 

 

 

 

 

8,422

 

 

Residential

 

27,964

 

 

 

263

 

 

 

 

 

 

 

28,227

 

 

Agtech

 

766

 

 

 

388

 

 

1,172

 

 

 

 

 

2,326

 

 

Infrastructure

 

2,801

 

 

 

 

 

 

 

 

 

 

2,801

 

 

Segments Income

 

39,953

 

 

 

651

 

 

1,172

 

 

 

 

 

41,776

 

 

Unallocated corporate expense

 

(9,205

)

 

 

161

 

 

50

 

 

 

 

 

(8,994

)

 

Consolidated income from operations

 

30,748

 

 

 

812

 

 

1,222

 

 

 

 

 

32,782

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

222

 

 

 

 

 

 

 

 

 

 

222

 

 

Other income

 

(1,892

)

 

 

 

 

 

 

1,881

 

 

 

(11

)

 

Income before income taxes

 

32,418

 

 

 

812

 

 

1,222

 

 

(1,881

)

 

 

32,571

 

 

Provision for income taxes

 

7,961

 

 

 

170

 

 

274

 

 

(469

)

 

 

7,936

 

 

Income from continuing operations

 

$

24,457

 

 

 

$

642

 

 

$

948

 

 

$

(1,412

)

 

 

$

24,635

 

 

Income from continuing operations per share - diluted

 

$

0.74

 

 

 

$

0.02

 

 

$

0.03

 

 

$

(0.04

)

 

 

$

0.75

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

 

 

 

 

 

 

 

 

Renewables

 

15.1

 

%

 

%

 

%

 

 

%

 

15.1

 

%

Residential

 

20.0

 

%

 

0.2

%

 

%

 

 

%

 

20.2

 

%

Agtech

 

1.8

 

%

 

0.9

%

 

2.8

%

 

 

%

 

5.5

 

%

Infrastructure

 

16.0

 

%

 

%

 

%

 

 

%

 

16.0

 

%

Segments Margin

 

15.7

 

%

 

0.3

%

 

0.5

%

 

 

%

 

16.4

 

%

Consolidated

 

12.0

 

%

 

0.3

%

 

0.5

%

 

 

%

 

12.8

 

%


Contacts

LHA Investor Relations
Jody Burfening/Carolyn Capaccio
(212) 838-3777
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  • Record quarterly net income of $25.1 million, an increase of 68% compared to second quarter 2020
  • Declared quarterly distribution of $0.4714 per unit; 28th consecutive quarterly distribution

HOUSTON--(BUSINESS WIRE)--Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported record net income attributable to the Partnership in the second quarter of 2021 of $25.1 million, or $0.71 per limited partner unit, an increase of $10.2 million compared to second quarter 2020 net income attributable to the Partnership of $14.9 million. The increase in net income was a result of higher production, higher earnings on third-party sales as well as a buyer deficiency fee. The buyer deficiency fee of $8.7 million is a result of lower planned production in 2021 attributable to the impacts of the winter storm which occurred in the first quarter and an outage at Westlake Chemical OpCo LP ("OpCo") Petro 1 facility, which occurred on June 25, 2021. Cash flows from operating activities in the second quarter of 2021 were $131.7 million, an increase of $18.9 million compared to second quarter 2020 cash flows from operating activities of $112.8 million. For the three months ended June 30, 2021, MLP distributable cash flow of $25.5 million increased by $8.6 million from second quarter 2020 MLP distributable cash flow of $16.9 million. The increase in MLP distributable cash flow was primarily attributable to the higher production and resulting higher earnings at OpCo, partially offset by increased maintenance costs and turnaround reserves.


Record second quarter 2021 net income attributable to the Partnership of $25.1 million increased by $10.0 million compared to first quarter 2021 net income attributable to the Partnership of $15.1 million. This increase was primarily attributable to higher production at OpCo and increased earnings on third party sales. Second quarter 2021 cash flows from operating activities of $131.7 million decreased by $23.7 million compared to first quarter 2021 cash flows from operating activities of $155.4 million. This decrease in cash flows from operating activities was primarily due to the receipt of a receivable from Westlake Chemical Corporation ("Westlake Chemical") in the first quarter, partially offset by higher earnings during the quarter. Second quarter 2021 MLP distributable cash flow of $25.5 million increased by $9.3 million compared to first quarter 2021 MLP distributable cash flow of $16.2 million. This increase was primarily attributable to the higher production and earnings at OpCo.

Net income attributable to the Partnership of $40.2 million, or $1.14 per limited partner unit, for the six months ended June 30, 2021 increased by $7.6 million compared to the first six months of 2020 net income attributable to the Partnership of $32.6 million. The increase in net income attributable to the Partnership as compared to the prior-year period was due to higher earnings on ethylene sold to Westlake Chemical under the Ethylene Sales Agreement and third parties and a buyer deficiency of $18.4 million related to the winter storm that occurred in the first quarter of 2021, partially offset by lower ethylene production. Cash flows from operating activities in the first six months of 2021 were $287.1 million, an increase of $63.4 million compared to the first six months of 2020 cash flows from operating activities of $223.7 million. This increase was primarily due to the receipt of a prior year receivable from Westlake and higher earnings during the period. For the six months ended June 30, 2021, MLP distributable cash flow of $41.8 million increased by $6.6 million compared to the first six months of 2020 MLP distributable cash flow of $35.2 million. The increase in MLP distributable cash flow as compared to the prior-year period was primarily attributable to the Partnership's higher earnings at OpCo, partially offset by increased maintenance costs and turnaround reserves.

"The Partnership had a record second quarter driven by the strong consumer markets for PVC construction materials and polyethylene packaging, which drove the resulting demand for ethylene. The strong demand for ethylene and the resulting robust pricing environment drove higher margins in our second quarter 2021 third-party ethylene sales," said Albert Chao, President and Chief Executive Officer.

OpCo's Ethylene Sales Agreement with Westlake Chemical is designed to provide for stable and predictable cash flows. The agreement provides that 95% of OpCo's ethylene production is sold to Westlake Chemical for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.

On August 2, 2021, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the second quarter of 2021 of $0.4714 per unit to be payable on August 26, 2021 to unitholders of record as of August 12, 2021, representing the 28th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.18x the declared distributions for the second quarter of 2021.

The statements in this release and the related teleconference relating to matters that are not historical facts, such as those with respect to cost recovery of expenses incurred in the second quarter of 2021, are forward-looking statements. These forward-looking statements are subject to significant risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, the COVID-19 pandemic and the response thereto; operating difficulties; the volume of ethylene that we are able to sell; the price at which we are able to sell ethylene; changes in the price and availability of feedstocks; changes in prevailing economic conditions; actions and commitments of Westlake Chemical Corporation; actions of third parties; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; changes in laws and regulations (or the interpretation thereof); inability to acquire or maintain necessary permits; inability to obtain necessary production equipment or replacement parts; technical difficulties or failures; labor disputes; difficulty collecting receivables; inability of our customers to take delivery; fires, explosions or other industrial accidents; our ability to borrow funds and access capital markets; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC in March 2021.

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Use of Non-GAAP Financial Measures

This release makes reference to certain "non-GAAP" financial measures, such as MLP distributable cash flow and EBITDA. For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. We report our financial results in accordance with U.S. GAAP, but believe that certain non-GAAP financial measures, such as MLP distributable cash flow and EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with U.S. GAAP. We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder. MLP distributable cash flow does not reflect changes in working capital balances. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization. MLP distributable cash flow and EBITDA are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess our operating performance as compared to other publicly traded partnerships, our ability to incur and service debt and fund capital expenditures and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. Reconciliations of MLP distributable cash flow to net income and to net cash provided by operating activities and of EBITDA to net income, income from operations and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, the Partnership owns a 22.8% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP's assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com.

Westlake Chemical Partners LP Conference Call Information:

A conference call to discuss Westlake Chemical Partners' second quarter 2021 results will be held Tuesday, August 3, 2021 at 1:00 PM Eastern Time (12:00 PM Central Time). To access the conference call, dial (855) 765-5686 or (234) 386-2848 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 321 65 79.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, August 10, 2021. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 321 65 79.

The conference call will also be available via webcast at: https://edge.media-server.com/mmc/p/go9q47ya and the earnings release can be obtained via the Partnership web page at: https://investors.wlkpartners.com/corporate-profile/default.aspx.

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

 

 

 

 

Net sales—Westlake Chemical Corporation ("Westlake")

 

$

240,956

 

 

 

$

227,431

 

 

 

$

460,759

 

 

 

$

442,259

 

 

Net co-product, ethylene and other sales—third parties

 

81,273

 

 

 

11,069

 

 

 

129,677

 

 

 

46,790

 

 

Total net sales

 

322,229

 

 

 

238,500

 

 

 

590,436

 

 

 

489,049

 

 

Cost of sales

 

191,200

 

 

 

148,470

 

 

 

371,708

 

 

 

295,471

 

 

Gross profit

 

131,029

 

 

 

90,030

 

 

 

218,728

 

 

 

193,578

 

 

Selling, general and administrative expenses

 

8,269

 

 

 

6,139

 

 

 

16,942

 

 

 

12,335

 

 

Income from operations

 

122,760

 

 

 

83,891

 

 

 

201,786

 

 

 

181,243

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense—Westlake

 

(2,224

)

 

 

(3,431

)

 

 

(4,460

)

 

 

(7,381

)

 

Other income, net

 

21

 

 

 

123

 

 

 

28

 

 

 

708

 

 

Income before income taxes

 

120,557

 

 

 

80,583

 

 

 

197,354

 

 

 

174,570

 

 

Income tax provision

 

263

 

 

 

206

 

 

 

438

 

 

 

423

 

 

Net income

 

120,294

 

 

 

80,377

 

 

 

196,916

 

 

 

174,147

 

 

Less: Net income attributable to noncontrolling interests in Westlake Chemical OpCo LP ("OpCo")

 

95,195

 

 

 

65,517

 

 

 

156,671

 

 

 

141,540

 

 

Net income attributable to Westlake Partners

 

$

25,099

 

 

 

$

14,860

 

 

 

$

40,245

 

 

 

$

32,607

 

 

 

 

 

 

 

 

 

 

 

Net income per limited partners unit attributable to Westlake Partners (basic and diluted)

 

 

 

 

 

 

 

 

Common units

 

$

0.71

 

 

 

$

0.43

 

 

 

$

1.14

 

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

 

$

0.4714

 

 

 

$

0.9428

 

 

 

$

0.9428

 

 

 

 

 

 

 

 

 

 

 

MLP distributable cash flow

 

$

25,538

 

 

 

$

16,855

 

 

 

$

41,783

 

 

 

$

35,192

 

 

 

 

 

 

 

 

 

 

 

Distributions declared

 

 

 

 

 

 

 

 

Limited partner units—publicly and privately held

 

$

9,938

 

 

 

$

9,933

 

 

 

$

19,874

 

 

 

$

19,867

 

 

Limited partner units—Westlake

 

6,657

 

 

 

6,657

 

 

 

13,314

 

 

 

13,314

 

 

Total distributions declared

 

$

16,595

 

 

 

$

16,590

 

 

 

$

33,188

 

 

 

$

33,181

 

 

EBITDA

 

$

151,483

 

 

 

$

109,827

 

 

 

$

258,058

 

 

 

$

233,795

 

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,
2021

 

December 31,
2020

 

 

 

 

 

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

17,665

 

 

 

$

17,154

 

 

Receivable under the Investment Management Agreement—Westlake

 

222,249

 

 

 

123,228

 

 

Accounts receivable, net—Westlake

 

66,948

 

 

 

108,028

 

 

Accounts receivable, net—third parties

 

24,962

 

 

 

11,029

 

 

Inventories

 

4,929

 

 

 

3,474

 

 

Prepaid expenses and other current assets

 

61

 

 

 

392

 

 

Total current assets

 

336,814

 

 

 

263,305

 

 

Property, plant and equipment, net

 

1,030,016

 

 

 

1,050,677

 

 

Other assets, net

 

34,925

 

 

 

42,506

 

 

Total assets

 

$

1,401,755

 

 

 

$

1,356,488

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued liabilities)

 

$

48,653

 

 

 

$

39,754

 

 

Long-term debt payable to Westlake

 

399,674

 

 

 

399,674

 

 

Other liabilities

 

1,670

 

 

 

1,923

 

 

Total liabilities

 

449,997

 

 

 

441,351

 

 

Common unitholders—publicly and privately held

 

476,076

 

 

 

471,701

 

 

Common unitholder—Westlake

 

51,103

 

 

 

48,270

 

 

General partner—Westlake

 

(242,572

)

 

 

(242,572

)

 

Total Westlake Partners partners' capital

 

284,607

 

 

 

277,399

 

 

Noncontrolling interest in OpCo

 

667,151

 

 

 

637,738

 

 

Total equity

 

951,758

 

 

 

915,137

 

 

Total liabilities and equity

 

$

1,401,755

 

 

 

$

1,356,488

 

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

2021

 

2020

 

 

 

 

 

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

196,916

 

 

 

$

174,147

 

 

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

 

 

 

 

Depreciation and amortization

 

56,244

 

 

 

51,844

 

 

Other balance sheet changes

 

33,958

 

 

 

(2,272

)

 

Net cash provided by operating activities

 

287,118

 

 

 

223,719

 

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

(27,289

)

 

 

(20,595

)

 

Maturities of investments with Westlake under the Investment Management Agreement

 

83,000

 

 

 

181,000

 

 

Investments with Westlake under the Investment Management Agreement

 

(182,000

)

 

 

(190,000

)

 

Other

 

126

 

 

 

 

 

Net cash used for investing activities

 

(126,163

)

 

 

(29,595

)

 

Cash flows from financing activities

 

 

 

 

Quarterly distributions to noncontrolling interest retained in OpCo by Westlake

 

(127,258

)

 

 

(157,248

)

 

Quarterly distributions to unitholders

 

(33,186

)

 

 

(33,181

)

 

Net cash used for financing activities

 

(160,444

)

 

 

(190,429

)

 

Net increase in cash and cash equivalents

 

511

 

 

 

3,695

 

 

Cash and cash equivalents at beginning of period

 

17,154

 

 

 

19,923

 

 

Cash and cash equivalents at end of period

 

$

17,665

 

 

 

$

23,618

 

 

WESTLAKE CHEMICAL PARTNERS LP

RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME

AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

 

Three Months
Ended March 31,

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

155,408

 

 

 

$

131,710

 

 

 

$

112,758

 

 

 

$

287,118

 

 

 

$

223,719

 

 

Changes in operating assets and liabilities and other

 

(78,786

)

 

 

(11,416

)

 

 

(32,381

)

 

 

(90,202

)

 

 

(49,572

)

 

Net Income

 

76,622

 

 

 

120,294

 

 

 

80,377

 

 

 

196,916

 

 

 

174,147

 

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

28,898

 

 

 

28,734

 

 

 

26,164

 

 

 

57,632

 

 

 

52,291

 

 

Mark-to-market adjustment loss (gain) on derivative contracts

 

 

 

 

 

 

 

704

 

 

 

 

 

 

(1,787

)

 

Less:

 

 

 

 

 

 

 

 

 

 

Contribution to turnaround reserves

 

(12,332

)

 

 

(12,463

)

 

 

(9,884

)

 

 

(24,795

)

 

 

(19,807

)

 

Maintenance capital expenditures

 

(11,743

)

 

 

(14,344

)

 

 

(8,228

)

 

 

(26,087

)

 

 

(19,349

)

 

Distributable cash flow attributable to noncontrolling interest in OpCo

 

(65,200

)

 

 

(96,683

)

 

 

(72,278

)

 

 

(161,883

)

 

 

(150,303

)

 

MLP distributable cash flow

 

$

16,245

 

 

 

$

25,538

 

 

 

$

16,855

 

 

 

$

41,783

 

 

 

$

35,192

 

 

WESTLAKE CHEMICAL PARTNERS LP

RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH

PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

 

Three Months
Ended March 31,

 

Three Months Ended June 30,

 

Three Months Ended March 31,

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

155,408

 

 

 

$

131,710

 

 

 

$

112,758

 

 

 

$

287,118

 

 

 

$

223,719

 

 

Changes in operating assets and liabilities and other

 

(78,786

)

 

 

(11,416

)

 

 

(32,381

)

 

 

(90,202

)

 

 

(49,572

)

 

Net Income

 

76,622

 

 

 

120,294

 

 

 

80,377

 

 

 

196,916

 

 

 

174,147

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

7

 

 

 

21

 

 

 

123

 

 

 

28

 

 

 

708

 

 

Interest expense

 

(2,236

)

 

 

(2,224

)

 

 

(3,431

)

 

 

(4,460

)

 

 

(7,381

)

 

Income tax provision

 

(175

)

 

 

(263

)

 

 

(206

)

 

 

(438

)

 

 

(423

)

 

Income from operations

 

79,026

 

 

 

122,760

 

 

 

83,891

 

 

 

201,786

 

 

 

181,243

 

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

27,542

 

 

 

28,702

 

 

 

25,813

 

 

 

56,244

 

 

 

51,844

 

 

Other income, net

 

7

 

 

 

21

 

 

 

123

 

 

 

28

 

 

 

708

 

 

EBITDA

 

$

106,575

 

 

 

$

151,483

 

 

 

$

109,827

 

 

 

$

258,058

 

 

 

$

233,795

 

 

 


Contacts

(713) 585-2900
Investors—Steve Bender
Media—L. Benjamin Ederington

DUBLIN--(BUSINESS WIRE)--The "Carbon Credit Market, By Sector, and by Region - Size, Share, Outlook, and Opportunity Analysis, 2020 - 2027" report has been added to ResearchAndMarkets.com's offering.


Carbon credits provide business with a verified method to balance unavoidable carbon footprint by directly supporting projects that are proven to reduce carbon emissions. One Carbon Offset/Credit represents the reduction of greenhouse gases equal to one metric ton of carbon dioxide equivalent (CO2e). The United Nations' Intergovernmental Panel on Climate Change (IPCC) developed a carbon credit proposal to reduce worldwide carbon emissions in a 1997 agreement known as the Kyoto Protocol. The Kyoto Protocol was signed in Kyoto, Japan, in 1997 by 192 industrialized countries. Countries that ratify the Kyoto Protocol are assigned a maximum limit of CO2 emission levels. Emitting more than the assigned limit will result in a penalty for the violating country in the form of lower emissions limit for the following period. However, if a country wants to emit more greenhouse gases than its allowed limit (without penalty), then it may participate in carbon trading using an Emissions Reduction Purchase Agreement (ERPA).

Company Profiles

  • WGL Holdings, Inc.
  • Enking International
  • Green Mountain Energy
  • Native Energy
  • Cool Effect Inc.
  • ClearSky Climate Solutions
  • Sustainable Travel International
  • 3 Degrees
  • terrapass
  • Sterling Planet, Inc.

Market Dynamics

The global carbon credit market is expected to grow significantly during the forecast period, owing to the increasing investment in the carbon credit market. At present, the carbon credit market is only limited to companies that are dealing with carbon emissions and its regulations. However, the rapidly growing global carbon credit market is expected to attract funding from various financial institutions such as venture capitals, banks, and others. On the other hand, international non-profit organizations are also investing in the carbon credit market in order to fund and promote scalable climate and environmental actions. For instance, in 2019, The World Bank, an international financial institution, initiated the Climate Change Fund Management Unit, which is responsible for developing new financial instruments for climate-resilient development, and low-carbon and scale-up climate action with the help of private-sector capital. The World Bank is investing around US$ 5 billion in capital for this initiative.

Among sector, forestry segment is expected to exhibit the highest growth during the forecast period. Forests play a vital role in combating climate change. Tropical forests cover about 15 percent of the world's land surface and contain about 25 percent of the carbon on the planet's surface. The loss and degradation of forests accounts for 15 - 20 percent of global carbon emissions. The majority of these emissions are the result of deforestation in the tropics, largely due to conversion of the forest to more lucrative economic activities such as agriculture and mining. The market for forest carbon credits has been significantly growing over the past ten years. Currently, there are three different project types that are eligible to produce carbon offsets; afforestation or reforestation, avoided conversion, and improved forest management (IFM). Improved forest management projects are the most common compliance offsets traded in California's cap and trade program.

Key features of the study:

  • This report provides in-depth analysis of global carbon credit market size (US$ Billion) and compound annual growth rate (CAGR %) for the forecast period (2020- 2027), considering 2019 as the base year
  • It elucidates potential revenue opportunities across different segments and explains attractive investment proposition matrices for this market
  • This study also provides key insights about market drivers, restraints, opportunities, new product launches or approvals, regional outlook, and competitive strategies adopted by the leading market players
  • It profiles leading players in the global carbon credit market based on the following parameters - company overview, financial performance, product portfolio, geographical presence, market capital, key developments, strategies, and future plans
  • Insights from this report would allow marketers and management authorities of companies to make informed decisions regarding future product launches, product upgrades, market expansion, and marketing tactics
  • The global carbon credit market report caters to various stakeholders in this industry including investors, suppliers, managed service providers, third-party service providers, distributors, new entrants, and value-added resellers
  • Stakeholders would have ease in decision-making through various strategy matrices used in analyzing the global carbon credit market

Key Topics Covered:

1. Research Objectives and Assumptions

2. Market Purview

3. Market Dynamics, Regulations, and Trends Analysis

  • Market Dynamics
  • Drivers
  • Restraints
  • Market Opportunities
  • Regulatory Scenario
  • Industry Trend
  • Merger and Acquisitions
  • Procedure Of Carbon Credit Trading
  • Carbon Credit (Offset) Purchased By Companies
  • Carbon Offsetting Process
  • Global Greenhouse Gas Emissions Overview
  • Per Capita Carbon Emissions Data By Country (2019)
  • Overview Of Initiatives By Country
  • Carbon credit market: Protocols and standards
  • Carbon Crediting Mechanisms
  • Carbon Pricing Overview
  • Impact of COVID-19 Pandemic

4. Global Carbon Credit Market, By Sector, 2017-2027 (US$ Million)

5. Global Carbon Credit Market, By Region, 2017-2027 (US$ Million)

6. Competitive Landscape

7. Section

For more information about this report visit https://www.researchandmarkets.com/r/uz23zt


Contacts

ResearchAndMarkets.com
Laura Wood, Senior Press Manager
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For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Bidgely will be demonstrating the power of data analytics, artificial intelligence (AI) and personalization for utilities again this year at the industry’s premier educational and customer service event CS Week 2021. Through informative sessions alongside customers like NV Energy and Southern California Gas (SoCalGas®), audiences will learn how to craft personalized, digital customer journeys; engage low-medium income (LMI) populations; and empower CSR teams through AI techniques that are proven to elevate customer satisfaction and engagement.



“Despite the many challenges facing the industry, progressive utilities are leaning into their digital transformation journeys. As a recognized leader in worldwide digital customer engagement, we are bringing the top stories from turning customer service into customer value to CS Week this year alongside our customers and partners - in-person and virtually,” said Gautam Aggarwal, Chief Business Officer at Bidgely.

NV Energy & Bidgely at CS Week 2021, August 16-19 in Tampa, Fla.

Bidgely CEO Abhay Gupta will join Adam Grant, manager of demand side management program delivery at NV Energy, for the CS Week presentation AI in Utilities: A Customer-Centric Approach to Energy Management. The presentation will outline how NV Energy successfully implemented a wide-range of AI-informed solutions to better connect with customers, deliver programs more successfully and realize gains across operations areas, including personalized customer care co-browsing. At the event, visit Bidgely in Meeting Room #446 or Bidgely can also be found in the Salesforce theater. To book a meeting with the team at CS Week, visit go.bidgely.com/csweek2021.

SoCalGas & Bidgely at CS Week Virtual Touch, September 13-17

As part of CS Week Virtual Touch, Dr. Maria Liza Legaspi, energy management supervisor at SoCalGas, and Bidgely Strategy and Growth Manager Pauline Marcou will broadcast their discussion Achieving Behavioral EE with Medium Consumption Customers. The session will look at how SoCalGas used artificial intelligence and a digital-first platform to expand its behavioral energy efficiency approach to medium consumption customers. By delivering more inclusive and intelligent communications, SoCalGas provided greater numbers of more diverse customers with a superior level of service, insight and personalized support - resulting in over 360,000 therms saved as well as a 50 percent open rate and 81 percent “Like” rating on digital communications.

Bidgely Engage Virtual 2021: FutureReady

In Bidgely’s commitment to furthering industry dialogue around how utilities can leverage customer-centric AI to better achieve their goals, Bidgely is once again hosting its premier energy AI event Engage Virtual. This year’s conference focuses on how leading utilities are taking an analytics-driven approach to balancing immediate business outcomes (CX, DSM, etc.) alongside larger goals, such as net-zero targets, customer relationships and modernization. Join us virtually on October 5-8, 2021 for three short days of high impact sessions, followed by a day of hands-on demos illustrating AI in action. Hear from utility executives and industry leaders from Duke Energy, Portland General Electric, Pepco, APS, ConEdison, PSEG-LI, SECC, Guidehouse Insights and more.

Register at: bidgely.com/engage.

About Bidgely

Bidgely is an AI-powered SaaS Company accelerating a clean energy future by enabling energy companies and consumers to make data-driven energy-related decisions. Powered by our unique patented technology, Bidgely's UtilityAI™ Platform transforms multiple dimensions of customer data - such as energy consumption, demographic, and interactions - into deeply accurate and actionable consumer energy insights. We leverage these insights to empower each customer with personalized recommendations, tailored to their individual personality and lifestyle, usage attributes, behavioral patterns, purchase propensity, and beyond. From a Distributed Energy Resources (DER) and Grid Edge perspective, whether it is smart thermostats to EV chargers, solar PVs to TOU rate designs and tariffs; UtilityAI™ energy analytics provides deep visibility into generation, consumption for better peak load shaping and grid planning, and delivers targeted recommendations for new value-added products and services. With roots in Silicon Valley, Bidgely has over 17 energy patents, $50M+ in funding, retains 30+ data scientists, and brings a passion for AI to utilities serving residential and commercial customers around the world. For more information, please visit www.bidgely.com or the Bidgely blog at bidgely.com/blog.


Contacts

Christine Bennett
Bidgely
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ST. JOHN’S, Newfoundland--(BUSINESS WIRE)--$ARR.TO #energytransition--Altius Renewable Royalties (TSX:ARR) (“ARR”) reports that Great Bay Renewables (“Great Bay”), its subsidiary jointly controlled with funds managed by affiliates of Apollo Global Management (the “Apollo Funds”), has closed a US$35 million royalty investment with Longroad Energy (“Longroad”) related to Longroad’s 331 MWdc (250 MWac) Prospero 2 solar project located in Andrews County, Texas (“Prospero 2”).


Longroad is a top-tier developer, owner, and operator of renewable energy projects, having developed over 60 renewable energy projects totaling over 6 GW across North America. The project achieved commercial operation on August 2, 2021 and is operated by Longroad. The solar facility is set upon lands leased from the University of Texas under a long-term lease agreement. Over two-thirds of the expected Prospero 2 power output is contracted to two companies, Davita and Zimmer Biomet, under fifteen-year, unit contingent Power Purchase Agreements, with the remainder of the project’s energy output expected to be sold into the ERCOT spot market.

The royalty investment has been structured using royalty rates that vary over time, which achieve Great Bay’s investment hurdles while optimizing Longroad’s project level cash flow profile. Great Bay expects to earn a return of 8-12% on its investment over the initial life of the project, with royalty revenue starting at a lower level starting in January 2022 and increasing materially after the first five years of operation for the remainder of the project life.

Brian Dalton, CEO of ARR, stated, “ARR’s joint venture operating team at GBR has once again brought innovation to the financing of the rapidly growing US renewable energy industry. By providing partner-like funding directly into the capital structure of an operating project, in addition to the growth being experienced from the existing platform of portfolio-based investments in earlier stage projects, we are clearly demonstrating that our royalty financing structures are earning acceptance and adoption within the renewable energy sector. As a result, we are more encouraged than ever about the possibilities for further successful capital deployment.”

Frank Getman, CEO of Great Bay, commented, “We are excited to invest in such a high-quality project that was developed, constructed and now owned and operated by one of the strongest teams in the sector. We value this new relationship with Longroad and look forward to supporting Longroad in its goal of responsibly developing, owning, and operating renewable energy projects as we transition to a clean energy future.” Getman added, “This is our first royalty investment directly into an operating project, which speaks to the increasing adoption of our partner-like funding and greatly expands the addressable market for our royalty investment product.”

“Longroad is excited to add this innovative product to our capital structure,” said Pete Keel, Longroad’s CFO. “Great Bay’s royalty investment is a good fit for Prospero 2 and further enables Longroad to build out our operating fleet, which today stands at over 1.5 GW of net ownership. We look forward to working with Great Bay again in the future.”

Apollo Funding and Investment Structuring

ARR and the Apollo Funds have agreed to fund the Longroad investment with 70% of the capital provided by the Apollo Funds and the balance of US$11 million to be funded directly by ARR. Post-closing, the Apollo Funds will have funded US$59 million in total, approximately US$48 million of which counts towards the Apollo Funds’ initial US$80 million commitment. The balance of US$32 million is expected to be funded by the end of 2021. Upon completion of the Apollo Funds’ earn-in, the joint venture partners will fund new opportunities on an equal basis.

Additional information concerning the Prospero 2 project including a SEDAR-filed Material Change Report can be found at arr.energy.

About ARR

ARR is a recently formed renewable energy company whose business is to provide long-term, royalty level investment capital to renewable power developers, operators, and originators through its joint venture Great Bay Renewables. The Company combines industry expertise with innovative, partner-focused solutions to further the growth of the renewable energy sector as it fulfills its critical role in enabling the global energy transition.


Contacts

Flora Wood
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: 1.877.576.2209
Direct: +1(416)346.9020

Ben Lewis
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel: 1.877.576.2209

Purpose-built marine amplifier range increases power and optimizes performance

OLATHE, Kan.--(BUSINESS WIRE)--Garmin International, Inc., a unit of Garmin Ltd. (NASDAQ: GRMN), the world’s largest1 and most innovative marine electronics manufacturer, today announced the Apollo™ Series amplifiers from Fusion® Entertainment, a Garmin brand, delivering the best performance and most power for boats equipped with Fusion Digital Signal Processing (DSP)-enabled stereos and Fusion speakers2. Designed exclusively for Fusion marine entertainment systems, the new Apollo Series enhance audio clarity and reduce distortion for a superior onboard entertainment experience.



“With Apollo Series amplifiers on board, boaters can play their favorite songs louder and cleaner than ever before, even when cutting through the waves at full throttle,” said Dan Bartel, Garmin vice president of global consumer sales. “By offering an innovative amplifier range specifically designed for Fusion systems, boaters can expect to have the same quality of sound performance found in high-end home audio systems while out on their boats.”

Amplify the moment with more power and better audio
Thanks to 150 W RMS per channel3, High Power Mode3 and reduced Total Harmonic Distortion (THD), Apollo Series amplifiers deliver clearer audio on the water and optimize audio reproduction for each individual zone on board. To protect Fusion marine entertainment systems on board, Apollo Series amplifiers also feature Multiple Protection Modes and ignition protection.

Simple installation and set up
With in-the-box mounting brackets and Easy Tune functionality, the installation and set up process has never been quicker or simpler. Using a wireless Fusion-Link™ connection, fine-tuning and adjusting complex audio settings for marine entertainment systems is no longer a problem that requires the help of outside audio experts. By simply selecting the relevant DSP audio profiles in the Fusion-Link app, boaters can sync and tune their Apollo Series amplifiers for optimized audio reproduction, right from their mobile device.

Built to last
Featuring Fusion’s signature True-Marine design and 3-year warranty, the Apollo Series amplifiers are built to last season after season with protection against harsh marine environments – such as salt fog, water and UV – enclosed in a slick, white powder-coated aluminum casing that provides a modern aesthetic to any boat.

In addition to 1-, 4-, 6- and 8-channel options, the Apollo Series also offers a 2-channel Apollo zone amplifier to target and make use of zones not being amplified on board. The Apollo zone amplifier is available with 12V and 24V compatibility and features a compact design that fits anywhere around the boat.

The Apollo Series amplifiers are available now with suggested retail prices ranging from $179.99 to $949.99. For more information about the Apollo Series amplifiers and their seamless integration with Garmin marine electronics, visit www.garmin.com/fusionaudioentertainment.

Engineered on the inside for life on the outside, Garmin products have revolutionized life for anglers, sailors, mariners and boat enthusiasts everywhere. Committed to developing the most sophisticated marine electronics the industry has ever known, Garmin believes every day is an opportunity to innovate and a chance to beat yesterday. For the sixth consecutive year, Garmin was recently named the Manufacturer of the Year by the National Marine Electronics Association (NMEA). Other Garmin marine brands include Navionics®. For more information, visit Garmin's virtual pressroom at garmin.com/newsroom, email This email address is being protected from spambots. You need JavaScript enabled to view it., or follow us at facebook.com/garmin, twitter.com/garminnews, instagram.com/garmin, youtube.com/garmin or linkedin.com/company/garmin.

1 Based on 2020 reported sales.
2 Amplifiers are designed exclusively for use with Fusion DSP-enabled stereos (Apollo RA770, Apollo RA670, Apollo WB670 and RA210) and Fusion speakers
3 Applies to the 4-channel, 6-channel, 8-channel versions only; it does not apply for the monoblock and zone amplifiers

About Garmin International, Inc.
Garmin International, Inc. is a subsidiary of Garmin Ltd. (Nasdaq: GRMN). Garmin Ltd. is incorporated in Switzerland, and its principal subsidiaries are located in the United States, Taiwan and the United Kingdom. Garmin, Fusion and Navionics are registered trademarks and Apollo, Fusion-Link and True-Marine are trademarks of Garmin Ltd. or its subsidiaries.

Notice on Forward-Looking Statements:
This release includes forward-looking statements regarding Garmin Ltd. and its business. Such statements are based on management’s current expectations. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of known and unknown risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors listed in the Annual Report on Form 10-K for the year ended December 26, 2020, filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of such Form 10-K is available at http://www.garmin.com/aboutGarmin/invRelations/finReports.html. No forward-looking statement can be guaranteed. Forward-looking statements speak only as of the date on which they are made and Garmin undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.


Contacts

Riley Swickard
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  • Safety & Shipping Review 2021: 49 large ships lost worldwide last year. Total losses down 50% over 10 years. Number of shipping incidents (2,703) declines year-on-year.
  • Shipping industry resilient through pandemic, but crew change crisis has long-term consequences. Covid-19 delays and surge in demand for shipping increasing cost of claims. Inadequate ship maintenance could bring future claims.
  • Suez Canal incident shows ever-increasing vessel sizes continue to pose a disproportionately large risk with costly groundings and salvage operations. High number of fires and containers lost at sea.

NEW YORK--(BUSINESS WIRE)--#AGCS--The international shipping industry continued its long-term positive safety trend over the past year but has to master Covid challenges, apply the learnings from the Ever Given Suez Canal incident and prepare for cyber and climate change challenges ahead. The number of large vessels lost remained at record low levels in 2020, while reported incidents declined year-on-year, according to marine insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2021.



“The shipping sector has shown great resilience through the coronavirus pandemic, as evidenced by strong trade volumes and the recovery we are seeing in several parts of the industry today,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. “Total losses are at historic low levels for the third year running. However, it is not all smooth sailing. The ongoing crew crisis, the increasing number of issues posed by larger vessels, growing concerns around supply chain delays and disruptions, as well as complying with environmental targets, bring significant risk management challenges for ship owners and their crews.”

The annual AGCS study analyzes reported shipping losses and casualties (incidents) over 100 gross tons. During 2020, 49 total losses of vessels were reported globally, similar to a year earlier (48) and the second lowest total this century. This represents a 50% decline over 10 years (98 in 2011). The number of shipping incidents declined from 2,818 to 2,703 in 2020 (by 4%). There have been more than 870 shipping losses over the past decade.

The South China, Indochina, Indonesia and Philippines maritime region remains the global loss hotspot, accounting for one in every three losses in 2020 (16) with incidents up year-on-year. Cargo ships (18) account for more than a third of vessels lost in the past year and 40% of total losses over the past decade. Foundered (sunk/submerged) was the main cause of total losses over the past year, accounting for one in two vessels. Machinery damage/failure was the top cause of shipping incidents globally, accounting for 40%.

Covid-19 factors

Despite the devastating economic impact of Covid-19, the effect on maritime trade has been less than first feared. Global seaborne trade volumes are on course to surpass 2019 levels this year after declining slightly in 2020. However, the recovery remains volatile. Covid-19-related delays at ports and shipping capacity management problems have led to congestion at peak times and a shortage of empty containers. In June 2021, it was estimated there was a record 300 freighters waiting to enter overcrowded ports. The time container ships are spending waiting for port berths has more than doubled since 2019.

The crew change situation on vessels is a humanitarian crisis which continues to affect the health and wellbeing of seafarers. In March 2021, it was estimated some 200,000 seafarers remained on board vessels unable to be repatriated due to Covid-19 restrictions. Extended periods at sea can lead to mental fatigue and poor decision-making, which ultimately impact safety. There have already been shipping incidents which have featured crews who have been on board for longer than they should have. Seafarer training is suffering, while attracting new talent is problematic given working conditions. Future crew shortages could impact the surge in demand for shipping as international trade rebounds.

Although Covid-19 has resulted in limited direct marine claims to date, the sector has not been spared significant loss activity. “Overall, the frequency of marine claims has not reduced. We are also seeing an increased cost of hull and machinery claims due to delays in the manufacture and delivery of spare parts, as well as a squeeze on available shipyard space,” says Justus Heinrich, Global Product Leader, Marine Hull, at AGCS. “Costs associated with salvage and repairs have also increased.” In future, insurers could potentially see an uptick in machinery breakdown claims if Covid-19 has affected crews’ ability to carry out maintenance or follow manufacturers’ protocols.

Larger vessels, larger exposures

The blocking of the Suez Canal by the Ever Given container ship in March 2021 is the latest in a growing list of incidents involving large vessels or mega-ships. Ships have become ever-larger as shipping companies seek economies of scale and fuel efficiency. The largest container ships break the 20,000 teu mark, with vessels over 24,000 teu on order – capacity of container ships vessels alone has increased by 1,500% over 50 years and has more than doubled over the past 15 years.

“Larger vessels present unique risks. Responding to incidents is more complex and expensive. Approach channels to existing ports may have been dredged deeper and berths and wharfs extended to accommodate large vessels but the overall size of ports has remained the same. As a result, a ‘miss’ can turn into a ‘hit’ more often for the ultra-large container vessels,” says Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS. If the Ever Given had not been freed, salvage would have required the lengthy process of unloading some 18,000 containers, requiring specialist cranes. The wreck removal of the large car carrier, Golden Ray, which capsized in US waters in 2019 with more than 4,000 vehicles on it has taken over a year and a half and cost several hundreds of millions of dollars.

The number of fires on board large vessels has increased significantly in recent years. There was a record 40 cargo-related fires alone in 2019. Across all vessel types, the number of fires/explosions resulting in total losses increased again in 2020, hitting a four-year high of 10. Fires often start in containers, which can be the result of non-/mis-declaration of hazardous cargo, such as chemicals and batteries. When mis-declared, these might be improperly packed and stowed on board, which can result in ignition and/or complicate detection and firefighting. Major incidents have shown container fires can easily get out of control and result in the crew abandoning the vessel on safety grounds, thus increasing the size of loss.

Loss of containers at sea also spiked last year (over 3,000) and have continued at a high level in 2021, disrupting supply chains and posing a potential pollution and navigation risk. The number lost is the worst in seven years. Larger vessels, more extreme weather, a surge in freight rates and mis-declared cargo weights (leading to container stack collapse), as well as the surge in demand for consumer goods may all be contributing to this increase. There are growing questions about how containers are secured on board ships.

Delay and supply chain issues

Maritime supply chain resilience is in the spotlight after a series of recent events. The Ever Given incident sent shockwaves through global supply chains dependent on seaborne transport. It compounded delays and disruption already caused by trade disputes, extreme weather, the pandemic and surges in demand for containerized goods and commodities. “Such events expose the weak links in supply chains and have magnified them,” says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS. “Developing more robust and diversified supply chains will become increasingly important, as will understanding pinch points and supply chain nodes.”

Piracy and cyber concerns

The world’s piracy hotspot, the Gulf of Guinea, accounted for over 95% of crew numbers kidnapped worldwide in 2020. Last year, 130 crew were kidnapped in 22 incidents in the region – the highest number ever – and the problem has continued. Vessels are being targeted further away from the shore – over 200 nautical miles (nm) in some cases. The Covid-19 pandemic could exacerbate piracy as it is tied to underlying social, political and economic problems, which could deteriorate further. Former hotspots like Somalia could re-emerge.

The report also notes that all four of the world’s largest shipping companies have already been hit by cyberattacks, and with geopolitical conflict increasingly played out in cyber space, concerns are growing about a potential strike on critical maritime infrastructure, such as a major port or shipping route. Increased awareness of – and regulation around – cyber risk is translating into an uptake of cyber insurance by shipping companies, although mostly for shore-based operations to date.

The environmental picture

With momentum gathering behind international efforts to tackle climate change, the shipping industry is likely to come under increasing pressure to accelerate its efforts. “A huge investment in research and development is required if the industry is to meet the challenging targets being set. Today’s existing fleet and technology will not get the shipping industry to the International Maritime Organization’s target of a 50% cut in emissions by 2050, let alone the more ambitious targets being discussed by national governments,” says Khanna.

Last year, the cap on the sulphur content of ships’ fuel was cut. Known as IMO 2020, the cut is expected to reduce emissions of harmful sulphur oxide (SOx) from shipping by 77%. Insurers have seen a number of machinery damage claims related to scrubbers, which remove SOx from exhaust gases for vessels using heavy marine fuel.

Most frequent loss and incident locations

According to the report, the South China, Indochina, Indonesia and Philippines maritime region is also the major loss location of the past decade (224 vessels), driven by high levels of local and international trade, congested ports and busy shipping lanes, older fleets and extreme weather exposure. Together, the South China, Indochina, Indonesia and Philippines, East Mediterranean and Black Sea, and Japan, Korea and North China maritime regions account for half of the 876 shipping losses of the past 10 years (437).

The British Isles, North Sea, English Channel and Bay of Biscay region saw the highest number of reported incidents (579) in 2020, although this was down year-on-year. The most accident-prone vessels of the last year were a Greek Island ferry and a RoRo ferry in Canadian waters, both involved in six different incidents.

About Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across 10 dedicated lines of business.

Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are not only the world’s largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film productions. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.

Worldwide, AGCS operates with its own teams in 31 countries and through the Allianz Group network and partners in over 200 countries and territories, employing around 4,400 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial ratings. In 2020, AGCS generated a total of €9.3 billion gross premium globally.

For more information please visit http://www.agcs.allianz.com/ or @AGCS_Insurance and LinkedIn.

Cautionary Note Regarding Forward-Looking Statements


Contacts

Press
Erin Burke
Harden Communications Partners
631 239 6903
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Reported earnings of $2.1 billion; adjusted earnings of $1.7 billion.
Generated cash provided by operating activities of $4.3 billion; cash from operations of $4.0 billion.
Produced 1,547 MBOED excluding Libya.


HOUSTON--(BUSINESS WIRE)--ConocoPhillips (NYSE: COP) today reported second-quarter 2021 earnings of $2.1 billion, or $1.55 per share, compared with second-quarter 2020 earnings of $0.3 billion, or $0.24 per share. Excluding special items, second-quarter 2021 adjusted earnings were $1.7 billion, or $1.27 per share, compared with a second-quarter 2020 adjusted loss of $1.0 billion, or ($0.92) per share. Special items for the current quarter included a gain on Cenovus Energy shares and a contingent payment from Cenovus associated with the 2017 Canadian disposition, partially offset by corporate expenses.

This quarter’s performance follows a market update held on June 30, during which the company laid out a compelling 10-year plan. The plan, based on a reference oil price of $50 per barrel West Texas Intermediate at 2020 real prices, provided a comprehensive outlook for the business post-Concho acquisition and reaffirmed the company’s commitment to playing a valued role in the energy transition, delivering sector-leading returns on and of capital and reducing greenhouse gas emissions. In conjunction with the market update, the company lowered its capital and adjusted operating cost guidance for 2021 and announced plans to increase 2021 share repurchases by $1 billion, bringing total planned return of capital to shareholders to roughly $6 billion for the year. A replay of the market update is available on the ConocoPhillips Investor Relations website, http://www.conocophillips.com/investor.

“The market update provided a durable plan for the business that is unmatched,” said Ryan Lance, ConocoPhillips chairman and chief executive officer. “We have a stronger, more flexible asset base and greater underlying efficiency resulting from the Concho acquisition and the restructuring work we’ve performed throughout our company. Our updated outlook comes at a time that we believe is a defining moment for the sector. ConocoPhillips uniquely meets this moment with a credible multi-year plan, continued strong execution, resilience with unhedged upside, a track record of peer-leading returns on and of capital, and a clear commitment to ESG excellence. These are the attributes that will reenlist investor interest in our sector, and we are ideally positioned to deliver them through the industry price cycles.”

Second-Quarter Highlights & Recent Announcements

  • Delivered strong operational performance across the company’s asset base, including successful planned maintenance turnarounds, resulting in second-quarter production of 1,547 MBOED, excluding Libya.
  • Cash provided by operating activities was $4.3 billion. Excluding working capital, cash from operations (CFO) of $4.0 billion exceeded capital expenditures and investments of $1.3 billion, generating free cash flow (FCF) of approximately $2.8 billion.
  • Distributed a total of $1.2 billion to shareholders, comprised of $0.6 billion in dividends and $0.6 billion in share repurchases, entirely funded from FCF.
  • Ended the quarter with combined cash, cash equivalents and restricted cash of $7.0 billion and short-term investments of $2.3 billion, totaling over $9 billion in ending cash and short-term investments.
  • Entered into divestiture agreements during July for certain Lower 48 non-core assets totaling nearly $0.2 billion, subject to customary closing adjustments, as part of the company’s plan to generate $2 to $3 billion in disposition proceeds over the next 18 months.

Second-Quarter Review

Production excluding Libya for the second quarter of 2021 was 1,547 thousand barrels of oil equivalent per day (MBOED), an increase of 566 MBOED from the same period a year ago. After adjusting for closed acquisitions and dispositions as well as impacts from the 2020 curtailment program, second-quarter 2021 production increased 46 MBOED or 3% from the same period a year ago. This increase was primarily due to new production from the Lower 48 and other development programs across the portfolio, partially offset by normal field decline. Production from Libya averaged 41 MBOED.

In the Lower 48, production averaged 794 MBOED, including 435 MBOED from the Permian, 227 MBOED from the Eagle Ford and 95 MBOED from the Bakken. In Alaska, drilling commenced at GMT2 and the first Fiord West well spud from the CD2 pad. In Norway, the Tor II project was completed with the remaining three wells of the eight-well program brought on line.

Earnings increased from second-quarter 2020 due to higher realized prices and volumes, partially offset by the absence of the second-quarter 2020 gain following completion of the Australia-West divestiture, as well as higher depreciation expense associated with the higher volumes. Excluding special items, adjusted earnings were higher compared with second-quarter 2020 due to higher realized prices and higher volumes, partially offset by increased depreciation expense associated with the higher volumes. The company’s total average realized price was $50.03 per BOE, 117% higher than the $23.09 per BOE realized in the second quarter of 2020, reflecting higher marker prices and improved realizations.

For the quarter, cash provided by operating activities was $4.3 billion. Excluding working capital, ConocoPhillips generated CFO of $4.0 billion. CFO was reduced by approximately $0.2 billion due to a discretionary pension plan contribution during the period. The company also funded $1.3 billion of capital expenditures and investments, paid $0.6 billion in dividends, repurchased $0.6 billion of shares and reported $1.8 billion in net sales of investments in financial instruments.

Six-Month Review

ConocoPhillips’ six-month 2021 earnings were $3.1 billion, or $2.31 per share, compared with a six-month 2020 loss of $1.5 billion, or ($1.37) per share. Six-month 2021 adjusted earnings were $2.6 billion, or $1.97 per share, compared with a six-month 2020 adjusted earnings loss of $0.5 billion, or ($0.47) per share.

Production excluding Libya for the first six months of 2021 was 1,518 MBOED, an increase of 388 MBOED from the same period a year ago. After adjusting for closed acquisitions and dispositions, as well as impacts from the 2020 curtailment program and Winter Storm Uri impacts from 2021, production increased 18 MBOED. This increase was primarily due to new production from the Lower 48 and other development programs across the portfolio, partially offset by normal field decline. Production from Libya averaged 40 MBOED.

The company’s total realized price during this period was $47.79 per BOE, 49% higher than the $32.15 per BOE realized in the first six months of 2020, reflecting higher marker prices and improved realizations.

In the first half of 2021, cash provided by operating activities was $6.3 billion. Excluding a $0.2 billion change in working capital, ConocoPhillips generated CFO of $6.1 billion. CFO was reduced by approximately $1.0 billion due to transaction and restructuring expenses and realized losses on the commodity hedging portfolio acquired from Concho. The company funded $2.5 billion of capital expenditures and investments, paid $1.2 billion in dividends, repurchased $1.0 billion of shares and reported $1.3 billion in net sales of investments in financial instruments.

Outlook

Third-quarter 2021 production is expected to be 1.48 to 1.52 MMBOED, reflecting seasonal turnarounds planned in Alaska and the Asia Pacific region. This guidance excludes Libya and assumes that previously announced divestitures close during the third quarter of 2021. All other guidance items are unchanged.

ConocoPhillips will host a conference call today at 12:00 p.m. Eastern time to discuss this announcement. To listen to the call and view related presentation materials and supplemental information, go to www.conocophillips.com/investor. A recording and transcript of the call will be posted afterward.

--- # # # ---

About ConocoPhillips

Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 15 countries, $85 billion of total assets, and approximately 10,100 employees at June 30, 2021. Production excluding Libya averaged 1,518 MBOED for the six months ended June 30, 2021, and proved reserves were 4.5 BBOE as of Dec. 31, 2020. For more information, go to www.conocophillips.com.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains forward-looking statements as defined under the federal securities laws. Forward-looking statements relate to future events and anticipated results of operations, business strategies, and other aspects of our operations or operating results. Words and phrases such as “anticipate," “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict," “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and other similar words can be used to identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Where, in any forward-looking statement, the company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future performance and involve certain risks, uncertainties and other factors beyond our control. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in the forward-looking statements. Factors that could cause actual results or events to differ materially from what is presented include the impact of public health crises, including pandemics (such as COVID-19) and epidemics and any related company or government policies or actions; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including changes resulting from a public health crisis or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including a prolonged decline in these prices relative to historical or future expected levels; changes in expected levels of oil and gas reserves or production; potential failures or delays in achieving expected reserve or production levels from existing and future oil and gas developments, including due to operating hazards, drilling risks or unsuccessful exploratory activities; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; legislative and regulatory initiatives addressing global climate change or other environmental concerns; investment in and development of competing or alternative energy sources; disruptions or interruptions impacting the transportation for our oil and gas production; international monetary conditions and exchange rate fluctuations; changes in international trade relationships, including the imposition of trade restrictions or tariffs on any materials or products (such as aluminum and steel) used in the operation of our business; our ability to collect payments when due under our settlement agreement with PDVSA; our ability to collect payments from the government of Venezuela as ordered by the ICSID; our ability to liquidate the common stock issued to us by Cenovus Energy Inc. at prices we deem acceptable, or at all; our ability to complete our announced or any future dispositions or acquisitions on time, if at all; the possibility that regulatory approvals for our announced or any future dispositions or acquisitions will not be received on a timely basis, if at all, or that such approvals may require modification to the terms of the transactions or our remaining business; business disruptions during or following our announced or any future dispositions or acquisitions, including the diversion of management time and attention; the ability to deploy net proceeds from our announced or any future dispositions in the manner and timeframe we anticipate, if at all; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation, including litigation related to our transaction with Concho Resources Inc. (Concho); the impact of competition and consolidation in the oil and gas industry; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; general domestic and international economic and political conditions; the ability to successfully integrate the operations of Concho with our operations and achieve the anticipated benefits from the transaction; unanticipated difficulties or expenditures relating to the Concho transaction; changes in fiscal regime or tax, environmental and other laws applicable to our business; and disruptions resulting from extraordinary weather events, civil unrest, war, terrorism or a cyber attack; and other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission. Unless legally required, ConocoPhillips expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We may use the term “resource” in this news release that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips website.

Use of Non-GAAP Financial Information – To supplement the presentation of the company’s financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), this news release and the accompanying supplemental financial information contain certain financial measures that are not prepared in accordance with GAAP, including adjusted earnings (calculated on a consolidated and on a segment-level basis), adjusted earnings per share, operating costs, adjusted operating costs, cash from operations (CFO) and free cash flow (FCF).

The company believes that the non-GAAP measures adjusted earnings (both on an aggregate and a per-share basis), operating costs and adjusted operating costs are useful to investors to help facilitate comparisons of the company’s operating performance associated with the company’s core business operations across periods on a consistent basis and with the performance and cost structures of peer companies by excluding items that do not directly relate to the company’s core business operations. The company further believes that the non-GAAP measure CFO is useful to investors to help understand changes in cash provided by operating activities excluding the timing effects associated with operating working capital changes across periods on a consistent basis and with the performance of peer companies. The company believes FCF is useful to investors in understanding how existing cash from operations is utilized as a source for sustaining our current capital plan and future development growth. FCF is not a measure of cash available for discretionary expenditures since the company has certain non-discretionary obligations such as debt service that are not deducted from the measure. Adjusted earnings is defined as net income (loss) attributable to ConocoPhillips adjusted for the impact of special items that do not directly relate to the company’s core business operations, or are of an unusual and non-recurring nature. Operating costs is defined by the company as the sum of production and operating expenses, selling, general and administrative expenses, exploration general and administrative expenses, geological and geophysical, lease rentals and other exploration expenses. Adjusted operating costs is defined as the company’s operating costs further adjusted to exclude expenses that do not directly relate to the company’s core business operations and are included as adjustments to arrive at adjusted earnings to the extent those adjustments impact operating costs. CFO is defined as cash provided by operating activities, excluding the impact of changes in operating working capital. FCF is defined as CFO net of capital expenditures and investments. The company believes that the above-mentioned non-GAAP measures, when viewed in combination with the company’s results prepared in accordance with GAAP, provides a more complete understanding of the factors and trends affecting the company’s business and performance. The company’s Board of Directors and management also use these non-GAAP measures to analyze the company’s operating performance across periods when overseeing and managing the company’s business.

Each of the non-GAAP measures included in this news release and the accompanying supplemental financial information has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the company’s results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the company’s presentation of non-GAAP measures in this news release and the accompanying supplemental financial information may not be comparable to similarly titled measures disclosed by other companies, including companies in our industry. The company may also change the calculation of any of the non-GAAP measures included in this news release and the accompanying supplemental financial information from time to time in light of its then existing operations to include other adjustments that may impact its operations.

Reconciliations of each non-GAAP measure presented in this news release to the most directly comparable financial measure calculated in accordance with GAAP are included in the release.

Other Terms – This news release also contains the term underlying production. Underlying production excludes Libya and reflects the impact of closed acquisitions and closed dispositions with an assumed close date of January 1, 2020. The company believes that underlying production is useful to investors to compare production excluding Libya and reflecting the impact of closed acquisitions and dispositions on a consistent go-forward basis across periods and with peer companies.

References in the release to earnings refer to net income/(loss) attributable to ConocoPhillips.

             
             
ConocoPhillips            
Table 1: Reconciliation of earnings to adjusted earnings            
$ Millions, Except as Indicated            
             

2Q21

   

2Q20

   

2021 YTD

   

2020 YTD

Pre-tax

Income
tax

After-tax

Per share of
common
stock
(dollars)

   

Pre-tax

Income
tax

After-tax

Per share of
common
stock
(dollars)

   

Pre-tax

Income
tax

After-tax

Per share of
common
stock
(dollars)

   

Pre-tax

Income
tax

After-tax

Per share of
common
stock
(dollars)

Earnings

$

2,091

 

1.55

 

   

260

 

0.24

 

   

3,073

 

2.31

 

   

(1,479

)

(1.37

)

Adjustments:            
(Gain) loss on CVE shares

(418

)

-

 

 

(418

)

(0.30

)

   

(551

)

-

 

(551

)

(0.51

)

   

(726

)

-

 

(726

)

(0.55

)

   

1,140

 

-

 

1,140

 

1.05

 

Net gain on asset sales

(68

)

16

 

 

(52

)

(0.04

)

   

(589

)

(5

)

(594

)

(0.56

)

   

(268

)

22

 

(246

)

(0.19

)

   

(551

)

(14

)

(565

)

(0.52

)

Pending claims and settlements

48

 

(10

)

 

38

 

0.03

 

   

(3

)

-

 

(3

)

-

 

   

48

 

(10

)

38

 

0.03

 

   

(32

)

-

 

(32

)

(0.03

)

Pension settlement expense

42

 

(9

)

 

33

 

0.02

 

   

-

 

-

 

-

 

-

 

   

42

 

(9

)

33

 

0.02

 

   

-

 

-

 

-

 

-

 

Transaction and restructuring expenses

23

 

(5

)

 

18

 

0.01

 

   

-

 

-

 

-

 

-

 

   

314

 

(53

)

261

 

0.20

 

   

-

 

-

 

-

 

-

 

Unrealized (gain) loss on FX derivative

8

 

(2

)

 

6

 

-

 

   

12

 

(3

)

9

 

0.01

 

   

12

 

(3

)

9

 

0.01

 

   

(63

)

13

 

(50

)

(0.05

)

Net loss on accelerated settlement of Concho hedging program

-

 

-

 

 

-

 

-

 

   

-

 

-

 

-

 

-

 

   

132

 

(31

)

101

 

0.08

 

   

-

 

-

 

-

 

-

 

Deferred tax adjustments

-

 

-

 

 

-

 

-

 

   

-

 

92

 

92

 

0.09

 

   

-

 

75

 

75

 

0.06

 

   

-

 

92

 

92

 

0.09

 

Impairments

-

 

-

 

 

-

 

-

 

   

(214

)

55

 

(159

)

(0.15

)

   

-

 

-

 

-

 

-

 

   

556

 

(122

)

434

 

0.40

 

Alberta tax credit

-

 

-

 

 

-

 

-

 

   

-

 

(48

)

(48

)

(0.04

)

   

-

 

-

 

-

 

-

 

   

-

 

(48

)

(48

)

(0.04

)

Adjusted earnings / (loss)

$

1,716

 

1.27

 

   

(994

)

(0.92

)

   

2,618

 

1.97

 

   

(508

)

(0.47

)

             
The income tax effects of the special items are primarily calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

 

 
ConocoPhillips
Table 2: Reconciliation of reported production to pro forma underlying production
In MBOED, Except as Indicated
 

  2Q21

2Q20

2021 YTD

2020 YTD

Total Reported ConocoPhillips Production

1,588

 

981

 

1,558

 

1,135

 

 
Adjustments:
Libya

(41

)

-

 

(40

)

(5

)

Total Production excluding Libya

1,547

 

981

 

1,518

 

1,130

 

 
Closed Dispositions1

-

 

(24

)

-

 

(41

)

Closed Acquisitions 2

-

 

319

 

-

 

323

 

Total Pro Forma Underlying Production

1,547

 

1,276

 

1,518

 

1,412

 

 
Estimated Production Curtailments3

-

 

225

 

-

 

113

 

Estimated Downtime from Winter Storm Uri4

-

 

-

 

25

 

-

 

 
1Includes production related to the completed Australia-West disposition and various Lower 48 dispositions.
2Includes production related to the acquisition of Concho which closed on January 15, 2021. 2020 has been pro forma adjusted for the acquisition based on volumes publicly reported by Concho.
3Estimated production impacts from price related curtailments, which are excluded from Total Production excluding Libya and Total Underlying Production.
4Estimated production impacts from Winter Storm Uri, which are excluded from Total Production excluding Libya and Total Underlying Production.
 
   
ConocoPhillips  
Table 3: Reconciliation of net cash provided by operating activities to free cash flow  
$ Millions, Except as Indicated  
   

2Q21

 

2021 YTD

Net Cash Provided by Operating Activities

4,251

 

6,331

   
Adjustments:  
Net operating working capital changes

211

 

196

Cash from operations

4,040

 

6,135

   
Capital expenditures and investments

1,265

 

2,465

Free Cash Flow

2,775

 

3,670

   
   

 


Contacts

Dennis Nuss (media)
281-293-1149
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Investor Relations
281-293-5000
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Capacity sizing simulation will ensure clean, continuous, and reliable electricity generation for cryptocurrency mining data centers

DENVER--(BUSINESS WIRE)--Veritone, Inc. (NASDAQ: VERI), the creator of the world’s first operating system for artificial intelligence, aiWARE™, today announced a new project with a leading microgrid developer to model the clean energy supply needs for a new U.S cryptocurrency mining project within Texas.


Global pressure for mining cryptocurrency using more clean energy sources over fossil fuels has spurred a migration to more environmentally-conscious countries such as the U.S., which now accounts for almost 17% of the world’s cryptocurrency. Mining data centers are increasingly powered by clean energy microgrids, which can bring reliability challenges due to the variable nature of green energy solutions.

Veritone’s AI-powered energy solutions enable independent power producers and microgrid developers to more accurately model and predict mining data center energy supply needs. The new contract calls for modeling and simulation of the energy sources required to optimally dispatch 1,000 mW of clean, continuous, and reliable power for crypto mining. The capacity sizing design simulation will leverage wind, solar, and battery sources, with natural gas as a backup power source.

“Veritone’s energy modeling and simulation helps independent power producers and microgrid developers plan for the most optimal energy mix before they deploy,” said Sean McEvoy, SVP of Energy at Veritone. “For this crypto mining project, during the day, solar and wind will power the data center, while surplus solar and wind power will charge battery systems. At night, battery and wind will power the data center, with natural gas available if needed. This hybrid microgrid / utility grid combination ensures 24x7 continuous operation, with Veritone ensuring supply and demand are always in balance.” McEvoy added, "We are seeing broad application of Veritone's technology to not just crypto mining, but improving the energy efficiency of any high power load operation, such as traditional data centers and agricultural operations."

Veritone simulations use Monte Carlo simulation models coupled with a risk-minimizing Veritone optimizer to determine optimal energy mix that considers the number, type, and size of solar panels, wind turbines, and battery storage systems and the dynamic price of these energy sources. The models process millions of data points in real-time, including weather forecasting, load profile, energy pricing, and energy device parameters and limitations including warranty information around optimal energy storage levels, dissipation levels, temperature, humidity, and other device and environmental factors.

Veritone energy solutions consist of a forecaster, optimizer, and controller to add optimization and resilience to any macro or microgrid. Veritone uses these technologies to simulate optimal energy supply mix and price for a range of devices and grid strategies. This simulation provides a blueprint for smart grid deployment, and ensures compliance with regulatory requirements.

“With cryptocurrency mining using clean energy now more than ever, Veritone gives miners and the energy producers that power them the assurance that they will always have the energy they need at the lowest possible cost,” said Chad Steelberg, Veritone CEO. “By optimizing data centers with dynamic AI models that intelligently route energy, we extend our core mission to build a safer, more vibrant, transparent, and empowered society through AI.”

For more information on Veritone Energy Solutions, please visit: https://www.veritone.com/solutions/energy/

About Veritone

Veritone (Nasdaq: VERI) is a leading provider of artificial intelligence (AI) technology and solutions. The company’s proprietary operating system, aiWARE™ powers a diverse set of AI applications and intelligent process automation solutions that are transforming both commercial and government organizations. aiWARE orchestrates an expanding ecosystem of machine learning models to transform audio, video, and other data sources into actionable intelligence. The company’s AI developer tools enable its customers and partners to easily develop and deploy custom applications that leverage the power of AI to dramatically improve operational efficiency and unlock untapped opportunities. Veritone is headquartered in Denver, Colorado and has offices in Costa Mesa, Denver, London, New York and San Diego. To learn more, visit www.veritone.com.

Safe Harbor Statement

This news release contains forward-looking statements, including without limitation statements regarding the expected capabilities of Veritone’s microgrid modeling, simulation, and other Energy solutions and the anticipated benefits thereof to customers. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Assumptions relating to the foregoing involve judgments and risks with respect to various matters which are difficult or impossible to predict accurately and many of which are beyond the control of Veritone. Certain of such judgments and risks are discussed in Veritone’s SEC filings. Although Veritone believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Veritone or any other person that their objectives or plans will be achieved. Veritone undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.


Contacts

Public Relations Contact: Kristi Labrum
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AUSTIN, Texas--(BUSINESS WIRE)--USA Compression Partners, LP (NYSE: USAC) (“USA Compression” or the “Partnership”) announced today its financial and operating results for the second quarter 2021.


Second Quarter 2021 Highlights

  • Total revenues were $156.6 million for the second quarter 2021, compared to $168.7 million for the second quarter 2020.
  • Net income was $2.7 million for the second quarter 2021, consistent with the second quarter 2020.
  • Net cash provided by operating activities was $99.5 million for the second quarter 2021, compared to $97.4 million for the second quarter 2020.
  • Adjusted EBITDA was $100.0 million for the second quarter 2021, compared to $105.5 million for the second quarter 2020.
  • Distributable Cash Flow was $52.5 million for the second quarter 2021, compared to $58.7 million for the second quarter 2020.
  • Announced cash distribution of $0.525 per common unit for the second quarter 2021, consistent with the second quarter 2020.
  • Distributable Cash Flow Coverage was 1.03x for the second quarter 2021, compared to 1.15x for the second quarter 2020.

“The second quarter of 2021 continued the pattern of stability in USA Compression’s business that we began to experience as we came into the year,” commented Eric D. Long, USA Compression’s President and Chief Executive Officer. “As the continued strength in commodity prices throughout the quarter helped further improve prospects for many across the broader energy industry, we have seen our customers maintain capital discipline and continue with their scaled-down budgets for 2021. While storage of crude oil and natural gas worldwide continues to be reduced, there is some potential short-term pressure on demand due to the COVID-19 Delta variant. As global economies open back up and continue to strengthen, we believe the stage is being set for improved E&P activity. We are seeing improving fundamentals for compression services – increased levels of quotes, contract execution and pricing – which should translate into an improved outlook for compression services in the latter half of 2021 and on into 2022. The post-election uncertainty of prospective regulatory and legislative actions regarding energy transition, has also tempered activity this year and may have further impact into the future.”

“More broadly, we believe the prospects for natural gas continue to be positive. While we’ve seen modestly increasing rig counts since the lows last summer, when combined with a meaningful acceleration in the rate of completing previously drilled but uncompleted wells, domestic natural gas production has increased more than 5% above this time last year. Exports of LNG have continued at or near historic highs. And with the continued strength in natural gas prices, we expect these trends to continue.”

“As we have throughout the recent cycle, we continue to focus on managing our capital spending and controlling expenses throughout the company. Our operating margins remain attractive and consistent with historical performance. These efforts helped in part to achieve coverage and leverage metrics better than our expectations for the quarter.”

Expansion capital expenditures were $8.2 million, maintenance capital expenditures were $5.0 million and cash interest expense, net was $30.1 million for the second quarter 2021.

On July 15, 2021, the Partnership announced a second quarter cash distribution of $0.525 per common unit, which corresponds to an annualized distribution rate of $2.10 per common unit. The distribution will be paid on August 6, 2021 to common unitholders of record as of the close of business on July 26, 2021.

Operational and Financial Data

 

Three Months Ended

 

June 30,
2021

 

March 31,
2021

 

June 30,
2020

Operational data:

 

 

 

 

 

Fleet horsepower (at period end)

3,686,584

 

 

3,720,745

 

 

3,718,092

 

Revenue generating horsepower (at period end)

2,912,628

 

 

2,987,627

 

 

3,125,909

 

Average revenue generating horsepower

2,944,909

 

 

2,994,418

 

 

3,191,348

 

Revenue generating compression units (at period end)

3,934

 

 

3,942

 

 

4,206

 

Horsepower utilization (at period end) (1)

81.9

%

 

83.1

%

 

86.2

%

Average horsepower utilization (for the period) (1)

82.4

%

 

83.1

%

 

88.0

%

 

 

 

 

 

 

Financial data ($ in thousands, except per horsepower data):

 

 

 

 

 

Revenue

$

156,562

 

 

$

157,513

 

 

$

168,651

 

Average revenue per revenue generating horsepower per month (2)

$

16.55

 

 

$

16.60

 

 

$

16.79

 

Net income

$

2,688

 

 

$

371

 

 

$

2,684

 

Operating income

$

35,145

 

 

$

32,760

 

 

$

34,894

 

Net cash provided by operating activities

$

99,459

 

 

$

39,612

 

 

$

97,355

 

Gross margin

$

51,731

 

 

$

47,855

 

 

$

58,345

 

Adjusted gross margin (3)

$

110,958

 

 

$

108,885

 

 

$

118,683

 

Adjusted gross margin percentage

70.9

%

 

69.1

%

 

70.4

%

Adjusted EBITDA (3)

$

99,988

 

 

$

99,553

 

 

$

105,481

 

Adjusted EBITDA percentage

63.9

%

 

63.2

%

 

62.5

%

Distributable Cash Flow (3)

$

52,536

 

 

$

52,580

 

 

$

58,686

 

____________________________________

(1)

Horsepower utilization is calculated as (i) the sum of (a) revenue generating horsepower; (b) horsepower in the Partnership’s fleet that is under contract but is not yet generating revenue; and (c) horsepower not yet in the Partnership’s fleet that is under contract but not yet generating revenue and that is subject to a purchase order, divided by (ii) total available horsepower less idle horsepower that is under repair.

 

 

Horsepower utilization based on revenue generating horsepower and fleet horsepower was 79.0%, 80.3% and 84.1% at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

 

 

Average horsepower utilization based on revenue generating horsepower and fleet horsepower was 79.6%, 80.4% and 86.0% for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

 

(2)

Calculated as the average of the result of dividing the contractual monthly rate, excluding standby or other temporary rates, for all units at the end of each month in the period by the sum of the revenue generating horsepower at the end of each month in the period.

 

(3)

Adjusted gross margin, Adjusted EBITDA and Distributable Cash Flow are all non-U.S. generally accepted accounting principles (“Non-GAAP”) financial measures. For the definition of each measure, as well as reconciliations of each measure to its most directly comparable financial measures calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures” below.

Liquidity and Long-Term Debt

As of June 30, 2021, the Partnership was in compliance with all covenants under its $1.6 billion revolving credit facility. As of June 30, 2021, the Partnership had outstanding borrowings under the revolving credit facility of $473.4 million, $1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $217.4 million. As of June 30, 2021, the outstanding aggregate principal amount of the Partnership’s 6.875% senior notes due 2026 and 6.875% senior notes due 2027 was $725.0 million and $750.0 million, respectively.

Full-Year 2021 Outlook

USA Compression is confirming its full-year 2021 guidance as follows:

  • Net income range of $0.0 million to $20.0 million;
  • A forward-looking estimate of net cash provided by operating activities is not provided because the items necessary to estimate net cash provided by operating activities, in particular the change in operating assets and liabilities, are not accessible or estimable at this time. The Partnership does not anticipate the changes in operating assets and liabilities to be material, but changes in accounts receivable, accounts payable, accrued liabilities and deferred revenue could be significant, such that the amount of net cash provided by operating activities would vary substantially from the amount of projected Adjusted EBITDA and Distributable Cash Flow;
  • Adjusted EBITDA range of $385.0 million to $405.0 million; and
  • Distributable Cash Flow range of $193.0 million to $213.0 million.

Conference Call

The Partnership will host a conference call today beginning at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss second quarter 2021 performance. The call will be broadcast live over the Internet. Investors may participate either by phone or audio webcast.

By Phone:

Dial 800-263-0877 inside the U.S. and Canada at least 10 minutes before the call and ask for the USA Compression Partners Earnings Call. Investors outside the U.S. and Canada should dial 646-828-8143. The conference ID for both is 9227045.

 

 

 

A replay of the call will be available through August 13, 2021. Callers inside the U.S. and Canada may access the replay by dialing 888-203-1112. Investors outside the U.S. and Canada should dial 719-457-0820. The conference ID for both is 9227045.

 

 

By Webcast:

Connect to the webcast via the “Events” page of USA Compression’s Investor Relations website at http://investors.usacompression.com. Please log in at least 10 minutes in advance to register and download any necessary software. A replay will be available shortly after the call.

About USA Compression Partners, LP

USA Compression Partners, LP is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of natural gas compression services in terms of total compression fleet horsepower. USA Compression partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USA Compression focuses on providing natural gas compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. More information is available at usacompression.com.

Non-GAAP Financial Measures

This news release includes the Non-GAAP financial measures of Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow Coverage Ratio.

Adjusted gross margin is defined as revenue less cost of operations, exclusive of depreciation and amortization expense. Management believes that Adjusted gross margin is useful as a supplemental measure to investors of the Partnership’s operating profitability. Adjusted gross margin is impacted primarily by the pricing trends for service operations and cost of operations, including labor rates for service technicians, volume and per unit costs for lubricant oils, quantity and pricing of routine preventative maintenance on compression units and property tax rates on compression units. Adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, its most directly comparable GAAP financial measure, or any other measure of financial performance presented in accordance with GAAP. Moreover, Adjusted gross margin as presented may not be comparable to similarly titled measures of other companies. Because the Partnership capitalizes assets, depreciation and amortization of equipment is a necessary element of its costs. To compensate for the limitations of Adjusted gross margin as a measure of the Partnership’s performance, management believes that it is important to consider gross margin determined under GAAP, as well as Adjusted gross margin, to evaluate the Partnership’s operating profitability.

Management views Adjusted EBITDA as one of its primary tools for evaluating the Partnership’s results of operations, and the Partnership tracks this item on a monthly basis both as an absolute amount and as a percentage of revenue compared to the prior month, year-to-date, prior year and budget. The Partnership defines EBITDA as net income (loss) before net interest expense, depreciation and amortization expense, and income tax expense. The Partnership defines Adjusted EBITDA as EBITDA plus impairment of compression equipment, impairment of goodwill, interest income on capital lease, unit-based compensation expense (benefit), severance charges, certain transaction expenses, loss (gain) on disposition of assets and other. Adjusted EBITDA is used as a supplemental financial measure by management and external users of its financial statements, such as investors and commercial banks, to assess:

  • the financial performance of the Partnership’s assets without regard to the impact of financing methods, capital structure or historical cost basis of the Partnership’s assets;
  • the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
  • the ability of the Partnership’s assets to generate cash sufficient to make debt payments and pay distributions; and
  • the Partnership’s operating performance as compared to those of other companies in its industry without regard to the impact of financing methods and capital structure.

Management believes that Adjusted EBITDA provides useful information to investors because, when viewed with GAAP results and the accompanying reconciliations, it provides a more complete understanding of the Partnership’s performance than GAAP results alone. Management also believes that external users of its financial statements benefit from having access to the same financial measures that management uses in evaluating the results of the Partnership’s business.

Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP as measures of operating performance and liquidity. Moreover, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

Distributable Cash Flow is defined as net income (loss) plus non-cash interest expense, non-cash income tax expense (benefit), depreciation and amortization expense, unit-based compensation expense (benefit), impairment of compression equipment, impairment of goodwill, certain transaction expenses, severance charges, loss (gain) on disposition of assets, proceeds from insurance recovery and other, less distributions on the Partnership’s Series A Preferred Units (“Preferred Units”) and maintenance capital expenditures.

Distributable Cash Flow should not be considered as an alternative to, or more meaningful than, net income (loss), operating income (loss), cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance and liquidity. Moreover, the Partnership’s Distributable Cash Flow as presented may not be comparable to similarly titled measures of other companies.

Management believes Distributable Cash Flow is an important measure of operating performance because it allows management, investors and others to compare basic cash flows the Partnership generates (after distributions on the Partnership’s Preferred Units but prior to any retained cash reserves established by the Partnership’s general partner and the effect of the Distribution Reinvestment Plan) to the cash distributions the Partnership expects to pay its common unitholders.

Distributable Cash Flow Coverage Ratio is defined as Distributable Cash Flow divided by distributions declared to common unitholders in respect of such period. Management believes Distributable Cash Flow Coverage Ratio is an important measure of operating performance because it allows management, investors and others to gauge the Partnership’s ability to pay distributions to common unitholders using the cash flows the Partnership generates. The Partnership’s Distributable Cash Flow Coverage Ratio as presented may not be comparable to similarly titled measures of other companies.

This news release also contains a forward-looking estimate of Adjusted EBITDA and Distributable Cash Flow projected to be generated by the Partnership in its 2021 fiscal year. A forward-looking estimate of net cash provided by operating activities and reconciliations of the forward-looking estimates of Adjusted EBITDA and Distributable Cash Flow to net cash provided by operating activities are not provided because the items necessary to estimate net cash provided by operating activities, in particular the change in operating assets and liabilities, are not accessible or estimable at this time. The Partnership does not anticipate the changes in operating assets and liabilities to be material, but changes in accounts receivable, accounts payable, accrued liabilities and deferred revenue could be significant, such that the amount of net cash provided by operating activities would vary substantially from the amount of projected Adjusted EBITDA and Distributable Cash Flow.

See “Reconciliation of Non-GAAP Financial Measures” for Adjusted gross margin reconciled to gross margin, Adjusted EBITDA reconciled to net income (loss) and net cash provided by operating activities, and net income (loss) and net cash provided by operating activities reconciled to Distributable Cash Flow and Distributable Cash Flow Coverage Ratio.

Forward-Looking Statements

Some of the information in this news release may contain forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “continue,” “if,” “project,” “outlook,” “will,” “could,” “should,” or other similar words or the negatives thereof, and include the Partnership’s expectation of future performance contained herein, including as described under “Full-Year 2021 Outlook.” These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other “forward-looking” information. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by known risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors noted below and other cautionary statements in this news release. The risk factors and other factors noted throughout this news release could cause actual results to differ materially from those contained in any forward-looking statement. Known material factors that could cause the Partnership’s actual results to differ materially from the results contemplated by such forward-looking statements include:

  • changes in the long-term supply of and demand for crude oil and natural gas, including as a result of uncertainty regarding the length of time it will take for the U.S. and the rest of the world to slow the spread of COVID-19 to the point where applicable authorities are comfortable continuing to ease, or declining to reinstate certain restrictions on various commercial and economic activities; such restrictions are designed to protect public health but also have the effect of reducing demand for crude oil and natural gas;
  • the severity and duration of world health events, including the COVID-19 outbreak, related economic repercussions, actions taken by governmental authorities and other third parties in response to the pandemic, which has caused and may in the future cause disruptions in the oil and gas industry and negatively impact demand for oil and gas;
  • changes in general economic conditions and changes in economic conditions of the crude oil and natural gas industries specifically, including the ability of members of the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (together with OPEC and other allied producing countries, “OPEC+”) to agree on and comply with supply limitations;
  • uncertainty regarding the timing, pace and extent of an economic recovery in the U.S. and elsewhere, which in turn will likely affect demand for crude oil and natural gas and therefore the demand for the compression and treating services we provide and the commercial opportunities available to us;
  • the deterioration of the financial condition of our customers, which may result in the initiation of bankruptcy proceedings with respect to customers;
  • renegotiation of material terms of customer contracts;
  • competitive conditions in our industry;
  • our ability to realize the anticipated benefits of acquisitions;
  • actions taken by our customers, competitors and third-party operators;
  • changes in the availability and cost of capital;
  • operating hazards, natural disasters, epidemics, pandemics (such as COVID-19), weather-related delays, casualty losses and other matters beyond our control;
  • operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions;
  • the restrictions on our business that are imposed under our long-term debt agreements;
  • information technology risks including the risk from cyberattack;
  • the effects of existing and future laws and governmental regulations;
  • the effects of future litigation;
  • factors described in Part I, Item 1A (“Risk Factors”) of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2021, and subsequently filed reports; and
  • other factors discussed in the Partnership’s filings with the SEC.

All forward-looking statements speak only as of the date of this news release and are expressly qualified in their entirety by the foregoing cautionary statements. Unless legally required, the Partnership undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

USA COMPRESSION PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per unit amounts
Unaudited)

 

Three Months Ended

 

June 30,
2021

 

March 31,
2021

 

June 30,
2020

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Contract operations

$

151,800

 

 

$

152,525

 

 

$

162,993

 

Parts and service

1,818

 

 

2,038

 

 

2,736

 

Related party

2,944

 

 

2,950

 

 

2,922

 

Total revenues

156,562

 

 

157,513

 

 

168,651

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of operations, exclusive of depreciation and amortization

45,604

 

 

48,628

 

 

49,968

 

Depreciation and amortization

59,227

 

 

61,030

 

 

60,338

 

Selling, general and administrative

15,288

 

 

13,800

 

 

20,315

 

Gain on disposition of assets

(1,105

)

 

(1,255

)

 

(787

)

Impairment of compression equipment

2,403

 

 

2,550

 

 

3,923

 

Total costs and expenses

121,417

 

 

124,753

 

 

133,757

 

Operating income

35,145

 

 

32,760

 

 

34,894

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense, net

(32,350

)

 

(32,288

)

 

(31,815

)

Other

45

 

 

25

 

 

24

 

Total other expense

(32,305

)

 

(32,263

)

 

(31,791

)

Net income before income tax expense

2,840

 

 

497

 

 

3,103

 

Income tax expense

152

 

 

126

 

 

419

 

Net income

2,688

 

 

371

 

 

2,684

 

Less: distributions on Preferred Units

(12,188

)

 

(12,187

)

 

(12,188

)

Net loss attributable to common unitholders’ interests

$

(9,500

)

 

$

(11,816

)

 

$

(9,504

)

 

 

 

 

 

 

 

 

 

Weighted average common units outstanding – basic and diluted

97,044

 

 

96,989

 

 

96,781

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common unit

$

(0.10

)

 

$

(0.12

)

 

$

(0.10

)

 

 

 

 

 

 

 

 

 

Distributions declared per common unit

$

0.525

 

 

$

0.525

 

 

$

0.525

 

USA COMPRESSION PARTNERS, LP
SELECTED BALANCE SHEET DATA
(In thousands, except unit amounts
Unaudited)

 

June 30,
2021

Selected Balance Sheet data:

 

Total assets

$

2,839,310

 

Long-term debt, net

$

1,928,413

 

Total partners’ capital

$

216,084

 

 

 

Common units outstanding

97,067,220

 


Contacts

Investor Contacts:
USA Compression Partners, LP
Matthew C. Liuzzi
Chief Financial Officer
512-369-1624
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Read full story here

RICHMOND, Va.--(BUSINESS WIRE)--#energy--Consumer Energy Alliance (CEA), the leading energy and environmental advocate for families and businesses, today released a report that finds that a natural gas ban would cost every household in Virginia more than $26,000.


The report, “The Hidden Costs of a Virginia Natural Gas Ban,” examines the impact of a natural gas ban if it were forced onto families and Virginians. Using open-source consumer data, CEA developed a cost calculator to provide an estimate of what a typical household in Richmond could expect to pay as a result of policies to ban natural gas service and use, depending on home configuration, appliances used and other factors.

These findings dovetail with previous research performed by CEA which found that the cost to replace just major gas appliances in homes nationwide would be more than $258 billion. The report also found that attempts to “electrify everything” would require a massive infrastructure buildout of over $100 billion in the state.

With one in three Virginia households using natural gas for home heating, banning natural gas would be financially devastating to families who would have to pay upwards of $26,000 to involuntarily reconfigure their home and purchase new appliances. A ban on natural gas would also disproportionately harm the 9.9% of Virginians who live at or below the poverty level, those on fixed incomes, and businesses still recovering from the economic hardships of COVID-19; as energy bills will inevitably increase,” CEA Vice President of State Affairs Kevin Doyle said.

Doyle added: “Natural gas is a critical resource for fueling Virginia’s families and businesses, but it has also been pivotal in the remarkable reductions in emissions that the state has achieved in recent years. Significant emissions reductions have occurred in Virginia while natural gas use has increased and expanded.”

“Virginians want affordable, reliable, secure, and sustainable energy to power their businesses, homes, and communities. This CEA report clearly demonstrates that banning natural gas from the market as a fuel or a feedstock fails this consumer test. Clean natural gas must be part of our future,” said Brett Vassey, President and CEO of the Virginia Manufacturers Association.

Doyle added: “Misguided attempts to ban energy services will only lead to undue financial burdens on Virginia’s families, seniors, small businesses and manufacturers and work against our environmental and climate goals. Consumers should retain the right to keep the energy service they want and choose appliances they wish to use – not activists with ill-considered agendas that put families last.”

To view the report, click here. The Virginia Report is part of a series of CEA reports on the impact natural gas bans would have on states. For more, click here.

About Consumer Energy Alliance

Consumer Energy Alliance (CEA) is the leading voice for sensible energy and environmental policies for consumers, bringing together families, farmers, small businesses, distributors, producers, and manufacturers to support America’s environmentally sustainable energy future. With more than 550,000 members nationwide, we are committed to leading the nation’s dialogue around energy, its critical role in the economy, and how it supports the vital supply chains for the families and businesses that depend on them. CEA works daily to encourage communities across the nation to seek sensible, realistic, and environmentally responsible solutions to meet our nation’s energy needs.


Contacts

Bryson Hull
(202) 657-2855
This email address is being protected from spambots. You need JavaScript enabled to view it.

Carbon reduction benefits of switching to natural gas in the near-term could support deeper decarbonization over the longer-term, acting as a “pre-build” of infrastructure needed to support emissions goals, IHS Markit study finds



LONDON--(BUSINESS WIRE)--The inherent versatility of gas infrastructure—particularly its ability to be converted to carry low-carbon fuels in the future—creates an opportunity for gas to be a “second pillar of decarbonization” over the long-term, according to a new study by IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions.

Entitled A Sustainable Flame: The Role of Gas in Net Zero, the new study says that natural gas can play a critical role both in early action on emissions reductions and also acting as a pre-build to greater decarbonization given the potential for the infrastructure to carry low-carbon gases—such as ammonia, hydrogen, synthetic methane and renewable natural gas—in the future.

Specifically, the study finds that these low-carbon gas applications could be viable with a carbon price between $40-$60 per ton, close to levels already found in some markets today.

“The versatility of natural gas infrastructure presents an opportunity to seize the low-hanging fruit of emissions reduction in the near-term while also making a down payment for deeper decarbonization,” said Michael Stoppard, chief strategist, global gas, IHS Markit. “Switching to natural gas can support vital early action by replacing coal and oil and their associated higher emissions while also acting as a pre-build of energy carriers for a low-carbon future.”

Replacing older and less efficient power plants with best-in-class natural gas generation reduces emissions by 50% per unit of electricity. The IHS Markit study finds that increasing natural gas use in power generation in Asia to displace coal could cut emissions by around 1 Gt—around 3% of all GHG emissions from the energy sector. This would require an increase in global gas production of about 15% from today’s level.

While substituting natural gas for higher-emitting fuels has an immediate and discernible impact on GHG emissions, some express concern that these investments may embed or lock in future emissions for several decades. However, the study finds that these “lock-in” concerns need not be the case because the infrastructure can be repurposed:

  • Pipelines—both transmission and distribution—can ship renewable natural gas. In an early stage, they can blend in ‘green’ gases to lower the carbon footprint, while in the longer term they can be repurposed for shipping of 100% hydrogen. So too with much of gas storage infrastructure
  • Gas-fired power plants can convert to run on hydrogen or sustainable ammonia, or in some circumstances can retro-fit carbon capture, utilization and storage (CCUS)
  • Liquefaction plants can be converted to liquefy hydrogen, likely at a lower cost than building a liquefied hydrogen plant from scratch
  • Industrial and domestic gas boilers can be manufactured to be readily adaptable from natural gas to hydrogen

“Repurposing infrastructure has technical challenges but the costs, while significant, are still lower than building entirely new facilities,” said Shankari Srinivasan, vice president, global and renewable gas, IHS Markit. “And it provides flexibility to policymakers and lenders who could structure authorizations and loans such that any new-build infrastructure be conversion-ready and have defined performance standards with limits on the life that the asset can operate before being converted.”

Investors could then decide whether to risk the investment on the basis of later conversion, or to run the economics on shorter asset life assumptions, the study says.

The underlying versatility of the infrastructure is important because gas will continue to be a vital component of the energy mix up to and through the transition to low-carbon gases, the study says.

For example, electricity delivered by wire is less well suited for meeting the need to produce heat, either for industrial processes or for heating buildings, the study notes. The IHS Markit case study of New York—whose current power system is sized at 31 GW—would require a system sized to over 150 GW for the full electrification of heating (and even with the full deployment of air-sourced heat pumps, the system would need to be 133 GW).

“Renewable capacity will continue to grow, electrification will broaden its reach and improvements in battery storage will make a decarbonized grid more reliable,” said Stoppard. “But the transition to a low-carbon gas supply will also be needed to serve the sectors beyond the reach of electrification and wires.”

About A Sustainable Flame:

A Sustainable Flame is a six-month research effort undertaken by the IHS Markit Climate and Sustainability Group.

The study explores the role, contribution and limitations of gas in driving forward decarbonization both globally and in the United States.

The complete report is available at: https://ihsmarkit.com/sustainable-flame

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2021 IHS Markit Ltd. All rights reserved.


Contacts

Jeff Marn
IHS Markit
+1 202 463 8213
This email address is being protected from spambots. You need JavaScript enabled to view it.

Press Team
+1 303 858 6417
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IHS Markit Vice Chairman Daniel Yergin convenes panel of senior energy experts in latest edition of CERAWeek Conversations – available at https://ondemand.ceraweek.com/cwc


WASHINGTON--(BUSINESS WIRE)--The pathways to net zero emissions by 2050 and the implications for energy markets, technology, geopolitics, supply chains and business strategy are explored in the latest episode of CERAWeek Conversations.

The pace and ultimate form of energy transition is a major force shaping the “New Map” of energy and geopolitics. Where past energy transitions have taken many decades or even centuries, ambitions to reach net zero emissions by 2050 necessitate a reshaping of the global energy system and the $93 trillion world economy in just 28 and a half years.

In a conversation moderated by Daniel Yergin, vice chairman, IHS Markit (NYSE: INFO) and author of The New Map: Energy, Climate, and the Clash of Nations, senior IHS Markit energy experts examine the key questions and implications on the “changing landscape” of energy transition.

“You can’t go anywhere in the energy world and indeed the policy world these days without running into those two words—Energy Transition,” Yergin says. “But energy transition has a lot of different meanings and there is a lot of confusion about it. So, what we want to do in this conversation is sort it out and provide some perspectives on where we are and where we’re going.”

Featured panelists:

  • Jim Burkhard, vice president, oil markets, energy and mobility, IHS Markit
  • Susan Farrell, vice president, climate and sustainability, IHS Markit
  • Atul Arya, senior vice president and chief energy strategist, IHS Markit

The complete video is available at: https://ondemand.ceraweek.com/cwc

Podcast version available: CERAWeek Conversations is also available via audio podcast on Apple Podcasts, Google Podcasts, Soundcloud, Spotify and Stitcher.

Selected excerpts:
Interview Recorded Tuesday, July 27, 2021

(Edited slightly for brevity only)

  • On the current momentum in global climate aspirations:

Jim Burkhard: “One of the more remarkable developments in 2020 that has continued into this year is the increase in aspirations on the part of governments to decarbonize. But if you go back to April of 2020—the depth of the lockdowns globally, the most severe global economic disruption since World War II—I don’t think it was inevitable at that time that there would be this move to increase aspirations to strengthen policy, to decarbonize. We saw aspirations increase; policies strengthen. Why is that?

“This is not just an academic question. The answer to this will shed light on how deeply rooted this recent momentum is. Part of the answer could be that COVID-19 reordered values and priorities for people [and] for governments. It could have also fed the sense that something is off track with nature.”

Susan Farrell: “The net zero target that started with China in September 2020—China is the number one emitter in the world—was a pretty big deal—followed by the number two emitter with the Biden administration also having a net zero by 2050 target. But in addition to that, there are several other actors on the stage who have really been forceful in the last 18 months. And the first is the financial sector.”

  • On the long horizon of energy transitions:

Atul Arya: “Changing the energy system takes decades, sometimes more than decades. Just in the last 12 months demand for all energy sources—oil, gas, coal—has increased significantly, in some cases above 2019 levels and emissions have also gone up significantly. This is a long journey and it’s not going to be that straightforward to just have a scenario and say that we can get to net zero by 2050 or 2060.”

Jim Burkhard: “The changes we’re seeing in the automotive system are the greatest in more than 100 years. One thing that’s clear is battery electric vehicles have won the capital allocation battle, have won the regulatory battle, particularly in Europe. But in the big picture, plug-in electric vehicles are still just about one percent of the global fleet. EVs today are about 10 million vehicles while there’s still about 1.3 billion oil-powered vehicles on the road.

“This transition is going to unfold over decades and not a year or two. Oil demand has been on a spectacular recovery since that massive decline in April [2020]. We’re on track to exceed the pre-COVID levels probably sometime next year. Oil demand this year is up over 7 mmbd over just a few months. It’s going to take time for oil to hit that plateau and then, perhaps in decades to come, decline.”

  • The financial and strategic pressures facing energy companies in the transition:

Susan Farrell: “[The financial sector has] continually throughout 2020 increased the number of signatories to the Task Force on Climate-Related Financial Disclosures. That requires companies to evaluate different futures and talk about their business values and business propositions, including in a world which reaches the Paris Agreement target of 1.5 degree limiting temperature rise. That world is very stringent on what happens to energy. They’re being asked to talk to their business strategies in that world, whether or not they think that’s likely to happen. There’s a lot of pressure on companies to talk about the future in different ways than before.”

“[Oil and gas companies] are seriously struggling with the pressure from the financial investors to demonstrate they are going to do something different in a time period that appears to be very different than the world might actually look. On one side they are planning to make investments that make sense in a world they believe is going to happen. On the other, they also have to explain what would happen if a very different world were to happen such as the net zero [scenarios].”

  • The three buckets of energy technologies for a low-carbon transition:

Atul Arya: “The way I would characterize the technology landscape is in three buckets. In one you have solar PV, also onshore wind and, increasingly, offshore wind which are really ready for scaled deployment. Then there is a second set of technologies which are ready for deployment; they still have cost challenges which would include carbon capture and sequestration and green hydrogen where we know there is a pathway to get to a low-cost, but it requires more deployment because that is where the learning will happen. There is a third bucket of technologies which are not quite there yet, and I would put storage in there. Large scale storage is quite far away, and it will require some very significant technological breakthrough.”

  • The shift from “Big Oil” to “Big Shovels” to power low-carbon technologies and the implications for global supply chains:

Daniel Yergin: “People know the term ‘Big Oil’—it’s been used for decades. But in The New Map I argue that we’re going to be talking about ‘big shovels’ because the wind and the sun are free, but you need a lot of materials [for renewable energy technologies]. There’s going to be whole new supply chains that have to be created. If everybody is rushing in the same direction at the same time, you’re going to get pressure on supply chains.

“We’re living now in a period of real pressure on supply chains—it could get much more intense and it’s going to get more geopolitical. China has a very key role and every day it seems the tensions between the United States and China are getting higher. That's something that's not getting that much attention, but you cannot remake what today is currently a $93 trillion world economy in 28 and a half years without a lot of “stuff”—and where that material is going to come from is going to be very important.”

  • On the varying pathways to net-zero and low-carbon between developed and developing countries:

Susan Farrell: “We tend to focus a lot on Europe and it’s because they’ve taken a leadership role and they want a leadership role in creating real change around the world. But the fact is that at the end of the day they are the fourth largest emitter when you take all EU 27 countries together; and they are behind China, the U.S. and India and they are already headed down. Their absolute emissions are not going to move the dial in getting to a lower carbon world. It’s got to be those big countries. There’s a real difference of views about how fast that can actually happen. How fast can you actually move this ship? It’s a huge energy system. Today 80% of primary energy comes from oil, gas and coal. Not will that move—it will move—but how fast can it move? There’s a great deal of discussion and debate at executive levels about how to adjust a company to take advantage of that in a profitable way.”

Atul Arya: “You just can’t force a country like India to flip the switch. Coal is deeply embedded in the Indian economy. But [people] think that we can switch coal to renewables; possibly gas, but maybe not that easily. Affordability is going to be hugely important. Also, the issue of employment. The coal industry in India employs millions of people. You can’t just flip the switch and say that we will move to renewables. You have to think about the employment for millions of people in a country like India.”

“Coal is 10% of global emissions—the biggest single source of emissions. What happens with coal is going to determine the path to net zero. You can have carbon capture, or you can substitute coal with gas or renewables but it’s not that straightforward. We need to think about what happens [with coal]. The other issue is money with technology. For COP 26, follow-the money. There was a commitment in Paris that $100 billion would go from the developed world to the developing world. That hasn’t happened. In a post-COVID world will that really happen? Unless the developing world decarbonizes, the path to net zero doesn’t exist.”

Jim Burkhard: “The priorities, the interests in Germany or the U.K. or France are not the same as India, Nigeria, or Vietnam. We are a long way away from having some type of globally aligned system to constrain carbon growth. It’s going to be a very bumpy road and the regulations—what prospers, what doesn’t—is going to vary by geography because the interests in these jurisdictions are not the same.”

  • Differentiated company strategies in the energy transition:

Susan Farrell: “Some companies are looking at an energy transition and others are looking at a transformation—some companies are transforming themselves. The auto companies may be moving faster than the market is. They are looking forward a long time because they have a long production period and new model times and therefore, they are changing quickly. Energy companies are doing the same thing and they are balancing off a scale portfolio with a growth portfolio. The really big integrated companies can do both. They can be present in the scale of oil and gas and they can participate in the growth markets of electricity and in the renewable sector at the same time. Other smaller companies in the oil and gas sector don’t really have that luxury to participate in both so they are trying to decide how to work through an energy transition as opposed to transforming their company. A third group—the national oil companies—are also struggling differently with looking at the future. Some can participate in both, but then there are others that simply have oil and gas as their patrimony, and they need to produce it because that is what their role is.”

Atul Arya: “If you go back 30 or 40 years to the Seven Sisters and the big oil and gas companies, it was a very narrow band within which they operated. Their strategies were very similar. But now the differentiation is huge, probably the biggest I have seen in my lifetime in their strategies. Also, European vs. U.S. differentiation has really expanded. I think we are going to see multiple strategies. Some want to go from international oil companies to integrated energy companies—easier said than done. It will be very interesting to see how this landscape evolves. One of the ways we look at it is: What are the service companies doing? They are, in a way, a leading indicator of what happens. What service companies are doing now are focusing on carbon capture, hydrogen, geothermal, lithium mining. You will see kind of a preview of what happens.”

Watch the complete video at: https://ondemand.ceraweek.com/cwc

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CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers, leaders from the technology, financial and industrial communities—and energy technology innovators.

The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.

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IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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News Media:
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Press Team
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LUXEMBOURG--(BUSINESS WIRE)--FREYR Battery (NYSE: FREY, or “FREYR”), the developer of clean, next-generation battery cell production capacity, will publish a press release detailing second quarter 2021 results and conduct a conference call on August 12, 2021.


The second quarter 2021 press release will be issued by 6:00 am U.S. Eastern Daylight Time (12:00 pm Central European Time) and the conference call is scheduled to begin at 8:00 am U.S. Eastern Daylight Time (2:00 pm Central European Time).

To access the conference call, listeners should contact the conference call operator at the appropriate number listed below approximately 10 minutes prior to the start of the call.

United Kingdom Toll: +44 3333000804
United States Toll: +1 6319131422
Switzerland Toll: +41 225809034
Spain Toll: +34 935472900
Norway Toll: +47 23500243
Luxembourg Toll: +352 27300160
Hong Kong Toll: +852 30600225
Germany Toll: +49 6913803430
France Toll: +33 170750711
Denmark Toll: +45 35445577
Canada Toll: +1 4162164189

The participant passcode for the call is: 14540890#

A webcast of the conference call will be broadcast simultaneously at https://streams.eventcdn.net/freyer/h1q2-2021/register on a listen-only basis. Please log in at least 10 minutes in advance to register and download any necessary software.

A replay of the webcast will be available at www.freyrbattery.com/link

About FREYR Battery

FREYR plans to develop up to 35 GWh of battery cell production capacity in Norway and additional 8 GWh via joint ventures in Norway and/or the Nordic region by 2025 to position the company as one of Europe’s largest battery cell suppliers. Five of the facilities will be located in the Mo i Rana industrial complex in Northern Norway, leveraging Norway’s highly skilled workforce and abundant, low-cost renewable energy sources from hydro and wind in a crisp, clear and energized environment. FREYR will supply safe, high energy density and cost competitive clean battery cells to the rapidly growing global markets for electric vehicles, energy storage, and marine applications. FREYR is committed to supporting cluster-based R&D initiatives and the development of an international ecosystem of scientific, commercial, and financial stakeholders to support the expansion of the battery value chain in our region. For more information, please visit www.freyrbattery.com.


Contacts

For investor inquiries, please contact:

Jeffrey Spittel, Vice President, Investor Relations
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Tel: (+1) 281-222-0161

Harald Bjørland, Investor Relations
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Tel: (+47) 908 58 221

For media inquiries, please contact:

Hilde Rønningsen, Director of Communications
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Tel: (+47) 453 97 184

Funding will accelerate the commercialization of the company’s advanced nuclear technology

PORTLAND, Ore.--(BUSINESS WIRE)--NuScale Power today announced that recent private capital investments from a diverse base of strategic investors total $152 million, closing out NuScale’s A-5 round of investments, and bringing the company’s total funding year to date to approximately $192 million. Investments have been secured from GS Energy, Doosan Heavy Industry and Construction, IHI Corporation, Samsung C&T Corporation, Sargent & Lundy and Sarens. This announcement follows a $40 million investment from JGC Holdings Corporation earlier this year.


NuScale is the leading developer of a small modular reactor (SMR) that delivers scalable, safe and reliable carbon-free nuclear power. Since 2007, NuScale has invested hundreds of millions in the development and commercialization of its SMR technology, which includes both private investments and cost-sharing awards from the U.S. Department of Energy (DOE).

“NuScale is incredibly excited to receive the support of such a distinguished group of partners who share our vision to transform the clean energy sector,” said John Hopkins, NuScale Power Chairman and Chief Executive Officer. “Taken together, these investments reflect the growing and substantial interest in NuScale’s technology as the world looks to us to provide affordable, carbon-free energy solutions.”

In August 2020, NuScale made history as the first and only SMR to receive design approval from the U.S. Nuclear Regulatory Commission (NRC), and in July of 2021, the Commission published the proposed rule that would certify the NuScale design – a crucial step towards the construction and deployment of this SMR technology.

This accomplishment would not have been possible without the support of the DOE, and this public-private partnership remains critical to the successful advancement of NuScale’s technology as it progresses to commercial deployment. The cost-shared funding provided by U.S. Congress has already accelerated NuScale’s advancement through the complex and rigorous NRC Design Certification process.

The Company maintains strong program momentum towards the commercialization of its SMR technology, including supply chain development, standard plant design, planning of plant delivery activities and startup and commissioning plans.

​​​​​About NuScale Power

NuScale Power has developed a new modular light water reactor nuclear power plant to supply energy for electrical generation, district heating, desalination, and other process heat applications. This groundbreaking small modular reactor (SMR) design features a fully factory-fabricated NuScale Power Module™ capable of generating 77 MW of electricity using a safer, smaller, and scalable version of pressurized water reactor technology. NuScale's scalable design—power plants that can house up to four, six, or 12 individual power modules—offers the benefits of carbon-free energy and reduces the financial commitments associated with gigawatt-sized nuclear facilities. The majority investor in NuScale is Fluor Corporation, a global engineering, procurement, and construction company with a 70-year history in commercial nuclear power.

NuScale is headquartered in Portland, OR, and has offices in Corvallis, OR; Rockville, MD; Charlotte, NC; Richland, WA; and London, UK. Follow us on Twitter: @NuScale_Power, Facebook: NuScale Power, LLC, LinkedIn: NuScale-Power, and Instagram: nuscale_power. Visit NuScale Power’s website.


Contacts

Diane Hughes, NuScale Vice President, Marketing & Communications
This email address is being protected from spambots. You need JavaScript enabled to view it. (C) 503-270-9329

  • Reported second-quarter earnings of $225 million and adjusted EBITDA of $337 million
  • Announced quarterly distribution of $0.875 per common unit

HOUSTON--(BUSINESS WIRE)--Phillips 66 Partners LP (NYSE: PSXP) announces second-quarter 2021 earnings of $225 million, or $0.91 per diluted common unit. Cash from operations was $286 million, and distributable cash flow was $267 million. Adjusted EBITDA was $337 million in the second quarter, compared with $289 million in the prior quarter.


This quarter we operated well and delivered solid financial performance,” said Greg Garland, Phillips 66 Partners Chairman and CEO. “Our results reflect higher throughput on our wholly owned and joint venture assets. During the quarter, we advanced construction of the C2G Pipeline and plan to begin operations by the fourth quarter of this year. We continue to operate our assets safely and reliably and maintain our strong financial position through disciplined capital allocation.”

On July 20, 2021, the general partner’s board of directors declared a second-quarter 2021 cash distribution of $0.875 per common unit, or $3.50 per unit on an annualized basis.

Financial Results

Phillips 66 Partners’ second-quarter 2021 earnings were $225 million, compared with a loss of $18 million in the first quarter. First-quarter results included a $198 million impairment resulting from the Partnership’s decision to exit the Liberty Pipeline project. The Partnership reported adjusted EBITDA of $337 million in the second quarter, compared with $289 million in the prior quarter. The increase in second-quarter earnings and adjusted EBITDA reflect higher volumes and lower utility costs at the Partnership’s wholly owned and joint venture assets following the first-quarter winter storms and higher pipeline and terminal volumes from increased utilization at Phillips 66-operated refineries.

Liquidity, Capital Expenditures and Investments

As of June 30, 2021, total debt outstanding was $3.9 billion. The Partnership had $2 million in cash and cash equivalents and $734 million available under its revolving credit facility.

The Partnership’s capital expenditures and investments for the quarter were $61 million. Growth capital included spend on the C2G Pipeline project and funding for the Bakken Pipeline optimization project.

On April 1, 2021, Phillips 66 Partners repaid the remaining $50 million of tax-exempt bonds. Also in April, the Partnership borrowed $450 million under a new term loan agreement. Proceeds were primarily used to repay amounts borrowed under the Partnership’s $750 million revolving credit facility.

Strategic Update

Phillips 66 Partners continued construction of the C2G Pipeline, a 16 inch ethane pipeline that will connect its Clemens Caverns storage facility to petrochemical facilities in Gregory, Texas, near Corpus Christi, Texas. The project is backed by long-term commitments. The pipeline is expected to be operational in the fourth quarter of 2021.

The Bakken Pipeline optimization project, supported by minimum volume commitments from long-term contracts, continues to progress with the next phase of incremental capacity commencing service in August.

Investor Webcast

Members of Phillips 66 Partners executive management will host a webcast today at 3 p.m. EDT to discuss the Partnership’s second-quarter performance. To listen to the conference call and view related presentation materials, go to www.phillips66partners.com/events. For detailed supplemental information, go to www.phillips66partners.com/reports.

About Phillips 66 Partners

Headquartered in Houston, Phillips 66 Partners is a master limited partnership formed by Phillips 66 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids pipelines, terminals and other midstream assets. For more information, visit www.phillips66partners.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements as defined under the federal securities laws. Words and phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements included in this news release are based on management’s expectations, estimates and projections as of the date they are made. These statements are not guarantees of future performance and you should not unduly rely on them as they involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include: the continued ability of Phillips 66 to satisfy its obligations under our commercial and other agreements; the volume of crude oil, refined petroleum products and NGL we or our equity affiliates transport, fractionate, terminal and store; the tariff rates with respect to volumes transported through our regulated assets, which are subject to review and possible adjustment by federal and state regulators; fluctuations in the prices for crude oil, refined petroleum products and NGL; the continuing effects of the COVID-19 pandemic and its negative impact on the demand for refined products; changes in governmental policies relating to crude oil, refined petroleum products or NGL pricing, regulation, taxation, or exports; liabilities associated with the risks and operational hazards inherent in transporting, fractionating, terminaling and storing crude oil, refined petroleum products and NGL; curtailment of operations due to accidents, severe weather (including as a result of climate change) or natural disasters, riots, strikes or lockouts; the inability to obtain or maintain permits, in a timely manner or at all, and the possible revocation or modification of permits; the operation, financing and distribution decisions of our equity affiliates; costs to comply with environmental laws and safety regulations; failure of information technology due to various causes, including unauthorized access or attacks; changes to the costs to deliver and transport crude oil, refined petroleum products and NGL; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; the failure to complete construction of capital projects on time and within budget; general domestic and international economic and political developments including armed hostilities, expropriation of assets, and other political, economic or diplomatic developments, including those caused by public health issues; our ability to comply with our debt covenants and to incur additional indebtedness on favorable terms; changes in tax, environmental and other laws and regulations; and other economic, business, competitive and/or regulatory factors affecting Phillips 66 Partners’ businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 Partners is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial InformationThis news release includes the terms “EBITDA,” “adjusted EBITDA,” “distributable cash flow” and “coverage ratio.” These are non-GAAP financial measures. EBITDA and adjusted EBITDA are included to help facilitate comparisons of operating performance of the Partnership with other companies in our industry. EBITDA and distributable cash flow help facilitate an assessment of our ability to generate sufficient cash flow to make distributions to our partners. We believe that the presentation of EBITDA, adjusted EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. Our coverage ratio is calculated as distributable cash flow divided by total cash distributions and is included to help indicate the Partnership’s ability to pay cash distributions from current earnings. The GAAP performance measure most directly comparable to EBITDA and adjusted EBITDA is net income (loss). The GAAP liquidity measure most comparable to EBITDA and distributable cash flow is net cash provided by operating activities. The GAAP financial measure most comparable to our coverage ratio is calculated as net cash provided by operating activities divided by total cash distributions. These non-GAAP financial measures should not be considered as alternatives to their comparable GAAP measures. They have important limitations as analytical tools because they exclude some but not all items that affect their corresponding GAAP measures. They should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because EBITDA, adjusted EBITDA, distributable cash flow and coverage ratio may be defined differently by other companies in our industry, our definition of those measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in this release.

References in the release to earnings or losses refer to net income or losses attributable to the Partnership. References to EBITDA refer to earnings before interest, income taxes, depreciation and amortization.

Results of Operations (Unaudited)

 

Summarized Financial Statement Information

 

 

 

 

 

 

Millions of Dollars
Except as Indicated

 

Q2 2021

 

Q1 2021

Selected Income Statement Data

 

 

 

 

 

Total revenues and other income

 

$

423

 

 

376

Net income (loss)

 

234

 

 

(11)

Net income (loss) attributable to the Partnership

 

225

 

 

(18)

 

 

 

 

 

 

Adjusted EBITDA

 

337

 

 

289

Distributable cash flow

 

267

 

 

233

 

 

 

 

 

 

Net Income (Loss) Attributable to the Partnership Per Limited Partner Unit—Diluted (Dollars)

 

 

 

 

 

Common units

 

$

0.91

 

 

(0.13)

 

 

 

 

 

 

Selected Balance Sheet Data

 

 

 

 

 

Cash and cash equivalents

 

$

2

 

 

3

Equity investments

 

2,962

 

 

3,029

Total assets

 

7,001

 

 

7,053

Total debt

 

3,910

 

 

3,944

Equity held by public

 

 

 

 

 

Preferred units

 

729

 

 

749

Common units

 

2,649

 

 

2,647

Equity held by Phillips 66

 

 

 

 

 

Common units

 

(820)

 

 

(828)

Statement of Income (Loss)

 

 

Millions of Dollars

 

Q2 2021

 

Q1 2021

Revenues and Other Income

 

 

 

 

 

Operating revenues—related parties

 

$

274

 

 

245

Operating revenues—third parties

 

6

 

 

7

Equity in earnings of affiliates

 

142

 

 

124

Other income

 

1

 

 

Total revenues and other income

 

423

 

 

376

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

Operating and maintenance expenses

 

93

 

 

95

Depreciation

 

34

 

 

34

Impairments

 

 

 

198

General and administrative expenses

 

18

 

 

17

Taxes other than income taxes

 

11

 

 

10

Interest and debt expense

 

32

 

 

33

Total costs and expenses

 

188

 

 

387

Income (loss) before income taxes

 

235

 

 

(11)

Income tax expense

 

1

 

 

Net Income (Loss)

 

234

 

 

(11)

Less: Net income attributable to noncontrolling interest

 

9

 

 

7

Net Income (Loss) Attributable to the Partnership

 

225

 

 

(18)

Less: Preferred unitholders’ interest in net income (loss) attributable to the Partnership

 

12

 

 

12

Limited Partners’ Interest in Net Income (Loss) Attributable to the Partnership

 

$

213

 

 

(30)

Selected Operating Data

 

 

Q2 2021

 

Q1 2021

Wholly Owned Operating Data

 

 

 

 

 

Pipelines

 

 

 

 

 

Pipeline revenues (millions of dollars)

 

$

121

 

 

104

Pipeline volumes(1) (thousands of barrels daily)

 

 

 

 

 

Crude oil

 

957

 

 

796

Refined petroleum products and NGL

 

1,029

 

 

809

Total

 

1,986

 

 

1,605

 

 

 

 

 

 

Average pipeline revenue per barrel (dollars)

 

$

0.66

 

 

0.71

 

 

 

 

 

 

Terminals

 

 

 

 

 

Terminal revenues (millions of dollars)

 

$

43

 

 

39

Terminal throughput (thousands of barrels daily)

 

 

 

 

 

Crude oil(2)

 

397

 

 

374

Refined petroleum products

 

827

 

 

657

Total

 

1,224

 

 

1,031

 

 

 

 

 

 

Average terminaling revenue per barrel (dollars)

 

$

0.38

 

 

0.41

 

 

 

 

 

 

Storage, processing and other revenues (millions of dollars)

 

$

116

 

 

109

Total Operating Revenues (millions of dollars)

 

$

280

 

 

252

 

 

 

 

 

 

Joint Venture Operating Data(3)

 

 

 

 

 

Crude oil, refined petroleum products and NGL (thousands of barrels daily)

 

1,327

 

 

1,052

(1) Represents the sum of volumes transported through each separately tariffed pipeline segment.

 

 

 

 

 

(2) Bayway and Ferndale rail rack volumes included in crude oil terminals.

(3) Proportional share of total pipeline and terminal volumes of joint ventures consistent with recognized equity in earnings of affiliates.

Cash Distributions

 

Millions of Dollars
Except as Indicated

 

Q2 2021

 

Q1 2021

Cash Distributions

 

 

 

 

 

Common units—public

 

$

51

 

 

52

Common units—Phillips 66

 

148

 

 

148

Total

 

$

199

 

 

200

 

 

 

 

 

 

Cash Distribution Per Common Unit (Dollars)

 

$

0.875

 

 

0.875

 

 

 

 

 

 

Coverage Ratio*

 

1.34

 

 

1.17

†Cash distributions declared attributable to the indicated periods.

 

 

 

*Calculated as distributable cash flow divided by total cash distributions. Used to indicate the Partnership’s ability to pay cash distributions from current earnings. Net cash provided by operating activities divided by total cash distributions was 1.44x and 1.14x at Q2 2021 and Q1 2021, respectively.

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Income (Loss) Attributable to the Partnership

 

 

Millions of Dollars

 

Q2 2021

 

Q1 2021

 

 

 

 

Net Income (Loss) Attributable to the Partnership

$

225

 

(18)

Plus:

 

 

 

Net income attributable to noncontrolling interest

9

 

7

Net Income (Loss)

234

 

(11)

Plus:

 

 

 

Depreciation

34

 

34

Net interest expense

32

 

33

Income tax expense

1

 

EBITDA

301

 

56

Plus:

 

 

 

Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments

51

 

49

Expenses indemnified or prefunded by Phillips 66

1

 

Impairments

 

198

Less:

 

 

 

Adjusted EBITDA attributable to noncontrolling interest

16

 

14

Adjusted EBITDA

337

 

289

Plus:

 

 

 

Deferred revenue impacts*

(4)

 

9

Less:

 

 

 

Equity affiliate distributions less than proportional adjusted EBITDA

3

 

14

Maintenance capital expenditures

17

 

6

Net interest expense

32

 

33

Preferred unit distributions

12

 

12

Income taxes paid

2

 

Distributable Cash Flow

$

267

 

233

*Difference between cash receipts and revenue recognition.

 

 

 

†Excludes Merey Sweeny capital reimbursements and turnaround impacts.

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities

 

 

Millions of Dollars

 

Q2 2021

 

Q1 2021

 

 

 

 

Net Cash Provided by Operating Activities

$

286

 

227

Plus:

 

 

 

Net interest expense

32

 

33

Income tax expense

1

 

Changes in working capital

(11)

 

(11)

Undistributed equity earnings

(7)

 

5

Impairments

 

(198)

Deferred revenues and other liabilities

2

 

Other

(2)

 

EBITDA

301

 

56

Plus:

 

 

 

Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments

51

 

49

Expenses indemnified or prefunded by Phillips 66

1

 

Impairments

 

198

Less:

 

 

 

Adjusted EBITDA attributable to noncontrolling interest

16

 

14

Adjusted EBITDA

337

 

289

Plus:

 

 

 

Deferred revenue impacts*

(4)

 

9

Less:

 

 

 

Equity affiliate distributions less than proportional adjusted EBITDA

3

 

14

Maintenance capital expenditures

17

 

6

Net interest expense

32

 

33

Preferred unit distributions

12

 

12

Income taxes paid

2

 

Distributable Cash Flow

$

267

 

233

*Difference between cash receipts and revenue recognition.

 

 

 

†Excludes Merey Sweeny capital reimbursements and turnaround impacts.

 


Contacts

Jeff Dietert (investors)
832-765-2297
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Shannon Holy (investors)
832-765-2297
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BRYN MAWR, Pa.--(BUSINESS WIRE)--Essential Utilities Inc. (NYSE: WTRG) today announced that its Aqua Texas water utility has acquired the water treatment and distribution system in The Commons of Lake Houston community in Huffman, Texas yesterday. The Commons’ system serves approximately 1,000 homes in the development.


The transaction is the first of which Aqua Texas was able to use a new Texas law that allows regulated water companies to pay a fair market value for the purchase of water and wastewater systems. Prior to the new law, enacted in 2019, a system’s value previously was determined by its depreciated original cost, which generally did not reflect a reasonable market value for those assets. The new FMV law applies to all water and wastewater utilities including those owned and operated by private investors and municipal governments.

When the agreement of sale was reached several months ago, Essential Chairman and CEO Christopher Franklin said The Commons agreement illustrated the benefits of the new fair market value law. “The Texas fair market value law offers a compelling solution to municipalities, developers and other utility owners who must meet ever-increasing health and environmental standards and the costs of operating and maintaining their systems,” said Franklin. “Aqua can benefit other communities like The Commons by leveraging our expertise in compliance, large-scale purchasing power and other efficiencies that can be realized with a larger, regional operation.”

My team and I are proud to welcome residents of The Commons as our new customers,” said Aqua Texas President Bob Laughman. “Although this is not a municipal acquisition, it is worth noting that municipalities in other states with FMV legislation have sold their utility systems to Aqua and used the proceeds to offset tax increases, build new municipal facilities, and fund new infrastructure projects among other things. In other cases, the sale has enabled municipalities to avoid the necessary cost to bring their systems into environmental regulatory compliance by shifting that responsibility to Aqua, as we are experts in compliance.”

The Commons is the first acquisition completed by Essential’s Aqua companies in 2021. The company currently has seven additional signed purchase agreements for water and wastewater systems which have a total purchase price of $458.5 million and represent approximately 233,000 equivalent dwelling units.

Aqua Texas serves about 200,000 people in 53 counties across Texas. Visit AquaAmerica.com for more information or follow @MyAquaAmerica on Facebook and Twitter.

About Essential

Essential is one of the largest publicly traded water, wastewater and natural gas providers in the U.S., serving approximately 5 million people across 10 states under the Aqua and Peoples brands. Essential is committed to excellence in proactive infrastructure investment, regulatory expertise, operational efficiency and environmental stewardship. The company recognizes the importance water and natural gas play in everyday life and is proud to deliver safe, reliable services that contribute to the quality of life in the communities it serves. For more information, visit http://www.essential.co.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including. There are important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements including: general economic business conditions; the successful integration of the customers and the facility; and other factors discussed in our Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission. For more information regarding risks and uncertainties associated with Essential Utilities’ business, please refer to Essential Utilities’ annual, quarterly and other SEC filings. Essential Utilities is not under any obligation — and expressly disclaims any such obligation — to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

WTRGF


Contacts

Brian Dingerdissen
Investor Relations
O: 610.645.1191
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Communications and Marketing
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  • Second quarter revenues of $6.1 billion; GAAP1 Net Income of $600 million.
  • Second quarter EBITDA of 15.9 percent; Diluted EPS of $4.10.
  • The company is maintaining its full year 2021 revenue guidance to be up 20 to 24 percent.
  • EBITDA is expected to be in the range of 15.5 to 16.0 percent; consistent with prior guidance.
  • Cummins is also announcing the exploration of strategic alternatives for its filtration business. Potential strategic alternatives to be explored include the separation of the Cummins Filtration business unit into a stand-alone company.

COLUMBUS, Ind.--(BUSINESS WIRE)--Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2021.

Second quarter revenues of $6.1 billion increased 59 percent from the same quarter in 2020. Sales in North America increased 74 percent while international revenues increased 42 percent driven by strong demand across all global markets compared to the same quarter in 2020, which was impacted significantly by the pandemic. Currency positively impacted sales by 3 percent primarily due to a weaker US dollar.

“Strong demand across many of our key markets drove continued sales growth in the second quarter, particularly in North America, and resulted in solid profitability,” said Chairman and CEO Tom Linebarger. “The strength of the order board reflects robust underlying demand in many of our markets which is remarkable considering the challenges and uncertainty we faced during this same period last year. I cannot thank our employees and the employees of our supply base enough for their unwavering contributions during these challenging times given the significant supply chain constraints we continue to experience in our industry.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter were $974 million (15.9 percent of sales), compared to $549 million (14.3 percent of sales) a year ago.

Net income attributable to Cummins in the second quarter was $600 million ($4.10 per diluted share) compared to $276 million ($1.86 per diluted share) in 2020. The tax rate in the second quarter was 21.4 percent including $7 million, or $0.05 per share, of unfavorable discrete items.

Cummins is also announcing today its exploration of strategic alternatives for its Filtration business unit. Potential strategic alternatives to be explored include the separation of the business into a stand-alone company.

Cummins Filtration, founded by Cummins in 1958, is a recognized leader in the filtration space, with a strong technological base of expertise and patents. Cummins Filtration has grown consistently, and as an independent company, would have the opportunity to accelerate growth as it further diversifies into new products and end markets. Cummins Filtration is a premier filtration platform with a broad portfolio of products for use in on-highway, heavy, medium, and light-duty trucks, off -highway industrial equipment, and power generation systems. The business benefits from a large installed base with comprehensive aftermarket coverage driving recurring revenue and cash flow visibility; and has a leading global footprint across many key regions; including North America, India, and China. Cummins Filtration is well-positioned for continued growth, sustained margin performance, and strong free cash flow generation. In 2020, the business had sales of approximately $1.2 billion.

The Cummins Board, along with management, believes a separation could realize value for Cummins and its stakeholders by, among other things, unlocking value for shareholders, enabling further enhanced focus on key strategic initiatives and empowering continued innovation in core and new technologies to power a more prosperous world. The Cummins Board and management also believe that a separation could simultaneously result in material benefits for Cummins Filtration, including:

  • Sharpened strategic focus
  • Increased operating flexibility and resources to capitalize on growth opportunities
  • Tailored capital allocation focused solely on Cummins Filtration’s growth and value creation strategy
  • Enhanced value for Cummins Filtration’s employees, customers, and other stakeholders

Chairman and CEO Tom Linebarger stated, “Cummins Filtration is a technology leader with global presence and significant runway for continued growth. We expect that the strategic alternatives we are considering will result in enhanced value for our stakeholders, and position Cummins Filtration to take advantage of enhanced opportunities to invest in organic and inorganic growth.”

The execution of this exploration process is dependent upon business and market conditions, along with a number of other factors and considerations.

2021 Outlook:

Based on the current forecast, Cummins maintains its full year 2021 revenue guidance of up 20 to 24 percent versus last year. EBITDA is expected to be in the range of 15.5 to 16.0 percent and the Company expects to return 75 percent of Operating Cash Flow to shareholders in 2021 in the form of dividends and share repurchases.

Any expenses outside of the normal course of business associated with the evaluation of strategic alternatives for the Filtration business have been excluded from the outlook provided.

Second Quarter 2021 Highlights:

  • The company released the 18th annual Sustainability Progress report, highlighting the performance versus Cummins’ 2020 environmental goals and continued pursuit of carbon neutrality through the PLANET 2050 environmental sustainability strategy. For the first time, the report includes the racial and ethnic makeup of Cummins’ U.S. workforce. The company also posted its first report aligned to the Taskforce on Climate-Related Financial Disclosures.
  • Cummins and Iberdrola announced an agreement to partner together to accelerate the growth of business opportunities in the electrolyzer market of Iberia, promoting the green hydrogen value chain. The alliance helps to position Cummins as a leading supplier of electrolyzer systems for large-scale projects in Iberia and Iberdrola as a leading developer of electrolyzer projects and hydrogen supplier to final industrial customers. In addition to the commercial partnership, Cummins announced plans for one of the world’s largest electrolyzer plants, which is scalable to more than 1GW per year, and will be located in Castilla-La Mancha, Spain.
  • Cummins has signed a Letter of Intent for Cummins to acquire a 50% equity interest in Momentum Fuel Technologies from Rush Enterprises. The joint venture between Rush Enterprises and Cummins will produce Cummins-branded natural gas fuel delivery systems for the commercial vehicle market in North America, combining the strengths of Momentum Fuel Technologies’ compressed natural gas (CNG) fuel delivery systems, Cummins’ powertrain expertise, and the engineering and support infrastructure of both companies.
  • The Company began testing of a hydrogen-fuel internal combustion engine, taking another step forward in advancing zero carbon technology. The proof-of-concept test is building on Cummins’ existing technology leadership in gaseous-fuel applications and powertrain leadership to create new power solutions that help customers meet the energy and environmental needs of the future.
  • Carla Harris was named to the Board of Directors, bringing over 30 years of experience in investment banking, equity capital markets, equity private placements, and initial public offerings. Ms. Harris brings both the current number of women and the current number of ethnically diverse people on the board to five.
  • In May, Cummins was named to the 2021 Best Corporate Citizen list, which ranks companies on their performance in addressing climate change, the environment, financial matters, governance, human rights, stakeholders and society, workforce issues and more.

1 Generally Accepted Accounting Principles in the U.S.

Second quarter 2021 detail (all comparisons to same period in 2020):

Engine Segment

  • Sales - $2.5 billion, up 75 percent
  • Segment EBITDA - $402 million, or 16.1 percent of sales, compared to $150 million or 10.5 percent of sales
  • On-highway revenues increased 104 percent driven by strong demand in the North American truck and pickup markets and off-highway revenues increased 10 percent driven by strong demand in international construction markets
  • Sales increased 104 percent in North America and 26 percent in international markets

Distribution Segment

  • Sales - $1.9 billion, up 20 percent
  • Segment EBITDA - $201 million, or 10.5 percent of sales, compared to $160 million or 10.0 percent of sales
  • Revenues in North America increased 18 percent and international sales increased by 22 percent
  • Demand increased across the power generation and engine markets in addition to parts and service compared to last year which was impacted significantly by the pandemic.

Components Segment

  • Sales - $2.0billion, up 73 percent
  • Segment EBITDA - $301 million, or 15.1 percent of sales, compared to $141 million or 12.3 percent of sales
  • Revenues in North America increased by 108 percent and international sales increased by 46 percent

Power Systems Segment

  • Sales - $1.1 billion, up 47 percent
  • Segment EBITDA - $139 million, or 12.2 percent of sales, compared to $91 million, or 11.7 percent of sales
  • Power generation revenues increased by 54 percent driven by growth in recreational vehicle and datacenter markets while industrial revenues increased 37 percent due to stronger demand in mining markets

New Power Segment

  • Sales - $24 million, up 140 percent
  • Segment EBITDA loss - $60 million
  • Revenues increased due to greater demand in transit and school bus markets in addition to the shipments of fuel cell systems to the rail market. Electrolyzer revenue decreased driven by timing of commissioning of projects.
  • Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles are contributing to EBITDA losses

About Cummins Inc.

Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 57,825 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $1.8 billion on sales of $19.8 billion in 2020. To learn more about Cummins visit cummins.com.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues and EBITDA. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse results of our internal review into our emissions certification process and compliance with emission standards; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; policy changes in international trade; the U.K.'s exit from the European Union; changes in taxation; global legal and ethical compliance costs and risks; increasingly stringent environmental laws and regulations; future bans or limitations on the use of diesel-powered products; supply shortages and supplier financial risk, particularly from any of our single-sourced suppliers, including suppliers that may be impacted by the COVID-19 pandemic; market slowdown due to the impacts from the COVID-19 pandemic, other public health crises, epidemics or pandemics; impacts to manufacturing and supply chain abilities from an extended shutdown or disruption of our operations due to the COVID-19 pandemic; aligning our capacity and production with our demand, including impacts of COVID-19; large truck manufacturers and original equipment manufacturers customers discontinuing outsourcing their engine supply needs or experiencing financial distress, particularly related to the COVID-19 pandemic, bankruptcy or change in control; a slowdown in infrastructure development and/or depressed commodity prices; failure to realize expected results from our investment in Eaton Cummins Automated Transmission Technologies joint venture; the actions of, and income from, joint ventures and other investees that we do not directly control; product recalls; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; variability in material and commodity costs; product liability claims; our sales mix of products; protection and validity of our patent and other intellectual property rights; disruptions in global credit and financial markets as the result of the COVID-19 pandemic; labor relations or work stoppages; reliance on our executive leadership team and other key personnel; climate change and global warming; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; exposure to potential security breaches or other disruptions to our information technology systems and data security; political, economic and other risks from operations in numerous countries; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates, particularly those related to the sustained slowdown of the global economy due to the COVID-19 pandemic; the price and availability of energy; the outcome of pending and future litigation and governmental proceedings; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2020 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited) (a)

 

 

 

Three months ended

In millions, except per share amounts

 

July 4,
2021

 

June 28,
2020

NET SALES

 

$

6,111

 

 

$

3,852

 

Cost of sales

 

4,633

 

 

2,962

 

GROSS MARGIN

 

1,478

 

 

890

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

600

 

 

470

 

Research, development and engineering expenses

 

276

 

 

189

 

Equity, royalty and interest income from investees

 

137

 

 

115

 

Other operating expense, net

 

(4)

 

 

(10)

 

OPERATING INCOME

 

735

 

 

336

 

Interest expense

 

29

 

 

23

 

Other income, net

 

73

 

 

49

 

INCOME BEFORE INCOME TAXES

 

779

 

 

362

 

Income tax expense

 

167

 

 

93

 

CONSOLIDATED NET INCOME

 

612

 

 

269

 

Less: Net income (loss) attributable to noncontrolling interests

 

12

 

 

(7)

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

600

 

 

$

276

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

Basic

 

$

4.14

 

 

$

1.87

 

Diluted

 

$

4.10

 

 

$

1.86

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

145.1

 

 

147.6

 

Diluted

 

146.5

 

 

148.0

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

 

 

 

Six months ended

In millions, except per share amounts

 

July 4,
2021

 

June 28,
2020

NET SALES

 

$

12,203

 

 

$

8,863

 

Cost of sales

 

9,239

 

 

6,679

 

GROSS MARGIN

 

2,964

 

 

2,184

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

1,174

 

 

1,016

 

Research, development and engineering expenses

 

536

 

 

427

 

Equity, royalty and interest income from investees

 

303

 

 

244

 

Other operating expense, net

 

(12)

 

 

(15)

 

OPERATING INCOME

 

1,545

 

 

970

 

Interest expense

 

57

 

 

46

 

Other income, net

 

74

 

 

93

 

INCOME BEFORE INCOME TAXES

 

1,562

 

 

1,017

 

Income tax expense

 

339

 

 

220

 

CONSOLIDATED NET INCOME

 

1,223

 

 

797

 

Less: Net income attributable to noncontrolling interests

 

20

 

 

10

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

1,203

 

 

$

787

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

Basic

 

$

8.24

 

 

$

5.30

 

Diluted

 

$

8.16

 

 

$

5.29

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

146.0

 

 

148.4

 

Diluted

 

147.4

 

 

148.8

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (a)

 

In millions, except par value

 

July 4,
2021

 

December 31,
2020

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

2,481

 

 

$

3,401

 

Marketable securities

 

438

 

 

461

 

Total cash, cash equivalents and marketable securities

 

2,919

 

 

3,862

 

Accounts and notes receivable, net

 

4,132

 

 

3,820

 

Inventories

 

4,076

 

 

3,425

 

Prepaid expenses and other current assets

 

804

 

 

790

 

Total current assets

 

11,931

 

 

11,897

 

Long-term assets

 

 

 

 

Property, plant and equipment, net

 

4,174

 

 

4,255

 

Investments and advances related to equity method investees

 

1,494

 

 

1,441

 

Goodwill

 

1,291

 

 

1,293

 

Other intangible assets, net

 

942

 

 

963

 

Pension assets

 

1,096

 

 

1,042

 

Other assets

 

1,680

 

 

1,733

 

Total assets

 

$

22,608

 

 

$

22,624

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable (principally trade)

 

$

3,172

 

 

$

2,820

 

Loans payable

 

54

 

 

169

 

Commercial paper

 

200

 

 

323

 

Accrued compensation, benefits and retirement costs

 

569

 

 

484

 

Current portion of accrued product warranty

 

661

 

 

674

 

Current portion of deferred revenue

 

805

 

 

691

 

Other accrued expenses

 

1,086

 

 

1,112

 

Current maturities of long-term debt

 

57

 

 

62

 

Total current liabilities

 

6,604

 

 

6,335

 

Long-term liabilities

 

 

 

 

Long-term debt

 

3,620

 

 

3,610

 

Pensions and other postretirement benefits

 

617

 

 

630

 

Accrued product warranty

 

674

 

 

672

 

Deferred revenue

 

828

 

 

840

 

Other liabilities

 

1,472

 

 

1,548

 

Total liabilities

 

$

13,815

 

 

$

13,635

 

 

 

 

 

 

EQUITY

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.4 shares issued

 

$

2,405

 

 

$

2,404

 

Retained earnings

 

16,228

 

 

15,419

 

Treasury stock, at cost, 78.8 and 74.8 shares

 

(8,838)

 

 

(7,779)

 

Accumulated other comprehensive loss

 

(1,929)

 

 

(1,982)

 

Total Cummins Inc. shareholders’ equity

 

7,866

 

 

8,062

 

Noncontrolling interests

 

927

 

 

927

 

Total equity

 

$

8,793

 

 

$

8,989

 

Total liabilities and equity

 

$

22,608

 

 

$

22,624

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

 

 

Three months ended

In millions

 

July 4,
2021

 

June 28,
2020

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Consolidated net income

 

$

612

 

 

$

269

 

Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities

 

 

Depreciation and amortization

 

167

 

 

165

 

Deferred income taxes

 

9

 

 

 

Equity in income of investees, net of dividends

 

22

 

 

(46)

 

Pension and OPEB expense

 

21

 

 

27

 

Pension contributions and OPEB payments

 

(17)

 

 

(22)

 

Share-based compensation expense

 

10

 

 

8

 

Restructuring payments

 

(1)

 

 

(33)

 

Gain on corporate owned life insurance

 

(20)

 

 

(21)

 

Foreign currency remeasurement and transaction exposure

 

9

 

 

(5)

 

Changes in current assets and liabilities

 

 

 

 

Accounts and notes receivable

 

43

 

 

63

 

Inventories

 

(292)

 

 

(53)

 

Other current assets

 

6

 

 

16

 

Accounts payable

 

(88)

 

 

(391)

 

Accrued expenses

 

193

 

 

(101)

 

Changes in other liabilities

 

(34)

 

 

171

 

Other, net

 

(24)

 

 

(69)

 

Net cash provided by (used in) operating activities

 

616

 

 

(22)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital expenditures

 

(125)

 

 

(77)

 

Investments in internal use software

 

(11)

 

 

(13)

 

Proceeds from sale of land

 

20

 

 

 

Investments in and advances to equity investees

 

34

 

 

(10)

 

Investments in marketable securities—acquisitions

 

(219)

 

 

(169)

 

Investments in marketable securities—liquidations

 

174

 

 

159

 

Cash flows from derivatives not designated as hedges

 

(2)

 

 

(28)

 

Other, net

 

8

 

 

3

 

Net cash used in investing activities

 

(121)

 

 

(135)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net (payments) borrowings of commercial paper

 

(117)

 

 

410

 

Payments on borrowings and finance lease obligations

 

(17)

 

 

(15)

 

Net payments under short-term credit agreements

 

 

 

(21)

 

Dividend payments on common stock

 

(197)

 

 

(193)

 

Repurchases of common stock

 

(672)

 

 

 

Proceeds from issuing common stock

 

8

 

 

19

 

Other, net

 

18

 

 

26

 

Net cash (used in) provided by financing activities

 

(977)

 

 

226

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

5

 

 

(9)

 

Net (decrease) increase in cash and cash equivalents

 

(477)

 

 

60

 

Cash and cash equivalents at beginning of period

 

2,958

 

 

1,691

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

2,481

 

 

$

1,751

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.


Contacts

Cummins Inc.
Jon Mills
Phone: 317-658-4540
Email:  This email address is being protected from spambots. You need JavaScript enabled to view it.


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SEATTLE--(BUSINESS WIRE)--Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2021 financial results including the following highlights compared to the same quarter of 2020:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 69% to $1.84
  • Net Earnings Attributable to Shareholders increased 72% to $316 million
  • Operating Income increased 66% to $411 million
  • Revenues increased 50% to $3.6 billion
  • Airfreight tonnage volume and ocean container volume increased 37% and 34%, respectively

“We continued to move unprecedented volumes during the quarter, as ocean and air buy/sell rates remained elevated and volatile, capacity was extremely tight, and supply chain disruptions showed no signs of abatement,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our entire company continues to perform at its very best, with strong performance and growth across all of our products. Because of ongoing supply/demand imbalances, as well as labor and equipment shortages around the globe, shippers face extraordinarily complex challenges throughout their supply chains. Logistics is now top of mind at the highest levels in most organizations. Unfortunately, there is no quick or simple fix to any of these issues and every one of our transactions seems to require significantly more attention and dedication. Whether it’s an ocean container, a customs declaration, a fulfillment order in one of our warehouses, or a high-touch, white-glove delivery for one of our Transcon customers – just about everything we do requires us to be more innovative, flexible, and alert to change in the current operating environment. I want to express enormous gratitude to our employees, who have continued to take care of our customers throughout these challenges.

“During the quarter, we achieved new records in airfreight tonnage and ocean container volumes, operating income and net earnings. Buy and sell rates remained significantly higher than pre-pandemic norms, as we worked with our carrier partners to secure precious space for our customers. It has not been easy. Many of the impediments to smoother trade flow, such as port congestion and equipment shortages, were not appreciably better in Q2 than they were in Q1.

“Currently, we do not foresee any meaningful improvements to the operating environment over at least the remainder of the year, as the global infrastructure for moving freight seems nearly stretched to its limit. Robust demand is bumping up against capacity constraints in the air and ocean markets, all of which is made more challenging by limited warehouse space, staffing constraints, port congestion, equipment dislocations, and driver shortages, not to mention additional disturbances such as the closure of the Yantian port due to a COVID-19 outbreak in May or the blockage of the Suez Canal back in March.

“We will continue to do all that we can to help our customers during such difficult times. While we remain optimistic that conditions will improve over time, we are unable to predict when that might take place, or how even the recovery might be, and we believe that demand will likely continue to outstrip capacity in both air and ocean for the near term, keeping buy/sell rates unsettled for at least the duration of 2021.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “The quarter just ended provides the first meaningful comparisons to a strong year-ago quarter in 2020, when we first started to see the results of our improved performance during the unprecedented conditions brought on by the global COVID-19 pandemic. At that time, we were just starting to demonstrate our ability to quickly adapt to a radically different operating environment of high demand for very specific products in certain lanes at a time when the vast majority of air capacity had been removed and most of our people were settling in to working from home. A year later, as we are cautiously beginning to bring our people back on site, we are navigating a multitude of challenges and performing at levels we have never seen before across the company and in all of our products. We are busier than ever, generating growth in revenue, operating income, and earnings that is well ahead of expenses, as we continue to learn how to operate in this environment. While we believe the current environment is likely to remain at least through the end of 2021, I would again caution that we are unable to predict how long these ongoing conditions will persist or the impact they will have on our future operations. Regardless, we will continue to make important investments in people, processes, and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.”

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 176 district offices and numerous branch locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time-definite transportation, order management, warehousing and distribution and customized logistics solutions.

____________________

1Diluted earnings attributable to shareholders per share.

NOTE: See Disclaimer on Forward-Looking Statements in this release.

Expeditors International of Washington, Inc.

Second Quarter 2021 Earnings Release, August 3, 2021

Financial Highlights for the three and six months ended June 30, 2021 and 2020 (Unaudited)

(in 000's of US dollars except per share data)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Revenues3

 

$

3,609,093

 

 

$

2,411,078

 

 

50%

 

$

6,807,913

 

 

$

4,254,845

 

 

60%

Directly related cost of transportation and other expenses1,3

 

$

2,598,633

 

 

$

1,661,487

 

 

56%

 

$

4,845,917

 

 

$

2,890,118

 

 

68%

Salaries and other operating expenses2

 

$

599,815

 

 

$

501,965

 

 

19%

 

$

1,165,836

 

 

$

958,046

 

 

22%

Operating income

 

$

410,645

 

 

$

247,626

 

 

66%

 

$

796,160

 

 

$

406,681

 

 

96%

Net earnings attributable to shareholders

 

$

316,372

 

 

$

183,869

 

 

72%

 

$

603,592

 

 

$

306,213

 

 

97%

Diluted earnings attributable to shareholders per share

 

$

1.84

 

 

$

1.09

 

 

69%

 

$

3.52

 

 

$

1.80

 

 

96%

Basic earnings attributable to shareholders per share

 

$

1.87

 

 

$

1.10

 

 

70%

 

$

3.57

 

 

$

1.83

 

 

95%

Diluted weighted average shares outstanding

 

 

171,677

 

 

 

169,290

 

 

 

 

 

171,660

 

 

 

170,382

 

 

 

Basic weighted average shares outstanding

 

 

169,210

 

 

 

166,767

 

 

 

 

 

169,140

 

 

 

167,751

 

 

 

____________________

1Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

2Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings.

3Beginning in the first quarter 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis.

During the three and six months ended June 30, 2021, we repurchased 0.5 million and 1.4 million shares of common stock at an average price of $124.94 and $104.20 per share, respectively. During the three and six months ended June 30, 2020, we repurchased 0.4 million and 4.4 million shares of common stock at an average price of $77.46 and $71.41 per share, respectively.

 

 

Employee Full-time Equivalents as of
June 30,

 

 

2021

 

2020

North America

 

 

6,949

 

 

 

6,749

 

Europe

 

 

3,700

 

 

 

3,419

 

North Asia

 

 

2,416

 

 

 

2,413

 

South Asia

 

 

1,671

 

 

 

1,654

 

Middle East, Africa and India

 

 

1,496

 

 

 

1,528

 

Latin America

 

 

781

 

 

 

823

 

Information Systems

 

 

968

 

 

 

971

 

Corporate

 

 

399

 

 

 

380

 

Total

18,380

 

 

 

17,937

Disclaimer on Forward-Looking Statements:

NOTE: See Disclaimer on Forward-Looking Statements in this release.

 

Second quarter year-over-year
percentage increase in:

2021

 

Airfreight
kilos

 

Ocean freight
FEU

April

 

29%

 

34%

May

 

39%

 

36%

June

 

46%

 

30%

Quarter

 

37%

 

34%

Investors may submit written questions via e-mail to: This email address is being protected from spambots. You need JavaScript enabled to view it.. Questions received by the end of business on August 6, 2021 will be considered in management's 8-K “Responses to Selected Questions.”

Disclaimer on Forward-Looking Statements:

Certain statements contained in this news release are “forward-looking statements,” based on management’s views with respect to future events and underlying assumptions that involve risks and uncertainties. These forward-looking statements include statements regarding the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our expectation that the supply/demand imbalance and rate volatility will continue for the remainder of 2021 and will stabilize over time; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization. The COVID-19 pandemic could have the effect of heightening many of the other risks described in Item 1A of our Annual Report on Form 10-K, including, without limitation, those related to the success of our strategy and desire to maintain historical unitary profitability, our ability to attract and retain customers, our ability to manage costs, interruptions to our information technology systems, the ability of third-party providers to perform and potential litigation as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission. These and other factors are discussed in the Company’s regulatory filings with the Securities and Exchange Commission, including those in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The forward-looking statements contained in this news release speak only as of this date and the Company does not assume any obligation to update them except as required by law.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

June 30,
2021

 

December 31,
2020

Assets:

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,674,121

 

 

$

1,527,791

 

Accounts receivable, less allowance for credit loss of $6,104 at June 30, 2021 and $5,579 at December 31, 2020

 

 

2,647,516

 

 

 

1,998,055

 

Deferred contract costs

 

 

534,692

 

 

 

327,448

 

Other

 

 

128,933

 

 

 

110,250

 

Total current assets

 

 

4,985,262

 

 

 

3,963,544

 

Property and equipment, less accumulated depreciation and amortization of $534,790 at June 30, 2021 and $516,988 at December 31, 2020

 

 

499,282

 

 

 

506,425

 

Operating lease right-of-use assets

 

 

443,708

 

 

 

432,723

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Other assets, net

 

 

16,992

 

 

 

16,884

 

Total assets

 

$

5,953,171

 

 

$

4,927,503

 

Liabilities:

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,408,572

 

 

$

1,136,859

 

Accrued expenses, primarily salaries and related costs

 

 

319,696

 

 

 

257,021

 

Contract liabilities

 

 

619,140

 

 

 

379,722

 

Current portion of operating lease liabilities

 

 

80,210

 

 

 

74,004

 

Federal, state and foreign income taxes

 

 

57,608

 

 

 

45,437

 

Total current liabilities

 

 

2,485,226

 

 

 

1,893,043

 

Noncurrent portion of operating lease liabilities

 

 

370,333

 

 

 

364,185

 

Deferred federal and state income taxes, net

 

 

13,961

 

 

 

7,048

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, none issued

 

 

 

 

 

Common stock, par value $0.01 per share. Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294 shares at December 31, 2020

 

 

1,692

 

 

 

1,693

 

Additional paid-in capital

 

 

79,357

 

 

 

157,496

 

Retained earnings

 

 

3,104,471

 

 

 

2,600,201

 

Accumulated other comprehensive loss

 

 

(106,066

)

 

 

(99,753

)

Total shareholders’ equity

 

 

3,079,454

 

 

 

2,659,637

 

Noncontrolling interest

 

 

4,197

 

 

 

3,590

 

Total equity

 

 

3,083,651

 

 

 

2,663,227

 

Total liabilities and equity

 

$

5,953,171

 

 

$

4,927,503

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

$

1,523,569

 

 

$

1,269,654

 

 

$

2,849,484

 

 

$

1,925,252

 

Ocean freight and ocean services

 

 

1,098,550

 

 

 

489,385

 

 

 

2,052,462

 

 

 

980,725

 

Customs brokerage and other services

 

 

986,974

 

 

 

652,039

 

 

 

1,905,967

 

 

 

1,348,868

 

Total revenues

 

 

3,609,093

 

 

 

2,411,078

 

 

 

6,807,913

 

 

 

4,254,845

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

 

1,136,328

 

 

 

932,137

 

 

 

2,090,872

 

 

 

1,398,865

 

Ocean freight and ocean services

 

 

862,251

 

 

 

361,272

 

 

 

1,604,686

 

 

 

725,668

 

Customs brokerage and other services

 

 

600,054

 

 

 

368,078

 

 

 

1,150,359

 

 

 

765,585

 

Salaries and related

 

 

481,186

 

 

 

395,107

 

 

 

933,291

 

 

 

737,147

 

Rent and occupancy

 

 

45,366

 

 

 

41,375

 

 

 

90,646

 

 

 

83,899

 

Depreciation and amortization

 

 

12,675

 

 

 

14,109

 

 

 

25,662

 

 

 

26,769

 

Selling and promotion

 

 

3,172

 

 

 

3,113

 

 

 

6,242

 

 

 

11,356

 

Other

 

 

57,416

 

 

 

48,261

 

 

 

109,995

 

 

 

98,875

 

Total operating expenses

 

 

3,198,448

 

 

 

2,163,452

 

 

 

6,011,753

 

 

 

3,848,164

 

Operating income

 

 

410,645

 

 

 

247,626

 

 

 

796,160

 

 

 

406,681

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,188

 

 

 

2,559

 

 

 

4,134

 

 

 

7,366

 

Other, net

 

 

2,649

 

 

 

797

 

 

 

5,649

 

 

 

4,181

 

Other income, net

 

 

4,837

 

 

 

3,356

 

 

 

9,783

 

 

 

11,547

 

Earnings before income taxes

 

 

415,482

 

 

 

250,982

 

 

 

805,943

 

 

 

418,228

 

Income tax expense

 

 

98,508

 

 

 

66,794

 

 

 

201,019

 

 

 

111,258

 

Net earnings

 

 

316,974

 

 

 

184,188

 

 

 

604,924

 

 

 

306,970

 

Less net earnings attributable to the noncontrolling interest

 

 

602

 

 

 

319

 

 

 

1,332

 

 

 

757

 

Net earnings attributable to shareholders

 

$

316,372

 

 

$

183,869

 

 

$

603,592

 

 

$

306,213

 

Diluted earnings attributable to shareholders per share

 

$

1.84

 

 

$

1.09

 

 

$

3.52

 

 

$

1.80

 

Basic earnings attributable to shareholders per share

 

$

1.87

 

 

$

1.10

 

 

$

3.57

 

 

$

1.83

 

Weighted average diluted shares outstanding

 

 

171,677

 

 

 

169,290

 

 

 

171,660

 

 

 

170,382

 

Weighted average basic shares outstanding

 

 

169,210

 

 

 

166,767

 

 

 

169,140

 

 

 

167,751

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

316,974

 

 

$

184,188

 

 

$

604,924

 

 

$

306,970

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions for losses on accounts receivable

 

 

1,090

 

 

 

2,389

 

 

 

2,289

 

 

 

4,209

 

Deferred income tax expense

 

 

1,850

 

 

 

9,287

 

 

 

10,001

 

 

 

4,148

 

Stock compensation expense

 

 

30,909

 

 

 

21,638

 

 

 

42,094

 

 

 

32,794

 

Depreciation and amortization

 

 

12,675

 

 

 

14,109

 

 

 

25,662

 

 

 

26,769

 

Other, net

 

 

346

 

 

 

118

 

 

 

897

 

 

 

551

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(410,783

)

 

 

(185,055

)

 

 

(663,697

)

 

 

(168,375

)

Increase in accounts payable and accrued expenses

 

 

100,118

 

 

 

106,760

 

 

 

333,271

 

 

 

107,677

 

Increase in deferred contract costs

 

 

(150,382

)

 

 

(2,333

)

 

 

(221,640

)

 

 

(18,401

)

Increase (decrease) in contract liabilities

 

 

174,504

 

 

 

(595

)

 

 

254,094

 

 

 

20,606

 

(Decrease) increase in income taxes payable, net

 

 

(47,994

)

 

 

20,154

 

 

 

(1,356

)

 

 

30,642

 

Decrease (increase) in other, net

 

 

1,164

 

 

 

16,061

 

 

 

(324

)

 

 

4,131

 

Net cash from operating activities

 

 

30,471

 

 

 

186,721

 

 

 

386,215

 

 

 

351,721

 

Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(6,539

)

 

 

(22,114

)

 

 

(14,930

)

 

 

(28,241

)

Other, net

 

 

138

 

 

 

(68

)

 

 

104

 

 

 

(211

)

Net cash from investing activities

 

 

(6,401

)

 

 

(22,182

)

 

 

(14,826

)

 

 

(28,452

)

Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

22,711

 

 

 

29,187

 

 

 

42,468

 

 

 

52,586

 

Repurchases of common stock

 

 

(62,472

)

 

 

(30,985

)

 

 

(148,469

)

 

 

(314,225

)

Dividends paid

 

 

(98,387

)

 

 

(86,815

)

 

 

(98,387

)

 

 

(86,815

)

Payments for taxes related to net share settlement of equity awards

 

 

(13,893

)

 

 

(9,170

)

 

 

(15,168

)

 

 

(10,566

)

Net cash from financing activities

 

 

(152,041

)

 

 

(97,783

)

 

 

(219,556

)

 

 

(359,020

)

Effect of exchange rate changes on cash and cash equivalents

 

 

8,699

 

 

 

1,726

 

 

 

(5,503

)

 

 

(14,285

)

Change in cash and cash equivalents

 

 

(119,272

)

 

 

68,482

 

 

 

146,330

 

 

 

(50,036

)

Cash and cash equivalents at beginning of period

 

 

1,793,393

 

 

 

1,111,973

 

 

 

1,527,791

 

 

 

1,230,491

 

Cash and cash equivalents at end of period

 

$

1,674,121

 

 

$

1,180,455

 

 

$

1,674,121

 

 

$

1,180,455

 

Taxes Paid:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

$

143,959

 

 

$

38,504

 

 

$

190,536

 

 

$

73,808

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Business Segment Information

(In thousands)

(Unaudited)

 

 

 

UNITED
STATES

 

OTHER

NORTH
AMERICA

 

LATIN
AMERICA

 

NORTH
ASIA

 

SOUTH
ASIA

 

EUROPE

 

MIDDLE
EAST,
AFRICA
AND
INDIA

 

ELIMI-
NATIONS

 

CONSOLI-
DATED

For the three months ended June 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

997,567

 

 

 

101,465

 

 

 

46,981

 

 

 

1,309,382

 

 

 

417,718

 

 

 

544,949

 

 

 

192,186

 

 

 

(1,155

)

 

 

3,609,093

 

Directly related cost of transportation and other expenses1

 

$

566,882

 

 

 

59,311

 

 

 

25,952

 

 

 

1,086,641

 

 

 

335,219

 

 

 

376,856

 

 

 

148,290

 

 

 

(518

)

 

 

2,598,633

 

Salaries and other operating expenses2

 

$

241,121

 

 

 

31,300

 

 

 

14,735

 

 

 

106,812

 

 

 

49,046

 

 

 

123,408

 

 

 

34,026

 

 

 

(633

)

 

 

599,815

 

Operating income

 

$

189,564

 

 

 

10,854

 

 

 

6,294

 

 

 

115,929

 

 

 

33,453

 

 

 

44,685

 

 

 

9,870

 

 

 

(4

)

 

 

410,645

 

Identifiable assets at period end

 

$

2,972,363

 

 

 

196,558

 

 

 

102,296

 

 

 

1,114,475

 

 

 

377,370

 

 

 

929,706

 

 

 

291,406

 

 

 

(31,003

)

 

 

5,953,171

 

Capital expenditures

 

$

2,905

 

 

 

64

 

 

 

72

 

 

 

400

 

 

 

532

 

 

 

2,100

 

 

 

466

 

 

 

 

 

 

6,539

 

Equity

 

$

2,163,114

 

 

 

80,802

 

 

 

36,316

 

 

 

318,111

 

 

 

146,583

 

 

 

255,006

 

 

 

128,148

 

 

 

(44,429

)

 

 

3,083,651

 

For the three months ended June 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

639,226

 

 

 

73,679

 

 

 

37,553

 

 

 

984,715

 

 

 

217,152

 

 

 

358,060

 

 

 

101,571

 

 

 

(878

)

 

 

2,411,078

 

Directly related cost of transportation and other expenses1, 3

 

$

354,619

 

 

 

40,814

 

 

 

22,701

 

 

 

775,572

 

 

 

153,194

 

 

 

242,170

 

 

 

72,868

 

 

 

(451

)

 

 

1,661,487

 

Salaries and other operating expenses2

 

$

207,703

 

 

 

25,283

 

 

 

12,112

 

 

 

97,171

 

 

 

39,184

 

 

 

95,757

 

 

 

25,188

 

 

 

(433

)

 

 

501,965

 

Operating income

 

$

76,904

 

 

 

7,582

 

 

 

2,740

 

 

 

111,972

 

 

 

24,774

 

 

 

20,133

 

 

 

3,515

 

 

 

6

 

 

 

247,626

 

Identifiable assets at period end

 

$

1,886,463

 

 

 

170,873

 

 

 

72,912

 

 

 

669,335

 

 

 

213,007

 

 

 

581,988

 

 

 

221,381

 

 

 

(5,782

)

 

 

3,810,177

 

Capital expenditures

 

$

19,076

 

 

 

1,148

 

 

 

216

 

 

 

385

 

 

 

182

 

 

 

993

 

 

 

114

 

 

 

 

 

 

22,114

 

Equity

 

$

1,399,124

 

 

 

71,165

 

 

 

29,758

 

 

 

306,022

 

 

 

108,777

 

 

 

168,060

 

 

 

116,279

 

 

 

(37,587

)

 

 

2,161,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNITED
STATES

 

OTHER
NORTH
AMERICA

 

LATIN
AMERICA

 

NORTH
ASIA

 

SOUTH
ASIA

 

EUROPE

 

MIDDLE
EAST,
AFRICA
AND
INDIA

 

ELIMI-
NATIONS

 

CONSOLI-
DATED

For the six months ended June 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

1,872,957

 

 

 

195,582

 

 

 

91,845

 

 

 

2,518,430

 

 

 

767,484

 

 

 

1,011,282

 

 

 

352,692

 

 

 

(2,359

)

 

 

6,807,913

 

Directly related cost of transportation and other expenses1, 3

 

$

1,069,517

 

 

 

112,361

 

 

 

52,652

 

 

 

2,054,170

 

 

 

605,163

 

 

 

683,765

 

 

 

269,399

 

 

 

(1,110

)

 

 

4,845,917

 

Salaries and other operating expenses2

 

$

479,819

 

 

 

57,037

 

 

 

27,112

 

 

 

213,732

 

 

 

92,211

 

 

 

232,863

 

 

 

64,301

 

 

 

(1,239

)

 

 

1,165,836

 

Operating income

 

$

323,621

 

 

 

26,184

 

 

 

12,081

 

 

 

250,528

 

 

 

70,110

 

 

 

94,654

 

 

 

18,992

 

 

 

(10

)

 

 

796,160

 

Identifiable assets at period end

 

$

2,972,363

 

 

 

196,558

 

 

 

102,296

 

 

 

1,114,475

 

 

 

377,370

 

 

 

929,706

 

 

 

291,406

 

 

 

(31,003

)

 

 

5,953,171

 

Capital expenditures

 

$

5,930

 

 

 

186

 

 

 

125

 

 

 

757

 

 

 

1,111

 

 

 

5,654

 

 

 

1,167

 

 

 

 

 

 

14,930

 

Equity

 

$

2,163,114

 

 

 

80,802

 

 

 

36,316

 

 

 

318,111

 

 

 

146,583

 

 

 

255,006

 

 

 

128,148

 

 

 

(44,429

)

 

 

3,083,651

 

For the six months ended June 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

1,289,631

 

 

 

154,910

 

 

 

75,444

 

 

 

1,481,872

 

 

 

383,233

 

 

 

665,020

 

 

 

206,553

 

 

 

(1,818

)

 

 

4,254,845

 

Directly related cost of transportation and other expenses1, 3

 

$

728,578

 

 

 

86,104

 

 

 

46,467

 

 

 

1,160,075

 

 

 

271,515

 

 

 

450,488

 

 

 

147,787

 

 

 

(896

)

 

 

2,890,118

 

Salaries and other operating expenses2

 

$

433,647

 

 

 

48,995

 

 

 

23,861

 

 

 

154,604

 

 

 

69,092

 

 

 

177,611

 

 

 

51,138

 

 

 

(902

)

 

 

958,046

 

Operating income

 

$

127,406

 

 

 

19,811

 

 

 

5,116

 

 

 

167,193

 

 

 

42,626

 

 

 

36,921

 

 

 

7,628

 

 

 

(20

)

 

 

406,681

 

Identifiable assets at period end

 

$

1,886,463

 

 

 

170,873

 

 

 

72,912

 

 

 

669,335

 

 

 

213,007

 

 

 

581,988

 

 

 

221,381

 

 

 

(5,782

)

 

 

3,810,177

 

Capital expenditures

 

$

23,573

 

 

 

1,209

 

 

 

318

 

 

 

710

 

 

 

370

 

 

 

1,638

 

 

 

423

 

 

 

 

 

 

28,241

 

Equity

 

$

1,399,124

 

 

 

71,165

 

 

 

29,758

 

 

 

306,022

 

 

 

108,777

 

 

 

168,060

 

 

 

116,279

 

 

 

(37,587

)

 

 

2,161,598

 


Contacts

Jeffrey S. Musser
President and Chief Executive Officer
(206) 674-3433

Bradley S. Powell
Senior Vice President and Chief Financial Officer
(206) 674-3412

Geoffrey Buscher
Director - Investor Relations
(206) 892-4510


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