Noncash Item – Goodwill Savannah GA http://goodwillsavannahga.org/ Wed, 29 Jun 2022 12:26:15 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://goodwillsavannahga.org/wp-content/uploads/2021/04/cropped-goodwill-32x32.png Noncash Item – Goodwill Savannah GA http://goodwillsavannahga.org/ 32 32 Perion reiterates its annual guidelines; Joins Apple in Privacy Crusade and Launches Massive Campaign for SORTTM – https://goodwillsavannahga.org/perion-reiterates-its-annual-guidelines-joins-apple-in-privacy-crusade-and-launches-massive-campaign-for-sorttm/ Wed, 29 Jun 2022 12:08:03 +0000 https://goodwillsavannahga.org/perion-reiterates-its-annual-guidelines-joins-apple-in-privacy-crusade-and-launches-massive-campaign-for-sorttm/

Engaging a privacy-conscious audience with a viral short film to educate users about online privacy risks

TEL AVIV & NEW YORK–(BUSINESS WIRE)–Perion Network Ltd. (NASDAQ: PERI) (TASE: PERI) a global advertising technology company that provides holistic solutions across the three main pillars of digital advertising – ad search, social media and display/video/CTV advertising – today launched an integrated campaign to raise awareness its owner SORTMT Platform. Unlike other offerings on the market, the Perion LOTMT is the first cookieless solution that guarantees complete anonymity for the ultimate privacy technology that users can completely trust.

The video, titledThe Complete Guide to Protecting Your Privacy Onlinedirected by award-winning filmmaker Max Joseph — co-host/executive producer of MTV’s Catfishdirector of HBO Max’s 15 minutes of shame (exec. produced by Monica Lewinsky), as well as a number of hit viral videos for Nike, Samsung and Rainforest Alliance (Cannes Lions Winner).

“As cookies and third-party data are phased out, businesses around the world are forced to deliver privacy solutions that meet rising consumer expectations,” said Doron Gerstel, CEO of Perion. “TO SORTMT does it in a unique and differentiated way that no other cookieless solution can match – as it captures no consumer data. Our short film shows how impossible it is to live a private life in today’s world, and how SORTMT solves the problem. We are honored to have collaborated with Max Joseph to capture SORT’s missionMT with irresistible humor.

TO SORTMTThe machine learning model analyzes millions of combinations of data to create cookieless targeting groups of people who think and react to ads like everyone else. It is the only cookie-free solution allowing advertisers to reach audiences when they are most receptive to seeing an advertisement, without the browser and device limitations faced by cookie-based approaches. .

“When Perion reached out, I was immediately interested,” Max Joseph said. “We live in the wild west of the internet, but SORT provides a much-needed service to verify advertisements for consumers letting people know that an advertisement is safe. Bringing attention to how jumpy we are online versus how cautious we are in real life was relevant, poignant and fun.

Annual Orientation 2022

“With the first half of 2022 behind us and with the visibility we have on the second half, we are confident to reiterate our annual guidance,” added Gerstel.

($M)

2021

Orientation 2022

% year-over-year growth(1)

Revenue

$478.5

$620-$640

32%

Adjusted EBITDA

$69.6

$98-$102

44%

EBITDA at REV Ex-TAC

37%

40%

(1) Half way orientation

Find the short film here and more information about SORT via the Perion website. The campaign launch was streamed live on Perion’s website and an archived webcast can be found here.

About Perion Network Ltd.

Perion (Nasdaq: PERI) is a global technology company that provides holistic strategic commerce solutions that enable brands and advertisers to effectively “capture and engage” users across multiple platforms and channels, including interactive connected television – or iCTV. Perion achieves this through its synchronized digital branding capabilities, which focus on high-impact creation; content monetization; its brand search network, in partnership with Microsoft Bing; and social media management that orchestrates and optimizes paid advertising. This diversification positions Perion for growth as budgets change between categories.

About SORTMT

TO SORTMT, or Smart Optimization of Responsive Traits, is a technology result of Perion’s investment in its “Intelligent HUB” – a platform for pulling signals across all advertising channels and optimizing traffic at scale, producing performance metrics. engagement and higher KPIs. TO SORTMT is powered by Undertone, a Perion company and the leader in data-driven, high-impact smart campaigns. Multidimensional targeting technology identifies otherwise unrecognized similarities between users and creates different groups – which is the “Responsive Traits” component of the platform.

Non-GAAP Measures

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude stock-based compensation expense, retention and vesting expense, remeasurement of contingent consideration related to acquisition, amortization of acquired intangible assets and related taxes, one-time expenses, foreign exchange costs, gains (losses) associated with ASC-842, and certain accounting entries under the accounting rules on business combinations companies that require us to recognize a legal performance obligation related to the revenue arrangements of an acquired entity based on its acquisition-date fair value. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is defined as operating profit excluding stock-based compensation expense, amortization, acquisition-related items including amortization of intangible assets, acquisition-related expenses, gains and losses recognized on changes in the fair value of contingent consideration agreements and certain accounting entries under accounting rules on business combinations that require us recognize a legal performance obligation related to the revenue arrangements of an acquired entity based on its fair value at the acquisition date. Revenue after traffic acquisition costs (“Revenue excluding TAC”) presents revenue less traffic acquisition costs, reflecting that a portion of our revenue must be directly transferred to publishers or advertisers and presents our revenue as excluding these items.

The purpose of these adjustments is to provide an indication of our performance excluding non-cash charges and other items considered by management to be outside of our core operating results. These non-GAAP measures are among the primary factors used by management in planning and forecasting future periods. In addition, non-GAAP measures are regularly used internally to understand, manage and evaluate our business and to make operational decisions, and we believe they are useful to investors as a consistent and comparable measure of the ongoing performance of our activities. However, our non-GAAP financial measures are not intended to be considered in isolation or as a substitute for comparable GAAP measures and should only be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. In addition, these non-GAAP financial measures may differ materially from non-GAAP financial measures used by other companies. Due to the high variability and difficulty in making accurate predictions and projections of some of the information excluded from these projected measures, as well as some of the excluded information that is not verifiable or accessible, we are unable to quantify certain amounts that would be required for such presentation without unreasonable effort. Accordingly, a reconciliation of non-GAAP forward-looking financial measures is not included.

Forward-looking statements

This press release contains historical information and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to Perion’s business, financial condition and results of operations. The words “will”, “believe”, “expect”, “intend”, “plan”, “should” and similar expressions are intended to identify forward-looking statements, and our preliminary results also constitute forward-looking statements. These statements reflect Perion’s current beliefs, assumptions and expectations regarding future events and are subject to risks and uncertainties. Many factors could cause Perion’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or financial information, including, among others, failure to realize the anticipated benefits of the companies and businesses we have acquired and may acquire in the future, risks relating to the integration of companies and businesses we acquire, including employee retention and customer acceptance; the risk that such transactions will divert management and other resources from ongoing business operations or otherwise disrupt the conduct of such activities, potential litigation associated with such transactions, and general risks associated with Perion’s business, including intense and frequent changes in the markets in which the companies operate and in general economic and business conditions, loss of key customers, unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to achieve efficiency and cost savings, changes in business strategy and various other factors, whether or not referenced in this press release. Various other risks and uncertainties may affect Perion and its results of operations, as described in Perion’s reports filed with the Securities and Exchange Commission from time to time, including its Annual Report on Form 20-F for the fiscal year ended on December 31, 2021 filed with the SEC on March 16, 2022. Perion undertakes no obligation to update these forward-looking statements.

contacts

Dudi Musler

VP Investor Relations

+972 54 787 6785

dudim@perion.com

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PPC pays off R1.2 billion of debt thanks to strong cash generation https://goodwillsavannahga.org/ppc-pays-off-r1-2-billion-of-debt-thanks-to-strong-cash-generation/ Mon, 27 Jun 2022 09:37:00 +0000 https://goodwillsavannahga.org/ppc-pays-off-r1-2-billion-of-debt-thanks-to-strong-cash-generation/

JSE-listed cement maker PPC reported a 19% year-on-year improvement in free cash from operations to R1.2 billion for the year ended March 31.

With the net proceeds from the sale of non-core assets, PPC was able to repay R1.2 billion of its debt during the year under review.

Its debt now stands at 1 billion rand.

During the year, PPC sold its PPC Lime and Botswana Aggregates businesses.

CFO Brenda Berlin said in a June 27 statement that the company’s continued efforts to prudently manage cash and debt have placed it in a strong financial position to navigate all economic cycles.

CEO Roland van Wijnen Told Engineering News that the company was focused on resuming dividends as soon as possible, while building efficiency to help ease inflationary pressures.

Unpacking the main negative impacts on the company’s earnings per share (EPS), which amounted to a loss of 5c for the year under review, compared to EPS of 3c in the previous financial year, he explained that PPC Zimbabwe had suffered a pre-tax loss. of R67 million and that impairments totaled R38 million.

Pre-tax profit from continuing operations decreased by R1.7 billion to R186 million and, excluding the non-cash items mentioned, operating profit from continuing operations would have decreased by R43 million during the year. year under review.

The group’s tax burden for the reporting year was R207 million.

Cash provided by continuing operations before changes in working capital decreased by 3% to R1.5 billion, while tight working capital management led to an increase in cash provided by continuing operations. 6% year-on-year to R1.4 billion.

Regarding PPC Barnet, in the Democratic Republic of Congo, long and binding agreements for the restructuring of the debt of senior lenders were signed on April 19, with all the conditions precedent having been fulfilled on April 29.

“Solvency was restored to PPC Barnet’s balance sheet through the capitalization of quasi-equity and historic deficit financing loans and, after the end of the year, debt restructuring became effective, thus restoring liquidity of the business,” the company explained.

Van Wijnen said cash generation and preservation remains a key performance metric for PPC.

Net cash used in investing activities was reduced to R72 million in the year under review from R392 million in the prior year, mainly due to the receipt of R503 million in cash from the divestment of PPC Lime and Botswana Aggregates offsetting an increase in investment in property, plant and equipment of R186 million.

Net cash inflow before financing activities improved to R973 million in the year under review, which is similar to the prior year’s net cash inflow before financing activities of R972 million.

Total costs, comprising cost of sales plus administration and operating expenses, increased 19% year-on-year to R9.3 billion, driven by an 85% increase in costs of PPC Zimbabwe.

Apart from continued hyperinflation and the 42% depreciation of the Zimbabwean dollar against the rand, the most significant element was an increase in the depreciation charge of PPC Zimbabwe to R386 million, due to the application of the hyperinflating effective depreciation rate method in the current context. year.

Costs, excluding depreciation and PPC Zimbabwe, increased 7% as efficiency gains offset inflation in input costs.

OPERATIONS

Cement sales volumes in the South Africa and Botswana region were in line with the prior year as demand normalized from a high level.

During the year under review, cement sales volumes increased by 5% to 9%.

During the year under review, cement revenues in South Africa and Botswana increased by 4% to R5.4 billion, compared to the previous year, while earnings before interest, taxes , depreciation and amortization decreased by 5% year-on-year to R825 million, mainly due to higher input cost inflation and lower volumes in the second half of the year.

PPC explained that cement sales in the region continued to benefit from demand growth in informal and rural markets, albeit at a normalized pace following the post-Covid-19 lockdown demand spike.

The company remains well positioned to respond to the government’s infrastructure program once it gains momentum, although the company has yet to experience a significant increase in cement sales from this program, with the exception of certain road construction activities.

The company noted a 19% increase in cement and clinker imports into South Africa, mostly from Vietnam, which effectively dumps materials into the country at cheap rates.

PPC estimates that imports account for around 10% of South African cement sales, despite local manufacturing capacity being sufficient to meet demand.

PPC works with other parties within the parameters of applicable competition laws to achieve a prompt outcome.

In terms of aggregates, ready-mixed concrete and cinder, PPC said it experienced strong demand for these materials in the first half of the year, due to an upturn in construction activity; however, higher than usual rainfall dampened demand in the second half.

Sales volumes for the ready-mixed concrete and aggregates businesses increased by 7% and 10%, respectively, in the year under review, while sales volumes for fly ash decreased by 17% from one year to the next.

Overall, the materials division’s revenue increased by 10% to R1.08 billion in the reporting year.

Although trading conditions remain difficult in Zimbabwe, due to the macroeconomic environment, it continues to trade ahead of expectations. During the year under review, PCP cement sales volumes in the country increased by 28% year-on-year.

PPC Zimbabwe’s revenue grew 34% year-on-year to R2.1 billion, driven by buoyant retail demand and support from government-funded projects.

Cement demand also rebounded strongly in Rwanda in the second half of the fiscal year as lockdown restrictions eased further in the country. According to PPC, retail demand, exports and government-funded projects are strong demand drivers in Rwanda.

Cement sales volumes in the country were up 20% year-on-year, while revenues increased 7% to R1.2 billion.

Meanwhile, PPC is making good progress in its decarbonization strategy as capital becomes available for investment. PPC aims to reduce its carbon emissions by 10%, or 76 kg/t of cementitious product, by FY2025.

The company aims to achieve this goal by reducing its clinker factor, increasing its use of alternative fuels and renewable energy, and improving equipment efficiency.

In the year under review, despite only launching its decarbonization strategy in November 2021, PPC has already reduced its clinker factor by 5% year-on-year and reduced its carbon emissions. carbon of approximately 8% of the cementitious product.

“As we execute the next phase of our strategy, we aim to strengthen our leadership position in our key markets, redouble our efforts to improve operational efficiency, optimize financial returns and accelerate decarbonization,” Van said. Wijnen.

]]>
Recent Global Automated Teller Machines (TVM) Market Trends, In-Depth Analysis, Opportunities, Size and Forecast to 2030 – Instant Interview https://goodwillsavannahga.org/recent-global-automated-teller-machines-tvm-market-trends-in-depth-analysis-opportunities-size-and-forecast-to-2030-instant-interview/ Thu, 23 Jun 2022 01:26:54 +0000 https://goodwillsavannahga.org/recent-global-automated-teller-machines-tvm-market-trends-in-depth-analysis-opportunities-size-and-forecast-to-2030-instant-interview/

The Automatic Teller Machines (TVM) market report contains point by point data on factors affecting interest, growth, opportunities, challenges and limitations. It gives detailed data on the design and prospects of global and territorial companies. In addition, the report stores information for research and improvement, new item shipments, reactions to items from global and neighboring trade areas by guiding players. The organized survey offers a graphical representation and schematic breakdown of the Automatic Teller Machines (TVM) market by region.

An in-depth study of key type and application segments has been done in the segmentation section. The authors of the report have provided reliable figures including sales and revenue forecast data by type and application for the period 2018-2030. They also studied how the segments are gaining or losing growth in various geographies and their respective countries. Through this study, readers can get a good grasp of the growth pattern and potential of various segments.

Get the Sample 2022 to 2030 Automated Teller Machine (TVM) Market Research Report: @ https://www.marquismarketreports.com/request-sample/42999

COVID-19 Impact Analysis

We have studied industry patterns with respect to COVID-19. We investigated the effect of COVID-19 on the trade chain of items in light of the upstream and downstream trade sectors. We dissect the effect of COVID-19 on different important places and nations. The effect of COVID-19 on future business improvement is discussed.

Competitive Perspectives

The dossier includes full-scale qualitative and quantitative market records, as well as the research strategies used to acquire numerous conclusions. This Automatic Teller Machines (TVM) The market research document includes a detailed list of major market players in addition to certain data on each company, collectively with industry agency company profile, sales shares, strategic assessment and modern developments

Market Key Players:

Parkeon
Photocopy
Scheidt & Bachmann
Wincor-Nixdorf
Omron
initiate
ICA traffic
IER
DUCATI Energy
Sigma
AEP
Genfare
GRG banking equipment

Segment Analysis: The Automated Teller Machine (TVM) market is segmented on the basis of

By type:

Cash payment type
Payment type other than cash

Per application:

Movie theater
Railway stations
Subway stations
Bus stations
Airport
Others

Key questions

  • What is the appraised value of the Global Automated Teller Machines (TVM) Market?
  • What is the pace of development of the global Automated Teller Machines (TVM) market?
  • What is the gauge size of the Global Automated Teller Machines (TVM) Market?
  • What are the vital organizations in the Global Automated Teller Machines (TVM) Market?

Contents

1 Industry Chain Overview

2 Global Production and Consumption by Geography

Presentation of the 3 main manufacturers

4 Market competition model

5 product type segments

6 End-use segment

7 Market Forecasts and Trends

8 Price and channel

9 Market Drivers and Investment Environment

10 Conclusion of the research

Quick Buy – Automated Teller Machines (TVM) Market Research Report: @ https://www.marquismarketreports.com/buy-now/42999

About Us:

Marquis Market Reports is a leading market research company providing management strategies and market research worldwide. We partner with clients across all industries and geographies to identify their most important opportunities, address their most critical challenges and transform their businesses. Our offerings include comprehensive market information in the form of research reports, production cost reports, feasibility studies and consulting services. Our team, which includes experienced researchers and analysts from various industries, is dedicated to providing high-quality data and insights to our client base, ranging from small and medium-sized businesses to Fortune 1000 companies.

Contact us:

Jacques Martin

responsible for business development

Marquis Market Reports.

USA: +1 978 309 9953

E-mail: [email protected]




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Lument Finance Trust Reports F https://goodwillsavannahga.org/lument-finance-trust-reports-f/ Sat, 18 Jun 2022 22:48:48 +0000 https://goodwillsavannahga.org/lument-finance-trust-reports-f/

NEW YORK, May 9, 2022 /PRNewswire/ — Lument Finance Trust, Inc. (NYSE: LFT) (“we”, “LFT” or “the Company”) today announced its results for the first quarter of 2022. GAAP net income attributable to common shareholders for the quarter was $1.8 millionWhere $0.05 per ordinary share. Distributable profit for the quarter was $1.7 millionWhere $0.05 per ordinary share. The Company has also published a detailed presentation of its results, available at www.lumentfinancetrust.com.

Conference Call and Webcast Information

The Company will also hold a conference call on Tuesday, May 10, 2022at 8:30 a.m. ET to provide a business update and discuss the first quarter 2022 financial results. The conference call can be accessed by dialing 1-888-336-7151 (U.S.) or 1-412-902-4251 (International). ). Note: there is no password; please ask the operator to join the Lument Finance Trust call. A live, listen-only webcast is also available and accessible via the URL:

https://app.webinar.net/Ay2Ln1vjv1O

For those unable to listen to the live stream, a recorded replay will be available for on-demand viewing approximately one hour after the end of the event via the Company’s website https://lumentfinancetrust.com/ and by telephone. The replay dial-in number is 1-877-344-7529 (US) or 1-412-317-0088 (International) with passcode 2306861.

Non-GAAP Financial Measures

In this news release, the Company presents certain financial measures that are not calculated in accordance with generally accepted accounting principles in United States (“GAAP”). Specifically, the Company reports distributable earnings, which is a non-GAAP financial measure within the meaning of Section 10(e) of Regulation SK and constitutes net earnings under GAAP. Although we believe that the non-GAAP information included in this press release provides additional information to help investors analyze our results and to help investors compare our results with those of other peer issuers, these measures are not not in accordance with GAAP and should not be considered a substitute for or superior to our financial information calculated in accordance with GAAP. The methods of calculating non-GAAP financial measures may differ materially from similarly titled measures used by other companies. Our GAAP financial results and reconciliations to those results should be carefully evaluated.

distributable profit

Distributable income is a non-GAAP measure, which we define as GAAP net income (loss) attributable to common shareholders calculated in accordance with GAAP, including realized losses not otherwise included in net income (loss). ) GAAP and excluding (i) – cash stock compensation, (ii) depreciation and amortization, (iii) unrealized gains or losses or other similar non-cash items which are included in net income for the applicable reporting period, whether or not such items are included in other comprehensive income (loss) or net income (loss), and (iv) one-time events as a result of changes in GAAP and certain material non-cash income or expense items after discussions with the Company’s Board of Directors and approved by a majority of the Company’s independent directors. Distributable Earnings reflects how we calculate base earnings in accordance with the terms of our management agreement between our manager and us, or our management agreement, for purposes of calculating the incentive compensation payable to our manager.

Although distributable income excludes the impact of any unrealized provision for credit losses, any loan loss is charged and realized through distributable income when deemed uncollectible. Uncollectibility is determined (i) upon resolution of a loan (i.e. when the loan is repaid, in whole or in part, or in the case of foreclosures, when the underlying asset is sold), or (ii) against any amount due under a loan, when it is determined that such amount is not collectible.

We believe distributable income provides meaningful information to consider in addition to our net income (loss) and cash flow from operating activities determined in accordance with GAAP. We believe that distributable income is a useful financial measure for current and potential future holders of our common shares because historically, over time, distributable income has been a strong indicator of our dividends per common share. As a REIT, we are generally required to distribute at least 90% of our taxable income annually, subject to certain adjustments, and therefore we believe that our dividends are one of the main reasons why shareholders can invest in our shares. ordinary. In addition, distributable earnings help us assess our performance by excluding the effects of certain transactions and GAAP adjustments which we believe are not necessarily representative of our current loan portfolio and operations, and are a measure of performance that we take into account when declaring our dividends.

Distributable income does not represent net income (loss) or cash generated from operating activities and should not be considered an alternative to GAAP net income (loss), or an indication of cash flow from operations. GAAP, a measure of our liquidity or an indication of the funds available for our cash requirements.

Reconciliation between GAAP and distributable earnings

Three months Completed

March 31, 2022

Reconciliation of GAAP information with non-GAAP information

Net income attributable to common shareholders

$1,769,841

Adjustments for non-distributable earnings

Unrealized (gain) on mortgage servicing rights

(147,382)

Total

(147,382)

Other adjustments

Recognized compensation expense related to restricted common shares

4,638

Income Tax Adjustment

51,665

Total

56,303

distributable profit

$1,678,762

Weighted average number of shares outstanding – basic and diluted

36,464,952

Distributable earnings per outstanding weighted share – basic and diluted

$0.05

About LFT

LFT is a Maryland company focused on investing, financing and managing a portfolio of commercial real estate investments. The Company invests primarily in transitional variable rate commercial mortgages, with an emphasis on mid-market multi-family assets.

LFT is externally managed and advised by OREC Investment Management, LLC d/b/a Lument Investment Management, a Delaware limited liability company.

Additional information and where to find it

Investors, security holders and other interested persons may find additional information about the Company on the SEC’s website at http://www.sec.gov/ or the Company’s website www.lumentfinancetrust.com or by directing inquiries to: Lument Finance Trust, 230 Park Avenue, 20th Floor, New York, NY 10169, Attention: Investor Relations.

Forward-looking statements

Certain statements included in this press release, any related webcast/conference call, and other oral statements made by our representatives from time to time may constitute forward-looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties. These forward-looking statements include information about possible or suspected future results of our business, financial condition, liquidity, results of operations, plans and objectives. You can identify forward-looking statements by using words such as “believe”, “expect”, “anticipate”, “project”, “estimate”, “plan”, “continue”, “intend” , “should”, “may”, “will”, “seek”, “would”, “could”, or similar expressions or other comparable terms, or through discussions of strategy, plans or intentions. Statements regarding the following matters, among others, may be forward-looking: return on equity; return on investments; the ability to borrow to finance assets; and the risks associated with investing in real estate assets, including changes in trading conditions and the general economy. Forward-looking statements are based on our beliefs, assumptions and expectations about our future performance, taking into account all information currently available to us as of the date of this press release or the date such statements are first made. time. Actual results may differ from expectations, estimates and projections. You are cautioned not to place undue reliance on any forward-looking statements contained in this press release and/or any related webcast/conference call and should carefully consider the factors described in Part I, Item IA “Risk Factors” in our reports. annual reports on Form 10-K, our quarterly reports on Form 10-Q, and other pending or periodic filings with the Securities and Exchange Commission (“SEC”), when evaluating these forward-looking statements. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. Additionally, many of these risks and uncertainties are currently magnified by and will continue to be magnified by the COVID-19 outbreak or may be magnified in the future. Additional information regarding these and other risk factors is contained in our Annual Report on Form 10-K for the year ended. December 31, 2021available on the Securities and Exchange Commission website at www.sec.gov. Except as required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

favicon.png?sn=NY51158&sd=2022-05-09 View original content to download multimedia: https://www.prnewswire.com/news-releases/lument-finance-trust-reports-first-quarter-results-301543041.html

SOURCE Lument Finance Trust, Inc.

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OPTICAL CABLE CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q) https://goodwillsavannahga.org/optical-cable-corp-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/ Mon, 13 Jun 2022 15:33:04 +0000 https://goodwillsavannahga.org/optical-cable-corp-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/

Forward-looking information




This Form 10-Q may contain certain forward-looking information within the
meaning of the federal securities laws. The forward-looking information may
include, among other information, (i) statements concerning our outlook for the
future, (ii) statements of belief, anticipation or expectation, (iii) future
plans, strategies or anticipated events, and (iv) similar information and
statements concerning matters that are not historical facts. Such
forward-looking information is subject to known and unknown variables,
uncertainties, contingencies and risks that may cause actual events or results
to differ materially from our expectations. Such known and unknown variables,
uncertainties, contingencies and risks (collectively, "factors") may also
adversely affect Optical Cable Corporation and its subsidiaries (collectively,
the "Company" or "OCC®"), the Company's future results of operations and future
financial condition, and/or the future equity value of the Company. Factors that
could cause or contribute to such differences from our expectations or that
could adversely affect the Company include, but are not limited to: the level of
sales to key customers, including distributors; timing of certain projects and
purchases by key customers; the economic conditions affecting network service
providers; corporate and/or government spending on information technology;
actions by competitors; fluctuations in the price of raw materials (including
optical fiber, copper, gold and other precious metals, plastics and other
materials); fluctuations in transportation costs; our dependence on customized
equipment for the manufacture of certain of our products in certain production
facilities; our ability to protect our proprietary manufacturing technology;
market conditions influencing prices or pricing in one or more of the markets in
which we participate, including the impact of increased competition; our
dependence on a limited number of suppliers for certain product components; the
loss of or conflict with one or more key suppliers or customers; an adverse
outcome in any litigation, claims and other actions, and potential litigation,
claims and other actions against us; an adverse outcome in any regulatory
reviews and audits and potential regulatory reviews and audits; adverse changes
in state tax laws and/or positions taken by state taxing authorities affecting
us; technological changes and introductions of new competing products; changes
in end-user preferences for competing technologies relative to our product
offering; economic conditions that affect the telecommunications sector, the
data communications sector, certain technology sectors and/or certain industry
market sectors (for example, mining, oil & gas, military, and wireless carrier
industry market sectors); economic conditions that affect U.S.-based
manufacturers; economic conditions or changes in relative currency strengths
(for example, the strengthening of the U.S. dollar relative to certain foreign
currencies) and import and/or export tariffs imposed by the U.S. and other
countries that affect certain geographic markets, industry market sector, and/or
the economy as a whole; inflation and the ability to recover cost increases;
changes in demand for our products from certain competitors for which we provide
private label connectivity products; changes in the mix of products sold during
any given period (due to, among other things, seasonality or varying strength or
weaknesses in particular markets in which we participate) which may impact gross
profits and gross profit margins or net sales; variations in orders and
production volumes of hybrid cables (fiber and copper) with high copper content,
which tend to have lower gross profit margins; significant variations in sales
resulting from: (i) high volatility within various geographic markets, within
targeted markets and industries, for certain types of products, and/or with
certain customers (whether related to the market generally or to specific
customers' business in particular), (ii) timing of large sales orders, and (iii)
high sales concentration among a limited number of customers in certain markets,
particularly the wireless carrier market; terrorist attacks or acts of war, any
current or potential future military conflicts, and acts of civil unrest; cold
wars and economic sanctions as a result of these activities; changes in the
level of spending by the United States government, including, but not limited to
military spending; ability to recruit and retain key personnel; poor labor
relations; increasing labor costs; delays, extended lead times and/or changes in
availability of needed raw materials, equipment and/or supplies; shipping and
other logistics challenges; impact of inflation or hyperinflation on costs,
including raw materials and labor, and ability to pass along any increased costs
to customers; impact of rising interest rates increasing the cost of capital;
impact of cybersecurity risks and incidents and the related actual or potential
costs and consequences of such risks and incidents, including costs to limit
such risks; the impact of data privacy laws and the General Data Protection
Regulation and the related actual or potential costs and consequences; the
impact of changes in accounting policies and related costs of compliance,
including changes by the Securities and Exchange Commission ("SEC"), the Public
Company Accounting Oversight Board ("PCAOB"), the Financial Accounting Standards
Board ("FASB"), and/or the International Accounting Standards Board ("IASB");
our ability to continue to successfully comply with, and the cost of compliance
with, the provisions of Section 404 of the Sarbanes-Oxley Act of 2002 or any
revisions to that act which apply to us; the impact of changes and potential
changes in federal laws and regulations adversely affecting our business and/or
which result in increases in our direct and indirect costs, including our direct
and indirect costs of compliance with such laws and regulations; rising
healthcare costs; impact of new or changed government laws and regulations on
healthcare costs; the impact of changes in state or federal tax laws and
regulations increasing our costs and/or impacting the net return to investors
owning our shares; any changes in the status of our compliance with covenants
with our lenders; our continued ability to maintain and/or secure future debt
financing and/or equity financing to adequately finance our ongoing operations;
changes in interest rates; the impact of future consolidation among competitors
and/or among customers adversely affecting our position with our customers
and/or our market position; actions by customers adversely affecting us in
reaction to the expansion of our product offering in any manner, including, but
not limited to, by offering products that compete with our customers, and/or by
entering into alliances with, making investments in or with, and/or acquiring
parties that compete with and/or have conflicts with our customers; voluntary or
involuntary delisting of the Company's common stock from any exchange on which
it is traded; the deregistration by the Company from SEC reporting requirements
as a result of the small number of holders of the Company's common stock;
adverse reactions by customers, vendors or other service providers to
unsolicited proposals regarding the ownership or management of the Company; the
additional costs of considering, responding to and possibly defending our
position on unsolicited proposals regarding the ownership or management of the
Company; direct and indirect impacts of weather, natural disasters and/or
epidemic, pandemic or endemic diseases (such as COVID-19) in the areas of the
world in which we operate, market our products and/or acquire raw materials
including impacts on supply chains, labor constraints impacting our production
volumes and costs; any present or future government mandates, travel
restrictions, shutdowns or other regulations regarding any epidemic, pandemic or
endemic diseases; an increase in the number of shares of the Company's common
stock issued and outstanding; economic downturns generally and/or in one or more
of the markets in which we operate; changes in market demand, exchange rates,
productivity, market dynamics, market confidence, macroeconomic and/or other
economic conditions in the areas of the world in which we operate and market our
products; and our success in managing the risks involved in the foregoing.



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We caution readers that the foregoing list of important factors is not exclusive. In addition, we incorporate by reference factors included in current reports on Form 8K and/or our other materials.




Dollar amounts presented in the following discussion have been rounded to the
nearest hundred thousand, except in the case of amounts less than one million
and except in the case of the table set forth in the "Results of Operations"
section, the amounts in which both cases have been rounded to the nearest
thousand.



Overview of the effects of COVID-19




The direct and indirect effects of the COVID-19 pandemic have materially
adversely impacted global economic conditions. Although there has been a trend
in increasing availability of COVID-19 vaccines, as well as an easing of
restrictions on social, business, travel and government activities and
functions, there continue to be uncertainties regarding the future direct and
indirect impacts of the COVID-19 pandemic.  These uncertainties include, but are
not limited to, potential fluctuations in infection rates, changes in federal,
state and local government regulations, supply chain disruptions, labor
availability challenges, increased costs, and economic contractions in various
markets.



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During the second quarter of fiscal year 2022, OCC continued to see its sales,
production volume, and sales order backlog/forward load increase.  Sales order
backlog/forward load continues to be higher than typical levels and product
demand is robust.  At the same time, we continue to experience supply chain
challenges (including availability of materials, increased lead times, and
increased costs) for certain raw materials.  While recently improving, we also
continue to experience challenges recruiting additional personnel.  These
challenges have resulted in longer lead times for certain products as sales
order backlog/forward load has grown, and has impacted shipped product volumes
and sales.  The OCC team has taken steps to successfully mitigate (to a certain
extent) the impacts of these challenges; however, at this time we believe these
challenges will continue.



Each of our three facilities have been open and operating since the beginning of
the COVID-19 pandemic. OCC's workforce was classified a "Defense Industrial Base
Essential Critical Infrastructure Workforce" under guidelines from the U.S.
Department of Defense and an "Essential Critical Infrastructure Workforce" under
guidelines by the U.S. Department of Homeland Security, Cybersecurity and
Infrastructure Security Agency (CISA).



We continue to see positive indicators of future strengthening in many of our
markets. We also continue to see increases in our sales order backlog/forward
load and drawdowns of finished goods inventories to fill incoming orders. We
believe that we will continue to benefit from improvement in our markets during
the remainder of fiscal year 2022; however, we cannot fully anticipate or
reasonably estimate the continuing direct and indirect impacts of the pandemic
on our various markets and customers, including impacts from emerging variants
of COVID-19 in our various markets.



The extent to which the COVID-19 pandemic will directly and indirectly affect
OCC in the future will depend on ongoing developments, which are subject to
uncertainty, including, but not limited to: supply chain and labor constraints
impacting our production volumes and costs; the continued recovery of certain of
OCC's markets; any resurgence of the virus (including its variant strains); the
degree of immunity provided by any current or future vaccines and boosters; any
government mandates, travel restrictions, shutdowns or other regulations related
to COVID-19 impacting the markets in which we operate, market our products
and/or acquire materials; as well as a variety of other unknowable factors. We
cannot fully anticipate or reasonably estimate all the ways in which the current
global health crisis and its direct and indirect effects could adversely impact
our business in the future.


General view of Optical cable company




Optical Cable Corporation (or OCC®) is a leading manufacturer of a broad range
of fiber optic and copper data communication cabling and connectivity solutions
primarily for the enterprise market and various harsh environment and specialty
markets (collectively, the non-carrier markets), and also the wireless carrier
market, offering integrated suites of high quality products which operate as a
system solution or seamlessly integrate with other providers' offerings. Our
product offerings include designs for uses ranging from enterprise network, data
center, residential, campus and Passive Optical LAN ("POL") installations to
customized products for specialty applications and harsh environments, including
military, industrial, mining, petrochemical and broadcast applications, as well
as the wireless carrier market. Our products include fiber optic and copper
cabling, hybrid cabling (which includes fiber optic and copper elements in a
single cable), fiber optic and copper connectors, specialty fiber optic, copper
and hybrid connectors, fiber optic and copper patch cords, pre-terminated fiber
optic and copper cable assemblies, racks, cabinets, datacom enclosures, patch
panels, face plates, multimedia boxes, fiber optic reels and accessories and
other cable and connectivity management accessories, and are designed to meet
the most demanding needs of end-users, delivering a high degree of reliability
and outstanding performance characteristics.



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OCC® is internationally recognized for pioneering the design and production of
fiber optic cables for the most demanding military field applications, as well
as of fiber optic cables suitable for both indoor and outdoor use, and creating
a broad product offering built on the evolution of these fundamental
technologies. OCC is also internationally recognized for pioneering the
development of innovative copper connectivity technology and designs used to
meet industry copper connectivity data communications standards.



Founded in 1983, Optical Cable Corporation is headquartered in Roanoke, Virginia
with offices, manufacturing and warehouse facilities located in Roanoke,
Virginia, near Asheville, North Carolina, and near Dallas, Texas. We primarily
manufacture our fiber optic cables at our Roanoke facility which is ISO
9001:2015 registered and MIL-STD-790G certified, primarily manufacture our
enterprise connectivity products at our Asheville facility which is ISO
9001:2015 registered, and primarily manufacture our harsh environment and
specialty connectivity products at our Dallas facility which is ISO 9001:2015
registered and MIL-STD-790G certified.



OCC designs, develops and manufactures fiber optic and hybrid cables for a broad
range of enterprise, harsh environment, wireless carrier and other specialty
markets and applications. We refer to these products as our fiber optic cable
offering. OCC designs, develops and manufactures fiber and copper connectivity
products for the enterprise market, including a broad range of enterprise and
residential applications. We refer to these products as our enterprise
connectivity product offering. OCC designs, develops and manufactures a broad
range of specialty fiber optic connectors and connectivity solutions principally
for use in military, harsh environment and other specialty applications. We
refer to these products as our harsh environment and specialty connectivity
product offering.



We market and sell the products manufactured at our Dallas facility through our
wholly owned subsidiary Applied Optical Systems, Inc. ("AOS") under the names
Optical Cable Corporation and OCC® by the efforts of our integrated OCC sales
team.



The OCC team seeks to provide top-tier communication solutions by bundling all
of our fiber optic and copper data communication product offerings into systems
that are best suited for individual data communication needs and application
requirements of our customers and the end-users of our systems.



Wholly owned subsidiary of OCC Centric Solutions LLC (“Centric Solutions”) provides cabling and connectivity solutions for the data center market. The Centric Solutions activity is located in the premises of OCC near Dallas, TX.




Optical Cable Corporation™, OCC®, Procyon®, Superior Modular Products™, SMP Data
Communications™, Applied Optical Systems™, Centric Solutions™ and associated
logos are trademarks of Optical Cable Corporation.



Summary of business performance for the second quarter of fiscal 2022

? Consolidated net sales for the second quarter of fiscal 2022 are up

9.3% at $17.2 millioncompared to $15.7 million for the same period last

year. Sequentially, net sales increased 19.1% in the second quarter of the fiscal year

year 2022, compared to net sales of $14.4 million for the first quarter of

    fiscal year 2022.



? The order book/load ahead continues to be higher than usual levels

and product demand is robust. Supply chain and labor constraints impact

    production volumes and costs.



? Gross margin increased by 4.4% for $5.0 million in the second quarter of the financial year

year 2022, compared to $4.8 million for the second quarter of the fiscal year

2021. Sequentially, gross profit increased 24.4% in the second quarter of

financial year 2022, compared to a gross margin of $4.0 million for the first

    quarter of fiscal year 2022.



? Gross profit margin (gross profit as a percentage of net sales) was 29.3%

in the second quarter of fiscal 2022, compared to 30.6% for the

    second quarter of fiscal year 2021.




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? SG&A expenses increased to $5.0 million during the second quarter of the financial year

year 2022 compared to $4.6 million during the second quarter of the financial year

    2021.



? The net loss was $228,000Where $0.03 per share, during the second quarter of the fiscal year

year 2022, compared to the net result of $3.4 millionWhere $0.45 per share, for the

comparable period last year with a $3.4 million Employee retention tax credit

    ("ERTC") reflected as income in the second quarter of fiscal year 2021.



? From April 30, 2022we have had $2.2 million in ERTC still to be reimbursed. We

    received the full amount of the ERTC receivable in May 2022.




Results of Operations



We sell our products internationally and domestically to our customers which
include major distributors, various regional and smaller distributors, original
equipment manufacturers and value-added resellers. All of our sales to customers
outside of the United States are denominated in U.S. dollars. We can experience
fluctuations in the percentage of net sales to customers outside of the United
States and in the United States from period to period based on the timing of
large orders, coupled with the impact of increases and decreases in sales to
customers in various regions of the world. Sales outside of the U.S. can also be
impacted by fluctuations in the exchange rate of the U.S. dollar compared to
other currencies.



Net sales consist of gross sales of products by the Company and its subsidiaries
on a consolidated basis less discounts, refunds and returns. Revenue is
recognized at the time product is transferred to the customer (including
distributors) at an amount that reflects the consideration expected to be
received in exchange for the product. Our customers generally do not have the
right of return unless a product is defective or damaged and is within the
parameters of the product warranty in effect for the sale.



Cost of goods sold consists of the cost of materials, product warranty costs and
compensation costs, and overhead and other costs related to our manufacturing
operations. The largest percentage of costs included in cost of goods sold is
attributable to costs of materials.



Our gross profit margin percentages are heavily dependent upon product mix on a
quarterly basis and may vary based on changes in product mix. To the extent not
impacted by product mix, gross profit margins tend to be higher when we achieve
higher net sales levels, as certain fixed manufacturing costs are spread over
higher sales. Hybrid cables (containing fiber and copper) with higher copper
content tend to have lower gross profit margins.



Selling, general and administrative expenses ("SG&A expenses") consist of the
compensation costs for sales and marketing personnel, shipping costs, trade show
expenses, customer support expenses, travel expenses, advertising, bad debt
expense, the compensation costs for administration and management personnel,
legal, accounting, advisory and professional fees, costs incurred to settle
litigation or claims and other actions against us, and other costs associated
with our operations.


Royalty income (expense), net, includes royalty income earned on licenses associated with our patented products, net of related royalties and expenses.




Amortization of intangible assets consists of the amortization of the costs,
including legal fees, associated with internally developed patents that have
been granted. Amortization of intangible assets is calculated using the
straight-line method over the estimated useful lives of the intangible assets.



Other income (expense), net, includes interest expense and other miscellaneous income and expense items not directly attributable to our operations.

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The following table sets forth and highlights fluctuations in selected line
items from our condensed consolidated statements of operations for the periods
indicated:



                             Three Months Ended                                Six Months Ended
                                  April 30,                Percent                 April 30,                Percent
                            2022             2021          Change            2022             2021          Change
Net sales               $ 17,201,000     $ 15,741,000           9.3 %    $ 31,641,000     $ 27,618,000          14.6 %
Gross profit               5,033,000        4,819,000           4.4 %       9,079,000        7,129,000          27.4 %
SG&A expenses              5,036,000        4,590,000           9.7 %       9,817,000        8,898,000          10.3 %
Net income (loss)           (228,000 )      3,385,000        (106.7 )%     (1,164,000 )      1,244,000        (193.6 )%



Three months completed April 30, 2022 and 2021



Net Sales



Consolidated net sales for the second quarter of fiscal year 2022 increased 9.3%
to $17.2 million, compared to net sales of $15.7 million for the same period
last year. We experienced an increase in net sales in both our enterprise and
specialty markets, including the wireless carrier market, in the second quarter
of fiscal year 2022, compared to the same period last year. Net sales to
customers in the United States increased 19.5%, while net sales to customers
outside of the United States decreased 28.3% in the second quarter of fiscal
year 2022, compared to the same period last year. We can experience fluctuations
in sales from quarter to quarter in the various markets in which we operate for
various reasons.  The decrease in net sales to customers outside of the United
States during the second quarter of fiscal year 2022 compared to the same period
last year was the result of certain specific larger projects for end-users
outside of the United States being sold to customers in the United States for
value-added processing during the second quarter.



Sequentially, consolidated net sales increased 19.1% for the second quarter of
fiscal year 2022, compared to net sales of $14.4 million for the first quarter
of fiscal year 2022.



Our sales order backlog/forward load continues to be higher than typical levels
and product demand is robust with demand for our products increasing during the
second quarter of fiscal year 2022.



Production volumes were tempered (which impacted net sales) during the second
quarter of fiscal year 2022 by supply chain and labor constraints. At this time,
we believe labor constraints are beginning to show signs of easing as we enter
the third quarter of fiscal year 2022.



We believe continuing direct and indirect impacts of the COVID-19 pandemic have
created challenges that are hampering production volumes and sales despite
increasing demand. These include supply chain challenges (availability,
increased lead times and increased costs) for certain raw materials, challenges
recruiting additional personnel to increase production volumes, and other cost
increases. We believe we have taken appropriate actions to mitigate the impact
of these challenges, as well as necessarily implemented prospective price
increases on new sales orders for many of our products. We also believe that we
will continue to see a trend of improving demand for our products. To the extent
the direct and indirect impacts of the COVID-19 pandemic on our customers,
suppliers, workforce and end-users decline, we expect net sales to further
increase.



We are continuing to see some positive indicators of future strengthening in our
markets and believe we will continue to benefit from improvement in our markets
during the remaining six months of fiscal year 2022; however, such anticipated
improvements could be negatively impacted by direct and indirect impacts of the
COVID-19 pandemic and macroeconomic and geopolitical risks.



Gross Profit



Our gross profit was $5.0 million in the second quarter of fiscal year 2022, an
increase of 4.4% compared to gross profit of $4.8 million in the second quarter
of fiscal year 2021. Sequentially, gross profit increased 24.4% in the second
quarter of fiscal year 2022, compared to gross profit of $4.0 million for the
first quarter of fiscal year 2022.



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Gross profit margin, or gross profit as a percentage of net sales, was 29.3% in
the second quarter of fiscal year 2022 compared to 30.6% in the second quarter
of fiscal year 2021.



The lower gross profit margin in the second quarter of fiscal year 2022 when
compared to the same period last year was primarily due to the impact of rapid
inflation causing increases in costs of raw materials for sales orders accepted
prior to raw material cost increases.



Our gross profit margins tend to be higher when we achieve higher net sales
levels due to our operating leverage as certain fixed manufacturing costs are
spread over higher sales, which we believe partially offset the impact of raw
material cost increases during the second quarter of fiscal year 2022. Our gross
profit margin percentages are also heavily dependent upon product mix on a
quarterly basis and may vary based on changes in product mix.



Selling, general and administrative expenses




SG&A expenses increased to $5.0 million during the second quarter of fiscal year
2022, compared to $4.6 million for the same period last year. SG&A expenses as a
percentage of net sales were 29.3% in the second quarter of fiscal year 2022,
compared to 29.2% in the second quarter of fiscal year 2021.



The increase in SG&A expenses during the second quarter of fiscal year 2022
compared to the same period last year was primarily the result of increases in
employee and contracted sales personnel related costs totaling $229,000.
Included in employee and contracted sales personnel related costs are
compensation costs which increased primarily due to commissions which increased
due to the increase in commissionable sales during the second quarter of fiscal
year 2022, new hires (net of terminations), and increases in compensation
expense (including increases in response to changing labor market conditions),
when compared to the second quarter of fiscal year 2021.



Also contributing to the increase in SG&A expenses during the second quarter of
fiscal year 2022 were increases in travel expenses, increases in shipping costs,
and increases in marketing expenses. Both travel and marketing expenses
increased due to the resumption of business travel during the second quarter of
fiscal year 2022 post-COVID-19 restrictions, when compared to the same period
last year.


Royalty revenue (expense), net




We recognized royalty expense, net of royalty income, totaling $7,000 during the
second quarter of fiscal year 2022 compared to royalty income, net of royalty
and related expenses totaling $43,000 during the second quarter of fiscal year
2021. Royalty expense and/or income may fluctuate based on sales of related
licensed products and estimates of amounts for non-licensed product sales, if
any.


Amortization of intangible assets

We recognized $12,000 amortization expense, associated with intangible assets, in the second quarter of fiscal 2022, compared to $11,000
during the second quarter of fiscal 2021.



Other Income (Expense), Net



We recognized other expense, net in the second quarter of fiscal year 2022 of
$212,000, compared to other income, net of $3.1 million in the second quarter of
fiscal year 2021. Other expense, net for the fiscal quarter ended April 30, 2022
is comprised primarily of interest expense together with other miscellaneous
items. The change in other expense, net during the second quarter of fiscal year
2022 was primarily due to the ERTC recognized as other income in the second
quarter of fiscal year 2021. During the second quarter of fiscal year 2021, we
qualified for a refundable payroll tax credit totaling $3.4 million that did not
recur in the second quarter of fiscal year 2022.



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The ERTC, created in the March 2020 CARES Act and then subsequently amended by
the Consolidated Appropriation Act ("CAA") of 2021, the American Rescue Plan Act
("ARPA") of 2021 and the Infrastructure Investment and Jobs Act ("IIJA") of
2021, is a refundable payroll credit for qualifying businesses keeping employees
on their payroll during the COVID-19 pandemic.  Under CAA, ARPA and IIJA
amendments, employers can claim a refundable tax credit against the employer
share of social security tax equal to 70% of the qualified wages (including
certain health care expenses) paid to employees after December 31, 2020 through
September 30, 2021.  Qualified wages were limited to $10,000 per employee per
calendar quarter in 2021 so the maximum ERTC available was $7,000 per employee
per calendar quarter.



OCC is an eligible small employer under the gross receipts decline test when
comparing the first calendar quarter of 2021 to the same quarter in calendar
year 2019, which qualified the Company to claim ERTC in both the first and
second calendar quarters of 2021 under the amended ERTC program.



Profit (loss) before income taxes




We reported a loss before income taxes of $233,000 for the second quarter of
fiscal year 2022, compared to income before income taxes of $3.4 million for the
second quarter of fiscal year 2021. The change was primarily due to the ERTC of
$3.4 million recognized during the second quarter of fiscal year 2021 that did
not recur in the second quarter of fiscal year 2022, and the increase in SG&A
expenses of $447,000, partially offset by the increase in gross profit of
$214,000.



Income Tax Expense (Benefit)



Income tax benefit totaled $5,000 in the second quarter of fiscal year 2022,
compared to income tax expense of $7,000 in the second quarter of fiscal year
2021. Our effective tax rate was 2.2% for the second quarter of fiscal year 2022
and less than one percent for the second quarter of fiscal year 2021.



Fluctuations in our effective tax rates are primarily due to permanent
differences in U.S. GAAP and tax accounting for various tax deductions and
benefits, but can also be significantly different from the statutory tax rate
when income or loss before taxes is at a level such that permanent differences
in U.S. GAAP and tax accounting treatment have a disproportional impact on the
projected effective tax rate.



We previously established a valuation allowance against all of our net deferred
tax assets. As a result of establishing a full valuation allowance against our
net deferred tax assets, if we generate sufficient taxable income in subsequent
periods to realize a portion or all of our net deferred tax assets, our
effective income tax rate could be unusually low due to the tax benefit
attributable to the necessary decrease in our valuation allowance. Further, if
we generate losses before taxes in subsequent periods, our effective income tax
rate could also be unusually low as any increase in our net deferred tax asset
from such a net operating loss for tax purposes would be offset by a
corresponding increase to our valuation allowance against our net deferred tax
assets.



If we generate sufficient income before taxes in subsequent periods such that
U.S. GAAP would permit us to conclude that the removal of any valuation
allowance against our net deferred tax asset is appropriate, then during the
period in which such determination is made, we will recognize the non-cash
benefit of such removal of the valuation allowance in income tax expense on our
consolidated statement of operations, which will increase net income and will
also increase the net deferred tax asset on our consolidated balance sheet. If
we do not generate sufficient income before taxes in subsequent periods such
that U.S. GAAP would permit us to conclude that the reduction or removal of any
valuation allowance against our net deferred tax asset is appropriate, then no
such non-cash benefit would be realized. There can be no assurance regarding any
future realization of the benefit by us of all or part of our net deferred tax
assets. As of October 31, 2021, the valuation allowance against our total gross
deferred tax assets totaled $4.3 million.



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Net Loss



Net loss for the second quarter of fiscal year 2022 was $228,000 compared to net
income $3.4 million for the second quarter of fiscal year 2021. This change was
primarily due to the decrease in income before income taxes of $3.6 million.



Semester completed April 30, 2022 and 2021



Net Sales



Consolidated net sales for the first half of fiscal year 2022 were $31.6
million, an increase of 14.6% compared to net sales of $27.6 million for the
same period last year. We experienced increases in net sales in both our
enterprise and specialty markets, including the wireless carrier market, in the
first half of fiscal year 2022, compared to the same period last year. Net sales
to customers in the United States increased 22.0%, while net sales to customers
outside of the United States decreased 15.0% in the first half of fiscal year
2022, compared to the same period last year. We can experience fluctuations in
sales from quarter to quarter in the various markets in which we operate for
various reasons.  The decrease in net sales to customers outside of the United
States during the first half of fiscal year 2022 compared to the same period
last year was the result of certain specific larger projects for end-users
outside of the United States being sold to customers in the United States for
value-added processing during the second quarter of fiscal year 2022.  Net sales
to customers outside of the United States increased 5.7% in the first quarter of
fiscal year 2022, compared to the same period last year.



As demand for our products continued to increase during the first half of fiscal
year 2022, our sales order backlog/forward load also continued to increase to
higher than typical levels.



Production volumes were tempered (which impacted net sales) during the first
half of fiscal year 2022 by supply chain and labor constraints. At this time, we
believe labor constraints are beginning to show signs of easing as we enter the
third quarter of fiscal year 2022.



We believe continuing direct and indirect impacts of the COVID-19 pandemic have
created challenges that are hampering production volumes and sales despite
increasing demand. These include supply chain challenges (availability,
increased lead times and increased costs) for certain raw materials, challenges
recruiting additional personnel to increase production volumes, and other cost
increases. We believe we have taken appropriate actions to mitigate the impact
of these challenges, as well as necessarily implemented prospective price
increase on new sales orders for many of our products. We also believe that we
will continue to see a trend of improving demand for our products. To the extent
the direct and indirect impacts of the COVID-19 pandemic on our customers,
suppliers, workforce and end-users decline, we expect net sales to further
increase.



We are continuing to see some positive indicators of future strengthening in our
markets and believe we will continue to benefit from improvement in our markets
during the remaining six months of fiscal year 2022; however, such anticipated
improvements could be negatively impacted by direct and indirect impacts of the
COVID-19 pandemic and macroeconomic and geopolitical risks.



Gross Profit



Our gross profit was $9.1 million in the first half of fiscal year 2022, an
increase of 27.4% compared to gross profit of $7.1 million in the first half of
fiscal year 2021. Gross profit margin increased to 28.7% in the first half of
fiscal year 2022 compared to 25.8% in the first half of fiscal year 2021.



Our gross profit margins tend to be higher when we achieve higher net sales
levels due to our operating leverage, as certain fixed manufacturing costs are
spread over higher sales. This operating leverage positively impacted our gross
profit margin during the first half of fiscal year 2022, particularly during the
first quarter of fiscal year 2022. This positive impact during the first quarter
of fiscal year 2022 was partially offset by the impact of increasing costs of
raw materials created by rapidly occurring inflation during the second quarter
for sales orders accepted prior to raw material cost increases. Additionally,
actions that we took in fiscal years 2020 and 2019 contributed to the increase
in our gross profit margin in the first half of fiscal year 2022, resulting in
an improved gross profit margin when compared to the first half of fiscal year
2021. Our gross profit margin percentages are also heavily dependent upon
product mix on a quarterly basis and may vary based on changes in product mix
from quarter to quarter.



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Selling, general and administrative expenses




SG&A expenses increased 10.3% to $9.8 million during the first half of fiscal
year 2022, compared to $8.9 million for the same period last year. SG&A expenses
as a percentage of net sales were 31.0% in the first half of fiscal year 2022,
compared to 32.2% in the first half of fiscal year 2021.



The increase in SG&A expenses during the first half of fiscal year 2022 compared
to the same period last year was primarily the result of increases in employee
and contracted sales personnel related costs totaling $537,000. Included in
employee and contracted sales personnel related costs are compensation costs
which increased primarily due to commissions which increased due to the increase
in commissionable sales during the first half of fiscal year 2022, new hires
(net of terminations), increases in compensation expense (including increases in
response to changing labor market conditions), accrued payroll taxes, and
share-based compensation expense which increased due to the vesting of
operational performance-based restricted stock during the first half of fiscal
year 2022, all when compared to the first half of fiscal year 2021.



Also contributing to the increase in SG&A expenses during the first half of
fiscal year 2022 were increases in travel expenses, increases in shipping costs,
and increases in marketing expenses. Both travel and marketing expenses
increased due to the resumption of business travel during the first half of
fiscal year 2022 post-COVID-19 restrictions, when compared to the same period
last year.


Royalty revenue (expense), net




We recognized royalty expense, net of royalty income, totaling $14,000 during
the first half of fiscal year 2022 compared to royalty income, net of royalty
and related expenses, of $50,000 during the first half of fiscal year 2021.
Royalty income and/or expense may fluctuate based on sales of related licensed
products and estimates of amounts for non-licensed product sales, if any.



Amortization of intangible assets

We recognized $24,000 amortization expense, associated with intangible assets, during the first half of fiscal year 2022, compared to $22,000 during the first half of fiscal year 2021.

Other income (expenses), net




We recognized other expense, net in the first half of fiscal year 2022 of
$382,000, compared to other income, net of $3.0 million in the first half of
fiscal year 2021. Other expense, net for the first half of fiscal year 2022 is
comprised primarily of interest expense together with other miscellaneous items.
The change in other expense, net during the first half of fiscal year 2022
compared to the same period last year was primarily due to the ERTC recognized
as other income in the first half of fiscal year 2021. During the first half of
fiscal year 2021, we qualified for a refundable payroll tax credit totaling $3.4
million.



The ERTC, created in the March 2020 CARES Act and then subsequently amended by
the Consolidated Appropriation Act ("CAA") of 2021, the American Rescue Plan Act
("ARPA") of 2021 and the Infrastructure Investment and Jobs Act ("IIJA") of
2021, is a refundable payroll credit for qualifying businesses keeping employees
on their payroll during the COVID-19 pandemic.  Under CAA, ARPA and IIJA
amendments, employers can claim a refundable tax credit against the employer
share of social security tax equal to 70% of the qualified wages (including
certain health care expenses) paid to employees after December 31, 2020 through
September 30, 2021.  Qualified wages were limited to $10,000 per employee per
calendar quarter in 2021 so the maximum ERTC available was $7,000 per employee
per calendar quarter.



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OCC is an eligible small employer under the gross receipts decline test when
comparing the first calendar quarter of 2021 to the same quarter in calendar
year 2019, which qualified the Company to claim ERTC in both the first and
second calendar quarters of 2021 under the amended ERTC program.



Profit (loss) before income taxes




We reported a loss before income taxes of $1.2 million for the first half of
fiscal year 2022, compared to income before income taxes of $1.2 million for the
first half of fiscal year 2021. The change was primarily due to the ERTC of $3.4
million recognized during the first half of fiscal year 2021, but did not recur
in the first half of fiscal year 2022, and the increase in SG&A expenses of
$919,000, partially offset by the increase in gross profit of $2.0 million.



Income tax expense (benefit)




Income tax expense totaled $8,000 in the first half of fiscal year 2022,
compared to income tax benefit of $26,000 in the first half of fiscal year 2021.
Our effective tax rate was less than negative one percent for the first half of
fiscal year 2022 and negative 2.1% for the first half of fiscal year 2021.



Fluctuations in our effective tax rates are primarily due to permanent
differences in U.S. GAAP and tax accounting for various tax deductions and
benefits, but can also be significantly different from the statutory tax rate
when income or loss before taxes is at a level such that permanent differences
in U.S. GAAP and tax accounting treatment have a disproportional impact on the
projected effective tax rate.



We previously established a valuation allowance against all of our net deferred
tax assets. As a result of establishing a full valuation allowance against our
net deferred tax assets, if we generate sufficient taxable income in subsequent
periods to realize a portion or all of our net deferred tax assets, our
effective income tax rate could be unusually low due to the tax benefit
attributable to the necessary decrease in our valuation allowance. Further, if
we generate losses before taxes in subsequent periods, our effective income tax
rate could also be unusually low as any increase in our net deferred tax asset
from such a net operating loss for tax purposes would be offset by a
corresponding increase to our valuation allowance against our net deferred tax
assets.



If we generate sufficient income before taxes in subsequent periods such that
U.S. GAAP would permit us to conclude that the removal of any valuation
allowance against our net deferred tax asset is appropriate, then during the
period in which such determination is made, we will recognize the non-cash
benefit of such removal of the valuation allowance in income tax expense on our
consolidated statement of operations, which will increase net income and will
also increase the net deferred tax asset on our consolidated balance sheet. If
we do not generate sufficient income before taxes in subsequent periods such
that U.S. GAAP would permit us to conclude that the reduction or removal of any
valuation allowance against our net deferred tax asset is appropriate, then no
such non-cash benefit would be realized. There can be no assurance regarding any
future realization of the benefit by us of all or part of our net deferred tax
assets. As of October 31, 2021, the valuation allowance against our total gross
deferred tax assets totaled $4.3 million.



Net Income (Loss)



Net loss for the first half of fiscal year 2022 was $1.2 million compared to net
income of $1.2 million for the first half of fiscal year 2021. This change was
primarily due to the decrease in income before income taxes of $2.4 million.



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Financial Condition



Total assets increased $3.9 million, or 10.2%, to $41.8 million at April 30,
2022, from $37.9 million at October 31, 2021. This increase was primarily due to
a $2.3 million increase in inventories largely as the result of the timing of
certain raw material purchases and a $2.2 million increase in trade accounts
receivable, net, resulting from the increase in net sales in the second quarter
of fiscal year 2022 when compared to the fourth quarter of fiscal year 2021.



Total liabilities increased $4.9 million, or 31.1%, to $20.6 million at April
30, 2022, from $15.7 million at October 31, 2021. The increase in total
liabilities was primarily due to net borrowings on our Revolver totaling $3.6
million and an increase in accounts payable and accrued expenses totaling $2.0
million primarily resulting from the timing of raw material purchases and
certain vendor payments.



Total shareholders' equity at April 30, 2022 decreased $1.0 million in the first
half of fiscal year 2022. The decrease resulted from a net loss of $1.2 million,
partially offset by share-based compensation, net of $133,000.



Cash and capital resources

Our primary capital requirements have been to fund working capital requirements, make payments on our Revolver, and make principal payments on long-term debt. Our primary source of capital for these purposes has been existing cash, cash provided from operations and borrowings under our Revolver (see “Credit Facilities” below).




Our cash totaled $239,000 as of April 30, 2022, an increase of $107,000 compared
to $132,000 as of October 31, 2021. The increase in cash for the six months
ended April 30, 2022 primarily resulted from net cash provided by financing
activities of $3.2 million, partially offset by capital expenditures totaling
$100,000 and cash used in operating activities of $3.0 million.



On April 30, 2022, we had working capital of $23.6 million compared to $21.4
million on October 31, 2021. The ratio of current assets to current liabilities
as of April 30, 2022 was 3.8 to 1.0 compared to 4.5 to 1.0 as of October 31,
2021. The increase in working capital was primarily due to the increase in
inventories of $2.3 million and the increase in trade accounts receivable, net
of $2.2 million, partially offset by the $2.0 million increase in accounts
payable and accrued expenses. The decrease in the current ratio was primarily
due to the fact that current assets increased $4.5 million, or 16.3%, while
current liabilities increased $2.3 million, or 36.7%.



As of April 30, 2022 and October 31, 2021, we had outstanding loan balances
under our Revolver totaling $7.0 million and $3.5 million, respectively. As of
April 30, 2022 and October 31, 2021, we had outstanding loan balances, excluding
our Revolver, totaling $4.7 million and $4.9 million, respectively.



Net Cash



Net cash used in operating activities was $3.0 million in the first half of
fiscal year 2022, compared to $392,000 for the first half of fiscal year 2021.
Net cash used in operating activities during the first half of fiscal year 2022
primarily resulted from an increase in inventories totaling $2.3 million and the
cash flow impact of increases in trade accounts receivable, net totaling $2.2
million, partially offset by certain adjustments to reconcile a net loss of $1.2
million to net cash used in operating activities including depreciation and
amortization of $569,000 and share-based compensation expense of $238,000.
Additionally, the cash flow impact of increases in accounts payable and accrued
expenses of $1.9 million further contributed to offset net cash used in
operating activities.



Net cash used in operating activities during the first half of fiscal year 2021
primarily resulted from an increase in other receivables totaling $3.4 million
and the cash flow impact of increases in trade accounts receivable, net totaling
$1.1 million, partially offset by certain adjustments to reconcile net income of
$1.2 million to net cash used in operating activities including depreciation and
amortization of $641,000 and share-based compensation expense of $142,000.
Additionally, the cash flow impact of increases in accounts payable and accrued
expenses of $1.5 million further contributed to offset net cash used in
operating activities.



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Net cash used in investing activities totaled $112,000 in the first half of
fiscal year 2022, compared to $105,000 in the first half of fiscal year 2021.
Net cash used in investing activities during the first half of fiscal years 2022
and 2021 resulted primarily from purchases of property and equipment and
deposits for the purchase of property and equipment.



Net cash provided by financing activities totaled $3.2 million for the first
half of fiscal year 2022, compared to $717,000 in the first half of fiscal year
2021. Net cash provided by financing activities in the first half of fiscal year
2022 resulted primarily from net proceeds on our revolving line of credit
totaling $3.6 million, partially offset by principal payments on long-term debt
totaling $161,000. Net cash provided by financing activities in the first half
of fiscal year 2021 resulted primarily from net proceeds on our revolving line
of credit totaling $948,000, partially offset by principal payments on long-term
debt totaling $181,000.



On July 14, 2015, our Board of Directors approved a plan to purchase and retire
up to 400,000 shares of our common stock, or approximately 6.0% of the shares
then outstanding (the "Repurchase Plan"). When the Repurchase Plan was approved,
we had anticipated that the purchases would be made over a 24- to 36-month
period, but there was no definite time period for repurchase or plan expiration.
As of April 30, 2022, we had 398,400 shares remaining to purchase under this
Repurchase Plan, and we have made no specific determination whether and over
what period these shares may or may not be purchased. Until future notice, we
continue to have no current plans to repurchase and retire our common stock and
have suspended the Repurchase Plan.



Credit Facilities



We have credit facilities consisting of a real estate term loan, as amended and
restated (the "Virginia Real Estate Loan"), a supplemental real estate term
loan, as amended and restated (the "North Carolina Real Estate Loan") and a
Revolving Credit Master Promissory Note and related agreements (collectively,
the "Revolver").



Both the Virginia Real Estate Loan and the North Carolina Real Estate Loan are
with Northeast Bank, have a fixed interest rate of 3.95% and are secured by a
first lien deed of trust on the Company's real property.



Our Revolver with North Mill Capital LLC (now doing business as SLR Business
Credit, "SLR") provides us with one or more advances in an amount up to: (a) 85%
of the aggregate outstanding amount of eligible accounts (the "eligible accounts
loan value"); plus (b) the lowest of (i) an amount up to 35% of the aggregate
value of eligible inventory, (ii) $5.0 million, and (iii) an amount not to
exceed 100% of the then outstanding eligible accounts loan value; minus (c) $1.5
million.



The maximum aggregate principal amount subject to the Revolver is $18.0 million.
Interest accrues on the daily balance at the per annum rate of 1.5% above the
Prime Rate in effect from time to time, but not less than 4.75% (the "Applicable
Rate"). In the event of a default, interest may become 6.0% above the Applicable
Rate. As of April 30, 2022, the Revolver accrued interest at the prime lending
rate plus 1.5% (resulting in a 5.0% rate at April 30, 2022). The initial term of
the Revolver is three years, with a termination date of July 24, 2023. After the
initial term and unless otherwise terminated, the loan may be extended in one
year periods subject to the agreement of SLR.



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The Revolver is secured by all of the following assets: properties, rights and
interests in property of the Company whether now owned or existing, or hereafter
acquired or arising, and wherever located; all accounts, equipment, commercial
tort claims, general intangibles, chattel paper, inventory, negotiable
collateral, investment property, financial assets, letter-of-credit rights,
supporting obligations, deposit accounts, money or assets of the Company, which
hereafter come into the possession, custody, or control of SLR; all proceeds and
products, whether tangible or intangible, of any of the foregoing, including
proceeds of insurance covering any or all of the foregoing; any and all tangible
or intangible property resulting from the sale, lease, license or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and all proceeds thereof; and any other assets of the Company which may be
subject to a lien in favor of SLR as security for the obligations under the Loan
Agreement.


From April 30, 2022we have had $7.0 million loans in progress on our Revolver and $3.3 million in available credit.



Capital Expenditures



We did not have any material commitments for capital expenditures as of April
30, 2022. During our 2022 fiscal year budgeting process, we included an estimate
for capital expenditures of $1.5 million for the year. We anticipate these
expenditures, to the extent made, will be funded out of our working capital,
cash provided by operations or borrowings under our Revolver, as appropriate.
Capital expenditures are reviewed and approved based on a variety of factors
including, but not limited to, current cash flow considerations, the expected
return on investment, project priorities, impact on current or future product
offerings, availability of personnel necessary to implement and begin using
acquired equipment, and economic conditions in general. Additionally, capital
expenditures above $750,000 would require approval from our lender.



Business acquisitions and other strategic investments, if any, are considered outside of our annual capital expenditure budgeting process.

Future Cash Flow Considerations




We believe that our future cash flow from operations, our cash on hand and our
existing credit facilities will be adequate to fund our operations for at least
the next twelve months.



From time to time, we are involved in various claims, legal actions and
regulatory reviews arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on our financial position, results of operations or liquidity.



Seasonality



We typically expect net sales to be relatively lower in the first half of each
fiscal year and relatively higher in the second half of each fiscal year, and
excluding other volatility, we would normally expect 48% of total net sales to
occur during the first half of a fiscal year and 52% of total net sales to occur
during the second half of a fiscal year. We believe this historical seasonality
pattern is generally indicative of an overall trend and reflective of the buying
patterns and budgetary considerations of our customers. However, this pattern
may be substantially altered during any quarter or year based on a variety of
factors. While we believe seasonality may be a factor that impacts our quarterly
net sales results, particularly when excluding the volatility of sales in the
wireless carrier market and the volatility of the direct and indirect effects of
the COVID-19 pandemic, we are not able to reliably predict the effects of
seasonality on net sales because these other factors can also substantially
impact our net sales patterns during the year.



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Significant Accounting Policies and Estimates




Our discussion and analysis of financial condition and results of operations is
based on the condensed consolidated financial statements and accompanying
condensed notes that have been prepared in accordance with U.S. generally
accepted accounting principles ("U.S. GAAP") for interim financial information
and the instructions to Form 10­Q and Regulation S­X. The preparation of these
condensed consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the condensed consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.



Note 1 to the consolidated financial statements filed with our Annual Report on
Form 10-K for fiscal year 2021 provides a summary of our significant accounting
policies. Those significant accounting policies detailed in our fiscal year 2021
Form 10-K did not change during the period from November 1, 2021 through April
30, 2022.



New Accounting Standards



There are no new accounting standards issued, but not yet adopted by us, which
are expected to be applicable to our financial position, operating results or
financial statement disclosures.



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GREIF, INC: Results of Operations and Financial Condition, Settlement FD Disclosure, Financial Statements and Exhibits (Form 8-K) https://goodwillsavannahga.org/greif-inc-results-of-operations-and-financial-condition-settlement-fd-disclosure-financial-statements-and-exhibits-form-8-k/ Fri, 10 Jun 2022 21:26:06 +0000 https://goodwillsavannahga.org/greif-inc-results-of-operations-and-financial-condition-settlement-fd-disclosure-financial-statements-and-exhibits-form-8-k/

Item 2.02. Results of Operations and Financial Condition.

On June 8, 2022, Greif, Inc. (the “Company”) issued a press release (the “Results Release”) announcing the financial results for its second quarter ended April 30, 2022. The full text of the earnings release is provided as Exhibit 99.1 to this current report on Form 8-K.

The earnings release included the following non-GAAP financial measures (the “Non-GAAP Measures”):

(i) the net income of the Company, excluding the impact of adjustments, for the second quarter of 2022 and the second quarter of 2021, which is equal to the consolidated net income of the Company for the applicable period plus restructuring charges, plus debt extinguishment, plus integration-related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, plus incremental COVID-19 related costs, net, plus the (gain) loss on disposal of property, plant, equipment and businesses, net gains and land gains, net, each net of tax, non-controlling interests and results of shareholders’ equity of unconsolidated affiliates and on a consolidated basis for the applicable period;

(ii) the earnings per diluted Class A share of the Company, excluding the impact of adjustments, for the second quarter of 2022 and the second quarter of 2021, which is equal to the earnings per diluted Class A share of the Company for the period applicable plus restructuring charges, plus debt extinguishment charges, plus integration-related costs, plus non-cash asset impairment charges, plus non-cash repo settlement charges, plus incremental costs related to COVID-19, net, plus (gain) loss on disposal of fixed assets, plant and equipment and businesses, net gains and property gains, net, each net of tax, non-investment interests the control and result of the shareholders’ equity of the unconsolidated affiliates and on a consolidated basis for the applicable period;

(iii) the Company’s consolidated Adjusted EBITDA for the second quarter of 2022 and the second quarter of 2021, which is equal to the Company’s consolidated net earnings for the applicable period plus interest expense, net, plus debt extinguishment, plus income tax expense, plus amortization, depletion, and impairment charges, plus restructuring charges, plus integration-related costs, plus impairment charges of non-cash assets, plus non-cash pension settlement charges, plus incremental COVID-19 related costs, net, plus (gain) loss on disposal of property, plant, equipment and businesses, net, plus forest capital gains, net, each on a consolidated basis for the applicable period;

(iv) the Company’s consolidated adjusted free cash flow for the second quarter of 2022 and the second quarter of 2021, which is equal to the Company’s consolidated net cash provided by operating activities for the applicable period less cash paid for property, plant and equipment purchases, plus cash paid for integration-related costs, plus cash paid for incremental COVID-19-related costs, net, plus cash paid for systems integration-related enterprise resource planning (“ERP”) plans, plus cash paid for debt issuance costs, each on a consolidated basis for the applicable period;

(v) the net debt of the Company for the second quarter of 2022 and the second quarter of 2021, which is equal to the total consolidated debt of the Company at the end of the applicable period less cash and cash equivalents at the end of the applicable period.

————————————————– ——————————

(vi) net revenue excluding foreign currency translation for Global industrial packaging line of business for the second quarter of 2022 and the second quarter of 2021, which is equal to the net sales of that line of business for the applicable quarter, after adjusting those sales for the second quarter of 2022 to take into account the currency conversion;

(vii) Adjusted EBITDA of the Company’s net income Global industrial packaging line of business for the second quarter of 2022 and the second quarter of 2021, which is equal to operating income for that line of business less other (income) expenses, net, less results of equity of unconsolidated affiliates, net tax, plus depreciation and amortization, plus restructuring charges, plus non-cash asset impairment charges, plus incremental COVID-19 related costs, net, plus (gains) losses on disposal of fixed assets, plants, equipment and businesses, net, each for the applicable period;

(viii) Adjusted EBITDA for Company revenue Paper packaging and services business segment for the second quarter of 2022 and the second quarter of 2021, which is equal to operating income for that business segment less non-cash pension settlement expenses, less other (income) expenses, net , plus amortization expense, plus restructuring charges , plus integration-related costs, plus non-cash pension settlement charges, plus incremental COVID-19 related costs, net, plus (gain) loss on the disposal of property, plant and equipment, plant, equipment and businesses, net, each for the applicable period; and

(ix) the Company’s debt ratio for the second and first quarters of 2022 and the second quarter of 2021, which is equal to the net debt divided by the EBITDA of the last twelve months, each as calculated according to the terms of the Company’s Second Amended and Restated Credit Agreement dated March 1, 2022which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2022.

The earnings release also included the following forward-looking non-GAAP measures:

(i) earnings per Class A share of the Company for fiscal year 2022 before adjustments, which equals earnings per diluted Class A share of the Company for that period plus restructuring charges, plus extinguishment charges of debt, plus integration-related costs, plus debt extinguishment charges, plus non-cash asset impairment charges, plus non-cash pension settlement charges, plus (gain) loss on disposal of fixed assets, plant, equipment and businesses, net, plus gains on forest land, net, each net of tax, non-controlling interests and equity results of unconsolidated affiliates and on a consolidated basis for the applicable period; and

(ii) the Company’s projected adjusted free cash flow guidance for fiscal 2022, which is equal to the Company’s consolidated net cash provided by operating activities for that period, less cash paid for purchases of fixed assets, plus cash paid for integration costs, plus cash paid for ERP systems related to the integration, plus cash paid for debt issuance costs. A reconciliation of this forward-looking non-GAAP financial measure has been included in the earnings release.

No reconciliation of the forward-looking non-GAAP financial measure to the most directly comparable GAAP financial measure for item (i) is included in the earnings release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, as well as some of the excluded information not being verifiable or accessible, the Company is unable to quantify certain amounts that should be included in the GAAP financial measure the most directly comparable without unreasonable effort.

The Company’s management uses non-GAAP measures to evaluate ongoing transactions and believes these non-GAAP measures are useful to investors. Excluding the impact of identified adjustments (restructuring costs, debt extinguishment costs, integration-related costs, non-cash asset impairment charges, non-cash pension settlement costs, additional costs related to COVID-19, net loss and (gain) on disposal of property, plant, equipment and businesses, net) allows management and investors to make meaningful comparisons of the Company’s current and historical performance. The Company’s management also believes that excluding the impact of the identified adjustments provides a stable platform on which to compare the historical performance of the Company and that investors want this information. Management estimates that using consolidated adjusted free cash flow, which excludes cash paid for capital expenditures, integration-related costs, incremental costs related to COVID-19, net, cash paid for integration-related ERP systems and cash paid for company debt issuance costs Consolidated net cash from operating activities, provides additional information to assess the cash flows generated by the Company and believes that it is information that investors find valuable. Non-GAAP measures are intended to supplement and should be read in conjunction with our financial results. Non-GAAP measures should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on non-GAAP measures.

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Section 7.01. FD Regulation Disclosure.

i. Transcript of the conference call

On June 9, 2022the Company’s management held a conference call with interested investors and financial analysts (the “Conference Call”) to discuss the Company’s financial results for its second quarter ended April 30, 2022. The transcript of the conference call record is provided as Exhibit 99.2 to this current report on Form 8-K.

Section 9.01. Financial statements and supporting documents.

(d)Exhibits.
Exhibit No.       Description
  99.1            Press release issued by Greif Inc. on June 8, 2022 announcing the financial
                  results for its second quarter ended April 30, 2022.
  99.2            File transcript of conference call with interested investors and financial
                  analysts held by management of Greif Inc. on June 9, 2022.

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Giving and Local Government: The Basics of Giving and Receiving https://goodwillsavannahga.org/giving-and-local-government-the-basics-of-giving-and-receiving/ Thu, 02 Jun 2022 16:01:14 +0000 https://goodwillsavannahga.org/giving-and-local-government-the-basics-of-giving-and-receiving/

June 2, 2022
by

Eric Lowell



Category:

Financial report
,
Donation of public funds


MRSC receives a number of questions each year regarding donations to and from local governments. This blog will look at two big questions: how a local government can receive donations and how a local government can donate – without violating the ban on donating public funds.


Receive donations


Local governments in Washington State are permitted to receive donations. For example, RCW 35.21.100 states:


Each city and town may, by ordinance, accept any sum of money or property given to it, bequest or bequest and execute the terms of the gift, bequest or bequest, if within the powers granted by law. If no term or condition is attached to the gift, will or bequest, the city or town may spend it or use it for any municipal purpose.


Although there is no similar legislative provision for counties, counties nevertheless have the inherent power to accept donations.


In general, special purpose districts may also accept donations (see, for example, RCW 70.44.060(1), which authorizes public hospital districts to accept donations). However, how special purpose districts may receive these donations may differ (for example, the Board of Harbor Commissioners must approve donations of real and personal property, per RCW 53.08.110).


Receiving gifts raises a host of issues, most commonly policies and procedures, reporting, and how to handle gifts with requirements. Let’s look at each.


Reporting requirements


A common question is whether or not donations to a local government are tax deductible. The IRS code at 26 USC §170(c)(1) states that a donation is tax deductible when it is intended for:


A state, possession of the United States, or any political subdivision of any of the aforementioned states, or the United States or the District of Columbia, but only if the contribution or donation is made for exclusively public purposes.


Note that the donation must be for “public purposes”, so it must not be intended to benefit any particular individual or group.


Additionally, the IRS requires certain documentation of the donation, as explained in Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. As noted on page four, if a donor wishes to claim a tax deduction for a donation to a local government that exceeds $250, the donor must obtain a written acknowledgment from the local government that contains the following:


  1. the name of the organization

  2. the amount of the cash contribution

  3. a description (but not the value) of the non-monetary contribution

  4. a statement that no goods or services were provided by the organization in exchange for the contribution, if any

  5. a description and good faith estimate of the value of the goods or services, if any, that an organization provided in exchange for the contribution


However, it is not necessary to include the donor’s social security number or tax identification number on the written acknowledgment.


Policies and Procedures


A best practice is for local governments to develop a donation acceptance policy and include any limitations on donations. The Town of Lakewood is accepting donations as follows:


The City may only accept and use donations for purposes related to the powers conferred on it by law. Any donation to the City that is accompanied by a contingency, term or condition on the use by the City of such donation that is inconsistent with this chapter or contrary to law must be refused by the city. The City may refuse to accept any donation that is inconsistent with the policies, plans, objectives or any other ordinance of the City.


What to do when gifts come with restrictions


If the donation is unrestricted, it can be used for any municipal purpose. However, some cash gifts, such as a bequest, may have requirements on how the funds can be spent.


If a local government accepts a donation with requirements for how the funds are to be spent, then the donation must be spent for that purpose. If the local government is unable to spend the funds for this purpose, it must reject the donation.


Note: For financial reporting purposes, all unspent donations at the end of the year with restrictions would be reported in the restricted year-end fund balance.


This covers the basics of accepting donations. Some local governments seek partnerships with businesses and communities to sponsor community programs, events and facilities as part of their business plans for funding. For examples of sponsorship/naming policies adopted by local governments, visit our Corporate Sponsorship and Naming Policies webpage.


To make donations


In general, local governments are not allowed to donate public funds. Article 8, Section 7 of the Washington State Constitution prohibits any local government entity from giving a gift or lending money, property, or the credit of the entity to any private party. Article 7 authorizes the use of public funds to provide “necessary support to the poor and infirm”. An example would be utility assistance programs that offer reduced payments or rates to low-income customers or people with disabilities.


In addition to supporting the poor and infirm, a donation from a local government should meet certain criteria. The courts have used a two-step process to determine whether or not a local government granted a donation of public funds. First, they will look to see if the funds were used to achieve a fundamental government objective. If the answer is yes, then there was no donation of public funds. Second, the courts will determine whether the government “intended to give” and whether it received an adequate return for any transfer of funds. Visit the MRSC Donation of Public Funds webpage for a more in-depth analysis of this constitutional prohibition.


Use of surplus


Many local governments may run into a problem donating public funds when donating surplus property. Local governments should put in place procedures and policies on surpluses and ensure that adequate care is taken to avoid donating surplus. In some cases, excess items will have de minimis or no cash value. The local government could probably justify donating such items if it includes certain steps as part of the surplus process. For example, the governing body should declare these items surplus and include a description that demonstrates the items have little or no value (e.g. obsolete, obsolete, broken, etc.)


In 2014, the town of White Salmon was getting rid of old, outdated tasers. The resolution for the surplus tasers notes that the city will donate the batteries and taser holsters to Skamania County, and explains the rationale: the county was still using the same model of surplus taser, so the city decided to donate the cases and batteries as spares. The city was able to justify donating these coins since the county is another local government and citizens of the city receive services from the county on occasion. As such, there was no issue of donating public funds.


In conclusion


Local governments should have policies and procedures in place for receiving and giving donations. The implications of accepting or donating should be considered. Proper procedures for donations must be followed to avoid a problem with donating public funds.


MRSC is a private, nonprofit organization serving local governments in Washington State. Eligible Washington State government agencies can use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

About Eric Lowell

Eric Lowell joined MRSC in December 2020 as a financial consultant. He has been involved in local government finance for over 13 years, including municipal government as well as a special purpose district.

Eric holds a BA in Secondary Education from Arizona State University and a BS in Accounting from Central Washington University.

SEE ALL MESSAGES BY Eric Lowell

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S Immo: Good operational performance in the first quarter https://goodwillsavannahga.org/s-immo-good-operational-performance-in-the-first-quarter/ Mon, 30 May 2022 05:56:01 +0000 https://goodwillsavannahga.org/s-immo-good-operational-performance-in-the-first-quarter/
  • Net income for the period increases by 143% compared to the previous year to reach 24.1 million euros
  • EPRA NAV increases to EUR 29.31 per share
  • EBIT up 12.0% to €20.4 million
  • Significant improvement in gross profit from hotel operations to 1.3 million euros
  • Revenues increase by around 33% to 57.0 million euros

The listed real estate investment company S IMMO AG again achieved a strong operational performance in the first quarter of 2022. Bruno Ettenauer, CEO of S IMMO AG, commented on the results: “Although we would have liked a better start year, the first quarter was relatively spared the effects of the war in Ukraine and the start of the reversal in interest rates. With sales up around 33%, we once again succeeded to bring the net result for the period to 24.1 m This corresponds to an increase of more than 140% compared to the previous year, which is explained not only by good operational performance, but also by the effects of valuation and non-recurring effects The current environment presents us with many challenges, but we believe that we are very well equipped thanks to our quality and diversified portfolio, our proven business model and our financial structure. extremely stable carrier.”

Marked increase in revenue and gross margin

In the first quarter, the operating result increased significantly and the gross profit increased by approximately 28% to 29.8 million euros. In conjunction with non-cash valuation effects in the financial and tax result, a significant increase in profit for the period was achieved for the first quarter. Revenues increased by around 33% to €57.0 million (Q1 2021: €43.0 million). This change is explained on the one hand by the increase in rental income and income from operating expenses and on the other hand by the increase in income from hotel operations.

Rental income increased by around 12% compared to the same period last year and amounted to EUR 35.8 million (Q1 2021: EUR 32.0 million). Property management expenses increased to €19.7 million (Q1 2021: €18.3 million), partly because the number of rental properties increased. Including the income from hotel operations, the gross profit therefore amounts to 29.8 million euros (Q1 2021: 23.2 million euros). This corresponds to an increase of approximately 28% compared to the same period of the previous year.

Significant improvement in hotel gross operating margin

Revenues from hotel management increased significantly compared to the first quarter of 2021 and amounted to 9.2 million euros (Q1 2021: 1.9 million euros). Gross profit from hotel activities improved to €1.3m (Q1 2021: -€1.3m), reflecting in particular the less severe restrictions related to the pandemic compared to the previous year.

Significantly higher net income for the period

Although the real estate valuation result amounted to -0.7 million EUR (Q1 2021: 2.5 million EUR) in the first quarter of 2022, the EBIT increased by approximately 12% to reach EUR 20.4 million (Q1 2021: EUR 18.2 million).

The financial result improved to a net result of 1.7 million euros (Q1 2021: -5.4 million euros), mainly due to positive valuations of derivatives. Due to a one-off effect in the area of ​​deferred taxes related to the eco-social tax reform, the total tax charge improved from -2.9 million EUR to 2.0 million EUR. As a result of these effects, the net income for the period increased by more than 140% to reach 24.1 million euros in the first quarter of 2022.

Capital market

In an environment dominated by uncertainties where the international indices were almost continuously in the red, the S IMMO share performed well and closed the first quarter at a price of 22.15 EUR and a performance since the start of the year of 1.84%. The EPRA NAV per share amounts to 29.31 per share at the end of the first quarter of 2022.

Focus on core business

Although geopolitical developments and events surrounding the COVID-19 pandemic are beyond the influence of S IMMO AG, they are closely monitored and the company’s strategies are adapted if necessary. After the successful sale of the 12.69% stake in IMMOFINANZ AG at the start of the year, S IMMO believes that it has a comfortable cash cushion for the coming months. The focus is again fully on the core business of acquiring, leasing and managing profitable properties in order to strengthen long-term cash flow. Along with the acquisition of other prominent properties, such as BudaPart Gate in Budapest at the end of 2021 and the planned closure of EXPO Business Park in Bucharest in the second quarter of 2022, the possibility of recognizing part of the strong valuation result in the German residential portfolio is under review. Herwig Teufelsdorfer, CIO of S IMMO AG, said: “The geographic diversification of our portfolio has proven to be extremely crisis-resistant, which is why we want to keep it in the same constellation as in the past. At the same time, we are considering investment opportunities in the Austrian market, which has been very stable lately.”

Update on CPI Property Group’s takeover bid

S IMMO’s shareholding was further strengthened in the first quarter of 2022. On April 14, 2022, CPI Property Group SA, which now holds 42.55% of the capital, requested the convening of an Extraordinary General Meeting to decide on removal of the right to vote. cap. With regard to the mandatory offer that CPI intends to announce to the shareholders of S IMMO after the registration of the amendment of the articles of association in the Austrian commercial register, we were able to negotiate an increase in the offer price from EUR 22.00 to EUR 23.50. We consider the granting of a right of withdrawal at the price of 23.50 euros as a fair consideration for the removal of the voting right ceiling. The proposal to remove the cap on voting rights will be voted on under item 1 of the agenda at the General Meeting of S IMMO on June 01, 2022.

Outlook for 2022

In addition to the ongoing pandemic, the first quarter of 2022 has been shaped by several events that will largely determine the course of the rest of the year, and at this point it remains to be seen how they will evolve going forward. . Friedrich Wachernig, COO of S IMMO AG, explained: “The war in Ukraine and the ongoing interest rate recovery since the first quarter have created a significantly more uncertain environment than at the end of 2021 in many respects. We have the advantage of being in a very stable position in terms of financing. The cash and cash equivalents generated by the profitable sale of IMMOFINANZ AG shares at the start of the year allow us to wait for favorable market phases and to exploit opportunities at the right time.”

Consolidated income statement for the period 01 January 2022 – 31 March 2022

in millions of EUR / fair value method

01-03/2022

01-03/2021

Revenue

57.0

43.0

of which rental income

35.8

32.0

of which revenue from operating expenses

12.0

9.1

of which hotel operating income

9.2

1.9

Other exploitation products

0.5

1.7

Expenses directly attributable to buildings

-19.7

-18.3

Hotel running costs

-8.0

-3.2

Gross profit

29.8

23.2

Proceeds from real estate disposals

0

0

Book value of assets sold

0

0

Capital gains or losses on real estate disposals

0

0

Management fees

-6.3

-5.1

EBITDA

23.5

18.1

Depreciation and amortization

-2.4

-2.4

Real estate valuation results

-0.7

2.5

Operating result (EBIT)

20.4

18.2

bottom line

1.7

-5.4

Net income before tax (EBT)

22.1

12.8

Income taxes

2.0

-2.9

Net income for the period

24.1

9.9

of which attributable to shareholders of the parent company

24.04

9.9

of which attributable to non-controlling interests

0.05

0.02

Earnings per share (in EUR)

0.34

0.14

Download P&L Q1 2022

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Troika Media Group Reports Third Quarter of Fiscal 2022 https://goodwillsavannahga.org/troika-media-group-reports-third-quarter-of-fiscal-2022/ Tue, 24 May 2022 15:40:53 +0000 https://goodwillsavannahga.org/troika-media-group-reports-third-quarter-of-fiscal-2022/

Revenue increased 307% quarter over quarter to $15.7 million.

The acquisition of Converge Direct, which closed on March 22, 2022, contributed $10.0 million to the company’s total revenue in just 10 days through the end of the third quarter.

As of March 31, 2022, the Company had $42.4 million of free cash on its balance sheet and expects strong revenue growth to continue in fiscal 2022.

The implementation of the new integrated group business strategy and operational restructuring of the company is underway with a new CEO and management team to deliver more efficient business operations and resilient revenue growth.

Los Angeles, CA, May 24, 2022 (GLOBE NEWSWIRE) — via NewMediaWire — Troika Media Group, Inc. (Nasdaq: TRKA) (“TMG” or “Company”), a transformational business solutions partner providing construction and brand enablement, technology and innovation, and performance marketing growth for global enterprises, today announced financial results for its fiscal 2022 third quarter ended March 31, 2022. Management will host a conference call to discuss these results and other reorganization updates after the company soon files with the Securities and Exchange Commission (SEC) the audited financial results of Converge Direct, LLC (“Converge”). ) and its affiliates for the years ended December 31, 2021, 2020 and 2019.

Third Quarter and Current Year Financial and Operational Highlights

  • Revenue increased 307% to $15.7 million in Q3 2022, compared to the prior year quarter.
  • The acquisition of Converge, which closed on March 22, 2022, contributed $10.0 million to total third quarter 2022 revenue (a 10-day revenue period included in the company’s third quarter ).
  • As of March 31, 2022, the Company had $42.4 million of free cash on its balance sheet and expects strong revenue growth to continue in fiscal 2022.
  • New business demand across all solution groups continues to build momentum in Q4 2022, with a growing number of new customers and diversified industries.

Management commentary

“We are pleased with the 307% increase in revenue in the third quarter of 2022 compared to the prior year quarter. The performance is indicative of the continued recovery of core branding and activation business post Covid, and a very small example of the impact the acquisition of Converge is expected to have on the company’s revenue once we are able to include a full quarter of Converge’s performance,” said Sid Toama, who was appointed CEO of TMG on May 19, 2022. “Demand for Troika’s performance-driven solutions for brand building, activation and marketing innovations is increasing. Business intelligence and acquisition capabilities of Converge customers will be an exciting addition to TMG’s new integrated business strategy and ultimately its revenue opportunities.

Mr. Toama added, “TMG is at an important point in its transformation following the acquisition of Converge; we are optimizing the organizational structure and functions designed to provide a scalable and more profitable business model. The plan is to leverage the company’s historic acquisitions to create an integrated group of attractive and profitable performance-driven business solutions powered by globally integrated business functions The changes we have made and are continuing to make bring should save significant long-term costs and accelerate TMG’s unified business, while continuing to build on Converge’s proven operating and business model.

Summary results for the third quarter of fiscal 2022 (GAAP)

Revenue for the three months ended March 31, 2022 and 2021 were $15.7 million and $3.9 million, respectively, an increase of approximately $11.8 million or 307%. This increase is mainly attributable to the acquisition of Converge, which closed on March 22, 2022, and the recognition of revenue of approximately $10.0 million. The remaining balance of approximately $1.8 million of revenue is attributable to TMG’s integrated brand and engagement solutions, which benefited from the generation of new business from UK and US-based subsidiaries after the COVID.

Operating expenses for the three months ended March 31, 2022 and 2021 were $17.6 million and $7.5 million, respectively, an increase of $10.1 million or 134.1%. The $10.1 million increase in operating costs is primarily related to one-time charges related to stock incentive plans of $8.1 million and one-time expenses in the form of professional fees associated with the acquisition of Converge of $2.4 million.

Operating loss for the three months ended March 31, 2022 was $13.7 million, an increase of $8.1 million over the prior year period. The increase is mainly attributable to the increase in operating expenses of $10.1 million and the increase in cost of products of $9.8 million partially offset by the increase in revenue of $11.8 million. millions of dollars.

Summary results for the third quarter of fiscal 2022 (Non-GAAP)*

Quarter ended March 31
2022 2021
Non-GAAP measures (unaudited):
Net loss $ (14,388,000) $ (4,679,000)
Acquisition fees and related professional fees 2,658,000
Depreciation and amortization 429,000 574,000
Interest expense, net 100,000
Bad Debt Expenses 85,000
Stock-based compensation expense 9,901,000 2,698,000
Legal settlement 59,000 47,000
Adjusted EBITDA $ (1,156,000) $ (1,360,000)

* Please refer to the “Non-GAAP Financial Measures” section below for a description of these measures.

Definitions

Adjusted EBITDA is defined as net income (net loss), excluding interest income; interest charges; other net income (expenses); income tax benefit (expense); depreciation and amortization; stock-based compensation expense and other payroll tax expense; and certain other non-cash or non-recurring items affecting net income (loss) from time to time.

Note: For adjustments and additional information regarding non-GAAP financial measures and other items discussed, please see “Non-GAAP Financial Measures”, “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures “.

About Troika Media Group

TMG is a transformational business solutions partner based in New York, Los Angeles and London. We deliver resilient brand equity, amplifying brands through emerging technologies and transcending them in culture to deliver performance-driven business growth. Troika’s expertise lies in the consumer products and services, entertainment and media, sports and sports betting, finance and professional, education and esports and gaming industries. Our clients include Apple, Hulu, Riot Games, Belvedere Vodka, Unilever, UFC, Leaf Home, AT&T, Andersen Windows, Peloton, CNN, HBO, ESPN, Wynn Resorts and Casinos, Tiffany & Co., IMAX, Netflix, Sony, Yahoo and Coca-Cola. For more information, visit www.thetmgrp.com.

Forward-looking statements

Certain statements in this press release that are not historical facts are forward-looking statements that reflect management’s current expectations, assumptions and estimates regarding future performance and economic conditions, and involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. Forward-looking statements are generally identifiable by the use of forward-looking words such as “believes”, “expects”, “may”, “hopes”, “will”, “should”, “plans”, “has intent to”, “provided”, “target”, “see”, “potential”, “estimates”, “preliminary” or “anticipate” or the negative thereof or comparable terminology, or through a discussion of the strategy or objectives or other future events or circumstances, or effects. Additionally, forward-looking statements contained in this release include, but are not limited to, the impact of the current COVID-19 pandemic, which may limit access to facilities, customers, management, personnel of support and professional advisors to the Company, and to develop and provide advanced voice and data communications systems, demand for the Company’s products and services, economic conditions in the United States and around the world, including the effects of the war in Ukraine, and the Company’s ability to recruit and retain management, technical and sales personnel or fully integrate the Converge business. Further information regarding factors that could affect the Company’s results and forward-looking statements is disclosed in the Company’s filings with the SEC. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company disclaims any intention or obligation, other than required by law, to update or revise any forward-looking statement, whether either as a result of new information, future events or otherwise

Contact with Investor Relations:

TraDigital IR

Kevin McGrath

+1-646-418-7002

kevin@tradigitalir.com

]]> Petco Health and Wellness: An Attractive Prospect for Pet Lovers https://goodwillsavannahga.org/petco-health-and-wellness-an-attractive-prospect-for-pet-lovers/ Sun, 22 May 2022 14:36:00 +0000 https://goodwillsavannahga.org/petco-health-and-wellness-an-attractive-prospect-for-pet-lovers/

FatCamera/E+ via Getty Images

Every dedicated pet owner understands that your pet becomes part of your family. And just like you would with a family member, you want to make sure your pet has everything it needs. in order to live a happy, long and productive life. Today, there are a few publicly traded companies that are dedicated to making this goal a reality. Such a company is Health and wellness company Petco (NASDAQ: WOOF). Over the past several years, the management team at Petco Health and Wellness has been very successful in growing the company’s revenue. Overall performance, while mixed, was also generally positive. At first glance, the stock might look slightly expensive from an earnings perspective if we use 2021 data. But when we look at projections for 2022, the company looks quite affordable. There is some concern about the economy in general, as well as an intensification of competition from Amazon (AMZN). But as long as the company continues to achieve the kind of performance it has, the upside could be attractive.

A company focused on pets

Operationally, Petco Health and Wellness has been around for over 55 years. But over the past few years, the company has really worked to transform itself from a traditional retailer into an omnichannel provider of pet health and wellness offerings. Today, the company provides more than 24 million active customers with a diverse and differentiated portfolio of products and services aimed at optimizing the health and well-being of companion animals. These products and services are available at more than 1,500 pet care centers across the United States, Mexico and Puerto Rico. The company also has a digital channel through which offers are provided.

The service offerings provided by the company include veterinary care, pet grooming and training. The company achieves this, in part, through the more than 1,000 weekly mobile clinics it runs in the regions where it operates. The company also operates 197 full-service veterinary hospitals, with plans to expand these to around 900 at some point in the distant future. In addition to this, the company offers what it calls its Vital Care Membership Program. This program costs $19.99 per month and includes benefits such as 20% off each pet groomer, 10% off all nutritional products, additional 5% off nutritional products if you register for repeat delivery, $20 off pet boarding, dog walking, or pet sitting services, $15 Pals rewards each month, and unlimited routine vet exams at all Vetco Total locations Care. Customers can also join the company’s Pal Rewards loyalty program for free.

Petco Health and Wellness Historical Financial Data

Author – SEC EDGAR Data

Over the past few years, the management team at Petco Health and Wellness has had a strong track record in growing the company’s revenue. Sales grew from $4.39 billion in 2018 to $5.81 billion in 2021. The strongest growth for the company came from 2020 to 2021, when sales soared 18% from one year to the next. Interestingly, this sales growth from 2020 to 2021 came at a time when the number of pet care centers the company owns in the United States and Puerto Rico increased from 1,454 to 1,433. Instead, the company really benefited from two things. First, it experienced an 18.9% increase in comparable sales. This is on top of the company’s 11.4% increase in comparable sales from 2019 to 2020. Second, the company has seen the number of veterinary practices it operates grow, from 125 to 197. The company’s strongest growth for the year came in the services and other category, where revenue jumped an impressive 43.2% thanks in large part to growing activity at veterinary hospitals across the country. company and the arrival of additional pets in its network. By comparison, supplies and pets saw more modest growth of 11.8%, while consumables sales jumped 19.3%.

During the same four-year window, the company’s net profits improved significantly. The company went from a net loss of $413.8 million in 2018 to a profit of $164.4 million last year. Operating cash flow also generally increased from $203.2 million in 2018 to $358.2 million in 2021. If we adjust for changes in working capital and non-cash lease costs, the he improvement was even greater, with the measure moving from minus $226.6 million to positive $411.4 million. Meanwhile, the company’s EBITDA also increased from $349.2 million to $448.9 million.

Looking to fiscal 2022, management has high expectations for the business. Revenue is expected to be between $6.15 billion and $6.25 billion. The company also expects adjusted earnings per share to be between $0.97 and $1. Halfway through, that would imply a net income of $263 million. Additionally, EBITDA is expected to be between $630 million and $645 million. If we assume that adjusted operating cash flow will grow at the same rate, it should be around $584.2 million for the year.

WOOF Stock Trading Multiples

Author – SEC EDGAR Data

By taking this data, we can easily evaluate the company. Using our 2021 results, we can see that the company is trading at a price/earnings multiple of 26.4. That drops to 16.5 if management’s forecast for the year is correct. The price to adjusted operating cash flow multiple is expected to be 10.5, a figure that is expected to drop to 7.4 using 2022 estimates. And the EV/EBITDA multiple is expected to be 12. ,9. This should eventually drop to 9.1 if management forecasts are correct. To put the company’s pricing into perspective, I compared it to five other pet-focused companies. On a price/earnings basis, only three of these companies had a positive result, with multiples ranging from 15.4 to 2,198. Using our 2021 and 2022 results, two of the three companies were cheaper than Petco Health and Wellness . Using the price/operating cash flow approach, the range for these companies was 11.3 to 6,962. Whether we used 2021 or 2022 numbers, our prospect was the cheapest of the bunch. Finally, using the EV to EBITDA approach, the range was 10.6 to 3,813. Using 2021 data, two of the five companies were cheaper than our target. And using 2022 estimates, our prospect was the cheapest.

Company Prizes / Earnings Price / Operating Cash EV / EBITDA
Health and wellness company Petco 26.4 10.5 12.9
Fluffy (CHWY) 2,198 52.5 285.4
Freshpet (FRPT) N / A 6,962 3,813
Central Garden & Pet Co (CENT) 15.4 23.4 10.6
Pet Med Express (PETS) 19.0 21.7 11.0
PetIQ (PETQ) N / A 11.3 17.2

Right now, the company’s stock looks quite attractive on a forward-looking basis. However, there are broader concerns about the state of the economy, and one of the first areas where people will cut spending on pets. However, the company continued to increase revenue during the pandemic. So I don’t see the impact there being that big. Perhaps the biggest concern for investors is the fact that Amazon recently held its first-ever Pet Day event, with deals on pet, home, and electronics products. Prime members were eligible for 10% cash back on pet products, and the company sold approximately 240 different SKUs in key items across all categories at an average discount of 26%. Some of these products were sold at discounts of up to 40%. Truth be told, it’s too early to tell if there will be any long-term damage for companies like Petco Health and Wellness. But with an addressable market of $119 billion, there’s likely plenty of room for multiple winners.

Take away

Based on the data provided, Petco Health and Wellness appears to be a truly quality company that is doing well in growing its revenue and bottom line. I understand there are short-term concerns about the company. But in the long run, I suspect the company will do just fine. Interestingly, the company is expected to release its financial results covering the first quarter of its fiscal 2022 on May 24. Investors should pay close attention to this and see what type of revisions, if any, might need to be made to management guidance. But in the absence of a significant shift in expectations, I think the company offers attractive opportunities for value investors.

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