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Clarivate Reports Third Quarter 2024 Results

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1 year ago

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LONDON, Nov. 6, 2024 /PRNewswire/ — Clarivate Plc (NYSE: CLVT) (the “Company” or “Clarivate”), a leading global provider of transformative intelligence, today reported results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial Highlights

Revenues of $622.2 million decreased 3.9%Organic revenues decreased 2.6%, as an increase in subscription revenues of 0.6% was offset by a decrease in re-occurring revenues of 1.1% and transactional and other revenues of 13.6%Net loss of $65.6 million; Net loss per diluted share of $0.09Adjusted net income(1) of $134.1 million decreased 12.1%; Adjusted diluted EPS(1) of $0.19 decreased 9.5% or $0.02Adjusted EBITDA(1) of $264.4 million decreased 6.0%; Adjusted EBITDA margin(1) of 42.5% decreased 100 basis points primarily due to lower revenuesNet cash provided by operating activities of $202.9 million increased $39.5 million; Free cash flow(1) of $126.3 million increased $24.6 million primarily due to the timing of working capital

Nine Months Ended September 30, 2024 Financial Highlights

Revenues of $1,893.7 million decreased 2.6%Organic revenues decreased 1.5% as an increase in subscription revenues of 1.2% was offset by a decline in re-occurring revenues of 2.3% and transactional and other revenues of 9.3%Net loss of $444.9 million; Net loss per diluted share of $0.69Adjusted net income(1) of $379.8 million decreased 12.8%; Adjusted diluted EPS(1) of $0.52 decreased 11.9% or $0.07Adjusted EBITDA(1) of $775.1 million decreased 5.4%; Adjusted EBITDA margin(1) of 40.9% decreased 120 basis points primarily due to lower revenuesNet cash provided by operating activities decreased $48.0 million to $505.3 million; Free cash flow(1) decreased $76.3 million to $298.4 million primarily due to lower operating income and increased capital expenditures

“Clarivate’s third quarter results are unsatisfactory and reflect an overdependency on fluctuating transactional revenue and areas of the business with low margin characteristics,” said Matti Shem Tov, Chief Executive Officer. “As we look ahead, it is clear the Company has work to do to improve performance. Our Value Creation Plan is designed to increase subscription and re-occurring revenue, improve sales execution, accelerate innovation and continue portfolio solutions rationalization. We will leverage Clarivate’s strong foundation, unique product offerings and talented team to take the necessary actions to improve predictability and drive profitable growth. Alongside the management team and Board, I am invigorated by the opportunities before us and remain focused on successfully executing our strategy to realize Clarivate’s potential.”

Removal of Outlook

As a result of the recent CEO transition and the work being done under the Value Creation Plan, the Company has removed its forward-looking outlook for 2024. All previous outlooks provided by the Company should no longer be relied upon.

Selected Financial Information

Three Months Ended

September 30,

Change

Nine Months Ended
September 30,

Change

(in millions, except percentages and per share data), (unaudited)

2024

2023

$

%

2024

2023

$

%

Revenues

$     622.2

$      647.2

$      (25.0)

(3.9) %

$  1,893.7

$  1,945.1

$     (51.4)

(2.6) %

Net income (loss)

$      (65.6)

$        12.3

$      (77.9)

N/M

$    (444.9)

$      (67.3)

$   (377.6)

N/M

Diluted EPS

$      (0.09)

$       (0.01)

$      (0.08)

N/M

$      (0.69)

$      (0.18)

$     (0.51)

N/M

Weighted average ordinary shares, diluted

718.7

670.9

47.8

7.1 %

690.5

673.9

16.6

2.5 %

Adjusted EBITDA(1)

$     264.4

$      281.4

$      (17.0)

(6.0) %

$     775.1

$     819.0

$     (43.9)

(5.4) %

Adjusted net income(1)

$     134.1

$      152.6

$      (18.5)

(12.1) %

$     379.8

$     435.7

$     (55.9)

(12.8) %

Adjusted diluted EPS(1)

$       0.19

$        0.21

$      (0.02)

(9.5) %

$       0.52

$       0.59

$     (0.07)

(11.9) %

Adjusted weighted average ordinary shares, diluted(1)

723.5

731.4

(7.9)

(1.1) %

726.1

733.6

(7.5)

(1.0) %

Net cash provided by operating activities

$     202.9

$      163.4

$       39.5

24.2 %

$     505.3

$     553.3

$     (48.0)

(8.7) %

Free cash flow(1)

$     126.3

$      101.7

$       24.6

24.2 %

$     298.4

$     374.7

$     (76.3)

(20.4) %

Third Quarter 2024 Commentary

Revenues for the third quarter decreased $25.0 million, or 3.9%, to $622.2 million, primarily due to the divestiture of Valipat in April 2024 and lower transactional sales across all three segments. Organic revenues decreased $16.5 million or 2.6%.

Subscription revenues for the third quarter increased $3.0 million, or 0.7%, to $411.1 million. Organic subscription revenues increased 0.6%, driven by price increases, partially offset by lower net volume in IP and LS&H.

Re-occurring revenues for the third quarter decreased $0.1 million, or 0.1%, to $106.7 million. Organic re-occurring revenues decreased 1.1%, primarily due to lower IP patent renewal volume.

Transactional and other revenues for the third quarter decreased $27.9 million, or 21.1%, to $104.4 million. Organic transactional and other revenues decreased 13.6%, due to lower sales across all three segments.

Balance Sheet and Cash Flow

As of September 30, 2024, cash and cash equivalents of $388.5 million increased $17.8 million compared to December 31, 2023.

The Company’s total debt outstanding as of September 30, 2024 was $4,711.5 million, a decrease of $58.8 million compared to December 31, 2023, driven by an accelerated debt repayment.

Net cash provided by operating activities of $505.3 million for the nine months ended September 30, 2024 decreased $48.0 million compared to the prior year period, primarily due to lower operating results, partially offset by timing differences in working capital. Free cash flow(1) for the nine months ended September 30, 2024 was $298.4 million, a decrease of $76.3 million compared to the prior year period.

Notes to press release

(1) Non-GAAP measure. Please see “Reconciliations to Certain Non-GAAP Measures” in this release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this press release.

N/M – Represents a change approximately equal or in excess of 100% or not meaningful.

Conference Call and Webcast

Clarivate will host a conference call and webcast today to review the results for the third quarter at 9:00 a.m. Eastern Time. The webcast is open to all interested parties and may include forward-looking information.

The live webcast of the earnings call will be accessible through the investor relations section of the Company’s website. To join the webcast please visit https://events.q4inc.com/attendee/495058600. 

Interested parties may access the live audio broadcast. U.S. participants may call 800-715-9871; international participants may call +1 646-307-1963 (long-distance charges will apply). The conference ID number is 5907538.

A replay of the webcast will also be available on https://ir.clarivate.com beginning two hours after the conclusion of the live call and will remain available for one year.

Use of Non-GAAP Financial Measures

Non-GAAP results are financial measures that are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.

We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations, and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

Definitions and reconciliations of non-GAAP measures, such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted diluted EPS, and Free cash flow to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.

Forward-Looking Statements

This communication includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the “safe harbor provisions” of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts, and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies, and the markets in which we operate. Such forward-looking statements are based on available current market material and management’s expectations, beliefs, and forecasts concerning future events impacting us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in Item 1A. Risk Factors of our annual report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Please consult our public filings with the SEC or on our website at www.clarivate.com. 

About Clarivate

Clarivate™ is a leading global provider of transformative intelligence. We offer enriched data, insights & analytics, workflow solutions and expert services in the areas of Academia & Government, Intellectual Property and Life Sciences & Healthcare. For more information, please visit www.clarivate.com. 

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

September 30,
2024

December 31,
2023

ASSETS

Current assets:

Cash and cash equivalents, including restricted cash

$                388.5

$                370.7

Accounts receivable, net

771.8

908.3

Prepaid expenses

97.7

88.5

Other current assets

81.1

68.0

Assets held for sale

—

26.7

Total current assets

1,339.1

1,462.2

Property and equipment, net

47.3

51.6

Other intangible assets, net

8,726.7

9,006.6

Goodwill

1,736.8

2,023.7

Other non-current assets

71.8

60.8

Deferred income taxes

50.8

46.7

Operating lease right-of-use assets

58.1

55.2

Total assets

$           12,030.6

$           12,706.8

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$                126.5

$                144.1

Accrued compensation

111.7

126.5

Accrued expenses and other current liabilities

375.1

315.2

Current portion of deferred revenues

890.2

983.1

Current portion of operating lease liability

22.1

24.4

Liabilities held for sale

—

6.7

Total current liabilities

1,525.6

1,600.0

Long-term debt

4,632.5

4,721.1

Non-current portion of deferred revenues

21.6

38.7

Other non-current liabilities

52.5

41.9

Deferred income taxes

227.0

249.6

Operating lease liabilities

57.9

63.2

Total liabilities

6,517.1

6,714.5

Commitments and contingencies

Shareholders’ equity:

Preferred Shares, no par value; 14.4 shares authorized; 5.25% Mandatory Convertible Preferred Shares, Series A, zero and 14.4 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

—

1,392.6

Ordinary Shares, no par value; unlimited shares authorized; 710.3 and 666.1 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

13,069.0

11,740.5

Accumulated other comprehensive loss

(433.8)

(495.3)

Accumulated deficit

(7,121.7)

(6,645.5)

Total shareholders’ equity

5,513.5

5,992.3

Total liabilities and shareholders’ equity

$           12,030.6

$           12,706.8

 

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(In millions, except per share data)

2024

2023

2024

2023

Revenues

$                 622.2

$                 647.2

$              1,893.7

$              1,945.1

Operating expenses:

Cost of revenues

210.1

220.6

641.5

674.8

Selling, general and administrative costs

169.7

171.9

546.8

559.3

Depreciation and amortization

177.2

176.8

541.0

527.5

Goodwill and intangible asset impairments

13.8

—

316.6

135.2

Restructuring and other impairments

4.0

3.7

14.2

25.3

Other operating expense (income), net

25.7

(13.0)

46.9

(30.5)

Total operating expenses

600.5

560.0

2,107.0

1,891.6

Income (loss) from operations

21.7

87.2

(213.3)

53.5

Fair value adjustment of warrants

—

(12.6)

(5.2)

(14.4)

Interest expense, net

72.2

71.9

213.5

218.5

Income (loss) before income taxes

(50.5)

27.9

(421.6)

(150.6)

Provision (benefit) for income taxes

15.1

15.6

23.3

(83.3)

Net income (loss)

(65.6)

12.3

(444.9)

(67.3)

Dividends on preferred shares

—

18.9

31.3

56.3

Net income (loss) attributable to ordinary shares

$                 (65.6)

$                   (6.6)

$               (476.2)

$               (123.6)

Per share:

Basic

$                 (0.09)

$                 (0.01)

$                 (0.69)

$                 (0.18)

Diluted

$                 (0.09)

$                 (0.01)

$                 (0.69)

$                 (0.18)

Weighted average shares used to compute earnings per share:

Basic

718.7

670.9

690.5

673.9

Diluted

718.7

670.9

690.5

673.9

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30,

(In millions)

2024

2023

Cash Flows From Operating Activities

  Net income (loss)

$                   (444.9)

$                     (67.3)

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

  Depreciation and amortization

541.0

527.5

  Share-based compensation

48.9

97.1

  Restructuring and other impairments, including goodwill

314.5

138.9

  Gain on legal settlement

—

(49.4)

  Deferred income taxes

(28.8)

(51.3)

  Amortization of debt issuance costs

11.1

12.9

  Other operating activities

36.1

2.4

Changes in operating assets and liabilities:

  Accounts receivable

148.2

110.3

  Prepaid expenses

(8.5)

(10.6)

  Other assets

(9.8)

19.5

  Accounts payable

(16.5)

(2.4)

  Accrued expenses and other current liabilities

22.1

(33.8)

  Deferred revenues

(102.3)

(56.9)

  Operating leases, net

(7.8)

(6.2)

  Other liabilities

2.0

(77.4)

Net cash provided by operating activities

505.3

553.3

Cash Flows From Investing Activities

  Capital expenditures

(206.9)

(178.6)

  Payments for acquisitions, net of cash acquired

(32.0)

(2.3)

  Proceeds from divestitures, net of cash divested

(19.2)

10.5

Net cash provided by (used for) investing activities

(258.1)

(170.4)

Cash Flows From Financing Activities

  Principal payments on term loans

(58.1)

(150.0)

  Payment of debt issuance costs and discounts

(20.1)

0.1

  Repurchases of ordinary shares

(100.0)

(100.0)

  Cash dividends on preferred shares

(37.7)

(56.7)

  Payments related to finance lease

(0.7)

(0.8)

  Payments related to tax withholding for share-based compensation

(13.9)

(14.8)

Net cash provided by (used for) financing activities

(230.5)

(322.2)

  Effects of exchange rates

1.1

(10.3)

Net change in cash and cash equivalents, including restricted cash

17.8

50.4

Cash and cash equivalents, including restricted cash, beginning of period

370.7

356.8

Cash and cash equivalents, including restricted cash, end of period

$                     388.5

$                     407.2

Supplemental Revenues Information

Annualized contract value (“ACV”) represents the annualized value for the next 12 months of subscription-based client license agreements, assuming that all expiring license agreements during that period are renewed at their current price level. Our ACV was $1,596.4 and $1,579.2 as of September 30, 2024 and 2023, respectively, which corresponds to an increase of 1.1%. The increase in ACV was primarily due to the impact of price increases, partially offset by volume declines.

The following tables present our revenues by type and by segment for the periods indicated, as well as the drivers of the variances between periods, including as a percentage of such revenues.

Three Months Ended
September 30,

Change

% of Change

(In millions, except percentages); (unaudited)

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Subscription revenues

$       411.1

$       408.1

$           3.0

0.7 %

0.2 %

— %

(0.1) %

0.6 %

Re-occurring revenues

106.7

106.8

(0.1)

(0.1) %

— %

— %

1.0 %

(1.1) %

Transactional and other revenues

104.4

132.3

(27.9)

(21.1) %

0.5 %

(8.1) %

0.1 %

(13.6) %

Revenues

$       622.2

$       647.2

$       (25.0)

(3.9) %

0.2 %

(1.6) %

0.1 %

(2.6) %

Nine Months Ended
September 30,

Change

% of Change

(In millions, except percentages); (unaudited)

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Subscription revenues

$     1,219.8

$     1,207.3

$         12.5

1.0 %

0.1 %

— %

(0.3) %

1.2 %

Re-occurring revenues

317.8

325.5

(7.7)

(2.4) %

— %

— %

(0.1) %

(2.3) %

Transactional and other revenues

356.1

412.3

(56.2)

(13.6) %

0.2 %

(4.5) %

— %

(9.3) %

Revenues

$     1,893.7

$     1,945.1

$       (51.4)

(2.6) %

0.1 %

(1.0) %

(0.2) %

(1.5) %

Three Months Ended
September 30,

Change

% of Change

(In millions, except percentages); (unaudited)

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Academia & Government

$       321.3

$       327.2

$         (5.9)

(1.8) %

— %

— %

(0.1) %

(1.7) %

Intellectual Property

199.8

211.7

(11.9)

(5.6) %

0.1 %

(4.6) %

0.7 %

(1.8) %

Life Sciences & Healthcare

101.1

108.3

(7.2)

(6.6) %

0.9 %

(0.7) %

(0.3) %

(6.5) %

Revenues

$       622.2

$       647.2

$       (25.0)

(3.9) %

0.2 %

(1.6) %

0.1 %

(2.6) %

Nine Months Ended
September 30,

Change

% of Change

(In millions, except percentages); (unaudited)

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Academia & Government

$       983.5

$       983.9

$         (0.4)

— %

— %

— %

(0.1) %

0.1 %

Intellectual Property

602.3

637.1

(34.8)

(5.5) %

— %

(2.6) %

(0.2) %

(2.7) %

Life Sciences & Healthcare

307.9

324.1

(16.2)

(5.0) %

0.5 %

(0.6) %

(0.5) %

(4.4) %

Revenues

$     1,893.7

$     1,945.1

$       (51.4)

(2.6) %

0.1 %

(1.0) %

(0.2) %

(1.5) %

Reconciliations to Certain Non-GAAP Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents Net income (loss) before the Provision (benefit) for income taxes, Depreciation and amortization, and Interest expense, net, adjusted to exclude acquisition and/or disposal-related transaction costs, share-based compensation, restructuring expenses, impairments, the impact of certain non-cash fair value adjustments on financial instruments, unrealized foreign currency gains/losses, legal settlements, and other items that are included in Net income (loss) for the period that we do not consider indicative of our ongoing operating performance. Net income (loss) margin is calculated by dividing Net income (loss) by Revenues. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenues.

The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the three and nine months ended September 30, 2024 and 2023 and reconciles these non-GAAP measures to our Net income (loss) and Net income (loss) margin for the same periods:

Three Months Ended
September 30,

Nine Months Ended
September 30,

(In millions, except percentages); (unaudited)

2024

2023

2024

2023

Net income (loss)

$       (65.6)

$         12.3

$     (444.9)

$       (67.3)

Provision (benefit) for income taxes

15.1

15.6

23.3

(83.3)

Depreciation and amortization

177.2

176.8

541.0

527.5

Interest expense, net

72.2

71.9

213.5

218.5

Transaction related costs

6.1

2.7

13.6

5.1

Share-based compensation expense

15.4

25.4

49.7

97.1

Goodwill and intangible asset impairments

13.8

—

316.6

135.2

Restructuring and other impairments

4.0

3.7

14.2

25.3

Fair value adjustment of warrants

—

(12.6)

(5.2)

(14.4)

Other(1)

26.2

(14.4)

53.3

(24.7)

Adjusted EBITDA

$       264.4

$       281.4

$       775.1

$       819.0

Net income (loss) margin

(10.5) %

1.9 %

(23.5) %

(3.5) %

Adjusted EBITDA margin

42.5 %

43.5 %

40.9 %

42.1 %

(1) Primarily reflects the net impact of unrealized foreign currency gains and losses, as well as other items that do not reflect our ongoing operating performance. For the nine months ended September 30, 2024, the amount includes a $14.8 loss on divestiture and for the nine months ended September 30, 2023, the amount includes a $49.4 gain on legal settlement.

Adjusted net income and Adjusted diluted EPS

Adjusted net income represents Net income (loss), adjusted to exclude acquisition and/or disposal-related transaction costs, amortization related to acquired intangible assets, share-based compensation, restructuring expenses, impairments, the impact of certain non-cash fair value adjustments on financial instruments, unrealized foreign currency gains/losses, legal settlements, and other items that are included in net income (loss) for the period that we do not consider indicative of our ongoing operating performance and the associated income tax impact of such adjustments.

Adjusted diluted EPS is calculated by dividing Adjusted net income by Adjusted diluted weighted average shares. The Adjusted diluted weighted average shares calculation assumes that all instruments in the calculation are dilutive.

The following tables present our calculation of Adjusted net income and Adjusted diluted EPS for the three and nine months ended September 30, 2024 and 2023 and reconciles these non-GAAP measures to our Net income (loss) and diluted EPS for the same periods:

Three Months Ended September 30,

2024

2023

(In millions, except per share amounts); (unaudited)

Amount

Per Share

Amount

Per Share

Net income (loss) and EPS

$              (65.6)

$              (0.09)

$                12.3

$                0.02

Transaction related costs

6.1

0.01

2.7

—

Share-based compensation expense

15.4

0.02

25.4

0.04

Amortization related to acquired intangible assets

138.7

0.19

141.9

0.21

Goodwill and intangible asset impairments

13.8

0.02

—

—

Restructuring and other impairments

4.0

0.01

3.7

0.01

Fair value adjustment of warrants

—

—

(12.6)

(0.02)

Other(1)

26.2

0.04

(14.4)

(0.04)

Income tax impact of related adjustments

(4.5)

(0.01)

(6.4)

(0.01)

Adjusted net income and Adjusted diluted EPS

$              134.1

$                0.19

$              152.6

$                0.21

Adjusted weighted average ordinary shares, diluted

723.5

731.4

(1) Primarily reflects the net impact of unrealized foreign currency gains and losses, as well as other items that do not reflect our ongoing operating performance.

 

Nine Months Ended September 30,

2024

2023

(In millions, except per share amounts); (unaudited)

Amount

Per Share

Amount

Per Share

Net income (loss) and EPS

$            (444.9)

$              (0.64)

$              (67.3)

$              (0.10)

Transaction related costs

13.6

0.02

5.1

0.01

Share-based compensation expense

49.7

0.07

97.1

0.14

Amortization related to acquired intangible assets

416.9

0.60

429.8

0.64

Goodwill and intangible asset impairments

316.6

0.46

135.2

0.20

Restructuring and other impairments

14.2

0.02

25.3

0.04

Fair value adjustment of warrants

(5.2)

(0.01)

(14.4)

(0.02)

Other(1)

53.3

0.05

(24.7)

(0.10)

Income tax impact of related adjustments

(34.4)

(0.05)

(150.4)

(0.22)

Adjusted net income and Adjusted diluted EPS

$              379.8

$                0.52

$              435.7

$                0.59

Adjusted weighted average ordinary shares, diluted

726.1

733.6

(1) Primarily reflects the net impact of unrealized foreign currency gains and losses, as well as other items that do not reflect our ongoing operating performance. For the nine months ended September 30, 2024, the amount includes a $14.8 loss on divestiture and for the nine months ended September 30, 2023, the amount includes a $49.4 gain on legal settlement.

Free cash flow

Free cash flow represents Net cash provided by (used for) operating activities less Capital expenditures. The following table reconciles this non-GAAP measure to Net cash provided by operating activities:

Three Months Ended September 30,

Nine Months Ended September 30,

(In millions); (unaudited)

2024

2023

2024

2023

Net cash provided by operating activities

$                    202.9

$                    163.4

$                    505.3

$                    553.3

  Capital expenditures

(76.6)

(61.7)

(206.9)

(178.6)

Free cash flow

$                    126.3

$                    101.7

$                    298.4

$                    374.7

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Toronto firm fined $5,000 for unauthorized use of professional engineer’s seal

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May 6, 2026

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TORONTO, May 6, 2026 /CNW/ – The Ontario Court of Justice has fined a Toronto firm $5,000 for applying a facsimile of a professional engineer’s seal to an engineering report without the engineer’s knowledge or consent.

In June 2023, 11951076 Canada Inc., operating as Studio Four, affixed an engineer’s seal to an engineering report and submitted it to the City of Hamilton in connection with a residential building project. The engineer whose seal was used did not authorize the use of the seal.

A complaint was made to Professional Engineers Ontario (PEO), which investigated and laid charges under the Professional Engineers Act (PEA).

On April 24, 2026, Studio Four pleaded guilty to one count of breaching section 40(3)(b) of the PEA. The firm’s two directors, Salim Afroz and Ashweek Chhabra, also pleaded guilty to breaching section 40(5) of the Act in connection with this conduct.

Studio Four was ordered to pay a $5,000 fine. The two directors each received suspended sentences.

As the regulator of professional engineering in Ontario, PEO reminds the public that the unauthorized use or forgery of a professional engineer’s seal on construction or design drawings is a quasi-criminal offence under the PEA. Such conduct may also result in criminal charges under the Criminal Code of Canada.

PEO administers the Professional Engineers Act to serve and protect the public interest by licensing Ontario’s more than 98,000 professional engineers and engineering firms. Professional engineers can be identified by the “P.Eng.” designation following their names.

Members of the public can verify a professional engineer or engineering firm by searching PEO’s public directories at peo.on.ca/directory. Concerns about unlicensed individuals or unauthorized firms may be reported through PEO’s enforcement hotline at 416-840-1444, 1-800-339-3716 ext. 1444, or enforcement@peo.on.ca.

SOURCE Professional Engineers Ontario

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Tell a Friend, Save on Travel! EF World Journeys Launches Cross-Brand Referral Program That Rewards Travelers to Inspire the People in Their Lives to Tour the Globe

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May 6, 2026

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New benefit allows travelers to unlock savings on future trips by introducing friends and family to EF Go Ahead Tours, EF Ultimate Break, and EF Adventures

CAMBRIDGE, Mass., May 6, 2026 /PRNewswire/ — EF World Journeys, a leader in guided, experiential travel for adults from Gen Z to Baby Boomers, today announced the launch of a new referral program, a travel rewards benefit that can be redeemed across EF Go Ahead Tours, EF Ultimate Break, and EF Adventures.

Under the new program, travelers will receive $100 in travel credit for every friend who books a trip using their referral, with every fifth referral earning you $500 and no cap on total rewards earned. In short, the more friends or family who book from your referral, the more you save on your next trip.

Each year, guided trips across EF World Journeys’ portfolio bring travelers together through shared experiences that extend far beyond the journey itself. Many of those travelers continue to engage with the people they meet on tour, often exchanging photos, stories, and future travel inspiration well after returning home. The new referral program builds on the natural desire to share those experiences, offering travelers easy ways to connect and invite friends, family members, and fellow adventurers to experience a guided group tour for themselves.

“At EF, we’ve always believed that one of the most powerful parts of travel is the connections and communities we create along the way,” said Heidi Durflinger, CEO of EF World Journeys USA. “This referral program makes that even easier, giving our travelers a way to bring friends and family into the experience while continuing to grow a global community of people who choose to explore the world together.”

How it works: Give $100. Get $100.

Refer a friend: Any traveler who has taken a trip with or is currently booked on tour  with EF Go Ahead Tours, EF Ultimate Break, or EF Adventures can now share a personal referral link via email, text, social media, or their respective EF World Journeys mobile app. Friends must be new to EF World Journeys, 18 or older, and have a valid email address to qualify.Both travelers earn $100: When the referred traveler books, both receive $100 in travel credit. Rewards are issued 60 days after booking confirmation, and referrals must book within six months.Earn $500 on every fifth referral: Referring travelers receive $500 for every fifth successful referral. There is no limit to how many referrals can be made, and rewards NEVER expire.

To celebrate the launch of the new referral program, EF Go Ahead Tours is offering an additional limited-time incentive. For the month of May 2026, travelers who refer a friend that books an EF Go Ahead Tours trip will receive an extra $100 referral reward on top of the standard program credit. The promotional bonus applies exclusively to EF Go Ahead Tours bookings and is available for a limited time.

One program. Three brands. Built for every kind of traveler.

EF World Journeys’ referral benefits are available when booking across its entire portfolio of guided, experiential travel companies, allowing travelers to earn and share rewards regardless of which tour operator they or their friends or family choose.

EF Go Ahead Tours offers curated guided travel for adults of all ages, including multi-generational travel groups and private or customized group tours.EF Ultimate Break serves travelers ages 18–35 with social, immersive itineraries.EF Adventures provides hiking, biking, and multi-adventure trips for active adults with a focus on lifelong learning, wellness and community.

Because the referral program spans all three tour operators at EF World Journeys, credits can move naturally within families and friend networks whose travel styles differ.

For example, a traveler who just had a life-changing trip on EF Go Ahead Tours’ A Week in Greece can refer her college-aged daughter to EF Ultimate Break’s Europe’s Icons: London, Paris & Rome and both receive $100 towards their next tour. She can then refer her basketball coach who is a hiking enthusiast to EF Adventure’s Italy Hiking: The Dolomites — and earn again.

This cross brand traveler benefit ensures that no matter how or where someone chooses to book travel across EF Go Ahead Tours, EF Ultimate Break, or EF Adventures – the rewards follow.

For EF Go Ahead Tours, please visit: https://www.goaheadtours.com/about/referrals
For EF Ultimate Break, please visit: https://www.efultimatebreak.com/traveling-with-us/refer-a-friend
For EF Adventures, please visit: https://www.efadventures.com/about/referrals-program

About EF World Journeys
EF World Journeys  is a leader in guided, experiential travel. We connect cultures, communities, and people through guided, group travel with leading tour operator brands like EF Ultimate Break (adults 18-35), EF Go Ahead Tours (adults 35+), and our newest brand, EF Adventures, focused on adventure tours for the active traveler in you. EF World Journeys is part of EF Education First. For over 60 years, EF has planned guided tours with a focus on education and cultural immersion. EF offers travelers 24/7 global support, affordable payment plans, and supports tours in more than 400 destinations worldwide. Since 1965, EF has been committed to opening the world through education. At EF World Journeys, we do just that, helping people of all ages experience the magic of travel, connecting travelers with new places, cultures, and, best of all, a diverse community of people excited to explore the world.

About EF Go Ahead Tours
EF Go Ahead Tours offers more than 200 guided trips across six continents. Each carefully planned, expertly led tour makes it easy for curious travelers of all ages to get to the heart of a destination. With a maximum group size well below the industry average, each trip has the perfect balance of planned sightseeing and free time to explore.

EF Go Ahead Tours is a tour operator brand within EF World Journeys, one of North America’s leading guided, experiential travel companies.

Join EF Go Ahead Tours’ affiliate program, supported by AWIN and earn commissions on booked tours.

About EF Ultimate Break
EF Ultimate Break is the best way to experience the world for anyone 18-35. With over 175 trips, we handle logistics for everything that makes travel a great experience from accommodations to flights to amazing tour directors to memory-making excursions. Our affordable interest-free payment plans make international travel possible for every traveler. EF Ultimate Break is part of EF World Journeys, a leader in guided, experiential travel with tour operator brands that also include EF Go Ahead Tours (adults 35+) and EF Adventures (all ages, 14+ with adult supervision). 

Are you an influencer or creator who wants to lead tours with your growing audience? Earn commissions on each booking by joining our influencer-hosted tour program. 

Media partners can now participate in EF Ultimate Break’s affiliate marketing program and earn commissions for tour bookings. Click here to learn more.

About EF Adventures
EF Adventures is an education-based adventure travel company offering 40+ guided tours across 25 countries and 5 continents. Launched in September 2024 as part of the EF World Journeys family of experiential travel brands, EF Adventures builds on more than 30 years of EF’s global expertise in educational and cultural immersion.

Each small-group tour blends active exploration with authentic learning, inviting travelers to engage with local traditions, communities, and ecosystems through guided experiences like hiking, biking, and multi-adventure activities such as kayaking, yoga, ziplining, and more. Designed for varied fitness levels and age groups, the EF Adventures experience combines adventure-based activity with hands-on cultural discovery that transforms how people see the world.

EF Adventures invites publishers and creators to become part of its growing affiliate network. Earn competitive commissions on confirmed bookings by referring travelers to efadventures.com. Learn more and apply here.

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SOURCE EF World Journeys

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NEO Battery Partners with Highest-Ranking ROK Army’s Capital Defense Command for Defense Drone & Robotics Batteries

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May 6, 2026

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Defense technology partnership with Republic of Korea (“ROK) Army’s Capital Defense Command (“CDC”), one of the highest-ranking command units responsible for securing the Presidential Office, the capital and key national infrastructureFocuses on battery supply and integration within CDC defense drone and robotics units, featuring specialized drone training and technical battery advisoryLeverages the CDC’s decision-making authority to accelerate the adoption of Korea-made battery technology across broader national defense and military units

TORONTO, May 6, 2026 /CNW/ – NEO Battery Materials Ltd. (“NEO” or the “Company”) (TSXV: NBM) (OTC: NBMFF), a low-cost, silicon-enhanced battery developer that enables longer-running, rapid-charging batteries for drones, robotics, and physical AI, is pleased to announce it has entered into a significant defense partnership agreement (the “Agreement”) with the Republic of Korea (“ROK”) Army’s Capital Defense Command (CDC) – a direct reporting unit to the President of South Korea and the Joint Chiefs of Staff. Stationed in Seoul and known as the “Shield Unit”, the CDC is one of the highest-ranking national command units, responsible for protecting the Presidential Office (Blue House), the capital and key national infrastructure.

This partnership represents a strategic expansion into a higher command level within the ROK Army, operating directly under the Army Headquarters with significant decision-making and procurement authority. The Agreement builds on NEO’s momentum in its Korean Defense Integration Strategy (see previously announced partnerships with the 12th Infantry Division dated April 1, 2026, and the Capital Mechanized Infantry Division dated April 22, 2026), and serves as a critical milestone due to the CDC’s ability to advocate for the prompt implementation of non-Chinese battery solutions that meet stringent security clearance and performance requirements.

The Agreement will focus on the supply and deployment of high-performance, defense batteries within the CDC’s drone and robotics units to enhance operational runtime and energy efficiency. Furthermore along with Korean drone partners, NEO will provide specialized drone training and technical battery advisory to support CDC’s personnel, all of whom are required to be certified in drone operations. This Agreement followed a successful live demonstration of NEO’s high-energy drone batteries held at the CDC’s parade ground on April 30, 2026.

Lieutenant General Changjoon Eo, Commander of the Capital Defense Command, expressed, “The CDC was highly impressed with the drone flight time performance exhibited by NEO’s high-performance batteries compared to commercial Chinese products. As the ROK Army and its units initiate the transition towards a Korea-made supply chain, NEO Battery will act as an integral partner for the CDC and its sub-units to ensure traceability and performance for defense batteries in our drone and robotics platforms.”

“Securing this partnership with a high-ranking command unit such as the CDC further validates the effectiveness of NEO’s battery technology,” stated Spencer Huh, President & CEO of NEO. “As the CDC is a heavy consumer of drone technology and requires high-performance, non-Chinese components to ensure national security, NEO’s in-country presence, along with our robust performance data and wide technology offering, aptly positions us to meet stringent scopes of work for the highest levels of the ROK military.”

About the ROK Army’s Capital Defense Command
Operating under the name “Shield Unit” or Chungjeongdae, the ROK Army’s Capital Defense Command is one of the highest-ranking, corps-level military organizations within the Republic of Korea’s Armed Forces and Operations Command. The CDC is primarily responsible for defending the Presidential Office, the capital, the Ministry of National Defense facilities, major government buildings, and key national infrastructure. The Command exercises several subordinate units, including the 1st Security Group, the 1st Air Defense Brigade, the CDC Military Police Group, and the 52nd and 56th Infantry Divisions.

About NEO Battery Materials Ltd.
NEO Battery Materials is a Canadian-South Korean battery technology company focused on developing and producing silicon-enhanced lithium-ion batteries in drones, robotics, physical AI, electric vehicles, and energy storage systems. With a patent-protected, low-cost silicon manufacturing process, NEO Battery enables longer-running and ultra-fast charging properties and provides end-to-end battery solutions from materials selection, cell architecture, and process optimization. The Company aims to be a globally-leading producer of high-performance lithium-ion batteries and materials, building a secure, robust battery supply chain for Western manufacturers. For more information, please visit the Company’s website at: https://www.neobatterymaterials.com/.

On Behalf of the Board of Directors
Spencer Huh
Director, President, and CEO

This news release includes certain forward-looking statements as well as management’s objectives, strategies, beliefs and intentions. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Generally, such forward-looking information can be identified notably by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: volatile stock prices; the general global markets and economic conditions; the possibility of write-downs and impairments; the risk associated with the research and development of battery-related technologies; the risk associated with the effectiveness and feasibility of battery material, electrode, and cell technologies that have not yet been tested or proven on commercial scale or under real-world operating conditions; the risks associated with battery-related manufacturing process scale-up, including maintaining consistent material, component, and cell quality, production yields, and process reproducibility at a pilot, semi-commercial, or commercial scale; the risks associated with compatibility of existing battery chemistries, formulations, components, or designs; unforeseen risks associated with entering into and maintaining collaborations, joint ventures, partnerships, or commercial contracts with battery cell manufacturers, original equipment manufacturers, and various companies in the global battery and downstream end-user supply chain; the risks associated with the failure to develop and produce commercially viable battery-related products or that technical goals may not be achieved within expected timelines or budgets under a joint development or collaboration; the risks associated with the Company’s technologies and products not meeting performance requirements or customer specifications; the risks that prototype and pilot-scale products do not advance into commercially produced products or translate into commercial orders; the risk associated with battery components and cell purchase orders and offtake supply that may not be fulfilled in full, on time, or at all as actual revenue realization depends on delivery schedules, achievement of technical milestones, and customer acceptance and validation; the risk associated with losing official vendor registration or status with existing customers; counterparty risk upon delivery of prototype and commercial products; the risks associated with constructing, completing, securing, and financing pilot, semi-commercial, and commercial battery materials, components, and cell manufacturing facilities including the Canadian and South Korean facilities; the risks associated with potential delays or increased costs with site preparation, equipment procurement and installation, and facility commissioning; the risks associated with integrating silicon anode material production, electrode manufacturing, and cell assembly within a single operational cluster or the Company’s business portfolio; the risks associated with supply chain disruptions or cost fluctuations in raw materials, processing chemicals, and additive prices, impacting production costs and commercial viability; the risks associated with uninsurable risks arising during the course of research, development and production; competition faced by the Company in securing experienced personnel, contracts and sales, and financing; access to adequate infrastructure and resources to support battery materials, components, and cell research and development activities; the risks associated with changes in the technology regulatory regime governing the Company; the risks associated with the timely execution of the Company’s strategies and business plans; the risks associated with the lithium-ion battery industry and end-users’ demand and adoption of the Company’s silicon anode technology and battery products; market adoption and integration challenges, including the difficulty of incorporating silicon anodes and silicon battery products within battery manufacturers and OEMs’ systems; the risks associated with the various environmental and political regulations the Company is subject to; risks related to regulatory and permitting delays; the reliance on key personnel; liquidity risks; the risk of litigation; risk management; and other risk factors as identified in the Company’s recent Financial Statements and MD&A and in recent securities filings for the Company which are available on www.sedarplus.ca. Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, continued R&D and commercialization activities, no material adverse change in precursor, raw material, equipment, and relevant cost prices, development and commercialization plans to proceed in accordance with plans and such plans to achieve their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Such forward-looking information has been provided for the purpose of assisting investors in understanding the Company’s business, operations, research and development, and commercialization plans and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this presentation, and the Company does not undertake to update such forward-looking information except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE NEO Battery Materials Ltd.

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