Seneca Foods Reports Financial Results for the Fourth Quarter 2017 and for the Twelve Months Ended March 31, 2017

MARION, N.Y., May 25, 2017 (GLOBE NEWSWIRE) — Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) today announced financial results for the fourth quarter and year ended March 31, 2017.

Highlights (vs. year-ago, year-to-date results):

  • Net sales decreased 2.3% to $1,245.7 million.
  • The decrease in sales attributed to unfavorable sales mix and lower selling price variance of $86.9 million partially offset by favorable sales volume variance of $57.2 million.
  • The favorable sales volume variance was primarily due to the Gray acquisition in the third quarter of 2016.
  • Net earnings decreased to $12.6 million or $1.27 per diluted share.
  • A significant portion of the net earnings comparative decline was attributable to a non-recurring gain of $24.3 million in the prior year.

“Fiscal Year 2017 was a challenging year for us.  Our business faced many of the same top-line issues that are affecting other consumer packaged food companies as retail shopping habits are shifting.   When coupled with heavier than normal inventory levels due to good growing conditions, selling prices declined over the course of the year as the company took steps to get its inventory levels in line, ” stated Kraig Kayser, President and Chief Executive Officer.

Financial Results for the Fiscal 2017 Year

Seneca Foods Corporation reported net earnings for the fiscal year ended March 31, 2017, of $12.6 million, or $1.27 per diluted share, compared to $54.5 million, or $5.42 per diluted share, in the fiscal year ended March 31, 2016.  A significant portion of the net earnings decrease was attributable to a non-recurring pre-tax gain of $24.3 million which occurred in the prior year.

Net sales for the fiscal year ended March 31, 2017, decreased from the fiscal year ended March 31, 2016 by 2.3%, to $1,245.7 million.  The decrease is attributable to lower selling prices/less favorable sales mix of $86.9 million partially offset by increased sales volume of $57.2 million which is primarily due to the Gray acquisition in the third quarter of 2016. 

Operating income was $29.1 million and $88.5 million for the year ended March 31, 2017 and 2016, respectively. Operating income, excluding the LIFO charge/credit and the restructuring charge/credit, for the twelve months ended March 31, 2017 and the twelve months ended March 31, 2016, this was $24.9 million and $74.0 million, respectively.  A reconciliation of reported operating income to operating income excluding LIFO and plant restructuring charges is provided below.

Other operating expense in 2017 was $2.4 million and mostly included a charge $1.2 million related to costs incurred due to some roof collapses at a Northwest plant and a charge for an impairment of a long-term asset of $1.1 million.  Other operating income in 2016 was $25.0 million and mostly included a gain of $24.3 million related to a contractual payment received in conjunction with a relationship transfer agreement with General Mills and a gain of $0.4 million from the sale of other fixed assets.

Highlights (vs. year-ago, fourth quarter results):

  • Net sales decreased $37.6 million, or 12.4% to $266.1 million.
  • The decrease in sales attributed to an unfavorable sales volume variance of $11.1 million and an unfavorable sales mix and lower selling price variance of $26.5 million.  The volume decline is in part attributable to the timing of Easter this year versus the prior year. 
  • Net earnings decreased to a loss of $(1.7) million or $(0.17) per diluted share.

Financial Results for the Fourth Quarter of 2017

The Company reported a net loss for the fiscal fourth quarter of 2017 was $(1.7) million, or $(0.17) per diluted share, compared to net earnings of $13.8 million, or $1.38 per diluted share, in the fiscal fourth quarter of 2016.  Net sales for the fourth quarter ended March 31, 2017, decreased from the fourth quarter ended March 31, 2016, by 12.4%, to $266.1 million.  The decrease is attributable to decreased sales volume of $11.1 million partially and lower selling prices/less favorable sales mix of $26.5 million.  

Operating income was $2.4 million and $22.1 million for the quarter ended March 31, 2017 and 2016, respectively. Operating (loss) income, excluding the LIFO credit/charge and the restructuring charge/credit, was $(5.0) million for the quarter ended March 31, 2017 and $11.3 million for the quarter ended March 31, 2016.  A reconciliation of reported operating income to operating income excluding LIFO and plant restructuring charges is provided below.

About Seneca Foods Corporation
Seneca Foods is North America’s leading provider of packaged fruits and vegetables, with facilities located throughout the United States. Its high quality products are primarily sourced from over 2,000 American farms.  Seneca holds the largest share of the retail private label, food service, and export canned vegetable markets, distributing to over 90 countries.   Products are also sold under the highly regarded brands of Libby’s®, CherryMan®, Green Valley®, Aunt Nellie’s®, READ®, Seneca Farms® and Seneca labels, including Seneca snack chips.  Seneca’s common stock is traded on the Nasdaq Global Stock Market under the symbols “SENEA” and “SENEB”. SENEA is included the S&P SmallCap 600, Russell 2000 and Russell 3000 indices.

Non-GAAP Financial Measures—Operating Income Excluding LIFO and Plant Restructuring Impact, EBITDA and FIFO EBITDA

Operating income excluding LIFO and plant restructuring, EBITDA and FIFO EBITDA are non-GAAP financial measures. The Company believes these non-GAAP financial measures provide a basis for comparison to companies that do not use LIFO or have plant restructuring and enhance the understanding of the Company’s historical operating performance.  The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

Set forth below is a reconciliation of reported Operating Income excluding LIFO and plant restructuring:

           
      Quarter Ended   Twelve Months Ended
      In millions   In millions
      3/31/2017   3/31/2016   3/31/2017   3/31/2016
      FY 2017   FY 2016   FY 2017   FY 2016
                   
Operating income, as reported:   $ 2.4   $ 22.1   $ 29.1   $ 88.5  
                   
LIFO credit     (6.5 )   (11.5 )   (6.0 )   (24.8 )
                   
Plant restructuring (credit) charge     (0.9 )   0.7     1.8     10.3  
                   
Operating (loss) income, excluding LIFO and plant restructuring impact   $ (5.0 ) $ 11.3   $ 24.9   $ 74.0  
                           

Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (earnings before interest, income taxes, depreciation, amortization, non-cash charges and credits related to the LIFO inventory valuation method). The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

   
  Year Ended
EBITDA and FIFO EBITDA: March 31, 2017   March 31, 2016
               
  (In thousands)
       
Net earnings $12,613     $54,458  
Income tax expense   7,414       25,999  
Interest expense, net of interest income   9,672       8,044  
Depreciation and amortization   24,824       21,737  
Interest amortization   (340 )     (300 )
EBITDA   54,183       109,938  
LIFO credit   (6,021 )     (24,792 )
FIFO EBITDA $48,162     $85,146  
               

Forward-Looking Information

The information contained in this release contains, or may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements appear in a number of places in this release and include statements regarding the intent, belief or current expectations of the Company or its officers (including statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates” or similar expressions) with respect to various matters.

Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.  Investors are cautioned not to place undue reliance on such statements, which speak only as of the date the statements were made.  Among the factors that could cause actual results to differ materially are:

  • general economic and business conditions;
  • cost and availability of commodities and other raw materials such as vegetables, steel and packaging materials;
  • transportation costs;
  • climate and weather affecting growing conditions and crop yields;
  • availability of financing;
  • leverage and the Company’s ability to service and reduce its debt;
  • foreign currency exchange and interest rate fluctuations;
  • effectiveness of the Company’s marketing and trade promotion programs;
  • changing consumer preferences;
  • competition;
  • product liability claims;
  • the loss of significant customers or a substantial reduction in orders from these customers;
  • changes in, or the failure or inability to comply with, United States, foreign and local governmental regulations, including environmental and health and safety regulations; and
  • other risks detailed from time to time in the reports filed by the Company with the SEC.

Except for ongoing obligations to disclose material information as required by the federal securities laws, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of the filing of this report or to reflect the occurrence of unanticipated events.

       
Seneca Foods Corporation      
Unaudited Condensed Consolidated Statements of Net Earnings      
For the Periods Ended March 31, 2017 and 2016      
(In thousands of dollars, except share data)      
                             
  Quarter   Year-to-Date      
  Fiscal 2017   Fiscal 2016   Fiscal 2017   Fiscal 2016      
                             
Net sales $ 266,115     $ 303,702     $ 1,245,681     $ 1,275,360      
                             
Plant restructuring (credit) expense (note 2) $ (949 )   $ 744     $ 1,829     $ 10,302      
                             
Other operating (expense) income net (note 3) $ (1,265 )   $ 371     $ (2,437 )   $ 24,971      
                             
Operating income (note 1) $ 2,432     $ 22,108     $ 29,121     $ 88,549      
(Earnings) Loss from equity investment   (78 )     (84 )     (578 )     48      
Interest expense, net   2,963       2,272       9,672       8,044      
Earnings before income taxes $ (453 )   $ 19,920     $ 20,027     $ 80,457      
                             
Income taxes expense   1,197       6,075       7,414       25,999      
                             
Net (loss) earnings $ (1,650 )   $ 13,845     $ 12,613     $ 54,458      
                             
(Loss) earnings attributable to common stock (note 4)   (1,641 )     13,712       12,475       53,891      
                             
Basic (loss) earnings per share $ (0.17 )   $ 1.39     $ 1.27     $ 5.46      
                             
Diluted (loss) earnings per share $ (0.17 )   $ 1.38     $ 1.27     $ 5.42      
                             
Weighted average shares outstanding basic   9,771,116       9,839,528       9,785,455       9,878,252      
                             
Weighted average shares outstanding diluted   9,840,945       9,909,710       9,855,284       9,948,434      
                             
Note 1: The effect of  the LIFO inventory valuation method on fourth quarter pre-tax results increased operating earnings by $6,455,000 for  
the three month period ended March 31, 2017 and increased operating earnings by $11,543,000 for the three month period ended March  
31, 2016.  The effect of  the LIFO inventory valuation method on year-to-date pre-tax results increased operating earnings by  
$6,021,000 for the twelve month period ended March 31, 2017 and increased operating earnings by $24,792,000 for the twelve month period  
ended March 31, 2016.  
Note 2: The twelve month period ended March 31, 2017 included a restructuring charge primarily for severance and moving costs of $1,829,000.  
The twelve month period ended March 31, 2016 included a restructuring charge for plant closure costs of $10,302,000.  
Note 3: Other loss for the twelve month period ended March 31, 2017 of $2,437,000 represents a charge for $1,160,000 related to some costs incurred  
due to some roof collapses as a result of heavy snowfall at at Northwest plant, a charge for impairment of a long-term asset of $1,052,000, a  
net loss on the sale of  unused fixed assets of $177,000 and other minor items.  
Other operating income for the twelve month period ended March 31, 2016 of $24,971,000 represents a $24,275,000 assignment credit related to  
the relationship transfer agreement among General Mills, B & G Foods and the Company, a $200,000 credit related to a contingency accrual for  
Prop 65, net gain on the sale of  unused fixed assets of $432,000 and a credit of $64,000 related to an adjustment to an environmental accrual.  
Note 4: The Company uses the “two-class” method for basic earnings per share by dividing the earnings attributable to  common shareholders  
by the weighted average of common shares outstanding during the period.  
   

Contact: 
Timothy J. Benjamin
315-926-8100

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CORRECTING and REPLACING — FXCM Group Provides Financial Information for Full Year 2016 and Q1 2017

NEW YORK, May 25, 2017 (GLOBE NEWSWIRE) — In a release issued under the same headline earlier today by FXCM Group, please note that several of the financial tables contained incorrect data. The corrected release follows:

FXCM Group Provides Financial Information for Full Year 2016 and Q1 2017

FXCM Group, LLC (“FXCM Group” or “FXCM”), a leading international provider of online foreign exchange trading, CFD trading, spread betting and related services, today provided selected financial information regarding its first quarter 2017 and full year 2016 results.

“In the first quarter of this year we were able to generate positive Adjusted EBITDA of $6.7 million in a difficult environment of low volatility,” said Brendan Callan, CEO of FXCM. “This is in large part due to a substantial cost reduction effort that leaves us well positioned for profitability moving forward.”

“With the recently announced sale of our stake in FastMatch, we expect our balance sheet to further improve as we continue to pay down our debt to Leucadia,” continued Callan. “We remain very optimistic about the future of our business.”

FXCM Group, LLC  (US Millions) (unaudited)

Selected Income Statement Data
Three months ended March 31, 2017

Total Net Revenues $45.9
   
Operating Expenses1 $39.1
   
Loss from Continuing Operations   ($10.4)
   
Net Loss ($28.2)
   
Adjusted EBITDA – Continuing Operations2      $6.7
   
1 Excludes depreciation & amortization of $5.1 million
2 See reconciliation following
                                                                 

Selected Balance Sheet Data 
As at March 31, 2017

Cash and Cash Equivalents   $141.7
   
Cash and cash equivalents, held for customers   $380.3
   
Total Assets $640.6
   
Credit Agreement to Leucadia $121.1
   
Total Members’ Capital  $59.0
   

For 2016, selected financial information is as follows:

FXCM Group, LLC  (US Millions) (unaudited)

Selected Income Statement Data
Twelve months ended December 31, 2016

Total Net Revenues $235.3
   
Operating Expenses1 $191.2
   
Income from Continuing Operations $196.0
   
Net Income $128.2
   
Adjusted EBITDA – Continuing Operations2 $41.0
   
1 Excludes depreciation & amortization of $21.6 million
2 See reconciliation following
 

 

Selected Balance Sheet Data
As at December 31, 2016

Cash and Cash Equivalents $198.9
   
Cash and cash equivalents, held for customers   $428.5
   
Total Assets $1,012.2
   
Credit Agreement to Leucadia $150.5
   
Total Members’ Capital $89.9
     

 

Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA1 – Continuing Operations

             
        Three Months   Twelve Months
Unaudited     Ended   Ended
US Millions      March 31, 2017     December 31, 2016 
             
             
Net (Loss) Income     $    (28.2 )   $    128.2  
             
Adjustments:          
Net Loss attributable to non-controlling interests2     (9.8 )       (57.3 )
             
Loss from discontinued operations, net of tax3     27.7         125.2  
             
Income tax (benefit) provision       (0.1 )       1.2  
             
Interest on borrowings       11.5         66.1  
             
Loss (gain) on derivative liabilities – Leucadia financing4     0.6         (206.8 )
             
Gain on sale of investment5           (37.2 )
             
Depreciation and amortization       5.1         21.6  
             
Total Adjustments         35.0         (87.2 )
             
Adjusted EBITDA1 – Continuing Operations $    6.7     $    41.0  
             

1 – Adjusted EBITDA from Continuing Operations is a Non-GAAP measure that is not prepared under any comprehensive set of accounting rules or principles and does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with U.S. GAAP.

2 – Represents the elimination of the share of net loss allocated among the non-controlling interests to calculate total consolidated net income (loss) from the Company’s operations.

3 – Represents the elimination of the loss attributable to discontinued operations, net of tax, in order to calculate income attributable to continuing operations only.

4 – Represents the elimination of the loss or gain attributable to the derivative liabilities embedded in the Company’s financing agreement with Leucadia, as it is a non-operating, non-cash loss or gain.

5 – Represents the elimination of the gain on sale of investment due to the non-recurring nature of this item.

This press release supersedes a press release previously issued that contained an error.

About FXCM Group, LLC

FXCM is a leading provider of online foreign exchange (FX) trading, CFD trading, spread betting and related services. The company’s mission is to provide global traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, meeting strict financial standards and striving for the best online trading experience in the market. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. In addition, FXCM offers educational courses on FX trading and provides trading tools proprietary data and premium resources. FXCM Pro provides retail brokers, small hedge funds and emerging market banks access to wholesale execution and liquidity, while providing high and medium frequency funds access to prime brokerage services via FXCM Prime.

Trading foreign exchange and CFDs on margin carries a high level of risk, which may result in losses that could exceed your deposits, therefore may not be suitable for all investors. Read full disclaimer.

FXCM Group is a holding company of Forex Capital Markets Limited, inclusive of all EU branches (FXCM UK), FXCM Australia Pty. Limited (FXCM AU), and all affiliates of aforementioned firms, or other firms under the FXCM group of companies [collectively “FXCM”].

Jaclyn Sales, 646-432-2463
Vice-President, Corporate Communications
jsales@fxcm.com 

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Gridsum Reports Unaudited First Quarter 2017 Financial Results

BEIJING, May 25, 2017 (GLOBE NEWSWIRE) — Gridsum Holding Inc. (“Gridsum” or the “Company”) (NASDAQ:GSUM), a leading provider of cloud-based big-data analytics, machine learning and artificial intelligence (“AI”) solutions in China, today reported its unaudited financial results for the first quarter ended March 31, 2017. The Company will hold a conference call at 8:30 p.m. Eastern Time on May 25, 2017, or 8:30 a.m. Beijing Time on May 26, 2017. Dial-in details are provided at the end of this release.

First Quarter 2017 Financial Highlights

  • Net revenues increased by 57.3% to RMB100.6 million (US$14.6 million) from RMB64.0 million in the comparable period in 2016, driven by 51.5% growth in Enterprise revenues and a 112.4% increase in e-Government and other revenues.
  • Gross profit increased by 64.6% to RMB90.0 million (US$13.1 million) from RMB54.7 million in the comparable period in 2016.

“The first quarter of 2017 was another solid quarter with robust financial and operating results,” stated Mr. Guosheng Qi, Chief Executive Officer of Gridsum. “We are pleased to see our topline continue its strong growth momentum, primarily driven by solid customer base expansion, which we target to grow by 30-40% in 2017, and a steady increase in Average Revenue Per User (“ARPU”). Meanwhile, we are glad to report that for the third consecutive year, Gridsum was named one of the Top 10 companies in Beijing’s high-tech Zhongguancun district in terms of the number of the patent applications filed. This is a strong testament to our innovation DNA and unwavering commitment to continuing to drive market leading R&D efforts. This commitment is exemplified by the fact that we have filed 1,653 patent applications in China, of which 583 are big-data focused and 148 are explicitly Enterprise-AI focused, as of March 31, 2017. In addition, we have consolidated all of our AI activities strategically, technically and organizationally into a new division: Gridsum Prophet, which encompasses all of our AI capabilities: machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. We believe that the increased intelligent features of our products that come from this will continue to be key going forward in driving new customer acquisition and ARPU growth.” 

Mr. Qi continued, “We have also strengthened our partnership with Tencent Cloud, having jointly developed an integrated speech to text solution for court trials and conferences, which we have the exclusive right to distribute in China’s nationwide court system. We see tremendous growth opportunities in front of us and will continue to penetrate into new markets, including financial services and intelligent CRM. With our first-mover advantage and cutting-edge technology, we will continue to enhance and build upon our product offerings and capitalize on the immense potential in the market. We believe we can further fortify our position as China’s leading provider of cloud-based big-data analytics, machine learning and AI solutions, and generate great value for our shareholders going forward.”

Mr. Michael Zhang, Chief Financial Officer of the Company, commented, “In the first quarter of 2017, our net revenues increased by 57.3% year over year to RMB100.6 million, driven by a solid 51.5% increase in our Enterprise revenues and 112.4% increase in e-Government and other revenues. The significant growth of our e-Government and other business was primarily driven by the better-than-expected performance in all the three revenue streams of e-Government, new media and legal services with legal services, in particular, exhibiting exceptional growth. To fuel further topline growth, we will leverage our superior sales efficiency and continue our targeted investment in sales and marketing to broaden our market visibility. R&D will remain another key area of focused investment to strengthen our technology leadership and drive expansion into new products and services.”

First Quarter 2017 Financial Results

REVENUES: Net revenues for the first quarter of 2017 increased by 57.3% to RMB100.6 million (US$14.6 million) from RMB64.0 million in the comparable period in 2016, driven by growth in Enterprise revenues and e-Government and other revenues.

Enterprise revenues increased by 51.5% to RMB88.9 million (US$12.9 million) in the first quarter of 2017 from RMB58.7 million in the comparable period in 2016. e-Government and other revenues increased by 112.4% to RMB13.8 million (US$2.0 million) in the first quarter of 2017 from RMB6.5 million in the comparable period in 2016. These growths were due to an increased number of customers as well as increased average revenue per customer.

COST OF REVENUES: Cost of revenues were RMB10.6 million (US$1.5 million), as compared with RMB9.3 million in the comparable period in 2016. The increase was primarily due to the RMB2.6 million increased cost of technical service fee, which was in line with total revenues growth.

GROSS PROFIT AND GROSS MARGIN: Gross profit for the first quarter of 2017 increased by 64.6% to RMB90.0 million (US$13.1 million) from RMB54.7 million in the comparable period in 2016. Gross margin for the first quarter of 2017 increased to 89.5%, as compared with 85.5% in the comparable period in 2016. The increase in gross margin was primarily attributable to the relatively larger portion of revenues coming from e-Government and other related sales, which have a higher gross margin, and improved revenue contribution from Enterprise revenue due to optimized service offering.

OPERATING EXPENSES: Total operating expenses for the first quarter of 2017 were RMB139.0 million (US$20.2 million), as compared with RMB76.3 million in the comparable period in 2016. As a percentage of net revenues, operating expenses were 138.2%, as compared with 119.3% in the comparable period in 2016, primarily due to the increased sales and marketing expenses and research and development expenses.

  • Sales and marketing expenses were RMB51.3 million (US$7.5 million) in the first quarter of 2017, as compared with RMB24.1 million in the comparable period in 2016. The increase was primarily due to a RMB20.8 million increase in marketing expenses and professional fees, a RMB3.8 million increase in personnel costs and a RMB2.6 million increase in overhead allocation, reflecting the Company’s strategy to drive long-term topline growth through sustainable investment in marketing and promotion activities by leveraging the existing high sales efficiency of the Company’s business. 
  • Research and development expenses were RMB51.9 million (US$7.5 million) in the first quarter of 2017, as compared with RMB32.4 million in the comparable period in 2016, including a RMB13.1 million increase in personnel costs and a RMB8.0 million increase in overhead allocation, which was partially offset by a RMB1.6 million reduction of outsourcing costs. The increase primarily reflected the Company’s strong commitment to enhance its technology competency and innovation capabilities.
  • General and administrative expenses were RMB35.8 million (US$5.2 million) in the first quarter of 2017, as compared with RMB19.7 million in the comparable period in 2016. The increase was primarily due to a RMB15.3 million increase in allowance for doubtful accounts and a RMB1.8 million increase in personnel cost, and partially offset by a RMB1.0 million reduction in overhead allocation. The increase in allowance for doubtful accounts was a result of relatively slow collection in the first quarter of 2017. 

LOSS FROM OPERATIONS: Loss from operations for the first quarter of 2017 was RMB49.0 million (US$7.1 million), as compared with RMB21.6 million in the comparable period in 2016.

NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 was RMB57.2 million (US$8.3 million), as compared with RMB31.1 million in the comparable period in 2016. The increase was primarily due to the increased operating expenses, including the incremental expenses as a result of being a publicly listed company.

NON-GAAP NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss attributable to Gridsum’s ordinary shareholders, which is defined as net loss attributable to Gridsum’s ordinary shareholders before share-based compensation expense, for the first quarter of 2017 was RMB52.2 million (US$7.6 million), as compared with RMB28.4 million in the comparable period in 2016.

EBITDA: Loss before interest, income tax, depreciation and amortization for the first quarter of 2017 was RMB43.0 million (US$6.2 million), as compared with RMB16.1 million in the comparable period in 2016. The increase was mainly due to the increase in loss from operation of RMB27.4 million, an increase in foreign exchange expense and other expense of RMB1.8 million, partially offset by depreciation and amortization expense of RMB2.3 million.

ADJUSTED EBITDA: Adjusted loss before interest, income tax, depreciation and amortization, which excludes share-based compensation expenses, was RMB38.0 million (US$5.5 million) for the first quarter of 2017, as compared with RMB13.4 million in the comparable period in 2016.

NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.3% to RMB1.92 (US$0.28), as compared with RMB3.11 in the comparable period in 2016.

NON-GAAP NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.4% to RMB1.75 (US$0.25), as compared with RMB2.84 in the comparable period in 2016.

Each ADS represents one Class B ordinary share. For purposes of determining net loss per ADS attributable to Gridsum’s ordinary shareholders, the weighted average number of ordinary shares for the first quarter of 2017 was 29,735,166. As of March 31, 2017, total number of ordinary shares outstanding was 29,735,166.

Balance Sheet
As of March 31, 2017, the Company had cash and cash equivalent of RMB183.4 million (US$26.7 million), time deposit of RMB68.8 million (US$10.0 million) and restricted cash of RMB258.1 million (US$37.5 million).

Recent Development: Launch of Gridsum Prophet AI Engine

The Company has recently consolidated all of its AI activities, technically, organizationally and strategically, into a new division called Gridsum Prophet. Gridsum Prophet is directly headed by the Company’s Chief Technology Officer, John Jiyang Liu. Gridsum Prophet encompasses all of the Company’s AI capabilities, including machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. It powers the Company’s intelligent products and solutions across the matrix of clients and industry verticals. It also allows the Company to see cross-industry, client and demographic correlations and relationships to add further value for clients. Gridsum Prophet is increasingly key in creating new differentiated product features for the Company’s existing products (e.g. marketing automation) and is central in defining and shaping new products, such as the Company’s social listening and brand management suite as well as the legal services suite and intelligent CRM product suites. Gridsum Prophet is also instrumental in defining Gridsum’s new product pipeline, such as the intelligent CRM and financial services product suites. The Company sees the new division playing an increasingly key role in customer acquisition, ARPU growth, new product development, and others.

Financial Outlook

For the full year of 2017, the Company retains its previous outlook that net revenues are expected to be in the range of RMB622 million to RMB634 million, representing approximately 57% year-over-year growth at the mid-point. These forecasts reflect the Company’s current and preliminary view, which may be subject to change.

Conference Call

The Company will hold a conference call on May 25, 2017 at 8:30 pm U.S. Eastern Time, or May 26, 2017 at 8:30 am Beijing Time to discuss its financial results.

Participants may access the call by dialing the following numbers:  
United States: +1-845-675-0437  
International Toll Free: +1-866-519-4004  
Hong Kong: +852-3018-6771  
China Domestic: 400-620-8038  
Conference ID: 22860602  
     
The replay will be accessible through June 2, 2017 by dialing the following numbers:  
United States Toll Free: +1-855-452-5696  
International: +61-2-8199-0299  
Conference ID: 22860602  

A live and archived webcast of the conference call will be available through the Company’s investor relations website at http://ir.gridsum.com.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8832 to US$1.00, the noon buying rate in effect on March 31, 2017 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all.

Statement Regarding Unaudited Condensed Financial Information

The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.

Use of Non-GAAP Financial Measures

In evaluating the Company’s business, the Company considers and uses the following non-GAAP financial measures as supplemental measures to review and assess the Company’s operating performance: non-GAAP net loss attributable to Gridsum’s ordinary shareholders, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders, EBITDA and adjusted EBITDA. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with U.S. GAAP. Non-GAAP net loss attributable to Gridsum’s ordinary shareholders is net loss attributable to Gridsum’s ordinary shareholders before share-based compensation, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders is the per share equivalent and non-GAAP net loss per ADS attributable to Gridsum’s ordinary shareholders is the per ADS equivalent, EBITDA is net loss before interest income and expenses, income tax expenses and depreciation expenses, and adjusted EBITDA is EBITDA before share-based compensation.

The Company presents these non-GAAP financial measures because they are used by the Company’s management to evaluate the Company’s operating performance and formulate the Company’s business plans. These non-GAAP financial measures enable the Company’s management to assess the Company’s operating results without considering the impact of non-cash charges, including depreciation expenses and share-based compensation, and without considering the impact of non-operating items such as interest income and expenses and income tax expenses. The Company also believes that the use of these non-GAAP measures facilitates investors’ assessment of the Company’s operating performance.

These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company’s operations. Interest income and expenses, income tax expenses, depreciation expenses and share-based compensation have been and may continue to be incurred in the Company’s business and are not reflected in the presentation of adjusted EBITDA. Further, these non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies, including Gridsum’s peer companies, so their utility for comparison purposes may be limited.

The Company compensates for these limitations by reconciling the Company’s non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, which should be considered when evaluating the Company’s performance.

About Gridsum

Gridsum Holding Inc. is a leading provider of cloud-based big-data analytics, machine learning and AI solutions for multinational and domestic enterprises and government agencies in China. Gridsum’s core technology, the Gridsum Big Data Platform, is built on a distributed computing framework and performs real-time multi-dimensional correlation analysis of both structured and unstructured data. This enables Gridsum’s customers to identify complex relationships within their data and gain new insights that help them make better business decisions. The Company is named “Gridsum” to symbolize the combination of distributed computing (Grid) and analytics (sum). As a digital intelligence pioneer, the Company’s mission is to help enterprises and government organizations in China use data in new and powerful ways to make better informed decisions and be more productive.

For more information, please visit http://www.gridsum.com/.

Safe Harbor Statement

This announcement contains forward-looking statements. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “may,” “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to” and similar statements. Among other things, quotations from management in this announcement, Gridsum’s financial outlook as well as Gridsum’s strategic and operational plans contain forward-looking statements. Gridsum may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Gridsum’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: unexpected difficulties in Gridsum’s pursuit of its goals and strategies; the unexpected developments, including slow growth, in the digital intelligence market; reduced demand for, and market acceptance of, Gridsum’s solutions; difficulties keeping and strengthening relationships with customers; potentially costly research and development activities; competitions in the digital intelligence market; PRC governmental policies relating to media, software, big data, the internet, internet content providers and online advertising; and general economic and business conditions in the regions where Gridsum provides solutions and services. Further information regarding these and other risks is included in Gridsum’s reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Gridsum undertakes no duty to update such information except as required under applicable law.

 
GRIDSUM HOLDING INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
 
  As of
  December 31,
 2016
  March 31,
2017
  March 31,
2017
  RMB   RMB   US $
ASSETS          
Current assets:          
Cash and cash equivalents 524,454   183,446   26,651
Time deposit 69,430   68,832   10,000
Restricted cash   258,120   37,500
Accounts receivable, net 412,301   492,253   71,515
Prepayments and other current assets 160,087   178,869   25,986
Total current assets 1,166,272   1,181,520   171,652
Non-current assets:          
Property, equipment and software, net 56,107   65,327   9,491
Other non-current assets 3,947   1,323   192
Total non-current assets 60,054   66,650   9,683
           
Total assets 1,226,326   1,248,170   181,335
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Short-term bank loans 65,093   164,000   23,826
Accounts payable 12,150   7,214   1,048
Salary and welfare payables 54,779   32,834   4,769
Taxes payable 66,589   75,687   10,996
Deferred revenues 50,110   39,945   5,803
Advances from customers 106,570   93,092   13,525
Accrued expenses and other current liabilities 58,473   78,217   11,363
Total current liabilities 413,764   490,989   71,330
           
Total liabilities 413,764   490,989   71,330
           
Shareholders’ equity:          
Total Gridsum shareholders’ equity 812,231   756,866   109,959
           
Non-controlling interests 331   315   46
Total shareholders’ equity 812,562   757,181   110,005
Total liabilities and shareholders’ equity 1,226,326   1,248,170   181,335
           

GRIDSUM HOLDING INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(All amounts in thousands, except for shares, per share and per ADS data)
               
  For the Three Months Ended
               
  March 31, 2016   December 31,
2016
  March 31, 2017   March 31, 2017
  RMB   RMB   RMB   US$
               
Revenues:              
Enterprise 58,701     128,408     88,912     12,917  
e-Government and other 6,482     30,008     13,766     2,000  
Less: Business tax and surcharges (1,222)     (4,942)     (2,094)     (304)  
Net revenues 63,961     153,474     100,584     14,613  
Cost of revenues (9,267)     (21,794)     (10,584)     (1,538)  
Gross profit 54,694     131,680     90,000     13,075  
Operating expenses:              
Sales and marketing expenses (24,141)     (50,942)     (51,323)     (7,456)  
Research and development expenses (32,434)     (47,508)     (51,930)     (7,544)  
General and administrative expenses (19,734)     (25,959)     (35,768)     (5,196)  
Total operating expenses (76,309)     (124,409)     (139,021)     (20,196)  
Income/(Loss) from operations (21,615)     7,271     (49,021)     (7,121)  
Other income/(expense):              
Foreign currency exchange gain/(loss) 127     279     (1,229)     (179)  
Interest income/(expense), net 106     (1,460)     (1,978)     (287)  
Other income/(expense), net 115     (1,117)     (339)     (49)  
Income/(Loss) before income tax (21,267)     4,973     (52,567)     (7,636)  
Income tax expense     (28,387)     (4,621)     (671)  
Net loss (21,267)     (23,414)     (57,188)     (8,307)  
               
Less: Net loss attributable to non-controlling interests (13)     (10)     (16)     (2)  
Net loss attributable to Gridsum Holding Inc. (21,254)     (23,404)     (57,172)     (8,305)  
               
Accretion to preferred shares redemption value (5,494)              
Cumulative dividend to preferred shareholders (4,332)              
Net loss attributable to Gridsum’s ordinary shareholders (31,080)     (23,404)     (57,172)     (8,305)  
               
Net loss (21,267)     (23,414)     (57,188)     (8,307)  
Foreign currency translation adjustment, net of nil tax 2,081     21,574     (3,205)     (466)  
Comprehensive loss (19,186)     (1,840)     (60,393)     (8,773)  
Less: Comprehensive loss attributable to non-controlling interests (13)     (10)     (16)     (2)  
Comprehensive loss attributable to Gridsum Holding Inc. (19,173)     (1,830)     (60,377)     (8,771)  
               
Weighted average number  of ordinary shares used in net loss per share attributable to Gridsum’s ordinary shareholders calculations:                      
Basic and diluted 10,000,000     29,702,394     29,735,166     29,735,166  
Net Loss per ordinary share attributable to Gridsum’s ordinary shareholders:                      
Basic and diluted (3.11)     (0.79)     (1.92)     (0.28)  
Net Loss per ADS attributable to Gridsum’s ordinary shareholders:                      
Basic and diluted (3.11)     (0.79)     (1.92)     (0.28)  

GRIDSUM HOLDING INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands, except for shares, per share and per ADS data)
               
  For the Three Months Ended
               
  March 31, 2016   December 31,
2016
  March 31, 2017   March 31, 2017
  RMB   RMB   RMB   US$
               
Reconciliation of net loss attributable to Gridsum’s ordinary shareholders to non-GAAP net loss attributable to Gridsum’s ordinary shareholders              
Net loss attributable to Gridsum’s ordinary shareholders (31,080)     (23,404)     (57,172)     (8,305)  
Share-based compensation 2,663     2,648     5,012     728  
Non-GAAP net loss attributable to Gridsum’s ordinary shareholders (28,417)     (20,756)     (52,160)     (7,577)  
Weighted average number of ordinary shares used in net loss per share attributable to Gridsum’s ordinary shareholders and non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders calculations:                      
Basic and diluted 10,000,000     29,702,394     29,735,166     29,735,166  
Net loss per ordinary share attributable to Gridsum’s ordinary shareholders:                      
Basic and diluted (3.11)     (0.79)     (1.92)     (0.28)  
Net loss per ADS attributable to Gridsum’s ordinary shareholders:                      
Basic and diluted (3.11)     (0.79)     (1.92)     (0.28)  
               
Non-GAAP net loss per ordinary share attributable to Gridsum’s ordinary shareholders:                      
Basic and diluted (2.84)     (0.70)     (1.75)     (0.25)  
Non-GAAP net loss per ADS attributable to Gridsum’s ordinary shareholders:                      
Basic and diluted (2.84)     (0.70)     (1.75)     (0.25)  
               
Reconciliation of net loss to EBITDA and adjusted EBITDA              
Net loss (21,267)     (23,414)     (57,188)     (8,307)  
Interest (income)/expense, net (106)     1,460     1,978     287  
Income tax expenses     28,387     4,621     671  
Depreciation and amortization expenses 5,280     7,496     7,603     1,105  
EBITDA (16,093)     13,929     (42,986)     (6,244)  
Share-based compensation 2,663     2,648     5,012     728  
Adjusted EBITDA (13,430)     16,577     (37,974)     (5,516)  

 

Investor Relation Contact:

ICR, Inc.
Xueli Song
Tel: +1 (646) 328-2510
Email: IR@gridsum.com