Subway appoints former Burger King executive as CEO
U.S. sandwich chain Subway on Monday named former Burger King executive Jonathan Fitzpatrick as its CEO starting July 28, tapping a fast-food industry veteran to lift sales and help expand its business globally.
Most recently, Fitzpatrick served as president and CEO of automotive services firm Driven Brands DRVN.O. Prior to that, he held several leadership positions in Burger King, including executive vice president, and chief brand and operations officer.
Subway, which operates nearly 37,000 restaurants worldwide, was bought by private equity firm Roark Capital about two years ago in a deal that valued the company at up to $9.55 billion, including debt.
Fitzpatrick replaces John Chidsey, who stepped down at the end of last year after five years at the helm.
The company said Fitzpatrick will work with interim CEO Carrie Walsh during the transition.
(Reporting by Savyata Mishra in Bengaluru; Editing by Maju Samuel)
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Please use the following link to follow along with the live stream: The dial-in number for the live call is 877-485-3108 (toll free) or 201-689-8264 (toll), and the conference ID is 13755131. A telephone replay of the call will be available for two weeks following the event by dialing 877-660-6853 (toll-free) or 201-612-7415 (toll) and entering the access code 13755131. The accompanying investor presentation will be available on August 7, 2025 on the investor section of Redwire's website at Any replay, rebroadcast, transcript or other reproduction or transmission of this conference call, other than the replay accessible by calling the number and website above, has not been authorized by Redwire Corporation and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents. About Redwire Corporation Redwire Corporation (NYSE:RDW) is an integrated space and defense tech company focused on advanced technologies. We are building the future of space infrastructure, autonomous systems and multi-domain operations leveraging digital engineering and AI automation. Redwire's approximately 1,300 employees located throughout the United States and Europe are committed to delivering innovative space and airborne platforms, transforming the future of multi-domain operations. For more information, please visit Use of Projections The financial outlook and projections, estimates and targets in this press release are forward-looking statements that are based on assumptions that are inherently subject to significant uncertainty and contingencies, many of which are beyond Redwire's control. Such calculation cannot be predicted with reasonable certainty and without unreasonable effort because of the timing, magnitude and variables associated with the recently completed merger with Edge Autonomy. Additionally, any such calculation, at this time, would imply a degree of precision that could be confusing or misleading to investors. Redwire's independent auditors have not audited, reviewed, compiled or performed any procedures with respect to the financial projections for purposes of inclusion in this press release, and, accordingly, they did not express an opinion or provide any other form of assurance with respect thereto for the purposes of this press release. While all financial projections, estimates and targets are necessarily speculative, Redwire believes that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection, estimate or target extends from the date of preparation. The assumptions and estimates underlying the projected, expected or target results for the combined company are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial projections, estimates and targets. The inclusion of financial projections, estimates and targets in this press release should not be regarded as an indication that Redwire, or its representatives, considered or consider the financial projections, estimates or targets to be a reliable prediction of future events. Further, inclusion of the prospective financial information in this press release should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved. Cautionary Statement Regarding Forward-Looking Statements Readers are cautioned that the statements contained in this press release regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are 'forward-looking statements' as defined by the 'safe harbor' provisions in the Private Securities Litigation Reform Act of 1995. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included or incorporated in this press release, including statements regarding our strategy, financial projections, including the prospective financial information provided in this press release, financial position, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, objectives of management, and the expected performance of Redwire following our acquisition of Edge Autonomy, among others, are forward-looking statements. Words such as 'expect,' 'anticipate,' 'should,' 'believe,' 'target,' 'continued,' 'project,' 'plan,' 'opportunity,' 'estimate,' 'potential,' 'predict,' 'demonstrates,' 'may,' 'will,' 'could,' 'intend,' 'shall,' 'possible,' 'forecast,' 'trends,' 'contemplate,' 'would,' 'approximately,' 'likely,' 'outlook,' 'schedule,' 'pipeline,' and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. These factors and circumstances include, but are not limited to (1) risks associated with economic uncertainty, including high inflation, effects of trade tariffs and other trade actions, supply chain challenges, labor shortages, increased labor costs, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession and reduced spending or suspension of investment in new or enhanced projects; (2) the failure of financial institutions or transactional counterparties; (3) Redwire's limited operating history in an evolving industry and history of losses to date as well as the limited operating history of Edge Autonomy and the relatively novel nature of the drone industry makes it difficult to evaluate our future prospects and the risks and challenges we may encounter; (4) the inability to successfully integrate recently completed and future acquisitions, including the recent acquisition of Edge Autonomy, as well as the failure to realize the anticipated benefits of our acquisition of Edge Autonomy or to realize estimated projected combined company results; (5) the development and continued refinement of many of Redwire's proprietary technologies, products and service offerings; (6) competition with new or existing companies; (7) a limited number of customers make up a high percentage of our revenue; (8) natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events; (9) adverse publicity stemming from any incident or perceived risk involving Redwire or our competitors; (10) incurring significant risks and uncertainties not covered by insurance or indemnity; (11) failure to respond to industry cycles in terms of our cost structure, manufacturing capacity, and/or personnel needs; (12) delays in the development, design, engineering and manufacturing of our core offerings; (13) unsatisfactory performance of our core offerings resulting from challenges in the space environment, extreme space weather events or otherwise; (14) impacts to our cash flows caused by our mix of fixed-price, cost-plus and time-and-material type contracts; (15) incurrence of expenditures prior to final receipt of a contract; (16) failure of new offerings and technologies to materialize; (17) the inability to convert orders in backlog into revenue; (18) the inability to properly manage the use of artificial intelligence in our business; (19) reliance on third-party launch vehicles to launch our spacecraft and customer payloads; (20) risk of an accident on launch or during a journey into space; (21) customers' willingness to adopt uncrewed aircraft systems technology; (22) Redwire's inability to meet expected financial results; (23) cyber-attacks and other security threats and disruptions; (24) failure to attract and retain highly qualified personnel; (25) risks resulting from broader geographic operations; (26) impairment of goodwill; (27) changes to our pension funding and costs, which are dependent on several economic assumptions; (28) inability to use net operating loss carryforwards and certain other tax attributes; (29) changes to the U.S. government's budget deficit and the national debt; (30) dependence on U.S. government contracts; (31) changes to our facility security clearance; (32) Redwire is subject to stringent U.S. economic sanctions, and trade control laws and regulations, as well as risks related to doing business in other countries; (33) failure to adequately protect our intellectual property rights; (34) failure to obtain necessary additional funding; (35) the fact that AE Industrial Partners and Bain Capital and their affiliates have significant influence over us, which could limit your ability to influence the outcome of key transactions; (36) the fact that provisions in our Certificate of Designation with respect to our Series A Convertible Preferred Stock may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock; (37) the fact that our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders of our other outstanding capital stock; (38) the possibility of sales of a substantial amount of our Common Stock by our current stockholders; (39) volatility in the trading price of our Common Stock; (40) identification of material weaknesses of other deficiencies or failure to maintain effective internal controls over financial reporting and (41) other risks and uncertainties described in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and those indicated from time to time in other documents filed or to be filed with the Securities and Exchange Commission by Redwire. The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. If underlying assumptions to forward-looking statements prove inaccurate, or if known or unknown risks or uncertainties materialize, actual results could vary materially from those anticipated, estimated, or projected. The forward-looking statements contained in this press release are made as of the date of this press release, and Redwire disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Persons reading this press release are cautioned not to place undue reliance on forward-looking statements. Non-GAAP Financial Information This press release contains financial measures that have not been prepared in accordance with United States Generally Accepted Accounting Principles ('U.S. GAAP'). These financial measures include Adjusted EBITDA and Free Cash Flow. Non-GAAP financial measures are used to supplement the financial information presented on a U.S. GAAP basis and should not be considered in isolation or as a substitute for the relevant U.S. GAAP measures and should be read in conjunction with information presented on a U.S. GAAP basis. Because not all companies use identical calculations, our presentation of Non-GAAP measures may not be comparable to other similarly titled measures of other companies. We encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Adjusted EBITDA is defined as net income (loss) adjusted for interest expense, net, income tax expense (benefit), depreciation and amortization, impairment expense, transaction expenses, acquisition integration costs, acquisition earnout costs, purchase accounting fair value adjustment related to deferred revenue and inventory, severance costs, capital market and advisory fees, litigation-related expenses, write-off of long-lived assets, equity-based compensation, committed equity facility transaction costs, debt financing costs, gains on sale of joint ventures, net of costs incurred, and warrant liability change in fair value adjustments. Free Cash Flow is computed as net cash provided by (used in) operating activities less capital expenditures. We use Adjusted EBITDA to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. We use Free Cash Flow as an indicator of liquidity to evaluate our period-over-period operating cash generation that will be used to service our debt, and can be used to invest in future growth through new business development activities and/or acquisitions, among other uses. Free Cash Flow does not represent the total increase or decrease in our cash balance, and it should not be inferred that the entire amount of Free Cash Flow is available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from this measure. Key Performance Indicators Management uses Key Performance Indicators ('KPIs') to assess the financial performance of the Company, monitor relevant trends and support financial, operational and strategic decision-making. Management frequently monitors and evaluates KPIs against internal targets, core business objectives as well as industry peers and may, on occasion, change the mix or calculation of KPIs to better align with the business, its operating environment, standard industry metrics or other considerations. If the Company changes the method by which it calculates or presents a KPI, prior period disclosures are recast to conform to current presentation. June 30, 2025 December 31, 2024 Current assets: Cash, cash equivalents and restricted cash $ 78,559 $ 49,071 Accounts receivable, net 36,811 21,905 Contract assets 51,044 43,044 Inventory, net 58,835 2,239 Prepaid expenses and other current assets 19,273 9,666 Total current assets 244,522 125,925 Property, plant and equipment, net of accumulated depreciation of $12,615 and $9,628 47,511 17,837 Right-of-use assets 30,248 15,277 Intangible assets, net of accumulated amortization of $32,195 and $25,920 396,130 61,788 Goodwill 789,254 71,161 Other non-current assets 521 629 Total assets $ 1,508,186 $ 292,617 Liabilities, Convertible Preferred Stock and Equity (Deficit) Current liabilities: Accounts payable $ 38,885 $ 32,127 Notes payable to sellers 7,171 — Short-term debt, including current portion of long-term debt 5,280 1,266 Short-term operating lease liabilities 4,573 4,354 Short-term finance lease liabilities 540 473 Accrued expenses 33,380 24,192 Deferred revenue 65,343 67,201 Other current liabilities 12,257 19,730 Total current liabilities 167,429 149,343 Long-term debt, net 185,464 124,464 Long-term operating lease liabilities 28,320 13,444 Long-term finance lease liabilities 1,068 980 Warrant liabilities 23,014 55,285 Deferred tax liabilities 40,800 582 Other non-current liabilities 2,606 428 Total liabilities $ 448,701 $ 344,526 Convertible preferred stock, $0.0001 par value, 125,292.00 shares authorized; issued and outstanding: 2025—103,855.14 and 2024—108,649.30. 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profit (19,064 ) 12,984 (10,023 ) 27,809 Operating expenses: Selling, general and administrative expenses 54,464 18,088 73,210 35,450 Transaction expenses 16,643 278 20,442 278 Research and development 1,720 1,748 2,533 2,788 Operating income (loss) (91,891 ) (7,130 ) (106,208 ) (10,707 ) Interest expense, net 23,755 3,009 27,349 5,927 Other (income) expense, net 13,937 7,933 (844 ) 9,425 Income (loss) before income taxes (129,583 ) (18,072 ) (132,713 ) (26,059 ) Income tax expense (benefit) (32,604 ) 15 (32,786 ) 124 Net income (loss) (96,979 ) (18,087 ) (99,927 ) (26,183 ) Net income (loss) attributable to noncontrolling interests — 5 — 4 Net income (loss) attributable to Redwire Corporation (96,979 ) (18,092 ) (99,927 ) (26,187 ) Less: dividends on Convertible Preferred Stock 29,739 9,699 33,179 12,742 Net income (loss) available to common shareholders $ (126,718 ) $ (27,791 ) $ (133,106 ) $ (38,929 ) Net income (loss) per common share: Basic and diluted $ (1.41 ) $ (0.42 ) $ (1.66 ) $ (0.59 ) Weighted-average shares outstanding: Basic and diluted 89,554,940 65,701,704 80,424,270 65,636,995 Comprehensive income (loss): Net income (loss) attributable to Redwire Corporation $ (96,979 ) $ (18,092 ) $ (99,927 ) $ (26,187 ) Foreign currency translation gain (loss), net of tax 10,174 (78 ) 11,009 (750 ) Total other comprehensive income (loss), net of tax 10,174 (78 ) 11,009 (750 ) Total comprehensive income (loss) $ (86,805 ) $ (18,170 ) $ (88,918 ) $ (26,937 ) REDWIRE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In thousands of U.S. dollars) Six Months Ended June 30, 2025 June 30, 2024 Cash flows from operating activities: Net income (loss) $ (99,927 ) $ (26,183 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization expense 8,106 5,678 Amortization of debt issuance costs and discount 642 349 Equity-based compensation expense 35,598 4,453 (Gain) loss on sale of joint ventures — (1,303 ) (Gain) loss on change in fair value of warrants 2,692 10,052 Deferred provision (benefit) for income taxes (32,069 ) 112 Non-cash lease (benefit) expense (266 ) 22 Other (3,411 ) 690 Changes in assets and liabilities: (Increase) decrease in accounts receivable (3,468 ) 9,987 (Increase) decrease in contract assets (5,724 ) (6,449 ) (Increase) decrease in inventory 1,449 (314 ) (Increase) decrease in prepaid expenses and other assets (3,024 ) 274 Increase (decrease) in accounts payable and accrued expenses (5,586 ) 4,838 Increase (decrease) in deferred revenue (28,433 ) (8,497 ) Increase (decrease) in operating lease liabilities (55 ) (169 ) Increase (decrease) in other liabilities 732 (282 ) Net cash provided by (used in) operating activities (132,744 ) (6,742 ) Cash flows from investing activities: Acquisition of businesses, net of cash acquired (151,791 ) — Net proceeds from sale of joint ventures — 4,598 Purchases of property, plant and equipment (4,752 ) (2,475 ) Purchase of intangible assets (5,186 ) (1,579 ) Net cash provided by (used in) investing activities (161,729 ) 544 Cash flows from financing activities: Proceeds received from debt 190,327 15,000 Repayments of debt (125,876 ) (7,988 ) Payment of debt issuance fees (105 ) (322 ) Repayment of finance leases (227 ) (235 ) Repayments of third-party advances (7,820 ) — Proceeds from issuance of common stock 328,684 530 Shares repurchased for settlement of employee tax withholdings on share-based awards (8 ) (56 ) Repurchase of convertible preferred stock (61,486 ) — Net cash provided by (used in) financing activities 323,489 6,929 Effect of foreign currency rate changes on cash, cash equivalents and restricted cash 472 (177 ) Net increase (decrease) in cash, cash equivalents and restricted cash 29,488 554 Cash, cash equivalents and restricted cash at beginning of period 49,071 30,278 Cash, cash equivalents and restricted cash at end of period $ 78,559 $ 30,832 REDWIRE CORPORATION Supplemental Non-GAAP Information Unaudited Adjusted EBITDA During the third quarter of 2024, we changed the Supplemental Non-GAAP Information to present only Adjusted EBITDA, whereas prior period disclosures also presented Pro Forma Adjusted EBITDA. Management believes the presentation of Pro Forma Adjusted EBITDA no longer provides the same meaningful insights into the Company's performance as it did during the initial years of the Company's formation. Prior period disclosures were recast to conform to current presentation. There was no change in the calculation of Adjusted EBITDA. The following table presents the reconciliations of Adjusted EBITDA to net income (loss), computed in accordance with U.S. GAAP. Three Months Ended Six Months Ended (in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Net income (loss) $ (96,979 ) $ (18,087 ) $ (99,927 ) $ (26,183 ) Interest expense, net 23,755 3,009 27,349 5,927 Income tax expense (benefit) (32,604 ) 15 (32,786 ) 124 Depreciation and amortization 5,060 2,925 8,106 5,678 Transaction expenses (i) 16,643 278 20,442 278 Acquisition integration costs (i) 457 — 457 — Purchase accounting fair value adjustment related to inventory (ii) 2,418 — 2,418 — Severance costs (iii) 1,999 159 2,176 167 Capital market and advisory fees (iv) 2,740 2,154 3,708 4,432 Litigation-related expenses (v) — 1,532 — 2,233 Equity-based compensation (vi) 32,686 1,918 35,598 4,453 Debt financing costs (vii) 105 — 105 — Gain on sale of joint ventures, net of costs incurred (viii) — (1,255 ) — (1,255 ) Warrant liability change in fair value adjustment (ix) 16,326 8,977 2,692 10,052 Adjusted EBITDA $ (27,394 ) $ 1,625 $ (29,662 ) $ 5,906 i. Redwire incurred acquisition costs including due diligence, integration costs and additional expenses related to pre-acquisition activity. Acquisition deal costs was reclassified as Transaction expenses to conform with current period presentation. ii. Redwire incurred adjustments to depreciate the purchase accounting fair value of inventory for Edge Autonomy. iii. Redwire incurred severance costs related to separation agreements entered into with former employees. iv. Redwire incurred capital market and advisory fees related to advisors assisting with transitional activities associated with becoming a public company, such as implementation of internal controls over financial reporting, and the internalization of corporate services, including, but not limited to, implementing enhanced enterprise resource planning systems. v. Redwire incurred expenses related to securities litigation. vi. Redwire incurred expenses related to equity-based compensation under Redwire's equity-based compensation plan and Edge Autonomy's incentive units. vii. Redwire incurred expenses related to debt financing agreements, including amendment related fees paid to third parties that are expensed in accordance with U.S. GAAP. viii. Redwire recognized a gain related to the sale of all its ownership in two joint ventures during 2024, presented net of transaction costs incurred. ix. Redwire adjusted the private warrant liability to reflect changes in fair value recognized as a gain or loss during the respective periods. Free Cash Flow The following table presents the reconciliation of Free Cash Flow to Net cash provided by (used in) operating activities, computed in accordance with U.S. GAAP. REDWIRE CORPORATION KEY PERFORMANCE INDICATORS Unaudited Book-to-Bill Our book-to-bill ratio was as follows for the periods presented: Three Months Ended Last Twelve Months (in thousands, except ratio) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Contracts awarded $ 90,563 $ 114,437 $ 227,058 $ 374,269 Revenues 61,760 78,111 261,353 292,000 Book-to-bill ratio 1.47 1.47 0.87 1.28 Book-to-bill is the ratio of total contracts awarded to revenues recorded in the same period. The contracts awarded balance includes firm contract orders, including time-and-material contracts, awarded during the period and does not include unexercised contract options or potential orders under indefinite delivery/indefinite quantity contracts. Although the contracts awarded balance reflects firm contract orders, terminations, amendments, or contract cancellations may occur which could result in a reduction to the contracts awarded balance. We view book-to-bill as an indicator of future revenue growth potential. To drive future revenue growth, our goal is for the level of contracts awarded in a given period to exceed the revenue recorded, thus yielding a book-to-bill ratio greater than 1.0. Our book-to-bill ratio was 1.47 for the three months ended June 30, 2025, as compared to 1.47 for the three months ended June 30, 2024. For the three months ended June 30, 2025, $73.7 million of the contracts awarded balance relates to the Edge Autonomy acquisition and none of the contracts awarded balance relates to acquired contract value for the three months ended June 30, 2024. Our book-to-bill ratio was 0.87 for the Last Twelve Months ('LTM') ended June 30, 2025, as compared to 1.28 for the LTM ended June 30, 2024. For the LTM ended June 30, 2025, contracts awarded includes $95.7 million of acquired contract value from Edge Autonomy and Hera Systems acquisitions, which were completed in the second quarter of 2025 and third quarter of 2024, respectively. For the LTM ended June 30, 2024, none of the contracts awarded balance relates to acquired contract value. Backlog The following table presents our contracted backlog as of June 30, 2025 and December 31, 2024, and related activity for the six months ended June 30, 2025 as compared to the year ended December 31, 2024. (in thousands) June 30, 2025 December 31, 2024 Organic backlog, beginning balance $ 280,969 $ 372,790 Organic additions during the period 71,591 207,704 Organic revenue recognized during the period (106,334 ) (297,699 ) Foreign currency translation 8,844 (1,826 ) Organic backlog, ending balance 255,070 280,969 Acquisition-related contract value, beginning balance 15,683 — Acquisition-related contract value acquired during the period 73,716 21,940 Acquisition-related additions during the period 1,500 145 Acquisition-related revenue recognized during the period (16,821 ) (6,402 ) Foreign currency translation 335 — Acquisition-related backlog, ending balance 74,413 15,683 Contracted backlog, ending balance $ 329,483 $ 296,652 We view growth in backlog as a key measure of our business growth. Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract). Our contracted backlog includes $86.9 million and $16.7 million in remaining contract value from contracts which recognize revenue at a point in time as of June 30, 2025 and as of December 31, 2024, respectively. Organic backlog change excludes backlog activity from acquisitions for the first four full quarters since the entities' acquisition date. Contracted backlog activity for the first four full quarters since the entities' acquisition date is included in acquisition-related contracted backlog change. After the completion of four fiscal quarters, acquired entities are treated as organic for current and comparable historical periods. Organic contract value includes the remaining contract value as of January 1 not yet recognized as revenue and additional orders awarded during the period for those entities treated as organic. Acquisition-related contract value includes remaining contract value as of the acquisition date not yet recognized as revenue and additional orders awarded during the period for entities not treated as organic. Organic revenue includes revenue earned during the period presented for those entities treated as organic, while acquisition-related revenue includes the same for all other entities, excluding any pre-acquisition revenue earned during the period. The acquisition-related backlog activity presented in the table above is related to the Edge Autonomy and Hera Systems acquisitions completed during the second quarter of 2025 and third quarter of 2024, respectively. Although contracted backlog reflects business associated with contracts that are considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog. In addition, some of our multi-year contracts are subject to annual funding. Management expects all amounts reflected in contracted backlog to ultimately be fully funded. Contracted backlog from foreign operations in Luxembourg and Belgium was $117.4 million and $70.5 million as of June 30, 2025 and December 31, 2024, respectively. These amounts are subject to foreign exchange rate translations from euros to U.S. dollars that could cause the remaining backlog balance to fluctuate with the foreign exchange rate at the time of measurement.
Globe and Mail
4 minutes ago
- Globe and Mail
Vital Energy Reports Second-Quarter 2025 Financial and Operating Results
TULSA, OK, Aug. 06, 2025 (GLOBE NEWSWIRE) -- Vital Energy, Inc. (NYSE: VTLE) ("Vital Energy" or the "Company") today reported second-quarter 2025 financial and operating results. Supplemental slides have been posted to the Company's website and can be found at A conference call is planned for 7:30 a.m. CT, Thursday, August 7, 2025. A webcast will be available through the Company's website. Second-Quarter 2025 Highlights Reported a net loss of $582.6 million, Adjusted Net Income 1 of $76.1 million and cash flow from operating activities of $252.3 million Generated Consolidated EBITDAX 1 of $338.1 million and Adjusted Free Cash Flow 1 of $36.1 million Reported capital investments of $257.0 million, excluding non-budgeted acquisitions and leasehold expenditures, above guidance of $215-$245 million Reported lease operating expense ("LOE") of $107.8 million, below guidance of $112-$118 million Reported total general and administrative expenses ("G&A") of $23.8 million, below guidance of $24.6-$26.7 million Produced 137.9 thousand barrels of oil equivalent per day ("MBOE/d") and oil of 62.1 thousand barrels of oil per day ("MBO/d"), within guidance of 133.0-139.0 MBOE/d and 61.0-65.0 MBO/d, respectively Commenced production from the Company's first two J-Hook wells On schedule to TIL all 38 second-half 2025 wells by early October Divested 3,800 net non-core acres in Crane and Upton counties, Texas, for $6.5 million in July 2025, with proceeds allocated to debt reduction 1 Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release. "Our second quarter results demonstrate our ongoing efforts to lower costs and optimize our assets, with the ultimate goal of enhancing returns," stated Jason Pigott, President and CEO. "We have made substantial progress to sustainably reduce operating, personnel and corporate costs as we streamline our business and strengthen our balance sheet. Additionally, we continue to lead the industry in the application of optimized well designs, completing our first J-Hook wells and commencing drilling on a section to be fully developed with 12 horseshoe wells. We remain committed to the capital and cost discipline that will allow us to generate sustainable Adjusted Free Cash Flow from our high-quality asset base." Second-Quarter 2025 Financial and Operations Summary Financial Results. The Company had a net loss of $582.6 million, or $(15.43) per diluted share. Results were impacted by a non-cash pre-tax impairment loss on oil and gas properties of $427.0 million and a valuation allowance against the Company's federal net deferred tax asset of $237.9 million. Adjusted Net Income was $76.1 million, or $2.02 per adjusted diluted share. Cash flows from operating activities were $252.3 million and Consolidated EBITDAX was $338.1 million. The impairment was related to the full cost ceiling limitation, driven primarily by the decline in the trailing 12-month SEC mandated oil price calculation, and excludes the value of the Company's commodity derivative positions and only includes the 171 proved undeveloped locations in the Company's current proved reserves out of approximately 920 inventory locations at the beginning of the year, net of divestitures. Additionally, as a result of the full cost ceiling impairment and the expectation of future impairments, a valuation allowance against the Company's net deferred tax asset was recorded. Production. Vital Energy's total and oil production averaged 137,864 BOE/d and 62,140 BO/d, respectively. Weather and temporary curtailments related to the installation of additional production equipment negatively impacted average daily production by 780 BOE/d, 500 BO/d of which was oil. Capital Investments. Total capital investments, excluding non-budgeted acquisitions and leasehold expenditures, were $257 million, including approximately $13 million related to drilling cost overruns and $11 million to accelerate development activity into the second quarter. Second quarter investments included $216 million in drilling and completions, $27 million in infrastructure investments, $8 million in other capitalized costs and $6 million in land, exploration and data-related costs. Operating Expenses. LOE was 6% lower than the midpoint of guidance at $107.8 million, driven by lower than expected costs on the recently acquired Point Energy assets and ongoing cost optimization across the Midland and Delaware basins that reduced field power generation and chemicals costs. G&A Expenses. Total G&A expenses were 7% below the midpoint of guidance at $23.8 million as the Company continued to reduce employee and professional costs. Adjusted Free Cash Flow and Net Debt. Adjusted Free Cash Flow was $36 million, with sustainable expense reductions largely offsetting drilling outspend. Net Debt 1 increased by $8 million during the quarter as the Company's net changes in operating assets and liabilities decreased by $41 million. Liquidity. At June 30, 2025, the Company had $745 million outstanding on its $1.4 billion senior secured credit facility and cash and cash equivalents of $30 million. 1 Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release. 2025 Outlook Production. Planned completion of 38 wells in late third quarter/early fourth quarter is expected to meaningfully increase production volumes. Total and oil production ranges for full-year 2025 were narrowed to account for actual second-quarter 2025 volumes and are expected to be 136.5-139.5 MBOE/d and 63.3-65.3 MBO/d, respectively. Capital Investments. Vital Energy reduced expectations for third quarter investments by $25 million to $235-$265 million, in part reflecting the acceleration of capital into the second quarter. Guidance for the fourth quarter is unchanged. Full-year 2025 capital expectations were narrowed to $850-$900 million. Operating Expenses. The Company expects recent improvements in operating expenses to be sustainable. Third quarter LOE is expected to be $109-$115 million and decline to $107-$113 million in the fourth quarter of 2025. G&A Expenses. In June, Vital Energy reduced its combined employee and contractor headcount by approximately 10%, resulting in sustainably lower G&A expense. Total G&A for both the third and fourth quarters of 2025 is expected to decline approximately 12% from second-quarter 2025 to a range of $20.0-$22.0 million. Non-core Divestitures. In July 2025, Vital Energy closed on the sale of approximately 3,800 net acres in Crane and Upton counties for $6.5 million. The sale included five of the Company's inventory locations in the Barnett formation with no impact to production. Year-to-date, Vital Energy has closed on non-core asset sales totaling $27 million. Adjusted Free Cash Flow and Net Debt. For full-year 2025, the Company expects to generate approximately $305 million of Adjusted Free Cash Flow at current oil prices of ~$67 per barrel WTI, inclusive of hedging proceeds, and reduce Net Debt by approximately $310 million. The estimated Net Debt reduction includes proceeds from non-core asset sales and increases in debt from working capital changes and organizational restructuring expenses. Through the first half of 2025, Vital Energy reduced Net Debt by $125 million. The Company expects to reduce Net Debt by approximately $25 million in the third quarter of 2025 and approximately $160 million in the fourth quarter. Third-Quarter 2025 Guidance The table below reflects the Company's guidance for production and capital investments. 3Q-25E Total production (MBOE/d) 128.0 - 134.0 Oil production (MBO/d) 58.0 - 62.0 Capital investments, excluding non-budgeted acquisitions ($ MM) $235 - $265 The table below reflects the Company's guidance for select revenue and expense items. 3Q-25E Average sales price realizations (excluding derivatives): Oil (% of WTI) 101% NGL (% of WTI) 21% Natural gas (% of Henry Hub) 23% Net settlements received (paid) for matured commodity derivatives ($ MM): Oil $11 NGL $5 Natural gas $20 Selected average costs & expenses: Lease operating expenses ($ MM) $109 - $115 Production and ad valorem taxes (% of oil, NGL and natural gas sales revenues) 6.40% Oil transportation and marketing expenses ($ MM) $10.7 - $11.7 Gas gathering, processing and transportation expenses ($ MM) $5.5 - $6.5 General and administrative expenses (excluding LTIP and transaction expenses, $ MM) $16.9 - $18.4 General and administrative expenses (LTIP cash, $ MM) $0.4 - $0.5 General and administrative expenses (LTIP non-cash, $ MM) $2.7 - $3.1 Depletion, depreciation and amortization ($ MM) $168 - $178 Conference Call Details Vital Energy plans to host a conference call at 7:30 a.m. CT on Thursday, August 7, 2025, to discuss its second-quarter 2025 financial and operating results. Supplemental slides will be posted to the Company's website. Interested parties are invited to listen to the call via the Company's website at under the tab for "Investor Relations | News & Presentations | Upcoming Events." About Vital Energy Vital Energy, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma. Vital Energy's business strategy is focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas. Additional information about Vital Energy may be found on its website at Forward-Looking Statements This press release and any oral statements made regarding the contents of this release, including in the conference call referenced herein, contain forward-looking statements as defined under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, that address activities that Vital Energy assumes, plans, expects, believes, intends, projects, indicates, enables, transforms, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events. Such statements are not guarantees of future performance and involve risks, assumptions and uncertainties. General risks relating to Vital Energy include, but are not limited to: the volatility of oil, NGL and natural gas prices, including the Company's area of operation in the Permian Basin; changes, uncertainty and instability in domestic and global production, supply and demand for oil, NGL and natural gas, and actions by the Organization of the Petroleum Exporting Countries members and other oil exporting nations ("OPEC+"); changes in general economic, business or industry conditions and market volatility, including as a result of slowing growth, inflationary pressures, monetary policy, tariffs, trade barriers, price and exchange controls and other regulatory requirements, including such changes that may be implemented by the United States ("U.S.") and foreign governments; the Company's ability to execute its strategies, including its ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to its financial results and to successfully integrate acquired businesses, assets and properties; the Company's ability to optimize spacing, drilling and completions techniques in order to maximize its rate of return, cash flows from operations and stockholder value; the ongoing instability and uncertainty in the U.S. and international energy, financial and consumer markets that could adversely affect the liquidity available to the Company and its customers and the demand for commodities, including oil, NGL and natural gas; competition in the oil and gas industry; the Company's ability to discover, estimate, develop and replace oil, NGL and natural gas reserves and inventory; insufficient transportation capacity in the Permian Basin and challenges associated with such constraint, and the availability and costs of sufficient gathering, processing, storage and export capacity; a decrease in production levels which may impair the Company's ability to meet its contractual obligations and ability to retain its leases; risks associated with the uncertainty of potential drilling locations and plans to drill in the future; the inability of significant customers to meet their obligations; revisions to the Company's reserve estimates as a result of changes in commodity prices, decline curves and other uncertainties; the availability and costs of drilling and production equipment, supplies, labor and oil and natural gas processing and other services; ongoing war and political instability in Ukraine, Israel and the Middle East and the effects of such conflicts on the global hydrocarbon market and supply chains; risks related to the geographic concentration of the Company's assets; the Company's ability to hedge commercial risk, including commodity price volatility, and regulations that affect the Company's ability to hedge such risks; the Company's ability to continue to maintain the borrowing capacity under its Senior Secured Credit Facility or access other means of obtaining capital and liquidity, especially during periods of sustained low commodity prices; the Company's ability to comply with restrictions contained in its debt agreements, including its Senior Secured Credit Facility and the indentures governing its senior unsecured notes, as well as debt that could be incurred in the future; the Company's ability to generate sufficient cash to service its indebtedness, fund its capital requirements and generate future profits; drilling and operating risks, including but not limited to, risks related to hydraulic fracturing, securing sufficient electricity to produce its wells without limitation, natural disasters and other matters beyond the Company's control; U.S. and international economic conditions and legal, tax, political and administrative developments, including the effects of energy, trade and environmental policies and existing and future laws and government regulations; the Company's ability to comply with federal, state and local regulatory requirements, including the One Big Beautiful Bill Act (the "OBBB Act") and any impact thereon by the OBBB Act taxes, tariffs and international trade; the impact of repurchases, if any, of securities from time to time; the Company's ability to maintain the health and safety of, as well as recruit and retain, qualified personnel, including senior management or other key personnel, necessary to operate its business; evolving cybersecurity risks such as those involving unauthorized access, denial-of-service attacks, third-party service provider failures, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing attacks, ransomware, social engineering, physical breaches or other actions; and the Company's belief that the outcome of any current legal proceedings will not materially affect its financial results and operations, and other factors, including those and other risks described in its Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report"), subsequent Quarterly Reports on Form 10-Q and those set forth from time to time in other filings with the Securities and Exchange Commission ("SEC"). These documents are available through Vital Energy's website at under the tab "Investor Relations" or through the SEC's Electronic Data Gathering and Analysis Retrieval System at Any of these factors could cause Vital Energy's actual results and plans to differ materially from those in the forward-looking statements. Therefore, Vital Energy can give no assurance that its future results will be as estimated. Any forward-looking statement speaks only as of the date on which such statement is made. Vital Energy does not intend to, and disclaims any obligation to, correct, update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. This press release and any accompanying disclosures include financial measures that are not in accordance with generally accepted accounting principles ("GAAP"), such as Adjusted Free Cash Flow, Adjusted Net Income, Net Debt and Consolidated EBITDAX. While management believes that such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. For a reconciliation of such non-GAAP financial measures to the nearest comparable measure in accordance with GAAP, please see the supplemental financial information at the end of this press release. Unless otherwise specified, references to "average sales price" refer to average sales price excluding the effects of the Company's derivative transactions. All amounts, dollars and percentages presented in this press release are rounded and therefore approximate. Vital Energy, Inc. Selected operating data Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (unaudited) (unaudited) Sales volumes: Oil (MBbl) 5,655 5,388 11,495 10,715 NGL (MBbl) 3,573 3,173 7,057 6,107 Natural gas (MMcf) 19,908 19,264 39,650 37,798 Oil equivalent (MBOE) (1) 12,546 11,771 25,160 23,121 Average daily oil equivalent sales volumes (BOE/d) (1) 137,864 129,356 139,005 127,038 Average daily oil sales volumes (Bbl/d) (1) 62,140 59,209 63,509 58,872 Average sales prices (1): Oil ($/Bbl) (2) $ 64.65 $ 81.97 $ 68.55 $ 80.03 NGL ($/Bbl) (2) $ 14.29 $ 12.57 $ 15.98 $ 14.24 Natural gas ($/Mcf) (2) $ 0.53 $ (0.28) $ 0.96 $ 0.34 Average sales price ($/BOE) (2) $ 34.06 $ 40.45 $ 37.31 $ 41.40 Oil, with commodity derivatives ($/Bbl) (3) $ 74.12 $ 76.90 $ 74.96 $ 75.93 NGL, with commodity derivatives ($/Bbl) (3) $ 14.93 $ 12.33 $ 16.00 $ 14.05 Natural gas, with commodity derivatives ($/Mcf) (3) $ 1.73 $ 0.70 $ 1.62 $ 1.05 Average sales price, with commodity derivatives ($/BOE) (3) $ 40.40 $ 39.66 $ 41.29 $ 40.61 Selected average costs and expenses per BOE sold (1): Lease operating expenses $ 8.59 $ 9.66 $ 8.40 $ 9.49 Production and ad valorem taxes 2.10 2.30 2.37 2.50 Oil transportation and marketing expenses 0.85 1.04 0.83 0.95 Gas gathering, processing and transportation expenses 0.43 0.43 0.48 0.32 General and administrative (excluding LTIP and transaction expenses) 1.68 1.67 1.62 1.89 Total selected operating expenses $ 13.65 $ 15.10 $ 13.70 $ 15.15 General and administrative (LTIP): LTIP cash $ (0.01) $ 0.03 $ (0.01) $ 0.10 LTIP non-cash $ 0.23 $ 0.30 $ 0.24 $ 0.29 Depletion, depreciation and amortization $ 14.86 $ 14.81 $ 14.96 $ 14.72 _______________________________________________________________________________ (1) The numbers presented are calculated based on actual amounts and may not recalculate using the rounded numbers presented in the table above. (2) Price reflects the average of actual sales prices received when control passes to the purchaser/customer adjusted for quality, certain transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the delivery point. (3) Price reflects the after-effects of the Company's commodity derivative transactions on its average sales prices. The Company's calculation of such after-effects includes settlements of matured commodity derivatives during the respective periods. Vital Energy, Inc. Consolidated balance sheets (in thousands, except share data) June 30, 2025 December 31, 2024 (unaudited) Assets Current assets: Cash and cash equivalents $ 30,194 $ 40,179 Accounts receivable, net 242,956 299,698 Derivatives 129,444 101,474 Other current assets 27,836 25,205 Total current assets 430,430 466,556 Property and equipment: Oil and natural gas properties, full cost method: Evaluated properties 14,136,321 13,587,040 Unevaluated properties not being depleted 176,117 242,792 Less: accumulated depletion and impairment (9,915,495) (8,966,200) Oil and natural gas properties, net 4,396,943 4,863,632 Midstream and other fixed assets, net 122,022 134,265 Property and equipment, net 4,518,965 4,997,897 Derivatives 33,165 34,564 Operating lease right-of-use assets 82,049 104,329 Deferred income taxes 3,396 239,685 Other noncurrent assets, net 32,446 35,915 Total assets $ 5,100,451 $ 5,878,946 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 158,125 $ 185,115 Accrued capital expenditures 109,844 95,593 Undistributed revenue and royalties 172,415 187,563 Operating lease liabilities 45,778 73,143 Other current liabilities 59,341 59,725 Total current liabilities 545,503 601,139 Long-term debt, net 2,321,294 2,454,242 Derivatives 19,466 5,814 Asset retirement obligations 75,620 82,941 Operating lease liabilities 27,941 26,733 Other noncurrent liabilities 5,049 7,506 Total liabilities 2,994,873 3,178,375 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 50,000,000 shares authorized and zero issued and outstanding as of June 30, 2025 and December 31, 2024 — — Common stock, $0.01 par value, 80,000,000 shares authorized, and 38,687,645 and 38,144,248 issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 387 381 Additional paid-in capital 3,829,651 3,823,241 Accumulated deficit (1,724,460) (1,123,051) Total stockholders' equity 2,105,578 2,700,571 Total liabilities and stockholders' equity $ 5,100,451 $ 5,878,946 Vital Energy, Inc. Consolidated statements of operations Three months ended June 30, Six months ended June 30, (in thousands, except per share data) 2025 2024 2025 2024 (unaudited) (unaudited) Revenues: Oil sales $ 365,605 $ 441,667 $ 787,937 $ 857,451 NGL sales 51,046 39,870 112,785 86,945 Natural gas sales 10,631 (5,371) 37,969 12,874 Other operating revenues 2,345 205 3,116 1,440 Total revenues 429,627 476,371 941,807 958,710 Costs and expenses: Lease operating expenses 107,750 113,742 211,235 219,470 Production and ad valorem taxes 26,356 27,079 59,581 57,693 Oil transportation and marketing expenses 10,649 12,199 20,769 22,032 Gas gathering, processing and transportation expenses 5,380 5,088 12,136 7,464 General and administrative 23,791 23,573 46,471 52,929 Organizational restructuring expenses 4,627 — 4,627 — Depletion, depreciation and amortization 186,424 174,298 376,324 340,405 Impairment expense 427,046 — 585,287 — Other operating expenses, net 2,263 2,593 4,176 3,611 Total costs and expenses 794,286 358,572 1,320,606 703,604 Gain (loss) on disposal of assets, net 1,255 36 1,365 166 Operating income (loss) (363,404) 117,835 (377,434) 255,272 Non-operating income (expense): Gain (loss) on derivatives, net 68,993 7,658 113,164 (144,489) Interest expense (49,854) (40,690) (100,234) (84,111) Loss on extinguishment of debt, net — (40,301) — (66,115) Other income (expense), net 863 2,609 1,216 4,674 Total non-operating income (expense), net 20,002 (70,724) 14,146 (290,041) Income (loss) before income taxes (343,402) 47,111 (363,288) (34,769) Income tax benefit (expense) (239,170) (10,409) (238,121) 5,340 Net income (loss) (582,572) 36,702 (601,409) (29,429) Preferred stock dividends — (303) — (652) Net income (loss) available to common stockholders $ (582,572) $ 36,399 $ (601,409) $ (30,081) Net income (loss) per common share: Basic $ (15.43) $ 1.00 $ (15.97) $ (0.84) Diluted $ (15.43) $ 0.98 $ (15.97) $ (0.84) Weighted-average common shares outstanding: Basic 37,761 36,381 37,670 35,973 Diluted 37,761 37,605 37,670 35,973 Vital Energy, Inc. Three months ended June 30, Six months ended June 30, (in thousands) 2025 2024 2025 2024 (unaudited) (unaudited) Cash flows from operating activities: Net income (loss) $ (582,572) $ 36,702 $ (601,409) $ (29,429) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Share-settled equity-based compensation, net 3,233 3,934 6,837 7,435 Depletion, depreciation and amortization 186,424 174,298 376,324 340,405 Impairment expense 427,046 — 585,287 — Mark-to-market on derivatives: (Gain) loss on derivatives, net (68,993) (7,658) (113,164) 144,489 Settlements received (paid) for matured derivatives, net 79,558 (9,262) 100,245 (18,262) Loss on extinguishment of debt, net — 40,301 — 66,115 Deferred income tax (benefit) expense 238,100 9,347 236,289 (7,577) Other, net 10,319 7,027 19,870 12,429 Changes in operating assets and liabilities: Accounts receivable, net 11,387 65,137 56,742 13,662 Other current assets (3,078) (1,961) (3,068) (7,607) Other noncurrent assets, net (675) 1,906 (4,309) 1,549 Accounts payable and accrued liabilities (5,236) (7,803) (26,990) (16,867) Undistributed revenue and royalties (20,760) 29,133 (15,148) 16,268 Other current liabilities (15,081) 964 1,018 (20,383) Other noncurrent liabilities (7,331) (3,664) (15,198) (5,236) Net cash provided by (used in) operating activities 252,341 338,401 603,326 496,991 Cash flows from investing activities: Acquisitions of oil and natural gas properties, net — (299) (1,636) (4,679) Capital expenditures: Oil and natural gas properties (258,929) (222,334) (488,541) (417,706) Midstream and other fixed assets (2,850) (4,093) (4,675) (9,178) Proceeds from dispositions of capital assets, net of selling costs 1,245 55 22,289 180 Other investing activities 1,233 — 1,140 (952) Net cash provided by (used in) investing activities (259,301) (226,671) (471,423) (432,335) Cash flows from financing activities: Borrowings on Senior Secured Credit Facility 215,000 275,000 365,000 405,000 Payments on Senior Secured Credit Facility (205,000) (450,000) (500,000) (450,000) Issuance of senior unsecured notes — 201,500 — 1,001,500 Extinguishment of debt — (498,696) — (952,214) Stock exchanged for tax withholding (33) (9) (3,956) (3,420) Payments for debt issuance costs — (4,564) — (20,285) Other, net (1,462) (1,722) (2,932) (2,734) Net cash provided by (used in) financing activities 8,505 (478,491) (141,888) (22,153) Net increase (decrease) in cash and cash equivalents 1,545 (366,761) (9,985) 42,503 Cash and cash equivalents, beginning of period 28,649 423,325 40,179 14,061 Cash and cash equivalents, end of period $ 30,194 $ 56,564 $ 30,194 $ 56,564 Vital Energy, Inc. Supplemental reconciliations of GAAP to non-GAAP financial measures Non-GAAP financial measures The non-GAAP financial measures of Adjusted Free Cash Flow, Adjusted Net Income, Consolidated EBITDAX, Net Debt and Net Debt to Consolidated EBITDAX, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Furthermore, these non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP measures of liquidity or financial performance, but rather should be considered in conjunction with GAAP measures, such as net income or loss, operating income or loss or cash flows from operating activities. Adjusted Free Cash Flow Adjusted Free Cash Flow is a non-GAAP financial measure that the Company defines as net cash provided by (used in) operating activities (GAAP) before net changes in operating assets and liabilities and transaction expenses related to non-budgeted acquisitions, less capital investments, excluding non-budgeted acquisition costs. Management believes Adjusted Free Cash Flow is useful to management and investors in evaluating operating trends in its business that are affected by production, commodity prices, operating costs and other related factors. There are significant limitations to the use of Adjusted Free Cash Flow as a measure of performance, including the lack of comparability due to the different methods of calculating Adjusted Free Cash Flow reported by different companies. This release also includes certain forward-looking non-GAAP measures. Due to the forward-looking nature of such measures, no reconciliations of these non-GAAP measures to their respective most directly comparable GAAP measure are available without unreasonable efforts. This is due to the inherent difficulty of forecasting the timing or amount of various reconciling items that would impact the most directly comparable forward-looking GAAP financial measure, that have not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. Accordingly, such reconciliations are excluded from this release. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. The following table presents a reconciliation of net cash provided by (used in) operating activities (GAAP) to Adjusted Free Cash Flow (non-GAAP) for the periods presented: Three months ended June 30, Six months ended June 30, (in thousands) 2025 2024 2025 2024 (unaudited) (unaudited) Net cash provided by (used in) operating activities $ 252,341 $ 338,401 $ 603,326 $ 496,991 Less: Net changes in operating assets and liabilities (40,774) 83,712 (6,953) (18,614) General and administrative (transaction expenses) — (15) — (347) Cash flows from operating activities before net changes in operating assets and liabilities and transaction expenses related to non-budgeted acquisitions 293,115 254,704 610,279 515,952 Less capital investments, excluding non-budgeted acquisition costs: Oil and natural gas properties (1) 254,195 205,521 505,459 418,786 Midstream and other fixed assets (1) 2,830 4,489 4,237 9,124 Total capital investments, excluding non-budgeted acquisition costs 257,025 210,010 509,696 427,910 Adjusted Free Cash Flow (non-GAAP) $ 36,090 $ 44,694 $ 100,583 $ 88,042 (1) Includes capitalized share-settled equity-based compensation and asset retirement costs. Adjusted Net Income Adjusted Net Income is a non-GAAP financial measure that the Company defines as net income or loss (GAAP) plus adjustments for mark-to-market on derivatives, premiums paid or received for commodity derivatives that matured during the period, organizational restructuring expenses, impairment expense, gains or losses on disposal of assets, income taxes, other non-recurring income and expenses and adjusted income tax expense. Management believes Adjusted Net Income helps investors in the oil and natural gas industry to measure and compare the Company's performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors. The following table presents a reconciliation of net income (loss) (GAAP) to Adjusted Net Income (non-GAAP) for the periods presented: Three months ended June 30, Six months ended June 30, (in thousands, except per share data) 2025 2024 2025 2024 (unaudited) (unaudited) Net income (loss) $ (582,572) $ 36,702 $ (601,409) $ (29,429) Plus: Mark-to-market on derivatives: (Gain) loss on derivatives, net (68,993) (7,658) (113,164) 144,489 Settlements received (paid) for matured derivatives, net 79,558 (9,262) 100,245 (18,262) Organizational restructuring expenses 4,627 — 4,627 — Impairment expense 427,046 — 585,287 — (Gain) loss on disposal of assets, net (1,255) (36) (1,365) (166) Loss on extinguishment of debt, net — 40,301 — 66,115 Income tax (benefit) expense 239,170 10,409 238,121 (5,340) General and administrative (transaction expenses) — 15 — 347 Adjusted income before adjusted income tax expense 97,581 70,471 212,342 157,754 Adjusted income tax expense (1) (21,468) (15,504) (46,715) (34,706) Adjusted Net Income (non-GAAP) $ 76,113 $ 54,967 $ 165,627 $ 123,048 Net income (loss) per common share: Basic $ (15.43) $ 1.00 $ (15.97) $ (0.84) Diluted $ (15.43) $ 0.98 $ (15.97) $ (0.84) Adjusted Net Income per common share: Basic $ 2.02 $ 1.51 $ 4.40 $ 3.42 Diluted $ 2.02 $ 1.46 $ 4.40 $ 3.42 Adjusted diluted $ 2.02 $ 1.46 $ 4.39 $ 3.30 Weighted-average common shares outstanding: Basic 37,761 36,381 37,670 35,973 Diluted 37,761 37,605 37,670 35,973 Adjusted diluted 37,762 37,605 37,749 37,264 (1) Adjusted income tax expense is calculated by applying a statutory tax rate of 22% for each of the periods ended June 30, 2025 and 2024. Consolidated EBITDAX Consolidated EBITDAX is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as net income or loss (GAAP) plus adjustments for share-settled equity-based compensation, depletion, depreciation and amortization, impairment expense, organizational restructuring expenses, gains or losses on disposal of assets, mark-to-market on derivatives, accretion expense, interest expense, income taxes and other non-recurring income and expenses. Consolidated EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, working capital movement or tax position. Consolidated EBITDAX does not represent funds available for future discretionary use because it excludes funds required for debt service, capital expenditures, working capital, income taxes, franchise taxes and other commitments and obligations. However, management believes Consolidated EBITDAX is useful to an investor because this measure: is used by investors in the oil and natural gas industry to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon accounting methods, the book value of assets, capital structure and the method by which assets were acquired, among other factors; helps investors to more meaningfully evaluate and compare the results of the Company's operations from period to period by removing the effect of the Company's capital structure from the Company's operating structure; and is used by management for various purposes, including (i) as a measure of operating performance, (ii) as a measure of compliance under the Senior Secured Credit Facility, (iii) in presentations to the board of directors and (iv) as a basis for strategic planning and forecasting. There are significant limitations to the use of Consolidated EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company's net income or loss and the lack of comparability of results of operations to different companies due to the different methods of calculating Consolidated EBITDAX, or similarly titled measures, reported by different companies. The Company is subject to financial covenants under the Senior Secured Credit Facility, one of which establishes a maximum permitted ratio of Net Debt, as defined in the Senior Secured Credit Facility, to Consolidated EBITDAX. See Note 7 in the 2024 Annual Report for additional discussion of the financial covenants under the Senior Secured Credit Facility. Additional information on Consolidated EBITDAX can be found in the Company's Eleventh Amendment to the Senior Secured Credit Facility, as filed with the SEC on September 13, 2023. The following table presents a reconciliation of net income (loss) (GAAP) to Consolidated EBITDAX (non-GAAP) for the periods presented: Three months ended June 30, Six months ended June 30, (in thousands) 2025 2024 2025 2024 (unaudited) (unaudited) Net income (loss) $ (582,572) $ 36,702 $ (601,409) $ (29,429) Plus: Share-settled equity-based compensation, net 3,233 3,934 6,837 7,435 Depletion, depreciation and amortization 186,424 174,298 376,324 340,405 Impairment expense 427,046 — 585,287 — Organizational restructuring expenses 4,627 — 4,627 — (Gain) loss on disposal of assets, net (1,255) (36) (1,365) (166) Mark-to-market on derivatives: (Gain) loss on derivatives, net (68,993) (7,658) (113,164) 144,489 Settlements received (paid) for matured derivatives, net 79,558 (9,262) 100,245 (18,262) Accretion expense 977 1,036 2,011 2,056 Interest expense 49,854 40,690 100,234 84,111 Loss extinguishment of debt, net — 40,301 — 66,115 Income tax (benefit) expense 239,170 10,409 238,121 (5,340) General and administrative (transaction expenses) — 15 — 347 Consolidated EBITDAX (non-GAAP) $ 338,069 $ 290,429 $ 697,748 $ 591,761 The following table presents a reconciliation of net cash provided by (used in) operating activities (GAAP) to Consolidated EBITDAX (non-GAAP) for the periods presented: Three months ended June 30, Six months ended June 30, (in thousands) 2025 2024 2025 2024 (unaudited) (unaudited) Net cash provided by (used in) operating activities $ 252,341 $ 338,401 $ 603,326 $ 496,991 Plus: Interest expense 49,854 40,690 100,234 84,111 Organizational restructuring expenses 4,627 — 4,627 — Current income tax (benefit) expense 1,070 1,062 1,832 2,237 Net changes in operating assets and liabilities 40,774 (83,712) 6,953 18,614 General and administrative (transaction expenses) — 15 — 347 Other, net (10,597) (6,027) (19,224) (10,539) Consolidated EBITDAX (non-GAAP) $ 338,069 $ 290,429 $ 697,748 $ 591,761 Net Debt Net Debt is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as the face value of long-term debt plus any outstanding letters of credit, less cash and cash equivalents, where cash and cash equivalents are capped at $100 million when there are borrowings on the Senior Secured Credit Facility. Management believes Net Debt is useful to management and investors in determining the Company's leverage position since the Company has the ability, and may decide, to use a portion of its cash and cash equivalents to reduce debt. (in thousands) June 30, 2025 December 31, 2024 (unaudited) Total senior unsecured notes $ 1,600,578 $ 1,600,578 Senior Secured Credit Facility 745,000 880,000 Total long-term debt $ 2,345,578 $ 2,480,578 Less: cash and cash equivalents 30,194 40,179 Net Debt (non-GAAP) $ 2,315,384 $ 2,440,399 Net Debt to Consolidated EBITDAX Net Debt to Consolidated EBITDAX is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as Net Debt divided by Consolidated EBITDAX for the previous four quarters, which requires various treatment of asset transaction impacts. Net Debt to Consolidated EBITDAX is used by the Company's management for various purposes, including as a measure of operating performance, in presentations to its board of directors and as a basis for strategic planning and forecasting.
