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Syneos Health Reports First Quarter 2021 Results

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Highlights

  • Revenue of $1,208.7 million for the three months ended March 31, 2021, representing a sequential increase of 6.0% compared to the three months ended December 31, 2020, and a year-over-year increase of 3.9% compared to the three months ended March 31, 2020.

  • Net new business awards of $1,548.8 million and $5,880.1 million for the three and twelve months ended March 31, 2021, representing book-to-bill ratios of 1.28x and 1.32x, respectively.

    • Clinical Solutions segment net new business awards of $1,215.5 million and $4,720.1 million for the three and twelve months ended March 31, 2021, representing book-to-bill ratios of 1.30x and 1.39x, respectively, and year-over-year backlog growth of 22.5% as of March 31, 2021.

    • Commercial Solutions segment net new business awards of $333.3 million and $1,160.0 million for the three and twelve months ended March 31, 2021, representing book-to-bill ratios of 1.23x and 1.09x, respectively, and year-over-year Deployment Solutions backlog growth of 7.6%.

  • GAAP net income of $38.7 million for the three months ended March 31, 2021, representing growth of 15.3% compared to the three months ended March 31, 2020.

  • Adjusted EBITDA of $151.1 million for the three months ended March 31, 2021, representing growth of 10.0% compared to the three months ended March 31, 2020.

  • GAAP diluted earnings per share of $0.37 for the three months ended March 31, 2021, representing growth of 15.6% compared to the three months ended March 31, 2020.

  • Adjusted diluted earnings per share of $0.79 for the three months ended March 31, 2021, representing growth of 16.2% compared to the three months ended March 31, 2020.

  • Full year 2021 guidance; revenue of $5,125 million to $5,325 million, GAAP net income of $212.3 million to $236.8 million, adjusted EBITDA of $745.0 million to $785.0 million, GAAP diluted earnings per share of $2.01 to $2.23, and adjusted diluted earnings per share of $4.17 to $4.42.

MORRISVILLE, N.C., April 29, 2021 (GLOBE NEWSWIRE) -- Syneos Health (Nasdaq:SYNH), the only fully integrated biopharmaceutical solutions organization, today reported financial results for the three months ended March 31, 2021.

“We delivered strong first quarter results and returned to year-over-year growth. Our integrated product development model, purpose-built to drive greater success for customers, continues to fuel robust backlog growth while delivering on the key drivers of our Value Creation Plan.” said Alistair Macdonald, Chief Executive Officer, Syneos Health. “We continued to invest in our Decentralized Solutions capabilities during the first quarter, further strengthening our Dynamic Assembly network with new partnerships in order to bring clinical trials closer to the patient. We remain confident in the long-term strength of our business given our market positioning and record backlog level, which we expect to fuel strong growth and profitability for the full year 2021.”

Please refer to the "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Measures" included in this press release and accompanying tables for important disclosures about non-GAAP measures and a reconciliation of these measures to the nearest GAAP measures.

First Quarter 2021 Results

For the three months ended March 31, 2021, revenue increased 3.9% to $1,208.7 million compared to the same period in the prior year. On a constant currency basis, revenue increased 2.9%. This increase was driven by revenue growth in Clinical Solutions partially offset by a revenue decline in Commercial Solutions, as discussed below. Prior period segment results have been recast to reflect the move of Regulatory and Operations Consulting from Commercial Solutions to Clinical Solutions.

For the three months ended March 31, 2021, Clinical Solutions revenue increased 6.3% to $938.0 million compared to the same period in the prior year. On a constant currency basis, revenue increased 5.2%. This increase was primarily due to the positive impacts from the Synteract and Illingworth Research Group acquisitions along with increased project start up activity, partially offset by the divestiture of the Company’s contingent staffing business in the second quarter of 2020 and a slower recovery in reimbursable out-of-pocket expenses. Acquisitions contributed approximately 575 basis points to revenue growth, while the divestiture of contingent staffing resulted in an approximate 140 basis point headwind to revenue growth.

For the three months ended March 31, 2021, Commercial Solutions revenue decreased 3.6% to $270.8 million from the same period in the prior year. On a constant currency basis, revenue decreased 4.2%. This decrease was primarily due to a disproportionate decline in reimbursable out-of-pocket expenses, driven by the impacts of COVID-19, as well as the divestiture of the Company’s medication adherence business in November 2020, partially offset by an increase in consulting services revenue. The decline in reimbursable out-of-pocket expenses and the divestiture of medication adherence resulted in an approximate 420 basis point and 245 basis point headwind to revenue growth, respectively.

GAAP net income for the three months ended March 31, 2021 increased 15.3% to $38.7 million, resulting in diluted earnings per share of $0.37, compared to GAAP net income of $33.6 million, or diluted earnings per share of $0.32, for the three months ended March 31, 2020. The increases in GAAP net income and diluted earnings per share were primarily due to higher gross margin partially offset by higher selling, general and administrative expenses and lower other income.

Adjusted net income for the three months ended March 31, 2021 increased 16.2% to $83.1 million, resulting in adjusted diluted earnings per share of $0.79, compared to adjusted net income of $71.5 million, or adjusted diluted earnings per share of $0.68 for the three months ended March 31, 2020. The increases in adjusted net income and adjusted diluted earnings per share were primarily due to the increase in adjusted EBITDA, discussed below, and lower interest expense.

Adjusted EBITDA for the three months ended March 31, 2021 increased 10.0% to $151.1 million from the same period in the prior year. The increase in adjusted EBITDA was driven primarily by ForwardBound, including operating leverage, partially offset by the negative impact of fluctuations in foreign currency exchange rates.

Net New Business Awards and Backlog

Net new business awards were $1,548.8 million and $5,880.1 million for the three and twelve months ended March 31, 2021, representing book-to-bill ratios of 1.28x and 1.32x, respectively. Clinical Solutions net new business awards were $1,215.5 million and $4,720.1 million for the three and twelve months ended March 31, 2021, representing a book-to-bill ratio of 1.30x and 1.39x, respectively. Commercial Solutions net new business awards were $333.3 million and $1,160.0 million for the three and twelve months ended March 31, 2021, representing book-to-bill ratios of 1.23x and 1.09x, respectively. These net new business awards contributed to an ending backlog of $11,218.0 million as of March 31, 2021, consisting of $10,509.9 million for Clinical Solutions and $708.1 million for the Deployment Solutions offering within Commercial Solutions.

Liquidity and Capital Management Update

Cash flows provided by operating activities were $127.1 million during the three months ended March 31, 2021.

During the three months ended March 31, 2021, the Company made $41.8 million and $64.1 million of voluntary prepayments against its Term Loan A and Term Loan B, respectively that were applied to future mandatory principal payments due. The Company is not required to make a mandatory payment against the principal balance of Term Loan A until October 2022 and Term Loan B until maturity in August 2024. The Company also amended its accounts receivable financing agreement to increase the amount it can borrow from $300.0 million to $365.0 million, and drew down the additional $65.0 million to partially fund the Term Loan A and Term Loan B voluntary prepayments.

During the three months ended March 31, 2021, the Company repurchased $44.5 million of common stock and has $255.5 million of remaining share repurchase authorization available through December 31, 2022.

Full Year 2021 Business Outlook

The Company's guidance takes into account a number of factors, including existing backlog, current sales pipeline, trends in cancellations and delays, and the Company’s ForwardBound initiative, which includes expansion of the Syneos Operations Network, process optimization, and automation initiatives. In addition, the guidance presented below represents the Company’s best efforts to estimate the impact of COVID-19 on its business. The severity and duration of the COVID-19 pandemic are outside of the Company’s control and, given the uncertain nature of the pandemic, could cause the Company’s future operating results to be different from our current expectations, particularly if the impact of the pandemic worsens. Furthermore, the guidance presented below is based on current foreign currency exchange rates, current interest rates, and the Company's expected non-GAAP effective tax rate of approximately 24.0% for the year ending December 31, 2021. The guidance is based upon the Company's estimated number of weighted average diluted shares outstanding, and does not take into account any share repurchases beyond the first quarter of 2021. The Company's full year 2021 guidance is outlined below:

FY 2021

Low

High

(in millions, except per share data)

Revenue

$

5,125.0

$

5,325.0

GAAP Net Income

212.3

236.8

GAAP Diluted EPS

2.01

2.23

Adjusted EBITDA

745.0

785.0

Adjusted Diluted EPS

$

4.17

$

4.42

Webcast and Conference Call Details

Syneos Health will host a conference call at 8:00 a.m. ET on April 29, 2021, to discuss its first quarter 2021 financial results. The live webcast will be available in listen-only mode in the Events section of the Company's Investor Relations website at investor.syneoshealth.com. To participate via phone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call.

An archived replay of the conference call is expected to be available online at investor.syneoshealth.com after 1:00 p.m. ET on April 29, 2021.

About Syneos Health

Syneos Health® (Nasdaq:SYNH) is the only fully integrated biopharmaceutical solutions organization. The Company, including a Contract Research Organization (CRO) and Contract Commercial Organization (CCO), is purpose-built to accelerate customer performance to address modern market realities. Syneos Health brings together approximately 25,000 clinical and commercial minds with the ability to support customers in more than 110 countries. The Company shares insights, uses the latest technologies, and applies advanced business practices to speed its customers’ delivery of important therapies to patients. To learn more about how Syneos Health is shortening the distance from lab to life® visit syneoshealth.com.

Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including the future impact of the COVID-19 pandemic on our business, financial results and financial condition, anticipated financial results for the full year 2021, our foundation for growth in 2021, and plans for cost savings and capital deployment. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to: risks associated with the COVID-19 pandemic; the Company’s potential failure to generate a large number of new business awards and the risk of delay, termination, reduction in scope, or failure to go to contract of business awards; the Company’s potential failure to convert backlog to revenue; fluctuations in the Company’s operating results and effective income tax rate; the impact of potentially underpricing the Company’s contracts, overrunning cost estimates, or failing to receive approval for or experiencing delays with documentation of change orders; cyber-security and other risks associated with the Company’s information systems infrastructure; changes and costs of compliance with regulations related to data privacy; concentration of the Company’s customers or therapeutic areas; the risks associated with doing business internationally; risks related to the impact of the U.K.’s withdrawal from the European Union; challenges by tax authorities of the Company’s intercompany transfer pricing policies; the Company’s potential failure to successfully increase its market share, grow its business, and execute its growth strategies; the Company’s ability to effectively upgrade its information systems; the Company’s failure to perform its services in accordance with contractual requirements, regulatory standards, and ethical considerations; risks related to the management of clinical trials; risks related to investments in the Company’s customers’ businesses or drugs and the Company’s related commercial rights strategies; the need to hire, develop, and retain key personnel; the impact of unfavorable economic conditions, including the uncertain international economic environment, changes in exchange rates; effective income tax rate fluctuations; the Company’s ability to protect its intellectual property; risks related to the Company’s acquisition strategy, including its ability to realize synergies; the Company’s relationships with customers who are in competition with each other; any failure to realize the full value of the Company’s goodwill and intangible assets; risks related to restructuring; the Company’s compliance with anti-corruption and anti-bribery laws; the Company’s dependence on third parties; potential employment liability; the Company’s ability to utilize net operating loss carryforwards and other tax attributes; downgrades of the Company’s credit ratings; competition in the biopharmaceutical services industry; outsourcing trends and changes in aggregate spending and research and development budgets; the impact of, including changes in, government regulations and healthcare reform; the Company’s ability to keep pace with rapid technological change; the cost of and the Company’s ability to service its substantial indebtedness; other risks related to ownership of the Company’s common stock; and other risk factors set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as updated by the Company’s other SEC filings, copies of which are available free of charge on the Company's website at investor.syneoshealth.com. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), this press release contains certain non-GAAP financial measures, including adjusted net income (including adjusted diluted earnings per share), EBITDA, adjusted EBITDA, and non-GAAP effective income tax rate. We also present revenue growth in constant currency. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period's foreign currency exchange rates measured against the comparative period's revenues. Constant currency segment revenue growth is defined as revenue for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period’s revenues.

A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s financial performance that excludes or includes amounts from the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the Company.

The Company defines adjusted net income (including adjusted diluted earnings per share) as net income (including diluted earnings per share) excluding acquisition-related amortization; restructuring and other costs; transaction and integration-related expenses; share-based compensation expense; gain or loss on extinguishment of debt; other income (expense), net; and the income tax effect of the above adjustments.

EBITDA represents earnings before interest, taxes, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA, further adjusted to exclude expenses and transactions that the Company believes are not representative of its core operations, namely: restructuring and other costs; transaction and integration-related expenses; share-based compensation expense; other income (expense), net; and gain or loss on extinguishment of debt. The Company presents EBITDA and adjusted EBITDA because it believes they are useful metrics for investors as they are commonly used by investors, analysts and debt holders to measure the Company's ability to fund capital expenditures and meet working capital requirements.

Each of the non-GAAP measures noted above are used by management and the Board to evaluate the Company's core operating results because they exclude certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business. Adjusted net income (including adjusted diluted earnings per share) and adjusted EBITDA are used by management and the Board to assess the performance of the Company's business.

Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. Also, other companies might calculate these measures differently. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures included in this press release and the accompanying tables.

Investor Relations Contact:

Ronnie Speight
Senior Vice President, Investor Relations
Phone: +1 919 745 2745
Email: Investor.Relations@syneoshealth.com

Press/Media Contact:

Gary Gatyas
Executive Director, External Communications
Phone: +1 908 763 3428
Email: gary.gatyas@syneoshealth.com



Syneos Health, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

Three Months Ended March 31,

2021

2020

Revenue

$

1,208,745

$

1,163,355

Costs and operating expenses:

Direct costs (exclusive of depreciation and amortization)

945,250

924,014

Selling, general, and administrative expenses

137,314

125,547

Restructuring and other costs

7,228

8,720

Depreciation

18,447

17,225

Amortization

39,491

38,882

Total operating expenses

1,147,730

1,114,388

Income from operations

61,015

48,967

Total other expense, net:

Interest expense, net

23,257

26,122

Loss on extinguishment of debt

603

Other income, net

(9,856

)

(18,930

)

Total other expense, net

14,004

7,192

Income before provision for income taxes

47,011

41,775

Income tax expense

8,287

8,201

Net income

$

38,724

$

33,574

Earnings per share attributable to common shareholders:

Basic

$

0.37

$

0.32

Diluted

$

0.37

$

0.32

Weighted average common shares outstanding:

Basic

104,274

104,265

Diluted

105,457

105,642



Syneos Health, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except par value)
(unaudited)

March 31, 2021

December 31, 2020

ASSETS

Current assets:

Cash, cash equivalents, and restricted cash

$

264,689

$

272,173

Accounts receivable and unbilled services, net

1,299,168

1,344,781

Prepaid expenses and other current assets

110,521

121,058

Total current assets

1,674,378

1,738,012

Property and equipment, net

202,618

216,200

Operating lease right-of-use assets

215,048

223,285

Goodwill

4,780,179

4,776,178

Intangible assets, net

896,386

933,525

Deferred income tax assets

34,964

35,059

Other long-term assets

151,076

141,047

Total assets

$

7,954,649

$

8,063,306

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

113,881

$

113,684

Accrued expenses

587,757

611,042

Deferred revenue

773,025

793,068

Current portion of operating lease obligations

40,759

42,082

Current portion of finance lease obligations

16,863

17,455

Total current liabilities

1,532,285

1,577,331

Long-term debt

2,862,574

2,902,054

Operating lease long-term obligations

213,662

221,760

Finance lease long-term obligations

27,768

31,522

Deferred income tax liabilities

17,043

20,216

Other long-term liabilities

64,440

68,311

Total liabilities

4,717,772

4,821,194

Commitments and contingencies

Shareholders' equity:

Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding at March 31, 2021 and December 31, 2020

Common stock, $0.01 par value; 600,000 shares authorized, 104,226 and 103,935 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

1,042

1,039

Additional paid-in capital

3,440,840

3,461,747

Accumulated other comprehensive loss, net of taxes

(39,174

)

(40,801

)

Accumulated deficit

(165,831

)

(179,873

)

Total shareholders' equity

3,236,877

3,242,112

Total liabilities and shareholders' equity

$

7,954,649

$

8,063,306



Syneos Health, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Three Months Ended
March 31,

2021

2020

Cash flows from operating activities:

Net income

$

38,724

$

33,574

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

Depreciation and amortization

57,938

56,107

Share-based compensation

17,353

15,998

(Recovery from) provision for doubtful accounts

(187

)

271

(Benefit from) provision for deferred income taxes

(4,653

)

8,159

Foreign currency transaction gains

(9,522

)

(15,019

)

Fair value adjustment of contingent obligations

(597

)

(4,095

)

Loss on extinguishment of debt

603

Other non-cash items

953

1,104

Changes in operating assets and liabilities, net of effect of business combinations:

Accounts receivable, unbilled services, and deferred revenue

30,997

(53,078

)

Accounts payable and accrued expenses

518

(66,426

)

Other assets and liabilities

(5,039

)

(15,202

)

Net cash provided by (used in) operating activities

127,088

(38,607

)

Cash flows from investing activities:

Payments related to acquisition of business, net of cash acquired

(9,982

)

Purchases of property and equipment

(11,173

)

(11,870

)

Proceeds from (investments in) unconsolidated affiliates

1,374

(6,750

)

Net cash used in investing activities

(19,781

)

(18,620

)

Cash flows from financing activities:

Payments of debt financing costs

(49

)

Repayments of long-term debt

(105,856

)

Proceeds from accounts receivable financing agreement

65,000

6,600

Repayments of accounts receivable financing agreement

(6,600

)

Proceeds from revolving line of credit

300,000

Payments of contingent consideration related to business combinations

(6,196

)

(26,592

)

Payments of finance leases

(4,269

)

(4,674

)

Payments for repurchases of common stock

(44,505

)

(32,029

)

Proceeds from exercises of stock options

10,804

12,358

Payments related to tax withholdings for share-based compensation

(26,295

)

(19,145

)

Net cash (used in) provided by financing activities

(111,366

)

229,918

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(3,425

)

(420

)

Net change in cash, cash equivalents, and restricted cash

(7,484

)

172,271

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

272,173

163,689

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

$

264,689

$

335,960



Syneos Health, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
(unaudited)

Three Months Ended
March 31,

2021

2020

EBITDA and adjusted EBITDA:

Net income, as reported

$

38,724

$

33,574

Interest expense, net

23,257

26,122

Income tax expense

8,287

8,201

Depreciation

18,447

17,225

Amortization (a)

39,491

38,882

EBITDA

128,206

124,004

Restructuring and other costs (b)

7,228

8,720

Transaction and integration-related expenses (c)

7,573

7,577

Share-based compensation (d)

17,353

15,998

Other income, net (e)

(9,856

)

(18,930

)

Loss on extinguishment of debt (f)

603

Adjusted EBITDA

$

151,107

$

137,369



Syneos Health, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share data)
(unaudited)

Three Months Ended
March 31,

2021

2020

Adjusted net income:

Net income, as reported

$

38,724

$

33,574

Amortization (a)

39,491

38,882

Restructuring and other costs (b)

7,228

8,720

Transaction and integration-related expenses (c)

7,573

7,577

Share-based compensation (d)

17,353

15,998

Other income, net (e)

(9,856

)

(18,930

)

Loss on extinguishment of debt (f)

603

Income tax adjustment to normalized rate (g)

(17,970

)

(14,364

)

Adjusted net income

$

83,146

$

71,457

Diluted weighted average common shares outstanding

105,457

105,642

Adjusted diluted earnings per share

$

0.79

$

0.68

  1. Represents the amortization of intangible assets associated with acquired backlog, customer relationships, trade names and trademarks, and intellectual property.

  2. Restructuring and other costs consist primarily of severance costs associated with a reduction/optimization of our workforce in line with our expectations of future business operations and termination costs in connection with abandonment and closure of redundant facilities and other lease-related charges.

  3. Represents fees associated with business combinations, stock repurchases and secondary stock offerings, debt placement and refinancings, and other corporate transactions costs.

  4. Represents non-cash share-based compensation expense related to awards granted under equity incentive plans.

  5. Other income is comprised primarily of foreign currency exchange gains and losses.

  6. Loss on extinguishment of debt is associated with debt prepayments and refinancing activities.

  7. Represents the income tax effect of the non-GAAP adjustments made to arrive at adjusted net income using an estimated effective tax rate of approximately 24.0% for the three months ended March 31, 2021 and March 31, 2020. These rates have been adjusted to exclude tax impacts related to valuation allowances recorded against deferred tax assets.



Syneos Health, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Full Year 2021 Guidance
(in millions, except per share data)
(Unaudited)

Low

High

EBITDA and Adjusted EBITDA:

GAAP net income

$

212.3

$

236.8

Adjustments (a):

Interest expense, net

87.0

89.0

Income tax expense

91.0

101.5

Depreciation

77.0

78.0

Amortization

158.0

158.0

EBITDA

625.3

663.3

Restructuring and other costs

25.0

26.0

Transaction and integration-related expenses

36.0

36.0

Share-based compensation

68.0

69.0

Other income, net

(9.9

)

(9.9

)

Loss on extinguishment of debt

0.6

0.6

Adjusted EBITDA

$

745.0

$

785.0


Adjusted
Net Income

Adjusted Diluted
Earnings Per Share

Low

High

Low

High

Adjusted net income and adjusted diluted earnings per share:

GAAP net income and diluted earnings per share

$

212.3

$

236.8

$

2.01

$

2.23

Adjustments:

Amortization (a)

158.0

158.0

1.49

1.49

Restructuring and other costs (a)

25.0

26.0

0.24

0.25

Transaction and integration-related expenses (a)

36.0

36.0

0.34

0.34

Share-based compensation (a)

68.0

69.0

0.64

0.65

Other income, net (a)

(9.9

)

(9.9

)

(0.09

)

(0.09

)

Loss on extinguishment of debt (a)

0.6

0.6

0.01

0.01

Income tax adjustment to normalized rate (b)

(48.5

)

(47.6

)

(0.46

)

(0.45

)

Adjusted net income and adjusted diluted earnings per share (c)

$

441.5

$

468.9

$

4.17

$

4.42

  1. Amounts are estimates with an estimated range of +/- 5% and are presented gross without the benefit of associated income tax deduction.

  2. Income tax expense is calculated and the adjustments are tax-affected at an approximate effective rate of 24.0%, which represents the Company's estimated full year non-GAAP effective tax rate.

  3. Guidance for Adjusted Diluted EPS is based on an expectation of a fully diluted weighted average share count for the year ending December 31, 2021 of approximately 105.9 million shares, which will vary by quarter.