On November 3, 2022 Amgen (NASDAQ:AMGN) reported financial results for the third quarter of 2022 (Press release, Amgen, NOV 3, 2022, View Source [SID1234622955]). Key results include:
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Total revenues decreased 1% to $6.7 billion in comparison to the third quarter of 2021, resulting from a 1% decline in global product sales, which reflected 8% volume growth offset primarily by 5% lower net selling price and 2% negative impact from foreign exchange. Excluding the 2% negative impact of foreign exchange on product sales, total revenues increased 2%.
Volumes grew double-digits for a number of products including LUMAKRAS/LUMYKRAS (sotorasib), Repatha (evolocumab), EVENITY (romosozumab-aqqg), Parsabiv (etelcalcetide), and Vectibix (panitumumab).
GAAP earnings per share (EPS) increased from $3.31 to $3.98 driven by a decrease in operating expenses due to a $0.4 billion licensing-related upfront payment to Kyowa Kirin Co., Ltd. (KKC) in Q3 2021 and lower weighted-average shares outstanding in Q3 2022.
GAAP operating income increased from $2.4 billion to $2.7 billion, and GAAP operating margin increased 5.0 percentage points to 42.6%.
Non-GAAP EPS increased from $4.08 to $4.70 driven by a decrease in operating expenses due to a $0.4 billion licensing-related upfront payment to KKC in Q3 2021 and lower weighted-average shares outstanding in Q3 2022.
Non-GAAP operating income increased from $3.1 billion to $3.3 billion, and non-GAAP operating margin increased 4.2 percentage points to 52.5%.
The Company generated $2.8 billion of free cash flow for the third quarter versus $2.2 billion in the third quarter of 2021.
2022 total revenues guidance revised to $26.0-$26.3 billion; EPS guidance revised to $11.46-$12.17 on a GAAP basis, and $17.25-$17.85 on a non-GAAP basis.
"Our medicines generated 8% volume growth in the quarter globally, with 11 products achieving record quarterly sales," said Robert A. Bradway, chairman and chief executive officer. "This growth reflects the strong underlying demand for our medicines and the value they bring to patients."
Non-GAAP EPS has been recast due to an update to our non-GAAP policy effective January 1, 2022, resulting in a $0.59 reduction of previously-reported non-GAAP EPS for the third quarter of 2021. Refer to Non-GAAP Financial Measures below for further discussion.
Product Sales Performance
Total product sales decreased 1% for the third quarter of 2022 versus the third quarter of 2021. Unit volumes grew 8% but were more than offset by 5% lower net selling price, 2% negative impact from foreign exchange, 1% lower inventory levels and 1% unfavorable changes to estimated sales deductions.
General Medicine
Prolia sales increased 7% year-over-year for the third quarter, driven by 8% volume growth.
EVENITY sales increased 35% year-over-year to a record $201 million for the third quarter, driven by strong volume growth across our markets. U.S. volumes grew 45% year-over-year and volumes outside the U.S. grew 30%.
Repatha sales increased 14% year-over-year for the third quarter, driven by 52% volume growth, partially offset by lower net selling price. In the U.S., sales grew 2%, driven by 32% volume growth, offset by lower net selling price resulting from higher rebates to support and expand access for patients. Outside the U.S., sales grew 26%, driven by 73% volume growth partially offset by lower net selling price; this volume growth and lower net selling price were both impacted by the inclusion of Repatha on China’s National Reimbursement Drug List as of January 1, 2022. Repatha remains the global proprotein convertase subtilisin/kexin type 9 (PCSK9) segment leader, with over 1.2 million patients treated since launch.
Aimovig (erenumab-aooe) sales increased 35% year-over-year for the third quarter, driven by favorable changes to estimated sales deductions and higher net selling price, partially offset by a 7% decline in volume.
Inflammation
TEZSPIRE (tezepelumab-ekko) generated $55 million of sales in the third quarter, driven by continued strong adoption in the U.S. by both allergists and pulmonologists across patients with all types of severe asthma. Healthcare providers acknowledge TEZSPIRE’s unique, differentiated profile and its broad potential to treat the 2.5 million patients worldwide with severe asthma who are uncontrolled, without any phenotypic and biomarker limitation.
Otezla (apremilast) sales increased 3% year-over-year for the third quarter, driven by 9% volume growth, partially offset by lower inventory levels and unfavorable foreign exchange impact. We expect continued volume growth given Otezla’s unique, broad indication to treat patients suffering from mild, moderate or severe psoriasis.
Enbrel (etanercept) sales decreased 14% year-over-year for the third quarter, driven by lower net selling price, a 5% decline from unfavorable changes to estimated sales deductions, and a 3% decline in volume. The 5% unfavorable impact of changes to estimated sales deductions results from a $114 million favorable adjustment in the third quarter of 2021, more than offsetting a $47 million favorable adjustment in this quarter. Going forward, we expect net selling price to continue to decline year-over-year, driven by increased competition.
AMGEVITA (adalimumab) sales increased 5% year-over-year for the third quarter, driven by 27% volume growth, partially offset by foreign exchange impact and lower net selling price resulting from increased competition. AMGEVITA continued to be the most prescribed adalimumab biosimilar in Europe.
Hematology-Oncology
LUMAKRAS/LUMYKRAS (sotorasib) generated $75 million of sales for the third quarter, driven by volume growth. Quarter-over-quarter sales declined 3% driven by lower net selling price due to an unfavorable price adjustment resulting from a reimbursement approval in Germany, partially offset by 15% volume growth. In the U.S., LUMAKRAS has been prescribed to over 3,700 patients by over 2,200 physicians in both academic and community settings. Outside the U.S., LUMYKRAS has now been approved in over 45 countries around the world. We are actively launching in 30 markets and pursuing reimbursement in the remaining countries.
KYPROLIS (carfilzomib) sales increased 9% year-over-year for the third quarter, driven by 11% volume growth.
XGEVA (denosumab) sales decreased 4% year-over-year for the third quarter, driven by a 3% decline in volume, lower inventory levels, and unfavorable foreign exchange impact, partially offset by higher net selling price.
Vectibix (panitumumab) sales increased 24% year-over-year for the third quarter, driven by volume growth. In the third quarter, volume growth benefited from the timing of shipments to Takeda, our partner in Japan.
Nplate (romiplostim) sales increased 5% year-over-year for the third quarter, primarily driven by 12% volume growth, partially offset by unfavorable changes to estimated sales deductions. In the third quarter, volume growth benefited from increased shipments to KKC, our partner in Japan.
BLINCYTO (blinatumomab) sales increased 14% year-over-year for the third quarter, driven by volume growth.
MVASI sales decreased 24% year-over-year for the third quarter, primarily driven by lower net selling price. The most recently published Average Selling Price (ASP) for MVASI in the U.S. declined 37% year-over-year and 12% quarter-over-quarter. Looking forward, we expect continued net selling price erosion and declining volume driven by increased competition and continued ASP erosion.
KANJINTI (trastuzumab-anns) sales decreased 38% year-over-year for the third quarter, primarily driven by lower net selling price and decline in volume, partially offset by favorable changes to estimated sales deductions. The most recently published ASP for KANJINTI in the U.S. declined 38% year-over-year and 11% quarter-over-quarter. Going forward, we expect continued net selling price deterioration and volume declines driven by increased competition and continued ASP erosion.
Established Products
Total sales of our established products, which include Neulasta (pegfilgrastim), NEUPOGEN (filgrastim), EPOGEN (epoetin alfa), Aranesp (darbepotein alfa), Parsabiv (etelcalcetide), and Sensipar/Mimpara (cinacalcet), decreased 17% year-over-year for the third quarter, primarily driven by lower net selling price and lower inventory levels. In the third quarter, the published ASP for Neulasta in the U.S. declined 24% year-over-year and 7% quarter-over-quarter. In the aggregate, we expect the year-over-year net selling price and volume erosion for this portfolio of products to continue.
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
Total Operating Expenses decreased 8%. Cost of Sales margin remained flat. Research & Development (R&D) expenses decreased 22% primarily due to a $400 million licensing-related upfront payment to KKC in 2021. Selling, General & Administrative (SG&A) expenses decreased 1%.
Operating Margin as a percentage of product sales increased 5.0 percentage points to 42.6%.
Tax Rate decreased 2.2 percentage points primarily due to the prior year nondeductible Acquired In-Process Research & Development (Acquired IPR&D) expense arising from the acquisition of Five Prime Therapeutics and net favorable items, partially offset by a nondeductible loss from a nonstrategic divestiture.
On a non-GAAP basis:
Total Operating Expenses decreased 8%. Cost of Sales margin increased 0.3 percentage points driven by changes in product mix, partially offset by lower manufacturing cost and lower costs associated with COVID-19 antibody shipments. R&D expenses decreased 22% primarily due to a $400 million licensing-related upfront payment to KKC in 2021. Without the one-time KKC upfront payment, R&D expenses increased 10% primarily due to higher late-stage program support and research and early pipeline spend, partially offset by lower marketed product support. SG&A expenses increased 1%.
Operating Margin as a percentage of product sales increased 4.2 percentage points to 52.5%.
Tax Rate decreased 0.4 percentage points primarily due to net favorable items during the quarter as compared to the prior year.
Cash Flow and Balance Sheet
The Company generated $2.8 billion of free cash flow in the third quarter of 2022 versus $2.2 billion in the third quarter of 2021 primarily driven by favorable changes in working capital.
The Company’s third quarter 2022 dividend of $1.94 per share was declared on August 3, 2022, and was paid on September 8, 2022, to all stockholders of record as of August 18, 2022, representing a 10% increase from 2021.
During the third quarter, 1.5 million shares of common stock were retired in connection with the final settlement of accelerated share repurchase agreements that the Company entered into in February 2022.
Cash and investments totaled $11.5 billion and debt outstanding totaled $38.7 billion as of September 30, 2022.
2022 Guidance
For the full year 2022, the Company now expects:
Total revenues in the range of $26.0 billion to $26.3 billion.
On a GAAP basis, EPS in the range of $11.46 to $12.17, and a tax rate in the range of 11.0% to 12.5%.
On a non-GAAP basis, EPS in the range of $17.25 to $17.85, and a tax rate in the range of 13.5% to 14.5%.
Capital expenditures to be approximately $950 million, unchanged from previous guidance.
Share repurchases in the range of $6.0 billion to $7.0 billion, unchanged from previous guidance.
Third Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
General Medicine
Repatha
An abstract based on data from the Repatha FOURIER and FOURIER-open label extension studies highlighting the association between the significant and sustained achievement of low and very low, low-density lipoprotein cholesterol (LDL-C) levels and lower rates of major cardiovascular events has been accepted as a late-breaking abstract at the American Heart Association Scientific Sessions (AHA) in November.
Olpasiran (AMG 890)
An abstract based on the end-of-treatment analysis data from a Phase 2 study of olpasiran, a small interfering RNA molecule that reduces Lipoprotein(a) (Lp(a)) synthesis in the liver in subjects with elevated Lp(a) has been accepted as a late-breaking clinical trial presentation at AHA in November.
AMG 133
A Phase 1 study of AMG 133, a multispecific that inhibits the gastric inhibitory polypeptide receptor (GIPR) and activates the glucagon-like peptide 1 (GLP-1) receptor, has completed enrollment.
Data from the single- and multiple-dose cohorts of this Phase 1 study will be presented at the 20th World Congress on Insulin Resistance, Diabetes, and Cardiovascular Disease (WCIRDC) Hybrid Conference in December.
Webcast call Monday, November. 7, 2022
David M. Reese, M.D., executive vice president of Research and Development at Amgen, along with members of Amgen’s R&D team and a clinical investigator, will discuss the Phase 2 data on olpasiran, data from the Repatha FOURIER and FOURIER-open label extension studies and will provide an update on a Phase 1 study of AMG 133 during the call. The webcast will be broadcast over the internet simultaneously and will be available to members of the news media, investors and the general public.
Inflammation
Otezla
In September, results were presented from:
The Phase 3 SPROUT study, evaluating Otezla in pediatric patients (ages 6 through 17) with moderate to severe plaque psoriasis. Otezla treatment resulted in significant improvements in measures of disease severity at week 16 compared with placebo.
The Phase 3 DISCREET study, evaluating Otezla in adult patients with moderate to severe genital psoriasis. Otezla treatment showed a clinically meaningful and statistically significant improvement in genital psoriasis, including improvements in skin clearance, itch, and quality of life at week 16 compared with placebo.
In both studies, safety findings were consistent with the known profile of Otezla; no new signals were identified.
Based on these results, discussions with the FDA are ongoing for DISCREET to add clinical data to Otezla U.S. prescribing information. Discussions with regulatory authorities globally for SPROUT are forthcoming.
TEZSPIRE
In September, TEZSPIRE was approved
in the European Union as an add-on maintenance treatment in adults and adolescents 12 years and older with severe asthma who are inadequately controlled despite high-dose inhaled corticosteroids plus another medicinal product for maintenance treatment.
by the Japanese Ministry of Health, Labour, and Welfare for the treatment of bronchial asthma in patients with severe or refractory disease in whom asthma symptoms cannot be controlled with mid- or high-dose inhaled corticosteroids and other long-term maintenance therapies.
Regulatory reviews continue in other jurisdictions.
In severe asthma, the PASSAGE Phase 4 real-world effectiveness study, the WAYFINDER Phase 3b study, and the SUNRISE Phase 3 study are enrolling patients.
A Phase 3 study continues to enroll patients with chronic rhinosinusitis with nasal polyps.
Planning is underway for a Phase 3 study in patients with eosinophilic esophagitis.
A Phase 2b study in patients with chronic spontaneous urticaria is fully enrolled, with data readout anticipated in H1-2023.
A Phase 2 study continues to enroll patients with chronic obstructive pulmonary disease.
Rocatinlimab (AMG 451 / KHK4083)
In September, data were presented
from a Phase 2 study of rocatinlimab, an anti-OX40 monoclonal antibody, which demonstrated improvement in head and neck atopic dermatitis in patients with moderate to severe disease.
demonstrating that rocatinlimab provides durable normalization of atopic dermatitis inflammation-related gene expression in skin biopsies from atopic dermatitis patients.
The ROCKET Phase 3 program evaluating rocatinlimab in patients with moderate to severe atopic dermatitis was initiated in June. Following additional discussions with regulators and our partner, we are amending the studies to further improve patient convenience and investigate a range of doses. Amendments are not related to safety or efficacy issues.
Rozibafusp alfa (AMG 570)
A Phase 2b study of rozibafusp alfa, an antibody-peptide conjugate that simultaneously blocks inducible T-cell costimulatory ligand (ICOSL) and B-cell activating factor (BAFF) activity, continues to enroll patients with systemic lupus erythematosus (SLE).
Efavaleukin alfa (AMG 592)
A Phase 2b study of efavaleukin alfa, an interleukin-2 (IL-2) mutein Fc fusion protein, continues to enroll patients with SLE while a Phase 2b study continues to enroll patients with ulcerative colitis.
Ordesekimab (AMG 714 / PRV-015)
A Phase 2b study of AMG 714, a monoclonal antibody that binds interleukin-15, continues to enroll patients with nonresponsive celiac disease.
Oncology
LUMAKRAS/LUMYKRAS
In August, data were presented demonstrating that
in a mostly pretreated advanced non-small cell lung cancer (NSCLC) population, lead-in cohorts treated with LUMAKRAS followed by a combination of LUMAKRAS and immunotherapy demonstrated durable clinical activity with lower rates of grade 3-4 Treatment-Related Adverse Events (TRAEs) compared to concurrently treated cohorts. Dose expansion is ongoing in treatment-naïve patients using lower-dose LUMAKRAS lead-in followed by combination of LUMAKRAS with pembrolizumab.
LUMAKRAS given in combination with Src homology region 2-containing protein tyrosine phosphatase 2 (SHP2) inhibitor RMC-4630 demonstrated promising clinical activity in patients with KRAS G12C-mutated NSCLC, most notably in KRAS G12C inhibitor-naïve patients.
In September, data were presented demonstrating that
in the global Phase 3 CodeBreaK 200 trial, LUMAKRAS treatment led to increased progression-free survival (PFS) (primary endpoint) and a significantly higher objective response rate (ORR) (key secondary endpoint) in patients with KRAS G12C-mutated NSCLC compared with intravenous chemotherapy docetaxel. Patient-reported outcomes (a key secondary endpoint) also favored LUMAKRAS versus docetaxel.
in the Phase 1b CodeBreaK 101 study, LUMAKRAS combined with Vectibix demonstrated encouraging efficacy and safety in patients with chemo-refractory metastatic colorectal cancer (CRC). This combination delivered a 30% ORR with a median PFS of 5.7 months. With a median follow up of 8.8 months, median overall survival (OS) was not yet reached. A Phase 3 trial continues to enroll using this combination.
The Company is planning to initiate a Phase 3 study of LUMAKRAS plus chemotherapy in first-line KRAS G12C mutant and PD-L1 negative advanced/metastatic NSCLC.
BLINCYTO
Eastern Cooperative Oncology Group and the American College of Radiology Imaging Network (ECOG-ACRIN) Cancer Research Group announced that a National Cancer Institute sponsored, registration enabling BLINCYTO randomized controlled trial (E1910) in adults with newly diagnosed Philadelphia chromosome negative B-cell acute lymphoblastic leukemia, met the primary endpoint of statistically significant improvement in OS at a predefined interim analysis. This study investigated the addition of BLINCYTO to standard of care chemotherapy. Data were submitted to a medical congress taking place later this year and will be submitted to regulatory authorities in due course.
Vectibix
American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) guidelines in the U.S. and European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) guidelines in Europe were updated to indicate anti-EGFR monoclonal antibodies are preferred treatment over bevacizumab in patients with RAS wild type (RAS/BRAF wild type by ESMO (Free ESMO Whitepaper)) metastatic CRC and left-sided tumors. These updates were based on the Vectibix PARADIGM study that was presented at ASCO (Free ASCO Whitepaper), where data demonstrated that the mFOLFOX6 + Vectibix combination provides a statistically significant improvement in OS over the mFOLFOX6 + bevacizumab combination as first-line treatment for metastatic CRC patients with a left-sided primary tumor and in the overall population.
Bemarituzumab
FORTITUDE-101, a Phase 3 study of bemarituzumab a fibroblast growth factor receptor 2b (FGFR2b) targeting monoclonal antibody, plus chemotherapy, versus placebo plus chemotherapy in first-line gastric cancer with FGFR2b overexpression continues to enroll patients.
FORTITUDE-102, a Phase 1b/3 study of bemarituzumab plus chemotherapy and nivolumab versus chemotherapy and nivolumab in first-line gastric cancer with FGFR2b overexpression is enrolling patients in the Phase 3 portion of the study.
FORTITUDE-103, a Phase 1b study of bemarituzumab plus oral chemotherapy regimens in first-line gastric cancer is enrolling patients.
FORTITUDE-201, a Phase 1b study of bemarituzumab monotherapy and in combination with standard of care therapy continues to enroll patients with squamous NSCLC with FGFR2b overexpression.
FORTITUDE-301, a Phase 1b/2 basket study evaluating the safety and efficacy of bemarituzumab monotherapy in solid tumors with FGFR2b overexpression is enrolling patients.
Tarlatamab (AMG 757)
In August, Phase 1 data from DeLLphi-300 were presented demonstrating that in heavily pretreated patients with small-cell lung cancer (SCLC), tarlatamab, a half-life extended (HLE) bispecific T-cell engager (BiTE) molecule targeting delta-like ligand 3 (DLL3), delivered a confirmed ORR of 23%, a median duration of response of 13.0 months and a median OS of 13.2 months. DeLLphi-301, a potentially registrational Phase 2 study of tarlatamab continues to enroll patients in this setting.
DeLLphi-300, a Phase 1 study of tarlatamab, continues to enroll patients with relapsed/refractory SCLC.
DeLLphi-302, a Phase 1b study of tarlatamab in combination with AMG 404, an anti-programmed cell death-1 monoclonal antibody, continues to enroll patients with second-line or later SCLC.
DeLLphi-303, a Phase 1b study of tarlatamab in combination with standard of care in first-line SCLC, is enrolling patients.
DeLLpro-300, a Phase 1b study of tarlatamab, continues to enroll patients with de novo or treatment-emergent neuroendocrine prostate cancer.
AMG 509
A Phase 1 dose-escalation study of AMG 509, a bispecific molecule targeting six-transmembrane epithelial antigen of prostate 1 (STEAP1) continues to enroll patients with metastatic castrate-resistant prostate cancer (mCRPC).
AMG 340
A Phase 1 dose-escalation study of AMG 340, a lower T-cell affinity BiTE molecule targeting prostate-specific membrane antigen (PSMA), continues to enroll patients with mCRPC.
AMG 193
A Phase 1/1b/2 study of AMG 193, a novel small molecule methylthioadenosine (MTA) cooperative protein arginine methyltransferase 5 (PRMT5) molecular glue, continues to enroll patients with advanced methylthioadenosine phosphorylase (MTAP)-null solid tumors.
Biosimilars
In August, the Company announced positive top-line results from the DAHLIA study, a randomized, double-blind, active-controlled, two-period crossover Phase 3 study evaluating the efficacy and safety of ABP 959, a biosimilar candidate to SOLIRIS (eculizumab), compared with SOLIRIS in adult patients with paroxysmal nocturnal hemoglobinuria (PNH).
The primary analysis of a randomized, double-blind, active controlled, Phase 3 study evaluating the efficacy and safety of ABP 938, an investigational biosimilar to EYLEA (aflibercept) compared with EYLEA met its primary endpoint in subjects with neovascular age-related macular degeneration; final analysis is expected in 2023.
A Phase 3 study evaluating the efficacy and safety of ABP 654 compared to STELARA (ustekinumab) in adult patients with moderate to severe plaque psoriasis has completed, and these data were submitted to the FDA to support U.S. approval.
A Phase 3 study to support an interchangeability designation in the U.S. for ABP 654 is ongoing.
A Phase 3 study to support an interchangeability designation in the U.S. for AMJEVITA (adalimumab-atto) is ongoing.
TEZSPIRE is being developed in collaboration with AstraZeneca.
Rocatinlimab, formerly AMG 451 / KHK4083 is being developed in collaboration with KKC.
Ordesekimab formerly AMG 714 and also known as PRV-015 is being developed in collaboration with Provention Bio.
AMG 509 is being developed in collaboration with Xencor.
STELARA is a registered trademark of Janssen Pharmaceutica NV.
EYLEA is a registered trademark of Regeneron Pharmaceuticals, Inc.
SOLIRIS is a registered trademark of Alexion Pharmaceuticals, Inc.
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the third quarters of 2022 and 2021, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2022 EPS and tax guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, divestitures, restructuring and certain other items from the related GAAP financial measures. Beginning January 1, 2022, following industry guidance from the U.S. Securities and Exchange Commission, the Company no longer excludes adjustments for upfront license fees, development milestones and IPR&D expenses of pre-approval programs related to licensing, collaboration and asset acquisition transactions from its non-GAAP financial measures. For purposes of comparability, the non-GAAP financial results for the third quarter of 2021 have been updated to reflect this change. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the third quarters of 2022 and 2021. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Management has also presented Total Revenues Adjusted for Foreign Currency Impact, which is a non-GAAP financial measure, for the third quarter of 2022. Total Revenues Adjusted for Foreign Currency Impact is computed by converting our current period local currency product sales using the prior period foreign currency exchange rates and comparing that to our current period product sales.
The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor’s overall understanding of the financial performance and prospects for the future of the Company’s ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company’s liquidity. Further, the Company believes Total Revenues Adjusted for Foreign Currency Impact provides supplementary information on the Company’s product sales performance by excluding changes in foreign currency exchange rates between comparative periods.
The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.