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Solventum Reports Third Quarter 2024 Financial Results and Raises Full-Year Guidance

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Reported sales increased 0.4% to $2.082 billion; organic sales increased 0.3%GAAP Earnings Per Share (EPS) of $0.70; adjusted EPS1 of $1.64Generated $169 million in cash from operations; free cash flow1 of $76 millionRaises full-year 2024 organic sales growth, adjusted EPS and free cash flow guidance

ST. PAUL, Minn., Nov. 7, 2024 /PRNewswire/ — Solventum (NYSE: SOLV) today reported financial results for the third quarter ended September 30, 2024.

“We have now delivered consecutive quarters of outperformance against our expectations, and based on these results, we are again raising our full-year guidance,” said Bryan Hanson, chief executive officer, Solventum. “It has been an exciting start, and we are confident that our three-phased approach will drive long-term growth and significant value creation.”

Third Quarter 2024 Financial Results

3 months ended September 30, 2024

(Millions of dollars, except per share amounts)

GAAP

non-GAAP1

Sales

$2,082

$2,082

Operating income

$275

$475

Operating income margin

13.2 %

22.8 %

Earnings per share (EPS)

$0.70

$1.64

Cash from operations/free cash flow1

$169

$76

Reported and organic sales growth reflect the expected normalization of pricing. By segment, organic sales growth was primarily driven by the MedSurg and Health Information Systems segments, partially offset by the Dental Solutions and Purification and Filtration segments. 

GAAP and adjusted operating income margin declined due to lower gross margins, including the impact from the 3M supply agreement mark-up, and an increase in operating expenses related to public company stand-up costs and growth investments.

1 Represents non-GAAP financial measure; see the “Non-GAAP Financial Measures” section for applicable information.

 

Segment and Total Company Net Sales for Third Quarter*

Three months ended
September 30

Increase/(Decrease)

(Dollars in millions)

2024

2023

Total

Currency
Impact

Other2

Organic

MedSurg

$          1,182

$          1,180

0.1 %

(0.1) %

(0.7) %

1.0 %

Dental Solutions

313

331

(5.2)

(1.2)

(3.9)

Health Information Systems

326

321

1.5

0.1

1.5

Purification and Filtration

238

242

(1.5)

(1.1)

(0.3)

Corporate and Unallocated3

23

NM

NM

NM

NM

Total Company

$          2,082

$          2,074

0.4 %

(0.1) %

0.2 %

0.3 %

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

2Other represents sales impact from acquisitions and divestitures measured separately for the first 12 months post-transaction. Divestiture impacts include lost sales from the company’s dental anesthetics business that was sold in August 2023 and certain health care businesses retained by 3M India in connection with the spin-off.

3Corporate and unallocated includes sales related to product supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off.

Full-Year 2024 Guidance
Solventum is raising its full-year 2024 guidance

Organic sales growth to the upper half of 0% to +1.0% (previously 0% to +1.0%)Adjusted EPS of $6.50 to $6.65 (previously $6.30 to $6.50)Free cash flow of $750M to $850M (previously $700M to $800M)

Organic sales, adjusted EPS and free cash flow amounts included in Solventum’s full-year guidance and additional considerations below are non-GAAP financial measures. Solventum does not provide reconciliations of the forward-looking non-GAAP financial measures to the respective GAAP metrics as it is unable to predict with reasonable certainty and without unreasonable effort certain items, such as the impact of changes in currency exchange rates, impacts associated with business acquisitions or divestitures, and the timing and magnitude of restructuring activities, among other items. 

Solventum’s full-year 2024 guidance is based on Q1 2024 as a carve-out plus the remainder of the year as a stand-alone company starting April 1, 2024.

See the “Non-GAAP Financial Measures” section for explanations of our non-GAAP financial measures.

Earnings Conference Call
Solventum will host a conference call today, November 7, at 4:30 p.m. Eastern Time to discuss its third quarter financial results and provide an update on its business. The conference call can be accessed via audio webcast at investors.solventum.com or by dialing (800) 715-9871 within the U.S. or +1 (646) 307-1963 for international callers, using the conference ID 6342275.

A replay of the webcast, along with the earnings press release, slides highlighting the results, and supplemental financial disclosures, will also be available at the same link on the Investor Relations section of the company’s website.

Forward-Looking Statement
This news release contains forward-looking information about Solventum’s financial results and estimates and business prospects that involve substantial risks and uncertainties. In particular, statements regarding the future performance of Solventum, including guidance for 2024, are forward-looking statements. You can identify these statements by the use of words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic, political, regulatory, international, trade and geopolitical conditions, natural disasters, war, public health crises, and other events beyond Solventum’s control; (2) operational execution risks; (3) damage to Solventum’s reputation or its brands; (4) risks from acquisitions, strategic alliances, divestitures and other strategic events; (5) Solventum’s business dealings involving third-party partners in various markets; (6) Solventum’s ability to access the capital and credit markets and changes in Solventum’s credit ratings; (7) exposure to interest rate and currency risks; (8) the highly competitive environment in which Solventum operates and consolidation in the healthcare industry; (9) reduction in customers’ research budgets or government funding; (10) the timing and market acceptance of Solventum’s new product and service offerings; (11) ongoing working relationships with certain key healthcare professionals; (12) changes in reimbursement practices of governments or private payers or other cost containment measures; (13) Solventum’s ability to obtain components or raw materials supplied by third parties and other manufacturing and related supply chain difficulties, interruptions, and disruptive factors; (14) legal and regulatory proceedings and legal compliance risks (including third-party risks) with regards to antitrust, FCPA and other anti-bribery laws, environmental laws, anti-kickback and false claims laws, privacy laws, product liability claims, tax laws, and other laws and regulations in the United States and other countries in which Solventum operates; (15) potential liabilities related to per-and polyfluoroalkyl substances; (16) risks related to the highly regulated environment in which Solventum operates; (17) climate change and measures to address climate change; (18) security breaches and other disruptions to information technology infrastructure; (19) Solventum’s failure to obtain, maintain, protect, or effectively enforce its intellectual property rights; (20) pension and postretirement obligation liabilities; (21) any events that adversely affect the sale or profitability of one of Solventum’s key products or the revenue delivered from sales to its key customers; (22) any failure by 3M Company (“3M“) to perform any of its obligations under the various separation agreements entered into in connection with the separation of Solventum from 3M and distribution (the “Spin-Off”); (23) any failure to realize the expected benefits of the Spin-Off; (24) Solventum’s ability to execute its turnaround strategy; (25) a determination by the IRS or other tax authorities that the Separation or certain related transactions should be treated as taxable transactions; (26) indebtedness incurred in the financing transactions undertaken in connection with the Separation and risks associated with additional indebtedness; (27) the risk that incremental costs of operating on a standalone basis (including the loss of synergies), costs of restructuring transactions and other costs incurred in connection with the Spin-Off will exceed Solventum’s estimates; and (28) the impact of the Spin-Off on Solventum’s businesses and the risk that the separation from 3M may be more difficult, time-consuming or costly than expected, including the impact on Solventum’s resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located under “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Solventum’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Solventum assumes no obligation to update any forward-looking statements discussed herein as a result of new information or future events or developments.

Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S. GAAP, Solventum also provides non-GAAP measures that we use, and plan to continue using, when monitoring and evaluating operating performance and measuring cash available to invest in our business. The adjusted measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP financial measures are supplemental measures of our performance and our liquidity that we believe help investors understand our underlying business performance and Solventum uses these measures as an indication of the strength of Solventum and its ability to generate cash.

Solventum calculates forward-looking non-GAAP financial measures, including organic sales growth, adjusted operating income, adjusted operating income margin, adjusted effective tax rate, adjusted earnings per share, and free cash flow based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. Solventum does not provide reconciliations of these forward-looking non-GAAP financial measures to the respective GAAP metrics as it is unable to predict with reasonable certainty and without unreasonable effort certain items such as the impact of changes in currency exchange rates, impacts associated with business acquisitions or divestitures, and the timing and magnitude of restructuring activities, among other items. The timing and amounts of these items are uncertain and could have a material impact on Solventum’s results in accordance with GAAP. 

The Q3 2024 financial statements and financial information, including reconciliations of non-GAAP financial measures, are available on Solventum’s website: investors.solventum.com.

About Solventum
At Solventum, we enable better, smarter, safer healthcare to improve lives. As a new company with a long legacy of creating breakthrough solutions for our customers’ toughest challenges, we pioneer game-changing innovations at the intersection of health, material and data science that change patients’ lives for the better — while empowering healthcare professionals to perform at their best. See how at Solventum.com

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

(Dollars in millions, except per-share amounts)

(Unaudited)

Three months ended
September 30,

Nine months ended
September 30,

2024

2023

2024

2023

Net sales of product

$       1,608

$       1,593

$       4,766

$       4,750

Net sales of software and rentals

474

481

1,413

1,411

Total net sales

2,082

2,074

6,179

6,161

Cost of product

793

748

2,341

2,262

Cost of software and rentals

124

117

364

364

Gross profit

1,165

1,209

3,474

3,535

Selling, general and administrative expenses

701

525

1,998

1,681

Research and development expenses

189

180

576

568

Total operating expenses

1,807

1,570

5,279

4,875

Operating income

275

504

900

1,286

Interest expense, net

107

260

Other expense (income), net

1

4

48

10

Income before income taxes

167

500

592

1,276

Provision for income taxes

45

40

144

202

Net Income

$          122

$          460

$          448

$       1,074

Earnings per share:

Basic earnings per share

$         0.70

$         2.66

$         2.59

$         6.22

Diluted earnings per share

0.70

2.66

2.58

6.22

Weighted-average number of share outstanding:

Basic

173.4

172.7

173.1

172.7

Diluted

173.9

172.7

173.4

172.7

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

(Dollars in millions)

(Unaudited)

September 30,

December 31,

(Millions)

2024

2023

Assets

Current assets

Cash and cash equivalents

$            772

$            194

Accounts receivable — net of allowances of $86 and $82

1,105

1,313

Due from related parties

222

Inventories

Finished goods

529

453

Work in process

181

171

Raw materials and supplies

243

233

Total inventories

953

857

Other current assets

302

155

Total current assets

3,354

2,519

Property, plant and equipment — net

1,599

1,457

Goodwill

6,592

6,535

Intangible assets — net

2,651

2,902

Other assets

549

530

Total assets

$        14,745

$        13,943

Liabilities

Current liabilities

Short-term borrowings and current portion of long-term debt

$            300

$               —

Accounts payable

560

477

Due to related parties

450

Unearned revenue

563

574

Other current liabilities

1,031

677

Total current liabilities

2,904

1,728

Long-term debt

7,809

Pension and postretirement benefits

321

166

Deferred income taxes

214

231

Other liabilities

305

152

Total liabilities

$        11,553

$          2,277

Equity

Common stock par value, $0.01 par value, 750,000,000 shares authorized

$                2

$               —

Shares issued and outstanding – September 30, 2024: 172,754,070

Shares issued and outstanding – December 31, 2023: 0

Additional paid-in capital

3,744

Retained earnings

211

Net parent investment

12,003

Accumulated other comprehensive income (loss)

(765)

(337)

Total equity

3,192

11,666

Total liabilities and equity

$        14,745

$        13,943

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

Nine months ended September 30,

(Millions)

2024

2023

Cash Flows from Operating Activities

Net income

$            448

$          1,074

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

405

422

Postretirement benefit plan expense

30

31

Stock-based compensation expense

87

32

Gain on business divestitures

(56)

Deferred income taxes

(93)

(99)

Changes in assets and liabilities

Accounts receivable

14

(24)

Due from related parties

200

Inventories

(99)

(7)

Accounts payable

200

48

Due to related parties

(393)

All other operating activities

167

(53)

Net cash provided by operating activities

966

1,368

Cash Flows from Investing Activities

Purchases of property, plant and equipment

(253)

(202)

Proceeds from sale of business

60

Net cash used in investing activities

(253)

(142)

Cash Flows from Financing Activities

Repayment of debt

(200)

Net transfers to 3M

(8,247)

(1,248)

Proceeds from long-term debt, net of issuance costs

8,303

Other — net

8

2

Net cash used in financing activities

(136)

(1,246)

Effect of exchange rate changes on cash and cash equivalents

1

1

Net increase (decrease) in cash and cash equivalents

578

(19)

Cash and cash equivalents at beginning of year

194

61

Cash and cash equivalents at end of period

$            772

$              42

 

Solventum Corporation

SALES CHANGE ANALYSIS4

(Dollars in millions)

(Unaudited)

Segment and Total Company Net Sales for the First Nine Months*

Nine months ended
September 30,

Increase/(Decrease)

(Dollars in millions)

2024

2023

Total

Currency
Impact

Other

Organic

MedSurg

$         3,463

$        3,464

— %

(0.6) %

(0.5) %

1.1 %

Dental Solutions

979

1,023

(4.3)

(0.6)

(1.9)

(1.8)

Health Information Systems

971

953

1.8

1.8

Purification and Filtration

721

721

0.1

(0.7)

(0.9)

1.7

Corporate and Unallocated5

45

NM

NM

NM

NM

Total Company

$         6,179

$        6,161

0.3 %

(0.5) %

— %

0.8 %

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

4Total sales change is calculated based on reported sales results. The components of sales change include organic local-currency sales, translation, and other. Organic local-currency sales include both organic volume impacts (which excludes acquisition and divestiture impacts, in addition to supply agreement and impacts) and selling price changes. Other represents sales impact from acquisitions and divestitures measured separately for the first 12 months post-transaction. Divestiture impacts include lost sales from the company’s dental anesthetics business that was sold in August 2023 and certain health care businesses retained by 3M India in connection with the spin-off.

5Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off.

Solventum Corporation and Subsidiaries
BUSINESS SEGMENTS
(Unaudited)

Operating segments include components of an enterprise where separate financial information is available that is evaluated regularly by the company’s Chief Operating Decision Maker (“CODM”) for the purpose of assessing performance and allocating resources. The company’s CODM is its Chief Executive Officer. The company’s operating activities are managed through four operating segments: MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration. There have been no changes to the composition of the segments or to financial information reported within each of the business segments. These segments have been identified based on the nature of the products sold and how the company manages its operations. Transactions among reportable segments are recorded at cost. No operating segments have been aggregated to form reportable segments.

Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, spin-off and separation-related costs and other net costs that the company chose not to allocate directly to its business segments. Spin-off and separation-related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone company, including system implementations, manufacturing relocation, legal entity separation, certain equity awards granted as part of the spin-off, profit mark-ups on transition service arrangements with 3M and other one-time costs. 

Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off. Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis. Business segment operating income is reconciled to total operating income below:

BUSINESS SEGMENT INFORMATION

Three months ended September 30, 2024

Three months ended September 30, 2023

(Dollars in millions)

Net Sales

Operating
Income

Operating
Margin %

Net Sales

Operating
Income

Operating
Margin %

MedSurg

$      1,182

$         243

20.6 %

$      1,180

$         307

26.0 %

Dental Solutions

313

72

23.0

331

114

34.4

Health Information Systems

326

105

32.2

321

114

35.5

Purification and Filtration

238

20

8.4

242

48

19.8

Total business segment operating income

$         440

$         583

Corporate and Unallocated:

Amortization expense

$         (88)

$         (92)

Other Corporate and Unallocated

(77)

13

Total Corporate and Unallocated

23

(165)

NM

(79)

NM

Total Company

$      2,082

$         275

13.2 %

$      2,074

$         504

24.3 %

BUSINESS SEGMENT INFORMATION

Nine months ended September 30, 2024

Nine months ended September 30, 2023

(Dollars in millions)

Net Sales

Operating
Income

Operating
Margin %

Net Sales

Operating
Income

Operating
Margin %

MedSurg

$      3,463

$         678

19.6 %

$      3,464

$         829

23.9 %

Dental Solutions

979

272

27.8

1,023

349

34.1

Health Information Systems

971

317

32.6

953

304

31.9

Purification and Filtration

721

78

10.8

721

134

18.6

Total business segment operating income

$      1,345

$      1,616

Corporate and Unallocated:

Amortization expense

$       (261)

$       (276)

Other Corporate and Unallocated

(184)

(54)

Total Corporate and Unallocated

45

(445)

NM

(330)

NM

Total Company

$      6,179

$         900

14.6 %

$      6,161

$      1,286

20.9 %

 

Solventum Corporation
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Unaudited)

In addition to reporting financial results in accordance with U.S. GAAP, the company use non-GAAP financial measures to supplement the financial measures prepared in accordance with U.S. GAAP. These include (1) Adjusted operating income, and adjusted operating income margin, (2) Adjusted earnings per share, and (3) Free cash flow. Management believes that these non-GAAP financial measures are useful in evaluating current performance and focusing management on our underlying operational results.

There are limitations to the use of the non-GAAP financial measures presented in this information statement. These non-GAAP financial measures are not prepared in accordance with U.S. GAAP nor do they have any standardized meaning under U.S. GAAP. In addition, other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to such similarly titled non-GAAP financial measures used by other companies. Management cautions you not to place undue reliance on these non-GAAP financial measures, but instead to consider them with the most directly comparable U.S. GAAP measure. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. These non-GAAP financial measures should be considered supplements to, not substitutes for, or superior to, the corresponding financial measures calculated in accordance with U.S. GAAP.

The tables below reconcile our non-GAAP financial measures to the nearest financial measure that is in accordance with U.S. GAAP for the periods presented.

Adjusted Operating Income, Adjusted Operating Income Margin and Adjusted Earnings Per Share (Non-GAAP measures)

Adjusted operating income and adjusted operating income margin are not defined under U.S. GAAP. Therefore, they should not be considered a substitute for earnings data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Solventum defines adjusted operating income as operating income excluding the effects of amortization, restructuring costs, and spin-off and separation-related costs. Adjusted operating income margin is adjusted operating income divided by the U.S GAAP measure total net sales for the same period. The company believes adjusted operating income and adjusted operating income margin provide investors with visibility into the company’s unleveraged, pre-tax operating results and reflects underlying financial performance. However, adjusted operating income should not be construed as inferring that the company’s future results will be unaffected by the items for which the measure adjusts.

Adjusted earnings per share is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for earnings data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Solventum defines adjusted earnings per share as net income excluding the after-tax effects of amortization, restructuring costs, spin-off and separation-related costs, and legal entity restructuring costs. The company believes adjusted earnings per share provides investors with improved comparability of underlying operating results and a further understanding and additional transparency regarding how the company evaluate the business. However, adjusted earnings per share should not be construed as inferring that the company’s future results will be unaffected by the items for which the measure adjusts.

Solventum Corporation

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)*

(Unaudited)

Three months ended September 30, 2024

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 2,082

$    917

56.0 %

$  1,807

$    275

13.2 %

$    108

$    167

$      122

$   0.70

26.9 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

(88)

88

4.2

88

73

0.42

Restructuring costs (a)

(1)

(1)

1

0.1

1

1

0.01

Spin-off and separation-related costs (b)

(27)

1.3

(111)

111

5.3

111

85

0.49

Legal entity restructuring (c)

4

0.02

Non-GAAP

$ 2,082

$    889

57.3 %

$  1,607

$    475

22.8 %

$    108

$    367

$      285

$   1.64

22.3 %

Three months ended September 30, 2023

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 2,074

$    865

58.3 %

$  1,570

$    504

24.3 %

$        4

$    500

$      460

$   2.66

8.0 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

(92)

92

4.4

92

77

0.45

Restructuring costs (a)

(1)

1

(1)

(1)

(1)

(0.01)

Spin-off and separation-related costs (b)

Gain on business divestitures

56

(56)

(2.7)

(56)

(40)

(0.23)

Non-GAAP

$ 2,074

$    864

58.3 %

$  1,535

$    539

26.0 %

$        4

$    535

$      496

$   2.87

7.3 %

_________

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

(a)    Consists of severance associated with restructuring programs.

(b)    Consists of costs specifically incurred in connection with the separation from 3M.

(c)    Consists of tax impacts for legal entity restructuring in connection with the separation from 3M.

6Cost of sales is the combination of cost of product and cost of software and rental line items from the Condensed Consolidated and Combined Statements of Income and represents the total company cost of sales.

7Other operating expenses is a combination of selling, general and administrative expenses and research and development expenses from the Condensed Consolidated and Combined Statements of Income and represents the total company other operating expenses.

8 Non-operating expense (income), net is the combination of interest expense, net and other expense (income), net line items from the Condensed Consolidated and Combined Statements of Income and represents the total company non-operating expense.

 

Solventum Corporation

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)*

(Unaudited)

Nine months ended September 30, 2024

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 6,179

$ 2,705

56.2 %

$  5,279

$    900

14.6 %

$    308

$    592

$      448

$   2.58

24.3 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

(261)

261

4.2

261

218

1.26

Restructuring costs (a)

(5)

0.1

(13)

13

0.2

13

9

0.06

Spin-off and separation-related costs (b)

(48)

0.8

(215)

215

3.5

(38)

253

205

1.18

Legal entity restructuring (c)

35

0.20

Non-GAAP

$ 6,179

$ 2,652

57.1 %

$  4,790

$ 1,389

22.5 %

$    270

$ 1,119

$      915

$   5.28

18.2 %

Nine months ended September 30, 2023

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 6,161

$ 2,626

57.4 %

$  4,875

$ 1,286

20.9 %

$      10

$ 1,276

$   1,074

$   6.22

15.8 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

(276)

276

4.5

276

231

1.33

Restructuring costs (a)

(12)

0.2

(38)

38

0.6

38

31

0.18

Spin-off and separation-related costs (b)

Gain on business divestitures

56

(56)

(0.9)

(56)

(40)

(0.23)

Non-GAAP

$ 6,161

$ 2,614

57.6 %

$  4,617

$ 1,544

25.1 %

$      10

$ 1,534

$   1,296

$   7.50

15.5 %

__________

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

(a)    Consists of severance associated with restructuring programs.

(b)    Consists of costs specifically incurred in connection with the separation from 3M.

(c)    Consists of tax impacts for legal entity restructuring in connection with the separation from 3M.

6Cost of sales is the combination of cost of product and cost of software and rental line items from the Condensed Consolidated and Combined Statements of Income and represents the total company cost of sales.

7Other operating expenses is a combination of selling, general and administrative expenses and research and development expenses from the Condensed Consolidated and Combined Statements of Income and represents the total company other operating expenses.

8 Non-operating expense (income), net is the combination of interest expense, net and other expense (income), net line items from the Condensed Consolidated and Combined Statements of Income and represents the total company non-operating expense.

Free Cash Flow (non-GAAP measure):

Free cash flow is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The company believes free cash flow is meaningful to investors as it is a useful measure of liquidity and the company uses these measures as an indication of the strength of the company and its ability to generate cash. Free cash flow varies across quarters throughout the year. Below find a recap of free cash flow.

(Dollars in millions)

Three months ended
September 30,

Nine months ended
September 30,

Major GAAP Cash Flow Categories

2024

2023

2024

2023

Net cash provided by operating activities

$           169

$           493

$           966

$         1,368

Net cash used in investing activities

(93)

(6)

(253)

(142)

Net cash used in financing activities

(202)

(485)

(136)

(1,246)

Free Cash Flow (non-GAAP measure)

Net cash provided by operating activities

$           169

$           493

$           966

$         1,368

Purchases of property, plant and equipment

(93)

(66)

(253)

(202)

Free cash flow*

76

427

713

1,166

__________________

*         Non-GAAP financial measure.

 

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Two Schools, One Vision: XCL World Academy and XCL American Academy to Merge

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SINGAPORE, Nov. 8, 2024 /PRNewswire/ — XCL Education Group today announced the merger of XCL American Academy into XCL World Academy in August 2025, creating a single, unified campus dedicated to providing an exceptional learning environment that fosters diversity, academic excellence, and personal growth for all students.

This will bring together the strengths of both schools, their innovative learning spaces, and experienced educators. Students will benefit from an enriched learning environment that seamlessly integrates the best of both worlds: the renowned IB program, along with the strong academic foundation provided by the American AERO standards.

“Following careful consideration and extensive consultation, we have made the strategic decision to merge XCL American Academy into XCL World Academy, to create an even stronger and cohesive learning environment for our students,” said Gilles Mahe, CEO of XCL Education Group. “This merger will allow us to better leverage our facilities and resources, for all our students.”

XCL also announced the launch of the new Innovation Hub earlier this year. The state-of-the-art multi-level building is purpose-designed to enhance the learning environment with the latest technology and specialized labs for students. The Innovation Hub is designed to be environmentally friendly and with sustainability at the forefront of design. The building includes clean air filtration in all learning spaces and home to a digital multimedia lab, specialist labs, and a multi-use esports arena.

“The $80 million investment in the Innovation Hub and other facilities at our campus in Singapore is a testament to our commitment to providing our students with the best possible learning environment,” said Mahe. “These facilities will provide our students with the opportunity to learn and grow in a world-class setting.”

“We are confident that this merger will deliver the best possible outcomes for every XCL student in Singapore,” said Mahe. “We look forward to welcoming all of our students to the unified campus in August 2025.”

About XCL Education Group
XCL Education is one of the largest, fastest growing K-12 education platforms in Southeast Asia. Headquartered in Singapore, it serves over 20,000 students across 17 K-12 campuses and 45 Preschools in Malaysia, Singapore, Thailand, and Vietnam.  XCL Education aspires to be a trusted and respected future-focused family of schools, fostering curiosity, excellence, and creating life-shaping impact on our students, staff, and communities we serve.  To learn more, visit XCL Education.  

About XCL World Academy
XCL World Academy is a premium international school in Singapore, offering a rigorous academic program for students aged 2 to 18 years. The school is authorized to offer the International Baccalaureate (IB) Primary Years Programme (PYP), Middle Years Programme (MYP), and Diploma Programme (DP). XCL World Academy is committed to providing a holistic education that develops students’ intellectual, social, emotional, and physical well-being.

About XCL American Academy
XCL American Academy is an international school in Singapore, offering high-quality, rigorous, and accessible American education for children aged 4 – 14 years.

 

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Sabre Corporation Announces Exchange Offers by Sabre GLBL Inc. for Certain Senior Secured Debt Securities

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SOUTHLAKE, Texas, Nov. 7, 2024 /PRNewswire/ — Sabre Corporation (“Sabre”) today announced that Sabre GLBL Inc. (“Sabre GLBL”), a wholly-owned subsidiary of Sabre, has commenced exchange offers (each, an “Exchange Offer” and together, the “Exchange Offers”) to exchange certain of its outstanding 11.250% Senior Secured Notes due 2027 (the “December 2027 Notes”) and 8.625% Senior Secured Notes due 2027 (the “June 2027 Notes” and, together with the December 2027 Notes, the “Existing Notes” and each of them a “series” of Existing Notes) for up to $500 million (as such amount may be amended by Sabre GLBL in its sole discretion, the “Maximum Exchange Amount”) in aggregate principal amount of Sabre GLBL’s new 10.750% Senior Secured Notes due 2029 (the “New Notes” and together with the Existing Notes, the “Securities”), upon the terms and subject to the conditions described in the confidential offering circular, dated as of November 7, 2024, for the Exchange Offers (as it may be amended or supplemented, the “Offering Circular”). The primary purpose of the Exchange Offers is to improve the Company’s maturity profile by extending the maturity date of the indebtedness represented by the Existing Notes from 2027 to 2029.

The aggregate principal amount of New Notes to be issued pursuant to the Exchange Offers is subject to a minimum principal amount of $250 million (the “New Notes Issuance Minimum”).

In addition, the principal amount of each series of Existing Notes that is accepted pursuant to the Exchange Offers will be subject to the “Acceptance Priority Level” (in numerical priority order), as set forth in the table below and as further described in the Offering Circular.

The following table summarizes certain terms of the Exchange Offers:

CUSIP No./ ISIN

Title of
Security

Principal
Amount
Outstanding

Acceptance
Priority
Level(1)

Exchange
Consideration(2)

Early Exchange
Premium(2)(3)

Total Exchange
Consideration(1)(2)(3)

CUSIP: 78573NAH5 (144A);
U86043AF0 (Reg. S) / ISIN:
US78573NAH52 (144A);
USU86043AF04 (Reg. S)           

11.250%
Senior
Secured Notes
due 2027

$555,000,000

1

$1,000.00 principal
amount of New Notes

$82.50 principal
amount of New
Notes

$1,082.50 principal
amount of New Notes

CUSIP: 78573NAJ1 (144A);
U86043AG8 (Reg. S) / ISIN:
US78573NAJ19 (144A);
USU86043AG86 (Reg. S)

8.625%
Senior
Secured Notes
due 2027

$903,077,000

2

$930.00 principal
amount of New Notes

$82.50 principal
amount of New
Notes

$1,012.50 principal
amount of New Notes

(1)   Acceptance of the Existing Notes is subject to the Acceptance Priority Level as described below.

(2)   For each $1,000 principal amount of Existing Notes.

(3)   Includes Early Exchange Premium.

If the aggregate principal amount of Existing Notes validly tendered on or before the Early Exchange Date (as defined below) constitutes a principal amount of Existing Notes that, if accepted by the Company, would result in issuing New Notes having an aggregate principal amount equal to or in excess of the Maximum Exchange Amount, the Company will not accept any Existing Notes tendered for exchange after the Early Exchange Date (even if they are of Acceptance Priority Level 1).  If acceptance of all validly tendered Existing Notes of a series on the Early Exchange Date or the Expiration Date (as defined below), as applicable, would result in the Company issuing New Notes having an aggregate principal amount in excess of the Maximum Exchange Amount, the tendered Existing Notes of such series will be accepted on a pro rata basis as described in the Offering Circular. On each settlement date, Existing Notes of a series having a higher Acceptance Priority Level will be accepted for exchange before any Existing Notes of a series having a lower Acceptance Priority Level. For the avoidance of doubt, if the Exchange Offers are not fully subscribed as of the Early Exchange Date, subject to the terms and conditions of the Exchange Offers, all existing Notes tendered at or prior to the Early Exchange Date will be accepted for exchange in priority to all Existing Notes tendered after the Early Exchange Date even if such Existing Notes tendered after the Early Exchange Date have a higher Acceptance Priority Level than the Existing Notes tendered at or prior to the Early Exchange Date.

The New Notes will mature on November 15, 2029 and will bear interest at a rate per annum equal to 10.750%. The New Notes will first be redeemable, at Sabre GLBL’s option, starting on November 15, 2026, at 105.375% of their outstanding principal amount, plus accrued interest, and under certain other circumstances described in the Offering Circular.

The New Notes and the guarantees thereof will be senior secured indebtedness and will rank equal in right of payment with all of the existing and future senior secured indebtedness of Sabre GLBL and the guarantors. The New Notes will initially be jointly and severally, irrevocably and unconditionally guaranteed by Sabre Holdings Corporation (“Sabre Holdings”) and all of Sabre GLBL’s current and future restricted subsidiaries that are borrowers under or guarantee Sabre GLBL’s senior secured credit facilities under certain of its existing credit agreements or certain other secured indebtedness. The New Notes and the guarantees thereof will be secured, subject to permitted liens, by a first-priority security interest in substantially all present and hereinafter acquired assets of Sabre GLBL and each of the guarantors (other than certain excluded assets). The New Notes will be guaranteed by the same parties and on the same basis, and secured by the same assets and on the same basis, as the Existing Notes. In addition, the covenants in the indenture for the New Notes will be substantially the same as the covenants applicable to the Existing Notes.

The Exchange Offers will expire at 5:00 p.m., New York City time, on December 9, 2024, unless extended (such date and time, as it may be extended, the “Expiration Date”), unless earlier terminated. Tenders of Existing Notes may be withdrawn from the Exchange Offers at or prior to, but not after, 5:00 p.m., New York City time, on November 21, 2024, unless extended (such date and time, as it may be extended, the “Withdrawal Deadline”). Eligible Holders (as defined below) must validly tender their Existing Notes at or prior to 5:00 p.m., New York City time, on November 21, 2024, unless extended (such date and time, as it may be extended, the “Early Exchange Date”), to be eligible to receive the Total Exchange Consideration (as set forth above), which includes the Early Exchange Premium (as set forth above) for such Existing Notes. Eligible Holders tendering Existing Notes after the Early Exchange Date and on or before the Expiration Date will only be eligible to receive the Exchange Consideration (as set forth above), which will equal the Total Exchange Consideration for such series of Existing Notes less the applicable Early Exchange Premium.

In addition to the Total Exchange Consideration or Exchange Consideration (as described in the table above), as applicable, Eligible Holders whose Existing Notes are accepted for exchange will be paid the accrued and unpaid interest, if any, on the Existing Notes to, but not including, the early settlement date, which is expected to be November 25, 2024, unless extended (such date and time, as it may be extended, the “Early Settlement Date”) on such Existing Notes; provided, however, that since any New Notes issued on the final settlement date, which is expected to be December 11, 2024, unless extended (such date and time, as it may be extended, the “Final Settlement Date”) will be issued with accrued interest from the Early Settlement Date up to, but not including, the Final Settlement Date, the amount of such accrued interest on any such New Notes will be deducted, from the cash payable as accrued interest on the Existing Notes exchanged on the Final Settlement Date, provided further that such net amount will not be below zero. For the avoidance of doubt, Eligible Holders (as defined below) who validly tender Existing Notes of a series after the Early Exchange Date but on or before the Expiration Date, will not receive accrued and unpaid interest, if any, on such Existing Notes from the Early Settlement Date through the Final Settlement Date. In addition, Eligible Holders of the December 2027 Notes whose tenders are settled after December 1, 2024 and before December 15, 2024 will be deemed to have consented to giving up any claim to the interest payment due on December 15 in respect of the December 2027 Notes that they might otherwise have as a result of the related interest payment record date of December 1, 2024, and will receive only the accrued interest described above. Interest on the New Notes will accrue from (and including) the Early Settlement Date. Interest on the New Notes will accrue from (and including) the Early Settlement Date.

Sabre GLBL’s obligation to accept for exchange the Existing Notes validly tendered and not validly withdrawn in each Exchange Offer is subject to the satisfaction or waiver of certain conditions as described in the Offering Circular, including the New Notes Issuance Minimum. Such conditions may be waived by Sabre GLBL in its sole discretion, subject to applicable law. Any waiver of a condition by Sabre GLBL will not constitute a waiver of any other condition. For avoidance of doubt, the Exchange Offer in respect of the December 2027 Notes is not conditioned on the Exchange Offer in respect of the June 2027 Notes, or vice versa. Sabre GLBL reserves the right to extend, amend or terminate any Exchange Offer for any reason or for no reason. In addition, Sabre GLBL reserves the right to increase, decrease or otherwise change the Maximum Exchange Amount in its sole discretion without extending the Early Exchange Date or the Withdrawal Deadline or otherwise reinstating withdrawal rights, subject to compliance with applicable law and the terms of outstanding indebtedness. Sabre GLBL will not receive any cash proceeds from the Exchange Offers and will not incur additional indebtedness in excess of the aggregate principal amount of Existing Notes that are exchanged in the Exchange Offers. 

Concurrently with the Exchange Offers, Sabre GLBL is offering lenders under its senior secured term loans (the “Old Term Loans”) to exchange up to approximately $375 million of their Old Term Loans for the same amount of new senior secured term loans maturing in November 2029 (the “New Term Loans”). Except for the extended maturity and new pricing terms of the New Term Loans, we expect that the New Term Loans will have substantially similar terms as the Old Term Loans. The consummation of each term loan exchange is conditioned on participation from at least $50 million in principal amount per tranche of the New Term Loans.

The consummation of each Exchange Offer is not subject to, or conditioned upon, the consummation of such term loan exchanges. The consummation of such term loan exchanges is not subject to, or conditioned upon, the consummation of any Exchange Offer. The proposed term loan exchanges are subject to market conditions and there can be no assurance that any or all of them will in fact be consummated in the manner described herein or at all.

The Exchange Offers are being made only to holders of Existing Notes that have certified, by submitting an instruction to the clearing system, that they are either (i) “qualified institutional buyers” as defined in Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”) or (ii) are located outside the United States and are not “U.S. persons” as defined in Rule 902 under the Securities Act (such holders, “Eligible Holders”). Only Eligible Holders are authorized to receive or review the Offering Circular or to participate in the Exchange Offers. Non U.S.-persons may also be subject to additional eligibility criteria.

Information Relating to the Exchange Offers

The complete terms and conditions of the Exchange Offers are set forth in the Offering Circular.  The Offering Circular contains important information and Eligible Holders are encouraged to read it in its entirety.  The Offering Circular will only be distributed to Eligible Holders who complete and return an eligibility form confirming that they are either a “qualified institutional buyer” under Rule 144A or not a “U.S. person” under Regulation S under the Securities Act for purposes of applicable securities laws.  Holders of Existing Notes who desire to complete an eligibility form should either visit www.dfking.com/sabre or request instructions by sending an e-mail to sabre@dfking.com or by calling D.F. King & Co., Inc., the information and exchange agent for the Exchange Offers, at (toll-free) (800) 848-3374 (toll-free) or (banks and brokers) (212) 269-5550.

None of Sabre, Sabre Holdings, Sabre GLBL, their affiliates, their respective boards of directors and stockholders, the Exchange Agent or Computershare Trust Company, N.A., as trustee for the Existing Notes and New Notes, are making any recommendation as to whether holders should tender any Existing Notes in response to the Exchange Offers. Holders must make their own decision as to whether to tender any of their Existing Notes, and, if so, the principal amount of Existing Notes to tender.

This press release is for informational purposes only and is neither an offer to buy nor a solicitation of an offer to sell any of the New Notes or any other securities. The Exchange Offers are not being made to holders of Existing Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. The Exchange Offers are only being made pursuant to the Offering Circular. Eligible Holders are strongly encouraged to read the Offering Circular carefully because it will contain important information.

The New Notes have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.  The New Notes have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the Offering Circular.

Forward-Looking Statements

Certain statements herein are forward-looking statements about trends, future events, uncertainties and our plans and expectations of what may happen in the future. Any statements that are not historical or current facts are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “guidance,” “outlook,” “target,” “expect, ” “anticipate,” “on track,” “continue,” “believe,” “momentum,” “position,” “continue,” “progress,” “confident,” “trend,” “plan,” “recurring,” “trajectory,” “pipeline,” “opportunity,” “potential,” “positioned,” “benefit,” “goal,” “confident,” “indicate,” “optimistic,” “will,” “forecast,” “strategy,” “estimate,” “project,” “may,” “should,” “would,” “intend,” or the negative of these terms, where applicable, or other comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Sabre’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. The potential risks and uncertainties include, among others, our ability to realize the anticipated benefits of the Exchange Offers and the proposed term loan exchange transaction and the risk that the Exchange Offers and the proposed term loan exchange transaction may not be consummated, financial condition and credit ratings, as well as on the travel industry and consumer spending more broadly, the effect of remote working arrangements on our operations and the speed and extent of the recovery across the broader travel ecosystem, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, the timing, implementation and effects of our growth strategies and technology transformation, the completion and effects of travel platforms, exposure to pricing pressure in the Travel Solutions business, changes affecting travel supplier customers, maintenance of the integrity of our systems and infrastructure and the effect of any security incidents, our ability to recruit, train and retain employees, competition in the travel distribution industry and solutions industry, failure to adapt to technological advancements, implementation of software solutions, implementation and effects of new, amended or renewed agreements and strategic partnerships, dependence on establishing, maintaining and renewing contracts with customers and other counterparties and collecting amounts due to us under these agreements, dependence on relationships with travel buyers, the ability to achieve our cost savings and efficiency goals and the effects of these goals, our collection, processing, storage, use and transmission of personal data and risks associated with PCI compliance, the effects of cost savings initiatives, the effects of new legislation or regulations or the failure to comply with regulations or other legal requirements, use of third-party distributor partners, the financial and business results and effects of acquisitions and divestitures of businesses or business operations, reliance on the value of our brands, reliance on third parties to provide information technology services and the effects of these services, the effects of any litigation, regulatory reviews and investigations, adverse global and regional economic and political conditions, risks related to global conflicts, risks arising from global operations, risks related to our significant amount of indebtedness, including increases in interest rates and our ability to refinance our debt, and tax-related matters.

More information about potential risks and uncertainties that could affect our business and results of operations is included in the “Risk Factors” and “Forward-Looking Statements” sections of Sabre Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on October 31, 2024 and Sabre Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 15, 2024, as well as other risks and uncertainties specified in the “Risk Factors” section of the Offering Circular. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. Unless required by law, Sabre undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

About Sabre

Sabre Corporation is a software and technology company that takes on the biggest opportunities and solves the most complex challenges in travel. The Company connects travel suppliers and buyers around the globe and across the ecosystem through innovative products and next-generation technology solutions. Sabre harnesses speed, scale and insights to build tomorrow’s technology today – empowering airlines, hoteliers, agencies and other partners to retail, distribute and fulfill travel worldwide. Headquartered in Southlake, Texas, USA, Sabre serves customers in more than 160 countries around the world.

SABR-F

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Shinsegae spreads Christmas magic to the world with a new global landmark ‘Shinsegae Square’

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SEOUL, South Korea, Nov. 8, 2024 /PRNewswire/ — “Heritage meets digital technology, Shinsegae paves its way to become an iconic landmark of Seoul, alluring customers from all around the world.”

Twinkling lights and glamorous moving images on the screen, Shinsegae Department Store, Korea’s first department store since 1963, presents a new landmark of Seoul in Myeong-dong which is located in the center of the capital and brings in the highest population of tourists.

Shinsegae Department Store has been an absolute favourite amongst millions of global customers along with Harrods(UK) and Isetan(Japan), taking the chart of No.1 leading position in the Korean department store industry by far.

Last year, Shinsegae Department Store in Myeong-dong has been visited by over 6 million customers from different countries, making the spot a ‘must-visit-place’ for Christmas season.

For the past 10 years, Shinsegae has delivered hopes and excitements to its onlookers visiting the place, wishing the best Christmas and New Year’s Eve for everyone.

With a size of three basketball courts(1292.3㎡), Shinsegae’s mega-sized digital signage is now recreated as ‘Shinsegae Square’ and presents an overwhelming beauty with the visuals from the screen.

This year, Shinsegae is showcasing a short film called ‘Pursuit of Christmas Moments’ to give the experience of joy and magical moments to the audience, elevating thrills for Christmas and New Year’s Eve.

The film depicts a story of Shinsegae Department Store being transformed into a magical Christmas castle along with fancy dinner parties inside and amusement parks embellished with glittering lights in the night sky, which will leave unforgettable memories for the visitors.

On the 31st of December, Shinsegae Square district will be presented as the spot to celebrate New Year’s Eve as it will exhibit diverse K-culture contents and media artworks.

Harmoniously permeated with historical buildings nearby, the audience will be fascinated by magnificent and breath-taking sceneries with feasts of colorful lights that Shinsegae Square sheds.

“Shinsegae Department Store now presents ‘Shinsegae Square’ where visual beauty and cutting-edge technologies are met to make the most cherishable memories to those visiting Seoul,” Shinsegae said.

“Rebranded as the iconic cultural hub with its K-culture contents and media artworks, Shinsegae Square will proceed to become the ultimate ‘lifestyle destination’, nowhere to be compared in Seoul.”

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