Chevron CEO Mike Wirth On Pushback From White House, Capital Expenditure

Following are excerpts from the unofficial transcript of a CNBC interview with Chevron Corporation (NYSE:CVX) CEO Michael Wirth on CNBC’s “Squawk Box” (M-F 6AM – 9AM ET) today, Friday, February 3rd for AT&T Pebble Beach Pro-Am in Pebble Beach, California. Chevron CEO Mike Wirth On Pushback From White House, Capital Expenditure Q4 2022 hedge fund […] Following are excerpts from the unofficial transcript of a CNBC interview with Chevron Corporation (NYSE:CVX) CEO Michael Wirth on CNBC’s “Squawk Box” (M-F 6AM – 9AM ET) today, Friday, February 3rd for AT&T Pebble Beach Pro-Am in Pebble Beach, California. Chevron CEO Mike Wirth On Pushback From White House, Capital Expenditure if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   All references must be sourced to CNBC. Wirth On Financial Priorities We actually are doing exactly what the White House is calling for. We’re staying consistent with our financial priorities and financial framework that we’ve long had for decades which is first to prioritize the dividend. We increased it 6% the 36th year in a row for dividend increases. We increased organic capital spending this year 30% above what it was last year, keep a very strong balance sheet and when we have cash excess for those needs, we return it to the owners of the company. Wirth On Repurchase Program We had a prior repurchase program that was authorized five years ago when we were repurchasing at about $5 billion a year and the program was a $25 billion program. We’re a stronger company this year. We’re repurchasing at $15 billion a year, a five-year execution on that plan would be $75 billion dollars. Wirth On Production Growth We’re growing at 3 to 4% production growth over the next several years. The demand for oil and gas is growing about 1% so we’re actually growing at a rate much faster than market demand. Wirth On China We’re starting to see signs out of China that there’s more activity that will drive demand. So you’re seeing a significant increase in airline flights being scheduled, so these are forward flights. We’re seeing road traffic and road congestion. There’s a number of different ways you measure this use of public transportation, people are moving around. Supply chains are restarting, businesses are restarting. I spoke to people in Davos that run businesses in China that are ramping up production so we do see indicators that the Chinese economy is beginning to grow and beginning to come out of the restrictions that it’s been under......»»

Category: blogSource: valuewalkFeb 3rd, 2023

It took a progressive Virginia suburb 8 years to let developers build apartments instead of single-family houses. It shows how hard it is to build middle-class housing in the US.

After fierce debate, Arlington County will finally vote to approve the construction of so-called "missing middle" housing. A demonstrator holds up a sign that says "Won't you be my neighbor?", a quote from the children's show Mister Rogers' Neighborhood, during the Arlington County board meeting in Arlington, Virginia, on July 16, 2022.Stefani Reynolds/Getty Images A growing number of communities are upzoning single-family neighborhoods to allow more housing options. Arlington, Virginia, is finally set to pass a "missing middle" housing policy after years of debate.  The policy change is just the first step in creating much needed new housing.  As Marjorie Green plans for the future, she knows she and her husband, both retired, won't be able to stay in the single-family detached home in North Arlington, Virginia, they've called home for almost 20 years. The house doesn't have a bedroom or bathroom on the first floor, which they'll eventually need as they age. The only realistic option for them in Arlington, a wealthy suburb of Washington, D.C., is to move into a condo that will also accommodate their two dogs. In Arlington, there aren't many options between a single-family home — the median price of which has climbed to $1.13 million — and large apartment complexes. But on Wednesday, the Arlington County board is poised to finally approve a highly fraught, years-long effort to "upzone" all single-family neighborhoods — eight years after the idea was first considered. The policy would legalize the construction of so-called "missing middle" housing — townhouses, duplexes, and other multi-family buildings up to six units — helping build "gentle density." Green, not to be confused with GOP Rep. Marjorie Taylor Greene, has spent years advocating for denser and more affordable housing as the Arlington leader of Virginians for Organized Interfaith Community Engagement (VOICE), a community organizing group that supports social justice initiatives. She and her husband would like to take advantage of the upzoning by replacing their house with a multi-unit building with accessible units, one of which they could live in."We could live in a ground floor unit and still have some backyard space for our dogs," Green, who's 65, told Insider. "We could have some other people in the building, and our daughters might have an investment that then they could use to help them buy a home someday." Across the country, middle-income housing is disappearing. Modest single-family homes are being torn down and replaced with larger, more expensive houses. A housing shortage, rising land prices and construction costs, and strict zoning regulations have made it near-impossible in many places for young families to find starter homes and seniors to find accessible housing. Arlington is just the latest community to address missing middle housing as a part of a broader national reckoning. Over the last few years, states and localities across the country have begun passing laws to increase density. A diverse set of cities and states, including Minneapolis and Maine, have ended single-family zoning. Oregon passed a law in 2018 allowing multi-family home construction across single-family neighborhoods in most cities. In 2021, California legalized the construction of up to four new houses on most single-family lots. But the process of upzoning is slow and highly-charged, even in progressive communities with a dire need for housing. In Arlington, county board hearings have turned into hours-long public debates and divided the community. On Saturday, almost 250 residents signed up to debate the proposal at a public hearing, forcing the board to bump the final vote to Wednesday. "It has become this huge community issue – neighbors against neighbors. I mean, it has gotten quite ugly," Alice Hogan, a longtime Arlington resident and housing policy consultant for the pro-missing middle housing Alliance for Housing Solutions, told Insider. "And it's quite sad because the scope and size of this program is minuscule compared to the problem we really need to be facing." Getty ImagesA heated debate over housing densityArlington has long been a wealthy, desirable suburb with good public schools and low rates of crime. But the county, about 80% of which is currently zoned for single-family housing, is in the midst of a major boom. Amazon selected the county as the home of its HQ2 in 2018, while Nestle, Boeing, and other major companies and government contractors have attracted a steady stream of high-income residents. In 2015, the county adopted its Affordable Housing Master Plan, identifying middle-income housing as a key area for growth. Three years ago, the county began studying missing middle housing in earnest. Advocates have long pushed a simple message: density is necessary and key to affordability. "Multifamily buildings and the people who live in them are not a burden and they're not a danger, they are a good thing to have," said Jane Fiegen Green, president of YIMBYs of Northern Virginia, a non-profit that advocates for more and denser housing. "There is no affordable housing on any level of the income spectrum without density. "YIMBY" stands for "Yes In My Backyard" and was created in response to the anti-development "NIMBY," which stands for "Not In My Backyard."They also point to the county's history of exclusionary zoning laws designed to keep Black families out of white, single-family neighborhoods. Across the country, critics of increasing housing density in single family neighborhoods are disproportionately older, wealthier, white homeowners. A survey released by the county last year found nearly 80% of homeowners opposed the missing middle policy and about 70% of renters supported it. Advocates of missing middle housing say there's a deep generational gap when it comes to housing density. Older residents, many of whom have owned single-family homes in the community for decades, are fearful of their neighborhoods changing. "I'm disappointed that much of the major pushback is coming from my generation," Green said. "We were the 'we're going to change the world' generation and in fact, now that we have a foothold in leafy suburban neighborhoods, many of us are saying, no, wait a minute, don't let that change impact us too much."But seniors are among those who could benefit the most from having new, smaller accessible housing in their neighborhoods. Critics of upzoning argue the increased density will lead to school crowding, reduced green space, and increased traffic, among other concerns.David Gerk, a longtime resident of Arlington, speaks during a public meeting opposing a zoning deregulation proposal known as missing middle that would make it easier to build duplexes, townhouses and other structures in more suburban areas of the county at Innovation Elementary in Arlington, VA on January 08, 2023.Craig Hudson/Getty ImagesIn an overwhelmingly Democratic county, the politics don't code neatly as red or blue. Fiegen Green said many Democratic officials have avoided the issue and not taken a side. Some Democrats, like Arlington County Board candidate Natalie Roy, are deeply opposed to the missing middle effort. Roy, who's also a realtor, argued that the policy change won't lead to desperately needed affordable housing for low-income residents. Her alternative housing plan involves offering more financial assistance to lower-income residents and more housing opportunities for seniors, but wouldn't create much new supply. Roy pointed to the fact that the county is already among the most densely populated in the country."My goal is not density, it is affordability and diversity," she said. "We do have high density exactly where it should be in Arlington — around transit corridors. We are a national model for it."She insisted that the missing middle housing initiative "is about getting rid of single-family homes." Roy pointed to a proposal to build three new townhomes on a single family lot in the expensive Lyon Park neighborhood. The new homes, each with 2,200 square feet of living space and a garage, would be on the market in late 2024 for $1.2 million. The pricey new housing, she argued, shows how upzoning won't serve middle class families. But upzoning supporters and experts say the additional supply of even high-end homes helps alleviate demand on existing housing.  "I don't know how you can argue against the fact that if a little brick house goes down and a mansion comes up, you've not added anything to the market," Pat Findikoglu, a retired Arlington public school teacher and volunteer for VOICE, told Insider. "If a little brick house goes down and a quad goes up, you've added three extra units." The initiative's proponents concede that upzoning won't come close to solving the county's shortage of affordable housing. But they argue that upzoning will allow more housing options across the spectrum of incomes and, over time, offer more abundant and affordable options. And they point to the county's separate efforts to build housing for low-income renters and homeowners. "What I've come to understand is, it's not enough to have housing for the poorest of the poor," Findikoglu said. "We need abundant housing at every single level."A sign opposing a zoning deregulation proposal known as missing middle that would make it easier to build duplexes, townhouses and other structures in more suburban areas of the county is seen in the Lyon Village neighborhood in Arlington, VA on January 08, 2023.Craig Hudson/Getty ImagesA long road to increasing housing densityAdvocates say that zoning reform is just a first, incremental step toward denser, and ultimately more affordable, neighborhoods. Cities and states that have ended single-family zoning haven't necessarily seen much new building. Additional regulatory changes are often necessary to incentivize new construction. David Garcia, policy director of the Terner Center for Housing Innovation at the University of California, Berkeley, and his team of researchers found that California's 2021 upzoning law could enable 700,000 new homes. But the actual amount of new construction will be far lower because of other land-use constraints, including height restrictions and parking requirements.In Minneapolis, which was the first US city to legalize multi-unit buildings on single-family lots, few new triplexes have been built because the land use reforms haven't been made. But Portland, Oregon — which now allows up to four-unit buildings on previously single-family lots — also changed their codes to allow the new structures to be larger than single-family homes. "That takes some time and some thought and it's not as easy as taking one vote," Garcia told Insider. "You have to think comprehensively about the suite of land use policies that impact the single family zones, not just the base zoning allowances."Despite the massive effort it took to come to the verge of passing missing middle housing, Arlington officials predict change will be slow and limited. "This will probably bring between 20 and 50 new developments a year," Hogan said. "I mean, a tiny drop in the bucket."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMar 21st, 2023

ABCAM PLC: Final results for the year ended 31 December 2022

15% Reported Revenue Growth & 8% Constant Exchange Rate Revenue Growth: Demand for Abcam In-house Products Continues CAMBRIDGE, England and WALTHAM, Mass.  , March 20, 2023 /PRNewswire/ -- Abcam plc (NASDAQ:ABCM) ('Abcam', the 'Group' or the 'Company'), a global leader in the supply of life science research tools, today announces its results for the year ended 31 December 2022 (the 'period').                                         SUMMARY PERFORMANCE     Year-End 31 December 2022 £m 2021 £m Revenue 361.7 315.4 Gross profit margin, % Adjusted gross profit margin, % 74.8% 75.5% 71.2% 72.2% Operating profit margin, % Adjusted operating profit margin, % Diluted (loss) / earnings per share ('EPS') (£) (2.8%) 21.1% (0.037) 2.3% 19.2% 0.019 Adjusted diluted earnings per share ('EPS') (£) 0.249 0.206 Return on Capital Employed ('ROCE'), % 8.9 % 7.6 % FULL YEAR FINANCIAL HIGHLIGHTS[1] Reported revenue growth of 15%; constant exchange rate ('CER') revenue growth of 8%- In-house revenues, including BioVision and Custom, Products & Licensing, recorded 26% reported revenue growth and 18% CER revenue growth Reported gross profit margin of 74.8%: Adjusted gross profit margin of 75.5%, an increase of 330 basis points from 72.2%, driven by the contribution of in-house revenues, including BioVision and Custom, Products & Licensing Operating loss of £10.1 million impacted by £18.3 million impairment charge on asset held for sale; adjusted operating profit increased 26% to £76.3m, resulting in a 190 basis points increase of adjusted operating profit margin to 21.1% Diluted loss per share of (£0.037) impacted by impairment charge on asset held for sale; adjusted diluted earnings per share increased 21% to £0.249 Return on capital employed increased to 8.9%, a 130-basis point improvement, favourably impacted by efficient capital utilization and higher adjusted operating profits [1] These results include discussion of alternative performance measures which include revenues calculated at Constant Exchange Rates (CER) and adjusted financial measures. CER results are calculated by applying prior period's actual exchange rates to this period's results.  Adjusted financial measures are reconciled to the most directly comparable measure prepared in accordance with IFRS in note 3 to the financial statements. BUSINESS HIGHLIGHTS In-house revenues, including BioVision and Custom, Products & Licensing, represent 67% of total sales, an increase of 600 basis points- Academic & Biopharmaceutical customers experienced double-digit percent reported revenue growth, Academic grew mid-single digits and Biopharmaceutical grew double-digit percent on a CER basis Partnering with biopharma, diagnostic and multiplex platform partners continued to generate current and future sources of growth with the number of commercialized antibodies with these partners rising to a total of more than 2,100   To support future growth, we've implemented an Oracle Cloud ERP system, and expanded sites in Waltham, Singapore, and Amsterdam Expanded Life Science Industry experience within the Board of Directors with the appointment of Luba Greenwood, as Non-Executive Director Cancellation of admission to trading on AIM completed and sole Nasdaq listing as of 14 December 2022 FY23 OUTLOOK The Company anticipates reported revenues of approximately £420 million to £440 million, representing 15% to 20% constant exchange rate revenue growth, combined with lower operating expense growth, resulting in adjusted operating profit margin expansion. FY2024 GOAL  The Company is reiterating its 2024 revenue goals of £450m-£525m with adjusted operating profit margins of greater than 30%.  Commenting on the performance, Alan Hirzel, Abcam's Chief Executive Officer, said:  "Our team is dedicated to supporting life science discovery, and the translation of discovery to social impact.  In the last ten years, our business has grown revenue at double digit rates because of the trust the market has in our team, our innovation, and our brand.  As we look ahead, we can be confident that we have and continue to build a sustainable and profitable growth company.  I am grateful to everyone at Abcam for their ongoing efforts through this exciting period. I also thank our customers and partners bringing Abcam into their labs and giving us all the opportunity to demonstrate our company's role in making progress happen together." Analyst and investor meeting and webcast: Abcam will host a conference call and webcast for analysts and investors today at 12:00 GMT/ 08:00 EDT. For details, and to register, please visit A recording of the webcast will be made available on Abcam's website, The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.   For further information please contact: Abcam + 44 (0) 1223 696 000 Alan Hirzel, Chief Executive Officer Michael Baldock, Chief Financial Officer Tommy Thomas, Vice President, Investor Relations     About Abcam plc  As an innovator in reagents and tools, Abcam's purpose is to serve life science researchers globally to achieve their mission faster. Providing the research and clinical communities with tools and scientific support, the Company offers highly validated antibodies, assays, and other research tools to address important targets in critical biological pathways.  Already a pioneer in data sharing and ecommerce in the life sciences, Abcam's ambition is to be the most influential company in life sciences by helping advance global understanding of biology and causes of disease, which, in turn, will drive new treatments and improved health.  Abcam's worldwide customer base of approximately one million life science researchers' uses Abcam's antibodies, reagents, biomarkers, and assays. By actively listening to and collaborating with these researchers, the Company continuously advances its portfolio to address their needs. A transparent program of customer reviews and datasheets, combined with industry-leading validation initiatives, gives researchers increased confidence in their results.  Founded in 1998 and headquartered in Cambridge, UK, the Company has served customers in more than 130 countries. Abcam's American Depositary Shares (ADSs) trade on the Nasdaq Global Select Market (NASDAQ:ABCM).  For more information, please visit or  Forward-Looking Statements    This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "seek," "believe," "estimate," "predict," "potential," "continue," "contemplate," "possible" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. They are not historical facts, nor are they guarantees of future performance.  Any express or implied statements contained in this announcement that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding Abcam's portfolio and ambitions, and our future results of operations and financial position such as our outlook for FY2023 and performance goals for FY2024 are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation:  challenges in implementing our strategies for revenue growth in light of competitive challenges; the development of new products or the enhancement of existing products, and the need to adapt to significant technological changes or respond to the introduction of new products by competitors to remain competitive; our customers discontinuing or spending less on research, development, production or other scientific endeavors; failing to successfully identify or integrate acquired businesses or assets into our operations or fully recognize the anticipated benefits of businesses or assets that we acquire; the ongoing COVID 19 pandemic, including variants, continues to affect our business, including impacts on our operations and supply chains; failing to successfully use, access and maintain information systems and implement new systems to handle our changing needs; cyber security risks and any failure to maintain the confidentiality, integrity and availability of our computer hardware, software and internet applications and related tools and functions; failing to successfully manage our current and potential future growth; any significant interruptions in our operations; our products failing to satisfy applicable quality criteria, specifications and performance standards; failing to maintain and enhance our brand and reputation; ability to react to unfavorable geopolitical or economic changes that affect life science funding; failing to deliver on transformational growth projects; our dependence upon management and highly skilled employees and our ability to attract and retain these highly skilled employees; and as a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and Nasdaq corporate governance rules and are permitted to file less information with the SEC than U.S. companies, which may limit the information available to holders of our American Depositary Shares ("ADS"); and the other important factors discussed under the caption "Risk Factors" in Abcam's Annual Report on Form 20-F for the year ended December 31, 2022 ("Annual Report") with the U.S. Securities and Exchange Commission ("SEC") on March 20, 2023, which is available on the SEC website at, as such factors may be updated from time to time in Abcam's subsequent filings with the SEC. Any forward-looking statements contained in this announcement speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. Abcam disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.    Use of Non-IFRS Financial Measures  To supplement our audited financial results prepared in accordance with International Financial Reporting Standards ("IFRS") we present Adjusted Operating Profit, Adjusted Operating Profit Margin, Return on Capital Employed ("ROCE"), Adjusted Diluted Earnings per Share, Total Constant Exchange Rate Revenue ("CER revenue"), Adjusted Selling, General and Administrative expenses, Adjusted Research & Development expenses, and Free Cash Flow, which are financial measures not prepared in accordance with IFRS ("non-IFRS financial measures"). We believe that the presentation of these non-IFRS financial measures provide useful information about our operating results and enhances the overall understanding of our past financial performance and future prospects, allowing for greater transparency with respect to key measures used by management in its financial and operational decision making.  These non-IFRS financial measures are supplemental in nature as they include and/or exclude certain items not included and/or excluded in the most directly comparable IFRS financial measures and should not be considered in isolation, or as a substitute for, financial measures prepared in accordance with IFRS. Further, other companies may calculate these non-IFRS financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.  Management believes that the presentation of (a) Adjusted Operating Profit, Adjusted Operating Profit Margin, ROCE, and Adjusted Diluted Earnings per Share, provide useful information to investors and others as management regularly reviews these measures as important indicators of our operating performance and makes decisions based on them, (b) CER revenue provides useful information to investors and others as management regularly reviews this measure to identify period-on-period or year-on-year performance of the business and makes decisions based on it, and (c) Adjusted Selling, General and Administrative expenses and Adjusted Research & Development expenses provide useful information to investors and others as management regularly reviews these measures to identify period-on-period or year-on-year performance of the business and makes decisions based on it, and (d) Free Cash Flow provides useful information to investors and others because management regularly reviews this measure as an important indicator of how much cash is generated by business operations, excluding capital related items, and provides an indication of the amount of cash available for discretionary investing or financing after removing capital related items, and makes decisions based on it. Please see "Non-IFRS Financial Measures" for a reconciliation of non-IFRS financial measures to their most directly comparable IFRS financial measures.  We define: Adjusted Operating Profit as profit for the period / year before taking account of finance income, finance costs, tax, exceptional items, share-based payments, and amortization of acquisition intangibles. Exceptional items consist of certain cash and non-cash items that we believe are not reflective of the normal course of our business; and we identify and determine items to be exceptional based on their nature and incidence or by or by their significance ("exceptional items"). As a result, the composition of exceptional items may vary from period to period / year to year. Adjusted Operating Profit Margin as adjusted operating profit calculated as a percentage of revenue. ROCE as Adjusted Operating Profit divided by capital employed, defined as total assets less current liabilities. Adjusted Diluted Earnings per Share as Adjusted Profit for the year divided by the weighted average number of ordinary shares for the purposes of diluted earnings per share. Adjusted Profit for the year used in this calculation is defined as profit for the year plus adjusting items (impairment of intangible assets, system and process improvement costs, acquisition costs, integration and reorganization costs, net of tax effects). Adjusted Diluted Earnings per Share is calculated with an adjustment to the weighted average number of shares outstanding to assume conversion of all potentially dilutive ordinary shares. Adjusted Selling, General and Administrative expenses as reported selling, general and administrative expenses for the year before taking account of exceptional items, share-based payments, and amortization of acquisition intangibles. Adjusted Research & Development expenses as reported research and development expenses for the year before taking account of exceptional items, share-based payments, and amortization of acquisition intangibles. CER as our total revenue growth from one fiscal period / year to the next on a constant exchange rate basis.  Free Cash Flow as net cash inflow from operating activities less net capital expenditure, transfer of cash from/(to) escrow in respect of future capital expenditure and the principal and interest elements of lease obligations. Management is unable to present quantitative reconciliations of Adjusted Operating Profit, Adjusted Operating Profit Margin, and CER revenue to their respective most directly comparable IFRS financial measures of Operating Profit, Operating Profit Margin and Reported Revenue on a forward-looking basis, because items that impact these IFRS financial measures are not within our control and/or cannot be reasonably predicted. Such information may have a significant, and potentially unpredictable, impact on our future financial results.   Year-end management report Introduction We are pleased with the continued progress of our business over the last 12 months and the way our people have responded to the evolving impact of COVID-19.  Indeed, the challenges presented since the pandemic began over three years ago have served to highlight the resilience of both our employees and our business, as well as the role Abcam and its customers have in advancing critical life science research. We are convinced more than ever that by continuing to develop our technologies, people, and capabilities, and focusing on customer needs, we can extend our market leadership, sustain durable growth, and become an increasingly influential partner within our industry. Demand for our products, and particularly Abcam's in-house developed products, continued to increase as customers continued to focus on their research, enabling greater productivity.  Whilst the global pandemic once again impacted revenues – we estimate that overall lab activity is now approaching pre-COVID levels in the Americas and EMEA, our largest geographical markets representing nearly 70% of total sales. In the year ended 31 December 2022, demand for our products continued but revenue growth was interrupted by the implementation of an Oracle Cloud ERP system and COVID-19 headwinds in China.  The combination of these factors impacted revenues by approximately £30 million on a reported basis resulting in total revenues increasing 8% CER (15% reported) to £361.7 million. On a reported basis, we incurred a net loss of £8.5 million impacted by £18.3 million impairment charge on an asset held for sale; and diluted EPS declined to -£3.7p. On an adjusted basis, adjusted operating profit increased 26%, to £76.3 million (2021: £60.4m), and adjusted diluted EPS increased 21% to 24.9p (2021: 20.6p). Despite the recent disruptions, the opportunities for growth in our markets remain, and we are committed to our customers and their long-term success thereby driving our future growth. As we near completion of our five-year strategic plan, we thank our approximately 1,800 employees for their ongoing commitment in the delivery of our plans – they are fundamental to the Group's future success. We continue to have a strong balance sheet (net debt of £30.6 million), and we are focused on investments in attractive organic and inorganic growth opportunities, as they arise.  Looking forward, with our expanding capabilities, financial position and market opportunities for growth, the Group is well-placed to sustain long-term value creation. Financial review Year ended 31 December Reported revenues  Change in reported revenues  %  CER growth  %  2022  £m  2021  £m  Catalogue revenue – regional split  Americas  147.2 114.8 28 % 16 % EMEA  87.1 82.3 6 % 6 % China 60.3 57.2 5 % (2 %) Japan  17.4 18.7 (7 %) 0 % Rest of Asia Pacific  27.8 23.4 19 % 9 % Catalogue revenue  339.8 296.4 15 % 8 % CP&L revenue1  21.9 19.0 15 % 5 % Total reported revenue  361.7 315.4 15 % 8 % Total revenue – product type  In-house  243.9 193.1 26 % 18 % Third party  117.8 122.3 (4 %) (9 %) Total reported revenue   361.7 315.4 15 % 8 %   REVENUE  We recorded revenue of £361.7 million for the year ended 31 December 2022 (2021: £315.4 m). Revenue grew 8% on a CER basis and reported revenues grew by 15%.  During the year, two factors impacted revenue growth. First, the implementation of the new Oracle Cloud ERP system disrupted revenues in September and October. Second, China revenues were impacted by COVID-19 controls and outbreaks. Based on the differences between forecasts and actual results, we estimate the aggregate impact to sales was approximately £30m. We estimate this headwind negatively impacted revenue growth by approximately 10% on a reported and 9% on our CER growth rates."  Catalogue revenues: £339.8 million (2021: £296.4m), grew approximately 8% CER and 15% on a reported basis, including BioVision. Catalogue revenue growth by region is as follows:   Americas +16% CER / +28% Reported  - Excluding Distributors, Americas sales were driven by high-teens digit CER in Biopharma, and high-single digit CER in Academia.  Excluding the estimated headwinds on revenues in 2022, Americas grew over 20% CER.  EMEA +6% CER / +6% Reported  - Excluding Distributors, EMEA sales were driven by high-teens digit CER in Biopharma, and low-single digit CER growth in Academia.  Excluding the estimated headwinds on revenues in 2022, EMEA grew low teens CER.  China (-2%) CER / +5% Reported - Excluding the estimated headwinds on revenues in 2022, China grew mid-teens digit CER. Rest of Asia Pacific including Japan +5% CER / +7% Reported   - Excluding Japan which experienced flat growth (on a CER basis), rest of Asia-Pacific grew high-single digit CER  From a served end markets basis, total catalogue sales are as follows:     Academia +4% CER / +11% Reported    Biopharma +10% CER / +18% Reported     Distributors +12% CER / +18% Reported  Custom, Products & Licenses revenues: £21.9 million (2021: £19.0m), grew approximately 5% CER and 15% on a reported basis: GROSS MARGIN Reported gross profit margin of 74.8%. Adjusted gross margin increased by 330 basis points, to 75.5%, in the year ended 31 December 2022, reflecting both a favourable movement in product mix towards high margin in-house products, and the positive impact of the BioVision acquisition. OPERATING COSTS   Year ended 31 December  Reported  Adjusted  2022  £m  2021  £m  2022  £m  2021  £m  Selling, general & administrative expenses ('SG&A')  224.5 189.7 176.3 150.6 Research & development expenses ('R&D')  56.1 27.8 20.6 16.7 Total operating costs and expenses  280.6 217.5 196.9 167.3   Selling, general and administrative expenses   Reported selling, general and administrative expenses of £224.5 million. Adjusted selling, general and administrative expenses increased by £25.7 million, to £176.3 million for the year ended 31 December 2022 compared to £150.6 million for the year ended 31 December 2021. The overall increase was due to an increase in salaries, IT systems and licenses, higher travel costs off a lower prior period, increased headcount for in-house teams and the inclusion of BioVision.     Research and development expenses   Reported research and development expenses of £56.1 million. Adjusted research and development expenses increased by £3.9 million, to £20.6 million, for the year ended 31 December 2022 compared to £16.7 million for the year ended 31 December 2021. The overall increase was due to increases in salary, and related costs in connection with the BioVision acquisition.      On a reported basis, total reported costs were £280.6 million (2021 £217.5m) reflect the adjusting items noted below.   ADJUSTING ITEMS  Total reported expenses include the following adjusting items:   £6.6 million relating to the Oracle Cloud ERP project (2021: £7.0m)  £15.7 million from acquisition, integration, and reorganisation charges (2021: £13.0m)  £16.9 million relating to the amortisation of acquired intangibles (2021: £9.1m)  £18.3 million related to impairment charge for asset held for sale (2021: £nil) £26.2 million in charges for share-based payments (2021: £20.0m)  £2.7 million relation to the amortization of fair value adjustments (2021: £3.1m) NET PROFIT   Adjusted net profit was £57.7 million (2021: £47.2m) driven by revenue growth, favourable product mix enabling gross margin expansion offsetting operational and innovation investments in the business.  Reported net loss was £8.5 million (2021: £4.4m Net Profit).   CASH  As of 31 December 2022, we had cash and cash equivalents of £89.0 million with drawings of £119.6 million as at the year ended 31 December 2022 resulting in a net debt position of £30.6 million.  We assess our liquidity, in part, through an analysis of our working capital together with our other sources of liquidity. As of 31 December 2022, our working capital balance, which is comprised of inventories, trade and other receivables and trade and other payables, was £84.2 million, an increase of £34.5 million from £49.7 million for the year ended 31 December 2021.  The increase in working capital during the year ended 31 December 2022, was impacted by: (i) the implementation of the new Oracle Cloud ERP system that disrupted revenues in the second half of the year ended 31 December 2022 (predominantly September and October), and (ii) the impact the COVID-19 pandemic in China, and the related preventative and precautionary measures, had on our business. Specifically, the increases in inventory and accounts receivables were driven by our inability to ship and invoice product sales and collect cash on a timely basis. LOOKING AHEAD We continue to experience good order demand across the business as market activity has largely resumed in most major geographies. Investments we have made, and that we continue to make, are enabling the business to sustain growth and we remain committed to generating revenue of £450 million – £525 million for the year ending 31 December 2024 (calculated at the average exchange rates for the 12 months ended June 2021). In the more immediate term, uncertainty in China arising from COVID-19 remains, yet research and commercial laboratory activity and demand have continued to recover and trading performance year to date is in line with the Board's expectations for January and February 2023. The business' cash generation and financial position continue to provide a foundation from which to pursue opportunities, including innovation, acquisitions and partnerships. We will continue to invest in our business to enable Abcam to provide innovative, trusted, and improved solutions for our customers. While the rate of investment is expected to moderate from recent levels as we pass the peak for this 2019-2024 strategy implementation, we have a continuing appetite to invest in growing Abcam sustainably for the long term. Supported by a clear purpose and strategy, and thanks to the efforts of all our employees and partners, we believe that Abcam is well positioned to continue delivering long-term value for our shareholders. Alan HirzelChief Executive Officer Michael S BaldockChief Financial Officer 20 March 2023 Forward-Looking Statements   This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any express or implied statements contained in this announcement that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding Abcam's portfolio and ambitions, and our future results of operations and financial position such as our guidance for FY2023 and performance goals for FY2024 are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation:  potential changes from unaudited management accounts, which are provisional and subject to review, to our audited financial statements; regional or global health pandemic, including the novel coronavirus ("COVID-19"), which has adversely affected elements of our business, and could severely affect our business, including due to impacts on our operations and supply chains; challenges in implementing our strategies for revenue growth in light of competitive challenges; developing new or enhancing existing products, adapting to significant technological change and responding to the introduction of new products by competitors to remain competitive; failing to successfully identify or integrate acquired businesses or assets into our operations or fully recognize the anticipated benefits of such businesses or assets; risks that our customers discontinue or spend less on research, development, production or other scientific endeavors with us; failing to successfully use, access and maintain information systems and implement new systems to handle our changing needs; cyber security risks and any failure to maintain the confidentiality, integrity and availability of our computer hardware, software and internet applications and related tools and functions; failing to successfully manage our current and potential future growth; failing to successfully increase access to the U.S. capital markets, which we anticipated would provide greater liquidity potential than AIM; any significant interruptions in our operations; risks that our products fail to satisfy applicable quality criteria, specifications and performance standards; failing to maintain our brand and reputation; our dependence upon management and highly skilled employees and risks that we are unable to attract and retain these highly skilled employees; and the other important factors discussed under the caption "Risk Factors" in Abcam's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission ("SEC") on 20 March 2023, which is available on the SEC website at, as such factors may be updated from time to time in Abcam's subsequent filings with the SEC. Any forward-looking statements contained in this announcement speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. Abcam disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.       Consolidated income statement For the year ended 31 December 2022 Year ended 31 December 2022.....»»

Category: earningsSource: benzingaMar 20th, 2023

The Townhouses at Post house Launch Sales–Rare Opportunity to Own New Build Townhouse With Amenity Package

Compass Development Marketing Group announces the launch of sales for the townhouses at Post House, 535 and 537 Pacific Street in Boerum Hill. Developed in concert with the highly successful condo project at 533 Pacific, the Townhomes at Post House, also designed by Workshop/APD, present an incredibly unique offering in... The post The Townhouses at Post house Launch Sales–Rare Opportunity to Own New Build Townhouse With Amenity Package appeared first on Real Estate Weekly. Compass Development Marketing Group announces the launch of sales for the townhouses at Post House, 535 and 537 Pacific Street in Boerum Hill. Developed in concert with the highly successful condo project at 533 Pacific, the Townhomes at Post House, also designed by Workshop/APD, present an incredibly unique offering in Brownstone Brooklyn. At 28-feetwide, these ground up, new construction homes offer the rare combination of high design, generous proportions, a private elevator, and access to condo amenities and private parking. Located at the intersection of Brooklyn’s most dynamic neighborhoods, including Park Slope, Fort Greene, Gowanus, and Downtown Brooklyn–the Townhomes at Post House offer residents the best of both city life and a quiet sanctuary. Workshop/APD devised a modern reinterpretation of the site’s original Post Office building, leaning into a contemporary, Art Deco-inspired look that honors both the historic site, while still offering the historic brownstone look of the neighborhood. “The Townhomes at Post House bring an elevated lifestyle experience to Boerum Hill,”says Tamara Abir from Compass.“We are thrilled to offer something so special and new for this neighborhood:luxurious townhouse living, with impeccably designed interiors by Workshop/APD, with the convenience of condominium amenities and parking. ”The Townhomes at Post House present an incredibly unique layout. The 28 foot wide townhouses each offer five bedrooms and six-and-a-half bathrooms, spanning 5,600 square feet of interior space. With outdoor space located on each floor and an expansive roof terrace, each residence offers an ideal indoor-outdoor living experience. Upon entering the townhomes, residents are greeted by a double-height vestibule and grand staircase with a transitional design. The custom staircase leads to a dramatic parlor floor with a chevron-patterned white oak flooring and space for multiple seating areas, centered around a gas fireplace and leading to a beautiful l terrace with grill station. The enormous chef’s kitchen and dining area are flooded with light from 5 south-facing windows. Both width and depth characterize this space–perfect for anyone in search of a Boerum Hill home with the feel of a large family residence. “The inspiration for the project came from the history of the previously existing building, which was a US Post Office established in 1925. We tried to highlight the classical architecture that was on the outside of the building with its arched windows and ornate brickwork.” said Brook Quach of Workshop/APD. “We thought of it as art deco with a modern approach, balancing geometry and curves. Geometric shapes that suggest an envelope flap carry a “letters from home” theme through out the entire project, while arches and curved ceilings create a clean and welcoming aesthetic both on the interior and exterior of the building. This is found throughout the townhouses, whether in the chevron wood floors that mimic an envelope or the soft, arched entry vestibule that emulates a mailbox’s opening. Beyond that, our choice of materials,like black metal, satin brass, and stacked tile reference the art deco period of the 1920s when the building first came to be. ”In a unique twist, townhouse residents will benefit from the full amenity package offered at Post House. In addition to apart-time doorman and on-site parking with an entrance from each individual townhouse, the amenity package includes a residents’ lounge with a custom greenhouse that opens directly onto the private courtyard, a wellness center with changing rooms and sauna, a children’s playroom, a maker’s rooms, and a pet spa. A landscaped roof deck equipped with an outdoor gym and lounging and dining areas completes the extensive amenity package. Post House is at the center of one of Brooklyn’s most sought-after neighborhoods, surrounded by world-renowned dining attractions, cultural institutions, and world-class parks. Residents can enjoy lively Atlantic Avenue with its collection of bars, restaurants, and retailers from around the globe, have easy access to Prospect Park or Brooklyn Bridge Park, catch a game at the Barclays Center, or view a performance at BAM. For more information or to schedule a private appointment, please call 646-285-1746, email or visit The post The Townhouses at Post house Launch Sales–Rare Opportunity to Own New Build Townhouse With Amenity Package appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyMar 19th, 2023

Reasons Why Investors Should Invest in SONY Stock Right Now

SONY's performance gains from continued demand for Play Station 5 and frequent product launches. Sony Group Corporation SONY appears to be a promising stock to add to the portfolio to tackle the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.Let’s look at the factors that make the stock an attractive pick:Attractive Pricing: Wall Street is facing extreme volatility due to macroeconomic factors, such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.The above-mentioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fallen 10.9%.The stock is down 20.4% from its 52-week high level of $107.52 on Mar 24, 2022, making it relatively affordable for investors.Solid Rank: SONY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Positive Earnings Surprise History: SONY has an impressive surprise record. Earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average being 22.2%.The company reported third-quarter fiscal 2022 net income per share (on a GAAP basis) of ¥263.89 per share ($1.87 per share), decreasing from ¥276.65 reported in the year-ago quarter.However, quarterly total revenues increased 13% year over year to ¥3,412.9 billion ($24,197.6 million).Factors That Augur WellSony is a well-known player in the video game space, with its PlayStation being one of the most sought-after gaming consoles in the world. The company’s Games & Network Services (G&NS) segment is one of the largest contributors to the top line. In the third quarter, the company sold 7.1 million units of Play Station 5 (PS5).In the third quarter, G&NS sales were up 53% year over year to ¥1246.5 billion. Sales in the segment increased owing to the positive impact of the forex movement, first-party titles and improving hardware sales.The company’s latest PS VR2 is expected to increase the performance of PS5 and provide an immersive virtual reality experience. The company expects to sell more than 19-million-unit sales for its PS5 for fiscal 2022.The Music segment is likely to have benefited from higher recorded music and music publishing sales from paid subscription streaming services. Also, the company’s Entertainment, Technology & Services (ET&S) continues to benefit from an increase in sales of digital cameras and favorable foreign exchange rates.For fiscal 2022, the company now expects sales of ¥11,500 billion, up 15.9% year over year. The top-line performance is likely to be driven by improvement in GN&S, Music, Pictures and ET&S segment sales.Recent DevelopmentsIn February, the company launched the next generation of its Creators' Cloud platform specifically for individual content creators and small content teams. Following the launch of Creators’ App, the next version of Creators' Cloud platform will include features like transferability of content from a select Sony camera to a smartphone and upload content from the smartphone to the Creators' Cloud.Prior to that, the company unveiled two new wireless headphones, the WH-CH720N and the WH-CH520, powered by Sony’s powerful in-house audio technology. The WH-CH720N has a suggested retail price of $149.99, while the WH-CH520 has a suggested retail price of $59.99.Both models will be available for purchase in spring 2023 at Sony Electronics, Amazon, Best Buy and other Sony-authorized retailers in three color options, namely, black, blue and white.Few HeadwindsDespite its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive gaming and entertainment market. This is likely to negatively impact the company’s performance.The company’s Pictures business segment is affected by lower sales for theatrical films and television licensing. In 2022, box office revenues in the United States were 60% compared with 2019, owing to fewer films being released due to pandemic-induced production delays.Other Stocks to ConsiderSome other top-ranked stocks in the broader technology space are Arista Networks ANET, Perion Network PERI and Pegasystems PEGA, each presently sporting a Zacks Rank #1.The Zacks Consensus Estimate for Arista Networks 2023 earnings is pegged at $5.79 per share, rising 11.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 23.1% in the past year.The Zacks Consensus Estimate for Perion’s 2023 earnings is pegged at $2.69 per share, rising 16% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 66% in the past year.The Zacks Consensus Estimate for Pegasystems 2023 earnings is pegged at $1.31 per share, rising 111.3% in the past 60 days.Pegasystems earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 40.8% in the past year. Free Report: Must-See Hydrogen Stocks Hydrogen fuel cells are already used to provide efficient, ultra-clean energy to buses, ships and even hospitals. This technology is on the verge of a massive breakthrough, one that could make hydrogen a major source of America's power. It could even totally revolutionize the EV industry. Zacks has released a special report revealing the 4 stocks experts believe will deliver the biggest gains.Download Cashing In on Cleaner Energy today, absolutely free.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Perion Network Ltd (PERI): Free Stock Analysis Report Pegasystems Inc. (PEGA): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Sony Corporation (SONY): Free Stock Analysis ReportTo read this article on click here.Zacks Investment Research.....»»

Category: topSource: zacksMar 14th, 2023

Arrival"s Preliminary Fourth Quarter and Full Year 2022 Financial Results

Ended Q4 with $205 Million of Cash on Hand Business Update will be held Monday, March 13, 2023 at 4:30 P.M. LUXEMBOURG, March 09, 2023 (GLOBE NEWSWIRE) -- Arrival (NASDAQ:ARVL), inventor of a unique new method of design and production of electric vehicles (EVs) by local Microfactories, today reported preliminary financial results for the fourth quarter and full year ended December 31, 2022. The Company will conduct its business update webinar after markets close on Monday, March 13, 2023 at 4:30 P.M. Eastern Time. The business update is being held at that time to allow the Company to potentially finalize a transaction which, if consummated, would provide additional liquidity and further extend its runway. The link to register for the webinar can be found at under Events. Fourth Quarter 2022 Preliminary Unaudited Financial Results Loss for Q4 of $588 - $597 million, compared to a loss of $67 million in the fourth quarter of 2021. This loss in Q4 2022 includes non-cash impairment charges and write-offs of approximately $406 million. Adjusted EBITDA loss for the fourth quarter of $162 - $172 million, compared to an adjusted EBITDA loss of $85 million in the fourth quarter of 2021. The increase quarter over quarter is due to an increase in the amount of salaries and contractor costs not capitalized in Q4 2022 vs Q4 2021 of approximately $70 million and an increase in parts and subassemblies spend of approximately $25 million offset by a non-recurring listing fee of approximately $20 million in the fourth quarter 2021. Administrative expenses in Q4 of approximately $133 million and non-capitalized R&D expenses of approximately $31 million, compared to administrative expenses of $43 million and non-capitalized R&D expenses of $28 million in the fourth quarter of 2021. Capital expenditure for the quarter, including tangible and intangible purchases, of $25 million, compared to $104 million in the fourth quarter of 2021. Capital expenditure for intangible and tangible assets decreased by $42 million and $37 million respectively. In Q4, the cash balance reduced by $126 million to $205 million. Primary uses of cash were related to working capital spend of $104 million, repayment on interest on loans and lease liabilities of $11 million, capex spend and other operational expenses. Cash and cash equivalents were approximately $205 million as of December 31, 2022. Shares outstanding totaled 638,050,175 and weighted average shares outstanding in Q4 totaled 631,256,324 as of December 31, 2022. Full Year 2022 Preliminary Unaudited Financial Results Expected Loss for the year of $998 - $1,008 million compared to a loss of $1,304 million in 2021. The full-year 2021 loss includes a one-time non-cash charge of $1,205 million1 (€1.0 billion) associated with the merger of Arrival and CIIG. Expected adjusted EBITDA loss for the year of $379 - $380 million, compared to an adjusted EBITDA loss of $203 million in 2021. The increase year over year is due to an increase in the amount of salaries and contractor costs not capitalized in 2022 compared to 2021 of approximately $102 million and an increase in parts and subassemblies spend of approximately $38 million. Expected capital expenditure, including tangible and intangible purchases, for the year of $245 million, compared to $291 million in 2021. Preliminary Financial Data The preliminary financial information included in this release is subject to completion of Arrival's year-end close procedures and further financial review. As a result, the preliminary results reflect Arrival's preliminary estimate with respect to such information, based on information currently available to management, and may differ from Arrival's actual financial results as of and for the quarter and full year ended December 31, 2022. These preliminary estimates should not be viewed as a substitute for full financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"), and they should not be viewed as indicative of our results for any future period. Webcast Information Arrival will host a Zoom webinar at 4:30 P.M. Eastern Time on Monday, March 13, 2023, to discuss its fourth quarter and full year 2022 financial results and business update. The live webcast will be accessible on the Company's website at A webcast replay will be available approximately two hours after the conclusion of the live event. Non-IFRS Financial Measures This press release includes Adjusted EBITDA which Arrival utilizes to assess the financial performance of its business that is not a measure recognized under IFRS. This non-IFRS measure should not be considered an alternative to performance measures determined in accordance with IFRS and may not be comparable to similar measures presented by other issuers. "Adjusted EBITDA" represents earnings before interest, tax, depreciation and amortization, adjusted for impairment of intangible assets and financial assets, share option expenses, listing expenses, fair value adjustments on Warrants, reversal of difference between fair value and nominal value of loans that got settled during the period, fair value movement of embedded derivative, realized and unrealized foreign exchange gains/losses and transaction bonuses. For a reconciliation of Adjusted EBITDA to Operating loss, see the reconciliation table included later in this press release. About Arrival Arrival's mission is to master a radically more efficient New Method to design, produce, sell and service best-ever electric vehicles, to support a world where cities are free from fossil fuel vehicles. Arrival's in-house technologies enable a unique approach to producing vehicles using rapidly-scalable, local Microfactories. Arrival (NASDAQ:ARVL) is a joint stock company governed by Luxembourg law. Forward-looking statements This press release refers to a potential transaction which is currently under negotiation. There can be no assurance that such transaction can be entered into or consummated on any particular timetable or at all. Statements regarding such potential transaction are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Media Contacts For Arrival Media Investors 1 Exchange rate for the years ended December 2021 based on average daily EUR/USD 0.8458 from January 1, 2021 to December 31, 2021 Preliminary Reconciliation of Net Loss to Non-IFRS measures In thousands of US$ Year ended December 31 Three months ended December 31   2022   2021* 2022   2021*   High Low   High Low   (Loss) for the year/period (1,007,608 ) (997,847.....»»

Category: earningsSource: benzingaMar 9th, 2023


Digital Transformation Evident: 50% of Total Revenue and Adjusted Operating Income from Digital Sources in 2022, as Digital Revenue Increases +16% YOY Net Leverage Declines to All-Time Low 4.29x Announces $0.1875 Dividend Per Share PURCHASE, N.Y., March 9, 2023 /PRNewswire/ -- Townsquare Media, Inc. (NYSE:TSQ) ("Townsquare", the "Company," "we," "us," or "our") announced today its financial results for the fourth quarter and year ended December 31, 2022. "I am proud to report that Townsquare's transformation into a Digital First Local Media Company allowed us to deliver record results in 2022 despite a progressively challenging economic landscape. In 2022, we drove net revenue and Adjusted EBITDA to new highs with strong net revenue growth of +11% year-over-year and Adjusted EBITDA growth of +8% year-over-year. In addition, we generated significant cash flow from operations of $50 million, ending the year with over $43 million of cash, and net leverage declined to an all-time low of 4.29x," commented Bill Wilson, Chief Executive Officer of Townsquare Media, Inc. "2022 was a significant inflection point for our Company. It marked the first year where radio no longer comprised the majority of our revenue and profit, further separating Townsquare from our local media peers, and placing a spotlight on our world-class team and our unique and differentiated strategy, assets, platforms and solutions. Our growth engine has been and will continue to be our digital solutions, which were the primary driver of our 2022 growth. Total digital revenue increased +16% year-over-year (and +12% in the fourth quarter) to $231 million, and total digital Adjusted Operating Income increased +12% year-over-year to $69 million, representing a 30% profit margin. We believe Townsquare's ability to drive profitable, sustainable digital growth is a key differentiator for our Company, and we reaffirm our expectation that our digital revenue will grow to at least $275 million by 2024." Mr. Wilson continued, "We are uniquely positioned as a Digital First Local Media Company focused principally on markets outside of the Top 50 in the United States, with a resilient digital growth engine supported by both a recurring subscription digital marketing solutions business, with a large addressable market and limited competition, and a highly differentiated digital advertising technology platform. We believe that our business model and strategy position us to weather the current economic environment better than most. We will continue to grow and support our local teams during these periods of macroeconomic challenges so that we can continue to be a resource to our local clients and audiences, and be well positioned to capture accelerated growth when economic tailwinds return. Our success has been and will continue to be the result of the Townsquare Team focusing on what we do best: creating high quality, local original content for our audiences and delivering creative and cost-effective marketing solutions for our local clients with strong return on investment." The Company also announced today that its Board of Directors approved the initiation of a quarterly cash dividend of $0.1875 per share. The dividend will be payable on May 1, 2023 to shareholders of record as of the close of business on March 27, 2023. "The Board's decision to approve a dividend reflects confidence in our current capitalization, the strength of our balance sheet, and our free cash flow generation. Our quarterly cash dividend of $0.1875 per share, or $0.75 per share on an annual basis, commences in May 2023," concluded Mr. Wilson. Segment ReportingWe have three reportable operating segments, Subscription Digital Marketing Solutions, Digital Advertising and Broadcast Advertising. The Subscription Digital Marketing Solutions segment includes our subscription digital marketing solutions business, Townsquare Interactive. The Digital Advertising segment, marketed externally as Townsquare Ignite, includes digital advertising on our owned and operated digital properties, our first party data digital management platform and our digital programmatic advertising platform. The Broadcast Advertising segment includes our local, regional, and national advertising products and solutions delivered via terrestrial radio broadcast, and other miscellaneous revenue that is associated with our broadcast advertising platform. The remainder of our business is reported in the Other category, which includes our live events business. Fourth Quarter Highlights* As compared to the fourth quarter of 2021: Net revenue increased 8.8% Net income increased $2.0 million Adjusted EBITDA increased 11.0% Total Digital net revenue increased 11.9% Subscription Digital Marketing Solutions ("Townsquare Interactive") net revenue increased 4.4% Digital Advertising net revenue increased 16.9% Total Digital Adjusted Operating Income increased 20.1% Subscription Digital Marketing Solutions Adjusted Operating Income increased 6.4% Digital Advertising Adjusted Operating Income increased 28.9% Broadcast Advertising net revenue increased 4.0% Diluted income per share was $0.20, and Adjusted Net Income per diluted share was $0.66 Full Year Highlights* As compared to the year ended December 31, 2021: Net revenue increased 10.8% Net income decreased $4.4 million Adjusted EBITDA increased 8.2% Total Digital net revenue increased 16.2% Subscription Digital Marketing Solutions net revenue increased 10.5% Digital Advertising net revenue increased 20.2% Total Digital Adjusted Operating Income increased 12.2% Subscription Digital Marketing Solutions Adjusted Operating Income increased 7.0% Digital Advertising Adjusted Operating Income increased 15.7% Broadcast Advertising net revenue increased 3.8% Repurchased aggregate $19.2 million of our 2026 Secured Senior Notes at or below par Completed the acquisition of Cherry Creek Broadcasting LLC ("Cherry Creek") for $18.5 million, net of closing adjustments *See below for discussion of non-GAAP measures. GuidanceFor the first quarter of 2023, net revenue is expected to be between $100.0 million and $102.0 million (-0.2% to +1.8% as compared to the prior year), and Adjusted EBITDA is expected to be between $17.5 million and $18.5 million. For the full year 2023, net revenue is expected to be between approximately $450 million and $470 million (-2.8% to +1.5% as compared to the prior year), and Adjusted EBITDA is expected to be between approximately $100 million and $110 million. Quarter Ended December 31, 2022 Compared to the Quarter Ended December 31, 2021 Net RevenueNet revenue for the three months ended December 31, 2022 increased $9.7 million, or 8.8%, to $120.3 million as compared to $110.6 million in the same period in 2021. Digital Advertising net revenue increased $5.4 million, or 16.9%, and Subscription Digital Marketing Solutions net revenue increased $0.9 million, or 4.4%, as compared to the same period in 2021. Broadcast Advertising net revenue increased $2.3 million, or 4.0%, as compared to the same period in 2021. Other net revenue increased $1.1 million due to an increase in the number of live events. Excluding political revenue of $4.0 million and $1.7 million for the three months ended December 31, 2022 and 2021, respectively, net revenue increased $7.4 million, or 6.8%, to $116.3 million, Digital Advertising net revenue increased $5.2 million, or 16.3%, to $36.8 million, and Broadcast Advertising net revenue increased $0.2 million, or 0.4%, to $55.6 million. Net IncomeNet income for the quarter ended December 31, 2022, increased $2.0 million to $3.9 million, as compared to net income of $1.9 million in the same period last year, primarily due to an income tax benefit, partially offset by non-cash impairment charges. Adjusted Net Income increased $8.5 million, primarily due to a decrease in the provision for income taxes of $6.8 million. Adjusted EBITDAAdjusted EBITDA for the three months ended December 31, 2022, increased $2.8 million, or 11.0%, to $28.4 million, as compared to $25.6 million in the same period last year. Adjusted EBITDA (Excluding Political) increased $0.9 million, or 3.7%, to $25.0 million, as compared to $24.1 million in the same period last year. Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Net RevenueNet revenue for the year ended December 31, 2022, increased $45.1 million, or 10.8%, to $463.1 million as compared to $418.0 million in 2021. Digital Advertising revenue increased $23.6 million, or 20.2% as compared to 2021 and our Subscription Digital Marketing Solutions revenue increased $8.6 million, or 10.5% as compared to 2021, primarily due to incremental net subscribers of approximately 3,850 for the year ended December 31, 2022. The increase in Broadcast Advertising Revenue of $8.3 million, or 3.8% was due in part to increases in the purchase of new advertising by our clients and an increase in political broadcast advertising revenue of $3.5 million. The increase in Other net revenue of $4.7 million is due to an increase in live events held during 2022. Excluding political revenue of $7.5 million and $3.5 million for the years ended December 31, 2022 and 2021, respectively, net revenue increased $41.1 million, or 9.9% to $455.6 million, Digital Advertising net revenue increased $23.1 million, or 19.7%, to $139.9 million, and Broadcast Advertising net revenue increased $4.8 million, or 2.2%, to $216.8 million. Net IncomeNet income for the year ended December 31, 2022 decreased $4.4 million, or 23.4%, to $14.4 million, as compared to $18.8 million in the same period last year, primarily driven by non-cash impairment charges to our FCC licenses, intangible assets, and investments of $31.1 million, partially offset by an increase in net revenue. Adjusted Net Income increased $24.4 million, primarily driven by the increase in net revenue and a decrease in the provision for income taxes of $16.3 million. Adjusted EBITDAAdjusted EBITDA for the year ended December 31, 2022 increased $8.6 million, or 8.2% to $113.7 million, as compared to $105.1 million in the same period last year. Adjusted EBITDA (Excluding Political) increased $5.2 million, or 5.1%, to $107.3 million, as compared to $102.1 million in the same period last year. Liquidity and Capital ResourcesAs of December 31, 2022, we had a total of $43.4 million of cash and cash equivalents and $530.8 million of outstanding indebtedness, representing 4.67x and 4.29x gross and net leverage, respectively, based on Adjusted EBITDA for the year ended December 31, 2022, of $113.7 million. The table below presents a summary, as of March 7, 2023, of our outstanding common stock. Security Number Outstanding Description Class A common stock 13,051,575 One vote per share. Class B common stock 815,296 10 votes per share.1 Class C common stock 3,461,341 No votes.1 Total 17,328,212 1 Each share converts into one share of Class A common stock upon transfer or at the option of the holder, subject to certain conditions, including compliance with FCC rules. Conference CallTownsquare Media, Inc. will host a conference call to discuss certain fourth quarter 2022 financial results and 2023 guidance on Thursday, March 9, 2023 at 8:00 a.m. Eastern Time. The conference call dial-in number is 1-877-407-0784 (U.S. & Canada) or 1-201-689-8560 (International) and the confirmation code is 13736640. A live webcast of the conference call will also be available on the investor relations page of the Company's website at A replay of the conference call will be available through March 16, 2023. To access the replay, please dial 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (International) and enter confirmation code 13736640. A web-based archive of the conference call will also be available at the above website. About Townsquare Media, Inc.Townsquare is a community-focused digital media and digital marketing solutions company with market leading local radio stations, principally focused outside the top 50 markets in the U.S. Our assets include a subscription digital marketing services business, Townsquare Interactive, providing website design, creation and hosting, search engine optimization, social media and online reputation management as well as other digital monthly services for approximately 30,650 SMBs; a robust digital advertising division, Townsquare Ignite, a powerful combination of a) an owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management platform; and a portfolio of 357 local terrestrial radio stations in 74 U.S. markets strategically situated outside the Top 50 markets in the United States. Our portfolio includes local media brands such as, and, and premier national music brands such as,,, and For more information, please visit, and Forward-Looking StatementsExcept for the historical information contained in this press release, the matters addressed are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "believe," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other words and terms. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include the impact of general economic conditions in the United States, or in the specific markets in which we currently do business including supply chain disruptions, inflation, labor shortages and the effect on advertising activity, industry conditions, including existing competition and future competitive technologies, the popularity of radio as a broadcasting and advertising medium, cancellations, disruptions or postponements of advertising schedules in response to national or world events, including the COVID-19 pandemic, our ability to develop and maintain digital technologies and hire and retain technical and sales talent, our dependence on key personnel, our capital expenditure requirements, our continued ability to identify suitable acquisition targets, and consummate and integrate any future acquisitions, legislative or regulatory requirements, risks and uncertainties relating to our leverage and changes in interest rates, our ability to obtain financing at times, in amounts and at rates considered appropriate by us, our ability to access the capital markets as and when needed and on terms that we consider favorable to us and other factors discussed in this section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report and under "Risk Factors" in our 2022 Annual Report on Form 10-K, for the year ended December 31, 2022, to be filed with the SEC, as well as other risks discussed from time to time in our filings with the SEC. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. The forward-looking statements included in this report are made only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Non-GAAP Financial Measures and DefinitionsIn this press release, we refer to Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA (Excluding Political), Adjusted Net (Loss) Income and Adjusted Net Income Per Share which are financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). We define Adjusted Operating Income as operating income before the deduction of depreciation and amortization, stock-based compensation, corporate expenses, transaction costs, business realignment costs, impairment of long-lived assets, intangible assets and investments and net (gain) loss on sale and retirement of assets. We define Adjusted EBITDA as net income before the deduction of income taxes, interest expense, net, (gain) loss on repurchases, extinguishment and modification of debt, transaction and business realignment costs, depreciation and amortization, stock-based compensation, impairment of long-lived assets, intangible assets and investments, net loss (gain) on sale and retirement of assets and other expense (income) net. We define Adjusted EBITDA (Excluding Political) as Adjusted EBITDA less political net revenue, net of a fifteen percent deduction to account for estimated national representative firm fees, music licensing fees and sales commissions expense. Adjusted Net Income is defined as net income before the deduction of transaction and business realignment costs, impairment of long-lived assets, intangible assets and investments, change in fair value of investment, net (gain) loss on sale and retirement of assets, (gain) loss on repurchases, extinguishment and modification of debt, gain on insurance recoveries and net income attributable to non-controlling interest, net of income taxes. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the weighted average shares outstanding. We define Net Leverage as our total outstanding indebtedness, net of our total cash balance as of December 31, 2022, divided by our Adjusted EBITDA for the twelve months ended December 31, 2022. These measures do not represent, and should not be considered as alternatives to or superior to, financial results and measures determined or calculated in accordance with GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. You should be aware that in the future we may incur expenses or charges that are the same as or similar to some of the adjustments in the presentation, and we do not infer that our future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP measures may not be comparable to similarly-named measures reported by other companies. We use Adjusted Operating Income to evaluate the operating performance of our business segments. We use Adjusted EBITDA and Adjusted EBITDA (Excluding Political) to facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting interest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance, and to facilitate year over year comparisons, by backing out the impact of political revenue which varies depending on the election cycle and may be unrelated to operating performance. We use Adjusted Net Income and Adjusted Net Income Per Share to assess total company operating performance on a consistent basis. We use Net Leverage to measure the Company's ability to handle its debt burden. We believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of transaction costs, net (gain) loss on sale and retirement of assets, business realignment costs and certain impairments. Further, while discretionary bonuses for members of management are not determined with reference to specific targets, our board of directors may consider Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA (Excluding Political), Adjusted Net Income, Adjusted Net Income Per Share, and Net Leverage when determining discretionary bonuses. Investor RelationsClaire Yenicay(203) TOWNSQUARE MEDIA, INC. CONSOLIDATED BALANCE SHEETS (in Thousands, Except Share and Per Share Data) December 31, 2022 December 31, 2021 ASSETS Current assets:    Cash and cash equivalents $              43,417 $              50,505 Accounts receivable, net of allowance of $5,946 and $6,743, respectively 61,234 57,647    Prepaid expenses and other current assets 16,037 12,086 Total current assets   120,688 120,238 Property and equipment, net 113,846 106,717 Intangible assets, net 276,838 278,265 Goodwill 161,385 157,947 Investments 19,106 18,217 Operating lease right-of-use-assets 50,962 42,996 Other assets 1,197 1,437 Restricted cash 496 494 Total assets   $            744,518 $            726,311 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:   Accounts payable $                4,127 $                5,676   Deferred revenue 10,669 10,208   Accrued compensation and benefits 14,831 14,411   Accrued expenses and other current liabilities 17,876 22,512   Operating lease liabilities, current 9,008 7,396   Accrued interest 15,203 15,754 Total current liabilities 71,714 75,957 Long-term debt, net of deferred financing costs of $6,324 and $8,479, respectively 524,442 541,521 Deferred tax liability 18,748 20,081 Operating lease liability, net of current portion 45,107 38,743 Other long-term liabilities 15,428 425 Total liabilities   675,439 676,727 Stockholders' equity: Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 12,964,312 and 12,573,654 shares issued and outstanding, respectively 130 126 Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 815,296 and 815,296 shares issued and outstanding, respectively 8 8 Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,461,341 and 3,461,341 shares issued and outstanding, respectively 35 35    Total common stock 173 169    Additional paid-in capital 309,645 302,724    Accumulated deficit (244,298) (256,635)    Non-controlling interest   3,559 3,326 Total stockholders' equity   69,079 49,584 Total liabilities and stockholders' equity   $            744,518 $            726,311   TOWNSQUARE MEDIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in Thousands, Except Per Share Data) Three Months Ended  December 31, Twelve Months Ended  December 31, 2022 2021 2022 2021 Net revenue $       120,276 $         110,578 $      463,077 $         417,957 Operating costs and expenses: Direct operating expenses, excluding depreciation, amortization, and stock-based compensation 83,350 76,465 324,931 288,302 Depreciation and amortization 5,498 4,552 19,044 19,098 Corporate expenses 8,536 8,546 24,428 24,542 Stock-based compensation 1,367 885 3,797 3,718 Transaction and business realignment costs 2,168 (542) 4,448 5,305 Impairment of long-lived assets, intangible assets and investments 10,917 1,818 31,114 1,913 Net loss (gain) on sale and retirement of assets 63 (12) (275) 601     Total operating costs and expenses 111,899 91,712 407,487 343,479     Operating income 8,377 18,866 55,590 74,478 Other expense (income): Interest expense, net 9,790 10,066 39,828 39,846 (Gain) loss on repurchases, extinguishment and modification of debt — — (108) 5,997 Other expense (income), net 158 2,955 2,044 (500)    (Loss) income from operations before tax (1,571) 5,845 13,826 29,135 Income tax (benefit) provision (5,503) 3,920 (564) 10,351 Net income $           3,932 $             1,925 $        14,390 $           18,784 Net income attributable to:      Controlling interests $           3,459 $             1,448 $        12,337 $           16,736      Non-controlling interests $              473 $               477 $          2,053 $             2,048 Basic income per share:     Attributable to common shares $             0.20 $              0.09 $            0.73 $              0.90     Attributable to participating shares $               — $              0.09 $              —.....»»

Category: earningsSource: benzingaMar 9th, 2023

Global Water Resources Reports Fourth Quarter and Full Year 2022 Results

PHOENIX, March 08, 2023 (GLOBE NEWSWIRE) -- Global Water Resources, Inc. (NASDAQ:GWRS), a pure-play water resource management company, reported results for the fourth quarter and full year ended December 31, 2022. All comparisons are to the same year-ago period unless otherwise noted. The company will hold a conference call at 1:00 p.m. Eastern time tomorrow to discuss the results (see dial-in information below.) Financial Highlights Revenues increased 7.7%, to $11.1 million in the fourth quarter of 2022, and increased 8.6% to $44.7 million for the full year (excluding unregulated revenues of approximately $0.7 million), with the growth due to an increase in active service connections and an increase in rates. Net income increased 138% to $824,000 or $0.04 per share in the fourth quarter of 2022. For the full year, net income increased 53% to $5.5 million or $0.24 per share. In November 2022, announced an increase in dividends to $0.29791 per share on an annualized basis. The first monthly dividend payment at the new rate was paid on December 29, 2022 to holders of record on December 15, 2022. Q4 2022 Operational Highlights Total active service connections increased 4.4% to 56,270 at December 31, 2022 from 53,882 at December 31, 2021. Continued design and engineering work for the Inland Port Arizona mega-site where Global Water will be working with Procter & Gamble (P&G) to provide water, wastewater and recycled water services to P&G's new manufacturing facility. $8.7 million of CAPEX investment in existing utilities to provide safe, reliable service, and focused on increasing revenues, reducing expenses and building rate base. Begun providing bulk water services to Seven Ranches Domestic Water District in Maricopa, Pinal County, Arizona. Surpassed six years without a significant compliance violation. Subsequent Event In February 2023, the company completed the acquisition of Farmers Water Co. in Pima County, Arizona. The acquisition added a total of 3,300 active water service connections and approximately 21.5 square miles of Certificate of Convenience and Necessity service area in the Town of Sahuarita and the surrounding unincorporated area of Pima County. It also increased Global Water's total active water service connections in Pima County to nearly 5,000. Management Commentary "2022 was great year of progress across the board, as demonstrated by our safety and compliance track records, business development success, and our top-line growth with increased profitability," stated Global Water Resources president and CEO, Ron Fleming. "These strong financial results were primarily driven by organic growth in connections, new connections associated with the acquisition of Las Quintas Serenas, and approval of new rates. "Early in 2022, we continued to expand our footprint with the acquisition and successful integration of two smaller ‘tuck-in' water utility acquisitions. We anticipate that the full integration of these small water utilities under our professional utility umbrella will help promote safe, reliable, smart water management practices for the benefit of all stakeholders. "During the fourth quarter, we recycled approximately 125 million gallons of water. This recycling is a result of our extensive ‘purple pipe' program that facilitates the use of recycled wastewater for use in common areas, thereby saving precious drinking water. Our automated real-time meter reading also helps preserve water resources, building upon nearly 15 years of experience implementing advanced metering infrastructure technology. Our special rate design, which was again supported and approved by the Arizona Corporation Commission in our most recent rate case, also incentivizes customers to conserve water on a daily basis. "In February of this year, we welcomed Farmers Water to our growing family of utility companies. As our largest acquisition since going public on Nasdaq in 2016, we see significant opportunity to make capital improvements, such as deploying the same advanced metering infrastructure or meter upgrade project we completed last quarter for Las Quintas Serenas. Through the implementation of our unique approach to utility consolidation, automation and water resource management, we will provide safe, high-quality, and sustainable water services to the community. "We are looking forward to working with P&G on providing water, wastewater and recycled water services to their new manufacturing facility. The new plant will be another major anchor for the Inland Port Arizona industrial mega-site, along with the new Nikola manufacturing plant that began production last year. These major projects demonstrate how Inland Port Arizona offers tremendous opportunities to companies looking locate to this area. In addition to job growth and associated residential expansion, we believe such large new facilities will enable the more efficient deployment of infrastructure and integrated utility operations that help provide safe, reliable and sustainable utility solutions for the entire region. "In the new year, our primary mission continues to be the growth of our core service areas, and aggregation of water and wastewater utilities, so that our customers and the communities we serve may realize the benefits of consolidation, regionalization, and proactive environmental stewardship. We continue to evaluate a number of attractive acquisition and expansion opportunities in Arizona's Sun Corridor, including growth regions around metropolitan Phoenix and Tucson. "While we are currently experiencing a slowdown in housing in response to inflation and increased interest rates, our service areas remain well positioned within the path of population and job growth in and around metro-Phoenix and Tucson, and we believe these regionally planned service areas could ultimately serve hundreds of thousands of service connections. We also anticipate future growth through service area expansions, such as those due to large industrial projects that would be looking to locate in or around our service areas. "We anticipate that the integration of our newly constructed and acquired facilities and the implementation of our Total Water Management will result in efficiency improvements, greater automation, and higher quality customer service. Additional benefits include access to our greater financial resources and economies of scale. As a result, we anticipate that both the utilities and the communities we serve will realize numerous benefits, as well as support our continued revenue growth and profitability in 2023." Q4 2022 Financial Summary Revenues Total revenues in the fourth quarter of 2022 increased $0.8 million or 7.7% to $11.1 million compared to $10.3 million in the same period in 2021. Total revenues for the full year 2022 increased $2.8 million or 6.7% to $44.7 million as compared to $41.9 million in 2021. The increase in revenue for both the quarter and year reflects the 4.4% increase in active service connections, with this due to organic growth and new connections associated with the acquisition of Las Quintas, as well as an increase in rates due to Rate Case Decision No. 78644. The increase in revenue was partially offset by ICFA revenue recognized in 2021 that did not occur in 2022. Operating Expenses Operating expenses increased $867,000 to $9.9 million in the fourth quarter of 2022 compared to $9.0 million in the same period in 2021. The increase was primarily attributed to increased general and administrative expenses as well as increased depreciation and amortization. These costs were slightly offset by lower operations and maintenance costs. Operating expenses for the full year 2022 increased $2.0 million or 5.7% to $36.9 million compared to $34.9 million in 2021. The increase in operating expenses was primarily due to the acquisition of Las Quintas Serenas combined with increased expenses as the company continued to grow. Additionally, general and administrative costs increased, including higher professional fees tied to acquisitions and higher regulatory expense tied to the company's recent rate case. Lastly, depreciation and amortization expense increased $0.4 million due to the company's capital expenditure program and the acquisition of Las Quintas Serenas. Other Expenses Total other expense totaled $275,000 for the fourth quarter of 2022 compared to other expense of $728,000 in the fourth quarter of 2021. The $453,000 improvement was primarily attributable to the higher capitalized interest during the three months ended December 31, 2022, partially offset by the income recognized on the one-time cell tower sale in the fourth quarter of 2021 that did not occur in 2022. Total other expense for the full year 2022 totaled $1.4 million compared to $2.2 million in 2021. The $0.8 million improvement was primarily driven by higher Buckeye growth premiums and lower interest expense in 2022, partially offset by the income recognized on the cell tower sale noted above. Net Income Net income totaled $824,000, or $0.04 per share, in the fourth quarter of 2022, compared to $346,000, or $0.02 per share in the same period in 2021. Net income increased $1.9 million to $5.5 million, or $0.24 per share in the full year 2022, from $3.6 million, or $0.16 per share in in 2021. Adjusted EBITDA Adjusted EBITDA remained relatively flat at $4.8 million in the fourth quarter of both 2022 and 2021. While revenue increased in the fourth quarter of 2022, the primary drivers for the relatively flat Adjusted EBITDA can be attributed to the Buckeye premium which was lower by $0.2 million and the company incurred higher deferred compensation costs by $0.3 million associated with the increase in stock price. Adjusted EBITDA increased $3.4 million, or 18.3%, to $22.1 million for the full year 2022 compared to $18.7 million in 2021. The increase was primarily attributable to increased revenue, partially offset by increased expenses tied to the acquisition of Las Quintas Serenas, the natural increase in expenses tied to growth, and the general and administrative increases including the higher professional fees tied to acquisitions and higher regulatory expense tied to the rate case. Capital Resources Cash and cash equivalents totaled $6.6 million at December 31, 2022, as compared to $12.6 million at December 31, 2021. The decrease was primarily due to the company's capital expenditures program as it continued to expand and invest in its infrastructure to support the recent growth and future growth expected within its service areas. As of December 31, 2022, the company has no notable near-term cash expenditures, other than a principal payment on its debt obligation in the amount of $1.9 million due in June 2023, $1.9 million due in December 2023 and $1.9 million due in June 2024. Dividend Policy In November 2022, the company announced an increase in dividend to $0.29791 per share on an annualized basis. It recently declared a monthly cash dividend of $0.02483 per common share (or $0.29791 per share on an annualized basis), which will be payable on March 31, 2023 to holders of record at the close of business on March 17, 2023. Business Strategy Global Water's near-term growth strategy involves increasing service connections, improving operating efficiencies, and increasing utility rates as approved by the Arizona Corporation Commission. The company plans to continue its aggregation of water and wastewater utilities that will allow the company and its customers to realize the benefits of consolidation, regionalization, and environmental stewardship. Connection Rates As of December 31, 2022, active service connections increased by 2,388 or 4.4% to 56,270, compared to 53,882 at December 31, 2021. The increase in active service connections was primarily due to growth in the company's service areas. Arizona's Growth Corridor: Positive Population and Economic Trends The Metropolitan Phoenix area is steadily growing due to low-cost housing, excellent weather, large and growing universities, a diverse employment base, and business friendly environment. The area's population has increased throughout 2020 and 2021, and it continues to grow. The Employment and Population Statistics Department of the State of Arizona predicts that Phoenix Metro will have a population of 5.8 million by 2030 and reach 6.5 million by 2040. The company sees this strong growth outlook as an opportunity to increase active service connections and grow revenues. Conference CallGlobal Water Resources will hold a conference call to discuss its fourth quarter and full year 2022 results tomorrow, followed by a question-and-answer period. Date: Thursday, March 9, 2023Time: 1:00 p.m. Eastern time (10:00 a.m. Pacific time)Toll-free dial-in number: 1-855-327-6837International dial-in number: 1-631-891-4304Conference ID: 10021334Webcast (live and replay): here The conference call webcast is also available via a link in the Investors section of the company's website at Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact CMA at 1-949-432-7566. A replay of the call will be available after 4:00 p.m. Eastern time on the same day through March 23, 2023. Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Replay ID: 10021334 About Global Water ResourcesGlobal Water Resources, Inc. is a leading water resource management company that owns and operates 29 systems which provide water, wastewater, and recycled water services. The company's service areas are located primarily in growth corridors around metropolitan Phoenix. Global Water recycles over 1 billion gallons of water annually. The company has been recognized for its highly effective implementation of Total Water Management (TWM). TWM is an integrated approach to managing the entire water cycle that involves owning and operating water, wastewater and recycled water utilities within the same geographic area in order to maximize the beneficial use of recycled water. It enables smart water management programs such as remote metering infrastructure and other advanced technologies, rate designs, and incentives that result in real conservation. TWM helps protect water supplies in water-scarce areas experiencing population growth. Global Water has received numerous industry awards, including national recognition as a ‘Utility of the Future Today' for its superior water reuse practices by a national consortium of water and conservation organizations led by the Water Environment Federation (WEF). The company also received Cityworks' 2022 Excellence in Departmental Practice Award for demonstrating leadership and creativity in applying public asset management strategies to daily operations and long-term planning. To learn more, visit Cautionary Statement Regarding Non-GAAP Measures This press release contains certain financial measures that are not recognized measures under accounting principles generally accepted in the United States of America ("GAAP"), including EBITDA, and Adjusted EBITDA. EBITDA is defined for the purposes of this press release as net income (loss) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA excluding the gain or loss related to (i) nonrecurring events; (ii) option expense related to awards made to the board of directors and management; (iii) restricted stock expense related to awards made to executive officers; and (iv) disposal of assets. Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures of our operating performance and provide our investors meaningful measures of overall corporate performance. EBITDA is also presented because management believes that it is frequently used by investment analysts, investors, and other interested parties as a measure of financial performance. Adjusted EBITDA is also presented because management believes that it provides our investors a measure of our recurring core business. However, non-GAAP measures do not have a standardized meaning prescribed by GAAP, and investors are cautioned that non-GAAP measures, such as EBITDA and Adjusted EBITDA, should not be construed as an alternative to net income or loss or other income statement data (which are determined in accordance with GAAP) as an indicator of our performance or as a measure of liquidity and cash flows. Management's method of calculating EBITDA and Adjusted EBITDA may differ materially from the method used by other companies and accordingly, may not be comparable to similarly titled measures used by other companies. A reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most comparable GAAP measure, is included in the schedules attached to this press release. Cautionary Note Regarding Forward-Looking Statements This press release includes certain forward-looking statements which reflect the company's expectations regarding future events. The forward-looking statements involve a number of assumptions, risks, uncertainties, and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning our strategy; expectations about future business plans, prospective performance, growth, and opportunities; future financial performance; regulatory and ACC proceedings and approvals, such as the anticipated benefits resulting from Rate Decision No. 78644, including our expected collective revenue increase due to new water and wastewater rates; acquisition plans and our ability to complete additional acquisitions and the expected future benefits; our dividend policy; population and growth projections; technologies; trends relating to our industry, market, population growth, and housing permits; liquidity; plans and expectations for capital expenditures; and other statements that are not historical facts as well as statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or the negative of these terms, or other words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to a number of risks, uncertainties, and assumptions, most of which are difficult to predict and many of which are beyond our control. Actual results may differ materially from these expectations due to changes in political, economic, business, market, regulatory, and other factors, including the duration and severity of the COVID-19 pandemic and the actions to contain the virus or treat its impact, such as the efficacy of vaccines (particularly with respect to emerging strains of the virus). Factors that may also affect future results are disclosed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our filings with the Securities and Exchange Commission (the "SEC"), which are available at the SEC's website at This includes, but is not limited to, our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings with the SEC. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements, which reflect management's views as of the date hereof. We undertake no obligation to publicly update any forward-looking statement, except as required by law, whether as a result of new information, future developments or otherwise. Company Contact:Michael Liebman CFO and SVPTel (480) 999-5104 Investor Relations Contact:Ron Both or Grant StudeCMA Investor RelationsTel (949) 432-7566Email contact Media & ESG Contact:Tim RandallCMA Media RelationsTel (949) 432-7572Email contact GLOBAL WATER RESOURCES, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)   December 31,2022   December 31,2021 ASSETS       PROPERTY, PLANT AND EQUIPMENT:       Land $ 1,480     $ 1,338   Depreciable property, plant and equipment   344,043       313,700   Construction work-in-progress   66,039       53,511   Other   697       697   Less accumulated depreciation   (124,522 )     (113,380 ) Net property, plant and equipment   287,737       255,866   CURRENT ASSETS:       Cash and cash equivalents   6,561       12,637   Accounts receivable — net   2,139       1,994   Customer payments in-transit   462       201   Unbilled revenue   2,557       2,510   Taxes, prepaid expenses, and other current assets   2,439       1,645   Total current assets   14,158       18,987   OTHER ASSETS:       Goodwill   4,957       5,730   Intangible assets — net   10,139       10,339   Regulatory asset   3,169       2,336   Restricted cash   1,001       806   Right-of -use asset   1,891       —   Other noncurrent assets   34       10   Total other assets   21,191       19,221   TOTAL ASSETS $ 323,086     $ 294,074   LIABILITIES AND SHAREHOLDERS' EQUITY       CURRENT LIABILITIES:       Accounts payable $ 2,173     $ 2,120   Accrued expenses   8,056       9,191   Customer and meter deposits   1,682       1,646   Long-term debt — current portion   3,833       3,833   Leases — current portion   505       142   Total current liabilities   16,249       16,932   NONCURRENT LIABILITIES:       Long-term debt   104,945       108,734   Long-term lease liabilities   1,616       199   Deferred revenue - ICFA   20,974       19,035   Regulatory liability   6,371       7,421   Advances in aid of construction   93,656       84,578   Contributions in aid of construction — net   26,404       21,326   Deferred income tax liabilities, net   5,949       3,269   Acquisition liability   1,773       1,773   Other noncurrent liabilities   755       778   Total noncurrent liabilities   262,443    .....»»

Category: earningsSource: benzingaMar 9th, 2023

Who Do We Target Now In The Inflation Blame Game?

Who Do We Target Now In The Inflation Blame Game? Authored by Graham Young via The Epoch Times, Inflation is rising everywhere, which does not mean it’s not a problem for politicians in Australia, just that they are a subset of politicians everywhere. So we are seeing a global hunt for alibis and scapegoats. In Australia,  the federal government and the union movement have chosen business—in particular mining and food—as their fall guy. There are a bunch of reasons why inflation is up. One is that demand is stronger than normal, but the supply of goods hasn’t kept up due to logistical problems left-over from COVID and normal resource scarcity. The reason demand has exploded is that money that couldn’t be spent for two years is being spent quickly and immediately. This is being funded by savings that accrued while most of us had our “gap year” for COVID and couldn’t travel or go out. No blame accrues there, apart from the fact they collectively shut us down when the pandemic handbook said that was the last thing you should do. Blame does accrue to governments who have also fuelled demand by loose monetary policy in the first place, and debt-fuelled expenditures in the second. They are adding record public spending to private spending. In the U.S. the spending is in packages such as the so-called “Build Back Better” and “Inflation Reduction” Acts. In Australia, we have various programs initiated by the government for energy transition, aged care, and childcare. Another reason is that the price of energy has skyrocketed. This is partly a result of the war in Ukraine, but the stats show prices rising well before then. This inflation is due to the energy transition, and it will intensify the further we transit into it. While politicians tout wind and solar as “clean, green, and cheap,” they are certainly not cheap, as evident by the rising cost of carbon credits. This is an outcome of government choice. Bigger Government, Designating Villain Status to Capitalism Another driver in Australia that will become more apparent as time goes by is government-driven labour market changes which will make wages artificially higher while decreasing the flexibility of the economy. Changes like the recent re-introduction of pattern-bargaining, centralised wage fixing, national industry awards, clamping down on the “gig economy,” increasing unionisation, and freeing the CFMEU (the union involved in all infrastructure work) from the oversight of the Australian Building and Construction Commission. Inflation has been bubbling away under the surface as variants of Modern Monetary Theory—the idea that governments could borrow and spend what they pleased without risking inflation—leading to insanely low-interest rates and over-extended national “credit cards.” These inflationary pressures manifested first in rising stock market valuations and then in elevated house prices. Now, they are hitting the hip pocket. None of this is to the credit of any government, so who to blame if you are intent on re-election? If your constituency is notionally labour, this is a very easy choice, it must be the capitalists. And so the intellectual establishments of the Australian left, like The Australia Institute and the ABC, are hard at work fabricating a case for inflation being caused by “profiteering” and “price gouging” by corporate Australia, particularly the energy and mining sector and food. They also point to an increase in capital profits versus labour as a share of the economy. Except the facts don’t bear them out. Energy and mining companies are price takers, with the price of their commodities swinging wildly in tune with small fluctuations in demand and supply. It was only in 2020 that the price of oil went negative for a brief period, hitting -$37 per barrel (negative US$23) in late April. For a period of a year or two, their financial statements were swimming in red ink. Now there is a shortage of supply, partly caused by the war in Ukraine, but mostly by the energy transition, with governments deliberately restricting new oil and gas developments. Purchasers know there is not enough to go around, so they are bidding the price up. This is how shortages are supposed to be handled—high prices encourage new developments and new supply, which eventually increases supply and lowers cost. Greedy for Profits or Just Better Business Practice? You can’t blame the energy companies for taking the prices their customers want to give them. The argument for food is similarly flawed. Take Woolworths, with 37 percent of the Australian grocery market, who reported their first half results this week. Profit is up 18 percent, but not because food prices are up. Their turnover in food is up only 2.5 percent, less than the rate of inflation. Increased profit appears to be the result of better management, increased sales in Big W, and rotation from expensive products into cheaper but more profitable home brands. The Australia Institute’s chief economist Richard Dennis points to an increase in the share of the economy of Capital Profits. However, as the graph below shows, labour has remained quite stable as a share of the economy, with the greatest retreat being “Gross Mixed Income.” Analysis by the Reserve Bank of Australia fingers the rise in the housing market and the financialisation of the economy (as it becomes more white-collar) as the reason for these moves. Labour and Capital Income. (Reserve Bank of Australia) There is nothing unusual about politicians seeking to implicate someone else in their failures, but there is a real inflationary danger here. If the public is convinced that it is corporate profit gouging that is causing the problem that can lead to price caps and super-taxes, that actually makes the problems worse. It can also trigger unsustainable wage rises, meant to rectify the situation but which, in fact, perpetuate the vicious cycle of spiralling price increases and inflation. By world standards, inflation is relatively low in Australia at the moment. Bad analysis followed by bad policy could change that and entrench high inflation for a lot longer. Tyler Durden Tue, 02/28/2023 - 21:25.....»»

Category: blogSource: zerohedgeFeb 28th, 2023

Nonprofit Vibrant Emotional Health to Increase Space in Headquarters Relocation to Rudin’s Reimagined 80 Pine Street

 Rudin, a full-service real estate organization, and one of New York City’s largest private owners, operators and developers of first-class real estate, announced today that nonprofit mental health provider Vibrant Emotional Health (Vibrant), has completed a 15-year lease totaling 59,550 square feet at 80 Pine Street, its 1.2-million-square-foot Financial District office tower.... The post Nonprofit Vibrant Emotional Health to Increase Space in Headquarters Relocation to Rudin’s Reimagined 80 Pine Street appeared first on Real Estate Weekly.  Rudin, a full-service real estate organization, and one of New York City’s largest private owners, operators and developers of first-class real estate, announced today that nonprofit mental health provider Vibrant Emotional Health (Vibrant), has completed a 15-year lease totaling 59,550 square feet at 80 Pine Street, its 1.2-million-square-foot Financial District office tower. Vibrant Emotional Health’s footprint will span the entire 18th and 19th floors of the 38-story building. The company has been at the forefront of promoting emotional well-being for all people for over 50 years, is the administrator of the national 988 Suicide & Crisis Lifeline (988 Lifeline), the national Disaster Distress Hotline, the Veterans Crisis Line, the NFL Life Line, and NYC Well, as well as community-based mental health programs across the country. Vibrant plans to relocate from its current 31,000-square-foot space at 50 Broadway in mid-2023. “Vibrant is excited to begin the next chapter of our organization’s story at the beautiful 80 Pine Street location,” said Lesleigh Irish-Underwood, Chief External Affairs Officer & Head of Brand for Vibrant Emotional Health. “At a time when so many across the country are experiencing obstacles to their mental health, empowering people to achieve emotional well-being is more important than ever before. To have Vibrant housed within these facilities will bolster the impact we are able to make with our work.” Vibrant’s headquarters relocation marks roughly 200,000 square feet of new leases, expansions, and renewals signed by Rudin over the past year at 80 Pine, which is in the final stages of a major modernization and repositioning. Working with Fogarty Finger Architecture, Rudin has renovated 80 Pine’s ground floor spaces, which now feature white terrazzo flooring, white oak paneled walls, energy efficient LED lighting and new elevator cabs. Rudin is also nearing completion on an interconnected amenity center located on the 22nd and 23rd floors. This space will feature a café, lounge, conference facility and a 4,600-square-foot outdoor terrace. The renovation program emphasizes occupant health and wellness with such features as touch-free access points and advanced air filtration technology. “Vibrant’s commitment is further validation of our ongoing efforts to maintain a best-in-class work environment at 80 Pine and a testament to Lower Manhattan’s continued allure as a business district,” said Michael Rudin, Executive Vice President at Rudin. “We are proud that 80 Pine continues to attract companies like Vibrant, which understand that workspaces that foster collaboration and creativity are vital to cultivating a successful company culture.” This is the eighth leasing commitment secured by Rudin at 80 Pine over the last year. Rudin previously announced seven new leases and expansions totaling over 136,000 square feet with The Global Alliance for TB Drug Development, Inc., Elefterakis, Elefterakis & Panek LLP, New York Property Insurance Underwriting Association, AccuWeather, Inc., CureMD, January Digital and The National Urban League. Each of these were signed following the commencement of the comprehensive capital improvement and amenity program at 80 Pine. Vibrant was represented by CBRE’s Chris Mansfield, Gerry Miovski, Masha Dudelzak and Ali Gordon. Rudin was represented in-house by Kevin Daly and Tom Keating. Designed by Emery Roth & Sons and constructed by the Rudin family in 1960, 80 Pine occupies a full block between Pearl and Water Streets, just steps from the Seaport District along the East River waterfront.  Its tower floors offer 360-degree views of the East River bridges, Brooklyn, Governors Island and New York Harbor. The JLL team of Frank Doyle, Alexander Chudnoff, John Wheeler, Kyle Young and Eliza Gordon are actively marketing 80 Pine. Diverse floorplates are available ranging from 13,000 square feet to 60,000 square feet are available and select floors feature large private terraces. The neighborhood features a wide variety of shops and restaurants, and a new concert venue at Pier 17. The building, which features an onsite bike valet and parking garage, is in close proximity to the 2, 3, 4, 5, J and Z subway lines, the Staten Island Ferry and the NYC Ferry. 80 Pine has received WiredScore Platinum certification in recognition of its best-in-class connectivity and was also recently awarded SmartScore Gold certification, identifying it as a leading smart building, defined by an exceptional user experience and high standards of sustainability. The building also utilizes Nantum OS, the world’s most advanced building operating system. Nantum OS is the flagship product of Prescriptive Data, a privately held smart building automation company focused on using artificial intelligence to improve efficiency, decrease carbon emissions and optimize tenant comfort. The post Nonprofit Vibrant Emotional Health to Increase Space in Headquarters Relocation to Rudin’s Reimagined 80 Pine Street appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyFeb 28th, 2023

ValueAct Capital Takes Stake In Spotify

What’s New In Activism – ValueAct Takes Stake In Spotify ValueAct Capital Management took a stake in music streaming company Spotify Technology SA (NYSE:SPOT) in a move expected to push for a tightening on spending and overall efficiencies. The new position was disclosed by the hedge fund’s CEO Mason Morfit during a Friday presentation at […] What’s New In Activism – ValueAct Takes Stake In Spotify ValueAct Capital Management took a stake in music streaming company Spotify Technology SA (NYSE:SPOT) in a move expected to push for a tightening on spending and overall efficiencies. The new position was disclosed by the hedge fund’s CEO Mason Morfit during a Friday presentation at Columbia University in New York. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   "Spotify's superpower was combining engineering breakthroughs with organizational abilities — it organized creators and copyright owners to build an entirely new economic model that benefited everyone involved," Morfit said. However, he added that the boom years saw Spotify's operating expenses and funding for content "explode." "It is now sorting out what was built to last and what was built for the bubble," the activist observed. Activism chart of the week In the 12 months ending February 9, 2023, 29 Asia-based companies were publicly subjected to divestiture-related demands. That is compared to 15 in the 12 months ending February 9, 2022. Source: Insightia | Activism What’s New In Proxy Voting - ICCR Concerns At J&J The Interfaith Center on Corporate Responsibility (ICCR) wrote to Johnson & Johnson (NYSE:JNJ) CEO and Chairman Joaquin Duato expressing its concern over alleged demands for payment for unwanted vaccines. In the February 7 letter, ICCR noted that a recent New York Times article alleged that J&J demanded payment from vaccine alliance Gavi for more than 150 million unwanted vaccines. "Forcing Gavi to pay an exorbitant sum for vaccines that it has repeatedly told J&J it does not want verges on extortion," the letter contended. ICCR further argued that such behavior is harmful for J&J shareholders due to the "significant reputational damage" generated by the controversy. The letter also claimed J&J risks alienating itself from its founding principle to "put the needs and well-being of the people we serve first." "We are deeply concerned that the face of J&J has changed drastically in recent years, and that the ethical application of the Credo has diminished," the letter said. Voting chart of the week In the 12 months ending February 13, 2023, environmental and social proposals subject to a vote at North America-based companies received an average of 26.2% support. This is compared to just 11.5% at Europe-based companies. Source: Insightia | Voting What’s New In Activist Shorts - Adani Stocks Dip Several listed companies within Indian conglomerate Adani saw their stocks dip yesterday following news on the group's move to trim its revenue growth target and investment plans. Adani has been going through a turbulent time since Hindenburg Research three weeks ago accused it of widespread fraud. Adani now aims to grow its revenues by 15% to 20% for at least the next fiscal year, down from a previous target of 40%, people familiar with the matter told Bloomberg. They also said Adani would postpone new capital expenditure to protect the group's financial stability in the wake of a fraud scandal sparked by the short report from Hindenburg.   In late January, Hindenburg accused Adani of accounting fraud and stock manipulation in an attack that has so far wiped out more than $120 billion from the market value of several group companies, despite a pushback from Adani, which rejected the allegations and threatened to sue Hindenburg. Shorts chart of the week In the 12 months ending February 10, 2023, three China-based companies were subjected to a public activist short campaign. That is down from 13 in the 12 months ending February 10, 2022. Source: Insightia | Activist Shorts Quote Of The Week This week's quote comes from Walt Disney Company as Nelson Peltz announced the end of his board fight at the entertainment giant. Read our reporting here.  “We respect and value the input of all our shareholders and we appreciate the decision by Trian Fund announced by Nelson Peltz this morning.” – Walt Disney Company.....»»

Category: blogSource: valuewalkFeb 15th, 2023

Vertiv: Cash Don’t Lie; Likely Insolvent in 2023

Vertiv Holdings Co (NYSE:VRT): Cash Don’t Lie[1] VRT Likely Insolvent in 2023 Rating UNDERPERFORM Price (14 February-23): $15.22 Target price: $0.00 52-week price range: $7.76 – $27.97 Market capitalization: $5.46B Enterprise value: $8.49B Summary: Cash don’t lie. Vertiv’s low margins have been obfuscated by the build-up of inventory and contribution from E&I’s more profitable products. […] Vertiv Holdings Co (NYSE:VRT): Cash Don’t Lie[1] VRT Likely Insolvent in 2023 Rating UNDERPERFORM Price (14 February-23): $15.22 Target price: $0.00 52-week price range: $7.76 – $27.97 Market capitalization: $5.46B Enterprise value: $8.49B Summary: Cash don’t lie. Vertiv’s low margins have been obfuscated by the build-up of inventory and contribution from E&I’s more profitable products. Management has focused investor attention on the growing backlog (of questionable profitability) and repeated promises of margins in the future. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Current adjusted operating profit (AOP) margins are inflated, but cash isn’t. The -59% collapse in adjusted cash flow margins since 2020 shows a company in increasing distress. Despite the best industry conditions in years, VRT narrowly avoided insolvency in 2022 by borrowing heavily. When credit runs dry in 2H23, the company may face insolvency again, absent an equity offering in the interim. Glassdoor Review Current Employee, more than 3 years Worst corporate culture I have ever experienced Dec 20, 2022 - Engineer in Columbus, OH Pros Direct deposit shows up like clockwork, co-workers and direct managers are skilled, kind and supportive Cons Upper management, compensation, salary, terrible benefits, work/life balance, being told there is a hiring freeze while they spend money on more unneeded office space… The entire company appears to be beholden to the whims of Dave Cote. Advice to Management I have never worked for a company where upper management appears to have outright contempt for the employees. Typically you get at least some lip service to the concept that “our people are our greatest asset”. Not at Vertiv. Here we get “If you don’t like it, leave.” Im watching every skilled coworker leave one after the other due to nonsense RTO policies. The brain drain is ridiculous. Our systems are screwed up top to bottom so the new CEO has an all employee call to tell us not to blame the systems, blame ourselves. Rob Johnson seemed like his hands were tied by the board, the new CEO feels more like a henchman. Employees are demotivated, demoralized, and angry. I can’t fathom what the end game is aside from a buyout offer from a competitor. We could be a serious force in the industry and instead we will be a case study in terrible management. It’s just all so depressing. I had hoped to have a long career here. The Path to Zero Investor focus on the AOP metric is mis-guided and will eventually prove costly. Accounting measures can improve AOP while obscuring real economic performance. For example, in 2022, AOP margins are expected to stabilize at 8% - the same as 2020. Cash flow measures, however, have eroded. Our adjusted free cash flow (FCF) margins have declined to only 4% from 9.8% in 2020. The mid-point of the repeatedly lowered guidance for 2022 is for negative free cash flow of ($125M). We think it will be a stretch for the company to meet it. AOP margins will prove irrelevant when the company runs out of cash. By using adjusted FCF margins as an anchor, we estimate VRT’s true AOP margin to be 2.2%, not the 8% expected to be reported to investors in 2022. A margin of 2.2% warrants a 50% discount on the total valuation, in our view, implying a stock price of $3.22, 77% below current levels. We believe the presentation of AOP has been stabilized at the expense of working capital (WC), which has increased nearly 300% since 2020. Other companies in the industry have also experienced WC pressures due to supply chain challenges. The adjusted FCF margins of competitors have declined between -6% and -12% since 2020; VRT’s -59% collapse is an industry anomaly signaling a systemic problem. VRT burned $334M in cash flow from operations (CFO) in the first 9-months of 2022, due to large, unprofitable contracts. Working capital accounts used $448M of cash in the period. We think investors expecting higher margins going forward will be disappointed. VRT stocked-up on inventory at peak prices in 1Q and 2Q22. Current margins are inflated by older purchases. Going forward, the high-priced inventory will flow through the cost of goods. At the same time, materials prices are declining and some customers likely expect, or are contracted via pricing bands, to get lower prices. Margins were pressured in 2021 and 2022 as the company mishandled pricing in the inflationary environment; margins will be pressured going forward as the cost side was mishandled. Materials deflation should devalue both stock and work-in-progress inventory. The margin picture is further clouded by the E&I acquisition. Management failed to disclose that VRT had a reseller relationship with E&I prior to the acquisition. Rather than E&I underperforming original expectations, we hypothesize that the relationship may have been concealed to facilitate internal sales/profit transfer from E&I to VRT. Allocating the shortfall to E&I, would obscure continued margin erosion at the company’s much larger core business and support management’s margin improvement narrative. Cash flow performance has been terrible even inclusive of E&I, which had margins of ~2.5x VRT’s. Liquidity ceased to be a topic of discussion on conference calls, likely because the company is in crisis. VRT narrowly avoided insolvency in 2022 only by borrowing heavily from its ABL facility, despite the damage it does to the already slim margins. We estimate the ABL facility will run dry in 2H23, potentially pushing VRT into insolvency. A prudent step would be an equity offering before then to avoid the catastrophe. Management has used unrealistic financial promises, debt and an acquisition to avoid permanent impairment to the equity. However, the low-margin business is too overlevered to be bought and does not have the pricing power or cost discipline to thrive, even at the cyclical peak. In the end, we expect VRT’s equity to be worthless, like almost every other SPAC of its vintage. I. Adjusted AOP Margin is 2% Not the Reported 8% VRT focuses investor attention on AOP, a metric akin to EBITDA. Guidance on AOP has been repeatedly revised downward in the last two years – a total negative adjustment of -23% for 2021 and -12% for 2022. As poor as AOP performance has been, reliance on the metric leads investors to overestimate financial performance and overlook the more important problematic cash flow results. Cash flow performance has been a disaster. In 2021, annual FCF was 47% below original guidance. If 4Q22 guidance is met, FCF will come in 183% below original guidance for the year. Our credibility matters greatly to us. And we don't want to guide to numbers we may not be able to deliver even in the face of strong orders. David Cote, Q1 2020 In the table below, we provide a summary of guidance to actual results, cash flow statistics, and an adjusted AOP estimate for 2022. Reported AOP margins increased from 2020 to 2021 and are expected to stabilize at 8% in 2022. The critical figures here are in the cash flow. We adjusted the cash flow margin by adding back both the interest expense and the negative impact of accounts receivable to mitigate the impact of leverage and increased sales. The adjusted metric shows the cash generating power of the underlying business. The results are telling. Included 2022 expectations is an adjusted FCF margin of only 4%, down from 7.7% and 9.8% in 2021 and 2020, respectively. So, while AOP margins have stabilized at comparable levels with 2020, cash flow margins collapsed by 60%. The fall came despite the contribution of the acquired high-margin E&I business; VRT as a stand-alone entity would have been worse. In the right-most column, we adjust 2022 AOP to reflect expected free cash flow margins. We back into AOP by using 2020’s FCF margin with 2022 revenue expectations. If VRT’s expected 8% AOP margin was real, it should generate $207M in FCF versus current estimates of ($125M). We subtract the negative $332M FCF delta from the expected $460M of AOP to get an adjusted figure of $128M. Our analysis shows the real AOP margin is only 2.2%. The year-to-date cash burn has led to a liquidity crisis, although it has not been acknowledged by the company. In fact, discussion of cash levels ceased as liquidity evaporated. When asked about cash on the 4Q21 call, CFO Dave Fallon stated that liquidity would bottom in 2Q22 and improve thereafter. On the 1Q22 call, management said “liquidity was strong at $720M”. There was no mention of cash or liquidity on the 2Q22 call when the company drew-down $175M from the ABL facility for the first time in years, nor on the 3Q22 call when they drew-down another ~$105M. As of 3Q22, VRT had negative FCF of ($408M); the latest FCF guidance is for a midpoint of ($125M). Yet, on the 1Q22 call, Mr. Fallon said “we are still comfortable with the $150M positive guide. If you look at that from a quarterly perspective, we do anticipate another cash burn in Q2. It should not be as high as what we saw in Q1 ($150M) , but we do anticipate significantly positive free cash flow in Q3 and Q4.” Contrary to Mr. Fallon’s April 27, 2022 projections, 2Q22 FCF was much less than 1Q at ($232M) and 3Q was ($20M). Almost one-third through the quarter, Mr. Fallon did not know that VRT’s 2Q cash burn would vastly exceed Q1, and he thought 3Q would be significantly positive and it was negative. In our view it is deeply problematic that VRT’s CFO appears to have zero visibility into cash flow, even in current quarters. VRT ended 3Q22 with $258M in cash after drawing $280M from the ABL facility. Absent the ABL funding, VRT would have been insolvent. The cash bridge comes at a cost of 3 to 4% for a company with a reported AOP margin of 7% to 8%. Thus approximately 13% of the AOP margin on factored receivables is given up in interest cost. The ABL facility was increased by $115M to $570M in September 2022. There is $215M available if the company is to remain with the 10% limit. We forecast the capacity will be exhausted in 2H23. We expect management will take the opportunity afforded by the current strength in the stock to conduct an equity offering. Pricing and Inventory Poor real margins are illustrated by both the lack of pricing power and the inability to manage working capital. The table below shows the evolution of pricing expectations in 2022. Management put out the initial estimate for net pricing on the 4Q21 conference call on February 23, 2022 when David Cote stated “Generating $100M of favorable price/costs for the full-year ’22, because much of that price is in the backlog…” Net pricing expectations for the year have collapsed 40% to $60M from $100M. Either the company did not have price in excess of inflation built into the backlog as Mr. Cote said, or it cannot control the cost side of the equation. In any case, VRT has not been able to obtain price in excess of inflation. For the first 9-months of the year, net pricing was ($20M); $80M of net price increases are expected in 4Q22. Even if accomplished, $60M in annual net pricing is a miniscule 1.2% on $5B in sales. Management is aware working capital accounts are critical for “engineered to order” manufacturers like VRT. As part of its efforts to become public in 2019 the company linked 20% of its executive compensation plans (and 33.33% of its Transformation Bonus plans) (including R. Johnson and D. Fallon, current CFO) to “Controllable cash” defined as reduction in past due accounts receivable (AR) aged 30 days or greater plus reduction in GAAP inventory and other adjustments in order to “increase utilization of working capital”. The focus on working capital efficiency appears to have been abandoned after going public. As shown in the table below, 2019 represents peak efficiency in our data set. Working capital has deteriorated rapidly since 2019, declining from 35 turns annually to only 10. Part of the reason for the deterioration is the focus on AOP. We believe, the current year’s AOP margins have been “maintained” at the expense of WC accounts. They include FIFO accounting, cost allocation to inventory, and factoring receivables, which reduces gross margins, though the cost is allocated below the operating line. We expect inventory to remain a problem over the next year. On the 2Q22 call, commenting on going forward pricing, Rob Johnson said he didn’t anticipate pricing to deteriorate going into 2023, “if inflationary conditions go”. “We bought inventory at higher prices, they (customers) understand that. So, it’s something that wouldn’t keep me up at night…” It should have kept Mr. Johnson up, and apparently the management team has noticed. On the 3Q22 call, Dave Fallon, Dave Cote and the new CEO Giodarno Albertazzi all talked about how the company was improving its SIOP process – Sales Inventory Operations Planning. We think their concern comes too late. VRT’s response to supply chain issues was to make a lot of high-priced “spot buys”, particularly in 2021. The company built inventory significantly in 1H22 when raw materials and component prices were peaking, as noted by Mr. Johnson. We believe the company will experience the worst of all worlds. VRT did not raise prices enough to keep up with inflation and lost margin. It purchased bulk inventory at spot/peak prices with suppliers decommitting and unwilling to extend credit. Current gross margins reflect the expense of the older, cheaper inventory. Over the next year, that the high-priced inventory will flow through the cost of goods. Unlike Mr. Johnson, we don’t think customers will “understand” and pay a higher price because VRT has expensive inventory. The company is likely to lose margin as prices decline, particularly as some contracts have pricing bands, giving customers the right to lower prices as component prices decline. One might call VRT’s execution of its pricing/inventory a lose now lose later strategy. II. VRT is Worst in Class Operations Management and some analysts attribute the working capital/inventory problems to industry dynamics. While it is true that there have been considerable supply chain disruptions, none of VRT’s competitors has experienced the magnitude of pricing pressures and free cash flow collapses that plague the company. For most of the electrical/HVAC companies Gross/AOP margins have expanded in the last year due to rising industry sales with double digit price realizations across the board. As evident in the exhibit below, the supply chain disruptions have put some strain on the WC accounts. (Again we adjust for interest expense and AR to make comparisons meaningful). Adjusted FCF margins in the industry declined between -6% and -12% nowhere near the -59% collapse at VRT. VRT’s aggressive and very expensive inventory growth relative to its revenue increases points out the main culprit and the unwillingness of suppliers to fund the company’s inventory buildup. VRT’s inventory has grown 41% more than sales, which is remarkable given the acquired E&I is sales additive, but does not carry much inventory. This compares to an inventory/sales growth differential of 11% for competitors. VRT’s significant gap signals potential overbuild/overvaluation of VRT’s newer stock while the least expensive initial purchases boost gross margins in the near-term. Despite the industry tailwind, VRT continues to struggle with gross margins, signaling lower price realizations likely due to product mix. It is unclear if the company is able to keep its competitive position within the fastest growing segments of the data center orders like liquid cooling given diminished in-house development capabilities. III. VRT’s Undisclosed Relationship with E&I The November 2021 acquisition of E&I Engineering further complicates VRT’s margin story. We discovered that VRT and E&I had a relationship prior to the acquisition. VRT had a product called the Vertiv Liebert MBX Busway. The MBX was actually a re-branded E&I IMPB Powerbar. Although we have not technically verified that they are the same products, it appears to be the case. By September 2022, less than a year after the acquisition, VRT mothballed the MBX product, replacing it with the Vertiv IMPB Powerbar from E&I. The pre-existing relationship and white-labeled products are material facts management should have disclosed. M&A transactions often involve companies with customer/supplier relationships. Part of the transaction often settles the pre-existing relationship. Any settlement along with previous inter-company sales should be discussed in the fairness opinion as they impact valuation and the allocation of consideration. We have to ask why management concealed the relationship, and reiterate our call for the company to file an 8-K with all fairness opinions to help answer the growing number of questions around the transaction. Prior to the acquisition, VRT was in essence a reseller of E&I’s most profitable product line. When VRT’s sales force would sell an MBX busway system all revenue would be recorded as VRT’s. The cost paid to E&I would be reflected in the cost of goods sold and presumably lower gross margin. Post-acquisition, it is unclear how revenue and gross margins are allocated. However, it is quite possible that transfer pricing has been used to shift revenue and margin to VRT with shortfalls assigned to E&I. Booking E&I sales and profits at VRT would not impact the consolidated results, but it would have the optical effect of inflating gross and AOP margins at VRT in support of management’s recovery narrative. This would partially explain why management has been non-specific and evasive when asked to explain E&I’s poor performance relative to original expectations, and why it remains enthusiastic regarding the strategic value, despite what appears to be an unmitigated failure if evaluated by the guidance/results presented to investors. At the time of the merger in September/November 2021, management guided for $570M in sales and $150M in EBITDA for E&I. In February 2022 on the 4Q21 call, management lowered sales expectation 18%, but EBITDA was down approximately 40%. Management simply noted that E&I faced the same issues VRT was facing. It is unclear why management didn’t figure that out by the announcement date or closing, when VRT along with the entire industry were in the thick of the pricing/inflation problems. Current guidance for E&I has increased sales to ~$500M, but lowered AOP to $67M, down approximately 52% from original guidance, implying margins roughly half of what was expected. It was a massive downgrade of expectations with almost no explanation. What if E&I is actually performing inline or close to original guidance? In the table below, we show the evolution of guidance for E&I and VRT to our hypothetical scenario where E&I 2022 results are inline with original expectations. We estimate original E&I guidance of $150M in EBITDA is ~$140M in AOP. VRT did not offer full-company guidance in September/October 2021; we backfilled the results with expectations set in February 2022. If E&I is performing as expected, it is generating closer to ~30% of AOP with only 10% of the revenue, implying that margins at VRT as a stand-alone entity have eroded to 6.2% from 8% in 2020 and 8.8% since expectations in September. The continued erosion shows that VRT’s stand-alone margins remain far below the 7.8% and 9.4% of 2020 and 2021, respectively, and that management has been unable to take effective corrective measures after 2-years. We do not know for sure if transfer pricing is playing a role in investor presentations. However, there should be evidence when 4Q22 is released. If E&I is generating only 50% of the AOP that was originally expected, VRT should record an impairment to goodwill, which was $1B of the $1.8B net assets acquired. If E&I is performing within a reasonable range of expectations, no impairment charge will be taken. We assume there is a reason management did not disclose the previous relationship with E&I. At the moment, obscuring transfer pricing issues is the hypothesis that makes the most sense. Recall, at the time the acquisition was announced, management reduced AOP and FCF guidance for 2021 by -10% and -32%, respectively – only to miss the lowered numbers by a wide margin just 3-months later. If the company went into 2022 without E&I and only 6% AOP margins as our hypothesis suggests, the stock would likely have collapsed like 99% of all other SPACs. In our view, avoiding wholesale collapse is ample motivation for both the high price tag paid for E&I and the possible the use of internal transfer pricing to obscure continued decline in the much larger, core business. IV. 4Q22 Positive Guidance Will Not Help the Dismal 2023 VRT has put focus on delivering the 4Q22 numbers after numerous guidance mis-announcements in its short history. However, even if the AOP number is met, total working capital additions of +$104M required to meet FCF guidance could be a stretch for the company. Moreover, if AR turns into a cash contributor, that will likely accelerate repayments under the factoring ABL facility thus mitigating the benefit. VRT ended 3Q22 with $258M in cash, down $181M for the 9-month period. The company drew-down $280M from the ABL facility over the time. The table shows estimated 2022 cash flow in the context of management guidance. As the table above illustrates Q4 should bring in some much-needed cash. However, the $284M FCF, if achieved, will be used to pay $75M of tax receivable agreement to the company’s PE sponsor along with ~$5M on the term loan and ABL loan (other than FILO) payments. Combined, they will likely halve the cash contribution.   The only way forward is to keep growing sales even at low to negative margin in order to access cash from the ABL facility. The cost is high. Using our estimated true AOP margin of 2.2%, ABL factoring would consume nearly 50% of the incremental margin. There is around $215M available on the ABL facility and $258M in cash. By our estimate, the cash poor model could lead to VRT’s insolvency in 2H23. Management is doubtless aware of the short funding runway and will have to do an equity offering. If 4Q22 AOP meets/beats, we would expect an offering in 1Q23. Management’s long history of margin promises goes back to the going public days when company presentation projected AOP margins to improve from 10% in 2018 to 11.7% in 2021 generating $511M and $557M of AOP in 2020 and 2021. The actual results are $342M for 2020 and $470M in 2021 which includes a significant acquisition and litigation settlement adjustment. ($404M net of them.) Investors should take the promises of $740M of AOP in 2023 or 61% increase from 2022 with appropriate skepticism. After all, instead of a bridge with specific numbers to explain the large increase, the latest management presentation includes a slide stating that VRT is “Transforming to a high-performance culture to drive operational excellence.” It evokes a female parent state with a baked good.[2] Legal Disclaimer In no way should this report be taken as investment advice or constitute responsibility for investment gains or losses. The information in this report should not be relied upon for investment decisions. All investors must conduct their own due diligence and consult their own investment advisors in making trading decisions. This is not a solicitation to transact in any of the securities mentioned. The data herein has been obtained from public sources we believe to be reliable. However, the information is presented on an ‘as is’ basis and we make no warranty of any kind as to the accuracy, timeliness and/or completeness of any material contained in this opinion piece. [1] Shakira version coming soon. [2] Motherhood and apple pie......»»

Category: blogSource: valuewalkFeb 14th, 2023

O’Reilly Automotive, Inc. (NASDAQ:ORLY) Q4 2022 Earnings Call Transcript

O’Reilly Automotive, Inc. (NASDAQ:ORLY) Q4 2022 Earnings Call Transcript February 9, 2023 Operator: Welcome to the O’Reilly Automotive, Inc. Fourth Quarter and Full Year 2022 Earnings Call. My name is Paul and I will be your operator for today’s call. I will now turn the call over to Jeremy Fletcher. Mr. Fletcher, you may begin. […] O’Reilly Automotive, Inc. (NASDAQ:ORLY) Q4 2022 Earnings Call Transcript February 9, 2023 Operator: Welcome to the O’Reilly Automotive, Inc. Fourth Quarter and Full Year 2022 Earnings Call. My name is Paul and I will be your operator for today’s call. I will now turn the call over to Jeremy Fletcher. Mr. Fletcher, you may begin. Jeremy Fletcher: Thank you, Paul. Good morning, everyone and thank you for joining us. During today’s conference call, we will discuss our fourth quarter and full year 2022 results and our outlook for 2023. After our prepared comments, we will host a question-and-answer period. Before we begin this morning, I would like to remind everyone that our comments today contain forward-looking statements and we intend to be covered by and we claim the protection under, the Safe Harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995. You can identify these statements by forward-looking words such as estimate, may, could, will, believe, expect, would, consider, should, anticipate, project, plan, intend or similar words. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest annual report on Form 10-K for the year ended December 31, 2021 and other recent SEC filings. The company assumes no obligation to update any forward-looking statements made during this call. At this time, I would like to introduce Greg Johnson. Greg Johnson: Thanks, Jeremy. Good morning, everyone and welcome to the O’Reilly Auto Parts fourth quarter conference call. Before we begin our discussion on our results and our plans for 2023, I’d like to take a few moments to discuss the announcement we made in January regarding the promotion of Brad Beckham and Brent Kirby to Co-Presidents. Our company is extremely focused on identifying and developing leaders who in turn are relentless in building the very best team in our industry. Our long-term commitment to succession planning is a critical component of our human capital strategy. In line with that strategy, we are extremely pleased to have Brent and Brad assume the elevated positions of Co-Presidents. Brad and Brent are exceptional leaders and are both driven by their passion for perpetuating our O’Reilly culture and providing excellent service to our customers. Brad and Brent bring diverse and broad experience to their roles of Co-President. Brad’s career with O’Reilly began 26 years ago when he joined the company as a parts specialist in Wagoner, Oklahoma. He has progressed through every leadership role in our store operations group, from Store Manager through Executive Vice President of Store Operations and Sales, before assuming the role of EVP and Chief Operating Officer and now Co-President. Brad’s leadership has been instrumental in the growth and expansion of our company and his impact is evident throughout the leadership ranks of our operational teams, many of whom have been mentored and promoted directly by Brad. As Co-President, Brad is responsible for the company’s domestic and international store operations and sales, real estate and expansion, human resources, training, legal, risk management, loss prevention and finance. Like Brad, Brent brings decades of retail leadership experience to his role as Co-President. Brent began his 35-year retail career with Lowe’s Companies and progressed through their ranks, ultimately serving in the roles of Senior Vice President of Store Operations, Chief Omnichannel Officer, and Chief Supply Chain Officer. Brent joined Team O’Reilly in 2018 as our Senior Vice President of omnichannel and made an immediate impact in that role before assuming leadership of our supply chain and distribution efforts. His extensive experience and significant DIY and professional retail industry knowledge is critical to our efforts to enhance our industry-leading inventory position, leverage technology investments to deliver powerful tools for our team, and drive deep connections with our DIY and professional customers. As Co-President, Brent is responsible for the company’s distribution operations, logistics, merchandising, inventory management, pricing, advertising, omnichannel, customer satisfaction, program management, electronic catalog, and information technology. Again, I am very pleased to have Brad and Brent step into these new roles and I am excited about the leadership they will provide to Team O’Reilly as Co-Presidents. Brad and Brent are participating on the call with me this morning, along with Jeremy Fletcher, our Chief Financial Officer. Greg Henslee, our Executive Chairman; and David O’Reilly, our Executive Vice Chairman, are also present on the call. I am once again pleased to begin our call today by congratulating Team O’Reilly on another record-breaking year in 2022. We finished the year with incredible momentum, posting a comparable store sales increase of 9% in the fourth quarter, representing an increase of almost 35% on a 3-year stack basis. For the full year of 2022, our team generated a robust 6.4% comparable store sales growth, which came in above the revised guidance range of 4.5% to 5.5% we provided last quarter and above the midpoint of our original comp range of 5% to 7% we said at the beginning of 2022. Even more impressive, our 6.4% comparable store sales growth in 2022 followed record-setting sales growth in 2021 and 2020 when we delivered comps of 13.3% and 10.9% respectively, resulting in 3-year stacked comps exceeding 30%. These strong top line results drove another year of record earnings per share as diluted EPS increased 8% to $33.44, representing a 3-year compounded annual growth rate of 23%. Our ability to continue to grow our business and capture market share year-in and year-out is a testament to our team’s commitment to providing excellent customer service and we couldn’t be more pleased with how our team finished 2022. Entering 2023, we remain bullish on the opportunities we see ahead of us and are anticipating another strong year of sales and earnings growth. For earnings per share, we have established the guidance for 2023 at $35.75 to $36.25, representing an increase of 8% versus 2022 at the midpoint. Achievement of our 2023 guidance would result in us doubling our EPS over the last 4 years, representing a compounded annual growth rate over 19%. This impressive performance and challenging target is a testament to the quality of our team and their commitment to our customers. Brad, Brent and Jeremy will walk through the rest of our detailed outlook in their prepared comments. But for now, I will just say that we are excited about the aggressive plans we have to invest in our business and continue to take market share and drive industry-leading results. Before I turn the call over to Brad, I want to share a little bit about the incredible culture building experience our team just had in January at our Annual Leadership Conference in Dallas. Each year, we bring all of our store managers, field leadership as well as our sales and DC management team members together in one place at one time to build leadership skills, enhance product knowledge, share best practices across our company, and celebrate our award-winning performance. The theme of this year’s conference was: One Team, Reunited. And it was definitely an appropriate rallying cry for our first in-person leadership conference in 3 years. The passion and energy displayed by our company leaders was infectious and it gives us even more confidence in the Team O’Reilly’s ability to drive future success through their unwavering commitment to our customers and fellow team members. To wrap up my prepared comments, I want to thank each of our team members for their dedication to our company’s long-term success and their outstanding performance in 2022. I am extremely proud of all of you and I am confident 2023 will be another record-setting year for Team O’Reilly. I will now turn the call over to Brad. Brad Beckham: Thanks, Greg and good morning everyone. I would also like to begin my comments this morning by congratulating Team O’Reilly on another great year in 2022. Our team’s focus on providing consistent, excellent customer service allowed us to generate the outstanding results we reported yesterday and we were excited about the opportunities we see to continue to grow our business. Now I’d like to provide some additional color on our fourth quarter comparable store sales results and outline our guidance for 2023. As we discussed on our third quarter conference call, we started the fourth quarter with strong sales volumes in line with trends we saw as we exited the third quarter. Those robust sales volumes continued through the end of the year, delivering results solidly above our expectations on both the professional and DIY sides of our business each month of the quarter. From a cadence perspective, the monthly comp was steady throughout the quarter with December being the strongest month of the quarter on a 2 and 3-year stack basis. As we finished the year, we saw broad-based strength across all of our markets in weather-related categories, such as batteries, cooling and antifreeze as well as our other core non-weather-related categories. We saw strength in both our DIY and professional businesses, with professional again leading the way with double-digit comparable store sales growth on robust increases in both ticket counts and average ticket size. As we finished 2022, we were very pleased with our professional performance and we believe the momentum we have created is the direct result of our team executing our proven business model at a high level and providing industry-leading customer service. We were also pleased to see the improved performance in our DIY business, which accelerated on a 1, 2 and 3-year comparable store sales growth basis, driven by our strong average ticket growth. As anticipated, DIY ticket counts were a partial offset to our comp growth due to difficult comparisons from strong traffic growth in the previous 2 years, but improved sequentially in quarter, continuing the trend we saw in the third quarter and exceeding our expectations. As we saw throughout 2022, growth in average ticket values drove our total comparable store sales growth in the fourth quarter. Average ticket size grew in the high single-digits on both sides of our business, supported primarily by the mid single-digit growth in same SKU inflation and augmented by a benefit from increasing clean improved quality and design of new parts. On a year-over-year basis, we saw a moderation in the same SKU benefit after peaking in the second and third quarters as we lap the acceleration of higher inflation in 2021 and saw modest increases in selling prices as we finished out 2022. The moderation in selling price increases correlate with what we are seeing in product acquisition costs as industry pricing has remained rational on both sides of the business and we have been successful in passing through cost increases. Now, I want to transition to a discussion of our 2023 sales guidance and our outlook for this year. As we disclosed in our earnings release yesterday, we are establishing our annual comparable store sales guidance for 2023 at a range of 4% to 6%. And we want to provide some color on the factors that are driving our expectations as it relates to both our outlook for our industry as well as the specific opportunities we see for our company. I will begin with our view of the prospects for our industry, which we believe are still very favorable. The health of the automotive aftermarket continues to be supported by strength in the core fundamental drivers of demand and the last few years have further reinforced the compelling value proposition that motivates consumers to invest in their vehicles. Since the onset of the pandemic, the scarcity of vehicles has forced many consumers to keep their vehicles longer. These investments consumers have made to keep their vehicles well maintained have paid off and we expect to see a continued willingness by consumers to invest in their high-quality vehicles at higher and higher mileages. We also have a positive outlook on the strength of the consumer in our industry and their ongoing willingness to prioritize their transportation needs. We continue to view the health of our customers as strong, supported by extremely low unemployment and robust growth in wages over the past 2 years. We think these factors provide a solid backdrop for growth in miles driven in our industry and solid demand over the next year. While miles driven still remain below pre-pandemic levels, we have seen growth in this key fundamental for our industry over the past 18 months. We believe we will see a continuation of the long-term industry trend of steady growth in miles driven resulting from population growth and an increase in the size of the U.S. car park. As we think about the broader macro factors that could impact the U.S. economy in the coming year, we remain cautious in our outlook for €“ outlook concerning ongoing headwinds from inflation and the potential for deterioration in economic conditions. Negative trends in the broader economy can €“ it can influence demand in our industry in the short-term, but we have consistently seen over time that consumers adjust quickly in challenging environments. In fact, in 2022, it was a good illustration of how this can play out. The pressure we saw from elevated gas prices, broad-based inflation and global economic shocks weighed on our results versus our expectations in the first half of the year. However, our customers adjusted as conditions stabilized and our business rebounded to meet our full year sales growth expectations. Our experience through multiple economic cycles in our company’s history is that consumers will prioritize the maintenance and the repair of their existing vehicles as a means to avoid a car payment and save money in the face of economic pressures. Ultimately, due to the non-discretionary and value-driven nature of our business, we have confidence our industry will perform well in 2023, even if we end up facing challenges in the broader economy. As confident as we are in the strength of our industry, the most important driver for our outlook for 2023 is the opportunity we see to outperform our competition and gain market share by out-executing €“ or excuse me, by executing our business model and providing the best customer service in the industry. To this end, I would like to spend a few minutes discussing our outlook on both sides of our business. We expect both our DIY and professional businesses to be positive contributors to our comparable store sales growth in 2023, with professional again expected to outperform. We are excited about the strength we built in 2022 in our professional business and we believe this will continue to accelerate our growth on this side of the business. We remain highly committed to being the industry leader in the quality of service and inventory availability we provide to the professional customer and our focus moving into 2023 is to aggressively lever these strengths to further consolidate this side of the market. We also see significant opportunity to grow our DIY business, but are more cautious in how we view our ability to increase ticket counts on a year-over-year basis. Our DIY ticket counts in 2022 were pressured in comparison to 2021 as we were still calendaring the impact of government stimulus and faced headwinds from gas price shocks and inflation. We feel like we have now completely lapped the artificial spikes in demand and are pleased with the steady DIY traffic we saw in the back half of the year. While there has been a lot of volatility in our comparisons over the past 3 years, our overall growth in DIY ticket counts has been solidly positive in total during that timeframe. We have clearly taken market share since the onset of the pandemic through consistent execution and excellent service even as we face the long-term industry trend of pressure to DIY ticket counts. For 2023, we will continue to face this industry dynamic where increased complexity and quality of parts extend service and repair intervals. As a result, we anticipate DIY traffic down will be down slightly in 2023 with an expectation that we will continue to gain market share to partially offset the normal industry drag on ticket counts. We expect the pressure to DIY traffic to be more than offset by increased average ticket. We anticipate average ticket on both sides of our business to benefit from low single-digit inflation arising from the carryover benefit on a year-over-year basis as we compare against price levels that ramp throughout 2022. Consistent with our historical practice, we are including only modest increases in price levels from this point forward in 2023. We do not expect to see growth in average ticket values above and beyond same-SKU inflation, resulting from increased product complexity and our ability to trade customers up to a higher quality product on the good-better-best spectrum. As we move through 2023, we anticipate comps in the first half of the year to be stronger than the back half as a result of the year-over-year same-SKU inflation benefit as well as easier comparisons in professional ticket counts, which ramped throughout 2022, and to a lesser degree, DIY ticket counts which faced more pronounced pressure in the first half of last year. We are off to a strong start thus far in 2023 and we are pleased to see continued momentum on both sides of our business. Now I want to spend some time covering our SG&A and operating profit performance in 2022 and our outlook for 2023 before turning the call over to Brent who will provide color on our gross margin. Fourth quarter SG&A expense as a percentage of sales was 32.2%, in line with the fourth quarter of 2021. As we noted in our press release yesterday, this number includes a $28 million charge associated with our transition to an enhanced paid time-off program for our team members. Average per store SG&A for 2022 was just €“ was up just over 4.8%, driven by incremental variable operating expenses on better-than-expected sales volumes and cost inflation in fuel, wage rates and team member benefits. Over the last several years, our teams have demonstrated an ability to drive an enhanced level of profitability and productivity on our SG&A spend as we are pleased with the finish to 2022. As we look forward to 2023, we are planning to grow average SG&A per store by approximately 4.5%. This level of spend is a step change higher than we would normally forecast in our initial SG&A guidance. While we anticipate facing some pressures to costs from ongoing inflation, the majority of our incremental spend anticipated in 2023 reflects deliberate decisions we are making to invest in our business. We are targeting initiatives we believe will enhance the value proposition we offer to both our team members and customers by investing in our professional parts people and our customer service levels, in turn, driving both long-term sales and operating profit dollar growth. We plan to deploy these resources to enhance our long-term operational strength with specific emphasis on strengthening our team member experience and benefits, upgrading our store vehicle fleet, refreshing and improving our store image and appearance, and deploying incremental technology projects as well as investments in infrastructure. We believe we have an opportunity to capitalize on our strong competitive position in our industry and further separate ourselves as we consolidate the market. We are highly confident our investment in these initiatives will provide strong long-term returns, but anticipate we will face initial pressure to our SG&A as a percentage of sales in 2023. Based on these expectations, coupled with the normal drag from new store expansion and our anticipated gross margin rate, which Brent will discuss in a minute, we are setting our operating profit guidance range at 19.8% to 20.3% of sales. At the midpoint of our guidance, we are expecting operating profit to increase over 4%. Ultimately, our leadership team is focused on enhancing the excellent customer service and overall value that creates strong relationships with our customers on both sides of the business that, in turn, drive long-term growth in operating profits. To finish up my prepared comments, I want to add to what Greg has already said about the incredible experience we had as a leadership team in Dallas and the enthusiasm our team showed for our business and the O’Reilly culture. This was my 26th Leadership Conference, my first being in 1998 when I first became a Store Manager and there is no doubt in my mind, it was our best one yet. Since there was €“ since this was our first in-person conference since 2020, the last two being virtual, there was certainly a lot for us to celebrate, but I was blown away by the commitment I saw from our team to not rest on our laurels or be satisfied with our past success. Instead, our team was passionate about the opportunities we have in front of us. As we look forward to 2023 and set an ambitious plan to outperform the competition and gain market share, we will be aggressive in supporting our teams and equipping them with the tools and resources to drive our company to an even higher level of performance. I want to once again thank Team O’Reilly for their continued dedication to our company. Now I will turn the call over to Brent. See also 25 Largest Apparel Companies in the world and 30 Best Stocks for Retirement. Brent Kirby: Thanks, Brad, and good morning, everyone. I would like to begin my remarks today by congratulating Team O’Reilly on yet another strong year. Once again, your commitment to consistent, excellent customer service drove outstanding results in 2022. As Greg and Brad have already shared, it was a privilege to be able to get together with our industry-leading team professional parts people at our leadership conference in January, and we are all incredibly excited about the strength of our business moving forward in 2023. Today, I’m going to discuss our fourth quarter and full year gross margin and supply chain results and our outlook for 2023 and provide color on our capital investments. Starting with gross margin. Our fourth quarter gross margin of 50.9% was 183 basis point decrease from the fourth quarter of 2021, but in line with our guidance expectations. For the full year, gross margin came in at 51.2%, which was 145 basis point decrease from last year. Our year-over-year margin results were primarily impacted by the rollout of our professional pricing initiative, combined with anticipated comparison headwinds to the LIFO benefits that we realized in 2021. We are pleased to generate a full year gross margin rate in the upper end of our guidance range. However, we’re even more excited to drive strong gross profit dollar growth. Our price investments and superior execution of our business model paid off in a solid 5% increase in gross profit dollars in 2022, which represents a 3-year compounded annual growth rate of 11%. I want to thank our supply chain store operations and sales teams for their hard work in driving these results in a dynamic and very challenging market environment. For 2023, we expect gross margin to be in the range of 50.8% to 51.3%, which is consistent with how we viewed our margin guide throughout 2022. Even though we aren’t anticipating a significant year-over-year change, there are a few puts and takes that I want to call out that we expect to impact our gross margin in 2023. To begin, we will face some remaining incremental pressure in the first quarter from our professional pricing initiative as we lap a higher gross margin run rate at the beginning of 2022 before we fully rolled out the initiative in the middle of the first quarter. We also will face headwinds from a number of other factors, including comparisons to temporary benefits in the first half of 2022 from the timing of selling price increases, a higher planned mix of professional business in 2023 as that side of the business continues to grow faster, the calendaring of the remaining LIFO benefit that we realized in 2022, and pressure on distribution costs as we continue to stabilize our network after the disruptive periods we have seen during the pandemic, and face headwinds in the fixed cost we capitalized in inventory driven by a significantly smaller planned inventory build in 2023. Offsetting these headwinds, our gross margin outlook also includes an anticipated benefit from modest acquisition cost improvements. On balance, we still expect to see inflationary pressure in acquisition cost in 2023, driven by rising labor and raw material costs in the supply chain. These are specific areas that we have seen some relief in from cost pressure that were passed along to us over the course of the last 2 years, specifically in freight and transportation costs. Beyond what we have built into our outlook for next year, we remain very cautious regarding the prospect for incremental reductions in acquisition costs as most of our supply chain partners continue to face broad inflationary pressures. On an individual basis, none of the discrete factors I just outlined represent a significant impact to our gross margin. And candidly, we normally don’t dig in at this level of detail in discussing the puts and takes that impact our margin. However, we think it’s important to provide additional color since there are so many moving pieces. Over the last several years, we have seen variability in our quarterly margin results that are not typical of the normal cadence for our business, driven by significant cost inflation, the reversal of our LIFO debit balance and the implementation of our professional pricing initiative. In 2023, we anticipate quarter-to-quarter gross margins to be more consistent, with only first quarter being slightly below our full year guidance, driven by product mix. However, since some of our comparisons are more challenging, in the first half of the year, we do expect to see some pressure on gross margin rate on a year-over-year basis in the first two quarters. Inventory per store at the end of 2022 was $730,000, which was up 15% from the end of last year, which is significantly above the target that we set for inventory growth at the beginning of 2022. Over the course of much of the last 3 years, it has been our intent to aggressively add incremental inventory dollars, and we have been constrained by supply chain challenges and the necessity to keep up with the strong sales volumes and replenishment needs of our stores. As we move through the back half of 2022, our supply chain distribution and store operations teams made tremendous progress in deploying additional inventory. We also proactively took advantage of opportunities to incrementally add inventory to our network as we saw upside in capitalizing on strong sales demand as supply constraints begin to ease. For 2023, we are planning per store inventory to increase approximately 2%, which is below our historical run rates. This is primarily because of the inventory additions that we accelerated at the end of 2022. Our ongoing inventory management is geared to deploy the right inventory at the optimal position within our tiered distribution network. While our expected incremental additions in 2023 are modest, our plans include continued adjustments to push out and pull back inventory to ensure that we’re offering the best possible local inventory assortments. A key part of our inventory deployment strategy is our ongoing evaluation and modification of all aspects of our hub store network, including the number of hub stores, sizing of inventory assortments and market positioning. A substantial amount of increased inventory that we deployed in 2022 and the dollars we plan to roll out in 2023 are targeted in our hub stores to further enhance our industry-leading inventory position. Our AP to inventory ratio at the end of the fourth quarter was 135%, which sets an all-time high for our company, and was heavily influenced by extremely strong sales volumes and inventory turns along with the impact from increased inflation and product acquisition costs. While we deployed significant incremental inventory into our distribution centers and stores in 2022, we actually saw a decrease in net inventory investment of $513 million. We anticipate our AP to inventory ratio to moderate slightly as we move through 2023 and currently expect to finish the year with a ratio of approximately 133%. Our capital expenditures in 2022 were $563 million, which fell short of our original plan by approximately $140 million. The lower CapEx was driven by a few different factors, including a heavier weighing of leased versus owned stores, the delay of certain store DC and headquarter projects and planned maintenance, and the timing of expenditures related to distribution expansion projects. Included in our expectations for 2023, our plan to deploy capital for the initiatives that were delayed in 2022 as well as support new store and DC development to support our long-term growth strategies in the U.S. and Mexico. For 2023, we are setting our capital expenditure guidance at $750 million to $800 million. We have also established a target of 180 to 190 net new store openings with a planned heavier mix of owned versus leased locations. Our CapEx outlook also includes significant investments in our distribution network as we will complete and open our newest distribute center in Guadalajara, Mexico and expect initial expenditures for future projects. We have identified several exciting projects and initiatives in 2023 to enhance our service levels and provide customers an improved efficiency and product availability. Our CapEx guidance includes planned investments in significant DC and store fleet upgrades, store projects to enhance the image, appearance and convenience of our stores, and strategic investments in information technology projects. Before I turn the call over to Jeremy, I want to again thank Team O’Reilly for their unwavering commitment to our customers and dedication to going the extra mile to deliver outstanding business results in 2022. Now I’d like to turn the call over to Jeremy. Jeremy Fletcher: Thanks, Brent. I would also like to congratulate Team O’Reilly on another outstanding year. Now we will fill in some additional details on our fourth quarter results and guidance for 2023. For the fourth quarter, sales increased $353 million, comprised of a $288 million increase in comp store sales, a $65 million increase in non-comp store sales, a $2 million increase in non-comp non-store sales, and a $2 million decrease from closed stores. For 2023, we expect our total revenues to be between $15.2 billion and $15.5 billion. Brent covered our gross margin performance and guidance earlier, but I want to provide a quick reminder on how we view the application of LIFO in our gross margin results. We view our reported gross margin as the best measurement of our performance. Since the GAAP cost of goods sold under the LIFO method most closely matches our current acquisition costs, as a result, we don’t view the normal application of LIFO as a discrete charge in our evaluation of gross margin. In the first quarter of 2022, we did receive a limited benefit of just under $10 million, resulting from the reversal of our historic LIFO debit balance and the final sell-through of inventory purchased prior to acquisition cost increases. This comparison headwind is a component of our gross margin expectations that Brent outlined earlier. Our fourth quarter effective tax rate was 18.2% of pretax income, comprised of a base rate of 19.9%, reduced by a 1.7% benefit for share-based compensation. This compares to the fourth quarter of 2021 rate of 19.4% of pretax income which was comprised of a base tax rate of 20.4% reduced by a 1% benefit for share-based compensation. The fourth quarter of 2022 base rate as compared to 2021 was lower as a result of an increase in certain state tax credits. For the full year, our effective tax rate was 22.4% of pretax income, comprised of a base rate of 23.3%, reduced by a 0.9% benefit for share-based compensation. For the full year of 2023, we expect an effective tax rate of 22.9%, comprised of a base rate of 23.4%, reduced by a benefit of 0.5% for share-based compensation. We expect the fourth quarter rate to be lower than the other three quarters due to the tolling of certain tax periods. Also, variations in the tax benefit from share-based compensation can create fluctuations in our quarterly tax rate. Now we will move on to free cash flow and the components that drove our results and our expectations for 2023. Free cash flow for 2022 was $2.4 billion versus $2.5 billion in 2021. The decrease of $178 million was driven by higher capital expenditures in 2022 versus 2021, and differences in accrued compensation. For 2023, we expect free cash flow to be in the range of $1.8 billion to $2.1 billion. As Brent discussed earlier, the expected year-over-year decrease is due to a planned increase in net inventory in 2023 versus the benefit we realized in 2022 as well as the planned increase in CapEx. These headwinds are expected to be partially offset by a benefit of $300 million in 2023, resulting from favorable timing of tax payments and disbursements for renewable energy tax credits. Moving on to debt, we finished the fourth quarter with an adjusted debt to EBITDA ratio of 1.84x as compared to our end of 2021 ratio of 1.69x, with the increase driven by our successful issuance of $850 million of 10-year senior notes in June, offset by the September retirement of $300 million of maturing notes. We continue to be below our leverage target of 2.5x, and plan to prudently approach that number over time. We continue to execute our share repurchase program. And for 2022, based on the strength of our business, we were able to purchase 5 million shares at an average share price of $661.66 for total investment of $3.3 billion. Since the inception of our share repurchase program in 2011, we have repurchased 91 million shares at an average share price of $224.8 for a total investment of $20.4 billion. We remain very confident that the average repurchase price is supported by the expected future discounted cash flows of our and we continue to view our buyback program as an effective means of returning excess capital to our shareholders. As a reminder, our EPS guidance includes the impact of shares repurchased through this call, but does not include additional share repurchases. Before I open up our call to your questions, I would like to thank our team for your hard work and dedication to our company and our customers. This concludes our prepared comments. At this time, I would like to ask Paul, the operator, to return to the line, and we will be happy to answer your questions. Q&A Session Follow O Reilly Automotive Inc (NASDAQ:ORLY) Follow O Reilly Automotive Inc (NASDAQ:ORLY) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. And the first question today is coming from Michael Lasser from UBS. Michael, your line is live. Michael Lasser: Good morning. Thanks a lot for taking my question. So prior to the pandemic , O’Reilly would consistently guide its comp in the 3% to 5% range. This year, that outlook calls for 4% to 6% increase. Are you backing into that based on the investments that you’re making in SG&A such that you need this sales level in order to drive leverage to cover the buildup of cost? And if so, does that create some downside comp risk kind of similar to how last year played out? Greg Johnson: Yes, Michael, this is Greg. I mean, the answer to your question is absolutely not. Brad and €“ talked a lot about our bullish thesis on both the industry and what we expected from our company in 2023. And the fact that miles driven has improved, not to the point of pre-pandemic levels, fuel prices have stabilized, new car sales and used car sale prices have been elevated, and overall sales have been softer over the past few years, I think there’ll be some recovery there in 2023, but we still see a tremendous opportunity just because new car sales may improve, that doesn’t mean that the millions of cars that are on the road today will just simply vanish. Cars are built better, they are lasting longer. And for all those reasons that Brad laid out. We’re very, very optimistic about the future. But as always, we’re cautious. First and fourth quarters are more volatile. And I don’t know what’s going to happen with the economy. The onset of spring impacts our volumes. But overall, on an annual basis, we remain very bullish for our future. Jeremy Fletcher: Michael, maybe the only thing I would add there is we continue to expect to an average ticket benefit that’s greater than normal years as we roll over some of the pricing changes that happened within our business and our industry last year. But even as we step behind or beyond some of those macro factors, we feel very positive about how we think about the opportunities we have from a share perspective as we move through next year. And those are things that we have confidence in because of the trends that we’ve seen for the last couple of quarters as we’ve seen the €“ I think our customer base be really resilient and respond, and we’ve seen traction and momentum on both sides of our business. Michael Lasser: That makes sense. My follow-up question, and you’ve gotten this a lot recently, is that costs have come down quite a bit, whether it’s supply chain costs in the form of lower containers, petroleum prices. Can you quantify the savings that O’Reilly is experiencing from these lower input costs? And are you passing along the savings in the form of lower prices or is that helping the profitability in offsetting some of the other pressures that you had identified? Jeremy Fletcher: Yes, Michael, maybe let me answer your question backwards and the second part first. Yes, we’re absolutely €“ whenever we see any potential benefits, we’re €“ we’ve been able to take that to the bottom line. We have not seen to date any market movements to roll back some of the increases that we’ve seen and if there is been any relief on pressures. And Brent talked about that as a positive within his prepared comments. We do expect some benefits there this year. I think to the first part of your question, we haven’t quantified €“ we won’t. And I would maybe caution a little bit to treat that as a big factor moving in one direction. There continues cost pressure on balance. We think that we will see more cost increases this year than decreases as our suppliers continue to stay under pressure. And while we’ve seen some reductions, and those are good, and we’re positive about that. We’re very cautious in how we think about that moving forward and the benefits that we would bake in. And I think you see that reflected and really how €“ I think we’ve talked about this for the last couple of quarters, but then also as we’ve laid out our outlook. Michael Lasser: Thank you so much and good luck to Brad and Brent in their new roles, and the entire team. Brad Beckham: Thank you, Michael. Brent Kirby: Thank you, Michael. Operator: Thank you. The next question is coming from Simeon Gutman from Morgan Stanley. Your line is live. Simeon Gutman: Hey, guys. I’m going to ask the one and a follow-up now. The first question on SG&A growth. Is this a 2023 event or €“ are the spending on the stores and people? Or do you foresee some of this spilling into next year? And then to clarify, if product the second is to follow up, if product acquisition costs start coming down, because you didn’t record a charge, does that create €“ does that €“ do we start creating a new debit balance? Just I think that, that won’t help the gross margin then since you didn’t create a charge you just build up another reserve. I just want to make sure that’s right. Greg Johnson: Yes. Simeon, I will take €“ I will start the SG&A response here, and then maybe Jeremy or Brent will want to chime in. We haven’t changed our focus. Our focus continues to be growing operating margin dollars. Our focus continues to be to grow top line faster than we grow SG&A. None of that’s changed. We still talk about our core culture value of expense control day-in and day-out. This change this year was a deliberate and a prudent effort to try to position us for future growth. There is a lot that’s changed over the past 2 years in the retail market and industries as a whole across all industries, actually. And we faced wage pressures, there is no secret there. We faced turnover. And we really looked ourselves in the mirror this year and had conversations with our team members about what is important. We want to stop the turnover, get back to normalized rates, make sure we have the ability to recruit, promote and retain the best talent, which is what we have been successful with for also €“ so part of that initiative, and I am not going to go into all of it, perhaps Brent or Brad would want to go into more detail. We called out the initiative on the PTO. That’s one example of us listening to our team members as to what’s important to them and an effort for us to position ourselves for future growth. I don’t know, Jeremy, if you had anything to add? Jeremy Fletcher: Yes. Maybe the only thing I would say is we establish our SG&A guidance 1 year at a time, and I don’t want to guide from a pure dollar perspective, what we look like beyond that. I think what Greg points to, though, is that we remain highly committed to making sure that we are driving the right results out of every part of what we invest in our business from an expense control standpoint. And so as we move beyond this year, we intend that these investments pay off, that we lever SG&A as a result of them. And I think what you would expect to see from that perspective hasn’t changed from a long-term standpoint. Does that mean we won’t find other things as we continue to move forward and invest in, we will continue to evaluate that. It is our intent to do what we can do to build the long-term strength of our business. And I think what you see in our guidance and what we talked about matches up with that. Maybe just briefly to address your second question around the LIFO perspective, to the extent we see cost decreases in the coming year, we again, don’t expect that on balance substantially. They are going to offset cost increases. It would require a magnitude of change there that’s far in excess of what we would expect for our LIFO accounting to push back into a debit balance. So, we will be on a credit LIFO for the foreseeable future and the impact of that is as we see cost increases that will get reflected pretty rapidly within our reported results. Simeon Gutman: Thank you. Jeremy Fletcher: Thanks. Operator: Thank you. The next question is coming from Greg Melich from Evercore ISI. Greg, your line is live. Greg Melich: Great. Thanks. I guess my first question was on wages. What was the inflation in average hourly wage that you saw last year? And what are you expecting this year in the guidance? Jeremy Fletcher: Yes. It was significant in 2022. It was in the mid to high-single digit range for inflation. It depends on market and type of position for us. We expect that to moderate off of those levels. We will have some carryover impact there from a comparative situation evolves. But we are still building in an expectation of somewhere in mid-single digit range from a wage perspective because of those factors. What I would tell you is that we see that is the ongoing regular management of our business. And we expect that, as we saw in 2022, that we will have the ability to pass along the cost increases to the extent that we have planned. And if that number ends up being different than what we foresee at this point in time, we will have the ability to pass it along as well. Greg Melich: Got it. And then my second question is on mix shift. You mentioned that as being a slight headwind to gross margin, I would love to have a little more detail on that and color within DIY and pro. Is there any trade-down occurring? What sort of behaviors are you seeing from your customers on both sides of the house? Brent Kirby: Yes. Greg, this is Brent. I can start on that and then others can chime in. We really €“ net overall, we haven’t seen a lot of trade-down. In some categories, we have actually seen trade up as cars become more sophisticated and OE requirements on batteries as an example, with AGM, and some of the higher price points that are required on a lot of replacement batteries today. So, we have seen a lot of that actually move the consumer from the best to the better in a lot of cases €“ or better to best, rather. We have seen a little bit a category where we still had some €“ a lot of inflation in the oil category, and we have had majors that have still struggled with their supply chain. In some cases, we have seen customers trade-down to some of our proprietary brands on oil. And quite frankly, they are happy with what they are getting and we are seeing some stickiness there with those customers with some of our proprietary brands, which long-term is a good thing for us. But net-net, we haven’t seen any violent move, one way or the other, in terms of trade-up or trade-down. Greg Johnson: And Greg, maybe specifically to your question, in Brett’s prepared comments, when you talked about some modest headwinds there, that’s really on the professional versus DIY mix, because we anticipate professional and our top line grows faster in that that creates just the mathematical pressure on Greg Melich: That’s a category mix effect, not within the two sides. Greg Johnson: That is side of business mix effect, not within each side from a category. Brent Kirby: The expectation is that the DIFM is going to outperform DIY. Greg Melich: Got it. Perfect. Well, good luck and thanks. Brent Kirby: Thanks Greg. Operator: Thank you. The next question is coming from Seth Basham from Wedbush. Seth, your line is live. Seth Basham: Thanks a lot and good morning. And my question is around the DIY side of the business. You mentioned that you see some opportunities for ticket growth, but you are more cautious. Now, even with the easier comparisons there in the first half of the year, would you expect ticket growth €“ ticket account growth, I should say, in the first half of 2023? Greg Johnson: Yes. Just to clarify, Seth, in Brad’s comments, we said we expect DIY tickets to be slightly down. Now, we see some benefit as we continue to perform well against the marketplace, we are gaining share on the DIY side of our business. And we will have some easier comparisons in the first part of the year because of the pressures we saw last year that you mentioned. That’s really all partial offsets against the longer term industry trend that we and others have talked about that pressures ticket count comps because of the increasing costs and complexity of vehicle parts that supports the average ticket price, but possibly lead to service intervals and repair cycles that extend out. So, we anticipate that, that is a bigger impact for us as we move through the year. But €“ and that is kind of consistent with how we would normally think about DIY tickets. Seth Basham: Got it. Okay. So, a little bit less pressure in the first half of the year and then more normal thereafter? Greg Johnson: Correct. Seth Basham: Thank you very much. Greg Johnson: Thanks Seth. Operator: Thank you. The next question is coming from Brian Nagel from Oppenheimer. Brian, your line is live. Brian Nagel: Hi. Good morning. Thanks for taking my questions. Congratulations on the promotions. Greg Johnson: Thanks Brian. Brent Kirby: Thank you, Brian. Brian Nagel: So, the first question, I guess it’s pretty simple, but the business did accelerate just from the comp perspective, even stacked up nicely here in Q4. And then the commentary you made suggests that strength has continued here to Q1. You mentioned weather is a driver. Is there €“ I guess, can we maybe quantify the benefits of weather within that acceleration? And are there other factors that could help to explain why the business has strengthened further off of already strong levels? Jeremy Fletcher: Yes. Brian, thanks for the question. The weather is a part of the acceleration, I would tell you, it’s not all of the acceleration. So, we continue to see traction. And maybe I will start here and the other guys can jump in. We continue to see strong traction within our professional business and the trends there we have seen, we are very encouraged by. From a DIY perspective as we move further out in the middle part of the year when we saw pressure that, that customer has proven to be resilient and stabilized quite a bit. And we have seen some incremental improvements there that are positive. Obviously, as we think about those things, we look at them on a stack basis because of the comparison questions. But those types of things were positive. As we got to the last couple of weeks of the year, we had a cold snap that stretched across a lot of the country and we can see that pretty clearly. But even in that period of time, what we saw was broad-based across a lot of our regions and markets and customers. And we have been pleased with how we continue to see strength in the first quarter. Greg Johnson: Brian, I think one of the things we called out that I think you are referencing is the strength in winter categories. And we did see €“ actually it was the expected strength where we saw cold weather, snowy weather. Obviously, up in North, snow is probably better for us than it is in the South, but the recovery component after the snow gets cleared in the South helps us out as well. Brian Nagel: Got it. And then helpful. Then my second question, look, I know it’s early. We have been talking about it as an investment community inflation and within your business for a while. But maybe as you are starting to see those inflationary pressures begin to abate and recognizing you are not lowering prices, but prices may not be going up as much as they once were, are you seeing consumers react favorably to that? In other words, I am asking, are you starting to see the early indications of what may be sort of say, an elasticity of demand here? Jeremy Fletcher: Yes. It’s kind of tough to see that, Brian. I think it lays into a lot of other factors with the consumer. We don’t see the same types of pressure on our customers when we have those things pass through. The shocks are a big deal. We saw shocks in 2022. But pretty quickly, our consumer adjusted to that. They have a real non-discretionary need for what they buy from us. They got to keep their car on the road to be able to get to work, to take their kids to activities, to do so many things that are part of American life. So, as we move past that, we have, I think some benefits. Before we were a little bit more constrained, maybe we have more of an opportunity to add items to a job or to sell them up on the value perspective, and we feel positive. But I think our positivity is just around the overall strength of how we view that consumer. Greg Johnson: Brian, and to Brent’s earlier comments about a trading up, trading down, we just really haven’t seen evidence of a significant trade-down to drive us to think that there was tremendous cost pressure on the consumer. Some of the trade-up, trade-down, trade-across, as I have said in previous quarters, was about inventory availability. Perhaps we didn’t have the particular brand they wanted. But a lot of that subsided with the improvement in our supply chain. So, really haven’t seen any evidence of elasticity or trade-down. Brian Nagel: Got it. Alright. Guys, congrats again. Thank you. Greg Johnson: Thanks Brian. Operator: Thank you. And the next question is coming from Mike Baker from D.A. Davidson. Mike, your line is live. Mike Baker: Okay. Thanks guys. We sort of danced around this, I think a little bit, but I wanted to ask you about any concern about a price war or aggressive pricing? We talked about it a year ago, there was a big concern. It never really materialized. But now as auto is talking about getting more investment in pricing, your gross margin, the midpoint is down, can you just address how you talk about or think about pricing amongst your close-end competitors? Thanks. Greg Johnson: Yes, Mike. We €“ as we said last year when we introduced this concept of adjusting our prices, it was a very scientific process we went about. It was thought out, it was tested, it was evaluated. And it wasn’t across the board. It was directed to individual SKUs across individual categories. And we did not see any movement from our competitors at that time. Since then, we have clearly taken some market share. So, what our competitors do going forward, we don’t know. We have no control over it. But we have seen no evidence of that today. Brad, you live this day-in and day-out. What are your thoughts? Brad Beckham: Yes. Hi, good morning Mike. Yes. As you know, as we talked for a long time, all of us here have been in this industry a long time. We have been with the company a long time. That’s the first time in my 26-year career that we have really moved our framework down the way we did. And we have no plans to do that again. We felt like, as you know, there was a huge opportunity. We work in a $130 billion industry, and we do €“ we have 10% share. And as you know, on the professional side, it’s so much more fragmented. And with the disruption we saw the last couple of years in supply chain and some other things that hit the independents and some of the smaller players harder, especially some of the weaker ones, it was very strategic for us to make the decision we made. And we feel not only as good as we did a year ago, but we feel better in the decision we made. But it’s made, we did it, we rolled it out. And there is no plans to do that again. And just to remind you, Mike, our team’s pro-price initiative is probably fifth or sixth down the list when our operational and sales teams go to market. They are focused on having relationships with the installers. They are focused on having relationships with the decision makers, given the best delivery service in town, helping them turn their base. And I don’t necessarily contribute a large portion success last year to just pricing, it’s backing up the pricing with the top two, three, four things that make the pricing pay-off. And we feel really good about how that’s going to continue to build in 2023. Mike Baker: Yes. Sorry, go on. Brent Kirby: Yes. This is Brent. I was just €“ the only thing I would add to the comments Greg and Brad have already made on professional pricing is the framework remains intact and we monitor it on an ongoing basis. We monitor all our pricing on an ongoing basis. But we have stayed very rigorous around being competitive, but winning on service and parts availability. That’s how we win. Mike Baker: Yes. Makes perfect sense. Appreciate the color. Greg Johnson: Thank you. Operator: Thank you. The next question is coming from Chris Horvers from JPMorgan. Chris, your line is live. Chris Horvers: Thanks for squeezing me in. Dovetail on a couple of earlier questions. I guess on that DIY acceleration, you got past €“ gas prices came down, you had some favorable weather in December. But I guess as you would look at DIY, do you think your share gains accelerated sequentially? Like, to what degree was the acceleration some more of like non-specific to O’Reilly factors versus share gains that you have been driving? Jeremy Fletcher: Yes. Really hard to say, Chris. And I think, especially on the DIY side of the business, the pace of what we see from a ticket perspective, more modest than on the professional side. I think we talked about where it’s very clear that we know we are outperforming the market. We think that likely throughout the course of all of €˜22 and, frankly, 2021 and 2020, we have been outperforming the market and taking in share gain. So, I don’t know that we have seen a net incremental acceleration there. I think it would be hard to see. And maybe you would have to watch it for a few more quarters. I do think that a lot of what we have seen is our customers just continued to be strong and healthy. And the industry continues to prove out that there is a lot of value in investing in your vehicle at higher mileages that it’s €“ there is a good payback on that for customers. And I think that’s been a positive as well for us. Chris Horvers: And so I have sort of a two-part follow-up. So, one is, I guess on the PTO program, to what extent is this sort of a competitive need where direct competitors, companies like Walmart are €“ had a higher PTO option that you are reacting to in the environment? And then just second, as you think about the first half, obviously, weather always has an impact. It hasn’t been that great of a winter so far. Is the expectation as you lap that gas shock that is essentially muting what’s been a relatively warm winter? Brad Beckham: Hi Chris, this is Brad. I will touch on the PTO and then kick it over for the other. But as you know, Chris, we work in a people business. You have heard us talk for a long time about the importance of having tenure and knowledge and professional parts people. And quite frankly, we are very proud. When Brent and I talk, whether it’s the store teams or DC teams, we are very proud of our ability to retain and cut down on turnover amongst everything that’s happened in the last couple of years. But frankly, Chris, we are getting ahead. We are going to invest in our people. We are looking at human capital. We are looking at things that we are less looking at what maybe competitors do or other parts of retail is we feel like this is very strategic. We feel like our people value their time off. We feel like we need to be more flexible in the way we give them that time off. And so really, this for us is getting ahead, not following anybody. We are being proactive and we are going to invest in our people. Jeremy Fletcher: And then maybe on the weather part of your question Chris. I would say, obviously, we have had some positives there at the end of our fourth quarter just maybe more on balance, we would view weather as neutral. I think depending upon market, we see things, plus or minus, there is nothing from a significant change perspective that at least at this point, we would call out as having an overhang effect as we move through to the next couple of quarters as we think about cadence during the year, and I know Brad mentioned it in his comments. We do expect more strength in the first half of the year because of some of the opportunities on average ticket in the comparisons from a DIY and professional ticket count perspective is as we run up against some more opportunities there. But on balance, I think weather, we would say it’s favorable constructive for the type of demand we would like to see in 2023. Chris Horvers: Thanks so much. Have a great spring. Greg Johnson: Thanks Chris. Operator: Thank you. And the next question is coming from Scot Ciccarelli from Truist. Scot, your line is live. Scot Ciccarelli: Hi guys. Scot Ciccarelli. Thanks for squeezing me in as well. Just €“ I guess one more question regarding kind of the same SKU inflation comments you guys have already made. Are some vendors actually reducing product costs, or are we just talking about reducing the magnitude of increases, because obviously, that’s two different things. Brent Kirby: Yes. Chris, this is Brent €“ Scot, rather, this is Brent. I would tell you it’s a little bit of a mixed bag out there. There are some suppliers that have been more impacted by wage rates and raw material costs than others, obviously. We are always going to negotiate hard. We are always going to negotiate for best first cost. None of that stopped. We are relentless with that. We are going to continue to be. I hit on in the prepared comments, we have seen transportation costs abate from what they were from the peak. We have seen some benefit from that. So, we have also still seen some continued inflation even later in the cycle on petroleum products. So, it’s a mixed bag out there, but our guide anticipates that we are not going to see any tailwinds from acquisition costs. We are going to negotiate hard, and we are going to do everything we can to control cost. And then where we do have to absorb any increases, we will be able to pass those along to our customers. Jeremy Fletcher: And just to be completely clear on that one, Scot, when we say our guide, it does include some benefit from cost reductions. I think what Brent is saying there is that we are not anticipating a lot of incremental things versus what we haven’t seen already. Scot Ciccarelli: Got it. Okay. That’s very helpful. And then just clarity on the $28 million PTO charge in SG&A. Was that treated as a charge because that was like an accrual catch-up of some sort and then we are basically on a run rate basis for €˜23? Jeremy Fletcher: Yes. Scott, we did have an accrual catch-up. As we converted to the plan, we had some existing balances and some other types of sick and personal time items that as we enhanced, we had a one-time catch-up for team members. And then our run rate will be higher as a result of what we have seen. On a comparative basis, it will have normal comparisons there with the difference, obviously, that it will be a run rate throughout €˜23 as opposed to a fourth quarter charge in €˜22. Scot Ciccarelli: Very helpful. Thanks guys. Greg Johnson: Thanks Scot. Operator: Thank you. We have reached our allotted time for questions. I will now turn the call back over to Mr. Greg Johnson for closing remarks. Greg Johnson: Thank you, Paul. We would like to conclude our call today by thanking the entire O’Reilly team once again for their unwavering commitment to our customers and for our strong results we have posted in 2022. We look forward to another strong year in 2023. I would like to thank everyone for joining our call today, and we look forward to reporting 2023 first quarter results in April. Thank you. Operator: Thank you. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation. Follow O Reilly Automotive Inc (NASDAQ:ORLY) Follow O Reilly Automotive Inc (NASDAQ:ORLY) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Category: topSource: insidermonkeyFeb 13th, 2023

4 Refining & Marketing MLP Stocks Still Showing Potential

Despite some concerns, investors could still bet on the Zacks Oil and Gas - Refining & Marketing MLP operators like TRGP, SUN, CLMT and NGL. The Zacks Oil and Gas - Refining & Marketing MLP industry continues to benefit from strength in fundamentals, strong margins and robust fuel demand. Operators like Targa Resources TRGP, Sunoco LP SUN, Calumet Specialty Products Partners CLMT and NGL Energy Partners LP NGL also possess attributes to combat the value destruction from inflation. Apart from the underlying rationale for owning midstream companies during periods of rising consumer prices, the defensive nature of the stocks and their fee-based business models bode well in an unpredictable market.Industry OverviewMaster limited partnerships (or MLPs) differ from regular stocks since interests in them are referred to as units, and unitholders (not shareholders) are partners in the business. Importantly, these low-risk hybrid entities bring together the tax benefits of a limited partnership with the liquidity of publicly traded securities that earn a stable income. The assets owned by these partnerships are typically oil and natural gas pipelines and storage/infrastructure facilities. The Zacks Oil and Gas - Refining & Marketing MLP industry is a sub-sector of this business model. These firms operate refined products' terminals, storage facilities and transportation services. They are involved in selling refined petroleum products (including heating oil, gasoline, residual oil, jet fuel, etc.) and a plethora of non-energy materials (like asphalt, road salt, clay and gypsum).4 Trends Defining the Oil and Gas - Refining & Marketing MLP Industry's FutureSustainable Cash Flows: Considering the volatility in oil right now — especially the jitters associated with a looming economic slowdown (posing a risk to consumption) — a safer way of playing the sector would be to utilize MLPs, which offer considerable returns at a significantly lower risk. The assets that these partnerships own — oil and natural gas pipelines and storage facilities — typically bring in stable fee-based revenues under long-term contracts and have limited, if any, direct commodity-price exposure. Even within fee-based contracts, a significant portion is of a take-or-pay type, meaning that the MLPs get paid irrespective of the volume of commodities that get transported.Strong Margins: The industry’s improved fundamentals in the form of constrained supply and robust demand have led to rising refining profitability for the players involved. With product inventories running low and no near-term solution to replenish them, margins (especially for diesel and jet fuel) have set all-time highs. While margins have moderated from those spectacular levels, they are still reasonably high. Overall, elevated consumption paired with considerably lower refining capacity in the OECD countries should provide a tailwind for refinery profits throughout the year. In particular, constrained Russian fuel exports in the wake of the Ukraine conflict have further tightened the refining fundamentals.Offsetting Inflation Impact Through Distribution Growth: The major refining and marketing midstream players — being largely insulated to fluctuations in commodity prices — maintained their distribution levels through the crisis-stricken 2020. Now, with the energy space displaying secular demand growth, their relatively steady coverage should represent a more predictable midstream payout scenario in the near future. Adjusting costs with prevailing business activity, the partnerships have focused on free cash flow (post distribution payment) generation to lower debt and strengthen their financial position. The growing free cash flows could be used to boost investor returns through buybacks and distribution hikes. Finally, distribution growth can also help investors to offset some of the value destruction of the prevailing high inflationary environment.Ongoing Supply-Chain Bottlenecks: Despite the relatively bullish energy landscape and improved demand environment, the industry has not been immune to supply-chain disruptions and cost inflation. Macro issues like higher transportation expenses, driver scarcity and labor shortages have limited MLPs’ (or the energy infrastructure providers, also called the midstream group) ability to ship packaged volumes to their customers. Most operators have also felt the impact of inflation, which is rolling through the cost structure. What’s worse is that these headwinds across the system and the subsequent hit to profitability (due to difficulty in passing through the increased costs to clients) are expected to continue in the near future.Zacks Industry Rank Indicates Positive OutlookThe Zacks Oil and Gas – Refining & Marketing MLP is a 7-stock group within the broader Zacks Oil – Energy sector. The industry currently carries a Zacks Industry Rank #32, which places it in the top 13% of 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.Considering the encouraging near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.Industry Outperforms S&P 500 But Lags SectorThe Zacks Oil and Gas – Refining & Marketing MLP industry has fared better than the Zacks S&P 500 composite over the past year but has underperformed the broader Zacks Oil – Energy sector over the same period.The industry has gained 4.3% over this period compared with the broader sector’s increase of 13.7%. Meanwhile, the S&P 500 has lost 9.8%.One-Year Price Performance Industry's Current ValuationSince midstream-focused oil and gas partnerships use fixed-rate debt for most of their borrowings, it makes sense to value them based on the EV/EBITDA (enterprise value/ earnings before interest tax depreciation and amortization) ratio. This is because the valuation metric takes into account not just equity but also the level of debt. For capital-intensive companies, EV/EBITDA is a better valuation metric because it is not influenced by changing capital structures and ignores the effect of non-cash expenses.On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the industry is currently trading at 9.02X, lower than the S&P 500’s 12.55X. It is, however, well above the sector’s trailing-12-month EV/EBITDA of 3.14X.Over the past five years, the industry has traded as high as 17.13X, as low as 5.76X, with a median of 9.81X, as the chart below shows.Trailing 12-Month Enterprise Value-to-EBITDA (EV/EBITDA) Ratio (Past Five Years)  4 Oil and Gas - Refining & Marketing MLP Stocks to Watch ForSunoco LP: Sunoco participates in the transportation and supply phase of the U.S. petroleum market across a number of states. It also focuses on motor fuel distribution to convenience stores, independent dealers and commercial customers. SUN pays out 82.55 cents quarterly distribution ($3.302 per unit annually), which gives it a 7% yield at the current unit price.The gasoline station and convenience store operator beat the Zacks Consensus Estimate for earnings twice in the trailing four quarters. The 2022 Zacks Consensus Estimate for SUN indicates 2.7% earnings per unit growth over the previous year. Valued at around $4.8 billion, the Zacks Rank #1 (Strong Buy) SUN has gained 8.8% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here. Price and Consensus: SUN NGL Energy Partners LP: It is an MLP that owns water disposal wells, the Grand Mesa oil pipeline, and a wholesale propane/butane business. NGL Energy Partners has done a fairly admirable job of reducing costs. Its cash outflows as capital expenditure continue to fall as it keeps spending levels in check. Apart from significant capital cuts, the partnership should realize sizeable savings from headcount reduction and automation.The fiscal 2023 Zacks Consensus Estimate for NGL Energy Partners indicates 97.9% earnings per unit growth over fiscal 2022. The midstream operator, whose stock is down 29% in a year, carries a Zacks Rank #2 (Buy).Price and Consensus: NGL Calumet Specialty Products Partners, L.P.: This downstream operator focuses on specialty products (oil, waxes, white oils etc.) and solutions, in addition to renewable diesel (or refining). CLMT targets high-performance markets for lubricants and engineered fuels, which provide ample growth opportunities for the partnership.The 2023 Zacks Consensus Estimate for Indianapolis, IN-based Calumet indicates 191.7% year-over-year earnings per share growth. The firm beat the Zacks Consensus Estimate for earnings twice in the trailing four quarters. Valued at around $1.4 billion, the Zacks Rank #3 (Hold) CLMT has gone up 19.9% in a year.Price and Consensus: CLMT Targa Resources: Targa Resources’ fractionation ownership position in Mont Belvieu is among the company’s best midstream assets. The facility has connectivity to supply, storage, terminalling infrastructure, as well as to end markets through petrochemical complexes and exports. The company also has state-of-the-art LPG export facilities on the Gulf Coast at its Galena Park Marine Terminal.The 2023 Zacks Consensus Estimate for Houston, TX-based Targa Resources (which pays out 35 cents quarterly dividend), indicates 31.2% year-over-year earnings per share growth. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 15.2% increase from the year-ago period. The #3 Ranked stock has gained 18% in a year.Price and Consensus: TRGP  Free Report: Must-See Hydrogen Stocks Hydrogen fuel cells are already used to provide efficient, ultra-clean energy to buses, ships and even hospitals. This technology is on the verge of a massive breakthrough, one that could make hydrogen a major source of America's power. It could even totally revolutionize the EV industry. Zacks has released a special report revealing the 4 stocks experts believe will deliver the biggest gains.Download Cashing In on Cleaner Energy today, absolutely free.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Targa Resources, Inc. (TRGP): Free Stock Analysis Report Sunoco LP (SUN): Free Stock Analysis Report NGL Energy Partners LP (NGL): Free Stock Analysis Report Calumet Specialty Products Partners, L.P. (CLMT): Free Stock Analysis ReportTo read this article on click here.Zacks Investment Research.....»»

Category: topSource: zacksFeb 7th, 2023

These 3 Tips Will Turn Anyone Into A Successful Real Estate Investor

We have all watched reality shows like Flip or Flop, where investors go into a dirty, run down house and buy it for pennies on the dollar. Then, after spending just a few weeks working on the home to remodel it, they sell it for a huge profit. In some cases, the profit is in […] We have all watched reality shows like Flip or Flop, where investors go into a dirty, run down house and buy it for pennies on the dollar. Then, after spending just a few weeks working on the home to remodel it, they sell it for a huge profit. In some cases, the profit is in the millions. However, most of these shows are overly dramatized and faked. It is easy to watch these shows and think “I could do that.” The idea of making millions for a few weeks of work and with a relatively small up front investment appeals to almost everyone. However, there are a few catches the shows fail to highlight in their 45 minute long episode. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more Watching an episode of one of these shows and thinking you know enough to try it on your own would be the equivalent of watching the World Poker Tour on TV and then attempting to win a high stakes game at a table in Vegas using only that knowledge. You would learn very quickly there is no camera allowing you to see what cards the other players are holding in their hands. Tips To Become A Successful Real Estate Investor Just as you would not walk blindly into a poker tournament risking a large investment, you cannot jump into a real estate investment blindly either. Brad Hovis, author of Rollover to Retire, is a real estate investor who has mastered the art of investing in properties that provide constant passive income. He has three very important tips for prospective investors that could mean the difference between bankruptcy and financial freedom. The first thing Brad notes about real estate investing is that it is important to do it in a debt free scenario. Being in debt on an investment property is a risk you do not need or want to take. So how do you invest without going into debt if you do not personally have the capital? This is where Brad says "you have to know your role." There are two roles in investing, he claims. The blue collar role and the white collar role are equally important, but if you want to be successful as an investor, you must know which role you should take. The blue collar role is the person who can spot potential investment properties, and know enough about remodeling and flipping them to understand the cost associated with making them profitable. This person would be able to complete basic remodeling tasks, or have contractors on tap who can complete them in a timely manner. The white collar role would be the person who has enough capital to purchase and pay for the renovations on an investment property. The white collar partner in an investment venture may not know exactly what home renovations need to be done, or even how much they will cost, but they have the ability to cover those costs. Brad stresses the importance of avoiding bank loans to complete an investment. If the investment does not immediately turn a profit, a physical human partner is much easier to deal with than a bank when it comes to the capital involved. By utilizing a partner who has the funding to invest, you eliminate the need for personal debt. One of the tips Brad offers potential investors is that it is possible to be the white collar partner in an investing venture by using retirement funds to invest in real estate. A typical 401K account only yields about a 5-8% return each year in growth, according to Smart Asset. However, an investment property can offer a much higher percentage rate on the return in a much shorter time. Flipper Force says that a real estate investor should aim for at least a 10 to 20% return when investing in a property. Typical renovations on homes like this should take less than 4 months. That means that an active flipper in a hot market can turn at least two or three properties per year. This equates to a much higher rate of return on money you already have invested. One key point to remember is that passive income is king. Being able to flip a house for a relatively fast profit is handy for a young investor. However, as we age we tend to want to spend less time working and more time enjoying our life. Active income is the money we earn by completing a task. For most of the world that involves working for someone else or owning a small business. Passive income is created when you find a way to yield profits without actively having to be involved in the production of those profits. Investing in rental properties is a great way to build passive income. However, the keys to success remain the same. You must do it in a debt free environment. So, if you are not yet at the point of being a white collar partner, you need to find an investor who has the capital. The third, and probably most important tip Hovis has to offer is that "you have to keep emotions out of the deal." He says emotions are not your friend when investing in real estate and all investments need to be looked at with an eye for profit. Basically, if you want to be successful in real estate investing, follow these three guidelines. First, stay debt free in your investment. Second, know which role applies to you and be good at it. Third, keep your emotions out of the deal and approach the venture logically and armed with good accounting skills. Following these tips can make anyone successful and ignoring them can bankrupt any unwary investor......»»

Category: blogSource: valuewalkFeb 3rd, 2023

Meta – Shares Rebound On Revenue Beat And Cost-Base Rethink

Meta Platforms Inc (NASDAQ:META)’s revenue fell 4% to $32.2bn in the fourth quarter, which was better than expected. Costs and expenses rose 22% to $25.8bn. This resulted in operating profit falling by 49% to $6.4bn. The number of daily active people (DAP) using one of Meta’s sites, including Facebook, Messenger and Instagram, was 2.96bn, up […] Meta Platforms Inc (NASDAQ:META)’s revenue fell 4% to $32.2bn in the fourth quarter, which was better than expected. Costs and expenses rose 22% to $25.8bn. This resulted in operating profit falling by 49% to $6.4bn. The number of daily active people (DAP) using one of Meta’s sites, including Facebook, Messenger and Instagram, was 2.96bn, up 5% compared to last year. Meta said it took “several measures to pursue greater efficiency and to realign our business and strategic priorities. This includes a facilities consolidation strategy to sublease, early terminate, or abandon several office buildings under operating leases”, and the group will also be laying off approximately 11,000 employees. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Meta has also cancelled several data centre projects. In total, Meta has recognised restructuring charges of $4.2bn in the fourth quarter. Revenue in the new financial quarter is expected to be $26 - $28.5bn. Total expenses for the full year are now expected to come in at $89 - $95bn, which is lower than previous guidance of $94 - $100bn. Meta shares rose 18.1% in after-hours trading. Meta's Earnings Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown: Meta’s shares have seen a jet-fuelled rebound on news of a cost-base rethink. The market has been concerned about the company’s bloated expense line and lack of direction for some time, and these results display an effort to address both of those issues. Crucially, capital expenditure is set up to be funnelled towards the group’s core family of apps, which will go a long way to calming investors’ nerves, as will scaling back certain data centre projects. While the headcount reductions are never an easy decision, from a strategic point of view many will see this as the right way to go. It’s widely understood that Meta is one of the tech giants that stands to benefit the most from headcount reductions. While spending revisions are very welcome, there’s no escaping that capital expenditures are up significantly from $5.4bn at the same point last year. Meta’s previously tried too hard to master untested innovations, rather than doubling down on protecting and growing market share from its core platforms. The market has also rejoiced at the fact Meta’s revenue hasn’t taken as much of a tumble as feared, despite its higher level of vulnerability in a slowing economy compared to other advertising-reliant peers.   Meta getting its house in order is important because times are still tough. The group’s reported its third consecutive sales drop as the wider digital advertising landscape continues to struggle. Together with a tough economy, it’s very hard for Meta to move its top line in the right direction. While the Federal Reserve has slowed its interest rate increases for the second straight meeting, borrowing costs have still been pushed to their highest levels since 2007. That is a very challenging environment in which to be selling ad space, virtual or otherwise. There are also Meta-specific issues at play, which includes competition. TikTok, and increasingly Pinterest, are muscling in to take the shine away from Facebook and Instagram’s attractiveness to marketers. Year-to-date, Meta’s shares are up 23% against the Nasdaq which has climbed 14%. The market, which has its eyes firmly on the future, has clearly priced in a rebound of Meta’s advertising revenues. With peak inflation coming into view, and the recovery lane for the economy well signposted, there’s cautious optimism Meta can prove its bulls right......»»

Category: blogSource: valuewalkFeb 2nd, 2023

Victor Davis Hanson: The Radical Left Is The Establishment

Victor Davis Hanson: The Radical Left Is The Establishment Authored by Victor Davis Hanson via, Anarchy, American-Style The Left runs Oceania, and we work for their various bureaus... The 1960s revolution was both anarchic and nihilist. But it was waged against—not from—the establishment. Hippies and the Left either attacked institutions or, in Timothy Leary fashion, chose to “turn on, tune in, drop out” from them. The current revolution is much different—and far more dangerous—for at least three reasons. The Establishment Is the Revolution The current Left has no intention of “dropping out.” Why would it?  It now controls the very institutions of America that it once mocked and attacked—corporate boardrooms, Wall Street, state and local prosecuting attorneys, most big-city governments, the media, the Pentagon, network and most of cable news, professional sports, Hollywood, music, television, K-12 education, and academia.  In other words, the greatest levers of influence and power—money, education, entertainment, government, the news, and popular culture—are in the hands of the Left. They have transformed legitimate debate over gay marriage into a hate crime. Transgenderism went from a modern manifestation of ancient transvestism or gender dysphoria to a veritable litmus test of whether one was good or evil. Students have no need to jam administrators’ offices because the latter, themselves, are as radical as the protestors and often lead them on in a top-down fashion. Had they not long ago demonstrated they were perfectly willing to subvert meritocracy, free expression, and equality under the law, they would not be occupying their present positions. Apple, Google, Facebook, and other tech companies are not 1980s and 1990s “alternative” media geeks and hipsters creating neat gadgets for the people. They are not Steve Jobs and his pugnacious Apple battling the evil Microsoft or IBM, or the Macintosh commercial of 1984 depicting a maverick throwing a hammer into Big Brother’s screen. They are the Orwellian screen. The current generation of techies is effectively Stalinist. Big Tech now colludes with the FBI, the Democratic Party, and the bureaucratic state to suppress free expression, warp balloting, and serve as contractors of government surveillance. Currently, the most totalitarian people in America are likely to wear flip flops, have a nose ring or pink hair, and disguise their fascism with ’60s-retread costumes. There are no “armies of the night” marching on the Pentagon. Would-be demonstrators see no need, since radical identity politics, and gay, woke, and transgendered agendas are fast-tracked by the Department of Defense.  There are no protests against the Immigration and Customs Enforcement bureau or the “La Migra” anymore by advocates of illegal immigration, because the Left owns the border. And it has utterly destroyed it. There is no border, no border enforcement, and no meaningful immigration law. As many as 6 million illegal entries during the first two years of the Biden Administration are proof enough of that.  There are no cutting-edge Lenny Bruces or Mort Sahls fighting state censorship because entertainers accept that 1) there are no impediments to vulgarity or pornographic expression, but 2) no comic or commentator dares to take on the diversity, equity, and inclusion woke industry because he assumes he would be crushed, and his career ruined.  Question the woke status quo, and one is not canonized in Vanity Fair or Rolling Stone as a fighter against the “uptight establishment” or “the man” as in the past, but now demonized as a racist purveyor of “hate speech” and enemy of the people. The Left does not despise the FBI. It lauds it. And the bureau is no longer consumed with tracking down violent criminals and terrorists. Instead, it has become an enemy of parents worried about school indoctrination, or a retrieval service for lost first-family classified papers, laptops and diaries, or a Washington, D.C., cadre knee-deep in big money politics.  FBI agents are praised on left–wing media—given they have been activist conspirators who sought to destroy conservative candidates, deleted subpoenaed data, lied to federal investigators or committees while under oath, colluded with Russian oligarchs, doctored court evidence, and paid foreign nationals to compile campaign dirt on American citizens. There are no longer calls for a “three strikes” solution to violent crime as in the past, or talk of adopting the successful, time-tried “broken windows” theories of law enforcement, because there is no enforcement to modulate. The debate is no longer over enforcing the law, because de facto there is no law. The new legal establishment has replaced the old by simply nuking centuries of jurisprudence. Violent repeat criminal offenders injure and maim innocents in the morning and are released by noon to prey again—themselves baffled that the state is even crazier than they are. Note in the 2020-2021 riots, almost no one temporarily arrested was tried, despite $2 billion in damages, upwards of 40 violent deaths, the 1,500 injured law enforcement officers, and the torching of a courthouse, police precinct, and historic Washington, D.C., church. Instead, they were lauded by a mayor as participants in a “summer of love.” Seattle and Washington simply ceded city property to the violent protestors as if they occupied it by right of their superior morality. The summation of the entire sordid summer was the CNN chyron assuring America that the protests on their screens were “mostly peaceful” as flames shot up to the sky in the background. In the 1960s, rioters forced social welfare concessions—or else!—on the establishment. Today the establishment welcomes urban unrest as an excuse to implement agendas that in normal times would be unpalatable. In sum, we are living in anarchy, as institutions themselves have become nihilistic and weapons of the revolution. The Left, in viral fashion, took over the DNA of America’s institutions, and used them to help destroy their creators. If we are bewildered why Harvard law-graduate prosecutors let out violent criminals just hours after their arrests; or why hyper-rich, pampered athletes who live in near-apartheid enclaves  insult the flag, ignore the National Anthem, and sloganeer woke platitudes, it is because they were taught to undermine the status quo by fundamentally becoming it.  In our present anarchy, $7 a dozen eggs are affordable. Unaffordable gas prices become merely necessary “transitions” to fossil fuels. A “secure” border means there is none. Natural gas must be banned because it supposedly causes asthma. Tens of thousands of homeless defecate, urinate, inject, and fornicate in the increasingly vacant downtowns of Los Angeles and San Francisco, as the Golden Bear state, California, discusses reintroducing Grizzly bears.  Cars and yards are evil, elevators, high-rises, and buses sacred. There are 81 genders (and counting), with even more names for them. “Racist” is our exclamation point, fillip, a mere add-on emphatic. Everything from SAT tests to obesity to working out is racist. When little is racist, then everything must become racist. Batter someone to a pulp and you are out of jail in six hours; claim an election was suspicious and you can be in there for six months or more. Proven merit is a pejorative. Grades are deemed useless by those who could never earn As. Boilerplate equity oaths are the best guide to hiring, retention, and admission. The ACLU or the Anti-Defamation League exist only to spot the incorrect kind of censorship and the wrong kind of antisemitism. Macintosh Becomes MacBeth The second contribution to the present anarchy is big tech, which speeds up the revolution and spreads it broadly. Orwell’s Nineteen Eighty-Four was predicated not just on the Sovietization of the state, but the electronically ubiquitous and near instantaneous means by which the apparat ensures its dominance. One of the strangest things about the Left is that it no longer warns of 1984 but emulates it. How the Left became synonymous with the Internet, social media, mobile phones, pads, and laptops is a long story. But let it be said the Left, and not conservatives, have mastered them all. It has manipulated high tech to change the way we vote, access information, communicate, consume the news, buy, and sell, and express ourselves. In sum, they run Oceania and we work for their various bureaus. Our tech complex has combined the ethos of the 19th-century monopoly with the Chinese Communist system of mass ideological manipulation. The result is that the old Twitter or Facebook mob can ruin a career in a nanosecond. Google can manipulate the order of search results to render you a clueless Winston Smith bewildered by the alternate “reality” that pops up on your computer screen.  Wikipedia is pseudo-official falsification. Trotskization relied on scissors and paste; cancel culture can end you by a split-second use of the delete button—and erase you to 7 billion on the planet. Big Money, Big Woke  Globalization hollowed out the red-state interior and enriched the blue bicoastal elite. Wealth in mining, farming, construction, manufacturing, and assembly became dwarfed by riches of investment, high tech, social media, law, insurance, and real estate. The former were the up-by-the boot straps conservatives, the latter one day rich and the next moment through hype, investment, and venture capital, richer than anyone in the history of civilization. The wealthiest ZIP codes and congressional districts are blue, not red. Most of the Fortune 400 billionaires are left-wing. So, there is no ’60s-style talk about the evils of corporations and the supposedly idle rich, none of the old conspiracy theories about Anaconda Copper, ITT, or the Rockefellers.  The corporations are the Left and in service to it. Disney, American Airlines, and Nike are revolutionary icons, always ready to divest, cancel, fire, hire, and propagandize in service to woke commissars. That they are terrified by tiny bullies who have no constituencies is true, but then a Robespierre, Lenin, and Mao had initially no broad support either—at least before each mastered the use of terror and fright. In our anarchy, “dark money” like Mark Zuckerberg’s $419 million cash infusion into the 2020 balloting processes is now suddenly good, given it is almost all leftwing. Democrats outraise Republicans in campaign contributions by anywhere from three- to five-to-one. Bundling is noble. Netflix can buy the brand name of the Obamas for $100 million; George Soros can spend his pocket change of $40 million to elect district attorneys to destroy the law and empower criminals. Jimmy Carter used to be the poor-man idol of the old Democratic Party. Today, there is hardly a Democratic president, ex-president, or presidential candidate who is not a multi-multimillionaire—most by leveraging their heightened political profile. What anarchy we live in when the richest among us are the most radical and wish to destroy for all others what they enjoy.  John Kerry lectures us on climate change from his private jet. Your leaf blower, not his Gulfstream GIV-SP, is the global threat. Al Gore screams about the evils of carbon emissions—after pocketing $100 million by selling his failed and worthless cable station to smoky and sooty Qatar, fronting for the antisemitic Al Jazeera.  The Clintons feel the pain of the poor all the way to their $100 million fortune from shakedown lectures, Wall Street, “consulting,” and “foundation” contributions. Van Jones, CNN expert, the object of Valerie Jarrett’s oohing and awing, famous for his “whitelash” exegeses, and recipient of a $100 million Bezos award, now lectures us that the five rogue black policemen in Memphis, who beat to death a black suspect, are still proof of white racism that accounts for blacks belittling the lives of blacks.  In our present anarchy, we take seriously the lectures on microaggressions from the Duchess of Montecito. The Obamas weigh in on the dangers of climate change and rising seas from their seaside, multimillion-dollar Martha’s Vineyard estate, or Hawaii beachfront mansion that apparently has an invisible climate-change barrier on its beach. Kamala Harris is our border czar who assures us it is “secure,” defined by 5 million illegal entries since she took office. Nancy Pelosi works for the “children” and, after a life in politics, that selflessness ends up worth $100 million from her husband’s insider real estate deals and stock tips. It is almost as if socialist Bernie Sanders owned three homes, or anti-capitalist Elizabeth Warren was once a house flipper. So, the current revolution is anarchy, utter confusion, pure chaos.  Every time one turns on a computer, there will be someone or something somewhere ideologically warping its use. Your vote means nothing when California cannot account for 10 million automatically, computer-guided mailed-out ballots. That state is still in a drought, defined by releasing most of the water to the ocean that the wettest winter in memory produced.  Stanford students talk revolution, Antifa, and Black Lives Matter, and want to forbid the use of “American.” But from the look of their parking lots, they cannot decide whether Lexus, BMW, or Mercedes should be the most preferred campus car. Oprah and Whoopi suffer terribly from white supremacy. Jussie the foot soldier heroically took on one MAGA thug for each of his foot kicks.   “Don’t take off your mask” at a California McDonald’s means the man who ordered that edict is maskless at the French Laundry. “Don’t get your hair done during the lockdown” means the architect of that fiat sneaks around her salon, which she has all to herself. The common denominator to the anarchy? The hardcore Left is your FBI, CIA, and Justice Department all in one. It is Nineteen Eighty-Four. It is our era’s J. P. Morgan.  No wonder we are confused by the establishment anarchists and the anarchy they produce. Tyler Durden Mon, 01/30/2023 - 23:40.....»»

Category: blogSource: zerohedgeJan 31st, 2023

United Airlines Fourth-Quarter and Full-Year Financial Results: Achieved 9.1% Pre-tax Margin Ahead of Schedule in Q4

Q4 2022 pre-tax margin exceeded 2019 and vaulted United to an industry-leading position The changes United made to increase staffing and resources and invest in technology and infrastructure created strong operations and allowed United to recover quickly after winter storm Elliott Remains confident in hitting its 2023 financial performance targets fueled by United Next progress CHICAGO, Jan. 17, 2023 /PRNewswire/ -- United Airlines (UAL) today reported fourth-quarter and full-year 2022 financial results. The company exceeded adjusted operating margin1 guidance in the fourth quarter reporting a 11.1% operating margin; 11.2% operating margin on an adjusted basis1. Additionally the company reported a 9.1% pre-tax margin on a GAAP basis and 9.0% on an adjusted basis1, achieving its 2023 target ahead of schedule. The company grew operating revenue by 14% and TRASM (total revenue per available seat mile) by 26%, both versus fourth quarter 2019. The company remains confident in the 2023 United Next adjusted pre-tax margin1 target of about 9%. United was able to recover quickly from significant irregular operations in December as a result of winter storm Elliott. During the key holiday travel days between December 21 and 26, nearly 36% of all United flights were exposed to severe weather. Despite that impact, 90% of United customers made it to their destination within 4 hours of their scheduled arrival time. The company credits significant investment in its people, resources, technology and infrastructure over the past few years with its ability to recover from significant weather events.  "Thank you to the United team that, last month, managed through one of the worst weather events in my career to deliver for so many of our customers and get them home for the holidays," said United Airlines CEO Scott Kirby. "Our dedicated team used our state-of-the-art tools to prepare for the bad weather, take care of our customers and quickly recover once the worst of the weather had passed. Over the last three years, United has made critical investments in tools, infrastructure and our people – all of which are essential investments in our future. That's why we've got a big head start, and we're now poised to accelerate in 2023 as our United Next strategy becomes a reality." Fourth-Quarter Financial Results Net income of $843 million, adjusted net income1 of $811 million. Capacity down 9% compared to fourth-quarter 2019. Total operating revenue of $12.4 billion, up 14% compared to fourth-quarter 2019. TRASM of up 26% compared to fourth-quarter 2019. CASM of up 21%, and CASM-ex1 of up 11%, compared to fourth-quarter 2019. Operating margin of 11.1%, adjusted operating margin1 of 11.2%, both up over 2 pts. compared to fourth-quarter 2019. Pre-tax margin of 9.1%, adjusted pre-tax margin1 of 9.0%, both up and around 1 pt. compared to fourth-quarter 2019. Average fuel price per gallon of $3.54. Full-Year Financial Results Net income of $737 million, adjusted net income1 of $831 million. Operating margin of 5.2%, adjusted operating margin1 of 5.5%. Pre-tax margin of 2.2%, adjusted pre-tax margin1 of 2.5%. Ending available liquidity2 of $18.2 billion. Key Highlights Announced the largest widebody order by a U.S. carrier in commercial aviation history: 100 Boeing 787 Dreamliners with options to purchase 100 more. Also added 100 additional Boeing 737 MAX aircraft by exercising 44 options and adding 56 new firm orders. This historic purchase is the next chapter in the ambitious United Next plan and will bolster the airline's leadership role in global travel for years to come. Officially opened the United Aviate Academy, the only major U.S. airline to own a flight training school, with a historic inaugural pilot class of 80% women or people of color. Launched Calibrate, an in-house apprenticeship program that will help grow and diversify its pipeline of Aircraft Maintenance Technicians. Launched a new, national advertising campaign – "Good Leads The Way" – that tells the story of United's leadership in areas like customer service, diversity and sustainability, and captures the optimism fueling the airline's large ambitions at a time of unprecedented demand in air travel. Announced and began the expansion of its Flight Training Center in Denver, already the largest facility of its kind in the world. Announced a historic commercial agreement with Emirates that will enhance each airline's network and give customers easier access to hundreds of destinations around the world. Also announced a new direct flight between Newark/New York and Dubai beginning in March 2023, subject to government approval. Appointed by Department of Homeland Security Secretary Alejandro Mayorkas, United Chief Executive Officer Scott Kirby served as the Co-Chair of the Homeland Security Advisory Council and also served on the Board of Directors of the Business Roundtable as the Chairman of the Education and Workforce Committee. Hosted the first Eco-Skies Alliance Summit, bringing together leaders, corporate customers, and senior U.S. government officials for important discussions on sustainable aviation fuel, best practices of how to reduce carbon emissions from flying and how to collaborate on future sustainability solutions. Operational Performance In the fourth quarter, on-time arrival performance (arrival within 14 minutes of schedule) was at 80%, the best quarterly performance of 2022. United finished first among network carriers for on-time departures and completion at its three largest hubs – Denver, O'Hare and Houston – for the fourth-quarter and full-year 2022. In 2022, over 650,000 passenger connections were saved with ConnectionSaver, resulting in United achieving the lowest misconnect rate ever for the fourth quarter and full year (excluding 2020/2021). In the fourth quarter, Inflight Service, Check-In and Club Satisfaction beat their record from last quarter and ended with their highest quarterly performance since the launch of the NPS (Net Promoter Score) survey in 2020.  Customer Experience In 2022, 80% of domestic departures were operated on a dual-cabin aircraft, up from 67% in 2019. Despite the severe operating conditions during winter storm Elliott, 43% of our customer surveys included a compliment for something a United employee did to help them. Debuted free "bag drop shortcut" – a simple way for customers at United's U.S. hubs to skip the line, check their bag in a minute or less on average, and get to their flight. Began offering eligible T-Mobile customers free in-flight Wi-Fi and streaming where available on select domestic and short-haul international flights. United, with Jaguar North America, launched the first gate-to-gate airport transfer service powered by an all-electric fleet in the U.S. at Chicago O'Hare International Airport. Announced the return of kids' meals on board on select United flights where complimentary meals are served. Announced the opening of United Club FlySM, a new club concept for a U.S. airline at Denver International Airport. Opened the new United ClubSM location at Newark Liberty International Airport, a 30,000-square-foot space offering travelers a modern design, enhanced amenities and culinary offerings. Debuted new custom amenity kits for United Polaris® from Away ahead of summer travel. Debuted new plant-based menu items from Impossible Foods as part of United's goal to add more vegan and vegetarian options to its culinary lineup amidst growing demand for plant-based meat. Network Announced the 2023 summer schedule that includes adding new service to three cities – Malaga, Spain; Stockholm, Sweden; and Dubai, United Arab Emirates – United will be the No. 1 airline to Europe, Africa, India and the Middle East next summer with service to 37 cities, more destinations than all other U.S. airlines combined. Launched a new alliance partnership with Virgin Australia, began year-round, nonstop service between San Francisco and Brisbane, Australia and became the largest carrier between the United States and Australia. Began year-round, nonstop service between Washington, D.C., and Cape Town, South Africa and expanded to year-round nonstop service between New York/Newark and Cape Town, South Africa. Expanded the airline's codeshare agreement with Star Alliance member Singapore Airlines, making it easier for customers to travel to more cities in the United States, Southeast Asia and other destinations in the Asia-Pacific region. Announced a joint business agreement with Air Canada for the Canada-U.S. transborder market, building on the companies' long-standing alliance, that will give more flight options and better flight schedules to customers traveling between the two countries. Environmental, Social and Governance (ESG) In the fourth quarter, over 7,700 volunteer hours were served by more than 1,000 employee volunteers. In the fourth quarter, nearly 13 million miles were donated to 40 participating nonprofit organizations during United's Giving Tuesday 2022 campaign by over 700 donors, including nearly 2 million miles matched by United. In the fourth quarter, more than 4 million miles and over $111,000 were raised for Hurricane Fiona and Hurricane Ian relief efforts. In 2022, through a combination of cargo-only flights and passenger flights, United transported over 1 billion pounds of cargo, including approximately 121 million pounds of medical shipments and approximately 10,500 pounds of military shipments. United Airlines Ventures announced a strategic investment in NEXT Renewable Fuels (NEXT), which is acquiring a permit for a flagship biofuel refinery in Port Westward, Oregon, with expected production beginning in 2026. Announced a $15 million investment in Eve Air Mobility and a conditional purchase agreement for 200 four-seat electric aircraft with options to purchase 200 more, expecting the first deliveries as early as 2026. Launched United for Business Blueprint™, a new platform that will allow corporate customers to fully customize their business travel program contracts with United. United Airlines Ventures and Oxy Low Carbon Ventures announced a collaboration with Cemvita Factory to commercialize the production of sustainable aviation fuel intended to be developed through a revolutionary new process using carbon dioxide and synthetic microbes. Announced a strategic equity investment in Natron Energy, a battery manufacturer whose sodium-ion batteries have the potential to help United electrify its airport ground equipment like pushback tractors and operations at the gate. U.S. President Joe Biden appointed United President Brett Hart to the Board of Advisors on Historically Black Colleges and Universities. Along with the PGA TOUR, announced that it will award 51 golf teams at Historically Black Colleges and Universities with more than half a million dollars in grants to fund travel for golf tournaments and recruiting efforts. Announced a new collaboration with OneTen, a coalition committed to upskill, hire and advance Black talent into family-sustaining careers over the next 10 years. United Airlines Ventures announced an investment in and commercial agreement with Dimensional Energy, another step forward to reaching United's pledge to become 100% green by achieving net-zero greenhouse gas emissions by 2050, without relying on the use of traditional carbon offsets. Became the first U.S. airline to sign an agreement with Neste to purchase sustainable aviation fuel overseas. Over 42 million miles and more than $400,000 donated to World Central Kitchen, Airlink, American Red Cross, and Americares in support of Ukraine relief efforts by United's customers, with an additional 5 million miles and $100,000 matched by United. Earned a top score of 100% on the 2022 Disability Equality Index for the seventh consecutive year and was recognized as a "Best Place to Work" for Disability Inclusion. Hosted more than 100 volunteer events for United's 2nd Annual September of Service with more than 1,600 United employees volunteering 6,500 hours. Became the first airline to donate flights in support of the White House's Operation Fly Formula and transported Kendamil formula free of charge from Heathrow Airport in London to its Washington Dulles hub. Earnings Call UAL will hold a conference call to discuss fourth-quarter and full-year 2022 financial results, as well as its financial and operational outlook for first quarter 2023 and beyond, on Wednesday, January 18, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months. Outlook This press release should be read in conjunction with the company's Investor Update issued in connection with this quarterly earnings announcement, which provides additional information on the company's business outlook (including certain financial and operational guidance) and is furnished with this press release with the U.S. Securities and Exchange Commission on a Current Report on Form 8-K. The Investor Update is also available at Management will also discuss certain business outlook items during the quarterly earnings conference call. The company's business outlook is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release. Please see the section entitled "Cautionary Statement Regarding Forward-Looking Statements." About United United's shared purpose is "Connecting People. Uniting the World." From our U.S. hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C., United operates the most comprehensive global route network among North American carriers. United is bringing back our customers' favorite destinations and adding new ones on its way to becoming the world's best airline. For more about how to join the United team, please visit and more information about the company is at United Airlines Holdings, Inc., the parent company of United Airlines, Inc., is traded on the Nasdaq under the symbol "UAL". Website Information We routinely post important news and information regarding United on our corporate website,, and our investor relations website, We use our investor relations website as a primary channel for disclosing key information to our investors, including the timing of future investor conferences and earnings calls, press releases and other information about financial performance, reports filed or furnished with the U.S. Securities and Exchange Commission, information on corporate governance and details related to our annual meeting of shareholders. We may use our investor relations website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. We may also use social media channels to communicate with our investors and the public about our company and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels are not incorporated by reference into, and are not a part of, this document. Cautionary Statement Regarding Forward-Looking Statements:  This press release and the related attachments and Investor Update (as well as the oral statements made with respect to information contained in this release and the attachments) contain certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to, among other things, the potential impacts of the COVID-19 pandemic and other macroeconomic factors and steps the company plans to take in response thereto and goals, plans and projections regarding the company's financial position, results of operations, market position, capacity, fleet, product development, ESG targets and business strategy. Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about the company's future financial results, goals, plans, commitments, strategies and objectives and involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond the company's control and could cause the company's future financial results, goals, plans, commitments, strategies and objectives to differ materially from those expressed in, or implied by, the statements. Words such as "should," "could," "would," "will," "may," "expects," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "projects," "forecast," "guidance," "outlook," "goals," "targets," "pledge," "confident," "optimistic," "dedicated," "positioned" and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. All statements, other than those that relate solely to historical facts, are forward-looking statements. Additionally, forward-looking statements include conditional statements and statements that identify uncertainties or trends, discuss the possible future effects of known trends or uncertainties, or that indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law or regulation. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: the adverse impacts of the ongoing COVID-19 global pandemic on our business, operating results, financial condition and liquidity; execution risks associated with our strategic operating plan; changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned; any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions; adverse publicity, harm to our brand, reduced travel demand, potential tort liability and voluntary or mandatory operational restrictions as a result of an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners or another airline; the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity, including as a result of alliances, joint business arrangements or other consolidations; our reliance on a limited number of suppliers to source a majority of our aircraft and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers; disruptions to our regional network and United Express flights provided by third-party regional carriers; unfavorable economic and political conditions in the United States and globally (including inflationary pressures); reliance on third-party service providers and the impact of any significant failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; extended interruptions or disruptions in service at major airports where we operate and space, facility and infrastructure constrains at our hubs or other airports; geopolitical conflict, terrorist attacks or security events; any damage to our reputation or brand image; our reliance on technology and automated systems to operate our business and the impact of any significant failure or disruption of, or failure to effectively integrate and implement, the technology or systems; increasing privacy and data security obligations or a significant data breach; increased use of social media platforms by us, our employees and others; the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions on our operations; any failure to attract, train or retain skilled personnel, including our senior management team or other key employees; the monetary and operational costs of compliance with extensive government regulation of the airline industry; current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; costs, liabilities and risks associated with environmental regulation and climate change, including our climate goals; high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel (including as a result of the Russia-Ukraine military conflict); the impacts of our significant amount of financial leverage from fixed obligations, the possibility we may seek material amounts of additional financial liquidity in the short-term, and the impacts of insufficient liquidity on our financial condition and business; failure to comply with financial and other covenants governing our debt, including our MileagePlus® financing agreements; the impacts of the proposed phaseout of the London interbank offer rate; limitations on our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income for U.S. federal income tax purposes; our failure to realize the full value of our intangible assets or our long-lived assets, causing us to record impairments; fluctuations in the price of our common stock; the impacts of seasonality, weather events, infrastructure and other factors associated with the airline industry; increases in insurance costs or inadequate insurance coverage and other risks and uncertainties set forth in Part I, Item 1A. Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission. The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all potential risks and uncertainties. In addition, certain forward-looking outlook provided in this release relies on assumptions about the duration and severity of the COVID-19 pandemic, the timing of the return to a more stable business environment, the volatility of aircraft fuel prices, customer behavior changes and return in demand for air travel, among other things (together, the "Recovery Process"). The COVID-19 pandemic and the measures taken in response may continue to impact many aspects of our business, operating results, financial condition and liquidity in a number of ways, including labor shortages (including reductions in available staffing and related impacts to the company's flight schedules and reputation), facility closures and related costs and disruptions to the company's and its business partners' operations, reduced travel demand and consumer spending, increased operating costs, supply chain disruptions, logistics constraints, volatility in the price of our securities, our ability to access capital markets and volatility in the global economy and financial markets generally. If the actual Recovery Process differs materially from our assumptions, the impact of the COVID-19 pandemic on our business could be worse than expected, and our actual results may be negatively impacted and may vary materially from our expectations and projections. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change. For instance, we regularly monitor future demand and booking trends and adjust capacity, as needed. As such, our actual flown capacity may differ materially from currently published flight schedules or current estimations. Non-GAAP Financial Information:  In discussing financial results and guidance, the company refers to financial measures that are not in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP and are presented because management believes that they supplement or enhance management's, analysts' and investors' overall understanding of the company's underlying financial performance and trends and facilitate comparisons among current, past and future periods. Non-GAAP financial measures such as adjusted operating margin (which excludes special charges (credits)), CASM-ex (which excludes the impact of fuel expense, profit sharing, special charges and third-party expenses), adjusted pre-tax margin (which is calculated as pre-tax margin excluding operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net) and adjusted net income typically have exclusions or adjustments that include one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded because the company believes they neither relate to the ordinary course of the company's business nor reflect the company's underlying business performance. Because the non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related GAAP financial measures presented in the press release and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Please refer to the tables accompanying this release for a description of the non-GAAP adjustments and reconciliations of the historical non-GAAP financial measures used to the most comparable GAAP financial measure and related disclosures. -tables attached-  UNITED AIRLINES HOLDINGS, INC STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)  Three Months Ended December 31, % Increase/ (Decrease) 2022 vs. 2019 Year Ended December 31, % Increase/ (Decrease) 2022 vs. 2019 (In millions, except per share data) 2022 2021 2019 2022 2021 2019 Operating revenue: Passenger revenue $  11,202 $    6,878 $    9,933 12.8 $ 40,032 $ 20,197 $ 39,625 1.0 Cargo 472 727 316 49.4 2,171 2,349 1,179 84.1 Other operating revenue 726 587 639 13.6 2,752 2,088 2,455 12.1 Total operating revenue 12,400 8,192 10,888 13.9 44,955 24,634 43,259 3.9 Operating expense: Aircraft fuel 3,317 1,962 2,249 47.5 13,113 5,755 8,953 46.5 Salaries and related costs 3,000 2,579 3,078 (2.5) 11,466 9,566 12,071 (5.0) Landing fees and other rent 657 681 650 1.1 2,576 2,416 2,543 1.3 Depreciation and amortization 624 619 606 3.0 2,456 2,485 2,288 7.3 Regional capacity purchase 571 601 725 (21.2) 2,299 2,147 2,849 (19.3) Aircraft maintenance materials and outside repairs 600 399 475 26.3 2,153 1,316 1,794 20.0 Distribution expenses 434 235 417 4.1 1,535 677 1,651 (7.0) Aircraft rent 59 63 67 (11.9) 252 228 288 (12.5) Special charges (credits) 16 56 130 NM 140 (3,367) 246 NM Other operating expenses 1,745 1,405 1,630 7.1 6,628 4,433 6,275 5.6 Total operating expense 11,023 8,600 10,027 9.9 42,618 25,656 38,958 9.4 Operating income (loss) 1,377 (408) 861 59.9 2,337 (1,022) 4,301 (45.7) Nonoperating income (expense): Interest expense (479) (429) (161) 197.5 (1,778) (1,657) (731) 143.2 Interest income 156 6 30 420.0 298 36 133 124.1 Interest capitalized 32 23 20 60.0 105 80 85 23.5 Unrealized gains (losses) on investments, net 32 (125) 81 (60.5) 20 (34) 153 (86.9) Miscellaneous, net 12 88 13 (7.7) 8 40 (27) NM Total nonoperating expense, net (247) (437) (17) NM (1,347) (1,535) (387) 248.1 Income (loss) before income taxes 1,130 (845) 844 33.9 990 (2,557) 3,914 (74.7) Income tax expense (benefit) 287 (199) 203 41.4 253 (593) 905 (72.0) Net income (loss) $      843 $     (646) $      641 31.5 $      737 $ (1,964) $   ...Full story available on»»

Category: earningsSource: benzingaJan 17th, 2023

Transcript: Jennifer Grancio, Engine No. 1

       The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is… Read More The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture.        The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, Jennifer Grancio was there at Barclays when the beginning of ETFs and passive indexing really took off on an institutional basis. She was one of the founding members when BlackRock bought iShares from Barclays and really helped drive broad adoption of passive and ETFs in the financial community. Today, she is the CEO of Engine No. 1, which focuses on the fascinating transitions that are taking place in broad strokes across the economy. There are numerous opportunities in energy, in climate, in robotics, in automation, and her firm helps invest in those spaces. Not quite an activist investor, but she has worked with a number of companies like Exxon and General Motors and Occidental, where the input of Engine No. 1 drove significant changes at those companies. They’re a longtime investor than a black hat activist where they’re looking to buy stock Forza, an exit of the CEO and sell once the stock pops, really fascinating story. I found it quite fascinating and I think you will as well. So with no further ado, my interview with Engine No. 1’s Jennifer Grancio. Let’s start out talking about the early part of your career. I’m really curious how you ended up in BlackRock. But before that, you’re working as a consultant. JENNIFER GRANCIO, CHIEF EXECUTIVE OFFICER, ENGINE NO. 1: Yes. I think like a lot of people in undergrad, I went to Stanford thinking I was going to do genetics and science — RITHOLTZ: Right. GRANCIO: — did an internship, pivoted, ended up doing international relations. Then as you head towards the end of college, you figured you’re going to save the world, then I’m going to go work for the World Bank. The World Bank wants you to take out more student debt and get a master’s degree. So like so many other bright-eyed graduates, I trooped off to, you know, one of the traditional professional services professions. But what’s kind of interesting for me about consulting was this idea that you almost apprentice with somebody that’s senior, and you run around and try to help companies and problems. So it seems like a good idea at that time. RITHOLTZ: At that time. GRANCIO: And that’s what I went off to do. RITHOLTZ: So how do you go from that? How do you end up at a place like BlackRock? iShares seems to have been almost an accidental business line from them. Am I remembering correctly, that was a post financial crisis Barclays’ purchase, something along those lines? GRANCIO: Yes, exactly. Yeah. So if you go back, so management consulting, moved back to California and decided I was going to be a California person, not a New Yorker, no offense to New York, spent a lot of time here, all those things, right? RITHOLTZ: Better weather. The geography is beautiful. Sure. GRANCIO: And so I went looking for what I thought would be the best asset management business, I focused on asset management within the consulting space. Like, this idea that somehow if you got portfolio construction and savings right, you help people over time. And so I joined what was Barclays at that time. The asset management business of Barclays Bank was this little firm called Barclays Global Investors based in San Francisco. RITHOLTZ: And that was not such a little firm at that time, was it? GRANCIO: No. It was growing very quickly. And that business was an institutional business. So as an institutional business, we did indexing. We thought indexing was cool. And the iShares and the ETF idea came from, we just had a fundamental belief it was a better mousetrap. So there’s something about an ETF and we could go into that another time. There’s something about an ETF that’s a better mousetrap than a mutual fund. And so for Barclays Bank, we pitched here’s a great idea. Let’s build this ETF business in the U.S. And it’s a way for Barclays to build in the United States. And so we launched the business in 2000. So we launched it right into the dot-com crisis. RITHOLTZ: So from the dot-com crisis to the global financial crisis, what were the circumstances surrounding BlackRock saying to Barclays, yeah, we’ll take that little worthless business off your hands for a couple of hours? GRANCIO: Yeah. And the interesting thing about an ETF business is that it takes a long time to build. And so to your question, around that time, you’re going into 2008, Barclays needed cash. And the index business was starting to take off in the form of ETFs, or at least we thought that, but it was still a relatively small business. And so who were the other people that probably looked at that acquisition included other big indexers, big asset managers who weren’t sure, was indexing going to be a thing or not? Because remember, at the time, ETFs and index were synonymous, but Larry, you know, was more forward-looking. RITHOLTZ: Larry being? GRANCIO: Larry Fink of BlackRock. RITHOLTZ: Who arguably, and I know who Larry is, I just want the audience to know, arguably the purchase of iShares by BlackRock from Barclays could be one of the great opportunistic distressed purchases in the middle of a crisis ever in financials. What is iShares up to now? Like $4 trillion, something insanely? GRANCIO: Enormous. RITHOLTZ: Yeah. And they picked it up for a teeny tiny fraction of that. So what was your experience like when BlackRock took over iShares? GRANCIO: Yeah. So we built the iShares business first within Barclays. And we were a, you know, small but mighty team doing ETFs. And the whole idea I remember of ETFs is to go and to challenge mutual funds and challenge active management. So that’s a big thing to take on. And so as BlackRock work through the acquisition of all of the BGI business, including iShares, we spent a couple of years then getting to know BlackRock, as a little iShares team, and talking about ETFs and fee-based advice and portfolio construction, and all these things that we thought were trends we could take advantage of and use to build the business. But then the business really just got from strength to strength after that acquisition. We came out of the financial crisis, few rocky years in the ETF industry overall. Vanguard decided to get into ETFs in a serious way. BlackRock and iShares launched that core series as a competitive business. So kind of responding to what was going on in the market, and the business continued to grow and grow. And then I think from an ETF industry perspective, we did some important work on trying to protect the category of ETFs. So we did a lot of work with the U.S. regulators, European regulators and run the business in Europe for a while as well, talking about the differences between like a passive index fund, for example, an ETF that’s got commodity exposure and ETF that’s leveraged or inverse, in terms of trying to protect the vehicle and protect the category. And really since then, there’s just been continued explosive growth. RITHOLTZ: In your wildest dreams, did you ever imagine back from the sleepy early days of passive and ETF at Barclays that would grow up to be just the dominant intellectual force in investing, and reach the size it’s reached? What is even after this year, BlackRock has something like $8 trillion? $9 trillion? GRANCIO: Yeah. I mean, the numbers are huge. I think we did, but maybe we were naïve. But our view was, it was a trend that was going to happen. And if you could own the trend, and if you could accelerate the trend, this was a better way to invest. A better way to invest is to have a low cost solution at the core of the portfolio, and then hire people that are deeply capable to deliver alpha. So I would say we thought it could be big. But you know, it’s pretty amazing. RITHOLTZ: So you talk about accelerating the trend. What exactly do you do to help accelerate that trend? How do you drive acceptance of both ETFs as a wrapper as opposed to traditional ‘40 Act mutual funds, and passive versus more traditional stock picking market timing, active investment? GRANCIO: Yeah. I think when the industry first started, so going back, you know, 20 years now, the two things were synonymous. But, you know, let’s take those one at a time. So from a passive perspective, the argument we made as an industry selling passive ETFs was you really had to take a look at what the portfolio is doing over time, total cost, total risk exposure. And when you did that, you often found that there was a way to get better long-term performance and cheaper, by having some index in a portfolio. So that was the story on indexing. And then we kind of kept driving that into this idea of models. So now, you know, there’s a model, a huge amount of money, you know, trillions of dollars sit in models in U.S. wealth. What does that mean? It means a big wire house. Your brokerage puts a model together, this much of Europe, this much U.S., this much small cap. And then you can use index products to fill all those allocations. And so that was the kind of the 20-year build of how did passive get so big. And then ETF as a wrapper, it’s just a great way to get the price at the moment if you’re buying into the public markets, number one. And number two, it’s a great way to manage tax, where if you buy something now and you sell it in 20 years, and the markets gone up, guess what, we have to pay tax on that. But the kind of annual capital gains gift you get from a lot of mutual funds, it can be managed very astutely in the ETF wrapper. And that’s great. Like, that’s great for all investors. RITHOLTZ: Meaning if you’re a mutual fund owner who’s not selling, but somebody else sells and generates a capital gain, that gets spread around to the other older (ph) — GRANCIO: Exactly. So even if you’re — RITHOLTZ: — which doesn’t make sense at all. GRANCIO: I mean, as somebody that’s been doing ETFs for a long time, I say it doesn’t make any sense, whatsoever, because there’s another way to do it. And we’re finally seeing that now. We’re finally seeing a lot of the big mutual fund companies start converting into ETFs. RITHOLTZ: The flows even in a down year like 2022, the flows have all been towards passive, towards ETFs, towards low cost. It seems like a much better mousetrap. GRANCIO: I think it is. RITHOLTZ: But I’m not going to get much of an argument from you on that. So you mentioned Vanguard, we’re talking about Black Rock. Let’s talk a little bit about the role of brand on in the industry. How important is that when you’re putting out either a low cost passive ETF at 3 or 4 BPS, or something more active or thematic on the ETF side? GRANCIO: Yeah. I mean, the role of brand is pretty critical. And if you think about in the index business, if you’re managing it well, there’s not a lot of performance. It’s are you tracking the index? Yes or no. And so that power of the brand is massive. And my observation in this space is that the average investor, the average retail person that’s going out and investing or talking to an advisor, they don’t necessarily know one product provider or investor versus another. But they definitely know who they do business with or who they buy from. So that retail brokerage brand, their advisory brand has a huge impact on them. So to your question on Vanguard, like Vanguard is a brokerage firm, so you kind of know Vanguard. Vanguard does your 401(k), you’ve heard of Vanguard. And so for other people that enter the industry, and this is certainly what we did in the iShares business or what we do now at Engine No. 1, is you really have to be clear on who are you and what is your story because that brand matters a lot. RITHOLTZ: So you mentioned brokerage firms, and Vanguard does 401(k) brokerage. They do all sorts of obviously mutual funds and ETFs. How do you see some of the bigger custodians and actual brokers like Schwab and Fidelity in terms of ETF developments? We know it’s BlackRock, Vanguard and State Street at the top. These guys are no slouches either, are they? GRANCIO: No. I mean, I would say if we go back and we look at the history of ETFs and how they’ve developed, we see State Street, Vanguard and BlackRock. BlackRock iShares is very dominant, and they’re going to continue to be dominant in passive, period. They’re there. They’re big. They’re so big now. And we’ll come back to this later. I personally think there’s some problems with how big they are. But from an ease of buying decision-making perspective, they’re big. They’re dominant. The brokerages were late to get in the game. So Fidelity and Schwab got in much later. They don’t charge fees for those products. And so it makes it harder for them as a kind of a corporate organism to, you know, have that be a big part of their business. And then what we’re very excited about it Engine No. 1, and what you’re seeing with the mutual fund conversions, the big ones at DFA, at Franklin Templeton, and the list goes on, there are many, is that we’re now ready to move active funds into the ETF structure. And that I think is very exciting. But that’s new, that’s very new development. RITHOLTZ: So let’s talk a little bit about Engine No. 1. First, how did you get there from Black Rock? What led that transition? GRANCIO: Yeah. So I left BlackRock very large. I wanted to do a little bit more innovation. And I think sometimes the biggest firms are great, but they can’t always lead from an innovation or change perspective. RITHOLTZ: Right. GRANCIO: So I spent a couple of years, I built an advisory firm, and took a couple years to decide on, you know, what was the next move? And I did some great work with a number of large wealth and IRA firms that were going through an M&A or selling themselves process, did some work on impact investing, actually led me to Ethic and joined the MannKind board, but decided I was definitely going to be a builder, that there was this opportunity to do something different than traditional mutual fund and passive ETF. And so I started looking for what would be the thing I wanted to build with partners, and then I met Chris James. RITHOLTZ: And did you launch Engine No. 1, or did you join him when it was already existing? GRANCIO: We launched it together. Going back, you know, before we started the firm, so Chris James is our founder at Engine No. 1. And Chris’ background is hedge fund and private fund investments. And what he’s really known for, he’s known for taking an extremely long view on something and doing the work to let’s say, where is the opportunity as you go through a huge transformation or transition? So Chris was hard at work on this and wanted to reach into the wealth space. So rather than just doing products that were private and you could help institutions invest, what could we do that was broad and into the wealth space? So I joined him to collaborate, given my background on that side of the business. And the idea of Engine No. 1 is just to help people benefit from these huge transitions and transformations that are very much not the backwards-looking. Look, Google and Amazon got great. You know, our portfolios have a lot of growth in tech, great. There’s a lot of money to be made in the energy transition, transportation, agriculture. And so really, the idea of the firm is to be able to look forward, find mispricing, and make money as we go through these huge changes. RITHOLTZ: The firm’s name is intriguing. Where does Engine No. 1 come from? GRANCIO: The first firehouse in San Francisco is actually a couple of blocks from our office. And in talking about what we were trying to do, which is maybe it’s grandiose, but if you think about it like capitalism works. And what we were agitated about is we saw the market, you have ESG over here, very small. We think old school ESG does not work. We have a strong view on that. We’ll come back to that. Indexing, too many shares are locked up in indexes. Index don’t vote their shares. And then maybe most important of all, we’re going to need a General Motors and Ford to actually be able to do this huge transition from internal combustion to battery electric vehicles. And so, you know, actually, the firehouse is the center of the community, right. And if you think about how a community survives, the firehouse is the center of the community. It takes care of itself. A well-run business really should be as simple as sort of taking care of the environment, it’s in being aware of it. And in public markets, that means you also have to be able to adapt and manage their change. RITHOLTZ: So tell us a little bit about the strategies you guys employ. What are your key focuses? How do you deploy capital? GRANCIO: Yeah. As a business, we run an alts business, and then we run the ETF platform. So if you think about it very simply, these huge ideas about transition and transformation and how to make money are very common across what we do. But we have two businesses. And the big ideas are these transitions and transformations, and how do you take advantage. And so when we look at public companies, we look at every single company, and we look at what their path is through time. So I think this is one of the problems with a lot of investment strategies right now is they’re looking to short term. And then we build the impact or externality data, we just build it into the financial model, right? Because the data is out there particularly on governance, particularly on environmental issues. And when we do that, in the sectors that are in transition, let’s take energy, for example. If you’re an oil and gas company, and you don’t account for the emissions that you’re dealing with and you don’t decrease them over time, you’re going to have a problem. And we saw this when we started building the business that a lot of these companies were heading towards zero terminal value. So let’s take Exxon, for example — RITHOLTZ: Okay. GRANCIO: — where if you take Exxon, and Exxon keeps doing long-dated fossil fuel projects, and has no plan to reduce emissions at any point in time, and has no plans to develop a green business. Well, that’s not very good for Exxon stock when we get to 7 or 10 years out. And so we see a lot of these opportunities where like it’s just math. The capitalist system is supposed to have the company govern itself, so that it’s making money through time. It has a longer duration of business, and it has a higher value. And that’s the kind of the way that we work in everything that we do. RITHOLTZ: So you mentioned environmental issues and impact. You mentioned governance. This sounds a lot like two-thirds of ESG. GRANCIO: Yeah. We think the way people use that label is a little bit problematic. So people often use that label looking backwards. RITHOLTZ: Flash that out a little more — GRANCIO: Yeah, yeah. RITHOLTZ: — because when I hear someone mentions ESG, I typically think of an investor and for the most part, as we go through this generational wealth transfer, you do surveys of investors, husband passed away, the wife tends to be much more empathetic with issues of equality and environmental concerns. And the next generation is much more concerned. So it seems like there is a desire to express those beliefs in their portfolios. Why does that not work with ESG? GRANCIO: Yeah. I mean, I guess our view on that would be, you can always express values in a portfolio. But if you’re going to express values in a portfolio, say that I am expressing my values in the portfolio, which is different than the core concept of managing money over time generally, for the person that’s doing the managing is to be a fiduciary — RITHOLTZ: Right. GRANCIO: — and drive good outcomes and strong returns. And in general, for the investor, is to drive returns over time. And so the way we think about it is, really, you can do that. And any business that is going to survive over time has to be sustainable, has to address or basically cover their impacts, right, after the cost of capital so that they can be profitable over time. So instead of thinking ESG means it’s values based, I don’t like the company, they’re bad, I’m going to screen them out of my portfolio. We don’t think that’s a great way to manage your core portfolio over time. We think the better way is you simply have to engage with the companies to make sure that their most material impacts that’s financial data, right? That’s risk data if you don’t manage your emissions as an oil and gas company. And so let’s build that into just investing to make returns as opposed to this special class, which, you know, it devalues base and ESG tends to kind of infer value over performance, right, or divesting from companies that you don’t like. And we don’t think that’s a great way to invest. RITHOLTZ: So let me push back a little bit on the low carbon strategy. It seems like it’s half of the economic equation because people seem to be approaching entities like ExxonMobil and others, the suppliers of the carbon-based fuel. What is that doing if you’re ignoring the other half, the consumers? So every other company that is not a carbon energy producer is likely to be a carbon energy consumer. They’re running factories. They’re shipping goods. They’re having offices. Why focus on one half of the equation and not the other? GRANCIO: Yeah. I mean, I think that’s the right question. And we focus on both. And so let’s take for a minute the energy industry, and then the transportation or auto industry. That’s an example of that kind of handshake or handlock, right? So in the case of the car companies, that’s consumption. So if we’re consumers and we’re driving cars, which we still do and people are planning to do in the future, the car company can switch from encouraging the behavior of driving internal combustion engines, which have very high emissions, or the car company can know that the consumer demand is shifting a little bit and they can build a car that is an awesome battery electric, reasonably priced vehicle. And then they can capture that shift in demand. And that’s really good for the car company. So actually, we a hundred percent believe that this has to primarily be driven on the consumer demand side and on my first piece of that. So if I’m a consumer, I buy a car, you’ve got to start with the car company. However, if you look at global emissions, you know, 34 percent of that today comes from the energy companies. So at the same time in parallel, there’s still an opportunity to work with those companies on, as battery electric comes up, as fossil fuel comes down, how do those companies make a lot of money 9 or 10 years from now as we go through that transition? RITHOLTZ: Explain that 34 percent. Because, again, it’s that someone is a buyer, someone is a seller. They’re not burning 34 percent of the fossil fuels, they’re selling it to consumers — GRANCIO: That’s right. RITHOLTZ: — who were burning it. Like, there are some low carbon ETFs. I just don’t understand. It’s why the war on drugs failed, if you’re only going to interdict the supply but ignore the demands, you’re not going to be successful. GRANCIO: Yeah, that’s right. I mean, and we think from an investment perspective, if you want to solve this problem on how do you take emissions down, we think that problem can be solved and you can make money by owning the people that are going to win. So you asked before, like, what do we do? What strategies do we run in the ETF business? Our active team, it’s effectively hedge fund investors. So they’re very concentrated portfolios. We believe we’re right. There’s a handful of names, like under 30 names today in the portfolio. Ticker is NETZ, Transform Climate (NETZ), and what that portfolio holds is it holds companies that have emissions. But we believe that the companies in the portfolio are the companies that have the right strategy to, if I’m an energy company, I’m producing energy. There’s demand for energy, that’s what I do. But I’ll tell you my emissions, I’ll do methane third-party monitoring. I’ll do all the right things. So that from a social license to operate perspective, I’m at the top of my peer group. And in all cases, they have a strategy whereas fossil fuel demand declines, not today, but in 7, 10 years, they have a strategy to actually make money and still have value. So we’re picking the top best performing energy companies. We’re not saying energy is bad. Energy is essential, and we need that energy in the transition. And the portfolio then also holds the car companies that we think win. RITHOLTZ: So let’s talk about a couple of names. So a couple of energy names from NETZ and a couple of core companies from NETZ. GRANCIO: Yeah. And so one of the names we had in the portfolio, which is actually so highly valued, it goes in and out, depending on if it’s overvalued — RITHOLTZ: Right. GRANCIO: — it’s an active fund, is Occidental (OXY). And that’s an example, they were really the leader in the space. So they had started to develop greener businesses so that as fossil use comes down, they have another business and they’re competitive. That’s great for long-term value of the company. And — RITHOLTZ: What are their green businesses? Things like solar and wind or — GRANCIO: They have a range of things that they do in that space, but think of it as committing early to find ways to make money, having these people on staff, on the board that know how to run green businesses. And then from an emissions perspective, also, they were very early on telling us, being very transparent on Scope 1 and 2, and agreeing to oil, gas, methane partnership emissions with third-party monitoring of emissions, which we think is critical because again, methane emissions leaking, that’s probably the biggest thing. RITHOLTZ: Especially with natural gas. But with pretty any form of car being — GRANCIO: That’s right. RITHOLTZ: — capture, your carbon removal from the ground, that’s a big risk. Methane is even worse than CO2 in the atmosphere, right? GRANCIO: That’s right. And that’s right, and that’s some of the active ownership work we did on that portfolio, where Conoco and Devon are companies that we worked with, to join the methane third-party verification partnership this past summer. And that’s when we talk about Engine No. 1 as active owners, it’s not always, you know, the black hat activist. We actually haven’t done that other than Exxon. But the ability to really understand their business and go in and work with them. And actually, having them methane verified is a big deal, because then people understand what you’re doing in that part of the business. And it gives you license to operate because we need that energy source. RITHOLTZ: What are the car companies that are in NETZ? GRANCIO: General Motors is in NETZ. Ford has been, it goes in and out of the portfolio, based on how they’re doing, managing some of their supply chain constraint issues. And then Tesla is in the portfolio. But GM is at a much larger weight than Tesla. And then Tesla went out of the portfolio for governance reasons. RITHOLTZ: Because? Give me more specific. GRANCIO: Twitter. Because of Twitter. So the way that we manage that portfolio, basically what NETZ is, is you’re holding some of the biggest emitters, and you’re holding this 1.8 metric tons of emissions a year, so not low carbon, high carbon. And then what we expect is that those companies are going to take that number down to less than half within a decade. And so if you care about impact or sustainability, yeah, that’s great. That’s a huge win. You’re holding the companies, watching them. They’re taking emissions down. But if you want to make money, you’re holding the companies that are providing energy, but doing it in a way that they have a social license to operate. And then sort of come back to your Tesla example, all of this starts with governance. And so if a public company is going to make money over years and years, it’s all about governance. And do you understand your markets? Do you understand how things change? And so if you’re running Tesla and you have a huge job to do in terms of scaling that business, but you’re also doing other things at the same time — RITHOLTZ: Assess. GRANCIO: — and saying you don’t have time to run Tesla, well, that’s kind of a governance issue. RITHOLTZ: So when I looked at the acquisition of Twitter which started out as a lark, $44 billion, the market drops, wild overpayment. The bigger issue is if you think about who’s Tesla buyers, they seem to not be the people who Elon is playing to on Twitter. And in fact, as much as there are a lot of fanboys and I think you have to give Elon full credit for moving the entire auto industry to EVs, I think all the legacy-makers looked at him and said, we can’t let Elon do to us what Bezos did to the book industry and the booksellers and a dozen other industries. But it seems like he’s alienating that core middle left, all those liberals we’re going to own on Twitter. He seems to be chasing away a lot of his future buyers of Tesla’s. GRANCIO: He may be. That’s good news for GM NASA. We’re okay. We’re covered on that one. RITHOLTZ: And to say nothing about valuation issues and other assorted things — GRANCIO: Right. RITHOLTZ: — I’m assuming this is in strictly an ESG checklist. You looked at the usual — GRANCIO: Not at all. Yeah, we looked at the usual things and that’s maybe our main point, which is the people get in our industry in particular. They get stuck in old frameworks, right? An ETF is an index fund. An activist is somebody that comes in short term and fires the CEO. So I think we need to be careful of those sort of short ways and shorthand ways of thinking in investments. Our point of view is that there’s a lot of data available now. We have a huge amount of data. Take the climate and environmental-related issues. We have a lot of data on carbon, and we can estimate carbon prices. And so in a basic fundamental financial model, you can start with your old traditional financial model. But you can add in, we do this, we can add in the monetization of those emissions. And then as you build out your financial model, you can look at how the company reduces them over time. And we see those as purely financial metrics, right? That large externality for a company is a risk or financial measure. It’s not some separate ESG dot bubble rating system. It’s just their numbers, it’s math. It should go into the long-term valuation of the business. RITHOLTZ: Let’s talk about the Exxon situation. You accumulated a relatively small number of shares, and then reached out to management. Tell us about the process and how they reacted to your overtures. GRANCIO: Yeah. So from a team perspective, we started by making an economic case. So we did the work on here’s what we would do differently, here’s how we think the value of the business wouldn’t be higher if we did this. And the suggestions on what we would do differently included disclosure of emissions. It included better capital allocation decisions between this sort of short-term energy transition period. And we don’t know when it’s going to be, thanks to, you know, Putin and the Ukraine, longer than we thought a year ago. RITHOLTZ: Right. Right. GRANCIO: But at some point, we’re going to start to really pivot into an energy transition. And so what’s your best thinking, Exxon as a company, on what your business looks like, and your capability at a board level to extend the duration of the business, do things that may be renewable, or whatever they may be. What is it that you can do that’s in that area? And so those were the things that we requested. RITHOLTZ: They were receptive to that? GRANCIO: They were not receptive to that. But those are the things that we requested, which is usually how these things start. RITHOLTZ: So .02 percent of outstanding shares doesn’t exactly put the fear of God into them. Why a toe in the water and not a more substantial stake? GRANCIO: Exxon, going back to when we started the proxy campaign — RITHOLTZ: They were giant, right? GRANCIO: They were giant, but also they were a giant in terms of the big asset managers had not been able to get them to pivot from a governance perspective. So there were known concerns about governance. A lot of the big investors take a slower approach to work with management, not cause too much change, request changes. And there just hadn’t been any progress in this case. So we were able to have conversations. And the team did a huge amount of work with investors and passive investors, and active investors, walking through our economic case. If these things happen, better governance, better economic performance, and that, we think, is what allowed us to rally support. And as we were rallying support, as you see in this situation, I’m sure Exxon was talking to some of those investors as well. And so as we went through the campaign process, we saw some of these changes, changes in capital allocation decisions, and intention to launch a green business. So some of these changes started even before the proxy vote where new directors were elected onto the board. RITHOLTZ: So we talk a lot about specific companies. How do you look at the macro environment and geopolitics? You mentioned Putin’s invasion or the Russian invasion of Ukraine. Arguably, that’s going to accelerate the greening of Europe in particular, and the move to alternative energy sources, not dependent on Russia, which is all carbon. GRANCIO: Yeah. And I think to some extent, you can’t control what is the moment in time where the energy transition happens, right? However — RITHOLTZ: Right now. Right. Aren’t we more or less in the midst of this today? GRANCIO: We are in the transition. Absolutely. But we think that if you wanted to not use fossil or carbon intensive now, it wouldn’t possibly work. RITHOLTZ: Right. GRANCIO: We’re not ready to be transitioned. We are in the transition. And so the way we think about it is we have to be very savvy about where do you have a brown business? Where can that brown business be gray? Where does it start to use green techniques? Natural gas is a great example. We need natural gas. So how do you move natural gas in a way where you’re looking at methane. You don’t have methane leaks. You’re using green energy and electric sources to process the natural gas. There are a lot of things we can do even while we’re using fossil to be cleaner, nd to put the people that are cleaner and doing fossil in a better position to sell versus their competitor, because we are seeing these changes. And we do have a lot of people looking at carbon footprint as they’re buying or investing in companies. RITHOLTZ: So my colleague, Matt Levine mentioned your win. And now says, when they see you coming, you are no longer presenting as a scrappy, small startup. You’re bringing some receipts to the table. Hey, Exxon knuckled down. Now, you and I have a conversation. How has that changed since that win? GRANCIO: Yeah. We started with Exxon effectively. And so I wouldn’t say the next day, it was a sea change in a positive way. I would say it’s complicated, because after you’ve done that, the board and the CEO are a little bit worried about what our intentions are and it takes time to build those relationships. And Chris does a lot of this work directly with the CEOs and the companies that are in the portfolios. And it takes time to build trust. But our relationship with them is basically having modeled their business ourselves and modeled all their competitor businesses, and have gone to kind of up and down the supply chains. And once we get to know each other, we’re giving them what they find is actually some very helpful point of view on if I like your business, I think this, you know, consumer demand is going to flip sooner, you’re going to miss it, or how organized are you on supply chain? What are your bottlenecks? And so it’s become really very constructive with a lot of the companies that we work with. RITHOLTZ: It sounds like your early training in the consultant world wasn’t for naught. This is almost a hybrid between activist investing and consultants. GRANCIO: And just investing, right, high quality investing means you really have to understand what a company strategy is and what are the bottlenecks, what are the places where they may miss. If you understand those, you can make those faster, shorter, better, less risk. Then that’s really positive for being more sure that the company increases in value. RITHOLTZ: So let’s talk a little bit about your toolbox. You mentioned proxy voting, you mentioned modeling. What else does Engine No. 1 bring to the table as ways to get management to see the world from your perspective? GRANCIO: Yeah. And part of it is the data science work that we do around the sizing of emissions, comparative emissions, monetization of emissions, so call that our total value approach to looking at the externalities of these companies. So we bring that. We’ve done the modeling all the fundamental work that we do. And then it’s very active engagement, where we want to stay engaged. That’s part of where the alts business came from. If there’s something in the private markets that could work differently to help a big public company move, can we make connections? Can we help that move along? And then proxy voting is important. So most of what we do is this kind of very intense active engagement. And we’re active owners of the company, not always an activist in a traditional meaning. We also launched an index product. So you know, our view is that you really have to hold these companies if you want to own the winners over time. And if you want to drive change, you also have to hold the companies, you can’t divest. A problem in the dominance of the current index providers is that they’re big and it’s complicated to vote shares, because you have people on different sides of every issue. So while we’re at it, put a new index product out on the market, that ticker is VOTE, which is pretty simple. It’s literally an index. We vote the shares in line with our economic outcomes, and we post them as soon as we vote. So a little option for people that still want to use index instead of active. RITHOLTZ: That’s really interesting. We’ve talked about Exxon so far, and Tesla and Ford. Tell us about your involvement in General Motors, what attracted you to the company, and what sort of positioning do you have with it. GRANCIO: Yeah. And General Motors, it’s going to take some time, right? So General Motors has been in the portfolio since we launched NETZ and still is, and has stayed there. And when we work with General Motors, a lot of our work has been about how do we accelerate the transition to battery electric vehicles for them as a manufacturer, and not for an ideological reason, purely because we think the consumer demand is shifting more quickly. RITHOLTZ: That’s where the market is going. GRANCIO: Right. That’s where the market is going. RITHOLTZ: That’s where the consumer demand is moving. GRANCIO: Again, this is an economic argument for us in working with General Motors, that the faster you get to all battery electric, which means you need to build the battery plants, you need to build them bigger, you need to build them faster, you need supply agreements locked up for the rare metals, and then you need to work on bringing the cost of batteries down. Because as all of that happens, GM makes 8 to 9 million cars a year. And so if those cars are all battery electric vehicles and the battery cost comes down, you know, what’s Tesla’s multiple, right? They have the opportunity to go from where the GM multiple is today, which is very low, very depressed value stock, all the way up to what producing BEVs at scale is going to look like. And that’s a huge value creation opportunity. RITHOLTZ: Let’s talk about what’s going on in the world of ESG and greenwashing and wokeism. There’s so many things happening here and I think people don’t really use these buzzwords appropriately. Let’s start out with greenwashing. Tell us your view of it and why it’s problematic. GRANCIO: Well, I think if you could do everything from scratch, I get this a lot from people that run large asset management companies, they’re like, gosh, I wish I could just start everything from scratch again in this environment. So I think the reality is, if you’re running a strategy and you don’t care, or you don’t have risk metrics on, let’s say, the environment and your strategy, it’s very hard to fit them on top. And I think a lot of people get caught in that from a greenwashing perspective. What we do is we start from scratch. We think about these material impact things as financial data, and it’s just part of our process. And so there’s no greenwashing there. But for people that were investing in something and now want to take advantage of a moment in time, or people that are investing and actually don’t really understand how environmental risk factor into the portfolio, I do think you just have to take a timeout and go back to basics and better articulate what the strategy is and what you’re actually doing to the market. And if it’s not a green strategy, you kind of have to say that. RITHOLTZ: It seems like a lot of this has just been on the hot buzzword of the day. GRANCIO: Well, a lot of our society right now has been on the buzzword of the day. So I think we need to be very careful about that when it comes to investing. RITHOLTZ: So let’s talk about wokeism. You’re describing ESG as sort of a risk management tool to filter out certain potential problems down the road. But if I pick up the Wall Street Journal or the New York Post and flip it to the editorial section, all I hear is woke capitalism and this is what Disney is doing, and this is what Apple is doing, and this is what Nike is doing. Is this really woke capitalism? Tell us what’s happening in that space. GRANCIO: Yeah, I think we have to remember what capitalism is. And then I’m not sure what we mean by woke, which is part of the problem. So your capitalism is meant to be you in public markets kind of, you know, put that in the private markets as well. It’s meant to be you have a set of financial shareholders, you have other stakeholders. You’re making money for the shareholders over time. That’s the definition of capitalism. It’s really hard to make money for shareholders, the financial shareholders over time if you don’t treat your workers well or you destroy the community in which you live. That’s just kind of good business or doing business the right way. I think we sometimes get confused when we talk about values or practices, and you can’t link it directly back to financial returns. So, listen, when it comes to climate, we feel like we can do a pretty good job with the data out there, to link how a company handles climate and environment with how they perform as a stock over time. You know, there’s not enough data on the social side. The research is spotty. I really hope there’s better data. I hope the research gets better. I hope we have causality there. But I think as investors, we have to be careful what we’re talking about. If the company has less emissions, they get credit for trying to do the right thing and the stock price goes up. That’s capitalism. Where from a values-based perspective, we want to ask a company to do something, that’s a little bit different. So I think that distinction is really important. RITHOLTZ: And it’s pretty robust then on governance, if you — GRANCIO: Yes, it did. RITHOLTZ: — elevate women to senior members, if you have people on your board that are diverse. Those companies historically have outperformed the companies that have not. GRANCIO: Yeah. And the board, for a minute, is another one that’s very hard to reduce into one stat. So if you think about all the research that’s been done on boards, in Engine No. 1, we do a lot of work with academics. So we’re always trying to look for these places where we’ve got data and causality, and we can link it to economic outcomes. And when it comes to boards, what a lot of the research would tell us is if a board is deeply non-diverse, that first, if you add one diverse person or thinker, they may actually have worse performance. But if a board starts to have multiple varieties of diversity, and the board listens to the diverse points of view, those are the boards where we get the real outperformance. And then remember, it’s a board. So it’s not just diversity of thought, it has to be diversity of capability. Because as these companies go through change, you know, you need other CEOs that have been successful through change. You know, if you’re an old school media company, you need people on the board that are successful with where the puck is going. So I think we have to look for both of those kinds of diversity. And boards that listen to each other, have diversity and have that important diversity of capability, absolutely, those are going to be the highest performing ones. RITHOLTZ: So we talked about Exxon. We talked about GM, and Ford, and Tesla. What other companies are you looking at as being on the cutting edge of change to take advantage of this transitional moment? GRANCIO: Yeah. I mean, one of the things we’re excited about, I can’t talk about the product because we’re not through the SEC with it yet — RITHOLTZ: Right. GRANCIO: — although it’s in filing. But from a theme perspective, we’re super excited for the U.S., from a U.S. competitiveness perspective. What happened during COVID is supply chains were too global, too fragile, and they broke. RITHOLTZ: Right. GRANCIO: And so what we’re already seeing, and we’re going to see a lot more of this in the next few years, is we’re seeing a huge resurgence of manufacturing jobs in the U.S. and it’s going to be great for a lot of these communities. So we see semiconductor plants. We see battery plants, Michigan, Tennessee, Kentucky. RITHOLTZ: Arizona is starting a big chip — GRANCIO: — Texas. Exactly. So it’s happening already. There’s a huge increase in manufacturing. And then as that happens, if you build a manufacturing plant, there’s a huge job multiplier. You have people come in to build the plant, and people work in the plant, and people work to move goods in and out of a plant. And we’re going to see a huge growth, we believe, in railroads. So if you’re going to increase manufacturing in the North America, guess what, you don’t need to ship things overseas. You need better, more effective railroad, continuing to strengthen the lines and the movement of goods around the U.S. And then automation, so good and bad is, you know, we have less birthrate and less people coming to the U.S. And we’re going to have a huge number of quality jobs. And so companies like Rockwell Automation, that high quality jobs and brand new factories, with automation to assist in the manufacturing. It’s going to be pretty awesome from an investment team perspective. RITHOLTZ: So Rockwell just isn’t terrifying us with YouTube videos of robots that are coming to kill jobs (ph)? GRANCIO: No. The high quality blue collar, if you will, workers and all these new plants, they’re not going to be enough of them. And they’re going to be happy that robots are there to help them RITHOLTZ: Really quite interesting. So let’s talk a little bit about some of the political pushback to the sort of investing you do. Maybe Florida is the best example, passing laws to punish a specific company, Disney, who objected to Florida’s anti-LGBTQ sort of legislation. Is the environment changing for this sort of proxy voting and criticism and working with companies? Or is Florida just Florida and you know, it’s kind of a one-off? GRANCIO: Listen, I think companies have consumers. And so if I’m a company, if I’m Disney and I have consumers, and I feel like my company needs to stand for something because it allows me to serve my consumers to say my brand has value, that’s something that Disney is going to have to push for. So I think, first of all, when it comes to public companies, some of them have one audience, some of them have another audience, and they may need to behave in ways to make their audience feel good so they can be in business and sell their product. And I think, separately, if we talk about proxy voting, successful proxy votes should be economic. So back to the kind of fiduciary concept we were talking about earlier. So if a proxy vote says, you know, can you please disclose more information about your workforce? That’s helpful to investors. Great. That often makes sense to us. If the proxy vote says, I don’t like this thing you do, please don’t do it. But there’s no economic causality. RITHOLTZ: Right. GRANCIO: I think it’s hard for that to be a proxy voting issue versus a values-based conversation with the company. So our belief is proxy votes matter. We should all use our vote. But proxy voting is a tool to drive kind of long-term economic performance with companies. Sometimes there are just value-based issues that shouldn’t be tackled through proxy votes. RITHOLTZ: I know I only have you for a limited amount of time. So let’s jump to our favorite questions that we ask all of our guests starting with, tell us about your early mentors who helped to shape your career. GRANCIO: Yeah. It’s funny, I don’t have a lot of mentors where it was that one guiding light. I found that I picked up little bits and pieces from different people. So Condi Rice was a provost when I was at Stanford. RITHOLTZ: Really? GRANCIO: And so it was that inspiration that sort of sent me off down the international relations path. There was just a level of smarts and confidence that I really appreciated, that I picked up from her. And then a professor in business school who said women can definitely have it all. But you’re kidding yourself if you think you can have it all at the same time. So, like, pace yourself, Like, go after it, but pace yourself. You can’t literally do it all at the same time, which is good advice. And then I think there are a lot of people for me, where I learned one or two lessons from different people. And now, I do a lot of mentoring of other people. And that is my overarching suggestion on this is you got to ask a lot of questions. And you don’t always have to have a lifetime relationship with everyone, but get any nugget you can get and run with it. RITHOLTZ: I like it. Let’s talk about books. What are some of your favorites and what are you reading currently? GRANCIO: So Maya Angelou is actually a favorite of mine. I find it relaxing and it’s so different than what I do every day, and kind of American and lyrical. Harry Potter, one of our kids is younger, so working our way through Harry Potter. And then the Daniel Kahneman Thinking Fast and Acting Slow, I read that last year. I like that a lot because you got to remember sometimes how our brains work. And the fact that we rush to things and we shortcut, and we group things. And so I find that helpful sometimes and just being calm about how else can we solve a problem, or why is somebody reacting the way that they do. RITHOLTZ: What sort of advice would you give to a recent college graduate who is interested in a career in either impact ESG activist, whatever you want to call it, type investing, or ETF and passive investing? GRANCIO: Well, first, I’d say those are great areas to go into. You should go into it. And definitely learn how to invest, learn how to be an investor. Don’t stick to one fad or one mousetrap. If you can learn how to be an investor, or how investors think, that will serve you so well in our business. And I guess to new graduates, I would say don’t give up hope. It’s going to be a bad job market. So take those internships, be a little bit scrappy, and just learn from whatever that first job is, two years in, because you’ll pick up a phenomenal amount of information. And if it’s not what you love, great, then go do something else after it. But it’s a great place to build a career. RITHOLTZ: Really interesting. And our final question, what do you know about the world of investing today that you wish you knew 30 or so years ago? GRANCIO: I think it’s that the overall portfolio construction matters, right? So as an investor, thinking about when you build, like when we build Engine No. 1, we built products or we put strategies out into the market, the more you can make them balanced and with some duration. So if somebody puts something in the portfolio, they sort of understand what it’s going to do, and what the return stream looks like and what the risk looks like, as we’re investing and then selling to other people. I think that ability to build products that are durable, and it’s clear what they do is really, really important. It lets you build your brand. It lets you build trust with the investors. RITHOLTZ: Really interesting. Thank you, Jennifer, for being so generous with your time. We have been speaking with Jennifer Grancio. She is the CEO of Engine No. 1. If you enjoy this conversation, well, check out any of our previous 450 interviews. You can find those at iTunes, Spotify, YouTube, wherever you get your favorite podcasts. Sign up from my daily reads at You can follow me on Twitter @ritholtz. Check out all of the Bloomberg podcast @podcast. I would be remiss if I did not thank our crack team who helps put these conversations together each week. Sarah Livesey is my audio engineer. Atika Valbrun is my project manager. Sean Russo is my head of Research. Paris Wald is my producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END ~~~   The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureJan 17th, 2023

I compared poke on the continental US with the authentic version from Hawaii, and now I"ll only eat the real deal

I tried ahi and salmon poke in Washington, DC, and Hilo, Hawaii. Toppings like pineapple and mango made mainland poke worse, in my opinion. Poke has become popular far beyond Hawaii.Alex Bitter/Insider Poke has become popular around the world, with restaurants popping up far beyond its home of Hawaii. The US market for poke is expected to grow by $782 million, or 71%, between 2021 and 2026, according to market research firm Technavio. I tried poke on the US mainland and compared it with what's available in Hawaii. The Hawaii poke was simpler but tasted better to me since it wasn't cluttered with toppings. Poke, or marinated raw fish, has become popular around the US — and the world.A poke bowl with kimchi.GettyRestaurants that serve the dish have popped up everywhere from Manhattan to European capitals.Diners at a poke restaurant in London.Jonathan Brady/PA Images via Getty ImagesYou can't get a can of Pepsi or a Big Mac in Moscow anymore, but a quick search suggests you can choose between several poke restaurants in the Russian capital.A map showing poke restaurants in and around Moscow.Alex Bitter/InsiderI grew up in Hawaii eating poke, so I decided to try poke in Washington, DC, and compare it with what I could find in Hawaii.Alex Bitter/InsiderI started my comparison with a visit to Poke Papa, a restaurant in Washington's Chinatown.Alex Bitter/InsiderPoke Papa has roughly 1,100 reviews on Google, with an average rating of 4.7. That makes it the most reviewed poke shop in Washington, as well as one of the highest-rated.Alex Bitter/InsiderAt the counter, the first thing that caught my eye was the variety of toppings you could add to your poke. Examples were corn, mango, pineapple, and seaweed salad.Alex Bitter/InsiderPoke Papa guests can choose from a list of pre-built "signature" bowls.Alex Bitter/InsiderThey can also create their own custom bowls, with more-traditional options like spicy tuna and furikake (a mix of dried seaweed, fish, and sesame seeds), as well as unconventional additions such as crab salad and carrot.Alex Bitter/InsiderI ordered three of Poke Papa's signature bowls, each of which came with a few additional-topping options free of charge. The bowls were about $15 each.Alex Bitter/InsiderOne of the bowls was the "onolicious," which uses ahi (yellowfin tuna) in a soy sauce as its base. I added seaweed salad, mango, and pineapple as optional toppings.Alex Bitter/InsiderThe pineapple and mango were odd additions to the bowl. Ultimately, it was my choice to add them, but I wondered what on the menu, if anything, they would complement.Alex Bitter/InsiderThe fish wasn't fresh, but I liked the sauce on it the best out of the three bowls I ordered. It reminded me most of the poke I had growing up in Hawaii.Alex Bitter/insiderI also ordered the sakura-salmon bowl, which included salmon marinated in a sauce of cilantro, jalapeño, and yuzu, a citrus fruit that tastes like a cross between a lemon and a grapefruit. I added crab salad, seaweed salad, and corn as optional toppings.Alex Bitter/InsiderThe yuzu sauce mixed together flavors that didn't work well together, let alone on poke. Meanwhile, the fish itself didn't taste much like salmon.Alex Bitter/InsiderOverall, each of the three bowls felt like an odd mix of flavors. The mismatch was most pronounced with the fruit and vegetable toppings, but the sauces also disappointed me, especially the yuzu marinate on the salmon.Alex Bitter/InsiderAfter leaving Poke Papa, I headed a few blocks down the street to get something I would find more satisfying for dinner.Alex Bitter/InsiderA few days later, I met up with some friends who had also grown up in Hawaii to visit another local poke restaurant: Hilo Poke & Sushi in Washington's Adams Morgan neighborhood.Alex Bitter/InsiderI scanned the picture menu posted outside before entering. Like Poke Papa, the choices seemed to contain several toppings each.Alex Bitter/InsiderAnd like Poke Papa, Hilo's menu gave diners a lot of choices when it came to toppings. This time, though, I stuck to the restaurant's signature bowls and did not add any extra toppings.Alex Bitter/InsiderThe poke bowls at Hilo contained a dollop or two of fish. The "toppings," meanwhile, made up the majority of what was in the bowls.Alex Bitter/InsiderA great example was a bowl called "R. House" on the menu. It contained more cubed cream cheese, which I already thought was an odd choice, than poke.Alex Bitter/InsiderOne of my friends said that the wide variety of toppings reminded him more of Chipotle or Cava fare than authentic poke from Hawaii, which tends to include few, if any, additions.A Chipotle order.Grace Dean/InsiderI agreed. By this point, it was obvious that a lot of mainland poke restaurants were serving something very different from traditional poke from Hawaii.Alex Bitter/InsiderSo I flew to the real Hilo, Hawaii, to visit my parents for the holidays — and get some Hawaii poke to compare with what I had on the mainland.Alex Bitter/InsiderMy destination was a Hawaii supermarket chain called Sack N Save, which operates a store near my family's house.Alex Bitter/InsiderWhile there are many great restaurants in Hawaii that serve poke, Sack N Save and its sister chain, Foodland, have stores on the most populous Hawaiian islands, making it an easy place to stop for poke.Francis Dean/Corbis via Getty ImagesSack N Save and Foodland have built a reputation as a place to get poke, as demonstrated by these reusable bags I found near the front of the store.Alex Bitter/InsiderI headed to the back of the grocery store to get to the seafood department and the poke counter.Alex Bitter/InsiderI could choose from several kinds of poke, including spicy ahi and octopus.Alex Bitter/InsiderThere were almost no toppings, just different prices for different poke options. The only add-ons were cucumber kimchi and imitation crab, according to the menu.Alex Bitter/InsiderShoppers can also buy poke by the pound, a popular choice in Hawaii if you're headed to a party or plan on serving multiple people.Alex Bitter/InsiderI kept it simple and ordered a bowl with just spicy ahi, white rice, and furikake.Alex Bitter/InsiderAt $7.50, it was half the price of the poke bowls I had ordered in Washington — partially because it came from a grocery-store counter.Alex Bitter/InsiderWhile the entire bowl wasn't as big as the ones I got in Washington, there was a lot more fish than in any of the bowls that I had ordered at Poke Papa or Hilo.Alex Bitter/InsiderThe fish itself tasted fresher than anything I had in Washington.Alex Bitter/InsiderThe furikake provided a seaweed-flavored kick to the bowl without overpowering the poke itself.Alex Bitter/InsiderThis grocery-store poke was simple, but to me, it was superior to anything I ordered at the restaurants in Washington.Alex Bitter/InsiderI wanted to understand the disparity between poke on the mainland and in Hawaii, so I talked to Akina Harada, who grew up on the island of Oahu and founded Abunai Poke, a restaurant with locations in Washington and Philadelphia.Akina Harada, the founder of Abunai Poke.Akina HaradaHarada serves poke similar to what you can find in Hawaii, which means her poke doesn't come with toppings like mango or pineapple. "If you want something less traditional, per se, then there's other options," she said.Alex Bitter/InsiderGetting quality fish is a challenge outside Hawaii, Harada said. Abunai sources its ahi from farms on the East Coast, a higher-quality, more-expensive option than the frozen fish that many poke restaurants use, she said.Alexi Rosenfeld/Getty ImageThose two differences — fresh fish and fewer toppings — made the poke I had in Hawaii much better than the copy-cat versions I tried on the mainland.Alex Bitter/InsiderBefore I left Hawaii, I made sure to eat as much good poke as I could. The cluttered poke bowls of the mainland just didn't hit the spot for me.Alex Bitter/InsiderIf you can't get to Hawaii but like poke, I recommend ordering ahi or salmon marinated in spicy mayo or soy sauce. And, most importantly, skip the toppings.Poke from Koloa Fish Market on the island of Kauai.Michelle MishinaRead the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 12th, 2023

FTX customer assets worth more than $3.5 billion have been seized by Bahamian regulators until they can be returned

Bahamian regulators have taken control of FTX customer assets worth more than $3.5 billion in an effort to safeguard the funds. Photo illustration by Jonathan Raa/NurPhoto via Getty Images) FTX customer assets worth more than $3.5 billion have been seized by Bahamian authorities.  The assets were transferred under their ownership for safekeeping, according to regulators.  Customers and creditors will receive the funds after the Bahamas Supreme Court approves its delivery.    FTX customer assets worth more than $3.5 billion have been temporarily seized by Bahamian authorities, according to the country's markets regulator.The assets were transferred to digital wallets under the control of regulators on November 12, shortly after FTX filed for bankruptcy, per a statement on Thursday from the Securities Commission of the Bahamas.The move was aimed at safeguarding the assets, the regulator said, after more than $370 million were reportedly stolen from the crypto exchange in an apparent cyber attack after the firm went bust last month.It also follows reports that up to $2 billion in customer money vanished from the exchange after its founder and former CEO Sam Bankman-Fried quietly transferred large amounts to FTX's sister company Alameda Research. Those funds would then be used to make risky trades, venture capital investments, and lavish real estate purchases."The Commission determined that there was a significant risk of imminent dissipation as to the digital assets under the custody or control of FTXDM to the prejudice of its customers and creditors," they said. "The digital assets transferred on 12 November 2022 to digital wallets under the exclusive control the Commission are being held by the Commission on a temporary basis, until such time as The Bahamas Supreme Court directs the Commission to deliver them to the customers and creditors who own them," they added. FTX and more than 130 of its affiliates defaulted last month after the cryptocurrency exchange experienced a severe liquidity crunch and subsequent "run on the bank," resulting in an $8 billion loss of customer money. Once viewed as the white knight of the crypto industry, Bankman-Fried, has since been charged with several counts of fraud and is currently under house arrest at his parents' property. FTX customers whose money is stuck on the failed crypto exchange are now trying to get some of it back. But they are reportedly taking losses by selling their bankruptcy claims at steep discounts. They've also filed a class-action lawsuitagainst FTX to recover their funds.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 30th, 2022