Facebook Stock Reputation Is Not a Detriment to Its Business

InvestorPlace - Stock Market News, Stock Advice & Trading Tips Owning FB stock for the long term has not ceased being a good idea. It is the leader in social media and is blazing cyber trails. The post Facebook Stock Reputation Is Not a Detriment to Its Business appeared first on InvestorPlace. More From InvestorPlace Stock Prodigy Who Found NIO at $2… Says Buy THIS Now Man Who Called Black Monday: “Prepare Now.” #1 EV Stock Still Flying Under the Radar Interested in Crypto? Read This First........»»

Category: topSource: investorplaceNov 24th, 2021

A Close Analysis Of The LegalZoom Stock, Performance And Competitive Landscape

LegalZoom. com Inc (NASDAQ:LZ) is a company to watch, according to current Nasdaq stock exchange figures, with an enterprise value of 35.87 billion dollars. With an increasing number of people beginning their own businesses and many owners lacking interest in or knowledge of legal and compliance processes and frameworks, the future of the industry appears […] LegalZoom. com Inc (NASDAQ:LZ) is a company to watch, according to current Nasdaq stock exchange figures, with an enterprise value of 35.87 billion dollars. With an increasing number of people beginning their own businesses and many owners lacking interest in or knowledge of legal and compliance processes and frameworks, the future of the industry appears to be bright. .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 Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio 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); Q3 2021 hedge fund letters, conferences and more Get To Know The Company LegalZoom is a leading online platform for legal and compliance solutions in the United States, with the goal of democratizing the law. LegalZoom has more than 20 years of experience navigating complex regulations and simplifying the legal and compliance process for its customers throughout all 50 states and over 3,000 counties in the United States. The company specializes in business formation, corporate modifications, filings, business compliance, trademarks, patents, copyright, taxes, licenses, permits, agreements, and other services. LegalZoom assists its customers in forming and protecting their businesses, ideas, and families, and is driven by the basic concept that every business deserves the complete protection of the legal system and a simple means to keep compliant with it. What experts say about Legalzoom is that by 2022 they will have formed 10% of all new LLCs and 5% of all new corporations in the United States. This is astronomical - and yes, it allows small business owners to focus on their core competencies rather than the legal and regulatory complexities that come with running a business. In addition to business formations, LegalZoom provides continuing compliance and tax assistance, trademark and copyright filings, and estate planning documents to protect small businesses and their founders. “Our mission of Democratizing Law has been a constant from day one. Our goal is to level the playing field for small businesses by making the law accessible with simple and affordable services. At business formation, small businesses are looking for a lot more than just legal help. We’re excited to help remove roadblocks that get in their way, legal or otherwise,” Wernikoff said in a statement on the release day of LegalZoom on the stock market. Thoughts On Valuation & IPO The company's management and underwriters sought to sell 19.1 million shares at a price range of $24 to $27 per share, with the ultimate price set at $28, well above the higher end of the range. With the offering, the company expects to raise $535 million in gross proceeds. Net cash after the offering is estimated to be roughly $230 million based on the offer proceeds. The 194.1 million shares are worth $5.4 billion in equity, which translates to a $5.2 billion operational asset valuation. When we look at the underlying firm, we notice a sizable revenue base, as well as profitability. The company generated $408 million in revenue in 2019, with a $46 million operating profit after a $14 million impairment change. Revenues increased by 15% to $470 million and change in 2020, while operating profits increased slightly to $49 million, however they were really down if we compensate for the impairment charge incurred in 2019. Revenues during the first quarter of 2021 increased by 27% to $134.8 million, resulting in a $540 million sales run rate. This works out to approximately 10 times sales with a $5.2 billion operational asset valuation. With shares trading as high as nearly $40 in the first few days of trading, the company's value has increased by $2.3 billion, resulting in a $7.5 billion operational asset valuation. This means that, of course, expectations have risen to 14 times annualized sales and even lower earnings multiples. Final Thoughts Although LegalZoom is well positioned to be a long-term secular growth story, current valuations appear to already reflect this. Other concerns, aside from the valuation risks in terms of the sales multiple, are much more generic. This includes, among other things, a competitive operating environment, the perceived value of client counsel, and reputation (in the event that some incorrect advice is given). Fortunately, there are a number of traditional incumbents in the competitive area, and it appears that the company is well positioned to capture market share from them, making it an interesting enough tale to keep an eye on. Updated on Nov 29, 2021, 9:28 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 29th, 2021

Why You Should Pay Close Attention to Company Hiring Practices When Investing

Most savvy investors know the importance of doing your due diligence before you invest in any company. Long before you part with your hard-earned money, you should understand a company’s profitability, target audience, biggest competitors, and trajectory for future growth. To accomplish this, proactive investors look up a number of important metrics and facts about […] Most savvy investors know the importance of doing your due diligence before you invest in any company. Long before you part with your hard-earned money, you should understand a company’s profitability, target audience, biggest competitors, and trajectory for future growth. To accomplish this, proactive investors look up a number of important metrics and facts about the company they’re considering, including its past revenue, its past stock prices, its price to earnings (PE) ratio, and the profiles of its competitors. But have you considered looking at companies’ hiring practices as well? Elements of Hiring Practices to Consider There are several elements of company hiring practices worth considering while investigating potential investment options. For example: Background checks. Does this company conduct background checks on its employees before hiring them? While many past felons go on to have very meaningful and productive careers, there are certain industries that are more sensitive to criminal backgrounds. And these days, it’s incredibly easy to do a mugshots search and lookup conviction history – so there’s no excuse for a company to skip this step. Nepotism and cronyism. There’s nothing wrong with running a family business where multiple family members are involved. But there’s definitely something wrong with hiring a person just because they’re related to you or because you owe them a favor. Companies that practice nepotism and cronyism usually end up corrupt, inefficient, or both. Diversity and inclusion. Companies that practice diversity and inclusion in their hiring practices tend to be 70 percent more likely to capture new markets – and that’s just one of the benefits of diverse hiring. Does this company have employees from a diversity of different backgrounds? Or are they all pretty much interchangeable? Talent recruiting and reputation. Are there lots of people clamoring to work for this organization? Or does the company struggle to attract new people to the business? If a business mistreats its employees or if it doesn’t have a good reputation, it’s going to show. Compensation and benefits packages. How much does this company pay its employees? What kind of benefits packages does it offer? Companies that pay competitively tend to value their employees more – and tend to have more productive, thriving work environments, despite the higher cost of operations. Employee retention. As a combination of these factors and others, companies may benefit from higher employee retention. In turn, higher employee retention leads to reduced costs and greater continuity for the organization. Why Is Hiring So Important? Why is hiring so important for an investor to consider? Workforce and execution. Good hiring and management practices lead to a happier, more productive workforce. When a business is filled with employees who are actively engaged, and who actually care about the success of the organization, it’s much more likely to be successful. Longevity and continuity. It’s also important for an organization to have employees who have been with the business since the beginning – or at least for a long time. This leads to greater continuity and consistency, especially over the long term. Diligence and attention to detail. How much time and attention is a business willing to take when hiring employees? This attention to detail may spill over into other aspects of the business. For example, a business that cuts corners when hiring likely cuts corners in other areas as well. Brand reputation and future. Companies with great hiring practices, and those that treat their employees well, tend to benefit from a stronger brand reputation, setting them up for more appeal with customers and more long-term success. Investigating Hiring Practices How are you supposed to research hiring practices of companies? Company recruiting materials. You can start by reviewing the recruiting materials in circulation for this company. How does this company try to reach new talent? What is the hiring process like? You may even consider going through the application process yourself, to see firsthand how it works. Annual reports and statements. Most companies mention hiring and recruiting in their annual reports and in public company statements. Try to get a feel for employee turnover, productivity, employee satisfaction, and other factors. Employee reviews. It’s often better to learn about a company’s hiring practices from employees themselves. Look up employee reviews for this organization and see what they have to say about it. Are they happy with their overall experience? Are there common grievances among employees who work here? A company having a sketchy or questionable hiring practice probably isn’t enough to justify not investing in them. But in combination with other factors, it could represent a breaking point. Make sure you include hiring in your list of factors to research when investigating a company you want to invest in. You might be surprised at what you find.   Updated on Nov 27, 2021, 10:53 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 28th, 2021

Deere Reports Net Income of $1.283 Billion for Fourth Quarter, $5.963 Billion for Fiscal Year

MOLINE, Ill., Nov. 24, 2021 /PRNewswire/ -- Fourth-quarter net income rises on net sales gain of 19%, demonstrating solid execution and benefits of operating model. UAW contract agreement shows commitment to Deere's workforce. Full-year 2022 earnings forecast to be $6.5 to $7.0 billion, reflecting healthy demand. Deere & Company (NYSE:DE) reported net income of $1.283 billion for the fourth quarter ended October 31, 2021, or $4.12 per share, compared with net income of $757 million, or $2.39 per share, for the quarter ended November 1, 2020. For fiscal year 2021, net income attributable to Deere & Company was $5.963 billion, or $18.99 per share, compared with $2.751 billion, or $8.69 per share, in fiscal 2020. Worldwide net sales and revenues increased 16 percent, to $11.327 billion, for the fourth quarter of fiscal 2021 and rose 24 percent, to $44.024 billion, for the full year. Equipment operations net sales were $10.276 billion for the quarter and $39.737 billion for the year, compared with corresponding totals of $8.659 billion and $31.272 billion in 2020. "Deere's strong fourth-quarter and full-year performance was delivered by our dedicated employees, dealers, and suppliers throughout the world, who have helped safely maintain our operations and serve customers," said John C. May, chairman and chief executive officer. "Our results reflect strong end-market demand and our ability to continue serving customers while managing supply-chain issues and conducting contract negotiations with our largest union. Last week's ratification of a 6-year agreement with the UAW brings our highly skilled employees back to work building the finest products in our industries. The agreement shows our ongoing commitment to delivering best-in-class wages and benefits." Company Outlook & Summary Net income attributable to Deere & Company for fiscal 2022 is forecasted to be in a range of $6.5 billion to $7.0 billion. "Looking ahead, we expect demand for farm and construction equipment to continue benefiting from positive fundamentals, including favorable crop prices, economic growth, and increased investment in infrastructure," May said. "At the same time, we anticipate supply-chain pressures will continue to pose challenges in our industries. We are working closely with our suppliers to address these issues and ensure that our customers can deliver essential food and infrastructure more profitably and sustainably." Deere & Company Fourth Quarter Full Year $ in millions 2021 2020 % Change 2021 2020 % Change Net sales and revenues $ 11,327 $ 9,731 16% $ 44,024 $ 35,540 24% Net income $ 1,283 $ 757 69% $ 5,963 $ 2,751 117% Fully diluted EPS $ 4.12 $ 2.39 $ 18.99 $ 8.69 Net income in the fourth quarter and full-year 2020 was negatively affected by impairment charges and employee-separation costs of $211 million and $458 million after-tax, respectively. In addition, net income was unfavorably affected by discrete adjustments to the provision for income taxes in both periods of 2020. Equipment Operations Fourth Quarter $ in millions 2021 2020 % Change Net sales $ 10,276 $ 8,659 19% Operating profit $ 1,393 $ 1,056 32% Net income $ 1,056 $ 571 85% For a discussion of net sales and operating profit results, see the production and precision agriculture, small agriculture and turf, and construction and forestry sections below. Production & Precision Agriculture Fourth Quarter $ in millions 2021 2020 % Change Net sales $ 4,661 $ 3,801 23% Operating profit $ 777 $ 578 34% Operating margin 16.7% 15.2% Production and precision agriculture sales increased for the quarter due to higher shipment volumes and price realization. Operating profit rose primarily due to price realization and improved shipment volumes / mix. These items were partially offset by higher production costs. Results for fourth-quarter 2020 were negatively impacted by employee-separation expenses.   Small Agriculture & Turf Fourth Quarter $ in millions 2021 2020 % Change Net sales $ 2,809 $ 2,397 17% Operating profit $ 346 $ 282 23% Operating margin 12.3% 11.8% Small agriculture and turf sales increased for the quarter due to higher shipment volumes and price realization. Operating profit rose primarily due to improved shipment volumes / mix and price realization. These items were partially offset by higher production costs and higher research and development and selling, administrative, and general expenses. Employee-separation expenses and impairments negatively impacted the fourth quarter of 2020.   Construction & Forestry Fourth Quarter $ in millions 2021 2020 % Change Net sales $ 2,806 $ 2,461 14% Operating profit $ 270 $ 196 38% Operating margin 9.6% 8.0% Construction & Forestry sales moved higher for the quarter primarily due to higher shipment volumes and price realization. Operating profit improved mainly due to price realization and higher sales volume / mix. Partially offsetting these factors were increases in production costs and higher selling, administrative, and general and research and development expenses. Fourth-quarter 2020 results were adversely affected by employee-separation expenses and impairments.   Financial Services Fourth Quarter $ in millions 2021 2020 % Change Net income $ 227 $ 186 22% Net income for financial services in the quarter rose mainly due to income earned on a higher average portfolio and favorable financing spreads, as well as improvements on operating-lease residual values. These factors were partially offset by a higher provision for credit losses. Results in 2020 also were affected by employee-separation costs. Industry Outlook for Fiscal 2022 Agriculture & Turf U.S. & Canada: Large Ag Up ~ 15% Small Ag & Turf  ~ Flat Europe Up ~ 5% South America (Tractors & Combines) Up ~ 5% Asia  ~ Flat Construction & Forestry U.S. & Canada: Construction Equipment Up 5 to 10% Compact Construction Equipment Up 5 to 10% Global Forestry Up 10 to 15%   Deere Segment Outlook for Fiscal 2022 Currency Price $ in millions Net Sales Translation Realization Production & Precision Ag Up 20 to 25% 0% +9% Small Ag & Turf Up 15 to 20% -1% +7% Construction & Forestry Up 10 to 15% 0% +8% Financial Services Net Income $870 Financial Services. Fiscal-year 2022 net income attributable to Deere & Company for the financial services operations is forecast to be approximately $870 million. Results are expected to be slightly lower than fiscal 2021 due to a higher provision for credit losses, lower gains on operating-lease residual values, and higher selling, general, and administrative expenses. These factors are expected to be partially offset by income earned on a higher average portfolio. John Deere Capital Corporation The following is disclosed on behalf of the company's financial services subsidiary, John Deere Capital Corporation (JDCC), in connection with the disclosure requirements applicable to its periodic issuance of debt securities in the public market. Fourth Quarter Full Year $ in millions 2021 2020 % Change 2021 2020 % Change Revenue $ 673 $ 693 -3% $ 2,688 $ 2,808 -4% Net income $ 181 $ 154 18% $ 711 $ 425 67% Ending portfolio balance $ 41,488 $ 38,726 7% Net income for the fourth quarter of fiscal 2021 was higher than in the fourth quarter of 2020 primarily due to income earned on higher average portfolio balances and improvements on operating-lease residual values. These factors were partially offset by a higher provision for credit losses. Fourth-quarter 2020 results were also negatively impacted by employee-separation expenses. Full-year 2021 net income was higher than in 2020 due to improvements on operating-lease residual values, a lower provision for credit losses, favorable financing spreads, and income earned on a higher average portfolio. Full-year 2020 results also included impairments on lease residual values. Safe Harbor Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:  Statements under "Company Outlook & Summary," "Industry Outlook for Fiscal 2022," "Deere Segment Outlook (Fiscal 2022)," and other forward-looking statements herein that relate to future events, expectations, and trends involve factors that are subject to change and risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the company's businesses. The company's agricultural equipment businesses are subject to a number of uncertainties, including certain factors that affect farmers' confidence and financial condition. These factors include demand for agricultural products; world grain stocks; weather conditions and the effects of climate change; soil conditions; harvest yields; prices for commodities and livestock; crop and livestock production expenses; availability of transport for crops (including as a result of reduced state and local transportation budgets); trade restrictions and tariffs (e.g., China); global trade agreements; the level of farm product exports (including concerns about genetically modified organisms); the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production); real estate values; available acreage for farming; land ownership policies of governments; changes in government farm programs and policies; international reaction to such programs; changes in and effects of crop insurance programs; changes in environmental regulations and their impact on farming practices; animal diseases (e.g., African swine fever) and their effects on poultry, beef, and pork consumption and prices and on livestock feed demand; crop pests and diseases; and the impact of the COVID pandemic on the agricultural industry including demand for, and production and exports of, agricultural products, and commodity prices.  The production and precision agriculture business is dependent on agricultural conditions, and relies in part on hardware and software, guidance, connectivity and digital solutions, and automation and machine intelligence. Many factors contribute to the company's precision agriculture sales and results, including the impact to customers' profitability and/or sustainability outcomes; the rate of adoption and use by customers; availability of technological innovations; speed of research and development; effectiveness of partnerships with third parties; and the dealer channel's ability to support and service precision technology solutions. Factors affecting the company's small agriculture and turf equipment operations include agricultural conditions; consumer confidence; weather conditions and the effects of climate change; customer profitability; labor supply; consumer borrowing patterns; consumer purchasing preferences; housing starts and supply; infrastructure investment; spending by municipalities and golf courses; and consumable input costs. Factors affecting the company's construction and forestry equipment operations include consumer spending patterns; real estate and housing prices; the number of housing starts; interest rates; commodity prices such as oil and gas; the levels of public and non-residential construction; and investment in infrastructure. Prices for pulp, paper, lumber, and structural panels affect sales of forestry equipment. Many of the factors affecting the production and precision agriculture, small agriculture and turf, and construction and forestry segments have been and may continue to be impacted by global economic conditions, including those resulting from the COVID pandemic and responses to the pandemic taken by governments and other authorities. All of the company's businesses and its results are affected by general economic conditions in the global markets and industries in which the company operates; customer confidence in general economic conditions; government spending and taxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates (including the availability of IBOR reference rates); inflation and deflation rates; changes in weather and climate patterns; the political and social stability of the global markets in which the company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; natural disasters; and the spread of major epidemics or pandemics (including the COVID pandemic) and government and industry responses to such epidemics or pandemics, such as travel restrictions and extended shut downs of businesses. Continued uncertainties related to the magnitude, duration, and persistent effects of the COVID pandemic may significantly adversely affect the company's business and outlook. These uncertainties include, among other things: the duration and impact of the resurgence in COVID cases in any country, state, or region; the emergence, contagiousness, and threat of new and different strains of virus; the availability, acceptance, and effectiveness of vaccines; additional closures as mandated or otherwise made necessary by governmental authorities; disruptions in the supply chain, including those caused by industry capacity constraints, material availability, and global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers, and a prolonged delay in resumption of operations by one or more key suppliers, or the failure of any key suppliers; an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by COVID pandemic; the company's ability to meet commitments to customers on a timely basis as a result of increased costs and supply and transportation challenges; increased logistics costs; additional operating costs due to continued remote working arrangements, adherence to social distancing guidelines, and other COVID-related challenges; increased risk of cyber-attacks on network connections used in remote working arrangements; increased privacy-related risks due to processing health-related personal information; legal claims related to personal protective equipment designed, made, or provided by the company or alleged exposure to COVID on company premises; absence of employees due to illness; and the impact of the pandemic on the company's customers and dealers. The sustainability of the economic recovery observed in 2021 remains unclear and significant volatility could continue for a prolonged period. These factors, and others that are currently unknown or considered immaterial, could materially and adversely affect our business, liquidity, results of operations, and financial position. Significant changes in market liquidity conditions, changes in the company's credit ratings, and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the company's earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the company's products and customer confidence and purchase decisions, financing and repayment practices, and the number and size of customer delinquencies and defaults. A debt crisis in Europe, Latin America, or elsewhere could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, demand for equipment, and company operations and results. The company's investment management activities could be impaired by changes in the equity, bond, and other financial markets, which would negatively affect earnings. Continued effects of the withdrawal of the United Kingdom from the European Union could adversely affect business activity, political stability, and economic conditions in the United Kingdom, the European Union, and elsewhere. The economic conditions and outlook could be further adversely affected by (i) uncertainty regarding any new or modified trade arrangements between the United Kingdom and the European Union and/or other countries; (ii) the risk that one or more other European Union countries could come under increasing pressure to leave the European Union; or (iii) the risk that the euro as the single currency of the eurozone could cease to exist. Any of these developments could affect our businesses, liquidity, results of operations, and financial position. Additional factors that could materially affect the company's operations, access to capital, expenses, and results include changes in, uncertainty surrounding, and the impact of governmental trade, banking, monetary, and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs, and other areas; the potential default of the U.S. federal government if Congress fails to pass a fiscal 2022 budget resolution; governmental programs, policies, and tariffs for the benefit of certain industries or sectors; sanctions in particular jurisdictions; retaliatory actions to such changes in trade, banking, monetary, and fiscal policies; actions by central banks; actions by financial and securities regulators; actions by environmental, health, and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise, and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accounting standards; changes in tax rates, estimates, laws, and regulations and company actions related thereto; changes to and compliance with privacy, banking, and other regulations; changes to and compliance with economic sanctions and export controls laws and regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies. Other factors that could materially affect the company's results include production, design, and technological innovations and difficulties, including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights, whether through theft, infringement, counterfeiting, or otherwise; the availability and prices of strategically sourced materials, components, and whole goods; delays or disruptions in the company's supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations, or distribution; the failure of customers, dealers, suppliers, or the company to comply with laws, regulations, and company policy pertaining to employment, human rights, health, safety, the environment, sanctions, export controls, anti-corruption, privacy and data protection, and other ethical business practices; introduction of legislation that could affect the company's business model and intellectual property, such as right to repair or right to modify; events that damage the company's reputation or brand; significant investigations, claims, lawsuits, or other legal proceedings; start-up of new plants and products; the success of new product initiatives or business strategies; changes in customer product preferences and sales mix; gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions; oil and energy prices, supplies, and volatility; the availability and cost of freight; actions of competitors in the various industries in which the company competes, particularly price discounting; dealer practices, especially as to levels of new and used field inventories; changes in demand and pricing for used equipment and resulting impacts on lease residual values; labor relations and contracts, including work stoppages and other disruptions; changes in the ability to attract, develop, engage, and retain qualified personnel; acquisitions and divestitures of businesses; greater-than-anticipated transaction costs; the integration of new businesses; the failure or delay in closing or realizing anticipated benefits of acquisitions, joint ventures, or divestitures; the inability to deliver precision technology and agricultural solutions to customers; the implementation of the smart industrial operating model and other organizational changes; the failure to realize anticipated savings or benefits of cost reduction, productivity, or efficiency efforts; difficulties related to the conversion and implementation of enterprise resource planning systems; security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the company and its suppliers and dealers; security breaches with respect to the company's products; changes in company-declared dividends and common stock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market values of investment assets, compensation, retirement, discount, and mortality rates which impact retirement benefit costs; and significant changes in health care costs. The liquidity and ongoing profitability of John Deere Capital Corporation and the company's other financial services subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of the company's products. If general economic conditions deteriorate or capital markets become more volatile, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses. The company's forward-looking statements are based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The company, except as required by law, undertakes no obligation to update or revise its forward-looking statements, whether as a result of new developments or otherwise. Further information concerning the company and its businesses, including factors that could materially affect the company's financial results, is included in the company's other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q).   DEERE & COMPANY FOURTH QUARTER 2021 PRESS RELEASE (In millions of dollars) Unaudited Three Months Ended Years Ended October 31 November 1 % October 31 November 1 % 2021 2020 Change 2021 2020 Change Net sales and revenues: Production & precision ag net sales $ 4,661 $ 3,801 +23 $ 16,509 $ 12,962 +27 Small ag & turf net sales 2,809 2,397 +17 11,860 9,363 +27 Construction & forestry net sales 2,806 2,461 +14 11,368 8,947 +27 Financial services 869 891 -2 3,548 3,589 -1 Other revenues 182 181 +1 739 679 +9 Total net sales and revenues $ 11,327 $ 9,731 +16 $ 44,024 $ 35,540 +24 Operating profit: * Production & precision ag $ 777 $ 578 +34 $ 3,334 $ 1,969 +69 Small ag & turf 346 282 +23 2,045 1,000 +105 Construction & forestry 270 196 +38 1,489 590 +152 Financial services 299 249 +20 1,144 746 +53 Total operating profit 1,692 1,305 +30 8,012 4,305 +86 Reconciling items ** (78) (219) -64 (390) (472) -17 Income taxes (331) (329) +1 (1,659) (1,082) +53 Net income attributable to Deere & Company $ 1,283 $ 757 +69 $ 5,963 $ 2,751 +117 * Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses, and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains or losses. ** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.   DEERE & COMPANY STATEMENT OF CONSOLIDATED INCOME For the Three Months Ended October 31, 2021 and November 1, 2020 (In millions of dollars and shares except per share amounts) Unaudited  2021 2020 Net Sales and Revenues Net sales $ 10,276 $ 8,659 Finance and interest income 828 867 Other income 223 205 Total 11,327 9,731 Costs and Expenses Cost of sales 7,809 6,470 Research and development expenses 450 443 Selling, administrative and general expenses 936 1,011 Interest expense 210 278 Other operating expenses 309 414 Total 9,714 8,616 Income of Consolidated Group before Income Taxes 1,613 1,115 Provision for income taxes 330 329 Income of Consolidated Group 1,283 786 Equity in income (loss) of unconsolidated affiliates 1 (28) Net Income 1,284 758 Less: Net income attributable to noncontrolling interests 1 1 Net Income Attributable to Deere & Company $ 1,283 $ 757 Per Share Data Basic $ 4.15 $ 2.41 Diluted $ 4.12 $ 2.39 Average Shares Outstanding Basic 309.1 314.1 Diluted 311.5 317.1 See Condensed Notes to Consolidated Financial Statements.   DEERE & COMPANY STATEMENT OF CONSOLIDATED INCOME For the Years Ended October 31, 2021 and November 1, 2020 (In millions of dollars and shares except per share amounts) Unaudited 2021 2020 Net Sales and Revenues Net sales $ 39,737 $ 31,272 Finance and interest income 3,296 3,450 Other income 991 818 Total 44,024 35,540 Costs and Expenses Cost of sales 29,116 23,677 Research and development expenses 1,587 1,644 Selling, administrative and general expenses 3,383 3,477 Interest expense 993 1,247 Other operating expenses 1,343 1,612 Total 36,422 31,657 Income of Consolidated Group before Income Taxes 7,602 3,883 Provision for income taxes 1,658 1,082 Income of Consolidated Group 5,944 2,801 Equity in income (loss) of unconsolidated affiliates 21 (48) Net Income 5,965 2,753 Less: Net income attributable to noncontrolling interests 2 2 Net Income Attributable to Deere & Company $ 5,963 $ 2,751 Per Share Data Basic $ 19.14 $ 8.77 Diluted $ 18.99 $ 8.69 Average Shares Outstanding Basic 311.6 313.5 Diluted 314.0 316.6 See Condensed Notes to Consolidated Financial Statements.   DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEET As of October 31, 2021 and November 1, 2020 (In millions of dollars) Unaudited  2021 2020 Assets Cash and cash equivalents $ 8,017 $ 7,066 Marketable securities 728 641 Receivables from unconsolidated affiliates 27 31 Trade accounts and notes receivable - net 4,208 4,171 Financing receivables - net 33,799 29,750 Financing receivables securitized - net 4,659 4,703 Other receivables 1,738 1,220 Equipment on operating leases - net 6,988 7,298 Inventories 6,781 4,999 Property and equipment - net 5,820 5,817 Investments in unconsolidated affiliates 175 193 Goodwill 3,291 3,081 Other intangible assets - net 1,275 1,327 Retirement benefits 3,601 863 Deferred income taxes 1,037 1,499 Other assets 1,970 2,432 Total Assets $ 84,114 $ 75,091 Liabilities and Stockholders' Equity Liabilities Short-term borrowings $ 10,919 $ 8,582 Short-term securitization borrowings 4,605 4,682 Payables to unconsolidated affiliates 143 105 Accounts payable and accrued expenses 12,205 10,112 Deferred income taxes 576 519 Long-term borrowings 32,888 32,734 Retirement benefits and other liabilities 4,344 5,413 Total liabilities 65,680 62,147 Stockholders' Equity Total Deere & Company stockholders' equity 18,431 12,937 Noncontrolling interests 3 7 Total stockholders' equity 18,434 12,944 Total Liabilities and Stockholders' Equity $ 84,114 $ 75,091 See Condensed Notes to Consolidated Financial Statements.   DEERE & COMPANY STATEMENT OF CONSOLIDATED CASH FLOWS For the Years Ended October 31, 2021 and November 1, 2020 (In millions of dollars) Unaudited 2021 2020 Cash Flows from Operating Activities Net income $ 5,965 $ 2,753 Adjustments to reconcile net income to net cash provided by operating activities: Provision (credit) for credit losses (6) 110 Provision for depreciation and amortization 2,050 2,118 Impairment charges 50 194 Share-based compensation expense 82 81 Loss on sales of businesses and unconsolidated affiliates 24 Undistributed earnings of unconsolidated affiliates 2 (7) Credit for deferred income taxes (441) (11) Changes in assets and liabilities: Trade, notes, and financing receivables related to sales 969 2,009 Inventories (2,497) 397 Accounts payable and accrued expenses 1,884 (7) Accrued income taxes payable/receivable 11 8 Retirement benefits 29 (537) Other (372) 351 Net cash provided by operating activities 7,726 7,483 Cash Flows from Investing Activities Collections of receivables (excluding receivables related to sales) 18,959 17,381 Proceeds from maturities and sales of marketable securities 109 93 Proceeds from sales of equipment on operating leases 2,094 1,783 Cost of receivables acquired (excluding receivables related to sales) (23,653) (19,965) Acquisitions of businesses, net of cash acquired (244) (66).....»»

Category: earningsSource: benzingaNov 24th, 2021

A Top CEO Was Ousted After Making His Company More Environmentally Conscious. Now He’s Speaking Out

(To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.) The battle within Danone—producer of Activia and Oikos yogurts, Silk soy milk, and Evian water, among others—might have been dubbed a “food fight,” had it not erupted in such serious times. But it was no laughing matter. Months of… (To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.) The battle within Danone—producer of Activia and Oikos yogurts, Silk soy milk, and Evian water, among others—might have been dubbed a “food fight,” had it not erupted in such serious times. But it was no laughing matter. Months of tension within the executive board of the $36-billion global food giant exploded in March 2021, just as the world began easing its lockdowns and launching mass vaccination campaigns. In a gloves-off power struggle, two small stakeholders maneuvered a coup, ousting the company’s CEO and chairman Emmanuel Faber, whose four-year leadership had made him a star among environmentalists and climate activists. [time-brightcove not-tgx=”true”] Faber had turned Danone into an “enterprise à mission,” France’s new category similar to an American B-Corp, whose purpose was far broader than profits and growth. He named his strategy “One Planet, One Health,” and created a carbon adjusted earnings per share indicator, pegging Danone’s success directly to its environmental performance. While that brought applause from climate activists, the company’s shares lagged behind peers like Nestlé and Unilever during the pandemic, as sales of some key Danone products like Evian water plummeted. Amid the shock of Faber’s ouster, there were roiling questions over what it all meant. Do CEOs now face an impossible dilemma: Either to please their shareholders, or to join the fight for climate justice and social equity? Faber had placed those issues at the core of the company. And outside it, he threw himself into activist CEO coalitions like the B Team and Business for Inclusive Growth, or B4IG. Little wonder, then, that his firing left palpable distress in some circles, from Paris to the U.N. “Are these two objectives, environmental and economic, irreconcilable?” asked France’s liberal Le Monde of Faber’s ouster. “It plunges us into a confusion of emotions over the ethics of capitalism,” the paper said. Faber, for his part, was more sanguine. At 57, he escaped to his beloved Alps, where he was born and raised, and climbed the peaks, reflecting on what to do, after a 24-year career at Danone. In October, he took a partnership at agritech impact fund Astanor Ventures. Far from irreconcilable, environment and economic objectives are, he believes, becoming inexorably aligned. Over green tea and Perrier in Paris on Nov. 16, Faber spoke with TIME about the role business leaders must play in solving the world’s urgent crises. Fresh off the COP26 climate talks in Glasgow, he believes companies will be key—perhaps the key—to fighting climate change and inequity. (This interview has been condensed and edited for clarity.) It’s been a very strange year for you. Did you feel sideswiped by what happened at Danone? Danone had grown to become my family, so it’s like leaving your family. I didn’t choose that. But I suddenly discovered that I was totally free to reinvent myself, in terms of where I do want to spend time and with whom and how. Which is a privilege, really. What happened was a few people that saw a window of opportunity and for personal reasons pursued that opportunity at the moment where it was easy to destabilize the governance of the company. The outside world believed you wanted to create a climate-driven company, and were punished for it. You know, they had voted the equivalent of public Benefit Corporation [B-Corp] status, 99%, not even a year before, they had agreed with the €3 billion climate and digital acceleration plan that we had announced a year before. … None of them were opposed to what we were doing. You need to read the end of the story, which is unfortunately on the 29th of July. The whole board had to resign. They said they would not seek any reappointment, and all of them would step down with one year in advance. The board had lost total credibility to shareholders. How should corporate boards be changed? What needs to happen in this new generation of corporate leaders? Climate change is there. I don’t think you would find one CEO in the business ecosystem that would say it is not there. That is behind us, different from five years ago… Five years ago, that recently? Oh yeah. I think the pandemic has also taught us lessons, about the fact that there were elements in our supposedly well-controlled and old system that we did just not control. This virus is only half a living organism, and yet it played havoc with the health system. Suddenly we discovered that our food systems were entangled in such a complex web that food sovereignty became huge in the agenda. We suddenly learned that what we felt was a predictable model and a safe model wasn’t, that we hadn’t been super good at being efficient, but we were tested in our resilience in the system. The other thing is, I think last summer’s extreme weather events, fires all over the place, floods all over the place, brought to the public attention that climate change was not in five or 10 years, it was not for remote countries. It is here now. Agriculture is the first victim of climate change warming. The yields are declining, water stress all over the place, soils are eroded. We see a number of situations where civil society and citizens are going after governments for action or inaction against climate change. Governments will have no other way than turning to companies and corporations to do the job, because governments are not doing the job themselves. The private sector will be front and center of the climate transition. So that’s one. Employees collectives are asking questions about ESG [Environmental, Social, and Corporate Governance], big time. More and more, the war for talent is there for the larger companies. So many of the highly educated talents don’t want to work for these large companies. More and more employers are asking the new generation what they want: Meaning, they want impact. And then you have the shareholders. Already now it’s harder for the most carbon-emitting companies to find the right appeal from shareholders. I’ll just give you one example. Anglo American [Corporation] wanted to spin off their coal-mining operations, Thungela. Typically, the market would be ready to pay you 20 years of your current earnings because they believe these earnings have great potential to grow in the future. In the case of Thungela, when they spun it off, they got four months of EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortization] multiple. They couldn’t find enough investors that would be willing to pay the cost on their reputation to consciously, in 2021, choose to invest in the business which is purely coal mining. So how do you even keep a business like that going? Well, that’s exactly my point. The global financial markets are increasingly reluctant to finance these assets. So far, ESG has been sort of an easy path for CEOs and boards that wanted to look good, but weren’t ready to really walk the talk. That’s the whole question of greenwashing. I think there will always be greenwashing. All this greenwashing noise is paralyzing everybody. It’s penalizing the people that are doing the real stuff, because they can’t prove that, and it’s favoring the people that are not doing the real stuff, because they can claim without being challenged on the reality of this stuff, because there are no metrics. The big announcement at COP26 for me was when the IFRS [International Financial Reporting Standards, which sets rules for public companies] said that they have prepared a prototype for a climate standard that is going to be transparent, comparable, and reliable and audited. It’s huge news. What they are essentially saying is by 2023, all companies will be able to—and in some cases compelled to—report under these new standards. Essentially, 140 countries already agreed to be part of the IFRS metrics in the past, so they would take the additional metric on climate, and adopt it as part of their IFRS. Each company will have to report on its targets on CO2 emissions and its pathway to reduce that. If a company is ahead of its plan, the market will look at this positively. If you’re late, it means that there are some capital expenditures that you need to do in the future. That will mean additional debt. So immediately, the valuation of companies in the stock market will be impacted. Which means as for profits, when you are ahead of your forecast, you get a bump on your share price, and a bump down if you’re super late on your emissions trajectory. Suddenly you can be compared, within peers, within an industry. And you start having a situation where the capital allocation can be based not only on profit but also on carbon. So it’s a huge change. How many companies followed your model of using a carbon-adjusted earnings per share metric, to show the financial cost of the company’s carbon emissions? Zero. Because it takes time. There was a whole journey for those shareholders to understand where I was coming from. We took them into the fields. We had food scientists coming to speak to them. We had been constantly and consistently over years speaking about this to our shareholders. When we decided to become a B-Corp, we were puzzled about how to explain that to our shareholders. I received a short note from my friend Doug McMillon, CEO of Walmart, and he said, “Emmanuel, that’s so great.” So I call him and say, “Would you shoot a short video saying why you think it’s great? You’re my biggest customer.” So he he did that. It was 2017. The Investor Day started with a video of my biggest customer, saying why it was great. It cut 80% of the questions. So when like two years later, we come up with this CO2 adjusted metric, they knew that this carbon charge was not just here to save the planet, it was to save the business, because we needed that carbon in the soil, not in the air. Beyond the food and agriculture system, you don’t have the same magic of telling a story that it’s actually good for the business to put carbon back into the soil. The absence of metrics on carbon made it very difficult to do this. I think the day you have those climate metrics it will become obvious. Maybe we were just ahead by a few years. … The metrics may not be the ones that we had, but there will be one, which will make it a market conversation instead of just one company that had this crazy idea. What got a lot of people’s attention from COP26 in Glasgow was Greta Thunberg’s protests. I think maybe most people will remember her saying, “It’s all blah, blah, blah.” Is that just cynical? And what’s the impact of that on the real work being done? Is it just a sideshow? Unfortunately, it’s a combination of all of that. I don’t think this is only cynicism. I think there has been blah blah. I have myself said that we had not moved either fast or far enough. But I can see many things moving fast. We’re still behind the curve, but we have never been as close as coming to a tipping point. CEOs are held back in talking, by their legal teams, by their comms teams, by their PR teams. They have this polished, you know, sometimes bullshit kind of communication. Shareholders were not so interested in all these discussions three years ago, but now they got very interested, and so everyone is super nervous. But in themselves, [CEOs] know that there is a problem, and they know that there is an opportunity. The food industry, your industry, is a big carbon business. We started the journey on carbon emissions in 2008. By 2009, all the team managers at Danone had a significant incentive [to reduce our] carbon footprint. An incentive bonus. A third [of the bonus] was on social and environmental issues, among which was carbon. The EBITDA level of the company and the carbon footprint had an equal weight in my bonus. So that’s how far we and I went into walking the talk and putting our money where our mouth was. Were you losing some money because that was part of the equation? No, I was making money. We established in 2009 a trajectory that said our peak carbon emissions would be in 2025. And the result of the hard work of 15,000 team leaders, incentivized in their bonuses, led us to reach peak carbon six years in advance, in 2019. So we have constantly been ahead of our plan and the reduction of the intensity of carbon. When you speak about agriculture, carbon is 60% of the organic matter of the soils. And the intensive agriculture, the monoculture kind of agriculture that is the dominant food system, is actually extracting carbon from the soil. Danone was the first—Patagonia and ourselves—to start a regenerative organic certification in the U.S. in 2015. When we started, no one understood what that was. It started by saying we need to regenerate the soil health by going from intensive agricultural practices to practices that actually put carbon back into the soil. We know how to do that. How big has the idea of putting carbon back in the soil become? In 2019, I gathered 30 of the largest companies in the world that that are using resources from the soil: Textile companies, fashion companies, cosmetics, food retailers, some data companies, Microsoft, Google, joined…. So we are now two years after, we have a set of indicators, a framework for what regenerative agriculture stands for. And you find these huge companies. After Danone, you have Nestlé, that this year said by 2030, we will supply from regenerative agriculture. These people needed a safe place where they could incubate and think and work and get their teams to meet together and discuss as an ecosystem. You talk about monoculture agriculture—growing only one type of crop at a time, as is popular at large American farms—ruining soils and the need to put carbon back into the soil, so they’re actually seeing the effects in terms of the quality of their crops? The International Union for Nature Conservation, which is a UN agency on biodiversity, ran a big study. They looked at the wild relatives of the varieties that are being used in the fields. Wild vanilla. Wild coffee, etc. They found out that a third of all the wild relatives in beans are under threat of extinction. They found out that 100% of the sample they used on vanilla’s wild relatives are under the threat of extinction. The seeds of those wild varieties, they constantly adapt to the climate conditions, to the water availability, to the shades or no shades, to the temperature, to the sun, to everything. They mutate naturally. So with climate change, these wild varietals are going to be just way more able to deal with things, and it is so important that we bring them on board. If you are a Cargill or others, or the big coffee companies or the big cocoa companies, that are directly dealing with this reality, with the farmers who see their yields declining and the water scarcity more and more, they have either the choice of going up in altitudes—meaning lower lands at lower volumes, more expensive to adapt—or to find alternatives. This is one of these topics on which I see CEOs’ minds just opening when they realize that there is this opportunity. Because climate change is knocking on the door saying, “Here is the huge problem we have.” But also nature is saying, “Here are the huge abilities that I have to solve your problems.” In your new role in Astanor Ventures, are you going to be putting investments in the future of agriculture? I think at the juncture of technology and nature-based solutions. I’ll say something which is terribly unpopular, but which I’ve been saying for 10 years: We are not paying the true cost of food. We are just not. Do you think that should be reflected when we go to the supermarket? Yes, it should be more expensive. Because it’s not sustainable in terms of farmer income, in terms of animal welfare, in terms of your health sometimes. When we walk into a supermarket in 10 years’ time, is it going to look different? Will there be different products on the shelves? What do you think, and what would you like to see? I hope it is going to be different. There is one aspect that I think I am absolutely convinced about: The food system will relocalize. The second biggest topic for governments through the pandemic has been to make sure that there would be enough food. And they suddenly realized that with the complexity of the food system, there were these bottlenecks. The reduction of the food system carbon emissions will also come from the fact that the ingredients will travel less. In 20 years from now, you will have much more local food. I would like to see more diverse local food, and more expensive than you have today. Some subsidies should be redirected in order to make sure that the people that cannot afford to pay are being given the possibility to do that. At the end of the day, we know where the food systems have led us: About two billion people that are overweight in the world, about 700 million people that have diabetes. Instead of dealing with these obesity and diabetes issues, by providing better food aid and supporting people that need to be supported, you’d actually save money for the future. This is the whole theory of where I think we can gradually move. And climate change will force us to move there. I want to get back to the original thing we were talking about: What we call “conscious capitalism.” You sound almost kind of optimistic, that there are really big changes to come out of this pandemic. And yet inequality is worse, and the profit motivation seems as strong as ever. What makes you so hopeful that people are going to act in the common good rather than in their own self interest? I’m not sure they will. I’ve seen the worst and the best in this pandemic. We see all over the place that growing inequalities are a danger for democracies. So I’m not optimistic. But we’ve seen solidarity, social bonding, people changing their behaviors in many ways, again for the worse and for the best. I see climate change as such a huge frontier for us as a species, that I’m sure it will bring the worst. And I see signs that it can also bring the best. It would be illogical to blame capitalism and the global financial markets for ruining the resilience of our species. I’ve defined myself as a business activist. I’m an activist of business being part of the solution, being the fundamental solution, the solution. I saw you said that when you were 33, you thought of leaving business. Now you think it is the place to be. Yes, I really think so. Do you think the next generation of CEOs is going to be quite different? The next, I don’t know. But the next-next? I think yes. Maybe they will not join the companies. That’s the point. And this is why CEOs are paying a lot of attention to these collectives of employees that have started all around the world. They are highly educated, talented managers. And they will be candidates for CEOs. They are part of a generation that was born with these questions already. So it’s not a cultural shift [for them]. We were talking about this climate skilling and upskilling. How to make people aware of [climate change]. This is not a problem for that generation. They’re entirely into it already, sometimes too much, with climate anxiety and everything. So they will leave these large companies, in which case I think these large companies will simply not survive, because they will not have the skills. Put it this way, if you’re not able to lead climate strategy 10 years from now, you should not be a CEO. It’s as simple as that. Your company will not find capital. I’m pretty clear on that......»»

Category: topSource: timeNov 21st, 2021

The Metaverse - Much, Much Bigger Than Facebook

The Metaverse - Much, Much Bigger Than Facebook Authored by Bill Blain via, “I’m serious. She could actually be a 300-pound dude who lives in his momma’s basement in suburban Detroit. And her name is Chuck.” Facebook is now Meta, and Meta wants to own the Metaverse. Just what is the Metaverse, what are the opportunities, and can Mark Zuckerberg repeat the success of Facebook by monetising a whole new way of doing business, or is it shaping up to be something much, much more? This morning’s Porridge is dedicated to my new colleague Diaa, who was foolish enough to ask what I thought about Facebook.. he will learn.. As a distraction from worrying about What Biden and Xi actually said to each other, the state of wage inflation across economies, UK vs Yoorp unpleasantness, and wondering what 100,000 armed-to-the-teeth Russians are doing on the Ukraine border (aside from being a classic maskirovka to distract us from what Putin is really doing..), I thought today I might continue my grand tradition of writing about stuff I know I know very little about… So, just what is the Metaverse? What kind of opportunity does it represent? Is it, as so many fantabulous things in this wonderful world are, yet another digital solution in search of a problem? Is it hype or a genuine new trend? Of course, my interest in the Metaverse was pricked 2 weeks ago when Facebook Inc changed its name to Meta. Since then the stock is up 7%, only down 8% from its September high before the recent whistleblower news. A few cynics have suggested the renaming was all about trying to distance and shut-off the recent sordid whistleblower accusations about Facebook. Zuckerberg has previous form as something of a congenital acquisitive hoarder of the future – and he clearly wants to own “the metaverse” with the intention of monetising it. The question, and future value of the firm, ultimately lies in how well he achieves that. The Metaverse concept was first described and named by Science Fiction writer Neal Stephenson – whom I’ve actually read! – right in the very early days of the internet revolution. Way back in 1992 he presented a vision of human avatars inter-reacting in a 3D digital space in the novel “Snow Crash”. He pretty much nailed it – establishing digital life alongside concepts like “proof of work” leading inevitably to the concept of digital currencies, the genesis of Bitcoin, the Blockchain and now Non-Fungible Tokens. Today, the Metaverse is being “imagined” as some kind of Internet version 2.1 – but it’s really describes how we will all integrate digitally. It will offer a more immersive world of deeper engagement into virtual and augmented reality – once the technology catches up with the promises. “Digital Visionaries” are talking about how natural it will become to do everything from shopping, business and living a social life online in the form of single or multiple digital avatars… It informs the world of “Ready Player One” and raises fears about a “Matrix” like future. The thing is – whatever Facebook would have us believe – it’s already happening and has been for some time. The global gaming sector is now infinitely larger than the film industry at over $100 bln per annum.  Fortnite, the game, has become a global sensation, and now includes virtual concerts given by smart artists who see the future potential. The amount of cash spent in-game purchases is over $50 bln, just in the US! My family hails from the Scottish City of Dundee, once famous for “Jam, Jute and Journalism”. In the 30-years post-war, it looked to be in terminal decline, but is now the heart of the UK’s exploding gaming sector and home to best-selling game ever: Grand Theft Auto. (Incidentally, the City’s recovery began in 1982 when the UK’s first commercial UK computer; the ZX Spectrum, was built in Dundee!) It’s a city reborn. Zuckerberg has a problem. His existing brands; Facebook, Instagram and WhatsApp will remain essentially unchanged (for now) and are, essentially, advertising companies under competitive and evolutionary threat. They remain the dominant brands in social media advertising, but their user bases are not as sticky as once assumed, and they no longer have a monopoly as social media breaks and fragments into multiple players and themes. Let’s give Zuckerberg some credit for trying to derisk Facebook Meta by diversifying its earnings. The regulatory risks from privacy concerns and the charge its maximised advertising revenues to the detriment of users by targeting them with dangerous social media tosh are huge. How long before an American class action suite emerges for trillions alleging American youth have been mentally damaged by social media? Without Zuckerberg’s unique approach –  I suspect Facebook would be as unlamented as “Friends Reunited” in the social-media graveyard. He is painting the Metaverse he intends to own as a virtual environment where “you can be present with people in digital spaces”, an “embodied internet”, and how it’s going to “succeed the mobile internet”. It’s an opportunity for him to monetise Facebook’s investment in things like the Oculus VR set, and to diversify his earnings from pure (yet risky) advertising to actually selling hard and soft stuff in the Metaverse. Will he succeed in making Meta the dominant venue in the Metaverse? Don’t underestimate the potential for monetisation in the Metaverse. Earlier this year a 17 year old artist, Fewocious, sold 600 digital sneakers in NFT format through an on-line auction for…. $3.08 million. There is now a whole digital fashion universe selling unique NFT apparel gamers can wear on-line. As yet there isn’t a way of being able to dress across the net (enabling digital avatars to wear the same gear across multiple games and in multiple venues), but I’m assured it’s going to happen. There are now a host of earnest fashion designers exclusively focused on digital fashion. There clearly are also real and valuable applications for the metaverse in terms of virtual reality business and education. Effectively, Education when virtual last year when millions of school-kids zoomed an academic year because of Covid. Imagine a future where kids can attend any school they want as digital avatars – interesting, and horrific in terms of real social interaction, not to mention the health consequences of living on line. I’m intrigued by the business potential. Like every other firm we’re wondering just how much office space we really need. How often do clients actually visit the office? Do we all need to be there? Would we not be cheaper and more efficient to continue developing better on-line tools. Instead of one hour zoom calls, what about an on-line digital office open all day? The potential to design and innovate new ways of working in the metaverse are only limited by our imagination! Zuckerberg is a smart fellow who sees all that potential. He knows Facebook is a risk business – the declining numbers of young people using it isn’t compensated for by the ones using Instagram. The dominant younger generation platform is TikTok, which is now part China Government owned after it took an ownership stake in Bytedance. As the Facebook brand inevitably fades its advertising revenues will plummet. Therefore, he is staking the next stage of his brand’s development on his company’s 3D universe. He will find new ways to monetise whatever data Meta can find in its virtual and augmented reality universe – which is not without associated risks to consumers and therefore the company. And that’s where the jury is out – can he make Meta as much a monopoly as Facebook once was? If not, and I suspect its going to be a very crowded space, then Meta’s future is debatable long-term. One final thought – if the Metaverse takes off, then I suspect so does a currency to go with it. I am reassessing Ethereum. Tyler Durden Wed, 11/17/2021 - 19:40.....»»

Category: smallbizSource: nytNov 17th, 2021

Is Boeing The Worst Company On The Planet?

Is Boeing The Worst Company On The Planet? Authored by Bill Blain via, “Had the government done its job of regulating Boeing, it is highly unlikely that the 737 Max would have been globally grounded.” A new book on the fall of Boeing is getting the headlines this morning. I’ve been arguing it illustrates all the worst excess of capitalism – yet how many investors have called it out? Very few. Why does ESG apparently not apply to Boeing? Very short Porridge this morning as I’m about to fly… Thankfully, I shall not be flying on a Boeing 737 Max. At the end of this month a new book will be launched – Flying Blind: the 737 Max Tragedy and the Fall of Boeing, by Peter Robinson. Bloomberg carries a piece on it this morning: Boeing Built an Unsafe Plane, and Blamed the Pilots When it Crashed. Since the first tragic B-737 Max crash in 2018, and then the second on March 10th 2019, I’ve written about the unravelling tumble of Boeing many times. It’s been something of a journey – discovering the emperor not only had no clothes on, but was an abusive, thieving, wife-battering bully into the bargain. I have a childish fascination with aircraft, a geeky ability to identify and prattle about any plane that’s ever flown, and a business interest in aircraft finance. But nothing quite prepared me for just how badly Boeing’s myth collapsed. Frankly – I’m surprised it still exists, and hasn’t been split into a wholly newCo airliner maker, and a legacy Boeing to service its Military contracts. The world needs climate-clean new airliners, but Boeing is a busted flush and will need a massive injection to contribute anything. Airbus isn’t much better – its suffering a talent drain as engineers age and retire, and is struggling to maintain quality on its current products, let along deliver promised hydrogen clean tech by 2035. If ever there was a time to completely relaunch the airliner business… aside from having to reinvent them from the wheels up, and rebuild the workforce.. this would be it. Once Boeing was the byword for aviation brilliance – successfully launching the jet-age, making mass travel possible and displaying endless innovation and inventiveness as the premier aviation firm. And then the cost accountants took over – the old Boeing vanished the day McDonnell-Douglas famously bought Boeing with Boeing’s money in what’s turned out to be among the worst takeovers in corporate history. The last decent plane Boeing made was the innovative, fuel-efficient, composite Dreamliner. It cost $25 bln plus to develop – and it will take decades to recoup the money through clever accounting. (It may never make a real profit.) The plan had then been to develop a successor for the venerable B-737 which airlines and the environmental lobby would have loved: a fuel-efficient, climate friendly, lightweight city-to-city hopper. It never happened. Instead, the C-Suite cut costs and saved money. Their market was secure, a duopoly with Airbus and a packed 3-4 year order books, happy that airlines had little choice but keep buying whatever crud they offered. As interest rates fell Boeing borrowed more and more from market, using debt and earnings to buyback stock. The stock soared. Executives received enormous bonuses and stock option packages. Workers saw salary and conditions cut. Quality fell. The C-Suite decided not to invest in new aircraft development – they simply further extended the B-737, making the once slim thoroughbred of the skies into a fat, bloated, unstable, unsafe cow of flying metal that barely defied gravity. They told airlines crews would not need retraining. They lied. 346 people paid the ultimate price for Boeing compromising safety. Today Boeing has no aircraft on its books any airline really wants. Its new B-777x that finally showed up for the Dubai airshow earlier this week is years late. No one wants it. It’s utterly pointless in this new environment. There have been very few new Dreamliner orders – the whole programme may have lost money. Boeing is textbook corporate failure. Equally it’s a market failure. Have investors pilloryiedBoeing the same way they punish oil majors, miners and energy firms for the temerity of being involved in businesses that cause a perception problem because of the E in ESG? No they have not. Yet Beoing absa***glootly fails both the Social and Governance aspects of ESG. How many big investors have said they are dumping the stock? No, they keep buying because they know just how important Boeing is to the US economy, that it’s too big to fail, so it won’t be allowed to die.. When I give lectures on financial markets I cite Boeing as a prime example of a company guilty of every kind of corporate failure and blatant greed. Its leadership failed in every respect imaginable. It killed 346 people through the deliberate negligence of cost-cutting accountants and marketing teams. It sold an unsafe compromise of plane to avoid spending the money it would have cost to develop a new, more efficient and climate friendly single aisle short-haul airliner. It gambled the money it should have invested in new products by squandering the company’s earnings on stock buybacks to boost the incomes of senior executives. It is now effectively finished. Its reputation as a leading corporate is in taters. It can’t afford to develop new products. It has no current product airlines want – they will buy the relaunched 737 Max because there is nothing else and its’ cheap. Its employee relations are in tatters. What was once the pride of American engineering has a record for shoddy workmanship. It also exposes a number of critical failure across the US industrial complex, including the regulator, The FAA, whch was effectively “state-captured” by Boeing, enabling it to deliver compromises to trusting customers. If you use the search function on the top right of the Morning Porridge website you will find a whole series of Morning Porridges where Boeing was the main topic, including the following: July 10th 2019: Could Boeing trigger a market crash? October 22nd 2019: Boeing, Boeing, Boing, Bong.. May 1st 2020: Boeing, Marx was right? Enough said.. Tyler Durden Wed, 11/17/2021 - 12:10.....»»

Category: blogSource: zerohedgeNov 17th, 2021

The 4 best camper van rentals in 2021, plus insider tips for your first trip out

Camper vans provide a compact, affordable alternative to large RVs, with more comfort than traditional camping. Here are the best places to rent them. When you buy through our links, Insider may earn an affiliate commission. Learn more.Campervan North America LLC Due to COVID-19, many people are considering alternatives to flights and hotels for travel. A camper van is an increasingly alluring proposition for an affordable, socially-distanced vacation. We break down types of camper vans and the best camper van rentals to consider. Table of Contents: Masthead StickyThere's no denying the fact the travel landscape continues to evolve as we adapt to the ongoing pandemic. With plenty of perceived risks associated with both boarding a plane or booking a hotel, people are turning to alternatives to vacation closer to home.   An RV rental is one such way forward as your wheels, lodging, and dining are all relegated to one controlled space. However, they tend to be difficult to drive, sometimes too large for campgrounds, and pricey when it comes to fuel.For an equally convenient way to travel with more flexibility, consider the camper van. Like larger RVs and motorhomes, a camper van offers travelers increased levels of control over their environments. The best camper van is a self-contained living pod with sleeping, washing, and cooking facilities all onboard. They allow easy access to socially distant spots in nature, are easier to drive, better on fuel, and can slip into most campgrounds without problems.Finding the right camper van can be a challenge, though, as there exists a wide range of potential renting (and buying) options. Below are four of the best camper van rental services we've found based on reputation, customer satisfaction levels, specialties, all-around value, and fleet offerings.At the bottom of this guide, we've also included answers to a few FAQs, as well as tips and recommendations for first-timers.Here are the best camper van rentals of 2021Escape CampervansEscape CampervansPros: A well-established company with a good number of locations and excellent customer service. Cons: Some relatively older rental stock, but vans are regularly maintained. Company info and locations: Founded in New Zealand in 2003, the company opened in the US in 2008 and now has 12 locations and 600 vehicles. Locations include Denver, Los Angeles, Las Vegas, Miami, New York, Phoenix, Portland, Salt Lake City, San Francisco, Seattle, Calgary and Vancouver. Their vans have funky, painted exteriors and range from Jeeps up to large Newport campers.   COVID-19 policies: Enhanced, 80-point cleaning and detailing policies, facilities meeting CDC guidelines, minimizing customer contact (a contactless option will be offered from June 2020), flexible cancellation policies.  Typical rental costs: The Escape Mavericks package includes a camper van sleeping up to five people, priced at $35 per day for unlimited mileage in a Ford E-150 or Transit, with kitchen (stove, refrigerator). The price quote is for traveling out of Miami. Rent a camper van through Escape Campervans hereLost CampersLost CampersPros: One of the cheaper rental options on the market. Cons: Just two year-round locations. Entry-level vehicles are relatively basic. Company info and locations: A family-owned business that has operated since 2007. Locations in San Francisco and Los Angeles, and also Salt Lake City (seasonally). The company bills itself as the budget option, and rents out mainly Dodge Grands and Ford E350 vans. COVID-19 policies: Enhanced cleaning policies under CDC guidelines, minimizing contact with customers. Typical rental costs: Wanderer camper van sleeps two people, from $83 per night, rentals include unlimited mileage and roadside assistance. The vehicle includes a full outdoor kitchen including stove and ice chest. The price is for traveling out of Los Angeles.Rent a camper van from Lost Campers hereVintage Surfari WagonsVintage Surfari WagonsPros: The place to rent from if retro-chic appeals to you, with some truly special vehicles in their fleet. The company is exceptionally knowledgeable and will happily help out with suggested itineraries. Cons: The age of some of the vehicles means there are some restrictions on parts of the fleet in terms of range (some 100 miles per day limits) and restricted roads (some cannot drive up very steep inclines). There is just one location to rent from.  Company info and locations: This company has been specifically renting out vintage camper vans for over 14 years, and is based in Costa Mesa, California. Their fleet is exclusively restored VW camper vans from the 1970s and 1980s, with some less iconic but more modern vehicles as well, all with revamped interiors. COVID-19 policies: Enhanced, stringent disinfecting procedures, particularly for 'high touch' points. Typical rental costs: 1984 VW 'Lime Cello' Vanagaon sleeps four passengers with two sleeping berths (one a pop-top on the roof), from $169 per night, mileage conditions to be outlined at the time of booking. The vehicle includes a propane stove and refrigerator/icebox. The price quote is for traveling out of Costa Mesa. Rent a camper van from Vintage Surfari Wagons hereCampervan North AmericaCampervan North AmericaPros: The company rents out practical, no-frills vehicles and has a sizable fleet and good customer satisfaction ratings. Cons: The vehicles have relatively few amenities and fans of luxury additions may find them on the sparse side. Company info and locations: The company has been in business since 2009. Since starting out in Bozeman, Montana, they have expanded to four locations in Denver, Las Vegas, and Seattle. The company has been accredited with the Better Business Bureau since 2015 and holds an A+ rating.   COVID-19 policies: The company has instituted a comprehensive disinfecting program for each rental in accordance with CDC guidelines. Typical rental costs: The Bunkhouse camper van sleeps up to four people (one large bed, two single bunks), from $128 per night, 500 prepaid miles for $180, and a $90 set up/preparation fee. Based on a Dodge Promaster van, it does not come with a stove or refrigeration. The price quote is for traveling out of Denver.Rent a camper van from Campervan North America hereImportant info for first-timersIt's vital to check that you can park your camper van at the campground you intend to visit and check what facilities they have there.Booking ahead is key due to increased demand. Overnight campsite and park fees with 'hookups' (electricity, water, bathrooms, and/or sewage disposal) typically range from $30 to $50 per night or more for the best quality grounds. Some older camper vans may not be suitable for roads with steep inclines, so check your proposed routes with the rental company at the time of booking. Outside of campgrounds, it is also possible to find places to park (usually for limited amounts of time) without any facilities, either in remote areas or at designated spots. This is called 'dry camping' or 'boondocking' and is usually free of charge. You can find these locations on the website for the United States Forest Service or Campendium. This option is much easier for camper vans than it is for huge motorhomes.  There are other obvious preparation tips, such as having a full complement of water (some camper vans do not include running or potable water onboard), groceries, and other essentials. Many of the rental companies listed below have regularly-updated blogs and online resources that are well worth looking at if this is a first-time trip, and are all experts in their regions, and can help with suggested routes and campgrounds. We also suggest starting here with our favorite camper van accessories to make your trip exta comfy.FAQsWhat's the difference between a motor home and a camper van?Motor homes and camper vans both generally fall under the general definition of an RV.A motor home is usually larger, built on a bus or truck chassis, and has a divider between the driver's cab and the living quarters, which include comfortable sleeping, cooking, and bathroom facilities. A camper van is generally smaller, typically with no divide, and usually more basic. Many were not originally built to be self-contained living quarters and have been specially adapted and fitted to serve this purpose. Are all camper vans the same? Customers can choose from a range of outfitted vehicles, some with very basic facilities and some with rockstar levels of comfort but all offer flexibility, economic benefits, and control over the traveler's own environment. It's tricky to specify exact fuel economies for each type but for average-sized camper vans, around 20 miles per gallon is a good working average. "Camper vans offer great gas mileage and can access the more restricted roads (that might be unavailable to larger motorhomes)," Kirby Sandberg said. "They also offer great maneuverability and visibility when driving, and you'll save big by having the option to camp instead of booking into hotels." What kinds of camper vans are there?Basic outfitted/converted camper vans: These are general-use vans like the Ford Transit that were not built for camping but which have been converted. Additions usually include basic sleeping quarters and storage for camping or biking gear, with more upscale models including a small kitchen or galley area with a refrigerator, sink, and running water. Composting toilets and propane-heated shower attachments for outdoor showering are also possible.Purpose-made outfitted camper vans: These are usually newer-generation products built intentionally to be sold to travelers. They tend to be more luxurious with upgraded fixtures and fittings, made from comfortable materials, and feature nicely integrated electronics and plumbing facilities. Upper echelon versions have dining rooms and full bathrooms with showers, too. Brands of these include Winnebago, Volkswagen, and Airstream.High-top outfitted camper vans: These vehicles typically come with a higher roof that's either been factory-fitted on the original vehicle or extended as part of a conversion. Think of this as added "attic'' space that can be used for sleeping quarters, storage space for camping, or adventure gear. Some variations include pop-up or semi-rigid tops, as well as those compatible with rooftop tents. More great road trip guidesstellalevi/Getty ImagesThe best camper van accessoriesThe best RV rentalsThe best car rental companiesThe best road trips in the US, and where to stay along the wayRead the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 16th, 2021

The Home Depot Announces Third Quarter Results

ATLANTA, Nov. 16, 2021 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $36.8 billion for the third quarter of fiscal 2021, an increase of $3.3 billion, or 9.8 percent from the third quarter of fiscal 2020. Comparable sales for the third quarter of fiscal 2021 increased 6.1 percent, and comparable sales in the U.S. increased 5.5 percent. Net earnings for the third quarter of fiscal 2021 were $4.1 billion, or $3.92 per diluted share, compared with net earnings of $3.4 billion, or $3.18 per diluted share, in the same period of fiscal 2020. For the third quarter of fiscal 2021, diluted earnings per share increased 23.3 percent from the same period in the prior year. "As evidenced by our strong performance in the quarter, our team continues to do an outstanding job of operating with flexibility and agility," said Craig Menear, chairman and CEO. "Ultimately, this is what has allowed us to respond to the elevated home improvement demand that has persisted. I would like to extend my sincere appreciation to our team, as well as our supplier, supply chain, and transportation partners, as we continue to navigate this dynamic environment together." The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at At the end of the third quarter, the Company operated a total of 2,317 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico, including 14 stores from a small acquisition completed during the second quarter of fiscal 2021. The Company employs approximately 500,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE:HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index. Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the impact of the COVID-19 pandemic and the related recovery on our business, operations and financial results (which, among other things, may affect many of the items listed below); the demand for our products and services; net sales growth; comparable sales; effects of competition; our brand and reputation; implementation of store, interconnected retail, supply chain and technology initiatives; inventory and in-stock positions; state of the economy; state of the housing and home improvement markets; state of the credit markets, including mortgages, home equity loans and consumer credit; impact of tariffs; issues related to the payment methods we accept; demand for credit offerings; management of relationships with our associates, potential associates, suppliers and service providers; international trade disputes, natural disasters, public health issues (including pandemics and quarantines, related shut-downs and other governmental orders, and similar restrictions, as well as subsequent re-openings), and other business interruptions that could disrupt supply or delivery of, or demand for, the Company's products or services; continuation or suspension of share repurchases; net earnings performance; earnings per share; dividend targets; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; stock-based compensation expense; commodity or other price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us; the impact and expected outcome of investigations, inquiries, claims and litigation, including compliance with related settlements; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of regulatory changes, including changes to tax laws and regulations; store openings and closures; guidance for fiscal 2021 and beyond; financial outlook; and the impact of acquired companies, including HD Supply Holdings, Inc., on our organization and the ability to recognize the anticipated benefits of those acquisitions. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control, dependent on the actions of third parties, or are currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended January 31, 2021 and in our subsequent Quarterly Reports on Form 10-Q. There also may be other factors we cannot anticipate that are not described herein, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission and in our other public statements. THE HOME DEPOT, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended Nine Months Ended in millions, except per share data October 31,2021 November 1,2020 % Change October 31,2021 November 1,2020 % Change Net sales $ 36,820 $ 33,536 9.8 % $ 115,438 $ 99,849 15.6 % Cost of sales 24,257 22,080 9.9 76,468 65,827 16.2 Gross profit 12,563 11,456 9.7 38,970 34,022 14.5 Operating expenses: Selling, general and administrative 6,168 6,076 1.5 18,975 18,260 3.9 Depreciation and amortization 600 528 13.6 1,780 1,567 13.6 Total operating expenses 6,768 6,604 2.5 20,755 19,827 4.7 Operating income 5,795 4,852 19.4 18,215 14,195 28.3 Interest and other (income) expense:.....»»

Category: earningsSource: benzingaNov 16th, 2021

The Home Depot Announces Third Quarter Results

ATLANTA, Nov. 16, 2021 /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $36.8 billion for the third quarter of fiscal 2021, an increase of $3.3 billion, or 9.8 percent from the third quarter of fiscal 2020. Comparable sales for the third quarter of fiscal 2021 increased 6.1 percent, and comparable sales in the U.S. increased 5.5 percent. Net earnings for the third quarter of fiscal 2021 were $4.1 billion, or $3.92 per diluted share, compared with net earnings of $3.4 billion, or $3.18 per diluted share, in the same period of fiscal 2020. For the third quarter of fiscal 2021, diluted earnings per share increased 23.3 percent from the same period in the prior year. "As evidenced by our strong performance in the quarter, our team continues to do an outstanding job of operating with flexibility and agility," said Craig Menear, chairman and CEO. "Ultimately, this is what has allowed us to respond to the elevated home improvement demand that has persisted. I would like to extend my sincere appreciation to our team, as well as our supplier, supply chain, and transportation partners, as we continue to navigate this dynamic environment together." The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at At the end of the third quarter, the Company operated a total of 2,317 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico, including 14 stores from a small acquisition completed during the second quarter of fiscal 2021. The Company employs approximately 500,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE:HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index. Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the impact of the COVID-19 pandemic and the related recovery on our business, operations and financial results (which, among other things, may affect many of the items listed below); the demand for our products and services; net sales growth; comparable sales; effects of competition; our brand and reputation; implementation of store, interconnected retail, supply chain and technology initiatives; inventory and in-stock positions; state of the economy; state of the housing and home improvement markets; state of the credit markets, including mortgages, home equity loans and consumer credit; impact of tariffs; issues related to the payment methods we accept; demand for credit offerings; management of relationships with our associates, potential associates, suppliers and service providers; international trade disputes, natural disasters, public health issues (including pandemics and quarantines, related shut-downs and other governmental orders, and similar restrictions, as well as subsequent re-openings), and other business interruptions that could disrupt supply or delivery of, or demand for, the Company's products or services; continuation or suspension of share repurchases; net earnings performance; earnings per share; dividend targets; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; stock-based compensation expense; commodity or other price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us; the impact and expected outcome of investigations, inquiries, claims and litigation, including compliance with related settlements; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of regulatory changes, including changes to tax laws and regulations; store openings and closures; guidance for fiscal 2021 and beyond; financial outlook; and the impact of acquired companies, including HD Supply Holdings, Inc., on our organization and the ability to recognize the anticipated benefits of those acquisitions. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control, dependent on the actions of third parties, or are currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended January 31, 2021 and in our subsequent Quarterly Reports on Form 10-Q. There also may be other factors we cannot anticipate that are not described herein, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission and in our other public statements. THE HOME DEPOT, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended Nine Months Ended in millions, except per share data October 31,2021 November 1,2020 % Change October 31,2021 November 1,2020 % Change Net sales $ 36,820 $ 33,536 9.8 % $ 115,438 $ 99,849 15.6 % Cost of sales 24,257 22,080 9.9 76,468 65,827 16.2 Gross profit 12,563 11,456 9.7 38,970 34,022 14.5 Operating expenses: Selling, general and administrative 6,168 6,076 1.5 18,975 18,260 3.9 Depreciation and amortization 600 528 13.6 1,780 1,567 13.6 Total operating expenses 6,768 6,604 2.5 20,755 19,827 4.7 Operating income 5,795 4,852 19.4 18,215 14,195 28.3 Interest and other (income) expense:.....»»

Category: earningsSource: benzingaNov 16th, 2021

Cooper Companies" (COO) Buyout to Boost Women"s Healthcare

Cooper Companies' (COO) agrees to acquire Generate Life Sciences. It will be an important addition to the former's present offerings, while improving women's healthcare. The Cooper Companies, Inc. COO recently inked a definitive purchase agreement to acquire Generate Life Sciences for around $1.6 billion. The buyout is anticipated to be completed in the acquirer’s first fiscal quarter of 2022 upon the fulfillment of customary closing conditions, which include regulatory approval.It’s worth mentioning that Generate Life Sciences is a privately held company and a leading provider of donor egg and sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue).This transaction is likely to bolster Cooper Companies’ CooperSurgical (CSI) business segment.Rationale of the BuyoutPer management, the buyout is a strategic fit for CooperSurgical as it will enable the company to cater to the needs of fertility clinics and Ob/Gyns on the back of a more extensive product portfolio and services.Image Source: Zacks Investment ResearchGiven Cooper Companies’ leading position in women’s healthcare, the buyout, once completed, is going to be a crucial addition to its existing offerings. This, in turn, will enable the company to support its infrastructure and expertise, which include its sales forces’ solid clinical reputation and educational capabilities.From the financial perspective, the acquisition (excluding one-time charges and deal-related amortization) is anticipated to be accretive to Cooper Companies’ adjusted earnings per share by around 30 cents in the first year post completion.Market ProspectsPer a report by Grand View Research, the global women’s health market is anticipated to reach $47.8 billion by 2027, witnessing a CAGR of 4.9% during the forecast period (2016-2027). Hence, this buyout is a well-timed one for Cooper Companies.Another Notable DevelopmentIn August, Cooper Companies announced that its CooperVision MiSight 1 day contact lenses have received approval from China’s National Medical Products Administration — regulating medical devices and pharmaceuticals — for usage within the country post a priority review. CooperVision has been leading the way (for more than a decade) when it comes to building the global myopia management category to provide aid to millions of children and their caregivers through partnership with the optometry and ophthalmology communities.Price PerformanceShares of this Zacks Rank #4 (Sell) company have gained 14.9% on a year-to-date basis compared with the industry’s growth of 14.2%.Stocks to ConsiderSome better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, DexCom, Inc. DXCM, and AngioDynamics, Inc. ANGO.Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).DexCom’s earnings growth rate for next quarter is estimated at 60.6%. The company currently carries a Zacks Rank #2.DexCom surpassed earnings estimates in each of the trailing four quarters, the average surprise being 31.7%. The company’s earnings yield of 0.4% compares favorably with the industry’s (3.6%).AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company currently carries a Zacks Rank #2.AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%). 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report DexCom, Inc. (DXCM): Free Stock Analysis Report The Cooper Companies, Inc. (COO): Free Stock Analysis Report To read this article on click here......»»

Category: topSource: zacksNov 15th, 2021

SWK Holdings Corporation Announces Financial Results for Third Quarter 2021

DALLAS, Nov. 12, 2021 /PRNewswire/ -- Corporate Updates Conclusion of strategic review process with SWK to focus on specialty finance receivables business SWK evaluating ongoing dividend and additional leverage Third Quarter 2021 Finance Receivables Segment Updates: As of September 30, 2021, tangible book value per share was $17.50, a 12.7% increase from September 30, 2020 For the third quarter 2021, finance portfolio effective yield was 13.8%, a 40-bps increase compared with 13.4% for the third quarter 2020 For the third quarter 2021, finance portfolio realized yield was 18.8%, compared to 17.4% for the third quarter 2020 Core finance receivables business generated adjusted non-GAAP net income of $7.7 million for the quarter ended September 30, 2021, a 17.6% increase compared to $6.6 million for the quarter ended September 30, 2020 As of September 30, 2021, total investment assets were $206.3 million, a 10.3% increase from September 30, 2020 SWK Holdings Corporation (NASDAQ:SWKH) ("SWK" or the "Company"), a life science focused specialty finance company catering to small- and mid-sized commercial-stage companies, today provided a business update and announced its financial and operating results for the third quarter ended September 30, 2021. "I am pleased to report that both segments of our business performed well during the third quarter. The specialty finance portfolio continued its year-to-date strong performance as highlighted by its 18.8% realized yield during the quarter with strong underlying credit trends. Additionally, Enteris secured several new feasibility studies during the quarter and recently reported encouraging pharmacokinetics data for an internal development candidate," stated Winston Black, Chairman and CEO of SWK. "The recent completion of the strategic review process initiated earlier this year provides management the framework to focus efforts on our specialty finance business going forward. We have built a strong reputation with our platform and are encouraged by the Board's determination that growing the specialty finance business is in the best interests of our stockholders. We intend to return new deal originations to historical levels during 2022, although anticipate this may take a few quarters to ramp up as we fully intend to maintain the high integrity of our underwriting standards. Given SWK's strong current liquidity, including a Board commitment to increase leverage prudently as we scale, we foresee multiple opportunities to deploy capital given the need for small and mid-sized life sciences companies to obtain funding to enable innovation to reach the marketplace." Mr. Black continued, "Value creation continued at Enteris BioPharma, highlighted by six new Peptelligence® feasibility studies signed year-to-date. The increased industry interest in our Peptelligence technology is driven by the business development efforts of Dr. Rajiv Khosla and his team, as well as the technology's role in advancing Cara Therapeutics' Oral KORSUVA™ program. Last month, Enteris also announced successful completion of a Phase 1 clinical trial of optimized Peptelligence Oral Leuprolide, demonstrating delivery of drug levels comparable or greater to subcutaneous or depot injection. Enteris is advancing the program into the next round of clinical development, and we will provide additional details as warranted." Third Quarter 2021 Financial Results For the third quarter 2021, SWK reported total revenue of $9.6 million compared to $10.6 million for the third quarter 2020, which change was primarily the result of a $1.5 million increase in interest and fees earned on our finance receivables and a $2.6 million decrease in revenues from our Pharmaceutical Development segment. The $1.5 million increase in revenue attributable to our Finance Receivables segment primarily consists of a $1.4 million net increase in royalty income and a $1.1 million increase in fees and interest earned on our finance receivables due to funding new and existing loans, partially offset by a $1.0 million decrease in interest and fees earned on finance receivables that were paid off or paid down since the third quarter of 2020. The decrease in Pharmaceutical Development segment revenue includes $2.5 million of milestone revenue received in 2020 related to Enteris' license agreement with Cara. Income before taxes for the third quarter 2021 totaled $2.8 million compared to $3.9 million for the same period the previous year. The year-over-year $1.1 million decrease is primarily driven by a $2.6 million decrease in income from our Pharmaceutical Development segment due to the third quarter 2020 milestone achievement, offset by a $1.5 million increase in revenue from our Finance Receivables segment, and a $0.3 million net increase in operating expenses. The increase in operating expenses included a $1.0 million increase in expenses incurred in connection with the board's efforts to identify, review and explore strategic alternatives for the Company; such expenses primarily consist of legal and consulting fees, as well as board compensation. The increase in operating expenses was offset by a $2.0 million decrease in the amortization of intangible assets. GAAP net income for the quarter ended September 30, 2021, totaled $2.2 million, or $0.17 per diluted share, compared to $4.3 million, or $0.34 per diluted share for the third quarter 2020. For the third quarter 2021, non-GAAP adjusted net income was $4.3 million and non-GAAP adjusted net income for the Finance Receivables segment was $7.7 million, compared to $6.9 million and $6.6 million, respectively, for the third quarter 2020. Income producing assets (defined as finance receivables and corporate debt securities) totaled $196.3 million as of September 30, 2021. This is a 9.0% increase compared with income producing assets of $180.1 million as of September 30, 2020. Total investment assets, which include income producing assets plus equity-linked securities, totaled $206.3 million as of September 30, 2021, compared to the September 30, 2020 total investment assets of $187.1 million. Tangible financing book value per share totaled $17.50 as of September 30, 2021, a 12.7% increase from $15.52 as of September 30, 2020. Management views tangible financing book value per share as a relevant metric to value the Company's core finance receivable business. Book value per share was $20.36 as of September 30, 2021, compared to $18.44 as of September 30, 2020. Tables detailing SWK's financial performance for the third quarter 2021 are below. Portfolio Status During the quarter, SWK did not deploy any capital with existing portfolio companies. During the quarter ended September 30, 2021, the Company collected $7.1 million in principal payments. As of November 8, 2021, SWK had $6.4 million of unfunded commitments. At the end of the third quarter 2021, the weighted average projected effective yield of the finance receivables portfolio was 13.8%, including non-accrual positions, versus 13.4% at the end of the third quarter of last year. The projected effective yield is the rate at which income is expected to be recognized pursuant to the Company's revenue recognition policies, if all payments are received pursuant to the terms of the finance receivables and excludes non-interest earning assets such as warrants and equity investments. For the third quarter 2021, the realized yield of the finance receivables portfolio was 18.8%, versus 17.4% for the third quarter the previous year. The realized yield is inclusive of all fees, including all realized unamortized fees, amendment fees, and prepayment fees, and is calculated based on the simple average of finance receivables at the beginning and end of the period. The realized yield is greater than the effective yield due to actual cash collections being greater than modeled. Total portfolio investment activity for the three months ended September 30, 2021, and 2020 was as follows (in thousands): Three Months Ended September 30, 2021 2020 Beginning Portfolio $ 212,958 $ 182,311 Interest paid-in-kind 672 623 Investment in finance receivables — 6,350 Loan discount and fee accretion 885 555 Net unrealized gain (loss) on marketable investments and warrant assets 128 (193) Principal payments received on investments (7,112) (1,860) Royalty paydowns (1,284) (826) Warrant investments, net of cancellations — 79 Ending Portfolio $ 206,247 $ 187,039 Borrower Liquidity Events During the quarter ended September 30, 2021, no borrowers experienced liquidity events or repaid SWK. However, after quarter close, two borrowers repaid: In October 2021, borrower Thermedx repaid the $0.5 million subordinate note. Thermedx had repaid the majority of its facility in May 2019. In October 2021, borrower Misonix was acquired by Bioventus for $518.0 million. Upon closing of the transaction, Misonix made a $31.6 million payment to SWK to pay principal, accrued interest, and exit fees. Gain on the transaction will be recognized in SWK's fourth quarter. In conjunction with the acquisition, SWK tendered its Misonix stock at $28 per share and received $1.9 million of cash and 71,361 shares of Bioventus common stock, which are freely tradeable. Adjusted Non-GAAP Net Income The following table provides a reconciliation of SWK's reported (GAAP) consolidated net income to SWK's adjusted consolidated net income (Non-GAAP) for the three-month period ended September 30, 2021, and September 30, 2020. The table eliminates provisions for income taxes, non-cash mark-to-market changes on warrant assets and equity securities, amortization of Enteris intangible assets and any non-cash impact on the remeasurement of contingent consideration. Three Months EndedSeptember 30, 2021 2020 Consolidated net income $ 2,243 $ 4,342 Add (subtract): income tax expense (benefit) 513 (451) Add (subtract): (gain) loss on fair market value of equity securities (342) 178 Add (subtract): (gain) loss on fair market value of derivatives 214 (87) Add (subtract): strategic review legal, consulting and board expenses 1,004 126 Add: Enteris amortization expense 619 2,588 Add (subtract): (gain) loss on remeasurement of contingent consideration — 174 Adjusted income before income tax expense (benefit) 4,251 6,870 Adjusted income tax expense (benefit) — — Non-GAAP consolidated net income $ 4,251 $ 6,870 In the table above, management has deducted the following non-cash items: (i) change in the fair-market value of equities and warrants, as mark-to-market changes are non-cash, (ii) income taxes, as the Company has substantial net operating losses to offset against future income, (iii) amortization expense associated with Enteris intangible assets, and (iv) (gain) loss on remeasurement of contingent consideration. Management has also deducted legal and board expenses associated with the Company's strategic review; management believes these expenses are not reflective of operational execution. Finance Receivables Adjusted Non-GAAP Net Income The following table provides a reconciliation of SWK's consolidated adjusted income before provision for income taxes, listed in the table above, to the non-GAAP adjusted net income for the Finance Receivable segment for the three-month period ended September 30, 2021, and September 30, 2020. The table eliminates Enteris operating (income) and loss. The adjusted income before income taxes is derived in the table above and eliminates income tax expense, non-cash mark-to-market changes on warrant assets and equity securities. Three Months EndedSeptember 30, 2021 2020 Adjusted income before income tax expense (benefit).....»»

Category: earningsSource: benzingaNov 12th, 2021

Daniel Schlaepfer: “There Is No Such Thing As Free Day Trading”

High on the list of all the trends, habits, and businesses that the pandemic changed or helped boost, is day trading. Cerulli Associates asserts that during the peak of the pandemic in April 2020, the activity increased dramatically when compared to the same period the previous year. Q3 2021 hedge fund letters, conferences and more […] High on the list of all the trends, habits, and businesses that the pandemic changed or helped boost, is day trading. Cerulli Associates asserts that during the peak of the pandemic in April 2020, the activity increased dramatically when compared to the same period the previous year. .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 Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio 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); Q3 2021 hedge fund letters, conferences and more Bored at home and dealing with severe lockdowns, thousands of people turned to day trading apps to compensate for the loss of income, or simply to try their luck at big gains. During this time, applications like eToro and Robinhood Markets Inc (NASDAQ:HOOD) increased their online ads spending. The success of day trading was such that this year will have seen the public listing of both companies, with Robinhood’s already taking place in July, and eToro’s due in the fourth quarter. As more people engage in trading activity, we talked to Daniel Schlaepfer, President and CEO of global market-making firm Select Vantage Inc. (SVI) to discuss the exponential growth of day trading and the regulatory measures that need to be taken to ensure fair trading. In your view, what has caused day trading to become a more prominent feature of financial news headlines this year? It’s really been a mixture of things. The pandemic put the spotlight on day trading –both amateur and professional– for several reasons. The market volatility it brought about made trading riskier and therefore more exciting and more profitable for professional day traders, at least for some. It’s also true that public interest in amateur day trading increased because many people had lost a stable source of income and were spending more time at home. But I also think it goes deeper than this. We’re reaching a point in human history in which technology is providing almost anyone with the opportunity to control their financial welfare –or at least try to. Naturally, that is very alluring. I think greater access to public markets is a good thing, but that doesn’t mean that everyone will be successful. What is the best way to learn how to day trade? I won’t try to hide my bias. I think the best way to learn is to undergo professional training in a simulator before you trade with real capital, which is what my firm’s traders have to do before they can trade the firm’s capital. Of course, not everyone wants to be a professional day trader. You can learn through practice by trading on apps, but you might learn the hard way by losing your money. I also won’t hide my bias in recommending –a show sponsored by my firm which I am an executive director of– which talks about trends and strategies in real time. It’s the biggest day trading show on YouTube, and bias aside, I’ve heard from many amateur traders that it’s helped them better understand and analyse the markets. Do you agree with the view that amateur day trading has undergone a process of ‘gamification,’ making it both more attractive and risker to retail investors? I think it’s fair to say or at least to speculate that the illusion of “free trading” created by commission-free trading apps has caused a significant proportion of retail investors to treat trading like a game, rather than an investment practice that requires skill and experience, and which involves real losses as well as potential gains. The reality is that there is no such thing as free trading. The practice of Payment-For-Order-Flow (PFOF) enables brokerages like Robinhood to sell customers' buy and sell orders to wholesalers. So, brokers generate revenue by offering zero-commission trading to retail investors when commissions are in fact being subsidized by wholesalers. When something is free, human nature tends to undervalue it. What is your assessment of the SEC’s recent report on the so-called meme stock trading controversy (formally titled ‘Staff Report on Equity and Options Market Structure Conditions in Early 2021’)? It was comprehensive, but not particularly conclusive. Though it warned of the danger of PFOF, it stopped short of banning the practice outright, which I think was a missed opportunity. Doing so would give investors access to the better pricing of a perfect market. Access fees would become transparent and so properly factored into trading decisions. All investors would reap the full efficiencies of the market and correspondingly pay the true cost of facilitating trades. In turn, the fact of incurring this cost would likely deter small retail investors from indulging in risky gamification. From the market’s perspective, what should financial regulators do to ensure the fairest and most competitive trading environment? That’s a complicated question, and the reason for that is that financial regulation is generally too complicated in my view. Simply put, I think good regulation is regulation that is simple, easy to understand and easy to implement. You have previously argued that the cost of complying with financial regulation is too high. Why is this and what could be done to reduce its costs? After the financial crash there naturally emerged a consensus that more regulation was needed to prevent a repeat of the ‘too big to fail’ culture. Since then we’ve seen broad, ambitious, and all-encompassing regulation like Dodd-Frank and more recently MiFID II come into play. While this might all have been well intended, it also became extremely expensive for firms to implement, especially small firms. As such, many small to medium sized firms have been priced out of the market because of regulation. In other words they became “too small to comply.” I’ve been arguing for some time now that the priority for regulators around the world needs to be about bringing down the hidden costs of compliance. You have been involved in litigation proceedings with financial regulators –what was the incentive behind your actions? Yes, that's true. In 2016 I decided to sue the Australian Securities and Investments Commission (ASIC) for defamation. I learnt that they had communicated unfounded suspicions to other market participants that traders at my firm had engaged in market manipulation, which damaged our business. What was the outcome of this litigation? The judge found that I had been defamed, but defensively so. In other words, it was found that no market manipulation had taken place, and that in retrospect the regulator acted wrongly, but that they had the right to act as they did at the time in light of their ultimately ill-founded suspicions. For me that constitutes a moral victory, so it was worthwhile. The judgement stated that, although the appeal outcome didn’t go my way, I was successful on most issues, including the vindication of my reputation. I issued a statement in July manifesting concerns about the fact that ASIC's defence of qualified privilege could set a dangerous precedent for financial regulation. This shows how regulators can act with impunity and cause great reputational damage that could account for financial losses to market participants. How can understanding between market participants and financial regulators be improved and made more efficient? I think communication between regulators and market participants needs to be improved at all levels. I currently sit on the Market Structure Advisory Committee (MSAC) of The Ontario Securities Commission (OSC), which is a great forum for this. What does the future hold for the day trading industry and who stands to benefit the most from increased interest in day trading, whether amateur or professional? I think public interest in trading stocks will only continue to increase, and with time the public will only become better informed. Ultimately I’d like to think the health of the market will be the ultimate beneficiary, as public access means greater liquidity. Updated on Nov 9, 2021, 4:45 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 9th, 2021

Atotech Reports Third Quarter 2021 Results and Narrows 2021 Full-Year Guidance Range

Generates third quarter revenue of $383 million, an increase of 18% over the prior-year period, including chemistry organic revenue growth of 6% Reports net income of $19 million, an increase of 75% compared to Q3 2020 Delivers Adjusted EBITDA of $112 million, a 10% increase over the prior-year period Net leverage decreased to 3.1x Confirms guidance for full year 2021 organic revenue growth, which is expected to be in the range of 13% to 14%, including full year chemistry organic revenue growth of approximately 10% Narrows guidance for full year 2021 Adjusted EBITDA1, which is anticipated to be in the range of $440 million to $450 million. BERLIN, Germany, Nov. 09, 2021 (GLOBE NEWSWIRE) --  Atotech (NYSE:ATC), a leading specialty chemicals technology company and a market leader in advanced electroplating solutions, today reported financial results for the third quarter of 2021. The company maintained its revenue guidance and narrowed the Adjusted EBITDA guidance range for the full year 2021. Chemistry organic revenue growth, a key performance indicator for the Company, increased 6% over the third quarter of 2020. Chemistry organic revenue growth reflects chemistry revenue growth excluding the impact of foreign exchange translation ("FX") and palladium pass-through ("palladium"). Management Commentary Geoff Wild, Atotech's Chief Executive Officer said, "We are pleased by our strong third quarter performance. Atotech delivered results fully in-line with our expectations and our nine-months results are at record levels, despite the continuing disruption of global supply chains. The strength of demand and the resilience of our business model enables us to feel comfortable reiterating our full-year guidance. "This quarter, we saw strong demand in our Electronics segment for our semiconductor-related businesses as well as IC-substrates. In our GMF segment, we experienced good demand for construction-related products, partially offset by a slowdown in demand from the automotive OEMs, which was primarily felt towards the end of the quarter. We also observed increasing demand for our sustainability-related products. "As expected, in Q3 we saw freight costs decline from the first half; however, this improvement was counter-balanced by broad-based inflationary pressure, including raw material price increases. As a result, we have implemented price increases to our customers to mitigate those effects and will be rolling those price increases out over the coming months." Third-quarter 2021 Results Total revenue was $383 million for the third quarter of 2021, an increase of 18% over the prior-year period. Total organic revenue, which reflects total revenue excluding the impact of FX and palladium, increased 10%. Over the quarter, FX provided a 4% tailwind and palladium increased total revenue by a further 4%. These results were supported by organic growth in chemistry revenue of 6%. Adjusted EBITDA was $112 million for the third quarter of 2021, a 10% increase over the prior-year period, reflecting the chemistry organic volume growth and FX tailwinds, partially offset by increased costs associated with higher raw-material, freight and energy costs. Diluted earnings per share was $0.10 for the period ended September 30, 2021, and Adjusted EPS was $0.27. Adjusted EBITDA margin was 29% for the third quarter of 2021. The decline reflects the margin dilution from higher palladium prices as well as broad-based inflation in raw material costs. Third-quarter 2021 Segment Highlights Electronics: Revenue for the third quarter of 2021 in our Electronics segment was $254 million, an increase of 23% over the prior-year period. Total organic revenue grew 13%, consisting of 7% chemistry organic growth and a 60% increase in equipment organic revenue. Palladium pass-through increased revenue by 6% and FX was a 4% tailwind for the quarter. The Electronics organic revenue increase was driven by continued demand for the Company's advanced semiconductor packaging and IC-substrate solutions. End-market demand for computing applications and automobile electrification continued to gain momentum, but the overall slowdown in the Automobile sector for Electronics was also noticeable. As in prior quarters this year, the global build-out of production capacity for PCBs and semiconductors translated into strong demand for our equipment. Adjusted EBITDA for our Electronics segment was $84 million for the third quarter of 2021, an 18% increase over the prior-year period, primarily driven by chemistry volume growth. Adjusted EBITDA margin was 33%, a decline of 135 basis points, driven by dilution from higher palladium prices and the product-mix effect from lower gross- margin equipment revenue. General Metal Finishing: Revenue for the third quarter of 2021 in our GMF segment was $129 million, an increase of 9% over the prior-year period. Total organic GMF revenue increased 5%, consisting of 6% chemistry organic revenue growth and a 29% decline in organic revenue for equipment. Palladium and FX added 1% and 3% to revenue for the quarter, respectively. Chemistry organic revenue growth was primarily a function of continued recovery from the pandemic-depressed markets of 2020, supported by continued strength in sanitary and construction end-markets as well as sustainability projects. Automotive end-market demand slowed towards the end of the quarter. Adjusted EBITDA for our GMF segment was $28 million, an 8% decline compared to the prior-year quarter, primarily reflecting broad-based inflation in raw materials. Full Year 2021 Guidance Regarding the Company's 2021 outlook, Peter Frauenknecht, Atotech's Chief Financial Officer said, "As a result of our solid third quarter, we reiterate our revenue guidance. We continue to expect full year 2021 total organic revenue growth to be in the range of 13% to 14%, including full year organic growth in chemistry revenue of approximately 10%, which excludes the impact of FX and palladium pass-through. Additionally, we now expect full year 2021 adjusted EBITDA to be in the range of $440 million to $450 million, which represents a $2.5 million improvement over our prior guidance, at the mid-point." MKS Transaction On July 1, 2021, MKS Instruments, Inc. ("MKS"), a global provider of technologies that enable advanced processes and improve productivity, and Atotech Limited announced that they had entered into a definitive agreement pursuant to which MKS will acquire Atotech for $16.20 in cash and 0.0552 of a share of MKS common stock for each Atotech common share (the "MKS Transaction"). The MKS Transaction is to be effected by means of a scheme of arrangement under Article 125 of the Companies (Jersey) Law 1991 (as amended). The MKS Transaction has been unanimously approved by the MKS and Atotech boards of directors and each of the resolutions put to the Company's shareholders at the court meeting and the general meeting convened in connection with the MKS Transaction, which were each held on November 3, 2021, were passed by the requisite majority of votes. The closing of the MKS Transaction remains subject to the approval of the Royal Court of Jersey, regulatory approvals, and other customary closing conditions, and is expected to close by the fourth quarter of 2021. Conference Call In light of the pending transaction with MKS, the Company will not host a conference call today. Cautionary Statement Regarding Forward-Looking Statements This communication contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "target," and similar expressions and variations or negatives of these words. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies, and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, and such differences could be material. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. More information on potential factors that could affect Atotech's financial results is available in "Forward-Looking Statements", the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" within Atotech's most recent Annual Report on Form 20-F, and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission (the "SEC"), and such factors include, but are not limited to: the uncertainty of the magnitude, duration, geographic reach, impact on the global economy of the COVID-19 pandemic, as well as the current and potential travel restrictions, stay-at-home orders, and other economic restrictions implemented to address it; uncertainty, downturns, and changes in our target markets; foreign currency exchange rate fluctuations; reduced market acceptance and inability to keep pace with evolving technology and trends; loss of customers; increases in costs or reductions in the supplies of raw materials that may materially adversely affect our business, financial condition, and results of operations; our ability to provide products and services in light of changing environmental, health and safety, product liability, financial, and other legislation and regulation; our failure to compete successfully in product development; our ability to successfully execute our growth initiatives, business strategies, and operating plans; whether the secular trends we expect to drive growth in our business materialize to the degree we expect them to, or at all; material costs relating to environmental and health-and-safety requirements or liabilities; underfunded defined benefit pension plans; risk that the insurance we maintain may not fully cover all potential exposures; failure to comply with the anti-corruption laws of the United States and various international jurisdictions; tariffs, border adjustment taxes, or other adverse trade restrictions and impacts on our customers' value chains; political, economic, and legal uncertainties in China, the Chinese government's control of currency conversion and expatriation of funds, and the Chinese government's policy on foreign investment in China; regulations around the production and use of chemical substances that affect our products; the United Kingdom's withdrawal from the European Union; weak intellectual property rights in jurisdictions outside the United States; intellectual property infringement and product liability claims; our substantial indebtedness; our ability to obtain additional capital on commercially reasonable terms may be limited; risks related to our derivative instruments; our ability to attract, motivate, and retain senior management and qualified employees; increased risks to our global operations including, but not limited to, political instability, acts of terrorism, taxation, and unexpected regulatory and economic sanctions changes, among other things; natural disasters that may materially adversely affect our business, financial condition, and results of operations; the inherently hazardous nature of chemical manufacturing that could result in accidents that disrupt our operations and expose us to losses or liabilities; damage to our brand reputation; Carlyle's ability to control our common shares; risks relating to the proposed MKS Transaction, including that such transaction may not be consummated, any statements of belief and any statements of assumptions underlying any of the foregoing; and other factors beyond our control. Additional Information and Where to Find It Shareholders may obtain a free copy of the scheme document published by Atotech on September 28, 2021 in relation to the MKS Transaction (the "Scheme Document") and other documents Atotech files with the SEC (when available) through the website maintained by the SEC at The Scheme Document is also available free of charge on Atotech's investor relations website at together with copies of materials it files with, or furnishes to, the SEC. No Offer or Solicitation This communication is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the proposed MKS Transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. The proposed MKS Transaction will be implemented solely pursuant to the scheme of arrangement, subject to the terms and conditions of the definitive agreement between MKS and Atotech, dated July 1, 2021, which contains the full terms and conditions of the proposed MKS Transaction. Non-IFRS Financial Measures This communication contains certain non-IFRS financial measures designed to complement the financial information presented in accordance with IFRS because management believes such measures are useful to investors. However, our use of these non-IFRS financial measures may vary from that of others in our industry. Our non-IFRS metrics have limitations as analytical tools, and you should not consider them in isolation or as alternatives to consolidated net income (loss) or other performance measures derived in accordance with IFRS as measures of operating performance, operating cash flows or liquidity. The Company believes that these measures are important and supplement discussions and analysis of its results of operations and enhances an understanding of its operating performance. See the Appendix for a reconciliation of the non-IFRS financial measures. About Atotech Atotech is a leading specialty chemicals technology company and a market leader in advanced electroplating solutions. Atotech delivers chemistry, equipment, software, and services for innovative technology applications through an integrated systems-and-solutions approach. Atotech solutions are used in a wide variety of end-markets, including smartphones and other consumer electronics, communications infrastructure, and computing, as well as in numerous industrial and consumer applications such as automotive, heavy machinery, and household appliances. Atotech, headquartered in Berlin, Germany, is a team of 4,000 experts in over 40 countries generating annual revenues of $1.2 billion (2020). Atotech has manufacturing operations across Europe, the Americas, and Asia. With its well-established innovative strength and industry-leading global TechCenter network, Atotech delivers pioneering solutions combined with unparalleled on-site support for over 9,000 customers worldwide. For more information about Atotech, please visit us at Financial Statement Tables ATOTECH LIMITED Income Statement   Three months ended(unaudited) ($ in millions), except earnings per share Sept 30, 2021 Sept 30, 2020 Revenue $ 383.0   $ 325.4   Cost of sales, excluding depreciation and amortization   (193.2 )   (142.9 ) Depreciation and amortization   (44.0 )   (44.3 ) Selling, general and administrative expenses   (72.2 )   (71.3 ) Research and development expenses   (14.2 )   (13.2 ) Restructuring benefit (expenses)   (0.1 )   (0.1 ) Operating profit (loss)   59.3     53.7   Interest expense   (14.5 )   (36.2 ) Other income (expense), net   (2.1 )   10.8   Income (loss) before income taxes   42.7     28.3   Income tax expense   (23.3 )   (17.3 ) Consolidated net income (loss) $ 19.4   $ 11.1   Earnings per share     Basic earnings (loss) per share   0.10     (0.25 ) Diluted earnings (loss) per share   0.10     (0.25 )   Three months ended(unaudited) ($ in millions) Sept 30, 2021 Sept 30, 2020 Consolidated net income (loss) $ 19.4   $ 11.1   Other comprehensive income (loss)     Actuarial gains and losses   1.5     (4.7 ) Tax effect   (0.5 )   1.4   Items not potentially reclassifiable to statement of income   1.1     (3.3 ) Currency translation adjustment   (35.2 )   65.5   Hedge reserve   (0.1 )   (3.6 ) Thereof: Income (cost) of Hedging (OCI II)   0.3     3.7   Items potentially reclassifiable to statement of income (loss), net of tax   (35.3 )   61.9   Total other comprehensive income (loss), net amount.....»»

Category: earningsSource: benzingaNov 9th, 2021

Transcript: Thomas S. Gayner

     The transcript from this week’s, MiB: Thomas S. Gayner, Markel Corp, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the… Read More The post Transcript: Thomas S. Gayner appeared first on The Big Picture.      The transcript from this week’s, MiB: Thomas S. Gayner, Markel Corp, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the podcast I have an extra special guest. His name is Tom Gayner, and he has a fascinating position in the world of investing and finance. He is the Chief Investment Officer and Co-CEO of Markel Corporation, which he describes as a publicly-traded family office. They have an insurance arm, that’s the genesis and history of the company, but he also has been running the investment portfolio for quite a while. It’s their second arm. And they have — for lack of a better word — a venture, a private equity group that purchases companies. Really a fascinating history, a tremendous track record, and really very interesting gentleman, I found this conversation to be fascinating, and I think you will also. So, with no further ado, my discussion with Markel Corporation’s Tom Gayner. VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. RITHOLTZ: My extra special guest this week is Tom Gayner. He is the CIO and Co-CEO of Markel, a diversified financial holding company. He has been dubbed the next Warren Buffet by no less an expert than Jason Zweig of the Wall Street Journal. From 2000 to 2015, Gayner’s stocks have averaged a return of 11.3 percent annually, while the S&P 500 returned a mere 4.2 percent, counting dividends. Tom Gayner. welcome to Bloomberg. GAYNER: Thanks so much for having me. RITHOLTZ: So, I’ve been looking forward to having this conversation. You’re kind of an interesting guy working in kind of an interesting company. I don’t think a lot of folks know what Markel is and does. Why don’t we start by just give us the short version, what is Markel? GAYNER: Sure. And, in fact, not only do a lot of people not know what Markel does, a lot of people don’t know how to pronounce it. So, it’s a easy screening technique when somebody asked for Markel. They probably don’t know who they’re talking to. So, yes, Markel, to some degree, I think the shorthand way of describing it in — in the usage of today’s words is we’re a family office that happens to be publicly-traded. RITHOLTZ: Right. GAYNER: Now, the — the way that business started was in the 1930’s as a specialty insurance company. It’s kind of an interesting history, in that Sam Markel was in Norfolk, Virginia, and he was on the city council there. And Norfolk, Virginia was a place where a lot of veterans would be getting off the boat from World War I. Some of them decided to stay. And it was the early days of the automobile and trucking industry. So, Sam Markel had been an insurance agent. There were veterans getting off the boat. They were — they were providing cab rides, which were unregulated, unlicensed nickel a ride. Jitneys was the — the name of the term. Of course, accidents ensued, as will be the case, anything like that. And Sam Markel got a law passed that said, “If you’re going to operate one of these jitneys, you had to have insurance.” And so, … RITHOLTZ: So just the people to provide it. GAYNER: And — well, no insurance company was willing to take that sort of risk. So, Sam Markel said, “Well, I’ll start an insurance company to take that risk.” I don’t know what the chicken and egg was, whether Sam had the chess moves all laid out before he proposed the — proposed the ordinance. I’m — I would not be surprised if he did, but that was really the start and the genesis of the company. And — and they caught a mega wave in the sense that the automobile, trucks, the highway system, the interstate highway system for 30 or 40 years, you really had this tailwind of epic growth in the underlying business that — that they would insure. We could go on and on with this conversation, but I think the hallmark that still matters today is you look at the problems, you look at something that somebody needs, you try to be creative, you try to figure out a way to — to solve it, and — and that’s what Markel does. Historically, largely through insurance products and insuring things that a lot of other companies choose not to do for a variety of legitimate reasons. But then also we’ve expanded into a lot of different products and services, industrial products and services over the last 15 years with the growth of Markel Ventures. So, we — we can we can do anything and everything, and if we can figure out a way to make the customers, the employees better off by doing so, we’ll do it. RITHOLTZ: So, the interesting thing about the insurance side is insurers taking cash against the future potential liability, but between — when the policy is sold and when the payout has to be made, hey, we have to do something with all this capital, which brings us to your job. You’re essentially CIO of — of Markel Assets. How do we describe your title? And we’ll get to the Co-CEO thing in a bit. But technically, what is your job description? GAYNER: Well, the CIO, in terms of Chief Investment Officer as opposed to Chief Information Officer, that is exactly the job I had prior to becoming the Co-CEO and effectively, it is still a job that’s embedded in my role. Now, again if your business is story and you have the sophisticated listing base, if you think about insurance — first off, set it up. Your — your initial point is correct, in that an insurance company collects premiums today, and they’re going to make a payment to — for a claim sometime in the future. So, embedded in every single insurance company is an investment operation. RITHOLTZ: Right. GAYNER: And historically, it’s not been unusual for insurance companies to make the vast majority if not the totality of their earnings from what they make on the investments while they’re holding that pool of money. That — that’s the case. RITHOLTZ: If you can — if you can run the — the insurance side as a breakeven and then just be free to do what you want with that capital over until those potential liabilities come home to roost, that’s not a bad source of capital. It’s very cheap. GAYNER: Exactly. And a lot of minds have — have figured that out and — and — and known about that. For some interesting sort of financial history episodes. We go back to the 1960’s or 70’s when conglomerates were sort of the hot money things of the day. Many of those had an insurance company as the financial core of the business – Gulf & Western, Teledyne, things like that. Now, I think there’s an interesting cultural circumstance that’s at play there. In that if you look at insurance companies that are run by investment people, oftentimes that — that movie didn’t end that well because, you know, investment people have a certain mindset, a certain culture, a certain way of doing things, a certain … RITHOLTZ: Embracing things. GAYNER: … lifestyle — sort of lifestyle they’d like to — to lead, insurance people probably not wired that way. RITHOLTZ: Yes. GAYNER: And most insurance companies are run by people who came up through the discipline of insurance. So, they were claims people, they were actuaries, they were sales people, whatever, but the realm of insurance is — is what they are wired to do and how they understand life. They may or may not understand capital allocation and investments quite so much. Similarly — and — and as such, since they don’t understand it, I don’t think they appreciate it and the discipline and what’s required to be really top league in — in that requirement. Similarly, investment people, when — when they run an insurance-based organization and they came up through the realm of — of investments, I think sometimes there’s a tendency not to appreciate the detail work and the daily discipline of what it takes to — to run a — a very good insurance operation. So, if you look at organizations that have successfully been able to balance that tension and have both sides of the house not have one overwhelm the other side, that the list is very, very short. RITHOLTZ: Yeah. And — and we’re going to talk — let’s talk a little bit about that list. And part of the reason you’re implying is, hey, some groups are a little too safety first and to risk averse if they’re overly weighted on the insurance side, other groups are too aggressive and risk embracing. You need that balance, which leads us to the comparison that I have to ask. When did you start first hearing yourself described as the next Warren Buffett, a mini Warren Buffett. He used GEICO as a giant source of — of inexpensive capital and, obviously, did okay with it, right, did pretty well with it — better than pretty well. When did you first start hearing this noise because you’ve been with Markel now for 20 something years? GAYNER: A little over 30 years … RITHOLTZ: Thirty … GAYNER: … going to 1990. RITHOLTZ: … wow. Jeez … GAYNER: Yes. RITHOLTZ: … 31 years. So how long was it before these silly comparisons began? GAYNER: Well, I guess the first time I really heard it was when I said it to myself looking in the mirror. And — and frankly, that would have happened even before I joined Markel … RITHOLTZ: Really? GAYNER: … because the — the way that started was … RITHOLTZ: That’s hilarious. GAYNER: … the first time I became aware of — of Buffett and Berkshire was in 1984 with the seminal Carol Loomis article in Fortune. And I … RITHOLTZ: Right. GAYNER: … and I could remember I’ve worked for a firm called Davenport & Company of Virginia, wonderful firm, still there today. Been in Richmond since 1863, so … RITHOLTZ: Not going anywhere. GAYNER: … not going anywhere. The head of the department was a gentleman named Joe Antrim. And I read this article and here’s how naive and stupid I was. So, it was 1984, I was 22 years old, and I — I went into Joe’s office and I said, “Hey, Joe, have you ever heard of this guy named Warren Buffett.” And Joe was sort of a crusty fella, and he says, “It’s a Buffett, you idiot, and threw me out.” Well, I went to the cutting-edge technology of the day, which was the Standard & Poor’s tear sheet. RITHOLTZ: Right. GAYNER: And I — and I looked at the Berkshire Hathaway page. And my training is as an accountant. I started out as a CPA with PricewaterhouseCoopers. And I looked at those numbers, and I could tell without resorting to four decimal point calculations, they were good. RITHOLTZ: Right. GAYNER: So, I became a — I became aware of Berkshire at that point. RITHOLTZ: When did you first become a Berkshire investor? GAYNER: Not until 1990, which also points out how stupid one can be, because when I first saw it … RITHOLTZ: So, he was right when he — when he said, “Get out of my office.” GAYNER: He exactly was right. So as a kid and the stupid things you — you do as a kid, and I’ll — I’ll — I’ll defer to the notion that at age 22 you’re still a kid … RITHOLTZ: Sure. GAYNER: … so I asked for grace in that sense. So, I — I looked at it, I could tell the numbers were good, and I made the searing mistake. I think — I think the stock was $375 or something like that. RITHOLTZ: Ooh, so expensive. GAYNER: Exactly. RITHOLTZ: Yeah. GAYNER: And I said no stock could possibly be worth that much. RITHOLTZ: Right. GAYNER: So, I made the greatest mistake of omission and sat there and watched it go from that to — remember the first share we bought was $5,750. RITHOLTZ: Oh, my God. GAYNER: And — and by the way, that’s still a pretty good buy. RITHOLTZ: Right. GAYNER: But there’s immense lessons to be learned from that. So, the per share value as — as opposed to the per share price … RITHOLTZ: Right. GAYNER: … let’s do your math and do your homework about that. And by the way, getting back to Teledyne, which is one of those companies that was on the list of balancing out the insurance in the industrial sides of the business under the leadership of Henry Singleton, Fayez Sarofim is a famous money manager, who made a lot of his reputation and returns by being right about Teledyne in the early days. RITHOLTZ: Right. GAYNER: And people used to ask Sarofim what’s the next Teledyne. And his famous response was the next Teledyne is Teledyne. So, when you got something right and you’re going to have a … RITHOLTZ: Stay with it. GAYNER: Exactly. RITHOLTZ: Yeah. GAYNER: Dance with the girl you’re bragging with and keep dancing. But — so answering your question about how the Berkshire comparison started to take place, so in 1986, Markel went public. And luck of the draw, I was the analyst at Davenport who was assigned to cover it. RITHOLTZ: Ah, there we go. GAYNER: So, I started covering Markel from the day of the IPO. And what I observed was here was an insurance company that made an underwriting profit. And at that time, in an era of meaningfully higher rates, you didn’t really need to be disciplined about your insurance so much if you make so much from interest income that you — you could engage in cash flow underwrite. You just wanted to get cash in the door and worry about the claims … RITHOLTZ: Well, a nominal basis not necessarily … GAYNER: Correct. RITHOLTZ: … a real basis, but still … GAYNER: … but this was an unusual discipline to stick to the idea of making an underwriting profit even amidst the — the ability to earn epic investment returns. So, what I saw — and by this time I’m 25 or so — from the IPO is that here’s — here’s an insurance-based organization, which is going to make an — make it dedicated to making it underwriting profit, and Steve Markel, who is the Vice Chairman at the time, was open-minded and had already started making some equity investments with those pennies of underwriting profit out of each dollar. So, they have a long-term mentality from day one. So, I saw that instantly. It was a — it was a — it was a light bulb kind of realization, and I — and I — and I wanted to own some of that stock and be connected to the company. So, from ’86 through ’90, four years, Steve Markel became a friend, a client, a business associate. And he might tell the story differently. I might tell it differently depending on the point of view. But I sort of begged him for a job for four years because I just wanted to be part of that. In 1990, Markel did one of their famous “double the size of the company” deals, but they bought — they bought another company that was as large as what they were. Steve had been managing investments by himself, thought he might like a wingman and … RITHOLTZ: You got the call. GAYNER: … offered me the job at that time. I’ve got the call at that (inaudible). RITHOLTZ: And I assume you jumped right at it. GAYNER: Exactly. RITHOLTZ: And — and let — let me just stay with Markel for a moment. They famously — they don’t hold analyst days. They don’t give earnings guidance or things like that. At least that was the reputation back then. Tell us a little bit about that. What was the thinking behind if you’re going to cover us, you figure it out? GAYNER: Well, there’s a lot of layers to — to that, but I — but I think it makes sense. Think about it this way. If — if you — if you really are, as I said, the first definition of Markel, the — the family office, which is a very popular term these days, that was not a term so much in — in 1990 when I joined. If you really want shareholders who are going to be there for a long period of time and have a sense of ownership, and have a sense of partnership, and really wish to be multi-generational investors, well, I — I run a business and setting aside the investment side with the Markel Ventures’ sides of things, in the businesses that we run, which are long-term established businesses, I don’t think — and the people who run those businesses do not think about their customers in — in a quarterly time frame. We think about our customers as once you’re a customer of ours in whatever business we have, we want to be doing a good enough job for you and delivering enough value and delighting you in such a way that you want to keep doing business with us. So, cutting that into quarterly time frames and setting expectations that are tied to that, that just seems like a bad idea and — and contradictory to — to how we would really run a business. So, we didn’t have to think up all these things our self. We got to observe the — the way Buffett did things. And — and we’ve been going to the Berkshire Annual Meeting since — since 1991, which have been the — the first year — first year I joined, because what I said to Steve at that point was in terms of investors that we wanted to get at Markel, the people who are most likely to understand what we’re doing are people who are already in Berkshire. So rather than try to get them to come to Richmond and engage, so well … RITHOLTZ: Let’s go there. GAYNER: … if you own Berkshire, you’re already — you’re already qualified. RITHOLTZ: Right. GAYNER: So, let’s go there and start meeting people. So that very first year that we were there, just because I’ve been in the investment business for a couple of years, there were — there were six people that were willing to sit down and drink coffee and eat bagels with Steve Markel and I. And we didn’t have a formal presentation. I think we just talked and answered their questions. And that went on for maybe 2.5, three hours or something like that. RITHOLTZ: Wow. GAYNER: In that room, six people, Chuck Akre was one. He’s a legendary investor. I don’t know whether he’s been on your — your — your podcast or not. Wonderful guy and … RITHOLTZ: Make an introduction. GAYNER: He would be a … RITHOLTZ: OK. GAYNER: … well-worthy person to talk to, and he’s a meaningful teacher to me ever (inaudible). RITHOLTZ: We love people like that. GAYNER: I do indeed. Michael Lowenstein, whose father was Louis Lowenstein, the professor at Columbia Business … RITHOLTZ: Columbia, OK, sure. GAYNER: … School, exactly. And one of his cousins I can’t remember who, but wonderful family and sort of the right — the right kind of people. Having Peter Cayman (ph) for Boston — Jonathan Brandt at Ruane Cunniff is one of the panelists that asks Buffett questions at the meetings, whose father was a — a roommate and buddy of — of Buffett and Bill Ruane. So, we — we started off with just an absolutely wonderful set of people. And — and all Steve and I said at the end of that meeting was, “You know, we’ll be back again next year. And if you know anyone who would be interested, please let them know and we’ll stick together.” RITHOLTZ: Let’s have another one, I’m sure. GAYNER: So, we started doing that, and that became an annual tradition. And we did that year after year after year. What started with six people, by the time you got to the year before last, which was the last in-person meeting that Berkshire had, we had something on the order of 1,200 or 1,300 people at — at that meeting. And again, same format, we open it up. We say, “Thank you for being here. Great to see you. What questions can we answer for you?” And — and there are more Markel shareholders in that room than typically come to our annual meeting, so it — it really is cultivating of the community that that’s out there. And this year, unfortunately, because the Berkshire meeting was virtual and — and — and that the crowd wasn’t there, I said, “Well, we have the opportunity to try to create some center of gravity in Richmond, Virginia because that convening — that worldwide convening of people who are searching for certain values and certain ways of running the business, the world is hungry for that. So, let’s give them a forum and a venue to do so. So, we found the concert arena in Richmond, Virginia that had a roof, but open air to — to try to, you know, meet people halfway that the pandemic (inaudible) … RITHOLTZ: Makes sense. GAYNER: … we’re getting better. We — we had a meeting. We had — my goal was to get 100 and — 100 out of town professional investors to attend. We ended up with about 150 professional investors. And then between employees, associates, local people, we had 500 people at that meeting and we try to make it fun. We had — we had food trucks. We had beer trucks. We had a band. And that may seem minor, but it speaks to the culture of trying to connect with people in ways that you just cannot do in any other way than — than be with them, and — and to cultivate this long-term sense of ownership where your time horizons are — are infinite — eternal rather than — than cut into — to quarterly things. So, it’s just an entirely different way of approaching things and thinking about things, so it — it doesn’t really comport to match up with the — the — the typical way that — that major finance is done. Not right or wrong, just different. RITHOLTZ: I — I like it, I love the idea of burning man for finance … GAYNER: Exactly. RITHOLTZ: … instead of, oh, great another boring hotel conference room. I mean, the one good takeaway from the pandemic is those sorts of financial, you know, just deadly meetings, they seem to be attenuating quite — quite a bit. And … GAYNER: I think people are maximizing their multitasking skills when they’re with listening to something like that on a — on a Zoom call. I — I don’t — I don’t have the patience or the endurance to do that with a — without fidgeting and looking at something else, too. RITHOLTZ: I’m — I’m with you on it. Let’s talk a little bit about your background, which has some really interesting things about it. You’ve described yourself as knowing that you’re just good and not great. Explain that. Who — who goes out and says, “I am not great. I’m — I’m good and I am aware of that.” GAYNER: Well, I was in a discussion last night with an absolutely fascinating person, absolutely high-end quality on every measure you could — you could think about and — and that excellence shown through. And — and the discussion took this twist and turn where the — the distinction between an optimizer and a satisfier came up. RITHOLTZ: Sure. GAYNER: And — and I think there is a tendency among Taipei people, extraordinarily high accomplishment people, high achievers to really latch onto the idea of optimization. RITHOLTZ: Yeah. GAYNER: And there’s nothing wrong with that. But sometimes there can be a hidden intangible, unquantifiable cost to focusing entirely on optimizations all the time. Einstein says that, you know, not everything that counts can be counted and not everything that counts — Einstein is smarter than me, he’s a perfect example of how — I couldn’t remember it, not everything … RITHOLTZ: Not everything that counts can be counted and not everything that can be counted counts. GAYNER: There you go. My special guest Barry Ritholtz, thanks for the pickup in the (inaudible) there. RITHOLTZ: Was that Einstein? I thought that was — I thought that was some management consultant who said that. GAYNER: I’m going to go with Einstein. RITHOLTZ: OK. GAYNER: But I’ll defer to … RITHOLTZ: Makes it sound better. GAYNER: … I’ll defer to the fact-checking experts on that. But — but the point is there — there’s an element of — of intuition, of — of the — the intangible sense of — of — of spirit and culture that I find extraordinarily different — difficult to matter, that sometimes you got — you have to let people have some room to make some mistakes and look at outcomes that are not optimized. And what you get in — in design thinking and — and in systems approach if you’re dealing with the right kind of systems that there’s — there’s a bit of an evolutionary process where mistakes that you make start drifting away and things that you did right start compounding, and — and — and — and magnifying themselves. And — and as such, if you just — if you just leave a little slack in the system and you don’t try to press a to the last red line of — of what’s there, you allow time and space, and muscle, and rest, and energy to create things that you — you couldn’t have thought of beforehand that happened somewhat through serendipity. So, I think — I think humility — and it’s an epic challenge. I’m — I’m 59 years old now. And fortunately, things have worked out well. And I have credibility because my record is pretty good. I have a lot of empathy and — and — and understanding of the challenge that would face a 26-year-old or a 25-year-old one, or — or me at 22, trying to get on the ladder and — and get the career, get the leeway and latitude that I enjoy right now. Because if you think about it, say you’re 22 or 25 and you’re trying to pitch somebody to — to manage money for them or being given discretion, typically, if — if you just say the kinds of things that I do, we’re long-term, we’re going to be patient, we’re going to look at this and step in. So, you don’t really stand out enough to get people to — to write you a check. (COMMERCIAL BREAK) RITHOLTZ: Especially at 26. GAYNER: Exactly. So, you’re — you’re forced, almost — almost bullied by the system to make hyperbolic statements, and — and claim precision, and claim efforts that are — that are super human just to get people to — to give you the job and give you the money to manage. And — and I think markets are — are — are — are quantum systems. They — they — they defy understanding. And — and you can do a lot of work and you can keep trying to get to the next decimal point of understanding, but there’s a certain irreducible quantity to human psyche, and greed, and fear, and all those sort of things that really do matter in markets. And — and I just think it’s helpful to be humble to — to acknowledge that. Don’t pretend you can know it. And by virtue of not pretending that you — you can know it, I think you’re more open to ideas, people, different ways of thinking that you can start out with a premise that this person I’m talking to is probably smarter than I am. They’re demonstrably smarter than I am, so I think I should listen and learn something. And if you just go about your `daily life that way, you do learn things and you do get exposed to things and the people that were right. And you — they start to occupy a greater and greater share of your mindshare, and the people who are wrong kind of — kind of — kind of drift away into smaller and smaller thing. So, the math of compounding really accentuates the positive and it makes the — it makes the mistakes drift away into irrelevance over time. RITHOLTZ: I do like the idea of — of not being a — a maximalist optimizer to give you a little breathing space to allow creativity and collaboration, other things to bubble up. I don’t remember whose quote I am about to steal, but the line is, “Jazz is the space between the notes.” And it’s that same — you need a little breathing room in order to allow some creativity to take place. GAYNER: Exactly. RITHOLTZ: So — so let’s talk about a horrible, terrible, ridiculous mistake you’ve made or at least everyone else who does this. It’s a horrible mistake. Co-CEO is usually a disaster. Somehow you guys seem to have made that work. GAYNER: Yeah, I think you’re correct to point out that that’s — that’s not the odds with a bet, and I think it gets back to some of the history and culture of Markel that makes it work in the sense that you had Sam Markel who was the original founder of the company. He ran it from its inception up until, I think, the mid-50’s like 50 something like that. Sam had four sons who were two sets of twins. And when he unfortunately died, the business then was taken over by the — by the four sons. And — and they ran it essentially by unanimous consent. RITHOLTZ: Ooh. GAYNER: I believe they had lunch every day, if not almost every day. And for any kind of strategic or — or more than just little decision, there had to be unanimity among the four. RITHOLTZ: Wow. GAYNER: And I think you can sort of picture how this unspools. RITHOLTZ: Everyone has veto power. GAYNER: Exactly, and the company did not grow that much during their era that they ran it. But then what happened, but — so you went from one CEO to effectively four despite what the titles might have been. So, then the second generation started to go the way of all flesh … RITHOLTZ: (Inaudible), right. GAYNER: … and the third generation comes along. At this point there are 12 cousins that — that are in existence, some of whom work for Markel, some of whom did not. And the generational transfer succession issue started to be — become paramount and become important. A lot of sifting and sorting about that. The public offering — offering in 1986 was one of the tools used to bring about some — some finality there. RITHOLTZ: Sure. GAYNER: But at the end of all that sifting and sorting, three of the 12 cousins said “We’re in.” And in effect, they did a leverage buyout of the second generation where they gave them a note with a coupon to provide income and sale process to the — to the second generation, but gave them the stub equity underneath of it so that as they, you know, built the value of the business they’d attribute it to the equity as opposed to the debt that was there for the second generation. The — the IPO did two things. It — it paid off that debt. It gave the company a little bit of a capital base. And culturally, it said, “You know, you don’t need to be a member of the Markel family to own equity interest.” And — and I’m a perfect example of that. I’m not a Markel family member. I’m not married to Markel. I have no Markel blood. And we — but I’ve been there 37 years. I’ve been there since I was a kid, so I — I feel like a member of the Markel family. And I — I own some equity in the company from the IPO from … RITHOLTZ: Really? GAYNER: … from day one … RITHOLTZ: Wow. GAYNER: … and — and had always sort of been accumulating more stock as — as — as time goes by. So there — there’s that element of how the — the transition is taking place, so the — the four went down to three and — and really a triumvirate of Steve Markel, Tony Markel and Alan Kirschner who was a cousin-in-law, ran the business for decades. And as — as they started to — to — to move on, Alan retired from the board that year and a half to a year just so ago. Steve and Tony are still on the board, but not active in day-to-day management. You know, that — that went to three to two, so Richie and — and myself. And it — it’s also connected to the evolution of the business itself, in that historically, the insurance business was the largest single piece of the company. Investments are there, but, you know, it’s just the investment operation that’s embedded in the insurance company. So, while we emphasize investments more than most, every insurance company has an investment operation. So that — that wasn’t weird. As Markel Ventures has grown to become a substantial part of the company, they have two very distinct pieces of the company. So, in — in reality, the way it works between Richie and myself is that — and this is really the way it worked with Alan, Tony and Steve as well. In — in the era of the triumvirate, everything on the income statement reported to Tony Markel. So what branches did we have? How many sales people? What were the locations? All the — all the sort of things that would — that managing the (inaudible) all that would Tony would be the ultimate authority and really the ultimate CEO of that. And I was in the room sometimes when — when Alan and Steve would disagree with him, but they would always say at the end of that meeting, “If that is your decision, that is your area, so we support you.” And they walk out of the room, the door is closed, and the — there’s the — the team speaks with one voice. RITHOLTZ: That’s right. GAYNER: Similarly, Steve is in-charge of the balance sheet of the organization. And anything — the loss reserve setting, the — the M&A activity, strategic stuff like that, Steve was the ultimate authority on that sort of stuff. And Alan joked he was the world’s highest paid referee because he would adjudicate disputes between the two of them to — to make sure that’s how it worked. So, with Richie and I, it’s a slightly different gearing. He’s in charge of the insurance operations of the business. I’m in charge of the investments and the ventures’ operations. And our — our normal working relationship is if something meaningful or substantive comes up in one of our areas, the first person that I will talk to about an upcoming deal or a capital — a big capital allocation decision, I’ll talk to Richie and make sure he and I get on the same page. We — we don’t see the world eye-to-eye on everything, but we — we function and — and work it out. And similarly, on the insurance thing, he would come to me first and we work that out. So, on major capital allocation decisions, it’s very important that he and I manage to find agreement, and we have. On day — on day-to-day matters, the tactical execution of the business itself, we — we both operate as sole CEOs in the realm of the businesses we run. RITHOLTZ: So, you mentioned — so we have insurance, we have asset management. You mentioned the third arm, Markel Ventures. That’s kind of unusual for insurance company. Let’s talk a little bit about what — what brought this division about and what sort of things you look at. What do you focus on? RITHOLTZ: Sure. Well, again the way it came about was being aware of the Berkshire example whe.....»»

Category: blogSource: TheBigPictureNov 8th, 2021

FTI Consulting (FCN) Beats on Q3 Earnings, Raises 2021 View

Positive impact of foreign currency translations and increased segmental revenue boosts FTI Consulting's (FCN) third-quarter results. FTI Consulting, Inc. FCN delivered impressive third-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate.Better-than-expected results impressed the market, as the stock gained 2.2% since the earnings release on Oct 28.Adjusted earnings per share (excluding 6 cents from non-recurring items) of $2.02 surpassed the Zacks Consensus Estimate by 42.3% and increased 31.2% on a year-over-year basis. The bottom line was positively impacted by a higher operating income.FTI Consulting, Inc. Price, Consensus and EPS Surprise  FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote Total revenues of $702.2 million beat the consensus mark by 3.5% and increased 12.9% on a year-over-year basis. The uptick was driven by the positive impact of foreign currency translations, acquisition-related revenues and increased demand in the Forensic and Litigation Consulting, Technology, Corporate Finance & Restructuring and Economic Consulting segments.Revenues by SegmentForensic and Litigation Consulting revenues increased 22% year over year to $145.3 million. The surge was primarily driven the positive impact of exchange rates, acquisition-related revenues and higher demand for investigations, disputes and health solutions services. The segment contributed 20.7% to total revenues.  Strategic Communications revenues increased 31.1% year over year to $69.4 million. The uptick can be attributed to higher demand for corporate reputation and public affairs services, and favorable exchange rates. The segment contributed 9.9% to total revenues.Technology revenues increased 10.4% year over year to $64.7 million. The upside resulted from higher demand for litigation, investigations, information governance services and the positive impact of exchange rates. The segment contributed 9.2% to total revenues.Economic Consulting revenues were up 11.3% year over year to $172.5 million. The upside can be attributed to higher demand for non-M&A-related antitrust services, financial economics services and favorable exchange rates, partially offset by lower demand for M&A-related antitrust services. The segment contributed 24.6% to total revenues.Corporate Finance & Restructuring revenues increased 5.8% year over year to $250.3 million. The uptick was mainly due to favorable exchange rates, higher demand for transactions and business transformation services, partially offset by lower demand for restructuring services. The segment contributed 35.6% to total revenues.Operating ResultsAdjusted EBITDA was $100.3 million, up 10.3% on a year-over-year basis. Increase in Adjusted EBITDA was primarily caused by higher revenues. Adjusted EBITDA margin contracted 30 basis points year over year to 14.3%.Balance Sheet and Cash FlowFTI Consulting exited the quarter with cash and cash equivalents of $342.5 million compared with the prior quarter’s level of $256.9 million. Long-term debt was $319.35 million compared with $391.6 million witnessed at the end of the previous quarter. The company generated $196.9 million of net cash from operating activities and CapEx was $24.7 million.Raised 2021 GuidanceFTI Consulting raised its full-year 2021 guidance.The company now expects revenues between $2.75 billion and $2.8 billion compared with the previous guidance of $2.7 billion and $2.8 billion. The midpoint of the raised guidance ($2.775 billion) is above the current Zacks Consensus Estimate of $2.77 billion.Adjusted EPS is expected between $6.50 and $6.75 compared with the previous guidance of $6.00 and $6.50, the midpoint ($6.625) of which is lower than the current Zacks Consensus Estimate of $6.66.FTI Consulting currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Some Other Business Services CompaniesEquifax’s EFX third-quarter 2021 adjusted earnings of $1.85 per share beat the Zacks Consensus Estimate by 7.6%. The bottom line declined on a year-over-year basis. Revenues of $1.22 billion outpaced the consensus estimate by 3.6%. The top line increased 14.5% year over year on a reported basis and 14% on a local-currency basis.IQVIA’s IQV third-quarter 2021 adjusted earnings per share of $2.17 beat the consensus mark by 1.9% and rose 33.1% on a year-over-year basis. Total revenues of $3.39 billion outpaced the consensus estimate by 1%. The top line increased 21.7% year over year on a reported basis and 21.1% on a constant-currency basis.Omnicom’s OMC third-quarter 2021 adjusted earnings of $1.65 per share beat the consensus mark by 20.4% and increased 36.4% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 0.6% and increased 7.1% year over year. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>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 Omnicom Group Inc. (OMC): Free Stock Analysis Report Equifax, Inc. (EFX): Free Stock Analysis Report FTI Consulting, Inc. (FCN): Free Stock Analysis Report IQVIA Holdings Inc. (IQV): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 8th, 2021

The 5 best meat thermometers in 2021 for all types of cooks

We tested 12 meat thermometers, including digital, instant-read, and leave-in models, to determine the best. Table of Contents: Masthead Sticky A meat thermometer is one of the best tools you can invest in to improve your cooking. We tested 12 models and interviewed a lead chef at the Institute of Culinary Education to find the best meat thermometers. The Thermoworks Thermapen One is our top pick because it's fast, accurate, and easy to use. The most-used piece of equipment in my kitchen isn't my Dutch oven, or my chef's knife, or even my most beloved spatula - it's my thermometer. I invested in a good kitchen thermometer almost a decade ago and since then, it's carried me through countless dinner parties and holiday meals (including a pig roast), hundreds of weeknight dinners, and a career in professional kitchens. I use my thermometer to temp everything from a piece of chicken to a loaf of bread to a pot of caramel or a vat of frying oil - I've even taken the temperature of a baked potato. Using a thermometer to take the temperature of food is one of the first skills students learn in culinary school. Tracy Wilk, lead chef at the Institute of Culinary Education, said that a thermometer is a core tool that can make you a more confident cook. "A lot of home cooks can be intimidated by some techniques like cooking steak or tempering chocolate, but once you're able to work with temperatures, the gates really open up for your cooking abilities," Wilk said. "There's also satisfaction from a perfectly cooked roast chicken that isn't cut into a million pieces before it's served."Thermometers don't just help make your food taste better, they're also important for food safety. According to the Food and Drug Administration, a meat thermometer is the only way to ensure that meat, poultry, and egg products are cooked safely as color and texture are not always reliable. To find the best meat thermometers you can buy, I tested 12 different models, putting each through an identical set of tests to determine accuracy, ease of use, and durability. You can read more below about our testing methodology, as well as information on how to use and calibrate a thermometer, and why Thermoworks occupies all of the top spots in our guide.Here are the 5 best meat thermometers in 2021Best meat thermometer overall: Thermoworks Thermapen OneBest meat thermometer on a budget: Thermoworks ThermoPopBest leave-in meat thermometer: Thermoworks ChefAlarmBest leave-in meat thermometer on a budget: Thermoworks DOTBest meat thermometer for the grill: Thermoworks Smoke X2 Best meat thermometer overall Lily Alig/Insider The Thermoworks Thermapen One is the fastest and most accurate thermometer we tested, with thoughtful features like an automatically adjusting display and backlight sensor.Pros: Lab-calibrated, displays accurate temperature within seconds, large and easy to read display, automatic backlight, automatically turns on and off, display automatically rotates, can be used in Celsius or Fahrenheit, can be customized to display whole numbers or up to one decimal place, comes in 10 colorsCons: Might be more difficult for lefties to useA meat thermometer makes cooking easier, and the Thermapen One could not be easier to use. It has the same accuracy, speed, and helpful special features that made us choose the older model, the Thermapen MK4, as our previous top pick.If you own the MK4, there's no need to replace it just yet. The only differences between the two models are that the Thermapen One is supposed to read temperatures one to two seconds faster and with an even smaller margin of plus or minus .5 degrees Fahrenheit. In our testing, we found that the Thermapen One registered temperatures within one to two seconds. We conducted the boiling water and ice bath calibration tests to judge the accuracy of the thermometer, and it registered the right temperatures immediately. The Thermapen One isn't significantly faster than the MK4, but both thermometers are faster than any others on the market.Like the MK4, the Thermapen One has an automatically rotating display and a sensor probe that opens 180 degrees from the base. You can easily stick the thermometer in the side of a thin patty or even underneath a heavier piece of meat. Additionally, a sensor turns on the display backlight when it's dark out — a feature we found especially useful for grilling at night. The display is large and doesn't glare from any angle. The Thermapen One is ready to use out of the box, but you can easily customize it to read in Celsius or Fahrenheit and to show whole numbers or one decimal place.  Best budget meat thermometer Lauren Savoie/Insider The Thermoworks ThermoPop is a simple and easy-to-use meat thermometer at an entry-level price that's great for those just learning to cook. Pros: Accurate, fast, easy-to-read numbers, has a backlight, has a rotating display, can show temperatures in Celsius and Fahrenheit, comfortable for both lefties and righties to use, comes in nine color optionsCons: Backlight and display rotation have to be activated by pressing buttons, the rigid probe has some trouble getting into tight spots, only displays whole numbers, can't adjust digits if the thermometer needs calibrationWhile the Thermapen may be unparalleled in its features and accuracy, it comes at a premium price. For those learning to cook or just looking for something a little more simple or inexpensive, the Thermoworks ThermoPop has everything you need to get started, and it's about a third of the price of the Thermapen.The thermometer is lollipop-shaped with a long, thin probe on one end and a bulbous display on the other. The screen is clear and easy to read with large digits and a backlight. It's accurate and reports the temperature within four seconds of inserting the probe into the food — just a second longer than the Thermapen. Since its probe is upright instead of angled, it works equally well for lefties and righties.It has all the features you need in a thermometer, however, it takes an extra step to activate some of them. For example, you need to press a button to turn on the backlight or rotate the display while the Thermapen does both of these things automatically. It's also not quite as customizable — you can't set it to display one decimal place temperatures, it only shows whole numbers. And in the event that your thermometer's calibration is off, you can't make adjustments to the numbers on your own; you'd have to send it back to the company. It's also a little less maneuverable in tight spaces or awkward angles since the probe is straight instead of angled. That said, it's a great entry-level thermometer that has all the features you'll need for almost every type of cooking project. Best leave-in meat thermometer Lauren Savoie/Insider The Thermoworks ChefAlarm has many thoughtful features like built-in alarms, a timer, and a probe that stays in your food for the entire cook time, making it a great option for grilling or long cooking projects.Pros: Accurate, reads quickly, large display, built-in timer and stopwatch, high and low alarms, comes with a pot clip and carrying case, can buy and use other probe styles depending on your needs, magnetic base, can be used in both Celsius and Fahrenheit, comes in nine different colorsCons: Magnet not always strong enough to hold up the unit on oven door, takes some time to set up While fast-reading handheld thermometers like the Thermapen and ThermoPop are great for most uses, sometimes you need a thermometer that can be left in your food while it's cooking, which is where probe or leave-in thermometers like the Thermoworks ChefAlarm come in. The ChefAlarm is ideally designed for grilling, barbecue, or cooking long roasts in the oven. It features a high-temperature probe connected to a base that reports the current temperature, as well as the minimum and maximum temperatures your food has reached while cooking. Buttons on the base allow you to set a timer or stopwatch, along with alarms to tell you when your food has dropped above or below a certain desired temperature range. The base can be folded to sit stably on a counter or attached via a magnet to a metallic surface like a grill lid or oven door. It also comes with a carrying case and a clip for attaching the probe to pots for deep frying or candy making.In my temperature tests, the ChefAlarm was accurate and relatively fast, reporting temperatures within six seconds. However, between the probe, cable, and base, it has a lot of parts and is a bit unwieldy for stovetop cooking like searing steak or fish. I've found I get the most use out of it when grilling or cooking foods that take a lot of time. One tiny quibble I have with the ChefAlarm is that the magnet isn't always strong enough to hold the base up when attached to my oven door, which could be an issue if you have a wall-mounted oven with no easily reachable surface nearby. Best leave-in meat thermometer on a budget Lauren Savoie/Insider The Thermoworks DOT is a relatively inexpensive thermometer with a few simple, but well-designed features. It's an accurate leave-in thermometer without all the bells and whistles.Pros: Relatively fast, very accurate, clear display that's easy to read from afar, has a backlight, can buy and use other probe styles depending on your needs, magnetic base, alarm alerts when the food has reached its set temperature, can be used in both Celsius and Fahrenheit, comes in nine different color optionsCons: No timer, no minimum or maximum temperature display, only one volume setting, only displays whole numbersIf you're looking for a leave-in thermometer that is a bit simpler and less expensive than the ChefAlarm, the Thermoworks DOT is a more streamlined option. It consists of a circular, magnetic base attached to a 4.5-inch probe connected by a 47-inch cable. The front of the base has just two buttons: up and down, which you use to set your desired final cooking temperature. You stick the probe in the food and leave it there for the entire cook time, and the thermometer will beep loudly to let you know when your food has reached your desired temperature. The DOT has a backlight that can be activated with a button on the back of the base, and you can buy other specialty probes that work with it to suit your needs (though you most likely won't ever need to). One thing I particularly like about the DOT is that it's lighter than the ChefAlarm, and stays put when I attach it magnetically to my grill or oven. It's also incredibly accurate and a beat faster than the ChefAlarm, reporting the temperature within just five seconds.The DOT doesn't have a timer or the ability to show you minimum and maximum cooking temperatures, but you may not need either of those functions if you're cooking something simple, or you use a separate timer while cooking. Overall, it's a great option if you're looking to dabble with a leave-in thermometer, or don't need all the extra bells and whistles that come with a more expensive thermometer. Best meat thermometer for the grill Lauren Savoie/Insider If you're serious about barbecue, the Thermoworks Smoke X2 offers both accuracy and convenience with a leave-in probe that can transmit data to a pager more than a mile away. Pros: Comes with a pager so you can monitor temperatures from afar, pager works more than a mile away from the base, comes with two temperature probes, accurate, moderately fast read and data transmission time, can set high and low temperature alarms, has a backlight, can be used in both Celsius and Fahrenheit, comes in nine different colors, can be used with other specialty probes and equipmentCons: Too bulky for stovetop cookingIf you're cooking something that takes many, many hours or even days — as is often the case with barbecue — remote thermometers like the Thermoworks Smoke X2 let you monitor the temperature of your food from afar so you're not tied to the grill. The Smoke looks similar to other leave-in thermometers we tested. It comes with two probes that are connected by long wires to a base that sits outside your grill or oven. The base transmits that temperature data to a pager that you wear on a lanyard. Both probes were accurate and took about seven seconds to transmit the temperature to the base — slower than our other top picks, but much faster than any other remote thermometer I've tested. The base and pager stay connected up to a mile away from each other, which likely covers all the distance you'll need. While I didn't test the lengths of this claim, I did walk with the pager up to 1,000 feet away from the base and it never lost connection, even when I went upstairs, behind walls, and down the block.While The Smoke isn't a thermometer you'll likely use every day, it's a good investment if you regularly cook a lot of project recipes or barbecue. What else we tested Lauren Savoie/Insider We tested a total of 12 thermometers for this guide. Here are the ones we tested that didn't make the cut.What else we recommend and why:Lavatools Javelin PRO Duo Digital Meat Thermometer ($55.99): This fast-reading handheld thermometer is accurate, easy to use, and gives clear readouts. It has many of the features we love in the Thermapen One, like a backlight and auto-rotating display. While the Javelin is a great thermometer, the Thermapen edged this model out because its features were a bit more reliable; the Javelin's display sometimes rotated when we didn't want it to and you need to press a button to activate the backlight. These are minor quibbles, however, and this is a great option if you want a more affordable alternative with many of the same functions as the Thermapen. Lavatools Javelin Digital Meat Thermometer ($26.99): This petite thermometer is a little more than four inches long with a probe length of just 2.8 inches. While it's fast, accurate, and easy to read for its small size, it's a bit too small for everyday use. I found my hands getting uncomfortably hot when holding this thermometer in food that was cooking, and its probe is too short to get all the way into large roasts and cuts of meat. That said, it's small enough that you could clip it to a keychain, or use the included magnet to keep it on your fridge door for easy access when you need a thermometer in a pinch. It might be a good portable thermometer, but not one that I would want to use every day.What we don't recommend and why:OXO Good Grips Thermocouple Thermometer ($104.95): This instant-read thermometer is sleek, reports fast read-outs, and has a rotating display, but it was consistently off by one degree in all the calibration tests. While that wasn't a deal-breaker (and hardly enough of a difference to ruin your food), the rotating display consistently read upside down when I tried to use it in a hurry, like while searing steak. The probe does extend further than other models, which meant my left-handed husband could also use the thermometer comfortably in his dominant hand (many instant-read thermometers only extend far enough to be most versatile for right-handed use). It may be a good option for lefties, but I would've liked more accuracy and reliability given the price.Polder Stable-Read Digital Thermometer ($14.95): This thermometer beeps to let you know when it's at a stable reading, which can be useful if you're still figuring out the nuances of using a meat thermometer. However, that was just about its only redeeming factor. It was consistently off by about 3 degrees F, and the display is hard to read, doesn't rotate, and is not backlit. The probe is rigid and the thermometer is long, so it's not good for temping things at an angle. Finally, the probe sheath was really difficult to pull on and off; not great when you're trying to grab the thermometer quickly while your food cooks. ThermoPro Wireless Meat Thermometer ($56.99): While this remote thermometer was accurate, it was difficult to use compared to the Thermoworks Smoke and lacked many of the features we love in that thermometer. The ThermoPro's display is relatively small and hard to read, it wasn't intuitive to use and program, and it only has a range of up to 300 feet. It lost connection when I left the transmitter by the grill and took the pager with me into my house and up a flight of stairs. When it was connected to the pager, it took about 45 seconds for the thermometer to report the temperature in all of our accuracy tests — the longest of any product we tried. While this lag isn't likely to make a difference in your food if you're using it to cook barbecue or another long-cooking dish, it's much too slow for stovetop use or quick-cooking foods like steak or fish. Taylor Commercial Digital Thermometer ($15.99): While this thermometer was the least expensive of any model we tested, its display is teeny-tiny at just 1/4 inch tall. I had to squint to read the numbers, the display often fogged up, and there was a glare if I didn't hold the thermometer at the right angle. It also took a relatively long time to read at about 20 seconds, and in that time, my hand got hot from having to hold the thermometer close to the food for so long. It also wasn't very accurate and was consistently off by 2 degrees F in all our accuracy tests.Taylor Waterproof Instant Read Thermometer ($16.76): Another inexpensive option from Taylor, this thermometer was slightly easier to read and featured a backlight. While it was also faster and more accurate than the other Taylor thermometer we tried, it still wasn't without flaws. The display had a strong glare from certain angles and fogged up when close to hot foods; this was exacerbated by its short probe, which kept the thermometer (and our hands) near the heat. The buttons were also hard to press. This thermometer is currently out of stock. Yummly Smart Thermometer ($129.99): This thermometer is part of a new generation of leave-in thermometers that are completely wireless. The probe stays in your food the entire cooking time, but there are no wires coming out of your oven or grill like there are with the DOT or ChefAlarm. The probe wirelessly transmits temperature data to your phone, so you can see when the food is finished cooking. I tested this model and struggled with app and connectivity issues that rendered the thermometer basically useless. Our meat thermometer testing methodology Lauren Savoie/Insider I've been using kitchen thermometers as a core tool in my arsenal for more than a decade, including seven years working in professional kitchens as a product tester and editor for "America's Test Kitchen" and "Cook's Illustrated." For this guide, I leaned on my extensive experience testing and writing about kitchen products and using a thermometer almost daily, and also interviewed Tracy Wilk, lead chef at the Institute of Culinary Education, as well as Martin Bucknavage, senior food safety extension associate at the Penn State department of food science. I tested 12 different kitchen thermometers, putting each through a set of identical tests. Here's what I looked for in the best thermometers:Accuracy: A thermometer should be, above all, accurate. I looked for accuracy at both high and low temperatures, as well as accuracy over time. I put each model through three different accuracy tests: an ice bath test, a boiling water test, and a sous vide test where I tracked the temperature reported by each thermometer over two hours when placed in a water bath heated by an immersion circulator. You can read more about how I did the industry-standard ice bath and boiling water tests below. Though I used the thermometers while cooking food to evaluate the ease of use, I didn't include food in my accuracy tests since it introduces a number of hard-to-control variables like cooking temperature, size and thickness of the meat, and potential human error.Speed: In every test, I timed how long it took for the thermometer to report a steady, accurate temperature. Some thermometers read within seconds, while others took up to a minute. For remote thermometers, I also timed how long it took for the base to transmit the temperature data to the pager.Ease of use: A good thermometer needs to be easy to use and the readouts should be legible and easy to read. I used each thermometer over several weeks as part of my regular cooking routine, seeing how comfortable they were to hold over hot pans filled with searing steak, whether their screens fogged up when I stuck the probes into vats of chili, and generally evaluating how easy they were to handle, use, and read. Durability: Thermometers are often used in busy kitchens where bumps and spills happen. I tested the durability of the thermometers by knocking each from the counter onto the ground 10 times and checking for any cracking or functionality loss. All the thermometers passed this test.Special features: While a thermometer doesn't need to have any fancy features, I looked at any additional functions such as backlights, alarms, timers, and customizability. I checked to see that these functions were helpful and worked as intended. Types of meat thermometers Lauren Savoie/Insider In this guide, we focused on three primary types of thermometers used most commonly in cooking: instant-read thermometers, probe thermometers/leave-in thermometers, and remote thermometers. Here are the key differences between the styles:Instant-read thermometerPros: Fast read-out, slim design that fits easily in your hand, can check multiple locations in the food quickly, can be used for almost any taskCons: Not meant to be left in the food so you have to open the pot lid, oven door, or grill lid to check the temperature, which could result in heat loss and a longer cook time These devices are handheld digital thermometers that give you a temperature read-out in several seconds. They're the most versatile of the different thermometers, and if you're only going to buy one thermometer, this is the style to buy. They're great for stovetop cooking and foods that cook fast but also work well for checking on dishes you cook in the oven or grill. My instant-read thermometer is one of the most-used tools in my kitchen and the thermometer I reach for most often.Probe thermometer or leave-in thermometerPros: Great for long cooks where you don't want to poke the food too often, good for candy-making and deep-frying, often has built-in alarms or timersCons: Slightly slower read-out, not ideal for fast-cooking foods like steak or fish on the stovetop, more parts to keep track of, bigger and harder to operate with one handThese thermometers have a probe that's meant to be left in the food for the entire duration of cooking. The probe connects by a thin metal wire to a base that sits outside the stove, oven, or grill and shows the temperature read-out. Many probe thermometers also have extra functions like timers or alarms. This style is good for situations where you want to constantly monitor the temperature without having to frequently poke the food or open the oven door or grill lids, like when making large roasts or long-cooked braises. They're also useful for deep-frying and candy-making since you can clip the probe onto the pot and monitor the temperature of the frying oil or sugar for consistency.Remote thermometerPros: Pager or smartphone-connectivity that lets you monitor temperature from afar, good for long-cooking foods like barbecue or roastsCons: Most expensive, bulky, slightly longer read and transmission time than leave-in thermometersRemote thermometers are very similar to probe thermometers in that they have a leave-in probe connected to a base, but they have the added component of a pager that lets you monitor the temperature of your food from afar. This is popular for grilling and smoking, which typically have very long cook times. A remote thermometer lets you walk away from the grill or oven and still keep an eye on the temperature of your food. Many are also smartphone-connected, so you can check the temperature from your phone. While you can use them in all the same ways you would use a leave-in thermometer, they're usually bigger, heavier, and more expensive, so really only recommended if you do a lot of barbecuing or very long cooks. How to use a meat thermometer Lily Alig There are a few ways to ensure you're getting an accurate reading with your meat thermometer. Aim for the thickest part of the meat and check the temperature in multiple places. "You want the 'sensing point' of the thermometer to be in the middle of the meat, what we term the cold spot," Bucknavage said. This part of the meat takes the longest to cook, so it's the best spot to test for overall doneness. If you are cooking a thinner cut of meat or a patty, Bucknavage suggests inserting the thermometer into the side of the meat instead of the top. Make sure you don't hit bone when testing meat.How to read a thermometerReading a handheld digital meat thermometer is simple: it displays the temperature it senses. That said, if you're taking the temperature of something that is cooking fast, like a steak, you may notice the numbers on the display changing rapidly. This can be tricky, especially in high-pressure situations where you're cooking hot and fast.A good rule of thumb is to trust the lowest steady number you see. If you temp your chicken in a couple of different places, consider the lowest steady reading you found to be the most accurate temperature, as it's an indication that your food is not fully cooked in that spot.  Why ThermoWorks makes the best thermometers we tested Lauren Savoie/Insider With Thermoworks occupying all five of our top picks, you might think this guide is sponsored — it most assuredly is not. Our guides are never sponsored and we conduct the same set of tests on all products (you can read more about how we tested in our methodology). We put 12 different thermometers through the same rigorous criteria for this guide. So how did Thermoworks products come to best the competition?Here are some of the reasons Thermoworks thermometers tested so well, and why they're worth buying:Accuracy: A thermometer should be accurate. Thermoworks thermometers consistently gave the most precise and accurate measurements in our tests. Should your thermometer reading be off after doing basic calibration tests (very unlikely in a new thermometer, since many of its products come factory-calibrated, but a possibility with extended use), some of Thermoworks' thermometers are easily adjusted with buttons inside the battery compartment, or you can send the thermometer to the company for lab calibration. Thoughtful design: Thermoworks thermometers are thoughtfully designed and simple to use. The thermometers have just the right amount of features — nothing superfluous. Some features we found particularly helpful in our top picks were large readouts, backlit displays, and easy adjustability. Trusted industry leader: Thermoworks has been in business for 25 years and only makes thermometers and temperature tracking devices. Its staff is filled with engineers who are laser-focused on thermometry and calibration. Its reputation for doing one thing and doing it well has made it a trusted brand used not only by home cooks and in the foodservice industry, but also by pharmaceutical, construction, manufacturing, utility, heating and air conditioning, plastics and rubber, research and science, and other industries. Customer service: While customer service didn't factor into my rankings for this guide, it's worth noting that Thermoworks has some of the best customer service I've ever experienced. I've been using Thermoworks products daily for a decade as part of my job and in my own home. Whenever I've had a question, a call to the customer service line quickly puts me in touch with a technician who can answer questions big and small — from troubleshooting data logging software to basic questions about what thermometer is best for what use. Colors: While appearance also didn't factor into my ratings, I do love that most Thermoworks products come in nine to 10 colors, so you can choose one that feels customized and personal to you. How to calibrate a meat thermometer Lauren Savoie/Insider Before you use your meat thermometer for the first time, you should make sure it's accurate. This process is called "calibration," but that's a bit of a misnomer since you usually aren't making any adjustments, just checking accuracy. In addition to calibrating your thermometer before its first use, it's also a good idea to check its accuracy periodically, especially if you're using an older model or a dial thermometer. There are two industry-standard ways to calibrate your meat thermometer: the ice bath test and the boiling water test.   Ice bath testThe easiest way to check for accuracy is to prepare an ice bath. Here are the steps outlined on Thermoworks' website, which are standard across many brands:Fill a vessel like a large mug or bowl to the rim with ice.Add cold water to the vessel to fill the gaps between the ice. Stop filling when you've reached just below the lip of the vessel. Insert your thermometer's probe into the center of the ice bath and stir gently.An accurate thermometer should read 32 degrees F (or 0 degrees C) in the ice bath.Boiling water testIf you don't have ice readily available, you can also check the accuracy of your thermometer with boiling water. However, keep in mind that water boils at different temperatures depending on your location and the current atmospheric pressure. The boiling water calibration test should only be used in a pinch and only to detect glaring inaccuracies. Here are the steps:Fill a pot with at least four inches of water and bring to a boil over high heat.When the water is at a roaring boil with big bubbles bursting at the surface, insert your thermometer probe into the water, taking care that it doesn't touch the sides or bottom of the pot. Compare the temperature read-out to the estimated boiling point of water for your area. At sea level, water generally boils at 212 degrees F (100 degrees C). What to do if your thermometer is inaccurateIf you perform either of the above calibration tests and find that your thermometer is inaccurate, first check the accuracy range of your device, which should be listed on the packaging or instructions. Some thermometers allow for a variance of up to a degree plus or minus the target temperature. If your thermometer's reading is within the allowed range, there's no need to make adjustments. If your thermometer is off by more than the allowed range, follow any included instructions in the packaging for adjusting the read-out of your device. If your device isn't adjustable you have a couple of options. First, you can send the thermometer back to the manufacturer for calibration. The price and availability of this service will vary depending on the model, your warranty, and the company. Second, you can simply take a small piece of tape and write the amount the thermometer is off by on it and stick it to the thermometer body. Every time you use the thermometer, the tape will remind you to mentally adjust the read-out by the number written on the tape. Finally, if your thermometer was cheap or is old, you may just want to buy a new one. Check out our other grilling gear guides Jada Wong/Insider The best charcoal grillsThe best gas grillsThe best charcoal for grillingThe best grilling tools Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 4th, 2021

CARS Reports Third Quarter 2021 Results

CHICAGO, Nov. 4, 2021 /PRNewswire/ -- Inc. (NYSE:CARS) ("CARS" or the "Company"), a leading automotive marketplace platform that provides a robust set of industry-specific digital solutions, today released its financial results for the quarter ended September 30, 2021. Q3 2021 Financial and Key Metric Highlights Revenue of $156.6 million, up $12.2 million, or 8% year-over-year Net income of $2.4 million, or $0.03 per diluted share Adjusted EBITDA of $45.8 million, or 29% of Revenue Year-to-Date Net cash provided by operating activities of $116.2 million, up 20% year-over-year, with Free Cash Flow of $98.3 million, up 17% year-over-year Average Monthly Unique Visitors ("UVs") of 24.3 million, down 4% year-over-year Traffic of 142.4 million, down 10% year-over-year Monthly Average Revenue Per Dealer ("ARPD") of $2,332, up 7% from $2,183 in the prior-year period Dealer Customers of 19,029 as of September 30, 2021, up 184 compared to 18,845 as of June 30, 2021, and up 899, or 5%, compared to September 30, 2020 Operational Highlights Acquired CreditIQ, which is expected to close shortly, enabling the Company to enter the multi-billion-dollar auto finance market;'s 142.4 million visits, coupled with 247.5 million visits across 5,200 Dealer Inspire websites, will power CreditIQ's auto finance technology and create a new, lender-based revenue source Paid down $32.5 million of debt, bringing total debt repayments to $107.5 million for the nine months ended September 30, 2021, and will use $30.0 million of cash on hand to fund upfront consideration for the acquisition of CreditIQ, demonstrating the Company's continued strength in Free Cash Flow and focus on maintaining a strong balance sheet "Revenue continues on a consistent growth trajectory, driven by growth in ARPD from accelerating adoption of our industry-leading digital solutions, new dealer growth and record retention levels," stated Alex Vetter, President and Chief Executive Officer of CARS. "Our acquisition of CreditIQ will further strengthen the capabilities of our platform as we enter into a new and growing market, where the advantages of our category-leading brand and dealer network strengths are significant differentiators." Q3 2021 Results Revenue for the third quarter totaled $156.6 million, an increase of $12.2 million, or 8%, compared to the third quarter of 2020. Dealer revenue grew 12% year-over-year, driven by 7% growth in ARPD primarily related to continued penetration of the Company's FUEL and digital solutions products and 5% growth in dealer customers. OEM and national revenue declined 14% year-over-year due to pullbacks in OEM spending associated with fewer new model releases and continued inventory shortages, both resulting from supply-chain disruptions. Total operating expenses were $144.5 million in the third quarter of 2021, compared to $125.3 million for the prior-year period. Adjusted Operating Expenses for the third quarter were $136.4 million in the third quarter of 2021, an increase of $15.6 million compared to the prior-year period. The third quarter of 2020 reflects the Company's continued effective management of expenses, driven by the uncertainty caused by the COVID-19 pandemic; as a result, operating expenses were lower than those in the Company's typical operating environment. The year-over-year increases were due to higher marketing expense as the Company returned to a more typical spending environment, as well as increased compensation and higher Product and Technology expense related to continued investments to accelerate growth in the business. GAAP net income was $2.4 million, or $0.03 per diluted share, in the third quarter of 2021, compared to GAAP net loss of $12.3 million, or $(0.18) per diluted share, in the same period of the prior year. Adjusted EBITDA was $45.8 million, or 29% of revenue, in the third quarter of 2021, compared to $49.0 million, or 34% of revenue, for the same period of the prior year. The Company remains focused on driving high-quality traffic and leads while continuing to optimize marketing investments. Due to the record high traffic in the third quarter of 2020 in the midst of COVID-related restrictions, the Company experienced a decline in UVs and Traffic of 4% and 10%, respectively, year-over-year for the three months ended September 30, 2021. In addition, the Company experienced certain short-term negative impacts to UVs and Traffic in connection with the completion of the Technology Transformation. Compared to 2019, UVs were up 5% and Traffic was down 1%. Organic traffic remains strong at 68% of Traffic for the third quarter of 2021. For the third quarter of 2021, ARPD was $2,332, up 7% year-over-year and up 1%, compared to the second quarter of 2021, driven by continued growth in dealer solutions. Dealer Customers totaled 19,029 at the end of the third quarter, up 899, or 5%, compared to the prior year period and up 184, or 1%, compared to June 30, 2021, supported by continued record retention rates and new sales. Cash Flow and Balance Sheet Net cash provided by operating activities for the nine-month period ended September 30, 2021 was $116.2 million, up 20%, compared to $96.9 million in the same period of the prior year. Free Cash Flow for the nine months ended September 30, 2021 totaled $98.3 million, up 17%, compared to $84.3 million in the same period of the prior year. The Company made $32.5 million in debt payments during the third quarter, reducing total debt outstanding to $490.0 million as of September 30, 2021. In the first nine months of 2021, the Company repaid $107.5 million of its outstanding debt, of which $100.0 million were voluntary prepayments. The Company's total net leverage ratio as of September 30, 2021 improved to 2.3x, compared to 3.8x as of September 30, 2020. Total liquidity was $281.5 million, including cash and cash equivalents of $51.5 million and $230.0 million of revolver capacity, as of September 30, 2021. "Our business continues to generate significant cash flow, and the consistent paydown of debt this year has strengthened our balance sheet, giving us substantial flexibility to continue to make organic and inorganic investments like CreditIQ," stated Sonia Jain, Chief Financial Officer of CARS. Outlook For the fourth quarter of 2021, the Company expects Revenue of approximately $157.5 million to $159.5 million, and Adjusted EBITDA margins of approximately 28.5% to 30.5%. Guidance reflects the Company's expectation of continued growth, reflective of the strength of the business model and incorporates potential implications of the auto inventory shortage continuing in the fourth quarter and continued investments in marketing to support its brand and in technology to drive innovation. Q3 Earnings Call As previously announced, management will hold a conference call and webcast today at 9:00 a.m. CT. This webcast may be accessed at A replay of the webcast will be available at this website following the conclusion of the call until November 18, 2021. About CARS CARS is a leading automotive marketplace platform that provides a robust set of industry-specific digital solutions that connect car shoppers with sellers. Launched in 1998 with the flagship marketplace and headquartered in Chicago, the Company empowers shoppers with the data, resources and digital tools needed to make informed buying decisions and seamlessly connect with automotive retailers. In a rapidly changing market, CARS enables dealerships and OEMs with innovative technical solutions and data-driven intelligence to better reach and influence ready-to-buy shoppers, increase inventory turn and gain market share. In addition to, CARS brands include Dealer Inspire, a technology provider building solutions that future-proof dealerships with more efficient operations and connected digital experiences; FUEL, which gives dealers and OEMs the opportunity to harness the untapped power of digital video by leveraging's pure audience of in-market car shoppers, and DealerRater, a leading car dealer review and reputation management platform. The full suite of CARS properties includes™, Dealer Inspire®, FUEL™, DealerRater®,™,™ and®. For more information, visit Non-GAAP Financial Measures This earnings release discusses Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow and Adjusted Operating Expenses. These financial measures are not prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). These financial measures are presented as supplemental measures of operating performance because the Company believes they provide meaningful information regarding the Company's performance and provide a basis to compare operating results between periods. In addition, the Company uses Adjusted EBITDA as a measure for determining incentive compensation targets. Adjusted EBITDA also is used as a performance measure under the Company's credit agreement and includes adjustments such as the items defined below and other further adjustments, which are defined in the credit agreement. These non-GAAP financial measures are frequently used by the Company's lenders, securities analysts, investors and other interested parties to evaluate companies in the Company's industry. For a reconciliation of the non-GAAP measures presented in this earnings release to their most directly comparable financial measure prepared in accordance with GAAP, see "Non-GAAP Reconciliations" below. Other companies may define or calculate these measures differently, limiting their usefulness as comparative measures. Because of these limitations, non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. Definitions of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are presented in the tables below. The Company defines Adjusted EBITDA as net income (loss) before (1) interest expense, net, (2) income tax (benefit) expense, (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, (6) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, and (7) certain other items, such as transaction-related costs, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets. Transaction-related costs are certain expense items resulting from actual or potential transactions such as business combinations, mergers, acquisitions, dispositions, spin-offs, financing transactions, and other strategic transactions, including, without limitation, (1) transaction-related bonuses and (2) expenses for advisors and representatives such as investment bankers, consultants, attorneys and accounting firms. Transaction-related costs may also include, without limitation, transition and integration costs such as retention bonuses and acquisition-related milestone payments to acquired employees, in addition to consulting, compensation and other incremental costs associated with integration projects. The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures, including purchases of property and equipment and capitalization of internal-use software and website development costs. The Company defines Adjusted Operating Expenses as total operating expenses adjusted to exclude stock-based compensation, write-off and impairments of goodwill, intangible assets, long-lived assets, severance, transformation and other exit costs and transaction-related costs. Key Metric Definitions Traffic. Traffic is fundamental to the Company's business. Traffic to the CARS network of websites and mobile apps provides value to the Company's advertisers in terms of audience, awareness, consideration and conversion. In addition to tracking traffic volume and sources, the Company monitors activity on its properties, allowing the Company to innovate and refine its consumer-facing offerings. Traffic is defined as the number of visits to CARS desktop and mobile properties (responsive sites and mobile apps), measured using Adobe Analytics. Traffic does not include traffic to Dealer Inspire websites. Traffic provides an indication of the Company's consumer reach. Although the Company's consumer reach does not directly result in revenue, the Company believes its ability to reach in-market car shoppers is attractive to its dealer customers and national advertisers. Average Monthly Unique Visitors ("UVs"). Growth in unique visitors and consumer traffic to the Company's network of websites and mobile apps increases the number of impressions, clicks, leads and other events it can monetize to generate revenue. The Company defines UVs in a given month as the number of distinct visitors that engage with its platform during that month. Visitors are identified when a user first visits an individual CARS property on an individual device/browser combination or installs one of its mobile apps on an individual device. If a visitor accesses more than one of the Company's web properties or apps or uses more than one device or browser, each of those unique property/browser/app/device combinations counts toward the number of UVs. UVs do not include Dealer Inspire UVs. The Company measures UVs using Adobe Analytics. Dealer Customers. Dealer Customers represent dealerships using the Company's products as of the end of each reporting period. Each physical or virtual dealership location is counted separately, whether it is a single-location proprietorship or part of a large, consolidated dealer group. Multi-franchise dealerships at a single location are counted as one dealer. Average Revenue Per Dealer ("ARPD"). The Company believes that its ability to grow ARPD is an indicator of the value proposition of its platform. The Company defines ARPD as Dealer revenue, excluding digital advertising services, during the period divided by the monthly average number of Dealer Customers during the same period. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of historical facts are forward-looking statements. Forward-looking statements include information concerning the Company's industry, Dealer Customers, results of operations, business strategies, plans and objectives, market potential, outlook, trends, future financial performance, planned operational and product improvements, potential strategic transactions, including the proposed acquisition of CreditIQ, liquidity, including draws from its revolving credit facility, expense management and other matters and involve known and unknown risks that are difficult to predict. As a result, the Company's actual financial results, performance, achievements, strategic actions or prospects may differ materially from those expressed or implied by these forward-looking statements. These statements often include words such as "believe," "expect," "project," "anticipate," "outlook," "intend," "strategy," "plan," "estimate," "target," "seek," "will," "may," "would," "should," "could," "forecasts," "mission," "strive," "more," "goal" or similar expressions. Forward-looking statements are based on the Company's current expectations, beliefs, strategies, estimates, projections and assumptions, based on its experience in the industry as well as the Company's perceptions of historical trends, current conditions, expected future developments, current developments regarding the COVID-19 pandemic and other factors the Company thinks are appropriate. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by the Company and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are expressed in good faith and the Company believes these judgments are reasonable. However, you should understand that these statements are not guarantees of strategic action, performance or results. The Company's actual results and strategic actions could differ materially from those expressed in the forward-looking statements. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. Whether or not any such forward-looking statement is in fact achieved will depend on future events, some of which are beyond the Company's control. Forward-looking statements are subject to a number of risks, uncertainties and other important factors, many of which are beyond the Company's control, that could cause its actual results and strategic actions to differ materially from those expressed in the forward-looking statements contained in this press release. For a detailed discussion of many of these and other risks and uncertainties, see the Company's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form 8-K and its other filings with the Securities and Exchange Commission, available on the Company's website at or via EDGAR at All forward-looking statements contained in this press release are qualified by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of these risks and uncertainties. The forward-looking statements contained in this press release are based only on information currently available to the Company and speak only as of the date of this press release. The Company undertakes no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. The forward-looking statements in this report are intended to be subject to the safe harbor protection provided by the federal securities laws. CARS Investor Relations Contact:Robbin Moore-Randolphrmoorerandolph@cars.com312.601.5929 CARS Media Contact:Marita 312.601.5692 Inc. Consolidated Statements of Income (Loss) (In thousands, except per share data) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue:   Dealer $139,321 $123,955 $409,145 $   332,558   OEM and National 15,273 17,753 49,671 53,167   Other  1,959 2,684 6,562 8,770        Total revenue 156,553 144,392 465,378 394,495 Operating expenses:   Cost of revenue and operations 28,928 25,434 84,978 74,376   Product and technology 20,132 15,455 56,326 42,359   Marketing and sales.....»»

Category: earningsSource: benzingaNov 4th, 2021

Forget Q3, U.S. Economy Likely to Regain Pace in Q4: 5 Picks

We have applied our VGM Style Score to narrow down the search to five stocks. These are: NUE, UPS, GD, AZO and VLO. Wall Street has continued its strong recovery rally this month even though the U.S. economy grew just 2% in third-quarter 2021, after rising 6.4% and 6.7%, in the first and second quarter, respectively. The consensus estimate for the third quarter was 2.7%.Stock market performance is predominantly guided by future expectations and not by the past. The third quarter’s tepid GDP growth (although no way tepid if we consider historical U.S. GDP growth rate) was primarily owing to the rapid spread of the Delta variant of coronavirus, the gradual fading out of the pandemic-led fiscal stimulus, a massive spike in inflation rate due to supply-side bottlenecks and concerns about the Fed’s decision to taper monetary stimulus.Nevertheless, as we are approaching the end of the first month of the fourth quarter, several of the concerns mentioned above concerns have faded out. A series of economic data released in October reaffirms the strong fundamentals of the U.S. economy.A strong reduction of news cases of the Delta variant, robust third-quarter earnings results, expectations of sloid holiday season sales and readjustment by businesses with higher inflation this year should pave the way for strong fourth-quarter growth.U.S. Consumers Regain Confidence in EconomyThe Conference Board reported that U.S. consumer confidence index climbed to 113.8 in October from 109.8 in September, beating the consensus estimate of 107.5. The index rebounded after three consecutive months of decline.More importantly, the expectations sub-index (consumers’ outlook for income, business, and labor market conditions for the next 6 months) improved to 91.3 in October from 86.7 in September. A sharp reduction of new coronavirus cases, strong economic data and the gradual improvement in the labor market are the primary reasons for the index’s northbound move.The weekly jobless claims stayed at the low-end of the pandemic era over the last three months. Initial jobless claims fell below 300,000 in the last three reported weeks. This is the best level since Mar 14, 2020, just before the COVID-19 outbreak in the United States.Businesses Continue ExpansionThe Institute of Supply Management reported that both manufacturing and services PMIs showed exceptional results in September. Robust data for both manufacturing and services sectors will eventually lead to strong economic growth. Notably, the services sector accounts for 70% of the U.S. GDP while the manufacturing sector commands around 12% of economic activities.  Moreover, new orders for core capital goods (non-defense capital goods excluding aircraft) rose 0.8% in September to an all-time high. This metric is a closely watched proxy for a business investment plan. Shipments of core capital goods rose 1.4% in September. This metric is used to calculate equipment spending in GDP measurement.Expectations of Strong Holiday SalesRetail sales in September rose 0.7% in contrast to the consensus estimate of a decline of 0.1%. Year over year, retail sales climbed 13.9% in September. Core retail (excluding auto) sales in September rose 0.8%, beating the consensus estimate of 0.5%. ear over year, core retail sales jumped 15.6% in September.Retail sales rose steadily despite the termination of the weekly unemployment benefit on Sep 6. Consumer spending is likely to remain elevated as we are entering the holiday sales season. Holiday retail sales are likely to climb this year as projected by various major market researchers like Deloitte, Mastercard SpendingPulse, Bain and KPMG. Notably, consumer spending accounts for nearly 70% of U.S. GDP.Wall Street Likely to Fly HighWall Street regained its impressive momentum in October after a tumultuous September. Month to date, the Dow, the S&P 500 and the Nasdaq Composite, have rallied 5.6%, 6.7% and 6.9%, respectively. This performance is commendable as October is also known for its historically volatile trading pattern. In September, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — plummeted 4.3%, 4.8% and 5.3%, respectively.Market valuation has already discounted the likelihood of the Fed starting to taper its monthly bond-buy program this year. The current projection by the CME FedWatch shows 7% probability that the central bank will hike the benchmark interest rate in early 2022. The Fed has maintained that rate hike is unlikely before the second half of 2022.Finally, robust U.S. corporate earnings in the first and second and third quarters have bolstered market participants’ confidence in U.S. equities. All three major stock indexes posted record-highs in October. Year to date, the Dow, the S&P 500 and the Nasdaq Composite have rallied 16.7%, 22.4% and 19.9%, respectively.Our Top PicksSeveral good stocks are available for investment for the rest of this year. However, we have applied our VGM Style Score to narrow down the search to five stocks. These stocks have strong growth potential for the rest of 2021 and have seen solid earnings estimate revisions within the past 7 days, indicating that the market currently expects these companies to do solid business in 2021.Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.The chart below shows the price perfprmance of our five picks in the past month.Image Source: Zacks Investment ResearchNucor Corp. NUE is a leading producer of structural steel, steel bars, steel joists, steel deck and cold-finished bars in the United States. It operates through three segments: Steel Mills, Steel Products, and Raw Materials.The company has been seeing consistent momentum in the non-residential construction market. Demand in non-residential construction markets was strong in the most recent quarter. Nucor’s downstream products unit has been benefiting from continued strength in the non-residential construction markets.This Zacks Rank #1 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1.7% over the last 7 days.United Parcel Service Inc. UPS is the world's largest express carrier and package delivery company. It has been benefited by high package delivery demand. Robust improvement in all products is likely to have driven revenues at the U.S. Domestic Package segment. Strong demand in Europe is likely to have aided the International Package unit.UPS disclosed its intention to be carbon neutral across scope 1, 2 and 3 emissions in its global operations by 2050. Moreover, the company aims to bring about a 50% reduction in carbon dioxide per package delivered for its global small package operations It also aims to ensure that by 2035 all its facilities are powered by renewable electricity.This Zacks Rank #2 company has an expected earnings growth rate of 39% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2% over the last 7 days.Valero Energy Corp. VLO is the largest independent refiner and marketer of petroleum products in the United States. Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 3.1 million barrels per day in its 15 refineries located throughout the United States, Canada and the Caribbean.The majority of the company’s refining plants are situated in the Gulf coast area from where there is easy access to the export facilities. The company is poised to benefit from the new standard set by the International Maritime Organization.This Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved more than 100% over the last 7 days.General Dynamics Corp. GD is engaged in mission-critical information systems and technologies, land and expeditionary combat vehicles, armaments and munitions, shipbuilding and marine systems, and business aviation.General Dynamics appears to be on track for the entry of the G700 jet into service in the fourth quarter of 2022. Its impressive backlog trends indicate solid demand for the company’s products, thereby bolstering its revenue generation prospects significantly.This Zacks Rank #2 company has an expected earnings growth rate of 4.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.AutoZone Inc. AZO is one of the leading specialty retailers and distributor of automotive replacement parts and accessories in the United States. It operates in the Do-It-Yourself retail, Do-It-for-Me auto parts and products markets.AutoZone's high-quality products, store-expansion initiatives and omni-channel efforts to improve customer shopping experience are boosting its market share. The ramp up of e-commerce efforts including ship-to-home next day, buy online, pick-up in stores and commercial customer ordering are aiding AutoZone’s top-line growth. The solid reputation of the Duralast brand, competitive pricing and greater engagement from store-operating teams are supporting its growth.This Zacks Rank #2 company has an expected earnings growth rate of 2.5% for the current year (ending August 2022). The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last 7 days. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs Now >>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 General Dynamics Corporation (GD): Free Stock Analysis Report Nucor Corporation (NUE): Free Stock Analysis Report United Parcel Service, Inc. (UPS): Free Stock Analysis Report Valero Energy Corporation (VLO): Free Stock Analysis Report AutoZone, Inc. (AZO): Free Stock Analysis Report To read this article on click here......»»

Category: topSource: zacksOct 29th, 2021

Alluvial Fund 3Q21 Commentary: P10 Goes Public

Alluvial Fund commentary for the third quarter ended September 2021, discussing the IPO of P10 Holdings Inc (NYSE:PX). Q3 2021 hedge fund letters, conferences and more Dear Partners, Alluvial Fund Performance I am happy to report Alluvial Fund enjoyed another strong quarter, up 8.5% as small-cap and micro-cap stock indexes struggled. To date, it has […] Alluvial Fund commentary for the third quarter ended September 2021, discussing the IPO of P10 Holdings Inc (NYSE:PX). 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 Warren Buffett Series in PDF Get the entire 10-part series on Warren Buffett 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); Q3 2021 hedge fund letters, conferences and more Dear Partners, Alluvial Fund Performance I am happy to report Alluvial Fund enjoyed another strong quarter, up 8.5% as small-cap and micro-cap stock indexes struggled. To date, it has been a very good year for our enterprise. It feels good to see the market validate the thought and effort that has gone into building our very unusual portfolio. Much more commonly, the market treats our holdings with a disinterest bordering on disdain. Therein, of course, lies the opportunity, but it is not an enjoyable environment to occupy. It’s nice to have a strong quarter, just like it’s nice when your favorite baseball team wins a game or a series. But just as a strong quarter does not make a successful investment, winning a game or a series does not bring home the pennant. (As a fan of baseball’s sorriest franchise of the modern era, the Pittsburgh Pirates, I know this well.) I am enjoying our recent success as much as anyone, but I won’t let it distract me from the disciplined pursuit of long-term results, whatever ups and downs we may experience. A Market Debut For P10 Inc. And downs arrive in due course. For quite a while, I have been anticipating the day when our largest holding, P10 Inc., would conduct an IPO and up-list its shares to a major exchange. The day has come! Unfortunately, the company’s IPO has arrived with more of a dull thud than a splash, pricing below the indicated range. I can think of multiple reasons why the IPO failed to live up to expectations. It was a small offering, with the company and insiders looking to raise only $300 million or so. The shares being offered have little voting power, meaning buyers will have no ability to affect the company’s governance or strategic direction. Despite P10’s success thus far, it remains a new and unproven company, and a small one in the context of public companies. Whatever the reasons, this represents only a temporary set-back, not a change in narrative. I remind myself that at the IPO price of $12 (postreverse split) P10 shares have returned to where they traded just six weeks ago, before rumors of an IPO began to circulate. And compared to then, P10 is now better capitalized, more profitable, and an SEC-reporting NYSE company. At $12, shares of P10 offer remarkable value. Following the IPO, P10 has a market capitalization of $1.5 billion and debt of $180 million. Within six months, P10’s fee-paying assets under management should reach $17 billion, resulting in annual revenue of $170 million and normalized cash operating income of $94-102 million. Against this, P10’s interest expense will be around $11 million, resulting in free cash flow of $83-91 million, or 66-73 cents for a free cash flow yield close to 6%. Remember that P10 has virtually no need for capital expenditures and will not pay cash taxes for quite some time thanks to its large net operating loss carryforwards. This is my near-term outlook, but I believe P10’s free cash flow per share will climb past $1 in short order. Under the current capital structure, this would require assets under management to climb to $23 billion, a figure that I expect to be achieved inside of two years from a combination of internally generated AUM growth and ongoing acquisitions activity. P10’s business is among the best I have ever seen. It is supremely predictable and robust through all economic conditions. Its margins and returns on invested capital are tremendous, as is its runway for growth. I have confidence in the leadership of Robert Alpert and Clark Webb, each of whom has over $170 million at stake in P10 and his career and reputation on the line. 17x nearterm free cash flow is a bargain price to pay for a firm that could be worth multiples of its current value just a few years hence. P10’s underwhelming IPO is a short-term detour that costs us a little, but nothing about the longterm story or investment thesis has changed. Dips and declines are a fact of life in investing. This is the fourth or fifth time that P10 has fallen 20% or more since we have owned our shares, and it will not be the last. From time to time, I have sold some P10 shares for risk control purposes or to fund other opportunities. I had planned to let more shares go if the IPO priced in the high teens, but at $12, good luck to anyone trying to pry them from my fingers! Telcos: Comings And Goings Communications, as usual, remains an important theme for Alluvial Fund. Broadband is the new electrification. Much as the early and middle 20th century saw electricity reaching remote and rural areas, the story of our era is high-speed internet becoming available to most of humanity for the first time. Broadband, whether provided by traditional incumbent telcos and cable companies or upstarts like satellite providers and fibercos, is simply indispensable for participating fully in modern social and economic life. I believe providers of modern communications infrastructure should be valued much like gas, water, and electric utilities. It seems the market is slowly coming around to this view, particularly for our Italian fiber companies, Intred SpA (BIT:ITD) and Unidata SpA (BIT:UD). Both are up handsomely this year on growing revenue and excellent cash flow, and each continues to have a remarkable growth outlook at Italy races to catch up with its Western European peers. Intred will soon begin receiving revenue related to its winning tender to provide over 4,000 schools with broadband. Unidata’s joint venture with the Central Europe Broadband Fund will see the company invest in greenfield projects in suburban, exurban, and rural areas in the Rome metropolitan area. While each company remains a good valued, Unidata is the more attractive of the two and I have sold some Intred shares in favor of Unidata. On the domestic telecom front, LICT Corporation (OTCMKTS:LICT) just keeps performing its usual routine: generating cash, reinvesting in the business, and buying back stock with the excess. On a yearover- year basis, LICT repurchased 3.4% of shares outstanding. I expect the same or more this year. Meanwhile, LICT’s strategic review continues. The most likely outcome appears to be a spin-off of the company’s Michigan assets, which are cable-heavy and should trade at a reasonable multiple. Last week, LICT disclosed it had received an offer to buy the entire company at a premium, but that the offer was insufficient. I value LICT shares at $35,000-$40,000, and significantly more if the company is successful in buying back substantial additional shares. We are parting ways with our other domestic telecom, Nuvera Communications Inc (OTCMKTS:NUVR). Not for any particular failing by the company or concerns about valuation, but rather a loss of credibility. Over the years, management has assured me repeatedly that Nuvera would step into the spotlight, quit being the “quiet company” and begin telling its story to investors. Also, that the company would be active on the acquisitions front. Here we are, years later, with no changes and no activity. Nuvera still eschews press releases and any other attempt to build familiarity with investors. Even as Minnesota broadband mergers and acquisitions activity has heated up, Nuvera has sat on the sidelines. Any of a half dozen recent transactions in Minnesota would have been beneficial for Nuvera, but the company was either uninterested or unsuccessful in acquiring these assets. Meanwhile, the company’s balance sheet is rock solid with debt the lowest since the acquisition of Scott-Rice in 2018. To me, the economic rationale for acquiring assets at 6-10x free cash flow and funding these deals with debt at 4% is unassailable, but Nuvera apparently believes otherwise. There is nothing really wrong with being a sleepy company. Countless tiny banks and utilities operate quietly, serving their communities well and paying regular dividends, but otherwise doing little for shareholders. But companies like these owe it to investors to be honest about their goals and ambitions so investors may value them accordingly. And so, on to the next opportunity, having realized a healthy gain on our Nuvera shares. I don’t doubt that Nuvera will do fine in the coming years, but we are attempting to do better than just “fine.” Special Situations And Other Updates In other disappointing IPO-related news, I was elated see our acquisitive Cleveland industrial holding company, Crawford United Corp (OTCMKTS:CRAWA), file for an IPO in August only to withdraw the filing earlier this month. Crawford intended to use the IPO proceeds to strengthen its balance sheet and fund additional acquisitions. The company did not comment on the development. I suspect Crawford may be feeling the effects of the tight labor market and higher raw materials costs, which will put pressure on short-term results. Whatever the company’s short-term results may be, its long-term value will be driven by its ability to identify and acquire attractive manufacturing assets. Costrelated stresses on small manufacturers could actually prove a boon for Crawford if it enables them to acquire assets at lower valuations. It was a mixed quarter for our special situations investments. On one hand, Pegroco preferred shares moved up as the Swedish investment company reported strong results and prepared for the IPO of its largest holding, Nordisk Bergteknik (STO:NORB-B). The preferred shares are now trading just under face value. I expect the company to catch up on its dividend arrearage in the next few quarters. Plenty of upside remains. On the other hand, Series D preferred shares of Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR) trended slightly downward. The company and certain shareholders are at loggerheads over the treatment of Series A and B preferred shares, with a large holder threatening litigation. The most likely scenario in the months ahead remains a large repurchase of the Series D preferred shares, though it is also possible that a negotiated exchange agreement is reached with holders of the various series. Wheeler’s underlying properties must be worth at least $390 million or so for Series D preferreds to be worth at least their current trading price of $16. That is equal to 87% of gross property value and an implied cap rate of 9.5%. Wheeler’s grocery-anchored strip malls are nobody’s trophy assets, but they produce cash flow and are worth more than that. With a hard catalyst in the 2023 conversion option on the Series D preferreds, I am willing to wait for resolution. Markets may be at all-time highs, but I continue finding plenty of value in small, off-the-run companies and overlooked markets. Lately, I have identified several promising opportunities in Poland, where vibrant, profitable, and growing companies trade at one-third or less the multiples that similar companies fetch on US exchanges. More than one US post-bankruptcy/postrestructuring situation is wildly cheap, as well. I am adding to these holdings as the market allows. Expect more detail in the next quarterly letter. Thank you for your confidence in Alluvial. As always, I appreciate the opportunity to manage capital on your behalf. I know your investment represents years of hard work and prudent investing, and I will do my utmost to be a responsible steward of that legacy. The entirety of my family’s investable assets are invested in Alluvial Fund. I had planned to host some sort of partners’ gathering in New York this autumn, but I have decided to forgo any such event out of an abundance of caution. Perhaps I will see many of you in the spring. My associate, Tom Kapfer, and his wife Bailey welcomed a baby girl last month. All are doing well! Tom also passed level 2 of the CFA exam earlier this year. How he did it while juggling a fulltime job, house, and growing family, I do not know. It was certainly easier for me to pull off as a 20-something single guy sitting in my cheap apartment most evenings. Congrats! I remain available to discuss the portfolio in greater detail at any time. Please don’t hesitate to call or e-mail. And if you find yourself in the greater Pittsburgh area, dinner is on me! I hope you and your families are well, and I look forward to writing to you again in the new year. Best Regards, Dave Waters, CFA Alluvial Capital Management, LLC Updated on Oct 28, 2021, 2:16 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 28th, 2021

Learning From Trader Joe’s, Joe Coulombe

It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. Q3 2021 hedge fund letters, conferences […] It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. 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); Q3 2021 hedge fund letters, conferences and more If you choose a manager to whom you entrust your capital, in the words of Charlie Munger, choose a ‘business fanatic.’ Such individuals live, sleep and breathe their businesses. They’re not bound by the same restraints as most business people; constantly pushing boundaries, trialing new approaches, thinking outside the box, challenging conventional wisdom and always looking for business improvements. If you’re in business, these are the last type of people you want to compete with. One man that epitomized such fanaticism was the late Joe Coulombe, founder of the convenience store chain that carried his name, Trader Joe’s. “Edward H. Heller, a pioneer venture capitalist used the term ‘vivid spirit’ to describe the type of individual to whom he was ready to give significant financial backing. He said that behind every unusually successful corporation was this kind of determined entrepreneurial personality with the drive, the original ideas, and the skill to make such a company a truly worthwhile investment.” Phil Fisher Joe tells his story in the book, ‘Becoming Trader Joe - How I Did Business My Way and Still Beat the Big Guys.’ It contains a wealth of wisdom, particularly when it comes to thinking about running a successful retailer. Over more than a quarter of a century, Trader Joe’s sales grew at a compound rate of 19% per year and the company’s net worth grew at a compound rate of 26% per annum over the same period - no mean feat for a commodity business that’s hard to differentiate. Furthermore, the business never lost money in a year and incredibly each year was more profitable than the last. When the competitor 7-Eleven extended it’s footprint into California in the 1970’s, Pronto Markets, the precursor to Trader' Joe’s, already enjoyed the highest sales per store of any convenience operator in America by a factor of three. A high wage policy, strong locations, a few liquor licences, and the beginnings of a differentiated strategy through product knowledge was the core of their success. One of the mental models I particularly enjoyed in the book was Joe’s concept of ‘Double Entry Retailing.’ A form of second level thinking, Joe recognised that making changes to Demand Side factors had an influence on Supply Side factors which aren’t always obvious. A striking example was the introduction of orange juice freshly squeezed on the premises. While a great Demand Side success - customers embraced the product - it was a total nightmare to administer because of the Supply Side issues; the great variation in sweetness of oranges over the course of a year, difficulty in ensuring machines squeezed the right amount and disposal of the leftover rinds. As a result it was eventually phased out. You’ll recognise many of the characteristics that form a common link with the other great businesses we’ve studied. I’ve included some of my favourite extracts from the book below. Harnessing Demographic & Technological Change ‘The clue, the keystone of the arch of Trader Joe’s, was a small news item in Scientific American in 1965. When we left Stanford, my father-in-law, Bill Steere, a professor of botany, gave me a subscription to Scientific American. In terms of creating my fortune, it’s the most important magazine I’ve ever read. The news item said that, of all the people in the US who were qualified to go to college in 1932, in the pit of the Depression, only 2 percent did. By contrast, in 1964, of all the people qualified to go to college 60 percent in fact actually did. The big change, of course, was the GI Bill of Rights that went into effect in 1945. A second news item, one from the Wall Street Journal, told me that the Boeing 747 would go into service in 1970, and that it would slash the cost of international travel. In Pronto Markets we had noticed that people who travelled - even to San Francisco - were far more adventurous in what they were willing to put in their mouths. Travel is, after all, a form of education. Trader Joe’s was conceived from those two demographic news stories. What I saw here was a small but growing demographic opportunity in people who were well educated. 7-Eleven, and the whole convenience store genre, served the most basic needs of the most mindless demographics with cigarettes, Coca-Cola, milk, Budweiser, candy, bread, eggs. I saw an opportunity to differentiate ourselves radically from mainstream retailing to mainstream people.” Obliquity “I hope you’ll consider the following, my favourite quote from my favourite book on Management, ‘The Winning Performance’ by Clifford and Cavanaugh,’ ‘The fourth (general themes in winning corporations] is a view of profit and wealth-creation as inevitable byproducts of doing other things well. Money is a useful yardstick for measuring quantitative performance and profit and an obligation to investors. But … making money as an end in itself ranks low.’” A Bias to Action & Tenacity “In 1962, Barbara Tuchman published ‘The Guns of August’, an account of the first ninety days of WWI, It’s the best book on management - and, especially, mismanagement - I’ve ever read. The most basic conclusion I drew from from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you’ll probably succeed. Tenacity is as important as brilliance.” “Trying to find an optimum solution in business is a waste of time; the factors in the equation are changing all the time.” Value, Empower & Pay Employees Well “You’ve got to have something to hang your hat on. The one core value I chose was our high compensation policies, which I put in place from the very start in 1958… This is the most important single business decision I ever made: to pay people well. First Pronto Markets and then Trader Joe’s had the highest-paid, highest benefitted people in retail.” “Time and again I am asked why no one has successfully replicated Trader Joe’s. The answer is that no one has been willing to pay the wages and benefits, and thereby attract - and keep - the quality of people who work at Trader Joe’s.” “[I was asked,] ‘But how could you afford to pay so much more than your competition?’ The answer, of course, is that good people pay by their extra productivity. You can’t afford to have cheap employees.” “Equally important was our practice of giving every full-time employee an interview every six months. At Stanford I’d been taught that employees never organise (join unions) because of the money; they organise because of un-listened-to grievances.” “The [store] Captains had the salary plus a bonus that theoretically had no limit. The bonus was based on Trader Joe’s overall profit, allocated among the stores based on each store’s contribution. In 1988, several Captains made bonuses of more than 70 percent of their base pay. Unless a bonus system promises, and delivers big rewards, it should be abandoned.” “My idea, often stated to everybody, was that the [store] Captains should have the chance to make more than executives in the office. In a traditional chain store, managers aspire to become bureaucrats with cushy, high-paying jobs in the office. I wanted to kill such aspirations at the start.” “Part timers .. at a time when the minimum wage was $4.35, we often paid $13.00 per hour because these people were worth it.” “Productivity in part is a product of tenure. That’s why I believe that turnover is the most expensive form of labor expense.” “We instituted full health and dental insurance back in the 1960's when it was cheap. When I left, we were paying $6,000 per employee per year!” “Each full-timer was supposed to be able to perform every job in the store, including checking, balancing the books, ordering each department, stocking, opening, closing, going to the bank, etc. Everybody worked the check stands in the course of the day, including the [store] Captain.” “In thirty years we never had a layoff of full-time employees. Seasonal swings in business were handled with overtime pay to full-time employees, and by adjusting part-time hours. The stability of full-time employment at Trader Joe’s was due in part to caution opening new stores, and insisting on high volume stores.” “Cost of goods sold is the dominant expense. The funny thing is that grocers seem to spend more effort squeezing payroll than squeezing Cost of Goods Sold, though there is at least five times more opportunity in the latter.” Retail & Real Estate Decisions ‘First we upped the investment ante by taking only prime locations, which could generate the most sales, even though the rents were higher. A lease is an investment, perhaps the most serious and certainly the least changeable a retailer can make. Financially, a lease is simply a long-term loan… Most retail bankruptcies come from bad real estate leasing decisions… Early in my career I learned there are two kinds of decisions: the ones that are easily reversible and the ones that aren’t. Fifteen-year leases are the least-reversible decisions you can make. That’s why, throughout my career, I kept absolute control of real estate decisions.” “The keys to management are strong locations with good people.” “People often ask me, how many stores did we have at such-and-such time? It’s the wrong question to ask. What’s important is dollar sales. For example, from 1980 to 1988, we increased the number of stores by 50 percent but sales were up 340 percent.” “My preference is to have a few stores, as far apart as possible, and to make them as high volume as possible.” “Too many stores, to many irreversible leases, too much geographical saturation was a recurrent theme in the failure of American retail chains in the twentieth century.” “Ancient Mariner Retailers claim that ‘volume solves everything.’ If it’s profitable volume, they’re right. Things go most sour in the lowest-volume stores. It’s like riding a bicycle, the faster it goes, the more stable it is. The ‘normal distribution’ of most chains is 20% dogs, 60% okay stores, and 20% winners. I believe in ruthlessly dumping the dogs at whatever cost. Why? Because their real cost is in management energy. You always spend more time trying to make the dogs acceptable than in raising the okay stores into winners. And it’s in the dogs that you always have the most personnel problems." “I believe that the sine qua non for successful retailing is demographic coherence: all your locations should have the same demographics whether you are selling clothing or wine.” “I liked semi-decayed neighbourhoods, were the census tract income statistics looked terrible, but the mortgages were all paid-down, and the kids had left home. Housing and rental prices tend to be lower, and more suitable for those underpaid academics. Related to this, I was more interested in the number of households in a given area than the number of people in a ZIP code. Trader Joe’s is not a store for kids or big families. One or two adults is just fine.” “Computerisation has radically upgraded the statistics available: I’d probably do it more formally now. But there’s no substitute for ‘driving’ a location to ferret out traffic problems. And do it at night, too.” “I hardly need to mention that a trading area is rarely determined by a radius. It’s determined by geographical barriers, boulevard access, and where the demographics lie.” “Let’s go back to the question of number of stores. How do you space them? Here are some parameters: You need to have enough stores in a trading area to economically amortise the radio advertising. You need enough stores in an area to have a large enough pool of employees. My rule was that distance between stores should not be measured in miles but in driving time. I wanted no less than twenty minutes between stores. That pretty much avoided the dread word, cannibalisation. Could a given trading area support more Trader Joe’s? Almost certainly! I figured we could break even at ten thousand core residences. But I wanted super-volume stores. If the credo that super-volume stores have the fewest operating problems is valid, then the overall health of the chain, in the long run, is maximised.” “How many trading areas should you enter? As long as you can preserve the culture of the company, and as long as logistics don’t kill you, go ahead.” “Never, never, never sign a lease with a ‘continuous operation’ clause. That clause means you must stay open - you can’t ‘go dark’ and just pay the rent.” Product Knowledge “The buyers at the supermarket chains knew nothing about what they sold, and they don’t want to know. What they did know all about was extorting slotting allowances, cooperative ad revenue, failure allowances, and back-haul concessions from the manufacturers.” Four Tests “The advantage of hard liquor merchandise was that it met three tests: a) A high value per cubic inch, essential to a small store format b) A high rate of consumption c) It had to be easily handled If we could have added a fourth test, it would be that we had to be outstanding in the field. Still trying to maximise the use of a small store, I looked for categories that met the Four Tests; high value per cubic inch, high rate of consumption; easily handled; and something in which we could be outstanding in term of price or assortment. For example, diamonds met the first test but flunked the second. Fruits and vegetables met the first and second but flunked the third because produce requires constant reworking. Fresh meat flunked the third test even more.” Purpose “Most of my ideas about how to act as an entrepreneur are derived from ‘The Revolt of the Masses’ by Jose Ortega y Gasset, the greatest Spanish philosopher of the twentieth century. I believe it offers a master ‘plan of action’ for the would-be entrepreneur, who usually has no reputation and few resources. Ortega offers an explanation of how such a person can get an enterprise started. In the context of the career of Julius Caesar, an entrepreneur who started without power, Otega says of the state: ‘Human life, by its very nature, has to be dedicated to something, an enterprise glorious or humble, a destiny illustrious or trivial .. The State begins when groups, naturally divided, find themselves obliged to live in common. The obligation is not of brute force, but implies an impelling purpose, a common task which is set before the dispersed groups. Before all, the State is a plan of action and a Programme of Collaboration. The men are called upon so that together they may do something .. It is pure dynamism, the will to do something in common, and thanks to this the idea of the state, is bounded by no physical limits.” Most of my career has been spent selling ‘plans of action and programmes of collaboration.’ If you want to know what differentiates me from most manager’s that’s it. From the beginning, thanks to Ortega y Gasset, I’ve been aware of the need to sell everybody.” Radical Transparency “Throughout my career, my policy has been full disclosure to employees about the true state of affairs, almost to the point of imprudence. I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn the plans, but that his own troops would not.” Growth “Growth for the sake of growth still troubles me. It seems unnatural, even perverted. This helps explain why I went from 1974 to 1978 without opening another store. To keep sales increasing during the mid-1970s, we relied on new ideas implemented in existing stores. This was my favourite form of growth. I don’t think that any given store ever fully realises its potential.” Smallness & Empowerment “We developed a prototype [Trader Joe’s] store of 4,500 square feet. Here’s a good question: Given my need to get away from convenience stores, why did I stick with small stores? The answer was verbalised for us in ‘In Search of Excellence,’ Tom Peter’s best-selling book on management. He called it ‘The Power of Chunking’: ‘The essential building block of a company is the section [which] within its sphere does not await executive orders but takes initiatives. The key factor for success is getting one’s arms around almost any practical problem and knocking it off… The small group is the most visible of the chunking devices.’ The fundamental ‘chunk’ of Trader Joe’s is the individual store with its highly paid [store] Captain and staff; the people who are capable of exercising discretion. I admire Nordstrom’s fundamental instruction to its employees: use your judgement. Trader Joe’s finally settled down at an average of about eight thousand square feet in the 1980’s, but the concept of a relatively small store with a relatively small staff remains in force.” Marketing & Customers “At all times I wrote the Fearless Flyer [marketing newsletter] for over-educated, underpaid people. This requires two mindsets: Trader Joe’s Fearless Flyer Newsletter 1) There are no such things as consumers - dolts who are driven by drivel to buy stuff they don’t need or even want. There are only customers, people who are reasonably well informed, and very well focused in their buying habits. 2) We always looked up to the customers in the text of the Fearless Flyer. We assumed they knew more than they did, we never talked down to them. 3) Given the first two assumptions, we assumed that our readers had a thirst for knowledge, 180 degrees opposite from supermarket ads. We emphasised ‘informative advertising.’ Originally, we distributed the Fearless Flyer only in stores and to a small but growing list. [Later,] by mailing to addresses rather than to individuals - by blanketing entire ZIP codes - we were able to tremendously expand the distribution of the Fearless Flyer. The ZIPs to which we mailed, of course, were chosen on the basis of the likely concentration of over-educated and underpaid people.” Word of Mouth “Word of Mouth: The Power of True Believers. As everyone knows, word of mouth is the most effective advertising of all. I have been known to say that there’s no better business to run than a cult. Trader Joe’s became a cult of the over-educated and underpaid, partly because we deliberately tried to make it a cult and partly because we kept the implicit promises with our clientele.” “There aren’t many cult retailers who successfully retain their cult status over a long period of time. A couple in California are In-N-Out Burger and Fry’s Electronics. But across America, in every town, there’s a particular donut shop, pizza parlour, bakery, greengrocer, bar, etc. that has a cult following of True Believers.” Pricing “One of the fundamental tenets of Trader Joe’s is that retail prices don’t change unless costs change. There are no weekend ad prices, no in-and-out pricing… I have always believed that supermarkets pricing is a shell game and I wanted no part of it.” Retailing “The fundamental job of a retailer is to buy goods whole, cut them into pieces, and sell the pieces to the ultimate consumers. This is the most important mental construct I can impart on those of you who want to enter retailing. Most ‘retailers’ have no idea of the formal meaning of the word. Time and again, I had to remind myself just what my role in society was supposed to be.” “[We decided] no outsiders of any sort were permitted in the store. All the work was done by employees.]” “From 1958 through 1976, we tried to carry what the customer asked for, given the limits of our small stores and other operational parameters. Each store probably had access to ten thousand stock keeping units (SKUs), of which about three thousand were actually stocked in any given week. By the time I left in 1989, we were down to a band of 1,100 to 1,500 SKUs, all of which were delivered through a central distribution system.” “Along the way not only did we drop a lot of products that our customers would have liked us to sell, even at not-outstanding prices, but we stopped cashing checks in excess of the amount of purchase, we stopped full-case discounts, and we persistently shortened the hours. We violated every received wisdom of retailing except one: we delivered great value, which is where most retailers fall.” “[We were] willing to discontinue any product if we were are unable to offer the right deal to the customer.” “Instead of national brands, [we] focused on either Trader Joe’s label products or ‘no label’ products like nuts and dried fruits.” “We wouldn’t try to carry a whole line of spices, or bag candy, or vitamins. Each SKU had to justify itself as opposed to riding piggyback into the stores just so we had a ‘complete’ line. Depth of assortment was of no interest.” “Each SKU would stand on its own two feet as a profit centre. We would earn a gross profit on each SKU that was justified by the cost of handling that item. There would be no ‘loss leaders.’” “Above all we would not carry any item unless we could be outstanding in terms of price (and make a profit at that price) or uniqueness.” ‘I do not believe in keeping ‘spoils’ in the back room until some salesperson comes by to pick them up. I believe that products should move in only one direction, never back up the supply chain. When a bottle was broken, a can dented, or a ‘short fill’ was discovered, it went to the trash bin.” “A guideline: No private label product was introduced for the sake of having a private label. This is 100 percent contrary to the policy of most supermarkets… Each private label product had to have a reason, a point of differentiation.” “The willingness to do without any given product is one of the cornerstones of Trader Joe’s merchandising philosophy.” “No bulky products like paper towels or sugar, because the high-value-per-cubic inch rule still prevailed.. We simply went out of business on the ‘bulkers’ and did not replace them with private labels.” “I believe in the wisdom that you gain customers one by one, but you lose them in droves.” “Back in 1967, [we] made a bet that rising levels of education would fragment the masses, that a small but growing group of people would be dissatisfied with having to consume what everybody else consumed… This philosophical approach put us in conflict with the mainstream of American retailing, which emphasises continuous products. Thus when a supermarket promotes Coca-Cola it doesn’t have to explain that Coca-Cola is a secret formula for a soft drink created a century ago in Atlanta.. Wines have not been popular in America because, intrinsically, they are not continuous products. You can’t just order up some more sugar and chemicals and make another batch. In 1987, I outlined to the buyers where I thought we should go: 1) we want continuous products. Any sane person does. We want continuous products which are profitable without creating a high-price image. 2) to create such products, they needed to be differentiated at least in order to avoid direct price comparison. 3) products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. 4) I was willing to continue to indulge in the spectacular ‘closeout’ sales of branded products, but I wanted to do so in the context of much greater overall sales, principally generated by continuous products, most of them private label.” “I don’t think that the internet grocery store will successfully invade food retailing because you’re dealing with four different temperatures: dry grocery, refrigerated products, frozen products, and ice cream when you try to home-deliver foods.” “Showmanship is the sum total of all efforts to make contact with the customer. It’s the most ephemeral, the most difficult, and the most important of the Demand Side activities.” “All the research on whether people turn to the left or the right, or whether you can ‘force’ people to the rear of the store, is irrelevant if you’re a value retailer.” Win-Win “Honour thy vendors: After all, these are the guys you’re buying from. They should not be treated as adversaries. Five year plan 1977 said, ‘Buying, therefore, is not just a matter of trying to beat down suppliers on price. It is a creative exercise of developing alternatives.’ Many of our best product ideas and special buying opportunities came from our vendors.” “Vendors should be regarded as an extension of the retailer, a Marks and Spencer concept. Their employees should be regarded almost as employees of the retailer. Concern for their welfare should be shown, because employee turnover at vendors sometimes can be more costly than turnover of your own employees.” “Tenants who enter negotiations with the idea of beating the landlord at the objective future game usually get the kind of landlords they deserve. And vice versa.” “Other non-merchandise vendors are very much extensions of Trader Joe’s and should be treated as much. Since we owned no trucks, warehouses, etc., I asked our people to keep track of the outsourced drivers and do their best to see that our contractors were paid reasonable wages with reasonable working conditions. Turnover is the most expensive labour expense!’ Committees “I want to make it quite clear that I called all the shots. I reject management by committee.” Economies of Scale “The point where the ‘buying power’ and ‘selling power’ curves cross each other creates the magical physical thresholds. There are two magical physical thresholds that a retailer must achieve to be competitive: the truckload, and the ocean container load. These thresholds mark the limit of most economies of scale.” Focus & Outsource “We tried to stay out of all functions that were not central to our primary job in society: namely, buying and selling merchandise.. [We’d] been getting rid of all functions except those buying and selling. We got rid of our own maintenance people, we sold off almost all the real estate we had acquired during the 1970’s, we never took mainframe computing in-house, etc. Some choice quotes from Dr. Drucker: ‘In-house service activities have little incentive to improve their productivity .. The productivity is not likely to ramp up until it is possible to be promoted for doing a good job at it. And that will happen in support work only when such work is done by separate, free standing enterprises.’” Business Problems “All businesses have problems. It’s the problems that create the opportunities. If a business is easy, every simple bastard would enter it.” “This is one of the most important things I can impart; in any troubled company the people at lower levels know what ought to be done in terms of day-to-day operations. If you just ask them, you can find answers.” Adapt, Challenge the Status Quo “Believe me, you have to have a system for everything that has to happen in your business - you just may not be conscious of it. And you probably have still other systems that are not needed. That’s why The Winning Performance calls for a ‘continued contempt for business as usual.’ To practice ‘constitutional contempt,’ you have to arrive every day with the attitude, ‘Why do we do such-and-such that way?’ Better yet, why do we do it at all? Usually the answer is, ‘We’ve always done it that way,’ ‘That’s the way we did it at my last job,’ or ‘All our competitors are doing it.’ Mental Model - Double Entry Retailing “I hit on the idea of using double entry accounting as an analogy, what I call Double Entry Retailing. On the left side of the ledger is the business in terms of how its customers see it: I call this the Demand Side. On the right side of the ledger are the factors that limit or determine the retailer's ability to satisfy those demands: the Supply Side. All businesses, whether manufacturing, wholesaling, services, etc., have [the] fearful symmetry of both Demand and Supply sides. And all businesses are subject to the ultimate supply-side constraint of cash: you can do anything, no matter how stupid, within that fearful symmetry, as long as you don't run out of cash. From my view, the Demand Side of Retailers can be analysed in terms of five variables: The assortment of merchandise offered for sale. Pricing: stability and relative to competition. Convenience: geographical, in-store, and time. Credit: the accepted methods of payment. Showmanship: the sum of all activities that result in making contact with the customer, from advertising to store architecture to employee cleanliness. Here are factors on the Supply Side: Merchandise Vendors Employees  The way you do things: "habits" and "culture" Systems Non-merchandise vendors Landlords Governments Bankers and investment bankers Stockholders Crime As in double entry accounting, the change in any factor must be matched by a corresponding change in another factor. For example, a decision to increase geographical convenience (Demand Side) obviously involves some change of policy with landlords (Supply Side) including the amount of rent you're willing to pay. Consider how Barney's paid through the nose because they thought they had to offer the geographical convenience of being in Beverly Hills. How big a factor was this in Barney's subsequent bankruptcy? Was it Demand Side success at the price of Supply Side failure? The lists above aren't much different from other businesses. What distinguishes retailing is the asymmetry of the fearful symmetry: the huge number of customers (Demand Side) vs. the number of suppliers. This is the exact opposite of a government defence contractor. This lopsided butterfly may cause a retailer to act as if the only people they have to ‘sell’ to are customers: the Demand Side. That’s a major mistake. All the people on the supply side have to be sold, too.” “One of the smartest things we ever did was to cut the hours of Trader Joe’s. This is mostly a Supply Side question, but the quality and attitude of the employees handling our customers is a Demand Side factor.” Employee Ownership “From the beginning of Pronto Markets, one of my basic principles, one of my basic goals, was employee ownership of the business. Getting there, however, was complicated.” Summary I found the similarities between Trader Joe’s approach to retailing and the German retailer Aldi strikingly similar. Despite being on opposite sides of the world, both businesses evolved complementary retailing practices: a focus on private label, above market wages for employees, a win-win mentality and continuous innovation. It’s little wonder the Albrecht family were attracted to the business. Aldi acquired Trader Joe’s in 1979 and retained Joe as the independent manager for another ten years. Paying staff well, empowering and sharing information with them and maintaining smallness are consistent themes across many of the successful business stories we’ve studied. When it comes to the specifics of retailing, the analogy of super-volume stores better able to provide balance is a useful one. As are the insights into economies of scale, pricing strategy, jettisoning poorly performing stores, the power of word-of-mouth marketing and the means to abolish bureaucracy through the outsourcing of non-essential functions. Every business has its own quirks and idiosyncrasies. Identifying what they are and how they contribute to a firm’s success can provide clues in our own quest to find compounding machines; in the long run, it’s business success which determines share prices. The more businesses you study, the larger the toolkit of mental models you’ll have to apply in your investment endeavours. Source: 'Becoming Trader Joe - How I Did Business My Way & Still Beat the Big Guys,’ Joe Coulombe, Patty Civalleri. Harper Collins. 2021. Follow us on Twitter : @mastersinvest * NEW * Visit the Blog Archive Article by Investment Masters Class Updated on Oct 26, 2021, 1:11 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 26th, 2021