Pittsburgh manufacturers innovate with new, additive techniques

In this article, we will discuss the 12 largest magnesium-producing companies and the best magnesium stocks to buy now. If you want to skip our discussion on the growth prospects of the industry, go to the 5 Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy. According to a report issued by market intelligence […] In this article, we will discuss the 12 largest magnesium-producing companies and the best magnesium stocks to buy now. If you want to skip our discussion on the growth prospects of the industry, go to the 5 Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy. According to a report issued by market intelligence firm SkyQuest Technology, the global magnesium market is set to compound annually at an average rate of 5.3% from a size of $4.8 billion in 2022 to $7.25 billion by the end of this decade. Another report says the production of magnesium is set to increase at a compound annual growth rate (CAGR) of 5.30% from 1.09 million tons in 2023 to 1.42 million tons by 2028. Magnesium is considered one of the lightest metals in the use of mankind today. It is considered 30% lighter than aluminum and is widely used in alloys. Given the benefit of being lightweight and having a high melting point, magnesium is widely used by aircraft and automotive industries. Around 70% of the total global production of magnesium is used to make alloys. Meanwhile, 10% of global magnesium production is used as a raw material in making titanium, which is known for its resistance to corrosion. Another 10% of global magnesium production is diverted towards making steel for the construction industry. The significance of magnesium is further reiterated by the fact that most of the beverage cans in the US are made by forming an alloy with 5% magnesium. The automotive industry combines aluminum with magnesium to form an alloy for various components. According to the US Automotive Material Partnership, one pound of magnesium can replace two pounds of steel and 1.67 pounds of aluminum. This can result in automobile companies reducing the weight of their vehicles by 15%. Any reduction in weight means an improvement in fuel efficiency, which helps reduce carbon emissions and contribute towards safeguarding the environment. According to Australia-based company Latrobe Magnesium (LMG.AX), automobile manufacturers in China intend to increase the weight of magnesium in cars from 18.95 pounds in 2017 to 99.2 pounds by the end of this decade. Key Players in the Industry Magnesium is usually obtained from natural minerals like dolomite and magnesite in the form of carbonate. There is a 0.13% presence of magnesium in the form of carbonate in seawater as well. China is the biggest producer of magnesite in the world and is responsible for 63% of the global production, with an annual production of 17 million tons. China has emerged as a top magnesium producer in the past 20 years and is now home to the largest magnesium deposits in the world. Australia, Turkey, Brazil, and Russia are the second, third, and fourth biggest producers of magnesite, with an estimated annual production of 2.6 million tons, 1.8 million tons, 1.5 million tons, and 950,000 tons, respectively. In the North American region, US Magnesium is a prominent magnesium-producing entity with a claimed annual production capacity of 63,500 tons of primary magnesium. US Magnesium is a privately held company that was established in 1969. The company has an 80,000-acre production facility 60 miles away from Salt Lake City, Utah. Similarly, Dead Sea Magnesium and Shanxi Yinguang Magnesium Industry (Group) Co. are also among the largest magnesium-producing companies in the world. Investors looking to gain exposure to the industry are also investing in magnesium ETFs and the best magnesium stocks, such as Martin Marietta Materials, Inc. (NYSE:MLM), Albemarle Corporation (NYSE:ALB), and Jinduicheng Molybdenum Co., Ltd. (601958.SS). Pixabay/Public Domain Our Methodology To shortlist the largest magnesium-producing companies and the best magnesium stocks, we analyzed the hedge fund sentiment toward each stock and the market capitalization of the companies. The hedge fund sentiment has been assessed using Insider Monkey’s database of 910 hedge funds as of Q2 2023. The companies have been ranked in ascending order of their market capitalization as of September 1. By considering these two key criteria, we have curated a comprehensive list of the leading publicly listed companies in the magnesium industry and the best magnesium stocks. Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy 12. Luxfer Holdings PLC (NYSE:LXFR) Market Capitalization:  $323.6 million Number of Hedge Fund Holders: 14 Value of Hedge Fund Holdings: $88,574,169 Luxfer Holdings PLC (NYSE:LXFR) is a Milwaukee, Wisconsin-based industrial materials manufacturer founded in 1898. Luxfer MEL Technologies and Luxfer Magtech are two subsidiaries of the company that are involved in the magnesium value chain. Luxfer MEL Technologies makes magnesium alloys for application in the defense, automotive, oil, and gas industries. Meanwhile, Luxfer Magtech is involved in making magnesium chips, granules, and powders for various industries. The company has the distinction of being the founding member of the International Magnesium Association. Click here to read Luxfer Holdings PLC’s (NYSE:LXFR) Q2 2023 earnings call transcript. 11. Intrepid Potash, Inc. (NYSE:IPI) Market Capitalization: $364.47 million Number of Hedge Fund Holders: 8 Value of Hedge Fund Holdings: $18,803,848 Intrepid Potash, Inc. (NYSE:IPI), headquartered in Denver, Colorado, specializes in potash production. Magnesium is one of the key constituents of the potash manufactured by the company. Intrepid Potash, Inc. (NYSE:IPI) obtains magnesium from langbeinite, which contains potassium-magnesium sulfate. The company mines langbeinite from its mine in New Mexico. First Eagle Investment Management was the leading hedge fund investor in Intrepid Potash, Inc. (NYSE:IPI) during Q2 2023. The hedge fund increased its stake in the company by 251% during the second quarter of the year. You can also check out the 10 Best Potash Stocks to Buy here. 10. U.S. Silica Holdings, Inc. (NYSE:SLCA) Market Capitalization: $1.0 billion Number of Hedge Fund Holders: 20 Value of Hedge Fund Holdings: $43,531,476 U.S. Silica Holdings, Inc. (NYSE:SLCA) is a Katy, Texas-based miner, processor, and logistics provider of minerals with a portfolio of over 1,500 products. One of the materials produced by U.S. Silica Holdings, Inc. (NYSE:SLCA) is magnesium silicate. Magnesium silicate is a mineral compound that has numerous applications, such as being used as a filler in products like plastics, rubber, and paints, as well as in the production of ceramics and certain pharmaceuticals. During its Q2 2023 earnings call transcript, U.S. Silica Holdings, Inc. (NYSE:SLCA) maintained its projection of capital expenditure in the range of $50 to $60 million. The company is also considering the possibility of accelerating its capital investments to support growth initiatives. 9. Ferroglobe PLC (NASDAQ:GSM) Market Capitalization: $1.01 billion Number of Hedge Fund Holders: 22 Value of Hedge Fund Holdings: $106,469,550 Ferroglobe PLC (NASDAQ:GSM) is a London, UK-based provider of specialty metal products and alloys. The company is also involved in the production of Magnesium ferrosilicon (FeSiMg) alloy. Magnesium serves as the fundamental raw material to produce any FeSiMg alloy. The magnesium component in the FeSiMg alloy can vary, typically falling within the range of 5% to 10%. This alloy holds significant importance in the iron foundry industry, where it plays a critical role in various applications and processes. According to data compiled by Insider Monkey, Hosking Partners is the biggest hedge fund holder of Ferroglobe PLC (NASDAQ:GSM), with a stake valued at over $20.7 million as of Q2 2023. The hedge fund increased its holding in the company by 10% on a sequential basis. Click here to read Ferroglobe PLC’s (NASDAQ:GSM) earnings call transcript for Q2 2023. 8. Kaiser Aluminum Corporation (NASDAQ:KALU) Market Capitalization: $1.25 billion Number of Hedge Fund Holders: 11 Value of Hedge Fund Holdings: $24,161,338 Kaiser Aluminum Corporation (NASDAQ:KALU) is a Franklin, Tennessee-based aluminum maker founded in 1946. Kaiser Aluminum Corporation (NASDAQ:KALU) sources magnesium for its Warrick Rolling mill in Indiana, which is used to make aluminum-based beverage and food packaging products. Kaiser Aluminum had to declare force majeure in July last year. This decision was prompted by a force majeure declaration made by their magnesium supplier, US Magnesium LLC, in mid-2021. However, Kaiser Aluminum Corporation (NASDAQ:KALU) successfully resolved this issue and lifted the force majeure in September 2022 by securing magnesium supply from alternative sources, ensuring the continuity of their operations. 7. Compass Minerals International, Inc. (NYSE:CMP) Market Capitalization: $1.26 billion Number of Hedge Fund Holders: 18 Value of Hedge Fund Holdings: $114,899,170 Compass Minerals International, Inc. (NYSE:CMP) is an Overland Park, Kansas-based minerals producer that has the honor of being the biggest producer of magnesium chloride in the US. The company sources the mineral from the Great Salt Lake in Utah by having it separated from water through the oldest and one of the most energy-efficient techniques of solar evaporation. Magnesium chloride can be used as a stand-alone deicer and additive. Click here to read Compass Minerals International, Inc.’s (NYSE:CMP) earnings call transcript for Q3 2023. 6. Nanjing Yunhai Special Metals Co., Ltd (002182.SZ) Market Capitalization:  $1.79 billion (CNY 13.03 billion) Nanjing Yunhai Special Metals Co., Ltd (002182.SZ) is a Jiangsu, China-based company majorly focused on making magnesium-based alloys. The company has magnesium smelting and processing facilities located in the city of Nanjing in the Jiangsu Province of China. Nanjing Yunhai Special Metals Co., Ltd (002182.SZ) has an annual production capacity of around 50,000 metric tons of magnesium ingots and magnesium powder. The company uses a thermal reduction process to produce magnesium from dolomite ore. This is an energy-intensive process that requires high temperatures to reduce magnesium oxide into pure magnesium metal. In addition to Nanjing Yunhai Special Metals Co., Ltd (002182.SZ), Martin Marietta Materials, Inc. (NYSE:MLM), Albemarle Corporation (NYSE:ALB), and Jinduicheng Molybdenum Co., Ltd. (601958.SS) are also among the best magnesium stocks to buy.   Click to continue reading and see the 5 Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy.   Suggested articles: 25 Richest to Poorest Countries in Europe by GDP Per Capita (PPP) 10 Best Uninterrupted Power Supplies in 2023 25 Countries With The Most TikTok Users 2023 Disclosure: None. 12 Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy is originally published on Insider Monkey......»»

Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) Q2 2023 Earnings Call Transcript August 8, 2023 Operator: Thank you for standing by. I would like to welcome everyone to the Quarter Two 2023 Maravai LifeSciences’ Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a […] Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) Q2 2023 Earnings Call Transcript August 8, 2023 Operator: Thank you for standing by. I would like to welcome everyone to the Quarter Two 2023 Maravai LifeSciences’ Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I will now turn the conference over to Debra Hart. Deb, please go ahead. Debra Hart: Good afternoon, everyone. Thanks for joining us on our second quarter 2023 earnings call. Our press release and the slides that accompany today’s call are posted on our website and are available at investors.maravai.com. As you can see on our agenda on Slide 2, joining me today are Trey Martin, our new CEO, Kevin Herde, Chief Financial Officer, and Carl Hull, Executive Chairman of the Board. Drew Burch, Executive Vice President and General Manager of our Nucleic Acid Products, and Becky Buzzeo, our Chief Commercial Officer, will join the call for the question-and-answer session following the prepared remarks. We remind you, management will make forward-looking statements and refer to GAAP and non-GAAP financial measures during today’s call. It’s possible that actual results could differ from management’s expectations. We refer you to Slide 3 for more details on the forward-looking statements and our use of non-GAAP financial measures. Our just issued press release provides reconciliations to the most directly comparable GAAP measures. Please also refer to Maravai’s SEC filings for additional information on the risks and uncertainties that may impact our operating results, performance and financial condition. Now I’ll turn the call over to Carl. Carl Hull: Well, thank you, Deb, and good afternoon, everyone. We appreciate having you join us for our call today. During this call, we will provide the details of our financial results for the last quarter and our updated guidance. But first, I want to officially introduce and welcome Maravai’s new CEO, Trey Martin, who took over his role on July 27. As many of you know, Trey is a seasoned global life sciences executive with highly relevant industry experience from his time at IDT and Danaher. He brings to Maravai an ideal mix of strategic, operational and scientific acumen, combined with an outstanding operational track record. Over the course of his career, he has built and led complex global operations and successfully integrated multiple acquisitions, experiences particularly well aligned to lead the execution of Maravai’s long-term strategic growth plan. I have already seen firsthand that Trey is an excellent cultural fit at Maravai. He is a results-oriented leader with the ability to guide and motivate teams within a culture of high integrity and high performance. I know he is the right CEO to take Maravai through its next phase of innovation and growth. Before I turn it over to Trey, I want to share with each of you the observation that leading Maravai has been the single most rewarding experience in my career. I could not be more proud of what we have accomplished together. I extend my sincere thanks to our leadership team and to the dedicated employees across the world who enthusiastically serve our customers and their communities every day. I’m excited about the company’s future, where we are going and what we can achieve together. I’m confident that we have the team, the talent and the technology needed to deliver on our long-term objectives. If you’ll turn to Slide 5, I’ll now ask Trey to introduce himself and share some early observations. Over time, we’ll have many other opportunities to get to know him better. Trey? Trey Martin: Thank you, Carl. It’s an honor and a privilege for me to become the CEO of Maravai at this important juncture for the company. I believe we have immense potential to deepen our connections with the scientific and biopharma communities and further serve our customers while elevating the company as the life science tools provider of choice. During my 29-year career in genomics, I’ve had the good fortune to participate in several overlapping waves of technology from qPCR to next-gen sequencing, from synthetic biology to CRISPR gene editing. What I see now with the opportunities in mRNA is a convergence of technologies and experience that also leverages the many recent learnings from the pandemic and is driving the rapid growth of the mRNA therapeutics field. I believe Maravai has a particularly strong position with our technologies, expertise and long history in mRNA, in the broad field of nucleic acid chemistry. I strongly believe that this conversion gives us a unique opportunity to move the needle for human health. This is a unique opportunity, and I’m excited to be leading the company at a time where we’re focused on expanding the many growth opportunities in our base business and innovating to support the rapidly evolving needs of our mRNA, genomics, cell and gene therapy customers. It’s been fantastic serving as the President of Biologics Safety Testing here at Maravai as it enabled me to focus deeper into that part of the business to work with the team, to help navigate the post-pandemic transition and to understand the future value levers for the business. I look forward to bringing the insights I gained over the past seven months to my new role as I transition to leave a full company and as we work to unlock the potential we have across Maravai. In my first 11 days as CEO, I’ve already had the opportunity to meet with many of the team members of the Nucleic Acid Production segment, spend time in our labs, hold strategy sessions with the leadership team and meet with customers and commercial partners. Across Maravai, we have gold standard tools and technologies and a highly motivated employee base with a strong will and determination to meet our customers’ needs through innovation and value-added products and services. My learning has only just begun, but let me share what I’m most excited about, starting on Slide 6. We have a broad and diverse footprint of products and services that span many of the fastest-growing segments of biologics, genomics and cell and gene therapies, particularly at the front end of the drug development funnel, where we have the ability to win early and then to grow with our customers as they advance through the various phases of therapeutics development. We are the go-to nucleic acid chemistry provider in mRNA modalities and now have the opportunity to leverage our technology leadership to expand wallet share in mRNA and adjacent growth areas. We have a strong balance sheet that provides us the ability to augment our internal investments through strategic M&A, and we’re planning to have M&A continue to be a key part of our capital allocation strategy. If we examine each of these a little more closely, starting on Slide 7. In products and services, CleanCap has positioned us as the leader in co-transcriptional capping and mRNA manufacturing technologies. Our CleanCap franchise is a strong and meaningful technology differentiator with the flagship brand in the marketplace. CleanCap reagents have been cited in over 950 publications in the last eight years, including over 250 in 2022 alone, incorporated in three clinically approved products and dosed in billions of patients worldwide. We continue advancing the science, and I’ll provide an update on our newest CleanCap analog M6 in a few minutes. In addition to our leadership there, our services team has completed over 110 GMP manufacturing batches across 70 different products. That type of expertise is a key differentiator for us in a competitive industry where we remain very focused on mRNA and nucleic acid chemistry. mRNA manufacturing is not a commodity. Expertise with flexible custom services like we offer is unique and can support all facets of product realization to make our customers successful. We’re actively and continually making improvements to meet the evolving needs of our customers, both in RUO and GMP. Again, we believe we can win in discovery and assist our clients to smoothly move to GMP for Phase 1 and then beyond. First, in RUO, our turnaround time suffered through the pandemic demand. We’ve engaged in programs to dramatically accelerate our turnaround time since late 2022. Additionally, we streamlined our ordering and manufacturing processes through automation and added enhanced training for our commercial teams and added in-house analytics expertise. Through these efforts, our team has been able to sustain more than a 50% reduction in turnaround time for the past six months. Our proactive efforts to improve customer experience are paying off. In June, we saw an increase in commitments for RUO services, indicating we’re meeting our customers’ demands. Second, in our GMP manufacturing services, we saw a doubling of signed contracts in Q2 versus Q1, as well as strong funnel growth to support expected revenue recognition for GMP services in 2024. We are seeing investments in our capacity and capabilities strongly resonate with our GMP customers. We need to see a path to commercialization for their molecules. We are addressing those opportunities with our Flanders 2 facility expansion that is nearly complete. With the Flanders 2 site, customers will be able to continue manufacturing post Phase I and tech transfer their late phase programs into our state-of-the-art GMP mRNA manufacturing facility. Our key differentiator is that we’ve been making mRNA for over 20 years and give customers direct line to our experienced team to use our process and/or develop processes optimized to each program with scale-up, validation, analytics and qualification capabilities. This is what customers need from reliable manufacturing partners and for a successful supply chain. The capabilities we’re building in Flanders 2 should provide our customers with a seamless path to late-phase manufacturing and commercial GMP manufacturing of drug substances. On Slide 8, you’ll see the clinical pipeline continues to accelerate, and there are growing number of these customers. In 2019, there were 14 new clinical mRNA entries during the year. We have already seen 30 non-COVID programs enter the clinic in the first half of 2023, indicating the pipeline stands to be four times larger than pre-pandemic levels by the end of this year. This velocity of mRNA drugs moving into clinical phases demonstrates our investments are well positioned to be our customers’ first choice from discovery through commercialization. With our broad and diverse footprint of products and services that support the development of biologics, genomics and cell and gene therapies, our goal is to win in discovery or the front end of the funnel and then pull through our Phase I enablement and stay with our customers through the life cycle of their products. In addition to having products and services that enable us to serve as a trusted partner for different customer needs, we also have both deep chemistry and biology capabilities under one roof. Let’s turn to Slide 9. We have a reputation as the go-to nucleic acid chemistry provider and a real expert in mRNA-related modalities. By leveraging this technology leadership position and continuing to innovate, we have opportunities to gain wallet share in mRNA and adjacent advanced therapy areas such as cell therapy and gene editing. Our commitment to innovation advances the technology in key areas, allowing us to be a multi-modality supplier. For example, we have customers performing novel in vivo gene editing techniques that rely on us to initially deliver key raw materials for their research-grade mRNA manufacturing and then perform CDMO services to produce their mRNA drug substance and thirdly, supply them with long oligonucleotides. We believe our long-standing expertise in oligo manufacturing makes us the supplier of choice when looking to work on the leading edge of technology. It’s very common for our nucleic acid production customers to need multiple products from Cap analogs to other NTPs like N1-Methyl-Pseudouridine, to oligonucleotides, to enzymes. In fact, almost 3/4 of our NAP customers buy multiple products, and we strive to consistently build our technology portfolio, production capabilities and trusted supplier relationships. We continue to add new customers under formal license and supply agreements. During the first half of the year, we’ve executed three new agreements. The newest members of this value class of customers include innovators in gene editing as well as developers of key vaccines for infectious diseases in the Asia Pacific region. Top LNP developers and manufacturers of multiple delivery systems frequently use CleanCap in their mRNA manufacturing and see this as the standard for drug substance used in their studies. The reliability and quality of the mRNA produced is critical for the discovery and development of novel lipid technologies. Similarly, many customers are looking for our partnership to provide guidance and enable their encapsulation of mRNA and progression from drug substance to drug product. Our commercial team is expanding globally to bring our expertise to customers in key markets, including Europe, Japan and Korea, and we are finding strong engagement and adoption with innovators in each of these markets. There are many customers around the world doing exciting work in mRNA and cell and gene therapy who need products we provide. These are just a few examples of how we’re actively expanding our reach and ensuring even more customers benefit from our leading nucleic acid chemistry solutions and mRNA expertise. Moving to Slide 10. Our balance sheet remains exceptionally strong, which will allow us to pursue additional M&A to augment our organic growth initiatives. Our efforts here are focused on acquiring additional differentiated technologies to serve our customers and help them succeed. As we look ahead to the completion of 2023 and prepare for 2024, we remain focused on growing our base business and expanding margins with revenue leverage. I’m excited about our future, our capabilities and what we can achieve together to make a meaningful impact improving human health. I’m confident that we have the team, technologies and the talent to deliver on our long-term objectives. Now let me turn to our Q2 results on Slide 11. Q2 revenue came in at $69 million, roughly in line with the $70 million or so we mentioned in last quarter’s call as we navigated strong headwinds to our NAP services and products during the quarter. Those headwinds include the inventory rebalancing dynamics as we discussed in our earnings call for Q4 ’22 and the broader biotech market sluggishness that we discussed in our Q1 2023 earnings calls. Industry-wide, we are seeing customers changing their spending priorities in the wake of broader economic uncertainty and lower levels of venture and private equity-backed investment. As a result, key customers have become more focused on capital conservation efforts, which has constrained research and development budgets and is leading to longer decision-making process, causing customers to strategically prioritize and stage their programs. We continue to see customers utilize inventory levels built up during the pandemic, leading to lower near-term demand for some products as they return to a business-as-usual inventory approach. From what we can gather, this situation has clearly affected all players in the bioprocessing and CDMO services industries. Despite the slightly softer-than-expected performance, I’m highly encouraged by the positive performance we saw in several pockets of our business during Q2, including non-COVID CleanCap sales which were up 21% year-over-year in the quarter. We announced our new CleanCap M6 product on the Q1 call and product uptake has been especially encouraging as we saw orders from approximately 70 different innovators and have already received many repeat orders. This interest has come from a broad group of vaccine leaders from non-vaccine large pharma customers and from smaller mRNA-focused companies. Early feedback from customers has been encouraging. And I believe that M6 is a truly differentiated product that positions us to gain share from alternate capping methods. We think this is a game-changing innovation for manufacturing more potent mRNA therapeutics and vaccines and that its higher protein yield may offer the opportunity for higher efficacy, lower dosing or both. Within the Biologics Safety Testing segment, we continue to expand our presence in the cell and gene therapy space. Cygnus now supports all 17 out of 17 approved CAR-T cell and gene therapy products, plus the first-ever CAR-T approval in China. We are also seeing continued positive early interest in our MockV product line within BST. Additionally, we realized solid cash flow from operations during the second quarter of $19 million, bringing the first half cash flow from operations to a total of $104 million. Our revised market outlook for 2023, which Kevin will discuss in greater detail in a moment, takes into account the Q2 results and more modest expectation for the second half of the year. We are removing approximately $35 million of COVID-related revenue and reducing our outlook for the base business due to changes in our customers’ spending priorities and ongoing weakness in early-stage biotech funding as a result of slower-than-anticipated improvement to the broader market as previously discussed and a lack of anticipated improvement to the economic activity in China, all of which is pressuring the business. We believe this revised stance for the full year properly accounts for the current industry trends and economic uncertainties and mitigates the risk of shortfall relative to the expectations in the second half. Although I’m taking the helm during a uniquely challenging time and macro environment, my belief and enthusiasm for the company has not wavered. The strategic priorities, investments in innovation and a superior customer experience that Carl and the team have previously laid out remain unchanged. Strengthening our commercial operations, driving long-term base business revenue growth through market share gains with CleanCap, cross-selling products and product portfolio expansion and our relentless focus on new innovation, all of these are longer-term priorities that will enable us to emerge from the short-term pressures as a stronger company. And speaking of innovation, let’s move to Slide 12. I’m excited to share that we’ll be hosting an Investor R&D Day in New York on September 28. That day, we’ll provide a deeper dive into our company-wide initiatives to deliver sustainable long-term growth and showcase our leadership team. Deb will be providing more details and registration information as we get a little closer, and I look forward to meeting many of you in person. I’ll now ask Kevin to provide details on our second quarter performance and our updated guidance. Kevin? Kevin Herde: Thanks for the handoff, Trey, and good afternoon, everyone. As Trey mentioned, I will dive deeper into our Q2 and year-to-date financial results and discuss our updated outlook for 2023. Starting on Slide 14. As per our press release this afternoon, our Q2 2023 revenues were $69 million, roughly in line with our expectations for the quarter. As for earnings per share, both our GAAP-based basic and diluted EPS read a $0.05 per share loss, while adjusted fully diluted EPS was $0.00 per share for the quarter and was $0.03 per share for the first half of 2023. Our GAAP based net loss before the amount attributable to non-controlling interest was $11.9 million for the second quarter of 2023. Adjusted EBITDA, a non-GAAP measure, was $9.1 million for Q2, resulting in an adjusted EBITDA margin of 13% for the quarter. For the first six months of 2023, our adjusted EBITDA, a non-GAAP measure, was $32.9 million, resulting in adjusted EBITDA margin of 22%. The overall lower revenues over our cost structure led to the lower margin in the second quarter. In the second quarter, we also saw higher overhead and related direct labor expense versus first quarter levels. These incremental expenses reflect the lower manufacturing throughput in the quarter and the assessment of inventory turns in light of the lower projections for 2023. It was these expenses, combined with the higher depreciation and amortization associated with our organic and inorganic investments that offset the lower variable material portion of cost of revenues. We remain focused on balancing our investments in our facilities and our labor to best position us for the future while also actively managing our expense structure to address our current revenue outlook. This balance is critical to ensure we have the right capacity, capabilities and resources to be the best solution for our customers’ needs and best position ourselves for long-term opportunity we see in our addressable markets. Overall, given our low variable cost of revenues, we expect we’ll continue to see dynamic margin fluctuations that correlate to our revenue performance. When revenues meet certain levels, we see good leverage in our cost structure. This was exemplified by our performance within the recent quarter as we saw an adjusted EBITDA margin of 35% in the month of June with approximately $31 million in revenue. Turning to Slide 15. As Trey mentioned, we continue to have a strong balance sheet. Our cash and cash equivalents ended Q2 at $580 million, up approximately $30 million from a year ago, reflective of our strong cash generation over the last 12 months, offset by capital outlays for both organic investments and overall capabilities and the inorganic cash used to acquire unique additional capabilities, such as our Alphazyme acquisition earlier this year. Our adjusted free cash flow for the quarter was a negative $18 million. Adjusted free cash flow is a non-GAAP measure that we define as adjusted EBITDA less capital expenditures. The negative free cash flow in the quarter reflected net capital expenditures of $27 million tied to the completion of our biologics safety testing new facility in the Leland and the Flanders build-out for our nucleic acid production business for which we now have full occupancy of both components of that building. So we sit here today with $580 million in cash and gross debt of $536 million, which does not have a term maturing for over four years. This gross debt cash and debt structure continues to allow us maximum flexibility to actively evaluate additional M&A opportunities. We had a net interest expense in the first half of 2023 of $6 million, which is an effective net annualized rate of below 3%. I am very proud of our treasury and cash management team’s efforts over this year. Now turning to Slide 16. I’ll provide some more insights into our business segment financial performance for the quarter. The nucleic acid production business revenues were $53 million for the second quarter. Nucleic acid production represented 77% of the company’s total revenue in the quarter and generated $14 million in adjusted EBITDA in the quarter for a segment margin of 27%. On a year-to-date basis, adjusted EBITDA for this segment was $42 million, a margin of 37% on the first half revenues of $115 million. Included in the results of the nucleic acid production segment for the second quarter is our estimate of CleanCap revenues from our large COVID-19 vaccine customers of $11.6 million. This brings this total to $27.5 million for the first half of 2023. I will touch more on the remaining 2023 expectations for this in a moment. Our biologics safety testing business revenues were $16 million in the second quarter, contributing 23% of our total revenues. Our biologics safety testing business contributed $10 million of adjusted EBITDA in the quarter, a margin of 66%. Corporate expenses, that are not included in the segment adjusted EBITDA totals I just spoke to, were $15 million in the quarter, decreasing $3 million from Q1 levels. Turning to Slide 17 and our updated financial guidance for 2023. As Trey touched on and many of our peers have noted recently, it appears that the improvements in the broader biotech market sluggishness noted in our Q1 2023 call may be slower than anticipated, reflecting the changes in our customer spending priorities and more stringent budgetary practices that are negatively impacting what was already a transitional year for Maravai. I will do my best to discuss the changes to our full year guidance. Since our last call, we received updates from our large LSA, license and supply agreement, customers that resulted in less demand than we anticipated, mostly for COVID-related CleanCap. This, combined with many of our repeat product and technology customers delaying, canceling, decreasing or foregoing purchases of our products and services, particularly for nucleic acid raw materials, polygos and chemistry products, have resulted in lower overall expectations for this segment. Additionally, the increased capacity across the industry, combined with customers’ project rationalization and slower decision-making, has impacted our 2023 revenues for the services part of this business. Now overall, we are lowering our expected range of total revenues for 2023 to between $300 million to $325 million. At the midpoint, this is slightly over a $100 million reduction in revenues for the year. Let me break out this reduced view in more detail. We are reducing our estimate for COVID-related CleanCap revenues down from $100 million to $65 million. The $65 million is roughly a 90% decline from 2022 levels. The remaining portion of the $65 million for 2023 is all on non-cancelable purchase orders. This $65 million for 2023 has zero related revenues under our supply chain agreement with Pfizer and BioNTech for 2023. With $28 million recognized in the first half of 2023, this implies $37 million will ship in the second half, split between $15 million in Q3 and $22 million in Q4. We will continue to break out revenue related to COVID CleanCap for the remainder of 2023. However, as CleanCap continues to be adopted more broadly, including for combination respiratory vaccines post-pandemic, we will likely consider this as part of our base business for 2024 and beyond. We expect to see our biologics safety testing business revenues this year in a range of $65 million to $70 million. This business is currently seeing a leveling of demand in the $15 million to $18 million per quarter ranges that we have seen since Q2 of 2022. This lower range accounts for about $5 million to $10 million of our lower revenue guidance. This considers that China is not a growth region for this business as it has been in the prior years. The remainder of the reduction in our overall guidance is tied to lower expectations for our nucleic acid production business. Our nucleic acid production business, which excludes any estimated CleanCap COVID revenue demand, is now anticipated to be in the range of $170 million to $190 million, which at the midpoint, reflects an annual decline of about 15% from 2022 levels. This is frankly a disappointing reduction in our views for this segment, a segment that has seen a growth CAGR of over 35% from 2018 to 2022, but is reflective of the ongoing macroeconomic challenges and the impact of those challenges on our customers and their research and development budgets. This lowered expectation represents an extended softness in demand from existing customers versus our view from last quarter that product-related demand would recover in the second half of 2023. Further, our services business, which has been growing at a faster than the overall segment CAGR in recent years, is now anticipated to decline in 2023 as service contracts and opportunities we expected to achievable earlier this year have not come to fruition at the rate anticipated. This is due to a combination of factors, but mostly from customers rationalizing program spend, shifting programs to later dates and dynamics that the overall expansion of industry-wide capacity, which has led to more companies competing for fewer service contracts in 2023, which has also slowed the timing of commitments. Overall, as Trey mentioned, we believe we have a unique combination of best-in-class products, technologies, qualities and capabilities to support customers and market needs in a market with a very exciting long-term growth drivers. But at least in 2023, we are seeing a smaller overall revenue opportunity, and that is reflected in our updated guidance. We will manage through this challenging year while we set ourselves up for the future, a future that we strongly believe in. With regards to the gating of the remaining 2023 revenues, we estimate the third quarter total revenues in a range of $75 million to $80 million, which includes $15 million of scheduled COVID-related CleanCap revenues. This implies our fourth quarter will be slightly higher or in the range of roughly $80 million to $95 million in total revenues, up sequentially from Q3, partially due to the $7 million in higher COVID CleanCap revenues, which should total about $22 million in Q4. As a result of the lower revenue expectations for 2023, we have updated our estimated earnings metrics. We now anticipate adjusted fully diluted EPS in the range of $0.04 per share to $0.08 per share and adjusted EBITDA between $70 million and $80 million. Additionally, we expect the following additional financial expectations as listed on Slide 18. Interest expense, net of interest income between $16 million and $18 million. Depreciation and amortization between $38 million and $40 million. Stock-based compensation, which we show as a reconciling item from GAAP to non-GAAP EBITDA, be $34 million to $38 million. This also includes an as-if fully converted share count of 252 million shares and an adjusted effective tax rate of 24%. Further, we see net capital expenditures to be in the range of $55 million to $65 million this year. Now before I turn it back over to Trey, I want to personally thank Carl for the honor of being his financial wingman for the better part of 15 years. From our early days working together through a complex global blood screening collaboration to ensure the safety of the global donated blood supply to the development and launch of arguably the most successful molecular diagnostic instrument ever with PANTHER, to the successful sale of Gen-Probe to Hologic. And over the past six-plus years building out Maravai, where our investments and the miracles enabled by mRNA technologies played a critical role in helping end a global pandemic. Carl, you have undoubtedly left a meaningful mark in the history of life science tools and diagnostics, and I sincerely thank you for letting me be a small part of that journey. May your lust for life continue to rock on. Now back to Trey. Trey? Trey Martin: Thanks, Kevin. So to wrap up on Slide 20, I couldn’t be more pleased to be leading Maravai. While we’re facing some near-term headwinds, I’m confident in our resiliency and our longer-term opportunities as we continue to innovate in mRNA and build our product portfolio in other high-value areas. Even at these post-pandemic low levels, we’re still a profitable company and generating solid cash flow. We are putting our cash flow to work with organic investments in our facilities, human capital and product innovation. We will also continue to look for opportunities for inorganic investment to bolster our market position and provide our customers with additional solutions. We are committed to building a strong foundation for long-term sustainable growth of our base business, and we’ll continue to focus on operational excellence, innovation and people as our three strategic pillars. Carl, Kevin, Becky, Drew and I are now happy to answer your questions. So I’ll turn the call back over to the operator, and we will open the line for Q&A. Q&A Session Follow Maravai Lifesciences Holdings Inc. (NASDAQ:MRVI) Follow Maravai Lifesciences Holdings Inc. (NASDAQ:MRVI) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Your first question comes from the line of Matt Sykes from Goldman Sachs. Matt, your line is open. Matt Sykes: Hey, good afternoon. Thanks for taking my questions. Maybe the first one, just on sort of the weakness in demand in the industry. You guys talked a lot about sort of where some of the issues in demand were emerging biotech in China. I’m just curious on the inventory side, obviously, that’s another dynamic in the industry. Any commentary you would have in terms of customer inventory levels and any issues on that front? Or is it really just sort of the demand weakness that we’ve been witnessing throughout the sector? Carl Hull: Well, I think, Matt, that it’s more of the latter. It’s the general demand weakness across the sector. You can see by the fact that we talked about our large customers — largest customers not having reorder COVID-19 during 2023 — I’m sorry, CleanCap during 2023 that they clearly have been burning off that inventory. But I think the bigger factor for us is really just the combined headwinds that we’re seeing. Matt Sykes: Got it. And then, Kevin, just one for you. I mean, how should we be thinking about sort of normalized margins? Understanding there’s a lot of dynamics here with the revenue declines, but also the high fixed costs. But just given the volatility we’ve seen in margins, how it stepped down, how would you kind of help us from a modeling perspective, think about normalized margins for this business, mostly focused on nucleic acid rather than BST? Kevin Herde: Yeah. Thanks, Matt. Yeah, you’re right. I mean, certainly, margins have bounced around a bit and are pretty much tied to the changes in revenues. If you look at what we did in the first quarter, a 35% EBITDA margin and then the decline in margin down about [$50 million to $9 million] (ph) or roughly 12%, 13% range and really two things there. You have the high variable contribution tied to our revenues, which are north of 75%. So that’s roughly half of that on the lower end $10 million of revenue. And then one of the dynamics we haven’t seen or hasn’t been as transparent just because of our high revenue levels has been the impact within the nucleic acid production segment on manufacturing throughput and inventory levels, as I referenced. We had a favorable $3.5 million absorption variance in the first quarter as inventory levels went up and we had manufacturing outputs there, there have been unfavorable manufacturing variance in the second quarter of $3.5 million. So the combined impact about $7 million there quarter-over-quarter, and that was the remainder of the drop in EBITDA that you saw. So we’ll continue to see those sort of variations. They were a little bit masked by the super high revenue levels we had over the last 12 quarters or so, but you’ll see that a little bit more apparent as manufacturing levels go up and down throughout the year. I would say a better proxy for the margin prospectively as what we’ve seen over the last 12 months, I think that’s around 22% EBITDA margin. We should see some leverage on that as we increase revenues and control costs over that base. Operator: Your next question comes from the line of Conor McNamara of RBC Capital Markets. Conor, your line is open. Conor McNamara: Great. Thanks for taking the questions, guys. And first off, Carl, congrats on the retirement. Just to iterate — reiterate Kevin’s point, it’s been great working with you over the years, and you’ve done a fantastic job between PANTHER and CleanCap of combating the global pandemic. So thank you and best of luck. Carl Hull: Thanks, Conor. Conor McNamara: So once question for Trey, one question for Kevin. Trey, just if you think about the long-term growth of end markets within the nucleic acid market, six months ago, we were talking about 20% growth market. Longer term, do you think there’s anything that’s going on right now that has impacted the long-term views of where this market could go? And then Kevin, on the financial side, just how much of the revenue guide down was a push out from 2023 to 2024 versus just kind of a more conservative view on what demand is, given all the challenges that’s going on in the industry right now? Thanks for questions, guys. Trey Martin: Yeah. thanks, Conor. I think we all believe very firmly that we are in the right segments with the right technologies. This is definitely a turbulent time in the marketplace generally. We have a great deal of faith though in the long term mid to high double-digit growth rates of our target markets. It’s not a matter of if they return to growth, but when and we are just trying to navigate the turbulence at this time before taking off again. But so far, we haven’t seen anything or heard anything from customers that leads us to believe that this would be a long-term impact to those markets. Kevin Herde: Yeah. Then on your second question, Conor, the slightly more than $100 million of decline in the revenue guide, about 35% of that, around $40 million was attributable to our services business. And that’s where you really see some of this timing get pushed out. It’s a little hard to parse that $40 million decline from what we previously we’re forecasting to what we’re forecasting now between budget prioritizations, pushouts and potentially other factors within that segment, but that is sort of the magnitude of the services decline that we’re seeing. And certainly, some of that is resulted to prioritization and companies taking programs that are little more in line, which certainly leads to slower decision making and natural push-up timing into further periods. Conor McNamara: Great. Thanks for that guys. Appreciate it. Carl Hull: Thank you. Operator: Your next question comes from the line of Dan Leonard of Credit Suisse. Dan, your line is open. Dan Leonard: Great. Thank you. And congrats as well, Carl, to be able to retire. Carl Hull: Thanks, Daniel. Appreciate it. Dan Leonard: So a couple of questions. First off, on the updated CleanCap forecast. I appreciate that the — COVID CleanCap forecast. I appreciate the new forecast is merely reflecting your firm orders in hand, but it’s still a big ramp into the second half of the year compared to the first half. And it sounds like these are all take-or-pay obligations. Do you worry at all that by enforcing these obligations, the inventory overhang for COVID CleanCap is going to continue into 2024? Or are there reasons why that wouldn’t be a problem? Kevin Herde: Yeah, Dan, specifically, I don’t think we’re forcing these obligations here this year. This is really — these are actually not related to Pfizer and BioNTech. These are other customers and other regions. And this is specifically our scheduled program with them to support the finalization of their products and the launch of their programs. So I think these are very tied to what our customers expected usage is this year. And I think that you never know exactly what the uptake is going to be at the end of the quarter or at the end of the year related as this goes a little more seasonal. But as it relates to the $65 million we had this year, really tied to specific programs and our specific customer needs, and I would consider them stocking [per percent] (ph). Dan Leonard: Understood. That’s helpful clarification. And then my follow-up, are you able to speak to how the opportunity funnel is building for Flanders 2 be more fully integrated drug substance for mRNA? Trey Martin: Yes, I think we are. And as we released here, the Flanders 2 building has gained occupancy this period. We continue to work on fitting that out, but their commitments are being worked in the funnel, and I think I’ll pass it to Becky to get a little bit more specific about that. Becky Buzzeo: Yeah. I think we’ve gotten a lot of good reception on our Flanders 2 activities. As Trey said, we took occupancy of the building at the end of June and continue to meet our milestones on our construction. We’ll be GMP-ready midway through 2024, which puts us in line to continue some of the programs that we make Phase I material now for and then be able to continue servicing those programs and clients as they advance their clinical trials. That’s really our objective. Operator: Your next question comes from the line of Catherine Schulte of Baird. Catherine, your line is open. Catherine Schulte: Hey, guys, thanks for the questions. I guess, first, can you just give initial customer feedback on CleanCap M6? What’s been the mix of interest between existing and new customers? And have you seen any interest from enzymatic customers? Trey Martin: Yeah, thank you. We are really thrilled with the early response to CleanCap M6, again, having launched it just last quarter. I’ll hand that one to Drew for a few more specifics. Drew Burch: Yeah. Catherine, it’s been an exciting uptake for us. Customers have been quite interested and that really runs the gamut from large vaccine companies to large pharmaceutical companies that are pursuing non-vaccine applications to smaller mRNA-focused companies. So it’s been pretty much across the piece. And we’ve had a lot of customers come back for reorders after initial purchase. So we’re pretty excited about what we’ve seen so far. Catherine Schulte: All right. Great. And Kevin, you talked about your cost structure a little bit. You’ve made a lot of investments expanding capacity for nucleic acid production that might not be filled in the time frame you expected at the time of those investments. So are there any facility rationalizations that need to happen to bring down fixed costs given the lighter top line and any other cost actions that you’re taking? Kevin Herde: Yes, certainly. I mean, I think our commitment to the facility footprint we have is — remains steadfast because we think it’s the right thing, right solutions and capabilities for our customers long term. And these are obviously multiyear investments that are incredibly important. I would say, as it comes to best matching our expense structure to our revenue structure, that will — is something we actively manage. I would say that we’re going to continue to resource the Flanders building as we see the demand. And I think as Becky spoke to, that will be how we finalize our late-stage development, how we ramp up the labor, how we move people from existing facilities to new facilities based upon the mix of that revenue. And when it relates to the overall cost structure, yeah, certainly, we are already taking actions to minimize discretionary spend, be very selective with our labor and how we backfill and look at supporting our base of business, but at the same time, balancing that with the opportunity we still see and are very excited about. And that continues to mean we need the right commercial footprint. We also need the right innovation group because it’s doing amazing work. And I would say that when you step back and you look at our cost structure, as you know, a lot of it is people and facilities, but even with that, I would say, our labor efficiency metrics, when you define them as revenue per employee, are still amongst the very highest in life science tools and diagnostics at nearly $0.5 million per head of contribution. So it’s something we are sensitive to and look to balance, but it’s also something that’s a favorable attribute of our business model. Operator: Your next question comes from the line of Justin Bowers from Deutsche Bank. Justin, your line is open. Justin Bowers: Hey, good afternoon, everyone. So where are you now with your RUO turnaround time? And then can you provide us with just an updated number for total CleanCap for the year? Kevin Herde: Yeah. Thank you. So RUO mRNA turnaround time is now in the weeks, usually four to six weeks, and we have active programs to try to continue to cut that down as quickly as possible to really enable the entire discovery funnel in that space. And — I’m sorry, what was the second part of the question? Justin Bowers: Yeah, just if — what total CleanCap outlook is for the year? Kevin Herde: Total CleanCap outlook… Justin Bowers: CleanCap revenue. Kevin Herde: I’ve talked about this a little bit in the past. On a year-to-date basis, CleanCap revenue is sitting at $56 million, and that COVID piece is a little over $27 million there. So as Drew mentioned, very strong growth in the quarter of roughly 21%. On a year-to-date basis, non-COVID CleanCap has grown 16%. So really strong growth on our CleanCap franchise related to the indications that don’t support COVID. Justin Bowers: Got it. And then just a follow-up in terms of — can you talk a little bit about the competitive landscape and if you’re benefiting at all from the improved throughput times and any difference from what you’re seeing from competition here domestically and then in APAC? Trey Martin: Did you say in APAC as well? Justin Bowers: Yes. Trey Martin: Yeah, domestic — so there are a couple of parts to that. Domestic RUO mRNA is competitive. I would say there is likely more competition in the GMP space as people have many players, as you know, have built significant facilities. And at the same time, the market is rationalizing programs, as we’ve discussed many times. So I would say the competition is more in the later-phase GMP space. APAC, specifically, I don’t think we’ve seen anything different. And there is weakening marketing — market environment, particularly in China, as we’ve discussed. But competitively, I don’t think that has changed from previous updates. Operator: Your next question comes from the line of Tejas Savant from Morgan Stanley. Tejas, your line is open. Tejas Savant: Hey, guys, good evening. And Carl, congrats on the retirement here. Maybe to kick things off, I just want to ask you about the assumptions baked into the guide, Kevin, in terms of things like current weakness in China continuing and the budget flush dynamic that you’re assuming for the fourth quarter. Given just the magnitude of the repeated cuts we’ve had through ’23, what drives your confidence that the outlook is now truly de-risked? I mean, is it supported by sort of bottom-up work, frequency of check-ins with your customers have gone up? Anything else that you can point to, to sort of address this air pocket here in demand and enhance the near-term visibility that you guys have? Kevin Herde: Yeah. Sir, I’m happy to take that. Yeah, I think as we look at the back half of the year, the numbers, frankly, are such that our range incorporates anywhere from the back half of the year on the base business being down roughly 5% to being up roughly 15%. And so at the midpoint, I think, it’s a second half of the year that’s maybe about $7 million higher than the first half, so about a 6% growth. I think we’re seeing — leveling out certainly our biologics safety testing business, has been around this level for a while. We are seeing some old customers that didn’t order for the first half of the year starting to reorder. So that’s a positive sign. We are seeing an order book coming into the quarter that’s pretty consistent with what we’ve seen before and much higher than where we were starting in the second quarter. So that’s another positive sign. So that gives us some comfort that this is the right range for the second half of the year. Specific as it relates to China, kind of across the business, that’s about a [$15] (ph) million impact to the overall take down, most of that we see in our biologics safety testing business, as we’ve been seeing since the second quarter of last year. And we’re not assuming that that’s a growth region for us anymore. I mean, that was probably in the magnitude of a $25-ish million a year business from Maravai overall and growing a little bit. It’s going to obviously be substantially less than that here in 2023. Tejas Savant: Got it. That’s helpful. And then one quick follow-up. The first part is really on biotech. Can you just talk about your current sort of exposure to SMID Cap biotech customers on a revenue basis? And then, Kevin, a similar question for you on EBITDA margin, really. I mean, I think you clocked in at around the 13% range here. The guide is assuming a bump up to about 25%. Just walk us through the puts and takes there. I know you mentioned somewhat of that — the manufacturing variances and a swing associated with that, et cetera. But just help us build that bridge from 13% to 25% in the back half. Thank you. Kevin Herde: Yeah, I’ll handle this — certainly the second part of that question. As I spoke to, really, I think, the right proxy sort of our first six months, which is around 22%, I mean, we’re guiding to a little bit higher than that for the full year now, which assumes a little bit of margin increase and to see these at the higher revenue levels in the second half of the year, very high variable margin on the incremental COVID revenues that we’re going to see in the second half of the year. And as we flushed out a good deal of some of the overhead variances here in the second quarter, I think the risk of that being negative in the second half of the year is to minimize to 12% or so. So you could take that, along with controlling costs and discretionary spend that we’re certainly managing to match these revenue levels, I think to the extent we hit these ranges, so it will be a comfortable margin for us for the full year. Circling back on the exposure to the emerging biotech, I think I’ll pass that to Trey for now. Trey Martin: Sure. Yeah, we — obviously – we’re continuing to monitor that. It’s approximately 30%, just to answer your question out right of revenue that can be said to come from emerging biotech depending on how you draw those lines. That said, we are not seeing programs of significant size that are being pulled for funding necessarily. It’s the — prioritization is more of the issue there. But to answer the question directly, we’re at about 30% the way we classify small and mid cap. Operator: Your next question comes from the line of Matt Larew of William Blair. Matt, your line is open. Madeline Mollman: Hi, this is actually Madeline on for Matt. I was just wondering, I think that a large portion, I think you said $40 million of the guidance cut was coming from a decline in services revenue. Can you talk at all about the difference in margin profile for the services revenue versus the products revenue? Kevin Herde: Yeah, we don’t really get into specific margins on a product-by-product basis. It’s always a little bit of a hard to do just because we do have this fixed cost structure and our people do move from builds on the services side to supporting product builds and other things, and some of this is a little bit fungible. So we don’t specifically guide to that. We kind of look at it on an overall segment basis, more than anything else. But I would say when we look at our overall revenues, the two things that are distinct. One, we’ve seen — continue to see strong variable margins and consistent pricing across the product portfolio, which is a positive. On the services portfolio, we do take our current cost structure into account when we bid those products out and run those margin calculators to ensure we have the sort of margins that we’re looking to maintain, and we still believe that we’re at a competitive price point on our services and solutions and our products versus competition out there today. Madeline Mollman: Great. Thank you. And then one thing I think we’ve heard from peers this quarter is that some of the headwinds that originally were confined to that emerging biotech have now in terms of like pipeline rationalization, conservative spend, things like that are now expanding more to large pharma? Is that something that you’ve experienced as well? Trey Martin: I’ll take that one. I think that — we just got a little bit of a different customer profile with either the large life sciences competitors for the biotech suppliers. And what I think happened is we saw the hinge on the funding and the resulting desire to conserve capital on part of our customers. We saw that a little bit later than it was apparent to some of the other players in the industry. Why? It could be pure speculation on my part, but I think a lot of the mRNA therapeutic players were very well funded. But once it became apparent in the broader market that there was kind of this winter coming from a funding point of view, I think then the trend among our emerging biotech customers accelerated. We saw the names of a few of our customers in the paper in this past quarter that we hadn’t seen before. And so I do think that we’re not immune from that. And then broader questions on places like China and the headwinds there, relatively speaking, it was a smaller part of our business. We’re running $800 million, $900 million in revenues. Now it becomes more obvious. Operator: Your next question comes from the line of John Sourbeer. John, your line is open. John Sourbeer: Thanks. Carl, best of luck on retirement and, Trey, congrats on assuming the CEO role. Just when you look at some of the demand headwinds you talked about there, you kind of bucketed across prioritization, delays, capitalization, any way just to kind of further bucket that down and would you be willing to quantify what percentage or a dollar amount around the cancellations you’ve seen in the quarter or year-to-date? Trey Martin: Well, I don’t think that we’ve seen any specific cancellations in the quarter that we would refer to or that we call out. I’m looking around the table to see if anybody is shaking their head positively. They’ve got a great answer for you. [indiscernible] So look, I think the biggest impact we have seen in the last two quarters that surprised us against our prior forecast was clearly the emerging biogenics and the change in their spending patterns or willingness to spend. That happened significantly for us. And I think it probably had an outsized impact, if you will, of services business. And so if you were looking for what’s the major driver there, that would be one what I would call out. I don’t know, Becky, if you see it slightly different. Becky Buzzeo: Yeah, part of life insurance plan, mainly what we’ve seen is folks that have had multiple candidates in the pipeline, and they have paused advancing their Phase 1, which is where our GMP services is today as an offering and instead take candidates that are later phased forward and put that investment there, both in their people and their resources. And those are things that I — pipeline, I think, will come back. It’s just that they’re playing a more spread-out game instead of taking five molecules through Phase 1, maybe pausing their Phase 1 and taking their Phase 2 to 3 and keeping that funding because that has a less of a risk profile to it. Trey Martin: Okay. I think that actually takes us perfectly to time. Thanks, everybody for your questions, and I will pass it back to Jenny. Operator: This concludes today’s conference call. You may now disconnect. Follow Maravai Lifesciences Holdings Inc. (NASDAQ:MRVI) Follow Maravai Lifesciences Holdings Inc. (NASDAQ:MRVI) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Chipotle Mexican Grill, Inc. (NYSE:CMG) Q2 2023 Earnings Call Transcript July 26, 2023 Chipotle Mexican Grill, Inc. misses on earnings expectations. Reported EPS is $9.3 EPS, expectations were $12.29. Operator: Good afternoon, and welcome to the Chipotle Mexican Grill Second Quarter 2023 Results Call. All participants will be in listen-only mode. [Operator Instructions] After today’s […] Chipotle Mexican Grill, Inc. (NYSE:CMG) Q2 2023 Earnings Call Transcript July 26, 2023 Chipotle Mexican Grill, Inc. misses on earnings expectations. Reported EPS is $9.3 EPS, expectations were $12.29. Operator: Good afternoon, and welcome to the Chipotle Mexican Grill Second Quarter 2023 Results Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Cindy Olsen, Head of Investor Relations and Strategy. Please go ahead. Cindy Olsen: Hello, everyone, and welcome to our second quarter fiscal 2023 earnings call. By now, you should have access to our earnings press release. If not, it may be found on our Investor Relations website at ir.chipotle.com. I will begin by reminding you that certain statements and projections made in this presentation about our future business and financial results constitute forward-looking statements. These statements are based on management’s current business and market expectations, and our actual results could differ materially from those projections in the forward-looking statements. Please see the risk factors contained in our Annual Report on Form 10-K and in our Form 10-Q for a discussion of risks that may cause our actual results to vary from these forward-looking statements. Our discussion today will include non-GAAP financial measures. A reconciliation to GAAP measures can be found via the link included on the presentation page within the Investor Relations section of our website. We will start today’s call with prepared remarks from Brian Niccol, Chairman and Chief Executive Officer; and Jack Hartung, Chief Financial and Administrative Officer, after which we will take your questions. Our entire Executive leadership team is available during the Q&A session. And with that, I’ll turn the call over to Brian. Brian Niccol: Thanks, Cindy, and good afternoon, everyone. The strength in our business continued into the second quarter, driven by our focus on exceptional food and exceptional people, as well as the success of Chicken al Pastor. For the quarter, sales grew 14% to reach $2.5 billion, driven by a 7.4% comp. In restaurant sales increased 16%, digital sales represented 38% of sales. Restaurant level margin was 27.5%, an increase of 230 basis points year-over-year. Adjusted diluted EPS was $12.65, representing 36% growth over last year, and we opened 47 new restaurants, including 40 Chipotlanes. For the third quarter, we anticipate comps in the low to mid-single-digit range, driven by transaction growth, as we are rolling off of pricing. For the full year, we continue to anticipate mid to high-single-digit comps. Before reviewing our strategic priorities, I want to share a few organizational updates. As a way of maintaining a healthy growth mindset, we proactively conducted an in-depth review of our business needs and organizational structure to ensure we can deliver on our aggressive growth goals for future growth. This resulted in investments in areas like development, digital marketing, and international expansion. At the same time, we also identified areas where we could better optimize our organizational structure, such as putting our end-to-end digital experience, including product design, analytics, and the customer journey under Kurt Garner, our Chief Customer and Technology Officer. Additionally, we streamlined our strategic project management process to focus on key projects and to enable faster and more efficient decision-making. These changes will further support our five key strategies that will position us to win today while we grow our future, which include, number one, running successful restaurants with a people-accountable culture that provides great food with integrity while delivering exceptional in-restaurant and digital experiences. Number two, sustaining world-class people leadership by developing and retaining diverse talent at every level. Number three, making the brand visible, relevant, and loved to improve overall guest engagement. Number four, amplifying technology and innovation to drive growth and productivity at our restaurants and support centers. And number five, expanding access and convenience by accelerating new restaurant openings and laying the foundation for international expansion. Starting with our restaurants. While Project Square One is wrapping up, we have made the decision to permanently embed the program within our training DNA. On a quarterly basis, our crew members will be retrained on key components, ensuring we are always focused on being brilliant at the basics and that we never lose sight of training and developing exceptional people and preparing and serving exceptional food. Next quarter, we will reemphasize throughput and elevate our focus on proper deployment standards during peak periods, where we often only have three crew members on the front make line versus our minimum deployment of four. The fourth person, which is often the expediter, may leave the front line to help the digital make line. Our focus will be on coaching the expediter to stay on the front line and to bring together the items and in order and communicate them to the cashier as alleviating this bottleneck is critical for delivering great throughput. Additionally, we believe we have an opportunity to better optimize our smarter pickup times and deployment of labor on the digital make line during peak periods. As you may remember, we began testing changes to the cadence of orders on the digital make line in several markets to see if we could improve throughput by eliminating the need to pull a crew member from front line to help the digital make line. The good news is that in these restaurants, we are seeing an improvement in throughput on the front line and an improvement in on time on the digital make line. We will continue to test adjusting the cadence of orders on the digital make line at certain restaurants and roll out where we see the opportunity to improve the overall experience. We remain confident that balancing the deployment between the front and digital make lines along with continuous training and reps will further drive improvements in throughput. In fact, we have seen evidence this in certain restaurants. I was recently in New York at Chipotle on 50th and Park and it was a great experience with delicious food and fast throughput on the front line compared to my experience at the same restaurant exactly a year ago. The improvement in throughput was certainly noticeable as the employment of labor between the front make line and the digital make line was more balanced. Over the last year, the field leader responsible for this patch of restaurants in New York City worked with the GMs and crew members shoulder to shoulder on throughput fundamentals. During his regular restaurant visits, he also followed up with consistent feedback like reminding his restaurants to have an expo in position during peak periods. By having the proper deployment with an expo in place and the right balance between the front make line and the digital make line, throughput in his patch of restaurants improved by nearly five entrees in the peak 15 minutes as compared to the prior year. His restaurants are also outcomping his region and the company average demonstrating throughput drives performance. This is the type of leader we want to develop; one that builds a strong team, runs world-class restaurants, ensures we serve exceptional food every day and inspires our teams to achieve great results. And this brings me to our world-class people leadership. As part of our focus on developing our teams, we’ve relaunched Cultivate University for our newly promoted field leaders which is a three-day training program on the skills they need to truly excel in managing their patch of restaurants. This includes developing future leaders, the foundations of exceptional throughput and culinary, why it’s critical to protect our economic model and a culture of accountability. One of the most challenging transitions is from general manager managing one restaurant to field leader and managing around eight restaurants. Cultivate University is a program that will be offered each year to support our new field leaders as they make this transition to managing a $20 million business. We remain committed to hiring and developing the best people to work at Chipotle, through our competitive wages, industry-leading benefits, and tremendous growth opportunity. In fact, we are on track to surpass our 22,000 promotions from last year and create over 7,000 new jobs with our restaurants anticipated to open in 2023. We are also relaunching our successful and long-running behind-the-foil ad campaign. This campaign provides unfiltered and emotional testimonials from our team members about the impact Chipotle has had on their lives, as well as it glimpses into our daily preparation using our real ingredients and classic culinary techniques, a key differentiator for Chipotle. What better way to make the brand more visible, more relevant, and more loved than to feature our talented restaurant team members preparing exceptional food? And speaking of exceptional food, our menu innovation has been outstanding this year. Chicken al Pastor has proven to be a popular LTO with one in five transactions, including the new protein. It is boosting transactions with a strong repeat and is attracting new customers to Chipotle. It also delivered the highest positive social sentiment of any new menu introduction, and importantly, was simple for our teams to execute, which resulted in a win all around. As Chicken al Pastor wraps up in late August, we have a planned new menu item for later in the quarter. Our rewards program is another way we aim to drive frequency within our existing customer base, as our reward members come more often and spend more than non-rewards members. We’ve launched Freepotle earlier this year, which was designed to deliver a strong value proposition and attract new members with 10 free rewards dropped into our members’ accounts throughout the year. Freepotle has been successful in driving enrollments in the first half of the year as we surpassed 35 million reward members. With each strategic Freepotle drop, we are learning more about our customers’ behaviors and utilizing those learnings to personalize future offers. We will continue to look for creative ways to drive enrollment and improve engagement in our rewards program. In traditional media, we remain top of mind at sporting events as we leverage the basketball playoffs as a high-profile opportunity to spotlight the Chipotle brand, and through our NHL partnership, our Chipotle logo was featured on the ice during the Stanley Cup playoffs. Additionally, the return of the popular Chipotle Hockey Jersey Bogo Day had the highest participation in the history of the program. Chipotle’s ingredients continue to power many of the top male and female athletes on and off the field. Through our Real Food for Real Athletes campaign, we have showcased the inspiring journeys of athletes across all levels of sports and how Chipotle can help them perform their best by providing proper nutrition. Partnering with athletes and teams along with traditional media around big sporting events has been an authentic and successful way to connect the brand to some of our biggest fans. Shifting to technology and innovation in our restaurants. First, I wanted to provide an update on the benefits we have seen from the dual-sided grill, which we discussed last quarter. The new grill can cook the chicken in under four minutes versus 12 minutes on the plancha and can cook the steak in under one minute versus four minutes on the plancha. This allows for a faster recovery of freshly grilled chicken and steak, resulting in more opportunity to remain in stock during peak periods, as well as the ability to cook smaller batches, ensuring superior culinary. Additionally, the grill allows for more consistent execution with the same sear and char and maintains better moisture, resulting in juicier chicken and steak with less waste. Finally, it takes one of the most complex positions in our restaurants and significantly improves the learning curve, making it a more desirable role for our teams. The feedback from our guests and our teams continues to be very positive, and we recently completed the rollout of the dual-sided grill into 10 high volume locations as the next step in the stage gate process. We also began to do a broader rollout of our new third pan rice cookers, which eliminates our large rice pots and cooks the rice in our third pans that you see on the line. This streamlines the rice cooking process while delivering fresh, high-quality rice that’s cooked perfectly to our standards. It can also make single batches, allowing for a faster recovery time, less waste during non-peak periods, and the ability to make white and brown rice at the same time. We have rolled this out to our new restaurants with plans to add it to another 200 existing restaurants this year. And as part of our Cultivate Next fund, we recently invested in [Veedu], and together we are exploring collaborative robotics that will drive efficiencies and [easy paying] points for our employees. One device that we are in the process of developing cuts, cores, and peels an avocado. It’s called the autocado. This co-botic prototype saves time and eliminates a less favorable task, but still allows our teams to hand mash our signature guac. As you can see, all of these initiatives have a common goal, which is to improve the in-restaurant experience for our teams and our guests while maintaining or improving upon our high culinary standards. I’m really proud of the work the teams are doing to leverage automation, technology, and artificial intelligence, and it was nice to be recognized as one of Time magazine’s most innovative companies last month. Our final key strategy is to expand access and convenience. I’m thrilled to share the addition of Stephen Piacentini as our new Chief Development Officer. Stephen has extensive experience as some of the largest restaurant brands, and will lead our very talented and tenured development team as we look to reach 7,000 restaurants over time in North America. This year, we continue to target 255 to 285 new restaurants with over 80% including a Chipotle, and in fact, this quarter, we opened our 600th Chipotle. In Canada, performance remains strong with 34 locations, and we are on track to add about 10 new restaurants this year. We had our highest opening day ever in Canada this past quarter, which is a testament to the increasing excitement around the brand and our growth opportunity in the country. We also believe there’s even more opportunity on the 7,000 restaurants we were targeting longer term in North America, and we were laying the foundation for further international growth. For our recent reorganization, we added resources to our European operations, including bringing over one of our top U.S. operators to Europe to drive productivity and better align our operations with the U.S. We look forward to continued progress in Europe over the coming quarters as we aim to set up the region for long-term growth. And finally, we’ve recently announced our first ever development agreement with the Alshaya Group to open restaurants in the Middle East, which will further accelerate our international efforts. The Alshaya Group has successfully expanded many of the largest global brands into the Middle East, North Africa, and Europe, and they plan to open our first restaurants in Kuwait and United Arab Emirates in 2024. We’re excited to offer guests in the Middle East our responsibly sourced, classically cooked real food and look forward to furthering our purpose to cultivate a better world in this new territory. In closing, I want to thank our 114,000 employees for all their hard work to reestablish Chipotle standards of excellence in culture of accountability. Earlier this month, Chipotle celebrated its 30th anniversary of the opening of the first Chipotle restaurant in Denver, Colorado. What makes Chipotle special and has driven our success over the last 30 years is our people, our purpose of cultivating a better world, and our focus on delivering exceptional food. Our culinary, using the highest quality ingredients and classic cooking techniques, makes our food delicious. Our customization, convenience and speed are differentiators and our value is simply tremendous. This has resulted in an industry-leading brand with industry-leading economics and we still have a long runway for growth. We are well positioned to win today while we grow our future over the next 30 years. And with that, I will turn it over to Jack. Jack Hartung: Thanks, Brian, and good afternoon, everyone. Sales in the second quarter grew 14% year-over-year to reach $2.5 billion as comp sales grew 7.4% with over 4% transaction growth. For the third quarter, we anticipate comps in a low to mid-single-digit range driven by transaction growth as we roll off nearly 500 basis points of pricing in early August. We continue to forecast full-year comps in the mid to high single-digit range. Restaurant level margin of 27.5% increased about 230 basis points compared to last year and earnings per share adjusted for unusual items was $12.65, representing 36% year-over-year growth. The second quarter had unusual expenses related to corporate restructuring and corporate and restaurant asset impairments, including the closure of Pizzeria Locale. I’ll now go through the key P&L line items beginning with cost of sales. Cost of sales in the quarter were 29.4%, a decrease of about 100 basis points from last year. The benefit from last year’s menu price increases and lower avocado prices were partially offset by elevated costs across the board, most notably in beef, tortillas, dairy, salsa beans, and rice. For Q3, we expect our cost of sales to be around 30% due to higher beef and avocado prices. Our supply chain team has done a fantastic job at diversifying our avocado exposure, and in the third quarter, the majority of our avocados will come from Peru. While prices are higher than the very favorable levels in the second quarter, we are less impacted from the volatility in the Mexican avocado market. Labor costs for the quarter were 24.3%, a decrease of about 50 basis points from last year. The benefit from sales leveraged is partially offset by wage inflation, and for Q3, we expect our labor costs to be around 25% reflecting continued labor inflation and seasonally lower sales. Other operating costs for the quarter were 13.9%, a decrease of about 40 basis points from last year. This decrease was driven by sales leverage. Marketing and promo costs for the quarter were 2.4%, and in Q3, we expect marketing costs to step down to the low 2% range before stepping up in Q4 with a full year to come in right around 3%. In Q3, other operating costs are expected to be in the mid 14% range. G&A for the quarter was $157 million on a gap basis, or $153 million on a non-gap basis, excluding $3.5 million related to corporate restructuring expenses. As Brian mentioned, we recently went through a review of our organization needs to assure we’re well positioned to meet our long-term growth goals. G&A also includes $119 million in underlying G&A, $29 million related to non-cash stock compensation, and $5 million related to higher bonus accruals and payroll taxes on equity, investing, and exercises. For Q3, we expect our underlying G&A to be around $125 million, and to grow slightly their efforts would make investments in technology and people to support ongoing growth. We anticipate stock comp will be around $31 million in Q3, although this amount could move up or down based on our performance. We also expect to recognize about $4 million related to performance-based bonus accruals and payroll taxes on equity, investing, and exercises, bringing our anticipated total G&A and Q3 to around $160 million. Appreciation for the quarter was $79 million at 3.1% of sales, and we expect depreciation to increase slightly each quarter as we continue to open more restaurants. Asset retirement stepped up to $16.2 million, which includes $8.5 million related to corporate and restaurant asset impairments, including the closure of Pizzeria Locale. In the near term, we expect asset retirement to be around $8 million per quarter as we continue to prioritize the guest experience and focus on great ops. Our effective tax rate for Q2 was 23.8% due to an increase in tax benefits related to option exercises and equity investing. We continue to estimate our underlying effective tax rate will be in a 25% to 27% range, though it may vary each quarter based on discrete items. Our balance sheet remains strong as we enter the quarter with over $1.8 billion in cash, restricted cash, and investments with no debt. During the second quarter, we repurchased $88 million of our stock at an average price of $1,937. At the end of the quarter, we had $295 million remaining under our share authorization program. We opened 47 new restaurants in the second quarter of which 40 had a chipotle and we remain on track to open between 255 and 285 new restaurants this year with at least 80% including Chipotle. Our development timeline remains extended, but our pipeline remains strong, and we expect to move toward the high end of the 8% to 10% openings range once these timeline challenges subside. In closing, when I joined Chipotle, we were approaching our 10th anniversary with just over 200 restaurants. We were determined to change the way people think about and eat fast food by preparing delicious, fresh food using classic cooking techniques, sustainably raised, wholesome ingredients, and serving it quickly. Brian mentioned Chipotle celebrated its 30th anniversary earlier this month, and those fundamental values that made Chipotle successful are still deeply ingrained in our brand. Along the way, we’ve invested in food with integrity, expanded access and convenience through our digital channel, Chipotle’s an international expansion, and continue to innovate within our restaurants to improve the overall experience. We still have a long growth runway ahead, and a talented team excited to continue to build, expand, and evolve our brand and our purpose of cultivating a better world over the next 30 years. With that, we’re happy to take your questions. Q&A Session Follow Chipotle Mexican Grill Inc (NYSE:CMG) Follow Chipotle Mexican Grill Inc (NYSE:CMG) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: We will now begin the question and answer session. [Operator Instructions] Our first question comes from Andrew Charles from TD Cowan. Please go ahead. Andrew Charles: Great, thanks. I wanted to talk about pricing plans in the second half, just given inflation of the beef and avocado categories. What I’m looking to better understand is that is a price increase on the table for December when you historically took price in 2018 through ‘21, or does the resumption of student payments on September 1 that could weigh on restaurant industry spending, leads you to want to bear potentially weight on that and see how that plays out? Brian Niccol: Yes Andrew, this is Brian. Our approach on pricing has been obviously, it’s a lever that we will pull as kind of the last thing we like to pull, but I think we’ve proven time and time again that the brand is very strong, the value proposition is very strong, and we have that pricing power to use. Obviously, I think you heard Jack’s comments. We’re seeing some inflationary pressure both on the labor line and in some of the food areas when you pull on avocados. It’s something that we’re looking hard at, and as we get closer to that fourth quarter, we’ll make a decision on exactly what we want to do on the pricing front. I don’t know if you want to add anything there, Jack. Jack Hartung: No, I think Brian summarized it well, but we’ve had underlying inflation in the last two quarters, but we’ve had benefits from lower cost avocados, that’s offset that, and then also we’ve got a benefit because Chicken al Pastor has really shifted some of our customers from the more expensive beef into the less expensive chicken, that’s been a benefit as well. As those benefits subside, that’s when the inflation will flow through, and that’s where we’ll have a clear view of the inflation impact. We will, as you suggested, look at our customer demand transaction patterns as well before we make any final decisions on price. Andrew Charles: Okay, that’s helpful. Then just on the 3Q guidance, I know that you guys call it out that you’re seeing about five-year base points of price that rolls off in August. Can you just comment as well about the lower income consumer? I know last quarter you guys were talking about sequentially. They were seeing some strength in that consumer. I just wanted to know what you guys have seen in recent months to relate to that consumer. Brian Niccol: Yes, I mean, this is one of the elements of, I guess, the consumer demonstrating how resilient they are. Both the lower income consumer and kind of our higher income consumer are showing really good strength. I think that’s why we had such a strong traffic performance in the quarter, and we continue to exit that quarter with really healthy traffic or transaction trends. So we’re not seeing any weakness in the lower income consumer. If anything, they’ve continued to improve, and we’re feeling really good about the value proposition. We’re providing all income levels. Andrew Charles: Very helpful. Thanks, guys. Operator: The next question comes from David Tarantino from Baird. Please go ahead. David Tarantino: Hi. Good afternoon. First question, I just want to clarify how you’re thinking about the third quarter from a comps’ perspective. And maybe, Jack, if you can just talk about the underlying traffic trend you’re assuming in the third quarter relative to what you saw in the second quarter and whether that would imply any slowdown versus what you’ve been running? Jack Hartung: Yes, David, the components of our guidance just give kind of general ranges, and the menu price increase remaining after the August from last year rolls off will be called in that 2.5%, 2.6% range. We’re still expecting positive transactions throughout the quarter. In fact, we expect the transactions will probably be in the plus 3% to plus 3.5% range, somewhere in that range. We’re still seeing a little bit of a mixed impact. Our group size continues to normalize as people are returning to work, and so there’s less of a channel shift between digital and in restaurant ordering, but we are seeing that the group size is lowering. So this is the hardest part to predict, but we’re assuming that somewhere in that two-ish range, we’ll see a negative mix because the group size, somewhere in that 2% range. So those are the general components we’re thinking about. David Tarantino: And Jack, when you seasonally adjust the trends, would it imply a slowdown or is this more of the same of what you delivered in the second quarter? I just want to make sure I understand whether you’re seeing a slowdown in traffic. Jack Hartung: Yes, so there is a subtle seasonality shift that we’re seeing, David. We saw in early June as schools were letting out and as people started traveling more, we saw a little bit of an inflection point in transactions. We also, when we stratified our restaurants, we did see that restaurants in more touristy areas were benefiting, restaurants in non-touristy areas were a little bit softer. And just recently, within the last week, week and a half or so, we’re starting to see some normalization of that. So we’re still reading through that. We assume there’s not going to be a full bounce back in the fourth quarter, but we did assume the normalization, or the rest of the third quarter, but we did assume that the normalization that we’re seeing last week or so, that some of that will continue. So we’re still trying to do a read-through, but it looks like there was maybe a little early vacation taking this year that didn’t necessarily happen last year. David Tarantino: Great. Thank you. Operator: The next question comes from Sara Senatore from Bank of America. Please go ahead. Sara Senatore: Great. Thank you. I just wanted to talk about throughput in the context of that sounds like the traffic’s fairly stable. You talked about new equipment. I understand that cooktimes are down pretty dramatically. Could you translate that into, some sort of throughput measure and kind of what you’re seeing both presently and then what the opportunity is, I guess, as we think about throughput, the capacity is one side, but then making sure that, you have enough demand there to move the customers through and I’m trying to sort of understand the dynamics there. So anything you can tell us about throughput now and what you’re seeing with the new equipment? And then I’ll just have a quick follow-up. Brian Niccol: Yes, sure. So we’ve made some really good progress on the throughput side, but we’re not all the way to where we want to be. I think I mentioned this earlier, where the good news is we now consistently probably have three people on the front line, but really what that needs to be is four people in order for us to achieve kind of our pillars of great throughput. And that’s probably why we’re retrenching again on throughput, kind of going forward here. But as I mentioned in my comments earlier, in the places where we’ve seen restaurants or patches adopts I’ll call great throughput execution and you’re definitely seeing a move on to the two three to five transactions in their best 15 minutes. So, we know it’s out there, we just seem to do it as an entire enterprise and we’re focused on that piece going forward. As it relates to equipment and other tools to help us become even I say more efficient and faster, the double-sided grills are now in 10 restaurants and so not obviously across the system by any means but rather just move into our stage gate process that just enabled cooking times to dramatically decrease. So, checking goes from 12 minutes to three to four minutes, stage goes from three or four minutes to a minute. It makes the position a lot easier, it makes the culinary much more consistent and then obviously it gives us much more capacity on the plancha. So, that’s where we are with that. And then things like avocado and raisin very much still into pilot phase meaning like prototype phase but we’re pretty optimistic about what both of those can do for us but we’re not in any restaurants yet with either one of those items. Sara Senatore: And then just to sort of clarify as to follow-up is even through or again throughput and we’ve seen some really nice improvement in the last couple of quarters and transaction and traffic growth here it sounds like that anticipation as that’ll be fairly stable. I understand the comparisons I entered that like would you expect a kind of another step change in traffic as some of what you’re talking about best practices sort of disseminate across the system again just to understand how to translate throughput. Brian Niccol: Yes. No, absolutely. I mean I think there is a real opportunity for and not only the continued strength in traffic but a step up in traffic. As we get better at executing the tortilla is a throughput in, now that’s why I wanted to get that example of the one restaurant in New York. That restaurant’s outperforming a region, that’s doing a really nice job. And the reason is because they are executing every element of our throughput tilla’s with excellence. And so, as that happens more consistently across more patches or more restaurants. We anticipate we’re going to see increases both in traffic and total comp. So, obviously that comes with time, we’re dealing with a 110,000 employees that need to learn what great throughput is and what it looks like. But the teams making great progress, we’re focused on it and I’m confident we’re going to need a culture of throughput building this organization. Sara Senatore: Great. Thank you, very much. Operator: The next question comes from Danilo Gargiulo of Bernstein. Please go ahead. Danilo Gargiulo: Thank you. So, with the low-to-mid single-digit expected comp since 3Q, what is giving you the confidence to meaningfully accelerate a trajectory in 4Q to meet the full-year guidance, especially as we think about the 4Q compatible sales potentially becoming more from traffic versus from versus from pricing action. What actions are you contemplating to sustain the momentum? Brian Niccol: Yes. I mean, obviously we’re going to stay first and foremost on enhancing our operational performance as it relates to throughput. So, that will be a piece of the puzzle. We’ve got a new menu item that we’ll be bringing out after we finish the run on Chicken Al Pastor and then obviously role will evaluate what component and pricing it has in the fourth quarter as well given some of the inflationary pressures we’re seeing. So, you line those things up plus the strength of the trend that we already have and we feel really good about our full-year guidance. Danilo Gargiulo: Thank you. And maybe beyond this year or thinking a bit more multi-year on a multi-year basis, historically you have it secured it a more constant international roll out across Canada and Europe. So, what drove you to on the statement sizing and specifically why are you starting with the Middle East. So, can we expect a combination of co-op and concise mixing international market or is this more in a monetary step to fine tune your international expansion plans going forward? Jack Hartung: Yes. So, you can probably anticipate more of a mix. We still believe company ownership in Western Europe makes a lot of sense. We just had the opportunity to visit with the team there and in the last week or so, and we’re making great progress in London, Frankfurt, and obviously Paris. I mean, as we mentioned in the call too, Canada continues to really perform. So, we’re going to fill 10 new restaurants on a base of 34. So, you can see how we’re stepping up the development there and the team they face to a great job. As it relates to the Middle East and the partnership with Alshaya. As we looked around the world, we see there are certain regions where it’s like hey this makes a lot of sense for us to partner as opposed to try and go at it on our own. The Middle East is that region, Chipotle as a concept based on the work we’ve done, we believe it will resonate and perform really well. And then, when we have the opportunity to partner with Alshaya which we believe is one of the best operators in the region, we thought this is a great opportunity for us to experience what it’s like to work with a great operator in more of a franchise environment. So, we’re optimistic, we’re excited about getting those restaurants opened in Dubai, and Kuwait, and we look forward to a really successful partnership with them. But we’re really excited about where international can go both from a standpoint of partnerships and then company ownership. Operator: The next question comes from David Palmer from Evercore ISI. Please go ahead. David Palmer: Thanks. First I wanted to follow-up on the double sided growth question and then touch on the personalized marketing. On the double sided growth, you mentioned you’re in 10 stores now and that it’s maybe a third of the cook times. What is the pace that you anticipate on rolling that out and in as far as the metrics that we would focus on, what do you think ultimately would be the benefit to sales and profit from those growth? Brian Niccol: So, look we’re obviously really excited about what we’re already seeing just in the 10 restaurants both from a standpoint of yield, quality of culinary and then the team’s ability to execute over and over again. So, the excitement around the new cooking equipment is terrific you see because that means we’re going to get the execution that we want. To rule this out this product a year plus project, and the good news is the manufacturers have the capability to scale to what we need once we give them the green line. So, we’re pretty excited about this because obviously the bigger the volumes get with the amount of transactions that we’re doing, the fact that we now have even more capacity on the plancha, is a terrific outcome. And then it turns one of the harder jobs to train into one of the easiest jobs to train. And when the culinary is consistent, people get great chicken or steak, we know they love to pull in they come back. So, and we’re still dialing through all the components of the puts and calls on this but it looks very promising based on where we are in the first 10 stores. David Palmer: Thanks for that. And my first one is marketing. I think you recently launched that this seems to be something that would have a long runway to it where you could have different iteration and ultimately having AI be a component to it. Are we already seeing anything different from personalized marketing, where do you see this going and maybe give us a sense of how this could be impacting your business going forward? Thanks. Brian Niccol: Yes, sure. I mean, look, probably the most visible spot is just in the app with the suggestive sale. You’ll see already some personalization on what we’re offering and as far as recommendations go to add the order based on your history with the brand, and then obviously this goes all the way into the cohorts and the journeys that then we create. And we believe you do this across our 35 million rewards customers and now has meaningful scale where the customization results in loyalty that results in obviously additional sale. So, the most visible space, probably you’ll see it in the app at the web, and then it’s probably more new launched in how we communicate awesomely communicate with you and what exactly we say to you. But all the experiments we’re running, we’re continuing to see nice positive outcomes with every iteration that we do. The next big step for us is to roll this out in a way where it covers a lot more people at much more meaningful scale so that you feel it on the entire enterprise. David Palmer: All right. Thank you. Operator: The next question comes from John Ivankoe from JPMorgan. Please go ahead. John Ivankoe: Hi, thank you. I actually want to meet with a comment about excess capacity on the planche. It’s actually an interesting point. Do you think that it significantly broadens additional product opportunities that you totally can do? I mean that, double-sided grill takes care that, the chicken and the steak and presumably, maybe the planche can be used for something different than what you’re already selling. How big of an opportunity is that in your mind? Brian Niccol: I mean, look, we always want to make sure we execute the menu with excellence. And we like the cadence that we’re doing as far as new menu items go right now. But yes, it definitely frees up the capacity, which then allows us to evaluate how we do new menu items and maybe how long we want to keep certain menu items on. And so that is a big unlock for us. I’d say the biggest benefit, though is and when the restaurant opens at 10.30, you don’t have to start cooking chicken at eight in the morning. Because now we can be ready for that lunch business closer to the timing of lunch because it just takes a lot less time to cook all the chicken to be prepared. It also allows us to recover a lot faster. So in the event, you have a really big, lunch push at 11, you have the ability to recover for that lunch push that might be coming at 12. And so these are the things that I think are going to be really powerful for us going forward. And then also the simplicity at which the cooking creates for the team members is a big unlock too because then the culinary is just that much better every single time. John Ivankoe: Yes, I got it. And I agree in experience. Let me turn it to another question. You’ve been alluding to, including on this call, upward bias to the 7000 North American store target. I guess, are you prepared to start thinking about numbers and there’s a thousands at thousands. And I want to ask it in a question some years ago. I remember, I don’t remember exactly when it was, it used to be discussed that Chipotle would be a $10 billion brand. Well, here we are in ’23 and all likelihood it will be a $10 billion brand. Sorry for that. If you were to just look at the overall North American opportunity today, and I guess to some extent free the economy, how big of a brand do you think Chipotle could be just based on what you know about, the North American consumer market today in terms of how big we could expand from here? Brian Niccol: Yes, sure. I mean, look, we’re not ready to change the number yet, but the good news is the economics of every new restaurant that we open continue to be just terrific economics, where hopefully we’ll get closer to the higher end of that age to 10% once kind of we work through a little bit of the bottleneck that we have on development. But I believe we’re going to continue to grow the four wall revenue and then obviously the economics that come with it. So without even moving the $7,000 store count, if you all of a sudden find yourself at $3 million, $4 million average unit volumes, you’re in that $20 to $28 billion range. So lots of growth in front of us. And that’s without having to be really all that aggressive. That is just executing the plan we’ve been talking about. And I think as long as Chipotle stays focused on great culinary, great throughput, developing team members so that we’re ready to go when we open new restaurants, the number will grow. I think Jack told me when the company first went public, what was the number Jack? Jack Hartung: 3000. Brian Niccol: We said we were going to maybe do 3000 restaurants. So here we are. We’re at 3000 restaurants. I’m sure as we continue to grow both the AUVs will go up and the store council will go up. But yes, it’s pretty fun to think about we’re closing it on $10 billion and then I’m sure we’ll be talking about $20 billion and then probably from there we’ll be talking about $30 billion. So I don’t see a cap on this business anytime soon. John Ivankoe: Excellent. Thank you so much. Operator: The next question comes from Brian Mullan from Piper Sandler. Please go ahead. Brian Mullan: Hey, thank you. Just a question on automation, robotics in general. Hypothetically, if all your combined efforts were to yield a couple hundred base points of margin over, the next many number of years, are you inclined to want to let that all fall to the bottom line? Or perhaps would you want to let some of it fall to the bottom line and then spun the consumer value proposition with the rest? Maybe it’s too early to say just wondering if you’re already having those questions internally, even if it’s just philosophical right now. Brian Niccol: Yes, look, I mean, obviously the good news for us is. We aren’t capital constrained to invest in continuing to drive the Chipotle business, both in growth and in value as it relates to giving a great experience for a customer and a great experience for a team member. So obviously as we get closer, we’ll have a better idea of how much of it falls to the bottom line. But, right now I’m hoping a lot of it falls to the bottom line. But we’ll know a lot more as we get closer to when we roll it out. Brian Mullan: Thank you. Operator: The next question comes from Chris O’Cull from Stifel. Please go ahead. Chris O’Cull: Hi, thanks for taking the question. Brian, it sounds like the hyphen make line is close to that testing stage. So, can you help us understand how long you expect it to be in that phase and maybe walk through what the validation stage could look like? I’m also curious if you could describe what KPI is the team’s monitoring to determine the success of that make line? Brian Niccol: Yes, sure. So we have an inter-cultivate center right now. It’s fun to see it actually producing bulls and the team has done a phenomenal job of taking this from, a concept to a prototype to now a working prototype. We’ve learned a lot. We’re getting ready to figure out what the next gen version on this is, but it looks really promising. Obviously, key components of this are how fast can it do bulls, per 10 minutes, how accurate can it do the bulls, and then obviously our ability to expedite those bulls, meaning getting it to the customer in the correct order. So we think assuming the prototype continues to evolve and grow the way it has demonstrated its growth over time, we’ll have something to be putting into restaurants here in the next 12 to 18 months. So optimistic about where this gets to, but it’s one thing to run it in our cultivate center. It’s another thing to run it in a restaurant. And until we run it in a restaurant, it’s hard to really talk about the benefits or what the timing is of it. But conceptually, and what it looks like right now, still very promising a top priority to figure out how we get this thing into a restaurant sooner rather than later. Chris O’Cull: Great. And then I just had a follow-up. Jack, the step up in the underlying G&A run rate was pretty considerable. Can you break down maybe what’s driving that in a little more detail, and then how we should be thinking about the core run rate in the fourth quarter, and then maybe even just underlying growth for the out year? Jack Hartung: Yes. I mean, any increase in our underlying G&A is around some of the things that Brian mentioned, and it was part of our review where we’re investing in resources for Europe. We’re adding resources, frankly, for some of the innovation that we’re talking about in terms of probiotics and things like that. There’s some items in there where our equity, we’re expecting our equity based on our projections. We’ll step up. These are three-year calculations that you’re making. So, but in terms of underlying G&A, it’s going to be either people to support our growth or tech to support our growth. We haven’t given fourth quarter guidance, but I would expect there’d be another slight, a step up from Q3. Not a huge step up, but a modest step up. As we make sure we’ve got our teams all stepped up for the growth that we want to support, not just for this year but for the next several years going forward. Chris O’Cull: Great. Thanks, guys. Operator: The next question comes from Jon Tower from Citi. Please go ahead. Jon Tower: Great. Thanks. I just wanted to dig into development a little bit. And, Jack, I know you and your prepared remarks talked about some delays in the system, and I was hoping maybe you could drill into it a little bit, especially as you’re thinking about, getting to that 8%-10% range in terms of unit growth over time. Can you really get into what’s driving some of the delays in the market today? Is it, say, local market permitting, builder or developer issues, or are there problems with accessing equipment? I was hoping you could flesh that out for us. Jack Hartung: Yes, it’s not really equipment anymore. That was a challenge through the pandemic, and as we got out of the pandemic, but our teams have done a good job to pre-order, so we had bulk ordering. We’ve had good relations with our suppliers, so we get priority. So it’s really down to things that are city, under the city control, like getting utilities to the site. Sometimes it takes us weeks to just get somebody, to come out and make sure that we have utilities in, that are coming to the site. It does involve things like permitting, and then you talk about inspections as well. So it’s really a lot of these cities, what we’re hearing from our teams is that a lot of them are still working remote. And so to get somebody to show up when they need to show up and do the work has been a real challenge. Now, what we’re doing, Chris is here and Chris has been sending this message to the team is, we really got to rise to the city, okay? We have to make sure we’re calling, calling, calling because they’re doing some work and whether they’re working at home or whether they’re working in the office, they’re doing some work. Let’s make sure that we’re at the top of the list, that they’re hearing those often. And if they hear us more often, it’s likely they’re going to move it. So that’s the strategy to try to hopefully remove that bottleneck. Jon Tower: Got it. And just pivoting to the throughput initiatives, I appreciate all the training you guys have been doing. I’m just curious, I know Brian, you mentioned that, like, even on the make lines, making sure people, four people are on the front line at peak. Do you think you need to add labor hours to stores? Is it purely just getting people back to the aces and their places kind of belief? Brian Niccol: Yes, no, it’s more to do with getting the trust in the team to have the confidence to stay aces and places. Just yesterday I was in a restaurant and staffed, the deployment was right, the culinary was right, the restaurant looked great. Unfortunately, we didn’t have aces and places. You had too many people leaving the line to do other tasks that they shouldn’t have been doing when they got a line to the door. And I think once they understand that they stay in those places, they’ll power through that line to then go take care of the tasks accordingly. So I think it’s an element of they got to see it for themselves, they got to experience it, they got to trust it, because sometimes it’s hard. I mean, it’s hard to just stay in position when you, think you might need some more napkins out by the drink station. It’s like, well, hang in there, get through the line, and then you can go put additional napkins in the drink station. So I think it’s a component of they need experiences with it so that they can trust it. And I know Scott and the team are laser focused on getting the pillars of great throughput back into our culture, not just as an initiative. And the good news is, we’re staffed, turnover is looking really good at the general manager level. And we’re now in the low 20s. So their leader is staying much more consistent. I think you have consistency in leadership, consistency in message, we’ll get consistency in execution. So I’m very optimistic about where Scott and the operators are going to get us to when it comes to throughput. Jon Tower: Got it. Thanks. And then just lastly, I know your, your lines are somewhat capacity constrained. So in terms of adding additional items to the menu, not always easy, often times at the rotate, but with,– I think chicken al Pastor, I believe you said about 20% of your mix, transaction mix came from that during the period. So how, how, when do we think about that potentially becoming a permanent menu item? Brian Niccol: Well, look, it’s something we definitely will go back and evaluate. Obviously this was one that struck a chord with a lot of people and I can understand why it tastes great and it is great. So we’ll reevaluate if and when it makes sense to bring it back, how long we bring it back for, and if it should be a permanent item. The challenge for us is I think if you, we wanted to add something permanent, we got to remove something. So, that’d be something that we have to work through to just make sure we understand the trade off. Unidentified Analyst: Got it. Thanks for taking the questions. Brian Niccol: Yes. Operator: The next question comes from Dennis Geiger from UBS. Please go ahead. Dennis Geiger: Great. Thank you. Just wondering if you could provide a breakdown of the, the traffic price and mix for the, for the two queue. I think you gave the, the traffic component, but if you could kind of loosely break out those, those others, that’d be helpful. Jack Hartung: Yes. The traffic, I mentioned traffic in my comments, better than 4%, you know, on a positive side on traffic, the menu price increase was in the mid five, I call it 5.5, 5.6, something like that. And then we had this, this mix item that I’ve mentioned, we’re talking about the third quarter that actually reduced the comp by about 2.5%. And that, that mix is entirely due to group size. The group sizes continue to normalize as we continue, you’re watching people going back to the office. You’re seeing our, our urban locations, our outcomping or suburban location. So there’s still been a normalization since the pandemic and our group sizes are still continuing to normalize. They’re still group size. They’re still ahead of where we were in 2019 before the pandemic, but they, they continue to normalize pretty much each quarter. Dennis Geiger: Very helpful Jack. Just one or just, I know mix is probably a tough one group size in particular to, to predict. You give us the, the three queue as we look to the end of the year. Can that still be, I think closer to flat by the end of the year, or is that a little bit of a moving target given, given group size behaviors? And maybe that’s tough to predict. Thank you. Jack Hartung: Yes, I don’t think it’ll be totally flat, but it should narrow. In this current quarter, we’re about 1% group size over where we were in 2019. If you look at Q3 and Q4, they were about 3% to 4% it was, it was, 4% and Q3, 3% and Q4. So we’ve still got a gap there. That’s still to close, but it should diminish the two and a half that we saw on Q2 should diminish each quarter. I don’t think it’ll be totally flat by the end of the year though. Dennis Geiger: Thanks, Jack. Appreciate it. Operator: The next question comes from Brian Harbour from Morgan Stanley. Please go ahead. Brian Harbour: Yes, thank you. Good afternoon. Jack, could you just elaborate on some of the food cost drivers? I mean, you mentioned kind of what’s, what’s really driven a year-over-year, but maybe just versus last quarter versus some of your expectations. I’m sure avocado is part of it, but anything else. And also just as we, think about the rest of the year, will this new item, affect food costs in any way that we should think about? Jack Hartung: Yes. I mean, during, during the quarter, we had just a number of things that just had a slight increase. We had, some of our salsas or tortillas, our rice, our spices and all those, if you look at just the quarter, and if you look at the quarter consecutively, so Q2 versus Q1 that added like 40 or 50 basis points, but those were offset by a combination of favorable avocados compared to last year, as well as chicken al Pastor, as I mentioned before, it actually did ship people from steak and barbacoa, which is more, more expensive, higher food costs to our chicken, which is a lower food cost. So we’ve had this, just call it low grade inflation. That’s been hitting the P&L the last couple of quarters, but it’s been offset by favorable avocados and then favorable mix. One reason why, as we look forward into the, into the third quarter we do think there’s going to be a bump up in food costs. And that’s really attributable to this same kind of low grade inflation that we expect will continue into Q3 but we’re not going to have as avocado prices normalize. And as we shipped away from chicken al pastor, we won’t have that kind of offset to offset some of the inflation that we’re seeing. Brian Harbour: Okay. Thanks. Could you also just elaborate on what you said about Europe? And I guess the, the broader question is just how fast might we see that grow as we start to think about the next few years? Brian Niccol: Yes, look, I think very similar to what we did with Canada is the way to think about Europe, once we get performance consistent in Europe, like we did in Canada, we’ll start building much more aggressively. The team is very much focused on ensuring that we’re building a brand. And as we build the brand, we have the economics that support building a lot of restaurants and like I mentioned Jack, myself and Scott, we were just over there and the team has a terrific plan. The thing I love to see is when I was in, Frankfurt, Germany, there were a lot of Germans in a Chipotle enjoying Chipotle. When we were in London, there were a lot of Brits enjoying Chipotle. The thing that I also saw was a lot of people walked up at the restaurant and had no idea of what Chipotle is. So we still have a real opportunity to build a brand. And while we build that brand, ensure that we’ve got great economics that justify, building a lot more restaurants. Canada is a perfect example. We put a great leader in place there and not she’s headed out of the park, the economics perform. She’s doing a nice job of growing the brand, not surprising. We’re building a lot of restaurants. So, most recently, we just sent one of our top operators over to London to be a part of that team, lead the team with that work that he’s putting in place. I’m already seeing, big, big improvements in operational execution and I’m confident the economics will follow and I’m confident we’ll build a terrific brand. So assuming that all happens, you can see us then quickly being able to invest into building a lot more restaurants in those countries. So I think we’ve been pretty consistent on this. It’s like we’re in no rush to just start building restaurants for the sake of building restaurants. We want to have people that are ready to go. We want to have economics that makes sense and then we want to have a great brand that we can execute against time and time again. So that’s served us well in the United States. It’s serving us well in Canada. I believe it’ll serve us well in Europe. Brian Harbour: Thank you. Operator: And the last question comes from Zach Fadem from Wells Fargo. Please go ahead. Unidentified Analyst: Okay, good afternoon. This is John Park on for Zach. I guess on the franchising side, are there any more details you guys can provide on your new agreement with Alshaya? I guess around like the number of units in the initial development agreement, anything on the royalty rates, things like that. Brian Niccol: Not really. We’re just getting started with Alshaya. We’re excited to get the first couple of restaurants open. Obviously, both of us have expectations of a lot more restaurants than just a handful. And I’m confident we’re going to have great openings and this is going to turn into something that hopefully Alshaya considers a huge success and we consider a huge success. So more details to come, but we probably need to open the first one. Unidentified Analyst: Got it. And then just kind of switching gears a little bit. On the labor side, have you guys kind of started to see any leveling out of wage inflation for new hires as you kind of move through Q2 and into Q3? Brian Niccol: I would say it’s more normal. It’s in the 4%, 3% in that range. So there’s still inflation. It’s another consideration as we look at our model, look at our margins when we take pricing action. So it’s not anything we can’t handle. The great news is the applications are coming in. Our restaurants are doing a great job of staffing the restaurants. They’re doing a great job of getting our restaurants to model. So this is, I would call it again, kind of a low grade normal inflation going forward. Nothing that our model can’t absorb. Unidentified Analyst: Great, thanks a lot. Operator: This concludes our question and answer session. I would like to turn the conference back over to Brian Niccol for any closing remarks. Brian Niccol: All right, thank you. And thanks everybody for all the questions. I’ll just wrap up with, again, I think Chipotle’s demonstrated an excellent quarter. And I think it demonstrates the strength of our business. Very proud of what our teams have accomplished in the field. If I think about where we are today versus where we were a year ago, we are operating these restaurants significantly better. I believe there’s still a lot of upside in our ability to drive throughput going forward. I’m confident the teams are focused on it and we’re going to, see that happen. The other thing that I’m really excited about in our business is that we’re growing our business through traffic growth, and we’re doing it, in my opinion, the right way, where we’re continuing to drive our value proposition forward with great culinary, great people, and obviously great new restaurant opening. So very proud of our results, very optimistic about the future, and look forward to sharing our results next quarter with you all. Take care. Operator: The conference has now concluded. 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Agriculture - Operations industry's near-term prospects look clouded due to impacts of raw material and commodity price inflation, along with tight supply conditions. However, companies like ADM, CTVA, AGRO and LMNR are poised to gain on solid product portfolios and innovation. Higher investment costs and SG&A expense continue to mar the profitability of the companies participating in the Zacks Agriculture – Operations industry. Logistic and supply-chain issues, higher input costs, and elevated operational expenses have been affecting industry players for a while. Supply-chain concerns and commodity cost pressure have been affecting results.Nonetheless, the industry is poised to benefit from innovations and improved consumer demand for healthy products. Investments in acquisitions, joint ventures and expansions are likely to fortify the prospects of the industry players. Continued investments in assets and technological capabilities to innovate and serve customers bode well for players like Archer Daniels Midland Company ADM, Corteva Inc. CTVA, Adecoagro S.A. AGRO and Limoneira Co LMNR.About the IndustryThe Zacks Agriculture – Operations industry comprises companies that produce or procure, transport, store, process, and distribute agricultural commodities to consumers. It also distributes ingredients to other parts of the agriculture industry (including clothing, animal feed, energy and industrial product). Some industry players engage in dairy operations, land transformation activities and the development of food ingredients using gene-editing technology. The industry encompasses production activities related to traditional farming of crops (like corn, soybean, wheat and cotton), and livestock and poultry products (including meat, dairy and eggs). The products are mostly sold at grocery stores or exported overseas. These are also used as feedstock for other industries. For example, cotton is used in the clothing industry and corn is used in the ethanol industry.Factors Shaping the Future of Agriculture - Operations IndustryElevated Costs: Industry participants have been witnessing higher costs due to rising raw material, freight and logistics costs, including constraints in labor and trucking resources, leading to higher lead times for deliveries. Supply-chain concerns and commodity cost pressure have been affecting the profitability of agricultural companies for a while. The companies have resorted to pricing strategies to counter rising raw material costs. The industry participants are looking to counter the global supply-chain challenges by forming partnerships and distribution strategies. Despite the pricing strategies, supply-chain challenges and cost inflation are expected to continue hurting margins in the near term. Companies in the industry continue to face raised SG&A expenses due to higher performance-related compensation, project-related costs, commissions and variable compensation. The companies are also witnessing elevated costs for investments in technology and innovation to stay ahead of the race. Continued deleverage in SG&A expenses may continue to have a bearing on the profitability of companies.Agricultural Export Projections: Per the U.S. Department of Agriculture, agricultural export projections for fiscal 2023 (ending Sep 30) of $181 billion suggest a decline of $3.5 billion from the February forecast of a record $183.5 billion. The export forecasts have been affected by declines in commodity groups, including corn, wheat, grain and feed exports and livestock, poultry, and dairy. Corn exports are expected to decline due to lower unit values and volumes as Brazil is poised to harvest a record second crop of corn. Wheat exports are expected to be impacted by lower volumes and unit values, as well as increased competition. Overall grain and feed exports are projected at $40.5 billion, down $3.3 billion from February. Total livestock, poultry, and dairy exports will reflect declines in beef and poultry exports, more than offsetting the increases in pork exports.Robust Demand Trends for Organic Products: The industry has been benefiting from an organic movement, prompted by consumers’ increasing demand for healthier food. Agriculturists are adopting organic production techniques, and curtailing the use of chemicals and pesticides. Innovations in food processing, improved grain-handling techniques, larger storage spaces and strong emerging market demand are conducive to the industry’s growth. Healthy eating habits are likely to accelerate the purchase and consumption of alternative proteins. Focus on nourishment and wellness is pushing microbiome solutions to the forefront. The companies have been investing in acquisitions and joint ventures to build top-notch ingredients and solutions for meeting the demand for healthy products.Zacks Industry Rank Indicates Dull ProspectsThe Zacks Agriculture – Operations industry is a 14-stock group within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #216, which places it in the bottom 14% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries resulted from a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry vs. Broader MarketThe Zacks Agriculture – Operations industry has underperformed the S&P 500 and the Zacks Consumer Staples sector in a year.The stocks in the industry have collectively fallen 6.5% in a year against the growth of 19% for the Zacks S&P 500 composite and 6.7% for the sector.One-Year Price Performance Agriculture - Operations Industry's ValuationOn the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing Consumer Staples stocks, the industry is currently trading at 12.28X compared with the S&P 500’s 19.39X and the sector’s 18.09X.Over the last five years, the industry has traded as high as 17.37X, as low as 10.52X and at the median of 14.47X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years) 4 Agriculture Operations Stocks to Keep an Eye onNone of the stocks in the Zacks Agriculture – Operations universe currently carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). Here, we suggest four stocks with a Zacks Rank #3 (Hold) from the same industry, which investors may hold on to. You can see the complete list of today’s Zacks #1 Rank stocks here. Archer Daniels: This Chicago, IL-based agricultural product company’s leadership in key global trends like flexitarian diets, nutrition and sustainable materials has been a key contributor to its momentum. Its focus on making investments in assets and technological capabilities to serve customers efficiently is likely to be a significant growth driver. Solid demand, improved productivity and product innovations have been driving growth. Its Readiness program, positive cash flow and solid performance at the Nutrition unit have been aiding the results. The company has been progressing well on its three strategic pillars — optimize, drive and growth.Management is optimistic about the company’s 2022 results and envisions another year of strong earnings growth. It is poised to benefit from the robust performance of its Nutrition segment, owing to significant gains in the Human and Animal Nutrition units. The Zacks Consensus Estimate for Archer Daniels’ 2023 earnings has moved up by a penny in the past 30 days to $6.84 per share. The Zacks Consensus Estimate for ADM’s 2023 sales and earnings suggests declines of 4% and 12.9%, respectively, from the year-ago period’s reported figures. It delivered an earnings surprise of 23.4%, on average, in the trailing four quarters. The company has declined 3.5% in the past year.Price and Consensus: ADMCorteva: This Wilmington, DE-based pure-play agriculture company is poised to drive above-market growth through its industry-leading product pipeline, and rigorous approach to innovation and operating discipline. It is poised to accelerate its pace of innovation and existing leadership position in the high-value sector to meet the increasing market demand for naturally derived products through three new collaboration agreements. Strong price execution in seed, supply-chain flexibility and solid market demand for its balanced and differentiated new product portfolios are driving CTVA’s performance.The Zacks Consensus Estimate for Corteva’s 2023 earnings has been unchanged in the past 30 days. The Zacks Consensus Estimate for its 2023 sales and earnings suggests growth of 7.3% and 12%, respectively, from the year-ago period’s reported figures. The company delivered an earnings surprise of 62.7%, on average, in the trailing four quarters. The CTVA stock has increased 8.4% in the past year. Price and Consensus: CTVAAdecoagro: This Luxembourg-based agro-industrial company engages in farming crops and other agricultural products, dairy operations, sugar, ethanol and energy production, and land transformation activities in South America. The company benefits from high asset flexibility, which gives it a competitive advantage in the current uncertain market outlook. Its flexibility is reflected in its ability to increase the mix of anhydrous ethanol to benefit from its high prices and recovering demand. The company’s Farming & Land Transformation businesses have been benefiting from the consolidation of the five-year plan investments made in Crops, Rice and Dairy businesses, along with its focus on efficiencies.The company’s shares have rallied 7.8% in the past year. The Zacks Consensus Estimate for AGRO’s 2023 earnings has moved up 20.3% in the past seven days to 83 cents per share. The Zacks Consensus Estimate for the company’s 2023 sales and EPS suggests declines of 13.1% and 26.6%, respectively, from the year-ago period’s reported figures.Price and Consensus: AGROLimoneira: Santa Paula, CA-based Limoneira is a diversified citrus growing, packing, selling and marketing company with related agribusiness activities and real estate development operations. The company’s strategic approach toward fresh utilization has been resulting in robust sales of fresh lemons by its sales and marketing team. The company’s avocado segment’s sales are poised to benefit from robust pricing, which has almost doubled year over year. LMNR is on track with its new plan to expand One World of Citrus, increase its avocado plantings and strategically sell certain assets to dramatically increase cash flow in the near term.The company’s shares have gained 20.3% in the past year. The Zacks Consensus Estimate for its fiscal 2023 sales suggests a decline of 5.6% from the year-ago period’s reported figure. The loss estimate for fiscal 2023 of 20 cents implies a significant increase from a loss of 8 cents reported in the prior year. LMNR delivered a negative earnings surprise of 42.3%, on average, in the trailing four quarters.Price and Consensus: LMNR  Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 Archer Daniels Midland Company (ADM): Free Stock Analysis Report Adecoagro S.A. (AGRO): Free Stock Analysis Report Limoneira Co (LMNR): Free Stock Analysis Report Corteva, Inc. (CTVA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

In this article, we discuss the 10 best big name stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Big Name Stocks to Buy Now. The US economy and big business giants have a closely intertwined relationship, with these large corporations playing a significant […] In this article, we discuss the 10 best big name stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Big Name Stocks to Buy Now. The US economy and big business giants have a closely intertwined relationship, with these large corporations playing a significant role in shaping the economic landscape. They contribute to the growth of the US economy by driving productivity, innovation, and job creation. These companies invest heavily in research and development, which leads to the development of new technologies, products, and services. Their investments in capital infrastructure and expansion projects stimulate economic activity and create employment opportunities, supporting economic growth at both the national and local levels. Big companies are major employers, providing a significant number of jobs across a wide range of industries. They create both direct and indirect employment opportunities, contributing to lower unemployment rates and promoting economic stability. These companies often offer competitive wages, benefits, and career advancement opportunities, attracting a skilled workforce and enhancing labor market dynamics. Big business giants also have extensive supply chains, encompassing numerous suppliers, manufacturers, distributors, and service providers.  Their purchasing power and demands can influence the operations and growth of their supply chain partners. As a result, these companies have the ability to support and shape the growth of smaller businesses within their supply chains, contributing to job creation and economic development. Many big companies are multinational corporations that operate globally. Their international operations contribute to the US economy through exports, foreign direct investment, and global market expansion. Their ability to compete globally enhances the competitiveness of the US economy, supporting trade and generating economic gains. Surprisingly, the US economy is currently in a healthy state, considering the challenges it has faced, including the global pandemic, supply chain disruptions, and the impact of a war on a major global energy supplier. The labor market conditions alone provide strong support for the belief that the economy can achieve a desired soft landing, which is not uncommon despite claims suggesting otherwise. Although inflation remains a concern, it is much less worrisome than it was a year ago.  If US policymakers can avoid any detrimental policy decisions, such as failing to raise the debt ceiling, the outlook is positive that the economy will continue to innovate, generate employment opportunities, and produce goods and services after a few quarters of slower growth. According to the US Bureau of Economic Analysis, the current-account deficit of the United States decreased by $12.2 billion, or 5.6%, to reach $206.8 billion in the fourth quarter of 2022. The revised deficit for the third quarter was $219.0 billion. In terms of current-dollar gross domestic product (GDP), the fourth-quarter deficit accounted for 3.2%, which was a decline from 3.4% recorded in the third quarter. The US economy experienced a slowdown in the early months of 2023, with a growth rate of 1.1% on an annual basis. This decline in growth can be attributed to higher interest rates and a banking crisis that had a negative impact on various sectors. The Bureau of Economic Analysis released these latest figures, indicating a significant deceleration at a time when concerns about a recession are already looming, partly due to worries that the banking sector’s challenges will restrict lending. In comparison, the US economy had grown at an annual rate of 2.6% during the last quarter of 2022.  However, households continue to increase their spending, particularly on services like entertainment and travel, driven by pent-up demand. Business investment remains strong, especially in information-processing equipment and software. Some of the best big name stocks to monitor in this context include Microsoft Corporation (NASDAQ:MSFT), Atlassian Corporation Plc (NASDAQ:TEAM), and Zoom Video Communications, Inc. (NASDAQ:ZM). However, investment in nonresidential structures remains weak due to an oversupply of office buildings and retail spaces. The housing market experiences a true recession, with a significant slump.  Economic experts believe inflation will gradually settle back by late 2023 as demand for goods slows and businesses address their supply chain issues. However, this decline in inflation might be temporary as wages rise due to the continued strength of the labor market, leading to higher costs and prices. The Federal Reserve, despite its attempts to control inflation in 2022, has found it challenging to slow down the hot labor market enough to have a significant impact, resulting in inflation settling at approximately 6%. Nominal interest rates have reached levels that would have been considered burdensome a few years ago, but the overall economic activity remains relatively strong.  Our Methodology For this article, we selected big name stocks and ranked them based on overall hedge fund sentiment. Big name stocks are companies that have global brand capital and more than 100 hedge fund holders. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.  Best Big Name Stocks to Buy Now 10. UnitedHealth Group Incorporated (NYSE:UNH) Number of Hedge Fund Holders: 116  UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified healthcare firm. It is one of the best big name stocks to buy now. It is also one of the most reliable dividend players in the health market. For the past two decades, the company has consistently paid a dividend to shareholders. These payouts have registered consistent growth in the past thirteen years. On June 7, the firm declared a quarterly dividend of $1.88 per share, an increase of close to 14% from the previous dividend of $1.65 per share.  On May 30, JPMorgan analyst Lisa Gill maintained an Overweight rating on UnitedHealth Group Incorporated (NYSE:UNH) stock and lowered the price target to $562 from $595, updating models across the managed care coverage.  At the end of the first quarter of 2023, 116 hedge funds in the database of Insider Monkey held stakes worth $11.7 billion in UnitedHealth Group Incorporated (NYSE:UNH), compared to 110 in the preceding quarter worth $11.4 billion.  Just like Microsoft Corporation (NASDAQ:MSFT), Atlassian Corporation Plc (NASDAQ:TEAM), and Zoom Video Communications, Inc. (NASDAQ:ZM), UnitedHealth Group Incorporated (NYSE:UNH)  is one of the best big name stocks to buy now.  In its Q2 2022 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and UnitedHealth Group Incorporated (NYSE:UNH) was one of them. Here is what the fund said: “UnitedHealth Group Incorporated (NYSE:UNH) also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services. The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.” 9. Alibaba Group Holding Limited (NYSE:BABA) Number of Hedge Fund Holders: 128 Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People’s Republic of China and internationally. It is one of the best big name stocks to buy now. The company, like other tech competitors, is trying hard to capture the AI market. Recent reports suggest that the firm intends to incorporate a ChatGPT-like artificial intelligence technology into its meeting and messaging applications, aiming to enhance user experiences and communication efficiency.  On April 23, Susquehanna analyst Shyam Patil maintained a Positive rating on Alibaba Group Holding Limited (NYSE:BABA) stock and lowered the price target to $160 from $175, noting that Chinese macro appears to have improved somewhat and cost discipline continues to pay off. At the end of the first quarter of 2023, 128 hedge funds in the database of Insider Monkey held stakes worth $5.8 billion in Alibaba Group Holding Limited (NYSE:BABA), compared to 113 in the preceding quarter worth $5.6 billion.  In its Q3 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said: “Alibaba Group Holding Limited (NYSE:BABA) is the leading e-commerce company in China. The stock was weak over the quarter as they reported a quarterly revenue decline. The company has been heavily impacted by the continued covid-19 lockdowns throughout China and the aggressive rate increases and a deteriorating outlook for China’s economy have weighed heavily on the stock. The share price has also been under pressure due to the U.S. Securities and Exchange Commission’s plans to delist Chinese tech stocks in 2024 if they do not provide access to audit files.” 8. Salesforce, Inc. (NYSE:CRM) Number of Hedge Fund Holders: 136    Salesforce, Inc. (NYSE:CRM) provides customer relationship management technology that brings companies and customers together worldwide. It is one of the best big name stocks to buy now. On June 7, the firm announced that it was partnering with Google Cloud in a collaboration that will enable companies to leverage their data and utilize custom machine learning models to predict customer needs. This partnership builds on the previous collaboration between the two companies, expanding their data sharing initiatives and developing AI-powered customer service and marketing solutions.  On June 1, investment advisory BMO Capital maintained an Outperform rating on Salesforce, Inc. (NYSE:CRM) stock and raised the price target to $245 from $230, noting that Salesforce margin and free cash flow story remains strong.   At the end of the first quarter of 2023, 136 hedge funds in the database of Insider Monkey held stakes worth $9 billion in Salesforce, Inc. (NYSE:CRM), compared to 117 in the preceding quarter worth $8 billion.  In its Q3 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Salesforce, Inc. (NYSE:CRM) was one of them. Here is what the fund said: “Salesforce, Inc. (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.” 7. Uber Technologies, Inc. (NYSE:UBER) Number of Hedge Fund Holders: 144 Uber Technologies, Inc. (NYSE:UBER) develops and operates proprietary technology applications worldwide. It is one of the best big name stocks to buy now. In late May, the company announced that it would be joining hands with Waymo, an American autonomous driving technology company, to provide self-driving taxis. This collaboration aims to integrate Waymo’s autonomous driving technology into Uber’s ride-hailing platform. By combining their expertise, the companies intend to offer a new transportation service that utilizes self-driving vehicles. On May 3, Deutsche Bank analyst Benjamin Black maintained a Buy rating on Uber  Technologies, Inc. (NYSE:UBER) stock and raised the price target to $46 from $44, noting the firm reported another strong quarter and a very impressive Q2 gross bookings and EBITDA guide.  At the end of the first quarter of 2023, 144 hedge funds in the database of Insider Monkey held stakes worth $5.6 billion in Uber Technologies, Inc. (NYSE:UBER), compared to 135 in the preceding quarter worth $5.7 billion.  In its Q2 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Uber Technologies, Inc. (NYSE:UBER) was one of them. Here is what the fund said: “Uber Technologies, Inc. (NYSE:UBER) is a global technology platform that enables the transportation of people and products across cities and countries. The company’s three main business lines are 1) Mobility where the company is the number one or two player in the app-based personal transportation market in 10,000+ cities globally, 2) Delivery- (Uber Eats in the US) home delivery of prepared meals, grocery, liquor, and increasingly general retail products in seven of the top ten GDP markets globally, and 3) Freight- the largest global marketplace for end-to-end freight solutions including one million digitally connected truck drivers. In the company’s most recent quarter, it grew gross bookings 35% year over year, consummated transactions with 115 million unique customers, completed 1.7 billion trips a month, and all three divisions were adjusted EBITDA positive (…read more) 6. NVIDIA Corporation (NASDAQ:NVDA) Number of Hedge Fund Holders: 132       NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. It is one of the best big name stocks to buy now. On May 28, the firm unveiled the DGX-GH200 AI supercomputer, designed to accelerate artificial intelligence research and development. The system delivers impressive performance with 8 NVIDIA A100 GPUs, interconnected with NVIDIA NVSwitch technology. The DGX-GH200 offers high-speed networking, enhanced storage capacity, and improved energy efficiency for advanced AI workloads. On May 25, investment advisory Morgan Stanley maintained an Overweight rating on NVIDIA Corporation (NASDAQ:NVDA) stock and raised the price target to $450 from $304, noting the surge in AI was paying off sooner than expected for the firm.  Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in NVIDIA Corporation (NASDAQ:NVDA) with 17.9 million shares worth more than $4.9 billion.   In addition to Microsoft Corporation (NASDAQ:MSFT), Atlassian Corporation Plc (NASDAQ:TEAM), and Zoom Video Communications, Inc. (NASDAQ:ZM), NVIDIA Corporation (NASDAQ:NVDA) is one of the best big name stocks to buy now.  In its Q1 2023 investor letter, Fred Alger Management, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said: “NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put. Nvidia’s computational power is a critical enabler of Al and therefore critical to Al adoption, in our view. As such, we believe Nvidia is a long-term high unit volume growth opportunity. During the period, NVIDIA reported fiscal fourth-quarter results that met expectations, as the company navigated. through an inventory correction associated with the broad macroeconomic slowdown. Moreover, management gave fiscal year earnings guidance that was better than analyst estimates. noting strong year-over-year growth in gaming and data centers. Management’s constructive assessment of 2023 prospects. coupled with the rapid rollout and adoption of generative Al offerings, led to positive share price performance.”   Click to continue reading and see 5 Best Big Name Stocks to Buy Now.   Suggested Articles: 11 Best Low Risk Dividend Stocks To Invest In 15 Biggest Nanotechnology Companies in the World 11 Best Pet Stocks To Buy Disclose. None. 10 Best Big Name Stocks to Buy Now is originally published on Insider Monkey......»»

The Zacks Laser Systems and Components industry participants like Lumentum (LITE) and IPG Photonics (IPGP) gain from solid demand for emerging applications like cloud computing, autonomous driving, IoT and 5G amid pandemic-induced supply chain disruptions. The Zacks Laser Systems and Components industry is suffering from pandemic-induced supply chain disruptions, including parts and labor shortages, delays in ocean freight and port congestion. The demand-supply mismatch is expected to persist in the near term, thereby hurting prospects of the industry participants. Nevertheless, upbeat demand from electronics, semiconductors and healthcare end-markets is a major growth driver. Lumentum LITE and IPG Photonics IPGP are well-positioned to benefit from these trends. Robust demand for high-power continuous wave and pulsed laser for cutting and battery processing applications, growing demand for high-performance optical devices, and ongoing adoption of cloud computing, autonomous driving, IoT and 5G are key catalysts for these industry participants.Industry DescriptionThe Zacks Laser Systems and Components industry comprises companies offering high-performance fiber lasers, fiber amplifiers and diode lasers, optical and photonic products, and scanning technology solutions. The key end markets are semiconductor, metrology, advanced communication and medical devices. Industry participants also provide high-precision 3D sensors and system products for inspection and metrology. Moreover, in the medical devices space, laser and other energy-based aesthetic treatments can achieve therapeutic results by affecting structures within the skin. The development of safe and effective aesthetic treatments has resulted in a well-established market for these procedures. The company also operates in the cyclical surface mount technology (SMT) and semiconductor capital equipment markets.3 Laser Systems & Components Industry Trends to Watch Out ForEmerging Applications Driving Demand for Lasers: The industry is benefiting from increasing demand for emerging applications like additive manufacturing, facial recognition, gesture recognition, LiDAR applications and IoT. Advanced lasers, especially those with 3D sensing (3DS) capabilities, are enhancing interactions using technology. Notably, 3DS, the technology that allows users to create 3D printable objects, control games with body gestures and measure objects, is much in demand.Laser-IoT Combination Supports Efficiency: As industries are increasingly adopting automation techniques, combining lasers with IoT improves operating efficiency. Notably, IoT-supported manufacturing equipment is far easier to update with firmware. The combination not only reduces costs but also increases flexibility and reliability manifold by enabling material handling capabilities through remote sources. Additionally, strong demand from semiconductor and allied markets, which are seeing a rapid shift toward the production of micro and nano devices, is a positive for industry participants.Supply-Chain Disruption Hurts Prospect: Industry participants are suffering from pandemic-induced supply chain disruptions. Parts and labor shortages as well as delays in ocean freight and port congestion are hurting their ability to address customer needs. The demand-supply mismatch is expected to persist in the near term thereby hurting prospects of the industry participants.Zacks Industry Rank Indicates Dim ProspectsThe Zacks Laser Systems and Components industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #183, which places it in the bottom 27% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. Since Jun 30, 2021, the Zacks Consensus Estimate for the industry’s earnings for the current year has declined 60.5%.Despite the gloomy outlook, there are a couple of stocks worth watching in the industry. But before we present the top industry picks, it is worth looking at the industry’s shareholder returns and current valuation first.Industry Underperforms Broader Sector and S&P 500The Zacks Laser Systems and Components industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 composite over the past year.The industry has declined 38.1% over this period against the S&P 500’s fall of 23.2% and the broader sector’s decline of 32.3%.One-Year Price PerformanceIndustry's Current ValuationOn the basis of the trailing 12-month P/S, which is a commonly used multiple for valuing Laser Systems and Components stocks, we see that the industry is currently trading at 6.11X compared with the S&P 500’s 3.39X. It is also trading above the sector’s trailing 12-month P/S of 3.67X.Over the last five years, the industry has traded as high as 10.80X, as low as 5.90X and at the median of 8.77X, as the chart below shows:Trailing 12-Month Price-to-Sales (P/S) Ratio2 Laser Stocks to Keep a Close Eye onLumentum: This San Jose, CA-based company is a well-known provider of optical and photonic products addressing a range of end-market applications, including Optical Communications and Commercial Lasers for manufacturing, inspection and life-science applications.Lumentum is benefiting from strong customer demand for its communications products, which are essential for multi-year expansions in next-generation optical network capacity that are just beginning to be deployed. Expanding usage of high-performance lasers for 3D sensing and LiDAR is driving growth.Lumentum currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Lumentum’s fiscal 2022 earnings has been steady at $5.93 per share over the past month.Price & Consensus: LITE  IPG Photonics: Oxford, MA-based IPG Photonics develops and manufactures fiber & diode lasers, fiber amplifiers and transceivers that are used for diverse applications like materials processing, advanced applications, communications and medical. The stock has declined 1% in the past year.IPG Photonics is riding on strong demand for its core material processing product. The company is benefiting from accelerated growth in welding, marking and 3D printing in North America, Europe and Japan. Strong demand for AMB lasers is driving IPG’s growth, particularly from electric vehicle battery manufacturers.The consensus mark for IPG’s fiscal 2022 earnings has been steady at $4.71 per share over the past 30 days. IPG Photonics currently has a Zacks Rank #3 (Hold).Price & Consensus: IPGP  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 Lumentum Holdings Inc. (LITE): Free Stock Analysis Report IPG Photonics Corporation (IPGP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

In this article, we discuss the 25 best-selling cars, trucks, and SUVs for 2022 and 2023. If you want to skip the detailed analysis of the automotive industry, you can jump straight to the 5 Best Selling Cars, Trucks, and SUVs of 2022 and 2023. The automotive industry has experienced significant changes and challenges in […] In this article, we discuss the 25 best-selling cars, trucks, and SUVs for 2022 and 2023. If you want to skip the detailed analysis of the automotive industry, you can jump straight to the 5 Best Selling Cars, Trucks, and SUVs of 2022 and 2023. The automotive industry has experienced significant changes and challenges in the aftermath of the COVID-19 pandemic. It forced the automotive industry to adapt, innovate, and reevaluate its strategies. It also accelerated trends that were already in motion, such as the transition to electric and autonomous vehicles, digitalization, and changing consumer preferences for mobility solutions. These changes are likely to continue shaping the industry’s trajectory in the years to come. The automotive industry is poised for growth in the upcoming years despite the uncertain global economic conditions. It is anticipated that global car sales will surpass 69 million units in 2023, driven by increased market presence in emerging economies, the growing adoption of electric vehicles, and the reopening of China as it eases lockdown restrictions. These factors, combined with steady production rates and a backlog in demand for the sector, provide a degree of resilience against the challenges posed by rising living costs and supply chain disruptions, which have impacted both sales and production. Analysts project that car sales will continue to rise, reaching 74 million units in 2024, sustaining the upward trend observed since 2020 and approaching pre-pandemic levels. Several car companies have been performing well financially, technologically, and in terms of market reception. The automotive industry is dynamic, and rankings can change annually based on new model introductions, shifts in consumer preferences, global economic factors, and other variables. However, some major car manufacturers like Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Toyota Motor Corporation (NYSE:TM) have maintained their position as the top vehicle manufacturers for decades. The electric car industry is looking forward to substantial growth in the near future. Forward-thinking automakers and their primary suppliers have the chance to innovate within the expanding realm of software-defined vehicles (SDVs), focusing on software-driven features that enhance safety, convenience, and the overall in-car experience. Additionally, as businesses face increasing pressure to reduce carbon emissions and optimize logistics to counter inflation, there is a growing interest in efficient electric vehicles that lower the total cost of ownership. Due to their high demand, companies like Tesla, Inc. (NASDAQ:TSLA), NIO Inc. (NYSE:NIO), and Rivian Automotive, Inc. (NASDAQ:RIVN) have forced companies like Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) to step into the electric vehicle market. In its Q2 2023 earnings call, President and Chief Executive Officer of Ford Motor Company (NYSE:F), Jim Farley, said the following about the EV sector growth: “We’re going to dive more into the electric vehicle market during Q&A. But clearly, this transition to EVs is dynamic and so much more than just a change in propulsion. The number of global entrants is increasing even at the high end and the pricing pressure has dramatically increased in the past 60 days.” Looking ahead, challenges for the automotive aftermarket and the car industry include managing high inventories and navigating market price fluctuations in raw materials. Inflation, as well as rising food and energy costs, will remain major concerns for consumers, pushing them toward more affordable product choices. However, premium segments offering performance and convenience, such as all-season tires, larger rim sizes, and synthetic oils, will continue to drive growth. Emerging economies will present opportunities for forward-thinking manufacturers, and the reopening of the Chinese market will bolster the industry’s resilience. Meanwhile, there will be a growing emphasis on sustainability, rewarding innovative brands that offer environmentally friendly alternatives in response to mounting regulatory and consumer pressures. In the competitive automotive industry, General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Tesla, Inc. (NASDAQ:TSLA) are some of the automotive stocks that investors should keep their eye on. Our Methodology We collected the list of best-selling cars in the United States from several sources, including Car and Driver and Edmunds, and created a list of around 40 vehicles. We then checked the sales of each car from different sources and calculated their average for both years. The best-selling cars, trucks, and SUVs of 2023 are listed according to their estimated units sold in the US. 25 Bestselling Cars, Trucks, and SUVs of 2022 and 2023 25. Ford Escape Total number of sales: 202,210 units Ford Motor Company (NYSE:F)’s Escape has garnered popularity due to its well-rounded appeal and versatility. Its compact size makes it an ideal choice for urban dwellers seeking easy maneuverability and parking convenience. The availability of various powertrains, including gasoline, hybrid, and plug-in hybrid options, allows consumers to choose according to their specific needs and environmental considerations. The Escape boasts a comfortable interior with ample passenger and cargo space, catering to families and those with active lifestyles. Its competitive pricing and strong resale value make it an attractive financial choice. Ford Motor Company (NYSE:F)’s commitment to safety features and technology upgrades further enhances its appeal, solidifying the Escape’s status as a popular option in the competitive compact SUV market and making it to our list of best-selling cars, trucks, and SUVs of 2022 and 2023. 24. Nissan Altima Total number of sales: 203,200 units The Nissan Altima has gained popularity for a variety of reasons. One of its key attractions is its reputation for reliability and longevity, instilling confidence in buyers seeking a dependable vehicle. The Altima also stands out for its strong fuel efficiency, appealing to both budget-conscious consumers and environmentally-conscious drivers. Its comfortable interior, spacious cabin, and user-friendly technology contribute to its popularity among families and daily commuters. Furthermore, Nissan’s commitment to safety features and competitive pricing makes the Altima an attractive choice in the midsize sedan segment. These qualities, combined with a solid track record, have established the Altima as a well-liked and enduring option in the automotive market. 23. Honda Civic Total number of sales: 228,000 units Civic’s enduring popularity is rooted in its exceptional blend of qualities. Renowned for its reliability and durability, Honda Motor Co., Ltd. (NYSE:HMC)’s Civic consistently delivers a dependable and low-maintenance driving experience. Its fuel efficiency appeals to budget-conscious consumers, offering excellent miles per gallon. The Civic’s practicality shines with a spacious interior and a well-thought-out cabin layout, providing both comfort and convenience. Moreover, Honda Motor Co., Ltd. (NYSE:HMC)’s Civic has a reputation for safety features, strong resale value, and a wide range of trims and body styles which further solidifies its status as a perennial favorite among drivers seeking an affordable, efficient, and well-rounded compact car that stands the test of time. 22. Subaru Outback  Total number of sales: 228,650 units Subaru Outback is a Japanese vehicle that mostly comes in an all-wheel drive version. Its sixth generation for the North American market was introduced in 2019. The Outback has a reputation for being one of the longest-lasting vehicles. It also has top-of-the-line handling and performance and has high safety ratings. 21. Subaru Crosstrek  Total number of sales: 231,270 units The Subaru Crosstrek is the highest-selling vehicle that Subaru produces. Its base comes with a 152 horsepower 2.0-liter engine and also has a 182 horsepower 2.5-liter version available. Subaru Crosstrek is the 21st best-selling vehicle of 2022 and 2023. 20. Mazda CX-5  Total number of sales: 231,600 units The Mazda CX-5 is a compact crossover SUV that has been in production since 2012. It started after the discontinuation of the mid-size CX-7. The CX-5’s low body weight, exceptional handling, and performance have made it one of the best-selling vehicles in the North American market. It is sold in Japanese, Australian, European, Malaysian, and North American markets.  19. Honda Accord Total number of sales: 254,450 units The Honda Accord has earned the trust of consumers who seek a dependable vehicle. Its longevity is a testament to its robust construction and quality engineering. Honda Motor Co., Ltd. (NYSE:HMC)’s Accord offers a comfortable and spacious interior, making it suitable for families and daily commuters. Fuel efficiency is another hallmark, aligning with the need for economical transportation. Honda Motor Co., Ltd. (NYSE:HMC)’s commitment to safety, advanced technology, and innovative features ensures the Accord stays competitive. Furthermore, a diverse range of trims and engines allows buyers to tailor the vehicle to their preferences, cementing its position as a top choice among midsize sedans for decades. 18. Jeep Wrangler  Total number of sales: 266,050 The Jeep Wrangler comes in two different versions; a compact SUV and a mid-size SUV. It is one of the most sold SUVs in the world. Its fourth generation was introduced in 2017 which comes in a rear-wheel drive and a four-wheel drive version. Stellantis N.V. (NYSE:STLA)’s rugged off-roader, Wrangler, is one of the best-selling SUVs of 2022 and 2023. 17. Hyundai Tucson Total number of sales: 275,900 units   Tucson’s striking design, characterized by bold lines and a distinctive front grille, catches the eye and appeals to a wide range of consumers. Offering versatility in powertrains, including gas, hybrid, and plug-in hybrid options, it caters to various preferences and environmentally conscious buyers. The Tucson boasts a comfortable and well-designed interior, providing ample legroom and a user-friendly infotainment system. Additionally, Hyundai’s reputation for reliability and affordability adds to Tucson’s appeal, making it a popular choice among those seeking a stylish, practical, and dependable compact SUV. 16. Toyota Tacoma Total number of sales: 290,900 units As a midsize pickup truck, Tacoma offers excellent off-road capability and towing capacity, making it a top choice for outdoor enthusiasts and those with active lifestyles. Its durable build ensures that it can withstand tough conditions, while Toyota Motor Corporation (NYSE:TM)’s reliability and durability add to its appeal. The Tacoma’s diverse trim levels and configurations cater to a wide range of consumer needs, from workhorse to adventure companion. Its strong resale value and long-lasting performance have further solidified its status as a trusted and enduring favorite among pickup truck enthusiasts. 15. Toyota Camry Total number of sales: 295,200 units   The Toyota Camry, now in its eighth generation, remains a favorite worldwide for several compelling reasons. Its affordability stands out in a segment known for value. Toyota Motor Corporation (NYSE:TM)’s renowned reliability is exemplified by the Camry with quality and reliability. The Camry excels in practicality, fuel efficiency, ease of maintenance, safety ratings, aesthetics, and advanced tech features, making it a versatile and enduring choice. 14. Ford Explorer  Total number of sales: 312,100 Ford Explorer’s production started in 1990. Ford Motor Company (NYSE:F) has also introduced a battery-electric compact crossover of Ford Explorer for the European market. It comes in seven different versions and two of them are specifically made as Police Interceptor Utility and not sold to the general public. 13. Chevrolet Equinox Total number of sales: 318,000 Chevrolet Equinox is a crossover utility vehicle introduced in 2004. Chevrolet also introduced the Equinox EV in 2022 for the 2024 model year. It is the 13th best-selling vehicle on our list and according to several sources, it is one of General Motors Company (NYSE:GM)’s most dependable and reliable vehicles in production. 12. Tesla Model 3 Total number of sales: 319,700 units   The Tesla Model 3 combines impressive performance, efficiency, and safety, making it a popular choice. Its exterior boasts sleek curves, sharp lines, and a unique front grille for improved aerodynamics. Performance-wise, the Model 3 impresses with a 491km range, responsive acceleration, and customizable driving modes. Charging options are competitive, with 10-80% charge in 30 minutes on a DC charger. Due to its exceptional range, comfort, and performance, Tesla, Inc. (NASDAQ:TSLA)’s Model 3 continues to hold its position as the leading electric vehicle in the market around the world. 11. Toyota Corolla Total number of sales: 319,710 units Toyota Corolla is the crown jewel of Toyota Motor Corporation (NYSE:TM) and continues to dominate the global automotive market, delivering exceptional value to drivers worldwide. Renowned for its legendary reliability, the Corolla has earned the trust of countless drivers who prioritize a trouble-free ownership experience. Its reputation for longevity and minimal maintenance costs makes it a wise choice for both first-time car buyers and those seeking a dependable daily driver. Toyota Corolla is the best-selling car in the world and the 11th best-selling car in the US. Toyota Motor Corporation (NYSE:TM)’s Corolla topped 50 million sales in August 2021. 10. Toyota Highlander Total number of sales: 336,100 units The Highlander instills confidence in buyers seeking a trustworthy and durable SUV. Its spacious and well-designed interior comfortably accommodates passengers and offers ample cargo space, catering to families and those with active lifestyles. Toyota Motor Corporation (NYSE:TM)’s reputation for safety features and innovative technology further enhances its appeal, providing peace of mind on the road. The availability of various powertrains, including hybrid options, addresses different environmental concerns. With a reputation for strong resale value and competitive pricing, the Highlander continues to be a top choice in the competitive midsize SUV market, appealing to a broad spectrum of consumers. 9. Nissan Rogue Total number of sales: 334,225 Nissan Rogue is a CUV that comes in a front engine front wheel drive and an all-wheel drive version. Nissan debuted the Rogue at the North American International Auto Show in January 2007. Rogue is highly commended for its safety which is why its sales have placed it at number 9 on our list of best-selling cars, trucks, and SUVs. 8. Jeep Grand Cherokee  Total number of sales: 348,300 Jeep Grand Cherokee’s production started in 1992 and comes in a front-engine rear-wheel-drive and a front-engine four-wheel-drive version. It is famous for its practicality, reliability, and off-roading capabilities. The Grand Cherokee is the successor to the smaller Jeep Cherokee XJ. Jeep Grand Cherokee is produced by Fiat Chrysler Automobiles which is now a part of Stellantis N.V. (NYSE:STLA). 7. GMC Sierra Total number of sales: 384,530 units As a full-size pickup truck, the GMC Sierra is known for its robust towing and hauling capabilities, making it a top choice for those who need a workhorse. Its striking exterior design and luxurious interior options also cater to buyers seeking both style and substance. The availability of various trims, engines, and features allows customization to meet diverse needs. Additionally, General Motors Company (NYSE:GM) has a reputation for durability and reliability, which adds to the Sierra’s appeal, making it a favorite among truck enthusiasts and those requiring a dependable, high-performance vehicle for work and play. 6. Honda CR-V Total number of sales: 401,850 units The CR-V consistently delivers on Honda Motor Co., Ltd. (NYSE:HMC)’s reputation for longevity and dependability. Its versatility as a compact SUV offering ample interior space and practicality appeals to families and individuals alike. Efficient fuel economy and a comfortable ride enhance its daily usability. Honda Motor Co., Ltd. (NYSE:HMC)’s commitment to safety features and high resale value further bolsters its appeal. The CR-V’s consistent commitment to these attributes, coupled with a reputation for quality and a loyal customer base, solidifies its position as a top-selling car. Click to continue reading and see the 5 Bestselling Cars, Trucks, and SUVs of 2022 and 2023. Suggested articles: 12 Best Alcohol Stocks to Own According to Hedge Funds 15 Easiest Countries to Get Citizenship as an American 15 Best Affordable Stocks To Buy Under $5 Disclosure. None. 25 Bestselling Cars, Trucks, and SUVs of 2022 and 2023 is originally published on Insider Monkey......»»

In this piece, we will take a look at the ten best 3D printing and additive manufacturing stocks to buy. If you want to skip our introduction to why 3D manufacturing is one of the most important industries today, then check out 5 Best 3D Printing and Additive Manufacturing Stocks To Buy. 3D printing is […] In this piece, we will take a look at the ten best 3D printing and additive manufacturing stocks to buy. If you want to skip our introduction to why 3D manufacturing is one of the most important industries today, then check out 5 Best 3D Printing and Additive Manufacturing Stocks To Buy. 3D printing is one of the most disruptive technologies in the world today. It has allowed companies and enthusiasts to virtually create any product that they like out of thin air, whilst doing so otherwise would require large machines and hefty investments in fabrication equipment. This enables companies to rapidly build out parts and verify their engineering and design even if the fabrication is done only for testing purposes and mass production will take place through traditional machines. 3D printers and additive manufacturing as an industry have moved forward quite rapidly over the course of the past decade or so. They are now used to manufacture some of the most complex engineering products in the world, which can withstand significant forces. Industrial equipment and products manufacturer General Electric Company (NYSE:GE)’s Italian division Avio Aero manufactures jet engine turbine blades with 3D printing, and these end up spinning thousands of times in minute at  unimaginable forces inside a jet engine. For the ancient observer, the process of manufacturing a 3D printed jet engine blade would be nothing short of magic. It involves an electron beam welding together thin layers of metal to create a product that is insusceptible to hairline or microscopic cracks. Additionally, since the machines are capable of building robust components, they can also make other components such as sensor housings. Talking numbers, by using 3D printing to manufacture “tons” of components for the 787 aircraft, a Boeing supplier believes that the company can save as much as $3 million in costs over the long term. While $3 million in cost savings for a jet that costs hundreds of million of dollars might seem trivial, the fact that there are other methods to fabricate complex products which are fundamentally different from existing processes shows that there is significant room for innovation on the product front and for markets at the supply end. This potential seems to be on the mind of companies as well, since a study from Ernst & Young (EY) shows that out of 900 businesses surveyed in 2016 and 2019 each, the percentage that are applying additive manufacturing technology in their business operations process grew by more than 2.5x while those that did not intend to apply dropped by 3.7x. These are strong numbers for a small time period and the data also reveals that the highest percentage of business that do use 3D manufacturing are in China and South Korea. Another key benefit of 3D printing is the ability to produce simple products cheaply. A variety of goods, such as skateboards, goggles, and even football helmets are made by additive manufacturing. A key advantage of this is that the supply chains for these products can be easily set up domestically in the U.S. and create more jobs since traditionally such goods are imported from Asian countries where the cost of labor and other mass production inputs are lower. However, even though the potential of 3D printing is immense, the fact still remains that printers are not widely used for mass production. Mass production is the backbone of consumerism and capitalism as it allows firms to churn out billions of products each year with ease and improve the standard of living of consumers. One firm that mass produces products with 3D printing is Sonova. It makes hearing aids through additive manufacturing, and the firm claims that the technology has allowed it to produce hundreds of thousands of customized hearing pieces in a year. Finally, any discussion about 3D printing would be incomplete without SpaceX particularly as aerospace is one of the hottest topics in the media these days. SpaceX was one of the first companies to 3D print a rocket engine, as the firm revealed a thruster for its Dragon spacecraft built through additive manufacturing back in 2013. Another rocket company that is quite agile when it comes to blending the latest manufacturing technology in its production process is Relativity Space. The firm is aiming to compete with SpaceX in the crucial area of rocket reusability and it is designing the Terran R medium lift vehicle (equivalent to SpaceX’s Falcon 9). This rocket aims to be fully reusable and manufactured by 3D printing. As to what’s happening in the printer industry right now, here’s what the executives of Desktop Metal, Inc. (NYSE:DM) had to say during the firm’s latest earnings conference call: Revenue for the second quarter of 2023 was $53.3 million, a very strong 29% growth over the first quarter of 2023. As you’ll recall, we entered the year with a questionable outlook on the demand side as macro pressures with in our industry. And we certainly felt that in the first quarter. There was a continuation of that softness into the start of the second quarter. However, quarter momentum really began to pick up, and we finished the quarter with strength. While there’s still some element of caution in the environment, we’re very encouraged by the recent customer activity that led to our second quarter results. This momentum gives us confidence in the early signs of a recovery and also validates feedback we’ve been receiving from customers that we would see an uptick in orders as we progress through 2023. In combination with this improved customer demand profile in a variety of near-term growth opportunities, we feel very good about the second half of 2023, and we’re reaffirming our 2023 revenue guidance. Meanwhile, the DM team has been laser-focused on something we have full control of, reducing our cost structure. Today we’ll look at some top 3D printing and additive manufacturing stocks and the top picks in this piece are Apollo Global Management, Inc. (NYSE:APO), General Electric Company (NYSE:GE), and Autodesk, Inc. (NASDAQ:ADSK). Ruslans Golenkovs/Shutterstock.com Our Methodology To compile our list of the top 3D printing and additive manufacturing stocks, we used our previous coverage and Ark Invest’s 3D Printing ETF and ranked the top 30 companies that are traded on U.S. exchanges through the number of hedge funds that had bought their shares in Q2 2023. Out of these, the stocks with the highest hedge fund investors w ere selected as the top 3D printing and additive manufacturing stocks. Some firms, such as Microsoft Corporation (NASDAQ:MSFT), whose core business process does not depend on 3D printing were eliminated.  Best 3D Printing and Additive Manufacturing Stocks To Buy 10. Lincoln Electric Holdings, Inc. (NASDAQ:LECO) Q2 2023 Hedge Fund Holdings: 25 Lincoln Electric Holdings, Inc. (NASDAQ:LECO) is an American industrial products company that was set up in 1895 and claims to have the largest 3D metal printing installed capacity in the U.S. The firm is currently targeting the space for electric vehicle chargers as it received a new order on this front in September. By the end of this year’s second quarter, 25 out of the 910 hedge funds that were part of Insider Monkey’s database had held a stake in Lincoln Electric Holdings, Inc. (NASDAQ:LECO). Out of these, the firm’s largest shareholder is Ken Fisher’s Fisher Asset Management since it owns 609,995 shares that are worth $121 million. It joins General Electric Company (NYSE:GE), Apollo Global Management, Inc. (NYSE:APO), and Autodesk, Inc. (NASDAQ:ADSK) in our list of the best 3D printing and additive manufacturing stocks. 9. Trimble Inc. (NASDAQ:TRMB) Q2 2023 Hedge Fund Holdings: 29 Trimble Inc. (NASDAQ:TRMB) provides 3D printing design and software products for the infrastructure industry. The firm’s second quarter earnings results saw it grow its recurring revenue by 14% and the stock is up by a modest 1.46% year to date. As of June 2023, 29 out of the 910 hedge funds surveyed by Insider Monkey had bought the firm’s shares. Trimble Inc. (NASDAQ:TRMB)’s biggest hedge fund investor is Ian Simm’s Impax Asset Management through a stake worth $560 million. 8. ANSYS, Inc. (NASDAQ:ANSS) Q2 2023 Hedge Fund Holdings: 30 ANSYS, Inc. (NASDAQ:ANSS) is an American software company whose software allows customers to design their products for 3D manufacturing. The firm is making quite a splash on the bicycle manufacturing front as its software has allowed manufacturers to make a full bicycle frame. After digging through 910 hedge funds for their second quarter of 2023 investments, Insider Monkey discovered that 30 were ANSYS, Inc. (NASDAQ:ANSS)’s shareholders. Out of these, the firm’s biggest investor is Nicolai Tangen’s Ako Capital since it owns $274 million worth of shares. 7. DENTSPLY SIRONA Inc. (NASDAQ:XRAY) Q2 2023 Hedge Fund Holdings: 33 DENTSPLY SIRONA Inc. (NASDAQ:XRAY) provides 3D printers for dentists. The firm has beaten analyst EPS estimates in three of its four latest quarters, and the stock is rated Buy on average. Insider Monkey’s second quarter of 2023 survey covering 910 hedge funds revealed that 33 had held a stake in the company. DENTSPLY SIRONA Inc. (NASDAQ:XRAY)’s largest hedge fund shareholder is Jean-Marie Eveillard’s First Eagle Investment Management due to its $389 million investment. 6. Align Technology, Inc. (NASDAQ:ALGN) Q2 2023 Hedge Fund Holdings: 35 Align Technology, Inc. (NASDAQ:ALGN) manufactures 3D scanners that inform dentists and orthodontists about the shape and size of their patients’ mouths and other body parts. The firm expanded its presence in the sector in September after it acquired the European firm Cubicure for the latter’s 3D printing capabilities. As of Q2 2023 end, 35 out of the 910 hedge funds part of Insider Monkey’s database were Align Technology, Inc. (NASDAQ:ALGN)’s investors. Brian Bares’ Bares Capital Management is the biggest stakeholder among these through its $194 million investment. Apollo Global Management, Inc. (NYSE:APO), Align Technology, Inc. (NASDAQ:ALGN), General Electric Company (NYSE:GE), and Autodesk, Inc. (NASDAQ:ADSK) are some top additive manufacturing and 3D printing stocks being bought by hedge funds.   Click to continue reading and see 5 Best 3D Printing and Additive Manufacturing Stocks to Buy.   Suggested articles: 10 Best ESG ETFs 13 Tech Stocks with Biggest Upside 11 Robinhood Stocks with Biggest Upside Disclosure: None. 10 Best 3D Printing and Additive Manufacturing Stocks to Buy is originally published on Insider Monkey......»»

RF Industries, Ltd. (NASDAQ:RFIL) Q3 2023 Earnings Call Transcript September 14, 2023 RF Industries, Ltd. reports earnings inline with expectations. Reported EPS is $0.08 EPS, expectations were $0.08. Operator: Greetings. Welcome to the RF Industries Third Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now […] RF Industries, Ltd. (NASDAQ:RFIL) Q3 2023 Earnings Call Transcript September 14, 2023 RF Industries, Ltd. reports earnings inline with expectations. Reported EPS is $0.08 EPS, expectations were $0.08. Operator: Greetings. Welcome to the RF Industries Third Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host Jack Drapacz. You may begin. Jack Drapacz: Thank you, operator. Good afternoon, and welcome to RF Industries’ third quarter fiscal 2023 financial results conference call. With me on today’s call are RF Industries’ President and CEO, Rob Dawson. Before I turn the call over to Rob, I’d like to cover a few quick items. This afternoon, RF Industries issued a press release announcing its third quarter fiscal 2023 financial results. That release is available on the company’s website at rfindustries.com. This call is also being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company’s website. I want to remind everyone that during today’s call, management will make forward-looking statements that involve risks and uncertainties. Golubovy/Shutterstock.com Please note that except for the historical statements, statements on this call today may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. When used, the words anticipate, believe, expect, intend, future and other similar expressions identify forward-looking statements. These forward-looking statements reflect management’s current views with respect to future events and financial performance and are subject to risks and uncertainties, and actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing or sales of products and other risks and uncertainties discussed in the company’s periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. RF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today’s earnings release and the related current report on Form 8-K describe the differences between our GAAP and non-GAAP reporting and present the reconciliation between the two for the periods reported in the earnings release. With that said, I will now turn the conference over to Rob Dawson, President and Chief Executive Officer. Rob Dawson: Thank you, Jack. Good afternoon, everyone. Thanks for joining our third quarter fiscal 2023 conference call. Our CFO, Peter Yin, had to attend to a personal matter, so I’ll be handling today’s call solo. Our third quarter results tell the story of a very challenging quarter. As you saw in our press release, third quarter revenue was $15.7 million, down 34% year-over-year. I knew we had a tough comp against a record third quarter last year, but when I last spoke with you in June, we were seeing steady order activity and the expectation of consistent shipments of hybrid fiber cable. Overall, I thought we were seeing some decent momentum until we hit July. The pause hit hard with many of our key projects and shipment schedules put on hold. Customers were delaying delivery of their orders or freezing new orders for project-based deployments. Due to these delays, we shipped virtually no hybrid fiber cable in the quarter, along with less sales of carrier approved RF passes, and these surprising developments significantly impacted our quarter. Those of you following the industry know that the wireless carriers have greatly curtailed their capital spending over the last few quarters. Those carriers and the large neutral hosts have been restructuring their businesses to adapt to an environment of higher interest rates, overstock inventory and steep labor costs, among other things. This has included significant headcount reductions in the entire carrier ecosystem. Look across the board, and you’ll see even the big players in our space, like the radio manufacturers are going through some challenging times and reporting numbers well below the prior year in the North American market. While we can’t control the economic backdrop, we can control our own business, and that’s what we’ve been focused on. We have a very strong management team and board with a lot of knowledge and insight gained from past experience that gives us a bias towards action. We start with what we know to be true. Telecom is here to stay and continued investment in wireless infrastructure is mandatory, not optional. Second, there’s a tremendous pent-up demand to improve telecom infrastructure across the U.S., especially in the 4G and 5G build-outs. Third, network densification is the next phase of the build and is required to address coverage gaps and the constant consumer expectations for faster and faster connections with coverage everywhere. In the last 45 days alone, we’ve received orders and commitments of nearly $1.5 million for integrated small cell trades. We’ve also seen decent orders for passive and cabling for large stadium DAS builds. This is what densification looks like, and we believe that our offer is correctly positioned to benefit from it. We also know that our major customers can’t push the pause button indefinitely. And when they get going, they’ll be looking for better and more cost-effective solutions. That’s where we plan to shine. While timing can be hard to predict, we know that RF Industries has a broad selection of high-quality interconnect products and next-generation integrated systems. And we’re always innovating, both in the wireless carrier space and other markets. We recently launched our Microlab Enterprise Plus offering to serve the hundreds of integrators throughout the United States that are focused on enhancing cellular and public safety wireless in commercial buildings and multi-dwelling units. This opens the door to a new market opportunity that is not reliant on wireless carrier budget cycles and the early response to this exciting new offer has been very positive. Additionally, we continue to think strategically and explore other markets beyond wireless, such as wireline, utilities, transportation, safety, aerospace and defense, because many of our products have applications relevant in these areas, and we’re looking to diversify our exposure to broader markets. The growth we’ve seen with wireless carriers in the last few years can be viewed as a double-edged sword. The good news is that we have positioned ourselves directly in line of sight of wireless carrier CapEx, both organically and through M&A, which is a new position for the company in our almost 45 years in business. When the CapEx dollars flow, we see huge upside. The other edge of the sword is when that CapEx pauses and we have to retrench. So while we love the direct interaction with the wireless carrier ecosystem, and the team has done a terrific job to get us to that position, we also continue to look for avenues of diversification. Beyond investing in product development, we’ve also been executing on our plan to control costs and drive further synergies and by consolidating our facilities as we continue to focus on higher profitability. In the third quarter, we completed our manufacturing and distribution consolidation, and this helped reduce our quarterly operating expenses by $330,000 this quarter compared to the same quarter last year. And with the full benefit of this expense reduction in the fourth quarter, we expect even larger savings. In total, we expect annualized cost savings of approximately $2.5 million to $3 million. As we strip out these costs and look to increase sales, we expect our profitability to improve in future quarters, although it’s difficult to provide specific timing given the current broader market conditions. What we do know is that when revenue returns will be in a strong competitive position with a highly attractive product portfolio, a capital-light business model, and substantial operating leverage. Now I’ll give some color on our third quarter financials. As I mentioned earlier, third quarter revenue was $15.7 million, down 34% year-over-year. primarily reflecting a much lower contribution from hybrid fiber cable as well as lower sales related to carrier projects involving approved RF components. I do want to point out that our core interconnect products remained solid in the quarter, and large shipments and orders that were put on hold still remain in our backlog. The sales decline and product mix pressured consolidated third quarter gross profit margin which came in at 24.4% compared to 30.4% in the year ago quarter. Operating loss was $2 million versus operating income of $1.1 million in the comparable quarter, again, due to lower sales, including the cable products and RF components that I discussed. Taken together, these factors resulted in a net loss of $1.6 million or $0.16 per diluted share for the quarter compared to net income of $771,000 or $0.08 per diluted share in the third quarter of 2022. Non-GAAP net loss was $784,000 or $0.08 per diluted share compared to non-GAAP net income of $1.6 million or $0.16 per diluted share for the same period last year. Adjusted EBITDA loss for the third quarter was $940,000 this compares to adjusted EBITDA of $2.1 million in the third quarter of ’22, reflecting the impact of lower sales and less leverage to cover certain fixed costs. At the end of the third quarter, our cash and cash equivalents were $4.1 million. Working capital was $22.8 million and $2 million was available under our revolver. We drew down our revolver by $1 million to cover leasehold improvements associated with the consolidation efforts I mentioned earlier. During the quarter, we continued to work with our bank, and we successfully renegotiated the terms of our debt covenants, without any major changes to the structure of our term loan or revolver, giving us leeway to navigate this challenging time. Inventory was $20.2 million at the end of the quarter, up from $19.2 million in the year ago quarter. The year-over-year increase in inventory was primarily due to Microlab in which we’ve invested an additional $1.5 million since last year. On a sequential basis, we reduced inventory by $182,000. Looking ahead, we believe there’s more room to reduce and rationalize our inventory without jeopardizing our value proposition of inventory availability for our customers. We’ll continue to carefully manage our inventory levels to help build our cash position. We’re also constantly reviewing our pricing policies as we look for opportunities to increase our margins Backlog was $17.2 million at the end of the third quarter on bookings of $14 million. As of today, backlog stands at $16.7 million, which still includes many of the delayed hybrid fiber shipments. In fiscal 2023, we’re continuing to deal with market challenges that are pressuring our top line growth. Regardless, our focus on improving profitability is our top priority, and we’ve set what we believe is an attainable goal of achieving an adjusted EBITDA above 10% of sales as market conditions normalize. Regarding guidance for fiscal year 2023, with what we see today, it’s difficult to predict what to expect in the near term. Based on current visibility, we expect fourth quarter sales to increase sequentially from the third quarter and that subsequent quarters will continue to improve throughout 2024. While the near-term environment is difficult to navigate, our team is up to the task. Over the past six years, we’ve significantly grown and transformed the business while streamlining our operations for cost efficiencies, and we have continued to innovate with new product offerings that both widen and diversify our market opportunity. Once the CapEx faucet turns back on, we’re ready. In closing, I appreciate that it takes patience to wait out a business cycle. We’ve been through these pauses before, and I think we might be seeing a bottom forming in our market. While our quarterly revenue trend has been inconsistent and lumpy for the last several years, we’ve achieved significant growth, and we remain committed to our long-term strategy that has helped us profitably grow sales from $23 million to $85 million over that six-year term. We believe that Q3 was just a bump in the road, similar to the many bumps we’ve overcome in the past few years. Long term, RF Industries is in a great position to generate solid returns for investors and we’re grateful for the ongoing support of our shareholders. With that, I’ll open the call to questions. John? See also 30 Happiest Countries in the World and 10 Best Blockchain and Bitcoin ETFs. Q&A Session Follow R F Industries Ltd (NASDAQ:RFIL) Follow R F Industries Ltd (NASDAQ:RFIL) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] The first question comes from Josh Nichols with B. Riley. Please proceed. Unidentified Analyst: Hi there. This is [indiscernible] for Josh Nichols. I was just wondering if you could speak a little bit more about like carrier CapEx cycles and kind of what you’re seeing in terms of when those will resume? Rob Dawson: Sure. Yes, good question. So I mean, look, it’s not abnormal in a major build cycle, generational like this one, to have macro sites built first, then there’s usually a pause while they consume that, and then they’ll be the more densification build. So we think we’re in that pause at the moment, at least. I think everyone that I talked to agrees that, that’s what’s happening. And we expect the – with what we’re hearing today, we expect getting into calendar 2024 to be in a different environment. I think we’re hearing that not just from the carriers, but from the neutral host and tower companies, the contractors and integrators we’re hearing real site counts from people, and there’s folks out walking the sites to make sure the bill of material is accurate. That’s a phenomenon that typically leads to the cycle picking back up. And again, not that it couldn’t happen towards the end of ’23 in a broader way because we are seeing a little bit of increase there, but I think the bigger expectation is we get into ’24, ’25, ’26, there’s be some consistent spending on densification in particular. Unidentified Analyst: All right. Great. Thank you very much. Operator: [Operator Instructions] Okay. It looks like we have no further questions in queue. I’d like to turn the floor back to Robert Dawson for any closing remarks. Rob Dawson: Thank you, John, and thanks, everyone, for joining our call today. We look forward to sharing our fiscal fourth quarter results in December and look forward to speaking to many of you over the next few days. Have a good day. Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation. Follow R F Industries Ltd (NASDAQ:RFIL) Follow R F Industries Ltd (NASDAQ:RFIL) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Adobe Inc. (NASDAQ:ADBE) Q3 2023 Earnings Call Transcript September 14, 2023 Adobe Inc. beats earnings expectations. Reported EPS is $4.09, expectations were $3.97. Operator: Good day, and welcome to the Q3 FY 2023 Adobe Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jonathan Vaas, […] Adobe Inc. (NASDAQ:ADBE) Q3 2023 Earnings Call Transcript September 14, 2023 Adobe Inc. beats earnings expectations. Reported EPS is $4.09, expectations were $3.97. Operator: Good day, and welcome to the Q3 FY 2023 Adobe Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jonathan Vaas, VP of Investor Relations. Please go ahead. Jonathan Vaas: Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe’s Chair and CEO; David Wadhwani, President of Digital Media; Anil Chakravarthy, President of Digital Experience; and Dan Durn, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe’s third quarter fiscal year 2023 financial results. You can find our press release, as well as PDFs of our prepared remarks and financial results, on Adobe’s Investor Relations website. The information discussed on this call, including our financial targets and product plans, is as of today, September 14, and contains forward-looking statements that involve risk, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. Rawpixel.com/Shutterstock.com For a discussion of these risks, you should review the factors discussed in today’s press release and in Adobe’s SEC filings. On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates as well as constant currency rates. During this presentation, except per share amounts, Adobe’s executives will refer to constant currency growth rates, unless otherwise stated. Reconciliations are available in our earnings release and on Adobe’s Investor Relations website. I will now turn the call over to Shantanu. Shantanu Narayen: Thanks, Jonathan. Good afternoon. Adobe had another record Q3, achieving revenue of $4.89 billion, representing 13% year-over-year growth. GAAP earnings per share for the quarter was $3.05 and non-GAAP earnings per share was $4.09, representing 26% and 20% year-over-year growth, respectively. Driving this success is a rich and innovative product roadmap. The advances we are delivering across Creative Cloud, Document Cloud and Experience Cloud are enabling us to attract an ever-growing set of users while delivering more value to existing customers. Yesterday’s exciting announcements add to this roadmap. With the commercial availability of our generative AI capabilities, natively integrated in Adobe Creative Cloud, Adobe Express and Adobe Experience Cloud, we are unleashing a new era of AI-enhanced creativity for millions of customers around the globe. We are bringing generative AI to life across our portfolio of apps and services to deliver magic and productivity gains. Our rich datasets enable us to create foundation models in categories where we have deep domain expertise. In the six months since launch, Firefly has captivated people around the world who have generated over 2 billion images. We are excited about the potential to reimagine the content supply chain for all businesses through the integration of our clouds, enabling the delivery of personalized and engaging customer experiences. Our strategy to unleash creativity for all, accelerate document productivity and power digital businesses is driving our growth across every geography. By delivering innovative technology platforms and services, we continue to advance our industry leadership and delight a growing universe of customers. I’ll now turn it over to David to share more about our momentum in the Digital Media business. David Wadhwani: Thanks, Shantanu. Hello, everyone. In Q3, we achieved net new Digital Media ARR of $464 million and revenue of $3.59 billion, which grew 14% year-over-year, driven by strength in both our Creative and Document businesses. On the creative side, digital content creation and consumption are exploding across every creative category, customer segment and media type. Creative Cloud is the leading creativity platform, offering a comprehensive portfolio of products and services for every discipline across imaging, photography, design, video, animation and 3D. We’re excited about the growth we are driving with our creative flagship products, and with Adobe Express, our AI-first, all-in-one creativity app that makes it fast, easy and fun for any user to design and share standout content. Yesterday’s announcements highlighted several advances to our creative business: First, after an unprecedented beta that saw over 2 billion images generated, Adobe Firefly models and the Firefly web application are now commercially available. Firefly supports text prompts in over 100 languages and enables users around the world to create content that is designed to be safe for commercial use. We will continue to train and release new Firefly foundation models in areas where we have rich datasets and expertise, such as imaging, vector, video, design, 3D and more. Second, Adobe Firefly-powered features are now natively integrated into several Creative Cloud apps, including Generative Fill and Generative Expand in Photoshop, Generative Recolor in Illustrator, and Text to Image and Text Effects in Adobe Express. These deep integrations deliver more creative power than ever before to customers, enabling them to experiment, ideate, and create in completely new ways. Third, Adobe Firefly for Enterprise is now generally available for businesses to enable both creative teams and knowledge workers to confidently deploy AI-generated content. Adobe will empower customers to create custom models using proprietary assets to generate branded content and offer access to Firefly APIs so customers can embed the power of Firefly into their own content creation and automation workflows. And finally, we announced subscription offerings including new generative AI credits with the goal of enabling broad access and user adoption. Generative Credits are tokens that enable customers to turn text-based prompts into images, vectors and text effects with other content types to follow. Free and trial plans include a small number of monthly fast Generative Credits and will expose a broad base of prospects to the power of Adobe’s generative AI, expanding our top-of-funnel. Paid Firefly, Express and Creative Cloud plans will include a further allocation of fast Generative Credits. After the plan-specific number of Generative Credits is reached, users will have an opportunity to buy additional fast Generative Credit subscription packs. In Q3, we added $332 million of Creative ARR and achieved $2.91 billion of revenue, growing 14% year-over-year. Business highlights include: The integration of Firefly into Photoshop and Illustrator. Over 3 million users have downloaded the Photoshop and Illustrator beta releases. The general availability of Adobe Express now includes support for editing and posting designs, videos, images, PDFs, presentations and more. Express features include Firefly-powered Text to Image and Text Effects. Express is already being used by millions of people globally. New AI and 3D features in Premiere Pro and After Effects, including Enhance Speech and Text-Based Editing in Premiere Pro and a new 3D workspace in After Effects. The Text-Based Editing feature in Premiere Pro received the 2023 Hollywood Professional Association Award for Engineering Excellence. New Lightroom mobile now integrates directly with the camera roll and introduced a streamlined interface to make editing even easier on the go. The introduction of new video assets in Adobe Stock and strong product-led growth motions, drove a record Q3 for the Stock business. Key customer wins include Amazon, Havas, Paramount, SAP, Southern Graphics, Take-Two Interactive and U.S. Department of Energy. As we have continued to add new applications and delivered innovations across our creative offerings, we announced price updates for certain Creative Cloud plans across the Americas and Europe, starting November 1, 2023. In addition to being a growth driver in the Creative Cloud business, Acrobat and PDF continue to power the Document Cloud business. Whether it’s a sales contract, legal document or a back-to-school form, seamless document workflows across every device and platform are more important than ever for all of us to be productive in our professional and personal lives. Document Cloud is powering document productivity and automation across the web, desktop and mobile. In Q3, we achieved Document Cloud revenue of $685 million, growing 15% year-over-year. We added $132 million of net new Document Cloud ARR, with ending ARR growing 22% year-over-year in constant currency. Business highlights include: Significant growth in monthly active users across web, mobile, and embedded third-party app ecosystems, reflecting our growing top of funnel and the effectiveness of our product-led growth execution. Strong mobile momentum reflecting the value of Acrobat as an essential productivity application on mobile devices. Adoption of Acrobat and Acrobat Sign through increased link sharing for enhanced collaboration and approval workflows. Enhanced PDF workflows across Acrobat and Express making it seamless to create visually stunning PDFs. A new Adobe PDF Electronic Seal API, which is a cloud-based, end-to-end solution for applying electronic seals on PDFs at enterprise scale. Key customer wins include Citibank, GlaxoSmithKline, Emerson Electric, Morgan Stanley and Volkswagen. We continue to be excited about the pending Figma acquisition, which will reimagine the future of creativity and productivity. We remain engaged with regulators and have confidence in the merits of the case. We look forward to hosting Adobe MAX, the world’s largest creativity conference, next month in Los Angeles, where we will welcome 10,000 members of our global community and engage with hundreds of thousands more online. We will hear from inspiring creators and unveil innovations across Creative Cloud, Firefly and Express. In summary, we are excited about the pace of innovations across our Digital Media products and continued execution across multiple growth drivers. I’ll now pass it to Anil. Anil Chakravarthy: Thanks, David. Hello, everyone. Every company sees digital as an opportunity to drive experience-led growth. As I’ve spent time with customers across the world, it’s clear that they are prioritizing investments in customer experience management technology to improve customer acquisition, engagement, retention and operational efficiency. We are driving revenue growth across content and commerce, customer journeys, data insights and audiences and marketing workflows, leveraging the Adobe Experience Platform, demonstrating the strength of our business. Brands around the globe are working with Adobe to accelerate personalization at scale through generative AI. With the announcement of Adobe GenStudio, we are revolutionizing the entire content supply chain by simplifying the creation-to-activation process with generative AI capabilities and intelligent automation. Marketers and creative teams will now be able to create and modify commercially safe content to increase the scale and speed at which experiences are delivered. In Q3, we continued to drive strong growth in our Experience Cloud business, achieving $1.23 billion in revenue, representing 11% year-over-year growth, as a growing number of enterprises turned to Adobe as their trusted partner for customer experience management. Subscription revenue was $1.1 billion, representing 13% year-over-year growth. Adobe Experience Cloud delivers predictive, personalized, real-time digital experiences, from acquisition to monetization to retention. We are driving strong enterprise adoption of Adobe Experience Platform, and native apps including Real-Time CDP, Adobe Journey Optimizer and Customer Journey Analytics. For example, the Coca-Cola Company is leveraging Adobe Real-Time CDP and Adobe Journey Optimizer to bring together 98 million customer profiles globally into a single CDP to quickly deliver personalized campaigns and experiences. smart Europe, an all-electric automotive brand, is using Adobe Experience Cloud to offer customers the ability to personalize their vehicle purchases through the integration of Adobe Workfront, Adobe Creative Cloud and Adobe Experience Manager. Business highlights include: Strong momentum across AEP and native apps with the total book of business surpassing $600 million during the quarter. Adobe Journey Optimizer book of business more than doubled year-over-year as customers increasingly drive omnichannel personalization and engagement. Continued innovation in Adobe Experience Manager with AEM Assets now natively integrated with Firefly and Express, enabling any employee across an organization to generate and reuse beautiful on-brand content. Growth of our Workfront business, reflecting our ability to serve the workflow and collaboration needs of enterprise customers and agencies. In Q3, we added Havas to the growing list of top agencies standardizing on Adobe for their content supply chain. Expanded strategic partnership with Amazon. Given customer demand, we will jointly deliver AEP on AWS and Amazon will deploy Experience Cloud across their enterprise. Adobe’s leadership in Content Management Systems was recognized across three industry analyst reports, including the IDC MarketScape for Full-stack Content Management Systems, the IDC MarketScape for Hybrid Headless CMS and the Forrester Wave for Content Management Systems. Adobe was also named a Leader in the Gartner Magic Quadrant for Digital Commerce as well as the IDC MarketScape for OmniChannel Marketing Platforms for B2C Enterprises. Key customer wins include Amazon, Blue Cross Blue Shield of Florida, Dollar General, Havas, Intuit, IRS, Jet2.com, Lufthansa, Macy’s, MSC Cruises, Novo Nordisk and SAP. These and other customers continue to prioritize investments in customer experience management solutions despite increased scrutiny of enterprise IT spend. Our solutions enable enterprises to simultaneously achieve the twin goals of driving new customer acquisition and serving existing customers to deliver profitable growth. Adobe is well positioned to keep winning with our differentiated offerings, track record of innovations and ability to drive ROI for companies across industries. We’re looking forward to a strong close to the year. I will now pass it to Dan. Dan Durn: Thanks, Anil. Today I will start by summarizing Adobe’s performance in Q3 fiscal 2023, highlighting growth drivers across our businesses, and I’ll finish with financial targets. Adobe’s performance in Q3 demonstrates something that makes us exceptional, the combination of growth and profitability. In fact, at Adobe, rather than talking about trade-offs between growth or profitability, we call it an “and” statement. Growth and profitability is not new for us, we have been delivering both for a very long time and it is at the core of our operating philosophy. It all starts with prioritization, innovation and a sharp focus on execution. This philosophy shines through in our Q3 results. We are investing in technology platforms, global campaigns to attract and engage millions of customers and recruiting the best and brightest people in our industry. While doing that, Adobe is driving performance on margin and earnings, demonstrating what a special company we are. In Q3, Adobe achieved revenue of $4.89 billion, which represents 10% year-over-year growth, or 13% in constant currency. GAAP diluted earnings per share was $3.05, up 26% year-over-year, and non-GAAP diluted earnings per share was $4.09, up 20% year-over-year. Other business and financial highlights included: Digital Media revenue of $3.59 billion; net new Digital Media ARR of $464 million; Digital Experience revenue of $1.23 billion; cash flows from operations of $1.87 billion; RPO of $15.72 billion exiting the quarter; and repurchasing approximately 2.1 million shares of our stock during the quarter. In our Digital Media segment, we achieved Q3 revenue of $3.59 billion, which represents 11% year-over-year growth, or 14% in constant currency. We added $464 million of net new ARR in the quarter, our strongest Q3 on record, exiting the quarter with $14.60 billion of Digital Media ARR, growing 15% year-over-year in constant currency. We achieved Creative revenue of $2.91 billion, which represents 11% year-over-year growth, or 14% in constant currency. We added $332 million of net new Creative ARR in Q3, with strong demand across our offerings. Third quarter Creative growth drivers included: new user growth across geographies, customer segments and Creative offerings, driven by innovation and targeted campaigns utilizing insights from our data-driven operating model; outstanding top-of-funnel performance resulting from viral community excitement and success of our product-led growth strategy, driving traffic to Adobe.com; single app subscriptions for Photoshop driven by interest in the magic of Firefly, Generative Fill and Generative Expand; another great quarter for value-added services, including strong customer demand for Adobe Stock; continued customer adoption of Acrobat CC; strong engagement and retention across customer segments; and success in the enterprise, driven by transformational ETLAs that span the entire Creative portfolio, including CC All Apps for creative teams, Express for knowledge workers, Frame for collaboration, and Adobe Stock and Firefly for content. Adobe achieved Document Cloud revenue of $685 million, which represents 13% year-over-year growth, or 15% in constant currency, and we added $132 million of net new Document Cloud ARR in the quarter. Third quarter Document Cloud growth drivers included: success with new customer acquisition through our Reader and Acrobat web funnels and distribution partners, with monthly active users up over 70% year-over-year for Acrobat web; strong demand for Acrobat subscriptions across customer segments and geographies, driven by targeted offers; strength in monetization from Acrobat mobile, which grew ending ARR over 30% year-over-year in constant currency, driven by product innovation and conversion; and traction in B2B, with strong unit demand for our Team offering through the reseller and direct routes to market. Turning to our Digital Experience segment, in Q3, we achieved revenue of $1.23 billion, which represents 10% year-over-year growth, or 11% in constant currency. Q3 subscription revenue was $1.10 billion, which represents 12% year-over-year growth, or 13% in constant currency. Third quarter Digital Experience growth drivers included: demand for our Adobe Experience Platform and native applications, including Real-Time CDP, Customer Journey Analytics and Adobe Journey Optimizer. In Q3, subscription revenue for AEP and Apps grew 60% year-over-year; strength in Content and Commerce, with Adobe Experience Manager continuing to set the standard for enterprise content management; growth of our Workfront business, as workflow and collaboration are essential components of an enterprise content supply chain solution; strong retention rates in the quarter, as we continue to focus on value realization to our Digital Experience customers; and continued momentum in transformational platform deals with large enterprises adopting our end-to-end suite of applications. Adobe’s effective tax rate in Q3 was 19.5% on a GAAP basis and 18.5% on a non-GAAP basis. The GAAP tax rate came in lower than expected due to tax benefits associated with the vesting of share-based payments in the quarter. RPO exiting the quarter was $15.72 billion, growing 11% year-over-year, or 13% when adjusting for a 2% FX headwind. Our ending cash and short-term investment position exiting Q3 was $7.52 billion, and cash flows from operations in the quarter were $1.87 billion. In Q3, we entered into $1 billion share repurchase agreement, and we currently have $3.15 billion remaining of our $15 billion authorization granted in December 2020. Factoring in current macroeconomic conditions and year-end seasonal strength, for Q4, we are targeting: total Adobe revenue of $4.975 billion to $5.025 billion; Digital Media net new ARR of approximately $520 million; Digital Media segment revenue of $3.67 billion to $3.70 billion; Digital Experience segment revenue of $1.25 billion to $1.27 billion; Digital Experience subscription revenue of $1.11 billion to $1.13 billion; tax rate of approximately 18% on a GAAP basis and 18.5% on a non-GAAP basis; GAAP earnings per share of $3.10 to $3.15; and non-GAAP earnings per share of $4.10 to $4.15. Q3 was a great quarter for Adobe, and I couldn’t be more pleased with how the company is positioned to continue to deliver for our customers and investors. We’re looking forward to our Investor Meeting at Adobe MAX on October 10, where we’ll do a deep dive into our AI innovation. I hope to see you there. Shantanu, back to you. Shantanu Narayen: Thanks, Dan. Adobe’s strong Q3 results are a reflection of our team’s exceptional execution. We recently lost our beloved co-founder John Warnock. John’s brilliance and innovations changed the world. He was one of the greatest inventors of our generation and an inspiration to the technology industry. While we miss him tremendously, it gives me great comfort knowing that John was so proud of all of the innovation Adobe continues to deliver. As someone who shares John’s passion for product and innovation, I’m exceptionally energized by the technology platforms we are delivering with AI at the center across our three clouds to delight customers. Our brand, technology and our talented employees position us for a strong close to the year and continued growth in the decades to come. Adobe’s best days are ahead of us. Thank you. We will now take questions. See also 12 Best Large-Cap Value ETFs and 12 Best Small-Cap Value ETFs. Q&A Session Follow Adobe Inc. (NASDAQ:ADBE) Follow Adobe Inc. (NASDAQ:ADBE) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] And our first question will come from Keith Weiss with Morgan Stanley. Keith Weiss: Excellent. Thank you guys for taking the question and really nice quarter. Dan, actually a margin question, for you. And kind of a riddle that, like, we’ve been thinking about. We’ve been told generative AI is really expensive to run. The inference and training costs are really high. You guys have been running a beta for a while, 2 million images generated. There’s a lot of functionality already in the product. And your operating margins are up. Your gross margins are up on a year-on-year basis. So, how are you able to do that? Like, where are these costs going, if you will? And on a go-forward basis, if all this stuff becomes generally available, how should we think about that gross margin impact or the overall margin impact of generative AI on a go-forward basis? Thank you. Dan Durn: Yeah. Thanks, Keith. So, as you rightfully point out, the engine of innovation at the company is really strong. A lot of exciting announcements this week, but we’ve been at this now a year, bringing the magic of generative AI and Firefly to life. And we’re just getting started from an innovation standpoint. Over the last six months, we’ve been live with the beta. And as you point out, we’ve generated — our customers have generated over 2 billion images. And I know it’s not lost on people. All this has done while we’re delivering strong margins. But when we take a step back and think about these technologies, we have investments from a COGS standpoint, inferencing, content, from an R&D standpoint, training, creating foundation models, and David alluded to it in his prepared comments, the image model for Firefly family of models is out. But we’re going to bring other media types to market as well. So, we’re making substantive investments. When I go back to the framing of my prepared comments, we really have a fundamental operating philosophy that’s been alive at the company for a long time: growth and profitability. We’re going to prioritize, we’re going to innovate, and we’re going to execute with rigor, and you see that coming through in all of the financial results of the company. As we think about going — the profile going forward, what I’ll come back to is, is when we initially set fiscal 2023 targets, implicit in those targets was a 44.5% operating margin. If you think about how we just guided Q4, where we’ve got these four great new products and these technologies infused into the product lineup, and all of the support we’re going to do as we roll these out in our MAX conference down in L.A. again to keep the enthusiasm with the customer base building, implicit in that guide is an operating margin of around 45.5%. So, as you think about us leading this industry, leading the inflection that’s unfolding in front of us, that mid-40%s number we think is the right ballpark to think about the margin structure of the company as we continue to drive this technology and leadership. Looking forward to the Q4 earnings call where we will share more about our fiscal 2024 targets. Shantanu Narayen: And maybe Keith, just 30 seconds to add to that, for investors like you who want to make sure we’re not in any way not investing in the future, we are investing on training for 3D, for video, for new forms of imaging and vectors. So, what we are confident is while we continue to invest in that, the scrutiny that Dan and his team have on other expenses, that we can continue to drive top-line growth as well as cash flow and EPS. So, I think we’re unique in that respect. Keith Weiss: Definitely. Very impressive, guys. Thank you so much for taking the question. Operator: And our next question will come from Kash Rangan with Goldman Sachs. Kash Rangan: Sorry to hear of John Warnock’s passing. My condolences. But congrats on the quarter. As we look at the pricing model for generative AI products which are based on consumption, do you think that these — rather, how additive do you think the generative AI offerings will be to the growth profile of the company going forward? And also one for Dan. When you look at your Q4 guidance, are you contemplating — it looks like it’s not largely changed versus the Street’s prior expectations. Are we not embedding any opportunities to show what the generative AI products can do? Because they seem to be largely incremental to what had been contemplated when you first gave guidance fall of last year. Thank you so much. Shantanu Narayen: Well, Kash, maybe David and I can take the first parts of the question. And just again, for everybody on the call, I think to summarize the new offerings that we have, we’ve announced that we have a Firefly subscription. So, you can use a free trial number of credits, and after that, you can actually subscribe to Firefly. We have Adobe Express, which now includes an allocation of Firefly. We certainly have the Creative Cloud products and Photoshop and Illustrator that have it. We have Generation Credit Packs, and we have GenStudio for the Enterprise and to be able to deal with it. So first, I just wanted to make sure that you recognized the tremendous innovation that we’re delivering associated with that. And as you know, one of the things that we have done is to really focus on both new user acquisition, which is going to be driven across all of those offerings, as well as with the price increase, given there is an allocation associated with it for existing customers, they will start to see that as they roll over and they have to renew their subscription. So, I just wanted to set that bit, and maybe then I’ll ask David to add a little bit about each of these and how we see that play out. David Wadhwani: Yeah, thanks, Shantanu. Yeah, as Shantanu said, we look at the business implications of this through those two lenses: new user adoption, first and foremost, and then sort of opportunity to continue to grow the existing book of business. On the new user side, we’ve said this for years, our focus continues to be on proliferation. We believe that we have a massive number of users in front of us. We continue to have our primary focus being net user adds and subscribers. And so, the goal here in proliferation is to get the right value to the right audience at the right price. And if I think about the four new offerings that Shantanu teed up, I think two of them are primed to maybe be on the earlier side of that. First, on the individual side, Express. It’s been in the market for over a year now, and the new release of Express is a massive step forward in terms of the abilities that it has, both — everything from performance to support for a broader set of things beyond design, into video and into illustration, into PDF and document workflows. So, there’s just a tremendous amount of new value that we’ve added, including generative AI into that. So, we think that Express will be an early indicator of that success that we’re talking about. The second one is the work that we’re doing in the DME business in conjunction with Anil on the DX business around enterprises, so GenStudio, and enabling the broad base of marketers to actually use Express in conjunction with the Creative Studio teams using Creative Cloud to really accelerate their use of and creation of content......»»

Investments in products and e-commerce portals bode well for players like these. The Zacks Shoes and Retail Apparel industry has been dealing with hardships from elevated costs, disrupted supply chains, reduced spending trends on discretionary items and increased marketing investments. These traits have been the key burdens on the participating companies’ profits. Additionally, adverse currency movements threaten industry players due to their worldwide presence. However, players stand to benefit from robust demand for activewear and athletic shoes. New and innovative designs, along with increased consumer awareness about leading a healthy lifestyle, will likely continue to aid sales of fitness clothes and footwear. Industry players focused on product innovation, store expansion, digital investments and omni-channel growth are expected to gain. Investments in products and e-commerce portals bode well for players like Adidas AG ADDYY, Skechers SKX, Steven Madden SHOO and Carter’s Inc. CRI. About the Industry The Zacks Shoes and Retail Apparel industry comprises companies that design, source and market clothing, footwear and accessories for men, women and children under various brand names. Product offerings of the companies mostly include athletic and casual footwear, fashion apparel and activewear, sports equipment, bags, balls, and other sports and fashion accessories. The companies showcase their products through their branded outlets and websites. Some companies distribute products via other retail stores, such as national chains, online retailers, sporting goods stores, department stores, mass merchandisers, independent retailers and catalogs. A Look at What’s Shaping Shoes and Retail Apparel Industry’s Future Cost Headwinds: Companies in the industry are witnessing elevated costs due to factors like commodity cost inflation and reinvestments. Supply-chain constraints and elevated logistic costs have been acting as deterrents. Many companies expect increased logistic costs to hurt margins in the near term. Elevated marketing expenses, higher operating overhead and demand-creating expenses, and increased investments to enhance store and digital operations have been raising SG&A costs. Also, industry participants are witnessing rising costs to support brand campaigns and digital investments. The exit from the Russia business due to the Ukraine-Russia conflict is likely to be the key concern for some players. A tough and competitive labor market is another concern. These factors pose a threat to industry players’ margins. Consumer Demand Trends: Players in the industry have been benefiting from strong consumer demand for activewear/athleisure products and footwear, and the trend is expected to continue in 2023. Athletic goods and apparel companies offer products from footwear, sweatshirts, leggings, pants, jackets and tops to yoga wear and running clothes for men and women. The increasing fashion sense is boosting the demand for innovative clothes and footwear in the United States. Industry participants have been focused on product innovations, active promotions, store expansion and enhancing e-commerce capabilities to gain market share. Favorable health and wellness trends have been the key to inspiring footwear manufacturers to expand their product portfolio. The companies continue to innovate styles, materials and colors, and incorporate functional designs to grab a large share of the fast-growing market. Moreover, multi-functional shoes, which cater to casual and formal looks, have been gaining popularity. Increased participation of women in sports and outdoor activities in recent years has been a boon for industry players. E-Commerce Investments: E-commerce has been playing a crucial role in the athleisure market’s growth. The companies in the segment are looking to build a customer base through websites, social media and other digital channels. As consumers continue to shop from home, growth of athletic-inspired apparel and digital sales are likely to continue. Companies focused on expanding their athletic-based apparel lines and building on e-commerce capabilities are expected to witness growth in the long run. Efforts to accelerate deliveries through investments in supply chains and order fulfillment avenues are likely to provide an edge to industry players. Simultaneously, companies are investing in renovations and improved checkouts, as well as mobile point-of-sale capabilities, to make stores attractive. Efforts to enhance experiences through multiple channels are likely to contribute significantly to improving traffic and transactions in stores and online. Zacks Industry Rank Indicates Dull Prospects The Zacks Shoes and Retail Apparel Industry is a nine-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #210, which places it in the bottom 17% of more than 250 Zacks industries. The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1. The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. In the past year, the industry’s earnings estimates for 2023 have declined 7.1%. Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and the valuation picture. Industry Vs. Sector The Zacks Shoes and Retail Apparel industry has underperformed the sector and the S&P 500 in the past year. Stocks in the industry have collectively declined 6.6%. However, the Zacks Consumer Discretionary sector and the Zacks S&P 500 composite have rallied 5.5% and 13.6%, respectively. Shoes and Retail Apparel Industry’s Valuation On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing Consumer Discretionary stocks, the industry is currently trading at 22.36X compared with the S&P 500’s 19.18X and the sector’s 16.7X. Over the last five years, the industry has traded as high as 37.75X and as low as 20.15X, with the median of 27.1X. 4 Shoes & Retail Apparel Stocks to Watch Skechers: This Manhattan Beach, CA-based company designs, develops, markets and distributes footwear for men, women and children in the United States and overseas under the SKECHERS name, as well as several unique brand names. The company’s emphasis on new product lines, store remodeling projects, cost-containment efforts, inventory management and global distribution platform bodes well. SKX is focused on executing its long-term growth strategy, with a diverse assortment of innovative and comfortable products. This is expected to drive its top line in the near and long terms. Skechers is making strategic investments to improve infrastructure worldwide, primarily e-commerce platforms and distribution centers. The company’s international business is a significant sales growth driver. SKX has a trailing four-quarter earnings surprise of 39.1%, on average. The Zacks Consensus Estimate for the company’s 2023 sales and earnings indicates growth of 8.7% and 42%, respectively, from the year-ago quarter’s reported figure. The consensus estimate for SKX’s 2023 EPS has moved up 1.8% in the past 30 days. Shares of the Zacks Rank #1 (Strong Buy) footwear company have gained 34.9% in the past year. Adidas: The leading manufacturer and seller of athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia Pacific and Latin America is poised to gain from strong demand, compelling products and robust performance in its online business. Adidas has been benefiting from improved sell-through of all Adidas products in the market. Moreover, the company has been witnessing improved margins, driven by the recently implemented price increases and an improved channel mix. The Zacks Consensus Estimate for ADDYY’s 2023 top and bottom line indicates declines of 1.1% and 197%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for ADDYY’s 2023 loss has narrowed 5.9% in the past seven days. Adidas delivered an earnings surprise of 44.4%, on average, in the trailing four quarters. This Zacks Rank #3 (Hold) stock has rallied 35% in the past year. Steven Madden: The company designs, sources, markets and sells fashion-forward name-brand and private-label footwear for women, men and children, and private-label fashion handbags and accessories across the world. Its focus on boosting its direct-to-consumer business, expanding categories, enhancing its presence in the international markets and reinforcing its core U.S. wholesale footwear bodes well. It is also focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses, which is expected to boost the top and bottom lines. A proven business model, robust brands and various growth opportunities position the company well to drive overall growth and boost stakeholders’ value in the long run. The Zacks Consensus Estimate for SHOO’s 2023 sales and earnings indicates declines of 7.5% and 11.8%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for SHOO’s 2023 EPS has been unchanged in the past 30 days. The company has a negative trailing four-quarter earnings surprise of 1.5%, on average. Shares of this Zacks Rank #3 company have risen 15.7% in the past year. Carter’s: The company is the largest marketer of branded apparel and related products for babies and young children in North America. It has been gaining from a solid e-commerce business, driven by expanded omni-channel facilities like curbside pickup, same-day pickup, buy online and pickup at store, and ship from store. This, along with easy access to a broad array of online products when shopping in stores, bodes well. Carter’s has been benefiting from improved price realization and gains from share repurchases. The Zacks Consensus Estimate for CRI’s 2023 sales and earnings indicates declines of 7.1% and 15.8%, respectively, from the year-ago quarter’s reported figure. The consensus estimate for CRI’s 2023 EPS has moved down 1% in the past 30 days. It has a trailing four-quarter earnings surprise of 36.7%, on average. Shares of this Zacks Rank #3 company have declined 12.9% in the past year. Adidas AG (ADDYY): Free Stock Analysis Report Skechers U.S.A., Inc. (SKX): Free Stock Analysis Report Carter’s, Inc. (CRI): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research This article originally appeared on Zacks Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now......»»

The Shoes and Retail Apparel industry continues to witness elevated operating and input costs. Gains from product innovation, robust demand trends and digital growth are likely to support companies like ADDYY, SKX, SHOO and CRI. The Zacks Shoes and Retail Apparel industry has been dealing with hardships from elevated costs, disrupted supply chains, reduced spending trends on discretionary items and increased marketing investments. These traits have been the key burdens on the participating companies’ profits. Additionally, adverse currency movements threaten industry players due to their worldwide presence.However, players stand to benefit from robust demand for activewear and athletic shoes. New and innovative designs, along with increased consumer awareness about leading a healthy lifestyle, will likely continue to aid sales of fitness clothes and footwear. Industry players focused on product innovation, store expansion, digital investments and omni-channel growth are expected to gain. Investments in products and e-commerce portals bode well for players like Adidas AG ADDYY, Skechers SKX, Steven Madden SHOO and Carter’s Inc. CRI.About the IndustryThe Zacks Shoes and Retail Apparel industry comprises companies that design, source and market clothing, footwear and accessories for men, women and children under various brand names. Product offerings of the companies mostly include athletic and casual footwear, fashion apparel and activewear, sports equipment, bags, balls, and other sports and fashion accessories. The companies showcase their products through their branded outlets and websites. Some companies distribute products via other retail stores, such as national chains, online retailers, sporting goods stores, department stores, mass merchandisers, independent retailers and catalogs.A Look at What's Shaping Shoes and Retail Apparel Industry's FutureCost Headwinds: Companies in the industry are witnessing elevated costs due to factors like commodity cost inflation and reinvestments. Supply-chain constraints and elevated logistic costs have been acting as deterrents. Many companies expect increased logistic costs to hurt margins in the near term. Elevated marketing expenses, higher operating overhead and demand-creating expenses, and increased investments to enhance store and digital operations have been raising SG&A costs. Also, industry participants are witnessing rising costs to support brand campaigns and digital investments. The exit from the Russia business due to the Ukraine-Russia conflict is likely to be the key concern for some players. A tough and competitive labor market is another concern. These factors pose a threat to industry players’ margins.Consumer Demand Trends: Players in the industry have been benefiting from strong consumer demand for activewear/athleisure products and footwear, and the trend is expected to continue in 2023. Athletic goods and apparel companies offer products from footwear, sweatshirts, leggings, pants, jackets and tops to yoga wear and running clothes for men and women. The increasing fashion sense is boosting the demand for innovative clothes and footwear in the United States. Industry participants have been focused on product innovations, active promotions, store expansion and enhancing e-commerce capabilities to gain market share. Favorable health and wellness trends have been the key to inspiring footwear manufacturers to expand their product portfolio. The companies continue to innovate styles, materials and colors, and incorporate functional designs to grab a large share of the fast-growing market. Moreover, multi-functional shoes, which cater to casual and formal looks, have been gaining popularity. Increased participation of women in sports and outdoor activities in recent years has been a boon for industry players.E-Commerce Investments: E-commerce has been playing a crucial role in the athleisure market’s growth. The companies in the segment are looking to build a customer base through websites, social media and other digital channels. As consumers continue to shop from home, growth of athletic-inspired apparel and digital sales are likely to continue. Companies focused on expanding their athletic-based apparel lines and building on e-commerce capabilities are expected to witness growth in the long run. Efforts to accelerate deliveries through investments in supply chains and order fulfillment avenues are likely to provide an edge to industry players. Simultaneously, companies are investing in renovations and improved checkouts, as well as mobile point-of-sale capabilities, to make stores attractive. Efforts to enhance experiences through multiple channels are likely to contribute significantly to improving traffic and transactions in stores and online.Zacks Industry Rank Indicates Dull ProspectsThe Zacks Shoes and Retail Apparel Industry is a nine-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #210, which places it in the bottom 17% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. In the past year, the industry’s earnings estimates for 2023 have declined 7.1%.Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and the valuation picture.Industry Vs. SectorThe Zacks Shoes and Retail Apparel industry has underperformed the sector and the S&P 500 in the past year.Stocks in the industry have collectively declined 6.6%. However, the Zacks Consumer Discretionary sector and the Zacks S&P 500 composite have rallied 5.5% and 13.6%, respectively.One-Year Price PerformanceShoes and Retail Apparel Industry's ValuationOn the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing Consumer Discretionary stocks, the industry is currently trading at 22.36X compared with the S&P 500’s 19.18X and the sector’s 16.7X.Over the last five years, the industry has traded as high as 37.75X and as low as 20.15X, with the median of 27.1X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years)4 Shoes & Retail Apparel Stocks to WatchSkechers: This Manhattan Beach, CA-based company designs, develops, markets and distributes footwear for men, women and children in the United States and overseas under the SKECHERS name, as well as several unique brand names. The company’s emphasis on new product lines, store remodeling projects, cost-containment efforts, inventory management and global distribution platform bodes well. SKX is focused on executing its long-term growth strategy, with a diverse assortment of innovative and comfortable products. This is expected to drive its top line in the near and long terms.Skechers is making strategic investments to improve infrastructure worldwide, primarily e-commerce platforms and distribution centers. The company’s international business is a significant sales growth driver. SKX has a trailing four-quarter earnings surprise of 39.1%, on average. The Zacks Consensus Estimate for the company’s 2023 sales and earnings indicates growth of 8.7% and 42%, respectively, from the year-ago quarter’s reported figure. The consensus estimate for SKX’s 2023 EPS has moved up 1.8% in the past 30 days. Shares of the Zacks Rank #1 (Strong Buy) footwear company have gained 34.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here .Price and Consensus: SKXAdidas: The leading manufacturer and seller of athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia Pacific and Latin America is poised to gain from strong demand, compelling products and robust performance in its online business. Adidas has been benefiting from improved sell-through of all Adidas products in the market. Moreover, the company has been witnessing improved margins, driven by the recently implemented price increases and an improved channel mix.The Zacks Consensus Estimate for ADDYY’s 2023 top and bottom line indicates declines of 1.1% and 197%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for ADDYY’s 2023 loss has narrowed 5.9% in the past seven days. Adidas delivered an earnings surprise of 44.4%, on average, in the trailing four quarters. This Zacks Rank #3 (Hold) stock has rallied 35% in the past year. Price and Consensus: ADDYYSteven Madden: The company designs, sources, markets and sells fashion-forward name-brand and private-label footwear for women, men and children, and private-label fashion handbags and accessories across the world. Its focus on boosting its direct-to-consumer business, expanding categories, enhancing its presence in the international markets and reinforcing its core U.S. wholesale footwear bodes well. It is also focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses, which is expected to boost the top and bottom lines.A proven business model, robust brands and various growth opportunities position the company well to drive overall growth and boost stakeholders’ value in the long run. The Zacks Consensus Estimate for SHOO’s 2023 sales and earnings indicates declines of 7.5% and 11.8%, respectively, from the year-ago quarter’s reported figures. The consensus estimate for SHOO’s 2023 EPS has been unchanged in the past 30 days. The company has a negative trailing four-quarter earnings surprise of 1.5%, on average. Shares of this Zacks Rank #3 company have risen 15.7% in the past year.Price and Consensus: SHOOCarter’s: The company is the largest marketer of branded apparel and related products for babies and young children in North America. It has been gaining from a solid e-commerce business, driven by expanded omni-channel facilities like curbside pickup, same-day pickup, buy online and pickup at store, and ship from store. This, along with easy access to a broad array of online products when shopping in stores, bodes well. Carter’s has been benefiting from improved price realization and gains from share repurchases.The Zacks Consensus Estimate for CRI’s 2023 sales and earnings indicates declines of 7.1% and 15.8%, respectively, from the year-ago quarter’s reported figure. The consensus estimate for CRI’s 2023 EPS has moved down 1% in the past 30 days. It has a trailing four-quarter earnings surprise of 36.7%, on average. Shares of this Zacks Rank #3 company have declined 12.9% in the past year.Price and Consensus: CRI Free Report: Top EV Battery Stocks to Buy Now Just-released report reveals 5 stocks to profit as millions of EV batteries are made. Elon Musk tweeted that lithium prices have gone to "insane levels," and they're likely to keep climbing. As a result, a handful of lithium battery stocks are set to skyrocket. Access this report to discover which battery stocks to buy and which to avoid.Download free today.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 Adidas AG (ADDYY): Free Stock Analysis Report Skechers U.S.A., Inc. (SKX): Free Stock Analysis Report Carter's, Inc. (CRI): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

ATI is building a new additive manufacturing facility in Florida to support the U.S. Navy's nuclear propulsion program. ATI Inc. ATI has secured a contract from Bechtel Plant Machinery Inc. (BPMI) to assist in the development of highly specialized component solutions in support of the U.S. Naval Nuclear Propulsion Program. To fulfill this contract, which demands cutting-edge manufacturing methods, including metal additive manufacturing, ATI is set to establish a dedicated additive manufacturing facility near Fort Lauderdale, FL.ATI is bringing its extensive experience as a global provider of high-performance materials and solutions to aerospace and defense additive manufacturing in this project. ATI's Additive Manufacturing Products division will encompass advanced large-scale metal additive manufacturing, heat treatment processes, machining capabilities, and comprehensive quality inspection procedures, all housed within a secure facility. This facility is designed with room for expansion as ATI continues to advance its additive manufacturing technologies for assembling finished components.This collaboration represents the fusion of ATI Forged Products' proficiency in crafting critical machined forgings and ATI Specialty Materials' leadership in powder alloy technology. By establishing this facility, ATI is poised to optimize its capacity to provide advanced additively manufactured materials and components, which will significantly contribute to the defense industry. The growing demand from customers for more resilient and versatile materials and components, coupled with a commitment to ecological sustainability, will be met by this facility. Its anticipated commencement of operations is set for mid-2024.Within this single facility, cutting-edge additives and advanced manufacturing techniques will seamlessly blend with ATI's innovative powder alloys. Drawing from decades of experience delivering solutions that empower and safeguard, ATI noted it is well-positioned to usher in the next era of manufactured components.ATI reported adjusted earnings of 59 cents per share in the second quarter, indicating a 9% increase from the same period last year, surpassing the Zacks Consensus Estimate of 55 cents. Although the company's net sales for the quarter of $1,046 million fell slightly below the Zacks Consensus Estimate of $1,046.3 million, they still demonstrated a 9% growth compared to the previous year's quarter.Despite challenges such as lower deliveries of nickel-based alloys and precision rolled strip products, ATI managed to offset some of the impact through increased margins in its High-Performance Materials & Components segment. Furthermore, the successful restart of the titanium melt shop in Albany, OR, and ongoing expansion efforts in Richland, WA, position ATI favorably to capture market opportunities. The company is confident in its ability to deliver results in 2023 and beyond while staying committed to executing its long-term strategy.ATI Inc. Price and Consensus  ATI Inc. price-consensus-chart | ATI Inc. Quote Zacks Rank & Key PicksATI currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, Akzo Nobel N.V. AKZOY and Hawkins, Inc. HWKN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The earnings estimate for Carpenter Technology’s current year is pegged at $3.48, indicating a year-over-year growth of 205%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 10%. The company’s shares have rallied 59.4% in the past year.The consensus estimate for Akzo Nobel’s current-year earnings is pegged at $1.44, indicating a year-over-year growth of 67.4%. In the past 60 days, AKZOY’s current-year earnings estimate has been revised upward by 2.9%. The company’s shares have rallied 20.6% in the past year.The consensus estimate for Hawkins’ current-year earnings is pegged at $3.40, indicating a year-over-year growth of 18.9%. HWKN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have rallied 56.7% in the past year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant 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 ATI Inc. (ATI): Free Stock Analysis Report Carpenter Technology Corporation (CRS): Free Stock Analysis Report Akzo Nobel NV (AKZOY): Free Stock Analysis Report Hawkins, Inc. (HWKN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Can digital and/or high throughput manufacturing be applied to circuit boards? Can stretchable electronics be produced without sacrificing processing capabilities? ... Read more Can digital and/or high throughput manufacturing be applied to circuit boards? Can stretchable electronics be produced without sacrificing processing capabilities? Flexible hybrid electronics (FHE) is an emerging manufacturing methodology that aims to resolve both of these questions. By combining aspects of printed and conventional electronics, specifically conductive inks patterned on a flexible substrate with mounted components such as integrated circuits (ICs), it represents a compelling ‘best of both worlds’ solution. Matching Value Propositions to Applications At its core, FHE is an alternative approach to circuit manufacturing. As such, FHE circuits can, in principle, be used wherever comparatively simple PCBs are needed (i.e., not complex multilayer circuits). Of course, replacing an established incumbent technology requires a compelling advantage that is typically application-dependent – do not expect FHE circuits to displace the PCB in most consumer electronics anytime soon. Relative to existing flexible PCBs, FHE offers 3 distinct value propositions: Additive digital manufacturing, conformality/stretchability, and compatibility with roll-to-roll (R2R) manufacturing. The key to successful commercialization is finding a product-market fit where one or more of these value propositions either justifies switching or to facilitate a new application that would not otherwise be possible. Evaluating the value proposition of FHE across multiple applications with different manufacturing volumes. Source: IDTechEx Additive Digital Manufacturing Since conductive ink can be printed using digital methods such as inkjet or the emerging laser-induced forward transfer (LIFT), FHE enables additive digital manufacturing. FHE is thus well suited to prototyping and very high-mix low-volume (HMLV) manufacturing – it could also potentially be deployed to facilitate versioning and even ‘mass customization’, the latter of which is difficult to envisage without digital manufacturing. Additive manufacturing is less wasteful than more established subtractive approaches and is thus especially advantageous when components and, hence, conductive traces are widely spaced. One such example is mounting LEDs on sheets for large area lighting, which can also be produced by R2R manufacturing. Conformality/Stretchability Conformality/stretchability is a key value proposition of FHE. Whereas flexible PCBs often employ rigid islands for mounting packaged ICs and other rigid SMD components, FHE circuits can be more flexible since many components (e.g., sensors) can be printed. Furthermore, conductive inks that are either stretchable or can withstand bending enables a shorter bending radius and even stretchability. The flexible (and potentially stretchable) form factor makes FHE ideally suited to wearable technology, including electronic skin patches and e-textiles since it improves wearer comfort relative to the current rigid boxes that contain conventional electronics. Challenges include washability and sustainability concerns relative to reusable rigid electronics mounted within a removable box. R2R Manufacturing. For large-volume manufacturing, conductive traces can be printed using rotary analog methods such as flexography, gravure, and rotary screen printing. This enables very rapid deposition via R2R manufacturing, reducing costs. Cost benefits are especially significant if traces can be printed onto existing surfaces (such as packaging labels), eliminating the need for a dedicated structure. Given the large volumes required and relatively low value-add per item, minimizing costs is essential for electronics to be adopted for smart packaging/RFID. While most RFID tags currently use stamped aluminum foil for antennas, printing with copper inks will reduce costs and improve sustainability. R2R FHE production is forecast to expand to more sophisticated smart packaging circuits with greater functionality, such as sensing. Comprehensive Insight IDTechEx’s report “Flexible Hybrid Electronics 2024-2034” evaluates the status and prospects of FHE circuits, which we forecast to reach a market size of around US$1.8 billion by 2034 - more if the associated infrastructure, software, and services are included.  Drawing on years of following the printed electronics industry and 40 interview-based company profiles, the report outlines trends and innovations in the materials, components, and manufacturing methods required. It explores the application sectors where FHE is most likely to be adopted, drawing on current activity and in-depth discussions with contract manufacturers and potential adopters. Granular market forecasts break down the opportunities for FHE circuits across 5 application sectors (automotive, consumer goods, energy, healthcare/wellness, and infrastructure/buildings/industrial) into 39 specific opportunities, such as skin temperature sensors and printed RFID tags. To find out more about this IDTechEx report, including downloadable sample pages, please visit www.IDTechEx.com/FHE. About IDTechEx IDTechEx guides your strategic business decisions through its Research, Subscription and Consultancy products, helping you profit from emerging technologies. For more information, contact research@IDTechEx.com or visit www.IDTechEx.com......»»

Align Technologies (ALGN) announces acquisition of direct 3D printing pioneer Cubicure GmbH, backed by years of successful collaboration. Align Technologies ALGN recently announced a definitive agreement to acquire the privately held Cubicure GmbH. The announcement builds on Align and Cubicure’s successful collaboration spanning a number of years, which has contributed to breakthrough technologies and innovation in direct 3D printing.The acquisition price is approximately €79 million, subject to customary closing conditions and adjustments for Align’s existing ownership of the capital stock of Cubicure. The latest move will bolster ALGN‘s core capabilities in direct 3D printing and expand knowledge and expertise in one of the most strategic areas of innovation over the next decade.The transaction is expected to be completed in the fourth quarter of 2023 or early 2024.About Cubicure GmbHVienna-based Cubicure GmbH is a pioneer in solutions for polymer additive manufacturing. The company develops, produces and distributes innovative materials, equipment, and processes for industrial 3D printing solutions.Cubicure’s patented Hot Lithography technology uses a special heating and coating mechanism that enables the processing of highly viscous resins to produce particularly tough and temperature-resistant polymers. This high-precision 3D printing process facilitates the unprecedented additive manufacturing of resilient components with an astonishing first-of-its-kind material quality performance.Image Source: Zacks Investment ResearchNews in DetailHighly regarded in the global clear aligners market, Align Technologies has the largest 3D printing operations, producing more than 1 million custom appliances per day. It continues to innovate and invest in technologies that enable the next generation of direct 3D printed products, thereby creating more sustainable and efficient solutions.Initially started as a joint development program, the partnership with Cubicure unfolded the potential for significant innovation in scaling ALGN’s direct 3D printing processes. Per Align’s representative, the decision to acquire Cubicure is a logical progression to bring their competent team and unique cutting-edge technology in-house. This will enable ALGN to scale its 3D printing operations to eventually directly print millions of custom appliances per day, supporting its long-term growth strategy.The acquisition of Cubicure will also bolster ALGN’s existing intellectual property portfolio and know-how in direct 3D printing of appliances.Industry ProspectsPer a Research report, the 3D printing market is valued at $15.0 billion in 2023 and is expected to witness a CAGR of 18.1% till 2028.Recent DevelopmentsConcurrently with the acquisition news, Align Technologies announced an innovation for the Invisalign system for greater control of digital treatment planning. The company introduced Plan Editor in ClinCheck treatment planning software, a new tool in the Align digital workflow built into the Align Digital Platform.In addition, ALGN also launched the Invisalign Palatal Expander System, a modern and innovative direct 3D printed device based on proprietary and patented technology. Combined with Invisalign First aligners, Invisalign Palatal Expanders provide doctors with a full early intervention treatment solution, including both skeletal (orthopedic) and dental (orthodontic) arch expansion.Price PerformanceIn the past six months, ALGN shares have gained 11.3% compared with the industry’s rise of 9.6%Zacks Rank and Other Key PicksAlign Technologies currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Quanterix QTRX and SiBone SIBN. Each of these companies presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Haemonetics’stock has risen 18.9% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days.HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have soared 178.8% in the past year against the industry’s decline of 5.3%.QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have gained 23.7% in the past year against the industry’s decline of 5.1%.SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 28%. In the last reported quarter, SiBonedelivered an earnings surprise of 26.83%. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN): Free Stock Analysis Report Haemonetics Corporation (HAE): Free Stock Analysis Report Quanterix Corporation (QTRX): Free Stock Analysis Report SiBone (SIBN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Agriculture - Operations industry is well-poised to gain on solid product portfolios and innovation in the near term, offset by impacts of raw material and commodity price inflation. Companies like ADM, AGRO, DOLE and LMNR stand to gain. The Zacks Agriculture – Operations industry is poised to benefit from innovations and improved consumer demand for healthy products. Investments in acquisitions, joint ventures and expansions are likely to fortify the prospects of the industry players. Continued investments in assets and technological capabilities to innovate and serve customers bode well for players like Archer Daniels Midland Company ADM, Adecoagro S.A. AGRO, Dole plc DOLE and Limoneira Co LMNR.However, higher investment costs and SG&A expenses continue to mar the profitability of the companies participating in the industry. Logistic and supply-chain issues, higher input costs, and elevated operational expenses have been affecting industry players for a while. Supply-chain concerns and commodity cost pressure have been affecting results.About the IndustryThe Zacks Agriculture – Operations industry comprises companies that produce or procure, transport, store, process, and distribute agricultural commodities to consumers. It also distributes ingredients to other parts of the agriculture industry (including clothing, animal feed, energy and industrial products). Some industry players engage in dairy operations, land transformation activities and the development of food ingredients using gene-editing technology. The industry encompasses production activities related to traditional farming of crops (like corn, soybean, wheat and cotton) and livestock and poultry products (including meat, dairy and eggs). The products are mainly sold at grocery stores or exported overseas. These are also used as feedstock for other industries. For example, cotton is used in the clothing industry and corn is used in the ethanol industry.Factors Shaping the Future of Agriculture - Operations IndustryRobust Demand Trends for Organic Products: The industry has benefited from an organic movement prompted by consumers’ increasing demand for healthier food. Agriculturists are adopting organic production techniques and curtailing the use of chemicals and pesticides. Innovations in food processing, improved grain-handling techniques, larger storage spaces and strong emerging market demand are conducive to the industry’s growth. Healthy eating habits are likely to accelerate purchasing and consuming alternative proteins. Focus on nourishment and wellness is pushing microbiome solutions to the forefront. The companies have been investing in acquisitions and joint ventures to build top-notch ingredients and solutions for meeting the demand for healthy products.Agricultural Export Projections: Per the U.S. Department of Agriculture, agricultural export projections for fiscal 2023 (ending Sep 30, 2023) of $177.5 billion suggest a decline of $3.5 billion from the May forecast of a record $181 billion. The export forecasts have been affected by declines in commodity groups, including corn, wheat, and tree nut exports. Moreover, the agricultural export projections for fiscal 2024 are estimated at $172 billion, reflecting a further decline from the revised estimate for fiscal 2023. Lower exports of soybeans, soybean meal, and dairy products are expected to hurt agricultural exports in fiscal 2024.Elevated Costs: Industry participants have been witnessing higher costs due to rising raw material, freight and logistics costs, including constraints in labor and trucking resources, leading to higher lead times for deliveries. Supply-chain concerns and commodity cost pressure have been affecting the profitability of agricultural companies for a while. The companies have resorted to pricing strategies to counter rising raw material costs. The industry participants seek to counter the global supply-chain challenges by forming partnerships and distribution strategies. Despite the pricing strategies, supply-chain challenges and cost inflation are expected to continue hurting margins in the near term.Companies in the industry continue to face raised SG&A expenses due to higher performance-related compensation, project-related costs, commissions and variable compensation. The companies are also witnessing elevated costs for investments in technology and innovation to stay ahead of the race. Continued deleverage in SG&A expenses may continue to have a bearing on the profitability of companies.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Agriculture – Operations industry is a 13-stock group within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #109, which places it in the top 44% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries resulted from a positive aggregate earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, analysts are gradually gaining confidence in this group’s earnings growth potential.Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and valuation picture.Industry vs. Broader MarketIn a year, the Zacks Agriculture – Operations industry has underperformed the S&P 500 and the Zacks Consumer Staples sector.The stocks in the industry have collectively fallen 19.3% in a year against the growth of 13.5% for the Zacks S&P 500 composite. Meanwhile, the sector has declined 2.3% in the same period.One-Year Price PerformanceAgriculture - Operations Industry's ValuationOn the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing Consumer Staples stocks, the agriculture – Operations industry is currently trading at 11.75X compared with the S&P 500’s 19.44X and the sector’s 17.52X.Over the last five years, the industry has traded as high as 17.44X, as low as 10.52X and at the median of 14.44X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years)4 Agriculture Operations Stocks to Keep an Eye onTwo Zacks Agriculture – Operations universe stocks currently sport a Zacks Rank #1 (Strong Buy) or #2 (Buy). Here, we suggest two other stocks with a Zacks Rank #3 (Hold) from the same industry, which investors may hold on to. You can see the complete list of today’s Zacks #1 Rank stocks here. Adecoagro: This Luxembourg-based agro-industrial company engages in farming crops and other agricultural products, dairy operations, sugar, ethanol and energy production, and land transformation activities in South America. The company benefits from high asset flexibility, which gives it a competitive advantage in the current uncertain market outlook. Its flexibility is reflected in its ability to increase the mix of anhydrous ethanol to benefit from its high prices and recovering demand. The company’s Farming & Land Transformation businesses have been benefiting from consolidating the five-year plan investments made in Crops, Rice and Dairy businesses, along with its focus on efficiencies.The company’s shares have rallied 31.4% in the past year. The Zacks Consensus Estimate for AGRO’s 2023 earnings has increased 7.3% in the past 30 days to 88 cents per share. The Zacks Consensus Estimate for the company’s 2023 sales and EPS suggests declines of 11.2% and 22.1%, respectively, from the year-ago period’s reported figures. The company currently has a Zacks Rank #2.Price and Consensus: AGRODole: This Dublin, Ireland-based global leader in fresh produce is poised to benefit from improved logistical efficiencies in several areas, which brought increased stability to its core fruit business. The company’s diverse sourcing network and advanced farming practices are likely to help overcome the potential weather challenges in various regions. The company benefited from a healthier supply and demand balance in the first half of 2023, which allowed a better pricing environment in Europe and much improved selling conditions in non-core markets.The Zacks Consensus Estimate for Dole’s 2023 earnings has increased 6.9% in the past 30 days. The Zacks Consensus Estimate for its 2023 sales and earnings suggests a decline of 10.6% and 4.1%, respectively, from the year-ago period’s reported figures. The company delivered an earnings surprise of 57.5%, on average, in the trailing four quarters. The DOLE stock has increased 28.7% in the past year. he company currently has a Zacks Rank #2. Price and Consensus: DOLEArcher Daniels: This Chicago, IL-based agricultural product company’s leadership in critical global trends like flexitarian diets, nutrition and sustainable materials has contributed to its momentum. Its focus on investing in assets and technological capabilities to serve customers efficiently is likely to be a significant growth driver. Solid demand, improved productivity and product innovations have been driving growth. Its Readiness program, positive cash flow and solid performance at the Nutrition unit have been aiding the results. The company has been progressing well on its three strategic pillars — optimize, drive and growth.Management is optimistic about the company’s 2022 results and envisions another year of solid earnings growth. It is poised to benefit from the robust performance of its Nutrition segment, owing to significant gains in the Human and Animal Nutrition units. The Zacks Consensus Estimate for Archer Daniels’ 2023 earnings has increased 0.8% in the past 30 days to $7.18 per share. The Zacks Consensus Estimate for ADM’s 2023 sales and earnings suggests a decline of 3.7% and 8.5%, respectively, from the year-ago period’s reported figures. It delivered an earnings surprise of 22.4%, on average, in the trailing four quarters. The company has declined 9.6% in the past year. The company currently has a Zacks Rank #3.Price and Consensus: ADMLimoneira: Santa Paula, CA-based Limoneira is a diversified citrus growing, packing, selling and marketing company with related agribusiness activities and real estate development operations. The company’s strategic approach toward fresh utilization has resulted in robust sales of fresh lemons by its sales and marketing team. The company’s avocado segment’s sales are poised to benefit from robust pricing, which has almost doubled year over year. LMNR is on track with its new plan to expand One World of Citrus, increase its avocado plantings and strategically sell certain assets to increase cash flow in the near term dramatically.The company’s shares have gained 25.2% in the past year. The Zacks Consensus Estimate for its fiscal 2023 sales suggests a decline of 7.1% from the year-ago period’s reported figure. The loss estimate for fiscal 2023 of 15 cents implies a significant increase from a loss of 8 cents reported in the prior year. LMNR delivered a negative earnings surprise of 42.3%, on average, in the trailing four quarters. The company currently has a Zacks Rank #3.Price and Consensus: LMNR The New Gold Rush: How Lithium Batteries Will Make Millionaires As the electric vehicle revolution expands, investors have a chance to target huge gains. Millions of lithium batteries are being made & demand is expected to increase 889%.Download the brand-new FREE report revealing 5 EV battery stocks set to soar.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 Archer Daniels Midland Company (ADM): Free Stock Analysis Report Dole PLC (DOLE): Free Stock Analysis Report Adecoagro S.A. (AGRO): Free Stock Analysis Report Limoneira Co (LMNR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

In this article, we will be taking a look at the Top 20 Fruit Producing Countries In The World. If you are not interested in reading the details, head straight to the Top 5 Fruit Producing Countries in the world. Regarding the world’s bounty of fruits, certain countries like China, India, Brazil, and Turkey among […] In this article, we will be taking a look at the Top 20 Fruit Producing Countries In The World. If you are not interested in reading the details, head straight to the Top 5 Fruit Producing Countries in the world. Regarding the world’s bounty of fruits, certain countries like China, India, Brazil, and Turkey among others stand out as veritable orchards of plenty. These nations have harnessed their unique climates, fertile soils, and agricultural expertise to become global leaders in fruit production. From succulent citrus groves to sprawling vineyards and lush banana plantations to the sweet aroma of apple orchards, these countries satisfy their domestic demand and contribute significantly to the global fruit market.  Global Fruit Production Overview  In recent years, the global fruit production industry has experienced significant growth, with a rising demand for fresh and healthy produce from consumers worldwide. The top fruit-producing countries include China, India, the United States, Brazil, and Spain, responsible for producing a substantial amount of the world’s fruit. According to recent financial statistics, In 2023, the Fresh Fruits market generated $674.5 billion in revenue, with an expected annual growth rate of 6.79% from 2023 to 2028 (CAGR).  However, there has been a growing trend towards producing exotic fruits such as avocados, pineapples, and mangoes, contributing to the industry’s growth. Despite the industry’s overall sustainability, concerns about using pesticides and other chemicals in fruit cultivation have been raised. As a result, many fruit producers have started implementing organic and sustainable farming practices to meet the growing demand for healthy and environmentally responsible produce. By doing so, they are not only ensuring the safety of consumers but also contributing to a more sustainable and eco-friendly future.  Challenges and Opportunities in Fruit Agriculture  Fruit agriculture stands at a crossroads, presenting formidable challenges and promising opportunities. Climate change is a significant hurdle, with erratic weather patterns such as droughts and floods imperiling fruit crop growth and yields. Adaptation to shifting weather is paramount for farmers seeking to safeguard their harvests.  Another trial arises from the burgeoning call for organic and sustainable fruit production. An environmentally-conscious consumer base increasingly scrutinizes agricultural practices, favoring eco-friendly methods. However, the transition can be arduous for traditional growers who need more means to embrace sustainable techniques.  In the realm of Fresh Fruits, the market is poised to reach a volume of 303.70 billion kilograms by 2028, reflecting a robust 4.4% growth in 2024. On a per-person basis, the average volume in the Fresh Fruits market is projected to reach 33.14 kilograms in 2023. Amidst these challenges, an array of opportunities beckon in fruit agriculture. The exotic and specialty fruit sector is experiencing a surge in popularity as consumers seek novel and enticing flavors. Fruits like dragon fruit, kiwi, and pomegranate are reaching more households.  Furthermore, the rising demand for fruit-derived products like juices, smoothies, and snacks has created a burgeoning market. Fruit growers who can supply top-notch ingredients to food manufacturers and retailers are well-positioned. Recent financial projections indicate that the global fruit juice market, valued at $141 billion in 2021, is expected to grow to $182 billion by 2027, with an annual growth rate of 4.31% from 2022 to 2027, driven by the increasing appetite for health-conscious and natural beverages.  Leading Fruit Production Companies: A Overview of Key Players and Their Impact” When it comes to fruit production, there are a few companies that come to mind. One of the biggest names in the industry is Dole plc (NYSE:DOLE), which produces a wide variety of fruits including bananas, pineapples, and berries. In 2022, Dole plc (NYSE:DOLE) reported a net revenue of $9.2 billion. Another major player is Chiquita, known for their bananas and other tropical fruits. Chiquita reported a net revenue of $3.1 billion in 2022. Both companies have a strong presence in the global market and are committed to sustainable and ethical practices in their operations. Other notable fruit companies include Fresh Del Monte Produce, Inc. (NYSE:FDP), Sun-Maid, and Sunkist. Fresh Del Monte Produce, Inc. (NYSE:FDP) reported a net revenue of $4.4 billion in 2022. These companies like Dole plc (NYSE:DOLE) and Fresh Del monte Produce, Inc. (NYSE:FDP) among others have built their reputations on producing high-quality fruits that consumers can trust. Whether you’re looking for a healthy snack or ingredients for your favorite recipes, these leading fruit producing companies have got you covered. Market Dynamics and Future Trends  The fruit market is a dynamic and ever-changing industry that continues to evolve with the changing times. In recent years, there has been a significant rise in the demand for organic and locally sourced produce, which has increased the number of organic fruit farms and markets, with organic fruit sales growing by 11% in 2020 to reach a total of $18.2 billion. In addition, there has been a surge in the demand for exotic fruits. This trend is expected to continue as consumers become more adventurous with their food choices and seek out unique and exotic flavors.   Technology has also played a significant role in the fruit market, with the rise of e-commerce platforms making it easier than ever for consumers to purchase fruits worldwide, creating a global marketplace for fruits, leading to increased competition and lower prices.   Looking to the future, it is expected that the fruit market will continue to experience growth and change with the rise of new technologies and changing consumer preferences. Regardless of these changes, however, one thing remains certain – fruits will always be essential to a healthy and balanced diet.  Steve Buckley/Shutterstock.com Our Methodology   For our methodology, we have ranked the top fruit-producing countries in the world based on their number of fruit production in tonnes as of 2020. The data is taken from FAO. 20. South Africa  Total Fruit Production: 7,456,699 tonnes South Africa is a prominent fruit-producing country known for its diverse and high-quality fruits, such as citrus, grapes, apples, pears, oranges, avocados, mangoes, papayas, and pineapples. Its mild climate and fertile soil create ideal conditions for fruit cultivation. The country’s fruits are not only delicious but also highly nutritious. South Africa’s vibrant fruit industry generates significant revenue, with the Fresh Fruits market reaching US$2.06 billion in 2023. This market is projected to grow annually at 5.79% from 2023 to 2028.  19. Ecuador  Total Fruit Production: 7,630,370 tonnes Ecuador is a top fruit-producing country known for its diverse range of tropical fruits, including bananas, mangoes, pineapples, and papayas. It’s renowned as the world’s largest banana exporter, shipping over 300 million boxes annually, and is known for its exceptional taste and quality. Besides bananas, Ecuador also exports mangoes, pineapples, and papayas globally, prized for their sweetness and nutritional value. In 2023, the Fresh Fruits market in Ecuador is worth US$1.08 billion and is expected to grow annually at a rate of 1.79% from 2023 to 2028.  18. France   Total Fruit Production: 8,887,220 tonnes France is a leading fruit producer globally, known for its rich soil, favorable climate, and advanced agriculture. Popular fruits include apples, pears, cherries, peaches, apricots, plums, grapes, and strawberries, with France ranking second in European apple production and fifth in global strawberry production. The country’s fruit industry emphasizes safety and quality, making French fruits highly sought after worldwide. In 2023, the Fresh Fruits market in France is valued at US$12.53 billion, with an expected annual growth rate of 2.43% from 2023 to 2028.  17. Pakistan   Total Fruit Production: 9,825,573 tonnes Pakistan, one of the top fruit producing countries in the world is a leading global fruit producer, renowned for its favorable climate and fertile land, nurturing fruits like mangoes, oranges, bananas, and guavas. As the world’s fourth-largest mango producer, Pakistan is known for the exceptional quality of its fruits, in high global demand, boosting the economy and providing employment for millions. Pakistan’s fruit industry also promotes health with nutritious options that prevent diseases and improve well-being, benefiting local and global communities. The 2023 Fresh Fruits market in Pakistan is valued at US$8.5 billion, with an expected annual growth rate of 7.30% from 2023 to 2028.  16. Thailand   Total Fruit Production: 10,098,175 tonnes Thailand is renowned for its top-notch fruit production. They grow various fruits, including durian, mango, rambutan, pomelo, and longan, known for their sweet, juicy taste, vibrant colors, and unique shapes. This industry is a significant economic driver, generating over $4.6 billion in 2023 and providing employment for millions. Thai fruits are in high global demand due to their quality and freshness. Beyond economic benefits, they promote healthy eating habits packed with vitamins, minerals, and antioxidants that boost the immune system, aid digestion, and reduce the risk of chronic diseases. Thailand’s fruit industry combines taste, visual appeal, and health benefits, making it a top choice for local and global consumers.  15. Colombia  Total Fruit Production: 10,521,546 tonnes Colombia’s fruit industry has significantly contributed to the country’s economy. In 2023, the country’s fruit market reached $3.9 billion in revenue, with the top exports of bananas, pineapples, and avocados. The fruit industry provides employment opportunities for many people, with many small-scale farmers benefiting from the government’s support programs. With the growing demand for healthy and sustainable food products, Colombia’s fruit industry is poised for continued growth and success in the global market.  14. Vietnam  Total Fruit Production: 10,616,559 tonnes Vietnam which is also one of the most vegetable consuming countries, is a major global player in fruit production, capitalizing on its favorable climate and fertile lands to cultivate in-demand fruits like dragon fruit, mango, durian, and pomelo. These fruits are celebrated for their exceptional quality, thanks to advanced farming techniques and rigorous quality standards. This thriving industry significantly bolsters Vietnam’s economy, offering employment to millions and generating substantial foreign exchange income. Remarkably, Vietnam’s fruit and vegetable exports soared to a record-breaking $2.7 billion in the first half of 2023, primarily driven by China’s robust demand. Notably, durian took the lead as Vietnam’s top fruit export, followed by dragon fruit, which recorded export earnings exceeding $303.1 million from January to May, marking a 10.7% increase compared to the previous year.  13. Nigeria   Total Fruit Production: 11,529,922 tonnes Nigeria, a leading global fruit producer, boastsa diverse range of fruits like mangoes, pineapples, oranges, bananas, and watermelons. In 2023, the Fresh Fruits market in Nigeria is valued at a substantial $16.8 billion and is expected to grow annually by 11.55% from 2023 to 2028. This fruit industry significantly contributes to Nigeria’s economy by offering employment to millions and generating export revenue. The government’s support, including research and infrastructure improvement funding, aids the industry’s growth. Despite challenges like storage and transportation, Nigeria’s dedicated farmers continue to produce high-quality fruits locally and globally, positioning the country as a critical player in the global fruit market.  12. Egypt   Total Fruit Production: 14,733,617 tonnes Egypt, one of the top fruit producing countries in the world stands 12th on the list, focusing on citrus fruits like oranges, lemons, grapefruits, mangoes, guavas, figs, and pomegranates. Egyptian farmers employ modern techniques to ensure high-quality, healthy crops, with a growing trend toward organic farming. This industry significantly contributes to Egypt’s economy through both local consumption and global exports, with its strategic location facilitating exports to Europe, Asia, and Africa. Notably, Egypt is a significant exporter of citrus fruits, with oranges alone bringing in over $700 million in export revenue in 2021. The Fresh Fruits market in Egypt is valued at $14.18 billion in 2023 and is projected to grow annually by 10.27% from 2023 to 2028.  11. Philippines  Total Fruit Production: 16,482,063 tonnes The Philippines is a major global fruit producer, celebrated for its diverse range of fruits, including mangoes, bananas, durian, and lanzones, all thriving in its tropical climate and fertile soil. Fruit cultivation is a significant livelihood for many, and the country’s rich fruit abundance enhances its culinary offerings with local fruits as crucial ingredients. Notably, since the onset of COVID-19, Filipino consumers have embraced fresh fruits more, leading to a 36% increase in global new fruit imports to the Philippines, totaling $695 million in 2020. The Fruits and nuts market in the Philippines is valued at $5.05 billion in 2023 and is projected to grow annually by 7.32% from 2023 to 2028.  10. Italy   Total Fruit Production: 17,827,510 tonnes Due to its ideal climate and fertile soil, Italy is a top global fruit producer, celebrated for its diverse range, including grapes, cherries, apples, pears, and citrus fruits. Known for premium quality, Italian fruits are prized worldwide for their exceptional flavor, texture, and freshness. The fruit industry is a vital economic driver, offering income and employment, especially in rural areas, with many small-scale farmers depending on it. Italy’s fruit production also focuses on sustainable and organic farming practices to protect the environment and ensure long-term farm viability. In 2023, Italy’s fruit exports exceeded 10 billion euros for the first time, reflecting an 8% growth in international markets.  9. Iran   Total Fruit Production: 18,963,596 tonnes Iran is a top fruit producing country with a diverse range, including apples, grapes, pomegranates, and cherries. Its fruit production is for domestic consumption and international exports, contributing significantly to its economy. The government supports this industry through research, infrastructure development, and farmer assistance, ensuring its continued growth. Beyond its economic importance, fruits hold cultural and traditional value in Iranian cuisine and heritage. In 2021 Iran exported $146 million worth of tropical fruits, with India, Pakistan, China, Malaysia, and Turkey as the main destinations. The Fresh Fruits market in Iran is valued at $4.67 billion in 2023 and is expected to grow annually by 8.74% from 2023 to 2028.  8. Spain  Total Fruit Production: 19,471,070 tonnes Spain is a top global fruit producer, known for its high-quality fruits like oranges, lemons, grapes, and peaches, thriving in its fertile land and favorable climate. It’s a major contributor to the national economy, providing jobs and significant export revenue. Spain ranks first in mandarin production, second in watermelons, and third in strawberries globally. The Fresh Fruits market in Spain is valued at $11.29 billion in 2023 and is projected to grow annually by 2.27% from 2023 to 2028. In 2022, the value of fruit exports reached 8,843 million euros ($10.5 million), despite a 3% decrease, while vegetable exports dropped by 7% to 5.3 million tons.  7. Indonesia  Total Fruit Production: 22,743,965 tonnes Indonesia excels in fruit production and stands 7th on the list, yielding diverse fruits like bananas, pineapples, mangoes, and renowned durians, which are widely exported. This industry offers employment to many and contributes significantly to Indonesia’s economy. In 2021, Indonesia exported $80.4 million in tropical fruits, with China, Hong Kong, and the UAE as critical destinations. The Fresh Fruits market in Indonesia is valued at $20.64 billion in 2023 and is expected to grow annually by 7.69% from 2023 to 2028. With abundant natural resources and a favorable climate, Indonesia is set to remain a top fruit producer for years to come.  6. The United States  Total Fruit Production: 23,747,765 tonnes The United States is a significant fruit producer known for its diverse range of fruits grown in various regions, from apples in the Northeast to oranges in Florida and peaches in Georgia. Favorable climate, fertile soil, and advanced agricultural practices contribute to high-quality fruit production. Besides traditional fruits like berries and grapes, the US excels in growing exotic fruits like avocados and papayas. Sustainability and innovation are critical focuses for the future of fruit production in the USA. In 2022, US fresh fruit exports reached $4.1 billion, though this was an 8% drop compared to 2021, with export volume down 13% from the previous year.  Click to see and continue reading the Top 5 fruit producing countries in the world. Suggested Articles: Top 16 Medicine Producing Countries in the World. Top 20 Rice Producing Countries In The World.  25 Biggest Beef Producing Countries in the World.  Disclosure. None: The Top 20 fruit producing countries in the world is originally published on Insider Monkey......»»

NICE Ltd. (NASDAQ:NICE) Q2 2023 Earnings Call Transcript August 17, 2023 NICE Ltd. beats earnings expectations. Reported EPS is $2.13, expectations were $2.06. Operator: Welcome to the NICE Conference Call discussing Second Quarter 2023 Results, and thank you all for holding. [Operator Instructions] As a reminder, this conference is being recorded August 17, 2023. I […] NICE Ltd. (NASDAQ:NICE) Q2 2023 Earnings Call Transcript August 17, 2023 NICE Ltd. beats earnings expectations. Reported EPS is $2.13, expectations were $2.06. Operator: Welcome to the NICE Conference Call discussing Second Quarter 2023 Results, and thank you all for holding. [Operator Instructions] As a reminder, this conference is being recorded August 17, 2023. I would now like to turn this call over to Mr. Marty Cohen, Vice President, Investor Relations at NICE. Please go ahead. Marty Cohen : Thank you, operator. With me on the call today are Barak Eilam, Chief Executive Officer; and Beth Gaspich, Chief Financial Officer. Before we start, I’d like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, please be advised the company’s actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the company’s 2022 annual report on Form 20-F as filed with the Securities and Exchange Commission on March 30, 2023. During today’s call, we will present a more detailed discussion of second quarter 2023 results and the company’s guidance for the third quarter and full year 2023. You can find our press release as well as PDFs of our financial results on NICE’s Investor Relations website. Following our comments, there will be an opportunity for questions. Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations, which differ in certain respects from generally accepted accounting principles as reflected mainly in accounting for share-based compensation, amortization of acquired intangible assets, acquisition-related expenses, amortization of discount on debt and loss from extinguishment of debt and the tax effect of the non-GAAP adjustments. The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today’s press release. The information and some of our comments discussed on this call may contain forward-looking statements that are subject to risks, uncertainties and assumptions. I’ll now turn the call over to Barak. Barak Eilam : Thank you, Marty, and welcome, everyone. Our momentum continued into Q2 as evidenced by another strong quarter, highlighted by another double-digit growth across all key financial metrics. Total revenue increased 10% to $581 million driven by continued strong growth in the cloud, which grew 23% year-over-year outpacing the rest of the industry and at a much larger scale. In addition, our industry-leading superior profitability was once again reinforced in Q2, and it has become an unlimiting financial competitive advantage. Cloud gross margin continued to increase to 70.3%. Operating income increased 10% to $170 million, and our operating margin grew to 29.2%, up 20 basis points year-over-year. EPS came in at $2.13, representing an increase of 15%. Those strong results demonstrate the rapid progress we are making as we expand our total addressable market and leadership from core customer service to the broader CX category. This broader expansion encompasses digital engagement and conversational AI, where we are rapidly capturing market share. NICE is strategically positioned for complete coverage of all customer service interaction, digital and voice, agent-assisted and consumer-led. Furthermore, our state-of-the-art platform CXone combined with our clear leadership in all segments of the market, particularly large enterprises, allows us to greatly expand our TAM and market share while driving industry-best profitable growth. Let me start by describing how digital engagement drove the success of our business in Q2. We delivered a 70% increase in new digital bookings with much of the deals coming from large enterprises, and the share of new digital bookings doubled year-over-year. Many of those deals were displacements of legacy point solution vendors that are failing to deliver on the holistic digital approach required by large enterprises. In addition, we are winning many of these deals due to the native cloud architecture of CXone, the only platform in the market that seamlessly integrates digital and voice CX solutions. In Q2, we signed an 8-digit deal with one of the largest entertainment companies in the world. Not only did this large enterprise want to consolidate on to a cloud platform with a single vendor, but they also wanted to partner with a vendor that can take them into the future digitally as they are expanding their self-service and IVA capabilities on CXone, replacing legacy digital point solution providers. We signed a 7-digit deal with one of the largest hotel chains in the world, replacing the incumbent Gen 1 digital solution. With CXone’s AI-driven knowledge management capabilities, this company can now provide more advanced digital self-service for its customers. We signed a 7-digit deal with a large global payment processor as they’re consolidating on our CXone digital platform to future proof their digital needs. The emergence of AI coupled with gen AI is the most significant TAM expansion opportunity for NICE in all of our markets and in the CX space, in particular. The investments we made in building Enlighten over the last few years has embedded AI foundation of CXone with hundreds of CX-specific models is now emerging as a concrete material differentiation and revenue growth opportunity. And this is underscored by a record quarter of Enlighten bookings. Moreover, all of our $1 million plus ACV deals in the quarter included AI. We signed a 7-digit AI deal with a major communications company, which is looking to expand its capabilities around proactive conversational AI, and our advanced innovation was the only one that provides smart self-service. We signed a 7-digit deal with a large energy company, replacing the incumbency provider who could not meet their requirements as they are aiming to fully transform to AI-powered self-service. This customer is looking to greatly expand its digital interactions volume through trusted conversational AI and selected CXone for its AI precision and scalability. A very large consumer electronics company signed a 7-digit AI deal as they want to consolidate their self-service experience for sales and service, replacing their legacy bots with CXone AI. Enlighten AI in just all voice and digital interactions continuously identifies opportunities for automation and then fully executes interaction flows to self-service. We had many other large enterprise Enlighten deals, including one of the largest banks in the world and a Fortune 500 fintech company. From these deals and the ongoing momentum we are seeing with AI, we expect to generate significant future revenue resulting from the consumption-based pricing model of AI, which is tightly linked to the fast-growing volume of self-service interactions. Customer demand for Enlighten has been strong ever since we began delivering to the market. During our extremely successful Interactions customer conference back in June, we announced 3 new groundbreaking solutions leveraging the powerful combination of Enlighten and generative AI: Enlighten Copilot, turbocharging customer service employees; Enlighten Autopilot, the next-generation conversational AI; and Enlighten Actions, a whole new paradigm to manage CX. Subsequently, the Enlighten pipeline has rapidly accelerated. In fact, Enlighten bookings in Q2 were greater than the previous 5 quarters combined. We continue to win the clarification cycle in our markets across all segments and geographies, especially at the higher end of the market. Our high win rate is also leading to our unmatched profitable growth. The investments that we have made in building CXone as a native cloud platform with a suite of more than 45 applications have resulted in record adoption of incremental applications by our customers, leading to continuous growth in the average revenue per user throughout our entire customer base. Furthermore, the architecture of CXone with limitless scalability continues to fuel the expansion of our gross margin with every new deal. In Q2, we continue to win market share with large portfolio deals, reflecting the leading architecture, completeness and innovative end-to-end approach, including purpose-built analytics and AI of CXone. We signed an 8-digit deal with one of the largest car manufacturers in the world, replacing 2 large legacy incumbent on-premise vendors both with cloud solutions that could not provide a complete suite and seamless integration experience of CXone. We signed a 7-digit deal with a very large cruise ship operator, replacing the incumbent on-premise provider. We won the deal for our fully integrated suite of applications on a single cloud platform covering both digital and voice which is seamless and unified user experience. We signed a 7-digit deal with a very large retailer, which is a new Fortune 100 customer for NICE that has standardized on CXone. Copyright: photovibes / 123RF Stock Photo We replaced the incumbent on-premise provider. And following a competitive process, NICE was selected due to the clear leadership of CXone and our ability to serve on current and future transformational needs of this customer. Other large cloud deals in the quarter included 8-digit deals with 2 major U.S. banks and a 7-digit deal with the West Coast State government. The momentum that we are seeing at the high end of the market combined with the adoption of our fast-growing portfolio by our very large customer base will continue to fuel our profitability going forward. In summary, the CX cloudification cycle is rapidly expanding into the large enterprise market with AI approaching faster than many probably had expected. These dynamics are clearly favorable for NICE as we’ve been smartly investing over the past 6 years, winning the market and strategically preparing for this moment. In addition, we have an industry-best capital structure that allows us to further expand our market leadership at this crucial pivot in the CX market. Moreover, our extremely profitable position allows us to continue to invest and innovate at a breakneck speed while delivering strong top and bottom line results. I’ll now turn over the call to Beth. Beth Gaspich : Thank you, Barak, and good day, everyone. I am pleased to provide an analysis of our financial results and business performance for the second quarter of 2023 and our outlook for the third quarter and full year 2023. Our financial results in the second quarter grew double digits on both the top and bottom lines as our total revenue came in at the high end of our guidance range and EPS exceeded the high end of our guidance range. Total revenue for the second quarter was a record $581 million, up 10% year-over-year driven by the strength of our cloud business, which now represents a record 66% of our total revenue compared to 59% last year. Cloud revenue increased 23% to a record of $382 million in the second quarter as we continue to see increasing adoption of our CXone platform by large enterprises. The year-over-year growth in our cloud revenue resulted from a healthy mix in 3 key areas: expansion of our vast installed base through upsells; cross-sell adoption of our rich portfolio of applications; and new customer additions. Services revenue, which represented 27% of total revenue, was $159 million, a decrease of 5% year-over-year. Product revenue, which represented 7% of total revenue in the quarter compared to 10% of total revenue last year, decreased 23% to $40 million. This shift in the mix of our revenue is expected and is part of our cloud-first strategy as our customers increasingly transition from on-premise to cloud. Our recurring revenue further increased to a record 86% of total revenue in the second quarter compared to 83% last year. Recurring revenue is comprised primarily of a combination of cloud and maintenance revenue. From a geographic breakdown, the Americas region, which represented 83% of total revenue, grew 9% year-over-year. The EMEA region, which represented 11% of our total revenue, increased 14% year-over-year and 13% in constant currency. The APAC region, which represented 6% of total revenue, increased 7% year-over-year and 9% in constant currency. The foreign exchange headwinds in APAC and tailwinds in EMEA offset each other such that the net currency exchange impact on total revenue was negligible. Moving to our business unit breakdown. Customer engagement revenues, which represented 83% of our total revenue in Q2, were $481 million, a 12% increase. CXone, the most advanced digital and AI market-leading customer experience interactions cloud platform, is the continuous primary growth driver in customer engagement. Our emergence as an AI and digital leader in this space was evident in the new bookings in the quarter with a 70% increase year-over-year in digital bookings and will be a clear revenue growth driver of our business looking forward. Revenues from financial crime and compliance, which represented 17% of our total revenue in Q2 and totaled $100 million, delivered as expected a decrease of 2% year-over-year. Similar to customer engagement, our strategy to cloudify the segment of the market is gaining momentum through adoption of our cloud platforms, X-Sight and Xceed. We are progressing well on the cloudification of the financial crime and compliance customer base with a significant revenue uplift from every customer that has been converted. We expect to see this growth further accumulate in the financial crime and compliance revenue stream in future periods. Now to profitability. Our gross profit grew 7% year-over-year to $416 million. Total gross margin in Q2 was 71.6% compared to 73.3% in Q2 last year. The decrease in total gross margin is attributed to the decrease in product gross margin as a result of a change in the product revenue mix. Cloud gross margin increased 20 basis points year-over-year to 70.3% in Q2. We expect our cloud gross margin to continue to expand over time as our financial crime and compliance, public safety and CXone international expansion gain scale. We continue to see further enterprise adoption of the CXone platform as well as increasing volume-based usage from both digital and AI. The ongoing growth in our cloud revenue combined with the expanding cloud gross margin will also lead to an expansion of our overall gross margin. In Q2, operating income increased by 10% year-over-year to $170 million. And our industry-leading operating margin increased 20 basis points to 29.2% compared to 29% last year. EBITDA increased by 10% year-over-year to $187 million in the second quarter. Our best-in-class EBITDA margin in the second quarter increased to 32.1%, increasing slightly compared to last year. Earnings per share for the second quarter totaled a record $2.13, a double-digit increase of 15% compared to Q2 last year. Our financial and other income was $11 million, resulting from interest income earned from our healthy cash and investment portfolio and the foreign exchange revaluation of our balance sheet. Cash flow from operations in Q2 increased fourfold to $65 million compared to the prior year as a result of our strong billings and collections. Over the past 4 quarters, we have generated more than $0.5 billion in cash flow from operations. The strength of our cash flows provide us with significant flexibility and capital allocation priorities of M&A and share buyback. Accordingly, we continue to execute on the accelerated $250 million share repurchase program to be completed by the end of this year. In Q2, we repurchased shares in the amount of $65 million and executed 53% of that plan as of the end of June. Total cash and investments at the end of June totaled $1.662 billion. Our debt net of a hedge instrument was $543 million, resulting in net cash and investments exceeding $1.1 billion. In closing, we are pleased with our strong Q2 and first half 2023 financial results. In the first half of this year, we continue to demonstrate the strength of our business with notable growth in our overall revenue, cloud revenue, profitability and cash flow generation. Our consistent approach to drive a healthy mix of both top and bottom line growth is evident, and we remain committed to this excellence looking ahead to the second half of this year. Now before I hand it over to the operator, I will conclude my remarks with guidance. For the third quarter of 2023, we expect total revenue to be in the range of $590 million to $600 million representing 7% year-over-year growth at the midpoint. We expect the third quarter 2023 fully diluted earnings per share to be in a range of $2.10 to $2.20, representing 12% year-over-year growth at the midpoint. We are raising our full year 2023 total revenue and EPS guidance. We now expect total revenue to be in the range of $2.353 billion to $2.373 billion, representing 8% growth at the midpoint compared to full year 2022. We now expect full year 2023 fully diluted earnings per share to be in a range of $8.40 to $8.60, representing 12% growth at the midpoint compared to full year 2022. This includes our expectation that operating income will continue to achieve double-digit growth. I will now turn the call over to the operator for questions. Operator? See also 13 Best Future Stocks for the Long-Term and 30 High-Paying Remote Jobs Without a Degree or Experience. Q&A Session Follow Nice Ltd. (NASDAQ:NICE) Follow Nice Ltd. (NASDAQ:NICE) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Our first question comes from the line of Samad Samana with Jefferies. Samad Samana : So maybe first, Barak, one for you. Interactions was at a very interesting time. It was kind of the height of the AI commentary. I’m curious maybe what customer conversations following the conference have been like, particularly around some of the new products that you mentioned? And how we should think about maybe the pipeline that’s built out of Interactions this year versus prior years, given the interest levels around AI? Barak Eilam : Thanks for the question, Samad. So yes, we had a very exciting Interactions. Many of you attended it, and it was well attended beyond our expectations. We actually had many, many hundreds of people more than we expected, but I’m glad we could have accommodated everyone. And the content, of course, was great, both what we have provided, but many customers presented in the different breakout sessions. First, I’ll say, and I mentioned it in my earlier remarks is it created a very significant positive momentum into our pipeline. A lot of opportunities we have now in the pipeline that are progressing nicely started at the event. And many that existed before the event either matured further or even allowed us actually to win some deals in the quarter itself and even more so in July and Q3. So that’s about that. Specifically, there was a very big interest and a lot of conversation with respect to the introduction of the new models of Enlighten, Enlighten Copilot, Autopilot and Actions. And needless to say that earlier this year, there’s a lot of, call it, hype about generative AI. Things are starting to sink-in and enterprises are starting to realize that the right way for them to adopt it, adopt generative AI is not taking something generic that is not necessarily 100% precise or well secured or well connected to their platform. And they need domain expertise and Enlighten in order to introduce it into their CX environment. And as a result, we indeed see the success as I mentioned on the call with Enlighten, record booking in Q2 — Q2 booking of ENLIGHTEN equal or actually more than the previous 5 quarter together. And we see the momentum continues in the pipeline. So all in all, very successful Interaction, and we are very happy way more successful than previous event that they were successful by themselves as well. Samad Samana : Great. And then maybe a follow-up for you, Beth. Just looking at the cloud revenue number, growth slowed a little bit. And in terms of dollars added sequentially, it was a bit more modest than you’ve seen from 1Q to 2Q in the last couple of years. I just wanted to maybe understand how we should think about cloud growth. And if there’s anything in the quarter that may be muted that normal seasonality and just how we should think about the rest of the year for cloud revenue specifically. Beth Gaspich : Yes. Thank you for the question, Samad. We came in with a 23% cloud revenue for the quarter. It was completely aligned with our expectations, and we’re very pleased with that result. In fact, if you look at kind of the competitive environment and some of the other competitors in our space, our growth rate in our cloud is far exceeding what you’re seeing from some of the other players. So we’re very pleased with that growth. With respect to kind of the change from quarter-to-quarter, first, if you look on the last couple of years, you’ll see that, that change between the first quarter and the second in terms of the shift in the growth is pretty typical. And I think looking ahead, one of the things we know is Barak talked about both today and many of the past quarters, we are gaining more and more traction in the large enterprise, which we define as 750 or more agents in the contact centers......»»

Nano-X Imaging Ltd. (NASDAQ:NNOX) Q2 2023 Earnings Call Transcript August 17, 2023 Operator: Good morning, and thank you for standing by. Welcome to the Nano-X Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please […] Nano-X Imaging Ltd. (NASDAQ:NNOX) Q2 2023 Earnings Call Transcript August 17, 2023 Operator: Good morning, and thank you for standing by. Welcome to the Nano-X Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would like now to turn the conference over to Mike Cavanaugh, Investor Relations. Please go ahead. Mike Cavanaugh: Good afternoon, and thank you for joining us today. Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ended June 30, 2023. The release is currently available on the Investors section of the company’s site. Erez Meltzer, Chief Executive Officer; and Ran Daniel, Chief Financial Officer, will host this morning’s call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements regarding the company’s financial results, research and development, manufacturing and commercialization activities, regulatory process operations and other matters. These statements are subject to risks, uncertainties and assumptions that are based on management’s current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company’s views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the company’s filings with the Securities and Exchange Commission. Management will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of each non-GAAP financial measure to the nearest GAAP financial measure is provided in the company’s press release filed today. The non-GAAP financial measures include non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP other expenses and non-GAAP gross loss per share. With that, I’d like to turn the call over to Erez Meltzer. Erez Meltzer: Thanks, Mike, and welcome all to the Nanox second quarter 2023 earnings conference call. Throughout this quarter, we achieved significant advancements across multiple business segments. I would like to highlight that today’s call will extend a bit beyond our typical duration as I aim to offer more comprehensive insights. I will delve into specifics, including our strategic approach to the U.S. market, the reinforcement of our manufacturing and supply chain and our regulatory process. During the quarter, ended June 30, 2023, we continue to advance our commercialization efforts outside the U.S. following FDA clearance to market the multi-source Nanox.ARC. With this clearance, we are now preparing to establish our foothold in the U.S. market, complemented by our ongoing commercialization initiatives outside the U.S. Today, we are excited to delve into our commercial efforts in both the U.S. and the non-U.S. markets. About the U.S. deployment and strategy. Obtaining the 510(k) clearance from the FDA for the multi-source Nanox.ARC has been a long-standing strategic goal for the company and enable us to deploy the Nanox.ARC in the U.S. for the indication of use cleared by the FDA. As previously announced, we are in the process of establishing a U.S. demo as part of our strategic approach for our U.S. commercial activities. We have decided to shift this first unit and are now planning to install the unit in a clinical setting rather than a stand-alone commercial site. The system is planned to be installed in an East Coast facility and will expect to start to generate revenues alongside training and demonstrations. We believe that this first site will serve a dual purpose: first, as a training and demonstration center for Nanox.ARC, which will provide potential buyers with live demonstration of the technology which we believe is essential for informed acquisitions purposes by health care practices, hospitals and health systems; secondly, we believe the clinical site can raise awareness of the Nanox.ARC among key opinion leaders, radiologists and hospital system personnel. The first Nanox.CLOUD system was shipped from Israel and arrived in the U.S. for installation in the clinical site, which we expect to open the clinical site during the fourth quarter of this year. Based on market analysis of the U.S. market of clinicians, imaging administrators and directors, stakeholders recognize the clinical benefits of the Nanox.ARC and it’s more affordable approach to advanced imaging techniques. Furthermore, outpatient facilities such as skilled nursing facilities, freestanding emergency clinics and preliminary clinics showed interest in adopting the Nanox.ARC. Specifically, because such facilities typically do not have city capabilities and we believe such facilities view the Nanox.ARC as a more affordable way to keep patients in-house for advanced imaging needs, combined with a 2-D X-ray. Outpatient facilities also expressed potential interest in our MSaaS business model, which we believe reduces the risk of an upfront purchase because the cost is based on equipment use. We believe that gathering further clinical evidence will strengthen the support of our technology. Our U.S. go-to-market strategy is comprised of 3 primary components: customer targeting, building the sales team and using a hybrid business model. In terms of the customer targeting, we believe several factors impact willingness to adapt to our system, including the type of facility, the current imaging capabilities and imaging volumes and geographic locations, namely rural versus urban. Our aim is to strategically engage segments that show early adoption potential such as orthopedic clinics, skilled nursing facility, freestanding emergency departments and urgent care facilities. We intend to continue to build clinical evidence, particularly with the U.S. market, to support the adoption of our system as well as reimbursement mechanisms, specifically with commercial payers. We have strategically realigned our focus to enhance our presence in the U.S. market. Our initial efforts in commercialization and deployment within the U.S. will be concentrated on select states. This approach allows us to optimize customer service delivery and support in the near term. To execute our strategy, we have allocated internal sales resources, and we are planning to leverage the USARAD network in order to accelerate our initial penetration in the market. Furthermore, we are in the process of enhancing a U.S.-based sales and service team that will seek to generate leads, close sales, manage relationships and provide services for the Nanox.ARC installed base. We are also in the process of engaging an independent service provider to provide service needs in remote geographies and to decrease equipment downtime. We expect that the other operating areas such as medical affairs, regulatory, billing, finance and contracting will be supported by the existing international Nanox organization. For our business model in the U.S., we intend to use a hybrid approach combining a usage-based MSaaS model with a CapEx model to help promote adoption based on different segments. We have designed a training program to promote the Nanox.ARC. We intend to use a combination of pilot staff training, sales and marketing efforts to help meet customer needs. These aspects of our business strategy will require us to hire additional experienced health care business development professionals who will be charged with raising awareness of the Nanox.ARC among physicians, hospitals, urgent care operators and large health systems throughout the USA. To support these important efforts, I intend to increase my personal presence in the U.S. and make myself available of meeting — for meetings with potential customers as well as investors who would like to have an in-depth conversation about our technology, commercial strategy and future strategic plans. We look forward to providing further details in the upcoming months. With respect to the rest of the world deployment, turning to our commercialization efforts outside of the U.S. We continue to make significant progress in multiple countries, principally in Africa. As we have previously announced, we have an agreement with a distributor in Morocco and are working to accelerate deployments. We have deployed a Nanox.ARC system in a prominent hospital in Morocco that is a major health care provider in the southern region of the country. The distributor in Morocco received appropriate clearance to conduct certain scans with the Nanox.ARC. Subject to the clearance, the Nanox.ARC system has generated human images on incoming patients at the hospital, including chest. In Nigeria, we have installed an Nanox.ARC system, which we access will become operational upon receipt of the necessary regulatory approvals and certification that has been formally submitted to the local authorities, the NNRA, to facilitate clinical activities. We hope to begin generating human images in the very near future. As previously reported, we have already placed a system in Ghana at the UGMC Hospital mainly for training purposes, Meantime, our distributor has submitted the specific Nanox.ARC device for approval to the Ghana Food and Drug Authority for commercial use. We anticipate receiving an initial response in the fourth quarter of 2023. And in addition, we have engaged a clinical research organization to potentially hold clinical trials in both Morocco and Ghana, subject to local regulatory approvals. In alignment with our global initiatives and as announced in the past, we established a partnership with BIO Ventures for Global Health, BVGH, a nonprofit organization dedicated to solving global health issues by forming connections between people, resources and ideals. We completed the first phase of this program and are excited to begin the second series in just a few weeks, which involves a series of export-led seminars to train Nigeria and other African health care professionals on imaging topics. We also regularly host radiologists, distributors, representatives from hospital systems, investors and analysts at Nanox headquarter in Israel to discuss the Nanox.ARC system in detail and conduct live demonstration of the systems on site, providing firsthand insight into the capabilities of the Nanox.ARC. I’m happy to report that these meetings resulted in very positive feedback in writing. All of those efforts constitute just the beginning our goal to help people achieve better health outcomes. Lastly, on this front, as part of our global commercialization, we have started to generate initial revenues from the medical imaging equipment and MSaaS. With respect to the OEM. Before I provide an update on the manufacturing and production front, I’d like to share the news that we have entered an original equipment manufacturing, OEM, relationship with a U.S. government agency that we have signed and are working to develop. The government agency I referred to has procured Nanox [indiscernible] systems for assessment. Their interest in our technology is for the purposes of developing next-generation security scanning and nondestructive testing applications. The project is scheduled to commence next month. As part of our OEM efforts, we have sent several demo units to industry partners, out of which a leading partner independently examined Nanox cold cathode chip and reported a real technological break-through. With respect to the mass production, as we begin to deploy the Nanox.ARC and prepare for mass production, I would like to provide updates regarding research and development and manufacturing. We are currently using chips produced by our Korean fabrication facility in our Nanox.ARC system. However, to secure additional chips supply in anticipation of commercialization scale-up and acceleration of manufacturing activity, we recently entered into an agreement with CSEM, chip maker located in Switzerland. Pixabay / Public Domain We have proceeded to pay a phase 2 lab to fab development, which is expected to manufacture sample chips by the end of this year and provide production of chips in Q1 2024. For the commercial production of our digital X-ray tubes for use in Nanox.ARC, we plan to engage third-party manufacturers and suppliers based on, among other things, cost effectiveness. We are currently developing both ceramic and glass-based digital X-ray tubes for use in Nanox.ARC. Our Korean facility is currently our primary manufacturer and supplier for our ceramic digital X-ray tubes, and we are working with a third party for the production of glass-based digital x-ray tubes. For example, we recently started testing glass-based digital X-ray tubes manufactured by CEI. The testing includes performance, integration and radiation testing. Furthermore, we are negotiating with additional third party to produce digital X-ray tubes. Along with our existing manufacturing facilities in Israel and Korea, we believe these developments further strengthens our future supplies of both chip tubes, the 2 key components of the Nanox.ARC to support the scaled deployment of the Nanox.ARC units. In an additional step towards optimizing our mass manufacturing capabilities, we have initiated collaboration with ScanRay for Nanox.ARC systems assembly at scale. ScanRay, a medical equipment manufacturer, meets central standard requirements and serve as a supplier for prominent global medical entities. It is also the parent company of CEI, our Italian provider of glass-based digital X-ray tubes. With robust technological manufacturing capabilities in India, we plan to leverage in the coming years of the Nanox.ARC deployment. Regarding regulatory, I’d like to now turn our attention to regulatory and clinical trials update. On April 28, 2023, we obtained a 510(k) clearance from the FDA to market the Nanox.ARC, including the Nanox.CLOUD, it’s a company cloud-based infrastructure. The Nanox.ARC is a stationary X-ray system intends to produce demographic images of the human MSK system adjunctive to conventional radiology on adult patients. The approved device is intended to be used in professional health care facilities for radiological environment such as hospital, clinics, imaging centers and other medical practices by trained radiographers, radiologists and physicians. This version of the Nanox.ARC has the required capabilities to scan MSK chest and abdomen and to provide 2D X-ray images, conventional radiography subject to local regulatory approvals. We are also continuing to pursue the CE mark in the European Union with our notified body, aiming to submit during Q3 of 2023. In Israel, we are pursuing the AMAR clearance, the Israeli medical device listing. The required technical file was completed and submitted in early July 2023, and we expect a decision in the few months. Clinical. As previously discussed under our Helsinki permit, we started to collect clinical sample images of multiple human body anatomies with a Nanox.ARC system that was deployed in the Shamir hospital in Israel. We have completed the first phase of clinical sampling and have begun the second phase. We are in the final stages of approval of additional clinical sites in Israel, and this additional trial aims to utilize the Nanox.ARC, subject to receiving the final approval from the institutional IRB. This trial will aim to assess the diagnostic capabilities of Nanox.ARC in detecting chest and lung diseases. Installation of Nanox.ARC is expected to be completed within a month from its commencement, and the trial itself is scheduled to commence in the third quarter. With respect to Nanox.AI, I’m excited to share the progress we have made in the ADAPT trial with the National Health Service in the U.K. To date, all 5 of the testing sites in the U.K. have signed the collaboration agreement, and in addition, 3 sites: Cambridge, South Hampton and Bradford, has begun sending images to the Nanox.CLOUD platform. And we expect 2 more sites in Nottingham and Cardiff to begin sending images very soon. Nanox.AI is currently engaged in showcasing the product across a range of platforms to 10 integrated delivery networks in both the United States and in other regions. With that, I’d like to turn the call over to Ran Daniel, Chief Financial Officer, to review our financial results. Ran Daniel: Thank you, Erez. We reported a GAAP net loss for the second quarter of 2023 of $17.4 million compared with a net loss of $19.6 million in the second quarter of 2022. The decrease was largely due to a goodwill impairment of $14.3 million that was recorded in the comparable period and not in the 3 months ended June 30, 2023, which effect was offset in part by a decrease in the company’s earn-out liabilities in the amount of $12.8 million in the second quarter of 2022 versus an increase of $0.1 million in the second quarter of 2023. Revenues for the second quarter of 2023 were $2.6 million and the gross loss was $1.7 million on a GAAP basis. Revenues from the teleradiology services for the same period was $2.5 million with a gross profit of $0.4 million on a GAAP basis and a gross profit of $0.9 million on a non-GAAP basis, which represents a gross profit margin of approximately 14% on a GAAP basis and 36% on a non-GAAP basis. The increase in the company’s revenue in the second quarter of 2023 is mainly due to the increase in the number of radiologists that engaged in reading during the overnight and weekend shift. The decrease in the gross profit margin on a GAAP and a non-GAAP basis is mainly due to an increase in the cost of the company’s radiology due to the incentive payments which the company pays to the radiologist to engage in reading during the overnight and weekend shift. Research and development expenses for the second quarter of 2023 were $6.9 million as compared to $6.5 million for the comparable period in 2022. The increase of $0.4 million in our research and development expenses was mainly due to an increase in the company’s cost of labor in the amount of $0.7 million, mainly due to an increase in the headcount in connection with the development of the Nanox.ARC system, which was partially offset in part by a decrease in share-based compensation of $0.3 million, an increase in research and development grants that the company has received in the amount of $0.1 million. Sales and marketing expense for the second quarter of 2023 were $0.8 million as compared to $1.1 million for the comparable period in 2022. General and administrative expenses for the second quarter of 2023 were $7.6 million as compared to $11.2 million for the comparable period in 2022. The decrease of $3.6 million in the general and administrative expenses mainly was due to a decrease in the company’s cost of labor in the amount of $0.5 million due to a reduction in headcount as part of the company’s plan to increase efficiencies. In addition, we had a decrease in our share-based compensation in the amount of $2.8 million and a decrease in the cost of directors and officers liability insurance premium in the amount of $0.3 million. During the second quarter of 2023, we had accrued $0.7 million for the future settlement expenses in connection with the SEC investigation. As previously disclosed, the company and our team, our Chairman of the Board of Directors, reached agreement in principle with the SEC staff to settle the SEC investigation. The agreements are subject to finalization, including any financial remedies, which the company estimates will be approximately of $0.7 million in civil penalties from the company. Final resolution of this matter is subject to the preparation and negotiation of the documentation [Indiscernible] to all parties, including with respect to the company, approval by the company’s Board of Directors, and in the case of the SEC, authorization by the commission as well as approval by a federal district court. As mentioned above, we incurred an expense of $0.1 million and change in contingent earnout ability in the 3 months ended June 30, 2023. During the second quarter of 2023, we entered into an amendment to the stock purchase agreement with their former stockholders of USARAD. Under this amendment, the company paid an aggregate amount of approximately of $0.3 million in cash and 45,392 ordinary shares to the former stockholders of USARAD in consideration for the achievement of certain milestones in connection with the first earn-out period as defined in the USARAD stock purchase agreement. In addition, we paid an aggregate of $0.5 million in cash and 210,000 ordinary shares to the former stockholders of USARAD as consideration for the remainder of the milestones and applicable earn-out under the USARAD stock purchase agreement. Turning to our balance sheet. As of June 30, 2023, we had cash, cash equivalents, restricted cash and marketable securities of approximately $80.3 million and add $3.4 million loans from banks. We ended the quarter with a property and equipment of $45.2 million. As of June 30, 2023, we had approximately 55.5 million shares outstanding as compared to 52.1 million shares outstanding as of December 31, 2022. The increase was mainly due to the issuance of approximately 255,000 ordinary shares for the primary stockholders of USARAD under the amendment to the USARAD stock purchase agreement as previously discussed. On July 26, 2023, we raised $30 million in a registered direct offering by selling approximately 2.1 million shares and warrants to purchase up to 2.1 million shares. The net proceeds of the raise are intended to be used through further development restructuring and commercial deployment of our systems. With that, I’ll hand the call back over to Erez. Erez Meltzer: Once again, I want to thank you all for being here today and for being with Nanox on our multiyear journey to make medical imaging more accessible around the world. We have made tremendous strides in realizing our vision this year, and I’m proud of what our team has done to bring our company to doorstep of commercializing the ARC system at scale. Before we end the call, I want to announce that we will be hosting an Investor Day to be held in New York City at the end of September or the beginning of October 2023. And if you would like to attend either in person or virtually, please contact our Investor Relations partner at ICR West. Have a great day. Operator, please open the call for questions. See also Bill Gates Stock Portfolio: August 2023 Update and Michael Burry is Shorting the Market (Again) and Selling These 10 Stocks. Q&A Session Follow Nano-X Imaging Ltd. (NASDAQ:NNOX) Follow Nano-X Imaging Ltd. (NASDAQ:NNOX) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] The first question will come from Ross Osborn with Cantor Fitzgerald. Ross Osborn: Congrats on the progress. So starting off, would you discuss the level to which your system in Nigeria is operating in terms of scans per day? Erez Meltzer: I think it was indicated that the one in Nigeria right now is operating without the approval of getting scans for patients, or for human, and we’re waiting for the final NNRA approval for the scans in human — or to getting human images. Ross Osborn: Apologies, I may have missed it. So is Ghana operating on human scans, or is that also waiting? Erez Meltzer: Ghana is waiting for the final approval for commercial use. Ross Osborn: Okay. Understood. And then following on. Erez Meltzer: The one in Morocco is operating with human scans with images, like it’s in the full operation at the hospital. Ross Osborn: Okay. Great. Would you be able to provide Erez Meltzer: With all the — I beg your pardon? Ross Osborn: Would you be able to provide the level to which it’s operating in terms of scans per day? Erez Meltzer: Right now, we don’t disclose what’s the number of scans per day. But I think that in the next call or probably even earlier, in the Investors Day, we will provide the initial indication for the scans per day in all the units that we have installed. Ross Osborn: And then following up on this, when can we expect for you to deliver more systems to your commercialized operating countries? I believe Nigeria calls for 1,000, Ghana for 350 and Morocco for 270 systems. Erez Meltzer: First of all, as soon as we get the final approvals. But this basically will start in the next 2 quarters for sure. Ross Osborn: And then turning to the U.S., could you just walk us through the rationale for the delay in the training center operating? I believe it was previously calling for this summer. Erez Meltzer: The one thing that we’ve had an early indication is that we’re going to send the first systems. We are waiting for the approval of the demo center itself. But in the meanwhile, we have decided, as mentioned in the — in my preliminary, the — what I said actually earlier today, that we wanted to — we preferred to have the first system to be installed in a clinical site and to make it commercial earlier than the original plan. Since we have already a few clinical locations or clinics that are willing to install the systems even before we have the full operating — U.S. operation system — U.S. operation, then we decided that the first system will be installed in the next few weeks in one of these locations and would start both, first of all, to generate to scan patients and to generate revenues. Ross Osborn: And then last one for us and I’ll jump back in the queue. Would you discuss the size of your U.S. contract you announced today? And just so we’re on the same page, did the OEM sign on for your comprehensive system? Or are you now selling your chips on a stand-alone basis? Erez Meltzer: You mean the OEM agreement? Ross Osborn: Yes. Erez Meltzer: The OEM, we have a few OEM arrangements and collaboration. The one that was mentioned, it’s for the chip only. The others are into either chip or chip and tube. In addition, we are in the process of having a full demo, not only the tube itself, that will be tested in the next, I would say, 6 months. Ross Osborn: And then are you able to disclose the size of the contract with the U.S. government agency? Erez Meltzer: We are not allowed to. Operator: The next question comes from Jeff Cohen with Ladenburg. Your line is open......»»

Shapeways Holdings, Inc. (NYSE:SHPW) Q2 2023 Earnings Call Transcript August 14, 2023 Shapeways Holdings, Inc. beats earnings expectations. Reported EPS is $-0.99, expectations were $-1.12. Nikki Sacks : Greetings and welcome to Shapeways Second Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we get started, I’d like to […] Shapeways Holdings, Inc. (NYSE:SHPW) Q2 2023 Earnings Call Transcript August 14, 2023 Shapeways Holdings, Inc. beats earnings expectations. Reported EPS is $-0.99, expectations were $-1.12. Nikki Sacks : Greetings and welcome to Shapeways Second Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we get started, I’d like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including, without limitation, statements regarding our business strategy, future financial and operating performance, projected financial results for the third quarter of 2023, expected growth, impact of recent acquisitions, new offerings and market opportunity are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please see the company’s SEC filings, including the company’s quarterly report on Form 10-Q for the quarter ended June 30, 2023. The information provided in this conference call speaks only to the broadcast today, August 14, 2023. Shapeways disclaims any obligation, except as required by law, to update or revise forward-looking statements. Also, during the course of today’s call, we refer to adjusted EBITDA, which is a non-GAAP financial measure. There’s a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued before market open, which can be found on our website, shapeways.com. On the call today are Greg Kress, Chief Executive Officer; and Alberto Recchi, Chief Financial Officer. And now I would like to turn the call over to Greg. Greg? Greg Kress : Good afternoon, everyone. Thanks for joining us to discuss Shapeways second quarter 2023 financial results and progress on our key initiatives and strategic growth plan. I will begin by providing a business update and Alberto Recchi, our CFO, will then discuss our second quarter financial results and outlook for the third quarter. In the second quarter, we delivered revenue in line with our expectations and made meaningful progress on our key growth initiatives, particularly with regard to our software tools and services as well as our enterprise manufacturing customers. We continue to work towards our goal of achieving profitable growth over the long term as we realize increased contribution from high-margin software sales and continue to recognize revenue from our multiyear manufacturing contracts with enterprise customers as well as continue to closely manage expenses. We believe the market is approaching an inflection point in the overall adoption of digital manufacturing solutions. Furthermore, we believe that Shapeways is well positioned to take advantage of this market opportunity across an array of industries with a platform that combines high-quality, flexible, on-demand manufacturing with purpose-built proprietary software. We are pleased with our ongoing traction, and we’ll remain disciplined and prudent as we execute our operating plan. In terms of our software tools and services business, we have continued to scale and are pleased to deliver a revenue increase of 40% in the quarter compared to the same period in the prior year. We have recognized $1.4 million of software revenues year-to-date and believe we are on track to double software revenues for the full year 2023 from 2022. This success is a direct result of the steps we have taken since our go-public transaction, including investment in continuous product innovation and scaling customer acquisition. A key contributor of this growth is the realization of our expectations from the acquisition of MFG, which we completed last year. As a reminder, MFG is a platform that makes it easy for buyers of custom parts and custom part manufacturers to find and work with each other. MFG had historically focused on connecting small- and medium-sized manufacturers with custom part buyers through a global manufacturing database. This platform establishes a strong foundation for Shapeways to leverage and deploy our auto software features and capabilities to those manufacturers. In the second quarter, we refreshed the MFG brand. And year-to-date, we have released several transformative software enhancements aimed at driving success for manufacturers and their customers. 4 of our recent enhancements include Transactions, Orders, 3D viewer and Materials, each of which provide for increased customer acquisition, retention and lifetime value as well as additional sources of revenue. MFG Transactions streamlines the process of invoicing for both buyers and manufacturers by allowing manufacturers to send invoices to buyers and for buyers to pay for their services all within the MFG platform. MFG Orders further deepens the platform’s ability to help manage the ordering and manufacturing process, including tools such as request for quotes, customer communication, purchase order creation and managing — and manufacturing process tracking. The 3D viewer, which is a feature that has been widely requested by our users, allows for viewing of 3D models of custom parts, streamlining the quoting process, improving communication and allowing for greater accuracy and speed in the process. And MFG Materials is a new service, which provides a range of raw materials for manufacturers at discounted rates, reinforcing MFG’s role as a comprehensive partner in the manufacturing sector. These feature releases are just the start of how we believe MFG will grow to be a comprehensive and invaluable software platform for manufacturers. We believe Shapeways and MFG will be the platform of choice for manufacturers across the globe as we help them unlock new revenue opportunities that grow their business, find operational efficiencies and expand their manufacturing capabilities. minkus-aCniNTiIFd8-unsplash In terms of our enterprise manufacturing sales, we are seeing continued traction through our focused efforts and restructured go-to-market approach, including a sales force that focuses on high-value opportunities. In the second quarter, more than half of our revenues were with enterprise customers. As we realized double-digit growth in enterprise sales in the quarter, we also secured several notable contracts in our target industries for multiyear, multimillion-dollar orders that we will recognize in the coming quarters and years and which affirms our proficiency in serving these customers. To highlight a couple. One, we secured 2 new Tier 1 supplier contracts with leading automotive and transportation manufacturers for multiyear production programs, which we expect to result in more than $2.8 million annually in revenues for the next 7 years. We also expanded our medical customer base by securing 2 significant contracts, which we expect to generate revenues of approximately $2.5 million annually during the next 3 years. Shapeways is an FDA-compliant contract manufacturer, and we enable innovation in the medical sector through our additive manufacturing services. I am also proud that we — that our proficiency and innovation is being recognized industry-wide. In conjunction with Microsoft, we were jointly awarded the 2023 TCT Award, which recognized outstanding innovation and applications of 3D printing and additive manufacturing technologies across the globe. We won in the category of Consumer Product Applications for the Shapeways Configurator for Microsoft Adaptive accessories. The Shapeways Configurator enables users to customize their Microsoft Adaptive accessories with 3D printed add-ons to fit their unique needs, providing greater functionality, ease of use and comfort. Looking ahead, we remain laser-focused on executing on our strategic plan, which as I discussed is continuing to gain traction. We believe we will realize margin improvement in the coming quarters as we see the benefit from managing our operational costs, including the recently completed consolidation of our U.S. manufacturing facilities as well as the — ramping contribution from higher-margin software sales. We will remain disciplined and prudent as we continue our journey towards profitable growth. I would like to thank the entire Safeways team, our customers, our investors and all of our stakeholders for their ongoing support. Alberto will now discuss our financial results in more detail. Alberto Recchi : Thanks, Greg. I’ll provide a recap of our second quarter 2020 performance, give an update on the balance sheet position and provide guidance for the third quarter. In the second quarter, revenue was $8.4 million, flat from the prior year and in line with our guidance. We saw strong growth in software and enterprise sales, partially offset by lower sales from marketplace and self-service. We were unable to finalize the shipment of a key order in Q2, which has been pushed into Q3. This resulted in delayed revenue recognition that did not allow us to show the quarter-over-quarter revenue growth we were envisioning. However, that order is currently planned to ship in Q3. Our gross margins in the second quarter were 40% compared to 43% in the second quarter of 2022 and flat sequentially. We continue to deliver solid gross margins, and the year-over-year change was primarily due to inflationary pressures, the continued ramping of recently deployed new technologies and a more varied product mix. We anticipate realizing margin expansion over time as we see more contribution from higher-margin software sales, the benefits from the consolidation of our U.S. manufacturing operations as well as our cost optimization plan. Second quarter adjusted EBITDA was a loss of $6 million compared to a loss of $4.3 million in the second quarter of last year. SG&A expenses for the second quarter were $8.1 million compared to $6.8 million in the prior year, primarily reflect the increased professional fees and payouts related to the 2022 acquisitions. Turning to our balance sheet. As of June 30, 2023, our cash, cash equivalents and marketable securities totaled $24.7 million. During the quarter, we deployed approximately $7.4 million in cash from operating activities. We remain prudent and focused on further improving our cash burn while proactively monitoring our liquidity. On June 22, the 1-for-8 reverse stock split of the company’s common stock and corresponding common stock adjustment became effective. The primary goal of the reverse stock split was to increase the per share market price of the company’s common stock to meet the minimum $1 average closing price requirement for continued listing on the New York Stock Exchange. On August 1, we completed a voluntary transfer of the listing of our common stock and warrants to the Nasdaq Global Market from the New York Stock Exchange. We believe our company aligns well with the innovative growth platform represented by Nasdaq, and the transfer also allows us to benefit from the Nasdaq cost-effective offering. Looking ahead, for the third quarter of 2023, we anticipate revenues to be in the range of $8.5 million to $9 million. We remain focused on those areas that we believe offer the greatest opportunity, including enterprise manufacturing solution and commercializing our software and anticipate an accelerated ramp-up in these areas as the year progresses. With this, we’ve completed our prepared remarks, and we will now open the call for questions. Operator? See also Top 15 Pickleball Companies and Brands and Top 30 S&P 500 Stocks by Index Weight. Q&A Session Follow Shapeways Holdings Inc. Follow Shapeways Holdings Inc. We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] The first question comes from the line of Greg Palm with Craig-Hallum Capital Group. Greg Palm: I wanted to start with software sales. It sounded like, if I heard you right, expecting that to still double this year. Can — I missed what contribution was in the quarter or year-to-date. So can you just go over that? And then just in terms of gross margin that becoming a bigger part of the mix. So I would have thought that gross margin would have been starting to tick up, but it’s kind of remained flattish over like 2, 3 quarters. So kind of visibility in terms of when that positive favorable mix starts to hit the gross margin line. Greg Kress: Greg, thanks for taking the time. Appreciate the question. So going back to software, we still expect software to double this year. We’re seeing incredible progress, and it’s mostly fueled by the rise in the growth in bookings that we saw at the beginning of Q1 and into Q2 as we started to accelerate a lot of our customer acquisition as we started to really drive improvement in the overall churn model associated with the product. And so those bookings are being translated into revenue over the next 12 months. We’re signing 12-month contracts that range on average, I would say, roughly around $5,000 per contract, and so lifetime value is a little over $4,200. And so what we’re seeing is as those bookings come in, you’ll see them translate into revenue in the back half of the year. Now because those bookings growth really started taking place in Q1, you’re going to see that ramp happen in the back half of the year. So revenue continues to grow quarter — or month-over-month, quarter-over-quarter, but you’re going to see a more compounding effect as you get to the back half of the year. And so that proportion of revenue will start to really have an impact on our gross margins. I would also say the other thing that we are still finishing up in Q2, as you probably remember from our last call, is we consolidated our 2 U.S. manufacturing facilities, so the Long Island City facility with our Livonia facility. And in doing so, we still had duplicative costs like the first month of the Q2. And so there were still some additional costs in there. And so there’s still some lingering effects from that transition, but that transition is fully behind us now. And so as we move into Q3, we expect gross margin to continue to improve. And we’ve seen that month-over-month throughout the quarter, Q2. And so we expect that to continue into Q3 and Q4. Greg Palm: Okay. Perfect. That’s helpful color. And then just in terms of cash burn, can you just give us an update on where we sit today? What’s that look like over the next, I don’t know, maybe 12 to 18 months? Alberto Recchi: Sure. Maybe — should I — I’ll take that, Greg. So look, we closed the second quarter with a strong cash balance, right, close to $25 million in cash, which provides a company with, I guess, sufficient liquidity to keep supporting the ongoing execution of our strategic plan and also supports our normalized levels of cash burn. Now we’ll keep aligning our resources with the highest-opportunity areas to drive revenue growth, specifically in software and enterprise, while at the same time tightly managing our cost structure, right? We have a plan to take margins back to the levels where they have been historically. So if we’re able to deliver on this, you will see a significant cash burn improvement towards the end of the year. Now for Q2, so specifically the burn in Q2 included a onetime payment related to earn-out structures for the MFG and Linear AMS acquisitions and also some spillover expenses related to the move of our Long Island City facility to Livonia. Q3 will also include one last payment related to the Linear AMS acquisition, but we’re forecasting an improvement on burn quarter-over-quarter......»»