The 15 Most Fuel Efficient New Trucks

In this article, we will be taking a look at the 20 most affordable cars to buy in America in 2023. If you are not interested in reading the details, head straight to the 5 Most Affordable Cars To Buy In America In 2023. Factors to Consider When Buying an Affordable Car  When it comes […] In this article, we will be taking a look at the 20 most affordable cars to buy in America in 2023. If you are not interested in reading the details, head straight to the 5 Most Affordable Cars To Buy In America In 2023. Factors to Consider When Buying an Affordable Car  When it comes to buying an affordable car, there are several factors that you should consider before making a decision. One of the most important factors is the condition of the vehicle. You want to ensure that the car you are buying is in good condition and will last you for many years. Another essential factor to consider is the price of the vehicle. You want to ensure you get a good deal and not overpay for the car. In 2022, the average price of a new vehicle in the United States was approximately $48,681. Fuel efficiency is another crucial factor to consider when buying an affordable car. According to the Environmental Protection Agency, the average fuel economy of vehicles sold in the United States in 2020 was 24.9 miles per gallon (MPG) for combined city/highway driving.  Finally, you should consider the safety features of the car. You want to ensure that the vehicle you choose has all the necessary safety features to keep you and your passengers safe while on the road.  The senior consumer advice editor and content strategist at Edmunds, Ronald Montoya, said:  “Think about your actual needs, how long your commute is, how much you have to carry, and if you actually enjoy driving and might want something sporty. Avoid overbuying – you can probably get by with a smaller vehicle for most of your needs, and just rent something bigger once or twice a year, when you really need it.” Electric and Hybrid Options on a Budget  If you’re in the market for a new car and want to consider electric or hybrid options on a budget, you’re in luck! There are more options than ever before for eco-friendly vehicles that won’t break the bank. One option is the Nissan Leaf. Another option is the Toyota Motor Corporation (NYSE:TM)’s Prius C, known for its affordability and fuel efficiency. The Ford Motor Company (NYSE:F)’s C-Max Energi is another excellent option. the Ford Motor Corporation (NYSE:F)’s C-Max Energi has a plug-in hybrid system allowing electric-only driving for short distances. The CEO Jim Farley was optimistic about Ford’s trajectory when it comes to the EV industry. He made the following comments in a company’s capital market meeting in May, 2023: “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. Despite these puts and takes, we have confidence in the underlying trajectory of Ford’s business. Our portfolio of businesses is strong, thanks to businesses like Pro and Blue, and we are raising our estimated EBIT guidance this year to $11 billion to $12 billion. Operationally, we continue to be focused on capital discipline, solid returns even as we face uncertainties in the external environment. Supply chain disruptions are persistent, but they’re now easy. And we have more work to do to streamline our industrial system, reducing costs and improving quality. While EV adoption is still growing, the paradigm has shifted. EV price premiums over internal combustion vehicles fell more than $3,000 in the second quarter and nearly $5,000 in first half. We expect the EV market to remain volatile until the winners and losers shake out, and we are confident from a brand, from our incredible product strategy, our software, our scale and our cost position, we will be one of the winners long term.” Remember to consider tax incentives and rebates that may be available for purchasing an eco-friendly vehicle. With so many options available, making a responsible and budget-friendly choice for your car is easier than ever.  Dynamic Changes in Auto Industry Trends and Sales Projections for 2023 As we approach 2023, the auto industry is undergoing fascinating changes in sales trends. The surge in new car purchases can be attributed to the allure of cutting-edge technology and advanced features in the latest models.  In October 2022, TrueCar forecasted a 15% growth in total new vehicle industry sales, reaching 1,165,658 units, similar to September when adjusted for selling days. The seasonally adjusted annualized rate (SAAR) for light vehicle industry sales is estimated at 14.6 million units, a 13% increase from October 2021. Excluding fleet sales, U.S. retail deliveries of new cars and light trucks are expected to be 995,808 units, up 9% from last year but down about 2% from September 2022. However, the growing demand for cars and the ongoing automotive semiconductor shortage are causing a decline in used vehicle inventories. Consequently, both used and new vehicle prices are expected to rise shortly. This shift in the marketplace adds excitement to the automotive industry landscape.  Photo by Ethan Currier on Unsplash Our Methodology  For our methodology, we have ranked the most affordable cars To Buy in America in 2023 based on their starting base prices. We’ve obtained the data for number of units sold for some of these cars from Car Figures. Here is our list of the 20 most affordable cars to buy in America in 2023.  20. 2023 Honda Civic Sport Sedan    Starting base Price: $27,444   The 2023 Honda Motor Co., Ltd. (NYSE:HMC)’s Civic Spot Sedan is eagerly anticipated for its sleek design, advanced features, and fuel efficiency and stands first among the most affordable cars to buy in America in 2023. It offers a standard 158-hp 2.0-liter four-cylinder engine and an optional 180-hp turbocharged 1.5-liter four-cylinder, with front-wheel drive and a CVT. Warranty coverage is average, with complimentary scheduled maintenance for two years or 24,000 miles. Honda Motor Co., Ltd (NYSE:HMC) sold 111,108 Civic units in 2023, based on data from Car Figures. 19. 2023 Mazda 3    Starting Base Price: $23,715   The 2023 Mazda 3 is one of the best affordable cars in 2023 which offers a superb driving experience, featuring a sleek design, advanced safety tech, and SKYACTIV Technology for balanced performance and fuel efficiency. Engine choices include a base 2.5-liter four-cylinder and a quick turbocharged 2.5-liter. The base sedan is the most fuel-efficient at 28 mpg city and 37 mpg highway, while the turbocharged hatchback with all-wheel drive is less efficient at 23 mpg city and 31 mpg highway. Mazda sold 18,121 units of the 3 in 2023.   18. Ford Maverick    Starting Base Price: $23,690   The 2023 Ford Maverick shines with its 40 mpg highway fuel efficiency, versatile towing of up to 4,000 pounds, and advanced safety features like adaptive cruise control and lane departure warning. It offers a lively 250-hp 2.0-liter four-cylinder base engine with optional all-wheel drive and a hybrid version with a 2.5-liter four-cylinder and electric motor (front-wheel drive and CVT). The standard warranty doesn’t include complimentary scheduled maintenance. In 2023, Ford Motor Company (NYSE:F) sold 56,047 Maverick units.   17. 2024 Buick Envista   Starting Base Price: $23,495   The 2024 Buick Envista is a standout vehicle with impressive design and innovative features. Its advanced safety technology ensures passenger safety, including automatic emergency braking and lane departure warning. The car boasts a peppy 136-hp turbocharged 1.2-liter three-cylinder engine and responsive handling. Fuel efficiency is estimated at 28 mpg city and 32 mpg highway. Inside, it offers a roomy cabin for four and modern tech features. Warranty coverage is standard, with a three-year/36,000-mile limited warranty and a five-year/60,000-mile powertrain warranty, but it falls short compared to competitors like Hyundai’s Kona.   16. 2023 Mini Hardtop Classic 2-Door Hatchback   Starting Base Price: $23,400   The 2023 Mini Hardtop Classic 2-Door Hatchback, one of the most affordable cars to buy in America in 2023 is set to be a stylish, reliable, and fun-to-drive car, perfect for city streets and commutes. Expect it to come loaded with advanced technology and safety features, offering drivers connectivity and safety on the road. The base model features a 1.5-liter turbocharged three-cylinder engine, producing 134 hp and 162 lb-ft, providing a respectable 0-60 mph time of 7.6 seconds and fuel economy starting at 29/38 mpg city/highway with the automatic transmission.   15. 2023 Hyundai Kona    Starting Base Price: $22,140   The 2023 Hyundai Kona is set to remain popular thanks to its sleek design, advanced safety, and fuel efficiency. It offers two powertrains: a 147-hp four-cylinder with a six-speed auto and a 195-hp turbo-four with a seven-speed dual-clutch for better performance. Sales figures show a 28.95% YoY decrease from 2021 to 2022, with 63,994 sold in 2022, and 90,069 in 2021.  14. 2023 Chevrolet Trailblazer   Starting Base Price: $22,100   The 2023 Chevrolet Trailblazer is a versatile SUV known for its safety features and efficiency. It offers two turbocharged three-cylinder engines: a 1.2-liter and a 1.3-liter, with the latter providing more power. The 1.3-liter offers optional all-wheel drive, improving acceleration but not overly fast. Warranty coverage is average, with a three-year/36,000-mile limited warranty and a five-year/60,000-mile powertrain warranty. Chevrolet sold 61,808 Trailblazers so far in 2023.   13. 2023 Toyota Corolla LSE Sedan    Starting Base Price: $21,550   The 2023 Toyota Motor Corporation (NYSE:TM)’s Corolla LSE Sedan is a top-class vehicle known for its smooth ride, sleek design, and excellent fuel efficiency. It has advanced safety features, a spacious interior, and modern technology, making it perfect for families or those seeking comfort and convenience. Equipped with a 169-horsepower 2.0L Dynamic Force four-cylinder engine, it offers improved performance and quicker acceleration compared to its predecessor with a 1.8L engine. This reliable and stylish Toyota Motor Corporation (NYSE:TM)’s sedan is sure to exceed your expectations.   12. 2023 Hyundai Elantra   Starting Base Price: $20,950    The 2023 Hyundai Elantra is poised to maintain its reputation as a reliable and affordable option in the compact car market while introducing updates to its technology and safety features, enhancing its appeal. It offers a range of powertrains, including a 2.0-liter four-cylinder with 147 horsepower, a turbocharged 1.6-liter engine producing 201 horsepower, and hybrid variants. Fuel efficiency varies, with the hybrid achieving 53 mpg city and 56 mpg highway.  Hyundai offers a generous 10-year/100,000-mile powertrain warranty and three years or 36,000 miles of complimentary maintenance. In July 2023, Hyundai sold 11,898 Elantra units.   11. 2023 Volkswagen Jetta    Starting Base Price: $20,665   The 2023 Volkswagen Jetta, one of the most affordable cars to buy in America in 2023 impresses with its sleek design and robust 1.5-liter turbo-four engine, producing 158 hp and 184 lb-ft of torque. It offers a choice between a six-speed manual and an optional eight-speed automatic transmission, accelerating from 0 to 60 mph in 7.1 seconds in the SEL trim. Its infotainment system supports Apple CarPlay, Android Auto, gesture controls, and a mobile hotspot. Standard driver-assistance features are included, with advanced options available. Volkswagen provides In Q2 2023, 11,650 Jetta units were sold.   10. 2023 Nissan kick   Starting Base Price: $20,440   The 2023 Nissan Kicks can excel by emphasizing fuel efficiency and eco-friendliness to align with the growing interest in electric and hybrid vehicles, especially among younger buyers. Prioritizing advanced safety features like lane departure warning and automatic emergency braking appeals to safety-conscious consumers. Additionally, offering customizable interiors and ample storage adds practicality. The well-built, user-friendly interior with adult-friendly rear seats and generous cargo space stands out. Standard safety features include automated emergency braking and lane-departure warning, with optional adaptive cruise control. In 2023 so far, Nissan has sold 29,802 Kicks units.   9. 2024 Chevrolet Trax    Starting Base Price: $20,400   To excel with the 2024 Chevrolet Trax, one of the best affordable cars in 2023, prioritize improving fuel efficiency, embracing sleek modern design, emphasizing advanced safety features, exploring hybrid/electric options, and enhancing user-friendly technology. The 2024 Trax features a 137-hp 1.2-liter turbo engine, six-speed automatic, and front-wheel drive with an EPA-estimated 28 mpg city and 32 mpg highway. In 2022, Chevrolet sold 26,598 Trax units, down 37.55% from 2021’s 42,590 units.   8. 2023 Nissan Sentra   Starting Base Price: $20,050   The 2023 Nissan Sentra is highly anticipated for its sleek design, advanced features, and impressive fuel efficiency. It features a 149-hp 2.0-liter four-cylinder engine with a CVT automatic transmission. While it’s not the fastest in class, it offers a comfortable and compliant ride for daily commutes. Fuel efficiency is estimated at up to 29 mpg in the city and 39 mpg highway. Inside, it boasts an attractive design with a 7.0-inch display and comfortable zero-gravity seats. In Q2 2023, Nissan sold 34,938 Sentra units.   7. 2023 Kia Soul    Starting Base Price: $19,890   The 2023 Kia Soul prioritizes fuel efficiency to attract eco-conscious buyers, possibly by introducing hybrid or electric options. Incorporating advanced safety features like lane departure warning and automatic emergency braking would appeal to safety-conscious consumers. Offering customizable exterior and interior options would enhance personalization. The Soul currently features a 2.0-liter four-cylinder engine, producing 147 hp, with a CVT automatic transmission. In 2023, Kia sold 39,870 Soul units, a notable drop from 56,740 in 2022 and 75,126 in 2021, marking a 24.47% YoY decrease.   6. 2023 Subaru Impreza Starting Base Price: $19,795   The 2023 Subaru Impreza, one of the best affordable cars in 2023, is expected to maintain its reputation for reliability and efficiency, likely incorporating tech and design upgrades. The Impreza’s 152-hp engine and standard all-wheel drive offer a balanced driving experience. Fuel efficiency varies with the transmission, favoring the CVT option. While lacking style, the interior impresses with a user-friendly design, soft-touch materials, and comfortable seating. In 2023, Subaru sold 22,091 Impreza units, a decline from 30,846 in 2022 and 34,791 in 2021, marking a 11.34% YoY loss.   Click to see and continue reading the 5 Most Affordable Cars To Buy In America In 2023. Suggested Articles: Top 20 Most Expensive Cars of All Time.  12 Countries that Produce the Most Cars. 15 Cheapest New Cars for 2023. Disclosure. None: The 20 Most Affordable Cars To Buy In America in 2023 is originally published on Insider Monkey......»»

The Descartes Systems Group Inc. (NASDAQ:DSGX) Q2 2024 Earnings Call Transcript September 7, 2023 Operator: Good afternoon, ladies and gentlemen, and welcome to The Descartes Systems Group Quarterly Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is […] The Descartes Systems Group Inc. (NASDAQ:DSGX) Q2 2024 Earnings Call Transcript September 7, 2023 Operator: Good afternoon, ladies and gentlemen, and welcome to The Descartes Systems Group Quarterly Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Wednesday, September 6, 2023. I would now like to turn the conference over to Scott Pagan. Please go ahead. Scott Pagan: Thanks and good afternoon, everyone. Joining me on the call today are Ed Ryan, CEO; and Allan Brett, CFO. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Portions of today’s call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the Safe Harbor provisions of those laws. These forward-looking statements include statements related to our assessment of the current and future impact of geopolitical and economic uncertainty on our business and financial condition; Descartes’ operating performance, financial results and condition; Descartes’ gross margins and any growth in those gross margins; cash flow and use of cash; business outlook; baseline revenues, baseline operating expenses and baseline calibration; anticipated and potential revenue losses and gains; anticipated recognition and expensing of specific revenues and expenses; potential acquisitions and acquisition strategy; cost reduction and integration initiatives; and other matters that may constitute forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of Descartes to differ materially from the anticipated results, performance or achievements implied by such forward-looking statements. These factors are outlined in the press release and in the section entitled certain factors that may affect future results in documents filed and furnished with the Securities and Exchange Commission, the Ontario Securities Commission and other securities commissions across Canada, including our management’s discussion and analysis filed today. We provide forward-looking statements solely for the purpose of providing information about management’s current expectations and plans relating to the future. You’re cautioned that such information may not be appropriate for other purposes. We don’t undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based, except as required by law. And with that, let me turn the call over to Ed. Ed Ryan: Thanks, Scott, and welcome everyone to the call. We had an excellent first half of the year with record financial results this past quarter. We’re excited to go over those with you and give you some perspective about the business environment we see right now. But first, let me give you a roadmap for this call. I’ll start by hitting some highlights of last quarter and some aspects of how our business performed. I’ll then hand it over to Allan who will go over the Q2 financial results in more detail. I’ll then come back and provide an update on how we see the current business environment and how our business is calibrated as we enter Q3. And then we’ll open it up to the operator to coordinate the Q&A portion of the call. So let’s get started by looking at the quarter that just ended July 31. Key metrics we monitor include revenues, profits, cash flow from operations and returns on our investments. For this past quarter, we again had record performance in each of those areas. Total revenues were up 17% from a year ago with service revenues up almost 20%. Net income and EPS were up 23% and 19%, respectively. Income from operations was up 17% while adjusted EBITDA was up 12%. And we generated $52 million in cash from operations representing 86% of adjusted EBITDA. At the end of the quarter, we had $227 million in cash and we were debt free with an undrawn $350 million line of credit. We remain well capitalized, cash generating, debt free and ready to continue to invest in our business. We believe a company like ours is well positioned to continue to thrive in market conditions like these, because we’ve got good organic growth plus the experience and capital capacity to execute on acquisitions. We had a good quarter of organic growth in our core services revenues, so I want to highlight some of the drivers of that. The first is just real-time visibility. Just a refresher on this, a large part of shipping is people moving goods on other people’s assets, whether they be planes, trucks, rail or boats. There may also be intermediaries involved in arranging the shipments or making required filings, including freight brokers, third party logistics providers and customs brokers. With all those assets, modes of transportation, data sources, locations and parties involved, it can be challenging to know where a shipment is and knowing the location of a shipment and when that’s going to arrive is critical to serving your customer and running your business. Our visibility in transportation management solutions, which include MacroPoint, are increasingly important for our customers in this area. These solutions contributed to solid growth in the quarter for reasons including first, our solutions are better at tracking loads, customers pay based on the number of loads that are tracked by our solutions. So we’re aligned with our customers on doing what we can to connect as many carriers and intermediaries as possible to get location information on loads. We’ve launched new carrier self-connect tools that have helped our customers get even more location coverage across their network of carriers. We’ve also made investments in customer success personnel to help maximize the number of loads with full visibility. The outcome has been a greater percentage of loads tracked, better data, happier customers and strong growth. Second issue is we’re winning more deals and seeing strong demand for visibility. The real-time visibility market is not without competitors. However, we’re having good success at securing new customers and welcoming back some old ones, because our commitment to tracking the success. We have a broader network that’s across more modes of transportation than our competitors and that’s being recognized by customers as they choose the visibility solution for the future. Our customers often take comfort in our reliability, and that we’re operating a business they know will be around to serve them for the long term. The third issue is visibility is embedded in more Descartes solutions. Some customers come to us just for visibility, but others are using Descartes solutions and are looking to have visibility as an add-on to what they’re already doing. Each time we expand our solution set including by way of acquisition, we look for how we can embed visibility into the new solutions to provide an easier mechanism for our customers to track their loads. We believe that our best source of business is often our existing expansive and supportive customer base. So we’re making dedicated efforts to make visibility easier for those customers. Second big issue is routing, scheduling and mobile solutions and this contributed to our revenue success this quarter. These solutions are principally for when you’re managing your own fleet of vehicles rather than hiring space on other people’s vehicles. We believe we’re the most experienced company in this market and have the premier routing and scheduling solutions to offer. Our customers in this area have faced recent challenges including rising labor costs, challenges in security data, rising fuel prices, and customer demands for accurate delivery windows. This is contributing to strong demand with new customer projects and existing customers retuning their solutions. We’ve also been innovative in this market, which has contributed to our market leadership. We’ve recently launched a new generation route planning solution that has been rolled out with customers. And we’ve made investments in our solutions through acquisitions with safety solutions from GroundCloud and final mile delivery tracking from Localz, all factors that contributed to good growth in this area. The third area is global trade intelligence. Once again, we saw good growth in the global trade intelligence solutions in our business. Those solutions generally fall into three buckets. The first bucket is competitive intelligence. Our data mine solutions provide information on trade flows, historical classification of goods, and other logistics and supply chain intelligence. This information can be used to help make decisions about your own supply chain, but also to see how competitive you are with other companies supply chains. Recent attention on efficiency of supply chains has helped drive demand in this area. In addition, our data is front and center in many leading business publications as a source for data about logistics and supply chains, which has also been a good demand driver for us. The second bucket is tariff and duty data to make intelligent shipping decisions. We provide up-to-date data about tariff and duty rates and rules around the world, which can be used by leading global trade management systems to help run international supply chains. We’ve seen an increased level of changes in tariffs and duties principally as a consequence of geopolitical tensions and trade disputes. This has changed the design of many supply chains and has increased the importance of having accurate and timely information like ours. The third bucket is compliance. These solutions help our customers make sure they’re not shipping things to people they shouldn’t be. This may be to specific people, to specific countries, to specific geographies, or in some cases specific goods being shipped. These restrictions have expanded and increased in complexity, as the geopolitical tensions have increased, and trade disputes have emerged. In addition, governments in the larger economies, like the United States, have increased the resources dedicated to ensuring compliance and have levied substantial financial penalties on firms not taking compliance seriously. We’ve continued to see good demand for these compliance solutions as a result. The next area is e-commerce. This continues to be a growing market and part of our business. We’ve made investments into these solutions with additional leadership and also by way of acquisition with our purchase of XPS within the past year. The parcel market has seen some recent challenges with labor challenges at UPS, changing service preferences at the U.S. Postal Service and FedEx restructuring. However, our share in the market continues to increase as we work with partners to find the most efficient way for our customers to get their deliveries made. So good acquisition and organic contribution in the quarter. We’re very happy with how the business performed in the quarter and in particular with the organic growth the business was able to produce, a few comments on our two most recent acquisition additions. The first is on GroundCloud. We combined with GroundCloud in February. GroundCloud is particularly strong in safety and compliance solutions that help identify safety incidents faced by drivers and provide responsive and targeted video training on challenges drivers face. They also help companies manage delivery obligations as they have subcontractors to other delivery brands, such as FedEx. This was one of our larger acquisitions. And when we first combined, we indicated we anticipated some impact overall on our adjusted EBITDA margin, which we saw in Q1. We’ve made good progress on integration and actually saw a slight uptick in aggregate adjusted EBITDA margin this quarter, so we’re hoping that bodes well for the future. Finally, FedEx has recently announced that it may increase the number of shipments that will move to the independent contractor network. So we saw some good initial improved demand for that. Second acquisition is Localz. This business provides final mile visibility on deliveries. So if you’re used to watching your Uber driver or food delivery vehicle come down the street to your house, Localz technology replicates that experience for delivery of other goods. This was a key investment in our routing, scheduling and mobile space, something our own customers need and they seek to provide a better delivery experience for their own customers. This investment was critical to some of our new customers trusting their fleet management to Descartes. Let me just summarize as I hand it over to Allan to give full financial details on the quarter. We had record financial results. The business performed well. And we believe that’s a good reflection of the value that our customers continue to get from our solutions and the hard work that our team continues to put in for our customers. We ended the quarter with $227 million in cash, $350 million in available credit, and a market opportunity where we continue to grow the business for our customers both organically and through acquisitions. We remain focused on profitable growth so that we can continue to ensure our customers have a secure, stable and growing technology partner that can help them with their challenges well into the future. Many thanks to all the Descartes team members for everything they’ve done to contribute to a great quarter and continue to have our business in an enviable position for future success. I’ll turn the call over to Allan to go through our Q2 financial results in more detail. Copyright: dizanna / 123RF Stock Photo Allan Brett: Thanks, Ed. As indicated, I’m going to walk you through our financial highlights for our second quarter, which ended on July 31. We are pleased to report record quarterly revenue of 143.4 million this quarter, an increase of 17% from revenue of 123.0 million in Q2 last year. While revenue from new acquisitions, including the GroundCloud acquisition completed earlier in the year, as Ed just mentioned, contributed nicely to this growth, similarly to the first quarter and really the last several years, growth in revenue from new and existing customers from our existing solutions was the main driver in growth this quarter when compared to last year. Looking further at our numbers, our revenue mix in the quarter continued to be very strong with services revenue increasing 19% to 130.7 million or 91% of total revenue compared to 109.4 million or 89% of total revenue in the same quarter last year. Services revenue was also up nicely sequentially increasing just over 5% from the first quarter of this year, as we continue to help our customers expand with new services and additional volumes. Removing the impact of recent acquisitions, on a like-for-like basis, we would estimate that our growth in services revenue from new and existing customers would have been just over 9% for the quarter when compared to the same quarter last year, similarly to the results we saw in Q1 this year. License revenue came in at 1.4 million or just 1% of revenue in the quarter, down from license revenue of 3.3 million in the second quarter last year, as we had a couple of larger than normal license deals closed in the second quarter last year while professional services and other revenue came in at 11.3 million or 8% of revenue, up approximately 10% from revenue of 10.3 million in Q2 last year. This was mainly as a result of recent acquisitions, including GroundCloud. Gross margin for the second quarter was 76% of revenue for the quarter, pretty consistent with gross margins we realized both in the first quarter of this year and the second quarter last year. Operating expenses increased by approximately 19% in the second quarter over the same period last year, and this was primarily related to the impact of recent acquisitions, including GroundCloud but also from additional labor-related costs as we continue to invest in various areas of our business to prepare for future growth. So as a result of both revenue growth offset slightly by our planned cost increases in the business, we continue to see strong adjusted EBITDA growth of 12% to a record 60.6 million, up from 54.0 million in Q2 last year. As a percentage of revenue, adjusted EBITDA came in at 42.3% of revenue, down from 43.9% of revenue in Q2 last year. And as mentioned in Q1, this is once again primarily related to the acquisition of GroundCloud earlier in the year as it came into Descartes with much lower EBITDA ratios than the rest of our business. We should note that our adjusted EBITDA ratio as a percentage of revenue did increase slightly in Q2 when compared to Q1 of this year, as we’ve already started to work at improving the profitability on the GroundCloud business consistent with our plans as Ed mentioned earlier. As a result of the above, net income under GAAP came in at 28.1 million or $0.32 per diluted common share in the second quarter, an increase of 23% from net income of 22.9 million or $0.27 per diluted common share in the second quarter last year. If we look at our operating results for the first half of the year, the trends stay the same. Revenue came in at 280.0 million, an increase of 17% from revenue of 239.4 million in the first six months last year. For the six months year-to-date, adjusted EBITDA came in at 118.3 million or 42.3% of revenue, up just over 12% from 105.2 million or 43.9% of revenue last year. Net income for the six-month year-to-date period increased 25% coming in at 57.5 million or $0.66 per diluted common share compared to 46.0 million or $0.53 per diluted common share in the first half of last year, again, with higher operating profits being partially offset by higher tax expense. With these strong operating results and continued strong accounts receivable collections, cash flow generated from operations came in at 52.0 million or 86% of adjusted EBITDA in the second quarter, an increase of 12% from operating cash flow of 46.4 million or also 86% of adjusted EBITDA in the same quarter last year. For the six months year-to-date, operating cash flow has been 100.9 million or 85% of our adjusted EBITDA, up 11% from 90.8 million in the first half of last year. And we should mention as always going forward, we expect to continue to see strong cash flow conversion and generally expect cash from operations to be between 80% to 90% of our adjusted EBITDA in the periods ahead, subject any unusual fluctuations or future changes and contingent consideration payments that we’ll discuss later as I comment on our outlook for the second half of the year. So overall, we’re once again pleased with our operating results in the quarter as strong organic growth and solid performance from our recent acquisitions resulted in 17% growth in revenue and a 12% increase in adjusted EBITDA for the quarter. If we turn our attention to the balance sheet, our cash balances totaled 227 million at the end of July, an increase of approximately 45 million from the end of the first quarter in April. While we generated 52 million in cash flow from operations, we also used 6 million of our existing cash balances to complete an earn-out or contingent consideration payment on a past acquisition, while also adding 2 million in capital additions during the quarter. As a result, we currently have our 227 million of cash as well as a $350 million line of credit available under our credit facility available to deploy towards future acquisitions. So we continue to be well capitalized to allow us to consider all opportunities in our market consistent with our business plan. As we turn our attention to the second half of fiscal 2024, we should note the following. After incurring approximately 3.4 million in capital additions in the first half of the year, we expect to incur approximately 2 million to 3 million in additional capital additions for the balance of the year. At this point, we currently expect the second half of the year we’ll use approximately 22.8 million of our cash to pay additional contingent consideration payments on two acquisitions. While the entire 22.8 million estimated contingent consideration to be paid is now accrued for on our balance sheet, 12.7 million of this balance relates to the portion of the earn-out arrangements that were accrued for at the time of the acquisition and will be reflected in cash flow from financing activities while the remaining balance of approximately 10 million will be reflected in cash flow from operating activities when paid as a result of these acquisitions have been better than our initial expectations. After incurring amortization costs of 30.2 million in the first half of the year, we expect the amortization expense will be approximately 29.8 million for the second half of the year, with this figure being subject to adjustment for foreign exchange changes and future acquisitions. Our income tax rate for the second quarter came in at approximately 27% of pre-tax income, which is right around our blended statutory tax rate. Looking into the second half of the year, we currently expect our tax rate will continue to be in the range of 25% to 30% of our pre-tax income, or somewhere either side of our statutory blended rate. However, as always, we should state that our tax rate may fluctuate quarter-to-quarter from one-time items that may arise as we operate internationally across multiple countries. And finally, after incurring stock-based compensation expense of 7.4 million in the first half of this year, we currently expect stock compensation will be approximately 9.3 million for the balance of the year, subject to any forfeitures of stock options or shared units. And with that, I’ll turn it back over to Ed to wrap up with some closing comments as well as our baseline calibration for Q3. Ed Ryan: Great. Thanks, Allan. With Q3 a month in, we remain confident in our business but cautious about the broader economic circumstances and various statistics and commentary relating to the supply chain logistics markets. On the broader economic front, this continued high interest rates, pervasive conflict in Ukraine, labor availability challenges and various recessionary pressures and economic discussions. In the supply chain and logistics market, here’s a few things we’re noting. First is shipping volumes. Shipping volumes across various modes of transportation are below their pandemic highs and more closely tracking pre-pandemic trends. In addition, there are some current challenges such as the reduced flow through the Panama Canal caused by low water levels that could impact shipping alternatives. The second is retailer inventories. This higher level of retailer inventories potentially impacting fall replenishment cycles, inventories aren’t decreasing, implying retailers are matching demand with replenishment and potentially carrying more safety stock. The third is consumer demand. There’s uncertain consumer demand coming into this peak buying season, in particular it’s uncertain how spending habits will split between durable goods and services and experiences. Overall, U.S. consumer spending is still high, but there’s caution as we approach the holiday season. The fourth is some capacity left the market. The U.S. truck market has seen some capacity come out of the market with the recent bankruptcy of Yellow. The market continues to adjust the post pandemic volumes and it’s possible more capacity will leave. In air, we’re seeing capacity adjustments with less reliance on pure air freighters. With additional trade restrictions, there continues to be new restrictions announced principally relating to the war in Ukraine and in connection with burgeoning trade tensions between the U.S. and China. Some new restrictions have been announced with respect to investment in and trade in chip manufacturing, AI and quantum technologies. These restrictions can be positive for our global trade intelligence business, but can also impact freight volumes. There’s also labor challenges. Labor negotiations have created challenges for UPS, West Coast ports and Yellow and may impact other unionized supply chain players. Next are some logistics participants planning for a muted peak season. General commentary from logistics participants is bracing for lower volumes in the second half of the year with some companies taking proactive cost reduction activities. This is illustrative of the pervasive sentiment of caution. And then finally, distribution of parcel volumes among larger players is uncertain. As I mentioned earlier, UPS has some labor challenges which may have resulted in some parcel buying cautiously being redirected to other players. FedEx has publicly indicated it will be moving more parcel volume to its ground division with independent contractors and away from its Express division using employees. The U.S. Postal Service has implemented various new service adjustments as it seeks to compete and Amazon has announced its reentering the parcel delivery business. All of this combines to provide a very competitive environment with uncertainty as to how the volumes will shake out among the various providers. So those are some of the things we’re hearing from our customers and seeing in our business, things that also inform our calibration for the quarter. Our business is designed to be predictable and consistent. We believe that stability and reliability are valuable to our customers, employees and our broader stakeholders. To deliver this consistency, we continue to operate from the following principles. Our long-term plan is for our business to grow adjusted EBITDA 10% to 15% annually. We grow through a combination of organic growth and acquisitions. We take a neutral party approach to building and operated solutions on our global logistics network. We don’t favor any particular party. We run our business for all supply chain participants, connecting shippers, carriers, logistics, service providers and customs authorities. When we over perform, we try to invest that over performance back into our business. We focus on recurring revenues and establishing relationships with customers for life. And we thrive on operating a predictable business that allows us forward visibility to our revenues and investment paybacks. In our Q2 report, we provided a comprehensive description of baseline revenues, baseline calibration, and there are limitations. As of August 1, 2023, using a foreign exchange rate of $0.75 to the Canadian dollar, $1.10 to the euro and $1.28 to the Great Britain pound, we estimate that our baseline revenues for the third quarter of 2024 are approximately $124 million and our baseline operating expenses are approximately $78 million. We consider this to be our baseline adjusted EBITDA calibration of approximately $46 million for the third quarter of 2024 or approximately 37% of our baseline revenues as at August 1, 2023. We continue to expect the adjusted EBITDA operating margin range of 40% to 45%, our margins vary in that range given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business. Last quarter, GroundCloud impacted our margin while we started the integration work to bring it up to our desired Descartes contribution levels. The integration activities have gone well, we’ve already seen some margin improvement in Q2, and we’re planning for some additional margin improvement going forward, absent any other acquisition activity. We’ve got lots of exciting things planned in our business. It remains an uncertain broader economic and supply chain environment. But we believe our proven track record of execution, solid capital structure and customer focus will serve us well. Thanks, everyone, for joining us on the call today. As always, we’re available to talk to you about our business in whatever manner is most convenient for you. And with that, operator, I’ll turn it over to you for questions. See also States With the Lowest to Highest Capital Gains Tax Rate and 15 Biggest Clothing Manufacturing Countries in the World. Q&A Session Follow Descartes Systems Group Inc (NASDAQ:DSGX) Follow Descartes Systems Group Inc (NASDAQ:DSGX) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. Ladies and gentlemen, we will now conduct a question-and-answer session. [Operator Instructions]. Your first question comes from the line of Matt Pfau from William Blair. Your line is now open. Matt Pfau: Great. Thanks, guys. I wanted to follow up on some of the comments you made about potential headwinds in the back half of the year here. How should we think about those in terms of the potential impact on your business? Part of your business is transaction based but it’s not as simple as just being tied to shipping volume. So how do we think through the potential puts and takes there in terms of the impact on your revenue? Ed Ryan: Well, as we’ve been talking about for a year or two now, we have a lot of things going very well in our business. And maybe it will be going better if at some point in the future, transportation transactions went down. We don’t know what the future is going to bring. We’re just running the business, looking at what’s going on in the market and going hey, there’s some uncertainty out there. So we’ll see what happens. As you’ve seen in the past, transportation transactions have gone down and still performed very well. We do that because we sell a lot of software outside of that 60% of our recurring revenues outside of transaction-based volume. And even in the transaction space, we tend to be picking up more volume over the course of a quarter or a year because our customers are doing more business with us and as a result we end up doing pretty well even in the face of the industry having a lackluster time. So we’ll see what happens. I don’t know what’s going to happen in the rest of the year. We’ve heard different things, the same stuff you probably read in the paper. We’ll see what happens, but we like our chances either way. Matt Pfau: Great. And just wanted to follow up on MacroPoint. You called out that that’s been an area of strength and performing well in a trucking environment that was oversupplied. How does trucking capacity coming out of the system potentially impact that? Is that anything material to think about? Ed Ryan: That’s interesting. That’s actually one of the areas I think about when I made the comment a minute ago. MacroPoint continues to grow in a relatively flat truck environment, because it continues to pick up more and more customers and more volume from our competitors. I went over that in some of the prepared comments on the call today. But MacroPoint’s a big beneficiary of that as people realize the importance of having a network and they value that over a flashy application, because we can track more loads, more and more customers are settling with Descartes because they’re saying, hey, that’s what’s most important. My ability to put in 100 loads and be able to track high 80s, low 90s percentage of those loads is much more important than the visibility application I’m using myself. Most of the time, they’re not even using an application to look at these things. Matt Pfau: Great. Thanks guys for taking my questions. I appreciate it. Ed Ryan: Thanks, Matt. Operator: Your next question comes from the line of Paul Treiber from RBC. Your line is now open. Paul Treiber: Thanks very much. Good afternoon. Just a question on the earn-outs. I don’t recall in the past you having this degree of earn-outs. What’s changed now over the last several acquisitions that are leading to these earn-outs versus acquisitions in the past?.....»»

Beloved cars that are no longer in production include models from Cadillac, Chevrolet, Lotus, and Hummer. Despite many car enthusiasts' disappointment, automakers have discontinued several popular vehicle models over the years.Ford; Mercedes-Benz; Rolls Royce; Acura Many once-beloved vehicles car enthusiasts know and love are sadly, no longer being manufactured. Automakers have discontinued popular models from Chevrolet, Lotus, and more over the years. Here are more than 50 cars that will never be seen brand new again. Some car models aren't going anywhere any time soon.Take the Ford Mustang: since its first production year back in 1965, new 'Stangs have rolled off the factory line ever since.So too have mainstay family cars like the Toyota Camry and Honda Accord, both of which have enjoyed several decades of production with no end in sight.Other cars experience the occasional production hiatus, such as the Chevrolet Camaro, only to return redesigned and re-released a few years later.Still, other cars go out of production for good. And for every Pinto or El Camino that was rightly mothballed due to performance woes or wretched aesthetics, dozens of once-beloved cars have also been discontinued.Here are more than 50 cars that aren't being made anymore:Acura NSXThe Acura NSX.AcuraThe two-seater NSX started production in 2016, but the automaker said it would be discontinued after the 2023 model year.The impressive coupe sports car was not very profitable, unlike its first-generation predecessor, and Acura plans to focus on more popular and new models in the future.Acura TLThe Acura TL.Michael Kovac/Getty ImagesConsidered a luxury/sports car hybrid priced just in range of the average consumer, the Acura TL was a flagship vehicle for the automaker. It was considered safe, capable, and it retained its value well over the years. The company took a chance nonetheless, blending their lower end TSX and higher end TL into the mid-price TXL.AMC EagleThe AMC Eagle.YouTube/Cool Stuff in Weird CarsThe unique AMC Eagle merged the convenience of a compact sedan with the capabilities of a four-wheeler vehicle. At the time of its release in 1979, it was the only 4WD passenger car, and its off-road capabilities matched that of a Jeep or other smaller four-wheel drive automobile.AMC JavelinThe AMC Javelin.Allan Hamilton/Icon Sportswire/Corbis/Icon Sportswire/Getty ImagesProduced between 1967 and 1974, the AMC Javelin was a sleek, powerful-looking pony car that matched many other muscle cars of its day in looks and performance. The carmaker itself, the American Motor Company, would fold a little more than a decade after Javelin production ceased.Austin-Healy 3000The Austin-Healy 3000.Richard Bord/Getty ImagesThe gorgeous Austin-Healy 3000 was a British sports car sold for almost a decade, with the first model released in 1959. A winning road racer in its day, these classic cars remain popular with collectors today.BMW Z8The BMW Z8.BMWReleased in the year 2000, the BWM Z8 seemed to finally be the successful roadster the company had been trying to make for years, starting with the much smaller Z3. Though only produced for the years, the capable Z8 outperformed many much more expensive supercars in terms of acceleration, braking, and handling.Chevrolet SSThe Chevrolet SS.ChevroletCelebrated by its drivers but never a top-seller, the surprisingly capable Chevy SS saw its last production year in 2017. Though styled more like a luxury sedan, the car was powered more like a sports car, what with its 415 HP V8 engine.Chevy NovaThe Chevy Nova.YouTube/Lost & Found Classic Car CompanyProduced between 1968 and 1979 and then again between 1983 and 1985, the Chevy Nova was one of the most popular compact pony cars on the road, at least in its earlier iterations. The 1980s models were considerably less powerful than their predecessors.Chevrolet VoltThe Chevrolet Volt.ChevroletThe Volt is considered one of the first effective mass-market electric vehicles, though it is technically a hybrid owing to an internal combustion engine that kicks in when the battery power nears draining. It debuted in 2011, but 2019 was the last model year for the Chevy Volt.Cord 812The Cord 812.NBC Universal/ Walker DaltonThough today both the Cord 812 luxury touring car and the Cord Automobile company itself are largely forgotten, the stunning 812, with its long hood, sloping wheel covers, and domed cabin was perfectly representative of the tastes of the Gangster Era of the 1930s.Datsun 510The Datsun 510.Rick Loomis/Los Angeles Times/Getty ImagesThe Datsun 510 was small, lightweight, nimble and quick. While hardly a luxury car inside or out, its looks were elegantly simple and its low price and ease of repair made it quite desirable among cost-conscious consumers.Dodge DartThe Dodge Dart.Alexis Toureau/Gamma-Rapho/Getty ImagesThe first car called a Dodge Dart was sold throughout the 1960s and well into the 70s — the original Darts were reliable, affordable, came in hot rod models popular with auto enthusiast. Dodge revived the name for a more compact sedan released in 2012, but the latter model never caught on and was produced for just half a decade.Cadillac ATSThe Cadillac ATS.CadillacThe 2018 model year was the swan song for the Cadillac ATS, a sad fact for car lovers everywhere who consider this compact luxury sedan dynamic and capable. Sold for half a decade, the ATS was popular with many critics and with owners, but it failed to gain enough foothold in the sector dominated by cars like the BMW 3-Series.Cadillac Coupe DeVilleThe Cadillac Coupe DeVille.Altan Gocher / Barcroft Media/Getty Images / Barcroft Media/Getty ImagesThis big, beautiful vehicle was produced for nearly half a century, with the first iconic Cadillac DeVille cars sold in 1958. With a number of changes, the model remained in production until 2005.Cadillac El DoradoThe Cadillac El Dorado.Bill Greene/The Boston Globe/Getty ImagesThis large, luxurious vehicle came in both hardtop and convertible configurations and was for years the best selling luxury two-door car in America. The coupe was produced from 1953 until 2002.Chrysler Town & CountryThe Chrysler Town & Country.FCAWhile minivans are aspirational vehicles for few, the Town & Country was a staple automobile for families across America and beyond during its 27-year run. From the faux-wood paneled editions of the 1990s to the sleeker makes of the 2000s, the Town & Country was never thrilling, but always safe and reliable.Ferrari 308 GTSThe Ferrari 308 GTS.ermess/ShutterstockThough perhaps dated in looks now, the Ferrari 308 GTS was an iconic flagship of the Italian automaker from the mid 1970s well into the 1980s. You likely recognize it as the car from Magnum P.I.Fiat 850The Fiat 850.Arno van Dulmen/ShutterstockThe Fiat 850, manufactured between the mid-1960s and the mid-1970s, was the antithesis of the pony cars of the same era. Compact and affordable, more than 2 million of these cars were sold in myriad variations, including a convertible and even a small camper.Ford FocusThe Ford Focus.Ford MediaFor almost exactly two decades, a new Ford Focus was a common sight on roads around the globe, often the proud first new car of the driver behind the wheel. Safe, fuel-efficient, and priced to sell, the first Focus was sold in the midsummer of 1998, the last ever produced in the late spring of 2018.Ford GTThe Ford GT.FordFord ended production of the $500,000 supercar in late 2022 with the special LM Edition.Only 1,350 of the third-generation GTs were built, according to CNBC.Ford ThunderbirdThe 1955 Ford Thunderbird.FordThe Thunderbird was one of the most famous cars of the 20th century and was produced for several years into the 21st. T-Birds saw 11 distinct generations, with some of the 1950s, 60s, and 70s models beloved, while the Thunderbirds of the 2000s were nearly universally reviled.Geo MetroThe Geo Metro.YouTube/Geo JeffWhile hardly an icon of style or power or performance, the Geo Metro was nonetheless a popular vehicle for many years, made by two different carmakers from 1989 until 2001. Affordable, fuel-efficient, and relatively reliable, it was the perfect car for many consumers.Honda Del SolThe Honda Del Sol.HondaBuilt on a Honda Civic chassis, the compact, maneuverable semi-convertible Del Sol was mocked by some, but loved by many. Available with options for engines rated from 102 to 160 horsepower, some Del Sol models were quite fast and capable. The car was nonetheless cut from the lineup in 1998.Honda PreludeThe Honda Prelude.HondaThe four-seat, two-door Honda Prelude was produced from 1978 until 2001 and went through five different generations. Beloved by its drivers, the Prelude ultimately succumbed to competition from cars like the Mitsubishi Eclipse, the Toyota Celica, and even Honda's own Accord Coupe.Honda S2000The Honda S2000.HondaDuring its decade-long production life, from 1999 to 2009, the Honda S2000 was one of the most popular entry-level roadsters sold. It earned awards such as "Best Affordable Sports Car" (twice) and was on top 10 lists in almost every year of its production. The auto industry crisis that began in 2008 would kill off the S2000.Hummer H2The Hummer H2.shutterstock/walterericsyThe gas-guzzling and less-than-logical Hummer H2 was a beloved behemoth to many, an aspirational achievement for others, and an object of ire for many more. As revered as it was reviled, this massive machine was sold from 2002 to 2009.ImperialThe Imperial.Facebook/Jay Leno's GarageImperial was Chrysler's luxury division for a number of years in the middle of the 20th century. The brand released several makes called simply Imperial as well as makes like the Imperial Crown Convertible and the Imperial Southampton. The 1957-to-1966 makes of Imperial were the widest production cars ever made, spanning more than 81.5 inches across.Jaguar XJ220The Jaguar XJ220.Courtesy of RM Sotheby'sFor a time, the Jaguar XJ220 supercar was the world's fastest production car, with a reported top speed of 217 miles per hour. Fewer than 300 of this celebrated halo car were ever produced.Lamborghini AventadorThe Lamborghini Aventador.NewspressThe Aventador was unveiled at the Geneva Motor Show in 2011. Throughout its decade-long reign, the sports car was far more popular than the brand's other V12 models combined. It was discontinued with the Ultimae variant.Lamborghini CountachThe Lamborghini Countach.RM Sotheby'sThis classic sports car was produced between 1974 and 1990; its aggressive styling would become emblematic of the excesses of the 1980s. The Countach was the first mainstream production vehicle to use scissor doors, the type that rotate upward from a fixed hinge.Lotus EspritThe Lotus Esprit.National Motor Museum/Heritage Images/Getty ImagesSeen in a James Bond movie, "Pretty Woman," and many other films and shows, the Lotus Esprit was a symbol of the 1970s and '80s, and was in fact produced until 2004. Angular, sleek, and low, the Esprit looked as fast as it was.Mazda RX-7The Mazda RX-7.MazdaThe Mazda RX-7 was beloved of auto enthusiasts for its handling, its style, and for the rare rotary engine that powered the vehicle. Eschewing typical piston engines, the lightweight rotary engine delivered an exceptional power-to-weight ratio.Mercedes-Benz A-ClassThe Mercedes-Benz A-Class sedan.Mercedes-BenzMercedes-Benz decided to discontinue the A-Class sedan, but aficionados can still get the vehicle until its production ends in 2025.  Mercury MountaineerThe Mercury Mountaineer.Ford Motors/Getty ImagesThough identical to the Ford Explorer in many ways, the Mercury Mountaineer was an upscale SUV perfectly suited to the boom in bigger cars and trucks that began in the 1990s. Sold for 14 years, from 1996 to 2010, the Mountaineer disappeared along with the Mercury brand itself.Mitsubishi EclipseThe Mitsubishi Eclipse.MitsubishiThe Eclipse was produced over four generations, its production lasting from 1990 to 2012. The sporty, compact car was popular with young drivers and also with rally and road racers, though most car enthusiasts preferred the earlier generation Eclipses and were critical of the cars produced in the 2000s.Nash AirflyteThe Nash Airflyte.YouTube/Viva Las Vegas Autos, Inc.While decidedly — though charmingly — dated looking today, the Nash Motors Airflyte was a cutting-edge vehicle when it was produced in 1949. Developed with extensive wind tunnel testing, the car was highly aerodynamic, with everything from the shape of the windshield to the fenders calculated to reduce drag.Nissan 370ZThe Nissan 370Z.NissanThe 370Z came in both coupe and convertible versions before being discontinued, and was known for having a low center of gravity and short wheelbase, according to Nissan. Car enthusiasts who miss the 370Z should consider the all-new Nissan Z.Oldsmobile 442The Oldsmobile 442.Youtube/RK MotorsThis big, powerful muscle car came with a variety of engine packages over the years, including a make that had 160 horses under the hood all the way to an option packing a 400 horsepower motor.Packard EightThe Packard Eight.John Keeble/Getty ImagesFor nearly 60 years, the Packard Motor Car Company produced some of the finest-looking automobiles in America. The company merged with (soon-to-be-defunct) Studebaker in 1953, but not before producing cars including the stunning Packard Eight, one of the most celebrated touring cars of the 1930s.Pierce-ArrowThe Pierce-Arrow.Mike Moore/Getty ImagesFor the first few decades of the 20th century, a Pierce-Arrow car was the height of luxury, used by movie stars, politicians, and the super rich. It's little surprise, then, that the Pierce-Arrow Motor Car Company folded in 1938 having failed to gain sales among the general populace.Plymouth DusterThe Plymouth Duster.National Motor Museum/Heritage Images/Getty ImagesThe affordable Plymouth Duster was produced for six years during the 1970s. It came in multiple varieties with names such as Gold Duster, Feather Duster, and Space Duster. While emblematic of a set of compact sporty coupes of its day, it ultimately could not compete with more popular models like the Mustang.Pontiac Firebird Trans-AmThe Pontiac Firebird Trans-Am.Bob D'Olivo|Gerry Stiles/The Enthusiast Network/Getty ImagesPerhaps best known from the TV show "Smokey and the Bandit," the Pontiac Firebird was a classic American sports car produced from the late 1960s through the early 2000s. The best known Firebird model was the Trans-Am, a specialty package created expressly for this Pontiac car.Porsche 928The Porsche 928.National Motor Museum/Heritage Images/Getty ImagesThe luxurious, speedy grand touring car called the Porsche 928 was sold from 1978 through 1995. It had a powerful V8 engine under the hood and a 2+2 seating arrangement, thus able to accommodate four people (though the rear seats were quite small), a marked departure from the rear engine, two-seat cars for which Porsche was known.Rolls Royce DawnThe Rolls Royce Dawn.Rolls-Royce Motor CarsRolls Royce discontinued the droptop Dawn and hardtop Wraith, two two-door vehicles.Production ended for the two in the US in 2021.   Saab 900The Saab 900.National Motor Museum/Heritage Images/Getty ImagesThough never considered a stunner in terms of looks, the Saab 900 was perennially considered a capable and comfortable car. Saab 900s were sold for 20 years and came in four-door, coupe, and convertible varieties.Saturn SkyThe Saturn Sky.APThe compact, relatively low-priced, and generally well-liked Saturn Sky was a roadster that punched above its price point, packing up to 290 HP under the hood with an optional upgrade kit. Though a respected car in its own right, the Sky went out of production after just three years when Saturn LLC folded in 2010.Shelby AC Cobra1965 Shelby Cobra CSXBarry SmithThe Shelby Cobra roadster was intermittently produced for more than 50 years, with the first vehicles sold in 1962, and a limited release run of 50 cars produced to make the half-century celebration of the vehicle.Studebaker CommanderThe Studebaker Commander.Prodip Guha/Hindustan Times/Getty ImagesNow defunct US automaker Studebaker used the name Commander for a number of cars, but none would be so iconic of its era as the Studebaker Commander Custom Cruising Sedan released in the 1940s. These curvaceous art deco vehicles call the WWII era to mind at once.Suzuki SamuraiThe Suzuki Samurai.Aurelian Nedelcu/ShutterstockThough long gone from the market today, the low-cost, lightweight, but highly capable Suzuki Samurai 4WD vehicle was for a time so popular it outsold the Jeep Wrangler by a two-to-one margin.MTX Tatra V8The MTX Tatra V8.MTX Tatra V8/FacebookYou've probably never heard of the MTX Tatra V8 if you've even heard of Tatra, the Czech automaker in business since the 19th century. While the company only built four of their MTX Tatra V8s back in the early 1990s, it remains the fastest car ever made by a Czech company.Toyota CelicaThe Toyota Celica.ToyotaThe Celica was produced for an exceptionally long run, spanning from 1970 to 2006. In that 35-plus year span, the coupe was continually upgraded to match the style of the times. Eventually, as SUVs ascended and compact sports cars waned in popularity, changing tastes led to the end of the line for the Celica.Toyota MR2The Toyota MR2.Sahlan Hayes/Fairfax Media/Getty ImagesOne of the more affordable compact sports car for sale between the mid-1980s and the early 2000s, the Toyota MR2 was popular based on its great handling and eye-catching looks. It was prized by a small core group of fans, but sales lagged over time.Triumph HeraldThe Triumph Herald.Arterra/Universal Images Group/Getty ImagesMore than half a million Triumph Heralds were sold during the compact car's 12-year production run, which spanned from 1959 to 1971. During that time, the Triumph Motor Company was absorbed by another carmaker, and its brand was retired in the early '80s.VW Karmann GhiaThe VW Karmann Ghia.Manfred Segerer/ullstein bild via Getty ImagesOdd name notwithstanding, the Volkswagen Karmann Ghia was for a time a beloved car thought of as a luxury vehicle at an affordable price. It was built between 1955 and 1974 and sold well in Europe and South America.VW Type 2The VW Type 2.D. Pimborough/ShutterstockThe VW Type 2 minibus, icon of the hippies, is technically still produced today, though the modern VW T vans look nothing like the bulbous buses you picture with surfboards on the roof, guitars in the rear, and hair flowing out the windows. That classic split windshield ride was sold between 1950 and 1967.Read the original article on Business Insider.....»»

In this article, we will be taking a look at the 25 most valuable brands in the world in 2023. If you are not interested in reading the details, head straight to the 5 Most Valuable Brands In The World In 2023.  In 2023, the global business landscape continues to evolve, driven by technological advancements, […] In this article, we will be taking a look at the 25 most valuable brands in the world in 2023. If you are not interested in reading the details, head straight to the 5 Most Valuable Brands In The World In 2023.  In 2023, the global business landscape continues to evolve, driven by technological advancements, shifting consumer preferences, and dynamic market forces. The world’s most valuable brands like Amazon, Apple, and Walmart among others are at the forefront of this ever-changing landscape, whose influence extends far beyond their products and services. These brands represent the pinnacle of success, embodying innovation, trust, and a deep understanding of their customers. As we delve into the year’s rankings, we discover not only the names that have retained their coveted positions but also those newcomers that have surged ahead, reshaping industries and setting new standards for excellence.  Regional and Industry Trends in Brand Valuation  In recent years, exciting changes have emerged in brand valuation. One outstanding trend is the growing importance of brand value in emerging markets, particularly in Asia. As these economies expand and become more consumer-focused, brands that build strong customer relationships are well-positioned for success.  Regarding specific industries, technology, and retail dominate the brand valuation landscape. However, there’s also a noticeable shift towards sustainability and social responsibility, with brands prioritizing these values and seeing increased recognition and value. This shift is especially evident in the fashion industry, where consumers are becoming more conscious of their purchases’ environmental and ethical impact.  In terms of financial statistics, recent data shows that the total value of the world’s top 100 brands reached $7 trillion in 2021, marking a 44% increase from the previous year. The world’s top 10 most valuable brands are predominantly technology companies, with Apple, Amazon, and Microsoft claiming the top three spots. Nevertheless, several fashion and consumer goods brands, such as Nike and Louis Vuitton, have also secured marks on the list, underscoring the significance of brand value across various industries.  Technology Dominance: Tech Companies Among the Top Brands  It’s hard to deny technology’s significant impact on our daily lives. We rely heavily on devices like smartphones and laptops to stay connected, informed, and entertained. It’s no wonder, then, that tech companies are among the top brands in the world. For instance, Apple’s innovative products and sleek designs consistently rank it as one of the most valuable brands globally.   According to Forbes, Apple’s brand is worth $241.2 billion. Similarly, Google’s search engine and online tools have become synonymous with the internet. Google’s parent company, Alphabet, is worth over $1 trillion, making it one of the most valuable companies globally. Social media platforms like Facebook and Instagram have become household names, with billions of active users worldwide.   Facebook’s revenue for 2022 was $116.6 billion, while Instagram’s revenue is expected to reach $50 billion by 2023. But it’s not just the big players dominating the tech industry. Startups and smaller companies are also making waves, disrupting traditional industries and improving our lives in new ways. Fintech companies like Robinhood and Chime are changing how we invest and manage our money, while healthcare startups like Babylon Health and Heal use technology to improve access to healthcare services.  Future Outlook for Brand Valuation in 2023  In 2023, the continued rise of social media is expected to shape brand valuation. This trend will lead to a greater need to measure the impact of social media on brand value as more and more companies invest in their online presence. Advancements in data analytics and artificial intelligence will make it easier to collect and analyze data on consumer behaviour and brand sentiment, resulting in more accurate and reliable brand valuation.   In addition, the growing importance of sustainability and corporate social responsibility will likely impact brand valuation. As consumers become more conscious of the impact of their purchases on the environment and society, companies that prioritize sustainability and ethical practices will see an increase in brand value. This shift in consumer behavior will require companies to focus on financial performance and their societal impact, which will be reflected in their brand valuation.  Ken Wolter / Shutterstock.com   Our Methodology  For our methodology, we have ranked the most valuable brands in the world in 2023 based on their brand values as of 2023. We have relied on sources like Brand Finance and Statista for data accuracy.   Here is our list for the 25 most valuable brands in the world in 2023.  25. Shell plc (NYSE:SHEL) Brand Value: $48.2 billion  Shell plc (NYSE:SHEL), a global multinational with a 2022 net income of $42.8 billion and $381.3 billion in revenue, is among the world’s top brands, known for exceptional product quality and sustainability. Founded in 19th-century London, it operates in over 70 countries with assets totaling $352 billion. Since 2007, Shell plc (NYSE:SHEL) Retail has run 132 stations in Ukraine, employing around 1500 people, and offers high-quality products, including Shell V-Power fuel and LPG. Notably, Shell’s global pandemic relief contribution surpasses $30 million.  24. Allianz Group   Brand Value: $48.4 billion  Allianz Group, one of the most valuable brands in the world in 2023 with over 125 years of history, is a leader in insurance and financial services, operating in 70+ countries, serving over 100 million customers, and employing a global workforce of 150,000+. Their dedication to quality, customer relationships, and innovation positions them for continued success, with a 2022 net income of $7 million and revenue of $129.85 billion.  23. The Walt Disney Company (NYSE:DIS)  Brand Value: $49.5 billion  The Walt Disney Company (NYSE:DIS), a globally recognized and valuable brand and one of the US companies with the highest profit margins, spans theme parks, movies, T.V., and more, earning love worldwide. Constant innovation and adaptation to evolving tastes drive its continued success in the entertainment industry in 2023. The Walt Disney Company (NYSE:DIS)’s unwavering commitment to quality and broad appeal ensure its enduring leadership. In 2022, Disney reported a revenue of $82.7 billion and a net income of $3.19 billion.  22. AT&T Inc. (NYSE:T) Brand Value: $49.6 billion   AT&T Inc. (NYSE:T), a globally recognized and respected brand, boasts a rich history of providing reliable telecommunications services worldwide. Renowned for innovation and customer satisfaction, AT&T Inc. (NYSE:T) leads in technological advancements, offering cutting-edge mobile devices, high-speed internet, and dependable home phone service. Operating in over 200 countries and territories with a workforce of over 200,000, AT&T reported a 2022 revenue of $120.74 billion, cementing its status as a trusted and respected global brand.  21. Moutai  Brand Value: $49.7 billion   Moutai, renowned globally for its exceptional liquor, embodies sophistication and elegance through centuries of craftsmanship. Its rich history and unwavering commitment to excellence have made it a coveted brand among connoisseurs worldwide. As a prestigious Chinese spirit often referred to as “China’s National Liquor,” Moutai’s unique aroma, known as the “Charm of Moutai,” is a testament to its distinct production techniques. In 2022, Moutai reported a revenue of $18.8 billion, reinforcing its position as a symbol of quality and innovation poised for continued success.  20. WeChat  Brand Value: $50.2 billion   WeChat, a global brand, redefined communication with its multifunctional platform, integrating services from messaging to investments. Prioritizing user privacy and security through advanced encryption, it gained trust. Beyond China, WeChat expanded globally, especially in Southeast Asia, with localized services. Launched by Tencent in 2011, it has over 2 billion users, sending 45 billion messages daily. In 2022, it earned $81 billion in revenue, and its market value is expected to reach $62 billion by the end of 2023, cementing its status as a top messaging platform.  19. Toyota Motor Corporation (NYSE:TM) Brand Value: $52.5 billion   Toyota Motor Corporation (NYSE:TM), one of the most popular brands in the world, is renowned for crafting durable and reliable vehicles celebrated for longevity. Offering a diverse range of options, from sedans to SUVs, trucks, and hybrids, Toyota stands at the forefront of innovation and sustainability. Pioneering eco-friendly technologies like hybrid engines and fuel cells, Toyota Motor Corporation (NYSE:TM) is a leading automotive manufacturer, boasting a 10.24% global market share as of 2020 and achieving over 9.53 million vehicle sales worldwide in the same year. Notably, the Toyota Camry clinched the title of the best-selling car in the United States in 2020, with an impressive 294,348 units sold. In addition, Toyota’s commitment to hybrid technology was evident, with global hybrid vehicle sales surpassing 15 million units in 2020.  18. Starbucks Corporation (NASDAQ:SBUX) Brand Value: $53.4 billion   Starbucks Corporation (NASDAQ:SBUX), established in Seattle in 1971 and now operating in over 30,000 locations worldwide, is renowned for its premium coffee, exceptional customer service, and strong commitment to sustainability. Setting itself apart through a unique and welcoming customer experience, Starbucks emphasizes personalized service and invests heavily in employee training. The company leads the sustainable coffee movement, sourcing all its coffee ethically and sustainably while its in-store recycling program minimizes environmental impact. With over 20 million users of its mobile app in the United States, a loyalty program boasting 20 million members in North America, and a strong presence among customers aged 25-40 (46% in the U.S.), Starbucks Corporation (NASDAQ:SBUX) also purchases over 3% of the world’s coffee production and holds a brand value nearing $53.4 billion as of 2021.  17. Agricultural Bank Of China   Brand Value: $57.7 billion   The Agricultural Bank of China, a highly reputable financial brand, is a cornerstone in the agricultural sector and is known for its unwavering commitment to providing valuable financial solutions. Specializing in services for farmers and ranchers, it offers a comprehensive range of products, including loans, credit lines, and wealth management. Its dedication to sustainability, with substantial investments in renewable energy and sustainable agriculture practices, truly sets it apart. The bank holds 1129 patents, primarily in China and Hong Kong, with 318 granted and more than 88% remaining active.  16. Mercedes Benz   Brand Value: $58.8 billion   Mercedes Benz, a symbol of automotive luxury and a most valuable brand in the world in 2023, is renowned for its legacy of comfortable, technologically advanced, high-performance vehicles. These cars reflect the brand’s unwavering commitment to excellence, offering standout features. Whether you prefer a sporty coupe or a spacious SUV, Mercedes Benz has a model to suit your tastes. Renowned for quality and innovation, it remains a highly coveted global brand. As of December 31, 2022, Mercedes-Benz Mobility AG’s Supervisory Board comprises ten members, including five women, demonstrating a 50% female representation. The brand reported robust financials in 2022, with a revenue of $158 billion and a net income of $15.27 billion.  15. State Grid   Brand Value: $58.5 billion   The State Grid, a trusted and efficient brand in power provision, has invested significantly in technology and infrastructure to ensure reliable service for millions. Their intense focus on sustainability and innovation has made them a dependable and valuable choice for energy solutions. In 2022, as the primary supplier of 80% of China’s electricity needs, they reported remarkable 15% increases in revenue and profit. The Chinese government’s restructuring of power fees in May 2023 is set to enhance their ability to invest in upgrades, boosting revenue for both State Grid and China Southern Grid.  14. Facebook By Meta Platforms, Inc. (NASDAQ:META) Brand Value: $59 billion  Facebook by Meta Platforms, Inc, (NASDAQ:META) ranks among the world’s most valuable brands for several compelling reasons. It wields an extensive trove of user data, making it a prime choice for businesses seeking precise audience targeting through its robust advertising system. Beyond advertising, Facebook by Meta Platform, Inc. (NASDAQ:META) serves as a dynamic content-sharing hub, facilitating broader audience reach for marketers. Yet, its most precious asset is its capacity to connect people globally, fostering bonds among family, friends, and like-minded individuals. Boasting 2.96 billion monthly users, it reigns as the world’s leading social media platform, amassing $113 billion in ad revenue in 2022, supplemented by $2 billion from fees and payments. 71% of consumers and 65% of marketers intend to make it their primary platform in 2023.  13. The Home Depot Inc. (NYSE:HD) Brand Value: $61.1 billion  The Home Depot Inc. (NYSE:HD), one of the world’s most valuable brands, stands out for its extensive product range, top-notch customer service, and competitive prices, catering to homeowners, contractors, and DIY enthusiasts. Whether you seek tools, appliances, building materials, or decor, Home Depot offers comprehensive solutions backed by expert guidance. Beyond retail, their commitment to community support through their charitable foundation reflects their dedication to improving lives. With 2,298 global store locations and approximately 132.11 billion USD in 2020 net sales, The Home Depot, Inc. (NYSE:HD) commands a substantial over 23% market share in the U.S. Employing over 400,000 associates, it ranks among the world’s largest employers, asserting a significant presence in the global economy.  12. China Construction Bank   Brand Value: $62.7 billion  China Construction Bank (CCB), founded in 1954, is now among China’s largest and most successful financial institutions, operating globally in over 30 countries. It excels through a strong focus on innovation and technology, embracing digital transformation, online banking, and mobile payments, establishing itself as an industry leader. CCB is also known for its commitment to responsible banking practices, promoting sustainability, green finance, and community support. In 2022, it achieved $202 billion in revenue, ranking as the world’s second-largest commercial bank by revenue, while granting 2.53 million customers 2.35 trillion yuan ($330 billion) in inclusive finance loans.  11. Deutsche Telekom   Brand Value: $62.9 billion  Deutsche Telekom, a leading global telecommunications company, is renowned for its high-quality services, innovative products, and strong customer support. It has a substantial presence, operating under various names worldwide, including T-Mobile. In 2022, it reported robust growth, with net revenue reaching 114.4 billion euros, primarily driven by its U.S. operations, which account for 66% of revenue. While expanding, the company’s workforce decreased by 4.5% in 2022, with 39% of employees in Germany and 33% in the U.S. Deutsche Telekom’s commitment to excellence ensures its place among the world’s most valuable brands.  10. TikTok   Brand Value: $65.7 billion  TikTok, with 1 billion users globally, 60% of them belonging to Gen Z, is a prime platform for engaging a younger audience. Its algorithm promotes content that resonates with viewers, making it essential to create unique and appealing content that aligns with your brand’s values. The platform’s annual ad revenue in 2022 reached $9.9 billion, reflecting a significant 155% increase. To expand your brand and connect with younger demographics, TikTok is a robust consideration for showcasing your brand’s personality and mission.  9. Tesla, Inc. (NASDAQ:TSLA) Brand Value: $66.2 billion   Tesla, Inc. (NASDAQ:TSLA) a 2023 powerhouse brand, leads the automotive industry through innovation and sustainability. Its groundbreaking electric vehicles and renewable energy solutions attract eco-conscious consumers. Tesla’s effective marketing, futuristic designs, and bold campaigns create a robust global image. With a market value of $951.79 billion and impressive 2022 figures, including $81.462 billion in revenue and 3,638,900 units sold as of March 2023, Tesla, Inc. (NASDAQ:TSLA) holds a commanding 68% market share in the U.S., with the Model Y as the top-selling electric vehicle in 2022, solidifying its position as a valuable, forward-looking brand.  8. Verizon Communications, Inc. (NYSE:VZ) Brand Value: $67.4 billion   Verizon Communications, Inc. (NYSE:Z) a leading global brand, delivers top-notch services and cutting-edge technology. Renowned for its reliable network, swift speeds, and stellar customer service, it’s the preferred choice for mobile and internet services. Verizon’s commitment to innovation, including 5G and IoT solutions, keeps it at the forefront, earning trust and loyalty. With 143 million wireless and 9 million fixed broadband connections in 2022 and $137 billion in annual revenue, Verizon Communications, Inc. (NYSE:VZ) reigns as the most valuable telecom brand globally.  7. ICBC  Brand Value: $69.5 billion  Among the most valuable brands in the world, ICBC upholds its reputation through stellar customer service and innovative financial solutions. ICBC prioritizes customer needs by offering a wide array of financial products, from accounts to loans and investment options, along with user-friendly online and mobile banking. Furthermore, its commitment to social responsibility is evident through initiatives supporting education, poverty alleviation, and environmental protection. As the largest commercial bank globally, ICBC posted $214.7 billion in revenue in 2022, with $53.5 billion in profits. Holding over $5.7 trillion in assets, the bank maintains a strong capital adequacy ratio and a reduced nonperforming loan ratio, reflecting its resilience and role in China’s financial landscape.  6. Samsung Group   Brand Value: $99.7 billion  Among the world’s top brands, Samsung Group offers diverse products and services across industries. Renowned for innovation and quality, it enjoys global use. In-house manufacturing for 90% of components ensures control. With a 24.44% market share, Samsung dominates phone sales, while its 2022 revenue reached 226.5 billion USD, employing 267,937 people as of 2023. Samsung’s commitment to R&D and customer satisfaction keeps it at the technology forefront, making it a trusted and reliable brand.  Click to see and continue reading the 5 Most Valuable Brands In the World In 2023.  Suggested Articles: 15 Most Valuable Telecom Companies in the World. 15 Most Valuable Social Media Companies in the World.  10 Most Valuable Internet Companies Today. Disclosure. None: The 25 Most Valuable Brands In the World In 2023. .....»»

When you reside in the “City That Never Sleeps” (and its various cousin-cities), don’t let financial crunches rob you of ... Read more When you reside in the “City That Never Sleeps” (and its various cousin-cities), don’t let financial crunches rob you of your sleep! Does the thought of living on a budget in New York or Los Angeles seem to be a far-fetched dream? Think of bustling metropolitans – Boston, San Francisco, or even Washington, D.C. Enjoying the urban culture and accessing the coveted business avenues come at a hefty price! From groceries to housing rent: everything costs exorbitantly high! 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. NYC remains the most expensive metropolitan in the US and the second-most expensive city globally. Los Angeles follows closely, which has earned it the “least affordable” tag in the country. While you wouldn’t like to miss out on the lucrative professional opportunities or the urban culture in these cities, would it be logical to drain your earnings to afford a premium life? Strategic financial planning can help you live on a budget. Sounds unrealistic? Being a little tactical with your money-spending habits can help you stack up your savings even while enjoying the bustling lifestyle. Learn how to stretch your budget with these money-saving hacks and celebrate the urban lifestyle. How expensive is living in New York City or Los Angeles? Whether you plan to move to the Big Apple or Los Angeles, luxury and coveted prospects come at a cost! Before we bail you out of the extravaganza, look at these statistics. In New York, the cost of living is 31% higher compared to the national average. Lifestyle in Los Angeles is 51% higher than the national average, making it the least affordable city. In New York, housing costs exceed the national average by as much as 82%. Housing costs in Los Angeles are 19% higher than the national average. The monthly expense for a family of four in New York is $8,832, while that of a single person is $6,195. The figures for Los Angeles are $6,988 and $4,397, respectively. NY’s cost of living index is higher than the national average by 31%. The cost of food, groceries, healthcare, transportation, and other necessities in both cities exceeds the national average. Back in your mind, you might be pondering whether there’s an affordable way to budget and live in these metros. We have recommended some money-saving hacks that would cushion your financial burden. How to save the extra dollar while living in hot US metros? Thriving in an expensive city calls for meticulous budgeting. Why not save a few extra dollars when you have the provision? Maybe you plan to channel some of these savings to your retirement portfolio while diverting the rest to the money market. Be prudent with your shopping habits Saving money starts with shaping your shopping habits. Think of groceries and vegetables. Rather than squandering your hard-earned dollars at sizzling hypermarkets, why not shop from the regional farmers’ market in Los Angeles? Remember, purchasing groceries involves a significant expense. So, knowing where to collect your groceries from would undoubtedly make a difference. You’d get groceries much cheaper at the farmers’ market. Many of these markets offer reward programs and credit card discounts. Being tactical about how you purchase groceries, you can even end up saving more! Coming to retail shopping, visit the local flea markets in LA and NYC. Go for the Roadium or Rose Bowl rather than Target or Ikea. There are also thrift stores to purchase household goods and furniture. Then there are Craigslist advertisements and Facebook Marketplace. Shell out just a fraction of the cost compared to expensive stores around the city. Share your apartment Housing happens to be one of the heaviest cost overheads in NYC. So, don’t purchase a property unless you save adequately to invest in real estate. Instead, look out for rental accommodation and share your apartment with a few roommates. Consider living with your friends or colleagues to split the rent. Cheap accommodations are available on Airbnb for you to explore. Also, consider Rentometer or other similar tools to find affordable accommodations. Find your accommodation yourself to avoid shelling out a brokerage. This is usually equivalent to the rent for one month. On the other hand, if you own a property in Los Angeles or New York City, rent out a portion. This would draw in a monthly income to help you manage other expenses. Share cars, walk, or ride First, try not to use your car in NYC or Chicago. In some metro cities, you don’t need to travel too often between places. So, why not eliminate possible parking fines, fuel expenses, or hassles like oil changes? Use public transportation to make significant expenses to ease up your wallet. For Los Angeles or other sprawling cities, go for shared rides or carpool. At most, when you use your car, respect the parking norms to ditch chances of tickets. Get an inexpensive car and drive only when the situation looks too pressing. To save on parking, check out free valet parking offers at The Grove and other shopping centers. Get a membership or rewards program to save throughout the month for regular parking. Apart from ridesharing, go for Citi Bikes in NYC. With ride packages starting from a few dollars, you can easily navigate the city. Also, familiarize yourself with the popular train and bus routes and get weekly or monthly passes. Get meals from food trucks Eating out in NYC can hurt your wallet badly! Ordering your meals online can be equally expensive. For instance, ordering a plate of Thai Curry online with a base price of $14 can cost you as much as $25. This includes high delivery charges, unrealistic packing charges, and higher tips to the delivery agent! Switch to food trucks for meals at a reasonable budget. Burritos and tacos taste delicious! Try these out for dinners in Los Angeles rather than spending double the amount purchasing meals online. Taco trucks are popular throughout the city, and you can grab a plate for a few dollars. Occasionally, if you decide to eat out, fast casual dining would hurt your wallet less than sitting down. This way, you can enjoy a restaurant-dining experience with plenty of options. Coming to coffee, try to brew yours at home. In You’drdly get a cup in NYC at less than $2. A cold brew or latte can cost around $5. Considering two cups a day, you would be spending more than $100 a month with the basic one. That comes to $1,200 a year, which you can save by preparing your own coffee.  Managing entertainment and nightlife While it’s easy to fall for NYC and LA’s alluring nightlife and entertainment avenues, it pays to go the cheap way around. Restaurants, bars, and nightclubs look appealing, but you’d be draining your potential savings. Why compromise your long-term goals when you have alternatives to keep you engaged? Ditch the hype of expensive concerts and events that involve cover charges. Even tickets at Broadway cost hundreds of dollars. NYC has plenty of talent that you can engross yourself with for free. You have Prospect Park in Brooklyn and Brooklyn Bridge, where you can enjoy free strolls, bike rides, and tons of entertainment. Then there are free cultural events across the city dotting the calendar. Don’t miss out on the months of January and February to catch the Chinese New Year in Flushing and Chinatown. Also, you can enjoy the Feast of San Gennaro, located in Little Italy. Rather than becoming a regular at city bars, why not host house parties? By bringing in friends, you can also cook your meals at home, which can potentially save you a lot.  Get an NYPL card ASAP Being a bookworm has its benefits in terms of money management. Your obsession with books may keep you engaged in the Brooklyn Public Library, New York Public Library, or Queens Public Library. Of course, library cards and memberships wouldn’t cost as high as concert tickets! Besides, members can access different events and museums across the city. There are botanical gardens and society museums where you can enjoy the privileges of being a cardholder. You can also borrow free passes when you take your friends along to these recreational places. Visit the Culture Pass website for further information about the library card and reserve one. Bank on local rewards programs Well, do you take advantage of your credit card reward programs? A prudent approach on your end can save you hundreds of dollars. Why not make every dollar count by participating in grocery store and pharmacy loyalty programs? Making in-store purchases or online payments through specific credit cards can bag you handsome discounts. Also, have you considered capitalizing on your credit card reward points? Loyalty programs at popular stores can also fetch you discounts and cash-backs. For instance, regular customers at Vons often receive a discount at Shell station per gallon. Let these rewards accumulate, and put them aside in a savings account. Again, Rite Aid Wellness members can earn dollars as rewards that they can spend later at the store. Energy Savings So far, we have discussed negotiable expenses in the hottest metros that can make your costs manageable. What about non-negotiable bills like utilities or gas? Maybe, you’re already curtailing costs with energy-efficient appliances. Consider talking to your gas provider about discounts. Edison and Southern California Gas enable their customers to qualify for a discount. Embrace intelligent shopping habits and go for free stuff as much as possible. Even if you’re earning a six-figure salary, it pays to be strategic with your expenses. Why not plan long-term and invest in assets as you curtail unnecessary costs? With a calculated approach to your lifestyle, you won’t feel the heat of the extravaganza! FAQ Can I think of raising my family in New York or New York City? Well, New York may not be the best place to raise your family unless you are financially well-established. The cost of living in the city is among the highest in the world. However, if you are tactical while managing your finances, NYC has some of the best localities in the country to raise your family. Prioritizing safety, quality housing, and the availability of green spaces, NYC would be a great place to live with your family. What is smart budgeting in a metro city? Smart budgeting defines the secret to effective money management in a metro city. Try to automate your savings from your income. Try to save on your commutes and meals. Use a cycle or walk down locally rather than counting on your car for short commutes. Also, try to save on your housing rent. Where can I keep my savings each month? As you stack up your monthly savings, put them aside in a high-yielding savings account. From time to time, review your savings and invest for your mid-term and long-term goals. For instance, investing in stocks or mutual funds can help you grow your assets. You can also invest in asset classes like bonds, REITs, and annuities. How can I earn extra income in a metro city? Creating multiple sources of income in a metro city makes lifestyle easier. Consider investing in real estate and renting out the property to earn a consistent monthly income. Also, start a business during your leisure hours besides engaging yourself in your primary profession. Consider other passive income options like blogging or investing in dividend-paying stocks. What are some affordable localities in Los Angeles? Los Angeles has some of the safest neighborhoods in the country, which are affordable too. These include Paramount, Cudahy, and Carson. Also, you can check out suburbs like North Valley, Crenshaw, and Victor Heights. The post Money-Saving Hacks for the Big Apple, LA, and More: Stretch Your Budget Today appeared first on Due......»»

Ecopetrol S.A. (NYSE:EC) Q2 2023 Earnings Call Transcript August 12, 2023 Operator: [Call Starts Abruptly] And Operational Results for the Second Quarter of 2023. There will be a question-and-answer session at the end of the presentation. Before we begin, it is important to mention that, the comments in this call by Ecopetrol’s senior management include […] Ecopetrol S.A. (NYSE:EC) Q2 2023 Earnings Call Transcript August 12, 2023 Operator: [Call Starts Abruptly] And Operational Results for the Second Quarter of 2023. There will be a question-and-answer session at the end of the presentation. Before we begin, it is important to mention that, the comments in this call by Ecopetrol’s senior management include projections of the Company’s future performance. These projections do not constitute any commitment as to future results, nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr. Ricardo Roa, CEO of Ecopetrol; Diana Escobar, Vice President of Sustainability Development, Yeimy Baez, Vice President of Low-emission Solutions, Alberto Consuegra, COO and Jaime Caballero, CFO. Thank you for your attention. Mr. Roa, you may begin your conference. Ricardo Roa: Good morning, everyone, and welcome to the Ecopetrol Group’s second quarter 2023 conference call to present our operational and financial results. We appreciate your participation. First, I would like to highlight the dedication of our entire team, which has allowed us to achieve outstanding operating results in such a challenging market environment. Second quarter production average 728,000 barrels of oil equivalent per day with a yearly increase of 23,000 barrels versus the second quarter of 2022. And the highest quarterly figure in the last three years. This dynamism is a result of the strongest execution of our operation and increased production from strategic fields, including Cano Sur and Rubiales in Colombia and Permian in the United States. These fields have played a crucial role in supporting our growth, allowing us to meet our production targets for the year today. In the second quarter of this year, we recorded revenues of COP34.3 trillion, EBITDA of COP14.6 trillion, and net incomes of COP4.1 trillion. These figures are consistent with the 2023 financial plan. These results are supported by: Firstly, an enhanced operating performance through record in production, pumping lots in zone of our transportation system and refining throughputs, and clean fuel pollution loads in our refineries. Secondly, the exceptional results in Permian, Recetor, ISA, and Ecopetrol trade in Asia. Firstly, a positive impact of the exchange rate from sales and an efficient commercial strategy. During the second quarter, we reached the following significant strategy milestones. In May, we complete negotiations on the collective bargaining agreement for the next four years. The negotiation took place within a constructive and respectful trial with union organizations, finalizing with an agreement that will concurrently benefit our workers, the company, and the country. In June, Cartagena was notified of the international arbitral tribunal decision regarding to the claim filed on the January procurement and construction contract. For the expansion and modernization of the refinery. The arbitration process was initiated through a request filed by Reficar in March 2016, and correlating a contract breach with decision notified is subject to corrections, provisions, and clarifications of the records of the parties. This same amount were ranked in the top spot of the [indiscernible] Colombia 2023 timeframe. The business monitor of corporate reputation Permian and Ecopetrol as the best company for attracting talent in the country. This first half of 2023, we have added more than COP23.6 trillion in transfer nation, so that is royalties and dividends maintaining our current contribution to national development. On the other hand, the account receivable to the fuel price stabilization fund had the lowest average approval since January 2022. Finally, I would like to highlight that the cumulative CapEx execution to the second quarter at least COP12.3 billion being the highest in healthy early view in the last seven years demonstrating our commitment to innovation and growth. Please continue the next slide. During the first half of the year, we faced a highly uncertain macroeconomic situation. The possibility of conversation in the developed were high-interest rates and bank illustrate in the United States together with this lockdown in the Chinese economy. Have impacted the price up-to those and refine products introducing whether volatility to the market. Despite these challenges, we have excelled because of our companies operational resilience and adaptability. We have found opportunities within the current situation as OpEx could have focus on remediate goods and USA strategy to sale — purchase seek out great similar to those we offer. We have been able to explore the opportunities with our ongoing strategy in at the versatile markets and destinations emphasizing the strategy position of our trading subsidiary in Singapore. Ecopetrol Trading Asia which has sold over 85 million barrels of crude oil in the Asian market. During this quarter, could oil sales to the Asian [ph] continued to represent 54% of our results. Ecopetrol Trading Asia also successfully translate carbon-neutral could cargo is in line with the company’s TESG agenda. Its EBITDA for the second quarter of 2023 reached $62.5 million an increase of 42% over the previous quarter. In addition, the CO2 through of the Carbon Trading desk has allowed us to commercialize 10 million barrels of accumulated carbon offset crude oil as of last July. Also, the commercialization of asphalt with recycled plastic with an export level of 350 tons and the distribution of five projects in Colombia has boosted the energy transition and circular economy in region. All the commercial performance has allowed as trend in the differential of the crude oil basket ensuring our positioning in the market. The capital group continues production each all-inclusive strategy of efficiencies and competitiveness, allowing us to uphold the company’s solid operating performance despite inflationary and market challenges. We’re confident in our team’s ability to meet the facilities and remain committed to sustainable growth and success in this dynamic business climate. I now give the floor to Diana Escobar, Vice President of Sustainable Development, who will update you on our progress in the company’s total impact. Diana Escobar: Thank you, Ricardo. Ecopetrol’s commitment to generation of social value was evidence during this quarter through advancements in the performance of our social and environmental investment plan, which in 2023 total COP766 billion a figure equal to nearly 5% of the comparable investment by the nation’s general budget. I would like to underscore the most relevant achievements during this past quarter. We highlight the start of the second phase of the Meta food supply network program in partnership with the food and agricultural organization of the United Nations. Over the next three years, this program should positively impact 3,000 farming families and 32 associations in the region, strengthening production change under commercial liability. Moreover, a cooperation agreement was defined with the national government and companies in the industry to paid 43 kilometers of the Puerto Gaitan to Rubiales road located in the Department of Meta with an investment of more than COP214 billion. This project will sponsor, they are growing industrial productive and rural development of the European region, enabling over 1 million hectares with agricultural development potential and generating a positive annual impact of over 2.5% on the regional GDP. We also emphasize the successful national summit of the Ecopetrol’s entrepreneurship social investment program with the engagement of 1,576 entrepreneurs, micro and small enterprises from 45 municipalities that will receive benefits this year. In education, our school quality and retention programs have aided 641,000 students, which is 8% of the total enrollment in public educational institutions nationwide. Regarding the expansion of higher education coverage through the Ecopetrol graduate program. This quarter we awarded 94 new scholarship to students in rural areas reaching a historical total of 1,761 beneficiaries to date. In healthcare, our mobile unit Magdalena Medio has assisted more than 6500 people in seven Municipalities of the Mid Magdalena region with access to low complexity health services, which is equal to 8% of the vulnerable population in this area. Regarding access to utilities, namely gas, water, and power supply, our social gas program, certified gas, service connections for more than 5,200 new households in the departments of Atlantico, Santander, and Casamari concerning water supply, we highlight the provision of COP6.5 billion for the construction of one public drinking motor well that benefits more than 13,000 people from ethnic group, as a part of our commitment to provide water supply solutions in the department of La Guajira. In access to electricity we participated in a task force led by the Ministry of Mines and Energy seeking to define a portfolio of initiatives that can develop into self-sustaining energy communities. Our social investment portfolio has been further strengthened with the allocation to the Ecopetrol Group of 27 new projects valued at COP167 billion through the work for taxes mechanism. Our business group have the highest participation in this mechanism, 37% of the nationwide allocation. Finally, we would like to highlight the social dialogue processes carried out with the communities in our areas of influence. In the quarter, we conducted 13 dialogues processes involving more than 1000 social actors nationwide, for the participation of community action boards, academia, businesses, and local institutions. In addition, we launched the Ethnic Inclusiveness Support Program called Forming and Diversity. Training with you and past to Siberia Ethnic communities in Nagzira and Putumayo to strengthen their individual and organizational competencies. In this way, to our business lines, we contribute to generate social value throughout the country, closing gaps, and improving the quality of life for those most affected by social inequality. I will now turn the floor over to Jaime, who will present the key financial results for the second quarter. Jaime Caballero: Thank you, Diana. Ecopetrol recognizes that generating long-term value in a context of energy transition, requires an integrated balance between the achievement of financial profitability goals and the delivery of our strategic technology, environmental, social, and governance commitments with our stakeholders. Our performance dashboard shows significant progress in this regard. Technology is the main accelerator of this strategy generated benefits for close to up more than COP1 trillion in the first half of 2023 through increased revenue generation, cost reduction, avoided costs, and productivity increases. On environment, the Group, aware of the active role it must play in terms of climate change and energy transition, has made progress as follows. Regarding emissions reduction, during the first half of 2023, the Group achieved an accumulated reduction of greenhouse gas emissions of 1.09 million tons of CO2 equivalents in Scopes one and Scopes two, mainly in the upstream and downstream segment through different enablers such as fugitive emissions, venting, flaring optimization, energy efficiency programs and the use of renewables. A cumulative reduction of 1.40 million tons of CO2 equivalents by 2023 with respect to the 2019 baseline is projected. On water the following has been achieved. First, an average water withdrawal of 657,000 barrels of water per day for industrial use, well below the withdrawal limit of 724,000 barrels of water per day established for the operation. Second, a 49% reuse of freshwater withdrawal achieving an over compliance of 123% compared to the target set for the first semester of 2023. And third, a 29% reuse of production water affected by the pressure injection flow systems in [indiscernible] but compensated by the good performance of the other two indicators. As part of the ambition to incorporate non-conventional and alternative energy sources for self-consumption and promotion of cleaner energies, the company plans to incorporate 400 megawatts by 2023. Currently, 208 megawatts are in operation and another 200 megawatts are under construction to deliver the set target. Regarding social matters, in addition to the milestones previously mentioned by Diana, the following stand out, the 4,298 non-oil jobs generated that contribute to diversification of local economies and the 55,659 students benefited through quality and educational coverage projects. In terms of governance, the company maintains a solid and transparent corporate governance with a level of independence of 78% of its Board of Directors and a 33% female representation. These guides the fulfilling of the company’s strategy and is evaluated in indexes such as the Dow Jones Sustainability Index, where Ecopetrol Group aims to maintain or improve the corporate governance rating obtained in 2022. Please move on to the next slide. During the first half of 2023, we achieve outstanding financial indicators, amides an environment of lower crude oil and refined product realization prices. Roche recorded its second-best result since 2016 and closed the semester at 14.8% above the target of 10% for the year and higher than the average of around 11% reported by peer companies to date. The impact of higher fiscal contributions and the increase in capital employed was partially offset by higher operating income in the last 12 months. EBITDA margin was 44.3% mainly explained by the lower average rent price compared to the first semester of 2022 and the lower cracks of refined products, diesel, gasoline, and jet, which was partially offset by the net effect on revenues and purchases associated to the higher average exchange rate. Likewise, there was an increase in activity costs and operating expenses associated with the increase in activity in terms of production, refinery throughputs, and transported volumes, as well as some inflationary effects. During the semester, Ecopetrol Group recorded a higher EBITDA margin compared to its pear companies, which reported an average margin of around 34%. Regarding EBITDA by business line, a 78% contribution of hydrocarbons stands out underpinned by the upstream and midstream segments. Transmission and toll roads contributed with 16% of the EBITDA mainly associated to the results of the energy transmission segment. Finally, low emissions contributed with 6% of the EBITDA explained by a higher gas contribution. The gross debt to EBITDA indicator remained stable at 1.6 times below the target of 2.1 times for the year. The debt-equity ratio was 1.1 times primarily due to the higher financing U.S. dollars acquired mainly by Ecopetrol S.A. in the first half of the year. During the first half of 2023, Ecopetrol Group generated an operating cash flow of COP5.2 trillion as a result of the solid operating performance and the positive effect of the average exchange rate, which offset lower organization prices and the inflationary effect on cost. Operating cash flow accounting for the balance of FEPC, which I’ll explain in detail later, would be COP18.2 trillion at the end of the semester. Please move on to the next slide. In the first half of the year, Ecopetrol’s organic investments amounted COP12.3 trillion, the highest half-year figure in the last seven years, 41% above what was executed in the first half of 2022, and in line with the target for 2023 of between COP25.3 trillion and COP29.8 trillion. This demonstrates the company’s execution capacity in line with the target set out for the four pillars of the 2040 strategy, and contributes to our commitment to the economic growth of Colombia and the other countries where we operate. The hydrocarbons business line as a strategic priority for the company and as an enabler of investments in the energy transition, closed the semester with a solid execution for COP8.4 trillion, which represent 69% of the group’s investments. These investments were represented in growth projects throughout the integrated chain, both in Colombia and the United States. The investments in low emission solutions and TESG closed at COP1.5 trillion of which circa COP1.3 trillion were allocated to gas projects focused on assets located in the Piedemonte and other exploratory blocks. In TESG resources were allocated to decarbonization projects, efficient water management and operations, energy efficiency, fuel quality, and hydrogen. Investments in the transmission and toll roads business line amounted to COP2.4 trillion and corresponded to projects executed by ISA in energy transmission, toll roads, and telecommunications. These investments allowed progress in the construction of the electric circuit and in improvements aimed at increasing the reliability of the existing network, as well as in Ruta del Loa, Ruta de la Araucania and Ruta de los Rios road projects in Chile. Copyright: 1971yes / 123RF Stock Photo Please move on to the next slide. At the end of the first half of 2023, Ecopetrol recorded a consolidated cash position of COP13 trillion explained by first an operating cash flow generation of COP5.2 trillion, mainly associated with higher sales volumes due to higher production, the solid performance of the midstream and downstream segments, as well as energy projects. This was partially offset by the increase in working capital, mainly due to the accumulation of the FEPC account and the payment of income tax in some subsidiaries. Secondly, the outflow of investment resources for organic activities for COP10.7 trillion, mainly made by Ecopetrol and its subsidiaries, Permian, ISA and CENIT. And thirdly, the outflow of resources for the payment of dividends for COP2.6 trillion to minority shareholders and subsidiaries. Regarding the management of debt maturities for 2023 at Ecopetrol, we continue to advance in the refinancing strategy with which in June it carried out. A partial disbursement of close to COP693 billion from the financing line with bank Colombia, the prepayment of debt maturing in 2023 for $305 million. The issuing of bonds in the international capital markets for $1.5 billion and the launching of the repurchase offer for around $822 million plus interest for the prepayment of the remainder of the international bond issued in 2013 executed in August. As a result, the balance on maturities for 2023 at the end of August is close to $198 million, corresponding to principal installments of long-term debt. As for the average cost of debt, between the end of the first half of 2022 and the first half of 2023, the cost increased 28 basis points and close at approximately at 6.07%, which represents a highly controlled growth, despite the generalized context of higher international interest rates. It is also noteworthy that, despite the higher costs, average exchange rate, and indebtedness, the increase in financial expense between these periods was only 1%, reflecting the company’s ability to manage its debt even in a challenging rate environment. The company does not expect a substantial increase in the cost of debt for the remainder of 2023. Regarding the FEPC balance, the account receivable closed at COP30.9 trillion, reflecting an accumulation of COP13 trillion during the semester. Likewise, compensation was made without transfer of resources between the balance receivable from the FEPC account and the dividends in favor of the nation for COP8.4 trillion, leaving an amount of COP13.2 trillion pending for compensation. It is important to mention that, thanks to the adjustments in the price of gasoline and the price environment, the monthly accumulation of the FEPC has been decreasing and is expected to be below COP1 trillion per month in the second half of the year. Finally, it is important to reiterate that, the financial priorities of the Ecopetrol Group continue to be the value generation, through the delivery of the investment plan, proactive and competitive debt management, and the distribution of dividends as cash conditions allow. I will now pass the floor to Yeimy Baez, who will give us more details about the Low Emission Solutions business line. Yeimy Baez: Thanks Jamie. In the first half of the year, the gas LPG production reached 160,000 of equivalent oil barrels per day, 22% of the Group’s production mix. This business delivered an EBITDA of COP2,142 billion with an EBITDA margin of 47%. Our continued efforts to decarbonize our operations were blostered by the implementation of a wide range of initiatives and investment projects of low-emission solutions, aiming to significantly contribute to our strategic objectives. I would like to highlight the reduction of fuel and gas from — Pizzorama and [Indiscernible] fields by the means of connecting them to the gas market to offer additional volumes of about 1400 MBTU per day. This initiative allows us to reduce emissions of more than 36,000 tons of CO2 equivalent per year. We also were able to implement energy efficiency initiatives that led to reduce 5-gigawatt hours, 2-megawatts of consumption, equivalent to the electricity consumption of 16,000 and another 110 giga GBTU of thermal image. Energy management operational control and the use of slurry and bending of gas for cell generation of energy resulted in the loss — We continue to work on sustainable mobility during the second quarter of 2023. First, we started to deliver financial support to natural gas vehicles with the gas truck program, a fund of COP730 billion that includes an endowment by Ecopetrol. Second our subsidiary Asian pr. renew its transportation fleet with four gas-powered brand-new trucks in its operations. And finally, we deliver the first hydrogen refueling to the public transportation bus in Bogota for commissioning test. With the support of semi and 1H22. It is estimated that all these initiatives in sustainable mobility will achieve a reduction of more than 570 terms of CO2 per year. I’ll give some further remarks on a capitals effort to improve the wellbeing of the Columbia people. To date the program to connectable communities, to the natural gas has delivered 4,843 connections positively impacting families in rural areas of [indiscernible] and Atlantico, Santander, and Casanare have been the main vehicles to meet the target. We also signed new agreements that will allows us to expand the program coverage to connect another 4,000 families in 2023. In addition, we extended the micro LNG plant operations in Buenaventura until November, providing reliability of gas supply to 37,000 families in this area. Their company has done a significant amount of work to enrich its renewable energy portfolio. To that end new technologies have been introduced to our opportunities panel such as biomass, geothermal, and small-scale type. The operation of Brisas, Castilla, and San Fernando solar farms, as well as the Cantayus Small Hydroelectric Plant that allows us to reduce 5,883 tons of CO2 equivalent and save COP6,950 million in the second quarter of 2023. We’re also making progress in the construction of new photovoltaic capacity in Cartagena 23 megawatt, La Cira 56 megawatts, Copey, Ayacucho, and Vasconia solar farms with 15 megawatt and Caucasia with other 7 megawatt, which will contribute to the incorporation of 101 megawatt to our renewable energy metrics by the end of 2022. Finally, last June, we held the energy transition for three days, more than 3000 people, including Ecopetrol employees, international and local leaders, and experts gathered to share knowledge of the national and global context, industry experience, technological trends, and challenges of the energy transition. We continue to leverage the consolidation of the architecture for the business line, trend in the strategic pillar of cutting-edge knowledge. At Q3 for our 2040 strategy energy that response. I’ll now the pass the floor to Alberto who will talk about the main operational license. Alberto Consuegra: Thank you, Yeimy. Progress in the 2023 exploratory campaign reached 40% by the end of this semester. As we completed the drilling of 10 exploratory wells, seven of which have hydrocarbon potential and are located in the Llanos Orientales to having gas condensate potential in the Piedemonte Foothill, and one with natural gas potential in Northern Colombia in Cordoba. For this quarter, I would like to highlight the announcement we made about the success of the Tinamu-1 exploratory well operated by Ecopetrol located in Castilla la Nueva in the Department of Meta confirming the presence of 15 degrees API heavy crude oil. Extensive testing planned to begin in the third quarter of 2023. We made important progress in the assessment of onshore discovers. In Northern Colombia in there receive area early production connection of the Coralino-1 [indiscernible] discoveries to existing infrastructure is underway. Extensive testing expected begin by the end of 2023 for potential commerciality in 2024. With regards to the Flamenco’s discovery located in the Mid Magdalena Valley, the Flamenco is now commercially viable and the production license is expected to be awarded during the second half of 2023 in order to proceed with extension of commerciality for Flamencos 2,1,3 wells. Finally, extensive tests are being carried out in the Upper Magdalena Valley on the El Nino-1 [indiscernible] 2 wells and in CPO9 on the Col-1 and Lorito wells. Progress in offshore exploration activity in Colombia includes assessing the results of the Gorgon-2 appraisal well and the drilling of the Glaucus-1 well in the same area, which is expected to reach total depth in the second half of this year. In addition, we continued with pre-drilling activities of the Orca Norte-1, well as part of the appraisal process of the Orca discovery, and with the planning of the appraisal campaign of the Uchuva discovery to start in 2024. As part of the ongoing consultation with government agencies, mediation agreements were signed with the National Hydrocarbon Agency, ANH [indiscernible] National State Legal Defense Agency. Concerning controversies regarding the exploration and production agreements for the [indiscernible] Magdalena areas. Let’s go to the next slide, please. During the second quarter of this year, we achieved production of 728,000 barrels of oil equivalent per day, up 3.3% versus the same quarter of 2022, driven by a solid performance of Rubiales and positive results of the drilling campaigns at Cano Sur and Permian. These results were obtained despite the negative production impacts of around 6,400 barrels of oil equivalent per day. During the second quarter of the year due to social unrest issues, including the [indiscernible] closures, as well as load restrictions, and the temporary shutdown of the gas planting [indiscernible] due to attacks to the Cano Limon Covenas pipeline. We continue to make progress in decarbonizing our upstream segments. During the first half of the year, we highlight the development of projects that will eliminate emissions at the [indiscernible] production facilities in line with our commitment to reduce methane emissions by 2045. During this period, the upstream segment subsided in reducing 141,000 tons of CO2 equivalent emissions, which is above expectations for the semester. Let’s go to the next slide, please. After three years of the start of operations in the Permian. The joint venture between Ecopetrol and Oxy reached a record production at the end of May of a 100,000 barrels of oil equivalent per day before royalties, with approximately 62,000 barrels of oil equivalent per day corresponding to Ecopetrol’s participation. In addition to the production in the Midland Basin, we highlight the start of production in the Delaware area, after drilling and completing the first 19 wells. During the second quarter of 2023, we drilled 22 new wells, totaling now 279 wells and reaching a net production for Ecopetrol before royalties of 58,700 barrels of oil equivalent per day. By the end of the year, more than 110 wells are expected to be drilled and production should reach an annual average daily production in the range of 62,000 to 64,000 barrels of oil equivalent per day, before royalties for Ecopetrol. On the TESG front, Permian assets maintain low carbon intensity based on zero routing flaring. Methane monitoring continues at production facilities, along with other practices, such as tankless storage facilities, to reduce emissions at the source. Please continue to the next slide. For the Midstream segment, transported volumes increased year-on-year by nearly 20,000 barrels per day, primarily as a result of higher crude oil production in the Llanos region, greater availability of both refineries as well as operational optimizations in the refined product transport systems. So far this year, 10 reversal cycles have been carried out in the Centenario pipeline, ensuring the evacuation of production from the Cano Limon field. Likewise, an alternative route was implemented to evacuate condensed crude from Gibraltar and unloaded — station as a heavy crude diluent. The bottle making production of approximately 30 million cubic feet of gas in the Gibraltar field. During the second quarter, Senate continued to perform a cabotage operation from the Buenaventura Maritime terminal to the Tumaco terminal. Supplying part of the demand of products in this region of the country affected by restrictions on the Pan American Highway in line with our TESG strategy after three years of work led by Ocensa in partnership with Oleoducto de los Llanos Orientales, ODL, Oleoducto Bicentenario Colombia, OBC, and other regional entities, we highlight the completion of the Vida Manglar project, which restored and rehabilitated 39.2 hectares of mine growth in the Cispata Bay in Cordova, contributing to the natural regeneration of the area. Finally, the Ministry of Mines and Energy through the issuance of Resolution 279 of 2023, temporarily suspended the updating of crude oil transport tariffs that takes place in July of each year. Therefore, the current tariffs will remain enforce until the tariffs for the following period are set in accordance with the terms, established by the regular. Let’s continue with the next slide, please. In the Downstream segment, the Cartagena refinery achieved a record quarterly throughput of 209,000 barrels per day, thanks to the continuous operation of the Cartagena crude oil plant interconnection project, IPCC, by its acronym in Spanish, as well as the high operational availability of the plants. During the quarter, we reached an integrated throughput of 427,800 barrels per day, a 17% increase versus the same period in 2022. In line with our commitment to contribute to the improvement of Air quality in Colombian and deliver cleaner fuels stand out the record production of diesel, gasoline, and jet fuel for local supply in compliance with resolution 40103 that establishes the fuel content limits for Columbia. In 2Q 2023, we reached an integrated refining gross margin of $14.4 per barrel as a result of higher refinery throughput with plant availability levels surpassing 96%. Compared to 1Q 2023, the margin was mainly affected by a contraction in global demand reflected in lower diesel and jet fuel prices and higher crude oil prices. By the end of the year, margins are expected to remain at the double-digit level. In addition, scheduled maintenance will be carried out at both refineries during the second half of the year, ensuring the reliability and integrity of our operations. During the quarter we made progress in achieving various milestones of which I would like to emphasize, start maturation of the project to produce sustainable aviation fuels and renewable diesel in the Barrancabermeja refinery contributing to the carbonizing aviation sector. The start-up of the electrolyzer project in Esenttia that aims to generate hydrogen from water using solar panels as an energy source to partially cover the operation’s self-consumption. The execution of the 5G technology Barrancabermeja refinery with the aim of implementing industrial technology solutions in the operation which will enable efficiencies in maintenance and operation processes. We continue to advance on the zero-fuel oil path initiating production of AC-30 quality asphalt of Barrancabermeja refinery, those opening up new market opportunities. Let’s move on the next slide please. During the first half of the year, efficiencies of COP1.6 trillion were achieved, of which COP1.1 trillion contributed to mitigate the inflationary effects that continue to impact the cost and expenses. On this front, I would like to highlight the multiple initiatives that have allowed us to optimize dilution and evacuation costs of heavy, and extra-heavy crude oil. The implementation of production strategies that have contributed to reducing lifting costs, as well as energy efficiency strategies with the use of technology solutions and self-generation listing cost as of June 2023, amounted to $9.41 per barrel, a year-on-year increase of $0.13 per barrel, mainly attributed to inflationary effects on energy targets, well services, and chemical treatment whose impact was mitigated due to achieve deficiencies of $0.24 per barrel. Refining cash cost decreased by 14% compared to the first half of 2022, explained by increased throughput and exchange rate variance, offsetting higher costs from greater operating activity and inflationary effects. The cost per barrel transported as of June 2023 was $2.76 per barrel, which remains stable versus the same period of 2022, primarily due to the aggregate effect of higher operating costs, a greater average, the evaluation of the COP against the U.S. dollar, and additional volume transported. The total unit cost as of June, 2023 reached $45.6 per barrel a 14.7% decline compared to the same period of the previous year, mainly resulting from the effect of a higher exchange rate and an increasing traded volume. It should be noted that there was a COP700 per dollar year-on-year increase in the average exchange rate in this period, which resulted in an impact of approximately COP340 billion in operating costs and expenses. I now give the floor back to our CEO, Ricardo Roa. Ricardo Roa: Thanks, Alberto. The Transmission & Toll road business line generated positive operating and financial results in the first half of the year. These results were primarily sustained by the energy business in Brazil and Colombia and Toll roads in Chile. This record in a 10% contribution by the business line to the group’s revenues, 16% input to EBITDA, and 8% participation in net income for the first half of the year. They are mostly driven milestone for the quarter include. The allocation of two logs awarded in the energy transmission by the Brazilian National Electric Agency, as well as six extension in Brazil and one connection in Colombia. Startup of the UPME 07, 2017 Sabanalarga-Bolivar project, an inception of the SmartValves operation in the Santa Marta substation supporting reliability and the connection of renewable energies. This project will represent additional revenues of $10 million. ISA continues advising in the construction of 34 energy transmission projects, which represent the addition of 4,825 kilometers of transmission lines to the network and will generate revenues of approximately $260 million when they enter in operation. Finally, progress continues in the execution of additional works Ruta de los Rios and Ruta de la Araucania concessions which we generate new revenues and extend the terms of these concessions. I would like highlight that in this first half of 2023, Ecopetrol demonstrate exceptional resilience and solid operational capabilities within a challenging landscape. This was achieved through hard work indication, as well as years of support and commitment by every member of our organization. To the devotion of our team worldwide and productivity to recognize strategic opportunities, we continue to ensure sustainable growth with a historical execution of the investment plan. In Colombia from the production fields in the [indiscernible] palace to the offshore stations in the Caribbean, and globally from Chile through our Transmission & Toll roads business line to our trading company in Singapore. We will continue to focus on delivering operational excellence, innovation, and commitment to the energy transition. With great enthusiasm, we invite you to celebrate with us in September the 15th anniversary of our listing on the New York Stock Exchange. We will hold an event to share our achievements, financial results, and prospects, and the path to our 2040 strategy. Finally, I wish to attend all our employees and investor partners for their continued support, and to all of you who participated in this call conference today. Thank you for your time. I now open the floor for the questions. See also 15 Worst Performing Healthcare Stocks in 2023 and 30 Most Dangerous Countries in the World in 2023. Q&A Session Follow Ecopetrol S A (NYSE:EC) Follow Ecopetrol S A (NYSE:EC) 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 Andres Cardona from TD Bank. He is in line with a question. Mr. Cardona, the floor is yours. Andres Cardona: Good morning. Thank you for this opportunity. I have two questions. The first one is with respect to the EBITDA margin in the downstream segment. I understand there is an impairment because of the — we sold. And the reduced margins of petrochemicals. But I would like to understand if there are nonrecurring events, perhaps losses for reevaluation of inventories that would explain this impairment of the segment. And second of my question is if you have estimated the present value of the indemnity for the refi card. And if you could give us the perspective of the company regarding the possibility to recover these resources because it has been published in the media and also in — of the Minister of Mines, is there any of possibility of waiting for new auctions up for oil fields in Colombia? Thank you. Diana Escobar: Andres, good morning. Thank you for your question. With respect to the first one, about the effect on the EBITDA in the downstream effect, and inventories, I would say that, in this year, we had an inventory effect an accumulation in the first month of the year with a drop in the second few. And at large, the fact, on inventories — amounted to $5 million. Talking about the refineries, the inventory effect we have had cumulative in the first half of the year has been positive. In the case of Barranca, we had an accumulation of a volume metric inventory because of a drop-in demand. But in general, both Cartagena and Barranca have had positive inventories. In the whole Downstream segment to give you an idea of the cumulative inventory between Cartagena and Barranca was $27 million positive these have — and EBITDA $1,020 million so the inventory effect that was semester or text perceptive and our glad less than 2% as compared with EBITDA. We haven’t had any adjustments or one-time adjustments, you may complement this. Jaime Caballero: Thank you. Yes. With respect to the downstream, I don’t have much to add to what Walter said. We don’t have any exceptional material issues in the second quarter. And what you have seen in terms of margin is just a reflection of the change in the environmental conditions, but still, the down margins are still very appealing and competitive also. So, I would say that… and with respect to your question about replicant as it following knowledge in early June we received of a new favorable ruling for the refinery in the dispute with CBI today. The owner is McDermott and this gives rise to a potential expectation of recovery in the future. The steps to follow are first that their ruling is made firm. This is something we’ll be expecting by the end of the year. And once we have a firm ruling, we’ll be able to formalize a number of procedures for the recovery of those trends with the counterparty. To the extent that the strategy for recovery and the dialogue with the counterparty shed light on their amount of matters of this recovery. We will be adjusting the financial statements to reflect that expectation in an educated manner. That’s what I can say now......»»

The EV SPAC frenzy is fizzling, with Proterra (PTRA) being the latest to file for bankruptcy. Read on to know more about PTRA's fall from glory in the EV realm. The electric vehicle (EV) wave that roared in 2020 and 2021, driven by special purpose acquisition companies (SPACs), is crashing. The once-booming EV SPAC frenzy is now witnessing a sobering reality, as startups falter in their ambitious milestones, leaving investors disillusioned.The latest casualty in this changing landscape is Proterra PTRA, a leading manufacturer of zero-emission electric transit vehicles and EV technology solutions. The company filed for Chapter 11 bankruptcy early this week. The move comes after Lordstown Motors RIDEQ filed for bankruptcy protection in June 2023 after failing to resolve a dispute over a promised investment from Foxconn.After taking a shortcut to an IPO through SPAC mergers, most EV startups have been investigated for potentially misleading investors with unrealistic projections. This has resulted in diminishing cash reserves, putting immense pressure on startups that are struggling to scale up production while facing limited funding options in a turbulent economic environment.Moreover, the drop in valuations has made selling equity for much-needed cash less effective, leaving investors dissatisfied with the dilution of their stake, especially as established players like Ford F, General Motors GM and others enter the EV space. The road ahead remains uncertain for EV SPACs, with the need for sustained funding and doubts over their ability to deliver on promises. The current year is going to be crucial for EV startups as they walk a financial tightrope.Coming back to Proterra, its recent Chapter 11 bankruptcy filing has cast a shadow on its prospects, prompting a closer look at its journey from success to financial distress.Proterra’s Rise: From Pioneer to PowerhouseIt's especially shocking when industry stalwarts tumble. One such fall is of Proterra — once a notable name in the EV space. It gained recognition for its pioneering efforts in developing zero-emission electric transit buses and has been dedicated to creating sustainable transportation solutions since its inception. The company introduced the North American market to zero-emission electric buses in 2010. Proterra’s remarkable journey has seen the displacement of more than 180 million pounds of CO2 emissions, with their buses covering 40 million service miles.By 2015, the company had diversified into battery tech and powertrains, splitting into three distinct units — ‘Powered’ for vehicle and equipment electrification for OEMs, ‘Transit’ for battery electric buses for transit fleets and ‘Energy’ for charging solutions.The diversification allowed Proterra to expand beyond buses into various commercial vehicle applications, including cargo vans, off-highway equipment used in construction and mining, and Class 8 semi-trucks. The company expanded its heavy-duty EV charging infrastructure by more than 100 megawatts to support commercial vehicle fleets in North America.Proterra’s innovative battery technology and commitment to environmentally friendly solutions earned it a reputation as an industry darling, attracting attention from both investors and policymakers. PTRA’s achievements even caught the attention of President Biden, who virtually toured one of its facilities.Proterra went public in June 2021 via a merger with a SPAC. The deal was valued at $1.6 billion and seemed to echo its success story.PTRA currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Descent into BankruptcyFor a company that was quite well-established, the news of Proterra's Chapter 11 bankruptcy filing was a seismic shock to the industry. How did a well-established firm with three business lines, government aid and presidential praise find itself in such dire straits?Several factors resulted in Proterra's downfall. Firstly, Proterra's aggressive strategy to expand its three business lines simultaneously led to rapid capital burn, creating financial vulnerabilities that proved difficult to overcome. The tightening of the capital market only added fuel to the fire.Secondly, Proterra's business model faced unique challenges. The company’s primary clientele and transit agencies, reliant on federal and state funding, often resulted in prolonged deal finalizations and even price reductions to secure bids—straining Proterra’s profit margins. Proterra’s model of recognizing revenues after bus delivery was further jeopardized by inflation.Also, with each transit agency demanding unique bus specifications, Proterra found itself stuck in a loop of endless customizations. Scaling became challenging, requiring hefty working capital. Compounding these issues were supply chain constraints, which resulted in substantial delays and financial penalties for Proterra.Despite its initial successes, Proterra's journey took a dramatic turn with its recent bankruptcy filing. CEO Gareth Joyce cites market and macroeconomic forces hindering efficient scalability. As Proterra navigates this challenging period, it has emphasized its intention to honor its obligations to employees, vendors and suppliers. Meanwhile, it canceled its earnings call, which was scheduled for Wednesday.The company said that Moelis & Company LLC is acting as Proterra’s investment banker, FTI Consulting as its financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP as its legal advisor.A Bumpy Road AheadThe rise and fall of Proterra serve as a cautionary tale for the EV industry.  While the company aims to revitalize its financial standing through recapitalization or a sale, the Proterra narrative demonstrates that although groundbreaking technology and sustainability goals are essential, they must be coupled with sound financial management and a strategic and resilient approach to navigate uncertainties. As the company treads this uncertain path, the industry watches, hopeful yet wary of what the future holds. 4 Oil Stocks with Massive Upsides Global demand for oil is through the roof... and oil producers are struggling to keep up. So even though oil prices are well off their recent highs, you can expect big profits from the companies that supply the world with "black gold."  Zacks Investment Research has just released an urgent special report to help you bank on this trend.  In Oil Market on Fire, you'll discover 4 unexpected oil and gas stocks positioned for big gains in the coming weeks and months. You don't want to miss these recommendations. Download your free report now to see them.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 Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Proterra Inc. (PTRA): Free Stock Analysis Report Lordstown Motors Corp. (RIDEQ): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

IAMGOLD Corporation (NYSE:IAG) Q2 2023 Earnings Call Transcript August 11, 2023 Operator: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2023 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, […] IAMGOLD Corporation (NYSE:IAG) Q2 2023 Earnings Call Transcript August 11, 2023 Operator: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2023 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I’d like to turn the conference over to Graeme Jennings, Vice President, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings. Graeme Jennings: Thank you, operator. Welcome everyone to the IAMGOLD second quarter 2023 results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer; Maarten Theunissen, Chief Financial Officer; Bruno Lemelin, Senior Vice President, Operations and Projects; Tim Bradburn, Senior Vice President, General Counsel, and Corporate Secretary and Jerzy Orzechowski, Executive Project Director Cote Gold. Before we begin, we are joined today from IAMGOLD’s Toronto (ph) office, which is located on 313 territories on the traditional lands of many nations including the Mississauga of the credit, [indiscernible]. At IAMGOLD, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, transparency, and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures, including the presentation and the reconciliations of these measures in our most recent MD&A each under the heading non-GAAP financial measures. With respect to the technical information to be discussed, please refer to the information on the presentation under the heading qualified person and technical information. The slides referenced on this call can be viewed on our website. And I will now turn the call over to our President and CEO, Renaud Adams. Renaud Adams: Thank you, Graeme, and good morning, everyone and thank you for joining us. The second quarter for IAMGOLD was an important period for the company, as our operating teams made significant strides at both Essakane and Westwood, to bring our year-to-date attributable production to 220,000 ounces of gold and gas costs 1,234 per ounce, while keeping a safe work environment. We will walk through the quarterly operating results in more detail in a moment, but I want to congratulate our Essakane team for their remarkable resilience to allow for the mine to resume both mining and milling at full capacity in a very complex environment. Secondly, resolve significant progress of the Cote Gold Project. In June, the site reached over 1,900 workers’ site. Working together to push the project to approximately 86% completion. We remain on track with the top end of our cost to complete guidance in line with the project planned capital. Further, we are now seeing activities begin to critical transition from bulk construction to finishing activities and operational readiness. At Westwood, we continue to execute on our optimization plant, with the objective to turn the mine into a positive cash flow producer in the near term. The second quarter was my first four quarters as CEO in IAMGOLD and my conviction has only grown that this is a company poised position itself amongst our peers. We are entering a transformational period for the company and I’m extremely pleased with the expertise, relevant experience and leadership in place at IAMGOLD. Our zero harm missions continue be our priority number one, and we are looking at our corporate ESG strategy and execution. When we look ahead to 2024, once Cote Gold comes online and should Westwood take the next step, the next step in production post rehabilitation. The company will have a significantly higher production base and lower cost profile, providing a strong foundation cash flow and growth opportunities in Canada. Yet, before we get there, the short-term goals for IAMGOLD are cleared. Bring Cote online with a focus on achieving a steady and sustainable ramp up of operations and manage operations at Essakane and Westwood to improve our margin, while ensuring the safety of people in the community in which we operate. Longer-term, our goal is for IAMGOLD to become a high margin intermediate gold producer with a strong operating base in Canada. Financially, we will characterize returning our 70% position in Cote with our partners, Sumitomo, as well as use our cash flow to optimize our balance sheet and deliver the company to have a more efficient and balanced capital structure. With that, we will now dive into the operating and financial results and highlights for the quarter. I’m on Slide 5. Starting with health and safety, the company has seen an improving trend year-over-year, with a days away, restricted transferred duty rate of 0.39 and a total recordable injury rate of 0.66, based on 200,000 hours work, ensuring a safe work environment would always be our primary focus at IAMGOLD and our goal continue to be Zero Harm. On production, in Q2, the company produced 107,000 ounces of gold on an attributable basis, putting us well on the path for our auction guidance target of 410,000 to 470,000 ounces of gold this year. As we will get into a moment, the production results were driven by a second of performing to plan and higher grades recently revalidated underground zone at Westwood, which helped to mitigate the impact of some operating restriction due to poor air quality in the region for the forest fires in the quarter. The second quarter saw IAMGOLD report cash cost of $1,376 ounce sold and an all in sustaining cost of $1,912 per ounce. Our cost increase over the year prior mainly due to increase costs of blended supplies, including fuel, higher power costs and previously forecasted lower grade [indiscernible], as well as an increased rehabilitation cost at Westwood. As a result, we expect costs to come in at the top end of our annual guidance ranges. On Slide 6. Turning to Essakane. The mine reported Q2 attributable gold production of 88,000 ounce bringing the year-to-date total to 180,000 ounces of gold. Mining activities totaled 13.5 million tonnes, a significant increase quarter-over-quarter as the mining fleet returned operations to full capacity. Mining activity in the second quarter completed the transition to Phase 5, resulting in a higher strip ratio, in line with — and our plans as the operations move to new mining phases and lower grades from the prior quarter when grades were positively influenced from desired feed of material from the bottom of Phase 4 of the pit. Mill throughput in the second quarter was 3.1 million tonnes at an average head grade of 1.11 grams a tonne with throughput 42% higher than the first quarter. As operations were able to resume at full capacity to the improved ability to move necessary supply around the country. The mill reported an average recovery of 89%, which declined slightly from the prior quarter and the year prior due to lower grade including higher concentration of gravity carbon and sulfur. On a comp basis, as an added reported cash cost of $473 an ounce, an increase for the first quarter has head grades declined 30% from Q1 at the highest strip ratio. Additionally, we saw sustained system higher prices consumable as inflation pressures ease, but with signed — with few signs of reversal as well. Increase of the landed cost of fuel due to the impact of the security situation in the supply chain, higher labor costs to depreciation of the local currency and an increase in power generation costs as heavy fuel normally used for power generation was periodically substituted with more expenses like fuel in order to maintain operations during the period where supplies was limited. We are currently building additional tank at this accounting (ph), which will increase the HFO, head of storage capacity at 5 gram approximately 50%. We expect that the extra capacity will be in place in early Q4. On an all-in-sustaining basis, cost increase to $1,587 per ounce due to the higher operating costs as well as schedule higher volume, which stripping as the mine enters the new mine phases. Looking ahead, Essakane is on track for our production going into range of 340,000 to 380,000 ounces of gold. Mining activity is expected to maintain normal operating levels in the second half of the year, including increased level of waste stripping to open phases for 2024 onwards. The mill feed will consist of a combination of direct feed and stockpile as the mine fleet sequences through the targeted phases of waste stripping. Capital expenditure guidance for Essakane has unchanged and approximately $155 million. We increased volume of capital that provides waste in the second half of the year which total, while total tonnes moved are in line with the second quarter to provide access to mine areas in support of the 2024, 2025 production plan. It is worth noting that the mining activity and stripping programs assume no significant disruptions in the supply chain resulting from the security situation in the country and the region. The company plans to file an updated life of mine or as account an updated mineral resources during the fourth quarter of 2023. This will include the details of assessing the 9.9 million tonnes of stockpile material through the CIO circuit versus the prior plan to outline capital intensive heat leach scenario. On Slide 7. Turning to Westwood. Gold production was 19,000 ounces in the quarter. 40,000 ounces [indiscernible] year-to-date. Westwood continues to be in a unique position, as IAMGOLD has been essentially rebuilding the underground mine at the same time as active mining operations are being conducted. The mine has made significant strides over the year towards taking the next step in production entering 2024. Mining activity in the second quarter totaled 212,000 tonnes of ore, which was lower than the prior quarter, due to the impact of heavy wildfire smoke and the vicinity of the mine operations required for multiple underground shift to be canceled to ensure the continued safety of our workforce. However, it is worth highlighting that underground mining activities returned 56,000 tonnes of ore at a grade of 7.6 grams a ton, which is the highest grade mine from underground in over five years. As we begin to see the benefit of [indiscernible] and activities reopening previously [indiscernible]. Mill throughput within the second quarter was 251,000 tonnes at an average head grade of 2.52 grams a tonne and improved recoveries of 94% of the — on the higher grade. Cash costs and all-in-sustaining costs continue to apply at Westwood with a very high sensitivity to line output and due to the increased levels of ground support required for development and rehabilitation work relative to the annual plan. Additionally, mining activity started at the satellite open pit Fayolle with minimal productions in the quarter, yet adding $2.4 million of the failed development capital to operating cost. Looking ahead, Westwood is well on track with our guidance range of 78,000 to 90,000 ounces this year. Production levels and unit costs are expected to improve into the second half of the year, benefiting from the continued advancement of underground development, providing access to more and higher grade stope sequence. Mill fee will continue to be supplemented from available satellite surface deposits, including increased proportion of ore feed from the sale property in the second half of the year. On Slide 8, I just want to take a moment to dive a little deeper into our activities at Westwood. Underground development year-to-date is near record development rate with 2,855 meters of lateral development completed to secure safe access to multiple ore faces, including high grade pass producing areas, which would allow for increased operational flexibility in support of the 2024 and beyond production plan. We have increased the sustaining capital expenditure guidance for Westwood by $35 million. Of the underground rehabilitation, and development has been progressing ahead of schedule due to better than planned productivity rates, moving some of the 2024 work into 2023 and reducing the work required in 2024, while some of the rehabilitation work requires, more ground, support increasing costs. This work not only is allowing the return of mining into a higher grade area, that were previously closed, but also opened the door for potential mineral reserve increases should this variance been upgraded from resources as they are proven to be mineable. We will have an update 43 101 (ph) for Westwood in the fourth quarter. As production volumes increases and rehabilitation work decrease we expect to see cost cut down. With the goal of positioning the assets for positive free cash flow for a better and profitable 2024 and beyond. Slide 9. Turning to Côté Gold. I am pleased to have our executive project director here with us today, to walk us through the developments and progress in the quarter. Jerzy? Jerzy Orzechowski: Thank you, Renaud. The second quarter, considerable progress was made at Côté Gold (ph), achieving significant milestones and earthworks processing plant and operating readiness. It was a critical quarter as we started the quarter in the spring fall or the fresh head season. Water management systems have been put in place, handled the tasks administratively, and I must compliment the teams for the planning and management. At the end of the quarter, the project was approximately 86% complete. And as Renaud mentioned, we are now seeing activities move from the bulk construction to the more detailed and have very important finishing derivatives. The physical changes of the site have been remarkable, and I’ll walk you through some pictures on [indiscernible]. We currently have been over 1,900 workers at the site, with the camp at peak capacity, despite the house, our construction teams, contractors and subcontractors have done a great job and we have reached the 225 million hours’ worth milestone. On earthworks, we completed phase 1 on the TMF and have started to accumulate water in preparation for the pump startup. The primary and secondary crushing circuit made considerable achievements with the HPGR arriving on-site and installation progressing at the first phase. Inside of the plant, the installation of the ball new liners was ongoing and the multi-server active site to facilitate installation in early Q3. We have [indiscernible] completion of the leach tanks and installation of the agitators from our approximately six weeks to eight weeks later than originally planned, in order to prioritize the workforce on a critical installation of the crushing circuits. Finally, the power substation is now being commissioned with the connection to the provincial hydro grids schedule for this model. To allow the full electrification of site and the deployment of electric shovel later this quarter. Moving to recent pictures. Let me walk you through the main project areas of the site. Moving left to right on top to the bottom. Here we can see the TMF. As we are looking north east of the plant, the first line that you see, the boundary was at 92 million meter (ph) location, which was completed in Q1 and preparation for the fresh head season. The second liner boundary at 396, which completes phase 1 and allows for accumulation of water for the startup that you can see was also done. The next phase we’ll see the down rising to 409 elevation to allow for the full first 12 months of operations. Next in the middle top is the high voltage substation. And as I mentioned earlier, the substation focus has shifted from construction to decommissioning to prepare for amortization and collection of [indiscernible] hydro grid. Top right is the view of the primary crusher, where this fueling auxiliaries (ph) are complete and we are not putting the roof decking in place to commission the bridge crane for a final few lifts of the crusher components. Bottom left, we have an HPGR area illustrating very advanced mechanical installation and the teams are focusing around piping and electric lines position. The bottom middle is grinding with the bone of our action very advanced. We are transitioning to the final stage of sub-construction and early commissioning activities. And on the bottom right, you see the leach tank farm area, where we are concentrating on finalization of mechanical action, electrical and confusion of the piping installation. Moving on to the timeline. The Côté Gold continues to track well to the updated project schedule works production in early ‘24. We are working on close alignment with our partners, Sumitomo and our contractors to ensure that copies both safely on time and in the current budget and scope. Our focus in Q3 will be on complementing the construction of the remaining portions of the plant and starting pre-commissioning activities. Q4 will be focused on finalization of pre-commissioning of preparation for the oral introduction early in the year. With that, I will turn the call back to you Renaud. Thank you. Renaud Adams: Thank you, Jerzy. And on Côté, I’d like to add that our goal is straightforward. We want to ramp up — we want to ramp up of Côté to be among the most successful major gold projects there enough (ph). That is not to say, we are naive about the challenges ahead, but the team we have in place and continue to build, I’ve done this before. We’re excited about the future at Côté and what it means for IAMGOLD. On Slide 12. Of course, when talking about the future, we need to continue to highlight Gosselin. We are continuing to drill at Gosselin with nearly 1,000 meters complete so far this year. The deposit has only been drilled with a fraction of the meters compared to Côté and to half the debt and remains open long stride in our dam (ph). Our last batch of assays results earlier this year successfully intersected mineralization to the south, to the [indiscernible] and below the current resource boundary of the deposit. The goal of the current drill program is two-fold. Continue to expand the mineralized envelope of Gosselin, as well as infill to support ongoing technical study to advance metallurgical testing and to support mining and infrastructure study to begin reviewing alternative for potential inclusion of the Gosselin deposit, deposit into a future according to life of mine plan. We expect to have results for the ongoing drilling program in early Q4. WE believe that Gosselin with its initial resources of 3.4 million indicated ounces and 1.7 million ounces occurred continue to be in the early stage of discovery and Gosselin, its location immediately adjacent to the Côté deposit as a potential to add real value to the Côté project. With that, I will pass the call over to our CFO, who will walk us through Côté pending and financial review. Maarten?: Maarten Theunissen: Thank you, Renaud and good morning, everyone. Looking at project spending, the Côté Gold UJV incurred $270.1 million in project expenditures on 100% basis, or $189.1 million on a 70% basis during the quarter. It is worth highlighting that for accounting purposes, the JV funding and amending agreement does not meet the requirements on our IFRS to recognize the dilution of the company’s interest in the Côté UJV as a sale and so the company will continue to account and report for 70% of the assets and liabilities of the joint venture, as well as 70% of the incurred project expenditure. The company has recognized the financial liability on the balance sheet that approximates the current repurchase price, representing the $250 million funding contribution that Sumitomo made on IAMGOLD behalf. That resulted in our interest being diluted to 60.3%, as well as incremental funding that Sumitomo made due to their increased ownership and the accrued fee for the repurchase option. The liability will continue to increase with the 9.7% of incremental funding that Sumitomo provides until Côté achieves commercial production. This commencement of construction, $2.23 billion of the planned $2.965 billion of the project expenditure has been incurred. Looking ahead, the remaining cost to incur to complete Côté is estimated at $665 million to $735 million at 100% or $4165 million to $515 million at 70%. The higher range of the estimate to complete of $735 million will take us to the $2.965 billion for the August 2022 technical report. The table at the bottom outlines the provision of the Côté cost to complete guidance with the actual spending amount incurred quarter-over-quarter. In order to convert the expected incurred cost to complete at 70% to IAMGOLD’s actual funding requirements as a 60.3% joint venture partner. The incurred cost is just for changes in working capital, lease funding received and the decrease in the required cash balance helped by the UJV, when the level of expenditure reduces after the completion of construction. Our goals need to fund 60.3% of this target going forward. Now that funding a great arrangement and dilution has been concluded. During Q2, Sumitomo funded the remaining $61 million of the $250 million total as per the agreement on behalf of the company and an additional $18 million due to increased ownership. Sumitomo funded all of the joint venture cash flows up to May and the company commenced funding in June and funded approximately $60 million to the UJV during Q2. IAMGOLD will now fund 60.3% of the UJV cash golds that is approximately $425 million to $475 million during the construction phase. Turning to the Q2 financials. Revenue from continuing operations totaled $238.8 million from sales of 111,000 ounces at an average realized price of $1,973 per ounce. Adjusted EBITDA from continuing operations was $63.8 million for the quarter, translating to an adjusted loss per share of $0.01. In terms of our financial position, IAMGOLD ended the quarter with $747.7 million in cash and cash equivalents and $452.5 million available via the fully undrawn credit facility, which equates to total liquidity of approximately $1.2 billion. We are investing excess cash and funds in Canada at rates close to 5%. We note that within cash and cash equivalents $91.3 million was held by Côté Gold and $170.1 million was held by Essakane. For Côté, the Côté Gold UJV requires its joint venture partners to fund in advance two months of future expenditures and cash goals or might at the beginning of each such month, resulting in the month end cash balance approximating the following month’s expenditure. For Essakane, the company mainly uses dividends to repatriate funds, of which the company will receive 90% based on its ownership net of dividend taxes. It’s a planned dividend during the second quarter of $120 million, which was received by IAMGOLD subsequent to the quarter end, net of minority interest and withholding taxes. We note that the full extent of the credit facility availability is subject to a net debt to EBITDA [indiscernible] and interest coverage covenant. Therefore, the full extent of additional liquidity of the facility is reliant on the ability of our operations to generate sufficient EBITDA to support the [indiscernible] of the company. This is one of the reasons why we announced the $400 million term loan in the quarter, which allowed the company to pay down the credit facility and use the term loan for the capital requirements of Côté and therefore, de-linking Côté funding from certain items in the macroeconomic environment and our other operations. The term loan improves on both balance sheet and strength and flexibility allowing trade facility to be available to support working capital requirements during a better pivotal year, we were ramping up Côté as well as delivering the legacy gold by prepayment agreement and gives us some measure of insurance in case of foreseeing challenges with changes in the operating for macroeconomic environment. IAMGOLD’s fund is remaining portion of the Côté UJV funding estimate of $425 million to $475 million from available cash balances and the remaining proceeds from the Bambouk asset sales. And as Renaud noted at the beginning of the call, as Côté wraps up, we can then direct our attention to key longer term financial goals of returning to 70% in the Côté UJV and delivering our balance sheet towards a more optimal capital structure. With that, I will pass the call back to Renaud. Thank you, Renaud. Renaud Adams: Thank you, Maarten. And I really want to take a moment here to thank everyone on the IAMGOLD team for the tireless efforts and dedication. This is an exciting time for this company. I should also note that we will be holding a gold in mine tour (ph) for our investors and analyst in October. And I encourage you to reach out to Graeme and myself to save us part of the trip. We expect it would be very well attended considering the progress at Côté to date. With that, I would like to pass the call back to the operator for the Q&A. Operator? Q&A Session Follow Iamgold Corp (NYSE:IAG) Follow Iamgold Corp (NYSE:IAG) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. We’ll now begin the question-and0answer session. [Operator Instructions] Our first question is from Lawson Winder with Bank of America Securities. Please go ahead. Lawson Winder, your line is open. Lawson Winder: Thank you, operator. Good morning, Renaud and team. And Renaud, it’s very nice to hear from you. I wanted to just ask your, get an idea for your long term vision for IAMGOLD now that you’ve been in the role for about a quarter, a little over a quarter, particularly with respect to geographic focus and could IAMGOLD look to potential — potentially exit Burkina Faso once Côté has ramped up. And, yeah, I guess I’ll leave it there for now and follow-up after. Renaud Adams: Yeah. I appreciate the questions. And as you, as I mentioned on the call, our priority right now is definitely focused on Côté building a strong Canadian platform, continue to operate safely as a [indiscernible] significant mine for us as generated and continue to generate cash flow. We appreciate this situation right now in the Burkina and the regions, but our efforts and focus continue to make the mine work well for us and mission on contributor. As we move forward in the future, we’ll address some of the step by step the building of this company. But I would say at this stage, while we continue to focus on the strong and the safe operation of this [indiscernible] in parallel, as I mentioned, this is also to develop and grow a very strong base in Canada. This is as see the gain? Lawson Winder: I also wanted to ask about the plan to update the life of mine plan for Essakane. So just, I know it’s still early and you haven’t released the study yet, but is the thinking that the mine life might be reduced as a result of MOA away from the heap leach? Renaud Adams: No, we’re definitely not seeing a reduction. there was obviously questions about those tonnes that were previously meant to be on the heap leach, but I believe the team has worked very hard and diligently doing corporate those (ph), we’ve been capable as well to replace some ounces mines. So, we are not at expecting a reductions of life of mine. Lawson Winder: Okay, great. And I wanted to touch on Westwood, just given that, I mean, you’ve had knowledge of this asset for just about as long as anyone. You’ve kind of painted a picture of an improved outlook going forward in the — in your prepared remarks and in the MD&A. I am just curious like what is the upside for this mine? And you would well know that when this mine was first conceived of, I mean, the thought was it could produce 200,000 ounces a year. We’re far from that, but I mean, is even anything in the 100,000 ounce range potentially achievable in your view? Renaud Adams: Well, we are already under guidance of [indiscernible] at this year, in the guidance, 70,000, 90,000, which we’re we feel pretty strong that we’re going to meet well, as we continue, but you mentioned the 200,000 ounces. That’s definitely not the goal in the near future to push the mine to its limit. I would rather see this mine focused on quality, returning to a very strong and higher grade on the ground which we are readily — economics of this mine. So in the short term, of course, we’re using the satellite, the surface satellites. But the real game here as we continue to diligently prepare the mine is to return to the higher grade area and focused on quality as we move forward. So while we don’t see this mine necessarily now returning to the 200,000, we’re definitely feel strong that it could be a 125,000 to 150,000 ounces producer at a much better margin. Lawson Winder: And then if I could just ask about Côté finally and the autonomous truck haulage, is the assumption that you will be operating at a 100% autonomous truck haulage from day one or is there some flexibility built in there to sort of allow for potential hiccups. And the reason I’m asking is, we’ve seen other autonomous truck programs roll out and take quite a time, — quite an amount of time to get up to sort of full run rate and obviously it’s great you started early this year, but we’d just love to get your thoughts on that sort of ups and downs. Thanks. Renaud Adams: Well, I’m surely looking forward to the site tour in October to see the enormous progress and how it’s been, but I’ll ask Bruno to add a bit to that question. Bruno Lemelin: It’s kind of – and loss from — it was part of the original assumption to start from the get go with the autonomous fleet. And right now, what we see is, we see a ramp up that is on par as target. And again, there’s no need for an operation of the fleet via operators. So actually, we are commissioning trucks one after the other and they are fully utilized, autonomously and it works real good. Lawson Winder: Okay. Thank you all very much. Renaud Adams: Thanks. Operator: The next question is from Anita Soni with CIBC World Markets. Please go ahead. Anita Soni: Hi. Good morning, Renaud and team. A few questions from me. Just in terms of Côté, can you talk a little bit more about a process where you are, the leach tanks and that you said you were optimizing just to look for the critical leach tanks or to get those up and running? Can you talk about like how many of the total leach tanks that you have that you’re build the ones that are — you are new running at the beginning and how does that impact the ramp up going into 2024? Renaud Adams: I would ask Jerzy to give some details to it, but what I could tell you that overall, we are not saying issues, but with the tanks that would impact the commissioning of the mine. Jerzy? Jerzy Orzechowski: Yeah. Thank you, Renaud. Maybe if we can go back to the slide we have shown with the leach tank, so you can see the installation is quite advanced/ We are in a piping electrical installation work. Most of the detectors have been installed and we have to reshuffle the workforce to deal with some critical areas, which is the crushing circuit. As I mentioned, we have a capacity right now, so we are making tactical decisions of where to shift the manpower to deal with some critical issues of work to move forward with the decommissioning activities. As you see from that picture, the tonnes are in quite advanced stage and we are basically getting them ready for the pre-commissioning work and the hydro tests. We will be starting with the first four, five tonnes and then we’ll be gradually introducing more tonnes in the circuit and the start-up progresses. Anita Soni: Okay. Can I get — I have a second question with regard to the tailings facility. I think you gave us a little bit of color on that, but could you tell me how much capacity in the Phase 1? And then how much additional capacity were you looking for in the phase 2 of the dam? Jerzy Orzechowski: Oh, phase 2 of the dam is the full one year capacity of production. Phase 1 is about 1.5 million cubic meters, which allows us to accumulate enough of the water for a start up in commission. And phase 1 is complete. That’s — this is why some color on it, as you mentioned, because the best way to visualize it is to look at the liner lines. So, what you see, the second liner is basically phase 1 completion. As you can see, this picture is from July. So you can see there’s actually, if you look at the bottom of that picture, and there’s quite a bit of work, which is already advanced in the phase 2. Anita Soni: Okay. So the phase 2 is the full on, but my understanding is that you would definitely want that completed by Q4, right? I mean, is it a central line dam, right? So you need the retention, the time for the beaching to occur. Is that the case? Jerzy Orzechowski: That’s correct. Yeah. Anita Soni: Okay. Sorry. Renaud Adams: Yes, please repeat that, Andrea (ph). Jerzy Orzechowski: We are okay from a start-up. We have enough capacity to start up right now. Anita Soni: Sure. Okay. And then just in terms of, when we think about next year, you said early 2024, with six months out, can you give us some color on what early means? Like, when do you expect to have first gold pours out, like the beginning of the quarter in Q — in January or is it the end of the quarter or are we getting into Q2? It’s like, I just want to try again an idea of what 2024 would look like? Jerzy Orzechowski: I don’t think we’ll — we’re prepared to give you much finer date than the first quarter. I think this is… Renaud Adams: Yeah. I mean, one thing that is very important here Anita is, we had a chance to discuss that previously is the focus is really on ramp up and achieving and getting as close to the nameplate possible rather than focusing on the single item of the gold port. We want the gold port to be incorporated in the most efficient way to reach our nameplate. So having said that, we’re still pretty confident that the gold pour would occur early in Q1. Anita Soni: Early in Q1. Okay. All right. And then I just want to circle back on Westwood. You talked about maybe getting to 125 to 150 ultimately there. And I think you said the La Fayolle (ph) property should be adding contributing to the mix in the back half of the year. Could you remind me what the grades are at that one in the open pit? Renaud Adams: Bruno? Bruno Lemelin: Hello, Anita. Fayolle expect at around 4 to 5 grand per ton. So, we intend to close to 100,000 tonnes this year for us from Fayolle. Anita Soni: Okay. And how much have you done today there are zero to-date on La Fayolle. Bruno Lemelin: Just [indiscernible]. Anita Soni: Okay. Thank you very much. That’s all my questions. Renaud Adams: Thank you, Anita. Operator: [Operator Instructions] Our next question is from Mike Parkin with National Bank. Please go ahead. Mike Parkin: Hi guys. Thanks for taking my questions. Can I just confirm the timing of life of mine update for Essakane? When does that — do live? Renaud Adams: Did you see the technical report to [indiscernible]? Mike Parkin: Yes. Renaud Adams: So, Q4, from at least somewhere, you know, like in mid Q4. So, we want to have everyone a chance to digest properly their report prior to our early 2024 earnings. Mike Parkin: Okay. And then you’ve guided to higher costs and obviously Essakane is kind of your bigger asset. It’s been a bit lumpy but it’s been kind of tracking around $110 million over the last 12 months with Q1 being a bit late given the lower throughput. Can you give us a sense of like what’s going to drive, you were about $120 million direct operating costs in Q2? To get in line with guidance that kind of have a sense that it’s got to come down a bit in the second half and what changes there to get you into a slightly lower cost profile to get in line with guidance? Renaud Adams: Well, you would appreciate, of course, if you compared with the last couple of years, a big ticket is of course the increase in spending around the security. I mean, it is what it is. We need to do what we needs to be done, to keep everyone safe and the team has done an awesome job on this. But one of the biggest ticket, of course, as mentioned is fuel. And if you look at the Q2, for instance, the overrun and the FFO, LFO using LFO to generate power is a very big ticket. This is basically $100 an ounce and overall impact on the Q2. So moving forward, having said that, even though the cost has increased, there was a significant decrease in the mining unit cost in Q2 compared to Q1 of almost $1 a ton. So the mine is operating extremely well, but unfortunately, you have some inflation. So if we — I think the extra capacity of storage as we move towards Q4 will be a big element of it. Having more storage inventory and providing us with more chance to operate power 100%, which HFO will be a big, big, big ticket to it. But other than that, I’m totally convinced is not a performance and operating performance issue. It’s a procurement issue. It’s a security and it’s a difficulty sometimes to provide HFO for power. As we advance, should we have a better controls on the fuel supply and power generation being with HFO. Those will be the basic that gets to return to a full pass. Mike Parkin: Okay. Thanks very much guys. Operator: The next question is from Tanya Jakusconek with Scotiabank. Please go ahead. Tanya Jakusconek: Great. Good morning. Thank you for taking my questions. Just wanted to know, when is the technical study of Gosselin coming out? You mentioned that you are working on that one as well? Renaud Adams: Yeah. The — I think that this stage is metallurgical studies is prohibited priority. And as we mentioned, more we drill Gosselin, more we grow it. And I think it’s relevant to say that at this stage, we need to have a pretty good idea of the size of the Gosselin and what it needs to know before we dive too quick into studies and so forth. So I think 23 part of 24, we’re going to continue to be very aggressive on the drilling and growing the deposit, doing all metallurgical studies. And Bruno, you can add, but I definitely do not see the rush to any integration study or perhaps they even late ’24, ‘25. Unidentified Company Representative: Exactly. Hello, Tanya. This is [indiscernible]. And in addition with the metallurgical testing, we have also [indiscernible] type testing to perform. And obviously, the delineation drilling that is currently ongoing. Tanya Jakusconek: Okay. So all of this combined maybe late ‘24, ‘25 until the market gets some sense? Renaud Adams: Yes. Tanya Jakusconek: That be fair? Okay. All right. So that’s helpful there. And just on Essakane, I know, Mike asked about the cost. So should we just be thinking the rest of the year? Because you mentioned Westwood, we’re progressively getting better quarter-on-quarter and improvement in cost quarter-on-quarter as Essakane more evenly balance for the rest of the year. Would that be fair way of looking at that mine? Renaud Adams: Hello, Tanya. We should see forecast to be moderately lower in Q3 and Q4 as the situation with the fuel gets normalized. We also expect capitalized waste stripping to pursue its current plant program as well. And for mining as well, overall to have relatively the same kind of cost pressure we see on the input [indiscernible]. Tanya Jakusconek: Okay. So production evenly split? Renaud Adams: The great scenario is going to be also relatively the same. Tanya Jakusconek: Okay. And then can I ask because obviously getting the cash flow, getting cash flow from Essakane, we’ve got higher risks with the security issues in country. Can you just remind me what you’re doing there to try and mitigate this risk as much as you can with inventories on-site. Can you just remind me what you have there? So should something occur, which we hope doesn’t, but just an idea of what you have on-site and inventory levels? Renaud Adams: So Tanya, that as we’re trying to secure supplies, we’re increasing our working capital, we’ll have a slight impact related to the additional capacity for a fuel storage in Q4. We’re trying to do the same for ammonium nitrate for explosives. Maybe you want to talk a bit more about that, Maarten? Maarten Theunissen: Yeah. Good morning, Tanya. So we are seeing an increase in the inventory at the site as we are trying to build more capacity when there’s good opportunities to bring supplies in. So there was an increase in there. I think your question also asked about cash, getting cash out of the country. We, Essakane dividend of $120 million during the quarter, they had about $170 million of cash at the end of the quarter because of buildup. And we received that dividend after the closure of the quarter. So, we continue to be successful. No issues in moving funds from the country or having the hotels out of the country. Tanya Jakusconek: Okay. I was just wondering more like fuel explosives, other consumables are you carrying inventory the six months? Should I be thinking like that’s sort of your inventory levels? Three, six months, Is that fair? Maarten Theunissen: Yeah. And effective for fuel, we usually have an inventory close in between 15 days to 30 days. The expectation now is to increase that capacity close to 40 to 45 days. Tanya Jakusconek: Okay. For some reason, I thought you had longer. Sorry. Maarten Theunissen: No, I’m not on the, no, it’s actually lower. This is very much in line with, especially for field with best practices usually like when you said like 20 days will be more than enough usually and it has been in the past. Now because of the logistic of the convoy systems rather than frequent and periodically. So, we accumulate trucks and then we can avoid them. So there is a need here to increase because we do not have — as a previously, like a daily shipment and so forth. So we accumulate, we come voice (ph), so we need to increase the capacity, but it’s just very much in line with the matter of fact in Canada, you would have less than that. Tanya Jakusconek: Yeah. Okay. Great. Good luck. Thank you. Renaud Adams: Thanks. Operator: This concludes the time allocated for questions on today’s call. I’d like to hand the call back over to Graeme Jennings for closing remarks. Graeme Jennings: Thank you very much, operator, and thank you to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud or my — myself be at phone or email. Thank you all. Be safe and have a great day. Operator: This concludes today’s conference calls. You may disconnect your lines. Thank you for participating, and have a pleasant day. Follow Iamgold Corp (NYSE:IAG) Follow Iamgold Corp (NYSE:IAG) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Primo Water Corporation (NYSE:PRMW) Q2 2023 Earnings Call Transcript August 10, 2023 Primo Water Corporation beats earnings expectations. Reported EPS is $0.24, expectations were $0.21. Operator: Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Primo Water Corporation’s Second […] Primo Water Corporation (NYSE:PRMW) Q2 2023 Earnings Call Transcript August 10, 2023 Primo Water Corporation beats earnings expectations. Reported EPS is $0.24, expectations were $0.21. Operator: Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Primo Water Corporation’s Second Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Jon Kathol, Vice President, Investor Relations. Please go ahead. Jon Kathol: Welcome to Primo Water Corporation’s second quarter 2023 earnings conference call. All participants are currently in listen-only mode. This call will end no later than 11:00 AM Eastern Time. The call is being webcast live on Primo Water’s website at primollwatercorp.com and will be available for playback there for two weeks. This conference call contains forward-looking statements, including statements concerning the company’s future financial and operational performance. These statements should be considered in connection with cautionary statements and disclaimers contained in the Safe Harbor statements in this morning’s earnings press release and the company’s annual report on Form 10-K and quarterly reports on Form 10-Q and other filings with securities regulators. The company’s actual performance could differ materially from these statements, and the company undertakes no duty to update these forward-looking statements, except as expressly required by applicable law. A reconciliation of any non-GAAP financial measures discussed during the call with the most comparable measures in accordance with GAAP when the data is capable of being estimated is included in the company’s second quarter earnings announcement released earlier this morning or on the Investor Relations section of the company’s website at primowatercorp.com. We have also included a deck on our website that was designed to assist you throughout our discussion. I am accompanied by Tom Harrington, Primo Water’s Chief Executive Officer; and David Hass, Chief Financial Officer. Tom will start today’s call by providing a high-level review of the second quarter and our progress on Primo Water’s strategic initiatives. Then David will review our segment level performance and we’ll discuss our second quarter performance in greater detail and offer our outlook for the full year 2023 before handing the call back to Tom to provide a long-term view ahead of Q&A. With that, I will now turn the call over to Tom. Tom Harrington: Thank you, Jon, and good morning, everyone. Before I cover the results of our second quarter, I would like to take a moment to thank those of you who participated in our recent investor perception study conducted by Ravel. We appreciate the suggestions, the candor and the insights from your perspective and we’ll certainly take them into consideration going forward. I would also like to thank the Primo Water teams for their contributions to the continuing momentum of the business and delivering another quarter of strong results. As you know, I announced my retirement at the end of 2023 and the Board has initiated a search for my successor. The Board with the support of an international search firm is currently conducting a search process and meeting a number of highly qualified candidates. To ensure a smooth transition, I have agreed to continue to serve as CEO and on the Board until a successor has been identified and appointed. As you can see from our results, the business continues to perform well and is well-positioned for the future. In Q2, we delivered normalized FX neutral revenue growth of 8%, adjusted EBITDA growth of 13%, adjusted EBITDA margin of 20.5%, a 160 basis point overall increase versus the prior year, adjusted free cash flow of $41 million and sell-through of approximately 251,000 water dispensers. For Q2 2023, consolidated revenue increased to 4% to $593 million compared to $571 million. Excluding the impact of foreign exchange, normalized revenue increased 8% for the quarter. Normalized revenue excludes the exit from the single-use retail bottle water business in North America and the exit of our business in Russia. Adjusted EBITDA increased $14 million to $122 million, an increase of 13%. Excluding the impact of foreign exchange, adjusted EBITDA grew 12%. We delivered increased revenue, adjusted EBITDA growth and adjusted EBITDA margin expansion. Revenue growth was driven by strong revenue growth in Water Direct and Exchange of 7%, continued revenue growth in Water Refill and Filtration of 18%, increased revenue growth in our European operations of 9% excluding the impact of foreign exchange and global Water Direct customer retention of approximately 85% which was consistent with last quarter. Revenue growth in the quarter was driven by pricing actions. We believe that our investment in sales driven by Costco and our marketing initiatives along with tuck-in acquisitions will create customer growth by the end of 2023. The growth in customers is expected to reflect a combination of organic customer growth as well as the execution of our tuck-in strategy. As a reminder, our tuck-in acquisitions are a core component of our customer growth plan. These customers have strong retention rates synergized within 90 days, an enhance route density resulting in increased adjusted EBITDA dollars and margins in the markets were executed. Through our razor/razor blade business model, we had water dispenser sell-through of approximately 251,000 units in the quarter, up 4% versus prior year. Consumer demand remains resilient as the higher-priced tariff-related dispensers continue to work through our and our retail customer inventories. Referring to Slide 7 of our supplemental deck, our trailing 12-month dispenser sell-through remains greater than one million units sold. As a reminder, water dispenser sell-through represents the units sold by our retail customers to the end consumer and are a leading indicator of the future organic growth of our water solutions. This is an important metric for the company because these water dispenser sales drive connectivity to our water solutions resulting in recurring higher-margin revenue. Our consolidated Water Direct and Exchange business continued to experience strong top line momentum during the quarter with 7% revenue growth driven by pricing and 85% customer retention in Water Direct. During Q2, we continue to enhance our mobile app in North America with a biometric login and targeted messaging and offers. The average active users of the app were approximately 500,000, an increase of 5% versus the first quarter, while maintaining a 4.9 and 4.8 rating on Apple and Google stores respectively. Our digital focus in 2023 remained centered on new Water Direct customer acquisitions water dispenser sales and connectivity to our water solutions. During the quarter, we hired a Vice President of Marketing for our North American business and look forward to his contributions leading our efforts to improve customer growth, connectivity across all water services and further enhance the customer experience through new and more effective marketing initiatives. We also implemented a new software solution Medallia to engage directly with our customers in real time to solicit their feedback on our performance. We intend to extend the solution to Europe and Israel later this year. Our Water Refill and Filtration business continues to exhibit steady growth with revenue increasing 18% in the quarter. This growth is driven by pricing, improved service levels and machine uptime at our refill stations. We have a high refill station retention rate and we are expecting continued revenue and profit growth in this category. Water Refill targets a value-conscious consumer and provides similar margins to our other water offerings, which provides us a diverse platform of water services for all consumers. Consistent with our plan to grow the customer base through a combination of organic growth and tuck-in acquisition growth, we are pleased to announce that during the quarter we acquired the Diamond Springs company, which operates in Richmond, Virginia. This acquisition adds density while further strengthening our footprint in the region. Shifting to operating efficiencies, the ability to serve our customers in the most efficient amount of possible is a critical driver of both our short- and long-term profitability. Our automated route optimization ARO tool continues to yield efficiencies. We were able to increase revenue per route and units per day, while keeping route SG&A expense as a percentage of route revenue consistent with Q2 of last year. We will extend the use of ARO into our Refill and Filtration business later in 2023 to capture efficiencies and the improved service levels that this tool can deliver. In addition to capturing cost efficiencies, the reduction in mileage supports our commitments to reductions in greenhouse gas emissions. As part of our incremental CapEx investment, we increased the size of our private fleet, tractors and trailers to reduce the cost and variability associated with the use of common carriers. This fleet investment is specifically focused on the transportation of 3- and 5-gallon bottles from our production sites to our distribution centers. In the Pacific Northwest for example, we invested $2 million in private fleet equipment, yielding a reduced cost of $1.3 million on an annualized basis. A key service metric we focus on is on time in full or OTIF. OTIF simply put is did we deliver to the customer on the scheduled day with all the products they requested. OTIF in North America in Q2 is consistent with prior quarters. During the quarter, we published our 2022 ESG or sustainability report. Since publishing our inaugural report covering 2020, we further integrated our ESG sustainability strategies across our global business and aligned our operations with our commitments. We made significant progress towards our initiatives in 2022 and achieved new milestones as indicated in the report. A couple of our long-term 2030 targets include improving water efficiency by 20%, and obtaining zero waste at 50% of our production facilities. A copy of the report is included in the Investor Relations section of our corporate website, and we expect to continue to publish in an annual report going forward. Given the strong performance in the first half of the year, we feel confident in increasing our annual revenue guidance to be between $2.32 billion and $2.36 billion, with normalized revenue growth in a range of 7% to 9%. We expect full year 2023 adjusted EBITDA and to be between $460 million and $480 million and an increase in annual adjusted free cash flow to $150 million. I will now turn the call over to our CFO, David Hass, to review our second quarter financial results in greater detail. David Hass: Thank you, Tom and good morning, everyone. Starting with our second quarter results. Consolidated revenue increased 4% to $593 million compared to $571 million. Excluding the impact of foreign exchange, normalized revenue increased 8% for the quarter. Adjusted EBITDA grew 13% to $122 million which represents, a 160 basis points of margin expansion to 20.5%. Excluding the impact of foreign exchange, adjusted EBITDA grew 12%. Turning to our segment level performance for the quarter. North America revenue increased 3% to $451 million compared to $437 million. Excluding the impact of foreign exchange normalized revenue increased 7%. Adjusted EBITDA in North America increased 10% to $107 million. Adjusted EBITDA margins climbed 23.7%, a 140 basis point improvement over last year. In our Europe segment, revenue increased by 12% to $78 million. Excluding the impact of foreign exchange, normalized revenue increased 15%. Adjusted EBITDA in the Europe segment increased 50% to $18 million. Excluding the impact of foreign exchange adjusted EBITDA increased 44%. Adjusted EBITDA margins climbed to 22.8%, a 580 basis point improvement over last year. The results of our European operations continue to show strong improvements and have returned to pre-pandemic levels. Our focus on improving route density, increasing our scale, improving our route operations and the benefits of Europeans returning to the office are taking hold. Our team in Europe is executing their strategic plan, and we expect to see further improvements as we move through the balance of the year. Turning to our Q3 and full year outlook. We expect consolidated revenue from continuing operations for the third quarter to be between $612 million and $632 million and that our third quarter adjusted EBITDA will be in the range of $129 million to $139 million. As Tom mentioned, for the full year 2023, we are confident in increasing our guidance with revenue projected to be between $2.32 billion and $2.36 billion, with normalized revenue growth in the range of 7% to 9%. We now expect full year 2023 adjusted EBITDA to be between $460 million and $480 million with an annual adjusted free cash flow of $150 million, an increase of $10 million compared to previous guidance. Our increased adjusted EBITDA guidance is driven by the year-to-date performance that has come in ahead of our initial expectations as well as year-to-date tariff refunds of approximately $2.2 million that I will discuss in a moment. The balance of our increased annual guidance is driven by our confidence level for improved performance in the back half of the year as well as the expected contribution of our recent Diamond Spring tuck-in acquisition. Our SG&A expenses in the second quarter reflect the impact of higher commission payments to our delivery drivers as a result of increased pricing. The higher gross margins provided a net offset to the increased commission expense providing higher adjusted EBITDA. Our reported SG&A expenses in the second quarter also include several one-time charges, including those related to the proxy challenge during the second quarter. Without these one-time charges, our SG&A as a percent of sales would have been 52.6%, compared to the reported 53.5%. Year-to-date SG&A would have been 53.5%, compared to the reported 54.5%. We expect our Q3 SG&A to decline as a percent of sales, as we will benefit from the leverage and scale of higher volume due to seasonality. We are maintaining our 2023 CapEx guidance of approximately $200 million, which is approximately 7% of revenue plus an incremental $30 million. As a reminder in 2023 and 2024, we will invest an incremental $30 million per year as opposed to the $50 million noted in our November 2021 Investor Day. This decision is based upon our confidence and run rate performance that enables us to reduce the investment dollars and deliver the 2023 and 2024 outlook. Key initiatives to be funded from our CapEx plan, include driving digital growth, leading dispenser innovation, building a more environmentally friendly fleet, as well as investing in our private fleet, which will allow for a more efficient distribution of our products, installing more efficient water production lines, which will reduce water usage and increase productivity and driving growth Refill and Filtration with refreshed signage and branding of our existing units, the development of our on-the-go units, and new filtration innovations. We expect to return to our normalized total CapEx spend of approximately 7% of revenue in 2025. For full year 2023, we continue to expect interest expense of approximately $70 million to $75 million. The majority of our interest expense is tied to our two senior note debt facilities with very low interest rates of approximately 4% with maturity dates of 2028 and 2029. The balance of our interest expense is tied to our cash flow revolver loan that we are actively managing lower with excess cash while rates remain at approximately 7%. With the increase in our adjusted EBITDA guidance, we are moving our estimate for cash taxes toward the high end of our previously communicated range and currently expect approximately $25 million of cash taxes. This anticipates utilization of US net operating losses or NOLs. While we are limited in the amount of NOLs we can utilize each year, we still have significant US NOLs available in the balance of 2023 and 2024. As a reminder, our Water Dispenser category was previously under a 25% import tariff burden by US customs. The tariff impacted both the water dispensers that we rent as CapEx as well as the water dispensers we sell with the increased costs reflected as cost of goods sold. Our dispensers were reclassified in November of 2022 with recoveries of tariff funds available through a refund process. We have recorded the refunds in the same manner of the original transactions. Through Q2, we have received approximately $4 million of tariff refunds. Approximately $2.2 million of the $4 million is reflected in year-to-date adjusted EBITDA related to the water dispensers sold to retail and the remaining $1.8 million is related to the water dispensers that we rent as CapEx. The cumulative $4 million is reflected in our updated adjusted free cash flow guidance that we’ll discuss in a moment. While the refund progress is promising, we have not reflected any additional refund amounts in our updated guidance due to the uncertain timing of the refund process. One key learning from the investor perception study that we conducted was to be more transparent and clearly articulate expected outcomes especially on the topic of adjusted free cash flow. As we look at our performance in the front half of the year, we are confident in our ability to raise our annual adjusted free cash flow guidance to $150 million, an increase of $10 million. This is driven by our increased adjusted EBITDA outlook, the tariff refunds received to date slightly offset by the increase in our estimated cash taxes. While the estimated property sales will generate additional taxes, not contemplated in our $25 million cash tax estimates, these would be onetime in nature and added back to our reported adjusted free cash flow metric. We wanted to take time this quarter to clarify our adjusted free cash flow outlook and the changes since our last communication guidance on this metric. We continue to make progress on the sale of properties. The timing of our larger transactions is still estimated to occur in the second half of 2023 and have been the primary mechanism for funding our opportunistic share repurchase program as disclosed last year. As we did not complete any of these property sales during the quarter, we repurchased approximately $2 million worth of shares. To date, we have repurchased approximately $43 million under the existing program. We remain committed to achieving our targeted net leverage ratio of below 3x by the end of 2023 and a targeted net leverage ratio of less than 2.5x by the end of 2024. This will occur through both our adjusted EBITDA performance as well as utilizing this year’s property sales to reduce the borrowings on our cash flow revolver while opportunistically repurchasing shares. Our year-to-date tuck-in M&A activity along with the potential acquisitions for the back half of the year positions us to achieve our 2023 tuck-in purchase guidance of $20 million to $30 million. Acquisitions remain a complementary source of customer acquisition. Whether we acquire organically or through the acquisition of the customer base of tuck-insurance, both are means of scaling our customer base. The cost per customer acquired through acquisitions is typically similar to other means of acquisition. However, the difference lies in the stickiness of the customers. Customers acquired through tuck-in acquisitions are already users of the service and understand the benefits and the annual cost of Water Direct service. We remain committed to Water Direct tuck-ins as a way to accelerate density in our operating regions and provide operating scale. Our cash flow and balance sheet enable us to simultaneously return value to shareholders through regular quarterly dividends and opportunistic share repurchases, while continuing to invest in internal and external opportunities that will further strengthen our operations and drive long-term growth. The Board of Directors, the management team believe that repurchasing stock is an important part of our capital allocation strategy. Yesterday, our Board of Directors authorized a new $50 million share repurchase program, which replaces the previously authorized share repurchase program that expires on August 14, 2023. Finally, yesterday our Board of Directors authorized a quarterly dividend of $0.08 per common share which continues our path to the multiyear dividend step-up with an increase in our quarterly dividend per share of $0.01 in 2022, 2023 and another in 2024. I will now turn the call back to Tom. Tom Harrington: Thanks, David. Our performance reinforces our confidence in our ability to deliver sustained growth, supported by strong revenue growth in our Water Direct Exchange and Refill businesses, continued execution of our tuck-in M&A strategy the improved performance of our European operations and adjusted EBITDA margin expansion. We’re pleased to report that our commitment to improving the customer experience is paying off. We have seen a significant increase in service levels, the digital experience and customer satisfaction. We are excited about the opportunities that lie ahead. We are making solid progress and have the right plan and the right team in place to succeed. We are one of the only pure-play water platforms and we benefit from a large and growing revenue base. Our high single-digit long-term growth targets are driven by the connectivity of water dispensers, to our water solutions as well as consumer tailwinds such as the focus on health and wellness and concerns about aging global water infrastructure. We have a healthy balance sheet a compelling long-term growth outlook and an attractive margin profile. We remain confident that we will generate adjusted EBITDA approaching $530 million, with margins of approximately 21% and an adjusted ROIC of 12% by the end of 2024. Once again, I’d like to thank the Primo Water associates across the business for their tireless efforts to serve our customers. With that, I will turn the call back over to Jon for Q&A. Jon Kathol: Thanks, Tom. During the Q&A to ensure, we can hear from as many of you as possible. We would ask for a limit of one question and one follow-up per person. Thank you. Operator, please open the line for questions. Q&A Session Follow Primo Water Corp (NYSE:PRMW) Follow Primo Water Corp (NYSE:PRMW) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] One moment please, for your first question. Your first question comes from Dan Moore from CJS Securities. Please go ahead. Peter Lukas: Yes. Hi. Good morning. It’s Peter Lukas, for Dan. Thank you. You did give us a lot of color on free cash flow and do appreciate that. Just can you give us maybe a little more on the primary drivers that give you confidence, in generating $350 million of implied cash flow from operations? And how sustainable do you think that is going into 2024? Tom Harrington: Good morning, Pete this is Tom. I’ll let David, handle that. David? David Hass: Thanks, Pete. We understand the importance of predictable free cash flow. We wanted to thank the participants of the Refill [ph] perception study. The study confirmed what we anticipated which is being a little bit more transparent and support around the critical metric, of free cash flow and improving our messaging around it. This quarter, we wanted to provide a bit more clarity there. The $150 million is a noticeable step-up from last year where we ended the year at $85 million in adjusted free cash flow. It’s also a $10 million increase, from our prior guidance on the prior quarter. The primary reason there is the increased earnings power in the outlook that we’ve given, paired with some of the tariff refunds to date. And then, these gains are slightly offset with some estimated cash taxes for that increased operating income. And we will continue to provide updates related to free cash flow pacing, including how we think about long-term potential in coming quarters. Peter Lukas: Extremely, helpful. Thank you. And then you reiterated your 2024 goal of adjusted EBITDA approaching $530 million next year, which implies about a 13% growth from the midpoint. Can you talk about, what gives you the confidence in driving stronger operating leverage next year? Tom Harrington: Yes. If you just think about the performance this year, and the building momentum coming out of 2022, that we see continued high single-digit revenue growth, which is obviously, a key driver. We’re quite pleased with the EBITDA margin of 20.5% in the quarter, which I think is an all-time high for us. And you may recall, we achieved 20% adjusted EBITDA margins in both Q3 and Q4. So that 160 basis points clears the hurdle of what we’ve said about the exit of the retail water business in America, and got true expansion. So that — as you think about that track record now builds, as we drive revenue and frankly, we continue to focus on our operations. If you look at Page 10, in the supplemental deck, it’s an example of one being responsive frankly to our early learnings from the perception study, about providing more detail. But this is where we see the benefit of a number of our investments, and our focus on improving operations and routes matter, and our performance on the route side has been pretty solid over the recent quarters. So, all of that helps build our confidence, further builds our confidence about our ability to deliver 2024. Peter Lukas: Extremely, helpful. Thanks. I’ll jump back in the queue. Tom Harrington: Thanks Pete. Operator: Your next question comes from Nik Modi from RBC Capital Markets. Please go ahead. Tom Harrington: Good morning Nik. Nik Modi: Good morning Tom. I know you guys don’t provide this breakdown but I was hoping you can provide some clarity around kind of price versus falling contribution. And then just the broader question I just would love to hear about the Costco ramp and the implications that’s been having and if you can provide any context around that? Thank you. Tom Harrington: Yes. Thanks Nik. Before I speak specifically to Costco clearly we’re pleased with our 8% revenue growth in the quarter and the consistent revenue growth that we’ve produced over recent quarters. So that is certainly a trend. And to the earlier question is all about our confidence in our ability to drive topline revenue growth as we go forward into — frankly the end of this year and into 2024. You may recall in prior quarters when we talked about revenue growth, we articulated that we expected that pricing would be the key driver, key component of the revenue growth in the first half of the year. It turned out to be exactly the case. We also shared that as we shifted to the back half of the year, that we would expect to get more benefit as we built the relationship and the number of roadshow events that we execute at Costco. That still remains our expectation. We will continue to invest in growth that will include sales, that will include marketing initiatives, that will include digital investment, and it’s certainly going to include the customer experience. We’ll execute our M&A tuck-in plans as evidenced by our closing on the Diamond Springs business in Richmond, Virginia. We will achieve the debt pay down to under three by the end of 2023. And then we remain focused on share repurchase and dividend policy will remain in place. Specific to Costco the business continues to ramp, by ramp means week-over-week the number of in-store events that we execute in Costcos across the US. And that business, as I’ve said in the past, Nik is you don’t get a big spike you get the benefit of week-after-week building of the relationship and the number of Costco members that enjoy our service. So, that number will build through Q3 and Q4 and we’re confident currently in the pacing and pleased with the performance frankly of the teammates across the business that are executing. Nik Modi: Excellent. Thanks Tom. Tom Harrington: Thanks Nik. Operator: Your next question comes from Andrea Teixeira from JPMorgan. Please go ahead. Andrea Teixeira: Thank you. Good morning. So I have several questions just to get you to the top question and clarification and I would say in the spirit of improved disclosure I appreciate that. Number one how was the volume and price break down in particular Water Direct and the price carryover? I’m assuming the price carryover has moderated at least from now. So, looking at your guidance how much are you embedding in there? And of course, I saw what you said that is driven — the 7% was driven by — the 7% sales growth was driven by pricing, but I was wondering if on an organic basis, volumes were negative or just flat. And if you can — I understand the retention was 85%, but just if you can give us an idea of your retention in the Americas and how the elasticity has been evolving and receive as well. And then, my clarification question was on the gross margin. I think David you called out the $4 million benefit on — and I understand it goes — it flows through gross margin for the tariffs, and you have a record high gross margin which is obviously very welcome. So I’m thinking more, how should we all think about where gross margins will land in the future? Thank you, Tom Harringto: Good morning, Andrea. Andrea Teixeira: Good morning. Tom Harringto: That was a good question. We’re going to try and pick it apart here, as best as we can. We’ve got a couple of arms and legs in there. David, do you want to take the gross margin question? David Hass: Yeah. Let me address the tariff impact in gross margin, first. So $2.2 million year-to-date would be in as the tariff money is coming back from the government. Those tariff monies received that are affiliated or attributed to dispensers sold to retailers. How that flows through the income statement is a reduction in cost of goods in that particular quarter. So if I receive a dollar, it basically reduces cost of goods sold on that segment and that dollar then flows through, as an improved — as an improvement in EBITDA. The balance or the $1.8 million does not flow through the P&L in that way, because that portion of the tariff receipts is affiliated with the increased CapEx or the increased cost of those coolers when we were importing them to rent. And so that balance of money flows through other income and would not have been part of the expansion in gross profit. So going forward, how we look at that is, there are future tariff monies available, but it’s always the irregular if you will, cycle of how we receive them from the government. It’s been in fits and starts this year. That’s why we have not contemplated the additional monies we’re owed yet in our guide. Andrea Teixeira: Okay. David Hass: That’s all that said the gross margin expansion is the largest contributor to the normalized EBITDA expansion of 160 points on a comparative basis to last year. Andrea Teixeira: And would you think that is sustainable then, right? So I just did a simple math that on — excluding — and obviously those — that $2 million is negligible. You still have the first half north of 60. So the first half was like margin — gross margin of close to 61. How should the investors think about their margin going forward? David Hass: Yeah. We would still have obviously some shoulder seasons in Q1 and Q4 and peaks in Q2 and Q3, based on just throughput that goes through the system affiliated with higher consumption from customers. But I think what you’re seeing overall is a step-up as we’ve now lapped the single-use plastics drag on the gross margin. You’re seeing kind of what would a typical, company look like on a go-forward basis. So these are – again, you can exclude the $2 million which is relatively negligible. This should give you a good perspective of how the flighting could look in a future year when there’s not a little bit of tariff noise. Andrea Teixeira: That’s super helpful. Thank you. And Tom, I guess on the — a bit on the price against volume algorithm, and how we should be thinking on an organic basis for the business and how elasticity has been evolving? Tom Harrington: Yeah. I think, it’s important we shared earlier appreciation for the input from the shareholders and the Ravel per shareholders and sell side in terms of the perception study. We’re frankly digesting all of that information, because it is — I guess fresh would be a good word to use it. We’re reviewing it in real time. And what we’ve chosen to do is to provide lots of clarity around free cash flow because when we — as we inbound that data, it rose to the top of the list of what shareholders and others have said this is really important for us that you provide more clarity and disclosure and transparency around free cash flow. So, hence, the reason we’ve spent a fair bit of time in our materials and the script trying to provide just that. The second part that we wanted to get to was that page 10, I referenced earlier was around the route side of this business, and one of the ways how do you drive margins, how do you get leverage and that’s to demystify this. And we have frankly in the past provided pieces of this information and consistently and wanted to demystify that and provide that. That being said, we’re pleased with high single-digit revenue growth. I’ve said in the past a couple of things. I’ve said that our revenue will come from price and volume principally installed customer base new customers. I’ve also said that will generally doesn’t come the same way on a year-over-year basis. For this year, I’ve said in the first half of the year that the bulk of that top line revenue growth specifically in Water Direct was the reference point would come from pricing and that’s what happened. So we’re frankly quite pleased, because it delivered the numbers that we committed to and played out the way that we thought it would play out. As we shift to the second half of the year and we haven’t disclosed the pieces of a little bit of this, a little bit of that ever. But what we have said is that, we would expect that there would be more contribution as a result of the Costco program than pricing. We still believe that to be true. We are still fully committed to that high single-digit growth and obviously the $2.32 billion to $2.36 billion in revenue for the full year. Andrea Teixeira: And Tom if I can just go through that what you just mentioned and you did disclose this quarter and you start disclosing on a quarterly basis the customer count I believe from fourth quarter. And you did add 40,000 customers. I mean that came from Water Direct, if I’m not mistaken. So those would be the acquisition that you just announced, not announced to us, I guess, I mean you’re probably working through the quarter, or how much of that, it would be helpful just to know the 40,000 new customers were they basically mostly through the acquisition, or were they organic? Tom Harrington: A portion of that would certainly be through acquisition. So that’s the ending base if you will related to the Diamond Springs acquisition in Virginia. So that would certainly be part of it. You also have benefit of ongoing retention, right as an example that growth comes a lot of different ways. It comes from right? I can get customers through things like Costco, sales initiatives. I get customers through marketing and digital. I shared in the script how pleased we are that we’ve hired a new Vice President of Marketing and I look forward to his contributions. He doesn’t have [indiscernible] yet right? So he’s in the journey of learning. We get customers through acquisitions. And that M&A has long been a component part of how we add customers to our base over the long term. And it will be — continue to be that. And then certainly, when I say customer experience, the outcome of our customer experience investments is we extend the useful life — we extend the life of the customer. And that is a component of our growth story. So, all legs of that would be in the 2240 that we posted in the supplemental and on the web. Andrea Teixeira: Great. Thank you, very much. I’ll pass it on. Tom Harrington: Thanks, Andrea. Appreciate it. Andrea Teixeira: Thank you. Operator: Your next question comes from John Zamparo from CIBC. Please go ahead. John Zamparo: Thank you. Good morning. Tom Harrington: Hello John. Good morning. John Zamparo: I wanted to ask about pricing as well. And I would like to get your thoughts on your ability to pass through pricing in the second half and I appreciate the comments that more of your growth is going to come from customer adds particularly through the Costco program. But — the reason I ask this is we’ve seen different consumer companies talk about a more challenging period for pricing in the second half. So, do you plan to take incremental pricing, or are you relying on the impact of prior price increases? And I wonder how that might compare to the inflation you’re seeing? Tom Harrington: Yes. Good question. So the way to think about our pricing in the back half of the year is, we take normal pricing on the installed customer base, John, normal course. We have no plans to decrease that or increase that as we sit here today. So it would be normal course pricing when a customer reaches their anniversary date if you will of their original start date, we’ll put pricing through. So there’s no changes to any incrementality or decrement to that. So, kind of standard fair. Our delivery fees — we did take a delivery fee in Q2 and the wild card for us in inflation is really around fuel. So fuel had — overall oil prices had mitigated in the early part of this year. Although, as I’ve mentioned before, diesel has been a little more resistant than other forms. And we’ll deal with it depending on where that price goes. Now, I think oil price in the last I’ll be wrong. I didn’t look at it yesterday, but would have been the highest it’s been in nine months. We’ll see how that manifests in the pump. And if required we will act on delivery fee to adjust that if necessary. But as we sit here today, we’re highly confident in our ability to deliver that top line in our current construct. And you’re right, it includes the future benefit of as we build this Costco base for sure. So, we’re confident there. We’ve had the ability — as you’ve seen over the last — number of quarters our ability to drive through pricing and maintain the level of customer base, the stickiness of that customer base. So we’re quite pleased with that. And we don’t see anything changing where our company sits compared to others. John Zamparo: Okay. That’s helpful. I appreciate that, Tom. And then my follow-up is on the use of NOLs in the future. And in the past you’ve said, you can use these at a pretty reasonable rate in 2023 and 2024 but that they’ll drop off a bit in 2025. I’m trying to figure out how we should think about that? And if we should think about it on a dollar basis for cash taxes or a percent because the rate on cash taxes this year on pre-tax income seems mid- to high teens as a percentage. And I wonder what you think a reasonable level is in 2025 and beyond? Tom Harrington: Yes, that’s a David question. David Hass: Thanks, John. We’re certainly looking at that. As we’ve said before in the US side, where we have a majority of usable NOLs due to the operating profit generation. We’ve got two years, this year and next in the $46 million range on the NOL value and then that drops in 2025 by about $30 million. So about $16 million NOLs usable. And so we’re going through a lot of analysis there, jurisdictionally in combination with where profits are starting to drive now in our European business. We will be able to address that in future quarters when we’re able to comfortably address sort of a longer-term outlook that would take guidance into 2025. At this time we’re not commenting on it but I wanted to provide some color on at least the NOL schedule for the US business which is still the primary profit driver of the company. John Zamparo: Understood. That’s helpful. Thank you very much. Tom Harrington: Thanks, John. Operator: Your next question comes from Derek Lessard from TD Securities. Please go ahead. Unidentified Analyst: Good morning. This is Sheryl, standing in for Derek. Thanks for taking our questions and congrats on the strong results. Tom Harrington: Hi, Sheryl. Good morning. Unidentified Analyst: Good morning. So most of the questions are answered but we have a couple more. Just on the residential side, would you be able to talk about the changes in residential consumer behavior if there is any? And what you’re seeing so far in Q3? David Hass: Sure. This is David. We continue to see strong demand in both the Water Direct business. Again that is reflected in our future flighting of customer base attraction through Costco program. On the Water Exchange side, continued demand, as frankly that has been there for a decade plus and sees no sign of letup. And largely that’s why we attribute a lot of the dispenser sell-through success in that immediate connectivity factor. If I bought a dispenser, I have a trigger to do something with exchange or refill and I do that. On the Refill side, something that’s really playing out that ties back into some of the consumer elasticity question of a prior question, the Refill side has taken the price increase extremely well. This is the most value-conscious consumer in our portfolio. And we think a few factors are occurring there. One, it’s still the most valuable way to get bulk water today. Yes, you do the work yourself but you pay that discount to do the work and you go through that process. What we’ve seen really happening though is the on-shelf price of one gallon prefilled and 2.5-gallon prefilled as well as basically non-promotion prices for case-pack have really gone higher due to both resin increases as well as just overall pricing decisions by those brands. So that puts Refill in a very strong sweet spot of a value-based and attractive value for that consumer. I think you can see that in this quarter sort of increased around 18% in that business. Unidentified Analyst: All right. That’s great. Thank you. And a follow-up is on the commercial side. I think last quarter you mentioned that commercial sales has not yet returned to pre-pandemic level. Just curious where it is trending now? Thank you. Tom Harrington: Yes it’s still not back. But I think I referenced it, we believe it’s a tailwind, and you can see it in, frankly, the stellar performance of our business in Europe in terms of growth, and I think it was a 580 basis point improvement in adjusted EBITDA margin. So we’re seeing it come back. It’s not all the way back. I don’t know if it will ever be back to where it was in 2019, but we are seeing good performance on both sides of the Atlantic in that commercial customer base. And you’ll remember that the commercial customer base in Europe is a little bit more large office and the commercial customer base in North America is a little bit more of what we call small office. So, hopefully that helps. Unidentified Analyst: Yes. It does. Thank you. Tom Harrington : Thank you. Operator: Your next question comes from Steve Powers from Deutsche Bank. Please go ahead. Steve Powers : Hey, guys. Good morning. Tom Harrington : Good morning, Steve. Steve Powers : Good morning So I wanted to ask just maybe — just to give for a little bit more detail on to what extent — where we are in the process of flushing the dispensers from the marketplace to carry the higher tariff costs. I think you talked about that still being a bit of a headwind to consumption in the second quarter. So to what extent — where are we in that process? When is that inventory expected to clear from the channel? And then as you think about it, should we expect an acceleration in sell-through once that inventory does clear? How do we think about that over the coming couple of quarters coming here? Tom Harrington : A couple of ways to think about it. So we sold through 251,000, which was I want to say 4% versus prior quarter — prior year. So, we’re pleased with that. We are seeing inventories deplete, obviously, aggressively managing that. We would expect today that we will get to that 1 million dispenser 12-month sell-through number. TTM, I think, it’s in the supplemental would suggest 1,017 [ph] million. So we’re still on track for that which is a positive sign. The retail pricing is lagging. So until it’s all flushed through, which will be for sure not before the end of the year. We wouldn’t expect to see deflation in the price of dispensers. As we move into 2024, we haven’t guided anything on this, we would expect that the dispenser revenue might be lower than the prior year as the pricing that we’ve had to implement for tariffs is eliminated. So — and it’s going to vary by customers. So it’s not a perfect on Tuesday, January 3. It’s just not going to work that way. It’s going to vary by customer and how aggressive frankly they are — it will certainly depend to a large degree on promotional activity in Q4 particularly around traditional Black Friday day, days or weeks depending on how you look at it. So we still have a ways to go, but that’s how we look at it today. The key indicator is that we’re still getting the sell-through, and whilst we still deal with some elevated inventories and as I said by retail. Steve Powers : Yes. I guess, is there a reason to not be more — I mean I guess the revenue goes down as you — as there’s deflation that flows through. But I mean volumetrically, I would — I guess I’m thinking you should see an acceleration in sell-through, which is a good leading indicator as you’ve talked about. Is that too ambitious, or are the reasons to temper my enthusiasm or is that a fair expectation? Tom Harrington: I would — without giving guidance. I think 1 million a year is a good number. Because part of the way that you deal with this is there could be a mix shift on the dispensers that get sold. So, I can sell this lower-priced dispensers or I can sell higher-priced dispensers right? It’s going to — all of those have puts and takes on the pricing if you will per unit. So I think I’m going to model it. I’d model 1 million because that’s I think like a three-year number-ish in terms of if you looked at three buckets of individual years, Steve. Steve Powers: Yes. David Hass: Yes. And I think the follow-up I’d add there is, theoretically if you added 10% in the sell-through, you actually could do better helping connect more of the existing 1 million we already do sell to our existing solutions. So that’s why theoretically you could sell 1 million for several years on out as long as we improve our connectivity tactics, as long as we improve our market share in our businesses, the amount that convert to our use of water has a much higher throughput than just simply trying to gun the sell-through of the dispenser, if that makes sense. And on a dollar basis, it gets much more confusing because whether you choose to buy a pump or you choose to buy a high-end unit, the $300 that might do single cup coffee or tea is a very different mix. They still are going to consume the annual gallons when they buy whichever one they choose to buy. Steve Powers: Yes. Okay. Great. I appreciate the discussion. Thanks. Tom Harrington: Absolutely. David Hass: Thanks, Steve. Operator: [Operator Instructions] Your next question comes from Graham Price from Raymond James. Please go ahead. Graham Price: Hi. Good morning. Thanks for fitting me in. For my first one, great to see the progress on the private fleet side and you mentioned the $3.5 million in annualized savings. Just curious how high you think that can go? And then wondering if those routes to distribution centers are short enough to — they’re applicable to be electrified or use alternative fuels? Tom Harrington: Yes. Well, good morning. Two questions there. So we’re analyzing all of the private — all of the common carrier lines today. We’ll frankly never get to 100%. And it just has to do with — we like to have trips that you can complete in one day so out and back if you will. And that’s the most effective highest return and how we do this and then avoid all the short run spot rate. So the pack North West was the one where we put $2 million in and I think our annualized return is $1.3 million. There are other initiatives and work that we’re doing that are frankly part of our 2024 and the incremental CapEx that we’ve talked about – about how we benefit from those investments to get to the higher margin and to deliver the $530 million of EBITDA we’ve talked about for 2024 as an example. Electrification to-date on our — the bulk of our fleet which is beverage body large route trucks, large format bottles are not an affordable solution. So the cost for that asset is — I’ll be wrong but it’s 3x what it is for a propane route truck. So I think there’ll be a benefit sometime, but it’s not yet there today in terms of return on invested capital. So we’ve got to be thoughtful about the cost we lay out for the asset and the return we get balanced against our shift to propane is about being as ESG responsible as we can with the constraints of appropriate returns. Graham so hopefully that gets to your two questions. Graham Price: It does. Yes. Thank you for that. And then for my follow-up. I guess we saw a modest, but growing dispensary sales in Europe. And I assume that’s tied to the return to office trends that you mentioned. Just wondering about any, kind of, read through from that and what to expect from Europe in particular which looked especially strong this quarter? Tom Harrington: Yes. I think we — our European team has done a terrific job. We’re confident that they’ll deliver on their commitments and against their strategic plan as I think we referenced. So we have a high degree of confidence in their ability to deliver on their commitments. There is a benefit of more return to work for sure and we see that flow through. And we would be early stages on selling dispensers in Europe. So I wouldn’t yet call it a green shoot, but it wants to be one but we’ll continue to focus on how we provide solutions for European consumers to participate in one of our services at the end of the day. So we’re quite pleased with Europe and confident in our ability to continue to deliver their fair share of our 2023 and 2024. Graham Price: Yes. Right. Absolutely. Thank you very much. I will pass it along. Tom Harrington: Thanks. Have a good day. Operator: Jon, there are no further questions at this time. Please proceed with your closing remarks. Jon Kathol: Thanks, Julie. This concludes Primo Water’s second quarter results call. Thank you all for attending. Operator: Ladies and gentlemen, this concludes the conference call for today. We thank you for joining and you may now disconnect your lines. Thank you. Follow Primo Water Corp (NYSE:PRMW) Follow Primo Water Corp (NYSE:PRMW) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Second Fusion Test Successful – Time to Consider Cosmic Nudging; Two Ways in Which Nuclear Fusion Could Help Reverse Global ... Read more Second Fusion Test Successful – Time to Consider Cosmic Nudging; Two Ways in Which Nuclear Fusion Could Help Reverse Global Warming Breakthrough On Fusion Energy WASHINGTON, D.C. (August 7, 2013) – The new second and improved demonstration that nuclear fusion can be used to produce energy, by the Lawrence Livermore National Laboratory in California, might open the door to ways in which the virtually unlimited supply of clean energy, which fusion promises to provide, could be used to slow or perhaps even reverse global warming without the difficult task of slashing greenhouse gases. This is especially important in light of a recent very pessimistic report by the Intergovernmental Panel on Climate Change that the earth’s surface temperature will increase over the current century even under all assessed emission scenarios, says Professor John Banzhaf of George Washington University, who suggests at least two ways in which fusion energy might help solve the problem. In other words, despite valiant efforts to pressure countries to fight global warming by slashing their own greenhouse gas emissions, that plan seems not to be working, and the longer we limit our response to this unproven approach, the hotter the world is likely to become. Fusion power generation could help reduce global warming in at least two major ways, says Banzhaf, an MIT-trained engineer with two U.S. patents. First, fusion reactors could replace the need to use fossil fuels such as oil, coal, and natural gas, with their unavoidable emissions of greenhouse gases, to heat buildings (and even whole cities) and to power plants now used to generate electricity used in homes, factories, and other businesses. Fusion power “has no limits if you can get it to work,” notes Benioff, the CEO of Salesforce and a major investor in Commonwealth Fusion Systems, which aims to create compact fusion power plants. The company explains that “nuclear fusion could provide limitless clean energy with almost zero pollution and no radiation or radioactive waste. ‘One glass of water will provide enough fusion fuel [hydrogen] for one person’s lifetime,’ the company predicts on its website.” Since the feasibility of powering cars and trucks (and almost certainly also trains and large ships, and probably even airplanes) with batteries charged by electricity generated by power plants has been established, the burning of gasoline and diesel fuel for those common purposes could also be slashed if not totally eliminated. While the physics of fusion power generation must first be proven and also be much better understood, and the enormous engineering challenges of constructing and operating efficient fusion power plants must be overcome, this approach finally seems to be possible, and could replace many sources of greenhouse gases, especially if it is backed by the hundreds of billions of dollars now being discussed for research into other possible proposals for fighting global warming such as geoengineering. Geoengineering (defined as the large-scale manipulation of a specific process central to controlling Earth’s climate) is generally thought to include carbon dioxide removal, weather modification, and solar radiation management (e.g. by raising ground-level albedo, injecting sulfur particles into the stratosphere, whitening marine clouds, and delivering millions of tiny orbital mirrors or sunshades into space), but it might also include making a tiny change in Earth’s orbit made possible by energy from nuclear fusion, says Banzhaf. Using Cosmic Nudging To Fight Global Warming Thus, as a second way of using this new now-proven technology, fusion might be able to provide sufficient energy to make it possible to increase earth’s orbit by the tiny amount necessary to completely overcome global warming; an approach now being discussed and analyzed which could involve cosmic nudging. Drawing upon the original suggestion by Matteo Ceriotti, Lecturer in Space Systems Engineering at the University of Glasgow, Prof. Banzhaf has calculated that increasing Earth’s orbit by only 0.3% could completely offset global warming; thereby serving as an alternative (or as a supplemental approach) to achieving worldwide cooperation in slashing emissions of greenhouse gases by drastically modifying western lifestyles. See, for example, Using Cosmic Nudging [Changing the Orbits of Asteroids] to Fight Global Warming While even this tiny 0.3% change in Earth’s orbit would require enormous amounts of energy – energy which might be generated by large-scale nuclear fusion – the change could be achieved in a number of different proven ways: e.g., employing an electric thruster (an ion drive), constructing a huge solar sail, or utilizing a gravitational sling shot effect by changing the orbits of asteroids. Indeed, it might even be possible to exploit so-called “Δv leveraging” in which a body such as a large asteroid can be nudged slightly out of its orbit and, as a result, years later, could swing past the Earth, providing a much larger impulse to increase Earth’s orbit by a measurable amount. The concept of altering the orbits of asteroids to help sling shot Earth into a slightly different orbit gained traction when NASA recently reported that its test to determine whether it could accurately catch up to and then deflect an asteroid greatly surpassed expectations. Originally expected to reduce the asteroid’s orbit by only 73 seconds, the collision which NASA deliberately caused increased the asteroid’s orbital period by an astonishing period of 32 minutes.- giving it a boost more than 25 times as powerful as scientists had hoped for. More details about how such a cosmic nudge might be accomplished can be found at Can A Change In Orbit Save Planet Earth? Another approach to achieving a slightly larger Earth orbit was recently proposed in Can We Use a Giant Thruster to Change Earth’s Orbit? Moreover, a recent analysis including detailed calculations by an astrophysicist, as outlined in a newly published paper, have also lent more credence to Banzhaf’s original cosmic nudge idea. Banzhaf: Fusion Power Achieved – Now, Can It Nudge Earth Into a New Orbit? Entitled Cornell University – Gravity-Assist as a Solution to Save Earth from Global Warming, it says: “We propose using the gravity-assist by the asteroids to increase the orbital distance of the Earth from the Sun. We can manipulate the orbit of asteroids in the asteroid belt by solar sailing and propulsion engines to guide them towards the Mars orbit and a gravitational scattering can put asteroids in a favorable direction to provide an energy loss scattering from the Earth. The result would be increasing the orbital distance of the earth and consequently cooling down the Earth’s temperature.” More specifically, the paper shows how this could be accomplished within a reasonable time frame: “The time scale to lower the orbit is about 70 yrs for a 1010 kg mass asteroid. Using the installed propulsion jet engines on the asteroids will decrease this time scale and enable us to do the asteroid maneuvering for a larger number of asteroids. This project can enable us to change the earth’s orbit and cool down its temperature by decreasing the energy flux of the sun received by the earth. This project could be feasible for the future technology on earth.” In summary, if we are willing collectively to spend anything like the enormous amount of money necessary to slash greenhouse gas emissions (and put up with the huge lifestyle dislocations involved) on developing nuclear fusion as an energy source, and then on using it to deflect asteroids from their current orbits enough to enlarge Earth’s orbit by less than half of one percent, we might have a feasible alternative to overcome global warming. Thus, at the very least, in light of these two very recent encouraging developments – net power generation from nuclear fusion plus unexpected success in asteroid deflection – and detailed calculations suggesting its feasibility, Professor Banzhaf suggests that the concept of using nuclear fusion to provide sufficient energy for another way-outside-the-box approach (cosmic nudging) likewise deserves at least some study and consideration......»»

In this article, we discuss 10 best EV ETFs to invest in. If you want to skip our detailed discussion on the EV market, head directly to 5 Best EV, Battery and Autonomous Driving ETFs.  The International Energy Agency expects a significant increase in electric vehicle sales compared to 2022, with an estimated 35% year-over-year […] In this article, we discuss 10 best EV ETFs to invest in. If you want to skip our detailed discussion on the EV market, head directly to 5 Best EV, Battery and Autonomous Driving ETFs.  The International Energy Agency expects a significant increase in electric vehicle sales compared to 2022, with an estimated 35% year-over-year growth, amounting to 14 million units sold by the end of 2023. This uptick is expected to be driven by new purchases, especially in the second half of the year. Electric cars are expected to make up 18% of total vehicle sales for the whole year, given the national policies and incentives supporting the electric vehicle industry. Rising oil prices may further motivate buyers to switch to electric cars. While EV sales are typically low in non-major markets, countries like India, Thailand, and Indonesia experienced remarkable growth in 2022, with sales more than tripling compared to the previous year, reaching 80,000 units. In India, there is a significant increase in EV and component manufacturing, thanks to the government’s $3.2 billion incentive program that has attracted a total of $8.3 billion in investments. Similarly, Thailand and Indonesia are also making efforts to support EV adoption through policy schemes and investment incentives, potentially setting an example for other emerging market economies. Don’t Miss: 12 Best Biotech ETFs To Buy Global EV manufacturers are leaning towards advanced technology to compete amongst themselves and local industry leaders in the highly competitive Chinese market. China is the world’s largest electric vehicle market, with 5.9 million vehicles sold in 2022. This represents 59% of global EV sales, as reported by Canalys, a technology research firm. Domestic brands dominate the EV market in China, capturing an 81% share, with key players being BYD, Wuling, Chery, Changan, and GAC. BofA Securities predicts that China will maintain its position as the largest EV market globally in 2025, with an estimated 40%-45% market share. Canalys commented in a recent report:  “China’s domestic brands are leading the market in the development and implementation of advanced assisted driving systems, capitalizing on their early-entry advantages in the electric and intelligent vehicle sector. These brands have an edge over other joint ventures in the planning and execution of smart assisted driving systems.” Similarly, according to BofA analysts:  “China auto makers are accelerating vehicle platform, technology upgrade or innovation, leading to outstanding user experience. China EV products are much more competitive than before, and China will continue to see EV penetration expanding, in our view.” Also Read: 12 Best Agriculture ETFs To Buy The EV infrastructure is also expanding at a rapid pace. In April this year, Walmart Inc. (NYSE:WMT) revealed its plan to install electric vehicle charging stations at thousands of its US stores by 2030. The company will expand its fast-charging network for electric vehicles to Walmart and Sam’s Club locations nationwide, in addition to its existing 1,300 EV stations at 280 stores. In the past, Walmart Inc. (NYSE:WMT) has collaborated with EV charger providers EVgo, Inc. (NASDAQ:EVGO) and Electrify America. With more than 4,700 stores and 600 Sam’s Clubs located within 10 miles of approximately 90% of Americans, Walmart aims to make EV infrastructure reliable and easily accessible, hence promoting the clean energy initiative. Investing in EV ETFs is a convenient way to access the top EV, battery, and self-driving stocks like Albemarle Corporation (NYSE:ALB), Intel Corporation (NASDAQ:INTC), and Tesla, Inc. (NASDAQ:TSLA).  Our Methodology  We chose ETFs that offer exposure to large-, mid- and small-cap EV stocks to create a well-rounded list of the popular funds. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These EV ETFs have amassed significant gains in the last 5 years. The list is ranked in ascending order of the 5-Year performance of these ETFs as of August 4, 2023.  Photo by Michael Fousert on Unsplash Best EV, Battery and Autonomous Driving ETFs 10. KraneShares Electric Vehicles and Future Mobility Index ETF (NYSE:KARS) 5-Year Performance as of August 4: 48.92% KraneShares Electric Vehicles and Future Mobility Index ETF (NYSE:KARS) tracks the performance of the Bloomberg Electric Vehicles Index, which includes companies involved in electric vehicle production, autonomous driving, shared mobility, lithium and copper production, battery manufacturing, hydrogen fuel cells, and electric infrastructure businesses. The ETF was founded on January 18, 2018, and holds more than $190 million in net assets as of August 3, 2023, along with an expense ratio of 0.72%. KraneShares Electric Vehicles and Future Mobility Index ETF (NYSE:KARS) is one of the EV etfs to invest in.  Tesla, Inc. (NASDAQ:TSLA) is the largest holding of KraneShares Electric Vehicles and Future Mobility Index ETF (NYSE:KARS). On July 19, Tesla, Inc. (NASDAQ:TSLA) reported a Q2 non-GAAP EPS of $0.91 and a revenue of $24.93 billion, outperforming Wall Street estimates by $0.09 and $200 million, respectively. For the second quarter of 2023, Tesla announced new record vehicle deliveries of 466,140, exceeding market expectations.  According to Insider Monkey’s first quarter database, 82 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA), compared to 91 funds in the prior quarter. D E Shaw is a prominent stakeholder of the company, with 6.2 million shares worth $1.3 billion.  Baron Opportunity Fund had this to say about Tesla, Inc. (NASDAQ:TSLA) in the first quarter of 2023: “Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.” 9. ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) 5-Year Performance as of August 4: 56.48% ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) is an actively managed ETF, aiming for capital growth over the long term by investing in domestic and international stocks of autonomous transportation, robotics, and energy storage companies. ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) was established on September 30, 2014, and as of June 30, 2023, it maintains an expense ratio of 0.75%. ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) is one of the best EV ETFs to monitor.  UiPath Inc. (NYSE:PATH) is one of the top holdings of ARK Autonomous Technology & Robotics ETF (BATS:ARKQ). The company offers an end-to-end automation platform, specializing in robotic process automation (RPA) solutions. On May 24, UiPath Inc. (NYSE:PATH) reported a Q1 non-GAAP EPS of $0.11 and a revenue of $289.59 million, outperforming Wall Street estimates by $0.09 and $18.35 million, respectively.  According to Insider Monkey’s first quarter database, 36 hedge funds were bullish on UiPath Inc. (NYSE:PATH), with combined stakes worth $1.58 billion. Cathie Wood’s ARK Investment Management is the leading position holder in the company, with 44.8 million shares worth $788.3 million.  In addition to Albemarle Corporation (NYSE:ALB), Intel Corporation (NASDAQ:INTC), and Tesla, Inc. (NASDAQ:TSLA), UiPath Inc. (NYSE:PATH) is one of the top stocks on the radar of hedge funds.  Here is what ClearBridge Investments had to say about UiPath Inc. (NYSE:PATH) in its Q3 2022 investor letter: “Over the last three months, we similarly exited UiPath Inc. (NYSE:PATH) due to a change to our original thesis as we believe a new go-to-market strategy for its automation software could impact near-term execution. While we think process automation is a growing market, in a slowing macro environment single solutions may be more vulnerable than the platform solutions of software providers who can bundle products to meet a wide range of needs. In addition, the company has a material component of sales sourced in Europe where the economy is more vulnerable.” 8. iShares Self-Driving EV and Tech ETF (NYSE:IDRV) 5-Year Performance as of August 4: 65.90% iShares Self-Driving EV and Tech ETF (NYSE:IDRV) aims to replicate the performance of the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. This index comprises companies from developed and emerging markets that stand to benefit from advancements in electric vehicles, battery technologies, and autonomous driving technologies. The ETF was established on April 16, 2019. As of August 3, 2023, iShares Self-Driving EV and Tech ETF (NYSE:IDRV) has net assets worth $475.7 million and holds 53 stocks in its portfolio, along with an expense ratio of 0.47%. It is one of the best EV ETFs to invest in.  XPeng Inc. (NYSE:XPEV) is the largest holding of the iShares Self-Driving EV and Tech ETF (NYSE:IDRV). The company is based in the People’s Republic of China and is involved in the design, development, manufacturing, and marketing of intelligent electric vehicles. In July 2023, XPeng Inc. (NYSE:XPEV) reported delivering 11,008 Smart EVs, indicating a 28% month-over-month increase and marking the company’s sixth consecutive month of delivery growth.  According to Insider Monkey’s first quarter database, XPeng Inc. (NYSE:XPEV) was part of 20 hedge fund portfolios, compared to 17 in the prior quarter. Jos Shaver’s Electron Capital Partners is a prominent stakeholder of the company, with 2.30 million shares worth $25.5 million.  7. iShares Electric Vehicles and Driving Technology UCITS ETF (LON:ECAR.L) 5-Year Performance as of August 4: 74.51% iShares Electric Vehicles and Driving Technology UCITS ETF (LON:ECAR.L) aims to mirror the performance of the STOXX Global Electric Vehicles & Driving Technology NET Index. This index consists of developed and emerging market companies that are involved in electric vehicles and driving technologies. The ETF was introduced on February 20, 2019, and it holds $974.5 million in net assets as of August 3, 2023. With a portfolio of 97 stocks, iShares Electric Vehicles and Driving Technology UCITS ETF (LON:ECAR.L) offers an expense ratio of 0.40%. It is one of the best EV ETFs to invest in.  Rivian Automotive, Inc. (NASDAQ:RIVN) is the largest holding of the iShares Electric Vehicles and Driving Technology UCITS ETF (LON:ECAR.L). It is an electric vehicle manufacturer that sells five-passenger pickup trucks and seven-passenger SUVs. Rivian Automotive, Inc. (NASDAQ:RIVN) has also collaborated with Amazon to create an Electric Delivery Van using the Rivian Commercial Vehicle platform. According to Insider Monkey’s first quarter database, Rivian Automotive, Inc. (NASDAQ:RIVN) was part of 31 hedge fund portfolios, compared to 29 in the prior quarter. Daniel Sundheim’s D1 Capital Partners is the leading position holder in the company, with 13.90 million shares worth $215.30 million.  Baron Opportunity Fund made the following comment about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q1 2023 investor letter: “Shares of Rivian Automotive, Inc. (NASDAQ:RIVN), a U.S.-based EV manufacturer, fell during the quarter. Despite seven-fold growth in its monthly production rate between late 2021 and the end of 2022, production guidance for 2023 missed analyst forecasts because of supply-chain constraints, principally semiconductors. Moreover, notwithstanding an attractive long-term opportunity and favorable product reviews by customers and industry experts, investors remain concerned about liquidity risks as the company burns cash during its early production stage while unit economics remain challenged. Vehicle sales through the end of 2023 will be at Rivian’s legacy vehicle pricing, which was set before inflationary and supply-chain pressures emerged last year across the entire automotive space. New pricing and improved unit economics should be realized in 2024, and Rivian is slated to launch its R2 vehicle line in 2026. We have adjusted Rivian to a smaller position in our portfolio. Despite near-term macro and execution risks, we do believe that Rivian’s current valuation offers attractive long-term returns. During the year, we will remain focused on Rivian’s production ramp, vehicle demand, unit-level economics, and cost controls as well as progress on its R2 vehicle platform, its next-gen Enduro electric motor, and its battery system advancements.” 6. WisdomTree Battery Solutions UCITS ETF (LON:CHRG.L) 5-Year Performance as of August 4: 79.53% WisdomTree Battery Solutions UCITS ETF (LON:CHRG.L) aims to replicate the price and net dividend performance of the WisdomTree Battery Solutions Index. The ETF provides targeted exposure to companies offering battery and energy storage solutions while also meeting WisdomTree’s environmental, social, and governance (ESG) standards. Launched on February 26, 2020, WisdomTree Battery Solutions UCITS ETF (LON:CHRG.L) has just over $339 million in assets under management as of August 4, 2023. Its expense ratio is 0.40%. WisdomTree Battery Solutions UCITS ETF (LON:CHRG.L) is one of the best EV ETFs to invest in.  Joby Aviation, Inc. (NYSE:JOBY) is the largest holding of WisdomTree Battery Solutions UCITS ETF (LON:CHRG.L). Joby Aviation, Inc. (NYSE:JOBY) is focused on developing electric vertical takeoff and landing aircrafts for an aerial ridesharing service. On July 6, Joby Aviation, Inc. (NYSE:JOBY) disclosed that it has submitted all its certification plans to the Federal Aviation Administration (FAA). This move signifies notable advancement towards obtaining commercial certification for its aircraft, reaching the third stage out of five required for the process. According to Insider Monkey’s Q1 database, 15 hedge funds were long Joby Aviation, Inc. (NYSE:JOBY), compared to 17 funds in the prior quarter.  Like Albemarle Corporation (NYSE:ALB), Intel Corporation (NASDAQ:INTC), and Tesla, Inc. (NASDAQ:TSLA), Joby Aviation, Inc. (NYSE:JOBY) is one of the prominent stock picks of hedge funds this year.        Click to continue reading and see 5 Best EV, Battery and Autonomous Driving ETFs.    Suggested articles: 10 Oversold Growth Stocks To Buy 10 Oversold Value Stocks To Buy 10 Oversold Global Stocks To Buy   Disclosure: 10 Best EV, Battery and Autonomous Driving ETFs is originally published on Insider Monkey......»»

EVgo, Inc. (NASDAQ:EVGO) Q2 2023 Earnings Call Transcript August 2, 2023 EVgo, Inc. misses on earnings expectations. Reported EPS is $-0.51 EPS, expectations were $0.22. Operator: Ladies and gentlemen, thank you for standing by and welcome to the EVgo, Inc. Q2 2023 Earnings Call. I would now like to turn the call over to Heather […] EVgo, Inc. (NASDAQ:EVGO) Q2 2023 Earnings Call Transcript August 2, 2023 EVgo, Inc. misses on earnings expectations. Reported EPS is $-0.51 EPS, expectations were $0.22. Operator: Ladies and gentlemen, thank you for standing by and welcome to the EVgo, Inc. Q2 2023 Earnings Call. I would now like to turn the call over to Heather Davis, Vice President, Investor Relations. Please go ahead. Heather Davis: Good morning and welcome to EVgo’s second quarter 2023 earnings call. My name is Heather Davis, and I am the Head of Investor Relations at EVgo. Joining me on today’s call are Cathy Zoi, EVgo’s Chief Executive Officer; and Dennis Kish, Chief operating Officer. We’d like to send our congratulations to our CFO, Olga Shevorenkova on the arrival of her baby. Stephanie Lee is the company’s SVP of Accounting and Interim Chief Financial Officer will cover our financial results this quarter. Today, we will be discussing EVgo’s financial second quarter of 2023 financial results and outlook for the remainder of 2023 followed by a Q&A session. Today’s call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com. michael-fousert-YhXlYJYlr3c-unsplash The call will be archived and available there, along with the company’s earnings release and investor presentation after the conclusion of this call. During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the Risk Factors section of our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. The company’s SEC filings are available on the Investors section of our website. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. Also, please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures can be found in the earnings materials available on the Investors section of our website. With that, I’ll turn the call over to Cathy Zoi, EVgo’s CEO. Cathy Zoi: Thank you, Heather and good afternoon, everyone. I’m so pleased with the continued strong performance of results the EVgo team has achieved in the second quarter. Before we get into the details, I want to address the CEO succession plan we announced today. As you’ve likely seen, I’ve decided to retire as CEO and from the Board effective following our next earnings call expected around November 9th. After thorough consideration and process, the Board has decided that Badar Khan will be the next CEO of EVgo. Badar joined the Board of EVgo shortly after we went public and served as our lead Independent Director since that past. I just want to say that it has been a highlight of my career leading EVgo from a 50 person private enterprise focused on a then nation EV sector in 2017 to what it is today, a market-leading public company serving nearly 700,000 customers across the trillion-dollar EV market. With EVgo’s talented team, we built a durable business yielding unprecedented growth of charger deployments, network utilization and company revenues. The company’s next opportunity lies in scaling a business to meet the ever-increasing and evolving fast-charging demand. And I’m absolutely confident that EVgo will be in extremely capable hands with Badar as CEO. I’ve been fortunate to know and to work with Badar in his capacity as a member of EVgo’s Board and I’ve seen firsthand the breadth of his talent. For those of you who are unfamiliar with Badar, he’s a 25-year veteran of the clean energy transformation and utility space. Badar has significant executive leadership experience overseeing large customer-facing energy organizations like National Grid USA and Direct Energy. This experience aligns, ideally with the opportunity ahead for EVgo. He has a understanding of the dynamics of our business and is the right person to build on our successes and work with our outstanding executive team to take EVgo to the next level. He embodies the energy and vision that will take this company far. I want to offer my sincerest congratulations to my friend, and colleague Badar on this appointment and express to all of you my enthusiasm for the opportunity to continue working closely with Badar and my fellow EVgo colleagues and management team to ensure a smooth transition. I will remain fully engaged in day-to-day CEO until Badar formally steps into the role in November. After which, I will serve in an active advisory capacity until the end of the year. I’m grateful that we are able to take these steps and put in place a transition plan that will set the company up for continued success. Let’s now move into the discussion of EVgo’s tremendous second quarter results. EVgo had a phenomenal second quarter. Our growth momentum continued across all key areas of the business. Stalls in operation, customers, utilization, network throughput and revenue EVgo achieved over $50 million in revenue, and incredible nearly five-fold year-over-year increase. And network throughput more than doubled versus Q2 last year. Results like this demonstrates the ability of EVgo’s DC fast-charging business model to scale rapidly alongside EV adoption. We expected an inflection point in our business that is coming faster than many anticipated. Currently, they’re under 3 million EVs on US roads today. Just imagine the possibilities for EVgo, when electric vehicles are adopted at scale over the next 10 years and we’re even better positioned to capitalize on our first mover advantage. Coupled with our rigorous underwriting criteria for asset deployment and multiple possible capital funding vehicles, the future of EVgo is brighter than ever. It is truly exciting to be accelerating the electrification of transportation in the United States through EV charging. EVgo’s network of over 2,500 operational DC stalls delivered an impressive 24.9 gigawatt hours in the second quarter with strength in all sectors. Retail throughput more than doubled and fleets throughput grew 4x. Total charging sessions on the network increase, 85% year-over-year. Throughput on the network grew faster than session growth and significantly higher than operational stall growth and EV sales to MOD, the growth in throughput accelerated from the impressive growth demonstrated in the first quarter. In the second quarter, we achieved double-digit utilization across the entire network for the first time. Utilization exceeded 15%, at 30% of EVgo’s charging cells in June and with only around 1% EV adoption in the US. EVgo is experiencing mid-teens utilization and above in California, as well as markets outside of California, including Las Vegas, San Antonio, Dallas, Houston and Hartford New Haven. 27 different metropolitan areas had utilization above 10% in June. This growth in – EVgo we’ve got over 10 years of experience in navigating the complexities of fast-charging, and the know-how and relationships to rapidly expand that network to meet the needs of EV drivers and shareholders alike. Our key strengths include, first, EVgo has built a growth engine. We identified great locations. We work collaboratively with OEM, utilities, suppliers, housing contractors to construct and operate charging and construction. Definitely, EVgo is a financially disciplined operator. We will only build sites when they are projected to meet our double-digit return requirements. Third, EVgo is a technology innovator. As a leader in a young and evolving sector, EVgo has developed best-in-class hardware IT for charging all EVs and proprietary software to create a seamless charging experience. This includes our mobile approximately, Autocharge+ EVgo Advantage, Rideshare EVgo Reservations and EVgo Inside. Our in-house technology developed under the direction of a world-class engineering team is a major differentiator in the industry. And fourth EVgo ReNew, our comprehensive network upgrading program is in full flight. After assessing our original equipment in the field, we’ve upgraded or replaced over 350 stalls at strategically important locations and will continue to update the network as technology evolves. As you know, EVgo currently operates one of the largest DCFC charging networks in the United States. This collection of nationally distributed assets will deliver more throughput and generate more cash as new EVs are sold, driving operating leverage, increasing cash yields and driving higher returns on invested capital. Through our portfolio partners EVgo currently has thousands of prospective locations in our pipeline that pass our internal hurdles for investments. This pipeline of locations provides ample opportunity for EVgo to capture more market share and create shareholder value by applying the same rigorous principles of financial discipline we’ve deployed over the past six years. We are in the very early innings for this sector with much, much more demand to come. Today, there are roughly 30,000 test charges in the US and by 2030, industry analysts estimates the country will need more than 300,000. No single company will meet that demand alone. But we believe our experience, flywheels and first mover advantages position us to remain a charging leader and we look forward to continuing to execute on our strategy of disciplined investments in the fast-charging space, while continuing to work closely with our OEM partners. Let’s turn to an update on General Motors. Our partnership with GM remains strong and we will continue working with GM to expand our charging footprint and bring more fast charging to communities across the U.S. In fact, EVgo and GM announced yesterday that we have reached a milestone of 1,000 DCFC stalls deployed as part of our partnership to-date. The leadership from both EVgo and GM commemorated the occasion with a ribbon cutting in Metro Chicago on Tuesday with speakers from our Utility Partners and the state government joining us. We’ve added new GM Ultium signage to our chargers, we’ve identified locations where canopies make sense and we’re working together on integrating NACS connected into the network in a timetable that will meet the needs of GM drivers. As you know, EVgo eXtend is our capital light business model where EVgo builds and operates charging stations on behalf of our eXtend partners and its success demonstrates EVgo’s agility to serve evolving market segments in an accretive manner. EVgo’s Seminole, eXtend contract with “Pilot Flying J” is going exceedingly well. We’re making progress with the 2,000 cell PSJ program, which translated into considerable revenue for EVgo in this quarter. PSJ’s first sites are commissioned with more coming soon and we expect new locations to be operational in the third quarter. EVgo and Pilot also partners for NEVI Grant application and were recently awarded the majority of funds in the first – in the funding from Ohio. In fact, every PSJ EVgo extend application we jointly submitted has been awarded funds. In addition to eXtend wings for pilot, EVgo and Meijer also teamed up for several eXtend sites in Ohio that were selected for grant awards. Meijer is a great site post the EVgo owned locations and they’re seeking to bring EV charging to more of their stores through the eXtended model. Even the national interest around NEVI Grant, EVgo’s business development team is in active commercial discussions with numerous others for eXtend deals. EVgo’s success with PSJ both in terms of network deployment and funding wins has put us in the pole position to partner with retailers who are keen to participate in the fast-charging game. On fleet, EVgo continues to scale our strong partnerships with Uber and Lyft, making electrification accessible for Rideshare drivers via partner-specific charging rates across the country. Growth in this segment will continue to climb as more electric vehicles become available to Ride share drivers. Our fleet hubs business also continued to grow with an exciting milestone crossed this quarter when the EVgo team operationalized a new dedicated 18 stall charging hub site in San Francisco with one of our autonomous vehicle partners. This take-or-pay contract didn’t anchor in the hub’s business, which we see as a significant area of growth in the medium-term as AV robo taxis and last mile delivery companies adapted all-electric fleets. And now let’s talk a bit about charging technology. Following the European auto sector’s convergence to CCS conductors in 2014 and Tesla’s own switchover to CCS for its European vehicles in 2018 the presumption had been that the US will follow. But last quarter, a number of leading automakers announced plans to migrate to Tesla’s NACS connectors for model year 2025 or 2026 year is to be sold in North America. What does this mean for the EVindustry? Convergence to a standard connector will improve the customer experience and hence accelerate the march toward an all-electric future over the medium term. In the meantime, millions of CCS and CHAdeMO EVs will need to be supported on public fast-charging networks that use. And EVgo will serve them all. And our sustained support for electric for all EVgo currently charges over 50 different models of EVs with a variety of connector types including CCS, CHAdeMO and Tesla. So we already live in a world of multiple connectors and remain committed to serving all EVs. Tests will be integrating NACS connected into the EVgo network as soon as they’re available and have gone through appropriate reliability and safety testing. Let me turn to financing. To deliver on charging infrastructure’s long-term value opportunity, EVgo is deploying a holistic diversified approach to funding our capital needs. Historically, we have complemented our own investments with OEM partner funding, public grants and regulatory incentive programs. EVgo raised over $123 million in net proceeds through a primary equity offering in Q2. While EVgo was already projected to be well-capitalized through most of 2024, prior to the base, the equity raise bolstered our balance sheet and created runway to pursue a rapidly expanding set of value creating charging investments well into 2025. For 2023, we expect that most EVgo owned stalls that will be energized are being constructed under our General Motors agreement. Under this $97 million program, GM K pays EVgo approximately $33,000 per stall shortly after the stall is operational. This additional source of capital to EVgo contributes roughly 25% of the capital build cost for GM stalls. We are expecting to build roughly 700 GM stalls this year, which would amount to $23 million in cash funding. And as we’ve outlined in previous calls, EVgo has a long history of applying for winning and building charging cells that receive a variety of public, private incentives. Recently, we’ve highlighted $10 million of Utility Make-Ready Funding and $7.3 million of CALeVIP funding awards, which are only a few examples of the many programs available to EVgo. Emblematic of the massive funding available, the federal government’s NEVI program just getting underway is a larger version of the state and local programs EVgo has been successful in securing funds from over the last decades. As a reminder, NEVI funds will be distributed through 50 different state level programs and its passive precedent will take nine to 12 months to get from RFPs the selection of awardees. Following that, contracts are executed between State Department of Transportation and awardees, which too can be a multi-month process. And then, station construction can get underway. The fund is typically reimbursed to awardees after construction is complete and stations are energized. All this said, EVgo’s combination of market leadership, grant application experience and track record of being a good partner to government policymakers positions us well for securing NEVI Grant and we are off to a good start. EVgo and our eXtend partners were awarded $13.8 million for twenty sites under the Ohio NEVI program winning. 75% of the awards in that state’s first round. This was a tremendous success for our operations, grants, network planning and public policy teams. Several States, including Colorado, and Pennsylvania are reviewing NEVI applications right now and are expected to announce awardees in the coming months. Numerous others, including Virginia, Georgia, Oklahoma, Indiana and Michigan are earlier in the process with requests for proposals or qualifications currently open, suggesting projects could start sometime in the first half of 2024 after contracts are signed. In terms of government tax credits, Section 30C of the IRS code, officially the alternative refueling property tax credit can offset up to 30% or $100,000 per stall of charging infrastructure costs. And now has a provision allowing transferability of the credit to qualified and registered taxpaying entities. As such, 30C credits are considered when EVgo makes investment decisions on where to extend our network. We anticipate detailed guidance from the IRS before the end of 2023. Notably, diverse funding sources can be stacked, for example, assaulted as part of EVgo’s GM program received a $33,000 CapEx offset. In addition, some locations may be awarded NEVI Grants based on their corridor locations, as well as be eligible for a 30C credit. Availability of multiple funding sources extends the geographic footprint of stations that pass EVgo’s investment hurdles and makes those locations more profitable, a genuine accelerant to EVgo’s business. With billions of dollars of funding support becoming available from federal and state governments we’re excited to put more capital to work to increase shareholder value. And now, I’d like to turn the call over to Dennis, EVgo’s world-class COO to highlight some of the key elements of the growth engine we’ve built at EVgo. Dennis Kish: Thank you, Cathy. Since I started at EVgo just over 18 months ago, we’ve been continuously expanding our team’s ability to build a best-in-class charging network. EVgo has created a growth engine that can scale up to meet fast-charging demand and we had our best quarter ever. Just now with revenue growth of 457% and throughput growth of 147%, compared to a year ago we also commissioned 210 stalls in the quarter and are at 2500, operational stalls today. Let me set the table by describing what we know definitively will bring customers to our network. EV drivers value three things the most. First, having lots of stalls at a site, so they never have to wait; second, having fast chargers available, so they can fuel up quickly; and third having a reliable charging solution that works right on the first try. I’ll cover our progress in all three areas and begin with an update on EVgo’s typical station configuration. As Cathy mentioned, we’ve identified thousands of value creating new locations within our portfolio, partner network for future station builds. We currently target a minimum station size of six stalls, and we aim for eight to ten stalls if the site host has space available. We’re deploying ultra-fast 350 kilowatt chargers in locations that are typically near great amenities such as shopping, dining, and convenience stores. In certain locations, EVgo will soon be adding canopies as well as poultry charging for large trucks. Across the entire network, by the end of 2023, we expect to have approximately 30% more stalls per site, and 50% higher maximum power per site than we did at the end of 2022. These station configuration update yield several important customer benefits, including faster charges, less likelihood of waiting and higher up time. Generally, across the development cycle, we are beginning to see timetables improving. EVgo’s supply chain is operating efficiently. We are managing our hardware suppliers well, with long-term contracts in place with rolling forecasts, so our partners can manage their supply chain to meet EVgo’s needs. Construction lead times are relatively flat, which is expected, given the fact that we are now building larger sites. Local government permitting is generally getting faster as these authorities gain experience and familiarity with fast charging infrastructure deployments. Utilities remain the longest pole in the tent. A combination of long lead times for switchgear and transformers, along with internal resource demands for wholesale electrification is slowing many utilities. EVgo is working closely at the most senior levels with our utility partners, so they understand our project pipeline and how they can support our efforts to improve energization. We are sharing site-specific load roadmaps that are based on our network plan and that has resulted in a higher total number of stalls being energized this quarter than last. One pilot program that will be launched this year has this particularly excited. It enables us to perform more tasks in parallel with the utility and the early results show a 40% reduction in energization lead times. In addition to building the rapid growth engine for tech-enabled infrastructure deployment, we’re relentlessly focused on enhancing the customer experience. Last year, we announced the EVgo ReNew program, a continuous improvement effort which builds on our regular maintenance program with a robust plan to upgrade or in some cases retire charging station. In 2023, we expect to renew hundreds of stalls and are on track to meet our goals. Building on Cathy’s comments about integrating NACS connectors into our network, we will use the ReNew program lens to evaluate which stalls to retrofit with NACS. As EV technologies advance and the number of EV models grows, we remain committed to deploying equipment and software that will deliver the optimal customer experience and an efficient use of capital. Internally, we track an important metric, we call One and Done, which is a percentage of time a customer has a successful charging experience within a reasonable time window on their first try. It’s a success metric as opposed to an availability metric meaning that it attracts all often the customer gets what they came for, a completed charge. We are aiming to achieve one-and-done success rates of over 95% and have already improved six percentage points this year. With literally hundreds of thousands of charging sessions a month, charging attempts can be unsuccessful for a variety of reasons associated with the vehicle, the charger, the driver, or connections between any of those three. At EVgo, even if the chargers themselves aren’t the culprits of an unsuccessful charge attempt, we view it as our responsibility to create a seamless charging experience for our customers. The good news is that over the past four months, EVgo’s one and done Tiger team has made excellent progress in identifying and running to ground key causes of unsuccessful charge attempts. On the charger side, we recently identified two software bugs that were causing charging issues for customers and promptly rolled out updates. And we’re collaborating with our OEM partners to ensure that updates they’re making to their EVs and software work with our charges. EVgo’s innovation lab and satellite locations at OEM facilities that come in handy on this front. In terms of driver education, EVgo recently highlighted a step-by-step charging tutorial in our online video series Charge Talk to help new EVgo drivers feel confident pulling up to a public charging station. It turns out that a sizable number of first-time EV drivers don’t realize that the first step to EVgo charging is to plug in the connector, because this order of operation is opposite of what we all learn to do when we went to a gas station. EVgo won’t rest easy until we identify and solve every technical EV charger or driver education problem that might stand in the way of reaching 100% one-and-done success. I’ve spent my career leading complex operations efforts across the touch base and I can say unequivocally that at EVgo, we have built a growth engine with the processes in place to improve efficiency while delivering value to all of our stakeholders. With our relentless focus on advancing first mover technology, superior operations and customer experience, complemented by a backdrop of a rising sectorial tide, EVgo is poised for strong growth going forward. With that, I’ll turn the call over to Stephanie to discuss our quarterly financial results. Stephanie Lee: Thank you, Dennis. As Cathy and Dennis mentioned, EVgo reported record results for the second quarter of 2023 demonstrating the continued strength of our business and our strategy. As a company, we are leaning into the incredible opportunity ahead of us to meet the demand that we believe is coming. We grew revenues across our core revenue streams during the second quarter. Second quarter revenue of $50.6 million grew nearly 5x year-over-year and nearly doubled from the prior quarter. On a year-to-date basis, revenue in 2023 has already surpassed the revenue we generated in the entirety of 2022. The significant increase in revenue was driven by our EVgo eXtend contract with Pilot Flying J in partnership with GM, as well as our growing retail, commercial, and OEM charging revenues. eXtend revenue was $33.3 million in the second quarter with a vast majority of this exceptional revenue tied to hardware sales to PSJ and to a lesser extent, the construction of PSJ sites. Revenue recognized for PSJ hardware Sales is expected to be minimal in Q3 and potentially Q4 as we await the availability of BABA compliant chargers. As a reminder, there are no BABA compliant 350 kilowatt chargers currently being manufactured in the US and our suppliers are working hard to complete construction of their US facilities. BABA compliant chargers must also be fully certified and tested before products can begin shipping. Adjusted gross margin was 25.4% in the second quarter of 2023, which was consistent with the prior quarter. When compared to 37.3% in the second quarter of 2022, the year-over-year change was attributable to a lower mix of high margin regulatory credit revenues in Q2 of 2023. Adjusted G&A as a percentage of revenue improved from 256% in Q2 of 2022 to 46% in Q2 of 2023 illustrating the leverage, EVgo continues to realize from its existing network and ongoing investments in infrastructure, people, and processes. Adjusted EBITDA negative $10.6 million in Q2 2023 versus negative $19 .8 million in Q2 2022 reflecting the flow-through of the revenue growth. During the second quarter, cash, cash equivalents and restricted cash grew to $257.4 million as of June 30th. This includes $5.7 million of net proceeds raised under our ATM program followed by an additional $123.4 million of net proceeds, under our equity offering completed during the second quarter of 2023. We added approximately 210 new stalls to our network during the second quarter. And stalls in operation, or under construction were approximately 3,200 as of June 30th. As expected, we reduced our CapEx spending by nearly half from the previous quarter with net CapEx of $32.6 million. We purchased most of our equipment needed for 2023 stall deployments in the first quarter of this year and CapEx for the third quarter of 2023 is expected to remain lower as a result. CapEx will begin to ramp back up in the fourth quarter of 2023, as we begin mobilization for stalls expected to be operationalized in the early parts of 2024. Overall, CapEx for 2023 is expected to be lower than CapEx for the prior year. We will continue to remain agile in our supply chain and capacity planning to ensure that we can pivot appropriately in a responsive to the ever-changing regulatory landscape, including BABA, NEVI opportunities and NACS, while continuing to capitalize on our position of strengths and grow our stall base in a financially disciplined way to meet the ever-growing demand. Moving on to our full year 2023 guidance. EVgo was updating our full year revenue guidance to a range of $120 million to $150 million. Charging revenue accounted for 25% of total consolidated revenue for the second quarter of 2023. We anticipate sequential quarterly growth in our charging revenue in the third and fourth quarters, as we continue to expect quarter-over-quarter and year-over-year throughput growth and increases in our total customer accounts. eXtend revenue accounted for 66% of total consolidated revenue for the second quarter of 2023. The vast majority of the eXtend revenues generated in the first half of 2023 were related to equipment sales to PSJ and we expect that eXtend revenue for the second half of 2023 will be predominantly comprised of construction-related revenues. Equipment sales to PSJ for BABA compliant chargers may not materialize to any significant degree until 2024 although our suppliers continue to make good progress on the build out of their US manufacturing facilities. Our guidance assumes some BABA equipment sales to PSJ in the second half of 2023. EVgo was updating our full year adjusted EBITDA guidance to a range of negative $78 million to negative $68 million. EVgo will be making additional investments in the growth engine, we’ve created, including dedicated fleet hubs, eXtend, PlugShare and ReNew in the second half of 2023. We continue to expect to have a total of 3,400 to 4,000 DC fast charging stalls in operation or under construction by the end of 2023. As a reminder, this metric includes PSJ stalls. With this, I will turn the call over to the operator for questions. See also 25 Countries with the Highest Income Inequality in the World and 13 Safe Stocks To Invest In. Q&A Session Follow Evgo Inc. Follow Evgo Inc. 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 James West – Evercore ISI. Please go ahead. James West : Hey, good afternoon, everybody. Cathy Zoi: Hey, James. James West : And Cathy, congratulations on a great run at EVgo and all the things you’ve done for the company. Happy to be so early missed, but it sounds like you feel pretty good about Badar taking over. So, congratulations to Dan as well, congrats to you on a very successful run as CEO. Cathy Zoi: Thank you so much. It’s been a joy. James West : I guess, for my question, I’m really interested in this inflection point that’s happening with respect to throughput versus stall growth, because it seems like it’s ramping up really nicely here, which will be – I had always expected with now it’s kind of unfolding, it’s probably a function of a lot of factors, but is it mostly new EV models that are coming to the market that are maybe non-Tesla. Is it the customer experience is improving and say you had more repeat customers? What do you think is the main thing that’s driving this? Or is it just clearly more cars on the road? Cathy Zoi: Well, I think we should hire you James. It is actually all of those things. I mean, let me – we look at this with the light, as well, so, yes, absolutely what we are seeing is more EVs, the compounding effect as we talked about before is those EVs that are coming to EVgo ar more powerful. They’ve got bigger batteries and in fact, and then the ability to charge even faster. So, throughput goes up for every sort of 15 minutes. You’re getting your pumping through more electricity and we’ve got – we’ve got increased utilization because is that high mileage drivers coming on to the network. And I think that one of the things that we’re kind of excited about is the possibility that we’re seeing, even folks with garages, it looks like they’re coming to charge at our fast-charging stations. So, all of this for us is, it’s just like, it’s like our thesis is great, but even better than we might have thought. James West : Great. Got it. Thanks Cathy. Cathy Zoi: Thank you. Operator: Our next question comes from the line of Chris Pierce from Needham. Please go ahead. Chris Pierce: Hey, good afternoon. How are you today? I was wondering if you could just give me guidance on where could the upper bound of utilization go in the near term and the medium term. I know you guys were sharing more in the past couple of quarters. I’m just trying to get a sense of, I mean, I really have no idea how to even think about it. Cathy Zoi: No, Chris, it’s a great question. So there’s – we model it with it what we call an equilibrium utilization. So when we sort of do our math on is a station going pencil to our double-digit returns, we basically sort of tap it in like kind of a 20% – between 20%, 25%, just because we feel like, if it’s that good that there’s going to be other stations that will come into the market. So we model conservatively. With that said, we regularly have utilization at stations that is way higher than that. I mean, we’ve got, we’ve got some stations on the network right now that are over 50% utilization. We’ve had – during different time periods where we had intense Rideshare usage, on certain locations, we were up in the 60s than 50s. So, it’s – what we’re doing to actually give us even more runway for that is adding bells and whistles like being able to make reservations, right. Special like super off-peak rates for Rideshare. All of those like, sort of tools, software tools that you add on to the basic infrastructure will give us an ability to actually achieve utilization levels far greater than what we actually model when we do our underwriting. So, I in the short, I don’t know how to answer it to you to model realistically. What we do is we model conservatively and then, we surpass our whole expectations when we see it on the network. Chris Pierce: Okay. And then, are you, I mean, is it – are we miles away from competitor experts in a DC fast charger and do you see lower utilization at your – I just want to get a sense of how much runway in terms of the cars coming on the network for chargers going on? Let’s say, is that something that you build on your model as well?.....»»

Clean Harbors, Inc. (NYSE:CLH) Q2 2023 Earnings Call Transcript August 2, 2023 Clean Harbors, Inc. beats earnings expectations. Reported EPS is $2.44, expectations were $2.09. Operator: Greetings, and welcome to the Clean Harbors Second Quarter 2023 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to […] Clean Harbors, Inc. (NYSE:CLH) Q2 2023 Earnings Call Transcript August 2, 2023 Clean Harbors, Inc. beats earnings expectations. Reported EPS is $2.44, expectations were $2.09. Operator: Greetings, and welcome to the Clean Harbors Second Quarter 2023 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael McDonald, General Counsel. Thank you, sir. You may begin. Michael McDonald : Thank you, Christine, and good morning, everyone. With me on today’s call are our Co-Chief Executive Officers, Eric Gerstenberg; and Mike Battles; and our EVP and Chief Financial Officer, Eric Dugas, and SVP of Investor Relations, Jim Buckley. Slides for today’s call are posted on our Investor Relations website, and we invite you to follow along. Matters been discussing today that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place undue reliance on these statements, which reflect management’s opinions only as of today, August 2, 2023. Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period. Today’s discussion includes references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today’s news release, on our website and in the appendix of today’s presentation. Let me turn the call over to Eric Gerstenberg to start, Eric? Eric Gerstenberg : Thanks, Michael. Good morning, everyone, and thank you for joining us. Turning to our Q2 financial results on Slide 3. Our second quarter performance underscores the strength of our Environmental Services segment where our adjusted EBITDA margin climbed by 140 basis points from a year ago. This is a highly resilient business that is supported by scarce permitted assets, a strong safety record, technical expertise, a highly trained workforce, close customer relationships and effective capital allocation. Q2 marked our ES segment seventh consecutive quarter of growth and profitability. Its performance partly offset the decline of our Safety-Kleen Sustainable Solutions segment, which experienced some headwinds resulting from the adverse conditions that continue to affect the base oil and lubricant markets. Before I review the segments in more detail, I’d like to highlight our Safety results as Safety is central to everything we do. After a record Q1 performance, we delivered a second quarter TRIR of $0.68 the best Q2 in our history, which keeps us on track to achieve our ambitious annual TRIR goal of 0.70. The record-breaking heat across much of the country posted a unique challenge in Q2 and continues to do so as we move through the third quarter because our team is often required to wear personal protective equipment, both outdoors and in plant, we are focused on monitoring temperature and hydration. To everyone on our team, we appreciate all the proactive steps you take to keep yourself and your colleagues safe. Turning to Environmental Services on Slide 4. Segment revenue increased 7%, the growth of our Services business was underpinned by pricing and volume initiatives. Each of the segments 4 business units posted year-over-year gains with Industrial Services and Safety-Kleen Environmental branch businesses leading the way. Industrial Services revenue grew by 11% on the heels of a strong spring turnaround season and initial contributions from our Thompson acquisition. Our second full year of HBC, which we acquired in late 2021 is trending better than we anticipated. Safety-Kleen Environmental revenue climbed 16% with the demand for business’ core offerings continue to grow. For the second consecutive quarter, we performed 250,000 parts wash services, an increase of 4% from Q2 last year. Field Services revenue grew 7% despite not having any large-scale emergency response related projects. Technical Services revenue grew modestly, largely attributed to the many planned maintenance and repair days at our disposal facilities to address weather-related outages that occurred in Q1. As expected, utilization at our incinerators reached 84% this quarter, up 4 points sequentially, but down 6 points from Q2 last year, which had fewer down days. Looking ahead, we anticipate less down days in the back half of this year than we had in the first half. Average incineration price was up 8% in Q2. We made some important repairs and investments in the incinerators that limited utilization but our operations team worked hard to maximize the throughput to address our increasing backlog of waste. Landfill volume in the quarter was flat with the prior year. This year, our base business was particularly strong with a good mix of high-value waste, which resulted in average pricing increasing by 21%. Looking at Segment Profitability, a 13% adjusted EBITDA growth the ES segment once again outpaced the top line. Given our highly leverageable network of assets, higher revenue should consistently drive greater profitability. As noted last quarter, we are also benefiting from a number of productivity programs and cost reduction efforts across the organization. To counter inflationary pressures, we’ve been targeting $100 million of company-wide cost reductions in 2023, much of it in ES. As a result of all these factors, we increased our ES margins and are now topping 26%. Overall, a great quarter for the U.S. segment. Before handing it off to Mike to take you through SKSS. Let me touch on a recent development related to PFAS that should benefit our Environmental Services business materially in the coming years. Turning to Slide 5. In July, the U.S. Department of Defense issued new guidelines related to the incineration of materials containing PFAS, which research indicates is present at hundreds of military installations. The DoD has authorized commercial hazardous waste incineration as a method of addressing these forever chemicals. The DoD guidance also allows for hazardous waste landfills as an alternative remediation method. Last year, we published the results of a comprehensive third-party study that clearly demonstrated that we could effectively destroy a wide range of PFAS compounds, including AFFF firefighting foam at commercial scale. In that study, we proved that we can consistently achieve at least 69s of destruction, which is the gold standard for thermal methods. Additionally, the EPA conducted its own pilot study at its North Carolina facility and came out with similar conclusions about the potential for incineration. Given the compelling results of our study, we view the DoD’s decision to lift the PFAS moratorium as a very positive development for Clean Harbors long term. That being said, we don’t expect a material amount of opportunities from the DoD this year. The EPA still must set final guidelines related to acceptable levels of contamination in soil and water and provide recommended methods of storage, removal, transportation and destruction. In the interim, we plan to work closely with the DoD to develop the right solutions at military installations to best protect our nation’s armed forces. With that, let me turn things over to Mike to discuss SKSS and capital allocation. Mike? Mike Battles : Thanks, Eric, and good morning, everyone. Let me echo Eric’s comment about the great work of our team this quarter. We had a number of standout performers in our ES segment that helped us deliver overall results in line with our guidance for the 23rd consecutive quarter. That contingency is something that we personally take pride in. Moving to Slide 6. SKSS had another challenging quarter as the segment fell short of our profitability expectations. While we lowered our expectations on our last call, we do not anticipate the unusual absence of the Q2 seasonal pickup in demand and pricing this year. In fact, after a price decline in early April, posted prices fell again in June, which was the combination of a weak spot pricing environment all quarter long. While crude prices have risen more recently, they have not yet correlated to a rebound in base oil and lubricant pricing. On the top line, SKSS revenue dropped 15% based on weak pricing — based on the weak pricing climate brought on by global market conditions compared to a year ago when scarcity of supply was customer primary concern in the wake of major market disruptions. In Q2 of last year, posted prices rose by $1 a gallon, whereas this year in Q2 posted prices fell by $0.50, with spot pricing exhibiting even deeper discounts. In 2022, customers were concerned about shortages and allegations. Conversely, this year, buyers have been able to patiently wait on the sidelines, destocking inventories and holding out for lower prices. As a result of these conditions, SKSS adjusted EBITDA decreased 45% with a year-over-year drop in margin as our year term — as our near-term refining spreads have been compressed. While market conditions have remained unfavorable, the SKSS team has reacted quickly to counter the spread compression. The team is executing well in the areas we can control, that there’s collection pricing and volumes as well as rapid production — as well as plant production and volumes sold. During the quarter, we shifted rapidly from a pay for oil to charge for oil pricing model, while generating record collections of 64 million gallons. We also sold a record level of base oil gallons Q2, as our re-refining plants continue to run well. Flooded product volumes — blended product sales accounted for 19% of total output from our plants flat compared with a year ago, but up from the 15% we reported in Q1. We continue to win back blended customers we lost in the back half of 2022 due to additive shortages. Our direct volumes, which represents our closed-loop approach were at 7% in Q2, which is flat from a year ago and in line with our expectations. Our goal remains to increase their blended volumes this year to [average] on both the direct and wholesale sides. Overall, even with the declines we’ve seen this year in SKSS, this segment is still expected to deliver an approximately 20% adjusted EBITDA margin this year, and it remains a strong free cash flow generator and high ROIC business for us. Turning to Slide 7 and our capital allocation strategy. As part of our Vision 2027 strategy that we laid out at our Investor Day earlier this year, we have multiple avenues to grow our company. We continue to evaluate opportunities to invest in CapEx to drive organic growth particularly in the facility network, our maintenance shops and other areas. The build-out of our new state-of-the-art incinerator Nebraska remains on plan, on budget and on track for opening in early 2025. We installed the kill this quarter and are on track to hit a number of other critical construction milestones in the back half of this year. On the M&A front, the early returns on our Tonsan Adhesive acquisition are very promising. The business is proving to be synergistic and should support cross-selling going forward. We continue to see a good flow of potential bolt-on transactions for both offering segments. In Q2, we closed a very small acquisition, less than $10 million in size, or we added a company that leases more than 500 intermodal containers. We are confident that these assets will benefit us as we grow our business in the years ahead, particularly with the newest incinerator coming online and larger PFAS opportunities starting to develop. Eric Dugas will discuss our financial activity for the quarter, but I’d like to remind investors that our strong and flexible balance sheet allows us to remain opportunistic with respect to potential M&A. Overall, we remain on track to hit our financial targets in 2023 as momentum in our ES segment offsets — continued to offset any declines in SKSS. Strong demand for ES is not abated and our favorable market dynamics supporting our profitable growth in all of our 4 business segment units. Growth in Industrial Services continued to be a meaningful contributor to our 2023 success as we move towards the fall turnaround season. Within our disposal network, our record backlog positions us well for the back half of the year. The project pipeline within the ES segment shows no sign of slowing as the pace of restoring picks up and government infrastructure spending is starting to make its way into the market. Given the trajectory we’ve seen through 2023, we continue to expect nothing short of a record year in our ES segment. Although it’s disappointing that some are driving — that the some are driver did not stabilize the pricing environment in SKSS, we have responded quickly to market conditions. We will continue to control costs across the business, particularly on the collection side while still ensuring that we have enough supply to maximize output at our re-refineries. In total, we are maintaining our adjusted EBITDA and adjusted free cash flow guidance for the year as we believe our ES segment will offset the slowdown in SKSS. With that, let me turn it over to our CFO, Eric Dugas. Eric Dugas : Thank you, Mike, and good morning, everyone. Turning to the income statement on Slide 9. As Eric and Mike outlined, Q2 was a strong quarter for us, with our ES segment again delivering exceptional results exhibiting continued profitable growth and exiting Q2 with significant momentum across many of our service businesses. Total revenues for the quarter increased $42 million with our ES segment growing $81 million to more than offset the lower top line figures for SKSS. Adjusted EBITDA was $287.5 million in line with the guidance we provided in May, but down from the $309.1 million we reported a year ago when we benefited from a much higher base oil pricing due to global supply disruptions. Our adjusted EBITDA margin was 20.6%, in line with our expectations. Gross margin was 32.2% reflecting our ability to offset inflation with appropriate price increases and cost savings while increasing productivity and realizing gains from operational efficiencies. SG&A expense as a percentage of revenue was 12% in Q2, consistent with our expectations. For the full year, we anticipate being in the low 12% range and essentially flat with 2022. The team continues to do a great job of offsetting inflation and wage pressures with cost mitigation strategies. Depreciation and amortization in Q2 increased slightly to $89.7 million again, consistent with our expectations given the addition of Thompson. For the full year 2023, we continue to anticipate depreciation and amortization in the range of $350 million to $360 million. Income from operations in Q2 was $189.8 million, largely driven by our strong performance in Environmental Services. Net income for the quarter was $115.8 million, resulting in a GAAP earnings per share figure of $2.13. Turning to the balance sheet highlights on Slide 10. Cash and short-term marketable securities at quarter end were $326.1 million, reflecting our decision to pay down the entire $114 million of debt that was outstanding on our ABL revolver. Given our strong current financial position, we thought it was prudent to lower our interest expense with some of the excess cash we had on hand. As a result of that action, we ended the quarter with debt of just over $2.3 billion. We remain very comfortable with our overall debt portfolio as there are no significant amounts coming due for a number of years. Leverage on a net debt-to-EBITDA basis as of June 30 was approximately 2x. And our weighted average pretax cost of debt at the end of Q2 was just over 5%, with approximately 85% of our portfolio being at fixed rates. Turning to cash flows on Slide 11. Cash provided from operations in Q2 was up 22% to $207.6 million versus $170.6 million a year ago. CapEx net of disposals was $121.5 million in the quarter, up from prior year, partly as a result of spend on our Nebraska incinerator project, which accounted for $22 million of our Q2 CapEx. In the second quarter, adjusted free cash flow was $86 million, which was right in line with our internal expectations and keeping us on track to hit our annual target. For 2023, we continue to expect our net CapEx to be in the range of $400 million to $420 million. Full year spend on our Nebraska incinerator is expected to be in the range of $85 million to $90 million. Having spent $35 million year-to-date and some major construction bases planned for the coming months. We are also continuing to make investments in both equipment and our transportation fleet with an aim to minimize third-party rental spend while accommodating the growth that the businesses need. During Q2, we bought back 36,000 shares of stock at an average price of $137 per share and a total cost of $5 million. We still have close to $100 million remaining under our existing authorized buyback program. Moving to Slide 12. Based on our Q2 results and current market conditions for both of our operating segments, we are maintaining our 2023 adjusted EBITDA guidance range of $1.02 billion to $1.06 billion with a midpoint of $1.04 billion. Looking at our guidance from a quarterly perspective. We expect Q3 adjusted EBITDA to be approximately 7% to 9% below Q3 of 2022 due to a challenging year-over-year comp for our SKSS segment, but offset by continued positive growth in our ES segment. I’ll now provide an updated breakdown of how we expect our full year 2023 adjusted EBITDA guidance to translate to our reporting segments. In Environmental Services, we now expect adjusted EBITDA at the midpoint of our guidance to increase 15% to 17% from the full year of 2022. Demand for a range of services, particularly in Industrial, and that our Disposal facilities continues to be very strong. As a reminder, our full year 2023 guidance for the ES segment includes $12 million of adjusted EBITDA attributable to the Thompson acquisition. For SKSS, we now anticipate full year 2023 adjusted EBITDA at the midpoint of our guidance to decrease in the 35% to 40% range from last year, reflecting the ongoing pressure on base oil pricing. In our Corporate Segment, at the midpoint of our guide, we now expect negative adjusted EBITDA to be up 7% to 8% in 2023. The slight increase from our prior guidance reflects some higher expenses that occurred in Q2, primarily relating to insurance programs and professional fees. Overall, the team is doing a good job offsetting items like higher insurance expenses, salaries and corporate costs related to the Thompson acquisition with cost savings programs. For 2023, we continue to expect to deliver adjusted free cash flow of between $305 million and $345 million. I want to remind everyone that this guidance includes approximately $85 million to $90 million for the new incinerator this year. If you add that spend back, the midpoint of our adjusted free cash flow guidance would be about $450 million. In summary, Q2 was marked by solid execution in both segments. Our ES segment delivered profitable growth above our expectations. In our SKSS segment, while the financials were less than anticipated, the team responded rapidly to declining market conditions and as Mike said, did a nice job controlling what they could. Looking ahead, we’re enthusiastic about our near and long-term prospects, especially in the ES segment, where there are numerous tailwinds. We have not seen a meaningful slowdown in any of our core lines of business. Our sales pipeline as we sit here today is larger than it was 90 days ago. We had a healthy outlook for the second half of the year for multiple reasons, including the backlog of waste in our facilities, the additional waste streams that we continue to see enter the commercial marketplace, the emerging PFAS opportunity that Eric spoke about, and the schedule of projects we anticipate commencing going forward. Our goal is to continue to capitalize on these positive market dynamics in ES while managing through the current downturn in SKSS while setting the business up for future growth as macro factors impacting SKSS stabilize. Overall, we continue to expect another solid year for Clean Harbors in 2023 as we work towards achieving our Vision 2027 goals. With that, Christy, please open up the call for questions. Q&A Session Follow Clean Harbors Inc (NYSE:CLH) Follow Clean Harbors Inc (NYSE:CLH) 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 Michael Hoffman with Stifel. Michael Hoffman : So you said all this in the call on your prepared remarks. I just want to make sure we emphasize it, all lines of business, not just technical services and not just incineration, saw growth in ES. And the pricing, is that spread across all of them as well? And or is it concentrated just in disposal? Eric Gerstenberg : Yes, Michael, this is Eric. Thank you for the question. Yes, the pricing is across all lines of business. We continue to push price for disposal, transportation, labor across all areas of our businesses and that continues to take effect. Mike Battles: Michael, going back, this is Mike to add on to what Eric said. If you think back a few years, it was incineration scarce. And so we get pricing bugs on pricing in our facilities, whether it be landfill, incineration, TSDS, what have you. What’s happened over the past couple of years is that they’ve been a switch and that getting qualified safe compliant labor is also very tough, getting trucks and equipment also very difficult. And that’s allowed us to drive price kind of beyond just incineration, beyond facilities. And you see that this quarter with a terrific results in the industrial side and the field termite that Eric mentioned in his prepared remarks. Michael Hoffman : And Historically, the turnaround business is a little stronger in the first half than the second half. Is there — is that pattern holding? Or is it reversed and that’s helping give you me that much more confidence about totally asked directionally. Eric Gerstenberg : It certainly gives us that confidence. But yes, the first half of the year was more turnaround than traditional. We had very strong turnarounds season for our industrial services. We expect that to continue, and it’s really reflective in the numbers of that business. Michael Hoffman : Okay. And then, of course, everybody’s got to ask this SKSS question, I won’t be the first one, I’m sure. How do you give the market confidence on what you think the bottom is and when you think about that bottom, can — is there enough data? I can’t find it, to tell you whether there’s a correction is done in the finished goods side of the market which is partly influencing this problem. There’s just too much finished good out there and the blenders are going. We don’t need to buy oil to blend to make finished goods? Mike Battles: Yes, Michael, this is Mike. I’ll answer that question. At the end of the day, we feel that the business — we did everything we could to kind of control the costs — control costs, drive blended guidance, drive down PFO pricing to CFO pricing, and the plants ran really well. And we’re executing on the strategy we talked about back in our Vision 2027 presentations back at the end of March. Was the bottom? Hard to say. Start — I think that the midpoint of the business it starts with 2 over the short term. And if prices are increasing, it’s in the mid to high 2s, if price is decreasing, it’s in the high ones and the midpoint of our guide today is in the 190 range, and that’s after 3-plus price decreases over the first half of the year. And I’m hopeful that with crude prices coming back a little bit over the past few weeks, we see base oil pricing increasing just as a modeling answer for the purposes of the back half of the year, we’re assuming base oil prices remain flat. And so I’m hopeful given the most couple of weeks that I’ve heard around crude prices coming back, maybe there’s a base oil price increase, which would certainly kind of help us kind of get back to the 2 numbers we talked about in [indiscernible]. Michael Hoffman : Okay. And just so you alluded to midpoint SKSS 190, that puts ES at like 1.11 if you’re landing at somewhere around 2.55 to 2.60 on corporate overhead. We did all that math. Mike Battles: And really to — so we can have — we’re happy to answer questions about SKSS all day to your point, Michael, we probably will. But the ES business continues to do incredibly well. As Eric said in his prepared remarks, the incinerators had challenges in April and into May. Again, we still delivered 140 basis points of margin expansion in the ES business. And if you look at the guide and make an estimate for revenue, our margins in the back half of the year for the ES business will be 150 to 200 basis points better than prior year. And as such, we really are very bullish on that business, and excited about the future. And I want to make this point on the call is that we gave our Vision 2027, Eric and I sit in front of the — sit in front of the investor community has talked about it. I’m more bullish about Vision 237 now than I was 90 days ago. And more importantly, our pipeline has not changed. Our pipeline still is stronger today than it was 90 days ago, which again, I’m really excited about. Operator: Our next question comes from the line of Noah Kaye with Oppenheimer. Noah Kaye : Yes, just a little bit more math that last year, ES was 75%, right, of EBITDA pre-corporate expense and this year, it’s going to be 85% or more. So I think I’ll focus on the 85%. Can we start with that PFAS commentary, maybe you can level set for us how much PFAS remediation revenue you’ve seen year-to-date and what’s in the 2023 guidance? And then can you kind of break up the PFAS opportunity into different chunks? Maybe you can talk about potential revenue just with DoD or the government, just different ways for us to wrap our heads around how big this could be for you over time? Eric Gerstenberg : Yes. No, this is Eric. I’ll take that question. First, I’d say that our pipeline of PFAS opportunities continues to grow. I’m not going to put any exact revenue number on it, but we can tell you confidently that the number of opportunities we’re seeing across the board is a large opportunity for us. And we have really total comprehensive solutions that we like to talk about. We’re doing sampling. We’re doing the analysis for our customers, we’re able to provide remediation — full remediation of sites and transportation and a full suite of disposal capabilities from treatment, treatment of groundwater, treatment of industrial water we can obviously provide landfill solutions with a closed-loop landfill of managing the [indiscernible]. And then finally, obviously, the incineration that we talked about. That’s really phenomenal study that came out, great release by the DoD to lift the moratorium. So the opportunity for us continues to be there. And as regulations will continue to come into effect throughout the course of this year and into next year. We’re optimistic. The team has seen a lot of opportunities from all of our customers in a number of different areas. And we think our total waste solution is unmatched in the industry, and it really continues to look like a good prospect for us. Noah Kaye : I appreciate that. Hopefully, you can put some numbers around it over time, but that sounds a beat. You also made reference, I think — yes, go ahead. Mike Battles: It’s pretty small this year. As Eric said in the prepared remarks, the EPA has to kind of put more kind of guardrails as to how Clean is Clean. But it’s a $40 million, $50 million opportunity this year. It’s not a needle mover per se. Noah Kaye : Appreciate that. And then you made reference to some of the IIJ funding starting to come through. That was, I think, $21 billion, right, of appropriated money for environmental remediation. So just how much of that do you think Clean Harbors potentially captures and kind of over what time frame? I mean, when we see some of the funding announcements already coming out of EPA. But I just want to understand how this impacts kind of the outlook for the year and maybe over a multiyear time frame. Eric Gerstenberg : Yes. No, I think that projection of the $20 billion of spending was over the course of 5 years, that a large part of that is go get for us to be able to perform the remediation services and be able to feed volume into our landfills and our incinerators depending on the characteristics. So a good chunk of that $20 billion, $21 billion is go get for us, go get for the industry, and we’re well positioned with all of the assets and great infrastructure that we have to be able to participate in a substantial part of that. Operator: Our next question comes from the line of Tyler Brown with Raymond James. Tyler Brown : Eric G. pricing incineration, it was awfully good. And if I’m not mistaken, it was on a really tough comp. So can you just talk about the outlook in terms of price and volume in that market? Because we have heard about some weakness in the Chem markets, the industrial markets aren’t exactly the best. So maybe the backlog is smoothing that out, but can you just give us any color there? Eric Gerstenberg : Yes. That’s right, Tyler. Our price and mix continues to be about 50-50. We have opportunity in the backlog of that generation that we built up throughout the second quarter to bring that into the third quarter and the fourth quarter as our incineration utilization improves. But we’re continuing to see — we’re not seeing any slowing of chemical pricing or no [indiscernible] there. We’re continue to be on the trend of increasing our pricing, taking advantage of the difficult to handle waste streams feeding a tremendous amount of volume into our incinerators of drums and direct burn streams. And we’ve also been leveraging our TSDF to handle a lot more volume and prep it for our incinerators. So that’s helping us well. But price mix continues to be in that 50-50 area, and we continue to be bullish about it. Tyler Brown : Okay. Perfect. And then it looks like ES margins were up. I think you guys called it out 140 basis points year-over-year. I mean, that’s very solid, particularly given that you’re now starting to lap tougher comps but if we were to take a walk and bridge that 140 basis points, what were the key drivers in there? Because I would assume that Thompson was actually dilutive to margins, but then maybe fuel was a good guide. Just any thoughts on kind of how you got there? And then was it more driven by pricing or cost control or a little bit of both? Eric Gerstenberg : Tyler, I’ll start, and then I’m sure my colleagues here will add on. The 140 basis points was driven by a number of things. You’re correct in your assumption about industrial, a little bit dilutive on that. But we have — we’re steadfast about driving price in every single one of our lines of business for labor, equipment materials and also taking costs out of the business. We’re focused on that. As mentioned in our discussion earlier in the call, we have a target of $100 million of cost savings, and we’re executing on that to continue to expand the margins. We’re also in the process of putting in a new system that’s going to help support our industrial services platform to squeeze more margin out of that business and get more billable hours on worksheets and get paid better for our services there. And all those things have cumulated together and what we saw in Q2, what we continue to see. And we continue to be, again, bullish on the outlook as we execute on the cost programs, execute on pricing, execute on efficiencies within our business, leverage our labor network, which I think is really powerful. The team has done a great job of sharing resources that industrial team from Thompson has played well into our core legacy industrial services to help support their work. So the sharing of assets, the sharing of people, both have all contributed to that increase. Eric Dugas: And I think, just to add on to some of Eric’s comments, this is Eric D. Again, I think you’re right, Thompson, probably a little anti-dilutive to that. But if I think about the hydrochem acquisition that we did and continue to integrate that into the platform, I think this year, we’re really seeing some better margins out of that business from a lot of the cost-cutting and labor management that Eric mentioned. So better use of internal folks rather than third parties. Reduction in rental costs that will continue to drive to the business. But certainly, that acquisition is proving to have been a good one for us at this point. And certainly, the synergies from that are contributing to the margin growth in ES as well. Mike Battles: Only thing I’d add. Eric said it well. The only thing I’d add is that the other thing that’s happened is turnover is down direct labor turnover is down 200 basis points from the beginning of the year and 500 basis points year-over-year. And that investment we made in people, and in our organization, I think, is a material impact on our margin because those — that turnover costs us a lot of money and that turnover coming down because the investments we made in benefits and people is starting to really pay some dividends, something we’re really proud of. Tyler Brown : And just my last one here. So I think you were at 26% in ES, and I get it, this is seasonally a strong quarter, but I think that was kind of the best since 2012 when you didn’t have as much lower margin field and Industrial Service work. So if we were to ” Kind of dream the dream.” I mean why couldn’t this business be a consistent 30% or a 30-plus percent margin business longer term? Eric Gerstenberg : Yes, Tyler. We’re — we think it can be. We’re going to continue to execute on all the programs across our businesses with the market positions that we have in industrial and field and large and small customers with Safety-Kleen Environmental and Small and Clean Harbors on the large, will continue to execute and drive towards that 30%, and we see that in our path. Operator: Our next question comes from the line of Jerry Revich with Goldman Sachs. Jerry Revich : I’m wondering if we could. I wonder if you could just talk about the free cash flow cadence over the course of this year and how to think about conceptually ’24. Obviously, an environment where equipment availability has been all over the map, et cetera. How should we think about the puts and takes around the free cash flow bridge ’24 versus ’23 outside of earnings and ultimately, any opportunities either from a timing standpoint or a free cash flow improvement standpoint ’24 versus ’23 compared to what we’re seeing this year? Eric Dugas: Yes, Jerry, it’s Eric Dugas, I’ll start here. And I think the first thing I would point out to is really strong free cash flow so far this year. We’re nearly $50 million ahead of where we were last year despite some real headwinds with kind of cash taxes we paid on last year’s profitable earnings. And also the increased CapEx that we pointed to, some of which or a lot of which is related to the Nebraska project. So really happy this year with where we are. I think we’re well on our way to hitting the target for next year. When I think about 2024 in puts and takes, obviously, we’ll have a little bit less, I think, being spent on the Kimball incinerator. So that’s why we always like to talk about CapEx, excluding that number, but we continue to go up. But long term, I think we are kind of targeting that free cash flow conversion kind of in the low 40% range and above is when you look at our long-term targets. And really think with the business and the margin expansion we’re seeing and many of the other long-term tailwinds that we’ve talked about today, that’s kind of where we look to long term. Jerry Revich : Okay. And separately, Safety-Kleen Sustainability Solutions had pretty good margin performance sequentially, good 2 points better than normal seasonality. It looks like that business might be bottoming and turning the corner just based on your performance there. Can you just talk about is that consistent with what you’re seeing. I know you took down the outlook, but it feels like sequentially, things are stabilizing. And if that continues, EBITDA for the business should be up 3Q versus 2Q, I think. Eric Dugas: Yes. I think that you’re right, Jerry. We did make a large shift from PFO to CFO in the quarter, which had a dramatic impact on our profitability. And I think that really tested the team and their ability to drive that — and still collect a record amount of gallons. So really kind of a great quarter by them. I’m hopeful that we’re there. Certainly, as we talked about it earlier, the model as base oil prices stabilizing and if it raises that probably a good guide to us in the back half of the year. Jerry Revich : And Mike, just given the complexity of transitioning from paying people to charging them. Was the exit rate significantly more positive than the full quarter average just because these types of initiatives, I think, take time to implement. Is that a fair characterization? Mike Battles: They absolutely did. They started with — they started — we started the quarter in a pay for oil, and we ended in the kind of mid-teens charge oil at the end of the quarter. Operator: Our next question comes from the line of David Manthey with Baird. David Manthey : The question on Industrial exposure. Has Clean Harbors disaggregated from trends in industrial end markets? And the reason I ask is you’ve got 2.5 years of decelerating ISM, it’s been below 50 the PMI for the last 9 months now but yet you continue to see excellent trends today and into the second half in your ES business. Just thoughts on cyclicality of the business today versus what you had in the past? Mike Battles: Yes, Dave, this is Mike. I think that there are definitely — I see your concern where market factors tend to go down. I think there’s more complex waste streams coming into the network, which results in us being able to charge more and handle them. And so not all Industrial production is weighted equally. I would say that the advent of electric battery manufacturing and other types of complex chemicals around air conditioning and other sets of chemicals in the marketplace that are really driving kind of more complex waste into our network as such, being able to counterbalance Industrial production trends you may be seeing in the macro environment. David Manthey : Yes. That’s great to hear. And second, on the PFAS outlook, I guess the EPA is signaling that they may not mandate enforcement against passive receivers of PFAS. And it sounded like that’s landfills and airports and municipal water systems and a lot of potential parties here. Are the enforceable situations and the self-policing that will go on in this industry, are those enough to realize the opportunity that you see in front of you today? Eric Gerstenberg : Yes. I’ll answer that, Dave. Eric here. The the enforcement, putting that aside, what I think the opportunity is, is regardless of past enforcement, there is a treatment that needs to happen, treatment and remediation. So that’s where the opportunity is. And they’re going to have lower discharge standards for water treatment and industrial streams and groundwater streams. And obviously, the remediation of the sites is going to fuel material into our incinerators and into our landfills. So that’s really where we see the opportunity. Operator: [Operator Instructions] Our next question comes from the line of Tobey Sommer with Truist. Jasper Bibb: This is Jasper Bibb on for Tobey. Industrial Services revenue was up 11% with Thompson. Longer term, how do you address the pricing and margin outlook for that business as you continue to build your market share through there? Eric Gerstenberg : Yes, Josh. Eric here. We continue to drive price on a pretty set cadence with all of our customers in the Industrial business. And as mentioned earlier, we also have a new platform that we’re rolling out to combine the systems for both in Thompson and the Industrial and those systems will really help us deliver electronic worksheets that allow us to capture any leakage that we might be able to see across the business. So that, combined with the efficiencies that we’re realizing in the business by leveraging the combined headcount leveraging the rolling stock, the assets, the people together, working together is all contributing to the expansion, the margin expansion of that business and we’ll continue. So we’re bullish about increasing the margins as we go forward by combining the businesses and getting more stickier and cross-selling. There was a couple of new lines of business that we acquired through the Thompson acquisition that we’re selling to our legacy HPC customers. So that’s powerful as well. And that whole sales team from the Thompson Industrial Group also recognizes the environmental lines of business that we can cross-sell into the customers there. So all those things combined contribute to improving our margins and improving our growth and stickiness with those customers across the board. Jasper Bibb: That makes sense. And then with respect to the SKSS guide, just to clarify, I think you’ve now fully adjusted your charge for oil there to align with demand conditions or would you expect to have to continue metering out those charges based on what you saw in July pricing? Mike Battles: Yes, Josh, we — I think we have set ourselves up for a decent back half of the year. We’re assuming pricing stays in our model, in our guide, pricing stay solid, and our yield loan pricing stays the same. So we’re not — so then we’ll adjust that yield on pricing like we did in the first half of the year. So I think we’ve done all the actions and we need to do, in my opinion, to kind of deliver on the numbers that are in front of us, assuming stable base oil price. Jasper Bibb: Got it. Last question for me on the DoD authorization of incineration for PFAS. Just on timing, do you have any sense of a time line for when federal RFPs for PFAS disposal contracts might materialize? Or is that, I guess, more dependent on what comes out from EPA? Eric Gerstenberg : We think, Josh, that we’ll see that over the next year or 2, the opportunities with DoD. We’re already working collectively with them in a number of different sites, a number of different opportunities, and we think that will continue to grow here. Operator: Our next question comes from the line of Jim Ricchiuti with Needham. Jim Ricchiuti : Thank you. How does you date announcement effect conversations you may be having in the market with commercial customers, other government bodies? Eric Gerstenberg : Jim, I would say that there are — there’s a strong set of customers that were involved in manufacturing into some of these PFAS compounds that I think they know well that incineration thermal temperature incineration is really a preferred method here. And I think that resonates as well with the DoD, our experience and our interactions with chemical customers and DoD based on the concentration in DoD of the AFFF that has shown contamination. Thermal temperature, high temperature, reference incineration, it seems to be a preferred method there in those high concentrations. And so we think that’s an opportunity for us. That’s why we really go back in time. we wanted to prove out through our testing that our incinerators is a great technology to effectively with 69s to stray that contamination and we think that there is a good audience, a solid audience that recognizes that, that is the best disposal method for highly concentrated contamination. Mike Battles: I would add, Jim, that the DoD lifting the moratorium kind of validated our study. And so I really believe that what it means in the back half of the year in 2024, as Eric said in his prepared remarks, to put a finger on that. But it really just continues to substantiate kind of our long-term business model that incineration is a safe and effective way to handle these forever compounds. Jim Ricchiuti : Got it. Now that’s why I was driving that. And just with — I may have missed it. Did you provide the Thompson contribution in the quarter? Eric Dugas: In the quarter, we didn’t provide it it’s mid-single-digit millions. Jim Ricchiuti : Got it. And just as we think about the second half of the year, on the ES side, you alluded to some of the benefits you’re seeing some improvement in turnover. How much more of a tailwind is pricing going to be in the second half versus the first half? And then just related to that, on the cost side, have you seen some moderation at all in the other cost pressures in the business. Eric Gerstenberg : Yes, Jim, we’ve certainly seen moderation really on the salary side across the workforce that’s moderating. Our pricing efforts will continue to outpace inflation. We continue to execute well on that. So we’ll — we have a comprehensive program across all of our business units to continue to drive price along with the efforts that as mentioned earlier on taking cost out of the business and continuing to get more efficient. So we will continue to execute on that plan. Operator: Mr. Gerstenberg, we have no further questions at this time. I would now like to turn the floor back over to you for closing comments. Eric Gerstenberg : Thanks, everyone, for joining us today. Management will be participating in a number of IR events in the coming months. We look forward to interacting with you further at some of those events. And please enjoy the rest of your summer. Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day. Follow Clean Harbors Inc (NYSE:CLH) Follow Clean Harbors Inc (NYSE:CLH) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Hyster-Yale Materials Handling, Inc. (NYSE:HY) Q2 2023 Earnings Call Transcript August 2, 2023 Operator: Hello and thank you for standing by. My name is Regina and I will your conference operator today. At this time, I would like to welcome everyone to the Hyster-Yale Second Quarter Earnings Conference Call. All lines have been placed on […] Hyster-Yale Materials Handling, Inc. (NYSE:HY) Q2 2023 Earnings Call Transcript August 2, 2023 Operator: Hello and thank you for standing by. My name is Regina and I will your conference operator today. At this time, I would like to welcome everyone to the Hyster-Yale Second Quarter 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. [Operator Instructions] I would now like to turn the conference over Christina Kmetko, Investor Relations. Please go ahead. Christina Kmetko: Thank you. Good morning everyone and thanks for joining us today. Welcome to our 2023 second quarter earnings call. I’m Christina Kmetko, and I’m responsible for Investor Relations at Hyster-Yale. Joining me on today’s call are Al Rankin, Chairman and Chief Executive Officer; Rajiv Prasad, President; and Scott Minder, our Senior Vice President, Chief Financial Officer and Treasurer. Yesterday evening, we published our second quarter 2023 results and filed our 10-Q, both of which are available on our website. Today’s call is being recorded and webcast. The webcast will be on our website later this afternoon and available for approximately 12 months. Our remarks that follow, including answers to your questions, contain forward-looking statements. These statements are subject to several risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements made here today. These risks include, among others, matters that we’ve described in our earnings release and in our 10-Q and other filings with the SEC. We may not be update these forward-looking statements until our next quarterly earnings conference call. With the formalities out of the way, I’ll turn the call over to Rajiv. Rajiv Prasad: Thanks Christi and good morning, everyone. I’ll start today by providing the operational perspective and some high level observations on our robust second quarter results and why they exceeded our expectations. I’ll conclude with some color commentary on our markets. Scott will follow with our detailed financial results and outlook, and then Al will conclude our prepared remarks with his strategic perspective and open the call for any question. Second quarter consolidated revenue increased by 22%, or $195 million year-over-year, while operating profit advanced by almost $75 million from a prior year loss. This large profit improvement was driven by product margin increases above our initial estimates. A better-than-expected product margins had several drivers. First, we experienced a favorable mix shift towards higher margin sales channels. Second, material costs were lower than anticipated. And finally, as supply chain conditions in the Americas continue to improve, we eliminated the first week of the planned two-week plant shutdowns at the end of June. The North American plant used this extra time to reduce inventory and backlog units and ultimately shortened lead times. This extra production week helped Americas increase shipments by 14% over the first quarter. These positive factors were more than offset the negative impacts from the challenges in sourcing certain critical components. Third-party component shortages and related production impacts continued to be a headwind, but have moderated compared to the prior years. Globally, our second quarter unit shipments increased nearly 10% year-over-year and sequentially. This was principally due to Americas supply chain improvements, partially offset by production shortfalls in our EMEA factories. While the environment has improved, many of our factories still experience production complications due to ongoing skilled labor shortages and shortages of critical components. These challenges resulted in several production lines falling below their planned second quarter rate increased targets. Looking ahead, we’re expecting improving production rates in both Americas and EMEA, but still below potential due to continued labor shortages. In Europe, ongoing component supply constraints are likely to negatively impact production rates in the third quarter. However, we’re expecting an improvement in the fourth quarter. Despite these ongoing production challenges, we anticipate improving production and shipment volumes as the labor and supply issues continue to abate in the second half of 2023 compared to 2022 and first half 2023 levels. In the second quarter, labor and certain material costs continue to increase compared to prior year levels, principally in EMEA, but the rate of increase slowed substantially. Forward economic indicators suggest stabilizing inflationary pressures throughout the second half of this year. On past earning calls, we have called out the combination of inflation and our aged lower-priced backlog as profit margin constraints. At the end of the second quarter, we have essentially worked through all lower-margin backlog units booked prior to price increases implemented in 2021 and early 2022. In the second half of 2023, we expect further stabilizing of material costs, improving production rates and higher-priced truck production. These benefits should drive increased lift truck gross margins compared to prior year, particularly in Americas and EMEA. We expect this improvement to continue into early 2024. We’ll continue to monitor our material and labor costs closely, including the potential impact from tariffs and competition and we’ll adjust pricing as needed to maintain momentum towards our long-term unit margin goals. Shifting to our global market views. The latest available market data shows that the first quarter of 2023, new unit volumes were down in all major geographies. This compares to strong first quarter 2022 levels. Our internal estimates suggest that the market decline accelerated in the second quarter with all major geographies experiencing booking declines compared with prior year. Looking ahead, we expect the full year 2023 lift truck market decline in all regions compared to the prior year. We anticipate this year-over-year decline to accelerate in the second half of 2023 in all markets. Despite this deterioration, market should remain reasonably strong in most regions when compared to pre-pandemic levels. Lift Truck bookings decreased moderately in the second quarter compared to both first quarter and prior year levels. A healthy but declining global market and our continued focus on booking orders with solid margins contributed to the drop. While our bookings decreased, we increased market share in the second quarter compared to the prior year as our strategic programs gained traction. Looking forward, second half 2023 booking levels are projected to be comparable to the prior year. This is due to a so far steadier-than-expected market and further market share gains. We remain focused on booking higher-margin orders. We will work to balance our pricing and booking rates based on production lead times on a line-by-line basis, all to maximize profitable growth and free cash flow over time. With the combination of the increased production and lower booking during the quarter, we reduced our backlog by 6% from the first quarter of 2023 and by 19% from the early 2022 peak. However, it remains well above optimal levels. We’re projecting our unit backlog and lead times to trend towards normal levels over time as our production rates increase and booking levels moderate. However, both are likely to remain above preferred levels for some time. Our focus on strong bookings margin and building the older lower-margin backlog units have led to higher average unit margins in our remaining backlog. In the second quarter, the average sales price for a backlog unit increased 23% year-over-year and 5% sequentially. We expect these positive year-over-year margin trends to continue for the remainder of the year and into the beginning of 2024 and support continued improvements in our financial results. While the global economic outlook remains uncertain, our current $3.6 billion backlog of higher-margin trucks, representing almost a full year of revenue, will support our remaining 2023 production schedules and those in the first half of 2024. This high backlog levels could also serve as a shock absorber if bookings declined more rapidly than expected. Before I hand the call over to Scott, I’d like to add a few thoughts on our working capital and overall cash performance. We remain focused on mitigating the continuing impact from our supply chain and manufacturing challenges, which have increased our inventory abnormally. We will diligently work to reduce our inventory levels and improve cash flows by tailoring production to available supply levels. While inventory levels remain elevated, they are now decreasing. We’ve got a strong team focused on how to make the most units in the shortest amount of time while maximizing the use of on-hand material. We are collaborating with our suppliers to minimize disruptions, ensuring an efficient and consistent flow of material. Labor and supply constraints remain and can cause isolated production shortfalls and inventory increases. However, we expect continued improvement in 2023 and in early 2024. We’re also working closely with our dealer partners to balance order and delivery timing with their customers’ needs. We’re committed to increasing our cash flow and maintaining adequate liquidity. Our teams are laser focused on mitigating the continuing challenges and we are making progress. Now, I’ll turn the call over to Scott to update you on our financial results and provide our financial outlook. Scott? Scott Minder: Thanks Rajiv. As noted, the overall business generated strong second quarter financial results well ahead of our expectations. These results added to our improving performance trend since returning to profitability in the fourth quarter of 2022. Starting with revenue, we reported $1.1 billion in second quarter sales. This marked an increase of 22% or $195 million over the prior year. This growth was driven by a 23% increase in lift truck sales, significantly outpacing the 10% shipment growth rate over the same period. We remain focused on selling a rich mix of trucks with pricing that reflects the value our products deliver to our customers. We’re working toward increased production and shipping rates as supply chain constraints lessen. In the second quarter, we shipped 27,700 units, increasing 10% versus both the first quarter 2023 and the prior year. As Rajiv noted, improved component availability allowed our North American factories to work through a portion of their planned summer shutdowns, increasing production and shipments versus expectations for the quarter. Second quarter bookings remained at a healthy level of 21,300 units but decreased by roughly 9% year-over-year and 5% sequentially due to slowing market trends. As a result of our elevated production and lower bookings, our backlog declined to 92,800 units at the end of the second quarter. This favorable decrease helps to improve lead times on key products, some of which remain longer than 12 months. Moving to earnings, the company reported second quarter operating profit of roughly $60 million. This compares to an operating loss of nearly $60 million. This compares to an operating loss of nearly $16 million in the prior year. Since the company’s return to profitability in late 2022, we’ve maintained cost discipline as we’ve steadily grown revenues. As a result, the second quarter’s operating profit improvement rate outpaced the revenue growth rate, resulting in a 38% rate outpaced the revenue growth rate resulting in a 38% incremental margin for the quarter. Second quarter net income and earnings per share were $38 million and $2.21 respectively. These compared to losses of $19 million and $1.15 per share in the prior year. I’ll spend the next couple of minutes covering the results by business which provide additional color to our consolidated results. First, the lift truck business generated a second quarter operating profit of approximately 63 million dollars on sales as just over $1 billion, resulting in a 6% operating profit margin. This compared to an operating loss of roughly $12 million last year. The substantial year-over-year improvement was due to a positive price to material and freight cost ratio, an improved sales mix, and additional volumes in the quarter. The positive second quarter pricing impact helps to offset accumulated net inflation from prior periods. It provides a buffer against projected labor cost increases and uneven material cost trends in certain products and geographies. While second quarter employee related costs were above prior year levels, it’s worth noting that overhead or SG&A costs stated as a percentage of sales were in line with the prior year. The lift truck business remains vigilant over its costs and continues to seek out more efficient ways to leverage its assets as the business grows. Turning to Bolzoni, the business reported an operating profit of $5.4 million in the second quarter, 59% ahead of prior year. Sales increased by about 12% over the same period. Revenue and profit growth were aided by price increased benefits and higher sales volumes. Like the Lyft truck business, the Bolzoni team controlled costs, particularly at their manufacturing sites. Nuvera’s second quarter 2023 operating loss increased by about $1 million year over year to $9.2 million. Elevated employee related and product development costs, including those for the larger, higher power, 125 kilowatt engine accounted for this change. Looking ahead to the balance of 2023, we expect our robust backlog of higher margin trucks to support significantly improved revenues and operating profits compared to the prior year. At the product level, we anticipate fewer component and labor shortages to drive increased manufacturing efficiencies. Ultimately, this should lead to higher lift truck and attachment production and shipment. At the cost level, we expect stabilizing material and freight inflation, the ongoing benefits from our cost savings programs, and pricing discipline to counter any additional inflation, including labor costs. Finally, our strategic programs, which Al will touch on in a moment, should further enhance margins as they mature. As Rajiv noted, we’re gaining traction with these initiatives, as evidenced by our improving market share. Breaking 2023’s second half into quarters, we anticipate a normal seasonal slowdown in the third quarter, largely related to July plant shutdowns around the globe. As Rajiv noted earlier, our North American plants worked the first week of their planned shutdown in June, benefiting the second quarter’s output. As a result, we expect third quarter operating profit and margins to decrease sequentially from the strong second quarter results. This is largely due to normal seasonal patterns and ongoing EMEA production challenges. Fourth quarter results are anticipated to increase meaningfully versus the third quarter, largely due to the absence of planned production outages and anticipated EMEA improvements. Moving to Bolzoni, we anticipate a modest revenue decrease in second half 2023 compared to the first half of the year due to a projected market decline particularly in EMEA. As a result, second half 2023 operating profit and margins are expected to moderate from the strong first half performance. Despite the sequential decline, results should significantly exceed the second half of 2022 due to Bolzoni’s ongoing margin improvement efforts. Finally, Nuvera sales are expected to increase in the second half of 2023 versus prior year due to booked orders from current customers. Anticipated sales growth benefits are likely to be moderated by higher costs. As a result, 2023 second half operating loss is expected to improve versus the prior year in first half 2023’s operating losses. Taking a longer term view, product demonstrations continue to ramp up and provide real-life testing opportunities. These lay the foundation for fuel cell engine technology adoption and improved financial returns. As Rajiv highlighted earlier, our second quarter financial results included progress on our cash focused objectives. We’re gaining momentum on our cash generation and working capital reduction efforts. Second quarter net debt decreased by 4% year over year to $477 million, largely due to working capital improvements. As we move through the second half of 2023, we expect our inventory optimization efforts to continue driving improved results. We ended the second quarter with available borrowing capacity of approximately $216 million above the first quarter’s level, in part due to a temporary revolving credit facility expansion to better accommodate current working capital levels. Despite the increased borrowing capacity, our second quarter debt level declined by 3% from the first quarter. As a result of our improved profitability and lower debt, financial leverage measured by debt to total capital decreased by 300 basis points versus the first quarter of 2023. In the second quarter, total inventory decreased by 4% or $35 million sequentially, while our days inventory outstanding metric improved by three days. Finished goods and raw materials inventories both decreased, aided by the additional North American production week. While we’re making progress, we remain focused on further working capital improvements. These include increasing inventory efficiency and reducing inventory days on hand as our production rates continue to rise. Before I hand the call off to Al, I’ll close by saying we’re focused on what we can control, namely our overhead costs, working capital, cash flows, including our capital expenditures, and our market positioning. We’re prepared to manage the factors that we can’t control, leveraging our extensive unit backlog to sustain our business should global demand be negatively impacted. We’ll keep you updated as the rest of the year unfolds. Now, I’ll turn the call over to Al for his strategic perspectives. Al? Al Rankin: Before I talk specifically about the business, I’d like to note the different executive titles Christi mentioned in her opening remarks. As part of our long-term succession planning, in May, Rajiv was appointed President and Chief Executive Officer of Hyster-Yale Materials Handling, our public company. In addition to this new role, he also continues to serve as President and CEO of one of our operating companies, Hyster-Yale Group. As part of this succession planning process, I have now moved to the role of Executive Chairman. Rajiv, in his new role, will lead the company’s operating and strategy activities. And I will support him with a particular focus in strategic matters, joint oversight of key staff positions and board leadership. I’d like to congratulate Rajiv on this new role. Moving now to Hyster-Yale’s earnings, you just heard from Rajiv and Scott that the first half of the year has gone very well and that we continue to make significant progress both operationally and financially, including working down our elevated inventory balances. Our second quarter earnings reflect the improvement profit quality of our robust backlog, and we continue to have reasonable bookings despite softening market conditions. Looking forward, we expect our second half 2023 operating profit and net income to be significantly higher than the second half of last year. However, seasonal plant shutdowns, ongoing production challenges in EMEA, and an anticipated shift in sales and channel mix are all expected to have an impact on the lower third quarter results Scott mentioned. That said, Rajiv did note that we’ve essentially completed the build out of the lower priced, lower margin backlog units held over from prior periods. As a result, we expect continued year-over-year margin expansion in the second half of 2023, particularly in the Americas and EMEA. This, in combination with our improving production rates is expected to generate substantial operating profit and net income for the 2023 full year. In this context, we’re anticipating solid progress toward our 7% operating profit margin goal and greater than 20% return on capital employed goal at both the Lift Truck and Bolzoni businesses. I would add a word of caution to this outlook. While the year has started strong and while we are maintaining our positive full year view, uncertainty certainly is a cautionary factor in several areas including fragile EMEA supply chains, continuing labor availability issues, stubborn labor, and other cost inflation and possible cost increases for some critical components. In that context, we will be proceeding carefully in managing our business in the second half of 2023. As a result of the operating initiatives that have been outlined by Rajiv and Scott, we expect a significant increase in 2023 cash flow before financing activities compared with 2022. And we expect this trend to continue in 2024. As our cash flow and liquidity improve, we’ll expect to reduce debt levels and invest in the strategic growth and efficiency programs that were slowed somewhat over the past few years. Executing our core strategies remains a key focus area. We continue to invest for long-term profitable growth. We’re making solid progress toward our long-term operating profit margin and return on capital goals at both the Lift Truck and Bolzoni businesses as we return to more normal operating conditions. We expect this trend to continue in the second half of 2023. Hyster-Yale’s strategies remain generally consistent with past descriptions, but I do want to provide a few key updates for each business. The Lift Truck business’s primary strategic focus continues to be on launching its new modular and scalable products globally, as well as on projects geared toward truck electrification and implementing advanced technology capabilities. We’re also transforming our sales process around an industry-focused approach that better meets our customer needs, and we’re working to further enhance our independent dealer capabilities. We believe we are making good progress on all of these programs. Our initial set of modular scalable lift trucks were introduced in EMEA and Americas markets in 2022 and we expect to introduce them to the JPAC markets during the second half of 2023. Over the longer-term, these products should reduce supply chain costs and working capital as well as better meet our customer needs. The hydrogen fuel cell powered container handler, which uses Nuvera Fuel Cell engines and is now being tested in the Port of Los Angeles, continues to perform well. The Lift Truck business is also developing an electrified fuel cell reach stacker for the Port of Valencia in Spain. In addition, Nuvera and the Lift Truck business are working jointly with a large German customer to provide two Hyster electric container handling vehicles. These vehicles include the first ever Empty Container Handler powered by Nuvera Fuel Cell technology and the first Hyster terminal tractor in Europe. Each of these trucks are expected to be delivered to their customers for testing in the second half of 2023. Our big truck group is also exploring options for other electrification projects, especially within the European Union. Bolzoni continues to work on streamlining and strengthening its operations as a single integrated operating entity. The company is particularly focused on increasing its revenues in America — and the Americas, while also more generally enhancing its ability to serve key attachment industries and customers in all global markets. In conjunction with this, Bolzoni is working to expand its broad industry sales, marketing, and product support capabilities. Nuvera continues to focus on placing 45 kilowatt and 60 kilowatt fuel cell engines in heavy-duty vehicle applications where battery-only products do not provide adequate solutions. These applications are expected to provide significant and nearer term fuel cell adoption potential. Nuvera is also focusing on developing a heavy duty 125-kilowatt engine, which can operate in more power-demanding applications. Nuvera has announced several projects with third parties in the past year, who are testing or planning to test Nuvera engines in targeted applications. These include the trucks being worked on with the Lift Truck business as well as marine applications in the Netherlands and bus applications in China. Additionally, Nuvera plans to launch modular fuel cell powered power generators for stationary and mobile applications. In summary, we believe the improving 2023 results are due to actions we’ve taken since COVID-19 pandemic began, the implementation of key strategies and projects we have in place, and significant process improvements made over the past few years. We believe all of these factors position our company for substantial longer-term growth. Our more mature lift truck and Bolzoni businesses are the foundation for this improvement, while the Nuvera fuel cell business has substantial growth prospects that have yet to be realized. We expect, in the remainder of 2023, to build on our progress to-date. We have more work to do in executing our key strategic programs to achieve our long-term goals. We believe that we have the right business structure in place with the right core strategies to achieve our strategic and financial goals over time. We’ll now turn to any questions you may have. Q&A Session Follow Hyster-Yale Materials Handling Inc. (NYSE:HY) Follow Hyster-Yale Materials Handling Inc. (NYSE:HY) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Christina Kmetko: Okay. Looks like we do not have any questions, we’ll close with a few final reminders. A replay of our call will be available online later this morning. We’ll also post a transcript on the Investor Relations website when it becomes available. If you have any questions, please reach out to me. You can reach me at the phone number on the press release. I hope you enjoy the rest of your day, and I’ll now turn the call back to Regina to conclude. Operator: This call will be available for replay beginning today in approximately two hours after the completion and will run through 11:59 p.m. Eastern Time on August 9, 2023. The number to dial to access the replay is 800-770-2030, or 647-362-9199. The conference ID number to access the replay is 82174. That will conclude today’s conference call. Thank you all for joining. You may now disconnect. Follow Hyster-Yale Materials Handling Inc. (NYSE:HY) Follow Hyster-Yale Materials Handling Inc. (NYSE:HY) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Imperial Oil Limited (AMEX:IMO) Q2 2023 Earnings Call Transcript July 28, 2023 Imperial Oil Limited beats earnings expectations. Reported EPS is $2.84, expectations were $0.88. Operator: Good day, and welcome to the Imperial Oil 2Q ’23 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to […] Imperial Oil Limited (AMEX:IMO) Q2 2023 Earnings Call Transcript July 28, 2023 Imperial Oil Limited beats earnings expectations. Reported EPS is $2.84, expectations were $0.88. Operator: Good day, and welcome to the Imperial Oil 2Q ’23 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Dave Hughes, Vice President of Investor Relations. Please go ahead. Dave Hughes: Thank you, and good morning, everybody. Welcome to our second quarter earnings call. I am joined this morning by Imperial’s senior management team, including, Brad Corson, Chairman, President, and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Sherri Evers, Senior Vice President of Sustainability, Commercial Development & Product Solutions; and Simon Younger, Senior Vice President of the Upstream. A cautionary statement, today’s comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release, and are available on our Web site with a link to this conference call. Today’s comments may also contain forward-looking information. Any forward-looking information is not a guarantee of future performance, and actual future performance and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described in further detail in our second quarter earnings release that we issued this morning, as well as our most recent Form 10-K. All of these documents are available on SEDAR, EDGAR, and on our Web site. So, please refer to those. So, I will hand it over to Brad and to Dan to go through their remarks. And as always, we will follow-up after that with a Q&A session. So, Brad, over to you. Brad Corson: Thank you, Dave. Good morning, everybody, and welcome to our second quarter earnings call. I hope everyone is doing well. Before addressing the financial and operating results for the quarter, I wanted to take a moment to talk about the serious wildfire situation in Alberta, and across many parts of the country that has been present now for over the past few months, and continues in many areas today. Our thoughts continue to be with the many communities that were and continue to be impacted by these fires and related evacuations. Throughout this challenging time, Imperial is working directly with communities to help address emergency requests, including donating safety equipment and personal protective gear to firefighting crews, ensuring local supplies of jet fuel for firefighting planes. And our employees are helping deliver items donated by the company, such as water and nonperishable food to those impacted by the wildfires, as well as the first responders. I’d also like to send a heartfelt thank you to all the emergency services that have been doing such a tremendous job in battling these fires, and providing assistance and support to the impacted communities. Now, let’s talk about our second quarter performance. The results we will talk about over the next several minutes are reflective of a quarter that included a significant level of planned maintenance at three of our major assets. And I’m pleased to say that all the work was completed safely and consistent with our plans. And while we still have major planned turnaround work ahead of us, in particular a turnaround at our Sarnia refinery and chemicals site later this year, we expect to see stronger volumes in the second-half, most notably in the Upstream. The second quarter also saw continued strength in a community price environment. While we saw some moderation in diesel cracks, motor gasoline strengthened, and crude remained relatively steady, while WCS prices improved; all in all, a positive environment for us as we move into the second-half of the year. So, now, let’s review the second quarter results. Earnings for the quarter were $675 million, with cash from operating activities of over $1.1 billion when excluding working capital impacts. These results are notable in that they demonstrate continued strong performance in a period where we were executing a significant amount of planned maintenance activity, both in the Upstream and the Downstream. In the Upstream, production in the quarter was 363,000 gross oil-equivalent barrels per day, reflecting the impacts of major planned maintenance at Kearl and Syncrude. I’ll talk about each asset in more detail in a few minutes, but I’m pleased to say that this work was executed as per our plans, and operations are now back to normal at these two assets. We still have some planned maintenance scheduled for the second-half of the year, but it is much less significant. And given our first-half performance, we are moving into the second-half of the year with confidence in the production guidance we have provided. Our Downstream business also performed very well. Refining throughput averaged 388,000 barrels per day, which equates to refinery utilization in the quarter of 90%. This reflects a very successful major planned turnaround at Strathcona, which is our largest refinery. Operations are back to normal here as well. We ended the second quarter with year-to-date utilization of 93%, which is right on our guidance for our refining business. While we do have another significant planned turnaround at our Sarnia facility in the second-half of the year which impacts both the refinery and our chemical operations, we are confident in our plans and ability to deliver on our full-year guidance. We have talked a fair bit about our priorities as they relate to greenhouse gas emissions reduction, both our own and those of our customers. And I have a couple of exciting updates on our efforts in this area. Our Kearl mining facility received its first shipment of renewable diesel for use in our heavy-duty truck fleet. And we passed a significant milestone with respect to our renewable diesel project at Strathcona as we began mobilizing key contractors to the site to begin facility construction work. On shareholder returns, in addition to announcing a $0.50 per share dividend this morning, in late June, we also announced the renewal of our normal course issuer bid under which we plan to repurchase 5% of our outstanding shares, which amounts to around 29 million shares. And as you would have seen in our earnings press release this morning, we have decided to accelerate the buyback program with the intention of having it completed prior to the end of this year. As you know, we have a long track record of shareholder returns, and this underscores our continued commitment to returning surplus cash to shareholders in the most effective and efficient way possible. With that, I’ll pass things over to Dan. Dan Lyons: Thanks, Brad. In the second quarter, we reported net income of $675 million, a decrease of about $1.7 billion from the second quarter of 2022, reflecting lower commodity prices and significant turnaround activity. Looking sequentially, second quarter net income, of $675 million, is down $573 million from the first quarter, mainly driven by significant turnaround activity in the Upstream and Downstream, and weaker Downstream refining margins, partially offset by recovering Upstream realizations. Now, looking at each business line, the Upstream reported net income of $384 million, up $54 million from the first quarter net income of $330 million, reflecting higher realizations partly offset by lower volumes mainly from the turnaround activity at Kearl and Syncrude. The Downstream’s net income was $250 million, down $620 million from the first quarter’s net income of $870 million, reflecting planned turnaround activity at the Strathcona refinery, and lower refining margins. Finally, our Chemicals business continues to demonstrate strong and reliable operational performance, with net income of $71 million in the second quarter, up $18 million from the first quarter. Moving on to cash flow, in the second quarter we generated $885 million in cash flows from operating activities, an improvement of about $1.7 billion over the first quarter, reflecting the absence of the income tax catch-up payment we made in the first quarter of around $2.1 billion. Excluding working capital effects of $251 million, cash flow from operating activities for the second quarter was $1.136 billion, down about $400 million from the first quarter. Photo by Zbynek Burival on Unsplash We ended the quarter with just under $2.4 billion of cash on hand. Going on to CapEx, capital expenditures totaled $493 million in the second quarter, up $179 million from the second quarter of 2022, and in line with our plans and full-year guidance of $1.7 billion. In the Upstream, second quarter spending focused on smaller projects to sustain and grow production, as well as progressing the in-pit tailings project at Kearl, and the SA-SAGD Grand Rapids project at Cold Lake. Grand Rapids remains on track to be completed on an accelerated basis by the end of this year in line with our previous updates about one year ahead of schedule. In the Downstream, second quarter spending focused on progressing our renewable diesel project at Strathcona. This project is planned to start up in 2025. Shifting to shareholder distribution, in the second quarter of 2023, we paid $257 million of dividend as Brad noted, in line with our longstanding commitment to return cash to shareholders. On June 27, we announced the renewal of our normal course issuer bid. This NCIB allows us to purchase up to 5% of our outstanding shares. While we started purchasing the shares relatively over a 12-month period, we plan to accelerate the share purchases and the finish the program prior to yearend. Lastly, this morning we announced the third quarter dividend of $0.50 per share payable on October 1. Now, I will turn it back to Brad to discuss our operational performance. Brad Corson: Thanks, Dan. So, now let’s talk about our operating results for the quarter. Upstream production for the quarter averaged 363,000 oil-equivalent barrels per day, which is down 50,000 barrels per day versus the first quarter. Coincidentally, this is also down 50,000 barrels per day versus the second quarter of 2022. But when adjusting for the sale of XTO, we are down around 35,000 barrels per day year-on-year. The slower production was driven primarily by the major turnaround work that was completed in the quarter at both Kearl and Syncrude, as well as some production and steam cycle timing impacts at Cold Lake. The turnaround work executed in the quarter was completed safely and as per plan. In the quarter, we saw WTI crude prices come down slightly versus the first quarter. But we also saw a material tightening of the WTI-WCS differential, resulting in overall bitumen realizations being up quarter over quarter. On the petroleum product side, we saw continued softening of diesel prices. But gasoline strengthened leading into the summer driving season. And as result, overall refining margins remained above mid cycle. So, now let’s move on and talk about Kearl. Kearl’s production in the second quarter averaged 217,000 barrels per day gross, which was down 42,000 barrels per day versus the first quarter and down 7,000 barrels per day from the second quarter of 2022. Production in the quarter was impacted by our annual planned turnaround which as I noted was completed on schedule and also on budget. With this work behind us, we are looking to a strong second-half of the year which we are already demonstrating. With July expected to come in at around 285,000 barrels per day, which is approaching our best ever July of 287,000 per day gross. This is in line with our full-year guidance of 265 to 275,000 barrels per day gross. Now turning to cash operating cost, while we saw an increase versus the first quarter due primarily to the planned turnaround activities, we also saw a decrease of about $3.50 per barrel versus the second quarter of 2022, a quarter where we also had a major turnaround. Year-to-date cash operating cost at Kearl are just over $26 per barrel, which is about $6.50 per barrel lower than the first-half of 2022. This is the trending cost we are expecting to see as we continue to work towards our target of sustainable unit cash operating costs at or below $20 per barrel at Kearl. And as for a quick update on our autonomous oil program at Kearl. As of the end of the quarter, 73 out of our 79 caterpillar 797 heavy haul trucks have been converted to autonomous. And the remaining trucks are expected to be complete by the end of the third quarter. I am also pleased to provide you with an update on the Kearl environmental protection order which has been a key focus area for us. In the second quarter, we completed construction work on the key mitigation efforts to expand the existing seepage interception system. These expansions included additional drainage structures, pumping wells, and vacuum systems. Now that construction is complete and systems are fully operating, our focus is on continuous monitoring and gathering additional data to ensure these mitigation measures are working as intended. Additional assessment work will occur in the coming months and will include additional delineation drilling work in the area to determine if any further mitigations are required. We will continue to engage with the local indigenous communities to provide updates. And we continue to provide access for site tours and independent testing. To date, there is no indication of adverse impacts to wildlife or fish populations in nearby river system. Nor risk to drinking water for local communities. I would also like to say again how deeply apologetic we are to our indigenous partners for this unfortunate situation. We are committed to rebuilding the trust we have lost. And as you can see, we have been working very hard to correct the issue and ensure that it does not happen again. As noted earlier, I am also very pleased to announce that at Kearl, we started using renewable diesel in the heavy truck fleet for the first time. This will allow us to demonstrate the suitability of lower emission renewable diesel for use in heavy equipment applications across our customer base. Moving to Cold Lake; Cold Lake production for the second quarter averaged 132,000 barrels per day, which was 9000 barrels per day lower than the first quarter. And 12,000 barrels per day lower than the second quarter of 2022. The lower second quarter production was mainly driven by production and steam cycle time which as you know is not unusual for Cold Lake since it is predominantly using cyclic steam stimulation technology. Even with a lower production in the second quarter, we remained within guidance on year-to-date basis, and therefore, expected to deliver full-year production of 135 to 140,000 barrels per day. This guidance reflects a relatively minor planned turnaround at Cold Lake’s Nabiye plant which is scheduled to take place in the third quarter with an annualized volume impact of around 2,000 barrels per day. Next, I would like to provide a brief update on Grand Rapids Phase 1. As you know, this is another key project that will impact our emissions reduction plan and focus on profitable production growth. So, I am pleased to say that the project continues to progress very well against the accelerated timeline we communicated late last year. All well pairs have now been drilled and completed. And construction is around 80% complete. The project remains on track with startup of steam injection expected later this year. Once fully online, the Phase 1 of the project is expected to produce around 15,000 barrels per day. And I would also like to address a recent issue at our Cold Lake Mahihkan plant where a flock of Canadian geese came into contact with oil in a lime process water lagoon. The 12 birds have been taken to a rehabilitation center where they have been assessed and are being cleaned and cared for. We are monitoring their status. And they are currently good condition. We provided an immediate notification to regulators and local communities, and continue to provide regular updates accordingly. Cleanup of the oil, which totals approximately 6 barrels, is nearly complete. And we have put additional measures in place to protect wildlife including surveillance, decoys, and flags as well as additional noise cannons. I am disappointed that this has occurred. And we will be making every effort to learn and apply any preventive steps that are identified. Now, a few comments on Syncrude; Imperial’s share of Syncrude production for the quarter averaged 66,000 barrels per day, which was down 10,000 barrels per day versus the first quarter and down 15,000 barrels per day versus the second quarter of 2022. The main factor in the lower production was turnaround timing. In 2022, Syncrude’s main planned turnaround began in the third quarter. This year, the timing was advanced with the planned maintenance starting on March 22, and continuing for 63 days. The turnaround went well and was completed on schedule. Syncrude also experienced some bitumen production issues related to poor weather conditions and unplanned reliability events which impacted production in the quarter. The Interconnect pipeline continued to add value to the operation, enabling around 4,000 barrels per day of SSP production from imported bitumen, helping offset the volume impact of the reliability events. Looking ahead to the second-half of the year, Syncrude has a planned hydrotreater turnaround scheduled to start in mid-August and continue into early fourth quarter running around 60 days. The expected impact is 12,000 barrels per day in the quarter. Now, let’s move on and talk about the Downstream. In the second quarter, we refined an average of 388,000 barrels per day, which was down 29,000 barrels a day versus the first quarter and down 24,000 barrels per day versus the second quarter of 2022, reflecting a utilization of 90%. Coming off a very strong first quarter, we entered into a major planned turnaround at Strathcona, our largest refinery. The turnaround started April 3 and continued for 57 days at a cost in line with the guidance we provided of around $120 million. The team delivered a safe and successful turnaround, executing a significant scope of work over a shorter period of time than in the past, a remarkable achievement. So congratulations to the team. Year-to-date utilization of our refinery sits at 93%, so we are right on track to deliver on our guidance of 92% to 94%. Also, please keep in mind that we have another large turnaround plan for the late third quarter and into the fourth quarter at our Sarnia site. This turnaround also includes the chemical plant and is expected to run for six or seven weeks with an annualized crude throughput impact of 9,000 barrels per day and a cost of around $165 million which includes the chemical scope. Finally, I’d also like to wish Strathcona Refinery a happy 75th anniversary. July 17 marks 75 years of operations at the facility, and while the facility has changed dramatically in that time, a few things have remained quite constant, being a safe and reliable operation, as well as a good neighbor to the community over those 75 years. Congratulations to the entire Strathcona team, past and present, and thanks to all of our business partners and stakeholders for your long standing support. I mentioned earlier that we’ve reached an important milestone with our Strathcona Renewable diesel project as we began mobilizing key contractors to the site to commence construction. The project is progressing well, with detailed engineering and equipment fabrication progressing as per plan. Currently, construction activities are focused on, underground infrastructure work and tank foundation installation. The project is currently on schedule for a 2025 startup. Petroleum product sales in the quarter were 475,000 barrels per day which is up 20,000 barrels per day versus the first quarter and down 5,000 barrels per day versus the second quarter of 2022. The increase versus the first quarter is reflective of typical demand fluctuations, and demand for all products remains stable with motor gasoline and diesel at around 90% to 95% of 2019 levels. Jet fuel demand continues to strengthen and remains above 2019 levels. I would also note that being able to continue to supply strong sales demand like we saw in the second quarter, even with our largest refining asset offline for planned maintenance is a testament to the detailed planning that went into the event. Our thanks go out to the team for managing this so effectively. On crack spreads, diesel margins softened quarter-over-quarter, but have leveled out and are now showing some signs of strengthening and are well within the five year band. Motor gasoline cracks strengthened throughout the quarter as we entered into the summer driving season and they also remained strong versus last year but currently at the top of the five year band. And that brings us to Chemicals. Chemicals delivered strong results with earnings in the second quarter of $71 million which is up $18 million versus both the first quarter of this year and also the second quarter of 2022. As mentioned, we have some major planned maintenance at the Sarnia site scheduled to start later in the third quarter. This includes the chemical facility, although sales are not expected to be materially impacted. One other item, I wanted to mention was a quick update on progress on the Pathways Alliance. Imperial continues to be actively involved in the Pathways discussions with the government regarding the fiscal policy and regulatory certainty which is needed to progress this critical project. Conversations to-date have been collaborative, productive and focused on a deeper understanding of our foundational project and working towards meeting due diligence requirements for the government’s financial support. We have also started to engage with indigenous communities, which is a high priority for us. Engineering and field work is also underway to support the regulatory application for the Foundational project expected to be filed later this year. So, a lot of work underway by the six member companies to progress this unprecedented project in support of Alberta’s and Canada’s Net Zero goals by 2050 for Scope 1 and 2 emissions. So to wrap up, this was a solid quarter, underpinned by successful execution of significant planned maintenance at three of our major facilities. This work was completed safely, on time and on budget, enabling us to minimize the impact of having the facilities offline. But we’re not finished. We have another large turnaround at our Sarnia facility, as well as a relatively small planned turnaround at Cold Lake and a planned hydrotreater turnaround at Syncrude. So, the focus will remain on executing this work as safely, efficiently and effectively as we did in the second quarter. And as we look forward to the second-half of the year, we are targeting a strong finish. We will continue to focus on shareholder returns, and as we announced this morning, we are accelerating our recently renewed NCIB with the intent of completing it prior to the year-end. And as cash balances allow, we will continue to evaluate additional opportunities to return excess cash to our shareholders. We will continue to focus on sustainability and make progress towards our emission reduction goals in a thoughtful and pragmatic way. Today we talked about a few milestones in pursuit of these goals, including progress in our renewable diesel project, receiving the first shipment of renewable diesel at Kearl for use in our heavy haul trucks, progress towards completion of Grand Rapids Phase 1 and continued work on Pathways. I look forward to continuing to bring you updates on these attractive opportunities as we continue to focus on maximizing the value of our existing business, while at the same time responding to the changing needs of our customers and communities. And a key priority continues to be improving our environmental performance and fully addressing the recent incidents at Kearl and Cold Lake. As always, I’d like to thank you once again for your continued interest and support. And now we’ll move to the Q&A session. So I’ll pass it back to Dave. See also 10 Most Cushioned Walking Shoes for Work and 10 Safe Haven Stocks Billionaires Are Loading Up On. Q&A Session Follow Imperial Oil Ltd (NYSEMKT:IMO) Follow Imperial Oil Ltd (NYSEMKT:IMO) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Dave Hughes: Thanks, Brad. We’ll jump into the Q&A session now. As always, we’d appreciate if you could limit yourself to one question plus a follow-up, and that just helps us ensure we can get as many questions in as possible. So, with that, operator, could you please open up the Q&A line? Operator: Thank you. [Operator Instructions] We’ll go first to Manav Gupta with UBS. Manav Gupta: Good morning, guys. We are seeing a very strong rebound in refining cracks all across U.S. You have a unique portfolio whereby you are levered to East Coast crack, Chicago cracks, as well as the West Coast crack. And you have a track record of actually capturing that crack. So, as we look at the second-half of this year, what’s the outlook for refining, given a very strong rebound in cracks, and that it looks like you’re running much harder than the first-half? Brad Corson: Yes, thanks for the question. And I think you characterized it quite accurately. We are in a unique position here in Canada with three large refining assets, both in the east and west part of the country. We’ve got well-established infrastructure network, and all of that system together, coupled with other integration with our Upstream gives us a unique competitive advantage, and allows us to fully extract value from the market. As we look to the second-half of the year, we continue to have a very strong view of the market. And certainly, our priority will be to capture that. We do have the large turnaround, as I mentioned a couple of times, but we think even with that we are still in a very strong position to finish out the second-half of the year. And, of course, those turnaround activities, both at Strathcona, the first part of the year, Sarnia the second-half of the year, position us to continue to operate not only in a safe manner, but a very reliable manner, and fully maximize the utilization of these assets going forward so we can respond to market demands. Thanks for that question. Manav Gupta: Perfect. My quick follow-up here is, on Kearl, help us understand some milestones and what we can look for as you try and bring that cost down towards your target of $20 per barrel? Brad Corson: Yes, thanks for the question. We’re quite encouraged by the progress so far this year with our cost structure. I commented on the autonomous haul trucks. Those continue to be a cornerstone of our cost structure, and so delivering on full autonomy adds significant value to us. We talked about the turnaround, now putting that turnaround behind us, but noting that we completed it in a very cost-effective way also contributes to our overall cost structure. And then there are several examples where we are fully leveraging technology to also improve our cost. And all of that speaks to kind of the numerator of the unit cost, but equally important is the denominator. At Kearl, we obviously have a large fixed cost investment out there, so the more volume that we can produce will drive our unit cost down. And so, I talked about our volumes performance for the first-half of the year. The first quarter was, you may recall, a record — yes, a record first for us. The second quarter, which I just discussed, was actually our second highest — well, together, between the first — I think it was our third-highest second quarter. When you put that all together, it’s our second-highest first-half of the year. On the heels of last year, our highest second-half of the year. So, the message being, we continue to set records at Kearl. And it’s that momentum that I believe is going to drive us to a very strong second-half volumes performance. And that will continue to drive our cost structure down to the $20 per barrel target that we’ve set. Manav Gupta: Thank you so much for taking my questions. Brad Corson: Yes, thank you......»»

Covenant Logistics Group, Inc. (NASDAQ:CVLG) Q2 2023 Earnings Call Transcript July 27, 2023 Operator: Welcome to today’s Covenant Logistics Group Second Quarter Earnings Release Conference Call. Our host for today’s call is Tripp Grant. At this time all participants will be in a listen-only mode. Later we will conduct a question-and-answer session. I would now […] Covenant Logistics Group, Inc. (NASDAQ:CVLG) Q2 2023 Earnings Call Transcript July 27, 2023 Operator: Welcome to today’s Covenant Logistics Group Second Quarter Earnings Release Conference Call. Our host for today’s call is Tripp Grant. At this time all participants will be in a listen-only mode. Later we will conduct a question-and-answer session. I would now like to turn the call over to your host, Mr. Grant, you may begin. Tripp Grant: Thank you, Jen. Good morning, everyone, and welcome to the Covenant Logistics Group second quarter 2023 conference call. As a reminder, this call will contain forward-looking statements under the Private Securities Litigation Reform Act, which are subject to risks and uncertainties that could cause actual results to differ materially. Please review our SEC filings and most recent risk factors. We undertake no obligation to publicly update or revise any forward-looking statements. A copy of the prepared comments and additional financial information is available on our website at www.covenantlogistics.com/investors. I’m joined on the call today by David Parker and Paul Bunn. We are pleased with our results for the quarter, which showed comparative resilience in the midst of a very soft freight environment. Consolidated freight revenue was down 9% compared to a very tough prior year comparable when the freight environment peaked. The decline related primarily to operating approximately 11% fewer weighted average tractors in our truckload operations and less overflow freight handled by our Managed Freight segment due to lower overall demand. Adjusted operating income fell approximately $12 million or 43% compared to the prior year quarter, primarily as a result of our Expedited and Managed Freight segments, which declined by approximately $7.5 million and $6.5 million, respectively, offset by an increase of approximately $2 million in our Dedicated segment. Adjusted net income decreased 44% to $14.4 million, and adjusted earnings per share decreased 34% to $1.07 per share compared to the year ago quarter. Weighted average diluted shares decreased as a result of our share repurchase program. Key highlights for the quarter include; all four of our business segments, including Expedited, Dedicated, Managed Freight and Warehousing, achieved sequential improvement in profitability in the second quarter; the acquisition of Lew Thompson & Son Trucking, Inc., a dedicated contract carrier comprised of approximately 200 tractors, specializing in poultry and live haul transportation. We have been pleased with the operational results to date and are excited about the growth opportunities that lie ahead. Within our combined truckload segments, operations and maintenance-related expenses declined on a cents per total mile basis by $0.06 or 21%. And fixed equipment costs, including lease revenue equipment, depreciation and gains on sale, remained flat compared to the prior year. The average age of our fleet at June 30 remained flat sequentially at 26 months compared to March 31, 2023, largely due to the equipment acquired from Lew Thompson & Son Trucking. For the remainder of 2023, based on our current equipment order, we anticipate sequential improvement to the average age of our equipment. Gain on sale of revenue equipment was $2 million in the quarter compared to $0.4 million in the prior year. Our TEL leasing company investment produced $0.29 per diluted share compared to $0.33 per share versus the year ago period. Our net indebtedness at June 30 climbed to $187.2 million in the quarter, primarily as a result of the acquisition, yielding a leverage ratio of approximately 1.7x and debt-to-equity ratio of 33.1%. On an adjusted basis, return on invested capital was 13% for the current quarter versus 17.6% in the prior year. Now Paul will provide a little more color on the items affecting the individual business segments. Paul Bunn: Thanks, Tripp. Taking a moment to dive deeper into what drove our results for the quarter, starting with our Expedited segment, freight revenue declined 7% compared to the prior year, largely due to a 6% reduction in the average fleet. Rates declined by just over 10%, but were offset by almost a 10% improvement in average total miles per truck compared to a year ago. The improvement in utilization was principally attributable to newer equipment in the fleet and reduced downtime. While we are pleased with the segment’s utilization improvement, we recognize that year-over-year freight revenue per total mile comparisons will continue to be challenging for the remainder of 2023. While cost headwinds from salaries and wages and fixed equipment costs compressed margins, they were somewhat offset with improvements to variable-based equipment costs for the quarter. Our Dedicated segment experienced an 8% reduction in freight revenue compared to the 2022 quarter as a result of a 217 or 15% reduction on the average number of total trucks, offset by an 8% increase in revenue per truck. Despite the addition of Lew Thompson & Son Trucking fleet, the overall fleet reduction in our Dedicated segment aligns with our strategy of exiting unprofitable or underperforming business and replacing it when opportunities arise that meet our profitability and return requirements. We were pleased with both the year-over-year and sequential improvement to the adjusted margin and expect to continue to improve upon this segment’s profitability over the long term. Managed Freight experienced a 21% reduction of total freight revenue and a 76% reduction in adjusted operating profit. The significant reduction in revenue and operating profit was primarily attributable to little to no overflow freight from our asset-based truckload segments. The brokerage environment remains highly competitive with numerous brokers aggressively competing for volumes at the expense of margin. We anticipate continued margin pressure in this environment. Our Warehouse segment saw a 37% increase in freight revenue compared to the prior year, resulting from the start-up of new customers during the previous 12 months. We are pleased with the top line growth we’ve achieved in this segment, and the team has done a phenomenal job in executing these start-ups, which are both intense and time consuming. However, despite the significant top-line growth in the segment, we’ve only seen about a 10% improvement in adjusted operating profit compared to the prior year. Although we’re pleased with the sequential profitability improvement within this segment, we will continue to focus on improving profitability at the mid single-digits through improved labor utilization and rate increases with existing customers. Our minority investment in TEL contributed pretax income of $5.4 million for the quarter compared to $7.1 million in the prior year period. The decline was largely due to reduced gains on the sale of used equipment compared to the year ago. TEL’s revenue in the quarter grew 11%, and pretax net income decreased by 26% versus the second quarter of ’22. TEL increased its truck fleet in the quarter versus a year ago by 210 trucks to 2,283 and grew its trailer fleet by 84 to 7,031. As a reminder, TEL focuses on managing lease purchase programs for clients, leasing trucks and trailers to small fleets and shippers, aiding clients in the procurement and disposition of their equipment through a robust equipment buy-and-sell program. Due to the business model, gains and losses on the sale of equipment are a normal part of TEL’s business model and can cause earnings to fluctuate from quarter-to-quarter. Our investment in TEL is included in other assets on our consolidated balance sheet and has grown to $66 million as of June 30, 2023, from our original investment of $4.9 million in 2011. In 2022, we received $14.7 million in cash dividends from TEL, and we are anticipating approximately $19.8 million to be received during the second half of 2023. As we enter the third quarter, we are optimistic that the trough of the freight cycle is behind us, but are cautious about the rate at which we’ll see improvements. Regardless of how the freight economy responds, our primary focus remains on the long-term by continuing to invest in areas that provide opportunities for us to make forward progress on our strategic plan. The acquisition of Lew Thompson & Son and our investments in new revenue-generating equipment, people, technology are examples of this. Thank you for your time, and we’ll now open up the call for questions. Q&A Session Follow Covenant Logistics Group Inc. (NASDAQ:CVLG) Follow Covenant Logistics Group Inc. (NASDAQ:CVLG) 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 today will come from Jason Seidl with TD Cowen. Jason Seidl: Thank you, operator. Gentlemen, good morning. I wanted to queue in on that last comment that you talked about in terms of the broader trucking industry. I’m with you guys that we’re sort of off the bottom here, but how should we think about pricing on a sequential basis? Because I’m still getting some feedback from some private truckers from some just really lowball pricing out there like paid in North Carolina at less than $1 a mile being offered. So how should we think about that at least in the near-term? Paul Bunn: Jason, here’s what I would say is we’re still seeing that, too. But as a reminder, most of our stuffs tied up under contract rates. So when we talk about continuing to see margin pressure in the brokerage, that’s really where we’ve got exposure to that. On the Dedicated and Expedited side, I don’t think we’re going to see any pricing pressure in the near-term. I think we’ll see what contract rates do next year. I think that’s probably will have the larger effect on us. And I think it’s probably too early to tell exactly what those are going to do next year. But yes, a lot of the stuff that’s out there in the spot market, I mean, it will negatively affect the brokerage a little bit, but it shouldn’t affect Expedited and Dedicated for the balance of the year. Jason Seidl: That makes a lot of sense. Also, you called out a little bit of gains on sale. How should we look at gain on sale going forward? And what does the equipment market look like? Paul Bunn: Let me talk about the market, and I’ll let Tripp talk about gains on sale. Used equipment market has just continued to precipitously drop. It dropped a little bit from January to March. But since March, it’s been kind of in a free fall. It seems like July maybe has kind of hit a little bit of a floor in the used equipment market, but March to July was a pretty big drop. Tripp Grant: Yes, I agree. And quite honestly, and this is just me speaking, I don’t see the used equipment market getting any better in the next six to eight months. It’s continue — especially when you look at the rate, it’s continue — it has dropped over the last few months. This is a — we’ve talked about this in previous calls, but this is a very heavy CapEx year for us. We’re — really, over the last year and a half, I would say, we’ve been really investing in upgrading the fleet, and we’re going to continue to do that, because we think it’s for the best. It provides an optimized way of operating the fleet for us both, I would say, on kind of the ongoing variable cost and I think that there’s some fixed cost benefits with uptime. But here’s what I would say. Going forward, yes, we do have more newer equipment. We’re not — you’re not going to see a lot of fleet count growth in the back half of the year, which means that we’re going to be selling a lot of equipment, too. So it’s just a matter of how much it continues to drop. I don’t think you’re going to see huge gains on sale in Q3 and Q4, may see a little bit, but I don’t think that anything — I also don’t think you’re going to see significant losses either. So it’s marginal, I would say. But we appreciate — we watch our depreciation on our equipment and make sure that we’re depreciating it adequately, and I think we’ll be okay there. Jason Seidl: Okay. That’s great color. Last one, and I’ll turn it over to somebody else here. Lew Thompson, you got about two-thirds of a quarter, looks like a good acquisition for you guys, getting you in a niche end market that you really weren’t in. When I was hosting some calls with industry people before earlier this quarter, a lot of them were talking about how there’s a lot fewer financial buyers in the marketplace for sort of smaller niche acquisitions. Do you foresee other opportunities for yourself down the road, because multiples have come in a little bit? Paul Bunn: Jason, here’s what I would say. A, I agree, there’s less financial buyers in the market; B, we’re always looking for those really niche, value-add, contractual-type businesses. And so we got to digest. Remember, we did AAT in February of ’22, and then we just did Thompson in April. So we got to digest. But any of that niche, good margin, contractual type businesses out there, yes, we continue to field calls and are — we’ll keep looking at stuff like that as it comes about. Tripp Grant: Yes. And I just want to — just adding to that a little bit is making sure that our balance sheet could absolutely support an additional acquisition, and it’s something we may look at in the future. But our main focus, whether it’s AAT or Lew Thompson, most recently Lew Thompson, is really focusing on learning that business and starting off, getting out of the gate on the right foot, which we have the first two months of — since we acquired them. But there’s a lot of executional risk at play with anytime you do something a bit different, I would say, or niche kind of, as Paul had mentioned. But we’re really focused on execution. We want to make sure we do those the right way. And I think we’ll reap benefits from those that we’ve already done in the future if we can kind of continue to refine that and make sure we’re executing at a high level. Jason Seidl: Well, thank you gentlemen. I appreciate the time as always. Tripp Grant: Thanks Jason. Paul Bunn: Thanks Jason. Operator: And our next question will come from Scott Group with Wolfe Research. Scott Group: Hey, thanks. Good morning guys. Can you just talk us through how you’re thinking about back half of the year from an earnings standpoint? Do you think we see further sequential earnings growth from Q2 into the back half of the year? What are the puts and takes? TrippGrant: Yes, I mean I don’t want to get into giving any sort of like defined guidance, but we feel like we’ve got — and you’ve probably read it in the release, I mean we’re optimistic about the back half of the year. We said that there’s, we feel like we’re at the trough of the freight recession, and part of that may be due to our model. We’ve got a lot of LTL customers in Expedited. We’ve got, if you look at 2Q, we’ve got just two months of Lew Thompson. We’ve talked earlier about the optimism about how well Lew Thompson is running out of the gate as well as some potential growth opportunities that may come to fruition later in the year and early next year. So I think I’m optimistic about being able to increase earnings sequentially in Q3. I think there’s a big question mark. Q4, there’s some downtime with the holidays and there’s a big question mark about peak, not that peak is a big part of our business, but last year, it was virtually nothing. And I’m just not sure how much that’s going to contribute this year in 2023. But yes, I think we’re bullish on the next half of the year for us. Paul Bunn: Yes, Scott, let me add one thing to that. I agree with everything Tripp said. I think the one thing to watch is with our reduced share count, a few things going in the right direction could really be accretive in the back half of the year. And one bad accident could pull it the other direction. I think that’s one of the things everybody has got to remember with this reduced share count is the earnings have a lot of leverage up, but you also — you have a bad accident or something, there’s a lot of leverage on the downside. So on the balance, I agree with what Tripp said. I think we’re optimistic about the back half of the year, and I think we can continue to improve earnings quarter-over-quarter. Scott Group: Okay, helpful. And then — so you just mentioned you got a lot of LTL customers. What are you seeing in the market right now in the last week or so as shippers are scrambling to leave yellow? How is this [indiscernible]? Paul Bunn: Yes. We’re fielding a number of calls in the Expedited division. As you know, we do business with practically every major LTL and freight forwarder in that division. And so we continue to field a lot of calls as people need some incremental capacity. And it’s probably maybe 5% growth on Expedited revenue during the quarter. I mean it’s definitely going to be a positive on Expedited in the third quarter. There was really none of that in the second quarter. So it should be a positive for Expedited in the third quarter and likely into the fourth. Scott Group: Yes. And then just lastly, you mentioned the increased sort of leveraged earnings because of the buyback. What is the plan with the buyback going forward? Are you going to be continuing to be aggressive with it? Do you pause it? How do you think about that? Tripp Grant: I mean, I can’t really give specifics. All I can say, I guess, with that is we do have an open buyback plan right now that has some parameters around it that the bank will repurchase based on those parameters. But here’s what I would say, I really like how we’ve deployed capital over the last couple of years, and buybacks have been a big portion of that. So I think that there are always going to be on the playbook, not saying that we’re going to buy back X amount of shares in Q3 or Q4, but I think as circumstances warrant, I think that there are always going to be the go to — a go to — potential go to in our playbook to activate as part of our capital deployment plan. We like them. We’ve seen benefits from them. The question is, as circumstances change, how do you reprioritize those types of things and decisions? And I think they’re always going to be there. And I think that you guys will probably see us think about it or talk about it and move forward with another one in the future when circumstances warrant. Scott Group: Make sense. Thank you guys. Tripp Grant: Thanks Scott. Operator: And our next question will come from Jack Atkins with Stephens. Jack Atkins: Okay, great. Good morning and thanks for taking my questions guys. Congrats on a great quarter. So I guess, just kind of going back to the LTL and sort of the Expedited comments there for a moment. How are you guys thinking about approaching deploying additional capacity into that market? I mean is it — you have some longer-term partnerships there. Is it really a function of looking to secure longer-term commitments for additional trucks that you’d be willing to deploy into that LTL line haul part of the market? Paul Bunn: Yes, Jack, you hit it. I mean we’re — I would say we’re — there’s a few trucks here, a few trucks there to a lot of folks. But for us to add a significant volume of trucks, it’s going to be with the folks that we have longer-term partnerships with. And so, yes, it’s the — as we move those trucks around, they’re going to be more heavily weighted towards folks that are willing to sign up for those on a longer-term basis and that have been part — we were partners with through the ’21, ’22 cycle, and they’ve been partners with us through this ’23 cycle. And so that’s how we’re going to allocate our resources on trying to grow these teams for them. Jack Atkins: But as you think about this from an investor perspective, I guess the point I’m trying to make there or the question I’m asking is, as you bring on new business there, this isn’t just a short-term sort of stop gap for some of these guys. This is potentially a longer-term sort of step-up in business activity with this particular part of your customer base? Paul Bunn: Yes. I think, we’ll keep a high percentage of whatever we add with these customers on a longer-term basis. Because to your point, they’re digesting this growth and their model is changing. And so, yes, we’re strategically trying to make sure where we grow the most is for people that’s going to be sticky. Jack Atkins: Yes. No, absolutely. David Parker: Because, Jack, keep in mind, about 55% to 60% of that Expedited revenues is on guaranteed contracts. Jack Atkins: Right. Absolutely. That makes — yes, that makes sense. David Parker: Yes. We — as Paul was saying, when we add these trucks, whatever we do that’s going on to those customers that have been partners to us, and we’re partners, and part of that partnership that we got are long-term agreements between us. Jack Atkins: Absolutely. And that’s paid dividends over the last couple of years, for sure. So I guess, David, good to hear your voice. I guess maybe would love to get your perspective as well in terms of just how you’re thinking about the cycle. I know you bring a lot of perspective to this. I guess, could you maybe kind of help us think about where we are in terms of coming off the bottom here? And as you sort of think about capacity and all the puts and takes, are you more or less optimistic about sort of where we’re headed from a cycle perspective over the next six months? David Parker: Yes. I was going to handle last week at a conference with the [indiscernible] insurance, but had a big carrier conference — carrier panel. And — because I think there’s two things happening. We went around the room, the last question on the panel was, when do you think — because the whole group was a bunch of smaller carriers, when do you think that things are going to get better and when that day is going to come? And the time, Jack, were anywhere from, I heard spring, I heard 12 months from now, I heard spring, I heard December. And I was the last one to answer the question on there because this is the way I do believe. And I believe that we’re going to fill it in September. I believe in the next couple of months for the trucking industry, truckload guys are going to feel capacity constraints. I’m not saying it’s going to be 2022 over again, but it’s going to feel better than the last 12 months that we’ve gone through. And it’s all because of — because I’m not sure about the economy. But capacity had left and is leaving our industry, added by the fact of what Paul said that’s happened on the used truck prices just in the last 60 days. It hurts, and it hurts right now. It hurts this month. But overall, it’s good because as capacity leaves, the pricing power will return, and the pricing will make up for whatever shortfall we’re disappointed in that we didn’t sell a used truck for. And that’s all happened over the last 60 days. So I really believe trucking will start sensing it in the next couple of months, a timing of capacity, as long as the economy at least kind of stays and hangs where it’s at today. Those are my thought. Jack Atkins: Okay. All right. No, I appreciate that. Maybe last question, long-term strategically. I mean, as you guys think about the way you’d like to have your mix of assets deployed within the truckload market, you’ve been investing more outside of the kind of traditional long-haul, over-the-road, highly cyclical parts of the truckload market into things like AAT, Lew Thompson & Son, longer-term commitments within your Expedited team business for LTL. How do you think about the long-term mix of assets between traditional OTR truckload, and it was more niche parts of the market that really removed the cyclicality and where you can really see kind of compounded growth? David Parker: I would say this. I would say that we’ve been on this journey now really in 2015 when we brought over Delta Airlines. I actually went to the Board and said, we’re going to change our company around. We’re not going to be this feed for famine and hope things get better tomorrow. We are going down another road. And so we started that in 2015. It really came into fruition in 2018 with the acquisition of Landair. It really came into fruition in 2020 when we shut down SRT in the over-the-road solo side of the Covenant business, and we got out of the solo business. And we’re really in the market of Expedited, Dedicated, Warehousing and Managed Freight. And Managed Freight is brokerage of TMS. And we are really looking at those four avenues. And as I look at the whole and at this is that we get two things got to happen. We got to bring value to the customer, but that customer has got to bring value to us. That’s going to be a two way street that we’re both bringing value because at the end of the day, if we’re not bringing value, if our customer is not bringing value, the relationship will eventually end. Something will happen. And we were just so tired over all those years, 35 years or 33 years or whatever it’s been of, okay, the market is up, let’s go increase rates 5%. The market is down, let’s give it all back. And our model today is not doing that, and it’s because we’re bringing value. Our Expedited side of our business, our teams, everybody doesn’t have teams, we’re one of the largest team providers out there. If you truly need teams, then pay me for what it costs me to operate these teams, and we’ll be there during the great times of 2022, the Expedited side. It’s not that they came in larger just on rate. They came in this last year, instead of 20 trucks, I think, 17. And we work with our customers on that. And we got to make sure that we’ve got a pipeline to be able to take care of the ones that give you back, and then the broker side is really filling the OTR side of our business. And as you know, brokerage is up and down and barges are up and down. But as long as we can — it’s a high ROI on that business. And so I’m very pleased with that, and then Paul talked about the Warehousing. But those are the four areas that we’re concentrating in. And those are the areas that we’re going to continue to build either through internal growth or through acquisitions, as you call it, niches and those kinds of things. So that’s what we love. We love something that’s hard and something that everybody doesn’t do and it brings value to the customer. So that’s our model. Jack Atkins: David, it looks like it’s clearly working. I’ll hand it over. Operator: [Operator Instructions]. And our next question comes from Barry Haimes with Sage Asset Management. Barry Haimes: Hi guys. Thanks very much. Good quarter. I had two questions. One is, David, I wanted to circle back on your comment about capacity leaving the industry. Is there — so when you look at your brokerage segment, you might be able to get a read on that in terms of all the carriers that you work with. So is there anything either numerical or anecdotal that you could talk about to flesh that out a little bit more? And then I had one other question, but go ahead. David Parker: Yes. I just want to say, on the broker side, yes, you can. And I would say the main thing that’s happened on the brokerage side is that the small carriers have reached a point that they’re not going no lower. And that’s what we have seen is that we can’t get the capacity for any lower rate than what’s out there. So it’s showing you that capacity is starting to tighten a little bit because the rates are not falling like they were. Barry Haimes: Got it. Okay. Thank you. And then the other question is on the asset-based businesses that, as you pointed out, are more contract, are most of those roll in the spring? And any feel for where contract rates are in the market now versus where they might have been six months or a year ago? Thanks. Paul Bunn: Yes, most of our stuff is in the spring. And I would say January to April is when most of the asset-based contracts reset. Pricing is probably down mid single-digits on — if you combine Dedicated and Expedited, I would say our pricing is probably down mid single-digits if you kind of weight those. I would say people that have more of OTR they able to say U Call We Haul type exposure, those are probably down a lot more than mid single-digits. David, any more color you want to add on that? David Parker: No, I agree. It’s bringing a bit next year when rate starts, then we start looking at rates again. And I agree with Paul on this thing. Barry Haimes: Great. And just one last quick follow-up on that. So looking at the cost side for next year, as we start thinking about next year. Are there any big puts or takes we should think about as we’re thinking about cost structure in ’24 versus ’23? Thanks. Tripp Grant: So on the cost side, I mean we’ve been pleased with what we’ve seen. And with a lot of the costs, we’ve been really laser focused, I would say, as an enterprise starting in the fourth quarter of last year, kind of seen. I think we — it’s safe to say we kind of first felt it pretty significantly in November of 2022. And as a response to that, we’ve been laser-focused on cost. And the enterprise as a whole has done a great job and just really focused on cost savings throughout the enterprise, whether in a business unit or a back office. And that being said, that can only go so far. But I think a big part of the success story of where we have seen success, I would say, is on the investment in our new tractors. And we’ve done a lot there. It was painful last year. We had to pull some trucks early and created some fleet disruptions and created some drag on the P&L and impairment charge. If you go back and read the Q4 release, it was a little bit muddy. But we are seeing improved fuel economy. We’re seeing improved maintenance costs. We’re seeing improved retention, because we’re in — it’s a different market, but we’d like to think of it that they’re in newer equipment, better equipment, and more efficient. And so our utilization has improved as well. So I do think that we’ll continue to see cost improvements as we continue to upgrade and reduce the average age of our fleet. Fuel is kind of a wildcard. It goes up one month and goes down another month. I think directionally, it’s going to be going down. But quite honestly, I don’t see a lot of reduction in wages. So it’s a little bit of a mixed bag. I feel good about our cost journey to date. But 2024, when we have that type of leverage, we squeeze and turn it pretty hard this year. And how can — do we have the leverage to kind of offset some of those costs? But it’s kind of a hard question to answer, because I think there’s some ups and downs in there. But we feel good about the things that we can control, and we’re really happy with what we’ve done to date. Barry Haimes: Great. Thanks very much. Good luck. Tripp Grant: Thank you. Operator: [Operator Instructions]. And it appears there are no further questions at this time. Mr. Grant, I’ll turn the call back to you for any additional or closing remarks. Tripp Grant: Yes, Jen, thanks so much. I just wanted to thank everyone for your time and participation today. We’re excited about the quarter, pleased with our results and are optimistic about the future. And we look forward to speaking with everyone next quarter. Thanks very much, and have a good afternoon. Operator: This concludes today’s conference call. Thank you for attending. Follow Covenant Logistics Group Inc. (NASDAQ:CVLG) Follow Covenant Logistics Group Inc. (NASDAQ:CVLG) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

General Motors Company (NYSE:GM) Q2 2023 Earnings Call Transcript July 25, 2023 General Motors Company beats earnings expectations. Reported EPS is $1.91, expectations were $1.85. Operator: Good morning, and welcome to General Motors Company Second Quarter 2023 Earnings Conference Call. During the opening remarks, all participants will be in a listen-only mode. After the opening […] General Motors Company (NYSE:GM) Q2 2023 Earnings Call Transcript July 25, 2023 General Motors Company beats earnings expectations. Reported EPS is $1.91, expectations were $1.85. Operator: Good morning, and welcome to General Motors Company Second Quarter 2023 Earnings Conference Call. During the opening remarks, all participants will be in a listen-only mode. After the opening remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, the conference call is being recorded, Tuesday, July 25, 2023. I would now like to turn the conference over to Ashish Kohli, GM Vice President of Investor Relations. Ashish Kohli: Thank you, Amanda, and good morning, everybody. We appreciate you joining us as we review GM’s financial results for the second quarter of 2023. Our conference call materials were issued this morning and are available on GM’s Investor Relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM’s Chair and CEO; Paul Jacobson, GM’s Executive Vice President and CFO; and Kyle Vogt, CEO of Cruise. Dan Berce, President and CEO of GM Financial, will also join us for the Q&A portion of the call. On today’s call, management will management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filing for the SEC. Please review the safe harbor statement on the first page of our presentation as the content of our call will be governed by this language. And with that, I’m delighted to turn the call over to Mary. Mary Barra: Thanks, Ashish, and good morning, everyone. Our operating results continue to demonstrate strong growth, thanks to an incredible customer response to our new trucks and SUVs around the world and strong execution of our business plan by the GM team, our dealers, and suppliers. Together we delivered $3.2 billion in EBIT adjusted in the second quarter, including an $800 million charge for new commercial agreements we have with LGE and LGES. The charge reflects the conscious decision we made during the Chevrolet Bolt EV recalled to serve our customers in ways that go beyond traditional remedies, and we’re taking new steps that will reduce our costs and improve our margins over time. We’ll provide more details about EV margin improvement and IRA benefits at the Investor Day in November. Our momentum is broad-based. Year-over-year, we have now delivered four consecutive quarters of higher retail market share in the U.S. and our total share was up almost one full point in the first half, with strong pricing and incentive discipline. We lead the U.S. industry in both commercial and total fleet deliveries calendar year to date. We now have led the U.S. industry in initial quality for the second year in a row. We are focused on strong cost discipline and we are taking additional steps to lower our capital spending. All of this impacts the bottom line, so we are raising our full year earnings, free cash flow, and EPS guidance for the second time this year. We now expect full year EBIT adjusted earnings to be in the range of $12 billion to $14 billion up $1 billion from our guidance. Adjusted automotive free cash flow is now expected to be up $1.5 billion in a range of $7 billion to $9 billion, and EPS is now expected to be in a range of $7.15 to $8.15 per share. The actions we are taking to be more efficient are also having an immediate effect on capital spending. We now expect capital spending in 2023 to be in the $11 billion to $12 billion range, which is about a billion less than the high end of our prior guidance, and we are working on more reductions. This guidance assumes that we successfully negotiate new labor agreements without work stoppage. Our results in our new guidance underscore the strength of our products today. Last quarter we talked about new vehicles we’re launching to support strong margins. All of them are connecting with customers. At the higher end of the pickup market, the GMC Sierra 84 and Denali models are now 70% of heavy duty retail sales. Premium models also account for more than 70% of sales for the new GMC Canyon mid-sized pickup. For the Chevrolet Colorado, our high performance off-road models, the Z71 Trail Boss and ZR2 represent more than half of retail sales. The new Chevrolet Trax is also off to a very fast start and it’s driving solidly profitable growth. In the U.S., we delivered more than 20,000 Trax in the second quarter and we expect that to keep growing. Half of these customers are new to General Motors. All of these new vehicles help us deliver more than a $1,600 per unit increase in the ATPs U.S. compared to first quarter, with flat incentives and essentially flat inventory. We have the largest ATP increase in the industry by far. The other growth products I highlighted last quarter is Chevrolet Montana in South America and the tracks in Korea also continue to build momentum. The Montana is our first compact pickup for the Brazil market and in just four months it has earned one third of the segment. We’re now expanding distribution to other markets in South America. In Korea the Trax is an unqualified success just like it is in the U.S. Pricing is strong and has earned more than 50% market share in its segment and two thirds of the customers are new to GM. These hits in the great work the team has done on cost have us on track to deliver significantly higher EBIT adjusted in GM International this year excluding China equity income. Looking ahead we have several launches and growing segments around the world that will keep our momentum going. In North America these include the 2024 Chevrolet Traverse, which we revealed earlier this month. It goes into production in Lansing, Michigan late this year. In the EV market, we achieved our target to produce 50,000 electric vehicles in North America in the first half. About 80% were the Chevrolet Bolt EV and EUV platform, but the Ultium platform production is increasing. We’ve had more than 2,000 customer reserve GMC Hummer, EVs and Cadillac LYRIQ in transit to dealers at the end of June. With both cell and vehicle production increasing, we continue to target production of roughly 100,000 EVs in the second half of the year and will continue to grow from there. Demand for our EVs remains very strong because the Ultium Platform is purpose-built for electric vehicles and it does not force customers to compromise on style, performance, utility, range or towing. We have experienced unexpected delays in the ramp because our automation equipment supplier has been struggling with delivery issues that are constraining module assembly capacity. We are working on multiple fronts to put this behind us as quickly as possible and things are already improving. For example we have deployed teams from GM manufacturing engineering to work on site with our automation supplier to improve delivery times. We’ve also added manual module assembly lines and we’re installing more module capacity at our North American EV plants beginning with factory zero and spring hill this summer; Ramos Arizpe in the fall and CAMI in the second quarter of next year. And to address pent-up demand among our Hummer EV customers, we are planning to increase second half production by thousands of units. In the meantime Ultium Cells LLC is delivering great quality and production is ahead of schedule. Looking ahead the next phase of our EV acceleration is coming into sharper focus. For example we have now secured more than half of our 2030 direct sourcing target for many critical raw and process materials we need with significant on-shoring. During the quarter, this included an expansion of our Cathode Active Material joint venture in Canada and an investment to bring manganese sulfate processing to a new facility in Louisiana. As with other recent announcements, these agreements provide us with significant off-take and favorable commercial terms, which is a key component of the EV margin improvement strategy we outlined last quarter. Now let’s talk about fixed costs. Due to the success of the $2 billion fixed cost reduction plan we announced earlier this year, we have identified another billion in fixed costs that we will deliver over the same 2023 to 2024 timeframe. This new action will offset about $1 billion in depreciation and amortization, which means that relative to 2022, our automotive fixed costs will be down $2 billion on a net basis as we exit ’24. Key components include about $1 billion from the voluntary separation program, another $800 million in reduced sales and marketing expense and the remainder coming from significant reduction in all areas of the business, including engineering expense, travel, and administrative costs. We’re not done by any stretch. Mark and I have asked Norm de Greve, our new Chief Marketing Officer to take a fresh review of our spending and put us on a course to deliver world-class levels of marketing efficiency. Our product teams are also embracing a strategy we call winning with simplicity that will reduce design and engineering expense, supplier cost, order complexity, buildable combinations, and manufacturing complexity. For example, our teams are applying even greater discipline around our color and trim pallets, the way we package features and options and reuse. For our EV and ICE vehicles, we are targeting a 50% reduction in trim levels through a smart bundling of customer features and options. This results in fewer part numbers to simplify marketing, engineering, manufacturing, while maintaining the best features customers want. Yet we are maintaining market coverage for all major segments and price points and the U.S. will compete in ICE and EV segments that represent about 90% of the industry volumes in 2030. Our next generation full-size pickup and SUVs will show just how powerful winning with simplicity will be. We are investing significantly less capital and expect to deliver vehicles that will have much higher levels of customer-facing content and even better margins than today. Another great example of a capital efficient program is the next generation Chevrolet Bolt that we plan to execute. Our customers love today’s Bolt. It has been delivering record sales in some of the highest customer satisfaction and loyalty scores in the industry. It’s also important source of conquest sales for the company and for Chevrolet, more than 70% of customers are new to GM. We will keep some momentum going by delivering a new Bolt that delivers what customers have come to expect, which is great affordability, range and technology and we will execute it more quickly compared to an all-new program and with significantly lower engineering expense and capital investment by updating the vehicle with Ultium and Ultifi technologies and by applying our winning with simplicity discipline. We will have more details to share soon. Now, before we move to Paul’s comments and Q&A, I’d like to invite Kyle to update you on the important steps Cruise has taken to scale its business and make it profitable. So, Kyle over to you. Kyle Vogt: Thanks, Mary. We are halfway through our first year of rapid scaling and it’s going extremely well. We’re on a trajectory that most businesses dream of, which is exponential growth, driven by continuous improvement, engineering innovation and solid product market set. Our formula for driving this growth is quite simple. Number one, we increase the supply of vehicles. Number two, we increase the service availability, some more people can use it and number three, we would make the product awesome. So let’s talk about how we’re doing on all those and get into the numbers. On the supply side, we recently hit 390 concurrent driverless AVs. We believe this is the largest and fastest growing AV fleet in the world. Yet you will see several times this scale within the next six months. This is all on the Bolt platform, which we can scale the thousands of AVs, but we’re also about to transition to origins, which are a game changer for cost and are incredible to write in. And today, I’m pleased to share that our test vehicles are already running in driverless mode on public roads in multiple cities. And we are confident in our regulatory and permitting paths despite this being the first time a major OEM has manufactured a vehicle without traditional controls. As a result, we believe we’re the only AV company with a well-defined and significantly de-risk path to reach billions in revenue. On the second item, availability, we’re rapidly expanding cities, hours and service area. As very recently, we now operate a significant portion of our San Francisco fleet, 24×7 across the entire city. We’ve expanded geofences and hours in Austin and Phoenix, and we plan to expand significantly in the next 30 days. Lastly, we’ve done the prep work and we’ll launch commercial service in two or three more cities in the next 12 weeks alone, bringing us to as many as six commercial markets with several more following shortly after. All the critical ingredients, things like mapping, ground infrastructure, validation, user acquisition, etcetera, have become several times more efficient as we move from city to city. On the third, making the product awesome, we have over 85,000, five-star reviews in San Francisco alone. People love the product and it gets better every month with each new software update. And based on data from tens of thousands of users across multiple cities, it’s clear to us now that demand will greatly exceed supply for several years, and this gives us margin opportunity and a potential to be a head of plan on revenue growth. Now that is rapid scaling. I’ll share a few additional data points before we move on. Cruise cracked three million miles just 49 days after hitting two million miles, and the next million is going to be even faster. We’re now doing over 10,000 rides per week, but more importantly, we’re growing rides at 49% per month on average over the last six months. 28-day user retention is nearly at the level of a fully matured human ride-hill service, and it continues to turn upwards. The product is extremely sticky despite the limitations in hours and service availability that exist today. All of that scaling is occurring while also improving safety and driving down costs. Let’s take a look at those. Safety continues to improve despite increasing complexity. Our analysis of the first million miles shows AVs experience 54% fewer collisions than human drivers in similar environments, and 92% fewer with AV was the primary contributor. In other words, the vast majority of collisions are caused by inattentive or impaired human drivers, not the AV. And we expect a gap between human and AV performance to get much wider over the next 12 months. On the cost side, we’re seeing ideal trends. Our operational cost per mile travelled has gone down by an average of 15% per month for the last six months, led by optimizations and infrastructure, process improvements and automation. Our fixed cost due to machine learning training and simulation are also decreasing over time due to better simulation techniques and investments in efficiently, but most exciting is the step function improvements in cost, we will see as our newer vehicles and AV architecture is launched, due to having a much longer service life, the origin significantly reduces our cost per mile. We also have an optimized sensing and compute architecture in late stage development that costs about 75% less than what will be on the very first origins. It’s the first time Cruise’s custom chips will hit the road, which we expect before the end of next year. As our fleet rolls over to this architecture, we’ll start to see costs head below $1 per mile, the magic threshold at which robots actually become cheaper for most people than owning a car. Lastly, we have something else that’s fed in the works for a few years that is highly disruptive to the already highly disruptive AV industry, more on that later this year. So putting you things together, it’s clear now that Cruise is no longer a science project. There was one significant risk in reasons to doubt, but it’s now a rapidly growing business with a transformational product in a multi-trillion dollar TAM. We’ve made incredible progress in Q2 over Q1, and I’m excited to continue that momentum in the months ahead. We’re truly just getting started. Back to you, Mary. Mary Barra: Thanks, Kyle, and thanks for sharing the progress that the Cruise team is making is just incredible. So, before we move into Paul’s remarks, I’d like to address our negotiations with the UAW, which just kicked off and with Uniform. First and most importantly, I want to say how proud I am of our talented and experienced manufacturing workforce. There’s a direct connection between their hard work and our success, and we have a great future ahead of us. As we’ve talked about today, the future includes continued investment in strategic ICE vehicles, like the full-sized trucks, full-sized SUVs, and mid-sized SUVs. Our future also includes retooling existing assembly plans and upscaling the team as we transform the company to grow rapidly in EVs. We have a long history of negotiating fair contracts with both unions that reward our employees and support our long-term success of the business. Our goal this time will be no different. That’s the best possible outcome for all of our employees, plant communities, dealers, suppliers, and investors, and we look forward to constructive talks. So, thank you and now let me turn the call over to Paul. Paul Jacobson: Thank you, Mary, and good morning, everyone. Thank you for joining us. I’d like to start by thanking the team for their collaboration on delivering yet another quarter of strong results, and consistently meeting or exceeding our financial targets. At the same time, we are growing the business with four consecutive quarters of year-over-year U.S. retail share growth, and stable incentive spend. The core auto-operating performance continues to fuel the results and fund investments to drive growth in our business, with Q2, even adjusted of $3.2 billion, including the $800 million charge from the LG agreements. We also generated a 7.2% EBIT-adjusted margins, including a 180 basis point headwind from those LG agreements. Aided by a strong consumer and a robust product portfolio, we are raising guidance for the second time this year, driven by great products, successfully balancing supply with demand, and proactive cost management. We have made bold commitments, and to achieve them, we are focusing on a solid foundation. As Mary mentioned, we are well along our way to achieving the $2 billion automotive fixed cost reduction. We are also announcing another $1 billion fixed cost reduction to offset higher depreciation and amortization from the significant manufacturing investments we have been making, and our ICE and EV portfolios. This expands the impact of the plan with the only automotive fixed cost excluded being the lower pension income, a non-operating non-cash item. The product simplification initiatives are expected to have incremental benefits in the years to come, as we refresh future ICE products and transition to EVs. We are also taking a capital-efficient approach to our growth initiatives. For example, we have a profitability-driven strategy towards selectively re-entering Europe, and we recently announced a collaboration with Tesla, the double access to charging for our customers without much incremental investments. Community, these factors, along with a reduction in headcount, marketing spend, and overhead costs, will result in us realizing about a $1 billion of year-over-year fixed cost savings in 2023, with most of this benefit coming in the second half of the year. Getting into the Q2 results, revenue was $44.7 billion up 25% year-over-year driven by supply chain improvements and stable pricing. Wholesale volumes year-over-year were up 20% in Q2 and 12% year-to-date. For the full year we now anticipate being towards the high end of our 5% to 10% guidance range. We achieved $3.2 billion in EBIT adjusted, 7.2% EBIT adjusted margins and $1.91 in EPS diluted adjusted. Total company results were up $900 million year-over-year driven by supply chain improvements versus Q2 2022, but more importantly, we also had a combined $1.4 billion of headwinds from the LG agreements, lower pension income and lower GM financial earnings. ROIC was above our 20% target, demonstrating consistently strong and improving core operating performance. Adjusted auto-free cash flow was $5.5 billion up $4.1 billion year-over-year, driven by improved supply chain conditions and higher earnings year-over-year. During the quarter, we repurchased $500 million stock retiring another $14 million shares bringing the 2023 total to $865 million and 24 million shares retired. We expect our strong balance sheet and cash flow to support continued share repurchases as part of our capital allocation framework moving forward. North America delivered Q2 EBIT adjusted of $3.2 billion up $900 million year-over-year and EBIT adjusted margins of 8.6%. The strength of the product portfolio supported market share growth, higher ATPs and again stable incentives. North America performance was impacted by $700 million of the LG agreement charge, which was a 190 basis point headwind to margin in the segment. We’ve seen two consecutive quarters of higher warranty related costs, an area we’re monitoring very closely. The fundamental quality of our vehicles remain strong as evidenced by the JD Power ratings, however inflationary factors have increased the cost to repair vehicles and we’ve also seen incremental expenses associated with the recent ARC airbag inflator recall. Total U.S. dealer inventory was 428,000 units at quarter end, essentially flat from last quarter. Inventory on dealer lots of our new and most in-demand vehicles continue to run at around 10 days, including our full size SUVs, the all new Colorado and Canyon mid-size trucks, the Chevrolet Trailblazer and the Chevy Bolt. We are still targeting to end 2023 with 50 days to 60 days of total dealer inventory, although seasonality, production schedules and timing of fleet deliveries may take us out of this range from time to time. Supply chain and logistics challenges are trending in the right direction, however there are ongoing logistics congestion and industry wide railcar capacity shortages that we continue to take actions to mitigate. GM international delivered Q2 EBIT adjusted of $250 million, largely flat year over year. China equity income was $100 million up $150 million year-over-year as we lapped the COVID shutdowns in Q2 of 2022 and aggressively took actions to help offset industry challenge. I’d like to thank the China team for their tireless efforts and perseverance through multiple years in a challenging environment. EBIT adjusted in GM International excluding China equity income was $150 million, down $150 million year-over-year, driven by a $100 million charge from the LG agreements and $150 million of mark-to-market gains recorded in the prior year. Absent these items, the results would have been up year-over-year with price increases more than offsetting FX headwinds due to the strength of the product portfolio, a trend we expect to continue in the second half of the year. GM Financial delivered EBT adjusted of over $750 million down close to $350 million year-over-year in line with expectations and primarily due to a higher cost of funds and lower net leased vehicle income, partially offset by increased finance charge income from portfolio growth and a higher effective yield. GM Financial’s key metrics, balance sheet and liquidity remain strong providing them the ability to support the GM enterprise and our customers across economic cycles. As a result, we are taking our full year EBT adjusted guidance up to the $2.5 billion to $3 billion range. Corporate expenses were $350 million in the quarter down $400 million year-over-year, primarily due to differences in year-over-year mark-to-market changes in the portfolio. Cruise expenses were $600 million in the quarter, up $50 million year-over-year, driven by an increase in operating spend as they continue to expand operations successfully. As we look forward, due to the strong Q2 core performance and outlook, we are again increasing our full year guidance to EBIT-adjusted in the $12 billion to $14 billion range, EPS diluted adjusted to the $7.15 to $8.15 range and adjusted automotive free cash flow in the $7 billion to $9 billion range. Most of the underlying assumptions in our guidance remain unchanged from Q1, with stronger pricing, the main driver behind the increased outlook as we foreshadowed. In addition, we expect better cost performance in commodities and logistics costs to be neutral for the full year. We’re bringing the high end of our 2023 capital spend guidance down by $1 billion this year to the $11 billion to $12 billion range in part due to our simplification initiatives. We are evaluating and we’ll provide an update on the medium-term capital spend outlook at our Investor Day later in the year, but expect the spend to come down from the previous $11 billion to $13 billion range. For full year adjusted automotive free cash flow guidance, we expect working capital headwinds related to the module assembly challenges Mary mentioned — offset the benefit from the higher EBIT adjusted lower short-term timing impact result revenue more of cells. But this is expected to unwind as module assembly capacity increases. In closing, we remain very well positioned for the future and achieving our medium and our long-term targets as we’ve highlighted. We’re focusing on profitability, and our recent results demonstrate are not sacrificing margin for volume. We will continue this strategy with the decisions we’re making today, helping to drive a fundamentally stronger company beyond 2023. And when you factor in our expected revenue growth, including the opportunities from the software-defined vehicle, AV and other new businesses, this sets us up to grow margin as we get to the back half of the decade. This concludes our opening comments, and we’ll now move to the Q&A portion of the call. Q&A Session Follow General Motors Corp (NYSE:GM) Follow General Motors Corp (NYSE:GM) 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 Rod Lache with Wolfe Research. You may go ahead. Rod Lache: Congratulations on these numbers. I was hoping to maybe ask you for a broader question about EVs. You made some assumptions for EV pricing and EV costs when you laid out your hands for mid-decade profitability. And I’m hoping that you can just update us a little bit on your thinking just based on how the markets evolved with some cases with more aggressive competitive pricing. And obviously, we’re also seeing some manufacturers put in different manufacturing innovations to drive down costs. What are your latest thoughts on that? And have any of your observations led you to change any of your plans? Mary Barra: Thanks, Rod, for the question. I would say we’re doing a lot in that space. Our — what we said last year at Investor Day, it gets low to mid-single-digit margins for our EV portfolio by 2025 remains unchanged. Even with all the things that are moving in that, we’re committed to getting there. I think when you look at the incredible cost discipline that we’re demonstrating right now as well as winning with simplicity. It’s just going to take cost out of every part of the business and make everything more efficient. And we think actually be better from a consumer perspective. . As it relates specifically to manufacturing costs, there’s quite a bit of work. We have a special team that is looking at how do we continue to drive efficiency, especially in the body shop. And of course, the battery team is working on how do we take cost out from an LTM perspective with what we’ve learned by now having that up and running. So I think there are several areas we’re working on. We intend to have industry-leading margins, and we’re not going to stop until we get there and we still have a lot of levers to pull. I don’t know, Paul, if you want to add anything. Paul Jacobson: No, I think you covered it. I think, Rod, one of the things that we’ve asked — we’ve been asked on this call frequently is about pricing strategy. And when you look at the demand we have for our vehicles and as we’re ramping up production, we still have pent-up demand. People are hanging in there with orders. And I think with some of the challenges identified as we ramp production, we see a lot of consistent strong demand for the products that we’re producing. And I think that comes from a purpose-built EV that we did from the ground up, which I think is going to continue to impress people as we get more vehicles out on the road. Rod Lache: Okay. And just a follow-up on that. Just it sounds like you’re not changing your expectations for mid-decade pricing. Just wanted to clarify whether there’s been any changes based on observations that you’ve made on capacity growth and competitive actions? And then secondly, can you just maybe elaborate a little bit on this $800 million LG charge? And what that actually means you alluded to lower cost, but it wasn’t clear whether that was a one-timer or was that launch cost or something else? Mary Barra: So first of all, on pricing in our plan, of course, we’re going to be — we’re going to watch what’s going on in the marketplace. But I think one of the things we demonstrated for almost 15 years now is we’re going to be very disciplined with incentives and with our vehicles and when I think when you look at the original pricing that we announced I think it was very in line with what the customer expects for the value they’re going to see from the products. And so far we’re seeing that. So we believe we have priced the vehicles right. Again we have a lot of pent up demand. The feedback we’re getting anecdotally for instance, from LYRIQ, new LYRIQ owners is they’re just delighted with the vehicle. So I think we’ve got the pricing strategy right. Of course, we’re going to watch it. And we’re not changing our mid — our 2025 EV profitability guidance. We’ll pull all the levers that we have to either get there if there’s challenges or make it even stronger. So again, Rod, we know it’s a dynamic business, but we’re committed to get there. And I think this leadership team continues to be able to do what they say. As it relates to the $800 million, there were many issues that we wanted to take care of, but I would say a chunk of it was us doing the right thing for our customers that goes beyond what a traditional recall expense back to a supplier would be as we look at that because we chose to do the right thing from a timing perspective. And I think our customers are happy as evidenced by the still the strong. Actually, we can’t build enough Bolts right now. So we’ll share more about what everything means for our EV margins when we get to November. But again, we thought it was the right thing to do, and we are — have been and will continue to work with our partner, LG ES to take cost out of what of the Ultium and specifically the Cells, Operator: Our next question comes from Itay Michaeli with Citi. Itay Michaeli: And congrats on the results. Just wanted to ask a couple of questions on the Ultium ramp. First, the issue what you identified with the automation equipment for the modules. Can you talk about when you expect that to be fully resolved? And are you still targeting the $400,000 of cumulative volume by the first half of next year? Mary Barra: Yes, we so we’re not walking away from any of the targets we put out, whether it’s 100,000 in the second half of this year, leading them to 400,000 by middle of next year. And what you’re going to see in the second half of this year and then really crank up in the first half of next year is a lot more Ultium-based product. . We were surprised the supplier, we thought they were in better on track for the delivery that they had. So we have seen in our teams to help them get the automation up and running. We’ve already seen a lot of improvement from I’ll say, the last four to six weeks, we’re going to continue on that path. But to derisk it, we’ve also added additional lines because we don’t want module production to gate our launch of all the products that we have coming in the second half of this year and continuing into next. And we know we’re going to need that module assembly capability anyway as we continue to grow beyond the 400,000. So disappointing, I’ve personally been reviewing the lines. As you know, I’ve spent time in ME earlier in my career running. So we’ll get this behind us. I’m very confident of the teams we have in place. So you’ll see it improve as we get through I would say, into the end of third quarter, beginning of fourth quarter, and then I think it will primarily be behind us by the end of the year, if not a month or so sooner. Itay Michaeli: Terrific. That’s all very helpful. And then just a follow-up on — broadly on U.S. EV demand. There’s been a lot of focus on rising inventory. So just curious how you slot reservation orders as you ramp up Ultium products. And also how you’re thinking about the Silverado EV pricing just given the recent action from your competitor. Mary Barra: Yes. So I think from the recent competitive action, if you look at the Silverado work truck, the range, the telling capability, the overall performance. It’s a true truck. So when people aren’t having to make compromises or trade-offs. So I’m very confident, and we have strong demand for the Silverado work truck as well as the RST, which will be — that’s from a retail perspective out toward the end of the year. So I’m very confident with where we are in the pricing for the Silverado EV. And that’s — your first question, Itay, was… Itay Michaeli: Just probably on EV demand, what you’re seeing in reservations and just how confident are you kind of — what you’re seeing for your products in the next few months. Mary Barra: Yes. Again, we’re seeing with LYRIQ, we’re seeing with the HUMMER truck and SUV, Frankly, the Bolt, I mean these vehicles are getting to the dealers’ lots. And if they’re not already sold, the — they’ve got a list of people who are waiting for them. So — and we still have a lot of reservations and people who put deposits down. The churn on that is very, very low. And for the rare customer who decides they’re not going to wait for the vehicle, there are several more waiting in line. So again, we’re very confident. And it’s not by accident. It’s because we — there’s been some criticism that we should have been faster with our EVs. We’re going as fast as we can, but we wanted to make sure we were leveraging a platform that’s going to give us efficiency with Ultium and that consumers weren’t going to have to compromise. So I’m very confident with the product portfolio we have coming, the pricing and the demand. Operator: Our next question comes from Mark Delaney with Goldman Sachs. Mark Delaney: GM had strong pricing and mix again in the second quarter even as supply and inventory for the industry are gradually recovering and borrowing costs for consumers are higher. You talk about how you expect the market environment to evolve in the second half of the year? And are there any levers for GM in particular in order to help to sustain some of the strong core automotive performance that you’ve been seeing? . Paul Jacobson: Mark, it’s Paul. Thanks for the question. We’re still kind of operating somewhat cautiously as we said from the beginning of the year. We’re not assuming major increases in pricing or in average transaction prices going forward. So we expect that to continue, and it really starts with the demand that we see for our vehicles. We’ve tried to keep inventory pretty consistent. We’ve grown it a little bit to get it to the lower end of that 50- to 60-day range that we’re working on. But overall, maintaining discipline on the incentive side as well. So we’ve really been focused on driving share with margin performance. I think the team has done a good job. As to whether that will continue, we’re kind of taking it day by day, month by month. And we’re very pleased with the results. But as long as we see demand continuing to be as strong as it is for our vehicles, we think we’re going to continue to perform. Mark Delaney: That’s helpful. And on Cruise and good to hear all of the updates on the progress that Cruise is making. I recall you mentioned Cruise vehicles being safer by 54%. Maybe you can elaborate a bit on how you’re measuring the safety of the vehicles that Cruise has with its AVs relative to a human driver. And are there any specific features on the origin as it relates to safety that you could point out as perhaps drivers of additional improvement going forward? Kyle Vogt: Yes, sure. I’d be happy to. So clarify the 50-some-percent number was a reduction in any kind of collision. And the way that we measure that as we looked at the first 1 million miles of driving across the Cruise fleet and compare that to a human benchmark that we established with leading transportation research institute. And that was based on millions of miles of driving by human drivers then selected a subset of all those miles and matched it to EV drive. So as close as possible to it, apples-to-apples comparison. But beyond that, 50-some percent collision reduction doesn’t really tell the whole story because that includes things where the AV was sitting still and just got rare ended by driver. That’s not really the fault of AV. When you look at collisions where the AV was the primary contributor, 92% fewer collisions. So most of the time, it’s the other vehicle that’s the primary contributor towards any collision that we’ve seen. And then I guess another one we’re really proud of is AV is it 73% fewer collisions with meaningful risk of injuries. These are the more severe types of collisions, not just the low-speed fender benders. So all these in aggregate tell a very compelling story. And I would emphasize that this is still — this is the product as it exists today, and we push out a new software update each month, which targets specific kinds of safety improvements. So I think there was a question early on, on how the AVs do relative to humans. I think our data shows that we’re already at least from this data, there’s strong evidence of significant safety improvements. And I think it’s going to continue improving at a rapid clip as we continue to invest in machine learning technologies and other ways to drive up the safety of the product. Operator: Our next question comes from John Murphy with Bank of America. John Murphy: I just wanted to ask a question like we often do on cap viewed. I mean 102.7 in North America. A skeptic might say, hey, listen, you’re running all out and as you bring on more volume, you’re going to need to add fixed costs and variable costs. And with the risk of pricing coming down, you can see real compression in margin. But an optimist might say, listen, that’s staff capacity, pricing will hold up and you’ll just bring on variable costs as volumes recover. I’m just curious where in the spectrum, I think you actually are in sort of that range because it does seem like there’s some real opportunity if pricing holds up and you just bring on these variable costs, but there might be some real significant upside to margins over time. . Paul Jacobson: Yes. So certainly, that has been part of what’s been working for us for the first six months. And despite that higher capacity utilization, you’re seeing inventory remaining pretty much flat with a lot of the inventory growth or inventory still strapped in that in-transit bucket. As vehicles are making their way to the dealers, we see them still turning very, very quickly, and that’s allowed us to continue to lean into the pricing and make sure that we’ve got consistent incentive performance. And I think you’ve seen some outperformance from GM over the last several months in that space compared to the industry as a whole. So I think we’ve shown a willingness to balance supply with demand as we did in the first quarter, where we cut some of the capacity utilization intentionally to make sure that we kept margins flat or kept — sorry, inventory flat and margins strong. So we’re going to continue to watch that. But as we’ve seen, it’s provided tremendous benefits for us so far, and we’re going to continue to manage it that way. John Murphy: But if you were to flex up on volume, would it be mostly a variable cost that would come in? Or would there need to be some fixed costs that would come along with that step-up of buying with. Paul Jacobson: Yes, it would be mostly variable costs. But when you think about where the company is being utilized, it’s at the higher end now, with the demand that we’ve seen for the higher trim levels on the full-size trucks, SUVs, et cetera. So we might not be able to do it in a linear way. where you’ve got some mix if you’re increasing production on some of the lower-priced smaller vehicles across the board. So we watch that and try to maintain as much balance as we can. John Murphy: Okay. Just a follow-up on fleet. Fleet has been a real good guy for you and the industry. When you think about the durability and resilience of that in the face of even potentially some risk to the economy here, how durable is that. And is there just massive pent-up demand on the fleet that might carry the day even if rates were a little bit higher and we see a little bit of a soft patch in the economy? . Paul Jacobson: Yes. I think you captured it well, John. Obviously, we’ve got a lot of pent-up demand from the last few years where fleet took the brunt of some of the capacity challenges due to COVID and due to the semiconductor challenges. In fact, if you look at the first half of the year, year-to-date, it was the best fleet performance since 2007, largely fueled by the commercial side of the business. And as we’ve said before, the fleet business is very different than it was in the past, where it was very, very thin margins in an effort to drive volume. Our fleet business is performing very, very well with margins similar to the retail side. So the business continues to perform, the team is doing a great job, and we expect that to continue for the short and medium term. John Murphy: I’m sorry, just one housekeeping question. The 792 charge for the LG issue, was that contemplated in your initial guidance? Because if it wasn’t, it’s actually — the raise today is more like a $1.8 billion raise in the outlook. I’m just trying to understand if you were contemplating that before? Paul Jacobson: It’s contemplated a guidance raise itself. It wasn’t contemplated as we came into the year. John Murphy: Okay. So the raise is significant today. It’s actually more than $1 billion on operating basis if you were to back that out. Is that fair. Paul Jacobson: Yes. Like we said, the business continues to perform going back to what we said in the first quarter as long as the consumer held up and strong, we expected that we’d be able to surpass the guidance we put out and that certainly what you’ve seen through the second quarter and what we can see July month-to-date has held up very well as well. Operator: Our next question comes from Adam Jonas with Morgan Stanley. Adam Jonas: So a question on the new Bolt. I think in your prepared remarks, you said it will be updated with Ultium and Ultifi technology. Sorry to be pedantic here, but I just want to know, are you using attributes of Ultium? Or is this a full ground-up Ultium platform? Mary Barra: So it will incorporate — when the new version comes out, we will say it’s an Ultium-based product. So we are definitely leveraging that technology because that’s going to really help us get costs down. Remember, today’s Bolt is our second-generation battery technology and from Gen 2 to Ultium. We saw about a 40% reduction as we started to launch. So that’s going to really help drive the profitability of that vehicle. And then with the work that we’ve done from a software-defined vehicle, Ultifi, it will have latest from that perspective as well. So this is a very capital-efficient quick way to build. And the strong consumer response we have to the Bolt and getting affordable vehicle out into the marketplace. So as we continue to look for ways to drive capital efficiency, this is something we look before. But as we’ve gotten more experience, the team took a look and frankly, I’m super excited about it. Adam Jonas: Okay. Just a follow-up. Audi announced it’s going to use SAIC’s next-gen EV platform for China and possibly, elsewhere. Since SAIC is your biggest Chinese JV partner. I’m just wondering, could GM also consider using SAIC’s EV platform to address the specific needs of the Chinese EV consumer? Or is the strategy there kind of Ultium only for China? Like are you open to a potential use of another non-Ultium platform even if you could adapt some technology. Mary Barra: Yes, Adam. Great question. I think the Ultium platform is much more efficient. I think they’ve already indicated that their dedicated platform wasn’t competitive from a cost perspective. We’re continuing to take costs out of Ultium. But of course, we always look at what the joint venture partner can bring to the party, and we’re going to look to make sure that we’re competitive from an EV perspective in that market as well. So we are open and always considering whatever is the most cost-effective way to have a vehicle that’s going to have no compromises to meet the performance of, in this case, the Chinese consumer. Operator: Our next question comes from Dan Levy with Barclays. Dan Levy: First, I just wanted to ask about the commentary on CapEx, which you noted the $11 billion to $13 billion for ’24, ’25 is under review. You trimmed the CapEx for 2023. Maybe you can just give us a sense of how you’re looking at the manufacturing build-out. I think you noted that there’s some simplification initiatives. Is that just something that was incremental? Or was that a byproduct perhaps looking at the market a little differently in terms of demand. I guess we’re just wondering is that the slowdown in spend just purely the simplification. Or is there something else on the manufacturing side with market demand that’s causing you to slow down a little bit the way that you’re spending? Mary Barra: As there was no market-driven slowdown, this was really us looking and making sure we had the absolute right portfolio entries. And as I mentioned, for both EV and ICE we’re going to — by 2030, we’ll be covering 90% of the segments, but we looked and found ways to do that more efficiently. The Bolt is a good example, instead of doing an all-new vehicle really leveraging the capital that’s already there and the benefits we have by having the Ultium platform. And then I think the winning with simplicity, in the past, we’ve gone in and done complexity reduction. But if you don’t do it as you design the vehicle, you drive a lot of capital in vendor tooling and in the plant. And frankly, this is something we’ve been working on for the last several months. Mark Reuss is leading this initiative with the marketing and manufacturing teams. And we are finding, there’s a lot of ways to take cost out of manufacturing and from a capital perspective as well. So it’s pretty significant. You’ll hear and see more about it. But just the comment I made about getting rid of trims that directly correlates to spending less capital, especially on the vendor tooling side. Dan Levy: And then as a follow-up, I just wanted to pass the question on this — on the charge associated with the Bolt. And really, this pegs the question, Ultium is a new product, and I think there’s a lot of unknowns with the new product. How should we think about the type of warranty expense you may need to accrue on these products, how much more — I mean, is there a need to be an added level of conservatism as the ramping? Or is there some clear data that you have that shows just early on that the quality will be far greater than the initial Bolt, which was — you’ve clearly evolved on your architectures. But just wondering how you need to think about warranty expense going forward on the new vehicles . Mary Barra: Yes. I would say if you go back, the Bolt’s been in market for several years now and actually had very good warranty performance. Remember, this was two specific manufacturing defects that have occurred at the same time, caused the issue on the Bolt that was in the LG ES process. We — our team worked hand-in-hand with them. We understand exactly what happened. When you look at what we’re doing at the Ultium plants from a cell perspective and the amount of error proofing and the fact that we’re following the quality process and have the traceability that if there were an issue, we wouldn’t have to do the whole population. All of that’s been put in place. So I think all those lessons learnt. Then when you look at what we’ve got from an Ultium perspective already and what we’re seeing, I think we’re very confident that we’re going to see strong or I would say, good warranty performance, strong warranty performance on these vehicles because, again, using General Motors manufacturing quality systems and processes across the board. So I don’t think that because it’s new, I think some of the things we’re struggling with to start up with our suppliers is the modules, that’s not going to necessarily drive a quality issue. Again, we have quality checks and processes and using the appropriate error proofing to know that when we have a cell, when we have a module when we have a pack, it’s measured and checked for quality. Operator: Our next question comes from Chris McNally with Evercore. Chris McNally: I wanted to quickly go back to the $30 billion autonomous elephant in the room. And just a quick tech question for Kyle. So Assuming that the San Francisco policy update goes in sort of the industry’s favor, do you just have a broad sense for when the 24×7 rollout will happen in San Francisco quarter, the consumer rides, I know there’s internal testing where you’re blanketing the city, but just curious on the consumer side. And then just how many AVs would it take to sort of blanket a city like San Francisco to have a disruptive service similar to Uber. Can you do it with under 1,000 to 2,000 origin? Kyle Vogt: Yes, good question. So on the San Francisco side, so right now, as I said earlier, a significant portion of our fleet is operating 24×7, and that service is open to employees. So we are not far from opening that up to the general public. I can’t give specific dates. But basically, we’re operating that service to employees. Things are looking pretty good. So that is coming pretty soon. And as for what it would take to blanket a city like San Francisco, our goal is, as I think I said on previous calls is to make sure that we ramp up manufacturing capacity. We’ve got a variety of markets to absorb those vehicles. And there are practical reasons to ramp up gradually in the city, just to make sure it acclimates as it’s transitioning to a new form of mobility. So it’s not our intention just to sort of vehicles and sort of direct them all into a single city. That’s our perspective. There’s over 10,000 human ride hill drivers in San Francisco, potentially much more than that, depending on how you count it. Those drivers, of course, aren’t working 20 hours a day like a robotaxi could. So it does not make a very high number to generate significant revenue in a city like San Francisco. But certainly, there’s capacity to absorb several thousand per city at minimum. Chris McNally: Much appreciate it. And then just a high-level question on the strategy for whoever comes to capital funding. Mary, it looks like there’s about 3-plus type quarters before you’d have to sort of consider funding Cruise? Just any thoughts on internal versus external funding given the environment. Mary Barra: I don’t really have anything to comment right now. We certainly are generating the free cash flow that we can fund Cruise’s expansion, and we’ll look to see what’s in the best interest of our shareholders. . Operator: Our next question comes from Tom Narayan with RBC. Tom Narayan: Mary, a question — maybe a philosophical one on autonomy and how you view Ultra Cruise. In light of what we heard from Tesla and how they are potentially planning to license an FSD product. Just curious to how you view Ultra Cruise, would that be a revenue profit center? Or just a product enhancer. How do you see the kind of Level 2 plus product for you? Mary Barra: We definitely see the Level 2 plus product as revenue-generating and profit-generating and very pleased with what we have with Super Cruise, and we’re going to continue to enhance as we move forward. And we’ll have more to share about this when we get to Investor Day in the fall. Tom Narayan: Okay. And as a follow-up on Cruise. You made a strong case, obviously, on the safety features. Just wondering if you could give some color on how perhaps you’re arguing that on a regulatory perspective, maybe on a federal level, like what are kind of the obstacles? And I mean, is that you see happening more likely now? Is there kind of a greater appeal now that you’re seeing all these safety benefits? Is it a stronger case now than maybe it was before? Mary Barra: I think as we continue to grow in miles, but first of all, we’re not arguing with the regulators. We’re talking to the regulators and sharing the information, which we’ve been doing for several years now. And so they understand how we’re measuring safe with what Kyle referred to with what we did with outside groups and continuing to share the information. I think it’s very goal aligned with what the Department of Transportation and NYCTA is looking for us to improve road safety. So of course, we’re going to continue that dialogue, share the information, and we’re very optimistic of where we’re headed. . Operator: Our last question comes from Ryan Brinkman with JPMorgan. Ryan Brinkman: Okay. Great. It looks like the China equity income in 2Q was similar to 1Q, rounding to $21 billion, down from sort of $0.2 billion a year ago and of course, $0.5 billion quarterly pre-pandemic. What is required, do you think to restore China profitability to where you would like it to be, I don’t know, from a sales or a share or perspective? It seems like you’ve got really great traction in that market for lower-priced EVs, such as for the Wuling brand. How should we think about your strategy for electrifying your high-end brands in China? Is that the catalyst do you think to higher profits in that market? Mary Barra: Well, definitely, we have strong ICE products and performance there are already clear to winning as we go forward is having the right portfolio of EVs for Cadillac and Buick especially. And so we have a lot of those vehicles being launched right now, and we’re continuing to work to make sure they’re efficient in meeting the customer needs. But let’s also remember, right now, we’re in the high single-digit market — market share place right now even with all the — in fact that there’s 100 new EV entries. So we’ve got to have the right EVs at the right price with the right technology. I was over there I guess, maybe two months ago now and did a full review of our product line and obviously spent time understanding where the competition is. I think we’ve got the right products coming. We’ve got to go out there and sell them now engage our team to get that done. Ryan Brinkman: Okay. Great. And then just maybe lastly on the Bolt charge. Is the charge driven more by something differently being done for the consumer versus what was previously communicated? Or is it more of a like rejiggering of the cost-sharing agreement between GM and LG for the previously announced actions? Mary Barra: Well, for a portion of it, obviously, as you announced the recall and then you look what it’s going to take, we took some time working with the LG ES team to come up with a diagnostic that then over a period of time indicates that the vehicle can go from the reduction of 80% battery charge to the — back to the full battery charge. That took a little longer. And so as we did that, we wanted to make sure we were taking care of the consumers, replacing the battery packs maybe faster than what we would have ended up needing to do. And just having attention to them because again, we have a very strong Bolt customer, and we wanted to make sure that they understood we’re going to stand behind it. So I think we took the right actions. And as we looked at that, where we were as we were well into having that issue behind us, we looked at what was right from where the costs fell. So we just were doing the right thing. LG is a very strategic partner to us. And like I said, there’s a lot of work that we’re doing together and individually to continue to improve our cost position. Operator: I’d now like to turn the call over to Mary Barra for closing comments. Mary Barra: Thank you so much, and I want to thank everybody for your questions. As I said at the opening of the call, the success we’ve had in the second quarter and the first half ties directly to the great new vehicles we’ve launched and strong execution of our business plan. Our outlook, both for the second half and over the next several years, will increasingly be shaped by our optimized ICE and EV portfolio, our investment that we’re making, not only in the vehicles, but also the growth opportunities as well as cost discipline. And — this will be the focus of our next Investor Day that’s going to be held in mid-November. The agenda will include a detailed look at our software strategy, led by Mike Abbott, who joined us from Apple in May. You’re also going to have the opportunity to drive our new STBs and experience the expanding capabilities, as I mentioned, of Super Cruise. And one of the most important vehicles you’re going to get to drive is the new Chevrolet Silverado EV work truck that we talked about it. I think most powerful examples of the benefits of the investment we made starting in 2018 on the Ultium platform. It offers up to 40% more driving range, faster charging and far greater towing capability than competitors because, again, it was purpose built to be an EV. And that’s something that we’ve made the investments. We were going through the growing pains right now. Others they’re going to need to do that as they get to their dedicated platform. So I’m very excited about what we’re doing to be able to demonstrate in November and just know that we’re going to continue to execute with discipline across all aspects of the business as we are in Q3 and into Q4. So appreciate everyone and look forward to seeing you then and probably talk to most of you before then. So thanks for your participation. And I hope everybody has a great day. Operator: That concludes the conference for today. Thank you for joining. You may disconnect. Follow General Motors Corp (NYSE:GM) Follow General Motors Corp (NYSE:GM) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

PACCAR Inc (NASDAQ:PCAR) Q2 2023 Earnings Call Transcript July 25, 2023 PACCAR Inc beats earnings expectations. Reported EPS is $2.33, expectations were $2.18. Operator: Good morning and welcome to PACCAR’s Second Quarter 2023 Earnings Conference Call. All lines have been in a listen-only mode until the question-and-answer session. Today’s call is being recorded and if […] PACCAR Inc (NASDAQ:PCAR) Q2 2023 Earnings Call Transcript July 25, 2023 PACCAR Inc beats earnings expectations. Reported EPS is $2.33, expectations were $2.18. Operator: Good morning and welcome to PACCAR’s Second Quarter 2023 Earnings Conference Call. All lines have been in a listen-only mode until the question-and-answer session. Today’s call is being recorded and if anyone has any objection, they can disconnect at this time. I would now like to introduce Mr. Ken Hastings, PACCAR’s Director of Investor Relations. Mr. Hastings, please go ahead. Ken Hastings: Good morning. We would like to welcome those listening by phone and those on the webcast. My name is Ken Hastings, PACCAR’s Director of Investor Relations. And joining me this morning are Preston Feight, Chief Executive Officer; Harrie Schippers, President and Chief Financial Officer; and Brice Poplawski, Vice President and Controller. As with prior conference calls, we ask that any members of the media on the line participate in a listen-only mode. Certain information presented today will be forward-looking and involve risks and uncertainties, including general economic and competitive conditions that may affect expected results. For additional information, please see our SEC filings and the Investor Relations page at paccar.com. I would now like to introduce Preston Feight. Preston Feight: Hey, good morning. Harrie Schippers, Brice Poplawski, Ken Hastings, and I will update you on our second quarter financial results and business highlights. I’ll start by saying thank you to PACCAR’s great employees who continue to deliver excellent results and provide our customers with the best trucks and transportation solutions in the world. PACCAR achieved record revenues and net income in the second quarter due to its excellent portfolio of new trucks, robust aftermarket parts business, healthy financial services performance and continued strong market demand. PACCAR’s revenues increased 24% to $8.9 billion. Net income increased 70% to $1.22 billion. PACCAR Parts’ second quarter revenues increased by more than 11% to $1.6 billion. Parts’ pretax profits were $419 million, 19% higher than the second quarter of last year. Truck, parts and other gross margins were excellent in the second quarter at 18.8%, up from 14.4% in the same period last year. PACCAR is delivering structurally higher margins as a result of our investments in the industry-leading new range of premium trucks, our sophisticated and successful aftermarket parts business, and as a result of our overall global growth. PACCAR’s innovative research and development programs and partnerships provide our customers with the right products and technology to help them optimize their operations. During the second quarter, we’re pleased to announce the expansion of our strategic partnership with Toyota to develop and bring to market zero emissions hydrogen fuel cell-powered Peterbilt and Kenworth trucks. PACCAR’s Powertrain portfolio of hydrogen fuel cell, hydrogen combustion, battery electric and clean diesel technologies position the company and our customers for an excellent future. PACCAR Financial also had an excellent quarter, achieving profits of $145 million due to its high-quality portfolio and positive used truck results. Looking at the truck market. Industry build has been gradually increasing this year. And in the US and Canada, we estimate that Class 8 market to be in the range of 290,000 to 320,000 trucks. The 2023 European truck market is expected to be in a range of 300,000 to 330,000 units. We project the South American above 16 tonne truck market to be in a range of 105,000 to 115,000 vehicles this year. South America is an important region for PACCAR’s geographic growth. DAF Brasil has done an excellent job growing market share since we opened the business 10 years ago, achieving a record 9.2% share in the first six months of this year. As we look forward to the rest of this year, and 2024, the truck markets are expected to remain healthy and PACCAR will continue to deliver excellent performance. Harrie Schippers will now provide an update on PACCAR Parts, PACCAR Financial Services and other business highlights. Harrie Schippers: Thanks, Preston. PACCAR delivered 51,900 trucks during the second quarter. Supply chain is improving, though occasional supplier shortages still limit production. We estimate third quarter deliveries to be in the range of 48,000 to 52,000 trucks. The third quarter delivery estimate reflects the normal summer shutdown in Europe. PACCAR achieved strong truck, parts and other gross margins of 18.8% in the second quarter. We estimate third quarter gross margins to be in the 18% to 19% range, reflecting continued high-level performance of PACCAR’s Truck and Parts business. PACCAR Parts achieved strong second quarter gross margins of 31.6%. The Parts business continued its track record of high sales and profit growth, with quarterly sales growing by 11% and profits by 19% compared to the same period last year. PACCAR Parts is focused on expanding its customer base, and providing a full range of technology-enabled transportation solutions is driving its excellent results. In the last five years, annual Parts sales have grown by 73%, and Parts profits have increased by 136%. The consistent performance of Parts as a high-growth, high-margin business is structurally beneficial to PACCAR. Third quarter Parts sales are expected to increase 6% to 8% compared to the same period last year. PACCAR Parts’ growth is supported by a network of 18 distribution centers, more than 2,000 dealer locations and 250 independent TRP stores, as well as technologies like managed dealer inventory and innovative e-commerce systems. PACCAR Parts continues to expand and will open a new distribution center in Massbach, Germany next year. Each new distribution center increases the number of dealers and customers benefiting from receiving parts on the same or next day. PACCAR Financial Services second quarter pretax income was a solid $145 million. The Financial Services business benefited from excellent portfolio quality and good used truck results. Used truck prices have moderated, but are historically strong. With its larger portfolio and superb credit quality, PACCAR Financial is having another very good year. PACCAR has invested $7.5 billion in new and expanded facilities, innovative products and new technologies during the past decade. These investments have created the newest and most impressive line-up of trucks in the industry and will contribute to excellent performance for many years. PACCAR’s after tax return on invested capital improved to an industry-leading 35% in the first half of the year, up from 22% in the same period last year. Capital expenditures are projected to be $625 million to $675 million this year, and research and development expenses are estimated to be $400 million to $430 million. PACCAR’s industry-leading truck line-up, highly efficient manufacturing operations, best-in-class Parts and Financial Services businesses and the continued development of advanced technologies position the company well for today and for the future. Thank you. We’d be pleased to answer your questions. Q&A Session Follow Paccar Inc (NASDAQ:PCAR) Follow Paccar Inc (NASDAQ:PCAR) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] Our first question today is from Steve Volkmann from Jefferies. Steve, please go ahead. Your line is open. Steve Volkmann: Great. Thank you, guys for the question. Preston, since you brought it up, I’m curious if you might be willing to provide any additional thoughts on 2024 you know being a robust year? Do you guys have orders for ‘24? And you know how much visibility and how much confidence do you have that 2024 you know can be a robust year? Preston Feight: Well, Steve, it’s good to talk to you. Thanks for the question. I’d start by saying being full for 2023 right now is a great place to be operating from. The markets continue to be healthy for us around the world, and what we see is that we have great conversations going on with our customers, and so we’re having great conversations around what the trucks are going to be and their order needs are going to be for next year. There are some sectors out there that are exceptionally good. That’s LTL, vocational and otherwise, and demand is expected to be strong. Steve Volkmann: Okay. Maybe I’ll pivot again on ‘24. But if ‘24 were to be a down year in any amount, you talked about sort of structurally higher margins, I’m curious how you guys think the decremental margins would look if there was a decrement? Preston Feight: Well, Steve, you know we don’t provide 2024 guidance in this call. And I think you do hit up on a really good point, though, which is the structural improvements of PACCAR compared to a few years ago are significant, right. The product investments we’ve made; industry-leading trucks we have in Europe that are significantly outperforming; the growth we have in South America, which is significant; the new medium-duty products in North America; and the fact that PACCAR Parts is doing such a great job with being a high-margin, high-growth, technology-driven transportation solutions provider for our customers, all of those things contribute to a great future. Steve Volkmann: Got it. Thank you, guys. Preston Feight: You bet. Have a good day. Operator: Thank you. Our next question is from Tami Zakaria from JPMorgan. Tami, please go ahead. Your line is open. Tami Zakaria: Hi. Good morning. Thank you so much for taking my questions. So my first question is, since your order books are full for this year, like you said, you probably have visibility into fourth quarter deliveries as well. So should the fourth quarter deliveries be sequentially better than the third quarter or possibly the highest delivery quarter of the year? Or how should we think about 4Q versus 3Q? Preston Feight: Yeah. What I would think about is the second half, Tami, and the second half being a strong second half with the full backlog. You know you have some differences in the markets in Q3 and Q4, and Q3 in Europe has its summer shutdowns so that affects things. In North America in Q4, there’s more holidays as well. But, in general, we will be trying to increase build. We still continue to look at the market as being somewhat constrained in terms of supply base. That periodically affects us and everyone else, and so that may have a pacing item on the deliveries in Q4. Tami Zakaria: Got it. Thank you. And then, can you comment on what was the price realization for trucks and parts in the second quarter? And do you expect price realization to sequentially decline in the back half? Preston Feight: I’ll let Harrie kind of talk about that one. Harrie Schippers: Pricing for trucks in the second quarter was up 15%. We saw significant cost increases still in the order of magnitude of 9% for trucks. And then for parts, cost increases were a little higher, but more than offset by price increases for parts of around 13%. Tami Zakaria: And any comments – Harrie Schippers: So with that – Tami Zakaria: On the back half in pricing outlook? Harrie Schippers: No, with all the new products and the structural improvements that Preston just explained, I think we’re in a good position to maintain our pricing discipline. Preston Feight: And I think Harrie shared that you know we expect margins of 18% to 19% in Q3, and I think that’s kind of a testament of how we see the price-cost analysis going. Tami Zakaria: Perfect. Thank you. Preston Feight: You bet. Have a good day. Operator: Thank you. Our next question is from Chad Dillard from Bernstein. Chad, please go ahead. Your line is open. Chad Dillard: Hi, good morning, guys. So as you look – as you think about price-cost over say the next 12 months and also contemplate the pullback we’ve seen in raw material costs, do you think the market is strong enough for you to actually increase that price-cost spread? Or do you think you’ll need to get them back to understand how you’re thinking about you know managing that balance? Preston Feight: I guess we don’t spend as much time thinking about it in those terms. We continue to think about it in terms of the relationships we have with our customers, the strength of the product performance and the value that provides to the customer. Like as we’ve shared before, the new trucks are providing you know at least 7% improvement in fuel economy, which is bringing thousands and thousands of dollars of benefit to our customers, there’s the trucks that these drivers want. And so I think our customers make a good decision around trying to buy the best product for their operations which are PACCAR’s products, and that gives us a good pricing position as a premium brand in the market. Cost. Well, cost is something that you know you get to follow as much as us, and we look at the world around us and see some movement in costs in positive ways and still labor pressures on the other side of it. So it’s a little bit ambiguous. Chad Dillard: Got it. Okay. And just second question. So there are some industry forecasts are calling for something on the order of like a 15% cut of production in the coming year, and I’m certainly not you know holding it to that. But, how should we think about your ability to grow your Parts business in such an environment? Preston Feight: I think the Parts business is growing for several reasons. One is it’s because our ability to get parts to our customers in the same day or next day has changed a lot. So we are the desired place to go for parts for people. I think the application of technology by our team has been an enabler as well, like we make sure that our dealers have the right parts that they need and support. And I think that understanding our customers’ needs is how we think about it. So, Parts is really a transportation solutions provider, which makes them the go-to source for customers. And we think we’re the leader in that space, and that helps us grow the business through all parts of the coming years. Chad Dillard: Okay, thank you. Preston Feight: You bet. Operator: Thank you. Our next question comes from Rob Wertheimer from Melius Research. Rob, please go ahead. Your line is open. Rob Wertheimer: Thank you. Good morning, guys. Preston Feight: Hi, Rob. Rob Wertheimer: Just a mechanical question on how you typically open orders for the year forward? Are you still holding back at all just on containing other uncertainty? And then a real market-based question on vocational trucks, whether you expect or have already seen some of the strength that may come with the infrastructure bill or general construction appearing there and whether there are any constraints on that market growth from body building or other capacity issues? Thank you. Preston Feight: Yeah. So the first question on how we think about the order book. And we have close relationships with our customers, and those relationships carry on all the time. So some customers want to place orders already and want multiyear orders, and we deal with those customers on a case-by-case basis. We try not to get ahead of ourselves in general pricing release before we understand what the world is going to look like a little bit in 2024. So the next quarter or so, that will start to free up. In terms of the vocational market, I think about that, it is exceptionally strong right now. There is a limitation on – from the bodybuilder standpoint. They’re trying to build as many bodies as they can. We’re building as many vocational trucks as we can, and we think we’re at the beginning of that. So we think that, that will continue for quite some time as investments into America are continuing. Rob Wertheimer: Got it. Thank you. Preston Feight: You bet. Operator: Thank you. Our next question today comes from David Raso from Evercore ISI. David, please go ahead. Your line is open. David Raso: Hi. Thank you for the time. The Parts business, the third quarter, the up 7% midpoint, I’m just trying to get a sense of the volume baked in. The first quarter, right, pricing was up 15% in Parts. You had a little bit of currency drag, so you know volumes were up a little. The second quarter, given that price comment, I’m not sure volume was up at all in Parts. The third quarter, I’m just giving you a sense of the volume. Are the volumes assumed down in the third quarter year-over-year and then you have the price to get back to 7% total? Harrie Schippers: So the 6% to 8% growth in the third quarter, what you have to take into account, David, is that last year, we saw a very strong growth in Parts, especially in the third quarter. And with this 6% to 8% growth, we expect the year to be 10% to 13% higher than last year, which is excellent and above our long-term average. David Raso: Okay. So that implies the fourth quarter is up only similar to the third. But again, I know it’s tough comp, just so I kind of understand the volume/price issue. Is the slowdown mostly volume going a bit negative? Or is there something about the pricing? I’m just trying to understand that cadence between volume and price so I can better understand how to model the margins. Harrie Schippers: I wouldn’t call it a slowdown, David. I think with the Parts business is growing 6% to 8% in the quarter, 10% to 13% for the year. That’s an excellent performance by the entire PACCAR Parts’ team. David Raso: Yeah, I’m not refuting. I’m just trying to get a sense of the volume versus price that you’re thinking about the rest of the year. That’s all. In the up 7%, is that all price? Or is it volume down and price up to more than negate the volume decline? I’m just trying to get that split. Harrie Schippers: Sure. Of course, it’s a combination of volume and price. Preston Feight: Yeah. If you’re trying to get it in the macro, David, maybe you could look at it and say like there was a lot of pent-up pressure for Parts and getting inventories right into people’s businesses, dealerships, customers. And I think some of that has been met on the Parts side of the business, not on the Truck side really. And now that’s kind of the flow that we’re looking at going forward. David Raso: That’s fair. Okay. So we’re just sort of normalizing the Parts after heavy last year kind of stocking. And then by the end of the year, you’re hopefully balanced here on the Parts? Is that sort of the idea? Preston Feight: I guess we say it differently and say that as Harrie said, I think aptly that you see the growth being steady growth over the full year with just a 6% to 8% third quarter in it. And then growth again next year. So, the business is doing tremendously well. David Raso: Okay, thank you. And one follow-up. On the order books for ‘24, are we looking to do that a quarter or six months at a time like we’ve done recently? Or more return to a more traditional you know open up for the full year? Thank you. Preston Feight: I think what we’ll do is, we’ll look at the first part of the year and decide what the first part of the year looks like and release like that as we get into the general pricing. David Raso: Okay. I appreciate it. Thank you. Preston Feight: You bet. Operator: Thank you. Our next question is from Jamie Cook from Credit Suisse. Jamie, please go ahead. Your line is open. Jamie Cook: Hi. Good morning. Nice quarter. I guess just two questions. One, I know you’re full on production for 2023, and that’s limited to some degree you know by supply chain constraints still. Can you talk to sort of where delivery for the year or in the back half, if supply chain was back to more normalized levels? I’m wondering you know potentially, is that a tailwind to 2024? You know I mean if markets – if supply chain gets back to normal share, because we’ve underserved the market? And then my second question, can you just give – I know you had some you know nice market share gains in South America. Could you just give you know broad view on what your market share is relative to the order book if it’s improved and sort of what markets potentially next year? And down – assuming the downturn has happened, where would be the biggest opportunity for PACCAR to gain market share? Thank you. Preston Feight: So the first part of your question, Jamie, good talking with you, is really around – I do think that the supply constraints continue at some modest level, and that modest level does provide a tailwind to the market in 2024. I agree with you. I think on the second side of your question, I don’t know, maybe Harrie has thoughts on it or something like that. But – Harrie Schippers: Well, I think market share, we’ve been building as many trucks in the first half of this year as we can around the world, and so market share is a result of that. And yeah, we’ve seen strong market share growth in South America. We expect further growth opportunities there. Market shares in North America and Europe have had a slow start of the year. But as we progress during the year, we expect growth opportunities across the world. Preston Feight: Yeah. To add into it, I would say like you know our build percentage is increasing. And as our build percentage increases, which has been supply-constrained, then our market share grows. And we see nothing but strong demand for the products. So it’s really just about being to associate that demand, and that’s just going to take us some time to get the build out. Jamie Cook: Thank you. Preston Feight: You bet. Operator: Thank you. Our next question today is from Steven Fisher from UBS. Steven, please go ahead. Your line is open. Steven Fisher: Great, thanks. Good morning. So within your 18% to 19% Q3 gross margin forecast, can you just help us with some of the underlying factors there? I assume the European shutdown will be a headwind. So does that mean kind of mix of Parts versus Trucks is a tailwind that offsets that? Or the mix from new models is still a tailwind? What – or are there other factors to consider? Maybe you could just help us with a little bit of buildup of how that kind of stays in that range. Preston Feight: You know I think it’s pretty steady performance between Parts and Trucks in Q3 from Q2, I mean which I think kind of lays into what we’re seeing in the market, which is a strong market with strong performance. And that’s happening on the Truck and Parts side, and we see that continuing. Harrie Schippers: I would echo that. If I look at the third quarter, it’s probably just a continuation of what we’ve seen in the second quarter. Steven Fisher: Okay, that’s helpful. And then you had in the release about the expansion of Chillicothe. I guess in terms of capacity needs, how are you planning for 2025 and 2026? There’s some talk about this being sort of a record North American up cycle. How are you thinking about that? And how do you think the rest of the supply chain is preparing for this? Are there going to be kind of capacity strength if this demand cycle plays out with that pre-buy as people are thinking? Preston Feight: Yeah. I would say that what we’re doing in Chillicothe is what we do all the time, which is making investments into our facilities to increase capacity and efficiencies. It’s just a good example of it in Chillicothe, and that 105,000 square foot building expansion we did there just helps us get more product out and even increases the level of high quality to a next level-up. From a build-out standpoint, that’s just what we do. Like I said, we’re doing it there. We’re making investments in Columbus. We’re making investments in Mexico. Really all around the world in South America. So, we see the growth of PACCAR in the long-term, and so we want to make sure that we’re prepared for that with the factories. From a supply base standpoint, we have great suppliers. We work closely with them to make sure that they have the capacity. Obviously, they’ve had unusual circumstances in the past couple of years. I’d expect some normalization there, and we’ll continue to work closely with them to make sure that they can provide the product we need. Steven Fisher: Okay, thank you very much. Preston Feight: You bet. Operator: Thank you. Our next question today comes from Tim Thein from Citigroup. Tim, please go ahead. Your line is open. Tim Thein: Great, thank you. Good morning. Yeah, Preston, it’s just, I guess, yet another one on the Parts business, and I think you know this will be a North American focus. But I’m just curious you know if you listen to some of the public truckload companies that have reported. I mean they’ve seen some pretty – you know a lot of pressure just in terms of utilization and pressure on profitability. I’m just curious you know a lot of the discussion was just on the positive messaging that you’re kind of conveying. But any warning signs that you’re seeing or hearing from either your large fleet customers or your dealers in terms of you know sometimes when you get pressure on profitability, you may get some maintenance intervals that get pushed out or a rebuild that get extended or what have you? I’m just curious if there’s been any signs of that? Or is it just, they’re chugging right through that and it’s you know that the business is not feeling that? I’m just curious it’s kind of real time what you’re hearing from the team specific to your truckload customers. Preston Feight: Sure. Great question. Good to think about it in that broad term. You know I think from a truckload carrier standpoint, you heard their comments in their earnings calls, as have we, and in our relationships with them, and they’ve come through. I think a tough few months for them in terms of utilization and rates, but they also kind of will say that there may be have seen the bottom of it, and things are starting to show signs of improvement in that truckload carrier. But that’s not the whole market. We also see the LTL market continuing to be strong, and we see the vocational market continuing to be strong, as well as medium duty. So, from a total business standpoint, we see this steady, strong position that we’re in, and we expect that to continue. And then that may even be aided as the truckload carriers see improvement in their businesses in the coming quarters. Tim Thein: Got it, okay. And that makes sense. And then just within your truck order board within the backlog. Is there you know historically, PACCAR, again, more North American-oriented question. But pretty well balanced you know certainly at least against some of your OEM peers across you know small, mid, large-sized fleets. Is the order board and kind of the – how the deliveries have played out, are you seeing more – has that shifted more towards your big large fleets or I guess you know large fleet this year? And what do you think about the investment appetite for your small to mid-sized carriers as you think about ‘24? Preston Feight: You know I think of it – I think it’s more representative of the first way you kind of came at the market through the vocational and truckload and over-the-road carriers versus vocational rather than the small, mid, large. I think that there’s variance within that small, mid, large sector. Tim Thein: Got it. Okay. Preston Feight: Very good. Thank you. Operator: Thank you. Our next question comes from Nicole DeBlase from Deutsche Bank. Nicole, please go ahead. Your line is open. Nicole DeBlase: Yeah, thanks for the question. Maybe just starting with your 3Q delivery outlook, down at the midpoint a little bit Q-on-Q. Is that a 100% driven by European holidays, so you’re effectively projecting US production flat to up in the third quarter? Harrie Schippers: That is correct, Nicole. And Europe that has a 3-week summer shutdown every year. It takes three weeks of production out. And some of that is offset by higher production in all the parts of the world. Nicole DeBlase: Okay. Okay, understood. And then you know in the spirit of the expanded relationship with Toyota on the hydrogen fuel cell side, can you just talk a little bit about the level of customer demand that you’re actually hearing for hydrogen fuel cell trucks at this point? Preston Feight: Yeah. That’s a – it’s a great question. It’s one that the customers are trying to understand the choices out in front of them, right, with the regulations coming, they’d like to know whether they’re going to be using clean diesel, whether hydrogen infrastructure is going to develop, whether they can use hydrogen combustion, hydrogen fuel cells or battery electric. It seems like it will be some combination of both for a while or some all of the above for a while. And so I think there is quite a bit of an interest on behalf of Peterbilt and Kenworth and the Toyota fuel cell project, and we’ve got strong inquiries and orders for that already. And I would expect people will explore that. Obviously, they’re trying to balance this total cost of ownership for all the different technologies and it’s early days, and I think that they’re trying to learn right now more than they’re trying to convert. Nicole DeBlase: Thanks. I’ll pass it on. Operator: Thank you. Our next question is from Jerry Revich from Goldman Sachs. Jerry, please go ahead. Your line is open. Jerry Revich: Thank you. Good morning and good afternoon. Preston, I wonder if I could ask, you know your profit per truck now stands at $18,000 you know in prior cycles. It hasn’t gotten above $10,000. Can you just talk about what’s driven that acceleration? Because you know you’ve always had the premium brand in the market, it feels like you’re getting a higher return on the incremental fuel efficiency improvements in automation. I’m wondering if you could just maybe help us understand how much of that improvement is those areas versus improved competitive discipline and how are you thinking about opportunities from here on the next set of product development platforms that you folks have set up on the road map? Preston Feight: Sure. Thanks for the question. I do think that what the investments we’ve made over the past several years are paying off. I mean are paying off in a bunch of different markets. So paying off in the fact that within DAF in Europe, we have the only truck that complies with mass and dimensions is fully compliant with that. It provides great aerodynamic benefit, great driver benefit we’re able to sell it at a higher price and provide better profitability for ourselves, because the customers get a benefit in that fuel economy. Similarly, at Kenworth and Peterbilt, the new T680 and 579 are doing a great job of providing the industry’s leading fuel economy for our customers. And then the new medium-duty products that we launched give us a different level of profitability in the medium-duty space and customer benefits as well. So all of those things kind of are taking our profitability to a structurally-improved level. And South America, I should add, is also a business growth area for us where that’s contributing. So we see that these are sustainable, long-term advantages. And then to the second part of your question about future. Well, we couldn’t be more excited than we are about the investments we have going forward. There’s a whole suite of things that we’re working on right now that I think will just continue to set the standard in terms of premium trucks and transportation solutions. Jerry Revich: Super. And then you know from an SG&A standpoint, any one-off pieces in the quarter? Really interesting to see SG&A down as much as it was sequentially and flat year-over-year given the top line growth, how should we be thinking about the SG&A leverage off of this 2Q base? Harrie Schippers: Yeah we continue to control our SG&A expenses very tightly. That’s how we run the business. So we’ve seen some increases here and there, but it’s offset by being more efficient elsewhere and, a very controlled SG&A spending level going forward is what you’re going to expect from us. Jerry Revich: Thanks, Harrie. And then just last one. In the prepared remarks, you spoke about the new facilities improving, your dealer on-time deliveries and ability to stock. Where do dealer inventories of your, you know A runners stand today versus a year ago? Is it fair to assume service levels are up versus a year ago and inventories are up at your dealers’ level for the high-volume runners? Preston Feight: Yeah, I think that that’s – it’s a fair observation that a year ago, things were pretty tight and constrained in terms of Parts inventory, and that’s been maybe ameliorated to some percentage. So that’s helping people get their service done in a more quick way which is good for our customers, which is what we’re always out for. Harrie Schippers: And Parts inventories have gone up, of course, as we sell more. Net-net, inventory turns were at record levels in the second quarter. So continue to have the inventory that we need to satisfy our customers. Preston Feight: And it’s helped us as we grow our overall share of the Parts business. Jerry Revich: Great, thank you. Operator: Thank you. Our next question is from Matt Elkott from Cowen & Co. Matt, please go ahead. Your line is open. Matt Elkott: Good morning and good afternoon and thank you. Just a quick follow-up on Europe. You guys obviously have a technology advantage over the last few quarters there. But is the outlook in Europe primarily driven by technology? Because the European economy does face you know some challenges broadly, and that’s being reflected in freight at times, at least on the intermodal side – on the rail and intermodal side. Preston Feight: I think is that – I think what you’re saying is that you can imagine the European economy has maybe – has felt like the mouth kilometers are down a little bit year-over-year, and we recognize that. But we do think that the new truck is performing so well that that’s to our advantage in Europe. Matt Elkott: Okay. And then follow – another follow-up on the hydrogen side with Toyota fuel cell. You guys have been somewhat of the opinion that hydrogen, ICE engines could be you know one of the most viable bridges to whatever technology we coalesce around long-term. Do you still think that? Or is the Toyota fuel cell partnership, you know does it market a change? Preston Feight: No, I think that we do still think it can be a solution. I think that it depends upon regulatory allowance. Like in Europe, hydrogen ICE is allowed as a zero emissions product. That’s not determined yet in the North American space. It has to be still discussed with the agencies. Again, we think that there is efficiencies of fuel cells and different efficiencies with hydrogen ICE and different ones for battery electric. So I think it’s important that we explore and work through all of those and figure out what the best total cost of ownership is for our customers because that’s really what we’re driving for. And that’s the level of the conversation right now. And we think it’s a bit early to make a call on which one is going to be right. We do think that diesel engines will be a significant part of that for the years to come. Matt Elkott: Got it. Yeah and just one final clarification. I know supply chain disruptions have eased generally in recent quarters. But is there a way to gauge how far we still are from pre-COVID levels? And if you guys see a line of sight into getting back to those levels you know next year? Preston Feight: I don’t know if there’s a way to gauge it. I would say the suppliers are doing a pretty good job of trying to work through it as quickly as they can and trying to increase their capacity and meet the – satisfy the market. Nobody wants to do it more than them or us. And so together, we’re working through that. And I keep seeing this improvement. It’s far better than it was a couple of quarters ago, and we expect it will be better in the quarters to come. Matt Elkott: Great. Thank you very much. Operator: Thank you. Our next question is from Jeff Kauffman from Vertical Research Partners. Jeff, please go ahead. Your line is open. Jeff Kauffman: Thank you very much. Hi guys. Just wanted to get [technical difficulty] already on one item, and then I want to go back to the zero emission vehicles and a follow-up there. For PACCAR Financial, it looks like the fleet was up about 2%, but assets were up about 6% versus first quarter. Could you help me understand that differential? Harrie Schippers: The average sales prices of trucks have gone up quite a bit over the last couple of years. We said earlier during the call, in the second quarter, pricing was at 15%. So even with 2% growth in the total fleet for PACCAR Financial, the total assets grow with the higher prices per truck as well, of course. Jeff Kauffman: All right. Thanks, Harrie. And secondly, talking about the new emission vehicles, I had a chance to see the new truck at ACT Expo. And I was asking, “Well, are people putting in orders? And when would you deliver the market?” And I was told, “Oh, yeah, you can put it in order today, but we’re probably looking at a 2025-ish timeframe.” And I just want to kind of follow-up on that. The electric vehicle push was aggressive. It feels like some folks are pulling back over challenge of the charging infrastructure and what have you. You answered the earlier question what are you seeing on fuel cell. But can you give us an idea of when that truck is likely to be available? And maybe kind of update what’s going on with customers on the battery electric side? Preston Feight: Well, sure, happy to do that. So 2024 is when we think we’ll be putting fuel cell trucks out there with the Toyota project. So that’s – we’ve already done 11 of them in the market. That was our first fleets that we did last year, and now we’re kind of just finishing up what will be a higher volume run. We expect that to be in the hundreds still. It’s kind of what I would expect on the fuel cell level. Your comments on people pulling back or not, we see still strong interest on EV, battery electric EV, but there is an infrastructure thing that needs to be worked through as a society. What our position is, is PACCAR will have the best products, whether they’re battery electric, diesel, hydrogen fuel cell, hydrogen combustion. We’ll have that entire suite available, and then we’ll be ready for the market. So we work closely with the regulatory agencies to support them and work with our customers to support them and puts us in a great position for the future. We could not be more excited about the kinds of technologies and what that does for PACCAR’s future and how we’ll perform. Jeff Kauffman: Awesome. Thank you. Preston Feight: You bet. Operator: Thank you. Our next question is from Michael Feniger from Bank of America. Michael, please go ahead. Your line is open. Michael Feniger: Thank you. Preston, are you seeing anything in the Truck market in terms of the way freight moves or your customers’ purchasing patterns that maybe suggest a normal traditional replacement cycle? It’s higher than what we’ve observed historically. Are fleet operators trying to keep a younger fleet? Or any other trends that maybe what we normally think is replacement demand if the market returns there is actually higher given some changes in the freight and the transportation market? Preston Feight: You’re right. I do think it will be higher than maybe people used to think of it. But more importantly to me is the fact that the trucks that are being produced, specifically by PACCAR are providing operating cost advantages, which helps people want to renew their fleet at a sooner level. If you get a 7% benefit in fuel economy from a new Peterbilt or Kenworth or a DAF in Europe, the value is so high that you just want to replace the truck, plus the driver satisfaction is higher, and it’s just a good business decision. So I think we see those turns happening more frequently. Michael Feniger: Helpful. And you mentioned earlier in the call how used truck values have moderated, yet still high on a historical basis. Do you find the spread between new truck pricing and your used truck pricing wider than normal? Or is the moderation in used truck values more of just a normalization of production? Curious how you’re kind of seeing that used values playing out in the second half of this year? Harrie Schippers: Talk about normalization of used truck prices. If we compare back to a year ago, used truck prices were extremely high and probably not even healthy for the market. I think in the meantime, used truck prices have come down to very normal levels. And our company, it’s the finance company that sells the used trucks. And we’ve built out a network of 13 used truck centers that help us to sell more used trucks to retail customers at a premium price. So even at a slightly moderated used truck pricing levels, the finance company continues to do well and is able to sell the used trucks that we get back at profit levels. Michael Feniger: Thank you. Harrie Schippers: You bet. Operator: Thank you. [Operator Instructions] We have no further questions. I would like to hand back for any closing remarks. Ken Hastings: We’d like to thank everyone for joining the call, and thank you, operator. Operator: Thank you, everyone for joining today’s call. You may now disconnect your lines, and have a lovely day. Follow Paccar Inc (NASDAQ:PCAR) Follow Paccar Inc (NASDAQ:PCAR) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

A Nikola truck reportedly caught on fire, damaging the company's reputation. Electric truck maker Nikola Corp. (NASDAQ: NKLA) had one of its trucks catch on fire. It may not be the same one that caught on fire with a few others in June. However, the trouble damages a company that is probably already damaged beyond repair. Trucks do catch on fire occasionally. This happened with several Ford F-150 Lightnings. Ford can weather this, given its size, balance sheet and brand. A tiny startup is another matter. (These are the 15 most fuel-efficient trucks.) Reuters, which reported the fire, wrote that “At approximately 2 pm today at Nikola HQ, one of the trucks that was previously damaged reignited. No one was injured and the fire was quickly contained.” That is no one except management’s reputation. Nikola’s stock rose earlier this month due to a deal for BayoTech, a modest-size hydrogen producer, which will buy up to 50 Nikola Class 8 hydrogen fuel cell trucks between now and 2028. In addition, a huge German company, Bosch, said it would begin production of its fuel-cell power product, with Nikola as the anchor customer. Neither deal can do much to save Nikola, which trades as a penny stock for $2.50 a share. That is down 57% in the past year. Nikola’s finances are a train wreck. In the most recent quarter, it announced 31 wholesale deliveries to dealers and 33 retail sales to end customers. That fails to represent even modest success. 24/7 Wall St. America’s Deadliest Cars to Drive wallst_recirc_link_tracking_init( "31734444664be82a58a250", "graphic" ); In the same period, Nikola lost $169 million on $11 million of revenue. In a crowded electric vehicle market with dozens of competitors, some of which are huge, Nikola does not have a chance. 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......»»

How US Vehicle Production Has Shifted Over 45 Years Over the last few decades, vehicle production in the U.S. has dramatically shifted, with SUVs emerging as the indisputable frontrunners. Once perceived as vehicles solely for off-road capabilities and adventuring (hence the name sport utility vehicle), SUVs soon became a useful transportation alternative for large families. Shortly after, they became the top-selling models for many automakers. In the graphic below, Visual Capitalist's Marcus Lu and Bruno Venditti, using on the annual production shares of different vehicle types from the U.S. Environmental Protection Agency (EPA), explore the factors that have led to the surging popularity of SUVs. U.S. Vehicle Production: The Rise of SUVs As SUV production has evolved, they’ve started to blur the line between car and truck classes. The EPA classifies most two-wheel drive SUVs under 6,000 lbs as cars (car SUVs), while those with four-wheel drive or above 6,000 lbs are trucks (truck SUVs). In the American market, sedans and wagons dominated production from before the 1970s and well into the 1990s. Combined with smaller car SUVs, cars accounted for more than half of U.S. vehicle production well into the 2010s. But the rapid rise of heavier truck SUVs has shifted the landscape. Sedans and wagons dipped below 50% of market production for the first time in 2004. And by 2017, trucks (including truck SUVs, pickups, and minivans) have been the ones accounting for over half of new vehicle production. The growth of SUVs can be partially linked to all-wheel drive systems that gained momentum in the 1980s, with the Audi Quattro winning three rallies in its rookie season of 1981. During that same time, new SUV models started to gain popularity, like the 1984 Jeep Cherokee—considered the first modern SUV with four doors—and Land Rover’s Range Rover, which entered the North American market in 1987. By melding the benefits of space, performance, and comfort into one vehicle, SUVs began competing with both vans and station wagons as the quintessential family car. In the 90s, affordable midsize models like the Ford Explorer, Subaru Legacy Outback, and Toyota RAV4 paved the way for more middle-class families to enter the SUV market. However, SUV production has been prone to fluctuations. Demand first started dropping as gas prices rose in the lead-up to the 2008 recession, which further strained finances and caused families to opt for cheaper non-SUV models. This significantly hurt the American “Big Three” automotive producers (GM, Ford, and Chrysler) at the time, for which trucks and SUVs had become the primary market. SUV Fuel Efficiency and Millennials Driven by improvements in fuel efficiency and societal trends, SUV demand roared back over the last 10 years. Automakers have implemented fuel-saving technologies, such as direct injection and turbocharging, and have used more lightweight materials in construction to further boost engine efficiency. While fuel efficiency has improved across all types of vehicles over the last four decades, sedans and wagons climbed far earlier in miles per gallon (MPG) scores, while SUVs have only more recently started catching up. Since 2000, fuel efficiency for sedans and wagons improved by around 38%, while car SUVs saw a jump of 70% over the same time period, with both sitting at just over 30 MPG for 2021 models. Even larger truck SUVs, seen as the epitome of gas-guzzling vehicles, have become as efficient (in MPG terms) as sedans were in the 2000s. Another factor influencing the market is the surprising entry of millennials, who now represent the majority of the population in the United States. Just a few years ago, automakers were fretting over millennials being a childless, car-less, city-dwelling group who cared little about buying cars or homes. Fast forward to today—as millennials have aged and their wallets have gotten a little heavier, more of them are buying SUVs to drive to their suburban homes or just to fit their dogs. SUVs are also benefiting from the shift to electric vehicles. In 2022, SUVs represented 46% of global car sales, and electric SUVs accounted for over half of global electric car sales. Tyler Durden Fri, 07/21/2023 - 20:40.....»»