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CareTrust REIT, Inc. (NYSE:CTRE) Q2 2023 Earnings Call Transcript August 4, 2023 Operator: Good morning. My name is Colby and I will be your conference operator today. At this time, I would like to welcome everyone to the CareTrust REIT Second Quarter 2023 Earnings Conference Call. [Operator Instructions] After the speakers’ remarks, there will be […] CareTrust REIT, Inc. (NYSE:CTRE) Q2 2023 Earnings Call Transcript August 4, 2023 Operator: Good morning. My name is Colby and I will be your conference operator today. At this time, I would like to welcome everyone to the CareTrust REIT Second Quarter 2023 Earnings Conference Call. [Operator Instructions] After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Lauren Beale, CareTrust’s Senior Vice President and Controller. You may begin. Lauren Beale: Thank you and welcome to CareTrust REIT’s second quarter 2023 earnings call. Participants should be aware that this call is being recorded and listeners are advised that any forward-looking statements made on today’s call are based on management’s current expectations, assumptions, and beliefs about CareTrust’s business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and other matters and may or may not reference other matters affecting the company’s business or the businesses of its tenants, including factors that are beyond their control, such as natural disasters, pandemics such as COVID-19 and governmental actions. The company’s statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein. Listeners should not place undue reliance on forward-looking statements and are encouraged to review CareTrust’s SEC filings for a more complete discussion of factors that could impact results, as well as any financial or other statistical information required by SEC Regulation G. Except as required by law, CareTrust REIT and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances or for any other reason. During the call, the company will reference non-GAAP metrics such as EBITDA, FFO and FAD or FAD and normalized EBITDA, FFO and FAD. When viewed together with GAAP results, the company believes these measures can provide a more complete understanding of its business, but cautions that they should not be relied upon to the exclusion of GAAP reports. Yesterday, CareTrust filed its Form 10-Q and accompanying press release and its quarterly financial supplement, each of which can be accessed on the Investor Relations section of CareTrust website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period. On the call this morning are Dave Sedgwick, President, and Chief Executive Officer; Bill Wagner, Chief Financial Officer; and James Callister, Chief Investment Officer. I’ll now turn the call over to Dave Sedgwick, CareTrust REIT’s President, and CEO. Dave? Dave Sedgwick: Well, good morning, everyone, and thank you for joining us. Q2 saw continued positive momentum on many fronts: investments, operator relationships, the existing portfolio, and equity issuance. I’ll touch briefly on these and on the regulatory environment before handing the call over to James and Bill to provide more color. First, investments and operator relationships. Investing roughly $200 million at our historic yields across eight transactions with six new operators in one quarter represent some of the best work done in that short amount of time in our history. Last year, with the dearth of attractive acquisition opportunities, we decided to lend more than in years past. Our view of lending is that in most cases, those loans do not directly produce real growth, because of the short-term nature of the returns and the need to immediately recycle the payoffs. However, there is a strategic case for measured lending activity here, if several criteria are met that lead us to believe there will be real growth opportunities with that borrower or operator in the future. In fact, of the roughly $200 million invested in the quarter, a $128 million is an indirect result of last year’s lending activities. Capital has not historically been the constraint for us to grow. For CareTrust, the choice of operator has always been the most important consideration for new investments. We are thrilled to welcome six new operators in the quarter. That deeper bench opens up new markets and new opportunities for investment. We are eager to help grow these relationships and continue to expand our existing operator relationships as well. Second, looking at the existing portfolio, last quarter, I gave more color around one skilled nursing operator, not in our top 10 with negative lease coverage that accounted for roughly $5 million of contractual rent. We decided the best path forward is to classify these assets as held for sale and are currently negotiating the sale of these properties. We’ve therefore removed this operator from the supplemental. In this up, we have reported on lease coverage in an expanded way since the pandemic began. We’ve been reporting coverage in three ways: first, on a pre-pandemic basis; two, excluding provider relief funds; and three, amortizing those provider relief funds through their eligible periods. When you look at coverage, excluding the relief funds trailing 12 property level EBITDAR coverage for the portfolio through March 23 increased to 2.13 times overall, compared to the 12-month leading up to December 2022 of 2.01 times. Removing the properties now held for sale contributed to 9 bps to the overall coverage improvement. Finally, on the regulatory front, two quick comments. First, we continue to wait for the proposed minimum staffing requirement from the Biden administration. We don’t have any more insight really into what to expect and has been speculated by many others. And second, we’re pleased to see the announcement this week of the net 4% increase to the medicare rate effective October for fiscal year 2024. So the first-half of the year was extremely busy for the whole team here. We’re excited for the new investments and the new operator relationships. We’re pleased to see the vast majority of the portfolio doing well and positioned to expand together, including the investments and equity issuance from the ATM forward, year-to-date we have already funded 96% of the $215 million of new investments and are going into the second-half of the year with ample dry powder to continue to grow the business and set up the company for a return to growth in 2024. With that, James, we’ll talk about our recent investment activity and pipeline. James? James Callister: Thanks, Dave, and good morning, everyone. I’ll start by adding some additional color on the transactions Dave referred to in his remarks and we’ll then turn to discussing the current acquisitions market and our deal pipeline. Q2 was an exciting and busy quarter for the acquisitions team at CareTrust. As Dave mentioned, during the quarter we closed eight transactions, seven acquisitions and one mortgage loan. Acquired 12 facilities and added six new operated relationships with a total investment amount for the quarter of approximately $200 million at an initial blended yield of 8.4% and we expect the stabilized yield on these assets after two years to be 9.5%, not including annual CPI based rent escalators. Of the 12 facilities we acquired during this quarter seven are skilled nursing, four are assisted living in memory care, and one of them is a skilled nursing and assisted living campus. We also closed on a $26 million mortgage loan. Several of these transactions closed subsequent to the date of our Q1 earnings call. During June, we closed on a four facility skilled nursing portfolio in Southern California and entered into a 15-year master lease agreement with Lynx Healthcare. Lynx is an established California skilled nursing operator, who we have known and admired for many years. Year one rent under Lynx master lease is approximately $6.8 million increasing to $7.6 million in year two and to $8.9 million in year three, with CPI based annual rent desk escalators thereafter. In June, we also closed three other transactions the acquisition of a 125 bed skilled nursing facility in Katy, Texas, the acquisition of a two facility memory care portfolio in Michigan and Ohio and the funding of a $26 million mortgage loan secured by a skilled nursing assisted living and independent living campus located in Loma Linda, California. In July, we followed these transactions up by funding a $15.7 million mortgage loan on two Florida skilled nursing facilities to our existing tenant, the Elevation Group, at an interest rate of 9%. While we are excited to have put $215 million out to work this year, we do not feel like we are done. Overall, deal flow remains strong at a pace relatively unchanged from last quarter. We continue to opportunistically pursue deals where we feel our access to capital, low execution risk, and reputation as a quality transaction partner, make us a particularly attractive buyer. With respect to the skilled nursing acquisitions market, pricing has continued to adjust as we have seen a further tightening of credit by lenders, who continue to increase borrowers’ equity requirements and require additional recourse liability to borrowers and guarantors. There continue to be attractive opportunities to source and pursue skilled nursing acquisitions, particularly in those states where there have been favorable medicaid rate increases. With respect to seniors housing, we are still seeing a gap between seller and buyer pricing expectations. Much of the seniors housing deal flow coming across our desk involves increasing numbers of facilities in some stage of operational distress, as sellers face hikes and variable interest rate loans and/or maturity day risk. Moving forward, with many of the high leverage buyers not as active in the acquisition space as they have been previously, and given the company’s access to funds through our low leverage and ability to issue equity, we remain focused on external growth opportunities. We continue to foster and enhance our relationships with the broker community, but we have also seen promising results from our decision last year to direct additional resources and manpower towards sourcing off market opportunities and towards developing new operator relationships and geographically strategic areas. Nevertheless, we are careful to continue our history of a disciplined approach to underwriting and evaluation as we work closely with operators to focus on key factors that will allow them to execute on their business plans with a sustainable rent structure. The pipeline today sits at approximately a $150 million as we continue to look for opportunities that can be accretive to our operators. We will continue to execute on our acquisition strategy of disciplined growth with risk adjusted returns consistent with how CareTrust has been built over the past nine years. And with that, I’ll turn it over to Bill. Bill Wagner: Thanks James. For the quarter, normalized FFO decreased 2.8% over the prior year quarter to $34.6 million and normalized FAD decreased by 3.6% to $36.1 million. On a per share basis, normalized FFO decreased $0.02 to $0.35 per share, the normalized FAD decreased $0.03 to $0.36 per share. Rental income for the quarter was $47.7 million, compared to $46.2 million in Q1. The increase of $1.6 million is due largely to the following items. First, we received approximately $1.1 million from new investments; second we received approximately $369,000 in CPI bumps; third, tenant reimbursements, which are non-income and FFO producing, because they have a corresponding expense increased $507,000 to $1.2 million. Lastly, these positive items were offset by $202,000 lower cash related to a prior tenant that we’ve mentioned on the last two calls, a $180,000 lower cash collect collections from existing tenants that are on a cash basis and $63,000 from properties that we have sold. If you exclude the tenant reimbursements amount of $1.2 million, contractual cash rental revenue was $46.5 million for the quarter. Another way to reconcile the contractual cash rent of $46.5 million is to take last quarter supplemental where we disclosed annualized contractual cash rent at 3/31 of a $184.3 million. If you back out the one tenant we’ve been talking about, who represents about $5.1 million you get an annualized number of a $179.2 million, divide that by four to get a quarterly number of $44.8 million. Add in the $1.1 million of new investments, $280,000 of CPI bumps, $370,000 of cash collected from that one tenant, and you get $46.5 million. There are some other immaterial items in there that net to zero. I’m hope this — I’m hopeful this helps you better reconcile this number. Interest income was down $635,000, due to a $15 million note that was paid off at the end of Q1. The quarterly interest income rate on our Notes portfolio is approximately $4.4 million. Interest expense was up $1.2 million from Q1 due to higher borrowings and rates. Also, subsequent to quarter-end, we drew $30 million more on the revolver. G&A expense decreased $343,000 from Q1 due mostly to show lower short-term incentive comp. Stock compensation continued to be roughly $1 million, due to stock forfeitures in Q2 related to certain performance criteria that needed to occur that likely will not be met. I expect that it will return to a quarterly run rate of around $1.6 million in Q3 and Q4 and G&A expense for the year will be around $21 million. Cash collections for the quarter came in at 96.7% of contractual rent and in July, we collected 98%. We entered into a forward sale agreement under the ATM program and to-date have approximately 10.6 million shares at an average gross price of $19.80 for net proceeds of $207 million. As a result, our liquidity remains extremely strong with approximately $12 million in cash, $290 million available under our revolver and the $207 million of future ATM proceeds. I expect we will settle this contract during the third quarter and use the proceeds to pay down the line. Leverage also continued to be strong with a net debt to normalized EBITDA ratio of 3.8 times, which is below our stated range of 4 times to 5 times. Our net debt to enterprise value was 26% as of quarter end, and we achieved a fixed charge coverage ratio of 4.5 times. And with that, I’ll turn it back to Dave. Dave Sedgwick: Great. Thanks, Bill. We hope the reports been helpful to you and happy to take your questions now. Q&A Session Follow Caretrust Reit Inc. (NASDAQ:CTRE) Follow Caretrust Reit Inc. (NASDAQ:CTRE) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Your first question comes from the line of Tao Qiu from Berenberg Capital. Your line is open. Tao Qiu: Hey, good morning out there. Congrats on a very active quarter. I think I lost kind of how many transactions that came through, but the street was certainly impressive. Dave Sedgwick: Thank you. Tao Qiu: But my first question is on the $5 million tenant, I think last quarter you said was the main reason that keeps you from issuing full-year earnings guidance. The assets have been moved to [Indiscernible] sell. You see some rents this quarter and some more in third quarter. It doesn’t seem to be a lot of downside from here. Are there any other variables that we’re now considering from a guidance perspective? Dave Sedgwick: Oh, great question. No, I’d say that this tenant and the — how it ultimately plays out continues to be the primary factor for us in, and not issuing guidance quite yet. The sales price and the amount of rent that is in place is significant enough for us to hold off on guidance at this point. Tao Qiu: Got it. And the follow-up on that, I think in Iowa, I saw that Medicare rate rose by $50 in April and I think another $15 in September, so understanding the starting rate in that state is pretty low, but curious why would you choose to sell the assets today rather than kind of seeing through the rate gains? Dave Sedgwick: Yes. The — we believe that the best path forward for these particular assets is probably a sale, nothing is set in stone at this point. We’re negotiating, with the buyer right now. And we think that, that’s the best path forward. As we look at the proceeds from that and what a ultimate rent reset would be in the likelihood of being able to turn it around at the existing rent. When you look at all of that, we think that the — a sale is probably the most advantageous outcome for us. Tao Qiu: That’s fair. And one last one for me. So on the four ATM sales, how should we think about the settlement schedule? Like, from a modeling perspective, should we expect that to be settling multiple tranches? Just curious how we should build that into our models? Thank you. Bill Wagner: This is Bill. I would probably model that as settling it in the third quarter. We would probably hold it out a little bit longer if interest rates weren’t where they at — aren’t where they at, but given how high they are, the accretion of holding it out on the forward isn’t really there. So we’ll probably settle it in Q3, all of it. Tao Qiu: Great. Thanks, guys. Dave Sedgwick: Thank you. Operator: Your next question comes from the line of Wes Golladay from Baird. Your line is open. Wes Golladay: Hey, guys, are you looking to develop a lot of new relationships and just curious how big the pool is of the high quality operators that are actually looking to monetize assets? Dave Sedgwick: Well, we love that question. When we, you know, one of the things that makes us a little bit unique, I think, is the level of former operator experience that we have here at CareTrust. And so the priority that we give that decision in any investment is really paramount. If you look at the first real big wave of growth that we had, we had found, a number of hungry younger operators, and we placed some pretty good bets on them. And those have, for the most part, really paid out beautifully. And we feel like as we look at this next phase of growth, that’s going to come from expanding those existing relationships, but it’s also going to require some new ones. And so last year, we made some decisions around human capital here at CareTrust and moved some people over into investments with the express mandate to build that operator bench to find off, off market deals and to find operators that that we don’t know. And to see the fruit of that decision and effort happened so quickly, it’s been really gratifying to us as we’ve welcomed in six new operators already. We’re not done. So we’re going to continue to look for the best of breed operator that have some of the same characteristics as almost successful operators have demonstrated, so that we can have new geographies and new opportunities for growth that, that we haven’t quite had in the past. Wes Golladay: Okay. And then looking at the balance sheet, I’m just curious how low would you take leverage? And I guess what is the delta between your cost of debt and cost of equity, or would you — look to issue short-term debt in the near-term at any point? Just curious on how the balance sheet will be going forward. Bill Wagner: Yes. This is Bill. I’ll take that one. Right now [Technical Difficulty] short-term debt, which is our revolver and our equity is not that great. So as long as we’re doing deals at the yields that we’re currently doing and our stock price holds that where it’s currently at, I think you can assume that we’ll continue to issue equity, to match fund these investments as we go and that inevitably will take leverage down, but over time, I think as interest rates call it lower, and we continue to do more investments. We’ll probably, use a little bit more, short term debt with that revolver. Wes Golladay: Okay. Thanks for the time, everyone. Dave Sedgwick: Thank you. Operator: Your next question comes from the line of Steven Valiquette from Barclays Capital. Your line is open. Steven Valiquette: Oh, hi. Thanks guys. Thanks for taking the questions. Couple here, I guess first, just based on some of the comments from other health care REITs this quarter. Seems to still be a pretty wide range on sniff transaction valuations either from a, you know, per bed or a cap rate perspective, because the cap rates are maybe, you know, 8.5% to 10.5% range and per bed is anywhere from, you know, $75 to maybe a $125,000, somewhere in there. So just curious to get your thoughts on how you think the industry evaluations are trending directionally right now. And then I got a follow-up on a different topic that I’ll ask in a minute, I guess. James Callister: Sure, Steven. This is James. You know, I guess, I would say that, first, you know, per bed is really to us useful when the assets really aren’t cash flowing. And, you know, the variation in per bed pricing amongst different geographies is really huge. It’s just you can go from, you know, some markets trading close to $200,000 a bad to other market trading $30,000 a bed. So it’s really all over, I would say, and it’s hyper geographical for us as we look at it. I think that there is definitely on the skilled nursing side, you know, an upward trend in yields, that are being used to price the deals. I think that we’re, you know, starting in the high-9s or even 10 for beds on skilled nursing. And I think that, as some deals slowly start, you know, that we look at to actually become positive cash flowing, you know, then you do look at the per bed, but you also work super closely with your operator to make sure that you are really trying to dial in a stabilized value that will give them a rent stream they can really be successful with, which can be difficult in today’s environment, particularly with labor. I do think, like I said, rates are up in terms of the yield, but cap rates are still pretty much the same as skilled nursing world at around 12.5%. Steven Valiquette: Okay. Okay, that’s helpful. And shifting gears here a little bit, you know, among some of the healthcare, payer, and provider companies that we cover. There’s definitely been a buzz that behavioral health demand has accelerated this year. Seems like both from, you know, their per visit basis and but also for a facility based care settings. So I guess in light of that, just looking for, you know, maybe the latest update on the progression some of the facilities that you’re repurposing for behavioral? You know, the weather we’re close now to some reopenings, how you’re feeling about the pace of your strategy around this? And also just thinking about the, page nine in the supplement when you kind of break down the portfolio performance by property category. And when should we think that behavioral might be like a separate category within that? Is that something that might start happening for 2024 or if you guys haven’t thought about that yet, but just curious when that might become, you know, an additional category within the, you know, the property type breakdown of performance. Dave Sedgwick: Yes. That’s great. So our strategy with respect to behavioral has been to, let’s say, shoot some bullets before cannonballs. We want to take a bit of a measured approach and test out the thesis. And so we haven’t been super aggressive in trying to grow in that space just to grow, just to do it. Our philosophy for behavioral is exactly the same as it is with skilled nursing, which is we’ve got to have a conviction in the operator, their model, and have a really strong relationship with them in order to do that. Candidly, we’ve been so busy with our bread and butter and have seen so many great opportunities with the skilled nursing, seniors housing assets, but that’s taken, all of our attention. The conversions that are in place are still tracking. They’re coming along. The renovation work is underway. And, those will come online as soon as they are ready. I think early next year, we have had, we came close on a sale leaseback with the behavioral operator this year. They ultimately brought us — they had brought us in a little bit late into their process and decided to go ahead with the normal financing that they had planned. And so it’s still very much an area of interest for us, the priority to identify the best operators in the space, it’s a space that’s even more fragmented than the skilled nursing space is in terms of operators and building those relationships and finding those best operators is a bit of a challenge, but it’s when we’re here for. And we want to that segment over time, but it’s really going to be dependent on finding those operators and finding the right accretive deals. And so I think until we have a little bit more critical mass, that’s when we’ll start reporting on that as a separate segment. Steven Valiquette: Okay. Great. That’s definitely a helpful update. Thanks. Dave Sedgwick: Alright. Thank you. Operator: Your next question comes from the line of Michael Carroll from RBC Capital Markets. Your line is open. Michael Carroll: Yes, thanks. Dave, I want to touch back on the assets that you have held for sale. I know you said you have one interested buyer into that property, I mean, I guess, what is the level of interest? I mean, are there — is that — is the deal going to get done with that one buyer potentially or is there other players, kind of, in the sidelines that aren’t there looking at it too? Dave Sedgwick: Yes. We have fielded interest, we are working with a buyer right now. We’ve been negotiating purchase sale agreement in terms and all of that, that’s moving forward pretty well, but we’re sort of gotten out on the process, and we have fielded interest from some backup options and plan Bs that, that are a host of, you know, purchasing versus, re-tenanting with a purchase option and different things like that. But we’re — all of our energy right now is really with the group that we are negotiating with. Michael Carroll: Okay. And the existing operator, I know they still continue to pay a tiny bit of rent. I guess why are they still paying those small stub pieces of rent and are they interested in buying this portfolio? Dave Sedgwick: Yes. They have expressed interest in that. And I think that, you know, by staying active and engaged in improving the performance there and paying some rent, give them, you know, an advantage position in the negotiations and in our thought process. Michael Carroll: Okay. And then what’s the timeline should be expecting on this. I know for the past few quarters, you kind of highlighted that you’d have a plan in place and it could get done pretty quickly. I mean, is — could this get done by the end of the year? Dave Sedgwick: Oh, Mike, I hope so. But given the environment we’ve been in and that we remain in, transactionally, it’s just — it’s the most challenging market for buyers, who have to finance stuff, that we’ve ever seen. And so I want to — not make any prediction on the timing on this one. Michael Carroll: Okay. And would you provide are you willing to provide seller financing to the buyer? Dave Sedgwick: It’s a possibility, you know, our preference would be to have a clean break, but that might be required to get a deal done. Michael Carroll: Okay, great. Thank you. Dave Sedgwick: Thanks, Mike. Operator: Your next question comes from the line of Connor Siversky from Wells Fargo. Your line is open. Connor Siversky: Hi there. Happy Friday, everyone. Seems to be running out of question ideas here, but maybe taking a more abstract view on underwriting. You know, I’m curious as we’ve gone through COVID and the risk factors changed dramatically for, you know, skilled nursing. Has your perception of risk in the underwriting framework changed? And I mean that in the context of looking at the risk curve as rates have gone up, would you actually — would it be reasonable to assume that your underwriting standards have gotten more stringent, following what happened over the past couple years? Dave Sedgwick: It’s a great question. And, James, you can correct me if I’m wrong on any of this, but I think the short answer is no. That our underwriting hasn’t become more stringent. I think we’ve always tried and worked at having a very disciplined collaborative underwriting process with our operator. So before we even log in an LOI, we’re usually already underwritten the deal together and really tested each other’s assumptions and gotten comfortable. And so the process is very similar to what it was pre-pandemic. We just look at things in a bit of a different light, because of the pandemic today. But I still feel like we’ve been able to be successful even in the midst of the pandemic, underwriting these deals that, that maybe require return. I would point your attention to the investor deck that we put out along with maybe in June, we actually put in a slide there, the case study of a few buildings that we had underwritten with an existing operator. In the middle of the pandemic, I think that we acquired them in 2021, they were not cash flowing. So on underwater, basically, on day one, but we had worked on the pro forma together, and we as former operators feel like we can feasibility test that pretty well. The improvement from day one in place negative or under 1 times coverage to just about 18-months later was really impressive, a lot of the investments that we’ve done this year, kind of, followed that same model where these buildings haven’t been fully stabilized, perfect, anywhere, you know, only place to go is down. Now there’s been quite a bit of upside in them. And so, I think, Connor, that as we employ our experiences operators, and we select the right operator, and we collaboratively underwrite together that we can have great success. James Callister: Yes. I think, Connor, I would just add that, you know, through COVID, maybe we look at one, you know, few things differently, in particular on the expense side. We may really look at labor, obviously, a lot more carefully just in terms of understanding where the facilities are, what the labor situation is, and the immediate geography, looking closer, especially if it’s a rural deal at, are they really going to be able to find labor? So I think there’s one or two, you know, a few things from that came out from the fallout of COVID and where market is today, that have led us to focus more carefully on a few things. But the overall process is still pretty consistent with what we’ve done before. Connor Siversky: Great. Thank you for the color. Enjoy the weekend. Dave Sedgwick: Thanks, Connor. You too. Operator: [Operator Instructions] Your next question comes from the line of Austin Wurschmidt from KeyBanc Capital Markets. Your line is open. Austin Wurschmidt: Great. Thanks, everybody. If the existing operator or capital behind the existing operator were to purchase, you know, these assets in Iowa. I guess, is it safe to assume that, you know, you’d require kind of market value plus any back rent to win that deal? Dave Sedgwick: Yes. I think we just have to be a little careful on what we would accept and what we would, you know, during an open negotiation like this. So we’d probably have to, unfortunately, deflect comments on ongoing negotiations right now. Austin Wurschmidt: That’s fair. But and maybe if you were to sell or finance, how much of the deal value would you ultimately be willing to finance, just given kind of what’s happened here operationally and some of the challenges they faced? Dave Sedgwick: I’m really not trying to avoid you, but it’s kind of the same issue. What we’ve, you know, the terms of the transaction, how much we would finance, what the price would be, what conditions we would need, and that’s all very much, in play real time, so we can’t really comment on it. Austin Wurschmidt: Okay. and then just speaking back to the $150 million investment pipeline, what’s been kind of the timeline from, you know, time it enters the pipeline to where you’re able to close and, you know, how much really beyond that $150 million is crossing your desk that meets you know, criteria, but, you know, just is on the back burner until you’re really able to move on those? Bill Wagner: Also, it’d say that, you know, how long a deal takes from when we get it in to when we close, it’s all over the place, right? It’s very dependent on a number of things, you know, I think you see a, you know, a little bit of a rush in the, you know, June, July time period, especially in California with some changes in the chow regs. So, you know, sometimes the deal’s going to take you know, you might have to provide a 120 days of notice before you can close others, you know, you’ll get finished in 60 to 90 days. I would say typically from the time we see it, it’s probably a 90 to 120 day process. And in terms of, you know, things that are, you know, outside of the $150 million, I guess I’d say that, look, if something looks good to us, we’re — we really don’t put it on the back burner ever. It it’s front and center, and we’re going to get the resources to it that it needs for us to be competitive and go get it. So I think that, you know, things on the backburner, if you like them, they’re not going to stay there. They’re going to move to the top or towards the top very quickly. Austin Wurschmidt: Yes. It just seems like you guys have had success quickly backfilling that $150 million throughout the year. So I was just curious beyond that. But, last one for me, I’m just curious, what percent of your leases are CPI based? Bill Wagner: W: Dave Sedgwick: Yes. Almost all of them. I mean, if we give a short-term a fixed ramp, that might be there, but then ultimately it goes to CPI based, the vast majority are. Austin Wurschmidt: Okay, thank you. Dave Sedgwick: Thank you. Operator: There are no further questions at this time. I will now turn the call back over to Dave Sedgwick. Dave Sedgwick: Oh, thank you. Well, we really appreciate everybody’s support and questions. And as always, if there’s anything else that you’d like to talk to about, you know, where to reach us. Have a great weekend. Operator: This concludes today’s conference call. You may now disconnect. Follow Caretrust Reit Inc. (NASDAQ:CTRE) Follow Caretrust Reit Inc. 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Cognizant Technology Solutions Corporation (NASDAQ:CTSH) Q2 2023 Earnings Call Transcript August 2, 2023 Cognizant Technology Solutions Corporation beats earnings expectations. Reported EPS is $1.14, expectations were $0.97. Operator: Greetings, and welcome to the Cognizant Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure […] Cognizant Technology Solutions Corporation (NASDAQ:CTSH) Q2 2023 Earnings Call Transcript August 2, 2023 Cognizant Technology Solutions Corporation beats earnings expectations. Reported EPS is $1.14, expectations were $0.97. Operator: Greetings, and welcome to the Cognizant 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, Tyler Scott, the Vice President of Investor Relations. Please go ahead. Tyler Scott: Thank you, operator, and good afternoon, everyone. By now you should have received a copy of the earnings release and the investor supplement for the company’s second quarter 2023 results. If you have not, copies are available on our website, cognizant.com. The speakers we have on today’s call are Ravi Kumar, Chief Executive Officer; and Jan Siegmund, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today’s call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company’s earnings release and other filings with the SEC. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliations of non-GAAP financial measures where appropriate to the corresponding GAAP measures can be found in the company’s earnings release and other filings with the SEC. With that, I’d like to turn the call over to Ravi. Please go ahead. Ravi Kumar: Thank you, Tyler. Good afternoon, everyone. I would like to discuss four topics with you today. Our second quarter results, the demand environment of comprehensive commitment to generative AI and an update on our long-term priorities. We made continued progress during the quarter in what remains an uncertain global macroeconomic environment. Q2 came in at $4.9 billion at the high end of our guidance range. We were pleased to return to sequential revenue growth of more than 1%. Year-over-year Q2 revenue showed a modest decline of 40 basis points or essentially flat in constant currency. Our adjusted operating margin was 14.2% and adjusted EPS was $1.10. We recorded another quarter of strong bookings growth 17% year-over-year ending quarter two with record trailing 12-months bookings of $26.4 billion. A book-to-bill of 1.4x approximately 30% of our in quarter Q2 bookings were large deals and five of this deals exceeded $100 million each. Our bookings continue to be a balance mix of renewables, extensions and new opportunities. The leadership team and I remain intensely focused on a talent. So I am glad to see the continued reduction in our iteration with trailing 12-months voluntary attrition for our tech services business declining to 19.9% down 3 percentage points sequentially and 11 percentage points year-over-year. While Jan will cover our performance at a business segment level, I want to offer a quick word about financial services. Our quarterly year-over-year revenue decline in the segment reflects the soft market and continuing weakness in discretionary spending. In response, we are transitioning more existing work in the sector towards managed services as many clients remain focused on driving cost takeout, vendor consolidation and productivity initiatives. We also stepping up our engagement with fintech companies which we believe offer a great opportunity for digital transformation. And we are strengthening our capabilities with a goal of capturing discretionary spending on transformation work when it returns. For example, we continue to support the modernization of S&P Global’s Configure Prize Quote System to enable end-to-end digitization in what we believe is the world’s largest CPQ implementation on Salesforce. And we are collaborating with Max, Life Insurance to launch an innovation and development center in Chennai to help accelerate the digital transformation efforts. With a flexible fine-centric operating model, we can assist clients across industry sectors, takeout costs, consolidate their vendors and achieve both technology and operational efficiencies which provide opportunities for large deals. We can also help them develop digital platforms to deliver richer and more personalized experiences to their customers. What’s more, we can engineer technology into their products and services. As an example, we recently extended a partnership with Gilead Sciences. This agreement includes the renewable and expansion of Cognizant services for a total expected value of $800 million over the next five years. We’ll manage Gilead’s global idea infrastructure while leading digital transformation initiatives designed to enhance their overall client experience and enable faster time to market for the products. We will apply the power of GenAI and Intelligent Automation to help improve Gilead’s customer service experience and assist in driving greater manufacturing efficiencies. To support clients’ transformation leads, we’ve established a distinctive position across industry using a platform-centric approach designed to speed clients’ consumption of technology. You’ve seen the emphasis we’ve given to this platform approach. For example, Cognizant, TriZetto and healthcare are shared investigator platform in life sciences, asset performance excellence in smart manufacturing and Car-to-Cloud in automotive. Last quarter, we launched two new platforms with applications across industries, new royalty operations, which enables AI-led autonomous operations and Cognizant Sky-grade designed to help clients maximize the full potential of cloud. Turning to AI in quarter two, we expanded our platform portfolio further with Cognizant Neuro AI. It’s designed to speed the adoption of generative AI and harness its value in a flexible, secure, scalable and responsible way. With Neuro AI, we are helping clients advance from identifying company-specific use cases to operationalizing AI. I should point out that generative AI is a natural evolution of a work-crossed cognitive AI enterprise applications in data analytics services. To extract value from GenAI, the data must be curated, trained, modernized and made production ready. You also need a deep understanding of clients’ data estate, data architectures, data usage patterns, and business applications of the data. Our current approach to leverage third-party foundational models and enhance them with our platforms and IP and then fine tune the models for clients. Today we have more than 100 active client engagements in various stages with the focus on cognitive and generative AI, as well as hundreds more projects using AI services within the context of delivery. We’re designing a generative AI offerings for industry-specific solutions, cross-industry use cases in productivity, enablement, under themes like transforming code processes, improving the customer and employee experience, product innovations, software and coding, and knowledge management to name a few. For example, one of the world’s largest healthcare product companies, we are helping to speed up the research process by deploying GenAI to author scientific content. We developed a workbench that uses GPT models to summarize and generate content from unstructured and structured data, such as laboratory information management systems with the aim of automating the generation of regulatory content. For a top-20 property and casualty insurer, we have helped frame its GenAI strategy and conduct real-world tests based on company data. For example, we built a GenAI-based digital virtual assistant that analyzed large loss complex claims submissions. By referencing the insurer’s claim data, the virtual assistant was able to guide a human claims handler to gather nearly 100% of missing claims information. This simple application is expected to produce millions of dollars in savings through improved operational efficiency and reduced claim costs. In addition, we signed a new multi-year agreement with Nuance Communications, a Microsoft company, to help scale the resources for Nuance’s Dragon ambient experience operations. This solution is at the forefront of conversational AI and ambient clinical intelligence. Let’s turn to the essential role partners play in delivering our AI capabilities. We expanded our alliance with Google Cloud to help enterprise clients create, migrate, and modernize their AI journeys, and offer clients innovative industry solutions founded on the tenet of responsible AI. Our investments in developing GenAI capabilities include launching the Cognizant Google Cloud AI University, a program designed to train 25,000 Cognizant professionals on Google Cloud AI technologies. We’ll offer this program to our clients as well. And earlier today, we announced that as a part of our expanded partnership with Google, we’ll be building on Google Cloud’s Generative AI technology with Cognizant’s AI domain expertise to create a healthcare large language model. This LLM is designed to simplify and improve the accuracy of complex healthcare administrative tasks and strengthen business outcomes for healthcare organizations. We’ve also expanded our relationship with Microsoft to deliver industry solutions and enable AI-led transformation. This includes expanding the focus of our Microsoft Center of Excellence in AI and other next-gen technologies to drive competencies across architecture, technology leadership, value delivery tools, and enablement. Cognizant and ServiceNow have announced a strategic partnership to accelerate the adoption of AI-driven automation across industries. Our industry expertise and solutions integrated with ServiceNow’s intelligent platform for end-to-end digital transformation will bring to market offerings that are designed to solve complex problems, automate operations, and enhance employee as well as end-customer experiences through the use of AI. Now a quick update on our three long-term performance objectives, becoming an employer of choice in our industry, accelerating revenue growth, and enhancing operational discipline. Let’s start with the employer of choice. During our Q4 call, I talked about how tightly linked the client and the employee experience are, giving Cognizant the opportunity to create self-reinforcing cycles. Highly engaged talent with a passion for clients and a growth mindset attract the best clients. These clients, in turn, attract more of the best people, keeping the flywheel turning faster. Now, two quarters later, we are seeing the early benefits of this interdependent relationship between employees and clients. Our trailing 12-month voluntary attrition has been trending downwards for the last four quarters. And our just-completed annual people engagement survey showed meaningfully improved engagement results. Among the many questions the survey poses to associates, we saw multipoint increases in three areas strongly correlated to engagement. Would you recommend Cognizant as a great place to work? Are you excited about Cognizant’s future? And do you plan to be working at Cognizant two years from now? On the client side, data from our project-level client feedback process through the first half of this year shows solid improvement over the previous period scores as well as our best net promoter score since launching this program in 2021. I see us making real progress on creating a self-reinforcing cycle. From day one, my commitment to our associates has been to cultivate a diverse organization that reflects the world in which we operate. Our top priority has been to increase a diverse talent including at leadership levels. I’m delighted to say that in the past couple of months we have appointed 7 women to fill strategic roles at the Senior Vice President level. We are resolved to help all our associates bring their best selves to work and that means focusing on all aspects of their Cognizant experience. For example, we develop talent early through educational partnerships and apprenticeships. We invest heavily in upskilling and reskilling current employees through our award-winning leadership and development ecosystem. We also employ innovative trained to hire initiatives such as the Cognizant’s Skills Accelerators aimed at people seeking to kickstart a technology career in the U.S. and the Cognizant internship program for technology professionals looking to restart their careers. Our next priority is to accelerate revenue growth which is the absolute focus of the entire management team. We are differentiating Cognizant and large-deal opportunities by scaling our capabilities for cost take-out and optimization and focusing more on managed services. And we continue to see a strong pipeline of opportunities of the cost and efficiency side. Given the groundswell of interest in generative AI, the number of projects we have underway focused on cognitive and generative AI, we see this technology generating a new wave of opportunities for us. Accordingly we expect to invest approximately $1 billion in our generative AI capabilities over the next three years. Our third long-term priority is to enhance our operational discipline. We are working to fortify a day-to-day business execution and optimize cost of delivery by driving higher productivity powered by advances in tooling platforms and automation technologies and by improving their operational labor in areas like billable utilization. Our NextGen program which we announced last quarter is on track. We are making progress on removing structural costs as we continue to simplify our operating model and reline our office space to the future of hybrid work. Or our last call, I talked about a plan to redistribute some of our development centers from India’s largest cities to smaller cities. I’m pleased to announce the first phase of this shift with the planned opening of two new centers, one in Bhubaneswar and the other in Indore India, which offer great talent pools. Keep in mind the next generation next-generation program, over rights, overriding aim is to generate savings to invest in our people and our growth. Yan will provide additional details in his remarks on the next-gen program. In closing, I’m now seven months into my tenure as a CEO. I’ve met with more than 200 clients, dozens of our partners and through in-person and virtual town halls with most of our workforce. I’ve also made a point to continuously soliciting ideas and perspectives from our top thousand leaders on strategic topics of importance to our future. Further, a company-wide grassroots innovation movement launched earlier this year, Blue Bolt, has led to such a surge of fresh ideas with more than 32,000 generated so far that it’s now serving as a company’s innovation engine. I’m convinced Cognizant path to winning in the market place, runs through fully embracing our heritage and DNA. We are leaning into our heritage at the intersection of industry and technology, a flexible client-centric operating model and a distributed delivery network that bring together global and local capabilities. All-in-all, we’ve been making good progress, but to recognize how much more work lies ahead, continuing to build on our growth imperatives as the goal on which everyone in the company is focused. I especially want to express my heartfelt gratitude to all our associates for the extraordinary work they do each day. Before I turn the call to Jan, I want to comment on his plans for the future. Jan let me and the board knows his intention to retire from Cognizant early next year. Jan has been a wonderful business partner to me and over the past three years he’s played an instrumental role in designing and executing a strategic financial and operation operating plan while developing superb talent with our finance organization. As we begin the search for the company’s next CFO, I’m grateful for Jan’s willingness to work closely with his eventual successor to ensure his smooth transition. With that, I turn the call over to him to provide additional details on the quarter. Thank you. Jan Siegmund: Thank you, Ravi, for the kind words. I’m proud of what we have accomplished over the last three years, including our work together over the last seven months. I’m looking forward to continuing our partnership in the months ahead while the search for my successor is underway. Until then, it’s business as usual, so with that let’s turn out to our second quarter results. We delivered second quarter revenue at the high end of our guidance range and adjusted operating margins above expectations. We were pleased to deliver another strong quarter of bookings growth, driven by larger and longer duration deals. Our pipeline for larger bookings also remains strong and is up meaningfully year-over-year. Additionally, our NextGen program is on track and yielding early savings through our efforts to structurally reduce our cost base and fund investments for growth. Moving on to the details of the quarter. Second quarter revenue was $4.9 billion, representing an increase of over 1% sequentially and a decline of 40 basis points year-over-year, or roughly flat in constant currency. Year-over-year growth includes approximately 130 basis points of contribution from our recent acquisitions. Bookings growth in the quarter was again driven by a mixed shift towards larger deals, which had in turn led to longer average duration of our bookings. We are pleased with our bookings performance in the quarter and are focused on building momentum in the quarters ahead. Consistent with the first quarter, we have continued to experience softness in smaller, shorter duration contracts, which we attribute to weaker discretionary spending. The translation of bookings to revenue growth is impacted by this change in deal mix. As duration has increased, the conversion to revenue will be longer, but helps to improve our forward visibility. Moving on to segments result for the second quarter, where all growth rates provided will be year-over-year in constant currency. Within financial services, revenues declined 5%, which reflects a softer overall demand environment and weak discretionary spending. As we navigate this environment, we have continued to strengthen our leadership team and sharpen our client engagement. While our pipeline for work related to cost takeout and productivity-led initiatives remains healthy and meaningfully higher than prior year period, we expect the uncertainties of the macro environment to continue to impact the pace of client spending over the next several quarters. Health sciences revenue grew 2%. Growth was again driven by strong demand from healthcare clients for our integrated software solutions, which increased mid-teens year-over-year. While the life sciences was down year-over-year and impacted by softer discretionary spending, we experienced strong sequential growth driven by increased volumes with existing customers. Products and resources revenue grew 4%, reflecting the benefit from recently completed acquisitions, ramp of recent wins, and demand from automotive and travel and hospitality clients. This was partially offset by softer discretionary spending across industries. Communications, media, and technology revenue declined 40 basis points, reflecting softness among both technology and our communications and media clients. We expect growth to improve in Q3 as recent new bookings have already begun to ramp. Continuing with year-over-year revenue growth in constant currency, from a geographic perspective in Q2, North America revenue declined 2%, reflecting softness within our financial services and CMT portfolio. This was partially offset by growth in health sciences and products and resources. Our global growth markets, or GGM, which includes all revenue outside North America, grew approximately 5%. Growth was led by Europe, which grew 6%, and included strong growth within CMT and products and resources, particularly within automotive. Now moving on to margins. During the quarter, we incurred approximately $117 million cost related to our previously announced NextGen program. This negatively impacted our GAAP operating margin by approximately 240 basis points. Excluding this impact, adjusted operating margin was 14.2%. Operating margin included the negative impact from an increase in compensation cost, primarily the result of our two merit cycles since October 2022. This has impacted both gross margin and SG&A. This was partially offset by tailwinds from the depreciation of the Indian rupee and higher utilization. It also included an approximate 60 basis points benefit from an insurance recovery related to our previously disclosed 2020 cyber incident. Our GAAP tax rate in the quarter was 21.1%. Adjusted tax rate in the quarter was 21.7%. Our effective tax rate included a discrete benefit from a settlement related to U.S. state income taxes. Q2 diluted GAAP EPS was $0.91 and adjusted EPS was $1.10. Now turning to the balance sheet. We ended the quarter with cash and short-term investments of $2.1 billion or a net cash of $1.4 billion. DSO of 75 days increased two days sequentially and one day year-over-year. Free-cash flow in Q2 was a negative $32 million which reflects the previously disclosed impact from the change in the U.S. law that we discussed earlier this year. This change negatively impacted Q2 free cash flow by approximately $420 million which included tax payments of approximately $300 million related to 2022. This impact was largely in line with our expectations and we continue to expect free cash flow to represent approximately 90% of net income this year. During the quarter we’ve repurchased about three million shares for $200 million under our share repurchase program and returned $148 million to shareholders through our regular dividend. Year-to-date we have repurchased approximately six million shares for about $400 million. At quarter end we had $2.4 billion remaining under our share repurchase authorization. Turning to our forward outlook. For the third quarter we expect revenue in the range of $4.9 billion to $4.94 billion representing a year-over-year increase of 0.6% to 1.6% or a decline of 50 basis points to an increase of 50 basis points in current constant currency. Our guidance assumes currency will have a positive impact of a 110 basis points as well as an inorganic contribution of approximately 100 basis points. For the full year we are reiterating our constant currency revenue growth guidance. Our range is slightly wider than our historical practice reflecting a heightened level of uncertainty and the recent pace of client decision-making. For 2023 we expect revenue of $19.2 billion to $19.6 billion representing a decline of 0.9% to a growth of 1.1% or a decline of 1% to growth of 1% in constant currency. Inorganic contribution is still expected to be approximately 100 basis points. The midpoint of our guidance suggests a softer fourth quarter relative to historic norms as we anticipate softer demand and more volatile discretionary spending patterns driven by macroeconomic uncertainty to continue throughout the end of the year. As I mentioned earlier, the next-gen program is on track and our assumptions for cost savings are unchanged. However we now expect to incur $350 million in total charges versus $400 million previously. This reflects our assumption for lower employee separation cost as a result of voluntary attrition trend. We now expect to incur approximately $250 million of next-gen cost in 2023 including approximately $100 million relating to employee severance and an unchanged $150 million related to net consolidation of office space. Moving on to adjusted operating margin, our guidance is unchanged at 14.2% to 14.7%. Our margin outlook is impacted by several factors but primarily the negative impact from recent merit cycles. It also reflects our assumption for NextGen savings and growth investments including the dilutive early impact associates with large deals. We anticipate 2023 interest income of approximately $115 million versus $85 million previously reflecting the higher interest rate environment. Adjusted tax rate is expected to be in the range of 23% to 24% versus 24% to 26% percent previously due to several discrete items in the first half of the year. In 2023 we continue to expect to return approximately $1.4 billion to shareholders through share repurchases and our regular quarterly dividend. We continue to expect full year average shares outstanding of approximately $506 million. This leads to our full year adjusted earnings per share guidance of $4.25 to $4.48 versus $4.11 to $4.34 previously. With that we will open the call for your questions. Q&A Session Follow Cognizant Technology Solutions Corp (NASDAQ:CTSH) Follow Cognizant Technology Solutions Corp (NASDAQ:CTSH) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] Your first question comes from Ashwin Shirvaikar with Citi. Please go ahead. Ashwin Shirvaikar: Thank you and good execution in the quarter. I think my first question is with regards to the bookings. If you can provide maybe a little bit more color with regards to the nature of bookings, the nature of discussions with clients, and maybe even any CCD versus ATV balance that you can maybe talk about. Because I think the bigger issue here is not the bookings but the conversion. Ravi Kumar: Thank you, Ashwin. This is Ravi here. We had another good quarter of bookings growth, 17% Y&Y. We are excited about — I’ve spoken about this before — there are two swim lanes on large deals. One is related to transformation. One is related to efficiencies, productivity, cost takeout. I think it’s fair to say that at this point of time the deals we are seeing in the market are over-indexed to efficiency, cost takeout, consolidation kind of deals. We are excited about the fact that we are starting to win them and translate that into revenues for the future. You would understand that these deals come with a gestation period which is longer than the smaller deals or the transformational deals because of the nature of them. We had five deals more than $100 million TCV in the bookings. Two of them were renewals. One of them had renewals plus expansion. Two of them are net new. So a very healthy mix if I may, of our bookings. The interesting part of doing large deals is you build the rhythm so that even if the period is long enough, as you keep building the rhythm, it will start to contribute to the next year and the next year. I wish I had a big pipe the year before so that it would have contributed this year. So that’s how you see it. You have to create that rhythm. Financial services, of course, is less on small deals. Financial services and, for that matter, most of the sectors are muted on discretionary spend on small deals. So that’s the color of what we are seeing. We continue to be excited about our ability to win, our ability to also build the organizational infrastructure to execute them, including the productivity gains which we have baked into those deals as we factor them to win and execute. Jan, do you want to add anything? Jan Siegmund: Yes. So Ashwin to your question of translating all those bookings into revenue, I think intuitively you had already your finger on one of the components of the characteristics of our bookings this quarter, and that’s basically, on average, the duration of the deals that we signed up in the last year has very meaningfully lengthened, basically. So we have been signing up longer-term deals, on average, with a higher deal value. We actually saw an absolute decline on smaller deals with lower deals below $5 million in our pipeline and that’s softness and discretionary spending and smaller type of deals was just offset by the really excellent performance that we had on the larger deal volume and so that led to the 17% overall booking scope. But with respect to translating into revenue, the actual contribution of this book in volume just to give you an example for the rest of year revenue is actually lower than it was in the comparable quarter. So we really have built a pipeline for longer type of revenue streams in the future, which obviously gives us good comfort into the quality of revenue stream going forward, but it also explains why and we’re not seeing immediate uptake on our revenues as these bookings will take time to translate into revenue. Ashwin Shirvaikar: Thank you, that’s very useful. This second question on margins, pretty solid performance here and the question with regards to why you might not increase the full year range. I think Jan you answered part of that question in your prepared remarks when you said that there’s a ramp cost. I just want to make sure are there other things investments you’re making, from a R&D perspective perhaps into GenAI capabilities or things like that, investment payment, are there non-deal related factors also included in your decision to think the margin is unchanged. Jan Siegmund: Yes, I think the starting point for the market discussion is for the rest of the year, the one thing that’s different compared to prior period is that we won’t have an October at fourth quarter merit cycle in our in this year, because as you know, we move forward our merit cycle into April. So that’s going to be important as you build a quarterly model to consider. Secondly, I use this moment maybe to talk a little bit about the progress we have been making on our next year in the initiative, we have been recording a severance cost in the quarter as well as cost related to the restructuring or real estate portfolio and we’re going to start seeing increased impact of the NextGen action relative to our people in the third and fourth quarter, which gives us basically the room to offset some of the pressures that we’re seeing, namely some of expected pressure on the large deal rollout and letting those larger deals season in. And I think the general expectation of a given a higher uncertainty in our business environment that will create, I think, it could create some kind of unspecified yet to be seen pressures in our portfolio. We do have seen a number of clients, kind of reacting to their own economic pressure it’s reaching out to us. So we do see an economic environment in which they is pressure and so I think it turns out that I think NextGen is well-time to help us through this, but not it would be too early to celebrate basically a false success of that but we’re kind of really moving along in the execution of that program gets a bit of confidence to just reaffirm basically that operating marginal outlook. Ashwin Shirvaikar: Makes sense. Thank you both. Operator: Next question, Lisa Ellis with MoffettNathanson. Please go ahead. Lisa Ellis: Hi, good afternoon. Thanks for taking my question. Oh, follow up. Maybe first on the GenAI thread and Ravi you commented extensively on what at Cognizant you’re doing on GenAI externally with partners and to help clients transform their businesses. Can you comment maybe a little bit more detail on how you are deploying GenAI internally at Cognizant and how you see it over time you know being able to transform your business operations and maybe give you more competitive edge relative to peers. Thank you. Ravi Kumar: Thank you for that question. I did extensively speak about it because it is in the middle of everything we do in the company today. I see this as three; the GenAI embrace is going to be in three parts. The first part is how do we apply to our business to run our business, which is like eating our own dog food. The second is how do we make sure that we build our operating model, how would by GenAI? How do we make the average developer productivity increase multi-fold? How do we make sure that we build the platform to the instrumentation, the technology we need it. I also call it the ability to arbitrage on technology. I mean over the last 40 or 50 years tech services companies did labour arbitrage and capability arbitrage I would say this is our time to actually do an arbitrage and technology. The more the more instrumentation we create, the more we can make our model efficient enough with productivity gains. The question is how much of the productivity has to be shared with our clients so that we stay competitive to win as well as keep a part of it for us for ourselves. So I’m not as concerned about a smart developer, I’m concerned about an average developer how do I lift the productivity so that the productivity of the organization goes up? So that’s my second part of GenAI. We have extensively worked on building those platforms and we also started to partner with a big tech companies. I would say our ability to train in fact we made an announcement with Google to train 25,000 people. We made great progress on it. We ran an initiative with Microsoft on GenAI and the co-pilot initiative. Today along with the earnings we also timed a large language model in partnership with Google. I think that’s a step up. I mean, in general way I can, we could use the curation of data, the ability to use, use the model to contextualize to a business. I would say that’s the last mile on generative AI. But leveraging our healthcare expertise, leveraging the asset we have and healthcare, the install base we have in healthcare. We potentially thought it’s a good board move to actually build a large language model with Google. Now the third part of the mix, before I go to the third part, equally we are starting to think about how do we actually build cognitive skills in the company, which are different to the past. I mean, if generative AI is going to co-exist with humans in tech services, the reality is you read a very different cognitive diversity. We could potentially need people who don’t have a stem background because the people who have a stem background engineer those platforms, so the people who come with a cognitive diversity of say human sciences can actually apply generative AI to a client’s landscapes. Now coming to the third part of a generative AI story is, how do we actually embrace with our clients. I’ve actually spoken about a couple of examples in my earnings script, which is starting with a client at financial services. We have one on one on health care. All of those need front-end consultative skills to start with and back in platforms to support it. So our clients, we almost have 100 plus early engagements either on a proof of concept or on prototype model, where we are experimenting on how do we embrace generative AI with our clients. These 100 early engagements in different areas of the most I would say is in customer service. And the most I would say is related to efficiency, productivity and better experience. So I’m excited about all of what we’ve done. We’ve also completed $1 billion in the next three years to continue our investments in the space. And we want to stay ahead of the curve and be that cutting edge partner which our clients are looking for. Lisa Ellis: Terrific. Thank you. And then maybe for my question, my follow-up. I guess thinking about it as I’m being sad about Jan’s departure. But Ravi, maybe back on you know that you’ve been at Cognizant I guess coming up on a year or so. How are you thinking about kind of shaping the senior executive team at Cognizant? Are there some other kind of senior leaders you would point to that you’re bringing in and that you’re thinking about finding a replacement for Jan sort of what’s the profile and of folks that you’re looking at and bringing in given the priority you highlighted about making the Cognizant a top place an employer of choice. Thank you. Ravi Kumar: Thank you for that question. Jan is going to be with us until we identify a new CFO, and we’ll have some overlap period to it, and he’s been kind enough to partner with me in the last 7 months. I’ve not spent a year yet, but in the last 7 months but I’m very hopeful as we finish the transition, I will continue to have his support for the next few quarters. On leadership, per se, we have a very healthy bench. As I put my structure in place, I am excited about promoting and progressing people inside the company and giving them the opportunities. In fact, we have a sizable workforce which has spent more than 7 to 8 years at Cognizant. And I’m actually leading on to build that leadership from inside. We’ve also — I’m excited about Cognizant employees coming back to Cognizant. I mean, some of the leadership which left us in the last few years, which we believe are worthwhile and they call Cognizant their home, we have got them back. I have one leader who’s come back to do my Industry Solutions Group. I have one leader who has come back to run my infrastructure sales. I’m also excited about other external hires we’ve done. We’ve hired a leader for our telecom business. So the excitement of being a part of this journey allows me to straddle between the three, look for people inside the company who can be on that. And I think we have a very good bench of people who have been in the company for a long time, and I’m excited about grooming them to the future leadership. The second is bringing some of the people who want to come back, and we believe that they will add significant value to our future, and of course, the external hiring we could do. In fact, I hired a senior leader for running my partner, organization. So we have made some good progress on putting a leadership team to support us for the future. Operator: Next question, Bryan Bergin with TD Cowen. Please go ahead. Bryan Bergin: Hi, good afternoon. Thank you. So Ravi, wanted to follow up with a demand question here. Just did you get a sense of any real changes in demand KPIs over the past three months? Or would you say it’s been largely consistent as it relates to the level of macro and spending uncertainty that you have been conveying here over the course of 2023? And I guess based on these current client conversations, are you getting any sense of how long you anticipate discretionary spending to remain under pressure? Ravi Kumar: That’s a great question, actually. I mean, the demand profile has certainly been very volatile. I mean, if you are capturing opportunities related to discretionary spend, capturing opportunities related to future transformation of enterprise landscapes, it’s either been uncertain or it’s been kind of, in some places, it has fallen off. And that’s one of the reasons why Jan mentioned that smaller deals have — we have lesser volume of smaller deals and which is true for what the market situation is. Of course, Financial Services is the most impacted but we do see that in other sectors as well. I equally believe it also opens up an opportunity in places to consolidate. It opens up an opportunity to proactively go to our clients who are paranoid about the costs and give them a value proposition which appeals to them where their total cost — the total cost of ownership goes down but we’ve been in the process. It’s a win-win value proposition. So I’m seeing more of those deals and I’m doubling down on those deals, and that is allowing me to keep the large deal pipeline in good health. And it is an opportunity for us to even proactively go and bid for some of the business. I mean, one of the deals we announced is the Gilead Sciences deal, which is an existing customer. And we not only renewed the contract but we actually got an expansion on it. The key point there is in the past, those consolidation initiatives were run by a smaller productivity attached to technology and a bigger productivity attached to the efficiency of running your labor model, including offshoring, including a better pyramid, including a better roll ratio. I think we have a unique opportunity to switch that into a technology arbitrage which I spoke about, which is using technology to get better productivity and then sharing the benefits to your clients. And that can happen more with consolidation and I think we are trying to seize those opportunities. So I see like these two swim lanes, one which has kind of shrunk and another which is continuing to be in good shape. The idea is to double down on the one which is continuing to have traction so that you could set off against what you’re losing on the other side. But discretionary spend is pretty weak. That is something I should highlight. Bryan Bergin: Okay, okay. Understood. Appreciate all the color. And then just shifting to the workforce. So understanding headcount down quarter-over-quarter a bit more, I think, in the second quarter, but you do have NextGen flowing through there. Just thinking forward in the second half, is it fair to assume this workforce level remains relatively flat to down, just given the optimization in workforce and utilization? Ravi Kumar: The way I see it is there is opportunity for us to increase billable utilization, and I think there is some more headroom for me to do that. And as I continue to do that, we all want to hit end of a runway on increased utilization. That’s when you will see a flip on how you need more headcount to increase billable headcount. So I’ve said this in my last quarter as well that there was a cushion for us to increase utilization, billable utilization, that also contributed to our margin trajectory a bit. And I think we have some more headroom to increase our operational efficiency to run our business so that we can then get to a point where we then start to increase our net headcount. What also is important is we’ve also had a good trend of lower attrition. In fact, we ended up with 19.9% on a trailing 12 months, which is 3 percentage points lower than last quarter and almost 11 percentage points lower than Y-on-Y. And as we can keep that down, it will also help us to keep the headcount up. And then as we get to the other end of the NextGen cycle, it will kind of help. So I think we have some headroom for operational efficiency to conduct more billable work before we start to see headcount increase. Bryan Bergin: Understood. Thank you. Operator: Next question, Rayna Kumar with UBS. Please go ahead. Unidentified Analyst: Hi, good afternoon. My name is [indiscernible] I’m dialing in for Rayna. I had a question around generative AI. So the benefits of GenAI have been widely discussed but we haven’t heard as much about the potential risks. Given that GenAI can potentially improve the internal productivity, do you think there’s a risk to the top line over the medium term from like short contract lengths or pricing pressures? Ravi Kumar: This industry has always had productivity tools. If you go back to the last 20, 25 years, productivity tools have been a way to differentiate, and it has very nicely got baked into our estimation model and then subsequently our execution model. And in addition to labor arbitrage, those productivity tools were the reason why our clients actually came to us because we had capability, we had — we, of course, had capacity and we had productivity tooling to help them to deliver projects. I would say the advent of automation technologies in the last, I would believe, 5 years or so, including robotic process automation has been a continual embedment into our services. And I want to highlight that the universe we operate in is no longer tech spend of enterprises. The universe we operate in is operations spend of enterprises because technology is deeply embedded into operations. So these tools — embedding these tools has been — the industry as well as Cognizant has been very habituated to it. I mean, the ones who do it more are the ones who benefit out of it, and they then bake it into the estimation models. And the estimation models then allow you to stay more competitive than your peers to win business. And then as you win the business, you then keep working on engineering more so that you stay ahead of the curve. GenAI in a way has been a bigger inflection point. It’s not different in that continuum but it’s a much bigger inflection point. It is a complete game changer. So my belief is, and at least on behalf of Cognizant, I would say, we want to embrace that as much, to make it an opportunity for us for the future. If you don’t embrace it, it’s going to become a threat for you. If you embrace it and create that technology arbitrage I spoke about, it will allow us to get our clients to partner with us, even get our clients to partner with us at points where our — at points where they believe that they could in-source. They would potentially outsource because they see us as a unique way to bring productivity to them. So I’m excited about the fact that this is going to be an opportunity. And it’s a tectonic shift in the way our operating model will be. Operator: Thank you. Next question, Jamie Friedman with SIG. Please go ahead. James Friedman: Hi, I’m just curious as to — in terms of the environment for the second half, what do you see as the factors that could put you, say, towards the higher or lower end of the guidance, with furloughs contemplated potentially for the fourth quarter? Jan Siegmund: Yes. We — well, we try to give guidance that reflects at the midpoint our true expectations of what we achieve. So that’s really our core belief. And the elements that we are watching carefully in the next couple of quarters are the scaling of the implementation of a couple of our large contracts that we signed. Those are complex deals that need to be rolled out in partnership with our clients. And that can be just the practicalities of a complex project can give delays or can give you positive news. So that’s something that I’m very carefully watching. And certainly, there could be a theoretical path that some of these projects scale a little faster than we anticipated and that would give us some upside. But also in the quarter, we have observed this economic uncertainty hitting us, and you always get also some unanticipated bad news that happens. Certain deals get either canceled or scaled down or less visible, smaller deals just dissipate into nothing. So the general economic environment and the climate of our clients, and Ravi just gave you the assessment, we kind of feel that, that pressure will continue in the second two quarters on discretionary spend. That puts the pressure on it. And so in a sense, it’s really a balanced outlook that I have. We are lucky that we are able to add the revenue stream of large deals into our revenue mix compared to our competitors in our market. We didn’t have that last year, and so this is a truly incremental opportunity for us. But as everybody, we are facing also with a downward pressure in the rest of our portfolio. So I think the outlook that I gave is a fair and balanced view of the expectations that we have. James Friedman: Okay, thank you for that. And for my follow-up. Jan, that’s a great answer. But just wondering could you double click on the assumptions by vertical? I realize you don’t guide by vertical but, are at a higher level, any of these contemplated to be above or below the corporate average? Jan Siegmund: Yes. I think the one that what we’re trying to signal in my comments also is that we feel that for the next couple of quarters, we’re going to continue to see the pressure in Financial Services performing below our own. I hope, basically, but then the reality of a sector that has shown weakness really, I think, across in our industry. I don’t anticipate that to change. And there’s some strength, as you saw in the quarter and now have strength on a relative basis in Healthcare. And that reflects our strong market position that we have with our clients in Healthcare. So those would be the two big factors. Those trends are relatively consistent, I think, with what we have seen in the first two quarters of the year. James Friedman: Thank you. Operator: Next question, Tien-Tsin Huang with JPMorgan. Please go ahead. Tien-Tsin Huang: Hi, thanks so much for taking my questions. And Jan, congrats on the retirement news. I want to ask on the booking success, especially on the larger deals you have been talking about here. What changes are working? Is there a way to rank that for us because we get a lot of questions on pricing, of course? Where does pricing rank amongst all the factors with you winning on the larger deal side? And is there any impact here on gross margins for the second half to consider? Jan Siegmund: I think from my perspective, pricing is definitely a very important factor. All these deals are — or the vast, vast majority of these deals is competitive and you just have to be in the range of the expectations and meet the clients. And that is kind of table fixed. The commitment that the company brings to the table as we now compete for these large deals, from Ravi at the top to the entire team, from our markets to our integrated service lines is really different and I think has made a difference in winning the deals. Our clients have seen the commitment that we are making and the importance that we are giving to their specific deals just by the, I think, pure exposure and access to our teams and then obviously, the strength of our solutions that we have brought to the table. So it’s that whole package that plays into it. I would say these deals that you have seen here in the quarter and really starting in the year, a little bit stronger focused on traditional deals, focusing on cost takeout and some on consolidation, are more classic deals, bread-and-butter type deals, large in nature but that have made the portfolio of those wins. Maybe Ravi, you add a little? Ravi Kumar: Yes. So large deals come with a very different rhythm, right? We have made sure that we have an outreach now to our — to a chance, I mean, partners, hyperscalers, deal advisories and a whole bunch of players in the mix. The second is our ability to build institutional infrastructure because a lot of deals don’t just need the heavy lifting upstream. They need the heavy lifting downstream as well. So that you price them to win but you deliver them to margins. Our ability to put all of that together, I think the company had it before. I have kind of assembled it together and then we have strengthened it further. And our entrepreneurial spirit to go and tell our clients some provocative opportunities, which could create a win-win situation for our clients and us, and therefore, create value for the process, has helped us to create a large deal mindset or a growth mindset. And I’m very confident that, that’s now a part of the muscle of the company. So as we continue to invest on deal infrastructure into the market, as well as the mindset to be provocative with your clients and support that bold vision by building downstream infrastructure, organizational infrastructure including the tooling on new age AI-led productivity, that’s very important. The deals could be traditional but the levers you press could be relatively new. I mean, the amount of automation infrastructure, the amount of AI infrastructure you could use to actually create straight-through processing and operations kind of work and create higher productivity run, maintain as well as build businesses for our clients, I think, is — it’s a new lever. And I think we — I’m confident that we are ahead of the curve and therefore, we are competitive in the market to win these deals. Tien-Tsin Huang: Perfect. Thank you both on the thoughts. Operator: We’ve come to the end of the Q&A session. I would like to turn the call over to management for closing remarks. Tyler Scott: Great. Thank you very much, Stacey, and thank you all for joining us tonight. We look forward to catching up with you on our next earnings call. Talk to you soon. Operator: This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation. Follow Cognizant Technology Solutions Corp (NASDAQ:CTSH) Follow Cognizant Technology Solutions Corp (NASDAQ:CTSH) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Wonder Lofts, the historic condo conversion of the famed Wonder Lofts building in Hoboken, NJ, has officially unveiled its 14,400 square feet of world-class indoor and outdoor amenities, completing one of the most unique lifestyle opportunities found on New Jersey’s Hudson River Gold Coast. The boutique package of recreation and... The post First Look: Five Star Amenities Unveiled at Wonder Lofts, the Historic Condo Conversion of Hoboken, NJ’s Wonder Bread building. appeared first on Real Estate Weekly. Wonder Lofts, the historic condo conversion of the famed Wonder Lofts building in Hoboken, NJ, has officially unveiled its 14,400 square feet of world-class indoor and outdoor amenities, completing one of the most unique lifestyle opportunities found on New Jersey’s Hudson River Gold Coast. The boutique package of recreation and social spaces, expertly designed to incorporate the property’s industrial past, includes a second-floor residents’ lounge with a large, elegant living room that opens to a lushly landscaped, outdoor terraced patio and garden with seating areas.  A floor-to-ceiling brick, double-faced fireplace separates the living room from an open concept dining room and entertainment kitchen, and an adjacent billiards and game room.  Families appreciate the building’s children’s playroom, complete with padded floors, bean bag seating, toys, and books, as well as a fully equipped children’s art center ideal for fostering individual and group creativity and fun. A full gym equipped with the latest cardio and strength training equipment and a separate fully equipped yoga/flex studio will keep residents healthy in body and mind. There is also a screening room with couch seating and video gaming capability. The building also boasts a two-story lobby with an attended concierge, a large residents lounge with fireplace and co-working/study area, a secure onsite parking garage with electric car charging stations, a pet grooming area, large secure package delivery room and abundant bike storage.  When venturing outside, residents are greeted by an awe-inspiring rooftop with stunning 360-degree views of the Manhattan skyline, all of Hoboken and beyond.  The appointed space boasts a beautifully landscaped patio lounge featuring an infinity-edge swimming pool with lounge chairs, a circular outdoor bar underneath the restored water tower, gas barbeque grills, and abundant dining and lounge seating areas with a fire pit. “The remarkable array of indoor and outdoor amenities at Wonder Lofts redefines the resident experience, seamlessly merging historic charm with contemporary luxury befitting Wonder Lofts’ illustrious legacy,” said Robert Fourniadis, Senior Vice President – Residential of Prism Capital Partners, which developed Wonder Lofts in partnership with Parkwood Development and Angelo Gordon. “With the amenities now completed, prospective buyers visiting the property can fully grasp the unparalleled allure of the Wonder Lofts lifestyle.”  Wonder Lofts’ collection of newly constructed three-and four-bedroom luxury residences perfectly blends restored historic charm with contemporary finishes and functionality. Each home within Wonder Lofts features an open floorplan with suburban-sized designer kitchen with center island that opens to a spacious living room, primary bedrooms with a large walk-in closet, luxurious en-suite bathroom with large walk-in-shower, soaking tub and dual sink vanity, large windows, a Latch smart home entry system and abundant storage.  Other features found in many of the homes include a half-bath located off the great room, multi-functional den/home office, and a separate laundry room with custom cabinetry.  Each home comes with deeded parking in an on-site secure parking garage and private outdoor space.  Premium materials and contemporary finishes found through the residences are highlighted by 7.5-inch-wide white oak hardwood plank floors, custom white kitchen cabinetry framed with oak trim, elegant white Calcutta Laza kitchen countertops, top-of-the line kitchen appliances including a built-in Sub-Zero refrigerator/freezer, Wolf gas range, oven and microwave drawer, and Bosch dishwasher, and in many homes, an undercounter wine/beverage refrigerator. The in-residence laundry room is equipped with a Bosch washer and a Bosch dryer.  Bathrooms include custom wall-hung oak cabinetry with off-white Glacier honed marble countertop. Remaining homes are priced from $1.9 million to $3.5 million. Steeped in Tradition, Curated for Modern Living   Design touches of the original Wonder Bread factory, which once produced freshly baked bread from the 1910s to the 1960s, have been preserved in the contemporary redesign.  The original brick detail, archways, high ceilings, large windows, a smokestack, and a water tower were all meticulously restored, and such modern additions as a façade of glass and light grey aluminum add to and accentuate the restored original structure. The community also includes a newly constructed five-story building located across the street which is home to fifteen three- and four-bedroom condos, several of which include private yards.  Owners there have access to all the amenities of the main building, including the rooftop infinity pool. The Center of it All Wonder Lofts is located in the heart of Hoboken, bringing within easy reach all that the dynamic, family-friendly hamlet on the Hudson River is known for. With its tree-lined streets dotted with historic brownstones; an eclectic offering of neighborhood shops, restaurants, and nighttime haunts; numerous parks, a beautifully landscaped waterfront featuring majestic Manhattan skyline views; and proximity to Manhattan enhanced by PATH and Ferry service, this pedestrian-friendly town has matured from a convenient commuter starting point for singles and couples to a nesting ground for growing families. For more information on Wonder Lofts, visit www.WonderLoftsLiving.com or call 201-526-4040.    Wonder Lofts owes its breathtaking blend of industrial history and modern elegance to a team of professionals including two award-winning and renown design firms, Hoboken-based MVMK Architecture + Design who served as the project architect, and Manhattan-based Workshop/APD who served as the interior designer. These firms collaborated with an ownership team consisting of Prism Capital Partners, Angelo Gordon, and Parkwood Development and its exclusive sales and marketing agent CORE in creating the vision of a wonderful community that is now a reality. The post First Look: Five Star Amenities Unveiled at Wonder Lofts, the Historic Condo Conversion of Hoboken, NJ’s Wonder Bread building. appeared first on Real Estate Weekly......»»

Churchill Downs Incorporated (NASDAQ:CHDN) Q2 2023 Earnings Call Transcript July 27, 2023 Operator: Good day, ladies and gentlemen, and welcome to the Churchill Downs Inc. 2023 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will be given at that time. […] Churchill Downs Incorporated (NASDAQ:CHDN) Q2 2023 Earnings Call Transcript July 27, 2023 Operator: Good day, ladies and gentlemen, and welcome to the Churchill Downs Inc. 2023 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Phil Forbis, Vice President, Financial Planning and Analysis. Phil Forbis: Thank you, Andrew. Good morning, and welcome to our second quarter 2023 earnings conference call. After the company’s prepared remarks, we will open the call for your questions. The company’s 2023 second quarter business results were released yesterday afternoon. A copy of this release announcing results and other financial and statistical information about the period to be presented in this conference call, including information required by Regulation G, is available at the section of the company’s website titled News located at churchilldownsincorporated.com as well as in the website’s Investors section. Before we get started, I would like to remind you that some of the statements that we make today may include forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC. Specifically the most recent reports on Form 10-Q and Form 10-K. Any forward-looking statements that we make are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in yesterday’s earnings press release. The press release and Form 10-Q are available on our website at churchilldownsincorporated.com. And now I’ll turn the call over to our Chief Executive Officer, Mr. Bill Carstanjen. Bill Carstanjen: Thanks, Phil. Good morning, everyone. With me today are several members of our team, including Bill Mudd, our President and Chief Operating Officer; Marcia Dall, our Chief Financial Officer; and Brad Blackwell, our General Counsel. I will share some high-level thoughts on several strategic topics, and then Marcia will provide insight on our financial results as well as an update on our capital management strategy. After she finishes, we will take your questions. We delivered all-time record net revenues of $769 million, an all-time record adjusted EBITDA of $364 million in the second quarter of this year. We were very pleased with the results for this year’s 149th Kentucky Derby, a crowd of over 150,000 fans watched Mage at 15 to one odd pull off an incredible victory. Strong growth in ticketing and sponsorship revenue, coupled with record wagering generated a sizable increase in adjusted EBITDA, setting a new all-time record for Derby Week. We were thrilled to debut on time and on budget our new first turn experience, which provided one-of-a-kind premium accommodations with exclusive views of the horses and the racetrack from the rail of the historic first term. Our carefully planned and executed capital projects at Churchill Downs Racetrack over the last several years have delivered a solid foundation for ongoing growth in the coming years. We have kicked off our year-long preparation for the 150th Kentucky Derby next year. We launched ticket sales in several areas in late May and as of June 30th have already executed contracts for approximately 37% of our planned ticket revenue for next year’s Derby, which is significantly ahead of the pace for any previous year. We continue to make excellent progress on the Paddock project, which is a transformative undertaking for our facility. This project has many facets to it. We are adding additional reserve premium seating that will provide a wide variety of new seating and dining experiences for our guests. When this project is done, everyone who enters our racetrack will be treated to spectacular views of the Twin Spires and hepatic which we believe will provide a central for a venue that unites everyone will visit. We announced yesterday that we will be investing approximately $15 million to significantly improve the guest experience in our Jockey Club Suites area overlooking the home stretch of Churchill Downs Racetrack. We have 61 suites in our Jockey Club tower and host approximately 2,500 ticketed customers across the suites, dining areas and terraces. We expect to have the improvements in this area completed in time for the 150th Derby. We are already planning our next series of development projects for Churchill Downs Racetrack, there are many more opportunities to build out our facility to provide innovative and extraordinary once-in-a-lifetime experiences for new and existing guests. We hope to launch the next phase of our multiyear development plan immediately after the 150th therapy. Our commitment to investing in our flagship asset reflects our belief in our ability to generate consistent adjusted EBITDA growth with nominal levels of risk for years to come. Finally, we will also be adding a new sports bar in our existing simulcast area at Churchill Downs Racetrack in time for the launch of retail sports betting in Kentucky on September 7 of this year. Turning to our HRM entertainment venues, we were pleased to open the new hotel in Steakhouse at Derby City Gaming in Louisville in early June. This, coupled with the gaming floor expansion and the addition of the new sports bar earlier in the year, provides a suite of additional amenities for our guests to enjoy. While it is still early, we are exceeding revenue and profitability projections in the first month since opening. We are on track to open Derby City Gaming Downtown, our sixth Kentucky HRM entertainment venue in the fourth quarter of 2023. This venue is located in the heart of downtown Louisville across the street from the convention center. We announced that our seventh HRM facility will be just outside and to the east of Owensboro, Kentucky. We have identified a greenfield site and believe that this location will enable us to create a premier entertainment destination for all residents of the region. We are now focused on completing the permitting and site planning process. We will provide an update on the project timing and budget on our next earnings call. HRM entertainment venues across Kentucky will benefit from the passage of legislation banning gray games, which became effective on June 30. Gray games are essentially slot machines However, they are unregulated and do not pay state or local taxes and do not follow responsible gaming protocols, including restrictions regarding miners, anti-money laundering policies and procedures and a host of other federal and state laws designed to protect consumers and the community. With the ban only taking effect at the very end of last month, it is still unclear how much of an impact it will have on our HRM venues in Kentucky. We certainly believe that it will have a positive effect and will be a benefit to the Commonwealth of Kentucky, its citizens and the horse industry as well. Our Kentucky HRM venues will also benefit from the legalization of retail and online sports betting. We plan to have live retail sports books and our HRM venues on September 7 and time for the football season. We will also have a sports bar with sports betting in our Derby City gaming downtown facility when the property opens in the fourth quarter. Retail sports betting and our HRM venues will provide another incentive for new and existing customers to come to our properties. We also monetized a couple of the online sports betting licenses we have in Kentucky with B2B partners, including one with Land. Regarding our expansion in Virginia. Our Ross Emporia HRM venue will open later this quarter with 150 HRMs in the southern portion of the state, near the North Carolina border write-off Interstate 95. — our Dumfries HRM venue and hotel is being built in Northern Virginia, approximately 30 miles south of Washington, D.C., also directly off Interstate 95. I — this venue will open with 1,150 HRM machines in Phase 1, and we can go up to 1,800 total machines in Phase II. The construction is ongoing, and we expect the first phase of the project, including the gaming facility to be opened in the second quarter of 2024. We — in June, we announced plans to run a para-mutual referendum this November and Manassas Park, which is in Northern Virginia, where we hope to open a venue with 150 to 250 HRMs, — the city has really welcomed us and we are excited to pursue this opportunity. Currently, we have 6 of our allotted 10 HRM facilities open. Emporia will be the seventh, our large-scale Dumfries project. will replace our current temporary 150-unit facility and thus will not be additive to our total number of deployed licenses. Manassas Park would be our eighth license giving us 2 more to deploy in addition to our ability to relocate any existing facility to another location. We also recently announced that the Richmond City Council approved our partnership with Urban One as the city’s preferred casino operator. Over the last week, we obtained the required certificate of approval from the Virginia Lottery and the circuit court has granted our petition allowing the referendum. As a reminder, we have a 50-50 partnership with Urban One to build a Class II casino, hotel and event center in the city of Richmond upon approval via citywide referendum. If and when we obtain the right to proceed, we plan to build it in phases. The first phase consists of the casino and parking facilities and the second phase will include the hotel and the event center. This phased approach will enable us to expedite opening the casino portion of the project and generate cash flow to offset the construction cost of the second phase. This is the most financially prudent approach and provides near-term tax revenues for the city of Richmond to fund a variety of their priorities. We have also made significant progress on our Salem Hampshire HRM site plans, and we’ll be able to share more details on those plans by the end of the third quarter. Although this has taken longer than we would have liked, we remain excited and committed to creating a unique HRM entertainment offering for the Sanlam area that will also draw guests from the suburbs of Boston. We anticipate closing the exact transaction no later than the end of the year and potentially sooner if the remaining closing conditions are more quickly achieved. Through our ownership of Exact, our facilities in Virginia will be able to have a broader variety of games on their gaming floors, and we will be able to reduce the cost of providing and operating the machines. This will improve our top line and our margins for Virginia. We will also continue to improve the technology platform and to offer the exact system to third-party HRM operators. HRM venues are key strategic focus over the next 5 to 10 years for our company. These high-growth, high-margin investments provide an excellent return on capital and we will remain disciplined as we expand our existing footprint and product offerings. Regarding our TwinSpires segment, we were pleased this quarter to see the beginning of the benefits from our B2B expansion strategy. Our TwinSpires and United Tope businesses are now receiving B2B fees related to providing and settling wagers on horse races for FanDuel and DraftKings. Although we cannot comment on our B2B partners horse racing results, the Kentucky Derby was a great boost for both our TwinSpires horse racing platform, which saw a record handle and new registrants and for our B2B partners. We expect to add additional B2B partners over the next 12 months. We are very optimistic that horse racing and our TwinSpires services can be expanded meaningfully to online sports wagering platforms to reach millions of customers and that we will continue to benefit from the growth in incremental fees related to our B2B services over the longer term. Our TwinSpires handle was impacted in the second quarter by the loss of 88 race days as well as over 600 races, many from top tracks primarily related to the extensive wildfires in Canada. TwinSpires was also impacted by the move of the Churchill Downs race meat to Ellis Park in June. So many of our players Churchill Downs Racetrack single most important track that draws them to our site on any given day. We expect some Canadian wildfire impact on our TwinSpires handle in the third quarter. However, we will return to racing at Churchill Downs Racetrack for our September race made. Regarding our Gaming segment. We delivered record second quarter revenue and adjusted EBITDA with the addition of the Iowa and New York properties from the P2E acquisition. We did see mild softness across some of our regional gaming properties particularly in the first half of the quarter. Each regional market has different economic and competitive drivers than on a quarter-to-quarter basis can impact the performance of a property. Overall, despite the inflationary and economic pressures and increased interest rates over the past year, we remain highly confident in the performance of our regional gaming properties, which generate significant free cash flow. With respect to our Terra Hoak Casino and Resort, construction is progressing well with the planned grand opening for the casino and hotel in the second quarter of 2024. In summary, second quarter was another great quarter for us with all-time record financial results and the best is still to come. We have delivered strong growth from our investments in the Kentucky Derby, our acquisition of the P2E assets and our organic investments in HRM and other gaming entertainment venues. And we still have a lot more growth to come from the projects we have discussed today and the other is yet to be far enough along to share with you. We expect our growth plans to drive a material increase in adjusted EBITDA and free cash flow in the coming years, while we maintain one of the best balance sheets in the industry. With that, I’ll turn the call over to Marcia, and then we will take your questions. Marcia? Marcia Dall: Thanks, Bill, and good morning, everyone. As Bill shared, we delivered all-time record net revenue and all-time record adjusted EBITDA in the second quarter. Our diversified portfolio of businesses generated a 32% growth in revenue and a 25% growth in adjusted EBITDA on a quarter-over-quarter basis. I’ll start by sharing a few insights on these financial results then provide an update on capital management. First, regarding Derby Week a Tertio Downs Racetrack. As you saw in the press release that we issued immediately following the Derby, we once again set all-time records for wagering on the Kentucky Derby race the Kentucky Derby program and the Kentucky Derby week races. TwinSpires also generated record handle on the Derby Day program and on the Derby race. Derby Week is expected to generate $14 million to $16 million of incremental adjusted EBITDA for 2023. As a reminder, we recognize nearly all of the revenue and costs associated with Derby Week during the second quarter of the year. However, there are some ongoing SG&A-related costs associated with Therapy week that are recognized throughout the year. Also, the impact of Churchill Downs Racetrack from the shift in racing operations to Ellis Park for 3 weeks in June was approximately $4 million. While we are disappointed that we incurred this onetime impact to our financials in the second quarter, we believe it was the best long-term decision for our company. Second, our HRM properties in Kentucky and Virginia made strong contributions to our financial results in the second quarter. Overall, our HRM properties contributed nearly $50 million or 2/3 of our growth in adjusted EBITDA for the second quarter. Our organic investments in our Kentucky HRM properties grew 10% overall on a quarter-over-quarter basis and we benefited from the addition of the high-margin Virginia HRM properties that were part of the P2E acquisition. Our Virginia properties contributed $44 million of adjusted EBITDA in the second quarter reflecting a 46% margin collectively for these properties. Our margin was 1 point lower in the second quarter than first quarter reflecting some additional racing-related expenses associated with preparing for the Colonial Downs race meat, which kicked off last week. Our margin was also 1 point lower, primarily as a result of slightly lower top line results and increased marketing spend at our Hampton property. As expected, our Hampton property has seen increased competition from a new casino that opened approximately 6 months ago. We expect to improve margins for our Virginia Aron properties as we enhance the gaming floors and as we realize the benefits from the Exact acquisition in the future. Third, turning to our TwinSpires segment. TwinSpires handle and adjusted EBITDA were impacted in the second quarter from the shift in racing from Churchill Downs to Ellis Park. TwinSpires has a significant market share of Churchill Downs handle and then appears that betters did not shift all of their typical wagering during that time to Ellis Park. TwinSpires also was impacted in the quarter by the cancellation of various racetracks of approximately 15% of the thoroughbred race days during June as well as a number of standard bread races primarily due to the impact of Canadian wildfires on air quality conditions. We estimate that the combined adjusted EBITDA impact of these 2 unplanned and unusual events in the quarter was less than $2 million. We also had higher content-related expenses and slightly higher ADW taxes in certain jurisdictions. These unplanned events and higher expenses and taxes were offset by increased adjusted EBITDA associated with our B2B expansion related to our horseracing technology and settlement services and the benefits from our continued pivot out of the direct online sports and casino business. Despite these challenges, it is important to put the TwinSpires quarterly results in perspective. Although TwinSpires adjusted EBITDA was flat on a quarter-over-quarter basis, it was up 15% on a sequential quarter basis. This reflects the overall strength of this business, including the tremendous benefit it receives from the connection to Churchill Downs Racetrack and the Derby, and we believe it will continue to grow as we expand our B2B strategy. We do expect the TwinsSpires segment margins to return to more historical levels in the third and fourth quarter of this year. And based on our continued B2B and retail sports betting expansion and reduced marketing spend. And fourth, regarding our gaming business, we once again realized significant contributions in the second quarter from the addition of the New York and Iowa properties acquired in the P2E transaction. As Bill discussed, we did see mild top-line softness, which resulted in a collective modest decline in adjusted EBITDA on a quarter-over-quarter basis for our existing regional gaming properties. Our second quarter same-store wholly owned casino margins were down slightly more than one point compared to the same period in 2022. Our margins on a comparable basis are up 3.6 points for the same — for the second quarter compared to the same quarter in 2019, reflecting our retention of approximately half of the margin expansion benefit from the post-COVID peak in 2021. We recorded a $24.5 million non-cash impairment related to the gaming rights intangible for our Presque Isle Casino. This reflects the increasing competitive threat from great games the economic environment, including inflationary trends and the high interest rates and the impact of iGaming on retail gaming and the impact of operating in a high tax rate environment in the state. Turning to capital management. As a reminder, our Q4,1 stock split was effective May 22, so all of our per share metrics have been updated for this impact. We generated $372 million or $4.87 per share of free cash flow during the first half of the year. This is up $15 million or $0.25 per share over the first half of 2022 and reflects our strong diversified earnings. This increase over the prior year reflects the strong cash flow generated from our businesses that was partially offset by higher interest rates and a $33 million non-recurring tax refund in 2022. Regarding maintenance capital, we spent $30 million in the first half of the year, and we continue to expect to spend $75 million to $95 million in total for the year. Regarding project capital, we spent $282 million in the first half of the year, and we continue to expect to spend between $575 million and $675 million in total for the year. At the end of the second quarter, our Bank Covenant Net Leverage remained at 3.9x. Based on our planned acquisition of Exacta and our capital investments, we continue to expect our bank covenant net leverage to remain in the 4x range through the end of the year. We then expect our bank covenant net leverage to decline in 2024 and 2025. Overall, we are very pleased with the results that our team has delivered for the second quarter. The diversification of our portfolio and our strong balance sheet provides a solid foundation for growth through various economic cycles and operating opportunities. We are very well positioned to execute on our tangible pipeline of growth opportunities for the remainder of 2023 and beyond. With that, I’ll turn the call back over to Bill so that he can open the call for questions. Bill? Bill Carstanjen: Thank you, Marcia. At this point, we’re happy to take your questions. So fire away, please. Q&A Session Follow Churchill Downs Inc (NASDAQ:CHDN) Follow Churchill Downs Inc (NASDAQ:CHDN) 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 David Katz with Jefferies. David Katz: Hi. Good morning, everyone. Thanks for taking my questions. Look, I wanted to just talk about the gaming business, right, in regional gaming. And I suppose we include HRM in there. You’ve given us a lot of detail, but what I wanted to talk about in a general sense is, is there some — we’ve seen some industry numbers that come out a little bit down year-over-year. and I’ll speak for myself sort of keeping all of that processed into our numbers for regional gaming has been a little bit more complex in your case because of the growth. What is the underlying economy and demand environment looking like to you? And particularly as we start to get into July, — how is that sort of setting up going forward? Bill Carstanjen: Thanks for the question, David. So first, when you think about our company, you always have to pull back from just a quarter-by-quarter look. Our company, the way we’re structured, the way we’re built, we’re built to deliver a lot of growth over the next few years because of the projects that that we’ve developed and the pipeline we have. So, everything about that is the same as it’s been. It’s a time of extreme optimism, and at the time of execution for our company. So anytime I get a specific question about trends you might see in a given month or even over a quarter. I try to frame them in the context of that larger picture of how do we grow our company, how do we build our company. That’s something — that’s, of course, you have to set over a multiyear period. And that’s, of course, you have to stick through even month-to-month, quarter-to-quarter and year-to-year. So, everything about what we’re doing in our company remains on course and it remains a time of great optimism because of the strength of the pipeline that we’ve built. With respect to this prior quarter, I think if you look at the numbers across the entire country, you can see pockets of strength, and you can see pockets of weakness. In general, I’d say the second half of the quarter was stronger than the first half. And I would say even though we’re currently in an environment where we’re demonstrating for you substantial growth company primarily because of the P2E acquisition and some of those properties are performing very, very well for us. We still showed organic growth in our base business absent that acquisition. So those are the larger trends and themes, I think, to focus on when you think about our company. David Katz: And look, I think the important follow-up, if I may, is the growth pipeline, the considerable growth pipeline, since we last spoke on a public call about it 90 days ago, it is still comfortably intact, correct? Bill Carstanjen: Oh, yeah. I think start with the Kentucky Derby and the performance that we saw with the first term project, that really did exceed our expectations in terms of the immediate customer acceptance of that and the positive feedback we got from that. So — if you break it down, we feel very, very optimistic about all the projects we’re doing around the Derby. And from that, you spread into the HRMs with the dump freeze project that’s coming on, the Emporia, all the projects we’re doing there, and we feel really good about Terahode as well. So, at this point, what’s important for us, David, is execute, execute, execute. Get those properties done on time and on budget, just focused on executing the plans we’ve already put in place. So, in general, I’d say there is a lot of cause for optimism and those remain on course for delivery as we previously discussed. David Katz: Perfect. Thank you. Bill Carstanjen: Thanks, David. Operator: Thank you. One moment please for our next question. Our next question comes from the line of Dan Politzer with Wells Fargo. Dan Politzer: Hey. Good morning, everyone, and thanks for taking my questions. I wanted to follow up and drill a bit more into the gaming segment. I mean if I look at just the Iowa, New York properties that you recently acquired, it looks like revenue was more or less flat quarter-over-quarter and EBITDA was down. Is there a big seasonality component, or is there something going on specifically at those properties — and along those similar lines, like is there anything specific in Louisiana, that one also stood out as being down a bit year-over-year. And I ask this in the context of this was a segment to the prior question, we generally have a good feel for, and it seems there was just a lot of squishiness here. Thanks. Bill Carstanjen: I think in general, there are some labor pressures at different properties. I think that — those are common themes throughout the country. There is also some mild softness just in general on the top line. So, I wouldn’t want to call out those 2 particular properties or talk about the properties where they were strength. I would just say there’s some of that noise going on in the market in general. In general, it will wash out I’d never — while our team focuses and will respond quickly to data that they’ll see week-to-week, I don’t personally ever draw big trends from a month or 2 months — and again, in the last quarter, I saw a mixture of things. I thought the worst — the first half was a little rougher generally than the second half. So I don’t want to communicate to you, Dan, that I thought there was anything we needed to significantly adjust to based on what we saw in the first several months of owning that property or what we saw in the last quarter. It’s okay. It’s going to be fine. It will settle out and it will settle down. And I don’t think there’s any institutional or seismic sort of paradigm shifts that we have to adjust to in those markets, in particular or in general. Dan Politzer: Got it. Thanks. That’s helpful. And then I know it’s a bit early, but as we think about next year’s Derby and maybe the puts and takes between hepatic, the Jockey Club, maybe possibly more B2B deals, and then just being 150 as you think about pricing. Can you maybe walk through some of the puts and takes here as we try to bridge from this year to next year, and what may be the most incremental drivers of EBITDA growth? Bill Carstanjen: Yes. Next year, we’re delivering really seismic change in the on track experience at Derby. And so we’re delivering a bunch of new ticketing options, we’re impacting for existing seats, the experience. So next year, you’ll see a pretty significant expansion in ticket revenues. I think other things are moving well. Things like wagering are — the trend lines have been extremely strong there. But the biggest driver of Kentucky Derby EBITDA over time, has been the experience. It’s not seats. We never like to talk about it in terms of seats. We like to talk about it in terms of delivering different experiences for our customers. And next year, Derby 150, which is going to be a really significant event in the country. No one else can really make claims of 150 consecutive events in a row. We’re building around the uniqueness and specialness of the 150th consecutive Derby and the capital investment that’s been made in our facility to drive a meaningful increase in ticketing revenues. Dan Politzer: Understood. Thanks for the caller. Operator: Thank you. Please for our next question. Our next question comes from the line of Barry Jonas with Tru Securities. Barry Jonas: Hey guys. Good morning. Happy to hear races coming back to Churchill Downs soon, but I wanted to just ask about the suspension. What were the conclusions of the investigation and what steps have been taken to minimize future risks? Thanks. Bill Carstanjen: Thanks for the call, Barry. So we’ll announce shortly more details on the September Meet and some of the safety protocols that will be [indiscernible]. But the takeaway is the track is very safe. And what we needed to do is spend some of this time in the interim, while the track — while we ran the rest of the race meet at Ellis, to just go soup to nuts through every single thing we do at the racetrack. There were nothing that jumped out as an apparent cause of the injuries, of the breakdown. And as we went through and rebuilt our processes from the ground up to check everything that we do, to make extra sure, we didn’t find anything material. So the way to think about news like that is you have to do the best you can. You have to take the steps that you can to make it as safe as possible, and you constantly have to challenge yourself and review everything you do. But this was a series of unfortunate circumstances that happened during the early portion of our meet. And to the extent that there can be good that comes out of it. Everything we’ll do going forward, starting in September, we’ll do a little bit better and be a little bit more thorough and we’ll learn what we can, but there aren’t any material changes that have been made to the structure or the track or the surface of the track because bringing in some of the best set earl to help us evaluate it. We didn’t find anything fundamentally wrong or different about our track from previous years. So that, in a sense, can sometimes be unsatisfying, but that’s business and that’s sports. We just have to commit to continually doing everything we can, constant incremental improvements to be as safe as we possibly can, and we’ve done that. Barry Jonas: Great. I appreciate that color. Just as a follow-up, I wanted to ask about the Richman casino process. How do you see the valid initiative process differing now versus the last time? Bill Carstanjen: This time, we have the benefit of the data behind the process that was run a couple of years ago that didn’t involve us. So, the task of our team, of our partnership is to evaluate everything about last time to find places where we can drive incremental improvement. The good news about running a referendum a second time. And again, we didn’t run it the first time, but our partner was involved in running it the first time. The good news about doing that is you have a lot of data about how people voted and why they voted that way. And we’ll try to take all that and fold that into our processes this time to drive incremental improvement. It was 51-49 last time. It wasn’t a catastrophic defeat. It was lost in the margins. So, we’ll be fighting to win the confidence and the approval of those voters in the margins that last time didn’t have enough confidence in the project. Barry Jonas: Okay, thank you. Bill Carstanjen: Thanks, Barry. Operator: Thank you. One moment please for our next question. And our next question comes from the line of Joe Stauff with SIG. Joe Stauff: Thank you. Good morning, Bill, Marcia. Bill, I know you had mentioned in your opening comments, but I wanted to ask you maybe the best way to think about timing of the benefits associated with the new Kentucky law and outlying basically gray market machines. It’s a tough answer in terms of anticipating when that tailwind starts to show up for you guys. So, I wonder if you could maybe talk about that a little bit more, and then I have one follow-up, please. Bill Carstanjen: Sure. It was the decision of the legislature to pass legislation, which was signed by the governor, banning gray games was a really good thing for the Commonwealth. Gaming is supposed to be a regulated and tax business, in particular on the regulatory front, it’s important that there are basic protocols and processes in place to protect patrons who choose to participate and to prevent patrons who shouldn’t be participating. So, all in all, this was a very good thing that happened in the Commonwealth of Kentucky. Obviously, when you have unregulated, unlicensed, uncontrolled gaming, you see a lot of proliferation and expansion, and this arrested all of that. This stopped all of that. So, as we go forward from this point, and the opportunity for people to engage in that illegal gray game behavior is no longer there. We’ll see some of that demand shift over by a matter of lounge, you’ll see if it shifts over to the licensed regulated gaming which we participate in the HRM business. As to the individual impact of that, it will probably vary by facility and it will be hard to always isolate because at every one of our properties, we’re also doing other things to improve our business. For example, Derby City Gaming. We’ve opened up the hotel, we’re learning how to run that well, we’ve expanded the gaming floor. We also have sports wagering that goes live on September 7, so we have these other good things that are going on in our properties across the state. And one more positive factor will be the fact that illegal gaming in Kentucky is no longer permissible. So, I can’t totally isolate it for you at this time as we actually get real data. And as I think you know, we’re a very data-driven company. As we actually get real data into the system, maybe we’ll be able to comment more specifically, but at this time, it’s just kicking off, and we know it’s going to be positive, but it’s hard to quantify. Joe Stauff: Got you. And then just a follow-up on the Dumfries comments that you had. Phase 1 in the second quarter, I believe you outlined 11-50 in terms of just the number of units. What is the right way to think about how quickly or you think about adding and getting up to that more maximum number of roughly 1,800 units. Bill Carstanjen: Really good question. I think you can go a couple of different ways, and I think we’ll see how quickly it ramps, we will be talking to the community about the conditions around expansion, which involves opening the event center and the other spaces. We’ll be looking at all of that based on what actually happens when we open. Obviously, while without being able to predict the future, we expect strong demand, particularly on a per machine basis, so give us a little bit of time to get it open. Give us a little bit of time to complete the road infrastructure, give us a little bit of time to talk to the community about our partnership for expansion of the facility. All of that will be in play. And we’ll go from there. We’re obviously interested in ramping up as quickly as we can. We think the demand is going to be there and is going to be there quickly. But all of this has to be done carefully and in conjunction with the community and their expectations on traffic flow and the other amenities in the facility. We’re prepared to move very, very quickly, and we probably will end up doing that but I don’t want to promise that until we get the place open. Joe Stauff: Okay. Thanks a lot, Bill. Bill Carstanjen: Sure. Operator: Thank you. One moment please for our next question. Our next question comes from the line of Chad Beynon with Macquarie. Chad Beynon: Morning. Thanks for taking my question. First, with respect to reducing leverage, you obviously have several options, including divesting assets, sale leasebacks, you have some excess land that could be sold, or you could just grow your way out of leverage, which is kind of how you framed it before given the ramping and opening of properties that you’ve laid out. Given the current status of the of the environment from a macro standpoint, has anything changed just in terms of how you’re planning on deleveraging? Thanks. Bill Carstanjen: I don’t believe anything has really changed. While I read the same articles and look at the same data, many other people do about the economy and understand the natural concerns people might have about the state of the economy over the next year or two and interest rates, et cetera. For us, this is a time of expansion in our company. We have a very strong pipeline of great projects that make sense in any economic environment, so, nothing about the current economy makes us want to change our plans for executing our growth strategy, and along with our growth strategy and along with these properties and projects we’ve talked about today, will come a lot of additional EBITDA. And that’s how we’ve been building this company over the last number of years, and that’s how we’re going to continue to build it even through an economic cycle that put some people feel is likely to give people headwinds, I don’t think we believe as a senior management team that we’re feeling the headwinds in any material respect. So, we’re going to go continue to do what we’ve been doing, and we feel fortunate and blessed to have the pipeline of opportunities that we have. Chad Beynon: Thank you Bill. And then back to Virginia, the HRMs, you kind of outline the process in dump freeze, and I’m guessing it would be the same with the licenses that you have remaining outside of that. Lot of items going on in Virginia with new properties opening. We’ve seen North Carolina land-based casino legislation potentially proposed. But in terms of those last licenses, can you kind of help us think about the timeline of when you would kind of greenlight those or pick sites, is this something that could be several years out or maybe after the Richmond ballot, and some other items in North Carolina that would give you enough confidence to kind of move forward in certain locations? Bill Carstanjen: Sure. Good question. I’m reminded of the famed UCLA basketball coach, John Wooden, be quick, but don’t hurry. So, we plan on moving very quickly with respect to our remaining licenses in Virginia, and we think about things about what we do with underperforming ones as well, although they’ve all been fairly solid. So, I think you’ll see us move as quickly as we possibly can. There’s really a two-pronged approach to thinking about it. One is we have to identify markets in the state that we think are the best markets to use 1 of 10 licenses. We have to identify those. And then we have to go talk to those communities and get support to run a referendum. And as part of that phase, we also have to win the referendum. So there’s a lot that can happen in that second phase. And now we have additional things like the activity in North Carolina, which impacts Virginia because Virginia shares at Southern border with North Carolina immediately to their south. So we weren’t very focused for any additional sites anywhere near the southern border of Virginia. — because that’s where the Class 3 casinos in Virginia are largely — that’s where they’re all located except for the Richmond license, which is the one we’re participating for. The rest of them are down there on the southern border. So that was not a market that we were interested in continuing to pursue any way for any of our remaining Virginia licenses. We’re looking through more of the middle portion in the upper portion of the state. And we have lots of leads and lots of opportunities that we’re exploring. But that second phase I was talking to you about where the community is really your partnership in these. You have to have the city council support you have — or the county support, depending on the individual site and you have to win a referendum. Those are the logistics and the wrinkles that make this more than an academic exercise of simply looking at population centers and well centers through the state. So, we’re sorting all of that out. We, of course, want to get to 10 licenses as quickly as we responsibly can. But we don’t want to waste any. The challenge for the team is how do we maximize each of those licenses — and that’s back to that quote be quick, but don’t hurry. We don’t want to make mistakes and deploy these to suboptimal places. So, I think you’ll see us be very active in 2023, 2024. And — and to the extent we have remaining licenses, 2025. Chad Beynon: Thanks, Bill. Great quote and great insights. Appreciate it. Bill Carstanjen: Thanks, Chad. Operator: Thank you. One moment please for our next question. Our next question comes from the line of Jordan Bender with JMP Securities. Jordan Bender: Great. Thanks for taking my question. Bill, maybe a bigger picture question on TwinSpires and the horse racing industry. So, with horse wagering getting maybe a little bit more crowded with fixed odds or some of the real money gaming companies coming into the space — does consolidation make sense either from a track perspective to control more of the distribution of content or even platform M&A just to gain scale within the industry? Bill Carstanjen: Always a good question in times of change and uncertainty. It’s always a good question to think through things like that. What I would say is I believe our company has the single best online gaming asset. Others might disagree with that, and they’re free to have their opinion. But — our asset has stood the test of time. It generates a great deal of EBITDA. It demonstrates strong consistent margins. It’s a great asset. So, as we look at the winds of change in the online gaming space, whether it be horse racing or larger — we look at that from a position of strength, knowing that we have something that’s very valuable that is a proven commodity and around which we can build. So, I think I would start my answer with that, and I would end with that. We pay attention to all the themes and all the trends that are going on, but we really, really like our business, and we know how strong it is and we know what it’s capable of. And we have lots of thoughts on how we can and should build that. But we also — we’re never cocky about it or over confident about it. We’re also really watching to see how things develop because nobody really has a crystal ball, including us, — so we’re the company that tries to be good at responding to reality. We’re not claiming that we have a crystal ball and that we can always predict what happens. But we do think that our track record shows that we’re very good at responding rationally and in real time to what actually happens in the markets out there. And this is the time now and over the next couple of years where we’re going to see various changes in and the competitor landscape and in the markets in general as the sort of nascent online sports wagering space goes up a little bit. Jordan Bender: Great. And then for my follow-up, I know there’s always a push to get international involvement into the derby. Maybe just an update on what you saw this year coming out of Europe, coming out of Japan, either from a wagering or a participation point of view? Bill Carstanjen: We’re still in the beginning of our Odyssey on international. It is a big focus for us, particularly around ticketing and reach. So it’s — as several initiatives in the company have started when you first start them, you you’re seeing change, but it’s off a very small base. And that’s how I’d say our international profile looks. We’re seeing improvement. We’re seeing encouragement, but it’s off a very small base. But for our company, this is a big push going forward. We want our content out there for wagering. And we also want to reach the consumers across industrialized the industrialized world where just about in any major industrialized country, you see horse racing just about not in every one, but most, we want to reach those customers because as you know, covering our company, but also from our discussion a little bit earlier, driving ticket revenue, high-end ticket revenue — that’s a big part of the Kentucky Derby economic puzzle. That’s something we’ve been good at, and we want to reach those people that already demonstrate they pay those ticket prices to go to the equivalent of the outer really but the equivalent of that rate — our race in other countries. So it’s a focus, but the base is so small right now. It’s not a material change that we’re talking about. But over the next 3 to 5 years, you’ll hear us talking a lot more about this because we’re going to be demonstrating real commitment and effort to growing to growing that piece of our pie. Jordan Bender: Thank you. Operator: I would now like to hand the call back over to CEO, Bill Carstanjen for any closing remarks. Bill Carstanjen: Thank you. I want to thank all of you who participated in these calls that listen in for your interest in our company, for your commitment to our company. The folks that asked questions today, these were, in particular, really strong, sharp questions. We appreciate them. We’ll try to be good stewards of people’s trust in us and the capital that they’ve given us. So — we’ll talk to you next quarter, but you’re going to see activity over the next 90 days because we’re not slowing down. We’re charging ahead. This is a good time. There’s opportunity in environments like this. And this management team, this group of people, we’ve been together a long time, and we’ve proven through a variety of different environments that we can succeed. So we’re pedaling company, even if others out there are showing reticence, not us. So we’ll talk to you in 90 days. Thanks again for your confidence. Talk soon. Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating, and you may now disconnect. Follow Churchill Downs Inc (NASDAQ:CHDN) Follow Churchill Downs Inc (NASDAQ:CHDN) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Jim Quinn: Burning Books In A Brave New 1984 World, Part 2 Authored by Jim Quinn via The Burning Platform blog, In Part 1 of this article, I explored how Huxley, Orwell, and Bradbury foretold the use of technology by totalitarians to subjugate and control the masses. Now we move on to a currently hot topic – censorship. “Great is truth, but still greater, from a practical point of view, is silence about truth.” ― Aldous Huxley, Brave New World Censorship “There was always a minority afraid of something, and a great majority afraid of the dark, afraid of the future, afraid of the past, afraid of the present, afraid of themselves and shadows of themselves” ― Ray Bradbury, Fahrenheit 451 “There is more than one way to burn a book. And the world is full of people run­ning about with lit matches.” – Ray Bradbury The primary theme of Fahrenheit 451 is censorship. In Bradbury’s dystopia, burning books was the principal method of censorship, directed by the government, but generally supported by the masses. A form of self-censorship developed, as the dullards, intellectually lazy, and willfully ignorant, preferred books to be burned so they felt that would put them on a level playing field with the critical thinkers and intellectually curious minded. It always comes back to the government doing everything in their power to keep the masses apathetic, ill-informed, entertained, and distracted, to ensure their continued control over society. Bradbury believed the masses would go along with censorship because they already had television, radio, and fast cars, with vacuous programming, loud music, and unceasing advertising creating over-stimulation and distraction for the populace. They were too distracted to read a book, learn, think critically, or question the authorities. Bradbury doesn’t have much faith in either government or the people they rule. His view of humanity in general was not positive in the early 1950s. Imagine what he would think of American society seventy years later. The hostility towards books in Fahrenheit 451 for many was based on envy. The lazy, willfully ignorant masses didn’t want to feel intellectually inferior to those who wanted to read books, learn, inquire, think, and question the government narrative. Seeing your neighbor’s books burned gave a warped sense of satisfaction to the intentionally ignorant. When your government wants to keep you ignorant to better control you and you choose ignorance because it’s easier to not think, you’ve achieved dystopian perfection. Thinking is hard. Watching a screen is easy. The 1930’s and 1940’s saw the height of book burnings, with Goebbels and the Nazis burning books contrary to their ideology in the early 1930s, and then the counter book burnings of Nazi literature after 1945. It spread to the U.S., with the Karens of their day burning textbooks and literature they didn’t agree with. There will always be an authoritarian-minded segment of the population who seek power to decide what you should read or see. They do not believe freedom of speech as defined in the Constitution should be available to those they disagree with. “I wasn’t worried about freedom, I was worried about people being turned into morons by TV…the moronic influence of popular culture through local TV news and the proliferation of giant screens and the bombardment of factoids.” – Ray Bradbury Censorship is the cudgel they utilize to keep you from making up your own mind about ideas, historical events, opinions, and facts. If you don’t want the masses to know the truth, don’t let them see both sides of issues, keep them distracted by technology, and overload their brains with meaningless drivel. Bradbury’s dystopian fears have come to fruition, seventy years later. We are now a nation of low IQ sheep who “feel” smart because their overlords have lowered the bar so low, every dullard believes themselves to be smarter than Einstein, even though they can’t subtract 57 cents from $1.00 in their head. Generations have been indoctrinated to feel rather than think. They don’t even know what thinking means. “If you don’t want a man unhappy politically, don’t give him two sides to a question to worry him; give him one. Better yet, give him none. Let him forget there is such a thing as war. If the government is inefficient, top-heavy, and tax-mad, better it be all those than that people worry over it. Peace, Montag. Give the people contests they win by remembering the words to more popular songs or the names of state capitals or how much corn Iowa grew last year. Cram them full of noncombustible data, chock them so damned full of ‘facts’ they feel stuffed, but absolutely ‘brilliant’ with information. Then they’ll feel they’re thinking, they’ll get a sense of motion without moving. And they’ll be happy, because facts of that sort don’t change.” ― Ray Bradbury, Fahrenheit 451 One of Bradbury’s real pet peeves was special interest groups and minorities censoring books that offended them because they felt their group was either portrayed unfairly or not portrayed at all. In particular he regularly received complaint letters regarding his portrayal of female or black characters in his novels. Essentially every special interest group wants to be portrayed in a positive manner and will use all means necessary to censor portrayals they don’t like, including book burning and invoking hostility towards the author. Rather than make a cogent argument counter to a portrayal in a book, they scream at the top of their lungs and throw a temper tantrum. And this was fifty years before the introduction of social media platforms, where censorship has become an art form, and online temper tantrums by the easily offended have been aided and abetted by your government and their social media co-conspirators. Cancel culture is a cancerous tumor on our society and must be eradicated before it kills us. The depth and breadth of censorship in our world today far surpasses any dystopian visions Bradbury could conceptualize in Fahrenheit 451. The book burning firemen couldn’t hold a candle to what Twitter, Facebook, Google, Youtube, and the legacy regime media have done since the start of this century. We are now in the Woke Age of Censorship, where the outrage of the day results in mass censorship by the masters of deception and deceit. Even though censorship was used extensively during WWI and WW2 by governments trying to cover-up military defeats, I believe the modern Age of Censorship began with the assassination of John F. Kennedy by elements within the U.S. Deep State. The CIA could not allow the truth to be told, so the feckless Warren Commission produced a fake report about the lone gunman and if anyone questioned the official narrative, the CIA created a derogatory term to silence them – conspiracy theorist. As we know, this term is screeched by the regime media and their brain-dead acolytes on a daily basis in order to shut the rest of us up. One problem for these mouthpieces for the Deep State – virtually every conspiracy theory has been validated and proven true over the last several years. As we saw during the Vietnam War, censorship wasn’t quite as efficient as today. They were successfully able to pull off the Gulf of Tonkin false flag without the press uncovering the truth and the media went along with the narrative we were winning in the early years. But there were still some journalists with integrity in the 1960s like Seymour Hersh who refused to be censored. Even the networks started showing videos of the death and devastation. The entire war, based on lies, unraveled, brought down a president, and created turmoil and violence in the streets of America. The Deep State got slightly more sophisticated with 9/11 and the Iraq wars. As with JFK’s assassination, the government entities who would be implicated used a commission to cover-up their failures and lies regarding the 9/11 attacks. The no longer independent legacy media mouthed the official narrative and called all the independent journalists who revealed uncomfortable truths, conspiracy theorists. “Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it.” ― George Orwell, 1984 The mainstream media was tightly censored during the Iraq wars and willingly censored themselves in order to have continued access to military command. The real turning point for censorship and surveillance occurred with the passage of the totalitarian manifesto – The Patriot Act. This despotic legislation, pre-written and waiting for the opportunity to be unleashed upon America by Cheney and his neo-con co-conspirators, created a surveillance/censorship state that has grown to such a Constitution crushing size, it has effectively stripped citizens of all their rights. The regime media is all in on enforcing the dictates of their censorship masters. With only six media conglomerates controlling 90% of the news dissemination, the corporate fascist censorship machine was easy to roll out. The masses are easily manipulated through propaganda, censorship of non-governmental approved narratives (aka the truth), and the exact same messaging by all six state approved narrative machines. With the legacy regime media no longer interested in the truth, journalist hacks acting as mouthpieces for the Deep State narrative, and profits as their sole motivation, it has fallen to independent journalists, bloggers, and insiders with a conscience and integrity to uncover the truth and act as the sunlight and disinfectant on this vile diseased pustule, disguised as our government. The government loves to declare war on something in order to implement censorship protocols regarding their invented enemy, whether it be drugs, terrorism, Iraq, Syria, covid, Russia, or climate change. The Iraq war, instigated based on fictional WMD and false narratives about 9/11 involvement, was a censorship dream until two patriotic servicemen – Joe Darby and Bradley Manning – along with a true martyr on the altar of truth – Julian Assange – who has been illegally imprisoned for the last four years after spending seven years in the Ecuador embassy for daring to reveal the atrocities committed by the U.S., pulled back the curtain on their crimes. Darby revealed the torture photos from Abu Ghraib. Manning provided Assange with damaging videos and files, revealing the truth about the disastrous Iraq War. Snowden’s revelations about the illegal mass surveillance program run by the NSA, under the cover of The Patriot Act, once again pulled back the curtain on the surveillance/censorship state, whose sole purpose is to maintain power and control by any means necessary. Assange, Manning, and Snowden did nothing more than reveal the criminality of the U.S. government and the Deep State actors pulling the strings behind the scenes. Other patriots, like Seth Rich, who gave Assange Hillary’s emails during the 2016 election campaign revealing her criminality, was murdered in cold blood for defying the surveillance/censorship state. Your government and the shadowy figures constituting the invisible hand behind the scenes, demand censorship regarding their un-Constitutional treasonous acts. When an unelected ruling elite make it a crime to expose their crimes, any semblance of a government of the people, by the people, for the people has been abolished. “We know that no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power. Now you begin to understand me.” ― George Orwell, 1984 The censorship machine has entered hyper-speed overdrive since the election of Trump in 2016. You had Obama, Hillary, Comey, Brennan, Clapper, and dozens of other Deep State lackeys conspiring to bring down a duly elected president through the fake Russiagate conspiracy, concocted by them, propagandized by their state media organs, with all evidence of their treasonous conspiracy censored from the public because they controlled all the media outlets. The MO of these treacherous villains is to stay on the attack, accusing their victims of the very crimes they are committing, while suppressing and censoring anyone trying to reveal the truth. Two impeachments, based on nothing but lies, and a stolen election through mail-in ballot fraud and rigged voting machines, wasn’t enough for the psychopaths running the show. They took advantage of a naïve Trump on January 6, weaponizing a peaceful protest at the Capital by having agent provocateurs from the FBI create the “armed insurrection” in which no one was armed except the government plants. Pelosi, along with Wray and his FBI cohorts, planned and executed a fake insurrection, entrapping hundreds of honest citizens and imprisoning them for years on false charges. At the same time they suppressed and censored thousands of hours of videotape which would reveal the dozens of FBI plants instigating the entire “attack on democracy”. The censorship about Hunter Biden’s laptop, tens of millions in bribes paid to Hunter and “The Big Guy”, Hunter’s drug, gun and pedophilia crimes, and Biden crime family influence peddling across the globe, constituted real election interference in 2020. Other than the NY Post and Tucker Carlsson, the entire regime media complex censored the story, in particular the social media thought police – Twitter, Facebook and Google. Silence about the truth is the easiest form of censorship. Silence about the truth wasn’t going to cut it when it came to the greatest hoax in the history of mankind. As the initial test of whether their Great Reset plan could be sold to the masses through fear, threats, intimidation and narrative control, Schwab, Gates, Fauci, Tedros, and the rest of their Davos psychopath acolytes weaponized the annual flu by giving it a scary name, creating a multi-billion-dollar marketing campaign of fear, coercion, and peer pressure, and worked hand in hand with Big Pharma, Big Media, and the Silicon Valley social media tyrants to enrich themselves and censor anyone daring to question the approved narrative. This is when soft censorship devolved into proactive, destructive, deadly, demonetization censorship. The censorship conducted by Fauci, Biden, the regime media, the Sickcare complex, Twitter, Facebook, Google, and Big Pharma bought off academics, resulted in the deaths of millions. They sacrificed the lives of millions on the altar of ungodly gene therapy profits, a life destroying lockdown to test the limits of what the ignorant masses would accept, and shredding the last vestiges of our rapidly perishing Constitution. They knew masks didn’t work. They knew social distancing didn’t work. They knew ivermectin and hydroxychloroquine were tremendously effective, safe, and cheap treatments for covid. They knew their emergency use authorization and hundreds of billions in profits were at risk if they did not censor doctors, studies, and truth telling journalists who dared to provide factual evidence of those treatments working tremendously well in combating the symptoms of covid (aka the flu). Instead, they sentenced victims to death with Fauci’s remdesivir and putting them on vents. Allowing these treatments, along with natural immunity, and no lockdowns would have seen the entire episode end within a year, with minimal long-term impact. They knew their experimental gene therapy, sold as a safe and effective vaccine, was dangerous and ineffective. Big Pharma censored their own clinical trial data, and the FDA used some Orwellian doublespeak to change the decades old definition of vaccine, because the covid “vaccines” didn’t keep you from catching it, spreading it, or dying from it. Ironically, Google still does their darndest to keep the graphic below hidden from view, while promoting the pro-vaccine narrative. Based on the number of jabbed who are joining the disabled rolls, coming down with myocarditis, contracting turbo cancers, and generally dropping like flies, the powers that be will soon be re-defining “Died Suddenly” to be only those dying from climate change and gas stoves. The censoring of Dr. Malone, Dr. McCullough, Dr. Korry, Alex Berenson, RFK Jr., Ed Dowd, and hundreds of other truth-telling medical experts and journalists by social media corporations, in conspiracy with the White House and Fauci, was and still is a crime, violating the First Amendment of the Constitution. But we all know Biden and his handlers care naught about the Constitution. They violate it on a daily basis. Ed Dowd has been a lonely strident voice in the wilderness during the entire plandemic and continues to present factual proof regarding the disastrous ongoing impact of the Pfizer and Moderna jabs. His only platforms have been the alt-media, his own website, and since Musk took over, Twitter. The regime media continues to create a veil of censorship around the six sigma increases in youth mortality, disability claims among working age adults, and the skyrocketing occurrence of cardiovascular disease, cancers, and fertility issues among normally healthy individuals. The façade continues to crumble as actuarial data cannot be fudged. Life insurance companies know exactly how many 25- to 44-year-olds will die within a given year. Covid killed very few 25- to 44-year-olds. It killed those over 80 and the morbidly obese. The vaxx was so safe and effective it resulted in 80% more deaths than expected among the young. You will never see this data presented in the mainstream press. If this data about vaccines killing and injuring people or proof ivermectin and hydroxychloroquine saved lives makes it into the mainstream, it is decried as conspiracy theories and “fact checkers” declare the data false. Just google any of these terms and the first 50 articles will claim they are falsehoods. Controlling search engines is a censor’s dream. The censorship clown show arrived in the swamp last week with hearings reminiscent of the McCarthy era in the 1950s. Instead of trying to root out communists, the brain dead, low IQ, virtue signaling doofuses in the Democrat party attempted to discredit an honest truth telling man who has already had his father and uncle murdered by his government. RFK Jr.’s intelligence, guile and combativeness made the weasels and whiners shriek in agony as he destroyed their attempts to discredit the First Amendment. The Democrats acted like shrill three-year-olds, attempting to smear and defame a good man. The American people saw who the totalitarian censorship police are and who defends their right to say and write anything they choose. The lines have been clearly drawn, with those supporting authoritarian measures to shut you up, lock you down, and censor information contrary to their narrative, versus those of us who believe there should be absolute freedom of speech with no restrictions or government control. In a perfectly ironic twist of cognitive dissonance, the Democrat leadership attempted to censor RFK Jr. at a censorship hearing and after failing to censor him, proceeded to make a mockery of the hearing by first saying no censorship took place and eventually arguing censorship was a good thing. The NYT did its patriotic duty as the mouthpiece for the censorship regime, saying it was appropriate for the federal government to seek to tamp down the spread of falsehoods. There are no journalists with integrity and impartiality left working in the legacy media domain. The only truthful reporting can be found on Substack and several blogs by the likes of Greenwald, Taibbi, Berenson, Hersh, Kirsch, Malone, and a few dozen others. “A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” ― Aldous Huxley, Brave New World Huxley essentially believed a totalitarian state had no need to act forcefully in censoring thought. All it needed to do was use technology, conditioning, and drugs to keep the masses distracted, entertained, thoughtless, and sedated. They would willingly forfeit their liberties and freedoms for government protection and stability. There would be no need for overt censorship when the docile sheep-like masses willingly censored themselves. Conditioning from birth and copious doses of Soma produced a population who would never consider rebelling. These methods are utilized by our current totalitarian state, as government schools act as indoctrination centers and most of the population is either taking government approved drugs or “illegal” pharmaceuticals with a wink-wink from the authorities, who encourage homeless tent cities of drugged out zombies in every urban setting in America. Ironically, Brave New World has been one of the most censored and banned novels in history. Published in 1931 when the suffragette Karens of the day were busy enforcing prohibition, school boards were aghast at the mention of drugs and casual sex, missing the point of the novel entirely. It was banned all across pious America. The soft censorship theme of this novel contrasts greatly with Orwell’s dark vision of a brutal authoritarian surveillance/censorship state. “So long as they (the Proles) continued to work and breed, their other activities were without importance. Left to themselves, like cattle turned loose upon the plains of Argentina, they had reverted to a style of life that appeared to be natural to them, a sort of ancestral pattern…Heavy physical work, the care of home and children, petty quarrels with neighbors, films, football, beer and above all, gambling filled up the horizon of their minds. To keep them in control was not difficult.” ― George Orwell, 1984 Orwell actually had a pretty similar take on how the masses (aka Proles) were kept under control by bread and circuses, but the threat of being imprisoned and tortured for wrong thought was always front and center, with Big Brother monitoring their every word and action. Huxley’s soft censorship of loving your servitude devolved into working so hard you are too tired to do anything other than watch movies, drink, gamble, and root for your football team. The Proles would be too tired and distracted to rebel. The real censorship in Orwell’s 1984 involved controlling every piece of information, rewriting the content of newspapers and history books, and manipulating language to suit the needs of the Party. Enemies were created and adjusted as needed. The citizens were perfectly willing to believe whatever the Party told them. By controlling the present, the Party was able to engineer the past. By manipulating the past, the Party was able to justify its treacherous actions in the present. We’ve now reached a tipping point, where the majority thinks the minority should be censored and punished for thoughtcrime. The First Amendment is meaningless and inconvenient for those wielding the power in this country. The recent PEW poll about censoring “false” information produced truly disturbing results and opens the door to a dystopian future of the Deep State (aka Big Brother) censoring and manipulating all information we receive, while throwing dissenters and purveyors of contrary opinions into the gulag. This poll proves that government school indoctrination and endless propaganda messaging can sway the ignorant masses to believe provable falsities. The government, regime media, and social media did restrict people from seeing what the ruling elite decided was “false information”, about Russiagate, Wuhan lab leak, Hunter Biden’s laptop, election fraud, effectiveness of ivermectin & hydroxychloroquine, ineffectiveness of masks, useless & dangerous covid vaccines, and what really happened on January 6. The one problem with restricting access to this information was the “false information” was entirely true. Every conspiracy theory has proven to be right. There can be no restrictions on anyone’s speech for whatever reason. Censorship is a tool of totalitarians. The relentless march towards our own totalitarian dystopia is being built on a foundation of surveillance and censorship, enforced by unelected traitorous Deep State sycophants, unregulated rogue government agencies, and shadowy globalist billionaires. Whether this is part of the Great Reset plan to usher in a New World Order or just criminal degenerates raping and pillaging the last vestiges of a dying empire, the end result is we will own nothing, be happy (or else), live in our 15 minute gulag cities, eat lab grown meat with a side of crickets, fight off Gates’ GMO mosquitos, tool around in our solar powered scooters, while the government dims the sun, and their annual plandemic knocks off another few million. Bradbury, Huxley, and Orwell warned us, but we failed to heed their call. The consequences could be fatal to our once great republic. Everything the masses believe is false. They aren’t even conscious of the lies, so they will never rebel. The CIA and their cohorts have accomplished their goal. “Until they become conscious they will never rebel, and until after they have rebelled they cannot become conscious.” ― George Orwell, 1984 “We’ll know our disinformation program is complete when everything the American public believes is false.” – William Casey, former director of the CIA, upon being asked what the goal of the agency was (in 1981). In Part 3 of this article I will try to wrap up how the totalitarian measures, state control, and how truth, happiness, and materialism in those dystopian novels will play into our dark future. Tyler Durden Thu, 07/27/2023 - 16:20.....»»

ANSYS, Inc. (NASDAQ:ANSS) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Ladies and gentlemen, thank you for standing by and welcome to the ANSYS First Quarter 2023 Earnings Conference Call. With us today are Ajei Gopal, President and Chief Executive Officer; Nicole Anasenes, Chief Financial Officer; and Alex Di Ruzza, Investor Relations Manager. All […] ANSYS, Inc. (NASDAQ:ANSS) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Ladies and gentlemen, thank you for standing by and welcome to the ANSYS First Quarter 2023 Earnings Conference Call. With us today are Ajei Gopal, President and Chief Executive Officer; Nicole Anasenes, Chief Financial Officer; and Alex Di Ruzza, Investor Relations Manager. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. At this time, I would like to turn the conference over to Mr. Di Ruzza for opening remarks. Please go ahead. Alex Di Ruzza: Good morning, everyone. Our earnings release, the related prepared remarks document and the link to our first quarter 2023 Form 10-Q have all been posted on the homepage of our Investor Relations website. They contain the key financial information and supporting data relative to our first quarter financial results and business update as well as our Q2 and fiscal year 2023 outlook and the key underlying quantitative and qualitative assumptions. Today’s presentation contains forward-looking information. Important factors that may affect our future results are discussed in our public filings. Forward-looking statements are based upon our view of the business as of today and ANSYS undertakes no obligations to update any such information. During this call we will be referring to non-GAAP financial measures unless otherwise stated. A discussion of the various items that are excluded and the reconciliations of GAAP to the comparable non-GAAP financial measures are included in our earnings release materials. I would now like to turn the call over to our President and CEO, Ajei Gopal for his opening remarks. Ajei? Ajei Gopal: Good morning, everyone and thank you for joining us. Q1 was an outstanding quarter for ANSYS with the company once again surpassing expectations across all key metrics. We grew ACV by 19% in constant currency over Q1 2022, which reflects the power of our world-class products, the ongoing demand from our customers and the strength of our business. As a result of our strong Q1, we have operationally raised our full year guidance for ACV revenue and EPS. Nicole will have the details in a few minutes. ANSYS realized broad-based growth across the business in Q1. We grew revenue by double-digits in every region in the quarter with the Americas leading the way. From a vertical perspective the high-tech and semiconductor, aerospace and defense, and automotive and ground transportation sectors were again our top contributors. Our largest agreement in the quarter was a nearly $74 million three-year contract with a multinational aerospace and defense technology company based in the US We grew the account by showcasing the value ANSYS is driven at this long-time customer including a new workflow with our digital mission engineering and electromagnetic solutions that reduce the time required to bring a critical product to market by 50%. That same workflow is being reused by multiple groups within the company helping to drive more users, more products and more computations. On these calls, I often highlight a specific aspect of our business. Over the past several quarters, I have discussed the critical role that ANSYS solutions play in sustainability. I highlighted how customers are using our solutions in the development of next-generation semiconductor and I reviewed our leading suite of optical simulation products. For this call, I would like to give you additional insight into the innovation we are driving across our multiphysics portfolio through an easy-to-understand taxonomy of five technology pillars. Our investments in these pillars are applicable across our portfolio and demonstrate how we are building upon our product and technology leadership to further differentiate our solutions. Even more exciting is the interplay amongst these pillars, which is benefiting customers by helping them to solve more complex challenges, while driving our growth through more products, more users and more computations. As you know ANSYS is the leader in advanced numerical simulation methods that accurately predict the multiphysics behavior of engineered products. Our continued investment across our core multiphysics products is reflected in our first technology pillar, which is numerics. Accurately predicting physical phenomena in the real world, is intrinsically complicated. The numerics pillar encompasses the latest advances in science, mathematics and analytics, which help us gain a deeper understanding of the physical world. It is the essence, of what we do at ANSYS with our core products. Over the last several releases, we have further differentiated our products with advanced numerics capabilities. Let me give you just, a few examples. In ANSYS Mechanical, new functionality enables customers to automatically predict structural crack initiation and growth without the need for expert knowledge. In ANSYS HFSS, our leading electromagnetic solution users can now solve increasingly complicated problems by creating simulations 8 times larger than before. And in CFD, our fluids blade row analysis, enables customers to automatically mesh complex blade features while retaining the efficient Hex measures, that turbomachinery engineers demand. In Q1, we signed a new contract with a long-time customer INNIO, which uses advanced numerics capabilities from ANSYS to develop engines that run on a broad range of energy sources including hydrogen and biomethane. INNIO is expanding its usage of ANSYS multiphysics solutions, including structures and fluids, to accelerate time to market and to increase engine efficiency and performance. Our second technology pillar is high-performance computing or HPC, which is enabling customers to solve problems they couldn’t solve otherwise, and to do so faster than anyone thought possible. ANSYS has close partnerships with hyperscale computer partners, and has long taken advantage of distributed memory, multiprocessing and multiple cores to accelerate our customers’ products to market, and in the process drive more computations. Again, I could cite numerous examples of new HPC technologies, in our solutions. But in the interest of time, here are just a few. In ANSYS Mechanical, technologies such as hybrid parallel, which blends distributor and shared memory parallel programming techniques, enables simulations to scale to tens of thousands of compute cores. A new multi-GPU solver, empowers users to run ANSYS Fluent natively on multiple GPUs. This CFD solution, which we believe is the first general-purpose CFD solver for GPUs is 7 times less expensive in hardware purchase costs and consumes 4 times less power than an equivalent CPU solution. In Q1, we signed a contract with the International Technology Group, Andritz, which offers a broad portfolio of innovative, power plants, equipment, systems, services and digital solutions for a wide range of industries and end markets. As part of this agreement, Andritz is leveraging HPC to more rapidly solve complex structural and fluid simulations, to increase the efficiency of its turbines. As a result, Andritz is reducing the amount of physical testing needed to deliver its products to market. The next area of technology emphasis, is artificial intelligence and machine learning. AI is not restricted to a specific ANSYS product line. Instead, it is architectured across our portfolio to improve ease of use, to accelerate time to solve and to further democratize simulation. Let me start with the use of AI to accelerate the time required to complete the simulation. You might recall, that a single large complex simulation, can run for days across hundreds of cores. We are incorporating AI techniques directly into multiple products, to increase the speed and scale of a single simulation. For example, our real-time radar functionality enhances HFSS, is being used to train machine learning algorithms, for radar systems in cluttered environments with moving targets. Combining synthetic radar responses with machine learning, has resulted in a 1,000x speed up, compared to previous methods and has opened the door to exciting new opportunities, for automotive radar and autonomy. Artificial intelligence can also address the multiple iterative simulations needed to get to an optimal design point. Often customers use ANSYS products to run complex multi-variant optimizations, where they vary design parameters and boundary conditions over multiple simulation runs to reach the best design. Such multiple intrusive runs can be time-consuming due to the number of simulations that need to be performed. To address this issue, our optimization engine ANSYS optiSLang uses AI techniques to reduce the time it takes to intuitively run thousands of simulations for products across the ANSYS portfolio. For example, one customer designing electric motors initially needed seven hours to run an ANSYS-Motor CAD multivariate optimization with 4800 simulations. But with the AI techniques in optiSLang, they solve the same problem in an astonishing 17 minutes. Our fourth technology pillar is cloud and experience. We have made some recent announcements about our cloud marketplace offerings and we are continuing to invest in cloud native capabilities as well as user experience. ANSYS offers two distinct kinds of cloud offerings. The first is Cloud Marketplace and the second is cloud native. And this combination of marketplace and native takes full advantage of past innovations as well as some of our newly announced cloud capabilities. The marketplace offerings deliver flexibility to our customers by taking advantage of familiar ANSYS products, while leveraging the benefit of cloud computing and their own pre-existing relationships with cloud service providers. ANSYS has announced partnerships with key cloud providers AWS and Microsoft Azure. In quick, Q1, a developer of sustainability technologies for buildings and electric vehicles began using ANSYS Max well on the cloud thanks to ANSYS Gateway powered by AWS. Using this cloud-powered solution the customer is optimizing the electromagnetics of its smart motor design via cloud bursting on several independent workstations. Users can spin up a cluster in minutes and add remote users from satellite locations to improve overall agility and speed proof-of-concept. The company’s engineers are simultaneously running 125,000 simulations and analyzing design seven times faster, thanks to the solution. On the cloud native space, we are targeting new users and new use cases with a cloud-based platform for the development and deployment of new workflows and applications. While cloud native simulation is still early in the maturity cycle, we are continuing to advance this exciting technology. The final technology pillar empowers customers to optimize product designs to meet physical and behavioral requirements throughout the engineering design life cycle, thanks to digital engineering. Digital engineering relates to a set of connected federated and interoperable technologies that enable the collaborative execution of engineering tasks. Today, the vast majority of time and money spent on R&D goes towards failure mode avoidance. Digital engineering enables a more rigorous R&D process based on model-based engineering, system-level simulation and an agile iterative methodology that results in improved product quality and faster throughput with reduce costs. The latest release of ANSYS Minerva improves engineering productivity with efficient stimulation process and data management, while connecting powerful simulation and optimization solutions to an existing ecosystem of tools and processes. And ANSYs SCADE users can employ model-based systems engineering methods to design and generate reliable embedded software. As you might expect, this pillar is driving more users and more products. In Q1, we signed an agreement with a global automotive OEM that is expanding its use of ANSYS products to include additional electronics and model-based system engineering technologies. By taking advantage of these solutions, the automaker can enforce architecture from existing models, allowing for reuse and traceability of parts. The automaker has reported that the use of ANSYS simulation has decreased product development time by month, which is helping the company to keep pace with increasing customer demands. Our investments across these five technology pillars: Numerics, HBC, AI/ML, Cloud and Experience and digital engineering are critical for our ongoing successes. Even more important is the interplay amongst them, which is fueling ANSYS’ growth and widening our product leadership across the board. Our customers across industries are benefiting from many of these advances today, which is helping them to deliver their own innovations to market. Moving to our partner ecosystem. We recently announced a collaboration with Synopsys and Keysight Technologies, in which we developed a radio frequency design reference flow for TSMC’s 16-nanometer FinFET compact technology. TSMC’s technology is critical for advanced autonomous systems including automotive radar, 5G connectivity, security applications and environmental monitors. We also recently announced that ANSYS is expanding our university partnerships to train the next generation of engineers through a funded curriculum program. We are financially supporting educators to help them develop undergraduate engineering curricula at universities around the world. ANSYS is already being taught at more than 3,000 universities across nearly 90 countries and there have been more than 2.75 million downloads of our free student product. In Q1, we published the updated version of our corporate responsibility report. In it, we discussed the progress we have made against our ESG goals. Additionally, ANSYS has developed a focused strategy to support our customers’ sustainability objectives with a particular emphasis on clean environment, materials and circularity, energy solutions and manufacturing and operational efficiency. Finally, I’m excited to announce that ANSYS has again been certified as a most loved workplace. This certification recognizes great workplaces based on employee surveys that gauge levels of respect, collaboration, support and a sense of belonging. In summary, Q1 was an outstanding quarter that has set the stage for the rest of 2023. As we have demonstrated by again beating guidance across all key metrics, our end markets remain robust and our business has proven its resilience, despite some economic uncertainties. Customers understand our compelling value proposition, which is driving their top line growth and delivering bottom line savings. Our continued momentum, the strong customer relationships, we have consistently demonstrated and our ongoing investments in technology will propel us through 2023 and beyond. As a result, we are more confident than ever in our ability to achieve future milestones. And with that, I’ll now turn the call over to Nicole. Nicole? Nicole Anasenes: Thank you, Ajei. Good morning, everyone. Let me take a few minutes to add some perspective on our first quarter financial performance and provide context for our outlook and assumptions for Q2 and 2023. The first quarter demonstrated the strength of our business, as we delivered robust growth during Q1, and beat our financial guidance across all key metrics. ACV exceeded expectations and beat the high-end of our Q1 guidance in constant currency. Revenue, operating margin and EPS also exceeded the high-end of our guidance. Given the strength of demand for simulation and the momentum we see in our pipeline, we are operationally raising our full year ACV revenue and EPS. Operational improvements in our full year ACV outlook, is above and beyond our Q1 outperformance. I’ll provide additional details on our guidance in a few minutes. Now, let me discuss some of our Q1 financial highlights. Beginning with ACV, we delivered $399.4 million in Q1, which grew 16% year-over-year or 19% in constant currency. As Ajei mentioned, our growth was broad-based in the quarter, with growth seen across geographic regions, customer types and industries. Our wide ranging growth is evidence of the essential nature of our market-leading simulation portfolio. ACV from recurring sources grew 12% or 18% in constant currency year-over-year on a trailing 12-month basis and represented 82% of the total. This momentum in recurring ACV growth is driven by the strong annuity created by our ongoing shift to subscription leases. Q1 total revenue was $509.4 million and grew 19% or 22% in constant currency, which as I mentioned exceeded the high-end of our guidance, driven by the favorable mix of license types in the quarter. All geographic regions grew double-digits and contributed to revenue growth with the Americas leading the way. We had strong top line performance in Q1 with ACV and revenue, both growing double-digit in constant currency at 19% and 22% respectively. During the quarter, we delivered growth in excess of our model of double-digit growth including tuck-in M&A. We closed the quarter with a total balance of GAAP deferred revenue and backlog of $1.4 billion, which grew 13% year-over-year. During the quarter, we continued to manage our business with financial discipline. This yielded a solid first quarter gross margin of 91.2% and an operating margin of 39.8%, which was better than our guidance. Operating margin was positively impacted by outperforming on revenue, the favorable mix of license types as well as the timing of investments. The results with first quarter EPS of $1.85, which was also better than our guidance. Similar to operating margin, EPS benefited from strong revenue results and the timing of investments. Our effective tax rate in the first quarter was 17.5%, which is the rate that we expect for the remainder of 2023. Our unlevered operating cash flows in the first quarter totaled $269.5 million and grew 26.5% year-over-year, which benefited from strong collections. We ended the quarter with $507.9 million of cash and short-term investments on the balance sheet. In line with our capital allocation priorities, we repurchased approximately 650,000 shares during the quarter for around $196.5 million. We have 1.1 million shares available for repurchase under the current authorized share repurchase program. Now let me turn to the topic of guidance. We delivered an outstanding first quarter coming off an exceptional Q4 2022 and our updated 2023 forecast reflects the continued broad-based customer demand for a market-leading simulation portfolio. Looking to the remainder of the year, the pipeline of business has improved and continues to show momentum, which bolsters our confidence in achieving our 2023 and long-term outlook. However, offsetting our improved full year outlook is further strengthening of the US dollar against certain currencies particularly the Japanese Yen and Korean Yuan, relative to the exchange rates that were embedded in the outlook we provided in February. Notwithstanding the negative impact of exchange rates, our underlying business continues to demonstrate considerable momentum. Let me start with our full year 2023 guidance. We expect our full year ACV outlook to be in the range of $2.265 billion to $2.335 billion, which represents growth of 11.5% to 14.9% or 10.8% to 14.2% in constant currency. We are raising the midpoint of our ACV guidance in constant currency growth by approximately 1-point. That constant currency increase is driven by robust demand and translates to an operational increase of $16 million relative to our short February guidance. Our improved outlook is in excess of the Q1 overperformance we delivered relative to our Q1 guidance. This operational momentum was fully offset by $16 million of foreign exchange headwind. We expect revenue to be in the range of $2.242 billion to $2.322 billion, which is growth of 8.2% to 12% or 7.7% to 11.6% in constant currency. We are raising the midpoint of our revenue guidance in constant currency growth. Relative to our February guidance, our full year revenue increased $15 million from operational performance, which was fully offset by $15 million of foreign exchange headwind. As a result we expect our full year EPS to be in the range of $8.39 to $8.91 which represents an increase of $0.05 at the midpoint. Relative to our February guidance, our full year EPS increased by about $0.18 from better operational performance lower share count and higher interest income estimates, which was partially offset by absorbing $0.13 of foreign exchange headwind. Now, let me turn to our full year unlevered operating cash flow guidance. As a reminder, we now provide guidance for unlevered operating cash flow as it aligns to the long-term cumulative $3 billion cash flow outlook we provided at our 2022 investor update in August. Our 2023 guidance is a range of $699 million to $749 million. Relative to our February guidance, our full year unlevered operating cash flow guidance is adversely impacted by $11 million of foreign exchange headwinds. The underlying operating leverage in our business remains robust. Despite the foreign exchange headwinds that have emerged since our February guidance, our current outlook of 8% to 16% unlevered operating cash flow growth building off 16% growth in 2022 demonstrates cumulative cash flow which exceed the ACV growth. Further details on the reconciliation of GAAP operating cash flow to the comparable non-GAAP unlevered operating cash flow are contained in our prepared remarks document. Now, let me turn to guidance for Q2. For the second quarter, we expect ACV in the range of $474 million to $494 million. Seasonal SKU of our renewal base that is unique to 2023 is driving a relatively more muted Q2 dynamic. However, as I’ve mentioned in the past quarterly dynamics can be volatile. For the first half of 2023, we expect to deliver strong double-digit growth. Our full year ACV outlook implies growth above our model in the second half of 2023 and is supported by a robust pipeline and a strong base of renewals that underpin that ACV growth. The first half second half dynamics embedded in our guidance are playing out as we expected when we initiated guidance in February. Turning to the P&L. We expect Q2 revenue in the range of $473 million to $498 million. We expect Q2 operating margin in the range of 31.9% to 34.1% and EPS in the range of $1.35 to $1.53. Further details around specific currency rates and other assumptions that have been factored into our outlook for 2023 and Q2 are contained in the prepared remarks document. We have a strong forecast a highly recurring business model with three vectors of growth and a healthy backlog and pipeline all of which contributed to our confidence in our outlook and the underlying momentum of our business. This is reflected in the operationally increased outlook for ACV revenue and EPS. I would like to thank the entire ANSYS team for their outstanding execution in the first quarter, which drove robust financial performance and a strong start to 2023. We once again delivered a strong quarter, which coupled with the improvements in our sales forecast demonstrate the strength and resilience of the ANSYS business. I remain confident in our ability to deliver our 2023 and long-term outlook. Operator, we will now open the phone lines to take questions. Q&A Session Follow Ansys Inc (NASDAQ:ANSS) Follow Ansys Inc (NASDAQ:ANSS) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: We will now begin the question-and-answer session. The first question is from Jay Vleeschhouwer with Griffin Securities. Please go ahead. Jay Vleeschhouwer: Thank you. Good morning. Ajei, let me start first with your comments regarding multi-solution sales. And you — on occasion given the statistic as to the contribution of the number or — of those transactions? And within that are there any notable mix trends that you’re seeing with regard to the contribution of various types of solvers for example is CFD growing in particular industries relative to solver mix or electronics perhaps within certain industries becoming as material as structural or CFD or others. So I think if you could comment on some of those solver mix trends, I think that would be interesting on a per-industry basis. My follow-up question is with regard to your comments on the partner ecosystem. If you could speak more broadly about that, within engineering software ANSYS has an unusual number of such relationships. So it would be very interesting to hear, if you could comment on the materiality individually or collectively of those relationships, or how you think about that ecosystem relative to guidance in terms of your, relationships with companies like Synopsys, Altair et cetera. Thank you. Ajei Gopal: So Jay to answer there was a lot of — there were a lot of questions embedded in there, so let me try to do some justice to a couple of them perhaps. So when you think about the large sales so customers who have purchased more than $1 million or so in the quarter, I would say over 90%, have three or more physics and purchased three or more physics from ANSYS. And so that gives you some perspective of the strength of the multiphysics capabilities that we are able to bring to bear. As far as our products are concerned, obviously the strength of our flagship products is legendary. I mean everybody understands that we have a terrific product in the space. But what we’ve also seen is the interplay between products and the multiphysics nature of the portfolio I think coming through. So that’s also been really helpful. And obviously the advances that we’ve made that I’ve talked about in electromagnetics, in CFD and structures et cetera across the portfolio in Optics, all of those advances we’ve made across those five vectors of technology that I talked about are all helpful and important in the way that we engage with our customers and in the value that they see from our products. So I’m feeling very good about our product portfolio. I’m feeling very good about our multiphysics strategy and our ability to service our customers. With respect to our partnership ecosystem maybe it’s best to step back and talk a little bit about the philosophy. Look, we believe in an open ecosystem. I think it’s very important for us for our customers to recognize that the vendors that they’re working with are participating in the open ecosystem which means providing APIs, which means providing for interoperability and things of that nature. And so we are committed to that. We are working obviously with multiple — other vendors to make sure that customers can benefit from technologies. And obviously no single customer is going to be completely dedicated to a single-vendor. They’re going to have technologies from multiple-vendors. We want to make sure that that works for our customers. And so our partnership strategy is driven by that belief in an open ecosystem and the ability to work collaboratively to support customer needs. Jay Vleeschhouwer: Thank you. Ajei Gopal: Thanks Jay. Operator: The next question is from Jason Celino of KeyBanc Capital Markets. Please go ahead. Jason Celino: Great. Thank you. Ajei, you mentioned cloud native the strategy is targeting new users and new use cases. Can you just talk about the SAM extension a little bit? Is it about moving down or earlier in the design cycle or down market? Thanks. Ajei Gopal: Yeah. So as far as moving earlier or sort of the democratization of simulation there are a number of things that we’ve been doing and I think that’s continues to be important in our strategy. Number one is making our technology more accessible easier to use. We have certainly advances with respect to our discovery product portfolio. We continue to try to make the technology more accessible to less experienced engineers. Some of the — if you — I talked about some of the advances that we’ve made on technology on things like numerics and other areas of physics. We’re democratizing simulation by really expanding the use case of problems think about problems that we can solve today that couldn’t be solved earlier in a reasonable amount of time. The investments that we’re making are allowing customers to take advantage of this advanced simulation capability and we see that as a form of democratization and certainly the investments that we’re making across the GPUs, as well makes technology easier. There’s some really interesting work that we’re doing with AI/ML to help democratize simulation. As you know simulation can be difficult to set up and take an example of setting up something like a turbulent flow can be quite complex. And we’re using AI/ML techniques, for example, to help democratize that and make that easy for end users to set up fluent simulations. And I could go on and on. With respect to cloud, obviously, accessing simulation on the cloud opens the door to smaller customers who may not necessarily have access to high-speed computing. That’s certainly democratizing simulation and our continued investments in APIs I think also makes that easier for customers to build automation or special purpose applications on top of simulation. All of this in the aggregate extends the reach of simulation into areas where it wasn’t being used before. Jason Celino: Okay. Interesting. Thanks. And then just a quick follow-up, really strong Q1 ACV. I know you mentioned for Q2 some renewal dynamics, but I thought I’d just double check. Was anything closed earlier in Q1? Thanks. Nicole Anasenes: Yeah, Jason, thanks for the question. Yeah, the business is playing out as we expected at the start of the year. Our Q2 renewal dynamic is something that was considered in our full year guidance when we initiated in February. And as I mentioned in the prepared remarks, there’s a structural dynamic — timing dynamic in our renewal base for Q2 and that happens from time to time. But quarterly dynamics as we’ve always said can be really volatile and are not representative of momentum in the business. But what has changed since we initiated guidance in Q1 was as you point out we had a great Q1 where we not only grew 19% in constant currency, but we beat the midpoint of our guidance. And in addition to that our constant currency outlook for the quarter has improved. Our view of ACV growth before the impact of foreign exchange, which we talked about in the prepared remarks it’s increased based on the development of our pipeline since initiating guidance in February. It’s also underwritten by a highly recurring ACV model with over 80% of our ACV is recurring and a very strong base of renewals that we see in the second half. So if we step aside from the volatility quarters can have and you look at the implied ranges in our guidance, our guidance range implies double-digit constant currency growth for the first half and growth above our model of 12% in the second half again underwritten by that very strong renewal base, resulting in a 12.5% constant currency growth outlook at the midpoint, which is almost one point above the midpoint we indicated in February. So we feel really good about where we landed in Q1 after a really strong Q4 and strong 2022. And the guidance that we gave reflects the continued and improved optimism that we have overall in the business, notwithstanding, structural dynamics that sometimes happen in quarters, which introduced volatility. And that’s why we are always focused on the full year and how we progress our view of the full year. Jason Celino: Great. Thanks for the comprehensive answer. Thank you. Nicole Anasenes: You’re welcome. Operator: The next question is from Steve Tusa of JPMorgan. Please go ahead. Steve Tusa: Hi, good morning. Ajei Gopal: Good morning. Steve Tusa: Just a follow-up on that question. You mentioned the structural dynamics. Can you maybe just delve into that a little more? That just sounds like it’s some timing from that perspective? And then secondly just on the remarks there were a few less seven and eight-figure deals mentioned in the remarks than last quarter in particular. Anything to read into there as far as the size of the deals that you’re booking this quarter? Nicole Anasenes: Sure. So let me start with the first — your first question. And then will go to the second. So in terms of the renewal base, the timing of customer renewals happen at natural cycles within the quarter. And as we have been moving to the strategic selling motion and bringing individual, kind of, development teams projects, in a customer to more strategic multiyear lease arrangements, sometimes the timing of renewals can shift on a year-to-year basis over time, right, which is the reason why we’re very focused on the full year dynamic, because we take deals when they naturally occur because it optimizes the outcome for our customers, and it optimizes the outcome for ANSYS, which ultimately optimizes the outcome for investors. And so, the dynamic around the quarter is just something that happens from time to time. We had very, very strong Q1. The first half, is still strong in double digits. So we’re feeling really good about where we’re at, and there’s nothing about Q2 that wasn’t contemplated or seen or known when we started the year. As it relates to fewer 7- and 8-figure deals, I would say, the underlying dynamic around our large deal progression is not unchanged from any other prior Q1s. As you know, Q4 is our seasonally highest quarter, you tend to have a lot more closing in the quarter. And so on a relative basis, there may be more mentions. But the underlying dynamics, around the strength of the pipeline, around the ability to drive strategic relationships, and larger deals with our customers customers’ willingness to engage, customers willingness to close. None of those aspects have changed since we spoke in February, about how the shape of the business is progressing. Steve Tusa: That makes a ton of sense. And then just one more longer-term follow-up Ajei, I’m probably not the smartest tech guy on this call for sure, but obviously, AI/ML HPC all this stuff just seems to be pretty incredible and moving at a very fast pace. When do you think that inflection can tangibly influence your growth rate? I know you guys, have kind of a 10-year view on this stuff. But I mean, it seems like with the acceleration in these technologies that may be it is, pulling forward that impact to your growth, perhaps from several years from now, to maybe I don’t know 18 24 months? I mean, is it that visible of a growth driver, given the progression that’s happening and how accelerated it’s been? Ajei Gopal: Well, Steve, I think one of the important things to recognize is, we’ve been investing in these technologies for a while. And so one of the reasons why, I wanted to take the time during the call, to go through them is, because there’s just — because of exactly the dynamic you mentioned. There appears — there is a lot of activity in the marketplace and certainly people are aware of advances in technologies, and it’s an area where there’s been a lot of discussion. But if you think of areas like numeric, as an example, that’s been the bread and butter of ANSYS. That’s really understanding the mathematics, and the engineering, and the science around being able to appreciate and predict physical phenomena, and that is applicable of course across our portfolio. The HPC activity is certainly been included within our business, for a while. And if you think about the vectors of growth that we talked about in our Investor Day last year, we talked about more users. We talked about more products, and we talked about more computations. And the more computations vector is being driven by high-performance computing, and the desire for customers to solve larger and larger problems, which are solvable as you start to introduce additional cores, you starting to use GPUs and other architectures. So AI/ML is obviously, an area where we’ve been investing, as I said, for a while. And we have products in the market today, that are taking advantage of AI ML capabilities. So these are all technologies and I don’t want to repeat what I said on the call, but these are all technologies and areas where there continues to be investment in — within ANSYS, of course, across the industry and we continue to reap the benefit within our products to benefit our customers. Steve Tusa: Great. Thanks a lot. Operator: Next question is from Ken Wong of Oppenheimer. Please go ahead. Ken Wong: Great. Thank you for taking the questions. Nicole, just back on the 2Q ACV, I realize you’re maybe beating the dead horse here, but I think kind of the one kind of consistent question, we’re getting from investors is, just making sure that this has nothing to do with extended sales cycles or potentially smaller deal size commitments. The structure of those particular KPIs are consistent with, what you’re seeing in past quarters? Nicole Anasenes: Yes. That’s absolutely, the case. I mean this is just about an over — and you — I know have been have been with us quite a while. You’ve seen quarters go up and down based on these renewal dynamics which is again why we focus on the full year. So there’s nothing about the underlying dynamics in Q2 that are indicative of anything other than an underlying renewal base that has a SKU within the year that is driving those dynamics. Ken Wong: Got it. Perfect. Perfect. And then maybe just wanted to check on direct versus SMB. I mean with all the kind of disruption in our banking system right now, I was always a little concerned that maybe SMBs will have a harder time getting financing. Any changes in terms of what you’re seeing on the lower end of the market? Nicole Anasenes: No. I mean the underlying dynamics across all of our different customer segments have been performing pretty consistently as we’ve seen in prior Q1s. We had a lot of strength of course in the enterprise segment with the larger deals that we did this year and really strong in the Americas. But I would say we had strong growth across all three customer segments consistent with what we’ve had in the past. Ken Wong: Great. Thank you very much. Operator: The next question is from Adam Borg of Stifel. Please go ahead. Mike Richards: Hey, good morning. This is Mike Richards on for Adam Borg. Thanks for taking the question. I was just wondering if you could talk about linearity in the quarter and how that’s shaping up so far in the second quarter. Thanks. Nicole Anasenes: Yes. I mean I would say overall revenue linearity was somewhat – was pretty similar to what it was last year. It was slightly more skewed to the third month but it was pretty much in line overall. Mike Richards: Great. Thanks. Operator: The next question is from Joe Vruwink with Baird. Please go ahead. Joe Vruwink: Hi, everyone. Ajei just going back to your earlier discussion on democratizing simulation. I think to this point a lot of people think of Discovery when you say that and moving ANSYS into design and early stage development. Do the AI capabilities you’ve embedded with the high-end solvers begin to remove any sorts of bands or ceilings you maybe once associated with just the addressable users of an upper end products? Ajei Gopal: So when you think about the AI capabilities that we’ve got, we’re using AI in multiple areas. And one area that I mentioned of course is making it easier for people to use products. And I gave you example of Fluent earlier in what – in response to one of the questions. That’s a great example of making the technology, making our flagships easier to use. Discovery is also making the technologies easier to use in a more in a more broad-based manner. The use of AI/ML is very targeted within the portfolio. But another direction that we’re going and we talked about this in our investor meeting or Investor Day last year was our ability to start to support applications. And so one of the ways in which we can democratize simulation is not – is allowing users to take advantage of applications, purpose-built applications for their needs that are built – that take advantage of simulation. And to that end we’ve created a set of APIs based on Python which allow people to build applications workflows things of that nature that further democratize simulation. So we’re taking multiple routes to be able to make that happen. And in each of the directions we’re addressing a different opportunity to be able to broaden the use case of a simulation. Joe Vruwink: And then maybe just as a follow-up and related to your last comment when you have customers, end users creating purpose-built applications, this really gets into I would imagine more domain expertise aligned within high tech, within Aerospace and Defense, within Auto. Do you think this is kind of the conduit for of course, bigger deals more strategic deals that’s already been happening but does this kind of unlock a second wave of that phenomenon? Ajei Gopal: Well certainly, the fact that we have the ability for people to write these automations or extensions taking advantage of the power of our portfolio using Python, where they can use other routines open source other things that are outside of simulation to bring that into a sort of an overall workflow. That is something that has helped us – that’s helping us today. I mean there are examples of customers who have increased their use of ANSYS technologies because they’ve been able to build a very integrated workflow on top of this technology that allows more users to take advantage of what was previously restricted to a relatively small number of users. So that phenomenon that you’re saying of driving incremental opportunity within our portfolio is absolutely the case. Furthermore, we would imagine outside of our outside of — even outside of the engineering use case you could imagine long-term and this is a long-term statement, you can imagine other applications targeting others who are looking for the insights of physics-based simulation to be delivered to them. And we’ve talked about — and certainly last year we talked about a healthcare example where someone delivering medical care or surgeon delivering medical care uses an application, which is built for that surgeon. It has nothing to do — as far as their concern nothing to do with physics per se. They’re all about delivering the care that they need to deliver. But underneath simulation is being done to influence the directions that they go. So those are examples of next-generation applications, which we believe will happen in the long-term but that’s not a short-term impact. And so as we build out our capabilities we believe that we’re enabling both the short-term opportunity as well as the long-term opportunity, which we’ve been calling the notion of being able to get pervasive insight. Joe Vruwink: Thank you very much. Operator: The next question is from Blair Abernethy of Rosenblatt Securities. Please go ahead. Blair Abernethy: Thank you. Ajei just wondering if you could drill in a little bit for us on the aerospace and defense vertical $74 million deal there. That’s great. And I just wanted to see — what are you seeing in the defense side in particular given what’s been happening in the last 12 months? And any shift in buying patterns in that market? Ajei Gopal: Well, I mean, obviously A&D continues to be one of our top industries. And our aerospace customers are facing complex challenges things like engine width design lightweighting those continue to be areas of investment for our customers, but also a lot of work on Space 2.0 and the ability to be able to launch payloads into space. That’s another area where there continues to be a lot of interest. Obviously, commercial air is recovering post pandemic there continues to be more interest. And then of course from a defense perspective there’s obviously a global perspective. You’re seeing this certainly in the United States. You’re seeing this as you see increased spending in Germany, for example. So all of that represents long-term tailwinds into the aerospace and defense industries. And we certainly are very well-positioned given the nature of our technologies to be able to take advantage of that. Blair Abernethy: Great. Thank you. Operator: The next question is from Josh Tilton of Wolfe Research. Please go ahead. Josh Tilton: Hi, guys. Thanks for taking my first one. My first one is an easy one. What was the contribution of DYNAmore to ACV in the quarter? Nicole Anasenes: Yes. So we had spoken about DYNAmore for the full year as being about €30 million to €35 million with about half of it being in Q1 in our February call. And you can — the underlying assumption you can make is that we’re pretty in line with what we expected in February. Josh Tilton: Perfect. Thank you. And then, I guess, my follow-up is. I totally understand that the first half, second half dynamics are kind of playing out as you expected when you first gave guidance in the beginning of the year. But I guess, my question is the world has kind of changed since then? And is there anything you can give us maybe from your conversations with customers that’s just increasing your confidence that some of these second half renewals won’t get pushed out if the macro continues to deteriorate? Nicole Anasenes: Yes. I mean — so here’s the pragmatic answer to that is, if customers don’t renew they lose access to the software and they can’t build their products. And so the renewal base is very, very sticky because it affects their R&D cycles. And so — and just to kind of take it a step back and to contextualize kind of, where we sit in the corporate decision-making process and what has happened in other kind of economic events. Simulation tends to be the last thing that gets shutoff and the first thing that gets turned back on. And that’s because it is connected to people’s R&D. And R&D tends to be — the investments in R&D tend to be longer — long-term views as opposed to short-term tactics. So that’s one. The second is, even within the R&D process the areas that are most susceptible would be areas that are connected to seat counts and people and that’s not how the economics of our software work. So our software is — the way customers use our software is based on the capacity of compute that they need and the software that they need to run their simulations within their R&D cycle. And so, if there are underlying changes in the footprint of the R&D part of the business, it doesn’t really affect our part of the software stack in the R&D cycle. And the last part is, simulation actually can provide tailwinds for — and support the underlying cost efficiencies of our customers in their R&D cycle. Using simulation reduces the need for physical prototyping. It shortens the innovation cycle. You can have a single analyst run multiple simulations at the same time. And so, the throughput that you get and the efficiency that you get from using simulation to build products, has a very high ROI. And in times where you’re looking to transform simulation is valuable, not just in accelerating time to value to accelerate the top line, but also to support running R&D in a more efficient manner. And so, those are the underlying qualitative dynamics, but the real answer on the renewal base is that, it’s very, very sticky and a small short-term disruption in economic outlook has historically not had an impact on our overall business. Ajei Gopal: Yes. And just to amplify what Nicole said and to add a little bit more color as well. We’re not tied to the number of units produced, right? So, if you cut back on production for whatever reason, your R&D efforts still continue, because you’re building for the long term. And if you look at all of the industries that we serve, there are major transformations that are taking place in each of the industries and the long-term competitiveness of organizations is at stake. So if you’re in the automotive industry, for example, electrification is front and center, autonomy is front and center. And stepping back from any of these activities will result in a long-term degradation of their business and no one wants to go to it. And so, what we’re seeing and what we saw in the past, we saw this when we had this — when Lehman went out of business back in the day, we saw that R&D was the last that was cut and we saw that it was the first thing that was restored. And the lesson that was learned after that and there were reports and the there were — there was a lot of post-mortem done after that. But the lessons that we’ve learned is that the organizations that continue to invest in R&D were the ones that came out of that downturn and were successful afterwards. And so you see when we talk to customers, our value proposition is not just about accelerating R&D as I described. But our value proposition as Nicole said is also about being able to help cost. And we have well estab chapter inverse we can talk about how we can reduce warranty costs, how we can make engineers more efficient. We can talk about how we can reduce the amount of raw materials that have been used for experimentation purposes. They move away from physical prototyping. So that is a very hard ROI that we can make and we can make that case. Now I’ve spent — I’ve talked to our sales leaders around the world. I’ve talked to customers around the world. And I’m only getting — I’m getting strong support for our — for the guidance that we’ve given you. We’re seeing the markets — the customers are committed. We’re seeing that the nature of the technology that we provide is critical and we see our negotiations and discussions with customers kind of going as we expect. We call it as we see it. We’re not trying to come up with sort of speculation of what the markets might look like. We just call it as we see it. We can give you a perspective on where our customers are how they’re buying and all of that is reflected within — all that is reflected within our within the way that we’re guiding. So we feel great about the guidance we’ve given you. We feel great about the second half of the year. We feel great about Q2. And as Nicole has said several times on this call, there is an underlying dynamic of our — the renewals of our business. And for those of you who have been following our company for multiple years that underlying dynamic is exactly something that we’ve seen year after year after year. And we’ve always had quarters which are stronger in quarters which are relatively weaker in that context of the overall full year and so we manage to the full year. And that’s important for us and we feel really good about where we are right now. Josh Tilton: Super helpful. Really appreciate the thoughts and response. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks. Ajei Gopal: I’m excited about our outstanding start to 2023. I would like to thank the one ANSYS team around the world for our ongoing success. Our superior technology, our broad-based business momentum and our strong customer relationships give us even greater confidence in our ability to execute against long-term goals. Thank you for joining us this morning. I hope you all have a great day. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect. Follow Ansys Inc (NASDAQ:ANSS) Follow Ansys Inc (NASDAQ:ANSS) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

A limited number of two-story, three- and four-bedroom townhome-style residences has been released for sale at Wonder Lofts, the historic condominium conversion of the famed Wonder Lofts building in the heart of Hoboken, NJ, and are available for immediate occupancy. The Townhome Collection at Wonder Lofts is located at the... The post The Townhome Collection at Wonder Lofts – Expansive Two-Story Luxury Homes in Hoboken, NJ appeared first on Real Estate Weekly. A limited number of two-story, three- and four-bedroom townhome-style residences has been released for sale at Wonder Lofts, the historic condominium conversion of the famed Wonder Lofts building in the heart of Hoboken, NJ, and are available for immediate occupancy. The Townhome Collection at Wonder Lofts is located at the center of the storied building and features homes with soaring multi-level interiors that mirror the living space of traditional brownstones.  The expansive residences are a unique find in the Hudson County market, combining lofty living and entertaining areas inside and out complemented by Wonder Lofts’ modern amenities and concierge services.  Like all of Wonder Lofts’ homes, the townhome residences include deeded parking in an on-site, secure garage with electric charging stations.  Each spacious floorplan offered in the Townhome Collection is distinct. The upscale residences are generously sized from 2,367 to 2,482 square feet. The collection also includes a 1,708 square-foot two-bedroom home with a home office.  All the homes in this collection provide large attached private outdoor terraces, with two of these residences also offering an oversized rooftop cabana with magnificent New York City views.  “These homes deliver a new level of exclusive luxury living to Hoboken,” said Robert Fourniadis, Senior Vice President – Residential of Prism Capital Partners, which developed Wonder Lofts in partnership with Parkwood Development and Angelo Gordon.  “We expect these one-of-a-kind residences to have broad appeal to growing families looking for the space and privacy of a multi-level home along with the inspired lifestyle of a new-construction, full-service building.” Residences in the Townhome Collection feature the same extraordinary design elements found throughout Wonder Lofts’ 83 family-sized homes which are now more than 70% sold, with occupancy well underway.  Remaining homes are priced from $1,899,000 to $3,499,000.  The development team has arranged special mortgage financing with rates as low as 5.125% available for a limited time to qualified buyers. Each home within Wonder Lofts features an open floorplan with a suburban-sized designer kitchen with center island that opens to a spacious living room, primary bedrooms with a large walk-in closet, luxurious en-suite bathroom with large walk-in-shower, soaking tub and dual sink vanity, large windows, a Latch smart home entry system and abundant storage throughout the home.  Other features found in many of the homes include a half-bath located off the great room, multi-functional den/home office areas, and a separate in-unit laundry room with a sink, cabinetry, and a Bosch washer and dryer.  Upscale finishes and appointments include 7.5-inch-wide white oak hardwood plank floors, custom off-white kitchen cabinetry framed with oak trim, elegant white Calcutta Laza kitchen countertops, top-of-the line kitchen appliances including a built-in Sub-Zero refrigerator/freezer, Wolf gas range, oven and microwave drawer, and Bosch dishwasher, and in many homes, a Sub-Zero undercounter wine/beverage refrigerator. Bathrooms include custom wall-hung oak cabinetry with off-white Glacier honed marble countertop. Steeped in Tradition, Curated for Modern Living  Design touches of the original Wonder Bread factory, which once produced freshly baked bread from the 1910s to the 1960s, have been preserved in the contemporary redesign.  The original brick detail, archways, high ceilings, large windows, a smokestack, and a water tower were all meticulously restored, and such modern additions as a façade of glass and light grey aluminum add to and accentuate the restored original structure. The community also includes a newly constructed five-story building located across the street which is home to fifteen three- and four-bedroom condos, several of which include private yards.  Owners there have access to all the amenities of the main building, including the rooftop infinity pool. Magnificent Amenities for a Fully Realized Lifestyle Complimenting the luxury homes is 14,400 square feet of indoor and outdoor amenities.   The highest rooftop, with its stunning 360-degree views of the Manhattan skyline, all of Hoboken and beyond, is a beautifully landscaped patio lounge featuring an infinity swimming pool with lounge chairs, a circular outdoor bar underneath the restored water tower, gas barbeque grills, and abundant dining and lounge seating areas, include one with a fire pit. An indoor residents’ lounge on the second floor features a large and elegant living room that opens to a lushly landscaped, outdoor terraced patio and garden with seating areas.  A floor-to-ceiling brick, double-faced fireplace separates the living room from an open concept dining room and entertainment kitchen, and an adjacent billiards and game room. Families will appreciate the building’s children’s playroom, complete with padded floors, bean bag seating, toys, and books, as well as a fully equipped children’s art center ideal for fostering individual and group creativity and fun. A full gym equipped with the latest cardio and strength training equipment and a separate fully equipped yoga/flex studio will keep residents healthy in body and mind. There is also a screening room with couch seating and video gaming capability. The building also features a two-story, 24-hour attended lobby, an additional large residents’ lounge with fireplace and co-working/study area, a secure onsite parking garage with electric car charging stations and a pet grooming area that will provide a pleasant space for residents to pamper their furry family members. The Center of it All Wonder Lofts is located in the heart of Hoboken, bringing within easy reach all that the dynamic, family-friendly hamlet on the Hudson River is known for. With its tree-lined streets dotted with historic brownstones; an eclectic offering of neighborhood shops, restaurants, and nighttime haunts; numerous parks, a beautifully landscaped waterfront featuring majestic Manhattan skyline views; and proximity to Manhattan enhanced by PATH and Ferry service, this pedestrian-friendly town has matured from a convenient commuter starting point for singles and couples to a nesting ground for growing families. For more information on Wonder Lofts, visit www.WonderLoftsLiving.com or call 201-526-4040.    Wonder Lofts owes its breathtaking blend of industrial history and modern elegance to a team of professionals including two award-winning and renown design firms, Hoboken-based MVMK Architecture + Design who served as the project architect, and Manhattan-based Workshop/APD who served as the interior designer. These firms collaborated with an ownership team consisting of Prism Capital Partners, Angelo Gordon, and Parkwood Development and its exclusive sales and marketing agent CORE in creating the vision of a wonderful community that is now a reality. The post The Townhome Collection at Wonder Lofts – Expansive Two-Story Luxury Homes in Hoboken, NJ appeared first on Real Estate Weekly......»»

I checked out Fonda San Miguel, where Elon Musk loves to dine. I tried several of his favorite dishes and enjoyed his drink of choice. The author at Fonda San MiguelKatherine Stinson/Insider Financial Times recently shared that Fonda San Miguel is Elon Musk's favorite Mexican restaurant. The spot in Austin, Texas, serves authentic Mexican cuisine and opened in 1975. Insider writer Katherine Stinson loved the feel of the space and the dishes' attention to flavors. A Financial Times writer recently dined with Elon Musk at Fonda San Miguel in Austin, Texas. The writer cited it as Musk's favorite Mexican restaurant, so I decided to give it a try.I dined at Elon Musk’s favorite Mexican restaurant in Austin.Katherine Stinson/Business InsiderSource: FTFonda San Miguel was started in 1975 by business partners Tom Gilliland and Miguel Ravago.Fonda San Miguel is still housed in the same building Gilliland and Ravago found in 1975.Katherine Stinson/Business InsiderGilliland told Insider the pair moved Fonda San Miguel from its original location in Houston to Austin after stumbling upon the abandoned building that once housed another restaurant.The entrance to Fonda San Miguel is tucked away in North Central Austin.Katherine Stinson/Business InsiderGilliland said he and Ravago met while attending a foreign trade school in Phoenix, Arizona, and Ravago's family essentially adopted him.The atrium is the first thing you see entering the restaurant.Katherine Stinson/Business InsiderThe authentic Mexican cuisine that Ravago's grandmother cooked is what inspired Gilliland. Ravago, the restaurant's namesake, has since died.Fonda San Miguel is definitely worth a visit.Katherine Stinson/InsiderI arrived about 20 minutes before the restaurant opened at 5 p.m. on a Wednesday. I was surprised guests were allowed inside before opening, but it added to the restaurant's cozy atmosphere.You can sit in the central atrium or one of the side tables in the back for more privacy.Katherine Stinson/InsiderThe two front-of-house hostesses told me I was welcome to sit anywhere in the atrium. The atrium had bar seating for walk-ins who still wanted to enjoy the full menu.A four seater in the atrium area.Katherine Stinson/InsiderThe two hostesses warned me to grab a spot quickly before the restaurant opened. The moment 5 p.m. hit, guests started to flood in.An entryway to one of Fonda San Miguel’s main dining areas.Katherine Stinson/Business InsiderDon't be fooled by how small Fonda San Miguel appears on the outside: The restaurant interior is spacious and filled with multiple dining rooms for guests.There really isn’t a bad seat in the house at Fonda San Miguel.Katherine Stinson/InsiderThe restaurant was packed within 10 minutes. If you can't arrive right when it opens, you can make a reservation.The greenery in Fonda San Miguel’s dining rooms was a nice touch.Katherine Stinson/Business insiderService was incredibly fast. Soon after I sat down, I was provided free chips and salsa as a starter.Katherine Stinson/InsiderGilliland said this is an Americanized tradition and not standard in Mexican restaurants — it was the only compromise he made when attempting to keep Fonda San Miguel as authentic as possible based on customer feedback.There's something so comforting about free chips and salsa.Katherine Stinson/InsiderMusk ordered the house frozen margarita in the Financial Times article (he called it a "slushy with alcohol"). Since it was happy hour when I arrived, every tequila-based drink was $1 off.The Silver Coin tasted like tart alcoholic watermelon juice. I preferred the traditional house margarita, which was a bit sweeter.Katherine Stinson/InsiderI was intrigued by the Silver Coin, a watermelon-based tequila margarita served straight up, so I ordered one for comparison. I preferred Musk's drink of choice.Katherine Stinson/InsiderFor an appetizer, I tried one of the dishes Musk ordered: the Cordero (the Spanish word for "lamb") lamb chops, which cost $24.95.The Cordero lamb chops (if you can’t handle spice, the salsa is not for you!).Katherine Stinson/InsiderTraditionally, a Cordero dish is prepared during festivals and celebrations, where a whole lamb is slowly roasted over an open flame.Katherine Stinson/InsiderThe side of salsa de morita (a red salsa based around the flavor profile of a morita chile pepper) wasn't even necessary. Each bite of the Cordero chops was bursting with a rich and buttery flavor profile that felt like a perfect marriage of the garlic, herbs, and lemon that are used in the dish.The flavors added to the Cordero enhanced the meat’s natural flavor.Katherine Stinson/InsiderOne of the other options Musk ordered was the "Angels on Horseback" — three bacon-wrapped shrimp with white cheese and jalapeno served with a housemade escabeche sauce (a citrusy marinade seasoned with spices like paprika). I couldn't eat this dish due to allergies, but other diners told me the sauce reminded them of the escabeche their abuelas used to make. A post shared by Fonda San Miguel (@fondasanmiguel) Another dish Musk tried was the mixiote — slow-cooked, seasoned lamb served in a papillote that costs $38.95. I was told by other patrons that the dish had the same savory, melt-in-your mouth sensation I had with the Cordero. A post shared by @fondasanmigueltx I was impressed there was also a plant-based section of the menu. Gilliland hired a sous chef from the holistic spa hotel Miraval Austin to carefully curate this section. I ordered the $18 vegan enchiladas de hongos y coliflor plate to compare to the meat dishes.The vegan enchiladas de hongos y coliflor.Katherine Stinson/InsiderThe meatless mixture in the enchiladas de hongos y coliflor was a satisfying blend of mushrooms, walnuts, garlic, and onions. The creamy salsa verde on top really wrapped the flavors together with a spicy kick that wasn't overwhelming.The vegan creamy salsa verde was the perfect plate dressing.Katherine Stinson/InsiderWhile I enjoyed the vegan enchiladas, the main meat dishes I tried were the real stars of the show, particularly the $29.95 tacos al carbon — wagyu steak served with tortillas, a nopal paddle, grilled onions, and salsa albanil.Katherine Stinson/InsiderThis was my favorite meat-based dish. However, both this and Musk's favorite had incredibly tender bites of meat that were cooked to perfection.Tacos al carbon (Tortillas not pictured).Katherine Stinson/InsiderAnother dish Musk ordered was the chile en nogada, which currently isn't available on the menu. According to the restaurant's Instagram page, the dish is one of the most important meals in Mexico, as it contains the colors of the Mexican flag and is traditionally eaten on September 16 — Mexican Independence Day. A post shared by @fondasanmigueltx As I waited for my dessert, I checked out the bathroom, which was super clean and vibrant.The ladies restroom.Katherine Stinson/InsiderFor dessert, I ordered the postres de la tierra — a vegan bread pudding that costs $14. (There's also an assortment of nonvegan desserts.) My server noticed it took half an hour for my dessert to come out, so she brought me a second plate free of charge.Katherine Stinson/InsiderThe salty popcorn balanced out the sweetness of the vegan caramel and chocolate glaze drizzled over the soft piece of bread in the plate's center. (The menu said it had banana as well, but I never tasted that flavor in the dish.)The postres de la tierra is dairy and egg free.Katherine Stinson/InsiderGilliland said he and Ravago decided they would leave their celebrity guests alone when they chose to dine at Fonda San Miguel, and the servers are trained never to ask for autographs.The bar at Fonda San Miguel.Katherine Stinson/InsiderGilliland wants every single customer to feel like a celebrity. If great customer service and stellar food from start to finish equaled a celebrity experience, then call me an A-lister.You can be your own paparazzi in the ladies restroom.Katherine Stinson/InsiderWhile there's nothing wrong with cheaper Tex-Mex spots, Fonda San Miguel truly delivered on an elevated dining experience dedicated to details, from the beautiful interior design to the flavorful, authentic Mexican menu.The restaurant was still packed hours after I first arrived.Katherine Stinson/InsiderRead the original article on Business Insider.....»»

Insider has complied a list of everything you need to know about Goldman Sachs under David Solomon, including missteps and rising stars. Goldman Sachs CEO David SolomonGetty Images. Goldman Sachs CEO David Solomon took major steps to restructure the Wall Street bank in 2020. This week he acknowledged that some of his bets, including consumer bank Marcus, are not paying off.  Here's a look at his latest effort to reorganize the powerhouse bank.  Visit the Business section of Insider for more stories. Goldman Sachs been through a lot of changes since David Solomon took over in 2018. And now the bank CEO, who famously moonlights as an electronic dance music DJ, has been forced to rein in some of his efforts to transform the powerhouse bank, including plans to grow its consumer banking business.Solomon in October told investors that the 153-year-old bank would be pivoting away from its ambitions to build a full-service consumer and digital bank with Marcus. Following a string of product delays, executive departures, and complaints about spending, Goldman said it will stop trying seeking to "acquire customers on a mass scale," and instead focus on its existing consumer base. "There's no question the aspirations were broader than where we are now, and we are pulling back on some of that now," a humbled Solomon said during the company's third-quarter earnings call. "There has been a narrowing of the focus, a purposeful shift, and we're playing to the strengths that we have." In a nod to mounting complaints about the business, he added: "I appreciate the comment that shareholders haven't been excited about it and that drives some of our decision making."As Insider has previously reported, Marcus has also become a lightening-rod issue internally. The pivot comes amid a general slowdown in the banks bread-and-butter business of M&A and IPOs. Here's a rundown of other must-know news at Goldman, from struggles at its Marcus consumer bank to its return-to-office push, hires and exits.Who are the top leaders at Goldman?Goldman Sachs announced its second transformation in two yearsAndrew Kelly/ReutersDavid Solomon Goldman reorganized the bank in 2020 into four divisions: consumer and wealth management, asset management, investment banking, and global markets.He reversed course just two years later and whittled Goldman Sachs to three divisions: asset and wealth management, investment banking and trading, and a narrower consumer banking business called Platform Solutions.The move was appaluded by shareholders, but knocked some big wigs out of Solomon's center of gravity.  The biggest winner in Solomon's latest restructuring appears to be Marc Nachmann, the cohead of the trading business who will now be in sole charge of a newly created wealth and asset management unit. Among those executives who suffered the greatest loss of power, Julian Salisbury and Luke Sarsfield, the co-heads of the asset management division, are at the top of the list. Both, according to Bloomberg's reporting, are being demoted to senior positions within Nachmann's asset and wealth management division. Salisbury, known both inside and outside the bank as a top investor, will now become chief investment officer, Bloomberg reported. While Solomon retains his position as CEO, his reputation has taken a hit, including inside the bank where critics  say he istoo focused on vanity projects and rubbing elbows with celebrities. Read more: Who's up and who's down in the latest Goldman Sachs restructuring under CEO David SolomonGoldman Sachs insiders are fuming over their CEO's use of private jets to promote his side hustle as a DJHow an ex-AWS exec plans to transform Goldman Sachs into the Amazon of Wall StreetHow Julian Salisbury's swift rise at Goldman Sachs vaulted the soft-spoken Brit from the middle office to unlikely CEO contenderInside the rise of Stephanie Cohen, the Goldman Sachs dealmaker leading a make-or-break push to take on Main StreetGoldman Sachs has dropped the names of its largest managing director class in history — and it includes two-time Super Bowl champ and former NY Giants star Justin Tuck. See the full list here.Goldman Sachs' 2021 managing directors includes a 30-year-old black belt and English major who's opened up about experiencing 'imposter syndrome' at work. Here's a look at 6 rising stars who made the cut.Goldman Sachs CEO David Solomon is shaking up the bank with his hard-driving style. Here's what's pushing a herd of partners to the exits.An exodus is under way at Goldman Sachs. Here's a running list of all the partners jumping ship and where they're heading.Here's our exclusive Goldman Sachs org chart mapping out the hierarchy of top execsGoldman's struggles with MarcusStephanie Cohen, Goldman SachsJP YimGoldman Sachs launched its Marcus unit in 2016, known for its popular Apple Card.But Solomon's efforts to elevate the money-losing unit has come under scrutiny internally and externally. Other woes include a probe by the Consumer Financial Protection Bureau into its credit-card practices, disclosed in August. The Federal Reserve has also taken up a review of the unit, according to Bloomberg.The latest reorganization leaves Stephanie Cohen in charge of a whittle down consumer division that will now be called Platform Solutions. It will include the transaction banking business, the GreenSky buy now, pay later business that Goldman bought last year, and its credit card partnerships with corporates like Apple and General Motors. It is also expected to continue losing money for the foreseeable future.When Solomon broke the consumer bank into a new unit in 2020, it was considered a big vote of confidence for Cohen, who was on medical leave this summer, though she has recently returned to the management committee meetings she'd been missing, sources told Insider. Read more:Goldman Sachs is contemplating a pivot in David Solomon's consumer banking ambitionsWho's up and who's down in the latest Goldman Sachs restructuring under CEO David SolomonInside Goldman Sachs CEO David Solomon's struggles to right his Marcus consumer banking unitJPMorgan just snagged another MD from Marcus — marking its fourth major hire from Goldman Sachs' burgeoning consumer bank since JulyGoldman Sachs is ramping up its hiring of social media and influencer marketing pros as it expands to Main StreetGoldman Sachs is changing the name of its Marcus consumer bank to reflect growing appreciation by Main Street for its Wall Street tiesAn AI-powered chatbot for customers helped Goldman Sachs' Marcus realize 'massive savings,' according to a top exec. Here's how.Goldman Sachs' Liz Martin, a longtime partner within its trading division, just made the switch to the bank's consumer business. Here's why she made the jump.Meet Goldman Sachs' top 13 execs guiding its digital bank Marcus amidst a leadership shakeup and significant growthBurnout, blown deadlines, and a tech-talent exodus: How Goldman Sachs' Marcus is struggling to live up to its lofty consumer-banking ambitionsGoldman Sachs is hiring up to 300 engineers in its consumer business after product sprints triggered burnout and a tech exodusGoldman Sachs responded to burnout fears in its consumer division by making evenings and Fridays 'audio only,' encouraging staff to go for walks and talk on the phone insteadJPMorgan Chase poached a top Marcus exec along with key hires from Wells Fargo and Google to support a 'huge agenda' for digital bankingGoldman's return-to-office pushGoldman Sachs has asked employees to return to the office 5 days a weekReuters MarketplaceDespite his efforts to transform Goldman, Solomon is adhereing to tradition in other ways, including by calling workers back to the office five days a week as the coronavirus pandemic lifts. Other large banks, including JPMorgan and Citi, have said they would allow some employees to continue working from home.    In an effort to get workers back to the office, the company has been tracking employee ID swipes. Meanwhile, some pandemic perks have been pulled, including free gym memberships. While this has frustrated some staffers, the time to kvetch may have passed as layoffs now loom.   Read more:Goldman Sachs is tracking ID swipes so it can crack down on employees who are breaking its return-to-office rules. Here's what happens to those who don't show up enough.'Everyone is pissed': Tensions are rising at Goldman Sachs as the bank says goodbye to a host of pandemic-era perks. The latest to go? Free access to the company gym. Goldman Sachs offices are open. But getting junior bankers to return full time is proving tough.Goldman's dealmakers Goldman Sachs; Samantha Lee/InsiderAfter Goldman's investment-banking revenues declined by 41% during the second quarter, Chief Financial Officer Denis Coleman warned that the bank would be seeking to rein in expenses, including by cutting staff.Traditionally, Goldman cuts the bottom 5% or so of low performers each year, but halted that tradition during the pandemic as investment banking demand soared to new heights amid a larger dealmaking boom, resulting in increased an industry-wide talent shortage and record bonuses. More cuts could be coming. Goldman in October said third-quarter profit fell 43% to $3.07 billion, while revenue slipped 12% to $11.98 billion. M&A and IPOs have been down, despite the bank's role helping Amazon buy primary-care firm One Medical for $3.9 billion.In a sign that investment banking talent still have options, however, Goldman recently lost 11 members of its healthcare team amid complaints about working till 5 a.m. and lower bonuses. Read more: Meet the bankers behind Amazon's $4 billion deal for One Medical. The banks could see million-dollar pay days.Goldman Sachs layoffs are just around the corner. Inside the bank's annual performance review, which helps determines who stays and who goesAn exodus at Goldman Sachs: 11 members of the bank's healthcare team have left the firm over complaints about working till 5 a.m. and being hit with lower bonusesPorsches, super yachts, and $7 million Manhattan pied-a-terres: Inside the flurry of luxury spending spawned by Wall Street's record bonus seasonGoldman Sachs is pushing rival bankers to expletive-ridden tirades as it swoops in to win even more blockbuster M&AFrom cross-border M&A to more mega buyouts, top Goldman Sachs bankers map out why the dealmaking boom is just getting startedGoldman Sachs tapped Susie Scher as chairman of its global financing group, plus other changes in investment banking leadershipMeet Kim Posnett, the youngest head of a powerful team inside Goldman Sachs' investment bank that's focused on pitching new, innovative ways to get deals doneRead the full memo naming the new co-heads of Goldman Sachs' tech team as top dealmaker Nick Giovanni exitsJunior bankers in focus People enter and exit 200 West Street the Goldman Sachs building in New York.Brendan McDermid/ReutersJunior bankers became a big topic of discussion during the pandemic, starting in the spring of 2021 when the Goldman Sachs' juniors vented about 100-hour work-weeks. The bank bumped base pay for investment-banking analysts after several other banks raced to increase compensation amid a talent shortage.The going rate for investment-banking analysts on Wall Street, including Goldman Sachs, is now $110,000 before bonus, up from $85,000 pre-pandemic. But some Goldman juniors say working conditions haven't necessarily improved, leading to an exodus of talent from the healthcare team.The complaints come amid a wider call for change across Wall Street by young bankers who want more freedom to shut down their laptops at the end of the day.   Read more:An exodus at Goldman Sachs: 11 members of the bank's healthcare team have left the firm over complaints about working till 5 a.m. and being hit with lower bonusesWall Street banks are raising pay to record levels yet again. Here's a bank-by-bank rundown of new investment banker salaries, from analysts to MDs.Goldman Sachs polled 1,800 of its Gen Z interns on everything from their thoughts on the workplace to what they're investing in. Here are 12 key takeaways.A legally blind analyst at Goldman Sachs opens up about his struggle to get to Wall Street and his fight to help other people with disabilities score their dream jobsHere's what Goldman Sachs says is a typical day in the life of its analysts, from calls with CEOs to eating dinner at your deskApplying for a Goldman Sachs internship next year? Check out 29 leaked slides that reveal everything from what the gig entails to how its asset managers raise money.Goldman Sachs President John Waldron just laid out 3 ways the bank is aiming to win the war on burnout, and they don't include special bonuses or fancy vacationsHere are 3 ways Goldman Sachs is using automation to drum up new business for investment bankers, from pitch books to ECM dataGoldman's wealth-management pushMateusz Slodkowski/SOPA Images/LightRocket via Getty ImagesGoldman, a firm synonymous with enormous wealth, has in recent years tried to reshape itself as a bank that can count someone with just $1,000 to invest as a client just as it has long done business with large companies and the very wealthy.It launched Marcus Invest, a robo-advisor with a $1,000 minimum. And it has reorganized how its wealth businesses are situated, creating a new internal consumer and wealth management division. Goldman has some 800 advisors within private wealth globally. Despite the move away from consumer banking, Solomon appears to want to continue to push into wealth management. In October, he said Goldman Sachs Asset Management has grown into the nation's fifth largest asset manager. He also gave a shoutout to the company's Ayco unit for growing wealth customers through the workplace. "We also believe that reaching and serving employees in their workplace is a significant growth opportunity for Goldman Sachs," Solomon said on the third-quarter call.Read more:Goldman Sachs' Ayco unit is a big area of growth for the Wall Street powerhouse. Here's how it's upgrading early-career training for financial advisors.Goldman Sachs just hired a Schwab exec who pioneered the broker's Netflix-style pricing as the bank makes an aggressive push into wealthGoldman Sachs wants to hold onto its richest clients' kids. The bank's private wealth heads explain how its Marcus unit is helping them do that.Goldman Sachs execs lay out plans for its new robo-advisor as it takes on fintechs like Wealthfront and Betterment in a fiercely competitive spaceGoldman Sachs is hiring dozens of advisors for the firm's wealth business, and says it's getting a boost from companies pushing early retirements and layoffsOther must-know Goldman news:Wall Street firms from Goldman Sachs to Citi are swarming Texas to bring on thousands of tech hires, turning the state into the next big battleground for tech talentInside data-science projects at Goldman Sachs, UBS, and Citi helping bankers do everything from pitch clients to get ahead of activist shareholdersA Goldman Sachs engineer who fled Ukraine opens up about her survivor's guilt, anger at Russia, and fears for her family's safety: 'We end every call with, "I love you"'Goldman Sachs consumer exec Stephanie Cohen explains why the Wall Street bank just inked a $2.2 billion home-improvement lending dealGoldman Sachs CFO Stephen Scherr, a key architect of the firm's Marcus consumer bank, is retiringGoldman Sachs expects its lending business to mass affluent and RIA clients to hit $10 billion this year as the wealthy take out loans to cover taxes and all-cash offersRead the original article on Business Insider.....»»

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

Sandwiches are incredibly popular and according to the Wall Street Journal, about half of all adults in the United States consume one per day. There are many different types of bread found throughout the world, of which most if not all, pair very well with various ingredients, from fish and meat to the iconic peanut […] The post The Signature Sandwich of Every State appeared first on 24/7 Wall St.. Sandwiches are incredibly popular and according to the Wall Street Journal, about half of all adults in the United States consume one per day. There are many different types of bread found throughout the world, of which most if not all, pair very well with various ingredients, from fish and meat to the iconic peanut butter and jelly. Sandwiches are generally very easy to make and are usually very satisfying. They can serve as a full meal, a work lunch, or a fast breakfast on the go. (Here’s a list of the best breakfast sandwich in every state.) Although the most popular sandwich in the entire country is grilled cheese, with 79% of Americans declaring their liking for the toasty cheese between two slices, each state has its own favorite iconic sandwich. If you visit San Francisco or Buffalo, you have to try their signature sandwiches, Original Joe or a beef on weck – to get the full experience. To compile a list of each state’s most iconic sandwich, 24/7 Tempo consulted listings in Eater, Zagat, Thrillist, and Insider, as well as numerous state-specific sites. The majority of sandwiches feature meat as the main ingredient, although other proteins are stars in some states – like smoked salmon in Washington, pimento cheese in Georgia, and a vegan plant-based patty in Oregon. There may be some debate over whether burgers and hot dogs count as sandwiches, but they are included here due to their status as state icons. Whether you agree or not, you might want to make note of the best burger joint in every state. Here is each state’s most iconic sandwich Alabama Sandwich: Chicken with Alabama white sauce Where to try it: Miss Myra’s Pit Bar-B-Q, Birmingham Similar in texture to pulled pork, this Southern favorite is made with roasted, shredded chicken. Piled on a bun, the chicken is slathered with Alabama white sauce, a mixture of mayonnaise, vinegar, horseradish, salt, pepper, sugar, and cayenne. Alaska Sandwich: Reindeer sausage Where to try it: Reindeer Redhots, Sitka Reindeer were brought to Alaska from Siberia in the late 19th century to diversify the state’s food industry. Although reindeer never became the main source of meat for Alaskans, reindeer sausages are often consumed for breakfast or on a bun. To make the sausages, the reindeer meat is typically mixed with equal parts pork and beef. Arizona Sandwich: Sonoran hot dog Where to try it: El Güero Canelo, Tucson If you travel to Phoenix, Tucson, or anywhere in southern Arizona, you’ll see carts lining the streets selling Sonoran hot dogs. Wrapped in bacon and grilled, the hot dog is then placed into a bolillo-style bun (a savory bread bun similar to a baguette) and smothered with pinto beans, onions, tomatoes, and condiments including mayonnaise, mustard, and jalapeño salsa. Arkansas Sandwich: Deep-fried catfish Where to try it: Nick’s Bar-B-Que & Catfish, Carlisle Fried catfish, typically served with coleslaw and hush puppies, reigns as an Arkansas tradition. It’s easy to see why: The fish are abundant in the state – some caught in its streams, lakes, and rivers, and a lot of it brought over from Mississippi next door, where it is farmed in huge quantities. The catfish filets are first marinated in a mixture of buttermilk, water, salt, and pepper, then dredged in flour, cornmeal, and seafood seasonings. A quick fry of three minutes and the catfish is ready for the bun. California Sandwich: French dip Where to try it: Philippe the Original, Los Angeles Philippe’s and Cole’s Pacific Electric Buffet are two longtime downtown Los Angeles restaurants that claim to have invented the French dip sometime in the early 1900s. Wherever it was first made (possibly by mistake when a bun dropped into a pan of meat drippings), the French dip is a mouthwatering combination of tender slices of beef nestled in a jus-soaked French bun. Colorado Sandwich: Fool’s Gold Loaf Where to try it: Colorado Mine Company, Denver On a visit to Denver in 1976, Elvis Presley reportedly loved the Fool’s Gold Loaf served at the Colorado Mining Company. And why not? The “sandwich” is made from a hollowed-out loaf of bread stuffed with peanut butter, grape jam, and bacon strips, all baked for 15 minutes to give it a golden brown hue. Connecticut Sandwich: Hot lobster roll Where to try it: Abbott’s Lobster in the Rough, Noank (seasonal) There are two different versions of lobster rolls, one in Connecticut and one in Maine. Connecticut’s version of the lobster roll features warm lobster meat instead of the cold meat served elsewhere in New England. The warm lobster is tossed with butter and then stuffed into a toasted, buttered hot dog or hamburger bun. Delaware Sandwich: Soft shell crab Where to try it: Mickey’s Family Crab House, Bethany Beach The peak season for crab pots in Delaware is between March 1 to Nov. 30, although crabbing can be done year-round, with soft shells usually fading away in September. In the state, the soft shell crab is typically fried and then served on a bun with a variety of toppings from tartar sauce to bacon as well as lettuce and tomato. Florida Sandwich: Cuban Where to try it: The Floridian, Tampa When Cubans migrated to Southern Florida, they brought along their favorite sandwich, appropriately named the Cuban. Today, the sandwich has become a source of a friendly rivalry between Miami and Tampa. Whoever created the sandwich, the Cuban is a pork lover’s delight. Made with pork, ham, swiss cheese, mustard, and pickles, the sandwich is toasted in a plancha, a press similar to a panini press but without the grooves. Georgia Sandwich: Pimento cheese Where to try it: Fox Bros. BBQ, Atlanta Georgia’s pimento cheese sandwich is one of the few meatless sandwiches on this list and has earned a special spot at the Masters Golf Tournament in Augusta. Served on white bread, the sandwich is filled with what has been called the pâté of the South – a spread made of cheddar or processed American cheese with pimentos and mayo. Hawaii Sandwich: Kālua pork Where to try it: Kono’s Northshore, various locations Kālua refers to the traditional Hawaiian method of cooking pork in an underground oven, or imu, and is a standard luau dish. As a popular Hawaiian sandwich filling, it’s more likely to be slow-roasted in an oven with liquid smoke, then pulled or shredded. Idaho Sandwich: Basque lamb Where to try it: Bar Gernika, Boise Home to one of the largest Basque populations in the country, Idaho is known for its Basque lamb sandwich, which has risen to iconic status there. It’s similar to a sub but made with sliced roast lamb, melted cheese, caramelized onions, and jalapeños. Illinois Sandwich: Italian beef Where to try it: Al’s #1 Italian Beef, Chicago Illinois’s famous Italian beef sandwich dates back to the 1930s if not earlier, when Italian immigrants worked for Chicago’s Union Stock Yards. The sandwich now rivals deep-dish pizza as a Chicago favorite. It’s made of seasoned slices of roast beef served on a long French roll. Toppings include giardiniera or sautéed green Italian sweet peppers. Indiana Sandwich: Pork tenderloin Where to try it: Aristocrat Pub & Restaurant, Indianapolis Indiana’s pork tenderloin sandwich is a crispy delight that consists of a breaded and fried piece of pork loin on a bun. The sandwich was born at Nick’s Kitchen in Huntington, which opened in 1908. The recipe is similar to that for Wienerschnitzel, except that the pork is deep-fried, not pan-fried. With Indiana fifth in the country for pork production, it’s not hard to find a pork tenderloin sandwich anywhere in the Hoosier State. Iowa Sandwich: Loose meat Where to try it: Maid-Rite, various locations Iowa’s iconic loose meat sandwich resembles a sloppy Joe, but there is a main difference. Iowa’s version is less saucy. Loose ground beef and chopped onions top a hamburger bun with dill pickles and yellow mustard as the final flourish. Kansas Sandwich: Burnt ends Where to try it: Roscoe’s BBQ, Edwardsville Burnt ends are the pieces of meat cut from the “point” half of a smoked brisket and are considered a delicacy. Because of the high-fat content in the brisket point, cooking time is long and slow. Popularized in Kansas City, the flavorful burnt ends are often served alone, but also make a great filling for sandwiches. Kentucky Sandwich: Hot Brown Where to try it: Brown Hotel, Louisville The hot brown was created during the Roaring 20s when it was first served at the Brown Hotel in Louisville to satisfy famished guests. It’s basically an open-faced sandwich made with thin slices of roasted turkey and tomato, sometimes with ham and/or bacon added, all topped with a cheesy mornay sauce. Best to use thick slices of Texas toast when making a sandwich this substantial. Louisiana Sandwich: Oyster po’boy Where to try it: Olde Tyme Grocery, Lafayette Louisiana’s staple is the oyster po’boy. Although the po’ boy may also be stuffed with other meats, including roast beef, shrimp, or crab, Louisiana French bread is what holds it all together. With its fluffy center and crisp crust, the bread is the perfect pocket for the po’boy. One theory as to the origin of the name is that it was first made and served at a New Orleans restaurant that fed striking streetcar workers for free. Maine Sandwich: Lobster roll Where to try it: Red’s Eats, Wiscasset Maine’s traditional lobster roll, which is different from Connecticut’s warm lobster roll, is made with chunks of fresh cold lobster meat tossed with mayonnaise and sometimes celery for a bit of crunch. The mixture is then stuffed into a buttered and toasted split-top hot dog roll. Maryland Sandwich: Pit beef Where to try it: Chaps Pit Beef, Baltimore The East Baltimore area has been known for its pit beef since the 1970s. It is basically, sliced roast beef cooked over charcoal and served with a horseradish-mustard sauce and sliced raw onion – but the sandwich gained real popularity after Chaps Pit Beef began serving the barbecue favorite in 1987. Massachusetts Sandwich: Fluffernutter Where to try it: The Big E (Eastern States Exposition, Sept. 16-Oct. 2, 2022), Springfield The fluffernutter is a favorite lunch sandwich for Massachusetts schoolchildren. This is a sweet and salty concoction of peanut butter and Marshmallow Fluff spread on white bread. The marshmallow confection, originally called Marshmallow Creme, was invented in the early 20th century, but the fluffernutter name was coined by an advertising agency only in 1960. Today, the fluffernutter is a mainstay in kid’s lunch boxes across New England. It’s rare to find it in a restaurant, but it’s a staple at Springfield’s annual Eastern States Exposition. Michigan Sandwich: Boogaloo Where to try it: Chef Gret’s Soul-in-the-Wall, Detroit Another version of the Sloppy Joe originated in Detroit in the 1960s. This relative of the sloppy Joe starts with loose ground beef topped with sautéed onions and American cheese on a grilled submarine bun. What sets this sandwich apart is the addition of a slightly sweet, herb-flavored barbecue sauce originally called Jean’s Sauce of the Island. Minnesota Sandwich: Walleye Where to try it: Tavern on Grand, Minneapolis Minnesota’s state fish is the walleye or walleye pike. Once the walleye filet is breaded and fried, it’s put on a soft bun and topped with lettuce, tomato, onion, and sometimes a dash of tangy sauce. Mississippi Sandwich: Slugburger/Doughburger Where to try it: Johnnie’s Drive-In Bar-B-Q, Tupelo The Slugburger or Doughburger was introduced to Northeast Mississippi in 1917 when Chicagoan John Weeks took his hamburger recipe with him to Corinth. Weeks asked local butchers to grind his burger meat with potato flakes and flour. Today, the classic Slugburgher is a pork-and-beef patty mixed with a meat extender (typically soybeans). Deep-fried, the burger is served on a bun with pickles, mustard, and onion. Missouri Sandwich: The St. Paul Where to try it: Bo Fung Chinese Restaurant, St. Louis Missouri’s St. Paul sandwich pays homage to the state’s Asian immigrants. The sandwich takes the classic egg foo Chinese-American dish and makes it into a patty. The hot patty is then nestled between slices of white bread and topped with pickles, lettuce, tomato, and mayo. Think of it as a Chinese-American version of an egg sandwich. Montana Sandwich: Elk burger Where to try it: The Corral, Gardiner Montana’s spin on the classic hamburger is the elk burger, except the meat used is elk, not beef. Compared to beef, elk has more protein and less fat, which means it can dry out easily when cooked, so when ordering, ask for it medium-rare. Nebraska Sandwich: Reuben Where to try it: The Committee Chophouse, Omaha Many people might think the Reuben originated in New York City. However, even though some reports claim the overstuffed sandwich was first served at Reuben’s Restaurant and Deli in Manhattan in 1914, Nebraskans counter it was first created at the Blackstone Hotel in Omaha in the 1920s. Whoever had it first, the Reuben is a savory mixture of salty corned beef, sauerkraut, melted Swiss cheese, and Russian dressing on rye bread. Nevada Sandwich: Pastrami Where to try it: Greenberg & Son’s Delicatessen, Las Vegas Pastrami descends from cured, seasoned meat originally from Romania and possibly Turkey. It was brought to New York by a Lithuanian immigrant in the late 19th century and quickly became a deli essential. Just why it should be so popular in Las Vegas isn’t certain – other than the fact that the city boasts many great delis, in casinos and otherwise – but many sources name it as Nevada’s most popular sandwich meat. New Hampshire Sandwich: Moe’s Original Italian Where to try it: Moe’s, various locations Moe’s Original Italian actually refers to the shop where the sandwich got its name in 1959. Owner Phil “Moe” Pagano sold only one type of sandwich – a sub made with mild salami, provolone, onions, peppers, tomatoes, and olives with a splash of olive oil. But New Englanders couldn’t get enough of the salty savory treat and today Moe’s Italian sandwiches are sold throughout the region. New Jersey Sandwich: Pork roll/Taylor ham Where to try it: Slater’s Deli, Leonardo Although some historians say Taylor ham originated during the Revolutionary War, the more likely scenario dates back to 1856 when John Taylor sold his special pork roll in Trenton. New Jerseyans continue to argue over whether to call the salty processed meat (think of it as a relative of Spam) Taylor ham or pork roll – it depends on what part of the state you’re from – yet they all agree it is a perfect accompaniment to an egg and cheese on a bun. New Mexico Sandwich: Green chile cheeseburger Where to try it: Santa Fe Bite, Santa Fe The green chile cheeseburger was first served at restaurants along Route 66 in New Mexico during the 1920s and 1930s. Today, the sandwich is simply a classic American hamburger of cooked ground beef topped with melted cheese and green chiles. New York Sandwich: Breakfast sandwich Where to try it: New York City, New York New York is a state that can claim many different sandwiches as its most iconic, from the kebab-like spiedie of upstate Binghamton to the beef on weck of Buffalo to the inevitable bagel with lox and a schmear. Somehow, though, none of these seem as definitive as the classic New York breakfast sandwich: a combo of eggs, cheese, and sometimes bacon, ham, or sausage on a bagel, roll, or English muffin. North Carolina Sandwich: Pulled pork Where to try it: Smokey’s BBQ Shack, Morrisville North Carolina has its own style of barbecue, and pulled pork is a prime example. Considered the oldest form of barbecue in the U.S., the pork is rubbed with a spice mixture before it’s smoked atop oak or hickory wood. During smoking, the meat is slathered with a spice and vinegar liquid. The meat is then pulled, chopped, or shredded and heaped on a bun or between slices of white bread. North Dakota Sandwich: Slush burger/sloppy Joe Where to try it: The Fabulous Kegs Drive-In, Grand Forks (seasonal) North Dakotans call their version of a sloppy Joe a slush burger. The story goes that sloppy Joes were invented in Iowa when a cook named Joe mixed loosely fried ground beef with tomato sauce and slapped it on a bun. (Of note, Key West, Florida, also lays claim to the sandwich.) Today, Sloppy Joes are a staple of Midwestern cuisine. Ohio Sandwich: Goetta Where to try it: Eckerlin Meats, Cincinnati If you go to Cincinnati, you’re sure to see goetta on the menu in restaurants. Brought to the city by German immigrants, it’s a meat-and-grain sausage, usually made with ground pork, oatmeal, and spices. Similar to scrapple and livermush, it was originally developed to extend meat over several meals, but fried crisp has become a sandwich favorite. Oklahoma Sandwich: Chicken-fried steak Where to try it: Kendall’s Restaurant, Noble Chicken fried steak is so beloved in Oklahoma that in 1988 the state legislature placed the dish on the official Oklahoma state meal list. Similar to German schnitzel, chicken fried steak begins with a piece of round steak, cut thin and tenderized by pounding. The meat is dipped in a milk-and-egg mixture and then dredged in flour, baking powder, salt, and pepper. The breaded meat is then fried to a golden, crisp brown, and served either on a plate (typically with gravy and mashed potatoes) or overflowing from a bun. Oregon Sandwich: Vegan burger Where to try it: Tin Thistle Café, North Bend The concept of a burger made with plant-based ingredients rather than meat may have originated in London when restaurateur Gregory Sams made his VegeBurger in the early 1980s. Around the same time, however, Paul Wenner, a restaurant owner in Gresham, Oregon, mixed leftover vegetables with rice pilaf and molded them into a loaf for what he called the Garden Loaf Sandwich, and today Oregon claims the vegan burger as its own. Pennsylvania Sandwich: Cheesesteak Where to try it: Pat’s King of Steaks, Philadelphia Philadelphians are fiercely proud of their signature sandwich – the cheesesteak. How the classic got invented is under debate, but some give credit to Philadelphians Pat and Harry Olivieri who started serving chopped steak on an Italian roll in the early 1930s at their hot dog stand. Today, you can go to many establishments in the city and order the treat made with thin slices of beefsteak “wit” or “witout” melted cheese. Rhode Island Sandwich: New York System wiener Where to try it: Olneyville New York System, Providence The curious name of Rhode Island’s New York System wiener is a reference to the popularity of hot dogs in New York’s Coney Island. The Ocean State’s version, developed in the 1940s in Providence’s Greek community – where short order cooks prepared the dish “on the arm,” or by lining an outstretched arm with buns and then adding the wieners and other ingredients with the other hand – is traditionally a four-inch pork, beef, and veal sausage in a steamed bun, topped with yellow mustard, onions, celery salt, and ground beef sauce – never ketchup. South Carolina Sandwich: Fried bologna Where to try it: Mom & Pop’s, Batesburg-Leesville The fried bologna sandwich is the epitome of Southern comfort food. Simple lunch meat is warmed up on a griddle and served on white bread with a smattering of mustard or mayo and yellow cheese. Although bologna originated in Italy, German immigrants are said to have brought it to America, where it gained popularity as a cheap meat during the Depression. South Dakota Sandwich: Pheasant salad Where to try it: Pheasant Restaurant & Lounge, Brookings South Dakota is famous for two things: Mount Rushmore and pheasants. During World War II, soldiers passing through the state were handed free pheasant salad sandwiches at a canteen in Aberdeen. The salad was a mixture of pheasant, carrots, onions, celery, relish, hardboiled eggs, and mayonnaise. Tennessee Sandwich: Hot chicken Where to try it: Prince’s Hot Chicken, Nashville The hot chicken sandwich is a hot-and-spicy delight that debuted at Prince’s Hot Chicken in Nashville. The chicken is breaded and fried, but what makes it special is the sweet and hot sauce that coats the meat. Today, Nashville holds city-wide competitions for the best hot chicken sandwich. Texas Sandwich: BBQ brisket Where to try it: Cooper’s Old Time Pit Bar-B-Que, Llano Jewish immigrants to Texas began selling smoked brisket at delis in the early 1900s. From there, BBQ brisket has become a Lone Star State tradition. Toppings may vary, but the real star of the sandwich is the slow-smoked slab of beef either sliced or chopped and put on a roll and slathered in hot sauce. Utah Sandwich: Pastrami burger Where to try it: Crown Burgers, Salt Lake City Call the pastrami burger the ultimate fusion food – thin strips of pastrami cover a cheeseburger on a sesame seed bun. Toppings include sliced tomatoes, lettuce, onions, and Thousand Island-like dressing. Although the pastrami burger has origins in California, Utahans have taken it as their own. Vermont Sandwich: The Vermonter Where to try it: Klinger’s Bread Company, South Burlington In the 1990s, Jason Maroney, a cook and waiter at Sweetwater’s in Burlington, reportedly created the Vermonter. Although the sandwich has many variations, its original form is made with roast turkey, cheddar, and apples on cranberry bread. Virginia Sandwich: Country ham Where to try it: Padow’s Hams & Deli, various locations Virginia’s country ham is different from other hams in how the meat is processed – cured and then smoked over apple and hickory wood fires. The ham is then aged in a smokehouse to give it its distinctive sweetness. Sliced thin and piled on a biscuit, it’s hard to beat. Washington Sandwich: Smoked salmon Where to try it: Larry’s Smokehouse, Snohomish Smoked salmon in Washington is a Pacific Northwest food staple. It is typically dry-brined in a solution of sugar and salt. sometimes with dill or pepper, then hot-smoked. Sliced, the fish is often served on toast or dark bread with cream cheese or a layer of ricotta (or garlic mayo in some versions), often with sliced raw onion added. Some Washingtonians also add it to a BLT. West Virginia Sandwich: Pepperoni roll Where to try it: The Donut Shop, Buckhannon You can argue as to whether or not a pepperoni roll is a sandwich, but it’s meat inside bread, so we’d say it qualifies. It has its origins in the early 20th century when Italian immigrants toiled in West Virginia’s coal mines. In 1927, a Calabrian immigrant named Giuseppe Argiro had the idea of rolling the thin-sliced spicy sausage in bread dough at his bakery in Fairmont. Easy to carry and satisfying, it became a favorite miners’ food not just in its home state but throughout the Appalachians. Wisconsin Sandwich: Bratwurst Where to try it: Charcoal Inn (North or South), Sheboygan Wisconsin isn’t just famous for its cheese. It is also well-known for its “brats” or bratwurst, a German-style pork (usually) sausage made with pork – perfect on a long roll with sauerkraut and mustard. The sausage was popularized in the state beginning in the 19th century when German immigrants made their way to the Badger State. Wyoming Sandwich: Bison burger Where to try it: Senator’s Steakhouse and Brass Buffalo Saloon, Cheyenne Bison burgers are made with the meat of bison, not cows. Less fatty than beef, bison has a similar protein content. In 1985, Wyoming designated bison as its state mammal. Sponsored: Want to Retire Early? Here’s a Great First Step Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free. Click here to match with up to 3 financial pros who would be excited to help you make financial decisions. 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From apple-cranberry tarts to the organic hot-cocoa mix, I reviewed holiday breakfast items from Trader Joe's to see what's worth buying this winter. I tried a bunch of Trader Joe's holiday breakfast foods and drinks.Paige BennettI taste-tested 10 Trader Joe's holiday breakfast items to see which ones were the most delicious.I wouldn't buy the iced gingerbread squares or the panettone again.I was a big fan of the organic hot-cocoa mix and mini cranberry-pistachio biscotti.Trader Joe's carries lots of seasonal foods, so this year, I decided to try the chain's breakfast options for the winter season.Here's how 10 Trader Joe's holiday breakfast items stacked up.I wasn't so sure about the filling in Trader Joe's apple-cranberry tarts.Trader Joe's apple-cranberry tarts had flaky crusts.Paige BennettI found a two-pack of apple-cranberry tarts in the bakery section.I expected the cranberries to be pretty tart and the thick, golden crust to be buttery and delicious.The apple-cranberry center looked bright red and kind of mushy.I liked the apple-cranberry tarts.The filling of the apple-cranberry tarts was really good.Paige BennettThe crust was slightly crumbly but held together well. It was also moist with a good buttery flavor.Though the filling didn't look amazing, it was really good. It was sweet at first, then tart from the cranberry.The tarts reminded me of the apple-pumpkin version Trader Joe's sold in the fall, but I liked the apple-cranberry combination even more.The iced gingerbread squares sounded like they'd be good with coffee. Trader Joe's iced gingerbread squares needed to be thawed out.Paige BennettThe iced gingerbread squares seemed like they'd pair great with coffee or hot cocoa and fruit on the cold mornings.I let the frozen squares thaw out at room temperature briefly before eating.They looked soft and fudgy, though the glaze looked a little thin in some spots.I was surprised that I didn’t really like the gingerbread squares.Trader Joe's iced gingerbread squares tasted OK.Paige BennettI usually love gingerbread but I don't think I'd buy the squares again.The glaze was hard and crispy and the gingerbread was denser and drier than I expected.In my opinion, the icing had an artificial taste to it. The gingerbread was too sweet for me and not as spiced as I prefer.The maple-cranberry-orange spread didn’t sound the most appetizing to me.I wasn't exactly sure what to eat with Trader Joe's maple-cranberry-orange spread.Paige BennettI didn't know what to expect from a combination of maple, cranberry, and orange in a single spread, nor did I know how I could use it outside of adding it to toast.Well, until I tried it.The maple-cranberry-orange spread was really unique and versatile.I'd use Trader Joe's maple-cranberry-orange spread on toast, yogurt, and more.Paige BennettAfter tasting the rich spread, I immediately thought of several uses for it. It tasted similar to a caramel sauce but with more depth.I first tried it on its own to get an idea of the flavor and eventually paired it with pancakes.The spread would be amazing with yogurt or oatmeal, or used in winter mocktails or cocktails.I made a thick batter with the cinnamon-bun-inspired pancake and waffle mix.I expected Trader Joe's cinnamon-bun-inspired pancake and waffle mix to be pretty sweet.Paige BennettI followed the box's instructions to turn the mix into pancakes.When I was finished, I triple-checked the instructions as the batter was so thick, I thought I may have mistakenly made the waffle mix instead.Luckily, the thick pancake batter gave me no trouble while cooking.The pancakes turned out great.The pancakes I made with Trader Joe's cinnamon bun-inspired mix turned out perfect.Paige BennettAfter my first tester pancake, the rest of the batch cooked up easily and beautifully.The pancakes tasted sweet and cinnamon-y as I expected.Even after using a generous amount of butter in the pan, they were drier than I would've liked. But it was nothing syrup couldn't fix.I also tried them with baked apples, which made the perfect pancake stack for a chilly day.Trader Joe's mini panettone was the perfect size for one to two people.Some of the bread stuck to the wrapper of the panettone. Paige BennettI was thankful that Trader Joe's carries a standard version and a one-person serving of panettone, an Italian sweet bread typically made with candied fruits.After opening the package, I noticed this mini panettone smelled strongly of raisins and that a lot of the bread stuck to the wrapper as I pulled it off.The panettone was OK, but I'd skip buying it for myself in the future.The panettone had a decent flavor.Paige BennettThe texture of the mini panettone was spongy and soft, and the raisins and candied citrus were evenly distributed.The bread itself was subtly sweet but fine overall. I appreciated the smaller size for serving just one or two people, but I don't think I'd buy it again. I was excited to try the cranberry-pistachio biscotti.I expected to like the flavor of Trader Joe's mini cranberry-pistachio biscotti.Paige BennettI'm a big fan of pistachio, so I looked forward to tasting it in Trader Joe's mini cranberry-pistachio biscotti.Because the biscotti are small, I thought they could make a great addition to a breakfast of fruit, yogurt, or eggs.Trader Joe's cranberry-pistachio biscotti was a perfect treat, especially paired with coffee.The cranberry-pistachio biscotti had a drizzle of icing on top.Paige BennettThe dried cranberry and nuts looked pretty evenly distributed throughout the biscotti.The cookie was very crunchy but softened up nicely when I dunked it in my coffee.I enjoyed the combination of the earthy, salty pistachio and the chewy, sweet bites of cranberry.I don't really like peppermint drinks, so I didn’t expect to enjoy the candy-cane green tea.Trader Joe's candy-cane green tea is decaffeinated.Paige BennettI enjoy swapping my usual coffee for tea every so often, but I don't typically gravitate toward peppermint tea.Still, I liked seeing that the candy-cane green tea is decaf.I was immediately hit with a strong peppermint smell when I removed the plastic wrapping from around the tea box.The candy-candy green tea won me over, especially when I added just a little honey.The tea bags didn't have strings.Paige BennettThe tea had a much more subtle peppermint flavor than the smell had led me to believe, and the beverage was smooth and earthy.I liked the tea best when it had a little bit of honey stirred into it.My only complaint is that the tea bags didn't have a string to pull them from my mug, but that's not a big issue.I was interested to see how the organic hot-cocoa mix would be with water.Trader Joe's organic hot-cocoa mix comes with 10 envelopes.Paige BennettTrader Joe's offers a variety of holiday beverages, but when it came to a chocolaty drink, I opted for the classic hot-cocoa mix.The mix came in a cute sweater-patterned box.The hot cocoa was rich and creamy, but still basic enough to pair with toppings or mix-ins.Trader Joe's organic hot-coca was a delicious, warm beverage.Paige BennettPer the instructions, I combined the cocoa powder with hot water.Even with water, the beverage was tasty without being too rich.I drank some as-is, which was great, but I also paired it with Trader Joe's cookie mug hangers.The two holiday products went together really well, and I think the mix would also go great with whipped cream or marshmallows.Trader Joe's cookie mug hangers looked so cute on the box.A lot of the mug toppers I bought were broken.Paige BennettThe gingerbread mug hangers seemed like a cute little treat to have with my coffee in the mornings.But when I opened the package, I was pretty disappointed to find that a lot of the cookie figures were broken.Luckily, they tasted good enough to buy again.Trader Joe's cookie mug hangers had a nice crunch.Paige BennettMany of the cookie figures didn't make it all in one piece but the ones that did nicely hung on the side of my mug.They also tasted good, with an ideal balance of sweetness and spiciness.They were very crunchy but softened up after dipping into hot cocoa.I'd probably buy these again, though I hope my next box has fewer broken cookies.I had to proof the double-chocolate croissants before I could bake them.Trader Joe's double-chocolate croissants come in a pack of four.Paige BennettI've seen rave reviews of Trader Joe's double-chocolate croissants on social media, so I looked forward to trying them.Per the instructions, I removed them from the box to let them proof overnight.The proofing was slightly inconvenient, but I felt hopeful the croissants would be worth the wait.I didn't think the croissants looked great but they tasted good, especially out of the oven.Trader Joe's double-chocolate croissants were light and flaky.Paige BennettI let the croissants rise for a little over nine hours, during which they doubled in size. Then, I baked them for 25 minutes.I didn't think they looked very appetizing when I pulled them from the oven.The pastry was light and flaky, with a slight chocolaty flavor, but I wished it was a little more buttery.The chocolate inside was very rich and delicious, especially when it was warm from the oven.I'd probably buy these again, but I might brush them with some melted butter after they come out of the oven to give them a better sheen and more flavor.Read the original article on Business Insider.....»»

Studies show that the rise of tools like ChatGPT is good news for employees who suck at their jobs Getty Images; Alyssa Powell/BIThe past few months I've been mulling over a series of studies economists have conducted on the value of artificial intelligence in the workplace. How much, they wanted to know, does AI help white-collar professionals do their jobs? The productivity gains they've observed are substantial: AI is clearly making us better, faster workers. The numbers have prompted AI optimists to predict an economic boom and AI pessimists to worry about a future of fewer jobs.But behind those numbers, buried a little deeper in the studies, is the finding that interests me. The question isn't how much AI helps out around the office but who it helps — and why.AI, the studies indicate, is making us more productive in a weird way. It's not helping everyone get better at their jobs. It's mostly turbocharging workers who are bad at their jobs, while doing little to aid — or even hindering — those who are already productive to begin with. AI, in other words, is raising overall productivity by narrowing the gap between high performers and low performers. It's equalizing white-collar work — a vast swath of the economy that has always been predicated on the assumption that some people will inherently be much, much better at their jobs than others.Before we get into the broader implications of the studies, let's start by reviewing their findings. Economists looked at the impact of AI in six different areas of work:Creative writing. Researchers tasked people to write a short story, with and without the help of an AI tool for generating ideas. Those who had no spark of their own became as much as 11% more novel and 23% more enjoyable with the help of AI. But the tool didn't benefit those who were already creative on their own.Office memos. Researchers had subjects complete writing tasks that are common in professional jobs — think press releases, short reports, delicate emails. Access to AI made everyone faster, regardless of their skill level, by an average of 37%. But when it came to the quality of their writing, AI mostly helped the low performers.Coding. Software engineers with fewer years of professional coding experience benefited much more from access to GitHub Copilot, an AI coding assistant, than veteran coders did.Management consulting. Researchers graded professional consultants on 18 knowledge-intensive tasks similar to what they actually do in their jobs. Access to GPT-4 boosted the scores of low performers by 43%, compared with only 17% for high performers.Law school. Researchers administered an exam to law students with and without GPT-4. Students at the bottom of the class got a big performance boost. But access to the tool actually hurt the grades of the students at the top of their class.Call-center work. Researchers measured the effects of a tailored AI tool that was introduced at a real call center. Novice and low-skilled workers became 34% more productive, while those with more experience and skill saw few benefits. Access to AI even slightly hindered the top performers on some measures, like conversation quality.So yes, AI boosts productivity in a wide variety of common office tasks, from repetitive work in low-paying call centers to complicated duties at elite management firms. And though most of the studies were hypothetical experiments in a lab — making their findings difficult to extrapolate to the real world — the call-center study looked at actual job performance at an actual company. But it's how AI increases productivity that should interest us the most. Together, the studies present a strong case that by disproportionately boosting those at the bottom, this new generation of AI tools is narrowing the variation in job performance. In just a few short months, it's already doing what decades of education have failed to do — it's equalizing the American workplace.When you stop to think about how large language models work, this finding makes sense. LLMs basically regurgitate what worked before — something the low performers can learn a lot from, but stuff the high performers already know. If you give everybody a cane, it'll speed up the slowest walkers the most. But it won't do much for Usain Bolt — and it might even slow him down.Unlike past technologies like the PC, which favored highly paid employees with college degrees, AI seems to be disproportionately helping those with fewer skills and less experience. Bettmann/GettyThis runs counter to how we're used to thinking about technology in the workplace. Over the past few decades, new technologies like industrial robots, the personal computer, and the internet have disproportionately aided highly skilled workers with college degrees, but they've done little to help (or, depending on who you ask, screwed over) those with fewer skills and less education. Economists call this skill-biased technological change, and it's a big reason income inequality has grown so much since the 1980s.Which brings us to the broader implications of the studies. If AI boosts the productivity of low performers, putting them on equal footing with the superstars, how is that going to change professional work as we know it?One possibility is that AI could help reverse America's growing chasm of income inequality. Some of the inequality we see today is a result of the huge gaps in salary within many elite professions — of a superstar software engineer, say, who can churn out thousands of lines of code in the blink of an eye, compared to an average-performing techie. Presumably, the superstar gets paid more because they're so much better at their job than everyone else. But if AI makes it so that every coder can blaze away, it'll be a lot harder for the hotshots to justify their astronomical salaries.This is something the law-school study touches on. "The legal profession has a well-known bimodal separation between 'elite' and 'nonelite' lawyers in pay and career opportunities," the authors write. "By helping to bring up the bottom (and even potentially bring down the top), AI tools could be a significant force for equality in the practice of law."But the true promise of AI lies in narrowing inequalities not within occupations, but between them. Software developers in the United States make, on average, 5.5 times more than fast-food workers. If AI makes it easier for a fast-food worker to move into a coding job, that's when we'll really start to see the income gap shrink. The GitHub Copilot study hinted at that: It found that the tool benefited novice programmers much more than expert ones. That could lower the barrier to entry for a whole new generation of aspiring engineers.If you're already one of the highly paid coders, this probably won't come as good news. Part of the reason programmers are paid so much is because there are so few of them. By allowing tons of people to flood into the occupation — and by turning crappy coders into decent ones — AI will almost certainly depress the sky-high salaries of those at the top of the profession. Education and expertise won't count for as much as they used to.Admittedly, this scenario I've laid out is an optimistic view of how AI will affect salaries. If it helps raise the skill level of subpar coders, then it will also raise their pay, right?Not necessarily. There's another way AI could reduce wage inequality: It could depress the pay of top earners without doing much to raise wages for those at the bottom. As productivity goes up, owners might opt to pocket the gains for themselves, lowering the salary ceiling rather than raising the salary floor. In this scenario, we'll have less income inequality thanks to AI. But we'll all make less. By commodifying the talents of the best illustrators, AI lowered their pay — the same way mechanized looms destroyed the livelihoods of artisan weavers in the Industrial Revolution. Unfortunately, that seems to be how AI is affecting the job market so far. In one study, researchers looked at what has happened to freelancers on the online platform Upwork who offer the services most affected by AI tools like ChatGPT. The number of jobs on the platform declined, and so did incomes. Those who were earning the most suffered the biggest hit. The top freelancers among those who offered image-based services received 7% fewer jobs and watched their earnings tank by a staggering 14%. In economic terms, AI isn't upskilling the workforce — it's deskilling it. By commodifying the talents of the best illustrators, it lowered their pay — the same way mechanized looms destroyed the livelihoods of artisan weavers at the onset of the Industrial Revolution. And AI systems are doing it, ironically, by feeding off the experience of the top performers, whose work provides the datasets they're trained on.The implications of these findings could go far beyond the question of pay and opportunity. We've organized much of white-collar work around the idea that there's a huge variation in both the quality and the quantity of work people produce. The entire idea of professionalism, in a sense, is predicated on the notion of talent. Some people are just really good at their jobs, the thinking goes, and it's worth throwing a lot of money at them to get them to work for you. That's why we receive raises for accumulating degrees and experience and expertise. And it's why companies have developed complicated performance-management systems to weed out the lower performers and to reward, retain, and promote the superstars.But if AI leads to a world in which employers get more or less the same work from everyone — regardless of schooling, years on the job, or inherent talent — that opens up all kinds of wacky possibilities for the future of work. Will companies start paying everyone in a particular job the same salary, regardless of their seniority level? Will promotions be a thing of the past? How will we raise our families and save for retirement if there's no opportunity for salary progression? Will HR departments dispense with time-consuming performance evaluations altogether? And if managers currently spend most of their time coaching, cajoling, and managing out their bottom performers, what happens to their jobs when there are no more bottom performers left?If we take the recent studies of AI at face value, the smart move for employers would be to hire the novices at cheap salaries and get rid of the veteran superstars who are earning the big bucks — implementing a "Moneyball"-style arbitrage for the ChatGPT age. But the thing is, I've spoken to a lot of executives over the past year about how they're rethinking their staffing plans, and not a single one has talked about scrapping their hotshot earners. In fact, many of them have told me, in private, that they intend to do the exact opposite. They're aiming to hire fewer entry-level people straight out of school, since AI can increasingly take on the straightforward, well-defined tasks these younger workers have traditionally performed. They plan to bulk up on experts who can ace the complicated stuff that's still too hard for machines to perform.If I had to guess, though, I'd say that trend won't last. A few enterprising employers will go all in on hiring job candidates with less experience and boosting their performance with AI. They'll save boatloads of money on salaries, and from there the practice will inevitably spread. That will open up all kinds of opportunities for professional wannabes to get their foot in the door. But for white-collar veterans, I suspect an onslaught is coming — one in which being good at your job will no longer offer the protections and perks it once did. When it comes to professions like law and management, talent has long been considered a ticket to success, deserving of rich rewards. Now, in the era of AI equality, it may turn out to be a costly liability.December 4, 2023: This story has been updated to clarify that the Upwork study focused not on the entire platform, but on the freelancers most affected by AI.Aki Ito is a senior correspondent at Business Insider.Read the original article on Business Insider.....»»

The new center in Volker Hall was constructed using a donation from the Heersink Family Foundation......»»

Studies show that the rise of tools like ChatGPT is good news for employees who suck at their jobs Getty Images; Alyssa Powell/BIThe past few months I've been mulling over a series of studies economists have conducted on the value of artificial intelligence in the workplace. How much, they wanted to know, does AI help white-collar professionals do their jobs? The productivity gains they've observed are substantial: AI is clearly making us better, faster workers. The numbers have prompted AI optimists to predict an economic boom and AI pessimists to worry about a future of fewer jobs.But behind those numbers, buried a little deeper in the studies, is the finding that interests me. The question isn't how much AI helps out around the office but who it helps — and why.AI, the studies indicate, is making us more productive in a weird way. It's not helping everyone get better at their jobs. It's mostly turbocharging workers who are bad at their jobs, while doing little to aid — or even hindering — those who are already productive to begin with. AI, in other words, is raising overall productivity by narrowing the gap between high performers and low performers. It's equalizing white-collar work — a vast swath of the economy that has always been predicated on the assumption that some people will inherently be much, much better at their jobs than others.Before we get into the broader implications of the studies, let's start by reviewing their findings. Economists looked at the impact of AI in six different areas of work:Creative writing. Researchers tasked people to write a short story, with and without the help of an AI tool for generating ideas. Those who had no spark of their own became as much as 11% more novel and 23% more enjoyable with the help of AI. But the tool didn't benefit those who were already creative on their own.Office memos. Researchers had subjects complete writing tasks that are common in professional jobs — think press releases, short reports, delicate emails. Access to AI made everyone faster, regardless of their skill level, by an average of 37%. But when it came to the quality of their writing, AI mostly helped the low performers.Coding. Software engineers with fewer years of professional coding experience benefited much more from access to GitHub Copilot, an AI coding assistant, than veteran coders did.Management consulting. Researchers graded professional consultants on 18 knowledge-intensive tasks similar to what they actually do in their jobs. Access to GPT-4 boosted the scores of low performers by 43%, compared with only 17% for high performers.Law school. Researchers administered an exam to law students with and without GPT-4. Students at the bottom of the class got a big performance boost. But access to the tool actually hurt the grades of the students at the top of their class.Call-center work. Researchers measured the effects of a tailored AI tool that was introduced at a real call center. Novice and low-skilled workers became 34% more productive, while those with more experience and skill saw few benefits. Access to AI even slightly hindered the top performers on some measures, like conversation quality.So yes, AI boosts productivity in a wide variety of common office tasks, from repetitive work in low-paying call centers to complicated duties at elite management firms. And though most of the studies were hypothetical experiments in a lab — making their findings difficult to extrapolate to the real world — the call-center study looked at actual job performance at an actual company. But it's how AI increases productivity that should interest us the most. Together, the studies present a strong case that by disproportionately boosting those at the bottom, this new generation of AI tools is narrowing the variation in job performance. In just a few short months, it's already doing what decades of education have failed to do — it's equalizing the American workplace.When you stop to think about how large language models work, this finding makes sense. LLMs basically regurgitate what worked before — something the low performers can learn a lot from, but stuff the high performers already know. If you give everybody a cane, it'll speed up the slowest walkers the most. But it won't do much for Usain Bolt — and it might even slow him down.Unlike past technologies like the PC, which favored highly paid employees with college degrees, AI seems to be disproportionately helping those with fewer skills and less experience. Bettmann/GettyThis runs counter to how we're used to thinking about technology in the workplace. Over the past few decades, new technologies like industrial robots, the personal computer, and the internet have disproportionately aided highly skilled workers with college degrees, but they've done little to help (or, depending on who you ask, screwed over) those with fewer skills and less education. Economists call this skill-biased technological change, and it's a big reason income inequality has grown so much since the 1980s.Which brings us to the broader implications of the studies. If AI boosts the productivity of low performers, putting them on equal footing with the superstars, how is that going to change professional work as we know it?One possibility is that AI could help reverse America's growing chasm of income inequality. Some of the inequality we see today is a result of the huge gaps in salary within many elite professions — of a superstar software engineer, say, who can churn out thousands of lines of code in the blink of an eye, compared to an average-performing techie. Presumably, the superstar gets paid more because they're so much better at their job than everyone else. But if AI makes it so that every coder can blaze away, it'll be a lot harder for the hotshots to justify their astronomical salaries.This is something the law-school study touches on. "The legal profession has a well-known bimodal separation between 'elite' and 'nonelite' lawyers in pay and career opportunities," the authors write. "By helping to bring up the bottom (and even potentially bring down the top), AI tools could be a significant force for equality in the practice of law."But the true promise of AI lies in narrowing inequalities not within occupations, but between them. Software developers in the United States make, on average, 5.5 times more than fast-food workers. If AI makes it easier for a fast-food worker to move into a coding job, that's when we'll really start to see the income gap shrink. The GitHub Copilot study hinted at that: It found that the tool benefited novice programmers much more than expert ones. That could lower the barrier to entry for a whole new generation of aspiring engineers.If you're already one of the highly paid coders, this probably won't come as good news. Part of the reason programmers are paid so much is because there are so few of them. By allowing tons of people to flood into the occupation — and by turning crappy coders into decent ones — AI will almost certainly depress the sky-high salaries of those at the top of the profession. Education and expertise won't count for as much as they used to.Admittedly, this scenario I've laid out is an optimistic view of how AI will affect salaries. If it helps raise the skill level of subpar coders, then it will also raise their pay, right?Not necessarily. There's another way AI could reduce wage inequality: It could depress the pay of top earners without doing much to raise wages for those at the bottom. As productivity goes up, owners might opt to pocket the gains for themselves, lowering the salary ceiling rather than raising the salary floor. In this scenario, we'll have less income inequality thanks to AI. But we'll all make less. By commodifying the talents of the best illustrators, AI lowered their pay — the same way mechanized looms destroyed the livelihoods of artisan weavers in the Industrial Revolution. Unfortunately, that seems to be how AI is affecting the job market so far. In one study, researchers looked at what happened to freelancers on the online platform Upwork after the introduction of AI tools like ChatGPT. The number of jobs on the platform declined, and so did incomes. Those who were earning the most suffered the biggest hit. The top freelancers among those who offered image-based services received 7% fewer jobs and watched their earnings tank by a staggering 14%. In economic terms, AI isn't upskilling the workforce — it's deskilling it. By commodifying the talents of the best illustrators, it lowered their pay — the same way mechanized looms destroyed the livelihoods of artisan weavers at the onset of the Industrial Revolution. And AI systems are doing it, ironically, by feeding off the experience of the top performers, whose work provides the datasets they're trained on.The implications of these findings could go far beyond the question of pay and opportunity. We've organized much of white-collar work around the idea that there's a huge variation in both the quality and the quantity of work people produce. The entire idea of professionalism, in a sense, is predicated on the notion of talent. Some people are just really good at their jobs, the thinking goes, and it's worth throwing a lot of money at them to get them to work for you. That's why we receive raises for accumulating degrees and experience and expertise. And it's why companies have developed complicated performance-management systems to weed out the lower performers and to reward, retain, and promote the superstars.But if AI leads to a world in which employers get more or less the same work from everyone — regardless of schooling, years on the job, or inherent talent — that opens up all kinds of wacky possibilities for the future of work. Will companies start paying everyone in a particular job the same salary, regardless of their seniority level? Will promotions be a thing of the past? How will we raise our families and save for retirement if there's no opportunity for salary progression? Will HR departments dispense with time-consuming performance evaluations altogether? And if managers currently spend most of their time coaching, cajoling, and managing out their bottom performers, what happens to their jobs when there are no more bottom performers left?If we take the recent studies of AI at face value, the smart move for employers would be to hire the novices at cheap salaries and get rid of the veteran superstars who are earning the big bucks — implementing a "Moneyball"-style arbitrage for the ChatGPT age. But the thing is, I've spoken to a lot of executives over the past year about how they're rethinking their staffing plans, and not a single one has talked about scrapping their hotshot earners. In fact, many of them have told me, in private, that they intend to do the exact opposite. They're aiming to hire fewer entry-level people straight out of school, since AI can increasingly take on the straightforward, well-defined tasks these younger workers have traditionally performed. They plan to bulk up on experts who can ace the complicated stuff that's still too hard for machines to perform.If I had to guess, though, I'd say that trend won't last. A few enterprising employers will go all in on hiring job candidates with less experience and boosting their performance with AI. They'll save boatloads of money on salaries, and from there the practice will inevitably spread. That will open up all kinds of opportunities for professional wannabes to get their foot in the door. But for white-collar veterans, I suspect an onslaught is coming — one in which being good at your job will no longer offer the protections and perks it once did. When it comes to professions like law and management, talent has long been considered a ticket to success, deserving of rich rewards. Now, in the era of AI equality, it may turn out to be a costly liability.Aki Ito is a senior correspondent at Business Insider.Read the original article on Business Insider.....»»

Here are five reasons customers who still favor the sandwich chain may want to consider avoiding it today. The post 5 Reasons to Avoid Subway Today appeared first on 24/7 Wall St.. Established in 1965, sandwich-focused chain Subway has around 37,000 locations in more than 100 countries, all independently owned and operated by a network of franchisees. Not only are there many standalone and strip mall locations, but they can be found in truck stops, airports, big-box stores and other high-traffic locations. Subway has even had stores in a laundromat, a Jewish community center, a riverboat and a church. At first, the freshness of the ingredients and the deliciousness of its offerings seriously impressed customers. The Miami-based company got in early on the trend of quick-service restaurants that prepared food to order right in front of the customer. Its other product offerings include wraps, salads, paninis and baked goods. Subway was lauded for its service and its healthy food options. (See 24 iconic sandwiches you can make at home.) However, it has fallen from its glory days when it had 44,702 restaurants worldwide (more than McDonald’s or Starbucks). After struggling for several years to turn things around, the company put itself up for sale earlier this year. What can customers who still favor Subway expect? Should they find somewhere else to grab a bite? Here are five reasons to consider avoiding Subway. 1. Will Your Subway Still Be There Next Week? While the rate of attrition has slowed, the number of Subway locations continues to fall and has since 2015. In that year it peaked at more than 27,100 in the United States. By 2022, there were less than 20,600 stores, a decline of almost 25% and the lowest number since 2005. Why have so many Subways closed? The company’s wild overexpansion in the years before 2015, when it was the fastest-growing franchise chain in the world, receives much of the blame. But locations with outdated operations and decor, stale menus, and mandated promotions and discounts that eroded the profits of franchise owners did not help any. Not to mention rising competition from other sandwich shops, and even food trucks and grocery stores. Closures are expected to continue, especially with new owners coming in. So, fans of Subway probably should not be surprised if they drop by for lunch one day and find the lights out and the doors locked. 2. Subway Is in the News Again? A quick look at the news shows recent robberies at Subway locations, a truck crashing through one restaurant, the death of an employee, and debate about whether Subway will be part of a monopoly once its sale is completed. To be sure, stuff happens at all fast-food chains and retailers, but Subway can seem something of a magnet for bad press. Subway locations in Seattle were the source of not one but two hepatitis A outbreaks, in 1996 and 1999. The latter reportedly cost Subway $1.6 million to a class-action lawsuit and $10 million in an out-of-court settlement. In 2007, an investigation in Arizona revealed that some of the chain’s “giant sub” sandwiches were not three feet long as advertised. Subway changed its marketing to focus on serving size rather than length. Yet, controversy arose again in 2013 when some of its footlong sandwiches were shown to be less than a foot long, resulting in a class-action lawsuit. Subway removed azodicarbonamide, a whitening agent and dough conditioner, from its bread in 2014 after bad press. This substance is sometimes referred to as the “yoga mat chemical” but has been deemed harmless and is still used in many consumable products, including those from other fast-food restaurants. (See the most popular fast-food chain in each state.) Perhaps the company’s biggest scandal was when longtime national spokesperson Jared Fogel was charged with possession of child pornography and illicit sexual conduct with a minor. Subway cut ties with Fogel, who pleaded guilty to the charges, and the company switched its marketing to focus on its history. And Subway has been accused of using fake chicken (2017) and fake tuna (2021). Of course, the company refuted these claims. This past year, Subway rolled out meat slicers to many of its locations, an $80 million investment. That way customers can see their meat freshly sliced as their sandwiches are made. Subway also received bad press for not closing restaurants in Russia after the invasion of Ukraine, as well as for featuring a controversial sports figure in some ads. Kind of makes one wonder what tomorrow’s headline will be. 3. When the Healthy Alternative Is Not So Healthy With its longtime slogan “Eat Fresh,” Subway has positioned itself as a healthier alternative to burgers, pizza, fried chicken and other fast-food offerings. It has gluten-free and low-sodium offerings. The company has a chicken welfare policy and is moving toward using only meat from animals raised without antibiotics, as well as sustainability in its supply chain. But is it really as healthy as all that? Depends on what customers order and at what portion size. Some six-inch subs can have up to 800 calories and 52 grams of fat. Its wraps can be worse, much worse. So can the salads. Its whole-wheat and whole-grain options are better than its white bread, which is high in sodium. All breads include carbs, of course. Meat options pepperoni, salami and ham are also high in sodium, as is the American cheese. Swiss is the least salty cheese option. Ranch, mayo and sweet onion sauce are high-calorie and sugary options. Subway’s Fresh Fit menu includes its healthiest offerings. But that won’t matter if the ingredients are not actually fresh. An investigation in 2017 found that some locations received deliveries of ingredients as little as once a week. Franchisees’ requests for more frequent deliveries reportedly were denied. As always, caveat emptor. (The best independent sandwich shop in each state.) 4. About Those Employees Ever wonder if those so-called Sandwich Artists at Subway are happy to be working there? The chain does have something of a reputation for having a low-pay, high-stress work environment. Some employees report receiving little training and uncertain or inconsistent hours, having low morale and not being allowed breaks. This leads to poor performance and high turnover, resulting in extra hiring and training costs for the franchises and the company. Not to mention variable quality from location to location. The company’s relationship with franchisees could also be described as fraught. While the cost of opening a Subway franchise may be lower than for other restaurants, profitability can be a challenge. Some franchise owners feel the franchise agreement greatly favors the corporation, while others report having a fear of retribution for anything less than toeing the company line. A 2019 investigation focused on stores closed for minor infractions so that the company can buy them back at a reduced cost and resell them to collect more fees. That is, if it can find a buyer. Subway reportedly has struggled to find franchisees, another reason it may still be closing so many locations. 5. What Will New Owners Mean for Subway? Earlier this year, private equity firm Roark Capital agreed to purchase Subway for $9.6 billion. The chain will join Jimmy Johns, Arby’s, Buffalo Wild Wings, Dunkin’, Cinnabon, Jamba Juice and many others in the new owner’s brand stable. One of the first aims when a private equity firm buys a company is to cut costs. In this case, that is likely to mean layoffs and additional store closures, especially in the United States. However, in the long term, Roark is expected to focus on expansion overseas. The new owners also could be forced to sell or close stores to please regulators. The Federal Trade Commission has opened an antitrust investigation due to Roark’s ownership of other sandwich chains. Could there be such a thing as a sandwich shop monopoly? Regardless of whether the FTC probe amounts to anything, the long period of uncertainty for Subway franchisees, employees and customers is far from over. Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free. Click here to match with up to 3 financial pros who would be excited to help you make financial decisions. The post 5 Reasons to Avoid Subway Today appeared first on 24/7 Wall St.......»»

Hewlett Packard Enterprise Company (NYSE:HPE) Q4 2023 Earnings Call Transcript November 28, 2023 Hewlett Packard Enterprise Company beats earnings expectations. Reported EPS is $0.52, expectations were $0.5. Operator: Good afternoon, and welcome to the Fourth Quarter 2023 Hewlett Packard Enterprise Earnings Conference Call. My name is Gary and I’ll be your conference moderator for today’s […] Hewlett Packard Enterprise Company (NYSE:HPE) Q4 2023 Earnings Call Transcript November 28, 2023 Hewlett Packard Enterprise Company beats earnings expectations. Reported EPS is $0.52, expectations were $0.5. Operator: Good afternoon, and welcome to the Fourth Quarter 2023 Hewlett Packard Enterprise Earnings Conference Call. My name is Gary and I’ll be your conference moderator for today’s call. At this time all participants will be in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Jeff Kvaal, Senior Director, Investor Relations. Please proceed. Jeff Kvaal: Thanks, Gary, and good afternoon, everyone. I’m Jeff Kvaal, I’d like to welcome you to our fiscal 2023 fourth quarter earnings conference call with Antonio Neri, HPE’s President and Chief Executive Officer; and Jeremy Cox, HPE’s Senior Vice President, Controller and Interim Chief Financial Officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE investor relations webpage. Elements of the financial information referenced on this call are forward-looking and are based on our best view of the world and our businesses as we see them today. HPE seems no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on the call reflects estimates based on the information available at this time and could differ materially from the amounts ultimately reported in HPE’s annual Form 10-K for the fiscal year ended October 31, 2023. For more detailed information, please see the disclaimers on the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions. Please refer to HPE’s filings with the SEC for a discussion of these risks. For financial information, we have expressed on a non-GAAP basis. We have provided a reconciliation to the comparable GAAP information on our website. Please refer to the tables and slide presentation accompanying today’s earnings release on our website for details. Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year-over-year basis and adjusted to exclude the impact of currency. Finally, Antonio and Jeremy will reference our earnings presentation in their prepared comments. And with that, let me turn it to you, Antonio. Antonio Neri: Thanks, Jeff and good afternoon, and thank you for joining us today. In fiscal year… Operator: Pardon me, this is the conference operator. The speaker’s line has appears to have dropped. Please remain on the line while we rejoin them. Thank you. Antonio Neri: Eddie, can you hear us? Operator: Yes sir, we can hear you now. Thank you. Antonio Neri: All right, thank you. Well thanks Jeff and good afternoon and thank you for joining us today. In fiscal year 2023, HPE delivered record performance against non-GAAP financial metrics by capitalizing on strong momentum across our portfolio. Our steady execution has resulted in higher revenue, further gross margin expansion, larger operating profit, and record-breaking non-GAAP diluted net earnings per share and free cash flow. Our growth engines in Intelligent Edge and HPC and AI, as well as our HPE GreenLake platform, are helping to accelerate our revenue and profit diversification. Importantly, HPE has achieved demonstrable success this year in our ongoing portfolio pivot to higher growth, higher margin areas aligned to the key market megatrends driving customer demand. I will focus my commentary today on our full-year fiscal year 2023 results and allow Jeremy to expand on the fourth quarter and segment results. I’m very proud of all that HPE delivered in fiscal year 2023 for our shareholders, our customers, and our team members. Our performance demonstrates the relevance of our strategy, our portfolio differentiation, and our strong execution. We delivered extraordinary innovation to customers, resulting in share gains in key markets and profitable growth for our company. HPE generated our highest gross margin and highest operating profits since I became CEO, and our highest annual revenue in four years. Non-GAAP diluted net earnings per share and free cash flow were the largest ever in our company’s history. We saw healthy, sustained growth in revenue at $29.1 billion for the full-year, an increase of 5.5% year-over-year in constant currency, a third straight year of revenue [Technical Difficulty] point of our full fiscal year 2023 guidance of 5%. Gross margins exceeded 35%. We also added substantially to our annualized revenue run rate closing fiscal year 2023 with more than $1.3 billion in ARR. That represents a nearly $370 million increase from this time last year. Non-GAAP operating profit margin was up 20 basis points year-over-year to end the year at 10.8%. We have executed well on our addressable market opportunities and exercised prudence with our expenses and obligations. Non-GAAP EPS increased 6.4% year-over-year to $2.15. Improved profitability also means that we have significantly boosted free cash flows, which rose by about $400 million this year to $2.2 billion, and nearly 25% year-over-year increase. Both non-GAAP, EPS, and free cash flow results are record-breaking and well above our fiscal year 2022 sum guidance. In summary, HPE delivered an impressive set of results in fiscal year 2023. With the progress we have made this year and are confidence in generating further value for our shareholders, we are raising our dividends in 2024. HPE is more relevant than ever to our customers. We have deliberately aligned our strategy over the last few years to significant trends in the market around edge, hybrid cloud, and AI. These growth engines align to our customers’ interests and where they are targeting their IT spend. Even against an uncertain macroeconomic backdrop, we saw continued though uneven, demand across our HPE portfolio with a significant acceleration in AI orders. Demand in our AI solutions is exploding. We saw a significant uptick in customer demand in recent quarters for accelerated computing infrastructure and services. In Q4, orders for servers that include accelerated processing units or APUs represented 32% of our total server order mix, up more than 250% from the beginning of fiscal year 2023. APUs, which includes GPU-based servers orders across our business, represented 25% of our total server order mix in fiscal year 2023. Our HPC & AI segment revenue grew 25% year-over-year in fiscal year 2023. We ended this fiscal year with the largest HPC & AI order book on record, driven by $3.6 billion in company-wide APU orders. This tops what has been an historically large order book in the third quarter, as demand accelerated for our supercomputing and AI solutions. We anticipate demand next fiscal year will remain very strong. We likely have a large order backlog and the GPU supply is less constrained. Two weeks ago at the Supercomputing Conference, we expanded our collaboration with NVIDIA to announce a turnkey pre-configured supercomputing solution for generative AI to streamline the model development process. The new solution speeds up the training and fine-tuning of AI models using [Indiscernible] data sets. Designed for large enterprises, research institutions, and government organizations, it comprises HPE AI software, our industry-leading supercomputing and storage solutions. Our HPE Slingshot Interconnect Fabric and HPE services, and the Quad NVIDIA Grace Hopper GH200 Superchip. Later this week at HPE Discover Barcelona, we will further expand our NVIDIA partnership with new solutions created for enterprise customers. Also this month, the University of Bristol announced that HPE has been selected to deliver the U.K.’s fastest supercomputer, thanks to our U.K. government investment of GPB225 million intended to make the nation a world leader in AI. The Japan National Institute of Information and Communications Technology recently turned to HPE Cray XD supercomputers to develop an AI-based multilingual communication tool to process, translate, and interpret text and images for 17 languages. And we just announced a partnership with Dark Bite a provider of next-generation high-performance computing green data centers to power its AI cloud service with HPE Cray supercomputers and our purpose-built machine learning software suite. With HPE built supercomputers consistently ranked among monthly top 10 within the top 500 most powerful and sustainable supercomputers, our clear leadership in this space continues to position us well in the AI market. Our Intelligent Edge segment was the largest driver of our revenue and profit growth in fiscal year 2023, making up 18% of our overall revenue and 39% of the segment operating profit. Fiscal year 2023 revenue in this segment increased by 45% to $5.2 billion, while operating margins expanded more than 1,200 basis points year-over-year to 27.3%, demonstrating the relevance of our offering and the payoff of investments over time. A critical part of our intelligent edge portfolio in the edge supply portfolio is to continue — will continue to contribute meaningfully to profitable growth for our shareholders. The compute segment is going through a cyclical period where customers are consuming prior investments making this a price-competitive market for now. As we prepare to capture a greater share of AI linked inferencing opportunities, we saw overall demand improved moderately in the second-half and are encouraged in our outlook for this segment. Customer interest in service with ATUs is growing. We are investing in specialized sales resources that can enhance future growth. We also know we must keep our focus on capturing heavy unit in this business, while keeping balancing our operating margin performance. The overall storage market has been sluggish this year. And on our — even our uneven performance in this segment is in line with most of our peers. However, we are encouraged with three quarters of stable demand. We saw sequential improvement in storage revenue in the fourth quarter. We continue to invest in our sales execution capabilities. We recently deployed a large specialized store sales force, including a team devoted to growing our storage IP product mix. We expect our subscription-based offerings and differentiated IP problems like HP Electra will continue to be sources of strong growth to enhance the profitability of this business in the year ahead. We remain focused on advancing our position in Hybrid Cloud. We ended the year with 29,000 customers on our HPE GreenLake cloud platform. Customers require a hybrid by design IT estate. They are attracted to our cloud platform because of its experience, flexibility and cost. In the fourth quarter, we closed our largest HPE GreenLake for private cloud enterprise deal to-date. In addition, we saw more customer demand around our HPE GreenLake SaaS offerings across data protection, observability and sustainability services. Finally, our HPE Financial Services segment continues to deliver strategic sustainable solutions for customers accelerating our strategy and helping to expand earnings for our shareholders. Financing volumes rose year-over-year with a major contribution from efforts to boost our other service volumes through HP GreenLake. Fiscal year 2023 was an important year for HP, one we advanced our strategy and delivered record financial performance for our shareholders through focused execution and operating discipline. I’m confident in our ability to continue to deliver for our shareholders in fiscal year 2024 and beyond for three main reasons. First, the work we have done over the last several years to innovate and invest in the right places, places where we have the expertise and the ability to scale has given us a portfolio that I believe stands apart from any other. Second we have weathered cyclical dynamics well. While others have had much more severe shift to make, we have been able to stay the course in bringing our strategy to life because we have made operational improvements and have managed expenses in a disciplined way. And finally, we have been bold in undertaking transformation across the company. The changes we have made to our operating model to strengthen capabilities in our growth segment, focus on our road maps across the portfolio, create new customer experience and reach them in new ways will each pay off next year and beyond. We are set up very well to navigate the current climate with and for our customers and to add significantly to the long-term profitability and value we create for our shareholders. While headwinds remain in certain segments of the IT market, HPE is positioned very well to continue our momentum, and we are lesser focused in areas where we know we can do more to improve our performance. I hope you share my optimism in what HP can achieve in the year ahead. Let me now invite Jeremy to discuss the fourth quarter and specific same year results. So Jeremy, over to you. Jeremy Cox: Thank you very much, Antonio. We closed FY ’23 with another solid performance. Our Q4 results reflect our strategic focus to diversify our business towards higher growth, higher margin areas of the market. The company’s transformation we have undertaken several years ago to pivot to edge and cloud is paying off. And with AI exploding in 2023, we see several promising indicators as we look further in 2024 and despite some unevenness in some areas of the IT market where we participate. Q4 performance was highlighted by healthy revenues and gross margins. Revenue grew 5% sequentially in constant currency to $7.4 billion. hitting the midpoint of our Q4 revenue guidance range. Year-over-year revenue, however, was down 6% on a difficult compare to Q4 ’22, during which significant order book consumption boosted our results. Q4 non-GAAP gross margin was 34.8%, which was up 170 basis points year-over-year, largely due to the increasing contribution of our Intelligent Edge segment. Let me remind you of the deliberate targeted investment decisions we made in Q4 that I flagged to SAM, which were funded with the better-than-expected OIE performance in the same period. The impact of this investment, along with the strong seasonal growth in HPC and AI resulted in a Q4 non-GAAP operating margin of 9.7%. This is down 60 basis points sequentially and 180 basis points year-over-year. We expect non-GAAP operating margins to quickly be over in Q1 ’24. This led to GAAP diluted net EPS to $0.49 and non-GAAP diluted net EPS to $0.52, which was at the high end of our Q4 guidance range of $0.48 to $0.52. Our Q4 free cash flow of $2.3 billion was record-breaking for the company. HPE also delivered an impressive full year performance in FY ’23. We delivered revenue growth of 5.5% in constant currency which was at the upper end of our guidance range of 4% to 6%. Currency was a 330 basis point headwind for the year. Non-GAAP diluted net EPS of $2.15 and was also at the high end of our prior guidance and well above our initial guidance from SAM 2022 $1.96 to $2.04. FY ’23 free cash flow of $2.2 billion was well above our guidance of $1.9 billion to $2.1 billion. Let’s now turn to our segment results. As a reminder, all revenue growth rates on this slide are in constant currency and I will discuss the segments in our prior structure. The company is now operating according to our new structure. And as communicated at SAM, we plan to file restated historical financials for the new segments well before we report our Q1 ’24 results. In Intelligent Edge, we grew revenue 40% year-over-year in Q4. Demand in our core product was down sequentially on customer digestion, but grew in our software-centric solutions such as our HP Aruba Central cloud management software and in our new TAM opportunities such as our SASE security software suite. Our operating margin of 29.5% was up more than 1,600 basis points year-over-year. While very pleased with this performance, we continue to expect a mid-20% operating margin over time as communicated at SAM 2023. And finally, we’re making progress on our order book and expect to be back close to historical normal levels by midyear 2024. In HPC & AI, Q4 revenue grew 38% year-over-year and 41% sequentially. Q4 revenue results included only a modest amount of AI revenue. On a sequential basis, the continued strength in AI demand lifted our order book in the HPC & AI segment to more than $3 billion, despite our significant revenue growth in the quarter. We continue to expect double-digit revenue growth in the segment over the next three years, and we are increasingly confident we will be above trend in FY ’24 with GPU supply or gating factor. Our Q4 operating margin was 4.7%, up 120 basis points year-over-year and 550 basis points sequentially. While we have much more progress to make, this does illustrate the positive benefits of scale. The early stage of the AI market, tightness in certain key accelerators and long lead times in this segment means that the HPC & AI margins will fluctuate. Storage revenues fell 12% year-over-year on a difficult compare, but rose 3% sequentially. Storage demand has now been flat to up for three straight quarters. HPE Electra revenue grew over 50% year-over-year and it will remain a robust growth contributor in FY ’24, supported by growth in file and object storage. HPE Electra is shifting our mix within storage to higher-margin software subscription revenue, which is a key driver of our ARR growth. Q4 storage operating margin of 8.1% was down 730 basis points year-over-year. Headwinds included the deferred revenue impact of the HP Electro subscription software, accelerated investment outpacing year-over-year revenue performance and a high mix of third-party products this quarter. Our investments in product portfolio give us confidence storage will make progress through FY ’24 toward our long-term operating profit margin target communicated at SAM 2023 of mid-teens. Compute revenue was down 30% year-over-year on a difficult compare and down 1% sequentially. De elongation and customer digestion, we discussed previously continued to be most prevalent in compute. Declining AUPs from a record high in Q1 ’23 was also a meaningful driver. However, two straight quarters of sequential improvement in demand lends further confidence to our FY ’24 outlook. Our full-year operating margin of 13.7% exceeded our target range of 11% to 13%, but the operating margin of 9.8% in Q4 was temporarily below the range. Given gross margins remain largely flat sequentially and the sequential demand increases, we continue to expect operating margins to be in the target range for FY ’24. HPE Financial Services revenues were flat year-over-year and financing volume was $1.5 billion. Our operating margin of 8.9% was down 220 basis points year-over-year reflecting rapid intra sites that we are offsetting through pricing as well as asset management margins returning to normal as supply challenges ease. Our Q4 loss ratio remained steady at 0.5%. Let’s double-click on our portfolio pivot to higher growth, higher margin recurring revenue and in particular, to Intelligent Edge. Even three years ago, the Intelligent Edge segment constituted just 10% of segment revenue. This year, it represented 18%. The operating profit trajectory is even more telling. The Intelligent Edge segment contributed approximately 14% of the segment’s operating profit three years ago and was nearly 40% in FY ’23. In FY ’24, we intend to give you a similar view combining our growth pillars of HPC and AI, hybrid cloud and intelligent edge segments. Within that, we expect the Intelligent Edge segment growth to moderate in the HPC & AI segment growth to accelerate. Robust demand in our hybrid cloud and as-a-service offerings illustrates the durability of our portfolio shift. ARR exceeded $1.3 billion in Q4. This represented 37% year-over-year growth, which is in line with our long-term CAGR target of 35% to 45%. Storage and Intelligent Edge software and services are the fastest-growing components of ARR. We continue to lift HPE GreenLake’s value proposition with an increasing mix of higher-margin recurring software and services revenue. Our software and services mix was 68% in the quarter. We expect this mix to increase into the upper 70% range by FY ’26. This expansion is driven by the growth of subscription-based software with our products and the increased attach of our HPE operational services, which rose double-digits in Q4. The rising software and services mix is expanding our as-a-service margins. Our as-a-service orders grew 11% year-over-year in Q4 and finished the year up a solid 23% after 68% growth in FY ’22. Our cumulative as-a-service TCV has now increased to nearly $13 billion. As ARR is now on a clear path to meaningful scale, we will simplify our as-a-service disclosure from ARR as-a-service orders in TCV to only ARR in FY ‘24. The explosion in AI demand is driving robust growth in our APU orders. Total APU orders, which include APUs in our compute, Cray EX and Cray XD businesses totaled $3.6 billion in FY ’23, which is up from the over $3 billion we disclosed at SAM 2023. HPE Cray XD APU orders accelerated in Q3 and in Q4, reaching $2.4 billion for the year. The impressive APU server demand is also evident in our total server demand. APUs represented 25% of total server order dollars in FY ’23, up from 10% in the prior year. We will continue to disclose APU orders. However, orders can be easily north of $100 million each, therefore, orders may be lumpy. But the key point is that we are capturing AI demand now and are well positioned for coming demand across the entire AI life cycle from training to tuning to inferencing. Our strategy is delivering top line growth and gross margin expansion. Despite the challenging macro ongoing product digestion and currency headwinds, we still produced one of our highest quarterly revenue figures since 2018, while sustaining our expanded gross margin profile. Our Q4 non-GAAP gross margin rose 170 basis points year-over-year to 34.8%. And our full year non-GAAP gross margin rose 140 basis points to 35.3%. That’s a more than 500 basis point improvement from FY ’18. Moving to free cash flow. In Q4, we generated $2.8 billion in cash flow from operations and $2.3 billion in free cash flow. Our $2.2 billion in free cash flow in FY ’23 was above the high end of our guidance and up meaningfully from $1.8 billion in FY ’22, primarily on improved earnings and net income conversion. We exited FY ’23 with a cash conversion cycle of negative four days, which exceeded our expectation for neutral we communicated at SAM. Strong working capital management in Q4 and reduced transformation costs in FY ’23 drove an improvement in our conversion of non-GAAP net earnings to free cash flow to approximately 80% in FY ’23. Continued progress in FY ‘24 and beyond leads us to expect to reach 90% by FY ’26. We reiterate our FY ‘24 free cash flow guidance from SAM of $1.9 billion to $2.1 billion. And we returned over $1 billion in capital to shareholders in FY ‘23, including $421 million in share repurchases. While certain price and volume parameters of our trading program limited us to below our $500 million target in FY ‘23, we reiterate our goal of returning 65% to 75% of free cash flow to shareholders between FY ’24 and FY ’26. Before we dive into our outlook, let me remind you that we will exclude H3C earnings and gain on sale from our non-GAAP results in FY ’24 as we noted at SAM. We continue to expect the process to conclude and the receipt of the cash proceeds in the first-half of calendar 2024. For Q1, we expect revenues in the range of $6.9 billion to $7.3 billion. This incorporates historical seasonality in our overall business, including in the HPC & AI segment after its strong Q4. We expect AI revenue acceleration to drive sequential growth in HPC & AI and total HPE revenue in Q2 ’24. We expect GAAP diluted net EPS between $0.24 and $0.32 and non-GAAP diluted net EPS between $0.42 and $0.50. We’re reiterating our prior year 2024 guidance of 2% to 4% revenue growth in constant currency. We expect OI&E, which as noted, excludes HCC going forward to be a headwind of approximately $300 million and our non-GAAP structural tax rate to be 15%. Our full-year GAAP diluted net EPS guidance of $1.81 to $2.01 is $0.02 lower than our prior view as a bit of transformation costs slipped into FY ’24. We are reiterating our full-year non-GAAP diluted net EPS guidance of $1.82 to $2.02. We also reiterate free cash flow guidance of between $1.9 billion and $2.1 billion. We continue to believe our FY ’24 performance will be weighted to the second-half of the year as GPU supply improves. We are increasing our dividend by 8% in FY ’24 and intend to return 65% to 75% of free cash flow to shareholders this year. So to conclude, while there continues to be unevenness in some areas of the IT market, our investment in growing areas of our portfolio is paying off. We are confident in our ability to continue to capture the AI explosion in demand. AI also opens broader customer discussions about the benefits of AI inferencing at the edge and the need to be hybrid by design. Our HPE GreenLake Cloud platform, our AI native portfolio, and our services expertise are perfectly aligned to the needs of our customers that we believe will turn into profitable growth for our shareholders. Now let’s open it up for questions. See also 25 Best Quotes From Charlie Munger and 13 Best Growth Stocks To Buy According To George Soros. Q&A Session Follow Hewlett Packard Enterprise Co (NYSE:HPE) Follow Hewlett Packard Enterprise Co (NYSE:HPE) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question is from Mike Ng with Goldman Sachs. Please go ahead. Mike Ng: Hey, good afternoon. Thank you very much for the question. I just have one on the APU orders of $3.6 billion. I was wondering if you could talk a little bit about the mix between compute, supercomputing and Cray XD. And if you could offer any color on the type of customers that are making this order? Is this your typical enterprise customer? Is it more of a Tier 2 or AI CSP? Any thoughts there would be great. Antonio Neri: Well, thanks, Mike. This is Antonio. So pretty much all the orders are in the HPC and AI segment, the vast majority. We saw now in Q4 some uptick in demand in the what I call the traditional compute. But what you have to think about it is AI is a life cycle, right? training to tuning to inferencing. And the products we talk here, whether it’s HPE Cray, XD or EX really are on the training side and the tuning side. And so when I think about the type of customers, I think about the model builders, right? So these are unique customers that in the past with generally, we have talk about it. Think about companies like Recussion, Pharmaceutical, Cruso energy, obviously, large language models like Aleph Alpha, Tiger Data or Northern Data, Geo Research and the like. These are big mobile builders, and they need a large amount of computational power. Now when we start seeing as an uptick in the tuning side with enterprises, because generally, they don’t tend to build models. They tend to leverage foundation models in the open source or some of these companies provide and then they tune those models with their data, but they want to do it in a private secure and obviously sustainable way. And that’s why we have made announcements with NVIDIA, and you can see further announcements later in the week. And then AI inferencing, I call it for using a sport analogy, singles and the doubles, right? So these are maybe a server with eight GPUs or accelerated resorts where they start deploying these models, they have been trained attuned into production and think about where their real-time processing data happen where business transformation takes place or maybe doing some sort of POC or pretraining experiments. And so now we start seeing that increasing. But the vast majority of compute is still CPU centric, and we saw some uptick in the GPUs. But the vast majority of all the APUs that we talked about are in the traditional high density for training and tuning, and that’s where our HPE Cray set of platforms plays a big role. And obviously, they also find its way to supercomputing at large scale that we have talked about from TRL Capital and in Aurora, [Indiscernible] and Norsk and the like. Anything you want to add? Jeremy Cox: The only thing I would just add to that is the supercomputing piece, specific to your question, is less than 10% in the total APU orders in FY ’23. The other interesting point to add on to the journey towards inferencing that Antonio mentioned is within compute, although against a very small base, we did see non-Tier 1 customer orders around GPU or APUs for compute increased about 100% in the quarter. So again, against a small base, but an interesting point to see the focus start moving towards that realm. Antonio Neri: Yes. Thanks, Jeremy. And again, only 10% of the POs were consumed in Supercompute rest was all in AI. Okay, thank you, Mike. Jeffrey Kvaal: Thanks, Mike. Gary, the next question please? Operator: The next question is from Wamsi Mohan with Bank of America. Please go ahead. Wamsi Mohan: Yes, thank you so much. Antonio, we’ve seen some networking companies talk about a slowdown and some inventory digestion. You’re still delivering very strong growth in edge high 30s. I know you called out a more front-end loaded performance for Edge. But curious how you’re thinking about the weight and pace of that business trajectory both on revenue and margin terms as you go through the course of the year? Antonio Neri: Yes. Thanks, Wamsi. I’m going to talk about demand and then Jeremy can talk about revenue margin, which we were very clear that right, what to expect. Obviously, we have driven a significant growth over the last two years. I think it was the 12th consecutive quarter of year-over-year revenue growth. That’s very impressive, we added $2 billion of revenue in the last 2 years. And obviously, that came with an expanded set of gross margins because of our software and subscription-based models that we have been driving. Traditionally, we think about that has been in the campus and branch, where in our switching or Wi-Fi. But more and more lately, obviously, it’s all software-driven and as well as expansion into the new times we discussed at the Security Analyst Meeting, including SD1 and security to create the SSC framework or the SASE framework we talked about it. And going forward, we are also going to add the private 5G, which we discussed. And let’s not forget, we have been also gaining momentum in the data center with our offers, which are an extension of our switching portfolio in the data center. So definitely was a quarter-over-quarter slight decline in orders for demand for products in the campus and branch, but we saw strong demand in the software in the security space. And that’s why at the securities and analyst meeting with Phil, we talked about this multiple ad adjacency we have add to the platform, and they are all incorporated into the HPE Aruba Central platform, which is part of HPE GreenLake. So again, we are committed to grow revenues next year on the higher pace that we created, again, on the $5.2 billion we just delivered......»»

Floor & Decor (FND) opens new warehouse store in Avenel, NJ, showcasing the efficient execution of its growth strategy. Floor & Decor Holdings, Inc. FND announces its debut location in Avenel, NJ, marking its 11th store opening in the New York City Metropolitan Area.The new warehouse store and design center will house 50 full-time and part-time associates led by the store’s chief executive merchant. The store’s grand opening is slated to be hosted on Dec 13, 2023, with a ribbon-cutting ceremony with the Woodbridge Chamber of Commerce.In appreciation of the new opening in Avenel, Floor & Decor will have a special PRO VIP Grand Opening event on Mar 5, 2024, to welcome its PRO network. Also, as part of the grand opening festivities, this store will host giveaways for its customers.The company is optimistic about the opening of a new store location. It believes this can offer diversified product and service offerings to the customers of the new community while growing in the process despite the ongoing economic challenges.Floor & Decor on Expansion SpreeFloor & Decor makes profitable investments to process its expansion strategies primarily by improvements in existing stores and opening new stores. By expanding its footprint and product portfolio, the company can reach out to new communities and accelerate its growth momentum.In the first nine months of 2023, Floor & Decor opened 17 new warehouse stores with a total fiscal third-quarter end count of 207 warehouse stores and five design studios. Recently in October 2023, the company opened five new warehouse stores, thus taking the store count to 22 year to date. It has plans to open about 10 new warehouse stores in the remaining fiscal fourth quarter to reach its annual goal of 32 warehouse stores.For 2024, the company anticipates continuing its New York expansion with a new warehouse store in Brooklyn. By focusing on elevating customer services, investing in new and existing stores and managing profitability efficiently, the company has been able to survive this uncertain economy.Image Source: Zacks Investment ResearchShares of this retailer specializing in hard-surface flooring for homeowners and professionals have increased 18.9% in the past year, outperforming the Zacks Building Products - Wood industry’s 3.4% growth.Zacks Rank & Key PicksFloor & Decor currently carries a Zacks Rank #5 (Strong Sell).Here are some better-ranked stocks that investors may consider from the Construction sector.Acuity Brands, Inc. AYI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.AYI delivered a trailing four-quarter earnings surprise of 12%, on average. The stock has declined 5.2% in the past year. The Zacks Consensus Estimate for AYI’s fiscal 2024 sales and earnings per share (EPS) indicates a decline of 3% and 4.7%, respectively, from a year ago.M-tron Industries, Inc. MPTI currently sports a Zacks Rank of 1. MPTI delivered a trailing four-quarter earnings surprise of 35.6%, on average. It has surged 262.2% in the past year.The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year.EMCOR Group, Inc. EME presently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 25%, on average. Shares of EME have increased 38.1% in the past year.The Zacks Consensus Estimate for EME’s 2023 sales and EPS indicates an improvement of 12% and 52.8%, respectively, from the prior-year levels. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report EMCOR Group, Inc. (EME): Free Stock Analysis Report Acuity Brands Inc (AYI): Free Stock Analysis Report Floor & Decor Holdings, Inc. (FND): Free Stock Analysis Report M-tron Industries, Inc. (MPTI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Nano-X Imaging Ltd. (NASDAQ:NNOX) Q3 2023 Earnings Call Transcript November 28, 2023 Nano-X Imaging Ltd. misses on earnings expectations. Reported EPS is $-0.37 EPS, expectations were $-0.3. Operator: Good day, and thank you for standing by. Welcome to the Nano-X Q3 2023 Earnings Conference Call. [Operator Instructions] And I would now like to turn the […] Nano-X Imaging Ltd. (NASDAQ:NNOX) Q3 2023 Earnings Call Transcript November 28, 2023 Nano-X Imaging Ltd. misses on earnings expectations. Reported EPS is $-0.37 EPS, expectations were $-0.3. Operator: Good day, and thank you for standing by. Welcome to the Nano-X Q3 2023 Earnings Conference Call. [Operator Instructions] And I would now like to turn the conference over to your speaker today, Mr. Mike Cavanaugh, Investor Relations. Sir, please go ahead. Mike Cavanaugh: Good afternoon, and thank you for joining us today. Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ended September 30, 2023. The release is currently available on the Investors section of the company’s website. Erez Meltzer, Chief Executive Officer, and Ran Daniel, Chief Financial Officer, will host this morning’s call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements regarding the company’s financial results, research and development, manufacturing and commercialization activities, regulatory process operations, and other matters. These statements are subject to risks, uncertainties, and assumptions that are based on management’s current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company’s views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the company’s filings with the Securities and Exchange Commission. Management will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of each non-GAAP financial measure to the nearest GAAP financial measure is provided in the company’s press release filed today. The non-GAAP financial measures include non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP other expenses and non-GAAP gross loss per share. With that, I’d like to turn the call over to Erez Meltzer. Erez Meltzer: Thanks, Mike, and as always, thank you all for joining us today for our financial results call and corporate update. As previously noted, we have intensified our efforts and focus on the US market to jumpstart our commercialization effort in the region. To support these important efforts, our team and I have increased our presence in the United States over the last few months, and I’m currently in the US. We have engaged in discussions with potential customers, clinical partners, particularly US healthcare sector professionals, focusing on reimbursement and medical workflow and other key stakeholders. We aim to expedite the implementation of our commercial infrastructure and advance our future strategic plans. Moving to the recent developments in deployments, I’m pleased to announce that we have established the first US-based commercial site and demonstration center for the Nanox.ARC, which is part of our initial wave in the US. The Nanox.ARC system has been installed in a New Jersey based imaging center, which marks the beginning of Nanox’s commercial expansion into the US market. The system passed all necessary tests conducted by a licensed and certified physicist, enable us to commence scanning of patients to acquire medical imaging using the Nanox.ARC, a stationary X-ray system intended to produce 3D thermographic images of the MSK system. The clinic staff will manage the operational, professional, and administrative services, allocating human resources and equipment for the efficient operation of Nanox system in the imaging center. This center will also serve as a demonstration center for our medical professionals, offering them an opportunity to familiarize themself with the system and facilitate the implementation process. More updates on the progress on installments in the US are expected on the Investor Day on December 4th. We are enhancing our US sales and service team, and I’m happy to announce we have signed an agreement with 626, a national healthcare technology and equipment management company. They will provide services for the Nanox.ARC, including warehousing, installation, training, maintenance, and customer support. Headquartered in Boca Raton, Florida, 626 offers tools necessary for imaging centers to achieve maximum uptime and maintain better patient care. 626 has expertise in modalities and medical imaging equipment, and provides customized services tailored to their client’s needs. With their ISO 13485 certification, national footprint, and over 160 field service engineers, they are an ideal company to partner with as we ramp up our commercialization efforts in the US. In addition to them supporting installations, maintenance and services in the field, we intend to install an ARC system in their suburban Atlanta 626 Imaging Academy for training and demonstration purposes. Turning now to our deployment efforts in the rest of the world. Outside of the key US market, we have begun to generate revenues from hardware deployment in Africa. While these revenues are currently small, they are growing. Additionally, as previously announced, a Nanox.ARC unit has been installed in the University of Ghana Medical Center Ltd, UGMC, one of the largest and most advanced hospitals in Ghana. We are pleased to announce that our local partner has obtained approval from the Ghana Food and Drug Authority, the GFDA, and it’ll soon be operational for clinical scanning of patients. In the meanwhile, we have received an order for additional units in Ghana. We’re also actively working on establishing a presence in Latin America. One of our distribution partners is in the process of securing an import license for Nanox.ARC, as well as laying the groundwork for a demonstration center. A potential location for the demo site has been identified at a large hospital offering this very space and expertise to provide the Nanox.ARC. We will provide further detail on this developments as we make substantial progress. Turning to our OEM initiatives. To meet the anticipated demand of our system, as previously announced, we entered into original equipment manufacturing agreement with Varex, a leading global manufacturer of imaging component based in Utah. We have since held formal partnership kickoff meetings at Varex headquarters in Salt Lake City, where the company’s executive and technical teams came together to continue final (tool) design efforts and map out all the roadmaps towards production. Expanding on our own related activity, we’re currently engaged with an industrial imaging equipment manufacturer on a tube development and manufacturing program we expect to formalize by the year-end to ensure an adequate future supply of tubes. Additionally, our collaboration with a US government agency exploring Nanox.ARC technology for use in security screening application is advancing with the acquisition of tubes and further testing and evaluation. Finally, a leading global medical technology company has purchased ammeters for internal testing and application development projects. Regarding our regulatory test, despite our efforts to gain regulatory approval in a number of markets across the world, sometimes our regulatory progress is slower than we would like, in some instances, such as with the FDA in the US. Each jurisdiction has its independent set of regulations, contributing to the complexity of the process. We are diligently navigating these challenges, prioritizing swift approvals, while ensuring accuracy and regulatory compliance. Nevertheless, we have not stopped pushing ahead with our regulatory efforts, which continue to be of foremost importance to Nano-X. As previously communicated, we partnered with BSI Group and a credible notified bargain based on the United Kingdom for eventual CE marking review and approval. I’m happy to announce that we have submitted our technical file for obtaining the CE mark. BSI’s formal review will begin in the first quarter of 2024, according to the planned timeline, and I look forward to providing updates upon the conclusion of this process. We have also made substantial progress in our home market, Israel. The medical device division of the Ministry of Health, known as AMAR, A-M-A-R, is the regulatory body that oversees medical devices. On November 22, 2023, Nanox.ARC received AMAR approval from the Israeli Ministry of Health, and it is now registered as a medical device in the Israeli market. Following this approval, the Israeli Ministry of Health granted Nanox.ARC a free sale certificate, which is a requirement for regulatory submission in some markets. Turning to our clinical efforts. As previously disclosed, the second phase of collecting clinical sample images of multiple human body anatomies with the Nanox.ARC system deployed at Shamir Hospital in Israel, is continuing. Additionally, Nanox reached an agreement with Beilinson Hospital, a part of the Clalit Health Services, the largest health service organization in Israel, and one of the largest in the world. According to this agreement, a human trial designed to assess diagnostic capabilities of the Nanox.ARC in detecting chest and lung diseases, will be launched at the Beilinson Hospital. All required Israel Ministry of Health approval, and Institutional Ethics Committee has been obtained, and the trial is scheduled to commence by the end of 2023. Now, I would like to provide an update on our Nanox.AI business segment. We generated $141,000 in revenue during this quarter, and Ran will review it in more detail shortly. At the end of the quarter, we announced compelling study results which demonstrated that Nanox.AI product found that approximately 60% of patients unknowingly had moderate to severe level of coronary artery calcium, also known as CAC, proven indicator of future cardiac events. The study was sponsored by Nanox.AI and conducted by Beilinson Hospital, utilizing Nanox.AI HealthCCSng, an FDA-cleared and CE-marked tool designed specifically for cardiac health assessment. HealthCCSng solution utilizes medical imaging data from routine chest CT scans to automatically quantify and analyze PAC, potentially offering an early detection mechanism for cardiovascular, calcium, and preventing cardiac care. In other Nanox.AI, a 510(k) submission for Nanox fatty liver detection known as Health (FLD), was submitted in September and is pending FDA 510(k) clearance. Health FLD is designed to detect early signs of fatty liver diseases from routine chest and abdominal CT scans, not specifically (indiscernible) fatty liver assessment. These updates are highly promising, and I look forward to providing additional updates on the Nanox.AI business throughout 2024. Before turning the call over to Ran, I’d like to revisit one of the AI products agreement that we have announced previously. In mid-2022, we announced a strategic agreement with Spectrum Health, now known as Corewell Health, one of the leading integrated delivery system, or IDMs, to use our AI population health solutions. Corewell management reports that their team has successfully integrated the Nanox.AI HealthCCSng solution into their patient care flow, recognizing its significant value in identifying new patients with medium and high calcium levels on chest CT scans. We have also received similar positive feedback from another healthcare system using Nanox.AI solutions. And with that, I’d like to now turn the call over to Ran Daniel to review our financial results. Ran? Ran Daniel: Thank you, Erez. We have reported a GAAP net loss for the third quarter of 2023 of $21.4 million, compared with a net loss of $19.1 million in the third quarter of 2022, which is the comparable period. The increase was largely due to a goodwill impairment of $7.4 million, an increase of $0.4 million in the sales and marketing expenses, which was offset by a decrease in our general and administration expenses in the amount of $5.6 million. Our non-GAAP net loss for the third quarter of 2023 was $9.4 million, compared with a net loss of $8.1 million in the comparable period. The increase was largely due to an increase of $0.4 million in the sales and marketing expenses, and $0.31 million in other expenses. Revenues for the third quarter of 2023 were $2.5 million, and gross loss was $1.7 million on a GAAP basis. Revenue for the comparable period were $2.4 million and gross loss was $1.5 million on a GAAP basis. Non-GAAP gross profit for the three months ended September 30, 2023, was $0.9 million, as compared to $1.1 million in the comparable period, which represents a gross profit margin of approximately 37% on a non-GAAP basis for the three months ended September 30, 2023, as compared to 46% on a non-GAAP basis in the comparable period. Revenue from teleradiology services for the three months ended September 30, 2023, was $2.2 million, with a gross profit of $0.2 million on a GAAP basis, as compared to revenue of $2.4 million, with a gross profit of $0.6 million on a GAAP basis in the comparable period, which represents gross profit margins of approximately 11% on a GAAP basis for the three months ended September 30, 2023, as compared to 26% on a GAAP basis in the comparable period. Non-GAAP gross profit of the company’s teleradiology services for the three months ended September 30, 2023, was $0.8 million, compared to $1.2 million in the comparable period, which represent gross profit margins of approximately 36% on a non-GAAP basis for the three months ended September 30, 2023, as compared to 49% on a non-GAAP basis in the comparable period. The decrease in the gross profit margins on a GAAP and non-GAAP basis is mainly due to an increase in the cost of the company’s radiology – due to the decrease in the (revenue), and payments of incentive payments which the company paid to the company’s radiologists engaged in the readings during the overnight and weekend shifts. During the three months ended September 30, 2023, the company started to generate revenue through the sales and deployment of its imaging systems, which amounted to $99,000, with a gross profit of $36,000 in a GAAP and- non-GAAP basis, which represents a gross profit margins of approximately 37% on a GAAP and non-GAAP basis. Those revenue stems from the sales and deployment of our 2D systems in Africa. Research and development expenses for the third quarter of 2023 were $0.6 million, as compared to $6.1 million for the comparable period in 2022. The decrease of $0.1 million was mainly due to a decrease in the cost of labor of $0.6 million, which was offset by an increase in the company’s development of the ARC system’s expenses in the amount of $0.5 million. Further, marketing expenses for the third quarter of 2023 were $1.1 million, as compared to $0.7 million for the comparable period in 2022. The increase was mainly due to our go-to market efforts in the US market in anticipation for the soft launch of our products in the US market. General and administrative expenses for the third quarter of 2023 were $5.0 million as compared to $10.6 million for the comparable period in 2022. The decrease of $5.6 million was mainly due to a decrease in our legal expenses in the amount of $2.9 million, largely as a result of the finalization of the SEC investigation, a decrease in share-based compensation in the amount of $2.7 million, and a decrease in the cost of directors and officers liability insurance premium in the amount of $0.3 million. Goodwill impairment for the third quarter of 2023 was $7.4 million due to the goodwill impairment related to the teleradiology reporting unit in the amount of $7.0 million, and the Nanox.AI reporting unit in the amount of $0.4 million, largely due to the increasing discount rate, and management estimates that it would take longer than we originally expected to generate original growth of revenues, gross profit, and positive operating cashflow in the AI and teleradiology business segment. During the first nine months of 2023, we had accrued $0.7 million for the future settlement expenses in connection with the SEC investigation. As previously discussed, the company and Ran Poliakine team, our Chairman of the Board of Directors, have reached a settlement agreement with the SEC. During October 2023, the company paid $650,000 in civil penalties under this agreement. Turning to our balance sheet. As of September 30, 2023, we have cash, cash equivalents, restricted deposits, and multiple securities of approximately $95.6 million, and have $3.3 million loan from a bank. We ended the quarter with property and equipment net of $45.1 million. As of September 30, 2023, we had approximately 57.7 million shares outstanding as compared to $52.1 million shares outstanding as of December 31, 2022. The increase was mainly due to the sales of approximately 2.1 million shares and warrants, the purchase of 2.1 million shares in a registered direct offering in consideration of the gross proceed of $30 million, and a net proceed of approximately $27.1 million, and the issuance of approximately 255,000 ordinary shares to the former shareholders of USARAD, under the amendment to the USARAD stock purchase agreement previously discussed. With that, I will hand the call back over to Erez. Erez Meltzer: Thank you all once again for joining our call today and for your ongoing support of Nano-X. We are making significant progress toward deployment of the Nanox.ARC system at scale in both the US and other markets, and I’m looking forward to our Investor Day next week and our Q4 update call in early 2024. If you would like to register for our Investor Day or meet with the Nano-X team while we are in New York area, please contact our Investor Relations partners at ICR Westwicke. Have a good day. Operator, please open the session to Q&A. See also 25 Best Cities where You can Retire on $4000 a Month and 20 States With the Cheapest Gas Prices in the US. Q&A Session Follow Nano-X Imaging Ltd. (NASDAQ:NNOX) Follow Nano-X Imaging Ltd. (NASDAQ:NNOX) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Our first question will come from Jeff Cohen of Ladenburg Thalmann. Your line is open. Jeff Cohen: Good morning, Erez, and Ran. How are you? Erez Meltzer: Great. Ran Daniel: Good morning, Jeff. Jeff Cohen: So, a few questions from our end. You spoke about a government agency and some security screening, and this may be a stupid question, but is that for people or is it for goods such as luggage? Erez Meltzer: No, we indicated last time – by the way, it’s the same agency that acquired the first one and the first trial was successful, so they now go to the next step. We don’t know exactly what’s the purpose of they use it. The only thing that we know that the indication that we got that it’s a kind of a defense, but we don’t know exactly what it is for. So, that’s what I can say. Jeff Cohen: Okay, got it. And can you go back to your EU submission and notified body? Walk us through the timeline there, as all the documentation has gone in or will be going in shortly, and what would you anticipate on a timeline being that there’s some further precedent in the US now? Erez Meltzer: So, in a way, we are kind of ahead of ahead of what we anticipated to do it next year. We have already submitted all the information, all – the way it goes that the notified (indiscernible) opens kind of window or a site that you upload all the information. It’s thousands of pages. Then once all the information is on, then you go to questions, further visits at the site, all kind of checks. I don’t want to give any – we have been saying all the time that regulation in medical equipment is something that is always challenging and very complicated and has a lot of facets, but we assume that with the quality of the information and the quality of the clinical trials that we have, and with the quality of the ISO that we passed, all of this, it’ll be real reasonably faster than what (indiscernible), and I have an estimation, but I think that it would be better to wait until we get a better clarity when in 2024 we will get it. Jeff Cohen: Okay. Is it safe to say you’re hopeful currently that you’ll get a EU clearance in 2024? Erez Meltzer: Say from whose point of view? I would say that it would be reasonable to say. Jeff Cohen: Got it. Okay. And then lastly for us, could you go back to the Varex facility in Utah and talk about their capabilities there as far as anticipated number of units that could be assembled and produced per month or per quarter or per year? Erez Meltzer: So, as you know, Varex is the largest player in tubes for the imaging in the world. I was there a few weeks ago. We had a long day session of the kickoff, both for the future roadmap of future breakthrough technologies, roadmap (indiscernible) for products. And the other thing is the continuous supply. And from the capacity point of view, they will be able to supply whatever we need going forward. We’re not going to be dependent (indiscernible). We’re going to continue with our strategy to ensure that we have at least two or three suppliers for each one of the components that we have. So, the tubes will be included and they will be one of – they will be a major supplier, but not the sole supplier. Jeff Cohen: Okay. Perfect. That does it for us. Thanks for taking the questions. Operator: Thank you. One moment, please for our next question. Our next question will come from Ross Osborn of Cantor Fitzgerald. Your line is open. Ross Osborn: Hey, guys, good morning. Congrats on the progress. Thanks for taking our questions, and hope your loved ones and employees are safe as possible given the war. So, starting off with the New Jersey Imaging Center, would you provide some more color on the types of patients the center manages and when we can expect the center to be up and running at scale? Erez Meltzer: Okay, up and running right now. The second is at scale right now is what we are focusing on, and we do hope that that it will be – I would say, we’ll be in scale probably by the end of the year or beginning of the next year in January. We are planning to open this site for demos for people who would be willing to visit and see. I would say also that this will be another solution that we have managed to create since right now in Israel, although we do business as usual, and everything that we’re planning, we’re doing, some people or some visits that were supposed to come to Israel have postponed their visits. So, they will be able to come to New Jersey and come and see, and we’re going to be there. It’s going to be served as the – 626, for example, the one that we mentioned, already were part of the installations that we had there......»»

Zscaler, Inc. (NASDAQ:ZS) Q1 2024 Earnings Call Transcript November 27, 2023 Zscaler, Inc. beats earnings expectations. Reported EPS is $0.67, expectations were $0.49. Operator: Thank you for standing by, and welcome to Zscaler’s First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen only mode. [Operator Instructions] As a reminder, today’s […] Zscaler, Inc. (NASDAQ:ZS) Q1 2024 Earnings Call Transcript November 27, 2023 Zscaler, Inc. beats earnings expectations. Reported EPS is $0.67, expectations were $0.49. Operator: Thank you for standing by, and welcome to Zscaler’s First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen only mode. [Operator Instructions] As a reminder, today’s call is being recorded. I will now turn the call over to your host, Mr. Bill Choi, Senior Vice President of Investor Relations and Strategic Finance. Please go ahead. Bill Choi: Good afternoon, everyone, and welcome to the Zscaler first quarter fiscal year 2024 earnings conference call. On the call with me today are Jay Chaudhry, Chairman and CEO; and Remo Canessa, CFO. Please note that we have posted our earnings release and a supplemental financial schedule to our Investor Relations website. Unless otherwise noted, all numbers we talk about today will be on an adjusted non-GAAP basis. You will find the reconciliation of GAAP to the non-GAAP financial measures in our earnings release. I’d like to remind you that today’s discussion will contain forward-looking statements, including, but not limited to, the company’s anticipated future revenue, calculated billings, operating performance, gross margin, operating expenses, operating income, net income, free cash flow, dollar-based net retention rate, future hiring decisions, remaining performance obligations, income taxes, earnings per share, our objectives and outlook, our customer response to our products, and our market share and market opportunity. The statements and other comments are not guarantees of future performance, but rather are subject to risk and uncertainty, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For a more complete discussion of the risks and uncertainties, please see our filings with the SEC as well as in today’s earnings release. I also want to inform you that we’ll be attending the UBS Global Technology Conference tomorrow. Now I’ll turn the call over to Jay. Jay Chaudhry: Thank you, Bill. I’m pleased to share our first quarter results, which exceeded our guidance across all metrics. We delivered 40% revenue growth and 34% billings growth. Our operating profit and free cash flow more than doubled year-over-year, and free cash flow margin reached a record 45%. We exceeded the rule of 60 for the 13th consecutive quarter, at a significant scale of $2 billion plus in ARR, we are delivering a unique combination of high growth and high profitability that only a few SaaS companies have accomplished. In Q1, we executed well in a challenging macro environment and what is typically a slower quarter for us. The elevated scrutiny of large deals remains mostly unchanged. The increased frequency of high-profile breaches, coupled with impending SEC disclosure requirements has propelled Zero Trust security more into focus at the management and the Board level. Against this backdrop, we achieved a Q1 record for number of new logo customers with over $1 million in ARR. We also achieved a record for new pipeline generation in a quarter. More customers are adopting our broader platform to consolidate multiple point products, increasing our average deal size. As a result, we are actively working on more large, multiyear, multi-pillar opportunities than ever before. To meet this demand and to further scale our business, we’re adding two key go-to-market leaders, one in sales and one in marketing. I will provide details about these new executives after reviewing our Q1 performance. Let me highlight three factors that drove our strong Q1 performance. First, large new logo wins were strong this quarter with a Q1 record of 14 new logos contributing over $1 million ARR. We ended with 468 such customers, up 34% year-over-year. These wins spanned across many verticals, proving that every vertical needs Zscaler. Second, Customers are buying the broader Zscaler platform with multiple product pillars. I have said before, over time, I believe every one of our customers will buy ZIA, ZPA and ZDX, for every user to deliver secure, fast and reliable access to any application anywhere. This quarter, nearly half of our new logo customers purchased all three user pillars, ZIA, ZPA and ZDX. In addition, strong platform upsells drove our 120% dollar-based net retention rate. Third, this was a record U.S. federal quarter with new business up over 90% year-over-year, including four deals that are greater than $1 million in ACV. We are starting to see larger awards as multiple U.S. federal agencies are standardizing on Zscaler to meet the President’s executive order to adopt Zero Trust security. We are extremely proud of having landed 12 of the 15 cabinet-level agencies as our customers, where we have plenty of opportunity to expand. For example, at a cabinet level agency, we expanded the ZIA and ZPA deployment from 25,000 users to 100,000 users, while cross-selling ZDX for all 100,000 users. We also won a top defense integrator who purchased ZIA, ZPA and ZDX for its employees. In parallel, they launched a go-to-market service to take Zscaler to their federal customers. As our SI partners are selling and deploying Zscaler for their customers they are also adopting Zscaler to make their own business secure, agile and competitive. From my conversations with hundreds of IT executives, it’s clear that cybersecurity is the number 1 IT spending priority. Adopting Zero Trust architecture and protecting their enterprise from Gen AI risks are top priorities for CISOs in 2024. We have enhanced our data protection policies or AIML applications and tools to protect our customers’ risk of data loss due to increasing use of Gen AI, our AI-powered threat protection uses a diffusion model to detect complex exploits and to catch sophisticated phishing attacks that evade traditional security controls. These AI-driven features are included in our Advanced Plus bundles, which are often priced 20% higher than advanced bundles. We now secured on average over 2 billion AI transactions every month for our customers. Next, let me discuss some of our Q1 deals, which demonstrate our differentiation and business value. We are starting to see some wins where customers are coming to us after initially purchasing a firewall-based single vendor SASE solution that failed to deliver in the real world. For those who are not familiar, firewall-based single vendor SASE is the combination of SD-WAN and firewall and VPN deployed as VMs in the cloud. A leading software company made an architectural shift to our Zero Trust exchange platform after trying to deploy a leading firewall vendor SASE solutions across 50 office locations and multiple public cloud sites. It became clear to the customer that this solution expanded their attack surface to all locations and increase the risk of lateral threat movement. They decided to move to our Zero Trust security with the purchase of Zscaler for users, our complete bundle for ZIA, ZPA and ZDX, for all 25,000 employees. Our Zero Trust Exchange connects users directly to apps, eliminating attack surface and lateral threat movement. The Unmanaged devices, the customer is deploying our browser isolation with ZPA to enable third parties to access their applications. Deals like this reinforce our conviction that firewall-based SaaS solutions are not the future of security that some analysts advocate. Customers are choosing Zscaler’s purpose-built Zero Trust platform. Let me highlight one new logo win where our superior security helped the customer after a breach. Despite extensive investments in firewalls and VPNs, a hospitality and gaming company experienced a crippling Ransomware breach. To restore their operations, they purchased the entire Zscaler for users bundle for 25,000 users. With Zscaler, the apps are now hidden from threat actors behind our Zero Trust Exchange and can’t be discovered, exploited or DDoS. This customer also purchased our new Risk 360 solution to understand the organization-wide risk and to get actionable information to reduce it. We have shared with you that data protection is one of the fastest-growing solutions for us. For our customers, after implementing cyber protection, adopting data protection is the natural second phase of their Zero Trust journey. For example, a Fortune 500 travel and hospitality services provider more than doubled their annual spend with us with data protection being a critical component of the upsell. The first purchase was ZIA for 22,000 users to inspect all traffic, including TLS encrypted traffic for cyber protection. As the next step, they are implementing real-time in-line DLP for sensitive data. Our solution also enables this customer to enforce policies for secure use of AI applications. These deals highlight the breadth and depth of our Zero Trust security platform. We also help our customers achieve high ROI by eliminating tech debt and consolidating multiple point products. For example, a Fortune 200 financial services group turned to Zscaler to consolidate data centers and safely adopt cloud with the necessary security controls for regulatory compliance. They purchased Zscaler for users bundled for 10,000 employees and workload communication for 1,500 workloads. By leveraging our cloud platform, they will eliminate half of the data centers, reduce their MPLS spend and consolidate security and networking client products. We are eliminating several point products, including secure web gateways, firewalls, IPS appliances, VPNs, CASB and DLP from seven security vendors. This deal is expected to generate a remarkable 5x ROI for the customer. I’m also excited to share that ZDX one of our emerging pillars continues to gain significant customer adoption. It is an important part of every deal conversation due to its unique ability to eliminate IT blind spots. ZDX significantly reduces helpless hours spent on ticket resolutions and manual correlation or metrics. Let me highlight a new logo deal where ZDX played a pivotal role. A top-ranked U.S. hospital network purchased ZIA and ZDX advance plus for 87,000 users and ZPA for 40,000 users. What initially began as a ZIA and ZPA project quickly evolved into a significant ZDX opportunity. The ZDX component alone is seven figures in ACV. Unlike the existing performance tools, ZDX provides comprehensive visibility and root cause analysis for users, devices and applications. This deal is a great example of the leverage we gained from working with system integrators like Accenture, who was awarded this overall transformation project. We’re also seeing strong customer interest in workload protection on other emerging product pillar. Our Zero Trust Exchange is designed for any to any secured communication. It may be users to apps workload to workload or IoT OT devices. Thousands of enterprises already leverage Zscaler platform for secure user-to-app communication. It is natural for them to extend our Zero Trust platform to secure their workload communication. To radically simplify multi-cloud connectivity and automated deployment of workload protection at scale, we recently released significant enhancements to our workload communications offering, including granular workload segmentation using AWS user-defined tags, the first Zero Trust security solution for workloads in the market, the only alternative is legacy virtual firewalls and real-time auto discovery of cloud resources. More than one-third of our customers have made initial purchases for workload protection. Workload communication often starts with small land deals. And we expect to rapidly expand to secure the growing number of workloads. Zscaler pioneered Zero Trust and SASE, both delivered by our cloud-native platform. we have established ourselves as a premier provider for user protection and are now making progress expanding into workload protection and IoT OT protection. We continue to push the boundaries of what our platform can achieve, extending it for B2B and 5G use cases. As we are like a switchboard for all communications, we collect full transaction logs and trillions of signals daily. We are utilizing those signals and logs to deliver AI-powered insights and automation for our customers. Let me discuss a few of the high-value products in our AI cloud family. We recently launched Risk360, which is the industry’s first holistic AI-powered risk quantification and mitigation solution. It delivers up-to-date risk posture and recommends corrective actions to mitigate risk in a timely fashion. We have already closed 10 plus Risk360 deals and are in active evaluations with over 100 enterprises. For these deals, we are getting 6-figure ACV on average, and we expect to grow this value over time. Risk360 provides critical insights to CISOs when reporting on cybersecurity risk strategy and governance, particularly in light of new SEC regulations. Another exciting new product, breach predictor currently under development uses predictive and generative AI models to anticipate potential bread scenarios and eliminate those risks before they materialize. Early feedback from customers who have previewed breach predictor indicates the enormous potential value this solution can deliver. We are working with our technology partners to bring this world-class innovation to thousands of customers to proactively protect against potential breaches. While we have achieved tremendous success for user protection solutions, our platform’s potential in other categories is just beginning. Our relentless innovations have paved the way for an ever-growing stream of opportunities. As our platform continues to scale and expand, our go-to-market efforts are continuing to evolve and scale as well. to enable the next stage of go-to-market scaling. I’m excited to share the appointments of two exceptional leaders, Mike Rich, CRO and President of Global Sales; and Joyce Kim as CMO. They bring a wealth of experience in driving revenue and pipeline growth. Mike joins from ServiceNow, Will as the President for Americas, we establish an efficient and scalable process to drive deeper engagements to large enterprises and to scale their business to over $8 billion in revenue and experience that’s critical to the next phase of our growth journey. Joyce’s previous experience includes CMO roles at Twilio, Genesis and ARM with expertise in building high-performance marketing teams and driving impactful marketing strategies and campaigns. With Mike assuming leadership of our sales organization, Dali in his capacity as the COO can focus on scaling our business operations. Dali has been instrumental in establishing the go-to-market process. which has helped Zscaler achieve a milestone of $2 billion in ARR. With our expanded portfolio of products and experienced CRO and CMO on board we will further scale our value-add sales process for larger platform deals, which will sustain our high growth. I’m thrilled to have strong go-to-market leaders who we believe will drive world-class execution to scale our business beyond $5 billion in ARR. Now I’d like to turn over the call to Remo for our financial results. Remo Canessa: Thank you, Jay. Our Q1 results exceeded our guidance on growth and profitability, even with ongoing customer scrutiny of large deals. Revenue was $497 million, up 40% year-over-year and up 9% sequentially. From a geographic perspective, Americas represented 53% of revenue, EMEA was 32% and APJ was 15%. As Jay highlighted, from a new business perspective, Federal had its best new ACV quarter ever, growing over 90% year-over-year. Our new ACV outside of the Fed also grew year-over-year. . Our total calculated billings in Q1 grew 34% year-over-year to $457 million. On a sequential basis, total billings declined 37% quarter-over-quarter with a difficult comparison to Q4, which had a $20 million upfront billing on a multiyear deal. As a reminder, our contract terms are typically one to three years, and we primarily invoice our customers one year in advance. Our calculated current billings grew 33% year-over-year, a seasonal decline of 32% quarter-over-quarter. Our remaining performance obligations, or RPO, grew 30% from a year ago to $3.49 billion, The current RPO is approximately 51% of the total RPO. We ended Q1 with 468 customers with greater than $1 million in ARR, adding 19 such customers in the quarter. 14 of the 19 $1 million ARR customer adds were new logos, which was a record for Q1. The continued strength of this large customer metric speaks to the strategic role we play in our customers’ digital transformation initiatives. We also entered the quarter with 2708 customers with greater than $100,000 in ARR. Our 12-month trailing dollar-based net retention rate was 120%. Turning to the rest of our Q1 financial performance. Total gross margin of 80.7% and compares to 80.7% in the prior quarter and 81.4% in the year ago quarter. Higher public cloud usage for emerging products drove the year-over-year change in the gross margin partially offset by approximately 60 basis points of benefit from a change in accounting attributed to the longer useful life of our cloud infrastructure. As mentioned last quarter, as a result of advances in technology and efficiencies in how we operate our server and network equipment. Starting this quarter, we extended the depreciable useful life of these assets in our cloud infrastructure from four to five years. Moving on, our total operating expenses increased 11% sequentially and 26% year-over-year to $311 million. We continue to generate significant leverage in our financial model with operating margin reaching 18%, an increase of approximately 620 basis points year-over-year. Our free cash flow margin was 45%, including data center CapEx of approximately 6% of revenue, Free cash flow benefited from strong collections for Q4 billings, including the $20 million upfront billings I mentioned. We ended the quarter with over $2.3 billion in cash, cash equivalents and short-term investments. Next, let me share some observations about the macro environment and our framework for guidance for the rest of the fiscal year. While the global macro environment remains challenging, and customers continue to scrutinize large deals from our perspective, customer sentiment seems to be stabilizing. Our customer engagements remain strong, and we have a large and growing pipeline. However, we want to be prudent in our assumptions given the sales leadership change. In our outlook for fiscal ’24, we’re balancing our business optimism and continued sales execution with ongoing macroeconomic uncertainties. With that in mind, let me provide our guidance for Q2 and full year fiscal 2024. As a reminder, these numbers are all non-GAAP. For the second quarter, we expect revenue in the range of $505 million to $507 million, reflecting a year-over-year growth of 30% to 31%, gross margins of 80%, including the change in accounting for useful life of server equipment. I would also like to remind investors that a number of our emerging products, including newer products like ZDX and Zscaler for workloads will initially have lower gross margins than our core products. We are currently managing the emerging products for time to market and grow, not optimizing them for gross margins. Operating profit in the range of $84 million to $86 million. Net other income of $15 million, income taxes of $8 million, earnings per share in the range of $0.57 to $0.58, assuming $160 million fully diluted shares. For the full year fiscal 2024, we’re updating our guidance as follows: increased revenue in the range of $2.09 billion to $2.1 billion or year-over-year growth of 29% to 30%; calculated billings in the range of $2.52 billion to $2.56 billion or year-over-year growth of 24% to 26%, we still expect our first half mix to be approximately 42% of our full year billings guide; increased operating profit in the range of $360 million to $365 million, which reflects up to 250 basis points of operating margin improvement compared to last year; income taxes of $35 million; increased earnings per share in the range of $2.45 to $2.48 assuming approximately 161 million fully diluted shares. We expect our free cash flow margin to be up year-over-year and in the low 20% range. We continue to expect our data center CapEx to be high single-digit percentage of revenue for the full year, reflecting a three to four percentage points of headwind to free cash flow margins. We expect the timing of CapEx spend to be more towards the second half of the year as we invest in upgrades to our cloud and AI infrastructure. Our guidance reflects our plans to invest aggressively in our business to pursue our significant market opportunity. With our new CRO and CMO coming on board, we expect to step up our sales and marketing investments in the coming quarters. In addition, we’ll increase investments in our technology platform and cloud infrastructure. With a large market opportunity and customers increasingly adopting the broader platform, we plan to invest aggressively to position us for long-term growth while increasing profitability. Operator, you may now open the call for questions. See also 25 Countries with Best Quality of Life for Expats and 20 States with Highest Minimum Wage and Low Cost of Living. Q&A Session Follow Zscaler Inc. (NASDAQ:ZS) Follow Zscaler Inc. (NASDAQ:ZS) 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 Brad Zelnick of Deutsche Bank. Your line is open. Brad Zelnick: Great. Thanks so much. And congrats on a strong start to the year and nice to see the leverage in these results. Jay, your distinction of SASE has always been clear and it’s perhaps no more obvious than right now at a time when traditional network security providers are having a tough time selling more and more boxes. And it seems they’re paying you a nice complement as they all double down their focus on the cloud and SASE. So as this all plays out competitively and you’re increasingly subject to the law of large numbers, how should we think about your ability to sustain high growth and specifically the rate at which you can scale your emerging product portfolio? Thanks. Jay Chaudhry: Brad, very good question. It is flattering to see all kind of vendors becoming SASE vendors overnight. But the challenge for them would be, it’s a different architecture. It’s not an incremental change and feature you can add on to it. That’s where we spent a dozen plus years building a true Zero Trust architecture, which is an advantage. That’s why we became the market leader. We pioneered this market. We evangelized to the fact that this is what’s needed for better cybersecurity and ransomware protection and cost reduction. The way I look at – to sustain high growth is the following. One, is there a market demand came out? The market is growing and expanding at much faster pace than I even thought. Two, do you have the right platform with the right architecture, the right functionality? You’ve seen us build this platform on a true Zero Trust architecture and expanded over the years. I think of what we had at the time of IPO versus what we have today. And the third area is go-to-market execution. We’ve done a great job starting with IPO, crossing $2 billion in ARR. And now we’ve got our sights set on crossing $5 billion. And we have been growing and adapting go-to-market also along with the platform. That’s why I’m very excited about bringing two key leaders: Mike as CRO; and Joyce as CMO, who can help us take us to the next level. Great market execution, great platform. I think with that, I’m very excited about the opportunity in front of us. Brad Zelnick: Thanks. Appreciate it. Operator: Thank you. One moment please. Our next question comes from the line of Saket Kalia of Barclays. Your line is open. Saket Kalia: Okay. Great. Hi guys, thanks for taking my question here. Jay, maybe for you, just building off of that last question on some of the slowness that we’ve seen with the traditional network security guys and the challenges with appliances. The question for you is maybe do you feel like customers are more willing now to replace their appliance firewalls at least at the branch with SASE architecture like what Zscaler provides so well? Jay Chaudhry: You know what I said many times, firewalls won’t go away, but they will become like mainframes. We have been replacing firewalls at the branches from the last several years. Now that trend is accelerated. And from one of the new things that’s done to help accelerate the demise of firewalls and branches is our branch connector technology, which now we package to make it available. So you can become a Starbucks-like office in a matter of minutes rather than trying to wait for a long, long time. So we’ve seen a campus environment becoming just like that. The only place where firewalls have been playing a significant role for a while is the data center, the east-west traffic and the like. You know that traffic is going away from the data center and that demand has to go away. So a big thing for someone to do it right, had to really offer a Starbucks like branch and zero-trust architecture. Market has made progress with traditional SD-WAN. We think traditional SD-WAN is a transitory technology. And once we have [broached] (ph) the market with Branch Connector actually is the next big phase to make it simple. Very excited with the opportunity to make the world free of firewalls. Saket Kalia: Makes sense. Thanks guys. Jay Chaudhry: Thank you. Operator: Thank you. One moment please. Our next question comes from the line of Alex Henderson of Needham & Company. Your line is open. Alex Henderson: I’m torn on what to ask, but I think I’ll go with the question around the channels. So you guys have been doing a lot of work on expanding your VAR channels, expanding reach into federal, expanding reach into MSPs, expanding into the cloud arena as much as possible. Can you give us some sense of how you think the mix of your sales leads will be driven by those different channel opportunities as we move through the current fiscal year, please? Jay Chaudhry: Sure. Alex, you rightfully said, we don’t have a simple straight VAR channel that traditionally firewall and network security vendors had. We have VARs who play a role. We have system integrators and we have service providers. And then there’s a separate set of SIs for federal business as well. Let’s look at each of these areas. VARs were slow to adopt Zscaler but now as the market has moved more and more of them are embracing us and our leader, [Indiscernible] has launched a number of programs where we’re seeing very good progress, with new source pipeline coming from our channel. The area we see probably a very rapidly growing opportunity is global systems incubators. Actually, my coming from ServiceNow, where a lot of partnership with global SIs have played a big role I expect that area to accelerate. And in this next level of fulfillment versus transformation. We like partners who work with us and work with partners – sorry, our customers to do transformation. And we have been selective. You aren’t going to find us with 5,000 or 10,000 channel partners. Our partners are hundreds. And we are doing targeted programs. We’re working with some of the very large global SIs and very large deals to do transformation. I mentioned one of these deals in my prepared remarks, and I mentioned another SI who actually brought Zscaler internal along with actually launching the service to go out there. Remo, do you want to add any more color? Remo Canessa: No, I think that’s good, Jay. Jay Chaudhry: Okay. Thank you, Alex. Alex Henderson: No comment on internal sales? Which is obviously a piece of it? Remo Canessa: So yes. So we’ve increased our capacity in the quarter for our sales reps. Our plan is to increase capacity through the year. The one comment I’d make on Q1 is that we were – we did hit our expectations internally, but we expect to hit basically our sales targets for the year. The current sales capacity that we have supports our guidance. And as Jay mentioned, with the new leadership with Mike on board, we’ll be looking to accelerate our hiring as we go through fiscal ’24. Alex Henderson: Great. Thank you so much. Operator: Thank you. One moment please. Our next question comes from the line of Joel Fishbein of Truist. Your line is open......»»