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Cue Health Inc. (NASDAQ:HLTH) Q2 2023 Earnings Call Transcript August 9, 2023 Cue Health Inc. beats earnings expectations. Reported EPS is $-0.51, expectations were $-0.53. Operator: Good day and thank you for standing by. Welcome to the Cue Health Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. […] Cue Health Inc. (NASDAQ:HLTH) Q2 2023 Earnings Call Transcript August 9, 2023 Cue Health Inc. beats earnings expectations. Reported EPS is $-0.51, expectations were $-0.53. Operator: Good day and thank you for standing by. Welcome to the Cue Health Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference call is being recorded. I would like to turn the conference over to your speaker for today, Lorna Williams. Please go ahead. Lorna Williams: Good afternoon and welcome to Cue’s second quarter 2023 earnings conference call. Joining me today are Ayub Khattak, Chairman and Chief Executive Officer of Cue Health; and Aasim Javed, Chief Financial Officer. Before we get started, let me begin by reminding you that we may be making forward-looking statements, including statements related to the expected performance of our business, future financial results and guidance, strategy, long-term growth, and overall future prospects, as well as the impact of the COVID-19 pandemic. These statements are subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from those described. These risks and uncertainties include, but are not limited to, those outlined in today’s call as well as other risks identified from time-to-time in our public statements and reports filed with the SEC. Forward-looking statements that we have made on this call are based on assumptions and beliefs as of the date they are made, and the company disclaims any obligation to update these statements, except as required by law. In addition, on today’s call, non-GAAP financial measures will be used. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings statements. Finally, I would like to mention that the press release and a recording of this call are available on the Investor Relations page of our website. With that, I’d like to turn the call over to Ayub. Ayub Khattak: Thank you, Lorna and thank you everyone for joining us today. Cue delivered total revenue of $10 million in the second quarter at the top end of our guidance. We expect next quarter to have revenue in the $11 million to $13 million range. Additionally, we have reached greater than $150 million in annualized cost savings ahead of schedule. Despite aggressive cost cutting, we’ve been able to maintain a strong pace of milestone achievements for test menu expansion and new products and services on the Cue platform, which I believe will help Cue return to revenue growth. To start, I’d like to summarize our progress on our number one strategic priority, test menu expansion for the Cue Health Monitoring System. We remain on track to have a robust respiratory care offering for the 2023-2024 respiratory season. In June, we achieved a landmark industry milestone when we became the first company to receive a de novo authorization for a COVID home use test. Cue system was thoroughly reviewed as part of FDA’s process for safety and efficacy. In our view, this is a very positive signal for our molecular test submissions already under FDA review and the others we have forthcoming. With this regulatory breakthrough, we set a new standard as the first de novo granted for any home use respiratory test. Historically, COVID testing was offered under an emergency use authorization. Our full approval enables Cue to continue to offer our simple to use accurate molecular tests, even if the emergency use authorization pathway ends. We are currently in productive conversations on our flu plus COVID multiplex and standalone RSV de novo submissions. We remain optimistic that our flu plus COVID multiplex test will be authorized in time for the respiratory season later this fall. In May, we submitted a de novo application for the Cue RSV molecular test for authorization at home and point of care and have already had productive interactions with the FDA around this very important test. Rounding out our respiratory pipeline, our step-through program continues and we now expect to complete our FDA submission early in 2024. We are often asked whether regulatory authorization of a test can turn into commercial revenue quickly or if there is a long ramp time. We already have our automated production lines built and they are ready to produce any tests in our menu at scale as they all share the same cartridge backbone and manufacturing process. What I want to emphasize is that we are ready to scale manufacturing and that it does not require additional CapEx investment as we already have roughly $200 million invested into our highly advanced manufacturing facilities. Furthermore, on the commercial side, we have more than 300 directly contracted enterprise and provider customers, public sector customers, and we have distribution relationships with major healthcare distributors. We have an installed base of more than a quarter million Cue readers and the number one request from our customers is additional menu. To be clear, with our manufacturing capabilities and existing customer relationships firmly in place, we think our launch of new tests will be as timely as possible. Going further on menu expansion, last week, Cue has awarded a BARDA contract to accelerate the development of a new comprehensive respiratory cartridge to detect flu, COVID, and RSV simultaneously. This is intended to be an over-the-counter and point-of-care test that will run on the same Cue reader that has already has a large install base. Cue has been working with BARDA for over five years as they previously supported the development of our standalone flu and COVID molecular test. Under this new contract, BARDA will provide funding of approximately $28 million to accelerate the development, validation, and regulatory authorization of an RSV flu and COVID combination test. Our initial objective is to have this multiplex available for the 2024 respiratory season. Moving to Cue’s menu expansion efforts in the sexual health category, the Cue-mpox molecular test is already authorized for the point of care. We believe this authorization is noteworthy as it is the first non-COVID test approved on the Cue platform and utilizes a sample collection method that is different from our COVID test. Our Chlamydia gonorrhea test continues to progress with the goal of FDA submission in the fourth quarter of this year, as planned. Our sexual health menu will be a very important complement to our respiratory menu. Now I will shift from the expansion of the Cue’s monitoring system to the Cue integrated care platform, where we have introduced a number of new products and services like Cue care, our telemed solution, Cue lab, our at home diagnostic test kits, and Cue pharmacy, a suite of prescription and over the counter treatments for common health and wellness concerns. Cue lab is our line of at home test kits. Customers can order a variety of diagnostic panels and standalone tests that are delivered to their homes and returned to lab for processing. Cue app includes tests for key heart health markers, sexual health panels, and hormone panels of various types. Results are available in the Cue health app, where customers can seamlessly access virtual care and receive prescription medication in consultation with a clinician. Cue app complements our test cartridge capability and enables us to provide more value to our customers and access more of the available market for diagnostic data. During the second quarter, we introduced Cue pharmacy to provide customers with convenient access to lifestyle treatments and common prescription medications. Our platform now treats respiratory infections like COVID and flu to UTIs to sexually transmitted infections like herpes and provides for birth control and treatments for common health conditions such as erectile dysfunction. Customers consult with a clinician through the Cue Health app for advice about their condition and if medically indicated, receive a prescription medication delivered to them or picked up from their local pharmacy. Now that we have fully launched the building blocks of the Integrated Care Platform, adding new test and treatments or combined test and treatment programs is a very small incremental effort. Well, Aasim will review our financial performance in detail, I am proud of how we have been executing with financial discipline. We ended the quarter with what we view as a strong balance sheet, including $129 million of cash on hand and continued to operate with no debt. We also delivered on our annualized run rate cost saving goal of $150 million ahead of original expectations. We plan to continue to manage our cash prudently as we progress through the regulatory process and gain commercial traction on our new set of diagnostic tests. I believe that the continued progress on our menu expansion and the launch of new products within our Integrated Care Platform well positions us for growth in the coming quarters. I am proud of the team’s hard work which has enabled customer centric end-to-end solutions that empower people to live their healthiest lives. With that, I’ll turn the call over to Aasim. Aasim Javed: Thank you, Ayub and good afternoon. Earlier this year, we announced our intention to reduce our cost by $150 million on an annualized basis and as of Q2, just two quarters into the year, we have now achieved that savings target. We are comfortable that this low rate of spend is sufficient for us to execute our highest priorities including regulatory approval and commercialization of our new molecular tests, key development programs and market traction with Cue Pharmacy and Cue Lab. As a result of these cost reduction efforts, strong execution of our development milestones and the expected contribution from new products and services, I believe that we have more than 12 months of cash on hand to run our operations. Now let’s walk through our financial results and Q3 guidance. Cue’s second quarter total revenue of $9.9 million was at the high end of our guidance range of $8 million to $10 million. In the quarter, our private sector contributed 76% or $7.6 million of sales. Public sector revenues were $2.3 million for the second quarter and total desiccated sales were $7.3 million. Q2 product gross profit was a loss of $21.8 million impacted by lower manufacturing volumes and an $11.7 million write down of excess inventory. Q2 total adjusted operating expenses were $59.3 million excluding the previously announced $6.6 million restructuring charge relating to our cost reduction plan. Sequentially, operating expenses decreased by 19% from the first quarter operating expenses of $72.9 million and Q2 adjusted OpEx was down almost 40% from Q4 2022 driven by our cost reduction efforts. Sales and marketing expenses were $8.1 million in the second quarter, a decrease of 53% from Q2 2022 driven by a decrease in digital and marketing costs. R&D expenses were $36.5 million for Q2, a decrease of 17% from $44 million of spend in Q2 2022 as we focus on clinical studies related to our respiratory and sexual health product offering. G&A expenses were $14.7 million during Q2 of this year, a decline of 42% from Q2 2022 spend of $25.4 million. As a result, adjusted net income was a loss of $77.2 million or $0.51 per diluted share and adjusted EBITDA for the second quarter was a loss of $53.1 million. Moving to the balance sheet, we ended the second quarter with cash of $128.6 million and no outstanding debt, reflecting a slower cash utilization rate in the second quarter versus Q1. Looking ahead, we expect our cash burden to decline in each of the next two quarters. Now, I’d like to move on to our guidance. While many of our industry peers expect COVID testing volumes to be down quarter-over-quarter, we expect revenues of $11 million to $13 million for the third quarter, growing double digits from Q2. As you may know, the vast majority of our revenue is driven by COVID testing demand. Forecasting this demand beyond the near term is challenging, therefore, we will continue to limit our forecast to quarterly expectations. As a reminder, Cue operates with no debt and we have a healthy balance sheet with $129 million of cash on hand. Even with lower top-line revenue in the second quarter, our quarterly cash utilization decreased by over 20% and we achieved our saving goal of $150 million of annualized cost reductions, substantially reducing our break-even point. Additionally, we expect our near-term catalysts, such as regulatory submissions and new product offerings through Cue Lab and Cue Pharmacy, to contribute to the growth of our top line in the near term. Finally, we are always evaluating financing opportunities and options to bolster our cash position and further fuel our growth. In summary, I am pleased with the progress being made against our 2023 priorities of test menu expansion, new product launches on our integrated care platform, and strong financial discipline. Looking ahead, we expect to have several molecular tests on the market in 2024, strengthening our expectations of a positive adjusted EBITDA by early 2025. With that, I would like to thank you for your attention and I’ll now turn the call over to the operator for questions. Q&A Session Follow Hlth Corp Follow Hlth Corp We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. [Operator Instructions] The first question today is coming from Tejas Savant of Morgan Stanley. Your line is open. Unidentified Analyst: Hi. Thank you. This is [indiscernible] on for Tejas. Congrats on the quarter. I just had a few questions regarding the BARDA contract. I was wondering if you could share some of the economics associated with the contract and how long the contract spans for, if it’s multiple years, and how you anticipate it flowing through the P&L? Aasim Javed: Thanks for the question. We’re very excited about being awarded this new $28 million contract with BARDA. We do think that the market is heading towards a multiplex test type of market and we think that a flu, COVID, RSV combination test will be a very strong entrance into the market. Our goal is to have this test available in the 24 respiratory season and this builds on the submissions that we’ve already put in place for the FDA, so we’ve already submitted it for flu plus COVID and for RSV and then this brings everything together. Another really important fact of this is that it will run on the same cartridge backbone and the same reader system, so it’ll get to have the advantage of plugging into our existing installed base. To jump in there on the P&L impact, the spend will show up on the R&D line item, but remember our R&D line item, where we have it at Q2 after the reductions we’ve taken, we expect that line item to stay relatively steady or constant over the next subsequent quarters and then the reimbursement for the spend would show up in revenue. Unidentified Analyst: Got it. Okay, that’s super helpful. And then among the non-COVID tests that you’ve been approved for or expected to be approved over the next 12 months, what do you think is the greatest opportunity to begin to drive non-COVID testing volumes in your mind, not just considering the size of the opportunity, but from the perspective of where you may get a rapid adoption given your current installed base? Ayub Khattak: We think flu COVID is a very big opportunity for us and then we think RSV amplifies that and so it makes it a completely comprehensive offering. We also think that with Chlamydia gonorrhea on the horizon, that’s a very important compliment to the respiratory menu. I think sexual health and respiratory really complement each other. One’s a little bit more seasonal than the other and so they expand the settings that the Cue platform can be adopted in. Both in the home and in the point of care setting. So we really think the compliments of those two things, so Chlamydia gonorrhea, flu COVID, RSV would be really important tests. Aasim Javed: And then to add to that, the tests that Ayub just mentioned, they have attractive reimbursement rates especially when you compare it to COVID and remember these tests are made by Cue on the same manufacturing line. So we expect these to be from a unit margin perspective, attractive, and that should help improve our gross margin profile as well. Unidentified Analyst: Okay, perfect. And then if I could just squeeze in one more, following the receivables purchase agreement with East West Bank of up to $20 million, can you maybe talk about any other financing options you are considering to continue to strengthen up the balance sheet and if you could help us think a bit about how we should be thinking about current cash runway? Aasim Javed: So we ended the quarter with about $130 million of cash with no debt. We’ve achieved our $150 million of annualized savings ahead of plan. And as we think about cash utilization, we noted that our cash utilization came down in Q2 versus Q1 and we expect that trend to continue in the upcoming quarters as well. Not only that, we have revenue catalysts with the test menu expansion that we’ve been talking about as well as the expectation of Cue Lab and Cue Pharmacy really contributing to that top line. The combination of those factors, we expect to have a set more than 12 months of cash. And secondly, we do — our confidence continues to build and strengthen on our EBITDA profitability for Q1 2025. And as we think about financing, look as you would expect, it’s something we always do evaluate and we will continue to do so. Unidentified Analyst: Perfect. Thanks so much for the time. Operator: Thank you for your question. One moment while we get ready for the next question. And our next question will be coming from David Delahunt of Goldman Sachs. David Delahunt: Hey, guys. So it sounds like you expect the flu and COVID combination test to be ready for its upcoming virus season. Could you tell us about what you expect the mix of single versus combination tests to be? Ayub Khattak: Yes. I mean, we obviously have contracts in place already for COVID, the single flex test, and we do have a healthy installed base that’s receptive to that test. But we do think that in general, the market is going to move towards multiplex tests. And so we are excited that we have the path there with the flu COVID in the near term and then flu COVID RSV in the long term as a single test. We think that’s going to be a very important test for us as well. So both in the near term and the longer term, we’re trending towards where we think the market really wants to go, which is towards more information and to disambiguate when you have symptoms and the cold flu season, you really just want to know what it is and then get the right treatment for that. So we do think that that’s the trend and that’s where we’re heading. Aasim Javed: And as you think about the second half of the year, we’ve been saying for a while now that we expect to return to growth in the second half of the year and that’s exactly what our guide would suggest. And we think about the mix of non-COVID versus COVID. We haven’t really spit that out in the past, but we have been saying and we continue to believe that non-COVID revenue would start small in Q3 and then grow into Q4 and that would really be a combination of flu COVID and then increased traction and momentum on Cue Lab and Cue Pharmacy. David Delahunt: Got it, thanks. And could you help us think about the incremental value of adding RSV to the flu COVID multiplex? Is there much of a price difference there? Ayub Khattak: We think that the utility of a flu COVID RSV or an RSV standalone is very high. A lot of people became very acutely aware of RSV last year as it was quite a significant public health burden. It is the number one cause of hospitalizations in young children and it is a significant cause of hospitalizations in adults over 65. So it’s a really big public health problem in addition to flu and COVID. And right now there’s a rising tide of awareness around RSV as there have been some activity around treatments and vaccines that have recently been approved by the FDA. So in recognition of the public health importance, it’s top of mind right now for both consumers and pediatricians and folks that treat elderly adults. So I think it’s a very important addition to the menu. David Delahunt: Got it, thanks. Keep up the good work. Ayub Khattak: Thank you. Operator: One moment for our next question. [Operator Instructions] Our next question will be coming from Charles Rhyee of TD Cowen. Your line is open. Charles Rhyee: Yes, thanks for taking the questions. Maybe just to follow up, in the quarter, do you have a breakdown between how many tests were done at a point of care like in a clinic or a physician’s office versus done at home by consumers? Ayub Khattak: Hi, Charles, when we think about the quarter, we don’t we don’t typically break out the test between our different customer segments. I think broadly our customer segments, the public sector, private sector, and then within private, we have enterprise, direct to consumer and provider, on the direct to consumer, we’ve historically spoken about them having about 12% of our installed base, which is a good proxy for how you think about direct to consumer revenue in totality. But the other sectors, we haven’t broken out at this point. Charles Rhyee: Okay, I asked that because, right, because, you have, you’re having a test approved for over the counter. And if you think about the opportunity there, I was just thinking about like, what are kind of some of the strategies that you’re thinking about? Because I know, right, at the start, it was really sort of an employer driven model to give the readers to their employees. And then obviously, they think in order to the test themselves and when the expansion would come, it would open a whole new test menu. But if we think about, particularly respiratory tests, I feel like I’m sick, I go to the pharmacy, I want to get a test. Is there a strategy to think about how to make leaders available more direct to consumers versus going online to the site to order and subscribe to a package. But I could go to like a Walgreens and just buy a reader. Just can you talk us through like how you’re thinking about that? Because at 12% that’s great. And clearly that’s grown in this last year. But particularly as we come into this respiratory season, and if you can get these other tests out, is there any thought to trying to accelerate, the user base because, that would be, I think at this point seems like a bigger opportunity or to really accelerate sort of adoption of the sort of adoption of the of these tests. Ayub Khattak: So I think one of the things that’s really important about our system is that it’s a molecular test, a cyanogen test, and yet it utilizes it’s very easy to use. It’s actually easier to use than an antigen test but it gives you the accuracy of a molecular test and the reader itself compared to other offerings and the point of care other readers and this is a much less expensive option. So we agree that lowering the barrier to adoption for the reader is a really important piece because they’ve seen a lot of good reordering from every from customers who adopt the reader and start to use the platform. So it’s a very important point that you’re making which is we can expand distribution by lowering barrier to entry on the reader and we certainly look at retail opportunities and have been, the enterprise option or that the ability to enter into the home through the enterprise of B2B B2C has been a very important part of our business and will continue to be we expect. So if you look at the proportion of tests that are run in the home versus point of care. I mean it’s going to get skewed as a result of the fact that not only do you have B2C but you have B2B2C that’s fueling use in the home and on the provider side there’s just a good opportunity there as well because like I said compared to the other offerings this reader or the barrier to entry is very low and yet you get a much easier test to use. So the fact that we originally designed this test this platform for consumers gives a lot of advantages in both the home setting of course but also in the point of care because ultimately in the point of care they want clinicians and nurses they want to be able to run tests very simply, very easily and build deliver that result to the patient and also to be reimbursed for it. And so we think that from the perspective of one care and consumer benefiting from the core design of the product which is to make it sort of consumer grade which is really the highest standard in — from an FDA or from a regulatory perspective because it means anybody can use it. And so it’s really good about the opportunity before us and the consumer side and the point of care and we will continue to look at options to expand the retail distribution. I will note that we are in retail pharmacies now and we are also in hospitals and we are also in home. I think it’s a really unique sort of aspect to Cue versus other platforms. Charles Rhyee: Okay, appreciate that. Maybe just talking about sort of the enterprise employer market. Can you talk about sort of the — where we are and sort of the selling season for next year? And I don’t know that you’ve touched on it in recent quarters but any kind of notable new signings of employers signing up for this the 10 million obviously it’s just I think how people are perceiving COVID right now but obviously with the flu and RSV coming back and expect to come back in the fall. Just curious on sort of what the interest level from new employers to sign up because when we look at the over a quarter million leaders that number have been growing very quickly for a while. It’s kind of slowed a little bit just curious on what the number of new accounts that you’ve been adding recently and then you kind of holler around that would be great. Thanks. Ayub Khattak: As we look at the COVID market in general and it’s been it’s a very dynamic time the public health emergency ended earlier this year and people are just really digging out from the whole pandemic all together. And so it is a sort of a transition moment for the market that being said we do think that there is a large market still for respiratory testing generally not just for COVID and we think that we’re on trend with that by introducing a multiplex option for flu COVID and then also with RSV added on to that. So we do think that this is where the market’s heading. We think we have the most compelling offering but of course signing new contracts and etc. that’s going to be a function of regulatory approvals for these compelling new products. So that’s why we really do expect more revenue and growth from these new products because that’s what the customers are asking for. And we think that’s going to be a really significant factor in being able to expand our installed base and a number of accounts. Charles Rhyee: Is that the message that you’re hearing you have core customers that are interested in signing up for their employees but they’re waiting till the t test menu does expand and I guess the question is just having the flu COVID plus standalone RSV is that the critical mass at least to get the ball rolling again? Or do you think we’ll need to wait maybe until early next year we’ll get more of the sexual health test as well to really accelerate sort of a new logos? Ayub Khattak: We do think that yes flu COVID and RSV are the really important set for more market penetration in the near term. Sexual health is a little bit of a different customer type. It’s more point of care, more sexual health planning and urgent care. It does open it up but if you’re talking about enterprise and specifically that’s more of a interest in flu COVID RSV set and also D2C is really aligned with, D2C and public sector are very aligned with respiratory and sexual health. So sexual health plays a very important role but in terms of when we’re talking about B2B B2C, I think we’re really talking more about respiratory because this is something that employers end up paying for anyways in some way or another because people, their employees they end up taking time off work they end up going to urgent care they end up getting a test anyways and that usually for self-insured employers they end up paying for that test, that lab test at a higher rate it’s more expensive. It’s less effective because it’s slower and you can’t treat off it as easily. So we think that the opportunity on the long term is really there with enterprise as well and then now what we’ve introduced is the Cue Lab we can complement the available test today with 14 additional panels that give you all sorts of other information that’s really important. Charles Rhyee: Yes. No that makes sense sorry if I could just ask one last question here. You talked about productive conversations with FDA. Are you in the commentary where have they have they already given you like questions have you responded to them? Maybe just give an update where we are in the commentary with FDA like where we are in terms of the clock on their response time? Ayub Khattak: Yes. So the COVID de novo was a really significant moment for us and that’s because it gave us the validation from the regulatory agency on the safety of the platform from a reader and cartridge backbone perspective meaning that what we’re going for in each new indication we don’t have to revalidate the reader and the cartridge backbone it’s really about the incremental chemistry changes and the clinical data that we were able to generate for those new applications. So that makes a really big difference first of all. And with regards to the dialogue state we’re definitely in dialogue on flu COVID and RSV and that’s where we get the confidence that we have in terms of feeling like we’ll have blue code for this respiratory season with RSV following on to that and I think it’s also a strong indication with our bar to contract and where that’s going after we got our COVID de novo to really bring all these things together into one single test of blue code and RSV. So we’re really making good progress across the board on these and specifically we know how important the regulatory piece is and we feel really strong that the COVID was a strong signal and we’re going to be able to bring this new test to market in part because of that Charles Rhyee: Great. Appreciate all the comments. Thanks. Operator: Thank you. This does conclude the conference call for today. Thank you all for joining. You may now disconnect and everyone have a great evening. Follow Hlth Corp Follow Hlth Corp We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

General Motors Company (NYSE:GM) Q2 2023 Earnings Call Transcript July 25, 2023 General Motors Company beats earnings expectations. Reported EPS is $1.91, expectations were $1.85. Operator: Good morning, and welcome to General Motors Company Second Quarter 2023 Earnings Conference Call. During the opening remarks, all participants will be in a listen-only mode. After the opening […] General Motors Company (NYSE:GM) Q2 2023 Earnings Call Transcript July 25, 2023 General Motors Company beats earnings expectations. Reported EPS is $1.91, expectations were $1.85. Operator: Good morning, and welcome to General Motors Company Second Quarter 2023 Earnings Conference Call. During the opening remarks, all participants will be in a listen-only mode. After the opening remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, the conference call is being recorded, Tuesday, July 25, 2023. I would now like to turn the conference over to Ashish Kohli, GM Vice President of Investor Relations. Ashish Kohli: Thank you, Amanda, and good morning, everybody. We appreciate you joining us as we review GM’s financial results for the second quarter of 2023. Our conference call materials were issued this morning and are available on GM’s Investor Relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM’s Chair and CEO; Paul Jacobson, GM’s Executive Vice President and CFO; and Kyle Vogt, CEO of Cruise. Dan Berce, President and CEO of GM Financial, will also join us for the Q&A portion of the call. On today’s call, management will management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filing for the SEC. Please review the safe harbor statement on the first page of our presentation as the content of our call will be governed by this language. And with that, I’m delighted to turn the call over to Mary. Mary Barra: Thanks, Ashish, and good morning, everyone. Our operating results continue to demonstrate strong growth, thanks to an incredible customer response to our new trucks and SUVs around the world and strong execution of our business plan by the GM team, our dealers, and suppliers. Together we delivered $3.2 billion in EBIT adjusted in the second quarter, including an $800 million charge for new commercial agreements we have with LGE and LGES. The charge reflects the conscious decision we made during the Chevrolet Bolt EV recalled to serve our customers in ways that go beyond traditional remedies, and we’re taking new steps that will reduce our costs and improve our margins over time. We’ll provide more details about EV margin improvement and IRA benefits at the Investor Day in November. Our momentum is broad-based. Year-over-year, we have now delivered four consecutive quarters of higher retail market share in the U.S. and our total share was up almost one full point in the first half, with strong pricing and incentive discipline. We lead the U.S. industry in both commercial and total fleet deliveries calendar year to date. We now have led the U.S. industry in initial quality for the second year in a row. We are focused on strong cost discipline and we are taking additional steps to lower our capital spending. All of this impacts the bottom line, so we are raising our full year earnings, free cash flow, and EPS guidance for the second time this year. We now expect full year EBIT adjusted earnings to be in the range of $12 billion to $14 billion up $1 billion from our guidance. Adjusted automotive free cash flow is now expected to be up $1.5 billion in a range of $7 billion to $9 billion, and EPS is now expected to be in a range of $7.15 to $8.15 per share. The actions we are taking to be more efficient are also having an immediate effect on capital spending. We now expect capital spending in 2023 to be in the $11 billion to $12 billion range, which is about a billion less than the high end of our prior guidance, and we are working on more reductions. This guidance assumes that we successfully negotiate new labor agreements without work stoppage. Our results in our new guidance underscore the strength of our products today. Last quarter we talked about new vehicles we’re launching to support strong margins. All of them are connecting with customers. At the higher end of the pickup market, the GMC Sierra 84 and Denali models are now 70% of heavy duty retail sales. Premium models also account for more than 70% of sales for the new GMC Canyon mid-sized pickup. For the Chevrolet Colorado, our high performance off-road models, the Z71 Trail Boss and ZR2 represent more than half of retail sales. The new Chevrolet Trax is also off to a very fast start and it’s driving solidly profitable growth. In the U.S., we delivered more than 20,000 Trax in the second quarter and we expect that to keep growing. Half of these customers are new to General Motors. All of these new vehicles help us deliver more than a $1,600 per unit increase in the ATPs U.S. compared to first quarter, with flat incentives and essentially flat inventory. We have the largest ATP increase in the industry by far. The other growth products I highlighted last quarter is Chevrolet Montana in South America and the tracks in Korea also continue to build momentum. The Montana is our first compact pickup for the Brazil market and in just four months it has earned one third of the segment. We’re now expanding distribution to other markets in South America. In Korea the Trax is an unqualified success just like it is in the U.S. Pricing is strong and has earned more than 50% market share in its segment and two thirds of the customers are new to GM. These hits in the great work the team has done on cost have us on track to deliver significantly higher EBIT adjusted in GM International this year excluding China equity income. Looking ahead we have several launches and growing segments around the world that will keep our momentum going. In North America these include the 2024 Chevrolet Traverse, which we revealed earlier this month. It goes into production in Lansing, Michigan late this year. In the EV market, we achieved our target to produce 50,000 electric vehicles in North America in the first half. About 80% were the Chevrolet Bolt EV and EUV platform, but the Ultium platform production is increasing. We’ve had more than 2,000 customer reserve GMC Hummer, EVs and Cadillac LYRIQ in transit to dealers at the end of June. With both cell and vehicle production increasing, we continue to target production of roughly 100,000 EVs in the second half of the year and will continue to grow from there. Demand for our EVs remains very strong because the Ultium Platform is purpose-built for electric vehicles and it does not force customers to compromise on style, performance, utility, range or towing. We have experienced unexpected delays in the ramp because our automation equipment supplier has been struggling with delivery issues that are constraining module assembly capacity. We are working on multiple fronts to put this behind us as quickly as possible and things are already improving. For example we have deployed teams from GM manufacturing engineering to work on site with our automation supplier to improve delivery times. We’ve also added manual module assembly lines and we’re installing more module capacity at our North American EV plants beginning with factory zero and spring hill this summer; Ramos Arizpe in the fall and CAMI in the second quarter of next year. And to address pent-up demand among our Hummer EV customers, we are planning to increase second half production by thousands of units. In the meantime Ultium Cells LLC is delivering great quality and production is ahead of schedule. Looking ahead the next phase of our EV acceleration is coming into sharper focus. For example we have now secured more than half of our 2030 direct sourcing target for many critical raw and process materials we need with significant on-shoring. During the quarter, this included an expansion of our Cathode Active Material joint venture in Canada and an investment to bring manganese sulfate processing to a new facility in Louisiana. As with other recent announcements, these agreements provide us with significant off-take and favorable commercial terms, which is a key component of the EV margin improvement strategy we outlined last quarter. Now let’s talk about fixed costs. Due to the success of the $2 billion fixed cost reduction plan we announced earlier this year, we have identified another billion in fixed costs that we will deliver over the same 2023 to 2024 timeframe. This new action will offset about $1 billion in depreciation and amortization, which means that relative to 2022, our automotive fixed costs will be down $2 billion on a net basis as we exit ’24. Key components include about $1 billion from the voluntary separation program, another $800 million in reduced sales and marketing expense and the remainder coming from significant reduction in all areas of the business, including engineering expense, travel, and administrative costs. We’re not done by any stretch. Mark and I have asked Norm de Greve, our new Chief Marketing Officer to take a fresh review of our spending and put us on a course to deliver world-class levels of marketing efficiency. Our product teams are also embracing a strategy we call winning with simplicity that will reduce design and engineering expense, supplier cost, order complexity, buildable combinations, and manufacturing complexity. For example, our teams are applying even greater discipline around our color and trim pallets, the way we package features and options and reuse. For our EV and ICE vehicles, we are targeting a 50% reduction in trim levels through a smart bundling of customer features and options. This results in fewer part numbers to simplify marketing, engineering, manufacturing, while maintaining the best features customers want. Yet we are maintaining market coverage for all major segments and price points and the U.S. will compete in ICE and EV segments that represent about 90% of the industry volumes in 2030. Our next generation full-size pickup and SUVs will show just how powerful winning with simplicity will be. We are investing significantly less capital and expect to deliver vehicles that will have much higher levels of customer-facing content and even better margins than today. Another great example of a capital efficient program is the next generation Chevrolet Bolt that we plan to execute. Our customers love today’s Bolt. It has been delivering record sales in some of the highest customer satisfaction and loyalty scores in the industry. It’s also important source of conquest sales for the company and for Chevrolet, more than 70% of customers are new to GM. We will keep some momentum going by delivering a new Bolt that delivers what customers have come to expect, which is great affordability, range and technology and we will execute it more quickly compared to an all-new program and with significantly lower engineering expense and capital investment by updating the vehicle with Ultium and Ultifi technologies and by applying our winning with simplicity discipline. We will have more details to share soon. Now, before we move to Paul’s comments and Q&A, I’d like to invite Kyle to update you on the important steps Cruise has taken to scale its business and make it profitable. So, Kyle over to you. Kyle Vogt: Thanks, Mary. We are halfway through our first year of rapid scaling and it’s going extremely well. We’re on a trajectory that most businesses dream of, which is exponential growth, driven by continuous improvement, engineering innovation and solid product market set. Our formula for driving this growth is quite simple. Number one, we increase the supply of vehicles. Number two, we increase the service availability, some more people can use it and number three, we would make the product awesome. So let’s talk about how we’re doing on all those and get into the numbers. On the supply side, we recently hit 390 concurrent driverless AVs. We believe this is the largest and fastest growing AV fleet in the world. Yet you will see several times this scale within the next six months. This is all on the Bolt platform, which we can scale the thousands of AVs, but we’re also about to transition to origins, which are a game changer for cost and are incredible to write in. And today, I’m pleased to share that our test vehicles are already running in driverless mode on public roads in multiple cities. And we are confident in our regulatory and permitting paths despite this being the first time a major OEM has manufactured a vehicle without traditional controls. As a result, we believe we’re the only AV company with a well-defined and significantly de-risk path to reach billions in revenue. On the second item, availability, we’re rapidly expanding cities, hours and service area. As very recently, we now operate a significant portion of our San Francisco fleet, 24×7 across the entire city. We’ve expanded geofences and hours in Austin and Phoenix, and we plan to expand significantly in the next 30 days. Lastly, we’ve done the prep work and we’ll launch commercial service in two or three more cities in the next 12 weeks alone, bringing us to as many as six commercial markets with several more following shortly after. All the critical ingredients, things like mapping, ground infrastructure, validation, user acquisition, etcetera, have become several times more efficient as we move from city to city. On the third, making the product awesome, we have over 85,000, five-star reviews in San Francisco alone. People love the product and it gets better every month with each new software update. And based on data from tens of thousands of users across multiple cities, it’s clear to us now that demand will greatly exceed supply for several years, and this gives us margin opportunity and a potential to be a head of plan on revenue growth. Now that is rapid scaling. I’ll share a few additional data points before we move on. Cruise cracked three million miles just 49 days after hitting two million miles, and the next million is going to be even faster. We’re now doing over 10,000 rides per week, but more importantly, we’re growing rides at 49% per month on average over the last six months. 28-day user retention is nearly at the level of a fully matured human ride-hill service, and it continues to turn upwards. The product is extremely sticky despite the limitations in hours and service availability that exist today. All of that scaling is occurring while also improving safety and driving down costs. Let’s take a look at those. Safety continues to improve despite increasing complexity. Our analysis of the first million miles shows AVs experience 54% fewer collisions than human drivers in similar environments, and 92% fewer with AV was the primary contributor. In other words, the vast majority of collisions are caused by inattentive or impaired human drivers, not the AV. And we expect a gap between human and AV performance to get much wider over the next 12 months. On the cost side, we’re seeing ideal trends. Our operational cost per mile travelled has gone down by an average of 15% per month for the last six months, led by optimizations and infrastructure, process improvements and automation. Our fixed cost due to machine learning training and simulation are also decreasing over time due to better simulation techniques and investments in efficiently, but most exciting is the step function improvements in cost, we will see as our newer vehicles and AV architecture is launched, due to having a much longer service life, the origin significantly reduces our cost per mile. We also have an optimized sensing and compute architecture in late stage development that costs about 75% less than what will be on the very first origins. It’s the first time Cruise’s custom chips will hit the road, which we expect before the end of next year. As our fleet rolls over to this architecture, we’ll start to see costs head below $1 per mile, the magic threshold at which robots actually become cheaper for most people than owning a car. Lastly, we have something else that’s fed in the works for a few years that is highly disruptive to the already highly disruptive AV industry, more on that later this year. So putting you things together, it’s clear now that Cruise is no longer a science project. There was one significant risk in reasons to doubt, but it’s now a rapidly growing business with a transformational product in a multi-trillion dollar TAM. We’ve made incredible progress in Q2 over Q1, and I’m excited to continue that momentum in the months ahead. We’re truly just getting started. Back to you, Mary. Mary Barra: Thanks, Kyle, and thanks for sharing the progress that the Cruise team is making is just incredible. So, before we move into Paul’s remarks, I’d like to address our negotiations with the UAW, which just kicked off and with Uniform. First and most importantly, I want to say how proud I am of our talented and experienced manufacturing workforce. There’s a direct connection between their hard work and our success, and we have a great future ahead of us. As we’ve talked about today, the future includes continued investment in strategic ICE vehicles, like the full-sized trucks, full-sized SUVs, and mid-sized SUVs. Our future also includes retooling existing assembly plans and upscaling the team as we transform the company to grow rapidly in EVs. We have a long history of negotiating fair contracts with both unions that reward our employees and support our long-term success of the business. Our goal this time will be no different. That’s the best possible outcome for all of our employees, plant communities, dealers, suppliers, and investors, and we look forward to constructive talks. So, thank you and now let me turn the call over to Paul. Paul Jacobson: Thank you, Mary, and good morning, everyone. Thank you for joining us. I’d like to start by thanking the team for their collaboration on delivering yet another quarter of strong results, and consistently meeting or exceeding our financial targets. At the same time, we are growing the business with four consecutive quarters of year-over-year U.S. retail share growth, and stable incentive spend. The core auto-operating performance continues to fuel the results and fund investments to drive growth in our business, with Q2, even adjusted of $3.2 billion, including the $800 million charge from the LG agreements. We also generated a 7.2% EBIT-adjusted margins, including a 180 basis point headwind from those LG agreements. Aided by a strong consumer and a robust product portfolio, we are raising guidance for the second time this year, driven by great products, successfully balancing supply with demand, and proactive cost management. We have made bold commitments, and to achieve them, we are focusing on a solid foundation. As Mary mentioned, we are well along our way to achieving the $2 billion automotive fixed cost reduction. We are also announcing another $1 billion fixed cost reduction to offset higher depreciation and amortization from the significant manufacturing investments we have been making, and our ICE and EV portfolios. This expands the impact of the plan with the only automotive fixed cost excluded being the lower pension income, a non-operating non-cash item. The product simplification initiatives are expected to have incremental benefits in the years to come, as we refresh future ICE products and transition to EVs. We are also taking a capital-efficient approach to our growth initiatives. For example, we have a profitability-driven strategy towards selectively re-entering Europe, and we recently announced a collaboration with Tesla, the double access to charging for our customers without much incremental investments. Community, these factors, along with a reduction in headcount, marketing spend, and overhead costs, will result in us realizing about a $1 billion of year-over-year fixed cost savings in 2023, with most of this benefit coming in the second half of the year. Getting into the Q2 results, revenue was $44.7 billion up 25% year-over-year driven by supply chain improvements and stable pricing. Wholesale volumes year-over-year were up 20% in Q2 and 12% year-to-date. For the full year we now anticipate being towards the high end of our 5% to 10% guidance range. We achieved $3.2 billion in EBIT adjusted, 7.2% EBIT adjusted margins and $1.91 in EPS diluted adjusted. Total company results were up $900 million year-over-year driven by supply chain improvements versus Q2 2022, but more importantly, we also had a combined $1.4 billion of headwinds from the LG agreements, lower pension income and lower GM financial earnings. ROIC was above our 20% target, demonstrating consistently strong and improving core operating performance. Adjusted auto-free cash flow was $5.5 billion up $4.1 billion year-over-year, driven by improved supply chain conditions and higher earnings year-over-year. During the quarter, we repurchased $500 million stock retiring another $14 million shares bringing the 2023 total to $865 million and 24 million shares retired. We expect our strong balance sheet and cash flow to support continued share repurchases as part of our capital allocation framework moving forward. North America delivered Q2 EBIT adjusted of $3.2 billion up $900 million year-over-year and EBIT adjusted margins of 8.6%. The strength of the product portfolio supported market share growth, higher ATPs and again stable incentives. North America performance was impacted by $700 million of the LG agreement charge, which was a 190 basis point headwind to margin in the segment. We’ve seen two consecutive quarters of higher warranty related costs, an area we’re monitoring very closely. The fundamental quality of our vehicles remain strong as evidenced by the JD Power ratings, however inflationary factors have increased the cost to repair vehicles and we’ve also seen incremental expenses associated with the recent ARC airbag inflator recall. Total U.S. dealer inventory was 428,000 units at quarter end, essentially flat from last quarter. Inventory on dealer lots of our new and most in-demand vehicles continue to run at around 10 days, including our full size SUVs, the all new Colorado and Canyon mid-size trucks, the Chevrolet Trailblazer and the Chevy Bolt. We are still targeting to end 2023 with 50 days to 60 days of total dealer inventory, although seasonality, production schedules and timing of fleet deliveries may take us out of this range from time to time. Supply chain and logistics challenges are trending in the right direction, however there are ongoing logistics congestion and industry wide railcar capacity shortages that we continue to take actions to mitigate. GM international delivered Q2 EBIT adjusted of $250 million, largely flat year over year. China equity income was $100 million up $150 million year-over-year as we lapped the COVID shutdowns in Q2 of 2022 and aggressively took actions to help offset industry challenge. I’d like to thank the China team for their tireless efforts and perseverance through multiple years in a challenging environment. EBIT adjusted in GM International excluding China equity income was $150 million, down $150 million year-over-year, driven by a $100 million charge from the LG agreements and $150 million of mark-to-market gains recorded in the prior year. Absent these items, the results would have been up year-over-year with price increases more than offsetting FX headwinds due to the strength of the product portfolio, a trend we expect to continue in the second half of the year. GM Financial delivered EBT adjusted of over $750 million down close to $350 million year-over-year in line with expectations and primarily due to a higher cost of funds and lower net leased vehicle income, partially offset by increased finance charge income from portfolio growth and a higher effective yield. GM Financial’s key metrics, balance sheet and liquidity remain strong providing them the ability to support the GM enterprise and our customers across economic cycles. As a result, we are taking our full year EBT adjusted guidance up to the $2.5 billion to $3 billion range. Corporate expenses were $350 million in the quarter down $400 million year-over-year, primarily due to differences in year-over-year mark-to-market changes in the portfolio. Cruise expenses were $600 million in the quarter, up $50 million year-over-year, driven by an increase in operating spend as they continue to expand operations successfully. As we look forward, due to the strong Q2 core performance and outlook, we are again increasing our full year guidance to EBIT-adjusted in the $12 billion to $14 billion range, EPS diluted adjusted to the $7.15 to $8.15 range and adjusted automotive free cash flow in the $7 billion to $9 billion range. Most of the underlying assumptions in our guidance remain unchanged from Q1, with stronger pricing, the main driver behind the increased outlook as we foreshadowed. In addition, we expect better cost performance in commodities and logistics costs to be neutral for the full year. We’re bringing the high end of our 2023 capital spend guidance down by $1 billion this year to the $11 billion to $12 billion range in part due to our simplification initiatives. We are evaluating and we’ll provide an update on the medium-term capital spend outlook at our Investor Day later in the year, but expect the spend to come down from the previous $11 billion to $13 billion range. For full year adjusted automotive free cash flow guidance, we expect working capital headwinds related to the module assembly challenges Mary mentioned — offset the benefit from the higher EBIT adjusted lower short-term timing impact result revenue more of cells. But this is expected to unwind as module assembly capacity increases. In closing, we remain very well positioned for the future and achieving our medium and our long-term targets as we’ve highlighted. We’re focusing on profitability, and our recent results demonstrate are not sacrificing margin for volume. We will continue this strategy with the decisions we’re making today, helping to drive a fundamentally stronger company beyond 2023. And when you factor in our expected revenue growth, including the opportunities from the software-defined vehicle, AV and other new businesses, this sets us up to grow margin as we get to the back half of the decade. This concludes our opening comments, and we’ll now move to the Q&A portion of the call. Q&A Session Follow General Motors Corp (NYSE:GM) Follow General Motors Corp (NYSE:GM) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Our first question comes from the line of Rod Lache with Wolfe Research. You may go ahead. Rod Lache: Congratulations on these numbers. I was hoping to maybe ask you for a broader question about EVs. You made some assumptions for EV pricing and EV costs when you laid out your hands for mid-decade profitability. And I’m hoping that you can just update us a little bit on your thinking just based on how the markets evolved with some cases with more aggressive competitive pricing. And obviously, we’re also seeing some manufacturers put in different manufacturing innovations to drive down costs. What are your latest thoughts on that? And have any of your observations led you to change any of your plans? Mary Barra: Thanks, Rod, for the question. I would say we’re doing a lot in that space. Our — what we said last year at Investor Day, it gets low to mid-single-digit margins for our EV portfolio by 2025 remains unchanged. Even with all the things that are moving in that, we’re committed to getting there. I think when you look at the incredible cost discipline that we’re demonstrating right now as well as winning with simplicity. It’s just going to take cost out of every part of the business and make everything more efficient. And we think actually be better from a consumer perspective. . As it relates specifically to manufacturing costs, there’s quite a bit of work. We have a special team that is looking at how do we continue to drive efficiency, especially in the body shop. And of course, the battery team is working on how do we take cost out from an LTM perspective with what we’ve learned by now having that up and running. So I think there are several areas we’re working on. We intend to have industry-leading margins, and we’re not going to stop until we get there and we still have a lot of levers to pull. I don’t know, Paul, if you want to add anything. Paul Jacobson: No, I think you covered it. I think, Rod, one of the things that we’ve asked — we’ve been asked on this call frequently is about pricing strategy. And when you look at the demand we have for our vehicles and as we’re ramping up production, we still have pent-up demand. People are hanging in there with orders. And I think with some of the challenges identified as we ramp production, we see a lot of consistent strong demand for the products that we’re producing. And I think that comes from a purpose-built EV that we did from the ground up, which I think is going to continue to impress people as we get more vehicles out on the road. Rod Lache: Okay. And just a follow-up on that. Just it sounds like you’re not changing your expectations for mid-decade pricing. Just wanted to clarify whether there’s been any changes based on observations that you’ve made on capacity growth and competitive actions? And then secondly, can you just maybe elaborate a little bit on this $800 million LG charge? And what that actually means you alluded to lower cost, but it wasn’t clear whether that was a one-timer or was that launch cost or something else? Mary Barra: So first of all, on pricing in our plan, of course, we’re going to be — we’re going to watch what’s going on in the marketplace. But I think one of the things we demonstrated for almost 15 years now is we’re going to be very disciplined with incentives and with our vehicles and when I think when you look at the original pricing that we announced I think it was very in line with what the customer expects for the value they’re going to see from the products. And so far we’re seeing that. So we believe we have priced the vehicles right. Again we have a lot of pent up demand. The feedback we’re getting anecdotally for instance, from LYRIQ, new LYRIQ owners is they’re just delighted with the vehicle. So I think we’ve got the pricing strategy right. Of course, we’re going to watch it. And we’re not changing our mid — our 2025 EV profitability guidance. We’ll pull all the levers that we have to either get there if there’s challenges or make it even stronger. So again, Rod, we know it’s a dynamic business, but we’re committed to get there. And I think this leadership team continues to be able to do what they say. As it relates to the $800 million, there were many issues that we wanted to take care of, but I would say a chunk of it was us doing the right thing for our customers that goes beyond what a traditional recall expense back to a supplier would be as we look at that because we chose to do the right thing from a timing perspective. And I think our customers are happy as evidenced by the still the strong. Actually, we can’t build enough Bolts right now. So we’ll share more about what everything means for our EV margins when we get to November. But again, we thought it was the right thing to do, and we are — have been and will continue to work with our partner, LG ES to take cost out of what of the Ultium and specifically the Cells, Operator: Our next question comes from Itay Michaeli with Citi. Itay Michaeli: And congrats on the results. Just wanted to ask a couple of questions on the Ultium ramp. First, the issue what you identified with the automation equipment for the modules. Can you talk about when you expect that to be fully resolved? And are you still targeting the $400,000 of cumulative volume by the first half of next year? Mary Barra: Yes, we so we’re not walking away from any of the targets we put out, whether it’s 100,000 in the second half of this year, leading them to 400,000 by middle of next year. And what you’re going to see in the second half of this year and then really crank up in the first half of next year is a lot more Ultium-based product. . We were surprised the supplier, we thought they were in better on track for the delivery that they had. So we have seen in our teams to help them get the automation up and running. We’ve already seen a lot of improvement from I’ll say, the last four to six weeks, we’re going to continue on that path. But to derisk it, we’ve also added additional lines because we don’t want module production to gate our launch of all the products that we have coming in the second half of this year and continuing into next. And we know we’re going to need that module assembly capability anyway as we continue to grow beyond the 400,000. So disappointing, I’ve personally been reviewing the lines. As you know, I’ve spent time in ME earlier in my career running. So we’ll get this behind us. I’m very confident of the teams we have in place. So you’ll see it improve as we get through I would say, into the end of third quarter, beginning of fourth quarter, and then I think it will primarily be behind us by the end of the year, if not a month or so sooner. Itay Michaeli: Terrific. That’s all very helpful. And then just a follow-up on — broadly on U.S. EV demand. There’s been a lot of focus on rising inventory. So just curious how you slot reservation orders as you ramp up Ultium products. And also how you’re thinking about the Silverado EV pricing just given the recent action from your competitor. Mary Barra: Yes. So I think from the recent competitive action, if you look at the Silverado work truck, the range, the telling capability, the overall performance. It’s a true truck. So when people aren’t having to make compromises or trade-offs. So I’m very confident, and we have strong demand for the Silverado work truck as well as the RST, which will be — that’s from a retail perspective out toward the end of the year. So I’m very confident with where we are in the pricing for the Silverado EV. And that’s — your first question, Itay, was… Itay Michaeli: Just probably on EV demand, what you’re seeing in reservations and just how confident are you kind of — what you’re seeing for your products in the next few months. Mary Barra: Yes. Again, we’re seeing with LYRIQ, we’re seeing with the HUMMER truck and SUV, Frankly, the Bolt, I mean these vehicles are getting to the dealers’ lots. And if they’re not already sold, the — they’ve got a list of people who are waiting for them. So — and we still have a lot of reservations and people who put deposits down. The churn on that is very, very low. And for the rare customer who decides they’re not going to wait for the vehicle, there are several more waiting in line. So again, we’re very confident. And it’s not by accident. It’s because we — there’s been some criticism that we should have been faster with our EVs. We’re going as fast as we can, but we wanted to make sure we were leveraging a platform that’s going to give us efficiency with Ultium and that consumers weren’t going to have to compromise. So I’m very confident with the product portfolio we have coming, the pricing and the demand. Operator: Our next question comes from Mark Delaney with Goldman Sachs. Mark Delaney: GM had strong pricing and mix again in the second quarter even as supply and inventory for the industry are gradually recovering and borrowing costs for consumers are higher. You talk about how you expect the market environment to evolve in the second half of the year? And are there any levers for GM in particular in order to help to sustain some of the strong core automotive performance that you’ve been seeing? . Paul Jacobson: Mark, it’s Paul. Thanks for the question. We’re still kind of operating somewhat cautiously as we said from the beginning of the year. We’re not assuming major increases in pricing or in average transaction prices going forward. So we expect that to continue, and it really starts with the demand that we see for our vehicles. We’ve tried to keep inventory pretty consistent. We’ve grown it a little bit to get it to the lower end of that 50- to 60-day range that we’re working on. But overall, maintaining discipline on the incentive side as well. So we’ve really been focused on driving share with margin performance. I think the team has done a good job. As to whether that will continue, we’re kind of taking it day by day, month by month. And we’re very pleased with the results. But as long as we see demand continuing to be as strong as it is for our vehicles, we think we’re going to continue to perform. Mark Delaney: That’s helpful. And on Cruise and good to hear all of the updates on the progress that Cruise is making. I recall you mentioned Cruise vehicles being safer by 54%. Maybe you can elaborate a bit on how you’re measuring the safety of the vehicles that Cruise has with its AVs relative to a human driver. And are there any specific features on the origin as it relates to safety that you could point out as perhaps drivers of additional improvement going forward? Kyle Vogt: Yes, sure. I’d be happy to. So clarify the 50-some-percent number was a reduction in any kind of collision. And the way that we measure that as we looked at the first 1 million miles of driving across the Cruise fleet and compare that to a human benchmark that we established with leading transportation research institute. And that was based on millions of miles of driving by human drivers then selected a subset of all those miles and matched it to EV drive. So as close as possible to it, apples-to-apples comparison. But beyond that, 50-some percent collision reduction doesn’t really tell the whole story because that includes things where the AV was sitting still and just got rare ended by driver. That’s not really the fault of AV. When you look at collisions where the AV was the primary contributor, 92% fewer collisions. So most of the time, it’s the other vehicle that’s the primary contributor towards any collision that we’ve seen. And then I guess another one we’re really proud of is AV is it 73% fewer collisions with meaningful risk of injuries. These are the more severe types of collisions, not just the low-speed fender benders. So all these in aggregate tell a very compelling story. And I would emphasize that this is still — this is the product as it exists today, and we push out a new software update each month, which targets specific kinds of safety improvements. So I think there was a question early on, on how the AVs do relative to humans. I think our data shows that we’re already at least from this data, there’s strong evidence of significant safety improvements. And I think it’s going to continue improving at a rapid clip as we continue to invest in machine learning technologies and other ways to drive up the safety of the product. Operator: Our next question comes from John Murphy with Bank of America. John Murphy: I just wanted to ask a question like we often do on cap viewed. I mean 102.7 in North America. A skeptic might say, hey, listen, you’re running all out and as you bring on more volume, you’re going to need to add fixed costs and variable costs. And with the risk of pricing coming down, you can see real compression in margin. But an optimist might say, listen, that’s staff capacity, pricing will hold up and you’ll just bring on variable costs as volumes recover. I’m just curious where in the spectrum, I think you actually are in sort of that range because it does seem like there’s some real opportunity if pricing holds up and you just bring on these variable costs, but there might be some real significant upside to margins over time. . Paul Jacobson: Yes. So certainly, that has been part of what’s been working for us for the first six months. And despite that higher capacity utilization, you’re seeing inventory remaining pretty much flat with a lot of the inventory growth or inventory still strapped in that in-transit bucket. As vehicles are making their way to the dealers, we see them still turning very, very quickly, and that’s allowed us to continue to lean into the pricing and make sure that we’ve got consistent incentive performance. And I think you’ve seen some outperformance from GM over the last several months in that space compared to the industry as a whole. So I think we’ve shown a willingness to balance supply with demand as we did in the first quarter, where we cut some of the capacity utilization intentionally to make sure that we kept margins flat or kept — sorry, inventory flat and margins strong. So we’re going to continue to watch that. But as we’ve seen, it’s provided tremendous benefits for us so far, and we’re going to continue to manage it that way. John Murphy: But if you were to flex up on volume, would it be mostly a variable cost that would come in? Or would there need to be some fixed costs that would come along with that step-up of buying with. Paul Jacobson: Yes, it would be mostly variable costs. But when you think about where the company is being utilized, it’s at the higher end now, with the demand that we’ve seen for the higher trim levels on the full-size trucks, SUVs, et cetera. So we might not be able to do it in a linear way. where you’ve got some mix if you’re increasing production on some of the lower-priced smaller vehicles across the board. So we watch that and try to maintain as much balance as we can. John Murphy: Okay. Just a follow-up on fleet. Fleet has been a real good guy for you and the industry. When you think about the durability and resilience of that in the face of even potentially some risk to the economy here, how durable is that. And is there just massive pent-up demand on the fleet that might carry the day even if rates were a little bit higher and we see a little bit of a soft patch in the economy? . Paul Jacobson: Yes. I think you captured it well, John. Obviously, we’ve got a lot of pent-up demand from the last few years where fleet took the brunt of some of the capacity challenges due to COVID and due to the semiconductor challenges. In fact, if you look at the first half of the year, year-to-date, it was the best fleet performance since 2007, largely fueled by the commercial side of the business. And as we’ve said before, the fleet business is very different than it was in the past, where it was very, very thin margins in an effort to drive volume. Our fleet business is performing very, very well with margins similar to the retail side. So the business continues to perform, the team is doing a great job, and we expect that to continue for the short and medium term. John Murphy: I’m sorry, just one housekeeping question. The 792 charge for the LG issue, was that contemplated in your initial guidance? Because if it wasn’t, it’s actually — the raise today is more like a $1.8 billion raise in the outlook. I’m just trying to understand if you were contemplating that before? Paul Jacobson: It’s contemplated a guidance raise itself. It wasn’t contemplated as we came into the year. John Murphy: Okay. So the raise is significant today. It’s actually more than $1 billion on operating basis if you were to back that out. Is that fair. Paul Jacobson: Yes. Like we said, the business continues to perform going back to what we said in the first quarter as long as the consumer held up and strong, we expected that we’d be able to surpass the guidance we put out and that certainly what you’ve seen through the second quarter and what we can see July month-to-date has held up very well as well. Operator: Our next question comes from Adam Jonas with Morgan Stanley. Adam Jonas: So a question on the new Bolt. I think in your prepared remarks, you said it will be updated with Ultium and Ultifi technology. Sorry to be pedantic here, but I just want to know, are you using attributes of Ultium? Or is this a full ground-up Ultium platform? Mary Barra: So it will incorporate — when the new version comes out, we will say it’s an Ultium-based product. So we are definitely leveraging that technology because that’s going to really help us get costs down. Remember, today’s Bolt is our second-generation battery technology and from Gen 2 to Ultium. We saw about a 40% reduction as we started to launch. So that’s going to really help drive the profitability of that vehicle. And then with the work that we’ve done from a software-defined vehicle, Ultifi, it will have latest from that perspective as well. So this is a very capital-efficient quick way to build. And the strong consumer response we have to the Bolt and getting affordable vehicle out into the marketplace. So as we continue to look for ways to drive capital efficiency, this is something we look before. But as we’ve gotten more experience, the team took a look and frankly, I’m super excited about it. Adam Jonas: Okay. Just a follow-up. Audi announced it’s going to use SAIC’s next-gen EV platform for China and possibly, elsewhere. Since SAIC is your biggest Chinese JV partner. I’m just wondering, could GM also consider using SAIC’s EV platform to address the specific needs of the Chinese EV consumer? Or is the strategy there kind of Ultium only for China? Like are you open to a potential use of another non-Ultium platform even if you could adapt some technology. Mary Barra: Yes, Adam. Great question. I think the Ultium platform is much more efficient. I think they’ve already indicated that their dedicated platform wasn’t competitive from a cost perspective. We’re continuing to take costs out of Ultium. But of course, we always look at what the joint venture partner can bring to the party, and we’re going to look to make sure that we’re competitive from an EV perspective in that market as well. So we are open and always considering whatever is the most cost-effective way to have a vehicle that’s going to have no compromises to meet the performance of, in this case, the Chinese consumer. Operator: Our next question comes from Dan Levy with Barclays. Dan Levy: First, I just wanted to ask about the commentary on CapEx, which you noted the $11 billion to $13 billion for ’24, ’25 is under review. You trimmed the CapEx for 2023. Maybe you can just give us a sense of how you’re looking at the manufacturing build-out. I think you noted that there’s some simplification initiatives. Is that just something that was incremental? Or was that a byproduct perhaps looking at the market a little differently in terms of demand. I guess we’re just wondering is that the slowdown in spend just purely the simplification. Or is there something else on the manufacturing side with market demand that’s causing you to slow down a little bit the way that you’re spending? Mary Barra: As there was no market-driven slowdown, this was really us looking and making sure we had the absolute right portfolio entries. And as I mentioned, for both EV and ICE we’re going to — by 2030, we’ll be covering 90% of the segments, but we looked and found ways to do that more efficiently. The Bolt is a good example, instead of doing an all-new vehicle really leveraging the capital that’s already there and the benefits we have by having the Ultium platform. And then I think the winning with simplicity, in the past, we’ve gone in and done complexity reduction. But if you don’t do it as you design the vehicle, you drive a lot of capital in vendor tooling and in the plant. And frankly, this is something we’ve been working on for the last several months. Mark Reuss is leading this initiative with the marketing and manufacturing teams. And we are finding, there’s a lot of ways to take cost out of manufacturing and from a capital perspective as well. So it’s pretty significant. You’ll hear and see more about it. But just the comment I made about getting rid of trims that directly correlates to spending less capital, especially on the vendor tooling side. Dan Levy: And then as a follow-up, I just wanted to pass the question on this — on the charge associated with the Bolt. And really, this pegs the question, Ultium is a new product, and I think there’s a lot of unknowns with the new product. How should we think about the type of warranty expense you may need to accrue on these products, how much more — I mean, is there a need to be an added level of conservatism as the ramping? Or is there some clear data that you have that shows just early on that the quality will be far greater than the initial Bolt, which was — you’ve clearly evolved on your architectures. But just wondering how you need to think about warranty expense going forward on the new vehicles . Mary Barra: Yes. I would say if you go back, the Bolt’s been in market for several years now and actually had very good warranty performance. Remember, this was two specific manufacturing defects that have occurred at the same time, caused the issue on the Bolt that was in the LG ES process. We — our team worked hand-in-hand with them. We understand exactly what happened. When you look at what we’re doing at the Ultium plants from a cell perspective and the amount of error proofing and the fact that we’re following the quality process and have the traceability that if there were an issue, we wouldn’t have to do the whole population. All of that’s been put in place. So I think all those lessons learnt. Then when you look at what we’ve got from an Ultium perspective already and what we’re seeing, I think we’re very confident that we’re going to see strong or I would say, good warranty performance, strong warranty performance on these vehicles because, again, using General Motors manufacturing quality systems and processes across the board. So I don’t think that because it’s new, I think some of the things we’re struggling with to start up with our suppliers is the modules, that’s not going to necessarily drive a quality issue. Again, we have quality checks and processes and using the appropriate error proofing to know that when we have a cell, when we have a module when we have a pack, it’s measured and checked for quality. Operator: Our next question comes from Chris McNally with Evercore. Chris McNally: I wanted to quickly go back to the $30 billion autonomous elephant in the room. And just a quick tech question for Kyle. So Assuming that the San Francisco policy update goes in sort of the industry’s favor, do you just have a broad sense for when the 24×7 rollout will happen in San Francisco quarter, the consumer rides, I know there’s internal testing where you’re blanketing the city, but just curious on the consumer side. And then just how many AVs would it take to sort of blanket a city like San Francisco to have a disruptive service similar to Uber. Can you do it with under 1,000 to 2,000 origin? Kyle Vogt: Yes, good question. So on the San Francisco side, so right now, as I said earlier, a significant portion of our fleet is operating 24×7, and that service is open to employees. So we are not far from opening that up to the general public. I can’t give specific dates. But basically, we’re operating that service to employees. Things are looking pretty good. So that is coming pretty soon. And as for what it would take to blanket a city like San Francisco, our goal is, as I think I said on previous calls is to make sure that we ramp up manufacturing capacity. We’ve got a variety of markets to absorb those vehicles. And there are practical reasons to ramp up gradually in the city, just to make sure it acclimates as it’s transitioning to a new form of mobility. So it’s not our intention just to sort of vehicles and sort of direct them all into a single city. That’s our perspective. There’s over 10,000 human ride hill drivers in San Francisco, potentially much more than that, depending on how you count it. Those drivers, of course, aren’t working 20 hours a day like a robotaxi could. So it does not make a very high number to generate significant revenue in a city like San Francisco. But certainly, there’s capacity to absorb several thousand per city at minimum. Chris McNally: Much appreciate it. And then just a high-level question on the strategy for whoever comes to capital funding. Mary, it looks like there’s about 3-plus type quarters before you’d have to sort of consider funding Cruise? Just any thoughts on internal versus external funding given the environment. Mary Barra: I don’t really have anything to comment right now. We certainly are generating the free cash flow that we can fund Cruise’s expansion, and we’ll look to see what’s in the best interest of our shareholders. . Operator: Our next question comes from Tom Narayan with RBC. Tom Narayan: Mary, a question — maybe a philosophical one on autonomy and how you view Ultra Cruise. In light of what we heard from Tesla and how they are potentially planning to license an FSD product. Just curious to how you view Ultra Cruise, would that be a revenue profit center? Or just a product enhancer. How do you see the kind of Level 2 plus product for you? Mary Barra: We definitely see the Level 2 plus product as revenue-generating and profit-generating and very pleased with what we have with Super Cruise, and we’re going to continue to enhance as we move forward. And we’ll have more to share about this when we get to Investor Day in the fall. Tom Narayan: Okay. And as a follow-up on Cruise. You made a strong case, obviously, on the safety features. Just wondering if you could give some color on how perhaps you’re arguing that on a regulatory perspective, maybe on a federal level, like what are kind of the obstacles? And I mean, is that you see happening more likely now? Is there kind of a greater appeal now that you’re seeing all these safety benefits? Is it a stronger case now than maybe it was before? Mary Barra: I think as we continue to grow in miles, but first of all, we’re not arguing with the regulators. We’re talking to the regulators and sharing the information, which we’ve been doing for several years now. And so they understand how we’re measuring safe with what Kyle referred to with what we did with outside groups and continuing to share the information. I think it’s very goal aligned with what the Department of Transportation and NYCTA is looking for us to improve road safety. So of course, we’re going to continue that dialogue, share the information, and we’re very optimistic of where we’re headed. . Operator: Our last question comes from Ryan Brinkman with JPMorgan. Ryan Brinkman: Okay. Great. It looks like the China equity income in 2Q was similar to 1Q, rounding to $21 billion, down from sort of $0.2 billion a year ago and of course, $0.5 billion quarterly pre-pandemic. What is required, do you think to restore China profitability to where you would like it to be, I don’t know, from a sales or a share or perspective? It seems like you’ve got really great traction in that market for lower-priced EVs, such as for the Wuling brand. How should we think about your strategy for electrifying your high-end brands in China? Is that the catalyst do you think to higher profits in that market? Mary Barra: Well, definitely, we have strong ICE products and performance there are already clear to winning as we go forward is having the right portfolio of EVs for Cadillac and Buick especially. And so we have a lot of those vehicles being launched right now, and we’re continuing to work to make sure they’re efficient in meeting the customer needs. But let’s also remember, right now, we’re in the high single-digit market — market share place right now even with all the — in fact that there’s 100 new EV entries. So we’ve got to have the right EVs at the right price with the right technology. I was over there I guess, maybe two months ago now and did a full review of our product line and obviously spent time understanding where the competition is. I think we’ve got the right products coming. We’ve got to go out there and sell them now engage our team to get that done. Ryan Brinkman: Okay. Great. And then just maybe lastly on the Bolt charge. Is the charge driven more by something differently being done for the consumer versus what was previously communicated? Or is it more of a like rejiggering of the cost-sharing agreement between GM and LG for the previously announced actions? Mary Barra: Well, for a portion of it, obviously, as you announced the recall and then you look what it’s going to take, we took some time working with the LG ES team to come up with a diagnostic that then over a period of time indicates that the vehicle can go from the reduction of 80% battery charge to the — back to the full battery charge. That took a little longer. And so as we did that, we wanted to make sure we were taking care of the consumers, replacing the battery packs maybe faster than what we would have ended up needing to do. And just having attention to them because again, we have a very strong Bolt customer, and we wanted to make sure that they understood we’re going to stand behind it. So I think we took the right actions. And as we looked at that, where we were as we were well into having that issue behind us, we looked at what was right from where the costs fell. So we just were doing the right thing. LG is a very strategic partner to us. And like I said, there’s a lot of work that we’re doing together and individually to continue to improve our cost position. Operator: I’d now like to turn the call over to Mary Barra for closing comments. Mary Barra: Thank you so much, and I want to thank everybody for your questions. As I said at the opening of the call, the success we’ve had in the second quarter and the first half ties directly to the great new vehicles we’ve launched and strong execution of our business plan. Our outlook, both for the second half and over the next several years, will increasingly be shaped by our optimized ICE and EV portfolio, our investment that we’re making, not only in the vehicles, but also the growth opportunities as well as cost discipline. And — this will be the focus of our next Investor Day that’s going to be held in mid-November. The agenda will include a detailed look at our software strategy, led by Mike Abbott, who joined us from Apple in May. You’re also going to have the opportunity to drive our new STBs and experience the expanding capabilities, as I mentioned, of Super Cruise. And one of the most important vehicles you’re going to get to drive is the new Chevrolet Silverado EV work truck that we talked about it. I think most powerful examples of the benefits of the investment we made starting in 2018 on the Ultium platform. It offers up to 40% more driving range, faster charging and far greater towing capability than competitors because, again, it was purpose built to be an EV. And that’s something that we’ve made the investments. We were going through the growing pains right now. Others they’re going to need to do that as they get to their dedicated platform. So I’m very excited about what we’re doing to be able to demonstrate in November and just know that we’re going to continue to execute with discipline across all aspects of the business as we are in Q3 and into Q4. So appreciate everyone and look forward to seeing you then and probably talk to most of you before then. So thanks for your participation. And I hope everybody has a great day. Operator: That concludes the conference for today. Thank you for joining. You may disconnect. Follow General Motors Corp (NYSE:GM) Follow General Motors Corp (NYSE:GM) We may use your email to send marketing emails about our services. 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Silgan Holdings Inc. (NYSE:SLGN) Q2 2023 Earnings Call Transcript July 26, 2023 Silgan Holdings Inc. beats earnings expectations. Reported EPS is $1.08, expectations were $0.89. Operator: Ladies and gentlemen, thank you for standing by and welcome to the Silgan Holdings Second Quarter 2023 Earnings Call. I would now like to turn the call over to […] Silgan Holdings Inc. (NYSE:SLGN) Q2 2023 Earnings Call Transcript July 26, 2023 Silgan Holdings Inc. beats earnings expectations. Reported EPS is $1.08, expectations were $0.89. Operator: Ladies and gentlemen, thank you for standing by and welcome to the Silgan Holdings Second Quarter 2023 Earnings Call. I would now like to turn the call over to Alex Hutter, Vice President of Investor Relations of Silgan Holdings. Please go ahead. Alexander Hutter: Thank you and good morning. Joining me on the call today are Adam Greenlee, President and CEO; Bob Lewis, EVP, Corporate Development and Administration; and Kim Ulmer, SVP, CFO and Treasurer. Before we begin the call today, we would like to make it clear that certain statements made today on this conference call may be forward-looking statements. These forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting the company and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in the company’s annual report on Form 10-K for 2022 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements. In addition the commentary on today’s call may contain references to certain non-GAAP financial metrics including adjusted EBIT, adjusted EBITDA, free cash flow and adjusted net income per diluted share. A reconciliation of these metrics which should not be considered substitutes for similar GAAP metrics can be found in today’s press release available in the Investor Relations section of our website at silganholdings.com. With that, let me turn it over to Adam. Adam Greenlee: Thank you, Alex, and we’d like to welcome everyone to Silgan’s second quarter 2023 earnings call. I’ll make a few comments about the second quarter and share our thoughts regarding the remainder of the year. Kim will then review our financial performance and provide more details around our 2023 outlook, and then Bob, Kim and I will be happy to answer any questions. The second quarter presented a challenging comparative versus the prior year’s record performance and as market conditions evolved late in the quarter our businesses took quick actions to adapt to those changes. We continue to advance our strategic initiatives and once again the company benefited from a balanced portfolio of businesses. Strong operating performance in our Metal Containers segment helped drive double digit adjusted EBIT growth in the segment while we also continued to experience increased demand and volume growth in our high value dispensing products. As we exited the first quarter and earlier in the second quarter consumer demand for our products and our customer demand forecast remained strong. As the quarter progressed, we began to see what appeared to be a broad based volume shift with many of our large customers. As we worked with our customers to better understand the drivers of this dynamic and given how closely integrated we are with many of them, we came to understand that while consumer demand remained resilient, several of our customers were initiating internal working capital and inventory management initiatives for the second half of 2023. These initiatives are separate from the prior destocking activities related to the products that had seen a significant surge in COVID related volumes. As expected, except for lawn and garden products, that destocking is now complete as those products have returned to a normalized level of demand. While our targeted growth markets in each of our businesses continue to perform well, growth in 2023 has been overshadowed by these inventory management programs in the second half of the year. Due to our customers’ changed priorities for the second half, we are also shifting our focus to align our operational footprint and business activities to the revised second half projections and we will be driving out cost from each of our businesses. As always we have an intense focus on understanding and meeting the unique needs of our customers and supporting any of their initiatives. Turning to our second quarter results, strong performance in metal containers and inline performance in custom containers were offset by two primary items in our Dispensing and Specialty Closures segment. The largest item was the result of a skilled labor challenge at one of our U.S. closures, food and beverage facilities, which limited the output of that facility and created significant incremental costs in our overall system to serve those customers. As always, Silgan worked diligently to insulate our customers from any operational issues we may face as we work to mitigate these impacts. We will continue to incur incremental costs to serve our customers in the second half, but have already taken aggressive actions that will result in those costs reducing through the end of the year and the issue itself being resolved as we transition into 2024. Food: In certain products in certain regions we have seen evidence of consumers trading down to lower cost packaged products. We have a long history that clearly shows that Silgan’s products tend to do well in challenging economic times, and we continue to believe that our broad portfolio of products is well positioned to once again be a preferred vehicle of nutrition and at home use for consumers who are seeking value at retail. Beverage Closures: In certain products in certain regions we have seen evidence of consumers trading down to lower cost packaged products. We have a long history that clearly shows that Silgan’s products tend to do well in challenging economic times, and we continue to believe that our broad portfolio of products is well positioned to once again be a preferred vehicle of nutrition and at home use for consumers who are seeking value at retail. Food: As a result of these items, we now expect adjusted EBIT for both the Dispensing & Specialty Closures and Metal Containers segment to be comparable to the prior year record level despite our customers’ inventory management programs. We have also revised our expectations for Custom Containers adjusted EBIT lower as the commercialization of the new contractual business awards has been delayed into 2024 in conjunction with those customers’ inventory management programs. With that, Kim will take you through the financials for the quarter and our estimates for the third quarter and full year. Beverage: As a result of these items, we now expect adjusted EBIT for both the Dispensing & Specialty Closures and Metal Containers segment to be comparable to the prior year record level despite our customers’ inventory management programs. We have also revised our expectations for Custom Containers adjusted EBIT lower as the commercialization of the new contractual business awards has been delayed into 2024 in conjunction with those customers’ inventory management programs. With that, Kim will take you through the financials for the quarter and our estimates for the third quarter and full year. Kim Ulmer: Thank you, Adam. Net sales for the second quarter of 2023 were approximately $1.4 billion. Excluding non-recurring sales associated with Russia in the second quarter of 2022, second quarter of 2023 sales declined 6% from the record prior year period, driven primarily by lower volumes in each of our segments, partially offset by improved mix and the pass-through of raw material and other cost inflation. Total adjusted EBIT for the quarter of $160.8 million, decreased by 14% on a year-over-year basis with record adjusted EBIT in the Metal Containers segment, offset by lower adjusted EBIT in the Dispensing & Specialty Closures and Custom Containers segments. Adjusted net income for diluted share declined $0.26 from the record achieved in the second quarter of 2022 with higher interest expense of $0.08, non-recurring sales associated with Russia of $0.06 and lower volumes driving the year-over-year decline. During the quarter we wrote up a tax indemnity and related tax reserves from a historical acquisition as the statute of limitation expired. The write-off of these items adversely impacted corporate expense by approximately $2 million and interest expense by approximately $3.5 million and benefited our tax expense by approximately $5 million in the quarter. The net impact of these tax related items was neutral to adjusted earnings per diluted share and our effective tax rate excluding these impacts would have been approximately 23%. Turning to our segments, Dispensing & Specialty Closures segment sales declined 6% versus the prior year, excluding a 1% impact from Russian sales primarily as a result of lower volume mix of 6%. The decline in volume was driven by double digit declines for higher volume closures for Food & Beverage markets primarily in Europe, which more than offset high single digit volume growth in higher value dispensing products. Second quarter 2023 Dispensing & Specialty Closures adjusted EBIT decreased $23.4 million versus the record achieved in the prior year period as a result of the benefits in the prior year from an inventory management program and cost recovery for customer project expenditures and lower volume mix. Relative to our expectations entering the quarter, the shortfall in adjusted EBIT was driven primarily by skilled labor challenges and associated costs at a U.S. Food & Beverage Closures facility, which impacted the quarter by approximately $10 million and lower volume for Food & Beverage products primarily in Europe. In our Metal Containers segment, our teams continued to perform at a very high level again in the quarter and while volume was below prior year levels due to prior year post pandemic restocking activity ensued, Pet volumes remained strong in the quarter. Metal Containers adjusted EBIT was a new record for the second quarter and increased nearly 20% from the prior year quarter as the business continued to successfully pass-through labor and other manufacturing costs while actively managing our cost structure. In Custom Containers, our previously discussed non-renewal contractual business in the segment and lower food and personal care volume drove volumes 14% below the second quarter of 2022, which coupled with lower resin costs on a year-over-year basis resulted in sales 17% below the prior year period. As expected Custom Containers adjusted EBIT declined $11 million as compared to the record achieved in the second quarter of 2022, primarily as a result of lower volumes. With customer inventory management programs impacting volume and the timing of the commercialization of new business being deferred to 2024, we anticipate third quarter volume to decline approximately 10% from the prior year and third quarter adjusted EBIT to be below second quarter levels. Looking ahead to the third quarter, we are estimating adjusted net income per diluted share in the range of $1.10 to $1.20, which includes higher interest expense of $0.08 per share and a $0.03 per share impact associated with non-recurring sales for Russia. On a segment level with adjusted EBIT comparable to the prior year record levels in Dispensing & Specialty Closures in Metal Containers and below the prior year in Custom Containers. For the full year 2023, we now expect total adjusted EBIT to decrease by a low single digit percentage as compared to the record prior year with adjusted EBIT comparable to the prior year record levels in Dispensing & Specialty Closures in Metal Containers and below the prior year in Custom Containers. As a result, we are revising our outlook of adjusted net income for diluted share from a range of $3.95 to $4.15 to a range of $3.40 to $3.60, which includes a year-over-year headwind of $0.30 per share for interest expense, which we now expect to be approximately $170 million and a tax rate of approximately 24%. These estimates exclude the impact from certain adjustments outlined in Table C of our press release. As we bridge our revised expectations for the full year to our prior estimates, we are now expecting approximately $0.55 cents lower adjusted net income per diluted share in 2023, which is comprised primarily of the following items. Approximately $0.30 per share, primarily due to the customer inventory management programs across all the segments with roughly half of that impact being in custom containers due to the inclusions of delay in commercializing the new business awards, approximately $0.15 per share for the full year from the labor challenges and associated costs in our U.S. Food & Beverage Closures facility, and approximately $0.10 per share higher interest expense as a result of higher interest rates on our variable rate debt. Based on our current earnings outlook for 2023, we are also revising our estimate of free cash flow to $375 million with CapEx now expected to be approximately $230 million. That concludes our prepared remarks and we’ll open the call for questions. Operator, would you kindly provide the directions for the question-and-answer session? Q&A Session Follow Silgan Holdings Inc (NASDAQ:SLGN) Follow Silgan Holdings Inc (NASDAQ:SLGN) 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 Anthony Pettinari from Citi. Please go ahead. Anthony Pettinari: Hi good morning. Adam, in terms, hey, in terms of customer inventory management programs, it seems like a lot of CPGs have been destocking maybe for close to a year now, and it sounds like we have kind of a new round of destocking initiatives. Is it possible to talk a little bit more, maybe qualitatively about how these inventory management programs are maybe different than what was initiated, I guess, late last year and is it possible to quantify maybe days on hand, are customers going back to pre-pandemic levels or is there sort of a way to frame what this new inventory level might be versus history for your customers? Adam Greenlee: Hey sure, and Anthony, maybe before I get into those details, I just want to make it really clear to everybody that the team here at Silgan is very disappointed with our performance in the second quarter and our revised outlook for the remainder of the year. We believe the current issues we’re facing are transitory in nature and will be contained to the year of 2023. What I can also tell you is that the Silgan team collectively understands the challenge that’s right in front of us, and we remain confident in the earnings power and the outlook for each of our franchise businesses. So as we think about what’s different about this inventory situation, Anthony versus the, what I’m going to call the COVID related destocking that we were experiencing in certain products last year, this is much more broad based. So in fairness, the destocking we talked about previously related to COVID items, again, items that had a surge during COVID, like hard surface cleaners and sanitizers, those types of products, we have essentially cleared that destocking and we are now seeing growth again in those products. So unfortunately this is an entirely new program and I think this has really centered around the fact that there has been significant inflation that has been not only passed through to consumers, but to our customers as well, not just in the products that we sell, but in ingredients and other packaging raw materials, et cetera. And the reality is, I don’t think the days of units on hand of finished goods are terribly different. The dollar value of that inventory is significantly higher than it’s been at any time in recent past. And you take into account the interest rates that we’re now paying collectively that we’re all dealing with, the interest expense of holding that inventory is really what I think is driving our customers to make a broader based decision on how they’re thinking about working capital and inventory management and again, it’s across all of our businesses. So we view this as something much different than the COVID related destocking activities from last year. Anthony Pettinari: Okay. That’s very helpful. And then you talked about aligning cost structures with the new volume outlook. In terms of the benefits of restructuring programs on a dollar basis, are there any numbers that you can give us for 2023 or 2024 in terms of what you expect those programs to deliver? Adam Greenlee: Sure, and in fairness to our teams, Anthony, the revised forecast that we got in from our customers really were in the very late days of June and into early July. So this is a very recent phenomenon that we’re dealing with as far as the inventory management program. So we have instituted a few of those activities already. We’ve got a lot more activities that we’re going to be talking about on the next call that we have in October. But I think just given the sensitivity to some of the changes that we’re going to make, we’re going to hold off having those conversations until our teams are fully informed of all of those actions that we’re taking. Anthony Pettinari: Okay, understood. I’ll turn it over. Adam Greenlee: Thank you. Operator: Our next question comes from the line of Gabe Hajde from Wells Fargo. Please go ahead. Gabe Hajde: Adam, Bob and Kim, good morning all. I had a question I think, or I suspect I know the answer to this, but there was also a reference of I want to say $5 million or so of incremental corporate development costs in the quarter. I’m just curious maybe Bob, if you can speak to that sort of calibrate what maybe timing or things that we should be expecting, I mean, I know you guys have talked about being active, but anything else would be helpful? Robert Lewis: Yes, sure Gabe. Look, this is not anything that’s out of the ordinary, right? We maintain an active posture in the M&A corporate development market. I think what you just see is what’s happening in the quarter is kind of the timing of some, when some of those costs came through. I wouldn’t read a whole lot into it because it is ongoing activity that happens pretty regularly through our P&L. It may be a little more visible in this quarter, but that’s really it. And I would take that as kind of no change to our posture around capital allocation and corporate development activity. So nothing, there should be no read through there one way or the other around how we’re feeling about the M&A side of the business. Gabe Hajde: Okay. And then the other one, as it relates to the skilled labor issue that you guys are dealing with right now, I guess the natural extension or the question would be to the extent you look across the, the remainder of the platform, are there any upcoming contract negotiations, union or otherwise that you guys are kind of preemptively going after at this point to avoid that or could something go wrong with what you’re dealing with now such that it bleeds into 2024? Like how, you know, degree of confidence there that it’s $0.15 and we can kind of look past it as being transitory? Robert Lewis: Sure. So we just have our normal course union contract negotiations, nothing outside of the ordinary from that perspective for the first part of your question, Gabe. That really wasn’t what happened at the facility that we’re talking about with the labor challenge that we have. I think what I’d say is that we are very proud of all of our Silgan employees and really how everyone stepped up through the pandemic and took it very personally to meet the significantly elevated demand levels that we saw for our products through the pandemic. And unfortunately, I think what we’ve gotten to is just, we’ve got one facility in kind of a rural location where we are having some absenteeism problems and we are addressing those very clearly and very quickly and it is absolutely our opinion that we will resolve those issues within the year for sure. Some of the aggressive actions that we’ve taken, we’ve got a broad network in our Food & Beverage Closures manufacturing platform around the world to utilize and we are doing that. So we’ve moved a significant amount of volume out of that facility. We have also moved one production line to another facility within the United States all of which is really why the expense is so large in the quarter is all the actions that we’ve taken to mitigate it and insulate our customer at the exact same time. So, I think we’ve got a really good degree of confidence that the situation is going to be resolved one way or the other with all of the actions we’ve taken and actions that we can continue to move forward with as well. Gabe Hajde: Understood, thank you. I’ll jump back in. Operator: Our next question comes from the line of George Staphos from Bank of America. Please go ahead. George Staphos: Yes, hi, good morning. This is actually [indiscernible] sitting in for George. He had a conflict this morning. So just on Dispensing & Specialty Closures obviously volumes have been challenged for several quarters now and I understand that you’re guiding a low single digit growth for 3Q, but ultimately what does this say about kind of the intermediate and long-term growth outlook for that business and when can we expect DSC [ph] to get back to sort of sustained growth? Adam Greenlee: Sure, great question and really it’s the markets that we’re talking about that are impacting the overall volume trend in the business. So our dispensing products, again, had been growing at kind of the double digit percentage growth rates year-over-year. I think in the quarter we were up high single digits in our dispensing products. So the conversation for today’s conversation is about the Food & Beverage market and it’s really about our European Food & Beverage customers that we’re talking about. So, we’ve seen softness in Q2. Really as a reminder, our Metal Closures in Europe are part of a premium package in the marketplace. And what we are seeing to some degree in the European economy is the consumers struggling a bit and they are in fact trading down in some cases. We have the benefit of having a metal food can business in Europe as well, that we are seeing some benefit in volume as consumers trade down, but it’s been a very tough year thus far for consumers, particularly for Food & Beverage products in Europe. So look, we think that’s going to ultimately resolve itself. We think that the dispensing platform continues to grow, delivers high single digit growth and then we’ve got really as we move through the second half of the year, relatively fair comps versus the prior year where we had seen softer food and beverage volumes in the second half of last year. And then we also talked about the COVID related destocking activities last year that we’ve already cleared. So we feel confident about the back half forecast that we have for Dispensing & Specialty Closures, and maybe more importantly, we feel really good about the long-term growth rate that we’ve applied to the business. Nothing has changed from our perspective due to this short-term transitory issue. George Staphos: Okay. Got it, got it. And then just on Custom Containers with the delay of the commercialization of that new business, I guess can you just expand on that a little bit and I guess when, how is the timing shifted on, on that front? Adam Greenlee: Yes, good question. And when we came into the year we were looking for commercialization in the second half of the year. As it turns out many of our customers that we have these new business awards with have had labor challenges of their own. And we were having difficulty in having the right teams at our customers to work on these projects. And as it turns out as part of the inventory management, working capital management, those positions are have been pushed off to rehire until the early part of next year. So the contracts are signed, the capital is being spent and we are preparing for commercialization, but our customers teams will be ready to begin those commercializations early in 2024. Our products will be ready to ship in early 2024 as well and we’re confident that we have a full year of those volumes as we turn the page. George Staphos: Good, thanks. Operator: Our next question comes from the line of Mike Roxland from Truist Security. Please go ahead. Mike Roxland: Thank you, Adam, Bob, Kim and Alex for taking my questions. First one, just on the cost actions, I understand you’re electing to discuss if it’s relatively new. But would it be fair to assume, Adam, that since that these costs are, or these actions that you’re taking are going to be temporary, you indicated that the destocking headwinds themselves should be temporary? And does this also give me the opportunity to maybe go through your portfolio more holistically to make more permanent action moves? Adam Greenlee: So actually, I would say that the actions that we’re going to be taking are more permanent. We are rightsizing our capacities, our footprint, our business activities to the projections from our customers for the second half of the year. And Mike, I think the interesting piece of that as we look forward into 2024, what Silgan has historically done, has been able to flex our capacity up to meet our customers’ increased needs and that’s how we’re viewing our first look at 2024 at this point. We’re going to make sure we get the cost out this year, and we’ll be able to flex up to meet those needs next year. Mike Roxland: And just a quick follow-up then Adam thank you for the color, would you say that you’ve — as your customers enroll, maybe you’ve grown a little bit more relative to your customers since you can actually close facilities permanently and still flex up to meet their needs? Adam Greenlee: I don’t think we’re going further than our customers. I think we are going to right size our footprint and our capacity to the demand that we see. And we’re in intimate conversations with our customers daily on what that looks like, not only for the remainder of the year, but going forward. And again, I think what I’ll just reiterate, Mike, is that we have a long history of having a very low-cost platform that we’re able to flex up, and it’s the entirety of our fixed cost system that that incremental margin fully utilizing a facility and stressing the assets is where Silgan’s made a lot of money for our shareholders over time. Robert Lewis: Mike, just to add some color to that. I think if you look back as we came through the whole pandemic-related volume surge, right, we all sort of kept capacity available to meet that peak demand. And I think part of this is just getting back to the roots of what Silgan does and being able to take cost out and doing that at a time where we’re seeing some softness coming from our customers at least in a transitory way. But what we’ve always been able to do over time is take those kind of fixed costs out and flex up when we need, which is exactly Adam’s point. So I wouldn’t view this as we’re permanently rightsizing or downsizing. We’re just getting, maybe I’ll use the reverse terminology, we’re not permanently downsizing. We’re rightsizing with the ability to flex back up when we need to. Mike Roxland: Got it. Very clear. And then just one quick additional question. Can you talk about the benefit, if any, do you expect to have lower resin costs particularly around polypropylene? Obviously, that was a headwind in 1Q, those costs have declined significantly in 2Q. It wasn’t really — you didn’t guys have mentioned it at all. So I’m just wondering if you could do expect some type of tailwind from lower resin costs. Thank you. Adam Greenlee: Yes. Maybe just as a quick reminder, we’re right at the beginning of hurricane season. So any commentary will be subject to whatever happens with the weather along the Gulf Coast and the East Coast. But as we sit here today, you’re right, polypropylene is expected to decline in the back half of the year, and we’ll see what happens. We typically take a conservative view on resin in our forecasting models. And as you’ll recall from the last earnings call that we had, resin and polypropylene specifically had increased dramatically, I think in excess of 10% on CDI in both February and March. And ultimately, it wound up falling, I’ll say, just as fast in the second quarter. So we didn’t mention it much, Mike, simply because it didn’t have much of an impact versus our expectation that we had in the quarter. And again, we’re just going to be conservative in how we look at it as the remainder of the year plays out. Mike Roxland: Thanks very much. Operator: Our next question comes from the line of Arun Viswanathan from RBC Capital Markets. Please go ahead. Arun Viswanathan: Great. Thanks for taking my question. I just wanted to ask a little bit about the demand environment. You talked a lot about inflation impacts and or we’ve seen that with — in many categories. Do you think that that is the main issue going on here? I know that there’s, obviously, the customer loss, but aside from that, do you think demand is really being impacted by inflationary aspects historically? I mean, many of these smaller kind of food beverage categories have been a little bit more stable. I know there’s a whipsaw effect with COVID and so on. But maybe what are you hearing from your customers as far as inflationary impacts on consumer demand levels? Thanks. Adam Greenlee: Sure. Thanks, Arun. And I think it’s important to differentiate the geographies in which we deal with. So maybe the tougher one to start with is Europe. And we think the consumer has been weaker in Europe and that is reflected in our Dispensing & Specialty Closures, Food & Beverage business. It also translates to our metal food container business in Europe, where we are seeing some of the benefits of the trade down that seems to be occurring. I think broadly what I would say again is that the consumer seems to be spending the same amount of money at retail on a monthly basis. Maybe they’re taking more trips to the store, but they’re roughly spending the same dollars. We are very clear they are getting less for the money that they’re spending. So inflation is having an impact. And I think, not speaking for any customer in particular, but you look at CPG companies and what they’ve been reporting, they are talking a lot about the price recovery that they’ve gotten and price ahead of cost and shrink inflation. Again, all of that does fall down to the consumer. So in the U.S. market, I think the consumer has been very resilient thus far. We have not seen a significant impact from the consumer. And I’d say that in all of our businesses, including we haven’t seen necessarily a trade down to the food can in the U.S. market at this point. Look, we’ve got a long history of dealing with different economic cycles throughout our businesses. Silgan typically does well when economic circumstances are challenging and so we’re ready for this if it happens. If not, we think our businesses are continuing to perform pretty well at this point, even with the transitory issue that we’re dealing with, with the inventory management programs our customers have initiated. Arun Viswanathan: Okay. Thanks for that. And given that backdrop then, when you look into the next couple of years, I guess, is it mainly maybe some deflation that would return you to maybe low single-digit volume growth or I know that you have a number of different end markets and fragrance, for example, maybe holding up pretty well as is Pet food. But is that really the main driver here that we need to see some deflation and relief for the consumer before Silgan kind of returns to more consistent positive volume growth or are there other levers you can pull? Adam Greenlee: No, I actually don’t think that’s what we’re waiting for. I mean, again, taking a half a step back, I’d say we’re cycling over all-time record volumes and record profits in our business from last year. So our comps are very difficult. That’s fine. We expect to continue to grow from there. So once we pass this transitory issue, I mean, I would say nothing has changed about our near-term or long-term outlook for the businesses. So dispensing and in Dispensing & Specialty Closure segment, dispensing is going to continue to grow at kind of a high single-digit rate from a volume perspective. We think food and beverage markets will normalize and provide kind of GDP-ish kind of growth. But the DSC segment, we’re expecting nice growth from it. You move over to metal containers, nothing’s changed. Really, what’s happening in 2023 is exactly what we expected to have happened. We have nice growth in Pet food. We have stability in vegetable and really soups returning to kind of a normal soup pattern. And so that is going to drive with 50% roughly of our volume in wet pet food. That will drive growth in metal containers as well. You move to custom containers, we do have this mismatch of business wins versus the piece of business that we chose not to renew our contract on. And if you go back several years, we’ve been talking about the wins and what we decide not to renew is going to be a little bit lumpy. That’s what we’re riding through right now. So we’re excited about the new business that we’ve won that we have signed contracts for, that will return more profit than what we walked away from in the other agreement in 2024. So margins in that business remain strong. We had set a 15% EBITDA margin for Custom Containers many years ago. We’ve operated well above that for several years. The new business awards we’re talking about will be at or above that level and those are long-term contracts. So we feel really good about all three of our franchise businesses for the near-term and the long-term outlook, we’re just riding in through this transitory issue for the next six months. Arun Viswanathan: Got it. Thanks a lot. Operator: Our next question comes from the line of Ghansham Panjabi from Baird. Please go ahead. Ghansham Panjabi: Hey guys. Good morning. I missed [indiscernible] I apologize if you covered this, but on dispensing closures, Adam, you talked about some of the weakness in Europe. Is that — how do you sort of see that playing out, right? Because the classic CPG strategy is to raise prices when inflation goes up and then as inflation sort of moderates to adjust on a promotional activity basis and stuff like that, that’s been true in the U.S. historically. How do you sort of see that playing out for Europe? Adam Greenlee: Well, I think the issue in Europe, specifically for this business in Food &Beverage is again, the glass package with the metal closure is considered the premium package in the marketplace. So it is we are seeing the trade down to private label. We’re I’d say, fairly well represented. We’re probably a little more weighted to brand versus private label, but we’re seeing that trade down. We’re also seeing the trade down from private label into food cans. So look, the consumer is in a tough spot in Europe and we think they’ve taken specific actions to trade down. Really, it’s more of a question about the inflation on our package, which is driven in large part by what the glass manufacturers are doing in the marketplace. And that’s, I think, the biggest component that our customers are thinking about and as we think about the premiumization of that package. Ghansham Panjabi: And then on the same token back in May of last year where on the big box stores, we’re talking about too much inventory and destocking, now they’re starting to inform and talk about promotional activity and partnering with their suppliers and so on. Is it just sort of a lag that in the supply chain as it relates to using incremental weakness now versus maybe a forward-looking trajectory that’s actually more favorable for the market back half onwards to 2024? Adam Greenlee: Well, I do think that — I agree with you that I think what needs to happen is promotional activity. And some of that price versus cost that we talked about for the large CPGs and retail collapsing a little bit and getting back to where consumers are engaged in procuring those products and inflation is going to match what is happening in the market. So I think I’ve read the same reports, Ghansham, from retail partnering with some CPGs. I tell you, I think for the most part, what we’re seeing right now with our customers is they are liking the price points that they’re at in the marketplace, and they’ve been willing to forgo a little bit of volume to retain that price. I think that has to change at some point. And we’re in those conversations all the time. We’ll see what happens here as we work through this inventory management program for the end of the year as we head into 2024, I think it has to be addressed. I think that will drive volume in the future periods. Robert Lewis: Yes. I wouldn’t walk too quickly past Adam’s prior comments as well, just as some of our customers are getting after the carrying cost of this high-value inventory, and looking to land with lower cost inventory as that promotional activity comes back. So that’s kind of what gives us some confidence that this is a bit transitory, right? It’s just getting after cost that they’re carrying particularly in these high interest rate environments and looking to position themselves well for moving into 2024. Ghansham Panjabi: Okay, awesome. Thanks so much. Operator: Our next question comes from the line of Daniel Rizzo from Jefferies. Please go ahead. Daniel Rizzo: Good morning. Thank you for taking my call. So I think you mentioned that the issues with labor or a $10 million headwind in the quarter. I was just wondering how we should think about it for the next two quarters. I know there were some onetime stuff here or some transitory stuff, but how will it — what will the cadence be in Q3 and Q4 with those costs? Adam Greenlee: Thanks, Dan. Yes, it will mitigate throughout the quarter. So I mean, I think if it was $10 million in the quarter in Q2, I think Q3 is let’s call it $6 million and kind of Q4, we’re kind of ending the year at $3-ish million and then having it fully resolved by the end of the year. To be clear, our objective is to beat all those numbers I just gave you, but that’s what’s included in our forecast. Daniel Rizzo: When you say it’s going to resolve by the end of the year, that’s not — are you assuming that, I guess, your labor resolves itself or is this like kind of working around them, if you know what I’m saying, like, regardless of what they do, this will be resolved by the end of the year? Adam Greenlee: I think that’s what I tried to say earlier is regardless it will be resolved. So yes, it’s a little bit of both. So in fairness Dan, look, with our manufacturing footprint around the world, we have sent hundreds of millions of units to other facilities to support our customers. We have, as I said, picked up one operating line and moved it to another facility in the U.S. that has labor that is able to manufacture the parts. That line is already up and running in the other plant. That’s how quickly we’ve moved and our team actually did a great job in coordinating all of those activities. So one way or another, this is going to get resolved. Daniel Rizzo: Okay, great. Thank you. And then you mentioned trading down in Europe with some of your higher-end products, but Beauty wasn’t mentioned. And I think in the past, you said that’s fairly resilient even though you are in high-end products there. I was wondering if that’s something that’s still intact or if you could potentially see some trade down within that end market as well? Adam Greenlee: Sure. It’s a great question. I was trying to be very specific to Food & Beverage when I was talking about the premium products on the retail shelf. So when you move over to kind of our dispensing products, again we’re seeing high single-digit growth across the board, some of our higher value items are even growing at a greater rate than that. So if you think about Beauty & Fragrance, look, it’s been a wonderful growth engine for the entirety of the business. The future is also very bright for those products. We really have seen at this point no slowdown in the European market for those premium products in fragrance and beauty at this point. Daniel Rizzo: Okay. And then one final question just on your own inventories in terms of your own, I guess, destocking, could we expect some, I guess, some cash relief as you kind of adjust yourselves as well to what kind of the new dynamic is within some of the closures end market? Robert Lewis: Yes. So I think that’s what you’re seeing is embedded in our free cash — our revised free cash flow guide is that we’ve taken a hard look at return rates on CapEx. We’re looking at our inventory levels to get those rightsized as well. So yes, that’s part of the DNA of what we do in this scenario. Daniel Rizzo: Thank you very much. Operator: Our next question comes from the line of Kyle White from Deutsche Bank. Please go ahead. Kyle White: Hey good morning. Thanks for taking the question. A couple of questions on the outlook, just starting with dispensing, you’re targeting for segment income to be flat for the year, kind of implies a pretty meaningful step up on a sequential basis as well as year-over-year. Just trying to understand what’s kind of driving that uptick given it seems like volumes are still a bit challenged and then you have the labor issue. And then longer term, what’s the right margin profile for this segment just given the moving parts related to mix with the higher value products relative to the legacy closures. Adam Greenlee: Sure. Great questions, Kyle. So look, when we look at the back half of Dispensing & Specialty Closures, really it’s more about what happened last year and again, the significant impact of COVID-related destocking in this particular segment occurred in the second half of last year. So we’re cycling over that. Those products, again, to be clear, I’ll just keep using the example on this call of our trigger sprayers or hard surface cleaners, they were up double-digit percentage in Q2, and we anticipate that continuing on through the remainder of the year as we have fully cycled through that destocking activity. As I mentioned earlier, we also had some softer volumes last year in the U.S. market for Food & Beverage in the second half of the year. Our current outlook is for a normal third and fourth quarter for Food & Beverage in the U.S. market, so cycling a little bit against a softer comp there. And then, at the end of the day, we continued to grow in our core markets for this segment. So we’ll continue to see growth in those high-value dispensing systems and dispensers. All that is sort of offset a little bit by the challenge of the European market. We’ve got a relatively conservative Food & Beverage forecast for the back half of the year and then obviously, working with our customers through this inventory management program in the last six months of this year. All of that nets to low single-digit kind of growth for the back half of the year in the segment. So we feel pretty good that we’ve got that captured correctly and are pulling all the levers to execute and make that happen. From a margin profile standpoint, again, I think what you’re seeing in this business is accelerated and outsized growth in the high-value dispensing applications. So margins will continue to trend upwards as we go forward. We’ve talked a lot about mix. I probably will spare everyone on this call again from going through the mix conversation with our Food & Beverage Closures. But look, this business will continue to trend favorably in margins as we continue to grow the dispensing side of the segment. Robert Lewis: Yes. I think Kyle, there’s not much that’s changed around the margin profile between those categories, right? So if you think about, what I’ll call the legacy dispensing side of our business, that’s kind of a, call it a mid-to-high teens margin profile and the dispensing side, which is where the growth is coming is in the low to mid-20s kind of profile on a margin basis. So as we continue to see growth there, that should accrete to margins, assuming neutral raw material, right, the pass-through mechanisms will have some import there. But the underlying margin should be accretive as we continue to grow in the dispensing side of the business. Adam Greenlee: And just to tie terminology, your legacy that Bob just mentioned, is the Food & Beverage that I was talking about earlier. So we’re — Bob’s got it exactly right. Kyle White: Got it. It’s very helpful. And similar type of question on metal containers, I mean this business has been exceeding expectations for the first half of the year, I think income is up 33%, and now you’re forecasting for income to be flat for the full year. So I’m just kind of trying to understand the second half dynamics there. Is there anything related to the PAC [ph] versus to why we should see a year-over-year decline in income? Adam Greenlee: Well, hey look, the PAC in the U.S. market, in particular, the PAC is running a little bit late. So that is reflected in our forecast. There was a little bit of slippage from Q2 into Q3, and then we’ll also see some push from Q3 into Q4, all of which is relatively normal for us. But I would say the PACs running call it, maybe three to four weeks late at this point. So we are expecting some PAC to get into Q4. As you think about it being flat, it was really about, again, what we did last year as far as our inventory management programs, late in the year last year that created significant benefit for the company, it’s just not repeatable. So we’re cycling against a significant benefit from the prior year. Kyle White: Got it. That makes sense. I’ll turn it over. Operator: Our next question comes from Gabe Hajde from Wells Fargo. Please go ahead. Gabe Hajde: Thanks for taking the follow up. Just a quick one and Adam, I don’t feel like I’ve maybe got a clear answer. Going back to economics class, if you’re talking about higher cost to carry inventory for your customers, has there been anything in the discussions in terms of maybe them delaying purchases or wanting to destock in anticipation of lower cost products from yourselves or maybe lower ingredient costs going into 2024? Just trying to understand like to the extent there could be a restock event or something like that in 2024 and they draw things down too far. Adam Greenlee: Yes. I think — look, we’re early in that conversation right now. I think the most significant item I can give you there, Gabe, is that there are trade cases for 10 plate steel that are in front of the government right now, which we’re expecting to hear resolution one way or the other, call it in late August, early September. And we don’t know how the — we don’t know what the decision is going to look like and it creates a really wide disparity of outcomes. So I think we and our customers have both elected to wait to make that decision once we have more information. So I genuinely don’t believe that, that is what’s driving any of the conversation that we’re having with our customers. I just would say when you look at their unit volumes and inventory, I don’t think it’s terribly different than what they’ve historically held in unit volumes. I think the dollar value associated with that inventory is so significantly higher, because of inflation in raw materials, because of inflation in ingredients and their labor cost, and their logistic costs. That’s what’s driving the inventory management program that we’ve been talking about with our customers. Gabe Hajde: Thank you. Adam Greenlee: Sure. Operator: I would now like to turn the call over to Adam Greenlee for closing remarks. Adam Greenlee: Great. Thank you very much, and thank you all for your interest in the company. We look forward to talking about our third quarter earnings results in late October. Thank you. Have a great day. Operator: Thank you, ladies and gentlemen. This does conclude today’s call. Thank you for your participation. You may now disconnect. Follow Silgan Holdings Inc (NASDAQ:SLGN) Follow Silgan Holdings Inc (NASDAQ:SLGN) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

 Jamestown, a global real estate investment and management firm, today announced pre-leasing is underway at Ponce City Market’s Signal House, a new 21-story, 162-unit residential building designed for sophisticated residents seeking frictionless living. Located directly adjacent to the Atlanta BeltLine at North Avenue, the connected community will offer access to a curated... The post Pre-Leasing Begins at Ponce City Market’s Signal House appeared first on Real Estate Weekly.  Jamestown, a global real estate investment and management firm, today announced pre-leasing is underway at Ponce City Market’s Signal House, a new 21-story, 162-unit residential building designed for sophisticated residents seeking frictionless living. Located directly adjacent to the Atlanta BeltLine at North Avenue, the connected community will offer access to a curated suite of fully integrated experiences, services and technologies, including an all-in-one smartphone app, designed to make every day easier.  “We believe there is unmet demand for an intown, tech-enabled community living experience tailored to a more sophisticated audience,” said Michael Phillips, President of Jamestown. “Signal House integrates digital convenience with high-touch analog support to create a frictionless lifestyle. Interwoven with the broader Ponce City Market community and amenities, Signal House will be a community within a community organized around wellness, culinary, and other lifestyle programming and made effortless by intuitive tech.” The modern residences, which range from one to three bedrooms, are projected to be available for move-in fall 2023 and will feature light-filled interiors, bedrooms with space to lounge, clean and efficient modern kitchens, balconies with a view of Old Fourth Ward, and seamless integration with all that Ponce City Market has to offer. Residents will have access to amenities through hospitality-inspired front-of-house services, a full-time community concierge, and a smartphone app, which can be used to simply and conveniently pay rent, book a suite of services – including maintenance, housekeeping, plant watering, dry cleaning, dog walking and personal assistance – schedule personal care appointments and group fitness sessions, arrange a car share or ride-share, utilize keyless entry and manage thermostat control. Signal House’s community coordinator will plan onsite events, classes, and gatherings – all bookable via the app – for residents. Residents will also be able to enjoy a social lifestyle through the building’s amenities, including a pool terrace with a shaded grotto lounge and outdoor shower, a multipurpose fitness room with connected outdoor fitness space for group classes and private instruction, wellness rooms for personal treatments like massages and other services, an intimate clubhouse lounge and a dining room complete with a full commercial chef’s kitchen and connected outdoor seating. Steps away, residents can visit medical providers One Medical and Tend Dental, and fitness studios including CorePower Yoga and Forum Athletic Club, at Ponce City Market. Common spaces in the building will also include a rooftop terrace with outdoor grilling, dining, and lounging spaces, and community garden plots. The building will feature direct access to the BeltLine, ample bicycle storage, a pet washroom with grooming tubs, tenant storage spaces, secure mail and package rooms, and a flex workspace with conferencing and presentation capabilities. The building’s north side features a 15-story mural painted by a group of local Atlanta artists, including Matt Evans, Austin Blue, and Danielle Brutto. Signal House will also feature 3,300 square feet of BeltLine-fronting retail space and is targeting LEED certification and Fitwel Certification, the leading healthy building certification used by top real estate companies across the globe to ensure their assets are designed and operated to positively impact the health, productivity, and satisfaction of residents, employees, and tenants. The new building is part of Ponce City Market’s next phase, which includes more than 700,000 square feet of new live, work, and shop space. Designed with a focus on sustainability and wellness, the new development will evolve the mixed-used model and structured shopping experience. In addition to Signal House, Ponce City Market is building 619 Ponce, a four-story mass timber loft office building, and a flexible-stay hospitality living building featuring 405 furnished units with short-term and long-term stay options. Ponce City Market first opened its doors in 2015 and has since been credited as a catalyst for revitalizing Atlanta’s Old Fourth Ward neighborhood. Today, Ponce City Market is a major employment hub for creative and technology companies and is home to 90 businesses. The new development is projected to bring more than 550 long-term jobs to the campus. In total, Ponce City Market will house some 100 businesses collectively employing more than 5,750 people and will include over 800 residences when the project is complete and fully activated. The post Pre-Leasing Begins at Ponce City Market’s Signal House appeared first on Real Estate Weekly......»»

Jamestown, a global real estate investment and management firm, today announced new details for Signal House, a multi-family rental building designed for active adults and the 55+ community at Atlanta’s iconic Ponce City Market. The apartments, which range from one to three bedrooms, are projected to be available for move-in... The post Jamestown Reveals New Details About Signal House: Multi-Family Rental Building Designed For Active Adults & 55+ Community appeared first on Real Estate Weekly. Jamestown, a global real estate investment and management firm, today announced new details for Signal House, a multi-family rental building designed for active adults and the 55+ community at Atlanta’s iconic Ponce City Market. The apartments, which range from one to three bedrooms, are projected to be available for move-in Q3 2023, with leasing beginning Q1 2023. Located directly adjacent to the Atlanta BeltLine at North Avenue, Signal House will be a 21-story, 162-unit multi-family rental building providing a digitally integrated living experience. A property app will give residents the ability to book a suite of services, including housekeeping, plant watering, dry cleaning, food delivery & dining reservations, and massage & personal trainer appointments. With access to a full-service daytime concierge and an onsite lifestyle director, residents will be able to enjoy a social lifestyle through the building’s amenities, including a pool terrace with a shaded grotto lounge and outdoor shower, a multipurpose fitness room with connected outdoor fitness space for group classes and private instruction, wellness rooms for personal treatments, an intimate clubhouse lounge and a dining room complete with a full commercial chef’s kitchen and connected outdoor seating. Common spaces in the building will also include a rooftop terrace with outdoor grilling, dining and lounging spaces, and community garden plots. The building will feature direct access to the BeltLine, ample bicycle storage, a pet washroom with grooming tubs, tenant storage spaces, secure mail & package rooms, and a flex workspace with conferencing and presentation capabilities. “Continuing Ponce City Market’s legacy of innovation and neighborhood connectivity, Signal House will offer the 55+ community a unique social and urban living experience,” said Michael Phillips, President of Jamestown. “With direct connectivity to the BeltLine and access to venues for gathering, plus health and wellness experiences, residents will find themselves in a lively, intown community.” Signal House will also feature 3,300 square feet of BeltLine-fronting retail space and is part of Ponce City Market’s next phase, which includes more than 700,000 square feet of new live, work and shop space. Designed with a focus on sustainability and wellness, the new development will evolve the mixed-used model and structured shopping experience. In addition to Signal House, Ponce City Market is building 619 Ponce, a four-story mass timber loft office building, and a flexible-stay hospitality living building featuring 405 furnished units with short-term and long-term stay options. Ponce City Market first opened its doors in 2015 and has since been credited as the catalyst for revitalizing Atlanta’s Old Fourth Ward neighborhood. Today, Ponce City Market has become a major employment hub for creative and technology companies, and is currently home to 90 businesses. The new development is projected to bring more than 550 long-term jobs to the campus. In total, Ponce City Market will house some 100 businesses collectively employing more than 5,750 people and will include over 800 residences when the project is complete and fully activated. The post Jamestown Reveals New Details About Signal House: Multi-Family Rental Building Designed For Active Adults & 55+ Community appeared first on Real Estate Weekly......»»

 Ventures Development Group (VDG) and joint-venture partner BCDC have broken ground on The Southerly at Shipyards, a 270-unit, Class A apartment community in St. Augustine, Florida.  The project is part of a larger master-planned development, including townhomes, single-family for-sale residential homes, a boutique hotel, walkable retail, flex office space and a signature... The post Ventures Development Group, BCDC Start The Southerly at Shipyards in St. Augustine appeared first on Real Estate Weekly.  Ventures Development Group (VDG) and joint-venture partner BCDC have broken ground on The Southerly at Shipyards, a 270-unit, Class A apartment community in St. Augustine, Florida.  The project is part of a larger master-planned development, including townhomes, single-family for-sale residential homes, a boutique hotel, walkable retail, flex office space and a signature restaurant all overlooking the San Sebastian River and historic downtown St. Augustine. “We are pleased to work again with BCDC in providing another best-in-class residential community, specifically to the St. Augustine market,” said Sean Siebert, principal of Ventures Development Group. “We believe our attention to detail differentiates our communities from others in delivering what tenants desire when choosing their homes.”  “The Southerly at Shipyards represents the sixth development in which VDG and BCDC will serve as partners, bringing a high degree of familiarity and a proven track record for success to the sponsorship team,” said BCDC President and CEO Litt Glover. “Our project is thoughtfully designed to be the best-in-class, capitalizing on the exceptional location and surrounding development master plan.” The Southerly will feature luxury finishes and resort-style community amenities, including a sky lounge overlooking the San Sebastian River, a pool and hot tub, outdoor kitchen with a firepit and pizza oven, 24-hour fitness center and a co-working lounge. The property will also include a club room, package room, pet park and dog-washing station and a structured parking garage accompanied by street-level parking spaces.  VDG is leading the project with co-sponsor BCDC. Ameris Bank is the senior lender. JHP Architecture & Urban Design is the architect and ARCO Murray is the general contractor.  The partnership expects the delivery of the first units in the 2nd quarter of 2024. The post Ventures Development Group, BCDC Start The Southerly at Shipyards in St. Augustine appeared first on Real Estate Weekly......»»

Teledyne Technologies (TDY) unveils the launch of its Kobra 725 modular robot, which is an enhanced and technologically advanced version of the Kobra 710 unmanned ground system. Teledyne Technologies Incorporated’s TDY business unit, Teledyne FLIR, recently unveiled its Kobra 725 modular robot, which offers enhanced and technologically advanced features compared to the Kobra 710 unmanned ground system. This launch exemplifies Teledyne’s capability to continuously upgrade its products to meet the ever-changing requirements of military expeditions.Significance of Kobra 725The newly launched Kobra 725 comes with a series of upgrades and enhancements that will aid in effortless military expeditions. It further aims to provide a powerful, highly mobile system that will assist in mitigating potential threats during military missions.Moreover, Kobra 725 offers unmatched power and payload support in an easy-to-operate package. The robot’s advanced manipulator arm can lift heavy loads and stretches to a height of nearly four meters to access hard-to-reach places.Additionally, at less than 250 kg, the rugged Kobra 725 is highly maneuverable, even in rough terrain, and can climb stairs and even surmount jersey barriers. Meanwhile, its new technology boasts the features of full-HD cameras with wide-angle visual/thermal mobility cameras, field-swappable radio modules and AES-256 encryption.Such enhanced features make it perfectly suitable for a range of military applications, namely Explosive Ordnance Disposal/counter-vehicle-borne IED missions, remote CBRN detection, weapon integration and reconnaissance, coupled with other hard jobs, from building safety and hazmat inspection to nuclear power maintenance.Going forward, due to technologically advanced features, which are well-suited for any military mission, Teledyne Technologies is likely to witness a steady inflow of orders involving the robot. This, in turn, shall bolster TDY’s revenues from its newly formed business through Teledyne FLIR, which manufactures robotic platforms like Kobra 725.Growth ProspectsTo enhance warfare capabilities with modern technology, nations are increasingly spending on robotics to ease the military expeditions of ground troops.Per Mordor Intelligence projections, the global military robot market is expected to witness a CAGR of more than 7% over the 2022-2031 period. Such projections exemplify immense opportunities for Teledyne Technologies, with an already established position in the military defense market, to further reap the benefits of the expanding robot market.Prominent defense majors that are involved in manufacturing military robots and hence can enjoy the perks of the military robot market’s growth trends are Northrop Grumman NOC, BAE System BAESY and Elbit Systems Ltd. ESLT.Northrop Grumman's Andros FX is a dexterous unmanned ground vehicle designed to defeat a wide range of threats, including vehicle-borne improvised explosive devices. It also features updated system electronics, mobility improvements for increased speed and maneuverability and a new touchscreen operator control unit with 3-D system graphics, advanced manipulator controls and improved user interface.Northrop Grumman has a long-term earnings growth rate of 6.1%. NOC shares have appreciated 22.1% in the past year.BAE Systems’ Robotic Technology Demonstrator (“RTD”) is an advancement for unmanned combat vehicles. RTD technologies include sensors with true 360-degree situational awareness, including long-wave infrared imaging, signal processing and video distribution. It also includes a tethered unmanned aerial system to support situational awareness and reconnaissance.BAE Systemsboasts a long-term earnings growth rate of 7.2%. BAESY stock has rallied 21.1% in the past year.Elbit Systems has field-proven technology and real-world operational experience in designing, integrating and deploying reliable and scalable robotic and autonomous systems. Its PROBOT (professional robot) platform is designed from the ground up as an autonomous, robust, lightweight tactical support vehicle with high mobility and all-terrain maneuverability in urban and rural environments. PROBOT can carry heavy payloads and integrate into logistics, medevac, CBRNE, ISR and special operations.The Zacks Consensus Estimate for Elbit Systems’ 2022 sales indicates a surge of 7.2% from the prior-year reported figure. ESLT shares have appreciated 44.6% in the past year.Price MovementIn the past year, shares of Teledyne Technologies have declined 15.1% compared with the industry’s fall of 7.3%.Image Source: Zacks Investment ResearchZacks RankTeledyne Technologies currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks' Top Picks to Cash in on Electric Vehicles Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investorsSee 5 EV Stocks With Extreme Upside Potential >>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 Northrop Grumman Corporation (NOC): Free Stock Analysis Report Bae Systems PLC (BAESY): Free Stock Analysis Report Elbit Systems Ltd. (ESLT): Free Stock Analysis Report Teledyne Technologies Incorporated (TDY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

LCOR today broke ground on its newest development at 1515 Surf Avenue in Coney Island. The site was acquired via land deal in late 2019 with the Russo family that also owns Gargiulo’s restaurant across the street and will consist of 463 apartments, including 139 affordable units and 11,000 s/f of... The post LCOR breaks ground for 463-unit sustainable Coney Island development appeared first on Real Estate Weekly. LCOR today broke ground on its newest development at 1515 Surf Avenue in Coney Island. The site was acquired via land deal in late 2019 with the Russo family that also owns Gargiulo’s restaurant across the street and will consist of 463 apartments, including 139 affordable units and 11,000 s/f of ground floor retail space.  Through a partnership with Ecosave USA, the project was awarded a grant from the New York State Energy Research and Development Authority’s (NYSERDA) Community Heat Pump System Pilot Program. A geothermal heat pump system effectively uses the earth to heat and cool the building and its domestic hot water systems, which eliminates the need for traditional equipment that runs on fossil fuels.    The result will be the largest geothermal project in New York City’s history which will significantly reduce carbon emissions by over 60 percent and serve as a model for residential developments across the country.   “LCOR is committed to the long-term sustainability of communities we invest in. That includes addressing climate change and taking steps to reduce dependence on fossil fuels and towards clean energy,” said Anthony Tortora, LCOR Senior Vice President. “Coney Island is an ideal location to bring environmentally responsible development that will make healthy, active living along the waterfront available to families of all income levels.”  Rendering of 151 Surf Avenue 1515 Surf Avenue, located between Surf Avenue and Mermaid Avenue and 15th and 16th Street, issteps away from the beach and public transportation with the Coney Island-Stillwell Avenue station around the corner.  According to Ecosave CEO, Marcelo Rouco, “The drive to reduce greenhouse gas emissions in a financially viable way begins by electrifying buildings with geothermal, which cuts energy operating expenses and carbon emissions in half. We are proud to work with LCOR, who made the right choice for our planet, future generations, and their investment.”  Designed by STUDIO V Architecture, the project will feature an amenity package that includes an ocean-facing outdoor pool, deck and gym, multiple tenant lounges, various flex co-working spaces, an indoor basketball and handball court, over 20,000 s/f of landscaped outdoor space and accessory off-street parking.  “Coney Island was once the laboratory for innovation and our architecture reinvents this with the ‘Vertical Boardwalk’ a stacked sequence of overlapping social spaces and dune gardens, punctuating the architecture and overlooking the iconic beach,” said Jay Valgora, founder of STUDIO V. “The design speaks to LCOR’s community-centric values- advancing resiliency, sustainability, and creative residential design.”  State Senator Diane Savino added, “I want to congratulate LCOR and NYSERDA for having the vision to not just develop much needed housing but to do so in an innovative fashion. All too often in government we talk about sustainability in housing but here we are actually walking the walk, programs like this will lead us into the 21st century and provide for more efficient housing.”  Construction is expected to be completed in 2024.  At the ceremony, Conor Greene, legislative director for Assembly Woman Mathylde Frontus also conveyed excitement for the project. “Coney Island is coming back strong again and projects like this ensure we will make the needs our neighbors and the long-term sustainability of our community a top priority. I commend LCOR and their partners for being bold.”  The post LCOR breaks ground for 463-unit sustainable Coney Island development appeared first on Real Estate Weekly......»»

Futures Rise, Yen Soars, JGBs Tumble As BOJ Rattles Markets US equity futures are mixed with tech outperforming notably, as both GOOG and AMD rose +2.8% and 3.7% pre-mkt, respectively. As of 8:00am ET, S&P futures were up 0.1% to 4,560 and Nasdaq futures gained 0.2%.  10Y Treasury yields rose 5 basis points as Japanese bonds tumbled and the yen surged 1.6% against the dollar amid renewed speculation that the Bank of Japan will scrap the world’s last negative interest-rate regime as soon as the Dec 19 BOJ meeting (spoiler alert: it won't). Of course, if the BOJ does indeed hike yields, US yields will move sharply higher. Elsewhere, the USD is weaker and commodities are higher led by a rebound in the energy complex; WTI is back above $70. Today’s macro data is on Job Cuts, Initial/Continuing Claims, and Consumer Credit. Tomorrow’s NFP data is the more market moving data. In premarket trading, US mega-tech stocks rose helped by gains in Alphabet and AMD, while the broader market struggled for direction. Here are the most notable premarket movers: Alphabet shares rise 2.6% a day after Google released Gemini, the “largest and most capable AI model” the company has ever built, as analysts were largely positive about its long-awaited AI model. JPMorgan notes that investors might have snoozed on the release, but he is positive about Google’s progress in this area. AMD shares rise 3.2% after the chipmaker unveiled new so-called accelerator chips aimed at taking on the lucrative artificial intelligence market dominated by its peer Nvidia. The company noted that it will be able to run AI software faster than rival products. Braze (BRZE) climbs 8.6% after the software company boosted its revenue guidance for the full fiscal year, beating the average analyst estimate. Bumble (BMBL) shares gain 0.9% after the dating-app company was initiated with an overweight recommendation at Wells Fargo, which expressed optimism on the sustainability of growth in its namesake app. Cerevel Therapeutics shares rise 13% after AbbVie agreed to acquire the biotech company in a deal valued at about $8.7 billion. This is the second acquisition for AbbVie in about a week as it comes on the heals of the $10.1 billion deal to purchase cancer-drug maker ImmunoGen. C3.ai falls 9.8% as the data management and analysis software company reported revenue for the second quarter that missed the average analyst estimate. It also issued a forecast for an operating loss in the fiscal year that was worse than projected. Chewy shares drop 9.9% after the online pet supplies retailer cut its full-year net sales guidance, which missed consensus estimates. Analysts viewed the results as disappointing, with Citi describing them as “lackluster.” Additionally, analysts noted that the focus now turns to the analyst day, which takes place next week. GameStop shares drop 7% after the video-game retailer reported third-quarter net sales that missed estimates. The company also announced a new policy that would allow chief executive officer Ryan Cohen to invest the company’s excess cash in equity securities, which Wedbush said was “the most inane decision we have ever seen.” Datadog shares rise 1.8% after Stifel upgrades the software platform provider to buy from hold, citing a survey indicating fewer customers looking to cut spending. GameStop shares drop 7.7% after the video-game retailer reported third-quarter net sales that missed estimates. Analysts called the print “mixed,” noting that revenue came in lower than expected. Rivian shares gain 3.0% after Stifel initiates coverage of the electric-vehicle maker with a buy rating, while peer Lucid’s shares ease as it is started at hold. The broker expects industry hurdles to diminish over the next few years and make way for sales growth. MicroAlgo gained 48%, adding to Wednesday’s 296% rally that was driven by an announcement that its Chinese companies plan to sign a cooperation agreement over postgraduate training with two other bodies. Rivian gains as much as 1.5% after Stifel initiates coverage of the electric-vehicle maker with a buy rating, while peer Lucid’s shares ease as it is started at hold. The broker expects industry hurdles to diminish over the next few years and make way for sales growth. Semtech shares are up 9.5% after the semiconductor device company reported third-quarter results that beat expectations and gave a forecast. Analysts said the report suggests a bottom ahead. Sprinklr shares slump 25%, set for their worst day on record, as analysts highlighted disappointing preliminary guidance for 2025 from the application software firm, seeing it as a sign that tough economic conditions are starting to bite. Take-Two falls 1.8% as BofA Global Research cut the recommendation on the video game publisher to neutral from buy, assuming a later launch of the company’s highly-anticipated Grand Theft Auto VI video game The highlight of the overnight session was the surge in the yen and the plunge in JGBs which followed a jump in bets on a BOJ rate hike after hawkish hints by Governor Kazuo Ueda and his deputy spooked markets. Swaps at one point signaled a 45% chance of a policy shift this month. The move was another jolt to the global government rally, raising further doubts that central banks are ready to pivot toward rate cuts. Traders also pointed to the fact that markets have run up in recent weeks and are due for a pause. There was a sense of caution ahead US labor market data, including jobless claims today and non-farm payrolls on Friday. “Both valuation and positioning would argue for exhaustion in the recent bond rally,” said Mohit Kumar, chief European economist at Jefferies International. “Given our view of only a mild recession and inflation still remaining sticky, we would argue that the market has run a bit ahead of itself.” European stocks ticked lower on Thursday, pausing after rallying to a four-month high as concerns over economic weakness outweighed recent hopes that interest rate cuts could be on the table for next year. The Stoxx Europe 600 was down 0.2% led lower by losses across rate-sensitive sectors including real estate and technology as bond yields rose, and a drop in travel and leisure stocks as JPMorgan turned more cautious on airlines. Among individual movers, shares in Swiss IT services firm SoftwareOne Holding AG edged higher following a Reuters report that Bain Capital is the last remaining bidder for the company after others dropped out, while Renault SA was little-changed after the French carmaker unveiled plans to cut electric vehicle production costs in half by 2027. European equities have rallied over 8% since reaching an October low, driven by gains across real estate stocks and technology as traders upped their bets on monetary easing from the ECB next year. Here are the biggest movers Thursday: Games Workshop shares drop as much as 15%, the biggest intraday decline since September 2022, after the table-top games maker issued a trading update for the first-half of the year Air France drops as much as 6.9%, Lufthansa -4.9% and IAG -3.7%, dragging down the Stoxx 600 transport & leisure index after JPMorgan turns more cautious on airlines, downgrading several Future plc shares drop as much as 31% after earnings missed estimates. The margin outlook for 2024 suggests a material cut to expectations, according to analysts Vodafone shares fall as much as 2.2% after Exane cuts the stock to underperform, saying the sale of its operations in Spain and potential deals in the UK and Italy are likely to dilute FCF Branicks drops as much as 11% after Bankhaus Metzler downgraded its rating on the commercial property investor to sell, citing the need for further disposals to pay its debt Hanza falls as much as 11% to SEK85.8, hovering just above the level of an offering of 3.53m new shares. The offering was priced at SEK85 apiece, a discount of about 10% to the last close Vertu Motors plunges as much as 24%, a record drop, after the UK automotive dealership issued a profit warning citing “negative external market factors” Smart Metering Systems gains as much as 43% to 969p, exceeding the 955p/share recommended cash offer from KKR, which values the utility company’s shares at about £1.3b Coats Group rises as much as 11% after the industrial thread manufacturer said it will no longer make payments to plug its pension deficit from the start of 2024 Kin & Carta gains as much as 11% at 114.80p to trade just below Apax Partners improved offer price of 120p per share in cash. “We do think that [European] equities have gone too far, we are quite cautious on the economic outlook,” Joost van Leenders, senior investment strategist at Van Lanschot Kempen, said by phone. “Since central banks started hiking interest rates, that we’ve seen an environment where higher yields are bad for equities and lower yields are good for equities, and that’s also driving the market at the moment.” Earlier in the session, Asian stocks declined following the weak lead from Wall St where risk sentiment soured after more soft labour data, while markets digested mixed Chinese trade data which showed the first expansion in exports since April although imports surprisingly contracted. Hang Seng and Shanghai Comp were varied with the mainland choppy amid mixed Chinese trade data in which exports expanded but the surprise contraction in imports suggested weaker domestic demand, while the Hong Kong benchmark suffered after Moody’s revised its credit outlook for the special administrative region to negative. Japan's Nikkei 225 was the worst hit and slipped back beneath the 33,000 level amid headwinds from a firmer currency and higher yields. Australia's ASX 200 was subdued amid notable underperformance in energy following the recent drop in oil prices to multi-month lows and with mixed trade data from both Australia and its largest trading partner. In FX, the Bloomberg dollar spot index fell 0.2% reversing three sessions of gains to fall against all Group-of-10 peers; the yen soared, building on Asian-hours strength and Japanese bond futures fell sharply after the BOJ Governor Ueda discussed possible exit options in semiannual testimony. CAD and EUR are the weakest performers in G-10 FX, JPY and NOK outperform. The Swiss franc rose to the strongest level against the euro since the Swiss National Bank abandoned its currency cap almost nine years ago. The move reflects a shift in interest-rate expectations as confidence grows that the European Central Bank will move to cut rates sooner than its Swiss counterpart. USD/JPY dropped as much as 1.8% to a three-month low of 144.64 in the currency pair’s biggest move since January EUR/USD turned six sessions of losses to rise as much as 0.2% to 1.0785; One-week volatility increases to 9.53%, highest since May 4 as the tenor now captures the Fed and ECB policy decisions EUR/CHF dropped as much as 0.1% to 0.94087, the Swiss franc’s highest level against the euro since the SNB axed its cap in 2015 In commodities, crude futures advanced reversed several days of losses. Spot gold rose roughly $8 to trade near $2,033/oz.  Bitcoin slipped below $44,000. Looking To the day ahead now, and data releases include the US weekly initial jobless claims, German and Italian industrial production for October, along with Italian retail sales for October. Meanwhile from central banks, we’ll hear from the ECB’s Holzmann and Elderson. Market Snapshot S&P 500 futures little changed at 4,554.25 MXAP down 0.2% to 161.07 MXAPJ down 0.4% to 498.16 Nikkei down 1.8% to 32,858.31 Topix down 1.1% to 2,359.91 Hang Seng Index down 0.7% to 16,345.89 Shanghai Composite little changed at 2,966.21 Sensex down 0.2% to 69,524.31 Australia S&P/ASX 200 little changed at 7,173.34 Kospi down 0.1% to 2,492.07 STOXX Europe 600 down 0.3% to 468.74 German 10Y yield little changed at 2.21% Euro up 0.1% to $1.0778 Brent Futures up 0.9% to $75.00/bbl Gold spot up 0.3% to $2,032.05 U.S. Dollar Index down 0.27% to 103.88 Top Overnight Stores Moody’s Investors Service advised staff in China to work from home ahead of its cut to the outlook for the country’s sovereign credit rating, a suggestion staff believed was prompted by concern over Beijing’s possible reaction, according to two employees familiar with the situation. FT The amount of money that institutional investors have in Chinese stocks and bonds has declined by more than $31 billion this year, through October, the biggest net outflow since China joined the World Trade Organization in 2001, official Chinese data show. WSJ Bets on a BOJ rate hike surged after hawkish hints by Governor Kazuo Ueda and his deputy spooked markets. Swaps at one point signaled a 45% chance of a policy shift this month, but Bloomberg Economics said it’s too soon. BBG The European Union is nearing a deal on what is poised to become the most comprehensive regulation of artificial intelligence in the western world but negotiators are still trying to hammer out the final details. BBG Companies on both sides of the Atlantic are rushing to issue debt, taking advantage of the cheapest borrowing costs available in months following the sharp global bond market rally. Corporate borrowers in the US and Europe issued $246bn worth of investment-grade and junk bonds in November alone — 57 per cent more than October’s total, and $16bn higher than the average figure for the first 10 months of the year, according to data from LSEG. FT OpenAI has a new board, but its directors may still confront the same old problem. The artificial-intelligence startup’s unusual business structure that gave oversight of its for-profit business to a nonprofit board will be an unresolved issue for the new board to tackle. WSJ Nikki Haley drew attacks from rivals over her links to Wall Street in last night’s debate as her GOP bid gains steam. President Biden suffered a setback when Senate Republicans blocked $66 billion in emergency Ukraine aid. BBG Blackstone-backed Candle Media asked lenders to restructure some of its debt after recent acquisitions like Reese Witherspoon’s company failed to hit profit targets. The startup led by two Disney veterans has more than $1 billion in debt. BBG SpaceX started talks about selling shares at a raised valuation of over $175 billion, people familiar said, a boost from the summer’s $150 billion. The tender offer may range from $500 million to $750 million and value the shares at about $95 apiece. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks declined following the weak lead from Wall St where risk sentiment soured after more soft labour data, while markets digested mixed Chinese trade data which showed the first expansion in exports since April although imports surprisingly contracted. ASX 200 was subdued amid notable underperformance in energy following the recent drop in oil prices to multi-month lows and with mixed trade data from both Australia and its largest trading partner. Nikkei 225 was the worst hit and slipped back beneath the 33,000 level amid headwinds from a firmer currency and higher yields. Hang Seng and Shanghai Comp were varied with the mainland choppy amid mixed Chinese trade data in which exports expanded but the surprise contraction in imports suggested weaker domestic demand, while the Hong Kong benchmark suffered after Moody’s revised its credit outlook for the special administrative region to negative. Top Asian News Chinese President Xi met with European Council President Michel and European Commission President von der Leyen and said that both sides should maintain development momentum between China and the EU. Xi added that China and the EU have the responsibility to work together to provide more stability for the world and should be partners in mutually beneficial cooperation, as well as continuously enhance political mutual trust. BoJ Governor Ueda suggested that “handling of monetary policy would get tougher from the end of the year”; Japan's economy is to continue recovering moderately, supported mainly by accommodative financial conditions and effects of economic stimulus measures but noted that uncertainty over Japan's economy is extremely high. Ueda reiterated they will patiently continue monetary easing under YCC to support economic activity and the cycle of wage growth, while they have not yet reached a situation in which they can achieve the price target sustainably and stably with sufficient certainty. Furthermore, Ueda said they have not made a decision on which interest rate to target and don't have any specific idea in mind on how much they will raise rates once they end NIRP. ASEAN Plus Three deputy financial chiefs agreed on a system framework for a new regional emergency lending facility, according to a joint statement cited by Reuters. BoJ Governor Ueda said no specific discussion on FX with Japanese PM Kishida and there were no special demands from PM Kishida China's State Council has published a document to support further development of Shanghai Free Trade Zone Chinese Foreign Minister Wang Yi says expressed concerns about EV subsidy probe European equities Eurostoxx50 (-0.3%) are on a weaker footing following a negative handover from the APAC session. European sectors have a heavy negative bias, though Utilities hold onto marginal gains; whilst Travel & Leisure is weighed on by Air France (-5.9%) and Lufthansa (-4.5%) amid broker downgrades. Additionally, Retail names are impacted to varying degrees amid research reports of shows that the named brands are at risk of sourcing products which have been made by Uyghurs forced to work in state-imposed labor transfer programs. US equity futures are mixed with specifics relatively light thus far; NQ (+0.2%) is holding onto gains ahead of US IJCs and Wholesale Sales. Top European News ECB's Villeroy reiterated that the issue of possible rate cuts could be raised in 2024 but not right now, while he also repeated that disinflation is happening quicker than expected. Reuters poll showed all 90 economists unanimously expect the ECB to keep the Deposit Rate at 4.00% at next week's meeting, while 51 out of 90 expect a rate cut by end-Q2 2024 and the rest forecast a cut in Q3 2024 or later. Reuters Poll, BoE: to hold the Bank Rate at 5.25% through Q2-2024 (same as the November poll); UK economy to expand 0.4% in 2024 and 1.2% in 2025 (same as November) Norges Bank Regional Network Report: enterprises expect annual wage growth of 5.45 (prev. 5.4%) in 2023 and 4.5% (prev. 4.6%) in 2024. French Finance Minister Le Maire says we are 90% in agreement with Germany on reform of the EU's stability and growth pact, but our red line is that incentive to invest and reform must be kept. EU Commission approves France's EUR 4.12bln scheme to develop additional offshore wind energy EU AI Act could exclude open-source models from regulation, via Reuters citing a proposal FX The broader Dollar and index are pressured in early European trade by a rampant Yen, with participants attributing the notable upside in the Japanese currency to a surge in JGB yields coupled with commentary from BoJ Governor Ueda. USD/JPY has now extended losses of around 1.8% bringing the price below the 145.00 level; down to a 144.55 trough. Both the EUR and GBP trade with modest gains against the Dollar and flat against each other, with the currencies failing to fully benefit from the Dollar’s pullback amid losses in EUR/JPY and GBP/JPY. AUD, NZD, CAD trade mixed with the NZD and CAD flat against the Dollar while the AUD narrowly outperforms as base metals attempt a recovery. PBoC set USD/CNY mid-point at 7.1176 vs exp. 7.1623 (prev. 7.1140). Fixed Income Déjà vu for Bunds with another data-driven uptick occurring at the start of the session lifting the contract above the 135.00 mark to a 135.77 high. Gilts and USTs are once again softer as recent pronounced dovish pricing eases incrementally ahead of US NFP (Fri), CPI (Tue) and then the FOMC/BoE next week. France sells EUR 4.99bln vs exp. EUR 4-5bln 2.75% 2027, 0.00% 2032, 1.25% 2034 OATs and 0.10% 2029 I/L OAT Spain sells EUR 2.93bln vs exp. EUR 2.5-3.5bln 0.60% 2029, 3.90% 2039 Bono and EUR 0.505bln vs. exp. 0.25-0.75bln 0.70% 2033 I/L BoE allots GBP 4bln of one-week funds in the short-term repo operation, a new record Commodities WTI and Brent (+1.1%) are firmer intraday amid the pullback in the Dollar coupled with some corrective price action after yesterday’s slump. Spot gold tilts higher amid the softer Dollar but remains around recent ranges near USD 2,030/oz awaiting today’s US data ahead of Friday’s NFP; base metals also benefit from Dollar weakness. Russia's Kremlin spokesman said President Putin and Saudi Arabia's Crown Prince discussed OPEC+ cooperation which will continue, according to TASS. Kuwait supports the OPEC+ agreement and is committed to voluntary cuts, according to the state news agency. Algeria does not rule out extending voluntary oil cuts beyond Q1 or taking additional measures, according to the energy minister. Venezuela's PDVSA authorised loading for the first two crude cargoes bound for India following sanctions relief, which were sold by Eni (ENI IM) and Chevron (CVX) to Indian refiners. First Quantum (FM CA) Panama workers agreed to a severance package with the copper mine remaining halted with 10-20% of staff working, according to the union. Russian Kremlin: President Putin confirmed with Saudi's MBS the specific agreements reached at OPEC+ Geopolitics G7 leaders' statement noted commitment remains to restrict exports of all items critical to Russia's military and industrial base and they will work to further curtail Russia's use of the international financial system to further its war with Ukraine. Furthermore, G7 leaders are committed to tightening compliance and enforcement of the price cap policy on Russian oil, including by imposing sanctions on those engaged in deceptive practices. Senior Biden administration officials agreed that striking Houthis is the wrong course of action for now, according to Politico. White House's Kirby said they are watching the "worrisome" burgeoning defence relationship between Iran and Russia. US Secretary of State Blinken spoke with Guyanese President Ali and reaffirmed US unwavering support for Guyana's sovereignty, while it was separately reported that a Guyanese army helicopter reportedly went missing near the border with Venezuela, according to AFP News Agency. US Event Calendar 07:30: Nov. Challenger Job Cuts -40.8% YoY, prior 8.8% 08:30: Nov. Continuing Claims, est. 1.91m, prior 1.93m 08:30: Dec. Initial Jobless Claims, est. 220,000, prior 218,000 10:00: Oct. Wholesale Trade Sales MoM, est. 1.0%, prior 2.2% 10:00: Oct. Wholesale Inventories MoM, est. -0.2%, prior -0.2% 12:00: 3Q US Household Change in Net Wor, prior $5.49t 15:00: Oct. Consumer Credit, est. $8.5b, prior $9.06b DB's Jim Reid concludes the overnight wrap Our year-end EMR survey aimed at market participants is currently ongoing. We’ve got lots of questions about 2024, and are interested in how you expect the year ahead to play out. Questions include where you see the biggest risks, whether there’ll be a US recession, and the chance of Donald Trump being elected President. At the end we also ask about your favourite Christmas song. The survey will close on Friday and the link to answer is here. All responses are anonymous, and it’s possible to skip questions without answering and move on. All help gratefully received. When it comes to the last 24 hours, markets have seen a sharp reversal in tone, with bond yields seeing a significant increase overnight and equities losing ground, despite a major bond rally taking place yesterday. The main catalyst for this have been comments from Bank of Japan officials, which have suddenly seen investors ramp up the chances that the BoJ could bring an end to their negative interest rate policy. For instance, yesterday saw Deputy Governor Himono discuss the impact of negative rates, pointing out that households could benefit from higher net interest income if rates were positive. Indeed, he also added that “there would be a sufficient possibility of achieving a positive outcome from the exit, since a wide range of households and firms would benefit from the virtuous cycle between wages and prices”. So some fairly positive remarks about what could happen in such a scenario. This morning, we’ve since heard from BoJ Governor Ueda, who added to that speculation by saying that policy management would “become even more challenging from the year-end and heading into next year”. In turn, investors are now pricing in a 37% chance that the BoJ are going to end their negative interest rate policy at the meeting on December 19, and at one point overnight that even got as high as 45%. J apanese government bonds have also seen a sharp selloff, with yields on 10yr JGBs up +11.5bps overnight, and that move got further support after a 30yr auction saw weak demand. Moreover, the impact hasn’t just been confined to Japan, with yields on 10yr Treasuries up +6.8bps overnight to 4.17%. This backdrop has meant equities have lost ground in Asia, with Japanese equities seeing the biggest underperformance and the Nikkei down by -1.88%. We’ll have to see what happens at the next meeting, but in some respects this echoes what happened in markets last December 2022, when there was a late selloff at year-end after the major central banks remained hawkish, and the BoJ announced a surprise shift in its yield curve control policy, which was seen as paving the way for a potential end to their ultra-loose monetary policy. Remember as well that a BoJ normalisation will have a broader impact, because it would remove one of the last global anchors that’s helped to keep borrowing costs at lower levels more broadly . Before those overnight developments, yields had actually fallen to their lowest levels in months, with investors growing increasingly optimistic about a soft landing and the chance of rate cuts. Clearly overnight’s developments could change things, and we’ve got a very important round of central bank meetings next week, but several developments yesterday helped support the bond rally. For instance, the ADP’s report of private payrolls came in beneath consensus, which helped cement expectations that the Fed would be cutting rates in the months ahead. Moreover, oil prices saw their weakest day in three weeks, falling to a new 5-month low, which added to the sense that inflationary pressures were easing. And in turn, many risk assets also put in a decent performance, with Europe’s STOXX 600 (+0.52%) at a 4-month high, whilst US HY spreads reached their joint-tightest level in over 18 months. There was a bit of a late selloff in the US session however, and the S&P 500 (-0.39%) lost ground for a third consecutive day. In terms of that bond rally yesterday, there were significant milestones in Europe, with yields on 10yr bunds (-4.8bps) closing at a 7-month low of 2.20%, and those on 10yr OATs (-6.5bps) closing at an 8-month low of 2.74%. Meanwhile in the US, 10yr Treasury yields were down -6.1bps to 4.105%, marking their lowest closing level in nearly four months. The decline was led by breakevens, with the 10yr breakeven down -3.8bps to 2.16%, its lowest since March. Overnight however, we’ve seen that momentum reverse, and investors are pricing in a slightly more hawkish path for the Fed. For instance, t he chance of a rate hike by the March meeting has fallen from 76% on Tuesday, to 69% by yesterday’s close, and 65% now. Nevertheless, the US data did point in the direction of rate cuts yesterday, with the ADP’s report showing that growth in private payrolls fell to +103k in November (vs. +130k expected), which is in line with the slower pace of the last couple of months. So that added to the indicators pointing to a softer labour market. It also comes ahead of tomorrow’s US jobs report, where our US economists are anticipating that nonfarm payrolls will be up by +130k. Second, the revised estimates for Q3 productivity showed that nonfarm productivity was up by an annualised +5.2% in Q3, which is up from the previous estimate of +4.7%. In addition, unit labour costs were revised down to show an annualised -1.2% decline, which is larger than the -0.8% reading in the previous estimate. So the data was favouring a more sanguine inflation outlook. That rally got further support from the latest decline in oil prices, which left Brent Crude (-3.76%) at $74.30/bbl, and WTI (-4.07%) at $69.38/bbl. In both cases, that’s their lowest level in 5 months, and there’s been growing evidence that this decline is feeding through into the real economy. For example, data from the AAA shows that US gasoline prices were down to $3.216 per gallon on Tuesday, the lowest since January 1. Other commodities also struggled yesterday, with copper (-1.48%) down for a third consecutive day, and Bloomberg’s Commodity Spot Index (-2.03%) closed at a 5-month low. For equities, yesterday brought another fairly divergent performance across regions and sectors. There was more weakness in the US, where the S&P 500 (-0.39%) lost ground for a third day running, and futures overnight are down a further -0.09%. Energy stocks were a notable underperformer amidst the latest decline in oil prices, with those in the S&P 500 down -1.64%, whilst the Magnificent 7 (-0.88%) also struggled. However, the e qual-weighted S&P 500 (+0.06%) saw a better performance, with 55% of S&P 500 constituents up on the day. Meanwhile, there were further milestones in Europe, with the DAX (+0.75%) closing at another all-time high thanks to a 7th consecutive advance, and the STOXX 600 (+0.52%) closed at a 4-month high. But overnight in Asia, we’ve seen a broader weakness in equities that hasn’t just been in Japan. For instance, the Hang Seng is down -1.20% to its lowest level since November 2022, whilst the Shanghai Comp (-0.21%), the CSI 300 (-0.26%) and the KOSPI (-0.14%) have all lost ground as well. Elsewhere, the Bank of Canada announced their latest policy decision yesterday, leaving interest rates unchanged as expected. In their statement, it said they were “still concerned about risks to the outlook for inflation” and “prepared to raise the policy rate further if needed.” But as with other central banks, investors have become increasingly confident about the chance of a rate cut in recent weeks, and a 25bp cut is now fully priced in by the April meeting . Looking at yesterday’s other data, German factory orders contracted by -3.7% in October (vs. +0.2% expected). In the meantime, the construction PMI for November fell to 36.2, which is the weakest it’s been since April 2020 at the height of the Covid-19 pandemic. Here in the UK, the construction PMI also fell to 45.5 in November. To the day ahead now, and data releases include the US weekly initial jobless claims, German and Italian industrial production for October, along with Italian retail sales for October. Meanwhile from central banks, we’ll hear from the ECB’s Holzmann and Elderson. Tyler Durden Thu, 12/07/2023 - 08:16.....»»

Micron (MU) unveils a 232-layer NAND-based Micron 3500 NVMe SSD for gaming, content production and artificial intelligence. Micron Technology MU announced that it has started shipping 3500 NVMe solid state drive (SSD), which is based on its 232-layer NAND technology. This product is set to reduce the time for loading games on computers, speed up content editing in 4K and 8K video formats and accelerate computing speeds for business applications and artificial intelligence (AI) workloads.The 232-Layer NAND has been built to power data centers, consumer electronics, mobile devices and personal computers. During its release, the 232-Layer NAND stood out as the sole flash-memory technology, offering a 28% smaller package size than earlier Micron generations.The compact size of the NAND contributes to the small and slim design of the Micron 3500 NVMe SSD. Introduced in the M.2 form factor, the Micron 3500 NVMe is ideal for powerful portable computers. Its compact dimensions allow it to take up less space while offering storage capacities of up to two terabytes.Also, the SSD has DirectStorage APIs that work closely with the NVMe hardware to reduce the operating system’s workload significantly. This enables direct data transfer to the Graphics Processing Unit while achieving higher bandwidth with lower CPU usage. The Micron 3500 NVMe SSD is claimed to deliver top-notch Standard Performance Evaluation Corporation Workstation Performance Characterization (SPECwpc) capabilities, making it reliable for various real-world environments and diverse industry needs.Micron Technology, Inc. Price and Consensus Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. QuoteMicron Benefits From Expanding PortfolioThe recent product launch of 3500 NVMe SSD will strengthen the Data Center revenues of MU. The segment will also benefit from the recently launched 7500 NVMe SSD for data centers. Other recently introduced products that will aid the company's growth are Micron CZ120 memory expansion modules, Crucial T500 Gen4 NVMe SSD and 128GB DDR5 RDIMM for upgrading its 1-beta process node.Micron is also addressing some near-term challenges, including issues related to customer inventory accumulation. However, MU's customers have made progress in reducing excess inventory of memory and storage products as demonstrated in the company’s fourth-quarter fiscal 2023 results.Additionally, a growing number of cloud computing providers, the wider adoption of 5G cellular networks and the expansion of artificial intelligence are expected to fuel the demand for Micron's memory chips. The company is also investing domestically, including the establishment of a fab facility in Idaho, which will strengthen its global supply chain, catering to the expanding global AI market.Zacks Rank & Stocks to ConsiderMicron currently carries a Zacks Rank #3 (Hold). Shares of MU have gained 47.4% year to date.Some better-ranked stocks from the broader technology sector are NetEase NTES and Bel Fuse BELFB, Dropbox DBX, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for NetEase's fourth-quarter 2023 earnings has been revised upward by 10 cents to $1.83 per share in the past 30 days. For fiscal 2023, earnings estimates have increased 30 cents to $7.26 per share in the past 30 days.NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 16.63%. Shares of NTES have gained 41.4% year to date.The Zacks Consensus Estimate for Bel Fuse’s fourth-quarter fiscal 2023 earnings has been revised by 38 cents northward to $1.44 per share in the past 60 days. For fiscal 2024, earnings estimates have increased 72 cents to $6.28 in the past 60 days.BELFB’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 56.92%. Shares of BELFB have surged 66.7% year to date.The Zacks Consensus Estimate for Dropbox's fourth-quarter 2023 earnings has remained unchanged for the past 90 days at 48 cents per share. For fiscal 2023, earnings estimates have been revised 7 cents upward to $1.96 per share in the past 30 days.DBX’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 13.14%. Shares of DBX have rallied 26.6% year to date. Zacks Reveals ChatGPT "Sleeper" Stock One little-known company is at the heart of an especially brilliant Artificial Intelligence sector. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion. As a service to readers, Zacks is providing a bonus report that names and explains this explosive growth stock and 4 other "must buys." Plus more.Download Free ChatGPT Stock Report Right Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Micron Technology, Inc. (MU): Free Stock Analysis Report NetEase, Inc. (NTES): Free Stock Analysis Report Bel Fuse Inc. (BELFB): Free Stock Analysis Report Dropbox, Inc. (DBX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

GitLab Inc. (NASDAQ:GTLB) Q3 2024 Earnings Call Transcript December 4, 2023 GitLab Inc. beats earnings expectations. Reported EPS is $0.09, expectations were $-0.01. Operator: Thank you for joining us today for GitLab’s Third Quarter of Fiscal Year 2024 Financial Results Presentation. GitLab’s Co-Founder and CEO, Sid Sijbrandij, and GitLab’s Chief Financial Officer, Brian Robins, will […] GitLab Inc. (NASDAQ:GTLB) Q3 2024 Earnings Call Transcript December 4, 2023 GitLab Inc. beats earnings expectations. Reported EPS is $0.09, expectations were $-0.01. Operator: Thank you for joining us today for GitLab’s Third Quarter of Fiscal Year 2024 Financial Results Presentation. GitLab’s Co-Founder and CEO, Sid Sijbrandij, and GitLab’s Chief Financial Officer, Brian Robins, will provide commentary on the quarter and fiscal year. Please note we will be opening up the call for panelist questions. To ask a question please use the chat feature and post your question directly to IR Questions using the drop-down menu. Before we begin, I’ll cover the Safe Harbor statement. During this conference call, we may make forward-looking statements within the meaning of the federal securities laws. These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated. For a complete discussion of risk associated with these forward-looking statements in our business, please refer to our earnings release distributed today in our SEC filings, including our most recent quarterly report on Form 10-Q and our most recent annual report on Form 10-K. Our forward-looking statements are based upon information currently available to us. We caution you to not place undue reliance on forward-looking statements, and we undertake no duty or obligation to update or revise any forward-looking statement, or to report any future events, or circumstances or to reflect the occurrence of unanticipated events. We may also discuss financial performance measures that differ from comparable measures contained in our financial statements prepared in accordance with US GAAP. These non-GAAP measures are not intended to be a substitute for our GAAP results. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release which, along with these reconciliations and additional supplemental information, are available at ir.gitlab.com. A replay of today’s call will also be posted on ir.gitlab.com. I will now turn the call over to GitLab’s Co-Founder and Chief Executive Officer, Sid Sijbrandij. Sid Sijbrandij: Thank you for joining us today. We delivered a strong quarter. Revenue grew 32% year-over-year, driven by the continued adoption of our DevSecOps Platform. GitLab is the only DevSecOps platform that brings together security, compliance & governance, AI, and enterprise agile planning. Enterprises face complexity from all directions in the form of rapidly increasing user expectations, more advanced cyber attacks, and more strict industry regulations. We believe they need GitLab to help them navigate this complexity and realize business value. Our platform improves engineering productivity, reduces software spend. That’s why our customers report seeing 7x faster cycle times with GitLab. Today, I’ll discuss how we are driving results in three key areas. First, we’re adding new security & governance capabilities in our platform. Second, we integrated AI throughout the software development lifecycle. And third, we added an Enterprise Agile Planning offering to make our platform available to non-technical users. Let’s start with our security & governance functionality. These are at the heart of our platform and set us apart from the competition. Organizations like CARFAX and Lockheed Martin trust GitLab to help them build security & compliance into their workflows. With GitLab, organizations and their engineering teams report that they catch vulnerabilities earlier in the development process. And compliance leaders can set the right controls and governance frameworks. In contrast, security point solutions can cause friction for developers. With point solutions, developers either have to wait on security teams to identify vulnerabilities. Or, if they have access to a security scanner to assess their code, they need to manually copy and paste the scanner results back into their development tool. The result is, code that isn’t scanned at the time it’s written. This increases the time required to detect and resolve vulnerabilities. Our platform enables organizations to integrate security directly into the developer workflow. A recent product innovation our customers are excited about is our new security findings workflow extension. This extension enables developers to see and address their security findings directly in their IDE while they work, without breaking their flow. Our customers see the value of bringing security and compliance into the same platform where developers work. An example is DoubleVerify, a leading software platform for digital media measurement, data, and analytics. DoubleVerify was previously using GitLab Premium alongside several point solutions for their application security needs. They recently upgraded to GitLab Ultimate to bring security findings closer to their developers. Now, their developers can identify, learn about, and fix vulnerabilities in the same place where they work, without switching applications. Another key differentiator for us in the security & compliance space is GitLab Dedicated, our single-tenant SaaS solution that provides customers with data isolation and residency. With GitLab Dedicated, customers in highly regulated industries get the benefit of a comprehensive DevSecOps platform while meeting complex and stringent compliance and regulatory requirements. A large telecommunications company in Asia-Pacific recently upgraded to GitLab Dedicated to enhance their privacy and compliance capabilities across their software development lifecycle. In Q3 we also launched a new self-serve portal where customers can configure and maintain their GitLab Dedicated instances. This product innovation will create a more effective onboarding experience for new customers. Now, I’d like to discuss our second topic, which is our unique approach to AI. We already have 14 AI features available to our customers. That’s more than any other DevSecOps platform. We continue to innovate. GitLab Duo is our suite of AI-powered DevSecOps workflows that enable customers to boost speed and efficiency without sacrificing privacy, security, and compliance. We have three principles in our AI strategy. First, we are the only platform that integrates AI throughout the entire software development lifecycle. As developers become more effective, we enable security and operations team members to keep pace. Also, developers only spend 25% of their time writing code. AI within DevSecOps should focus on more than just code creation. Second, we are privacy and transparency first in our approach to AI. Our customers are eager to use AI, but they want to do so responsibly. To support them with this, we do not use their code to train the AI models used by other customers. Our privacy first approach is why more than 50% of the Fortune 100 trust GitLab to secure their intellectual property. Third, our AI is powered by a diverse set of models from technology partners as well as our own AI models. This allows us to select the best AI model for each use case. In Q3, we released the beta of GitLab Duo Vulnerability Summary. This is a cool feature that provides AI-generated explanations of security vulnerabilities and suggestions for how to fix them. Another example of our progress is GitLab Duo Code Suggestions, our AI-powered code creation feature. It will be generally available in our December product release. We have been hearing from our customers that they are seeing efficiency improvements upwards of 50% with Code Suggestions. And finally, we recently announced the beta release of GitLab Duo Chat. With GitLab Duo Chat, users can quickly understand project status, get help with planning and configuration, receive explanations of suggested code, and generate tests, all without context switching. To start, GitLab Chat is available within the GitLab UI, Web IDE, and VS Code. We plan to add support for more editors in the future. Our approach to AI is resonating with our customers. For example, Amado Gramajo, Vice President of Infrastructure & DevOps at Nasdaq, recently shared his excitement about how GitLab Duo will help Nasdaq protect their intellectual property and stay in line with regulatory mandates. And, presenting at this year’s Gartner Application Innovation Summit, Bal Kang at NatWest said, GitLab Duo enables our developers to be more productive, efficient, and successful in creating secure code. We’re excited to see the benefits of GitLab’s AI features across the entire value chain and even our most seasoned engineers are seeing value. Our next focus area is Enterprise Agile Planning. Our Enterprise Agile Planning offering brings portfolio and project management capabilities into the same platform where engineers work. Organizations already see our Enterprise Agile Planning capabilities as a strong alternative to established tools on the market, like Jira. For example, Iron Mountain, a global information management service provider, was struggling to manage the plugins required to integrate Jira with the rest of their development process. By moving from Jira to GitLab Ultimate, Iron Mountain was able to scale their Agile framework to drive more effective collaboration between Enterprise IT teams and key stakeholders. Atlassian’s decision to stop support for its server offering is making customers reconsider what product they use for Enterprise Agile Planning. We are focused on making it easier for these customers to move to GitLab SaaS and self-managed. We recently launched a new Enterprise Agile Planning SKU. Now, GitLab Ultimate customers can easily bring non-technical users into the platform. Security & compliance, AI, and Enterprise Agile Planning strengthen our position as the leader in the DevSecOps platform category. The breadth and depth of our platform across the entire software development lifecycle differentiate us from point solutions and our main competitor, GitHub. Let me give a few examples of why enterprises choose GitLab. First is a leading global financial platform that tried to integrate GitHub with several other DevOps tools. This created complex workflows that required time-consuming maintenance. Now the customer is moving their code repository and CI from GitHub to GitLab. And GitLab was able to replace other point solutions for automation, continuous delivery, and package management as well. With GitLab, the customer is able to reduce costs and centralize their work on a single platform, with eight times faster deployments and four times faster feature delivery. Another example is a business networking organization that initially built its software development workflows around GitHub. They began hitting usage limits when running builds, and quickly realized that GitHub was not efficient enough to support their growth. They switched to GitLab Premium and saw a 7x increase in the number of pipelines run. They also needed a comprehensive security & compliance solution that GitHub was unable to provide. As a result, the company upgraded to GitLab Ultimate this year to help them build a major new product to serve their rapidly growing customer base. We believe that enterprises need more than a developer platform. They need a full DevSecOps platform that scales and streamlines software development workflows while ensuring robust security and compliance. This was on full display at our DevSecOps World Tour. We recently rounded out this year’s 11-stop World Tour with a final event in Washington, DC. Each event included a fireside chat where customers like Carrefour, Deutsche Telekom, Southwest Airlines, and Splunk shared how they rely on GitLab to improve security, drive efficiency, and accelerate time to market. We created the DevOps Platform category, and we continue to set the standard. We remain focused on helping enterprises build fast and stay secure with tools that teams love to use. We are well-positioned to win in the estimated $40 billion market opportunity in front of us. I’d like to thank all our customers, as well as our partners, team members, community members, and investors, for their continued support. I will now turn it over to Brian Robins, GitLab’s Chief Financial Officer. Brian Robins: Thank you Sid, and thank you again for everyone joining us today. Overall we saw strong performance in the third quarter. Our revenue grew 32% year-over-year and we delivered over 2,200 basis points of non-GAAP operating margin expansion. I am pleased to share our first quarter of non-GAAP operating profit. This is a major milestone for us in efficiently scaling the business to address our large market opportunity. At the same time, we continue to make targeted investments in key product areas. These include security & governance, AI, and enterprise agile planning. Looking back at the quarter, I want to share some of the areas we have been closely monitoring. These include sales cycles, win rates, contraction, and Ultimate. In comparing Q3 with Q2 of FY ‘24, we have seen overall sales cycles lengthen. During Q3 buying behavior in our enterprise segment stabilized. However in the mid-market and SMB, we see customers continue to be cautious in the uncertain macro environment. We have adapted our go-to-market approach in this environment to deliver predictable and strong results. In Q3, our win rates have improved, signaling that the value proposition of our DevSecOps platform is resonating in the market. Contraction during Q3 also improved for the third consecutive quarter and is in-line with levels from Q3 last year. And finally, we continued to see strong adoption of Ultimate, our top tier. Ultimate represented over 50% of Q3 ARR bookings, driven by customer wins for security & compliance use cases. Now, turning to the numbers. Revenue of $149.7 million this quarter represents an increase of 32% organically from Q3 of the prior year. We ended Q3 with over 8,100 customers with ARR of at least 5,000, compared to over 7,800 customers in the second quarter of FY ‘24. This compares to over 6,400 customers in Q3 of the prior year. This represents a year-over-year growth rate of approximately 26%. Currently, customers with greater than 5,000 in ARR represent approximately 95% of our total ARR. We also measure the performance and growth of our larger customers, who we define as those spending more than $100,000 in ARR with us. At the end of the third quarter of FY ‘24, we had 874 customers with ARR of at least $100,000, compared to 810 customers in Q2 of FY ‘24. This compares to 638 customers in the third quarter of FY ‘23. This represents a year-over-year growth rate of approximately 37%. As many of you know, we do not believe calculated billings to be a good indicator of our business, given that prior period comparisons can be impacted by a number of factors, most notably our history of large prepaid multi-year deals. This quarter total RPO grew 40% year-over-year to $548.1 million. cRPO grew 34% to $371.8 million for the same time frame. We ended our third quarter with a dollar-based net retention rate of 128%. As a reminder, this is a trailing 12 month metric that compares the expansion activity of customers over the last 12 months, with that same cohort of customers during the prior 12 month period. This quarter we have updated our dollar-based net retention rate calculation methodology to reflect operational changes to our customer account hierarchies. The trend of declining but stabilizing rate has been consistent based on both the previous and the new dollar-based net retention rate calculations. Non-GAAP gross margins were 91% for the quarter, which is consistent with the preceding quarter. This is slightly improved from the third quarter of FY ‘23. SaaS represents over 25% of total revenue and grew 53% year-over-year. We have been able to maintain best-in-class non-GAAP gross margins despite the higher cost of SaaS delivery. This is another example of how we continue to drive efficiencies in the business. We saw improved operating leverage this quarter, largely driven by realizing greater efficiencies as we continue to scale the business. Q3 non-GAAP operating profit was $4.7 million, or 3% of revenue, compared to a loss of $21.6 million, or negative 19% of revenue in the third quarter of last year. This includes an operating loss of $2.6 million for JiHu, our JV and majority owned subsidiary. On a standalone GitLab basis, Q3 non-GAAP operating income was $7.3 million, or 5% of revenue. Operating cash use was $6.0 million in the third quarter of FY ‘24, compared to a $1.2 million use of cash in operating activities in the same quarter of last year. Since FY ’23, we have been proactively negotiating a bilateral advance pricing agreement, or APA, relating to our transfer pricing arrangements between the Netherlands and the US tax authorities. The proposed agreements between the company, the IRS and the Dutch Tax Authority are not yet final. However, given the stage of discussions during the third quarter, we recorded an estimate of $254 million non-recurring income tax adjustment. This adjustment does not impact our non-GAAP earnings per share. I believe this change positions GitLab for the future by optimizing our long-term tax position. The APA will result in an exit cash tax payment to the Dutch Tax Authority in the future. The timing is dependent on ongoing work with both parties and we will keep you updated on future earnings calls. Our modeling shows the exit payment should be recouped as tax savings over future periods. Now let’s turn to guidance. We are assuming that the trends in the business we have seen over the last few quarters continue. For fourth quarter of FY ’24, we expect total revenue of $157 million to $158 million, representing a growth rate of 28% to 29% year-over-year. We expect a non-GAAP operating income of $5 million to $6 million. And, we expect a non-GAAP net income per share of $0.08 to $0.09, assuming 164 million weighted average diluted shares outstanding. For the full year FY24, we now expect total revenue of $573 million to $574 million, representing a growth rate of approximately 35% year-over-year. We expect a non-GAAP operating loss of $10 million to $9 million. And, we expect non-GAAP net income per share of $0.12 to $0.13 assuming 162 million weighted average diluted shares outstanding. On a percentage basis, our new annual FY ‘24 guidance implies non-GAAP operating improvement of approximately 1,900 basis points year-over-year at the midpoint of our guidance. We believe that our continued focus on responsible growth will yield further improvements in our unit economics. I’m pleased to guide to a profitable non-GAAP operating income in 4Q. We remain on track to achieve free cash flow breakeven for FY25 excluding any non-recurring cash tax payments related to the APA result I discussed earlier. There are a number of drivers we believe will fuel our business in FY ‘25 and beyond. At our core, continuing to deliver customer value with our DevSecOps platform aligns our success with our customers’ success. Additionally in April of this year, we raised the price of our Premium tier for the first time in five years. Thus far, customer behavior has been in-line with our expectations, although as a reminder we anticipate the real financial impact from this change through FY ‘26. Another driver is the launch of Dedicated. GitLab Dedicated allows us to serve companies in highly regulated industries with complex security & compliance requirements. The largest deal we signed in Q3 was an eight-figure TCV expansion with an auto company on Dedicated. The final driver for FY ‘25 and beyond is the monetization of our AI capabilities. Last month we announced the general availability of GitLab Duo Code Suggestions is expected in our December product release. Separately, I would like to provide an update on JiHu, our China joint venture. Our goal remains to deconsolidate JiHu. However, we cannot predict the likelihood or timing of when this may potentially occur. Thus, for modeling purposes for FY ‘24, we now forecast approximately $22 million of expenses related to JiHu, compared with $19 million in FY ‘23. Excluding the impact of JiHu, we anticipate GitLab will be non-GAAP operating income breakeven in FY24. In closing, I’m pleased with our business momentum driven by our market-leading platform approach and commitment to capturing our large market opportunity. Chris, our new CRO, has led consistent execution with our sales teams and partners to drive a strong quarter. Looking forward, we continue to prioritize driving revenue growth in a responsible manner. With that, we will now move to Q&A. To ask a question please use the chat feature and post your question directly to IR Questions. We are ready for the first question. See also 12 Most Promising Stocks to Buy According to Hedge Funds and 12 Best Healthcare Dividend Stocks To Buy Now. Q&A Session Follow Gitlab Inc. Follow Gitlab Inc. We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: In the essence of time, we do request everyone to limit themselves to one question. And our first question comes from Koji with Bank of America. Koji Ikeda: Hey guys, thanks for taking the question. A couple of times in the prepared remarks you guys mentioned enterprise agile planning. I thought that was pretty interesting that you guys are highlighting that. So curious to hear what you believe the opportunity is there. Is this a big replacement opportunity? How do we think about that? I believe it’s included in the pricing model. Just want to make sure we understand the opportunity here on the planning side. Thank you. Sid Sijbrandij: Yeah, thanks for the question. We’re really thrilled about this market opportunity. With enterprise agile planning, we bring portfolio and project management capabilities into the same platform where the engineers work, and it is included in our ultimate pricing today. But we introduced a new SKU where we can reach a different non-engineering audience, people who will use the enterprise agile planning, but not the DevSec and Ops features. And we’ve shown that we can migrate thousands of these planning users successfully. I want to note it’s still very early days for this. So our guidance includes the limited anticipated impact for Q4. This is a long-term strategy that will take some time to come to fruition. The biggest impact is not expected in the coming fiscal year, but in the years after. Koji Ikeda: Thank you. Operator: Up next, we have Karl with UBS. Karl Keirstead: Congratulations on the results. Sid, I’ll pose this question to you. One of the interesting things I thought you said on the last earnings call was that you suggested that we might be at the very beginning of a displacement cycle for Atlassian Jira, and you called out a large bank that was, in fact, beginning to do that. With the passage of another three months, Sid, do you mind updating us on that? Is there any further evidence that’s giving you conviction that that’s, in fact, starting to happen? Any other anecdotes or metrics you could share? Sid Sijbrandij: Yeah, thanks for asking. We’re very pleased with our pipeline for this — for enterprise agile planning in this new SKU we have, and it’s being helped by Atlassian’s end of support for their server product. Because of that being deprecated, a lot of customers are taking stock of where they’re at. And they’re not even always moving to GitLab self-managed, sometimes they move to GitLab SaaS, but it is a time, a natural point for them to evaluate. And they see the advantage of bringing together their planning users with their engineers, security people and operations people. The tighter those work together, the faster the cycle time. Karl Keirstead: Okay, thank you. Sid Sijbrandij: Thank you. Operator: Our next question comes from Mike at Needham. Mike Cikos: Hey guys, thanks for taking the question here. I did just want to double check. So the first piece there, Brian, I appreciate the update. It sounds like the premium price queue increase is tracking in line with expectations. Just wanted to see if there was any more color you could you could parse out there and if that in any way or your assumptions for that premium price SKU has changed when we think about that Q4 guidance you guys are putting out there today. Would just like to tackle that first. Thank you. Brian Robins: Yeah, thanks Mike. We’re happy with the performance of the premium price SKU. It’s in line with what we modeled. One of the things that we’ve noted is first orders, especially in SMB and mid-market, are lower than expected and you’ll see some of that in the base customers of greater than 5K, but overall we’re happy with the premium price impact and it’s in line with our expectations. Mike Cikos: Thanks for that. And on the SMB and mid-market as well, is there any way you could help us think about — I think you cited that with the elongated deal cycles we saw on a sequential basis, so can you help us think about what is the company’s revenue exposure to those SMB and mid-market customers as well as when that elongation did start to show itself? And I’ll leave it there. Thank you, guys. Brian Robins: Yeah, the enterprise percentage of the total has remained pretty consistent. It’s around 60% of the total base. And then PubSec is a little over 10%. So SMB and mid-market makes up the remainder. Mike Cikos: Thank you. Operator: We will now hear from Ryan at Barclays. Ryan MacWilliams: Hey, guys. Thanks for the question. One for Brian and one for Sid. Brian, great to see the strong improvement in net retention. Just for modeling purposes, what was the benefit to the net retention number from the premium price increase? And for Sid, I was just wondering, when it comes to the new capabilities and interest from your customers around Generative AI, has that shifted at all their calculus between choosing between like self-hosted or the cloud? Just love to see maybe how they’re thinking about that decision. Thanks. Brian Robins: Yeah, I’ll take the dollar-based net retention first. And so, I wanted to call out, we’ve made a change in the way that we’ve calculated dollar-based net retention rate this quarter to better reflect the business itself. And so, this quarter, if you did the old way, be flat 124% to 124%. But the new way basically takes into the account, the account hierarchies. The old way that we did it actually kept a static view of the parent accounts. And if there was a merger, a new subsidiary, division being shut down or something, that actually showed a churn and then a new business. And so the change that we made, it’s important to note, doesn’t change the business at all. It just shifts between growth and new to give a better reflection of what’s going on in the business. This is reflected in our 10-Q for Q1 and Q2. And so you can see the disclosures there. But under the old method was 124% to 124%. And under the new method, it’s 128%. Sid, over to you. Sid Sijbrandij: Thanks. Regarding AI and SaaS versus self-managed, you’re able to do SaaS and AI self-managed with the AI on SaaS. And we also plan to have some of the AI features available purely self-managed. The way to keep, like most things will ship SaaS first only, then come to self-managed using SaaS for AI and then go to self-managed if they go there at all. What we are very positive about is our dedicated offering because it combines the convenience of SaaS and then having a single tenant installation with the increased kind of security posture that comes with that. I think that’s going to be a great solve, but we want to make sure that in the interim, our self-managed customers can use the AI features on SaaS, even if they keep having their self-managed installation. So that’s a that’s a priority for us. Ryan MacWilliams: Excellent. Yeah, we’ve heard really good feedback on Gitlab Dedicated. Brian, just real quick on that 128%, under the new method, what was the net retention the prior quarter? And just if you could parse out what the contribution was from the price increase or like a general range, that’d be helpful just on net retention side. Thank you......»»

Big Lots, Inc. (NYSE:BIG) Q3 2023 Earnings Call Transcript November 30, 2023 Big Lots, Inc. beats earnings expectations. Reported EPS is $-4.38, expectations were $-4.71. Alvin Concepcion: Good morning. This is Alvin Concepcion, Vice President of Investor Relations at Big Lots. Welcome to the Big Lots Third Quarter Conference Call. Currently, all lines are in […] Big Lots, Inc. (NYSE:BIG) Q3 2023 Earnings Call Transcript November 30, 2023 Big Lots, Inc. beats earnings expectations. Reported EPS is $-4.38, expectations were $-4.71. Alvin Concepcion: Good morning. This is Alvin Concepcion, Vice President of Investor Relations at Big Lots. Welcome to the Big Lots Third Quarter Conference Call. Currently, all lines are in a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. On the call with me today are Bruce Thorn, President and Chief Executive Officer; and Jonathan Ramsden, Executive Vice President, Chief Financial and Administrative Officer. Before starting today’s call, we would like to remind you that, any forward-looking statements made on the call involve risks and uncertainties that are subject to the company’s safe harbor provisions as stated in the company’s press release and SEC filings, and that actual results can differ materially from those described in the forward-looking statements. We would also like to point out that, commentary today is focused on adjusted non-GAAP results. Reconciliations of GAAP to non-GAAP adjusted results are available in today’s press release. The third quarter earnings release, presentation, and financial information are available at biglots.com/corporate/investors. A question-and-answer session will follow the prepared remarks. I will now turn the call over to Bruce. Bruce Thorn: Good morning, everyone, and thank you for joining us. Q3 remained a very challenging environment, the one in which we were able to deliver on or exceed our beginning-of-quarter guidance on all key metrics. We posted a sequential improvement in comp sales, significant year-over-year improvement in gross margin rate, and adjusted SG&A well below last year, despite absorbing additional expense related to the recent sale-leaseback. We believe these improvements are being driven by the five key actions that underlie our strategy. As a reminder, these are to own bargains, to communicate unmistakable value, to increase store relevance, to win with omnichannel, and to drive productivity. As these actions continue to gain momentum, we expect an adjusted Q4 operating result ahead of last year, marking the first quarter of year-over-year improvement in nearly three years, and we expect quarterly year-over-year improvements to continue through 2024. Progress on the five key actions, lower freight costs, and a reduced level of markdown supported by an appropriate inventory position drove the improvement in the third quarter. These factors will continue to be the primary drivers for sequential improvement in the fourth quarter. To support our ongoing turnaround, our efforts to aggressively manage costs, inventory, and capital expenditures, as well as monetize owned assets have enabled us to significantly strengthen our balance sheet. We are on track to achieve over $100 million of SG&A cost savings goals for the year, prior to project springboard savings. Project springboard is off to a strong start and on track to deliver $200 million of bottom-line opportunities, most of which we expect to realize in 2024. Our net liquidity at the end of the third quarter was a solid $258 million, despite the normal seasonal working capital build ahead of the holiday season. I’d like now to circle back to highlight some of the recent progress we’ve made on the five key actions, which will continue to drive momentum in our business as it relates to owning bargains. The third quarter marked an important milestone on our journey to provide incredible value. Our mix of bargains, which are closeout items, opportunistic buys, and other source products where we have a significant comparable price advantage was nearly 50% of sales in Q3, well exceeding our goal of over one-third by the end of the year. We achieve this by procuring products from over inventoried and distress retailers and vendors, and through new factory direct sourcing partners domestically and overseas. That said, our path to offer more compelling bargains across a broad range of categories is by no means complete. Our next phase is to offer more extreme bargains, whereas a typical bargain would be at a price that’s significantly below most retailer’s prices, an extreme bargain would be priced significantly below price leading retailers. To help us accelerate our progress on owning bargains, earlier today, we announced the creation of a new role, Senior Vice President of Extreme Value Sourcing to help lead our growing team of closeout buyers, and this leader will report directly to me. Seth Marks is a highly seasoned closeout merchant who will rejoin us next week after having spent time with our company earlier in his career. Seth brings almost 30 years of experience in off price and closeout sourcing and was with Big Lots when we were the clear market leader in broadline closeout retail. He returns to Big Lots with a wealth of strategic sourcing experience, deep industry relationships and merchandising background and extreme bargains. As it relates to communicating unmistakable value, our recent marketing efforts continue to bear fruit. Customers are increasingly recognizing the value of the bargains we are delivering every day, while also responding well to our promotions. In early October, we launched a Black Friday is every Friday series of events with up to 50% off deals through December 22nd. This is one example of how we are using Extreme Bargains events to engage customers, drive traffic, and create a positive halo around price perception. And we have accelerated our efforts to showcase value in our stores by emphasizing comparable value for our bargain offers, as well as increasing the penetration of bargains in our end caps and the drive aisle. As a result, we saw a further increase in our net customer value perception score. We rolled out new promotional tools and processes in June, which is helping us eliminate non-productive promotions and target our promotional spend, where we will see the greatest return and we expect to continue to accelerate this progress into 2024. We’re also getting better at refining our messages to our key customer segments to improve the effectiveness of marketing, such as furniture and mattress-focused campaigns that promote comp value price points delivered to home segment customers. We continue to focus on increasing store relevance. We are continuing to flex our assortment to capture customer demand. These efforts have shown encouraging results. Flexing our assortment encompasses increasing inventory in top-performing categories in stores, as well as taking inventory out of bottom-performing categories in stores, creating white space opportunities such as in PET to grow frequency, and optimizing our space with more productive SKUs, particularly in food and consumables. It also means introducing more newness and trend-right product in our assortment, such as the rollout of our new Broyhill collections. Additional modern furniture styles in many of our stores. Accent Furniture and expansion of decor, which began in the last few months. New products as a share of total SKUs are up year over year, and while it’s still early, overall, we are seeing a sales and gross margin uplift from new items. Similar to the flexing of our assortment in areas such as consumables where we’ve seen success we’re also experimenting with new store formats, showcasing expanded selections of trendy, stylish, and quality home decor and furniture with amazing comparable values. The intent is to provide us with learnings that can be applied to our broader store base. Improvement in store execution is also critical to increasing our relevance to help us on that journey we’re thrilled that Kristen Cox will join the leadership team next week as our Senior Vice President, Chief Stores Officer. Kristen has significant experience at running highly productive off-price stores where flexible branding and assortment at the store level is critical. Most recently, she was a Senior Vice President at Burlington Stores and before that at Macy’s, so we’re excited about her ability to drive the continuing evolution of our store base to better showcase our assortment, value offerings, and messaging. And we have been improving the customer experience to help us win with omnichannel. We continue to focus our omnichannel efforts on leveraging our store base and improving our customer’s experience across our digital platforms. For example, our new landing page launched in August showcases clearer value messaging, easier navigation, and an elevated design that she’s responding to. We’ve added comp values to the site to better communicate the value that Big Lots provides every day. We also added a buyout’s landing page, which are closeouts that features some of our best bargains that are often available only in stores. That said, we have more work to do to enhance our platform with special attention to our big-ticket furniture and seasonal products that she comes to biglots.com to research first. We’re excited with our progress and even more excited with the opportunity we have to positively influence her home shopping journey. We’ve also upgraded capabilities through our new order management system. This system provides a single view of inventory availability, which in turn improves product availability and promise states for our customers. We recently went live with the next phase of the rollout, which is to intelligently route and allocate orders to minimize split shipments to customers enhancing their experience, while also reducing shipping costs. We’re also focused on extending our brand into new and untapped spaces to engage new customers just in time for the holiday season we’re making it easier to take advantage of the bargains we’re known for by adding Uber Eats to our suite of marketplaces. This partnership will allow us to engage new and younger customers with our brand and bolster our marketplace sales growth already up nearly 75% year-to-date through Q3. These four key actions will be important traffic drivers in the future. The last key action is to drive productivity through structural cost reductions, inventory turns, and CapEx efficiency. As I mentioned, we are well on-track with these efforts and Jonathan will speak more about what we are doing to drive productivity in a few minutes. So, to sum it up, we are confident that the five key actions will translate into continued sequential improvement in financial performance in the near to medium-term. I will now make a few more comments about Q3, which as I noted a moment ago, was inline or ahead of our guidance on all key metrics. Comp sales were down 13.2% inline with our guidance of down low teens. Trends improved sequentially relative to the second quarter, driven primarily by an improvement in seasonal sales. That said, we are clearly not happy that comps were negative. Customers continue to be cautious on high ticket purchases, such as furniture, and traffic-driving categories such as food and consumables were impacted by fierce competition in the space, where there is less product differentiation, a point where I will come back to in a moment. Gross margins were up by 240 basis points versus last year, despite the sales decline, which was above our guidance of up 200 basis points. The year-over-year improvement was due to a significant benefit from lower freight costs and reduced markdown activity. Looking at specific category performance in the quarter, seasonal comps declined 15% in Q3, as a result of comping high promotions from last year due to an oversized seasonal buy. That said, the rate improved relative to Q2, aided by solid sales of Halloween and Christmas items. A sequentially improved sell through rate, combined with a material reduction in promotional activity versus last year in seasonal, gave a major boost to our overall gross margin rate. In Christmas items, new products and expansion of lower-priced outdoor, home décor, and glitzy styles performed well, and benefited from being featured as an extreme bargain on one of our Black Friday is every Friday events. In Q4, we are continuing to see strong sell through in Christmas items on a significantly lower buy than last year. Our furniture soft home and hard home categories were each down double-digits with furniture slightly better sequentially relative to Q2 on a year-over-year basis. In furniture, we have seen significant improvement in comps in Q4 to-date, which is a very encouraging sign for our overall business. Improvement is a result of better in stocks and newness in Broyhill items as well as clearing through United Furniture mitigation products, which were less optimal as we scrambled to procure assortments to fill the void, and we are not able to feature complete sets or pieces we would have wanted. As a reminder, we are just starting to lap the abrupt closure of United Furniture, previously our largest furniture vendor, which created significant headwinds for us beginning in Q4 last year. The improvement in furniture is also providing a positive halo effect on soft home sales. Also, our new assortments in areas such as accent, decor, and modern styles started to roll out in the third quarter, and we expect sales momentum to continue to build as we lean into newness and value offerings. In Food and Consumables, we were not aggressive enough with offering bargains in these highly competitive categories, and we are focused on accelerating the penetration of extreme bargains penetration of extreme bargains, particularly in the food category. This will be one of the areas of focus for — as he begins to accelerate our closeout buying. Along with our ongoing efforts to optimize and reset our consumable assortment, we are already seeing an improvement in these categories, which we expect to gain momentum in Q4. In regards to Q3, although the overall sales performance was not where we would like it to be, we saw a benefit from flexing food assortment up in high-demand areas as well as an optimized and reset consumables assortment, particularly in personal care categories such as hygiene and health care. Pet was again, a standout performer with positive comp growth aided by the expansion of our assortment in the fall. Before I pass it over to Jonathan, I’d like to take a moment to thank our over 30,000 associates, or as I’d like to call them, value creators for all of their hard work and efforts. Despite the challenges we continue to navigate, I know we can count on them all to bring their big every day. I’d also like to welcome our new value creators, Seth Marks and Kristen Cox to the team. I’ll now pass it over to Jonathan and I will return in a few moments to make some closing comments before taking your questions. Jonathan Ramsden: Good morning, everyone, and I would like to echo Bruce’s thanks to the entire team here at Big Lots for their outstanding efforts as we continue through our turnaround. As Bruce noted, we are encouraged by the progress we have made to stabilize and turn our business and look forward to deliver an adjusted Q4 operating result ahead of last year for the first time in almost three years. We’re confident that the five key actions and the excellent progress we are making on Project Springboard will continue this forward momentum in 2024. I will now provide some more detail on our Q3 results, which I will discuss on an adjusted basis, excluding distribution center closure costs, impairment charges, gains on the sale of real estate, and related expenses and fees related to Project Springboard. The third quarter summary can be found on page nine of our quarterly results presentation. Going into the quarter, we expected continued weakness in the sales environment due to inflation and weak overall demand for discretionary items. However, trends improve sequentially relative to the second quarter, driven by easier prior-year comparisons and improvements in our seasonal business, particularly Halloween and Christmas items, as well as effective promotional events. As a result, our inventories are at an appropriate level down similar to sales, and leaving us well-positioned to coming into Q4. Q3 net sales were $1.03 billion or 14.7% decrease compared to $1.20 billion a year ago. The decline versus 2022 was driven by a comparable sales decrease of 13.2%, which was in line with our guidance range. Our third quarter adjusted net loss was $127.9 million, resulting in an adjusted diluted loss per share for the quarter of $4.38. The gross margin rate for the quarter was 36.4%, up 240 basis points to last year and above our guidance. The improvement versus last year was driven primarily by lower freight costs and a reduced level of markdowns, particularly in seasonal items. Turning to adjusted SG&A total expenses for the quarter including depreciation were $487.7 million down 6% versus $518.5 million last year, and better than our guidance of down low single digits, SG&A included rent of approximately $6 million resulting from our recent sale lease pack, which also had the effect of reducing depreciation expense by around $750,000. Our strong performance on SG&A was driven across multiple line items and included some initial benefits from Project Springboard. Adjusted operating margin for the quarter was negative 11.1%. Interest expense for the quarter was $13.6 million up from $6.3 million in the third quarter last year due to higher average amounts drawn on our credit facility and higher interest rates year-over-year. Adjusted income tax for the quarter was $0.5 million, recall that last quarter we recorded a valuation allowance against deferred tax assets resulting from the company being in a three-year cumulative loss position at the end of the quarter. As a result, this quarter and going forward, we are not able to record a tax benefit related to loss carry forwards until we are in a three-year cumulative income position. As a result, we expect the tax rate to be in the near-zero range in Q4 as well. Total ending inventory cost was down 12.5% last year at $1.18 billion. This was driven by both lower on-hand units and average unit cost and also lower in transit inventory. During the third quarter, we opened eight new stores and closed two stores. The openings were all projects we committed to sometime back. We ended Q3 with 1,428 stores and total selling square footage of $33 million. Capital expenditures for the quarter were $15 million compared to $38 million last year. Depreciation expense in the quarter was $33.1 million, down $4 million to the same period last year. We ended the quarter with $46.6 million of cash and cash equivalents and $533 million of long-term debt. At the end of Q3 2022, we had $62.1 million of cash and cash equivalents and long-term debt of $459.9 million. Our debt position at the end of Q3 reflects the impact of the completion of the sale-leaseback on our California DC and 23 owned stores. Turning to the outlook, we continue to expect sales comps to improve sequentially in the fourth quarter into the down-high single-digit range. As our key merchandising and marketing actions continue to gain traction and as we lap easier comparisons, the 53rd week is expected to contribute approximately 400 basis points of sales benefit compared to the fourth quarter of 2022. This benefit will be partially offset by a net decrease in store count, which will have an unfavorable impact of approximately 300 basis points on sales. With regard to gross margin, we continue to expect our fourth quarter gross margin rate to improve and to be around 38% driven by reduced markdown activity, lower freight costs, and cost reduction and productivity initiatives. For Q4, we expect SG&A dollars to be down low single digits versus 2022. This includes approximately $8 million of rent expense related to the sale-leaseback, which will be partially offset by a lower depreciation of around $1.1 million. We expect interest expense to be approximately $8 million in Q4 slightly ahead of last year. With regard to CapEx, we continue to expect around $75 million for the year. We have opened 15 stores in 2023, including three in the fourth quarter to date, and expect 48 closures. With the closures heavily concentrated in this quarter. We currently expect four store openings in 2024, three of which were projects originally slated for 2023 to which we were already committed and one due to a relocation of a store where we are losing our lease. In general, all new store commitments remain on hold until our business situation improves. We expect full-year depreciation of around $140 million, including approximately $36 million in Q4. We expect a share count of approximately $29.3 million for Q4. We expect Q4 total inventory to be down mid-teens, representing a very favorable spread to sales as we continue our aggressive approach to managing inventory levels, again, all of our commentary on Q4 excludes the potential impact of impairment charges and other items including distribution center closure costs, gains on the sale of real estate and related expenses and consulting fees related to Project Springboard. We expect the 53rd week will benefit our Q4 sales by approximately $65 million and EPS by a few cents. I would now like to turn to spend a few moments to provide more details on our cost reduction and productivity efforts. We have now secured over $100 million of structural SG&A savings in 2023, prior to the initial benefits from Project Springboard. Overall, we are progressing in line with plan on Project Springboard, which we expect to drive $200 million or more of bottom-line benefits across SG&A and gross margin. Approximately 40% of the Project Springboard benefits are expected to come from cost of goods sold, 40% from other gross margin drives in activities, such as inventory optimization, pricing, and promotions, and 20% from SG&A savings in store and field operations, supply chain, and general office. We expect a high proportion of this Project Springboard benefits to be realized in 2024. Turning to liquidity. We ended the quarter with $258 million of net liquidity, despite the seasonal use of cash in Q3, as we build inventories ahead of the holiday season. We are comfortable with our position coming into the fourth quarter and expect to generate substantial free cash flow in the quarter. With regard to working capital, we are working towards a step change in how we manage inventory turns, targeting an improvement of 15% to 20% over the next year and more over time. A few items to cover as it relates to our sale-leaseback transaction. The transaction completed in the third quarter in Apply Valley, California distribution center and 23 owned store locations, generating proceeds of $306 million. We used $101 million of the proceeds to fully pay down the synthetic lease on the Apple Valley distribution center and a further $4 million to pay closing expenses and taxes. The balance of the proceeds provided us with additional liquidity to support our ongoing operations. We will continue to evaluate other asset monetization opportunities, including six remaining owned-store locations, our Columbus headquarters building, and other assets, which combined, we believe would have a monetizable value of over $100 million. We will disclose more details on the accounting for the sale-leaseback in our upcoming 10-Q filing. For book purposes, we will need to straight-line the rent and make other adjustments, which will create an initial annual incremental net rent expense of approximately $33 million, which will be partially offset by an initial annual reduction of approximately $4 million in depreciation expense and approximately $21 million in lower interest expense at current rates, resulting from debt pay down. I will also note that through Q1 of this year, we were incurring rent expense on a synthetic lease on the Apple Valley distribution center. Synthetic lease rent expense was $6.3 million for the 2022 fiscal year including $2.3 million in Q4 of 2022 and $2.3 million in Q1 2023, from which points in synthetic lease payments were reclassified as interest expense, until the synthetic lease was fully paid down on completion of the sale-leaseback in August. As a result, not all of the sale-leaseback rent is incremental. Turning back to our overall outlook. We believe we are in a strong position to return the company to growth and profitability, as we continue to execute on our five key actions. We have made significant progress in lowering our costs, managing capital and bolstering our balance sheet. As a result, we remain confident we can weather a continued period of macro-driven challenges until then, as our turnaround continues to gain traction. I’ll now turn the call back over to Bruce. Bruce Thorn: Thank you, Jonathan. So, to sum it up, our trajectory continues to improve and we delivered in the face of the challenging consumer environment. It’s becoming more evident that the key drivers of our improvement are the five key actions, which will enable us to return to growth and profitability over time. In the meantime, we are well-positioned to weather prolonged macroeconomic challenges due to our aggressive actions to strengthen our balance sheet. I’ll now turn the call back over to the moderator, so that we can begin to address your questions. Thank you. See also 15 Countries That Have The Best Doctors in the World and 20 Most Respected Professions in the US. Q&A Session Follow Big Lots Inc (NYSE:BIG) Follow Big Lots Inc (NYSE:BIG) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions]. And our first question is from the line of Joe Feldman with Telsey Advisory. Joe Feldman: Thanks, for taking my question. Wanted to get a little more understanding of the hiring of Seth Marks to run the extreme value. And I guess, how does that fit in with the chief — your Chief Merchandising Officer, and because I know, I think you said Seth’s going to be reporting to you, but will he have a different buying group or how will that work mechanically, I guess, within the organization to improve the merchandising and the closeout side of things? Bruce Thorn: Hey, good morning, Joe. This is Bruce. I’ll take that question. We’re really excited about Seth Marks joining the company. As we mentioned in our opening remarks. He brings a lot of great experience from the extreme value sourcing industry closeouts and was with us years ago when Big Lots was the leader in that area. And he is going to join our team actually next week. He is going to lead a continuing — a continuously growing group of closeout buyers. He’ll have a matrix reporting relationship with Margarita Giannantonio, our Chief Merchant, and myself, and the embedded closeout buyers under that DMM structure. That type of sourcing, as you probably know, is a little bit different than just some of the other sourcing we do for never-out type of product, as well as some of the off-price type of sourcing we get from factories across the globe. And it requires relationship building. And we’ve been building that. So, bringing in Seth, he’ll add a lot of value to it. One of the main reasons, he’ll be reporting to me is to get very quick decision-making capability. Many times, these deals require 24, 48-hour turns, getting the finances right, making sure the supply chain and all those things can coordinate. And so that just gives him faster access to making the deal get done. But Margarita, Seth, and I will be glued to our hips, getting this done, and we’re really excited about what he can bring. As we mentioned in the opening remarks, we’re already at 50% penetration on bargains which are a great value against most retailers. And now, we’re really focusing on these extreme bargains where Seth plays, he’s third generation in his family doing this business and we’ve seen, and we believe he’ll accelerate that penetration as well. Joe Feldman: Got it. Thank you. And maybe just as a quick follow-up, how are you guys, you mentioned food and consumables and, maybe missing the mark a little bit there and having some opportunity to improve. And I guess the strategy of food and consumables seems like it’s, changed a little bit over the past couple of years, and I’m just curious what your, how you view that fitting in going forward. Bruce Thorn: We, look the food and consumables marketplace right now is a fiercely competitive marketplace. And for us to be able to compete better, it very much requires us to get more extreme bargains, closeouts, if you will, high-quality closeouts. We weren’t as aggressive in pursuing those in the quarters before Q3. We have changed our stance on that we’re making room for it or open to buy in those areas has increased and we’ve got a team working on it and that should start changing this quarter. And we’ve got new leadership leading food in that respect as well, focused on that. It’s really important for us to differentiate ourselves in food, especially with extreme value, better than the leading price retailers, the grocery stores. And we have every ability to do that. Seth will play a big part in that as well. And the other way we differentiate ourselves is having more of a manufacturer label a good value compared to a national brand, but we’ll also have national brands for consistency of shop, but we’re changing the mix to be a much better value assortment and still good, good quality. And that’ll start changing, it is changing already, and we’ll start seeing the effects of that in the middle of Q4. Joe Feldman: Got it. Thank you. And good luck with fourth quarter. Bruce Thorn: Thanks, Joe. Operator: Our next question is from the line of Brad Thomas with KeyBanc Capital Markets. Please proceed with your question. Brad Thomas: Hi, good morning. Wanted to first ask about gross margin. You know, that’s been a nice bright spot for the company, and Jonathan, I was hoping you could just give us a little more context about maybe how much more runway you think there is as we look out to next year in terms of the benefits from the container rates and some of the more disciplined markdowns. Jonathan Ramsden: Yeah. Hey, good morning, Brad. We feel really good about the progress we’re making on gross margin. You know, big sequential step up, nice beat, to last year into our initial guidance coming into the quarter, we’ve continued to see a nice freight benefit through Q3 and also a significant benefit from lower markdowns, particularly on seasonal, which as you recall, a big drag on margins earlier in the year. So, we’re really pleased to see that story holding and coming together as we go through the year. In Q4 we’ll continue to get a year-over-year freight benefit. We’ll also get another benefit from lower markdowns in Q4. And then in the first half of ‘24, we will continue to see a fairly significant year-over-year freight benefit. The rate that we were paying in the spring of this year we’re still elevated relative to where we are today. So back half of next year, that will probably sort of even out, but the first half of the year we should see a nice benefit. So, we’re expected to be at 38% in the fourth quarter. We think we’re going to make good progress back towards 40% in 2024. We won’t get all the way there in ‘24, but we think we’ll make further progress relative to where we were for the full year as a whole in 2023. So, we feel good about the progress we’re making on gross margin. Freight has been, a really nice tailwind, but also getting markdowns down significantly has been really important. Brad Thomas: That’s very helpful, Jonathan. Thank you. And Bruce, if I could just follow up on some of the merchandising evolution and the deals and bargains that you are offering now. Could you talk a little bit more about maybe how much you want the merchandise assortment to change over the next six and 12 months? Which categories you’re most focused on driving the deals in? And then when you give us these percentages of the business that’s deals, can you describe this a little bit more, how much of this is really true closeout versus product that’s being manufactured just for you? Thanks. Bruce Thorn: Yes, Brad. Look, the more that we can move our assortment to an off-price comp value, the better. We would like to move as much of it as possible. We set a goal this year to be a third of our assortment in the bargain category, which means that we are beating most of our reference competitors in those prices that we have. We actually are trending, as you saw, nearly 50%. So, we have blown by that and we will take that as high as we can get it. Really, when I think about our assortment and Margarita as well, it is about having that clear value assortment at great price points. And then also having a mix of collective items that are differentiated. In our home categories and through furniture, bargains are harder to shop and comp. We have got a great value assortment. We always had a great value assortment there. But we are leaning into that even more and focusing on our good, better and best mix there. Over the time of COVID and the inflation, our good selection got a little bit out of whack and we have had to store those opening price points over the course of 2023. And we have made great progress. We have upgraded the quality across our furniture items. We have just got a great assortment out there. So, when I think about it, I would love to see the store, be a comp store in almost every respect, and be differentiated with exciting quality products. With returning to the extreme value or the extreme bargain penetration, that gets into a definition that the prices will have on those types of items will not just be better than most other retailers or reference retailers, competitive set, if you will, but better than the price leaders in the industry much better than them......»»

Job losses follow Broadcom's $69 billion acquisition of VMware. Broadcom CEO Hock E. TanLucas Jackson/ReutersMany VMware employees learned Monday their positions would be eliminated.Broadcom announced it closed its $69 billion acquisition of VMware on November 22.VMware had already started cutting jobs prior to the deal closing.Many VMware employees learned Monday that their positions will be eliminated following Broadcom closing its acquisition of the company.Broadcom first announced in May 2022 that it would acquire VMware for $61 billion and assume $8 billion of its net debt. It announced that it closed the acquisition on November 22, shortly after receiving regulatory clearance from China. Prior to that, it also had to receive regulatory clearance from other countries including the US and the UK.Employees whose positions were eliminated received an email on Monday viewed by Business Insider that said, "Broadcom recently completed its acquisition of VMware. As part of integration planning, and following an organizational needs assessment, we identified go-forward roles that will be required within the combined company. We regret to inform you that your position is being eliminated and your employment will be terminated.""We would like to thank you for your dedication and service. We want to make this transition as smooth as possible, including offering you a generous severance package and providing you a non-working paid notice period," the email continued.The exact number of employees impacted could not be determined by BI. Broadcom did not immediately respond to a request for comment.VMware had already begun job cuts prior to the acquisition closing, BI previously reported. VMware had sent a letter to employees before that saying that employees would either get an offer from Broadcom, get a transitional role, or receive severance.Some VMware employees speculated that Broadcom could spin out units like the security unit.In the past year, several top VMware executives have left the cloud computing company. Some VMware employees said they worried about a culture clash with Broadcom, especially as Broadcom requires returning to the office. They also said some customer deals had slowed down as they awaited the fate of VMware.Got a tip? Contact this reporter via email at rmchan@businessinsider.com, Signal at 646.376.6106, or Telegram at @rosaliechan. (PR pitches by email only, please.) Other types of secure messaging available upon request.Read the original article on Business Insider.....»»

ADM (ADM) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for Archer Daniels Midland (ADM). Shares have added about 4.6% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is ADM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Archer Daniels Q3 Earnings Beat Estimates, Revenues MissArcher Daniels Midland Company posted third-quarter 2023 results, wherein the top line missed the Zacks Consensus Estimate, but the bottom line beat the same. Both metrics declined year over year.Adjusted earnings of $1.63 per share in the third quarter outpaced the Zacks Consensus Estimate of $1.50. However, the figure declined 12.4% from $1.86 in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.52 per share, down 16.9% from the prior-year quarter’s $1.83.Revenues fell 12.1% year over year to $21,695 million and missed the Zacks Consensus Estimate of $23,217 million.Segment-wise, revenues for Ag Services & Oilseeds fell 13.9% year over year, whereas Carbohydrate Solutions’ revenues dropped 7.1% year over year. Also, Nutrition witnessed a year-over-year revenue decline of 4.3%.Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline by 7.8% and 0.5%, respectively.The gross profit decreased marginally year over year to $1,810 million but exceeded our estimate of $1,478.1 million. Meanwhile, the gross margin expanded 100 basis points to 8.3% in the quarter under review. The metric fared better than our estimate of 6.4%. SG&A expenses fell 0.4% to $815 million.Archer Daniels has reported an adjusted segmental operating profit of $1,492 million in third-quarter 2023, down 5.5% from the year-ago quarter. On a GAAP basis, ADM’s segmental operating profit fell 8.9% year over year to $1,421 million.Segmental Operating ProfitAdjusted operating profit for Ag Services & Oilseeds fell 21.1% year over year to $848 million. This is mainly due to weak North America origination results, which were hurt by lower export volumes due to large South America supplies. However, South America origination results have been solid, driven by higher volumes and margins stemming from strong export demand. The segment benefited from its strong Brazilian export capabilities and the commissioning of the Spiritwood production facility to serve the high demand for renewable green diesel.Crushing results declined year over year, driven by a drab year-over-year performance in global soy crush margins. On the flip side, robust soft seed margins, driven by the use of its flex capacity in EMEA, acted as upsides.Refined Products and Other results have been robust year over year, benefiting from strong export demand for biodiesel and domestic demand for food oil in EMEA. As noted, there were net positive mark-to-market timing effects during the quarter.The Carbohydrate Solutions segment’s adjusted operating profit increased 48.9% to $460 million. The Starches and Sweeteners sub-segment, including ethanol production from the wet mills, gained from solid demand as well as robust volumes and higher margins in North America. Meanwhile, the global wheat milling business witnessed higher margins, driven by solid demand.Vantage Corn Processors’ results have been higher year-over-year, driven by strong demand and margins for ethanol.In the Nutrition segment, the adjusted operating profit of $138 million fell 22% from $177 million in the year-ago quarter. The Human Nutrition unit’s results were lower year over year. The Flavors unit was robust on pricing actions in EMEA and had solid win rates in North America. Muted demand for plant-based proteins, particularly in the meat alternatives category, hurt the Specialty Ingredients unit. The Health & Wellness business’ results was strong year over year, backed by solid probiotic sales and a favorable impact associated with the revised commercial agreement with Spiber.The Animal Nutrition unit was weak year over year due to lower contributions from amino acids. Also, continued demand fulfillment challenges in Pet Solutions acted as a deterrent.Other FinancialsThe company ended the quarter with cash and cash equivalents of $1,498 million; long-term debt, including current maturities, of $8,225 million; and shareholders’ equity of $25,265 million. As of Sep 30, 2023, ADM provided $1,891 million in cash for operating activities. It repurchased shares worth $1.1 billion and cash dividends of $738 million in the first nine months of 2023.How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in fresh estimates.VGM ScoresCurrently, ADM has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ADM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks Reveals ChatGPT "Sleeper" Stock One little-known company is at the heart of an especially brilliant Artificial Intelligence sector. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion. As a service to readers, Zacks is providing a bonus report that names and explains this explosive growth stock and 4 other "must buys." Plus more.Download Free ChatGPT Stock Report Right Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Archer Daniels Midland Company (ADM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

There are certain terms that are synonymous with certain types of drinking places that offer cheap drinks. Typically, a bar that offers cheap drinks is most often known as a dive bar. In other places, it is referred to as a local watering hole. One thing is for certain – watering holes and dive bars […] The post The Top Local Dive Bar in Every State appeared first on 24/7 Wall St.. There are certain terms that are synonymous with certain types of drinking places that offer cheap drinks. Typically, a bar that offers cheap drinks is most often known as a dive bar. In other places, it is referred to as a local watering hole. One thing is for certain – watering holes and dive bars of today have evolved to mean something different than in years past. The meaning of the term ‘dive bar’ is one that has evolved over time, just like another drinking establishment, the speakeasy. A speakeasy used to be an illegal drinking place, whether high-tone or lowbrow, whose patrons were subject to arrest if they were discovered; today, it seems to just mean any place with a hidden entrance.  Dive bars were renowned for being notoriously disreputable, dirty, and possibly dangerous – the kinds of places where strangers weren’t welcome and where, if you weren’t a stranger, you were very likely to be disreputable, dirty, and possibly dangerous yourself. Today, many local drinking establishments known as dive bars increasingly mean a bar with character, someplace not too fancy, or an establishment with a personality of its own. They may be a little ill-kempt but rarely worrisomely unclean or in any way threatening. But if a dive bar is to be differentiated from any other neighborhood tavern, or from all the trendy new places with dive bar pretensions, there ought to be some agreed-upon definitions. There are certain attributes that a true dive bar should have: A regular clientele with regular bar seats – the kind of people who might turn to look at you when you walk in, but then turn back to their beers,  graffiti on the walls (or, at the very least, on the restroom walls); an old-school jukebox, tuned a little too loud; at least one pool table; and furnishings repaired with duct tape. What qualifies a certain locale as a dive bar? These are just a few critical components. Known for their early morning hours, many open as soon as it’s legal which in some states is 6 a.m. The type of beverages offered is key. Beer should be in cans, often including PBR (Pabst Blue Ribbon), as well as in bottles (taps are optional).  Lighting needs to be at a level that’s either too low or too high (ideally there are no windows), and the bartenders are either really friendly or really surly. But the top sign of a local watering hole is cheap drinks.  To assemble a list of the top 50 local dive bars in every state, 24/7 Tempo began by consulting ratings and reviews of establishments identifying themselves as dive bars, in whole or in part, on Yelp. Many of these were disqualified because they weren’t strictly a dive bar. Those that were primarily restaurants, sports bars, or chain operations, or because they were judged editorially to lack essential dive bar characteristics were not included. (Click here for the 20 biggest sports bar franchises in America.) We also consulted numerous roundups of dive bars, ranked and otherwise, from a variety of websites, including those of Thrillist, Tasting Table, and Daily Meal, as well as numerous local and regional sites and both websites and Facebook pages belonging to some of the bars under consideration. It is important to have a few tips before you embark on a dive-bar excursion. Many of them are cash-only. With only occasional exceptions, they’re not places where you’d want to eat anything fancier than a bag of chips or a frozen microwaved pizza. Some don’t even serve liquor – just lots of beer and maybe cheap bulk wine. Dive bars are often friendly, surprisingly welcoming hangouts; the bar tabs tend to be modest (even for a full evening of drinking); and you’ll almost certainly have more fun and more interesting experiences overall than you would if you’d gone to some swanky uptown place. (If you prefer that kind of establishment, though, these have recently been voted the best bars in America right now.) Here are the best dive bars in every state Alabama: Snapper’s Lounge > City: Orange Beach The unique feature at this no-frills beach dive in a Gulf Coast town just across the bay from Florida is a weathered 25-foot-long shuffleboard table, said to be half a century old. Beer is the usual drink here, though simple mixed drinks are available. Alaska: Van’s Dive Bar > City: Anchorage Live music, free popcorn, a pool table, and cheap drinks make it easy to see why this Anchorage institution has a loyal local clientele and appeals to any visitors savvy enough to find it. ALSO READ: Best Bar in Every State Arizona: Bay Horse Tavern > City: Tucson This Tucson standby is praised by Yelp reviewers for its “sharp, funny bartenders,” “great prices on drinks,” and “small patio for smoking with a TV.” “What a dump!” wrote another Yelper, adding, “I mean that in a good way.” Adding to the charm is the illuminated head of retired Bud Light mascot Spuds MacKenzie looks out over the bar above a cooler filled with “Important Beers”. Arkansas: Midtown Billiards > City: Little Rock This Little Rock institution is the perfect dive bar. Yelp comments include “Worse bar I’ve ever been to,” “[D]on’t think you’ll leave without a layer of grease on your clothes,” and “[Y]ou get hassled at the door, insulted by the staff, and hustled by the low rent meth head[s]…who camp out on the only two…pool tables.” On the plus side, other Yelpers say things like “Fantastic place,” “a delicious burger and staff,” and “This is as real as it gets.” California: Zeitgeist > City: San Francisco Zeitgeist is a Mission District punk bar that is famous for its Bloody Marys and its outdoor seating area but be prepared – it’s cash-only. Aficionados might question whether a true dive would have 64 beers on tap, as this one does – but some patrons find the staff to be rude and mean, which helps restore the place’s divey credentials. Colorado: Nob Hill Inn > City: Denver This slightly gritty Denver old-timer – there’s been a bar or restaurant on the site since 1937 and it’s been called the Nob Hill Inn since 1954 – is decorated with paintings done by the owner when he was an art student 30-plus years ago. According to the Denver news and arts publication Westword, “The off-band jukebox still takes dollar bills, and…[t]he crowd ebbs and flows as hipsters, old-timers, and guys wearing sunglasses indoors all come and go.” Connecticut: The Bruce Park Grill > City: Greenwich This upscale Connecticut community might be the last place you’d expect to find a dive bar, but the Bruce Park Grill is the real thing. Cheap beer, burgers, and pan pizzas, a shuffleboard table, friendly bartenders, and a regular clientele. It’s a world away from the posh boutiques and pricey restaurants nearby. 24/7 Wall St. The Oldest Bar in Every State Delaware: Comegys’ Pub > City: Wilmington This pub is a small, family-owned blue-collar watering hole known for its friendly staff and friendly regulars, Comegys’ has been called “the Cheers of Wilmington.” It’s the kind of place, one regular told the local entertainment site Out&About, where “Someone will always buy you a drink, whether you want one or not!” Florida: Boat Club > City: Tarpon Springs If beer is what you’re looking for, the Boat Club is the place for you. There’s beer and a little wine but no hard booze at what Yelp reviewers hail as a “dilapidated, crooked,” “classic Floridian dive bar” with “the wildest ambiance, the best bartenders, the greatest stories.” Perched above the Anclote River, leaning over it on “at least a 20-degree angle,” it’s “jam-packed with character.” As one comment notes, “Don’t come here looking for hipsteresque irony; you’ll be eaten alive.” Georgia: The Rail Pub > City: Savannah Opened in 1890 in what was then the city’s red light district, the Rail Pub has been everything from a railroad workers’ bar to a boarding house to a brothel. Today, the attractions in this “dark, dank, sketchy, and…amazing” joint (as one Yelper called it) include $5 Forties (40-ounce beers), free fried chicken and live music on Fridays, and, according to the bar’s website, “the city’s finest collection of daytime drinkers.” Hawaii: Honolulu Tavern > City: Honolulu “If you look up the definition of dive bar in the dictionary, you’ll see a picture of this place,” wrote one fan of this hole-in-the-wall local favorite on Yelp. Different cocktails and shots are featured every day of the week, and everybody seems to love the bartenders, variously hailed as “awesome,” “talkative,” and “the nicest people.” Idaho: Cactus Bar > City: Boise Another cash-only institution, the Cactus Bar offers “cheap strong drinks,” including $3 well drinks and domestic drafts and $5.50 microbrews daily from 10 a.m. to 2 a.m. “Many a Jäger Bomb has been defused at this downtown institution,” according to Boise Weekly. The clientele, says the Old Boise website, “includes bikers, students, and pretty much anyone who loves to drink.” 24/7 Wall St. The Most Iconic Fictional Bars in TV History Illinois: Chipp Inn > City: Chicago This bar’s origins are said to date back at least a century. The Chicago Bar Project website describes this cash-only corner joint as “a smallish room with walls of green and a gold-painted tin ceiling…[with] a battered wooden floor…[and] much Old Style and Pabst Blue Ribbon beer memorabilia.” Bring your own food (or order in), but as one local Yelper put it, it also has “cold beer, friendly bartender, reasonable prices, late hours…Just what was needed when we ran out of booze at home.” Indiana: Alley Bar > City: Bloomington “This is a day drinker’s paradise: peanut shells on the floor, solid selection of taps, natural light from street windows (but not too much), and a salty and well-seasoned bartender/owner/operator.” That’s according to a Yelp reviewer from Indianapolis. “Dark, narrow, hole in the wall, but perfect,” wrote another Yelper, adding, “It’s a place your father would have had drinks.” Iowa: Locust Tap > City: Des Moines Walls decorated extravagantly with graffiti, a decrepit tin ceiling, a drink-stained pool table – and, in the words of one Yelp reviewer, “They play loud music, have cheap beer, [and] the booths are falling apart….” are what add to the ambiance of the Locust Tap. Kansas: Fat Matt’s Vortex > City: Kansas City Built over an old crematorium (tours of the basement are available), this local institution in Strawberry Hill features bartenders full of character, flatscreen TVs, a pool table, icy cold beer, and a signature cocktail called Grog/Witches Brew. Kentucky: Chevy Chase Inn > City: Lexington “The cocktails are cheap [and] [t]he ambiance is dark, dirty, vintage, and brooding, in the best way” at this old-school dive bar (said to be the city’s oldest continuously operating watering hole), according to one Yelp comment. Another warns, “This place is not for posers! Zero poser policy!” Live music and a good choice of carry-in food options nearby are added attractions, and “Beer comes canned and ice cold.” 24/7 Wall St. The Best Bars in America Right Now Louisiana: Snake & Jake’s Christmas Club Lounge > City: New Orleans With one of the great rundown-dive-bar exteriors – complete with a large sign advertising Regal Beer on tap (the Bourbon Street brewery that produced it closed down in 1962) – Snake & Jake’s has been called a “bucket list dive bar destination” on Yelp. The site also notes that “The drinks are cheap, the staff is friendly and accommodating, and the bar dog is a friendly pup….” Reversing the usual morning-to-late-night policy of many dive bars, this one’s open from 7 p.m. to 7 a.m. And the holiday decorations stay up all year long. Maine: Ruski’s Tavern > City: Portland Uncommon for a dive bar, Ruski’s serves what many reviewers hail as excellent food – including hearty breakfasts. Yelpers call the place “unpretentious, casual, and…a great mix of locals of all ages and backgrounds” and note that “The drinks are strong, the service is warm and the music will keep you bopping.” Maryland: Mount Royal Tavern > City: Baltimore Come to this Belvedere dive bar, writes one Yelper, for “Cheap drinks, great music, diverse crowd, artwork on the ceiling and funny postings behind the bar,” as well as bartenders full of great tales to tell. One local notes “It’s grimy, dimly lit and a little sticky. I fell in love with it immediately.” Massachusetts: Moynagh’s Tavern > City: Worcester Opened in 1935, moved to its current location in 1948, and still in the Moynagh family, this classic neighborhood workers’ bar is near the DCU Center arena complex. “Cheap beer and everyone leaves you alone,” wrote one Yelp reviewer, even though it’s “the kinda place where you walk in and everyone looks over.” Another reviewer called out the “strong drinks [and] loud people” and observed that it’s “dark and a little dirty” – before adding, “It’s my kind of place.” Michigan: The Bronx Bar > City: Detroit Until she retired in 2018 after 42 years on the job, the big draw here was curmudgeonly daytime bartender Charleen Dexter, who remembers when beer was 15 cents a glass at this midtown standby. You can still get a cheap brew here (if not quite that cheap), and the burgers, fries, and fried pickle spears get good reviews. Critics complain about lousy service and too-loud music, but it has also been called “a fun, gritty place.” ALSO READ: America’s Top Selling Beer Brands Minnesota: Palmer’s Bar > City: Minneapolis This music club-dive bar dates its origins to 1906 and has operated under various names and owners ever since – becoming Palmer’s Bar in 1950. Strong drinks, cheap beer, and an outdoor area are among the attractions. According to the bar’s website, Palmer’s has been described as “a church for down and outers and those who romanticize them, a rare place where high and low rub elbows — bums and poets, thieves and slumming celebrities.” Mississippi: Gil’s Fish Camp > City: Ocean Springs This “laid back beach-hut bar with cheap booze, tasty crawfish, and a splendid waterfront view” (according to The Daily Meal) has cabins attached, in case you dive a little too deep. The beer is ice cold (“damn near frozen”), the atmosphere is great, and the bartender is “usually entertaining,” said Yelp reviewers. Missouri: Silverleaf Lounge > City: St. Louis The Silverleaf is cash only, but prices are low. “[T]he only way you can enjoy a cheaper drink is to drink at home,” noted one Yelper. “The standard by which all other neighborhood bars should be judged,” according to St. Louis’s Riverfront Times. “Patriotic relics line the walls,” the Times continues, “and a collection of regulars are a fixture at the bar, trading jokes and jibes with the bartender while a jukebox cranks out soul and oldies that harken back to the time music was actually good.” Montana: The Rhino > City: Missoula Officially known as The Rhinoceros, one Missoula resident posted all you need to know about this place on Yelp: “Peanut shells on the floor, a boozy musty aroma floating in the air, non-apologetic gruff bartenders and a crowd full of a nice mash-up of college students, resident alcoholics and adults trying to escape their children.” Its array of 50 beers on tap and more than 50 single-malt scotches may move it out of true dive bar territory for some, but the nightly specials are definitely dive-like in price. Nebraska: Harry’s Wonder Bar > City: Lincoln This downtown Lincoln institution takes its name from the fact that it occupies an old Wonder Bread store. Drinks are poured generously, and domestic beers are $6 a pitcher or $2 a bottle on weekdays from 2 p.m. to 6 p.m. There’s no food other than chips, jerky, and the like, but bartenders will nuke a Tombstone frozen pizza on request. There’s a pool table and there are some video games, but the main sport here is keno. “All of us in here play,” bartender Steve Coufal told the Lincoln Journal Star. ALSO READ: Best Bar in Every State Nevada: Rusty Spur Saloon > City: Las Vegas There’s a rearing silver-hued horse with a PBR logo on its hindquarters outside this old-style cocktail lounge in a motel parking lot, located in the Dollar Tree/Bass Pro Shops/Ross Dress for Less part of Sin City. “This is not a craft beer bar…,” warned one Yelp reviewer. “This is a Bud, Coors, PBR bar.” The best indication on Yelp that this is a true dive bar: “Unfriendly towards Pokémon Go players.” New Hampshire: McGarvey’s Saloon > City: Manchester Nothing says dive bar more than a fight. This saloon can claim the story of a man who was once arrested here and charged with biting off a portion of the bouncer’s finger when he tried to eject him. On the other hand, many Yelp reviewers praise the great service, drink specials, and welcoming locals. And one visitor from California on karaoke night noted: “[W]e had the distinct pleasure of witnessing two of the biggest ugliest gnarliest biker dudes singing the most beautiful love ballads – not together.” New Jersey: Hudson House Bar > City: Beach Haven “The Hud,” not far from Fantasy Island Amusement Park on the Jersey Shore’s Long Beach Island, was originally a Prohibition-era speakeasy. It’s deliberately unpromising looking from the outside. “[A]fter years of intentional disrepair, the Hud now resembles a haunted house,” wrote The Press of Atlantic City, “something akin to the Addams Family home with its peeling paint, strips of duct tape holding cracked windows together and lack of landscaping.” “Come here for cheap beer, the ambiance, and to experience a bar that time forgot,” counseled one Yelper. “Dirty Jersey at its finest,” said another. New Mexico: The Matador > City: Santa Fe According to Yelp: “Sort of gnarly dark post-punk atmosphere but great music and GREAT bartending.” “[B]e prepared to get up close and personal with other patrons when it’s busy…[and] don’t order anything complicated!” “If you want a lil’ grit, a good pour from a happy bartender…, good metal/punk, and that general feel of being transported somewhere that time doesn’t exist, head here.” New York: One Star > City: New York City Joe DiPietro’s No Idea was an anomaly: a true no-frills downtown dive bar on a trendy street in Manhattan’s Flatiron neighborhood (the upscale Gramercy Tavern was a few doors away). When the landlord priced him out of the place after 21 years, DiPietro moved to a new location nearby and opened this place – which owes its name to Yelp. He thought the one-star reviews of No Idea on the site were funny, and named his new bar in their honor. Of course, the One Star pages on Yelp are filled with four- and five-star assessments. Among the comments: “Kinda dingy lighting, long bar to sit at…;” “Go for the tallboy and whiskey shot special for $8;” “Sure it’s simple and plain, and that’s exactly what it’s meant to me.” 24/7 Wall St. The Oldest Bar in Every State North Carolina: Thirsty Beaver Saloon > City: Charlotte The owners of this modest brick-walled neighborhood dive refused to sell their property to developers a few years back, so the developers built a 323-unit apartment building around the place on three sides. Inside, wrote a Yelper, “It’s a small biker-esque bar with one bar, a couple of pool tables and cheap beer…and it has a 70s vibe” – expressed partly through a collection of bras hanging from the rafters and barred windows. “Grab yourself a PBR and pull up a stump to the old school jukebox,” advised another, “and slip into honky tonk heaven.” North Dakota: The Box > City: South Fargo Located off the lobby of an inexpensive chain hotel, The Box is a combination bar and mini-casino. It isn’t dark or dirty or dangerous-feeling, but qualifies as a dive with its menu (it includes cheese curds, fried pickles, pretzels with ranch dressing, and frozen pizzas); its low-priced drinks (including $1 “mystery shots”); its “cool” and “friendly” bartenders (according to Yelp); and the fact that it’s the place to go when you don’t want to be (Yelp again) “creeped out by the low lives of downtown, but don’t want to drink in these boring places where people have name tags and company logos all over their clothing.” Ohio: Harbor Inn Café > City: Cleveland Reviewers on Yelp like this West Bank dive bar – one of the oldest bars in Cleveland – for its “nautical and rather outdated” décor; “friendly bartender [and] friendlier patrons,” and “the history, the vibe, the thorough beer list and the low price tag.” Advice from one Yelper from the ‘burbs: “Take 15 people here, drink a lot of beer, and play darts. Don’t overthink it, you’ll hurt yourself.” Oklahoma: Edna’s > City: Oklahoma City The signature cocktail here sets the tone: called the Lunchbox, it’s made with fresh orange juice, light beer, and amaretto and served in a frosty mug. The bar claims to have served more than 2 million of them since it was invented accidentally in the 1990s. Reviewers describe Edna’s as a classic dive bar, with décor featuring dollar bills stapled to the walls. Bar namesake Edna Scott, who died in 2014, used to dance on the bar every time somebody played “Great Balls of Fire” on the jukebox. Oregon: Yamhill Pub > City: Portland The headline for an article a few years back about this octogenarian institution in Willamette Week reads “Yamhill Pub Somehow Endures As Downtown’s Only True Dive.” The sub-head counsels, “Do not order food, avoid the toilets, and never ask how this bar has managed to survive.” Low prices have doubtless helped. Newcomers here, according to Willamette Week, “are tolerated, begrudgingly.” ALSO READ: The Most Iconic Fictional Bars in TV History Pennsylvania: Lefty’s > City: Pittsburgh “[C]heap and strong drinks, colorful clientele, unpolished karaoke, and well-worn bar stools” are among the divey attractions at this Strip District standby, according to Yelp. Alcohol choices include a menu of “shot and a beer” combinations (the Jim Morrison is Bud and Jameson) and a choice of brews in bottles only from a list divided into “domestics” and “geeky beers.” Rhode Island: Pontiac Tap > City: Providence “[F]ar from a fancy place but it’s a fun place to kick back and relax with your friends,” wrote one Yelp reviewer, also noting that it’s “dark and dingy,” but that the drinks are “cheap and strong.” Another comment criticized the depressing atmosphere, calling the Tap “a mediocre bar that has a touch of kitsch” – but still another hailed it as “King of dive bars.” South Carolina: Cutty’s Bar & Grill > City: Charleston Cutty’s is the kind of place one Yelp reviewer might give only a single star to, “hoping to discourage fancy jerks from ruining this secret oasis for the neighborhood” – though another one might give it five stars with a note that “The moment you step into Cutty’s, you’re teleported from fancy-pants Charleston to a dive bar in the heart of the Midwest.” Still, another reviewer, several years back, wrote: “Great dive bar. I bought a pregnancy test out of the vending machine for $1 and a PBR for $2.” Strangely, the bar is said to sell more of the medicinal-tasting bitter Fernet Branca than anyone else in the state. South Dakota: Carey’s Bar > City: Vermillion Founded in 1954, Carey’s is a college-town dive bar (Vermillion, in the southeastern corner of the state, is home to the University of South Dakota). It’s cash only (there are nightly discounts on various drinks) and there’s no food other than free popcorn. though food may be brought in. “This is a cozy dive bar with wood throughout,” according to one Yelper. “A cool place to have a pint.” A taxidermied elk head with a cigarette in its mouth and “Go Yotes” mittens on its antlers (the USD football team is the Coyotes) overlooks the bar. Tennessee: Santa’s Pub > City: Nashville The specialties at this decade-old cash-only establishment are cold beer (the only alcohol on offer) and karaoke. One visiting out-of-towner called this the “Cutest place with the cutest local people (& cool tourists you actually wanna be around),” but warned, “Be prepared for a massive hangover!!” Another Yelp reviewer recently reported that country pop star Kelsea Ballerini was in the house recently and “bought the whole bar White Castle sliders.” 24/7 Wall St. The Best Bars in America Right Now Texas: Club No Minors > City: Houston In response to local liquor laws in the 1960s, the Galleria area Mexican restaurant El Patio opened a separate operation, the Club Villa Sana, through a door just inside the entrance. A sign reading “No Minors” was attached to the door, and the place soon became known as Club No Minors. The room is small, the live music (sometimes mariachis) is loud, and the margaritas – served in big water glasses – are potent. Patrons have been known to dance on the tables after a couple too many. Utah: Cheers to You > City: Salt Lake City “[L]oud and crowded and the design was likely commissioned by a drunk,” according to Yelp, whose reviewers also comment repeatedly on the rude bouncers. On the other hand, it’s a “fun casual dive bar with great drinks” with “[a]wesome bartenders and very friendly door guys” and “[e]xcellent, timely, courteous service.” Vermont: Charlie-O’s > City: Montpelier Charlie-O’s was a one-time biker hangout that has since turned into what one Yelper reviewer described as “a tiny little dive bar like you see in the movies where all the locals hang out for cheap drinks.” Another cited the “diverse crowd of bureaucrats, hippies and pool sharks” (or as another one put it “[n]ice people from all walks of life…congressmen to bums (if you can tell them apart)….” Alcohol is cheap here, but several reviewers have complained about the bar’s practice of limiting the number of drinks they’ll serve each customer (a not very dive-bar-like policy). Virginia: The Locker Room > City: Richmond This Virginia watering hole, located in the state’s capital city, is a place, according to Richmond’s RVA Magazine, that “has everything: indoor smoking, old dudes, a jukebox, pool and shuffleboard, Jell-o shooters, food that I would recommend you not eat” and is “the standard by which all other local dive bars should be judged.” In business since 1985, this is a family-owned place, with – the owner says – “free wifi, top-shelf snacks, and all the attitude you expect from a dive, complete with nicotine walls and ceiling tiles.” Washington: Al’s Tavern > City: Seattle Al’s is one of those places that inspires some regulars to give it one-star ratings on Yelp simply to discourage the wrong kinds of people from coming. “Dank lighting, funky smell, faded Formica, vinyl half booths, stale chips, surly staff, stray dogs, irregular regulars, janky pool table,” wrote one Al’s fan. “Stay away. You’ll just ruin it.” Another qualified his single-star rating by saying that it was “for the good of the bar and its regulars,” and implored readers to “Preserve the Al’s Tavern that’s been doing its thing since 1940.” Going the other direction with a five-star score, a woman from Philadelphia announced “This bar is making me consider moving to Seattle.” 24/7 Wall St. America’s Top Selling Beer Brands West Virginia: Red Carpet Lounge > City: Charleston “[A] beloved dive bar to the locals” and “the purest version of a dive bar in existence,” according to its fans on Yelp, the Red Carpet would be perfect except that “it’s too bright and the walls are too white for a real dive.” Hefty liquor pours and cheap beer attract “[e]very walk of life.” However, warns one reviewer, “The bar staff doesn’t like you. This is not ironic detachment. They honestly do not care for you. They will sell and serve you drinks regardless.” Wisconsin: Wolski’s Tavern > City: Milwaukee Wolski’s, which celebrated its 115th anniversary this year, offers patrons “Great bartenders, outstanding popcorn, inexpensive drinks, and steel dart boards,” according to one Yelp reviewer. Others call it a “Dark, dark, classic forever neighborhood bar,” but “NOT a dive bar in the traditional sticky floor, dirty bathroom sense.” Anyone who stays until the bar shuts down (at 2 or 2:30 a.m., depending on the night) gets an “I closed Wolksi’s” bumper sticker. These are said to have been distributed all over the world by the Wolski’s faithful. Wyoming: Joe’s Liquor & Bar > City: Rock Springs This combination of a package liquor store and what is said to be Wyoming’s smallest bar (with seating for only about 20 customers) is “as divey as divey can get, as local as local can get, and as cool as cool can get,” according to one Yelp review. The 1961-vintage Joe’s supplies “an authentic Wyoming experience,” and while there’s no beer on tap, the bar makes up for the omission “in personality and rowdiness.” 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 The Top Local Dive Bar in Every State appeared first on 24/7 Wall St.......»»

Layoffs And Bankruptcies Pile Up In Logistics Amid Shocking Downturn By Craig Fuller, CEO of FreightWaves Since launching in 2017, FreightWaves’ team of award-winning reporters has covered the good — and bad — news and events in the transportation and logistics industries. In those years, the freight transportation market has enjoyed prosperous times and periods of pain and misery. The freight market undergoes boom-and-bust cycles, like all commoditized industries. FreightWaves SONAR correctly predicted the start of a drop in the freight market in March 2022. Since then, the overcapacity spurred by the pandemic has caused freight-hauling rates to drop to 2019 levels — or worse. For the past 18-plus months, there have simply been too many trucks for too little freight. However, the impact has gone beyond U.S. trucking fleets and freight brokerages. The problems are not confined to the United States or just trucking. Ocean carriers, railroads, air cargo carriers and freight forwarders around the world have been impacted as well. No one at FreightWaves enjoys reporting bad news. One of my followers on X recently commented, “Everything you post/repost or talk about is doom and gloom. I challenge you to say/find something positive about the economy pertaining to the trucking industry.” I would love to do so. Unfortunately, the good news in freight, transportation and logistics has been sparse Severe recession in the freight market  After the market began to prove FreightWaves SONAR’s downturn prediction, some analysts and industry experts said the freight slowdown was a reversion to the mean. Unfortunately, it is not. We are in one of the worst downturns in freight market history, caused by a massive buildup of capacity, and it’s going to take time to burn it all off. Simply put, the freight market is experiencing a severe recession. FreightWaves has an obligation to report that news. Since early in 2022, many companies have gone out of business or severely cut back by letting employees go. Some of those companies were household names in the industry, such as Yellow Corp. and Convoy. Many others were much smaller, not known perhaps beyond their headquarters location. Nonetheless, the bankruptcies, closures and layoffs have piled up, and the financial and human losses have taken a toll. The following synopses are some of the articles that FreightWaves has published in the past year that illustrate the poor freight economy. The full articles can be read by following the links; ongoing coverage of the “state of freight” can be found here on FreightWaves.com. Bankruptcies and shutdowns  Nov. 6: A court ordered liquidation of Twin Express, a Minnesota trucking company with 76 employees, as FreightWaves’ Clarissa Hawes reported. The 35-year-old company defaulted on a $19 million dollar loan. Oct. 23: After its founder embezzled $25 million to purchase a G-550 jet and a $5 million mansion in Texas, Goldman Sachs-backed Slync wound down operations and hopes to sell its proprietary technology, as Hawes reported. Oct. 22: Fort Worth-based SEL Supply Chain Solutions shut down, Hawes reported. Closure of the freight brokerage — that at one time had $65 million in revenue — left 125 employees out of work. Oct. 19: Convoy, a venture capital-backed digital freight brokerage, shut down, as FreightWaves’ John Kingston reported. Valued at $3.8 billion, the “perfect storm” of the freight recession coupled with tighter capital markets was blamed for the company’s failure. Oct. 19: A third-generation, family-owned trucking company and brokerage, Certified Freight Logistics, ceased operations after 95 years, as FreightWaves’ Hawes reported. Layoffs impacted 157 workers, including 101 linehaul and local truck drivers. The wind-down of the Santa Maria, California-based company was expected to be completed by Nov. 18.  Oct. 12: Meadow Lark Transport, a 40-year-old Montana trucking company and freight brokerage that previously generated $200 million in revenue, shuttered operations, Hawes reported. The company had 273 drivers and 337 power units at the time of its closure, according to the Federal Motor Carrier Safety Administration. FMCSA data states the company’s brokerage authority was involuntarily revoked on Aug. 15 and its contract carrier authority was slated to be canceled on Oct. 28. Sept. 29: Grand Rapids, Michigan-based Titan Transportation Services Inc. abruptly ceased operations on Sept. 29, as Hawes reported. Owner-operators said on Oct. 11 that the company, doing business as Sunset Logistics, still hadn’t refunded their $1,000 in escrow or maintenance account funds. Sept. 25: An 85-year-old Indiana-based trucking and logistics company and its affiliates filed for Chapter 11 bankruptcy protection less than nine months after it was acquired by private-equity firm Transport Acquisitions, as FreightWaves’ Hawes reported. Founded in 1938, Otwell, Indiana-based Elmer Buchta Trucking, which offered bulk, dry van and pneumatic trucking services, had 100 drivers and more than 230 power units, according to federal data. Aug. 31: U.S. Postal Service contractor Matheson Flight Extenders filed paperwork stating that it planned to eliminate 305 jobs and close its sorting facility in Chicopee, Massachusetts, by the end of October, Hawes reported. That brought to about 1,000 the total job cuts it announced in the days around that time. Two other sorting facilities in Georgia and Maryland were also closed. Aug. 7: Yellow Corp. filed for bankruptcy, leaving 30,000 employees out of work, as FreightWaves’ Todd Maiden reported. This number included approximately 22,500 members of the Teamsters union. The bankruptcy marked the end of the 99-year-old LTL company. Aug. 7: FreightWaves’ Eric Kulisch reported Western Global Airlines, which operates chartered cargo jets for the U.S. military and other customers, filed for Chapter 11 bankruptcy protection and announced it will restructure. The company has nearly $500 million in debt. A bankruptcy restructuring has been expected for weeks because of collapsing revenues, a heavy debt load and the decision by credit rating agencies to pull their coverage because of the company’s lack of financial transparency. Bloomberg previously reported that Estero, Florida-based Western Global Airlines was arranging debtor-in-possession financing to support ongoing operations under a court-approved bankruptcy plan. July 25: After experiencing record sales growth during the COVID-19 pandemic, digital freight brokerage Surge Transportation filed for bankruptcy protection, as FreightWaves’ Hawes reported. The company said it was unprepared for the abrupt decline in product demand and soaring shipping costs that rocked the transportation industry.  July 17: Georgia-based trucking company Big J Express LLC, which reported a significant drop in revenue this year compared with the previous two years, filed for bankruptcy liquidation, Hawes reported. The company, which obtained its operating authority in 2014, had 37 drivers and the same number of power units and hauled general freight. Headquartered in Norcross, Georgia, Big J Express filed its petition in the U.S. Bankruptcy Court for the Northern District of Georgia. June 29: Cargo airline Amerijet laid off more than a dozen employees as the freight recession drags on, FreightWaves’ Kulisch reported. The airline said the move was necessary to protect its bottom line as revenues sag and costs rise. June 28: Ameritrans Express filed a bankruptcy petition in the U.S. Bankruptcy Court for the Eastern District of Virginia, as Hawes reported. Owner Frederick Amankwaahe waited almost four months before filing the Chapter 11 petition seeking to reorganize his company. Ameritrans provided transportation and delivery services as a contractor for the Postal Service. Its former employees are owed millions in unpaid wages. June 28: More than 60 small trucking companies are collectively owed millions of dollars after Transplus Freight System Inc. (Transplus), a Mississippi-based logistics firm, filed for bankruptcy liquidation in the U.S. Bankruptcy Court for the Northern District of Mississippi. FreightWaves’ Hawes reported the story. June 27: Ailing commercial electric pickup truck maker Lordstown Motors filed for Chapter 11 bankruptcy protection. It also put itself up for sale and sued former partner Foxconn, alleging fraud and failure by Foxconn to live up to its financial commitments. June 16: Tiger Cool Express, a refrigerated rail shipping and logistics company, abruptly halted operations amid financial troubles. The company reportedly fell behind on loan payments. FreightWaves’ Hawes reported the story. May 26: Peace Equipment LLC, headquartered in Edcouch, Texas, filed for Chapter 11 bankruptcy protection, citing rising operating costs and “reduced income in the trucking industry.” The company, which has been operating since 2016, has 38 drivers and 27 power units and hauls general freight, fresh produce and refrigerated food throughout the U.S. Hawes reported the story. March 24: Soler & Soler Hauling, a Miami-based trucking company, filed for bankruptcy protection. The company’s bankruptcy petition cited negative cash flow as well as high fuel and operating costs as factors for the bankruptcy. FreightWaves’ Hawes reported the story. March 22: Hawes reported that trucking company Flagship Transport abruptly ceased operations, leaving more than 450 truck drivers without jobs after they were not paid for weeks. Flagship Transport was a logistics holding company headquartered in Medley, Florida. March 7: FreightWorks Transport shut down after losing its top customer. The North Carolina-based trucking company laid off over 200 employees, including 140 drivers. FreightWaves’ Hawes reported the story. Late November 2022: Art Mulder & Sons, a family-owned trucking company that had been in business for more than 50 years, ceased operations. The Holland, Michigan-based company specialized in refrigerated LTL freight. Hawes reported the story. Nov. 26, 2022: Family-owned Mid Continent Trucking, a Denison, Iowa-based refrigerated carrier in business for 24 years, ceased operations. Co-owner Brian Wickersham said, “I would rather be able to pay my employees while I still have the money than wait until I don’t have it and then have to tell my employees that I can’t pay them.” FreightWaves’ Hawes reported the story. Nov. 16, 2022: Freon Logistics, a Bakersfield, California-based trucking company, filed for bankruptcy. It provided truckload, less-than-truckload, intermodal, repair and maintenance, and warehousing services. Freon Logistics employed about 500 people, including truck drivers, administrative personnel and others, according to court records. Many employees claimed they were owed back pay. Hawes reported the story. Sept. 30, 2022: Two trucking companies that contracted with the Postal Service to haul mail filed for Chapter 11 bankruptcy. McClellan Trucking Inc. filed its petition in the U.S. Bankruptcy Court for the Western District of Pennsylvania on Sept. 28, five days after the company’s parent company, Duran Transfer Inc., filed for bankruptcy protection on Sept. 23. The petitions state both companies are based at the same address in Waterford, Pennsylvania. The companies had been in business for more than 30 years and employed 23 people. FreightWaves’ Hawes reported the story. July 6, 2022: Vermont-based LTL carrier LandAir, which focused on hauling hazardous materials, ceased operations. The private equity-owned trucking company had 135 drivers and 148 power units at 11 service centers in the U.S., as well as two service centers in Toronto and Ottawa, Ontario. The 54-year-old company serviced the Northeast and parts of Canada. Originally called Allied Air Freight, the company was founded by Fred Spencer in 1968. Hawes reported the story. May 6, 2022: Family-owned Rooney Trucking Inc., headquartered in Polo, Missouri, ceased operations and filed Chapter 7 bankruptcy. The company contracted with the Postal Service to haul mail. Attorney Ryan Blay stated, “Fuel and labor expenses were certainly issues that affected Rooney Trucking Inc. The bigger issue, though, was the decision by the U.S. Postal Service to take away some routes and cancel certain contracts. The business couldn’t function profitably with a restricted income stream. This was the biggest factor in deciding to declare bankruptcy for the company.” FreightWaves’ Hawes reported the story. April 26, 2022: Sullivan, Illinois-based Marvin Keller Trucking filed for Chapter 11 bankruptcy protection, citing a jury award of $10 million in December 2021. The bankruptcy petition, filed in the U.S. Bankruptcy Court for the Central District of Illinois, stated the bankruptcy filing was necessary to “avoid irreparable and immediate harm” to the carrier’s operations. The company also noted higher fuel costs and “other market conditions” as reasons for the filing. Hawes reported the story. Layoffs Nov. 16: Vehicle life cycle management software provider Solera Holdings Inc. conducted a round of layoffs via Teams on Nov. 13. According to an update on Layoff.com, West Lake, Texas-based Solera released 44 members of its U.S.-based billing team and “now all of their billing is done in Mexico.” FreightWaves’ Grace Sharkey reported the story. Nov. 15: Trucking company 10 Roads Express laid off 66 workers at its facility in Fort Worth, citing the cancellation of postal contracts. The layoffs, which occurred Oct. 16, affected 55 truck drivers, four dispatchers and seven mechanics, according to a recent filing with the Texas Workforce Commission. FreightWaves’ Noi Mahoney reported the story. Nov. 8: Hyliion Holdings gives up its electric powertrain business to focus exclusively on its generator technology and cutting 175 jobs in the process. Nov. 4: Approximately 65 employees of Pittsburgh-based Elite Transit Solutions were laid off. This was the second round of job cuts the freight brokerage has experienced over the past month; about 20 employees were let go on Oct. 20. Hawes reported the story. Nov. 6: Nearly 200 senior pilots at UPS accepted the company’s voluntary severance package, and regional passenger airline PSA Airlines is trying to recruit them to close a crew shortage. The head count reduction at UPS Airlines is much more limited than one envisioned at rival FedEx Express, where management has acknowledged it has more than 700 excess pilots and recently urged flight crews to quit for the same type of offer at PSA Airlines, an American Airlines subsidiary that operates in the eastern United States. FreightWaves’ Kulisch reported the story. Nov. 3: Maersk announced plans to lay off 10,000 workers over the next year in light of “worsening market conditions.” The company has already conducted 6,500 of the layoffs, but those were unannounced. FreightWaves’ Greg Miller reported the story. Oct. 13: Flexport laid off 600 workers. Flexport implemented a 20% workforce reduction as the freight forwarder moved to plug financial losses and become more nimble. Kulisch reported the story. Sept. 29: Following a sale of BNSF Logistics’ brokerage unit to J.B. Hunt, an undisclosed number of employees were laid off. FreightWaves’ Joanna Marsh reported the story. Sept. 27: Seattle-based logistics provider Flexe conducted its second round of layoffs in 14 months and fired 33% of the company — about 400 workers. FreightWaves’ Mahoney reported the story. Sept. 12: GXO Logistics laid off 92 workers at a Texas distribution center. The contract supply chain solutions provider is ceasing operations at a distribution center in Wilmer, Texas. Mahoney reported the story. Sept. 1: Coyote Logistics laid off an unspecified number of employees. FreightWaves’ Rachel Premack reported the story. Aug. 31: Union Pacific furloughed at least 94 employees due to a drop in rail traffic. The International Association of Machinists and Aerospace Workers, a union, said Union Pacific was planning to store hundreds of locomotives as demand for rail traffic has dropped. FreightWaves’ Marsh reported the story.  Aug. 24: Nationwide moving and storage company WayForth laid off hundreds of employees and shuttered operations in eight states in an effort to stay afloat, as FreightWaves’ Hawes reported. The company’s CEO said the layoffs and reorganization were the result of a downturn in its business, which focuses on moving and storage services for seniors. The company planned to slash its workforce from about 500 employees to 50; laid off employees did not receive any severance packages. The company is exiting markets in Connecticut, Florida, Maryland, Massachusetts, New Jersey, North Carolina, Pennsylvania and Texas. FreightWaves’ Mahoney reported the story. Aug. 4: FedEx Corp., the nationwide parcel delivery giant, said it was eliminating 280 of 806 jobs at a facility in Fort Worth, Texas, after losing a customer. Mahoney reported the story. July 11: Freightos laid off 13% of employees as its revenue weakened. The digital freight marketplace also downgraded its 2023 guidance. FreightWaves’ Kulisch reported the story. June 29: Cargo airline Amerijet laid off more than a dozen workers. FreightWaves’ Kulisch reported the story. June 1: Venture capital-backed trucking technology provider CloudTrucks laid off an undisclosed number of employees. However, a source close to the company claimed that 40% of the CloudTrucks team was let go. Like many FreightTech companies that have laid off workers in recent months, CloudTrucks blamed the declining freight market for the job cuts. The company had raised nearly $142 million since its founding in 2019. FreightWaves’ Hawes reported the story. May 19: DHL Supply Chain and GXO Logistics laid off 80 workers in Texas, citing a loss of customers. FreightWaves’ Mahoney reported the story. May 19: Coyote Logistics announced more layoffs; this round comes after a reported 200 job cuts in February. May 11: U.S. Xpress laid off 150 staff members and reported a significant loss to the Securities and Exchange Commission. Knight-Swift acquired U.S. Xpress effective July 1. FreightWaves’ Kingston reported the story. May 9: Freight broker Lipsey Logistics cited a weak freight market as the reason for layoffs. A source familiar with the layoffs said an estimated 20 jobs were cut. FreightWaves’ Hawes reported the story. April 21: Flock Freight laid off 45 people — 8% of its workforce — in a second round of firings. More than 60 workers were fired in December 2022. Hawes reported the story. March 8: Global logistics giant Ceva Logistics cut 142 jobs at two of its facilities in Mount Juliet, Tennessee, effective April 22. Prior to the firings there were about 700 employees at the facilities. FreightWaves’ Hawes reported the story. Feb. 16: Convoy laid off an undisclosed number of employees and closed its Atlanta office. (Convoy ultimately closed in October 2023.) FreightWaves’ Sharkey reported the story. Jan. 23: Uber Freight cut about 150 jobs — 3% of its workforce. All the job losses were in its digital brokerage operations. FreightWaves’ Kingston reported the story. Jan. 18: Logistics giant Ryder laid off 800 workers in Texas. Ryder said the cutback was “due to a customer’s changing business needs.” FreightWaves’ Mahoney reported the story. Jan. 13: Electric truck manufacturer Nikola filed a layoff notice for employees of the former Romeo Power battery-making plant in California, affecting up to 400 workers. Nikola is transferring battery pack manufacturing to Arizona. FreightWaves’ Alan Adler reported the story.  Jan. 11: Flexport laid off about 20% of its employees. Its leadership said they would cut workers because the company had increasingly automated key systems and forecast decreased freight volumes. FreightWaves’ Kulisch reported the story. Jan. 3: Wells Fargo Bank filed a petition to force United Furniture Industries into Chapter 7 bankruptcy after UFI’s abrupt decision to cease operations two days before Thanksgiving 2022, as FreightWaves’ Hawes reported. Dec. 12, 2022: Fleet management solutions provider Motive laid off about 240 workers (6% of its workforce), blaming slowing demand. FreightWaves’ Mahoney reported the story. Dec. 12, 2022: Auto manufacturer Stellantis announced plans to close an Illinois automobile factory in February 2023, terminating 1,350 workers. The company blamed rising electric vehicle costs for the shutdown. Mahoney reported the story. Nov. 9, 2022: Freight brokerage giant C.H. Robinson laid off about 650 employees amid weaker-than-expected financial results in the third quarter of 2022. Oct. 29, 2022: Trucking payments platform AtoB laid off 30% of its employees, citing “external economic headwinds.” FreightWaves’ Mahoney reported the story. July 8, 2022: Logistics provider GXO announced it was closing a Milwaukee facility, laying off 144 workers. Mahoney reported the story. July 8, 2022: LandAir’s 450 employees were terminated, some via Zoom video call. Former workers and drivers said the management ran the LTL carrier “into the ground.” FreightWaves’ Hawes reported the story. June 21, 2022: Logistics company DB Schenker announced 130 employees would be laid off at its Fort Worth facility after it lost a Kraft Heinz contract. FreightWaves’ Mahoney reported the story. June 10, 2022: Global logistics provider Neovia cut 98 jobs at its Tannersville, Pennsylvania, facility. FreightWaves’ Hawes reported the story. April 14, 2022: Logistics giants Geodis and Ceva filed paperwork for hundreds of job cuts in Ohio. Geodis, headquartered in France, announced that it would close all business operations at its facility in Columbus, eliminating 302 jobs by the end of September 2022. Ceva Logistics, which is owned by French container carrier CMA CGM, said it would close a portion of the Groveport facility, located near Columbus, by Sept. 30. Hawes reported the story. Tyler Durden Tue, 11/21/2023 - 06:30.....»»

Beneficient (NASDAQ:BENF) Q2 2024 Earnings Call Transcript November 17, 2023 Operator: Good day, and thank you for standing by. Welcome to the Beneficient Second Quarter Fiscal 2024 Earnings Call. At this time, all participants are in a listen only mode. Please be advised that today’s conference is being recorded. I would now like to hand […] Beneficient (NASDAQ:BENF) Q2 2024 Earnings Call Transcript November 17, 2023 Operator: Good day, and thank you for standing by. Welcome to the Beneficient Second Quarter Fiscal 2024 Earnings Call. At this time, all participants are in a listen only mode. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, David Rost, General Counsel. Please go ahead. David Rost: Good afternoon. And thank you for joining us today for Beneficient’s fiscal second quarter 2024 conference call. In addition to this call, we issued an earnings press release that was posted to the Shareholder section of our website at shareholders.trustben.com. Today’s webcast is being recorded, and the replay will be available on the company’s website at shareholders.trustben.com. On today’s call, management’s prepared remarks and answers to questions may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those discussed today. Forward-looking statements represent management’s current estimates and Beneficient assumes no obligation to update any forward-looking statements in the future. Today’s call also contains certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our Web site for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. Hosting the call today are Mr. Brad Heppner, CEO and Chairman; and Mr. Greg Ezell, CFO. Following the prepared remarks, we will answer selected questions that were submitted through our Investor Relations Web site at shareholders.trustben.com. Now, I will hand the meeting over to Mr. Heppner. Brad Heppner: Thank you, David. And good afternoon, and thank you for joining us for our first earnings call as a public company. On today’s call, I will provide some insight into how Ben goes to market, an update on some key topics, and Greg will share some highlights from our results for our second fiscal quarter 2024 ended on September 30, 2023. Since our listing in June this year, we have secured our recent financing, enhanced our AltAccess tech platform and expanded our liquidity product offerings. I will now share a quick history and summarize the advantages of the Beneficient model. Ben is built to address the financial services needs of investors and sponsors within the illiquid private investment market. There are two kinds of asset markets; those that are liquid, such as stocks, bonds, currencies, commodity derivatives, mortgages; and then those that are illiquid, such as real estate, private companies and private fund partnerships, just to name a few. Ben aims to be the primary provider of liquidity solutions and financial services for investors in private markets. For the last millennium, illiquid markets have been transforming into liquid markets. Starting with family sponsored banking networks for more efficient capital formation, market-after-market has evolved from illiquidity toward increasing liquidity. This process has progressed in ways driven by technology and innovation that has increased and broadened access to opportunities for investors, which expands the market itself. Our mission is simple. Ben exists to transform the market for fund partnership interests and alternative asset investments from an illiquid market into a more liquid market available to everyone or stated simply, complete democratization. See also 30 Countries With The Best Street Food In The World and 20 Best Smelling Perfumes for Women that Men Love. Q&A Session Follow Beneficient Follow Beneficient We may use your email to send marketing emails about our services. Click here to read our privacy policy. Here at Ben, we believe all markets need three building blocks to drive access to retail investors toward a more liquid market. First, investment opportunities. We believe these are best in the form of efficient transactions regardless of trade size that are made available to a large number of investors. Second, transparent information. We believe this is best provided by providers with centralized market platforms with access to data, information and accurate transaction management for investors. And third, market participants who create the liquidity that makes the market deep and wide. Ben has been developing and expanding upon these building blocks in the illiquid alternative asset market and is now positioned to capitalize on this growing market that is now $12 trillion of net asset value. Ben was created to provide an end-to-end financial services solution through digitization to overcome these inefficiencies. Ben’s fintech capabilities provided through its AltAccess platform are designed to generate revenues by enabling efficient transactions within this illiquid market, from custody, to clearing, to cash flow transfers, to investor information. The challenge is that it can take years to build enough assets under administration, also known as AUA, to meaningfully scale the business and to achieve double digit margins. This is due to high system development costs and low unit fees. The good news is that our unique technological advantage and edge and our unique regulatory authorizations and charters position Ben with a first mover advantage. The way we will reach positive cash flow and profitability is by providing the needed liquidity to the market. We finance acquisitions of limited partnership interests from investors of all sizes and then hold these financings we originate, which will generate fees for us. These financings are backed by the limited partnership interests of our customers. We may also combine a number of our financings that we originated and closed through our AltAccess platform, and we may combine those together into a package that is attractive to other institutional investors to purchase then from Ben. Our early financings were large transactions to ensure our procedures and digital operations were stress tested. We continued to pursue large financings and large transactions at competitive rates. However, alongside the large transactions we have also concluded smaller transactions that are just as important and provide additional diversification. As I mentioned earlier, this is an extraordinarily large market opportunity as there is $12 trillion of limited partner net asset value worldwide. 75% is held by big institutions, yet $3 trillion is held by small investors. These small investors, which include high net worth individuals as well as smaller family offices often want liquidity for reasons that no big investor can even relate to, such as death, divorce, estate planning, charitable contributions and settling family matters. Ben’s long term growth strategy includes; first, building upon our technology such as our copywritten and trademarked AltAccess and AltQuote and other patent pending technologies, which will provide customers with a secure online delivery of liquidity solutions, as well as indicative quotes on the value of their alternative assets; second, expanding our offerings into complementary products and services that we will discuss in the future; and third, focusing on continued strong organic growth but also remaining open to potentially strategic accretive transactions that can add scale and diversification to expand Ben’s geographic reach. In terms of recent events, while access to capital remains challenging in the current environment, we have continued to work over the quarter to secure funding to support some of our strategic priorities. To that point, we recently closed a $25 million three year term loan. The company has utilized the proceeds to meet certain of its outstanding obligations, fund product distribution and provide additional working capital. Looking ahead, while we acknowledge the current macro uncertainties and risk of further economic deterioration, we believe that Ben is well positioned now as a public company for executing our strategy while also navigating the current market challenges we face. We’re extremely proud of our team for their execution and look forward to continue delivering on the tremendous growth opportunities that lie ahead to maximize long term shareholder value. With that, let me turn the call over to Greg Ezell, Ben’s Chief Financial Officer. Greg? Greg Ezell: Thank you, Brad. Now let’s turn to our quarterly results and our financial position as of September 30, 2023. My plan today is to summarize and contextualize the results from a top down perspective. Our financial structure is complicated as is true of many financial service companies, but the meaning of the numbers can sometimes be clearer when the results are simplified for illustration. For this, it’s relevant to review the business segment financial information for Ben Liquidity and Ben Custody as it’s the operations of these business segments, along with corporate and other, that accrues to Ben’s equity holders. The Customer ExAlt Trusts segment does not directly contribute income or loss to Ben’s equity holders. Ben generates revenues principally through two categories; interest revenue for supplying liquidity off the balance sheet; and fee revenue for the use of the platform and trust services. In our Ben Liquidity segment, we generate income through the base interest rate approximately 10% annually of the total financing amount and the potential for a 1 time catch up payment on the financing at the end of the life of the LP unit. The payment is capped generally at a 23% IRR net of all fees and other obligations. In our Ben Custody segment, we generate transaction fees, approximately 7% 1 time fee based on the initial NAV and recurring custody and trust service fees approximately 2.8% annually of the remaining NAV. Total NAV in the trust is driven by new originations, liquidations on existing LP interest and change in value of existing LP interest......»»

Sprouts Farmers (SFM) demonstrates resilience, and enhances customer interactions and strategic foresight, positioning itself for sustained growth and success in the dynamic retail landscape. Sprouts Farmers Market, Inc. SFM is diligently working toward creating a robust and integrated customer experience. The company is focusing on expanding its customer base through a multi-faceted approach that includes product innovation, enhanced customer experiences, targeted marketing featuring everyday great pricing, and technological advancements.In response to the growing demand for convenience, the company is also diversifying its product offerings to include ready-to-eat, ready-to-heat and ready-to-cook items. Additionally, SFM is expanding its private-label portfolio across various departments.Strategic partnerships with Instacart and DoorDash enabled the company to tap into new marketplaces, thereby fortifying its e-commerce growth. Evidencing the success of these efforts, e-commerce sales witnessed a substantial 16% rise in the third quarter of 2023, constituting 12.1% of the total sales for the period. Image Source: Zacks Investment Research Expanding FootprintAggressively pursuing revenue enhancement strategies, this Zacks Rank #3 (Hold) company expanded its footprint in the third quarter of 2023 by inaugurating 10 stores. The company has an ambitious plan to launch 30 stores in 2023, with an additional 35 stores slated for 2024, with the majority scheduled for the latter half of the year.Emphasizing smaller store prototypes, this strategic shift is geared toward greater profitability, particularly in key areas such as produce and frozen goods, amplifying the potential for increased sales. These initiatives align seamlessly with Sprouts Farmers' overarching objective of achieving an annual unit growth rate of 10%, beginning in 2024.Promising OutlookBuoyed by a commendable third-quarter performance, Sprouts Farmers unveils an optimistic outlook for 2023. Anticipating a 3% increase in comparable store sales and robust 6.5-7% growth in net sales, the company's management has revised its adjusted earnings before interest and taxes guidance to $387-$393 million, marking an upward adjustment from the previously stated $378-$390 million.This forecast indicates an 8.6% year-over-year increase in adjusted operating income. Furthermore, Sprouts Farmers expects full-year adjusted earnings per share to be $2.77-$2.81, indicating a substantial rise from the $2.39 reported in 2022.This specialty food retailer, which curates products with attributes appealing to the health enthusiast customer, has seen its shares outpace the Zacks Food-Natural Foods Products industry in the past year. In the said period, the stock has rallied 26% compared with the industry’s rise of 17.2%.3 Promising StocksWe have highlighted three better-ranked stocks, namely Ollie's Bargain Outlet Holdings, Inc. OLLI, Ross Stores Inc. ROST and Sovos Brands Inc. SOVO.Ollie's Bargain Outlet is a value retailer of brand-name merchandise at drastically reduced prices. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Ollie's Bargain Outlet’s current fiscal-year sales and EPS suggests growth of 14.2% and 67.9%, respectively, from the year-ago reported figures. OLLI has a trailing four-quarter earnings surprise of 1.3%, on average.Ross Stores is an off-price retailer of apparel and home accessories. The company currently has a Zacks Rank #2.The Zacks Consensus Estimate for Ross Stores’ current fiscal-year sales and EPS suggests growth of 7.2% and 21.7%, respectively, from the year-ago reported figures. ROST has a trailing four-quarter earnings surprise of 7.8%, on average.Sovos Brands is a food company. Its brand portfolio includes Rao's, a premium line of pasta sauces, pizza sauces, dry pastas, frozen entrees and soups. The company currently carries a Zacks Rank #2.The Zacks Consensus Estimate for Sovos Brands’ current financial-year sales and earnings suggests growth of 13.4% and 23.3%, respectively, from the year-ago reported numbers. SOVO has a trailing four-quarter earnings surprise of 21.9%, on average. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ross Stores, Inc. (ROST): Free Stock Analysis Report Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report Ollie's Bargain Outlet Holdings, Inc. (OLLI): Free Stock Analysis Report Sovos Brands, Inc. (SOVO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Lockheed (LMT) secures a $30.5 million modification contract to provide support services for AEGIS combat system. Lockheed Martin Corp.’s LMT business segment, Rotary and Mission Systems, recently clinched a modification contract involving AEGIS combat system. Valued at $30.5 million, the deal has been awarded by Naval Sea Systems Command, Washington, D.C.Per the deal, LMT will provide capability package development and fielding, system integration and fielding, and in-service sustainment services for AEGIS combat system. The contract is expected to be completed by Dec 31, 2024. The work related to the deal will be carried out in Moorestown, NJ.What’s Favoring Lockheed?As nations across the globe are increasing their defense budget to strengthen their warfare capabilities, spending on combat systems has increased. This contributes to growth of defense companies that are into manufacturing of efficient combat systems, which boast capabilities to address enemy threats.In this context, it is imperative to mention that LMT’s Aegis Combat System is the U.S. Navy’s most modern surface combat system. It is also the first fully-integrated combat system built to defend against advanced air and surface threats.This weapon system has witnessed significant demand owing to its remarkable features that are most suitable for military missions. It includes missile launching element, computer programs, radar and displays that are fully integrated to work together. This demand has led to significant order inflow for the company, like the latest one.Going forward, per the report from Mordor Intelligence firm, the naval combat system market is expected to witness a CAGR of more than 2.5% over the 2022-2027 period. This market growth prospect suggests a promising outlook for sustained order influx for LMT due to exceptional features of its Aegis combat systems.Peer ProspectsOther defense companies that stand to benefit from the expanding naval combat system market are as follows:Elbit Systems ESLT: Elbit Systems has more than three decades of experience in design and development of high-performance naval combat systems, including shipboard combat management systems, assuring information dominance over potential enemies, supporting a Common Tactical Picture, shortening decision cycles and executing rapid, accurate weapon engagement.The Zacks Consensus Estimate for ESLT’s 2023 sales indicates an improvement of 5.1% from 2022 levels. The Zacks Consensus Estimate for Elbit’s 2023 earnings calls for 14.4% growth from 2022 figure.BAE Systems BAESY: BAE Systems designs and manufactures naval ships and submarines as well as state-of-the-art combat systems and equipment. Its INTeACT combat management systems provide mission-critical capabilities and a vital advantage in combat systems.BAE Systems boasts a long-term earnings growth rate of 13.6%. The Zacks Consensus Estimate for BAE Systems’ 2023 sales indicates a 33.6% rise from 2022 actuals.RTX Corp. RTX: RTX’s Missiles & Defense unit serves as the prime mission systems equipment integrator for all electronic and combat systems for the DDG 1000 program, America’s next-generation combat ship. The company provides warships with a computing environment, electronic modular enclosures, an integrated undersea warfare system, MK57 vertical launching system, an advanced gun system and an integrated power system.RTX boasts a long-term earnings growth rate of 9.4%. The Zacks Consensus Estimate for the company’s 2023 sales implies a 10.5% rise from 2022 reported numbers.Price MovementIn the past year, shares of Lockheed have decreased 7.5% compared with the industry’s 12.8% decline.Image Source: Zacks Investment ResearchZacks RankLockheed currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lockheed Martin Corporation (LMT): Free Stock Analysis Report Bae Systems PLC (BAESY): Free Stock Analysis Report Elbit Systems Ltd. (ESLT): Free Stock Analysis Report RTX Corporation (RTX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

The Zacks Mining - Gold industry's near-term prospects are bright as gold prices are expected to gain. One can watch stocks like AGI, ORLA and EGO, backed by their growth prospects. The prospects for the Zacks Mining - Gold industry look bright at the moment on the back of improving gold prices. The yellow metal is likely to gain, fueled by ongoing geopolitical tensions as well as strong demand.With gold prices anticipated to gain further on demand-supply imbalance, companies like Alamos Gold AGI, Orla Mining ORLA and Eldorado Gold EGO are well-poised for growth, backed by their strong balance sheets, efforts to lower costs and growth initiatives.About the IndustryThe Zacks Mining - Gold industry comprises companies engaged in extracting gold from mines. These mines may be either underground or open pits. Mining is a long and complex process and requires significant financial resources. It involves exploration to evaluate the deposit's size, then assessing ways to extract and process the ore efficiently, safely and responsibly and develop the mine before the actual mining process. It normally takes 10-20 years for a gold mine to produce material that can finally be refined. Nowadays, industry players use a range of sophisticated techniques to extract gold and convert it into dore bars, an alloy of gold and silver, alongside other impurities. These are then sent for purification, after which gold is purchased as bars or coins or used in jewelry or other purposes.Major Trends Shaping the Future of the Mining-Gold IndustryUpbeat gold prices: Gold prices held their ground at above $1,900 per ounce through a major part of the third quarter of 2023, aided by a weaker dollar and increased buying by central banks. Even though gold prices had dipped near the end of the quarter, falling below $1,850 an ounce, the Federal Reserve indicates that interest rates are likely to remain higher for longer. Nevertheless, the average gold price for the quarter was at around $1,928.50 per ounce, which was 12% higher on a year-over-year basis. Gold prices have picked up again, notching a 6.8% gain in October, mainly driven by safe-haven buying due to the geopolitical flare-up in Israel. Year to date, gold prices have gained 6.4%. Gold has also recently gained support after Moody’s lowered its U.S. credit rating outlook from stable to negative, citing increasing fiscal deficits and political standoffs in Washington.Efforts to Counter High Costs to Sustain Margins: The industry has been facing a shortage of skilled workforce, causing a spike in wages. Industry players are persistently grappling with escalating production costs, including electricity, water, and material and supply-chain issues. Since the industry cannot control gold prices, it focuses on improving the sales volume and the operating cash flow and lowering unit net cash costs. The industry participants are opting for alternate energy sources, such as solar or wind farms, to minimize fuel-price volatility and secure supply. Miners are committed to cost-reduction strategies and digital innovation to drive operating efficiencies.Impending Demand and Supply Imbalance to Support Prices: Depleting resources, declining supply in old mines and the lack of new mines remain inherent threats to the industry. Due to the scarcity of discoveries and exhaustive existing resources, miners prefer building up reserves through acquisitions rather than digging new ones that are risky and capital-intensive. On the demand side, the use of gold in energy, healthcare and technology is rising. India and China account for around 50% of consumer gold demand. Economic and geopolitical uncertainty is driving safe-haven demand in China, while economic strength in India is yielding wealth-driven buying. Also, demand for physical gold is seasonally higher in the later part of the year, aided by the festival and wedding season in India. Holiday-related spending is expected to boost jewelry demand in China. The yellow metal has long been considered a safe-haven investment in financial or political uncertainty. Gold demand continues to be on the rise from central banks. Therefore, there will be an eventual demand-supply imbalance, which is likely to drive gold prices. Zacks Industry Rank Indicates Bright ProspectsThe group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. The Zacks Mining - Gold Industry, which is a 38-stock group within the broader Zacks Basic Materials sector, currently carries a Zacks Industry Rank #88, which places it in the top 35% of 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Versus S&P 500 & SectorThe Mining-Gold Industry has underperformed the S&P 500 Index but outperformed the Basic Material sector in a year. The stocks in the industry have collectively declined 1% compared with the broader sector’s fall of 4%. The S&P 500 has gained 12.2% in the same timeframe.One-Year Price Performance Industry's Current ValuationOn the basis of the forward 12-month EV/EBITDA, a commonly used multiple for valuing gold-mining companies, we see that the industry is currently trading at 5.74X compared with the S&P 500’s 10.64X and the Basic Material sector’s forward 12-month EV/EBITDA of 5.97X. This is shown in the charts below.Enterprise Value/EBITDA (EV/EBITDA) F12M RatioEnterprise Value/EBITDA (EV/EBITDA) F12M RatioOver the last five years, the industry traded as high as 9.26X and as low as 4.63X, with the median at 6.40X.3 Mining-Gold Stocks to Keep an Eye OnOrla Mining: The company recently reported that gold production was 32,425 ounces in the third quarter of 2023, bringing its year-to-date production to 87,393 ounces, driven by better-than-expected performance at Camino Rojo. The Camino Rojo Oxide Gold Mine achieved quarterly gold production of 32,425 ounces of gold in the quarter at an average ore stacking rate of 19,205 tons per day. Backed by this, ORLA increased 2023 gold production expectations to a range of 110,000 to 120,000 ounces from its previous guidance of 100,000 to 110,000 ounces.  The company continues to advance exploration activities across the portfolio with a total investment of $35 million, which continues to generate strong results. With a 10-year mine life and scope of extending through exploration, the Camino Rojo mine is expected to be a significant cash generator in the future.The Zack Consensus Estimate for earnings for the current year for this Vancouver, Canada-based company has moved up 19% over the past 90 days. It has a trailing four-quarter earnings surprise of 85.4%, on average. ORLA currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Price & Consensus: ORLAAlamos Gold: The company produced 135,400 ounces of gold in the third quarter of 2023, marking a 10% year-over-year increase and surpassing its guidance of 120,000-130,000 ounces. Strong performances from the Mulatos District and Island Gold aided this outperformance. This takes the company’s year-to-date output to 399,800 ounces, which puts it on track to deliver record production numbers in 2023. AGI’s efforts to lower costs will help in providing improved margins over the next several years, thereby supporting a strong free cash flow. The company continues to advance on its growth initiatives, including the Phase 3+ Expansion at Island Gold and the Lynn Lake and PDA projects. In August, the company reported the results of an updated Feasibility Study for the Lynn Lake project, which suggests higher average annual gold production of 207,000 ounces over the first five years and 176,000 ounces over the initial ten years — a 23% increase from the 2017 study. In May 2023, the company completed the previously announced acquisition of Manitou Gold Inc. Through this deal, AGI more than tripled its land package around the Island Gold Mine and added significant exploration potential in a relatively underexplored segment of the Michipicoten Greenstone Belt.The Zacks Consensus Estimate for the Toronto, Canada-based company’s 2023 earnings has moved up 21% over the past 90 days. The current estimate indicates an 85.7% year-over-year increase. AGI has a long-term earnings estimates growth rate of 20.1%. It has a trailing four-quarter earnings surprise of 25.6%, on average. AGI currently carries a Zacks Rank #2 (Buy).Price & Consensus: AGIEldorado Gold: The company produced 121,030 ounces of gold in the third quarter of 2023, up 2% year over year, driven by an enhanced materials handling circuit at Kisladag, productivity initiatives and associated improvements at Olympias. At its development project, Skouries, the company continues focusing on construction ramp-up and completing engineering and procurement in the third quarter. Underground development continued to advance the west decline. It is on a plan to reach the targeted development meters for 2023, while major earthworks initiatives include haul road construction to build earthworks structures as well as civil works related to the crushing facility. The project cost and schedule are on track, with commissioning in mid-2025 and commercial production at the end of 2025.Eldorado Gold is based in Vancouver, Canada. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings has moved up 11% over the past 90 days. The estimate indicates year-over-year growth of 720%. The company has an estimated long-term earnings growth of 51.6%. EGO has a trailing four-quarter earnings surprise of 496%, on average and currently carries a Zacks Rank #3 (Hold).Price & Consensus: EGO  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 Alamos Gold Inc. (AGI): Free Stock Analysis Report Eldorado Gold Corporation (EGO): Free Stock Analysis Report Orla Mining Ltd. 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